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SECURITIES AND EXCHANGE COMMISSION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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L Brands, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
L Brands, Inc. |
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Annual Meeting of Stockholders
May 19, 201620, 2021
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Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 19, 2016:20, 2021: The proxy statement and annual report to stockholders are available atwww.proxyvote.com.www.proxyvote.com.
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April 8,
2016DEAR STOCKHOLDER:
2021
DEAR STOCKHOLDER:
You are cordially invited to attend our
20162021 annual meeting of stockholders to be held at
8:10:30 a.m., Eastern Time, on May
19, 2016,20, 2021, at our offices located at Three Limited Parkway, Columbus, Ohio 43230. Our Investor Relations telephone number is (614) 415-7585 should you require assistance in finding the location of the meeting. The formal Notice of Annual Meeting of Stockholders and proxy statement are attached. If you plan to attend, please bring the Admittance Slip located at the back of this booklet and a picture I.D., and review the attendance information provided.
IWe hope that you will be able to attend and participate in the
meeting, at which time I will have the opportunity to review the business and operations of our company.meeting.
The matters to be acted upon by our stockholders are discussed in the Notice of Annual Meeting of Stockholders. It is important that your shares be represented and voted at the meeting. Accordingly, after reading the attached proxy statement,
would youplease kindly sign, date and return the enclosed proxy card or vote by telephone or via the Internet as described on the enclosed proxy card. Your vote is important regardless of the number of shares you own.
Sincerely yours, | | | |
Sincerely yours,
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/s/ Sarah E. Nash | | | /s/ Andrew M. Meslow |
/s/ Leslie H. Wexner
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Leslie H. Wexner
Sarah E. Nash | | | Andrew M. Meslow |
Chairman
Chair of the Board | | | Chief Executive Officer |
* We are continuing to monitor the public health and travel concerns relating to COVID-19 and the related recommendations and protocols issued by federal, state and local governments. In the event that it is not possible or advisable to hold our annual meeting at the time, date and place as originally planned, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication or adjourning or postponing the meeting. Any such change, including details on how to participate in a remote meeting, would be announced in advance via press release, a copy of which would be filed with the Securities and Exchange Commission as additional proxy solicitation materials and posted on our website at http://www.lb.com. Please check this website in advance of the meeting date if you are planning to attend in person.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE
STOCKHOLDERS STOCKHOLDERS OF L
BRANDS, INC.BRANDS, INC.:
We are pleased to invite you to attend our
20162021 annual meeting of stockholders
to:to be held at 10:30 a.m., Eastern Time, on May 20, 2021, at our offices located at Three Limited Parkway, Columbus, Ohio 43230. At the 2021 annual meeting of stockholders, you will vote on the following items of business:Elect the threeten nominees proposed by the Board of Directors as directors to serve for a three-year term.
directors.Ratify the appointment of our independent registered public accountants.
Vote on a proposal to amend the Certificate of Incorporation to remove supermajority voting requirements.
Hold an advisory vote to approve named executive officer compensation.
Vote on the stockholder proposal on proxy access,regarding stockholder action by written consent, if properly presented at the meeting.
Transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March
24, 201626, 2021 may vote at the meeting.
If you plan to attend, please bring the Admittance Slip located at the back of this booklet and a picture I.D., and review the attendance information provided. Your vote is important. Stockholders of record can give proxies by calling a toll-free telephone number, by using the Internet or by mailing their signed proxy cards. Whether or not you plan to attend the meeting, please vote by telephone or via the Internet or sign, date and return the enclosed proxy card in the envelope provided. Instructions are included on your proxy card. You may change your vote by submitting a later dated proxy (including a proxy via telephone or the Internet) or by attending the meeting and voting in person.
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| | By Order of the Board of Directors, |
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| | | /s/ Leslie H. WexnerSarah E. Nash |
Leslie H. Wexner
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Chairman
| | | Sarah E. Nash |
| | | Chair of the Board |
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PROXY STATEMENT TABLE OF CONTENTS
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INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
The Board of Directors (the “Board”) is soliciting your proxy to vote at our
20162021 annual meeting of stockholders (or at any adjournment of the meeting). This proxy statement summarizes the information you need to know to vote at the meeting. In this proxy statement, “we,” “our,” “L Brands” and the “Company” refer to L Brands, Inc.
We began mailing this proxy statement and the enclosed proxy card, or the Notice of Internet Availability of Proxy Materials (the “Notice”)
, on or about April
8, 20169, 2021 to all stockholders entitled to vote. The Company’s
20152020 Annual Report on Form 10-K
(the “2020 10-K”), which includes our financial statements, is being sent with this proxy statement and is available in paper copy by request or in electronic form.
Date, Time and Place of Meeting
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Date: |
| May 19, 201620, 2021 |
Time:
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Time:
| | 8:10:30 a.m., Eastern Time |
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Place: |
| Three Limited Parkway, Columbus, Ohio 43230 |
Stockholders who plan to attend the meeting in person must bring photo identification and the Admittance Slip located at the back of this booklet.
Although we are hosting an in-person annual meeting, due to the public health impact of the COVID-19 pandemic, and to support the health and well-being of our stockholders, associates and communities, attendees will be expected to comply with important health and safety protocols as recommended by the Centers for Disease Control and Prevention, including: wearing an appropriate face covering at all times while on the meeting premises, hand washing and/or applying hand sanitizer upon arrival and practicing social distancing by maintaining at least a six-feet distance from other attendees.
You should not attend if you feel unwell or if you have been exposed to COVID-19. Any person in attendance who exhibits cold or flu-like symptoms or who has been exposed to COVID-19 may be asked to leave the premises for the protection of the other attendees. We reserve the right to take any additional precautionary measures deemed appropriate in relation to the meeting and access to meeting premises, and may ask attendees to leave the meeting if they are not following our procedures.
Because of necessary security precautions, bags, purses and briefcases may be subject to inspection. To speed the admissions process, stockholders are encouraged to bring only essential items. Cameras, camcorders or videotaping equipment are not allowed.
We are continuing to monitor the public health and travel concerns relating to COVID-19 and the related recommendations and protocols issued by federal, state and local governments. In the event that it is not possible or advisable to hold our annual meeting at the time, date and place as originally planned, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication or adjourning or postponing the meeting. Any such change, including details on how to participate in a remote meeting, would be announced in advance via press release, a copy of which would be filed with the Securities and Exchange Commission (the “Commission”) as additional proxy solicitation materials and posted on our website at http://www.lb.com. Please check this website in advance of the meeting date if you are planning to attend in person.
Stockholders entitled to vote are those who owned Company common stock (which we refer to throughout this proxy statement as “Common Stock”) at the close of business on the record date, March
24, 2016.26, 2021. As of the record date, there were
287,003,940278,897,853 shares of Common Stock outstanding. Each share of Common Stock that you own entitles you to one vote.
Whether or not you plan to attend the annual meeting, we urge you to vote. Stockholders of record can give proxies by calling a toll-free telephone number, by using the Internet or by mailing their signed proxy cards.
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The telephone and Internet voting procedures are designed to authenticate stockholders’ identities, to allow stockholders to give their voting instructions and to confirm that stockholders’ instructions have been recorded properly. If you are voting by mail, please complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you are voting by telephone or via the Internet, please use the telephone or Internet voting procedures set forth on the enclosed proxy card. Returning the proxy card or voting via telephone or the Internet will not affect your right to attend the meeting and vote.
The enclosed proxy card indicates the number of shares that you own.
Voting instructions are included on your proxy card. If you properly fill in your proxy card and send it to us or vote via telephone or the Internet in time to vote, one of the individuals named on your proxy card (your “proxy”) will vote your shares as you have directed. If you sign the proxy card or vote via telephone or the Internet but do not make specific choices, your proxy will follow the Board’s recommendations and vote your shares in the following manner:
| • | “FOR” the election of the Board’s ten nominees for director (as described on page 5); |
| • | “FOR” the ratification of the appointment of our independent registered public accountants (as described on page 16); |
| • | “FOR” the advisory vote to approve named executive officer compensation (as described on page 17); and |
| • | “AGAINST” the stockholder proposal regarding stockholder action by written consent (as described on page 19). |
“FOR” the election of the Board’s three nominees for director (as described on pages 5 and 6);
“FOR” the ratification of the appointment of our independent registered public accountants (as described on page 14);
“FOR” the proposal to amend the Certificate of Incorporation to remove supermajority voting requirements (as described on pages 15 and 16), in recognition of the vote at the Company’s 2015 annual meeting of stockholders on a stockholder proposal addressing the same topic;
“FOR” on the advisory vote to approve named executive officer compensation (as described on pages 17 and 18); and
“AGAINST” the stockholder proposal (as described on pages 19 and 20).
If any other matter is properly presented at the meeting, your proxy will vote in accordance with his or her best judgment. At the time this proxy statement went to press, we knew of no other matters to be acted on at the meeting. See “—Vote Necessary to Approve Proposals” for a discussion of the votes required to approve these items.
Certain stockholders received a Notice containing instructions on how to access this proxy statement and our
2015 Annual Report on Form2020 10-K via the Internet. Those stockholders should refer to the Notice for instructions on how to vote.
You may revoke your proxy by:
submitting a later dated proxy (including a proxy via telephone or the Internet);
notifying our Secretary at our principal executive offices at Three Limited Parkway, Columbus, Ohio 43230, in writing before the meeting that you have revoked your proxy; or
voting in person at the meeting.
If you plan to vote in person, a ballot will be available when you arrive. However, if your shares are held in the name of your broker, bank or other nominee, you must bring an account statement or letter from the nominee indicating that you were the beneficial owner of the shares at the close of business on March
24, 2016,26, 2021, the record date for voting, as well as a proxy, executed in your favor, from the nominee.
Appointing Your Own Proxy
If you want to give your proxy to someone other than the individuals named as proxies on the proxy card, you may cross out the names of those individuals and insert the name of the individual you are authorizing to vote. Either you or that authorized individual must present the proxy card at the meeting.
A quorum of stockholders is necessary to hold a valid meeting. The presence in person or by proxy at the meeting of holders of shares representing at least one-third of the votes of the Common Stock entitled to vote constitutes a quorum. Abstentions and “broker non-votes” are counted as present for establishing a quorum. A broker non-vote occurs on an item when a broker is not permitted to vote on that item absent instruction from the beneficial owner of the shares and no instruction is given.
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Vote Necessary to Approve Proposals
Pursuant to the Company’s Bylaws, each director will be elected by a majority of the votes cast with respect to such director. A majority of the votes cast means that the number of votes “for” a director’s
election must exceed 50% of the votes cast with respect to that director’s election. Any “against” votes will count as a vote cast, but “abstentions” and broker non-votes will not count as a vote cast with respect to that director’s election. Under Delaware law, if the director is not elected at the annual meeting, the director will continue to serve on the Board as a “holdover director.” As required by the Company’s Bylaws, each director has submitted an irrevocable letter of resignation as director that becomes effective if he or she does not receive a majority of votes cast in an election and the Board accepts the resignation. If a director is not elected, the Nominating & Governance Committee will consider the director’s resignation and recommend to the Board whether to accept or reject the resignation. | election must exceed 50% of the votes cast with respect to that director’s election. Any “against” votes will count as a vote cast, but “abstentions” will not count as a vote cast with respect to that director’s election. Under Delaware law, if the director is not elected at the annual meeting, the director will continue to serve on the Board as a “holdover director.” As required by the Company’s Bylaws, each director has submitted an irrevocable letter of resignation as director that becomes effective if he or she does not receive a majority of votes cast in an election and the Board accepts the resignation. If a director is not elected, the Nominating & Governance Committee will consider the director’s resignation and recommend to the Board whether to accept or reject the resignation.
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The ratification of Ernst & Young LLP as our independent registered public accountants requires the affirmative vote of a majority of the votes present in person or by proxy and voting thereon.
The proposal to amend the Certificate of Incorporation to remove supermajority voting requirements requires the affirmative vote of at least 75% of the outstanding shares of the Company entitled to vote at the annual meeting.
The advisory vote to approve named executive officer compensation requires the affirmative vote of a majority of the votes present in person or by proxy and voting thereon. While this vote is required by law, it will neither be binding on the Company or the Board, nor will it create or imply any change in the fiduciary or other duties of, or impose any additional fiduciary or other duties on, the Company or the Board. However, the Human Capital and Compensation Committee (the “HCC Committee”) will take into account the outcome of the vote when considering future executive compensation decisions.
The stockholder proposal requires the affirmative vote of a majority of the votes present in person or byin proxy and voting thereon.
Impact of Abstentions and Broker Non-Votes
You may “abstain” from voting for any nominee in the election of directors and on the other proposals. Abstentions with respect to the election of directors and on the other proposals
except for the proposal to amend the Certificate of Incorporation to remove supermajority voting requirements, will be excluded entirely from the vote and will have no effect.
Abstentions with respect to the proposal to amend the Certificate of Incorporation will have the same effect as a vote “against” the proposal.In addition, under New York Stock Exchange (“NYSE”) rules, if your broker holds your shares in its name, your broker is permitted to vote your shares on the proposal to ratify Ernst & Young LLP as our independent registered public accountant,accountants, even if it did not receive voting instructions from you. Your broker may not vote your shares on any of the other matters without specific instruction. A “broker non-vote” occurs when a broker submits a proxy but refrains from voting. Shares represented by broker non-votes are counted as present or represented for purposes of determining the presence of a quorum but are not counted as otherwise present or represented.
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Obtaining Additional Copies of the Proxy Materials
We have adopted a procedure called “householding.” Under this procedure, stockholders who share the same last name and reside at the same mailing address will receive one Notice or one set of proxy materials (if they have elected to receive hard copies of the proxy materials), unless one of the stockholders at that address has notified us that they wish to receive individual copies. Stockholders who participate in householding continue to receive separate control numbers for voting. Householding does not in any way affect dividend check mailings.
If you hold Common Stock and currently are subject to householding, but prefer to receive separate copies of proxy materials and other stockholder communications from the Company, or if you are sharing an address with another stockholder and would like to consent to householding, you may revoke or grant your consent to
householding as appropriate at any time by calling toll-free at 1-866-540-7095 or notifying our Secretary at our principal executive offices at Three Limited Parkway, Columbus, Ohio 43230.
A number of brokerages and other institutional holders of record have implemented householding. If you hold your shares beneficially in street name, please contact your broker or other intermediary holder of record to request information about householding.
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PROPOSAL 1: ELECTION OF DIRECTORS
The Board has nominated threeten directors for election at the annual meeting. If you elect the threeten nominees they will hold office for a three-yearone-year term expiring at the 20192022 annual meeting or until their successors have been elected. All
Director Succession
The Board believes in the necessity of ongoing Board refreshment, and rigorous self-evaluation, diversity and succession planning. We regularly engage with our stockholders and other stakeholders on Board refreshment. We have added eight new directors since 2014, seven of whom are independent directors. If all director nominees are currently servingelected to serve as our directors, six of our directors will be women, including our Chair of the Board, four of whom are ethnically diverse. Information regarding ethnic and gender diversity is based on characteristics self-identified by director nominees.
The Board has in place a robust process that will allow us to continue to refresh the Board. We want a thoughtful approach to succession planning and an orderly transition, and the Board seeks to strike a balanced approach that allows the Board to benefit from the right mix of newer directors who bring fresh perspectives and seasoned directors who bring continuity and deep insight into our business and strategies. The Company believes that an effective Board consists of individuals who possess a variety of complementary skills, a range of tenures and a diversity of perspectives. We intend to assess and implement our Board succession plan with this in mind. The Nominating & Governance Committee and the Board consider the performance, contributions, skills and experience of our Board members in the broader context of the Board’s overall composition, with a view toward constituting a Board that has the integrity, judgment, skill set, experience and other characteristics to oversee the broad set of challenges that the Company faces and evaluate management on executing the Company’s business strategy.
Corporate Governance Highlights
The Board constantly reviews evolving best practices in corporate governance and stays abreast of developments in the area of corporate governance. We have a policy of robust engagement with stockholders, with continuing outreach to and dialogue with all of our major investors on a range of issues, including corporate governance matters and environmental and social goals and initiatives. Corporate governance highlights include:
Board Oversight
Oversees the Company’s strategic plans, capital structure, assessment and management of enterprise risk, cybersecurity and data security policies and environmental, social and governance (“ESG”) matters.
Regular reviews of succession plans for the Chief Executive Officer (the “CEO”) and other senior management positions.
Independent Chair of the Board.
Stockholder Rights and Accountability
Declassified the Board in 2020 – all directors are elected annually.
Removed all supermajority voting requirements in our certificate of incorporation in 2020.
Adopted proxy access, permitting up to 20 stockholders owning 3% or more of the outstanding shares of Common Stock continuously for at least three years to nominate the greater of two directors or up to 20% of our Board and include those nominees in our proxy materials.
Stockholders who own at least 25% of the outstanding shares of Common Stock may call a special meeting of stockholders.
In uncontested director elections, directors are elected by a majority of votes cast.
No “poison pill” in effect.
Annual Evaluations
Annual Board and committee assessments enhance performance.
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Environmental and Social Responsibility
Enterprise strategy for diversity, equity and inclusion.
Reduction of environmental impact through use of sustainably-managed materials and partnerships with environmentally responsible suppliers.
Commitment to improving the communities where we do business, including investing more than $8 million in non-profit organizations in our home office communities through the L Brands Foundation.
Director Experience, Qualifications, Attributes and Skills
We believe that our Boarddirectors, as a whole, possessespossess the right diversitymix of experience, qualifications, skills and skillsexperience to oversee and address the key issues facing our Company. In addition, we believe that each of our directors possesses key attributes that we seek in a director, including strongCompany now, and effective decision-making, communication and leadership skills. To ensure that the Board, Board committees and individual directors remain effective, the Nominating & Governance Committee oversees the annual evaluation of the Board, each Board committee and each individual director and recommends ways to improve performance. With respectcommitment to Board refreshment the Nominating & Governance Committee is responsible for identifying candidates who are qualified to serve on the Board and, as part of that review process, considersensure this moving forward. Our directors also reflect the diversity of the Company’s workforce, communities it serves, its customers and other key stakeholders.
The table below summarizes the qualifications, skills and experience
and expertise of
the current directors and areas where new directors might add additional perspectives. In that regard, in the past four years, three new directors have been appointed toour nominees for the Board.
The considerations of the Nominating & Governance Committee in identifying potential candidates are described in further detail in “—Committees of the Board of Directors—Nominating & Governance Committee.” In addition to periodic Board refreshment, we believe that a variety of director tenures is beneficial to ensure Board quality and continuity of experience, as reflected in the current composition of our Board. 
Set forth below is additional information about the experience and qualifications of each of the nominees for director
as well as each of the current members of the Board, that led
the Nominating & Governance Committee and the Board to conclude
at the time each individual was nominated to serve on the Board, that he or she would provide valuable insight and guidance as a member of the Board.
Your proxy will vote for each of the nominees unless you specify otherwise. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board; alternatively, the Board may elect to reduce the size of the Board. We do not know of any nominee of the Board who would be unable to serve as a director if elected.
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The Board recommends a vote FOR the election of all of the following nominees of the Board:
Patricia S. Bellinger | | | Director since 2017 | | | Age 60 |
Human Capital and Compensation Committee
Nominating & Governance Committee |
Ms. Bellinger is the Chief of Staff and
DirectorsNomineesStrategic Advisor to the President of the BoardHarvard University, an institution of higher education. From 2017 to 2018, she was a Senior Fellow at the 2016 Annual Meeting
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Dennis S. Hersch | | Director since 2006 | | Age 69 |
Mr. Hersch is President of N.A. Property, Inc., through which he acts asCenter for Public Leadership at Harvard Kennedy School, a business advisorgraduate and professional school. From 2013 to Mr.2017, she was an Adjunct Lecturer and Mrs. Wexner,the Executive Director at the Center for Public Leadership at the Harvard Kennedy School and has done so since February 2008. He also serves as a trustee of several trusts established by Mr. and Mrs. Wexner. Hefrom 2010 to 2013, she was a Managingthe Executive Director of J.P. Morgan Securities Inc., an investment bank,Executive Education at Harvard Business School, a graduate and professional school. Prior to joining Harvard Business School, Ms. Bellinger was group vice president at British Petroleum, a global energy company, from December 2005 through January 2008,2000 to 2007, where he served as the Global Chairman of its Mergers & Acquisitions Department. Mr. Hersch was a partner of Davis Polk & Wardwell LLP, a New York law firm, from 1978 until December 2005. Mr. Herschshe oversaw leadership development and established and led British Petroleum’s global diversity and inclusion transformation. Ms. Bellinger served as a director of Clearwire Corporation, a telecommunications company, from 2008 until 2013, NBCUniversal Enterprise,Pattern Energy Group Inc., a media relatedpower company, from 2013 until 2014, Sprout Foods, Inc.2018 and Paris-based Sodexo S.A., from 2005 until 2018 and as a producertrustee of organic baby food, from 2009 until 2015 and has serveduAspire. She also serves as a director of PJT Partners Inc., a financial advisory firm, since 2015. Mr. Hersch’sParis-based Sonepar and Safran S.A. Ms. Bellinger’s nomination is supported by his legalher extensive executive, business and financial expertise, as well as his considerableleadership experience with corporate governance matters, strategic issues and corporate transactions.
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David T. Kollat | | Director since 1976 | | Age 77 |
Dr. Kollat has been Chairman of 22, Inc., a management consulting firm, since 1987. He has served as director of Select Comfort Corporation, a designer, manufacturer and retailer of premium beds and bedding accessories, since 1994, and Wolverine World Wide, Inc., a global footwear, athletic apparel and accessories designer, manufacturer and retailer, since 1992. Dr. Kollat also served as director of Big Lots, Inc., a retailer, from 1990 to 2013. In addition to his broad business experience (including service on several boards of directors) and marketing expertise, Dr. Kollat’s nomination is supported by his particular experience in the retail, apparel and other related industries, both at the management and board levels.
directors. | | | | |
Leslie H. Wexner | | Director since 1963 | | Age 78 |
Mr. Wexner has been Chief Executive Officer of the Company since he founded the Company in 1963, and Chairman of the Board for 40 years. Mr. Wexner is the husband of Abigail S. Wexner. Mr. Wexner’s nomination is supported by his effective leadership of the Company since its inception.
Directors Whose Terms Continue until the 2017 Annual Meeting
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Donna A. James | | | Director since 2003 | | | Age 5863 |
Audit Committee
Nominating & Governance Committee |
In April 2006, Ms. James established Lardon & Associates LLC, a business and executive advisory services firm, where she is Managing Director. Ms. James served as the President of Nationwide Strategic Investments, a division of Nationwide Mutual Insurance Company, from 2003 through March 2006. Ms. James served as Executive Vice President and Chief Administrative Officer of Nationwide Mutual Insurance Company and Nationwide Financial Services from 2000 until 2003. Ms. James is a director of
Time Warner Cable Inc., a provider of video, data and voice services, Marathon Petroleum Corp., a transportation fuels refiner and Boston Scientific Corporation, a developer, manufacturer and marketer of medical
devices.devices, and The Hartford Financial Services Group, Inc., an investment and insurance company. Ms. James served as a director of Marathon Petroleum Corp., a transportation fuels refiner, from 2011 to 2018, and as an advisor to the Marathon Petroleum Corp. board of directors from 2019 to 2020. Ms. James also served as Chairman of Financial Settlement Services Agency, Inc. from 2005 through 2006, as director of CNO Financial Group, Inc., a holding company for a group of insurance companies, from 2007 to 2011,
and as director of Coca-Cola Enterprises Inc., a nonalcoholic beverages company, from 2005 to
2012. She currently serves on the Audit Committee of Marathon Petroleum Corp.2012 and as
the Chairperson of the Audit Committeea director of Time Warner Cable Inc.
, a provider of video, data and voice services, from 2009 to 2016. Ms. James’s nomination
wasis supported by her executive experience, financial expertise, service on several boards of directors and experience with respect to corporate diversity and related issues.
Francis A. Hondal | | | | |
Jeffrey H. Miro | | Director since 20062021 | | | Age 7356 |
Mr. Miro
Ms. Hondal is President of Loyalty and Engagement at Mastercard Incorporated, a global technology company in the payments industry and has beenserved in this position since 2018. She is also a senior partnermember of Mastercard Incorporated’s management committee and leads the Honigman Miller Schwartzdevelopment of products that enable consumer experiences through loyalty, rewards and Cohn LLP law firm since November 2004. Heperformance-based marketing services for enterprises worldwide. From 2015 to 2018, Ms. Hondal was a partnerExecutive Vice President of Credit and ChairmanLoyalty at Mastercard Incorporated, responsible for growing usage and preference of Mastercard branded products, and from 2011 to 2015 she was Executive Vice President of Products at Mastercard Incorporated. Ms. Hondal also spent 17 years at the law firm of Miro Weiner & Kramer from 1981 until November 2004. He is an Adjunct Professor of Law at The University of Michigan Law School, teaching coursesAmerican Express Company in taxationglobal and corporate governance. Mr. Miro wasregional roles within the consumer services division. Since September 2020 Ms. Hondal has served as a director of M/I Homes,Equitable Holdings, Inc., a national homefinancial service holding company comprised of two principal franchises, Equitable and AllianceBernstein. She is also a board observer for Flybits, a Canadian contextual marketing fintech, and serves on the board of the Florida International University Foundation. Ms. Hondal’s nomination is supported by her extensive consumer marketing, finance and management experience.
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Danielle Lee | | | Director since 2021 | | | Age 45 |
Ms. Lee is the Chief Fan Officer for the National Basketball Association, Inc. where she oversees brand, creative and multiplatform fan marketing globally and is charged with elevating brand perceptions, cultural connection and fan engagement. Prior to joining the NBA in 2020, Ms. Lee served for four years as Global Vice President, Partner Solutions at Spotify Technology S.A., where she was responsible for developing go-to-market strategy and growing global revenue across music, podcasts and high-impact digital experiences. Prior to Spotify, Ms. Lee served as Global Vice President, Commercial Marketing at Vevo LLC and spent seven years at AT&T Inc. and served as Vice President of Product Marketing and Innovation for AT&T AdWorks after beginning her career at Showtime Networks Inc. Ms. Lee’s nomination is supported by her extensive experience and involvement in brand building, company, until Decemberproduct innovation and strategic marketing across technology, media and entertainment.
Andrew M. Meslow | | | Director since 2020 | | | Age 51 |
Mr. Meslow is the Chief Executive Officer of the Company. Prior to his appointment as the Chief Executive Officer of the Company in May 2020, Mr. Meslow was the Chief Executive Officer of Bath & Body Works, a subsidiary of the Company, from February 2020 to May 2020. From 2012
to February 2020, he was the Chief Operating Officer of Bath & Body Works. Mr. Meslow also served in other positions at the Company and
was a director of Sotheby’s Holdings, Inc., an auctioneer of art, jewelry and collectibles, until May 2006.its subsidiaries from 2003, when he joined the Company, to 2012. Mr.
Miro’sMeslow’s nomination
wasis supported by his
legal expertise, particularly with respect to corporate governanceeffective leadership of the Company as Chief Executive Officer of the Company, his established track record backed by strong operating, business development and
real estate matters.execution skills and his extensive understanding of the Company’s businesses and industry. | | | | |
Michael G. Morris | | | Director since 2012 | | | Age 6974 |
Human Capital and Compensation Committee (Chair)
Executive Committee
Audit Committee |
Mr. Morris served as the Chairman of the Board of American Electric Power Company, Inc., one of the largest electric utilities in the United States, from 2012 to April 2014. From January 2004 until November 2011, Mr. Morris served as the President, Chief Executive Officer and Chairman of American Electric Power Company, Inc. From 1997 until 2003, he served as the
President, Chairman and Chief Executive Officer of Northeast Utilities, the largest electric utility in New England.
From 2013 to 2017, Mr. Morris
currently servesserved as a director of Spectra Energy Corp., one of North America’s leading natural gas infrastructure companies
until its acquisition by Enbridge Inc. From 2017 to 2018, Mr. Morris served as director of Spectra Energy Partners GP, LLC, the general partner of Spectra Energy Partners (DE) GP, LP, the general partner of Spectra Energy Partners, LP, a master limited partnership engaged in the transmission, storage and gathering of natural gas, and the transportation and storage of crude oil, until its acquisition by Enbridge Inc., and from 2018 to 2019, Mr. Morris served as a director of PHL Group, Inc. Mr. Morris currently serves as a director of The Hartford Financial Services Group, Inc., an investment and insurance company, and
as the Non-Executive Chairman of the board of directors of Alcoa Corporation, a producer of bauxite, alumina and aluminum. Mr. Morris served as a director of Alcoa Inc., a
leading producer of
aluminum.aluminum, from 2008 to 2016, until Alcoa Inc.’s separation into two standalone, publicly-traded companies, Alcoa Corporation and Arconic Inc. Mr. Morris’s nomination
wasis supported by his broad business experience and management expertise.
Sarah E. Nash | | | Director since 2019 | | | Age 67 |
Raymond Zimmerman | | Director since 1984 | | Age 83Chair of the Board
Executive Committee (Chair)
Nominating & Governance Committee (Chair) |
Mr. Zimmerman
Ms. Nash is the Chair of our Board. Ms. Nash is also Chair of the Board, Chief Executive Officer and majority shareholder of Service Merchandise LLC,Novagard Solutions, an innovator and manufacturer of silicone sealants and coatings and hybrid and foam solutions for the Building Systems, Electronics, EV and Battery and Industrial and Transportation markets. Ms. Nash spent nearly 30 years in investment banking at JPMorgan Chase & Co. (and predecessor companies), a retail company. Mr. Zimmerman wasfinancial services firm, retiring as Vice Chairman in July 2005. She currently serves on the boards of directors of Blackbaud, Inc., a software company providing technology solutions for the not-for-profit industry, and Knoll, Inc., a designer and manufacturer of lifestyle and workplace furnishing, textiles and fine leathers, and privately held HBD Industries, Inc. and Irving Oil Company. Ms. Nash is Trustee of the New York-Presbyterian Hospital, a member
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of the National Board of the Smithsonian Institution and a member of Smithsonian Tropical Research Institute (STRI), Panama. Ms. Nash holds a BA in political science from Vassar College. Ms. Nash’s nomination is supported by her extensive experience in capital markets, strategic transactions, corporate governance and non-profit organizations.
Robert H. Schottenstein | | | Director since 2017 | | | Age 68 |
Human Capital and Compensation Committee
Nominating & Governance Committee |
Mr. Schottenstein has been the Chairman and Chief Executive Officer of
99¢ Stuff, LLC from 1999 to 2003 and the ChairmanM/I Homes, Inc., one of the
Boardnation’s largest homebuilders, since 2004. From 2014 to March 2021, Mr. Schottenstein served on the board of Installed Building Products, Inc., a leading installer of insulation and
Chief Executive Officercomplementary building products for residential new construction. He also serves on the boards of
99¢ Stuff, Inc. from 2003 to 2008. In January 2007, 99¢ Stuff, Inc. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code, and in October 2007, 99¢ Stuff, Inc. emerged from bankruptcy. Mr. Zimmerman’s nomination was supported by his financial expertise and broad business experience, particularly in the retail sector.Directors Whose Terms Continue until the 2018 Annual Meeting
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E. Gordon Gee | | Director since 2012 | | Age 72 |
Dr. Gee is currently the President of West Virginia University, a large public research institution. Prior to his current service at West Virginia University, he led several other major universities, including The Ohio State University (2007—2013, 1990—1998)Wexner Medical Center, One Columbus, The Ohio State University Foundation and is Vice Chair and serves on the Executive Committee of Harvard University’s Joint Center for Housing. Mr. Schottenstein’s nomination is supported by his management and business experience and involvement in various public policy issues.
Anne Sheehan | | | Director since 2019 | | | Age 64 |
Audit Committee
Nominating & Governance Committee |
Ms. Sheehan was the Chair of the Securities and Exchange Commission’s Investor Advisory Committee from 2012 to 2020. From 2008 until 2018, Ms. Sheehan served as the Director of Corporate Governance at The California State Teachers’ Retirement System (CalSTRS),
Vanderbilt University (2000—2007)the largest educator-only pension fund in the world and the second largest pension fund in the United States. She previously served as the Chief Deputy Director for Policy at the California Department of Finance from 2004 to 2008 and as Executive Director at the California Building Industry Foundation from 2000 to 2004. Ms. Sheehan is a director of Cohn Robbins Holdings Corp.,
Brown University (1998—2000),a blank check company founded for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more business entities. Ms. Sheehan is a founder of the Investor Stewardship Group, serves on the Advisory Board of the Weinberg Center for Corporate Governance at the University of
Colorado (1985—1990),Delaware, is a member of the Advisory Board of Rock Center for Corporate Governance of Stanford Law School and
West Virginia University (1981—1985). Dr. Gee also currently servesis a Senior Advisor at PJT Camberview. Ms. Sheehan’s nomination is supported by her extensive experience as a
director of the National 4-H Council. He previously served as a director of the Company from 1992 to 2008, as a director of Hasbro, Inc., a branded-play company, from 1999 until 2010,corporate governance professional and
as a director of Bob Evans Farms, Inc., an ownerher senior management and
operator of family restaurants, from 2009 until 2014. Dr. Gee’s nomination was supported by his extensive executiveleadership experience addressing complex legislative, regulatory and
management experience, as well as his legal expertise and knowledge of the Company gained through his prior service as a director.public finance issues. | | | | |
| | | Director since 2014 | | | Age 5762 |
Audit Committee (Chair)
Executive Committee |
Mr. Steinour has been the Chairman, President & Chief Executive Officer of Huntington Bancshares Incorporated, a regional bank holding company, since 2009. From 2008 to 2009, Mr. Steinour was a Managing Partner in CrossHarbor Capital Partners, LLC, a recognized leading manager of alternative investments. Mr. Steinour was with Citizens Financial Group from 1992 to 2008, where he served in various executive roles, including President from 2005 to 2007 and Chief Executive Officer from 2007 to 2008. Mr. Steinour currentlyalso serves as a directorsupervisory board member of Exelon Corporation,The Clearing House, a utility services holding company.real-time payments platform. He previously served as a trustee of Liberty Property Trust, a real estate investment trust, from 2010 to 2014.2014, as a director of the Federal Reserve Bank of Cleveland, from 2017 to 2019, and as a director of Exelon Corporation, a utility services holding company, from 2007 to 2020. Mr. Steinour’s nomination wasis supported by his executive experience, financial expertise and service on several boards of directors.
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Allan R. Tessler | | Director since 1987 | | Age 79 |
Mr. Tessler has been Chairman of the Board and Chief Executive Officer of International Financial Group, Inc., an international merchant banking firm, since 1987 and is the Chairman and Chief Executive Officer of Teton Financial Services, a financial services company. He previously served as Chairman of the Board of Epoch Holding Corporation, an investment management company, from 2004 to 2013 and as Chairman of the Board of J Net Enterprises Inc., a technology holding company, from 2000 to 2004. Mr. Tessler also served as Chairman of the Board of InterWorld Corporation from 2001 to 2004 and as Chairman of Checker Holdings Corp. IV from 1997 to 2009. Mr. Tessler currently serves on the Audit Committee of Imperva, Inc., a provider of cyber security solutions, and as Chairman of the Board of Rocky Mountain Bank, a Wyoming bank. He has served as a director of TD Ameritrade Holding Corporation, a securities brokerage company, since November 2006, and as a director of Steel Partners Holding GP, Inc., a general partner of a global diversified holding company, since 2010. Mr. Tessler’s nomination was supported by his broad business experience and financial expertise, together with his involvement in various public policy issues.
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Abigail S. Wexner | | Director since 1997 | | Age 54 |
Mrs. Wexner is the chairman and CEO of Whitebarn Associates, a private investment company. She serves on the boards of Advanced Drainage Systems, Inc., a manufacturer of high performance thermoplastic corrugated pipe, The Ohio State University, Nationwide Children’s Hospital, the Columbus Downtown Development Corporation, the Columbus Partnership, Pelotonia, The Ohio State University Wexner Medical Center, The Wexner Foundation, The Columbus Jewish Federation and the United States Equestrian Team Foundation. She is founder and chair of the board for The Center for Family Safety and Healing and KidsOhio.org, founding board member and vice chair of the board for KIPP Columbus and a past chair of the Governing Committee of the Columbus Foundation. Mrs. Wexner is the wife of
Retiring Directors
Leslie H.
Wexner. Mrs. Wexner’s nomination was supported by her executiveWexner and
legal experience, as well as her expertise with respect to a wide range of diversity, philanthropic and public policy issues.Retiring Director
William R. Loomis, Jr. hasAbigail S. Wexner have informed the Company that hethey will retire from the Board effective May 19, 2016,20, 2021, at the conclusion of our annual meeting.
Mr. Wexner is the husband of Mrs. Wexner. We thank them for their years of exceptional contributions, dedication and distinguished service to the Company. Accordingly, the size of the Board will be reduced to 10 members immediately following the conclusion of our annual meeting and, therefore, stockholders may only cast their vote with respect to the 10 director nominees described above.
The Board has determined that each of the individuals nominated to serve on the Board
together with William R. Loomis, Jr. and each of the members of the Board who will continue to serve after the 2016 annual meeting of stockholders (except for
Dennis S. Hersch, Abigail S. Wexner and Leslie H. Wexner)Andrew M. Meslow), has no material relationship with the Company other than in his or her capacity as a director of the Company and that each is “independent” in accordance with applicable NYSE standards. If all director nominees are elected to serve as our directors, independent directors will constitute
more than two-thirds90% of our Board.
In making these determinations, the Board took into account all factors and circumstances that it considered relevant, including, where applicable, the existence of any employment relationship between the director
(or nominee)nominee or a member of the
director’s (or nominee’s)director nominee’s immediate family and the Company; whether within the past three years the director
(or nominee)nominee has served as an executive officer of the Company; whether the director
(or nominee)nominee or a member of the
director’s (or nominee’s)director nominee’s immediate family has received, during any twelve-month period within the last three years, direct compensation from the Company in excess of $120,000; whether the director
(or nominee)nominee or a member of the
director’s (or nominee’s)director nominee’s immediate family has been, within the last three years, a partner or an employee of the Company’s internal or external auditors; and whether the director
(or nominee)nominee or a member of the
director’s (or nominee’s)director nominee’s immediate family is employed by an entity that is engaged in business dealings with the Company. The Board has not adopted categorical standards with respect to director independence. The Board believes that it is more appropriate to make independence determinations on a case-by-case basis in light of all relevant factors.
Board Leadership
StructureMr. Leslie H. Wexner serves as Chairman of the Board and Chief Executive Officer of the Company. Mr. Wexner is the founder of the Company and has served as its Chairman and/or Chief Executive Officer for over fifty years. Mr. Wexner (through his personal holdings and associated trusts) is also the Company’s largest stockholder. The Board believes that Mr. Wexner’s experience and expertise in the Company’s business and operations is unrivaled and that he is uniquely qualified to lead the Company. Accordingly, the Company believes that Mr. Wexner’s service as both Chairman of the Board and Chief Executive Officer is a significant benefit to the Company and provides more effective leadership than could be achieved in another leadership structure.
Allan R. Tessler currently serves as the lead independent director. In July 2012, the Board determined that the lead independent director should be appointed solely by the independent directors, as they deem appropriate, and Mr. Tessler was subsequently reappointed as the lead independent director by them. As lead independent director, Mr. Tessler has the authority to call meetings of the independent directors, at which he serves as the chairman. Mr. Tessler also approves information sent to the Board, including the agenda for Board meetings, and is responsible for approving meeting schedules in order to assure that there is sufficient time for discussion of all agenda items.
The Company believes that the lead independent director structure, including Mr. Tessler’s service as lead independent director, offers independent oversight of the Company’s management to complement the leadership that Mr. Wexner provides to the Board as its Chairman.
Structure; Risk Oversight; Certain Compensation Matters
Ms. Nash, an independent director, serves as the Chair of the Board.
The Board, directly and through the Audit Committee and other committees of the Board, takes an active role in the oversight of the Company’s policies with respect to the assessment and management of enterprise risk. Among other things, the Board has policies in place for identifying the senior executive responsible for key risks as well as the Board committees with oversight responsibility for particular key risks. In a number of cases, oversight is conducted by the full Board.
Among other things, the Company, including the
CompensationHCC Committee,
of the Board, has evaluated the Company’s compensation structure from the perspective of enterprise risk. The Company, including the
CompensationHCC Committee, believes that the Company’s compensation structures are appropriate and do not incentivize inappropriate taking of business risks.
Cybersecurity Risk
The Audit Committee has oversight of the Company’s cybersecurity and data security policies. All members of the Audit Committee are independent directors. Members of management of the Company regularly brief the Board on issues relating to information security, fraud, data security and cybersecurity risk and developments, as well as the steps management has taken to monitor and control such exposures.
Review of Strategic Plans
and Capital Structure
The Board regularly reviews the Company’s strategic plans and conductscapital structure with a view toward long-term value creation.
Board Oversight of Environmental and Social Matters
The Company is a values-based company, and we strive to operate our business according to high standards of social responsibility. The Board, with the support, as relevant, of its HCC Committee and the Nominating & Governance Committee, reviews issues of social responsibility, including diversity, equity, and inclusion, ESG and philanthropic initiatives, and the Company’s policies, practices and progress with respect to such issues. Key areas of focus and highlights include:
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Diversity, Equity and Inclusion. Led by our Offices of Inclusion, we implemented a more robust enterprise strategy for diversity, equity and inclusion, based on the pillars of recruitment, education and development, engagement and retention, community and business. This includes the recruitment, retention and advancement of diverse talent among our Board, workforce and suppliers, that reflects the customers we serve and our communities. Specifically, we are taking the following steps:
Leaders, including our CEO, are engaging in conversations with individual associates and teams to listen and learn. We are committed to providing both large and small, formal and informal forums for associates to be heard.
We have gathered and are sharing resources to provide education, tools and insights for our associates on managing bias and being an ally.
As noted below, we have increased our investment in organizations that fund the fight against racism and inequality.
As an indication of our efforts in this area, we have scored between 95 and 100 on the Human Rights Campaign’s Corporate Equality Index every year for the past decade, with a perfect score of 100 in 2020.
Respecting Human Rights and the Planet throughout our Supply Chain. We select suppliers based on their ability and commitment to meet our stringent standards related to safety, quality, labor and the environment. The majority of our production comes from the United States, China, Vietnam, Sri Lanka, Indonesia and India and includes many long-term strategic partners. Suppliers are audited for compliance with our supplier code of conduct, with particular emphasis on forced labor.
Reducing our Environmental Impact.
Driving toward sustainable materials. We are working to reduce our environmental impact through the use of more sustainable materials and fibers and partnerships with more environmentally responsible suppliers. For example, under the Company’s Forest Products Procurement Policy, we work with our suppliers to source packaging and products – including those containing man-made cellulosic fibers – from certified forestry operations to reduce the pressures on endangered forests. Additionally, the Company participates in global initiatives to improve cotton farming and, by the end of 2021, will procure 50% of the Company's cotton through these more sustainable sources.
Minimizing use of hazardous chemicals. We have built a chemical management program (including supplier training) aimed at eliminating the discharge of priority chemical categories in conjunction with the manufacturing of our apparel products and have adopted the Zero Discharge of Hazardous Chemicals (ZDHC) Manufacturing Restricted Substances List (MRSL).
Reducing energy consumption, water use and greenhouse gas emissions. We have rolled out numerous energy-efficiency projects, such as use of LED lamps in stores, home offices and distribution centers. We also have a commitment to using efficient means of transporting our goods. Since 2006, we have been a partner in the U.S. Environmental Protection Agency’s SmartWay Transport Partnership program, which works with companies to reduce greenhouse gas emissions and air pollution from transportation of goods. And since 2009, we have been a member of the Ceres Business for Innovative Climate and Energy Policy (BICEP), an advocacy coalition of businesses committed to working with policymakers to pass meaningful energy and climate legislation. With respect to water use, we have taken steps to conserve water use in our buildings and in landscaping.
Supporting our Communities. In 2020, we invested more than $8 million in non-profit organizations in our home office communities through the L Brands Foundation, which included expanding our commitment to long-time community partners, the National Urban League and YWCA, by donating $1 million in 2020 to each of them (through their national and Columbus-based affiliates) to support the fight against racism and inequality.
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Empowering and Joining our Associates in Funding Research with the Goal of Ending Cancer. In 2020, we contributed to organizations such as Pelotonia and Susan G. Komen to support cancer research. Since 2010, L Brands has raised more than $65 million for Pelotonia where 100% of every participant-raised dollar funds cancer research at The Ohio State University Comprehensive Cancer Center – James Cancer Hospital and Solove Research Institute.
Responding to COVID. Utilizing various COVID-19 safety measures that are designed to align with guidelines from the Centers for Disease Control and Prevention, we have taken a number of steps to protect our employees and customers, including use of temperature checks and verifications from our associates that they are symptom-free; compensation for our associates who are quarantining due to a positive COVID-19 test; providing face masks to our associates and instituting policies for use of face masks; taking steps to promote social distancing at our stores, distribution centers and customer care centers; and increasing our cleaning regimen.
Human Capital Management
The Board recognizes that attracting, developing and retaining the best people is crucial to all aspects of the Company’s activities and long-term success and has oversight of the development and implementation of our human capital management programs, including diversity and inclusion practices and initiatives, recruiting, retention and career development and progression. Among other things, the Board reviews with members of management of the Company issues relating to human capital management such as associate engagement, workforce planning
retreat at least annually.and demographics, diversity and inclusion strategies and our corporate culture and in 2020 the Board adopted a new charter for the HCC Committee.
Succession Planning
The Board and its Nominating & Governance Committee have developed policies and principles governing succession planning with respect to the CEO and senior management.
Information Concerning Board Meeting Attendance
Our Board held
723 meetings in fiscal year
2015.2020. During fiscal year
2015,2020, all of the
then-current directors attended 75% or more of the total number of meetings of the Board and of the committees of the Board on which they served (which were held during the period in which they served).
The Audit Committee of the Board is instrumental in the Board’s fulfillment of its oversight responsibilities relating to (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the qualifications, independence and performance of the Company’s independent auditors and (iv) the performance of the Company’s internal audit function. The current members of the Audit Committee are
Ms.Mr. Steinour (Chair), Mses. James
(Chair), Dr. Kollat and
Messrs. TesslerSheehan and
Zimmerman.Mr. Morris. The Board has determined that each of the Audit Committee members meets the independence, expertise and experience standards established by the NYSE and the
Securities and Exchange Commission
(the “Commission”) for service on the Audit Committee of the Board and for designation as an “audit committee financial expert” within the meaning of the regulations promulgated by the Commission.
The Report of the Audit Committee can be found on page
5755 of this proxy statement. The Audit Committee held
1613 meetings in fiscal year
2015.2020.
Human Capital and Compensation Committee
The CompensationHCC Committee of the Board (i) oversees generally workforce management and development of the human capital of the Company, as well as the Company’s compensation and benefits philosophy and policies, generally, (ii) evaluates the Chief Executive Officer’s (the “CEO”) performance and overseesCEO’s compensation and sets his or her compensation, for the CEO, (iii) oversees the evaluation process and compensation structure for other members of the Company’s senior management and (iv) fulfills the other responsibilities set forth in its charter. In 2020, the Board adopted a new charter for the HCC Committee. The current members of the CompensationHCC Committee are Dr. KollatMr. Morris (Chair), Ms. Bellinger and Messrs. Gee, Miro and Morris.Mr. Schottenstein. The Board has determined that each of the current Human Capital and Compensation Committee members is “independent” in accordance with applicable NYSE standards.
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The Report of the
CompensationHCC Committee can be found on page
5250 of this proxy statement. The
CompensationHCC Committee held
1014 meetings in fiscal year
2015.2020.
Nominating & Governance Committee
The Nominating & Governance Committee of the Board
actively engages in the ongoing review of the composition of the Board and opportunities for Board refreshment. Based on its review, the Nominating & Governance Committee identifies and recommends to the Board candidates who are qualified to serve on the Board and its committees. The Nominating & Governance Committee
also considers and reviews the qualifications of any individual nominated for election to the Board by stockholders. It
also proposesis responsible for proposing a slate of candidates for election as directors at each annual meeting of stockholders.
The Nominating & Governance Committee also developsWe have added eight new directors since 2014, seven of whom are independent directors, who bring a diversity of skills, attributes and
recommendsperspectives to the
Board, and reviews from time to time, a set of corporate governance principles for the Company and monitors compliance with those principles.Board. In addition
the Nominating & Governance Committee oversees the annual evaluationto ongoing Board refreshment, we believe that a variety of
thedirector tenures is beneficial to ensure Board
each Board committeequality and
each individual director. The current memberscontinuity of
the Nominating & Governance Committee are Mr. Tessler (Chair), Ms. James, Dr. Kollat and Mr. Miro. The Board has determined that each ofexperience, as reflected in the current
Nominating & Governance Committee members is “independent” in accordance with applicable NYSE standards.composition of our Board.
The Nominating & Governance Committee develops and recommends to the Board criteria and procedures for the selection and evaluation of new individuals to serve as directors and committee members.
It also reviews and periodically makes recommendations to the Board regarding the composition, size, structure, practices, policies and activities of the Board and its committees. In
making its assessment and in identifying and evaluatingassessing director nominees, the Nominating & Governance Committee takes into account the qualifications of existing directors for continuing service or re-nomination, which may be affected by, among other things, the quality of their contributions, their attendance records, changes in their primary employment or other business affiliations, the number of boards of publicly held companies on which they serve or other competing demands on their time and attention. While the Board has not established any specific minimum qualifications for director nominees, as indicated in the Company’s corporate governance principles, the directors and any potential nominees should
be individuals of diverse backgrounds who possess the integrity, judgment, skills, experience and other characteristics that are deemed necessary or desirable for the effective performance of the Board’s oversight function. Certain of the skills, qualifications and particular areas of expertise considered with respect to the members of the Board
at the time each Director was nominated are summarized
on page 6 of this proxy statement and in the director biographies found on pages
57 through
89 of this proxy statement. Although the Nominating & Governance
Committee considers diversity as a factor in the selection of Board nominees, the Committee does not use formal quantitative or similar criteria with regard to diversity in its selection
process.process, the Company’s corporate governance principles provide that the Board will be composed of members of diverse backgrounds and, accordingly, the Committee considers the diversity of experience, background and expertise of the current directors and areas where new directors might add additional perspectives, as factors in the selection of Board nominees. If all director nominees are elected to serve as our directors, six of our directors will be women, including our Chair of the Board, four of whom are ethnically diverse. The Company will continue to require that the initial pool of candidates identified to be considered for any future Board vacancy include persons reflecting a diversity of race, ethnicity and gender. In addition, in connection with the use of a third-party search firm to identify external candidates who are qualified to serve as potential successors to the CEO, the Board will instruct such third-party search firm to take into consideration the Company’s commitment to diversity as defined above.
The Nominating & Governance Committee does not have a formal policy on the consideration of director candidates recommended by stockholders. The Board believes that it is more appropriate to provide the Nominating & Governance Committee flexibility in evaluating stockholder recommendations. In the event that a director nominee is recommended by a stockholder, the Nominating & Governance Committee will give due consideration to the director nominee and will use the same criteria used for evaluating Board director nominees, in addition to considering the information relating to the director nominee provided by the stockholder.
To date,
The Company engaged a search firm to assist the Nominating & Governance Committee in identifying and evaluating potential directors.
The Nominating & Governance Committee also develops and recommends to the Board, and regularly reviews, a set of corporate governance principles for the Company has not engaged third parties to identify or evaluate or assist in identifying potential director nominees, although the Company reserves the rightensure they reflect evolving best practices, monitors compliance with those principles and stays abreast of developments in the futurearea of corporate governance. The Nominating & Governance Committee also reviews and periodically makes recommendations to retainthe Board regarding the structure, practices, policies and activities of the Board and its committees. Each Board committee’s charter is reviewed at least annually. To ensure that the Board, Board committees and individual directors remain effective, the Nominating & Governance Committee oversees a third-party search firm, if appropriate.robust annual evaluation of the Board, each Board committee and each individual director and recommends ways to improve performance. At least annually, each of the Audit Committee, the HCC Committee and the Nominating & Governance Committee evaluates its own performance and reports to the Board on such evaluation. The full Board also engages in self-evaluation at least annually. The current
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members of the Nominating & Governance Committee are Ms. Nash (Chair), Mses. Bellinger, James and Sheehan and Mr. Schottenstein. The Board has determined that each of the current Nominating & Governance Committee members is “independent” in accordance with applicable NYSE standards.
The Nominating & Governance Committee held
35 meetings in fiscal year
2015.2020.
The Executive Committee of the Board may exercise, to the fullest extent permitted by law, all of the powers and authority granted to the Board. Among other things, the Executive Committee may declare dividends, authorize the issuance of stock and authorize the seal of the Company to be affixed to papers that require it. The current members of the Executive Committee are
Messrs. WexnerMs. Nash (Chair) and
Tessler.Finance Committee
The Finance Committee of the Board periodically reviews the Company’s financial positionMessrs. Morris and financial arrangements with banks and other financial institutions. The Finance Committee also makes recommendations on financial matters that it believes are necessary, advisable or appropriate. The current members of the Finance Committee are Mr. Tessler (Chair), Mr. Hersch, Dr. Kollat, Mr. Loomis, Mrs. Wexner and Mr. Zimmerman. However, Mr. Loomis will not serve on the Finance Committee past May 19, 2016, the date that his retirement becomes effective.
Inclusion Committee
The Inclusion Committee of the Board is instrumental in the Board’s fulfillment of its oversight responsibilities relating to, among other things, (i) the Company’s commitment to diversity and inclusion and (ii) the performance of the Company’s Office of Inclusion. The current members of the Inclusion Committee are Mrs. Wexner (Chair), Dr. Gee and Ms. James.
Steinour.
Meetings of the Company’s Non-Management Directors
The non-management
directors and the independent directors of the Board meet in
regular executive
session in connection with each regularly scheduled Board meeting. Mr. Tesslersessions. Ms. Nash serves as the chair of those
meetings. Mr. Meslow does not attend any meetings
which neitherof the non-management directors or the independent directors, and Mr. Wexner
norand Mrs. Wexner
attends.did not attend any meetings of the non-management directors or the independent directors.
Communications with Stockholders
We
The Board believes that it is important to understand stockholder perspectives on the Company and foster long-term relationships with stockholders and, to that end, we have a policy of robust engagement with stockholders,
includingwith continuing outreach to and dialogue with all of our major investors on a range of issues, including corporate governance
matters.matters and environmental and social goals and initiatives. Such engagements with investors have been highly constructive.
For example, based on stockholder feedback, we made a number of changes to our compensation program in the past few years, as discussed in more detail under “Compensation-Related Matters—Compensation Discussion and Analysis.” The Board also provides a process for interested parties to send communications to the full Board, the non-management members of the Board
the lead independent director and the members of the Audit Committee. Any director may be contacted by writing to him or her c/o L Brands, Inc., Three Limited Parkway, Columbus, Ohio 43230 or emailing at
boardofdirectors@lb.com. Any stockholder wishing to contact Audit Committee members may send an email to
auditcommittee@lb.com. Communications that are not related to a director’s duties and responsibilities as a Board member, a non-management director or an Audit Committee member may be excluded by the Office of the General Counsel, including, without limitation, solicitations and advertisements; junk mail; product-related communications; job referral materials such as resumes; surveys; and any other material that is determined to be illegal or otherwise inappropriate. The directors to whom such information is addressed are informed that the information has been removed and that it will be made available to such directors upon request.
Attendance at Annual Meetings
The Company does not have a formal policy regarding attendance by members of the Board at the Company’s annual meeting of stockholders. However, it encourages directors to attend and historically nearly all have done so. All of the then-current Board members attended the
20152020 annual
meeting, except for Ms. James and Mr. Morris.meeting. Each director is expected to dedicate sufficient time, energy and attention to ensure the diligent performance of his or her duties, including by attending meetings of the Board and the committees of which he or she is a member.
Code of Conduct, Related Person Transaction Policy and Associated Matters
The Company has a code of conduct that is applicable to all employees of the Company, including the CEO and Chief Financial Officer
(the “CFO”), and to members of the Board. Any amendments to the code or any waivers from any provisions of the code granted to executive officers or directors will be promptly disclosed to stockholders through posting on the Company’s website at
www.lb.com.
Under the Company’s Related Person Transaction Policy (the “Policy”), subject to certain exceptions, directors and executive officers of the Company are required to notify the Company of the existence or potential existence of any financial or commercial transaction, agreement or relationship involving the Company in which a director or executive officer or his or her immediate family members has a direct or indirect material interest. Each such transaction must be approved by the Board or a committee consisting solely of independent directors after consideration of all material facts and circumstances.
The Company is engaged in several projects designed to increase our speed and agility in producing products that satisfy our customers. In the case of our beauty, personal care and home fragrance businesses, the development
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of supplier facilities in close proximity to our headquarters and distribution facilities in central Ohio has been an integral part of capturing the many business benefits of speed and agility. The New Albany Company,
(“NACO”), a business beneficially owned by Mr. and Mrs. Wexner, is in the business of developing real estate, including industrial parks, and has sold land (and may in the future sell land) to certain vendors or third party developers in connection with the continuing development of an industrial park focused on the foregoing business categories
(the “Beauty Park”) in New Albany, Ohio. The Audit Committee monitors such vendor and third party transactions on an ongoing basis to assure that they are in the best interests of the Company and its stockholders generally.
In light of the Company’s highly favorable experience with vendors at the Beauty Park and our growth plans for the beauty, personal care and home fragrance businesses, the Company believes that certain new facilities required to achieve such projected growth should be located as close as possible to the Beauty Park. The Company identified certain land owned by NACO that, together with certain other adjacent parcels owned by a number of third parties in immediate proximity to the Beauty Park, would be desirable for the Company to acquire for future growth. Because of the Wexners’ interest in NACO, the matter was referred to, and evaluated and negotiated by, the Audit Committee in accordance with the Policy. In 2014, the Audit Committee negotiated the purchase of certain NACO land for approximately $21 million, and the assumption from NACO of contracts to purchase certain adjacent parcels directly from third parties for approximately $7 million, and determined that these transactions were fair to and in the best interests of the Company and its stockholders generally. In 2015, certain additional property immediately adjacent to the foregoing parcels became available, and the Company believed that it would be desirable to acquire such property for future growth. This potential transaction was also referred to the Audit Committee for evaluation and, if appropriate, negotiation. The Audit Committee subsequently negotiated with NACO the purchase of such property for approximately $5.3 million, and an existing building located in New Albany that was historically associated with the Bath & Body Works brand for approximately $250,000, and determined that these transactions were fair to and in the best interests of the Company and its stockholders generally. The determinations made by the Audit Committee in 2014 and 2015 under the Policy with respect to these transactions between the Company and NACO were made in reliance on,
among other things, advice from independent counsel and real estate appraisers and advisors, including opinions received from an independent financial advisor with specialized expertise in commercial real estate that such transactions were fair to the Company from a financial point of view.
Copies of the Company’s Code of Conduct, Corporate Governance Principles, Policy and Committee Charters
The Company’s code of conduct, corporate governance principles and Policy, as well as the charters of the Audit Committee, CompensationHCC Committee and Nominating & Governance Committee of the Board, are available on the Company’s website atwww.lb.com. Stockholders may also request a copy of any such document from: L Brands, Inc., Attention: Investor Relations, Three Limited Parkway, Columbus, Ohio 43230.
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PROPOSAL 2: RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee has appointed Ernst & Young LLP to serve as the Company’s independent registered public accountants for the fiscal year ending January 28, 2017.29, 2022. Ernst & Young LLP has been retained as the Company’s independent registered public accountants continuously since 2003.
The Audit Committee is responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accountants. The Audit Committee is responsible for approving the fees associated with the Company’s retention of Ernst & Young LLP. In accordance with the Commission’s rules, Ernst & Young LLP’s lead engagement partner rotates every five years. The Audit Committee is directly involved in the selection of Ernst & Young LLP’s lead engagement partner. In addition, the Audit Committee evaluates Ernst & Young LLP’s qualifications, performance and independence and presents its conclusions on these matters to the Board on at least an annual basis, and annually considers whether to continue its engagement of Ernst & Young LLP.
The members of the Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as the Company’s independent registered public accountants is in the best interests of the Company and its stockholders. We are asking you to ratify
thisErnst & Young LLP’s appointment, although your ratification is not required. A representative of Ernst & Young LLP will be present at the meeting, will have the opportunity to make a statement and will be available to respond to appropriate questions.
Additional information concerning the Company’s engagement of Ernst & Young LLP is included on page
58.56.
The Board recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accountants.
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PROPOSAL 3:
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO REMOVE SUPERMAJORITY VOTING REQUIREMENTSBackground; Governance Considerations
This proposal is being submitted to stockholders following a vote at the Company’s 2015 annual meeting on a stockholder proposal addressing the same topic. While the stockholder proposal last year did not receive sufficient votes to implement the change, it did receive a majority vote. Accordingly, consistent with its strong commitment to the careful consideration of stockholder views and recognizing that there are different perspectives on the issue of supermajority voting requirements, the Board has elected to submit the proposal described below to a stockholder vote.
The Board has evaluated the Company’s voting requirements on numerous occasions to ensure that they are in the best interests of the Company and its stockholders. In this regard, the Board has consistently determined that the retention of a supermajority vote standard for certain extraordinary matters is the best way to ensure that the interests of all stockholders are fully protected. The Board has consistently concluded that extraordinary transactions and fundamental changes to corporate governance should have the support of a broad consensus of the Company’s stockholders rather than just a simple majority, and that supermajority vote requirements protect stockholders against the potentially self-interested actions of short-term investors. The Board has also concluded that the Company’s existing supermajority voting provisions encourage persons or firms making unsolicited takeover proposals to negotiate directly with the Board, which provides the Board with increased leverage in the exercise of its fiduciary duties to negotiate the best possible return for stockholders, and which prevents the use of potentially coercive or abusive takeover tactics.
On the other hand, the Board is aware that certain stockholders and institutions disagree. These entities generally argue that a majority stockholder vote should be sufficient for any corporate action requiring stockholder approval, regardless of the considerations outlined above. This proposal reflects the Board’s determination to respond to, and address, that difference in perspective.
Proposed Amendment
If approved, the proposal would amend the Company’s Restated Certificate of Incorporation (the “Charter”) to provide for the elimination of each voting requirement that calls for a greater than simple majority vote (the “Amendment”).
Under the Company’s existing governance documents, a simple majority vote requirement already applies to most matters submitted for stockholder approval. The Charter provides that a supermajority vote of the stockholders is required to approve actions related to a small number of fundamental matters of corporate structure and governance. These matters are as follows: (i) approval of certain business combinations with an individual, entity or group that collectively owns 20% or more of the Company’s voting securities (an “interested stockholder”); (ii) approval of certain fundamental transactions with any corporation that, together with its affiliates, owns 5% or more of the Company’s voting securities, including mergers or a sale of substantially all of the Company’s assets; (iii) dissolution of the Company; (iv) removal of a director for cause; (v) an alteration, amendment or repeal of the Company’s Bylaws or any amendment to the Charter that contravenes any existing Bylaw of the Company; and (vi) an amendment of certain provisions in the Charter.
If the proposed Amendment is adopted, each of the foregoing supermajority voting requirements would be removed from the Charter. Instead, any matter voted on at any meeting of the stockholders would be decided by either the majority in voting interest of the stockholders voting on such matter or, in the case of certain business combinations with an interested stockholder, a majority of the outstanding shares of the Company excluding (except under certain circumstances) those held by the interested stockholder, unless otherwise provided by law. The default voting requirement in the Company’s Bylaws, contained in Section 1.10(c) therein, states, “At any
meeting of the stockholders all matters, except as otherwise provided in the certificate of incorporation, in these bylaws, or by law, shall be decided by the vote of a majority in voting interest of the stockholders present in person or by proxy and voting thereon, a quorum being present.” The Company’s Bylaws do not have any provisions containing supermajority voting requirements.
The text of the proposed Amendment, which would remove Articles EIGHTH and THIRTEENTH and Section 2 of Article FIFTH and Section 1 of Article ELEVENTH of the Charter in their entirety, and modify Articles TENTH and TWELFTH and Section 2 of Article ELEVENTH of the Charter, is attached as Appendix A to this proxy statement.
Required Vote
For the Amendment to become effective, this proposal must receive the affirmative vote of at least 75% of the outstanding shares of the Company entitled to vote at the annual meeting. If the proposal is approved by the required stockholder vote, the Board will take the necessary steps to amend the Charter as set forth in Appendix A. If the Amendment does not receive this level of stockholder approval, the Amendment will not be implemented and the Company’s current voting requirements will remain in place.
Board Recommendation
The Board continues to believe that the retention of the Company’s existing supermajority voting requirements for certain extraordinary matters provides stockholders with very meaningful protections against actions that may not be in their best interests. On the other hand, the Board recognizes that certain stockholders and institutions disagree and also believes that responsiveness to this perspective is an important matter of corporate governance. Accordingly, after careful consideration of the issue in accordance with its fiduciary duties, the Board has determined, in recognition of last year’s vote, to recommend a vote to approve the Amendment.
While the Board believes there is a strong argument to the contrary, the Board has elected to recommend that stockholders vote FOR the proposed Amendment in recognition of the stockholder vote at the Company’s 2015 annual meeting.
PROPOSAL 4: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER
COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection
Section 14A of the Securities Exchange Act
of 1934 requires us to provide an advisory stockholder vote to approve the compensation of the Company’s named executive officers (“NEOs”), as such compensation is disclosed pursuant to the disclosure rules of the Commission. After the Company’s
20112017 annual meeting, the Board determined to hold this advisory “say-on-pay” vote every year. Accordingly, the Company is providing its stockholders with the opportunity to cast an advisory vote on the fiscal
20152020 compensation of our NEOs as disclosed in this proxy statement, including the Compensation Discussion and Analysis (the “CD&A”), the compensation tables and other narrative executive compensation disclosures.
Stockholders are being asked to vote on the following resolution:
“RESOLVED, that the stockholders approve the compensation of the Company’s executive officers named in the
20152020 Summary Compensation Table, as disclosed pursuant to Item 402 of Regulation S-K (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and other narrative executive compensation disclosures).”
In fiscal 2015,
This past year has been like no other when it comes to change and a challenging environment. We have been preparing to operate Bath & Body Works and Victoria’s Secret as separate, standalone companies. We implemented cost reduction and performance improvements at Victoria’s Secret, which includes Victoria’s Secret Lingerie, PINK and Victoria’s Secret Beauty (referred to collectively as “VS NewCo”), while continuing to drive strong growth at Bath & Body Works. This work has been done in the Company delivered its fifth straight yearmidst of best-ever adjusted salesa global pandemic that has forced us, and earnings,most critically, our executive leadership, to be creative and agile, adopt new ways of working and implement best-in-class safety measures.
To navigate our business transformation, and manage this crisis, our Board prioritized establishing a leadership team that will address the challenges facing the business and position our brands for success, resulting in changes at the most senior executive levels. In May 2020, our founder, Leslie H. Wexner, stepped down as CEO and Chairman of the Board of L Brands, remaining a total shareholder returnmember of 19%the Board as Chairman Emeritus. Andrew M. Meslow, previously CEO of Bath & Body Works, was named CEO of L Brands and an increasejoined the Board. Stuart B. Burgdoerfer, current CFO of L Brands, took on the added role of interim CEO for VS NewCo.
At the end of June 2020, Charles C. McGuigan stepped down from his role as Chief Operating Officer of L Brands and CEO of Mast Global. In September 2020, Julie B. Rosen was hired as President at Bath & Body Works to lead the development of products across all categories. In October 2020, Shelley M. Milano left her role as Executive Vice President and Chief Human Resources Officer, allowing for separate human resources leadership teams for each of Bath & Body Works and VS NewCo going forward. Deon N. Riley joined L Brands in our stock priceDecember 2020 to fill the Chief Human Resources Officer role for L Brands and Bath & Body Works.
Following these changes, at the end of 14%. We believe in paying for performance, and our compensation program requires superior performance forfiscal 2020, our NEOs are as follows:
Andrew M. Meslow, CEO of L Brands.
Stuart B. Burgdoerfer, CFO of L Brands and interim CEO of VS NewCo.
James L. Bersani, President, Real Estate.
Julie B. Rosen, President, Bath & Body Works.
Deon N. Riley, Chief Human Resources Officer, L Brands and Bath & Body Works.
In addition the following former executive officers who departed during fiscal 2020 are also treated as NEOs under the Commission’s rules:
Leslie H. Wexner, former CEO.
Charles C. McGuigan, former Chief Operating Officer of L Brands and CEO of Mast Global.
Shelley M. Milano, former Executive Vice President and Chief Human Resources Officer.
We are committed to earn performance-based incentivesaligning our executive compensation with our Company’s performance. In connection with the Company’s strong performance in fiscal 2020, our CEO earned above-target short-term performance incentive
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payments according to the payout formulas established at
target. Base salaries and targeted long term performance-based equity incentive compensationthe beginning of each six-month performance period without retroactive adjustment for the
NEOs increased from fiscal 2014impact of the COVID-19 crisis on results. Long-term equity incentives were granted to
2015, in recognition of their continued success in the difficult challenge of beating our
best-ever results. Short term performance-based cashCEO as a one-time incentive
compensation increased in connection with
operating income performance that surpassed our stretch goals.NEO base salaries and short term performance-based incentive compensation targets for fiscal 2015 were set in March 2015 based on fiscal 2014 performance and our goals for 2015. With the goal of providing incentives for continued superior performance, the Compensation Committee took the following actions:
Awarded Mr. Wexner performance-based stock awards in January 2016 with a target value of approximately $14.1 million based on the achievement of financial and strategic goalshis promotion during fiscal 2015 and stock performance that ranks in the top three of our peer companies and exceeds the S&P 500 Index by 22 percentage points.
Increased the base salary for each2020. Substantially all of the NEOslong-term incentive is subject to challenging performance requirements that will only be earned if the Company achieves rigorous growth, profitability and return metrics that provide incentive for the first time in at least two years (seven years in the casea balance of Mr. Wexner) based on our growth and accomplishments inprofitability, support the last several fiscal years, including continued record-setting sales and earnings performance in fiscal 2013 and fiscal 2014.
Increased short term performance-based incentive compensation targets for eachstrategic direction of the NEOs to incent future performanceCompany, and further leverage their compensation.
alignment with stockholders.Increased the target value of performance-based Restricted Stock Units (“RSUs”) awarded to NEOs other than Mr. Wexner in April 2015 to recognize our record-setting financial performance in fiscal 2014, provide significant retentive value for these NEOs and incent future performance.
Set short term incentive compensation goals at targets that require continued growth in operating income over record fiscal 2014 results.
Continued the cumulative, long-term, relative performance measure required for NEOs to earn RSUs.
While both total shareholder return and total CEO compensation have increased over the last four years as a result of the Company’s outstanding performance, the Company’s increase in stockholder return, including reinvested dividends, exceeds the rate of increase in total CEO compensation (as disclosed in further detail in the CD&A).
Although the advisory stockholder vote on executive compensation is non-binding, the CompensationHCC Committee has considered and will continue to consider the outcome of the vote and feedback received from stockholders when making future compensation decisions for NEOs. We have a policyIn 2020, 90.9% of robust engagement with stockholders, including continuing outreach to and dialogue with all of our major institutional stockholders. Basedthe shares voting on the strong support from, as well as feedback from our engagement with, major stockholders, we did not make structural changes toproposal voted in favor of our executive compensation program in fiscal 2015. We have made a number of changes to our compensation program in previous years in accordance with our corporate governance principles and/or in response to stockholder and advisory group feedback, including:
program. Eliminating tax gross-ups for NEOs upon a change in control.
Instituting a “no hedging” policy governing stock trading.
Establishing a policy that discourages pledging of Company stock and requires advance approval of our General Counsel.
Establishing a policy prohibiting the future issuance of “single trigger” equity awards.
Establishing a clawback policy.
Establishing stock ownership guidelines set at five times base salary for our CEO, three times base salary for other NEOs and four times the annual stock retainer for Board members.
These changes, along with our continued strong performance, were important factors in achieving 91% stockholder support for our 2015 advisory vote on executive compensation. Given this strong level of support, the Compensation Committee has concluded that a large majority of our stockholders support our existing compensation program.
Please refer to the CD&A for a detailed discussion of the Company’s executive compensation principles and practices and the fiscal 20152020 compensation of our NEOs.
Board Recommendation
We continue to deliver extraordinary returns and are committed to creating long term value for our stockholders. The Company’s fifth straight year of record-setting sales and earnings was led by our NEOs who are incented to perform by our compensation program and its connection to results. In summary, we see
There is alignment between our performance, our stockholders’ interests and our
pay.TheNEOs’ pay; therefore, the Board recommends a vote FOR this proposal.
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PROPOSAL
5:4: STOCKHOLDER PROPOSAL
ON PROXY ACCESSREGARDING STOCKHOLDER ACTION BY WRITTEN CONSENT
John Chevedden, 2215 Nelson Ave., No. 205 Redondo Beach, CA 90278, owner of 90 shares of Common Stock, has notified the Company that he intends to submit the following proposal at this year’s meeting:
Proposal
5—4 – Shareholder
Proxy AccessRESOLVED: Right to Act by Written Consent
Shareholders askrequest that our board of directors take the necessary steps to adopt,permit written consent by the shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present and presentvoting. This includes shareholder ability to initiate any appropriate topic for written consent.
Taking action by written consent in place of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle like the election of a new director.
Michael Morris, Robert Schottenstein and Donna James were each rejected by 20 to 25 million votes each in 2020. Mr. Morris chaired the management pay committee and management pay was rejected by 20 million votes plus the management stock option plan was rejected by 24 million votes.
This proposal topic won 95%-support at Dover Corporation and 88%-support at AT&T.
The Bank of New York Mellon Corporation (BK) said it adopted written consent in 2019 after 45% support for a written consent shareholder proposal. This proposal could obtain 45% support or more at our 2021 annual meeting.
A shareholder right to act by written consent still affords LB management strong protection for a management holdout mentality for the status quo during the current rapidly changing business environment. Any action taken by written consent would still need 62% supermajority approval from the shares that normally cast ballots at the LB annual meeting to equal the required majority vote from all LB shares outstanding.
With the avalanche of bare bones online shareholder meetings in 2020 shareholder engagement and management transparency have taken a
“proxy access” bylaw as follows:Requirebig hit. Shareholders are so restricted in online meetings that management will never want a return to the Companymuch more transparent in-person shareholder meeting format. This is all the more reason to includesupport this corporate governance enhancement of shareholder written consent.
Shareholders are restricted in proxy materials preparedmaking their views known at online shareholder meetings because all constructive questions and comments can be screened out by management. For instance the Goodyear shareholder meeting was spoiled by a trigger-happy management mute button for shareholders. And AT&T, with 3000 institutional shareholders, would not even allow shareholders to speak.
The sole content of an online special shareholder meeting can be a few stilted formalities and the announcement of the vote with an almost total absence of communication, outreach or engagement with shareholders.
Now more than ever shareholders need to have the option to take action outside of a shareholder meeting
at which directorsand send a wake-up call to management, if need be, since tightly controlled online shareholder meetings are
to be elected the
name, DisclosureDeath Valley of shareholder engagement and
Statement (as defined herein) of any person nominated for election to the board by a shareholder or an unrestricted number of shareholders forming a group (the “Nominator”) that meets the criteria established below.Allow shareholders to vote on such nominee on the Company’s proxy card.
The number of shareholder-nominated candidates appearing in proxy materials should not exceed one quarter of the directors then serving or two, whichever is greater. This bylaw should supplement existing rights under Company bylaws, providing that a Nominator must:
a) have beneficially owned 3% or more of the Company’s outstanding common stock, including recallable loaned stock, continuously for at least three years before submitting the nomination;
b) give the Company, within the time period identified in its bylaws, written notice of the information required by the bylaws and any Securities and Exchange Commission (SEC) rules about (i) the nominee, including consent to being named in proxy materials and to serving as director if elected; and (ii) the Nominator, including proof it owns the required shares (the “Disclosure”); and
c) certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s communications with the Company shareholders, including the Disclosure and Statement; (ii) it will comply with all applicable laws and regulations if it uses soliciting material other than the Company’s proxy materials; and (iii) to the best of its knowledge, the required shares were acquired in the ordinary course of business, not to change or influence control at the Company.
The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of the nominee (the “Statement”). The Board should adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority given to multiple nominations exceeding the one-quarter limit. No additional restrictions that do not apply to other board nominees should be placed on these nominations or re-nominations.
Proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption,” raising US market capitalization by up to $140 billion. This is according to a cost-benefit analysis by the Chartered Financial Analyst Institute,Proxy Access in the United States: Revisiting the Proposed SEC Rule.
management transparency.
Please vote yes:
Shareholder Right to
enhance shareholder value:Shareholder Proxy Access—Act by Written Consent – Proposal 54
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Our Response—Statement in Opposition to Stockholder Proposal
on Proxy AccessRegarding Stockholder Action by Written Consent
The Board has carefully considered the above proposal and believes that it is not in the best interests of our stockholders to implement proxy access at this time.stockholders. Consequently, the Board recommends a vote AGAINST the proposal.
Our stockholders already have the ability to act outside the annual meeting cycle. Our stockholders have very significant, year-round avenues for raising important matters with our Board. Our bylaws permit holders of 25% or more of our stock to request a special meeting, which is a powerful means to consider and approve stockholder-sponsored actions and timely effect changes while ensuring the participation of all stockholders and retaining important procedural safeguards.
The Board reviewed the corporate governance landscape and believes that while many investors have strong views on proxy access, there is no current consensus on this issue. Some investors oppose proxy access altogether. Among those who favor proxy access, there are different views on the most appropriate way to implement proxy access and these views continue to evolve, including on appropriate thresholds and procedures around proxy access. In reviewing the proxy access provisionsproposal could deprive stockholders of the companies that have adopted proxy accessright to date, we have seen different practices emerge. participate in key decisions affecting the Company.
The Board believes that
our approach towards proxy access shouldthe proposal could result in stockholder disenfranchisement, as it could lead to stockholders being denied the ability to vote or otherwise have a say on proposed stockholder actions. Unlike stockholder actions taken at an annual or special meeting, stockholder actions by written consent can be
developedtaken without prior notice to, and without a vote of, other stockholders. This would enable certain stockholders, including small groups of large, self-interested stockholders, to take actions—effectively in
a careful and thoughtful fashionsecret—without the involvement of other stockholders, unlike actions taken at stockholder meetings that
is guided by a review of corporate governance developments and considerationensure the participation of all
potential consequences.In addition,stockholders and the opportunity for discussion.
The proposal lacks procedural safeguards that allow stockholders to make informed decisions.
The Board believes that the current proposal contains provisionscould result in stockholders being denied the opportunity to receive information about proposed actions and to make informed decisions. The approval of proposals at stockholder meetings ensures that proposals are widely disseminated to stockholders through a proxy statement and any additional soliciting materials, which must contain information about the proposed action as specified by the Commission. If a meeting is convened, the Board is provided with an opportunity to present its analysis and recommendations to stockholders. Further, the proxy statement and any additional soliciting materials must be distributed to all stockholders in advance of the meeting, providing stockholders with sufficient time and opportunity to consider the proposals before voting.
In contrast, stockholder action by written consent lacks these procedural safeguards. There is no requirement in the proposal to provide stockholders with a description of the proposed action or the reasons for the proposed action. It may be possible for some stockholders to take action without providing proper disclosure to other stockholders that discusses the issues that are the subject of the consent solicitation, or providing any information regarding themselves or their interests in the proposed action. As notice is not in line withrequired, stockholders may not have sufficient time or opportunity to evaluate the adoptions of proxy access to date and raises concerns about whether it properly balancesproposed action. Further, the interests of all stockholders. The proposalBoard does not limithave the numberopportunity to provide its views to stockholders with respect to a proposed action by written consent. It may therefore be generally more difficult for stockholders to make a considered decision on such proposed actions.
This proposal would also be costly and disruptive for the Company. Permitting solicitations and action outside of,
stockholders that can formand in addition to, the traditional setting of a
group to reach the 3% ownership threshold, while we believe that most companies that have adopted proxy access to date have imposed a limitstockholder meeting could result in significant commitments of additional time and expense on the
number of stockholders in a group. Further, the proposal lacks basic protective provisions. The proposal does not require that proxy access nominees have no affiliations with a competitorpart of the Company
nor doeswith little corresponding benefit to stockholders. In addition, given the
lack of procedural safeguards, different groups of stockholders could undertake duplicative and opposing written consents on the same proposal,
require nominees to be independent or to satisfy legal requirements applicable to directors of the Company.While we will review whether the implementation of proxy access would further enhance our corporate governance practices, theresulting in confusion and inefficiencies.
The Company’s current policies already demonstrate responsiveness and accountability.
The Board believes that the Company’s
existingstrong corporate governance practices
allow stockholders to put forward potential director nominees and ensuremakes the
responsivenessadoption of this proposal unnecessary, provide transparency and accountability of
incumbent directors.There are several avenues for stockholders to put forward potential director nominees. First, stockholders may submit names of potential director nominees directly to the Board for consideration,to all stockholders and demonstrate that the Nominating & Governance Committee will use the same criteriaCompany is responsive to evaluate such candidatesstockholder concerns:
In 2020, as
for other candidates considered by the Board. Second, stockholders already have the power, subject to the requirements inpart of the Company’s
Bylaws, to directly nominate and solicit proxies for their own director nominees at annual meetingsongoing review of
stockholders. Third, stockholders who hold at least 25% of the voting power of the outstanding stock of the Company have the power, subject to the requirements in the Company’s Bylaws, to request a special meeting to consider stockholder-sponsored actions, including actions with respect to directors.Other existing corporate governance practices, the Company amended our certificate of incorporation to eliminate the classified board structure and provide for all directors to be elected annually by stockholders. In addition, stockholders can remove directors with or without cause.
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In 2020, in response to stockholder feedback, the Company amended our certificate of incorporation to eliminate all supermajority voting provisions.
The Company’s bylaws provide proxy access permitting a stockholder (or a group of up to 20 stockholders) owning 3% or more of the
Company promote director accountabilityCompany’s outstanding Common Stock continuously for at least three years, to nominate and
responsiveness to stockholders. In uncontested elections, directors are elected only if they receive a majority of the votes cast, and incumbent directors are required to offer to resign if they fail to receive such a vote from the stockholders. Further, stockholders may communicate directly with the Board as described under “Proposal 1: Election of Directors—Communications with Stockholders.” Stockholders also have the right to submit proposals for consideration at an annual meeting and for inclusioninclude in the Company’s proxy
statement, subjectmaterials director nominees constituting up to
the rules and regulations20% of the
Commission.Board.
The Board also believes thatCompany has a majority voting standard for the current procedure, whereby the Nominating & Governance Committeeelection of directors in uncontested elections, and a director who does not obtain a majority vote is responsible for helpingrequired to submit a letter of resignation.
The Chair of the Board is an independent director.
The Company does not have a shareholder rights plan or poison pill.
We understand that action by stockholder written consent is a topic of interest to
identify potential nominees who are qualified to serve on the Board, has worked wellcertain stockholders and
continues to work well for our Company. The historical performance of the Company, including its fifth straight year of record-setting adjusted sales and earnings in 2015, led by a
Board selected based on the above considerations, demonstrates the effectiveness of the Board’s current director nominee selection process.Board Recommendation
After careful consideration of this proposal,topic about which perspectives vary. However, the Board believes that stockholder action by written consent is unnecessary given the Company’s current corporate governance practices, while creating the risk that it is notcould be used by small groups of self-interested stockholders to exclude other stockholders from critical decisions affecting the Company.
The Board Recommends a Vote AGAINST the Stockholder Proposal Regarding Stockholder Action by Written Consent.
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COMPENSATION-RELATED MATTERS Compensation Discussion and Analysis Executive Summary
This past fiscal year has been like no other when it comes to change and a challenging environment. We have been preparing to operate Bath & Body Works and Victoria’s Secret as separate, standalone companies. We implemented cost reduction and performance improvements at Victoria’s Secret, which includes Victoria’s Secret Lingerie, PINK and Victoria’s Secret Beauty, referred to collectively as VS NewCo, while continuing to drive strong growth at Bath & Body Works. This work has been done in the midst of a global pandemic that has forced us, and most critically, our executive leadership, to be creative and agile, adopt new ways of working and implement best-in-class safety measures.
To navigate our business transformation, and manage this crisis, our Board prioritized establishing a leadership team that will address the challenges facing the business and position our brands for success, resulting in changes at the most senior executive levels. In May 2020, our founder, Leslie H. Wexner stepped down as CEO and Chairman of the Board of L Brands, remaining a member of the Board as Chairman Emeritus. Andrew M. Meslow, previously CEO of Bath & Body Works, was named CEO of L Brands and joined the Board. Stuart B. Burgdoerfer, current CFO of L Brands, took on the added role of interim CEO for VS NewCo.
At the end of June 2020, Charles C. McGuigan stepped down from his role as Chief Operating Officer of L Brands and CEO of Mast Global. In September 2020, Julie B. Rosen was hired as President at Bath & Body Works to lead the development of products across all categories. In October 2020, Shelley M. Milano left her role as Executive Vice President and Chief Human Resources Officer, allowing for separate human resources leadership teams for each of Bath & Body Works and VS NewCo going forward. Deon N. Riley joined L Brands in December 2020 to fill the Chief Human Resources Officer role for L Brands and Bath & Body Works.
Following these changes, at the end of fiscal 2020, our NEOs are as follows:
Andrew M. Meslow, CEO of L Brands.
Stuart B. Burgdoerfer, CFO of L Brands and interim CEO of VS NewCo.
James L. Bersani, President, Real Estate.
Julie B. Rosen, President, Bath & Body Works.
Deon N. Riley, Chief Human Resources Officer, L Brands and Bath & Body Works.
In addition the following former executive officers who departed in 2020 are also treated as NEOs under the Commission’s rules:
Leslie H. Wexner, former CEO.
Charles C. McGuigan, former Chief Operating Officer of L Brands and CEO of Mast Global.
Shelley M. Milano, former Executive Vice President and Chief Human Resources Officer.
Fiscal 2020 Overview
Even without the disruption caused by the COVID-19 global pandemic, L Brands faced significant uncertainty and change in 2020. The fiscal year began with an agreement to sell 55% of the VS NewCo business to Sycamore Partners, positioning both Bath & Body Works and VS NewCo for long-term success as separate companies. When Sycamore Partners terminated the agreement in the midst of an extremely challenging business environment created by the pandemic, our efforts became entirely focused on navigating those challenges.
We took decisive actions to manage the L Brands business in the best interests of our stockholders, associates, partners, customers and communities. Our actions included expanding the Companyscope of our Compensation Committee, renamed the HCC Committee, to include oversight of the Company’s programs, policies, practices and its stockholdersstrategies relating to implement proxy access at this time.culture, talent, diversity, inclusion and equal employment opportunities in addition to oversight of the Company’s executive compensation plans. We will continuealso implemented compensation-related actions to monitor evolving market practices, so thatpreserve cash and retain key leaders and associates who are needed to help navigate the pandemic and execute on our plan to operate as separate businesses, including:
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Suspended cash compensation for the Board can make an informed decisionfor the first quarter of 2020.
Designed a competitive compensation package for our new CEO to ensure appropriate performance incentive along with long-term retention (see “—CEO Compensation” for details).
Temporarily reduced base compensation by 20% for leaders at the Senior Vice President level and above.
Eliminated the 2020 annual merit increase for all associates.
Suspended annual equity awards which, according to our normal practice, would have been granted to eligible leaders in March 2020.
Implemented a broad-based cash retention program for full-time, salaried associates in our home office, distribution centers and call center, including our NEOs. The NEO retention program is designed to ensure business continuity and leadership stability for strategically important leaders who are critical to navigating the COVID-19 crisis and executing on our plan to operate VS NewCo and Bath & Body Works as separate, standalone companies during a period of significant uncertainty.
Pay for Performance
As a specialty retailer, our business is constantly changing to
whether,enable growth. Our focus is on speed and
agility, in support of deliberate change. Our compensation program reflects this philosophy, increasing compensation when performance is strong and decreasing compensation when performance does not meet our expectations. The HCC Committee oversees our compensation program, ensuring that pay is aligned with performance. Strong performance in fiscal 2020 is reflected in the
proper terms upon which, to implement proxy access.short-term cash incentive payments for fiscal 2020.
We remained focused on successfully managing the business through the COVID-19 pandemic, with associate and customer safety our top priority, while consistently delivering a great experience in stores and online. Even with significant challenges in the retail environment, performance in fiscal 2020 exceeded our initial expectations, driven by exceptionally strong results at Bath & Body Works and better-than-expected performance at VS NewCo.
The
Board recommendspandemic had a
vote AGAINSTmaterial impact on our business, especially during the
stockholder proposal on proxy access.COMPENSATION-RELATED MATTERS
Compensation Discussion and Analysis
Executive Summary
Performance Overview
Fiscal 2015 was another record-setting year. We delivered our fifth straight year of best-ever adjusted sales and earnings under the leadershipfirst quarter, when nearly all of our NEOs, includingstores around the world were closed for a significant period. Notwithstanding the disruption to our CEO:
Operating income increased $239 million or 12%
Netbusiness, our leadership team reacted quickly and creatively, enabling progress in several areas. With focus on our direct channels we were able to maximize online sales to help offset the decline resulting from store closures. Direct sales increased $700 million or 6%
Comparable store sales109% at Bath & Body Works and 31% at VS NewCo. Due to good product acceptance and disciplined inventory management, we were also able to meaningfully pull back on promotional activity and achieve increased 5%
merchandise margin rates in both businesses. We also implemented a profit improvement plan for VS NewCo, taking action to decrease expenses, close unprofitable stores and improve our international business. This plan is expected to yield an annual benefit of approximately $400 million. As a result, we achieved the following results during fiscal 2020: | • | | Adjusted earnings per share of $3.46 compared to $2.29 last year1(1).
|
Comparable sales increased 21%; total sales decreased 8%, due to store closures.
| • | Gross profit rate increased 14%by 450 basis points(1); driven by a significant increase in the merchandise margin rate and buying and occupancy expense leverage. |
Total shareholder return was 19% and our stock price increased 14%
We are committed to returning value to our stockholders through a combination of dividends and share repurchase programs. In fiscal 2015, we increased our regular annual dividend 47% from $1.36 to $2.00 per share, paid a $2.00 per share special dividend and repurchased $483 million in stock. This commitment as well as our confidence in our growth opportunities is further demonstrated by increasing the annual dividend for 2016 20% from $2.00 to $2.40 per share, paying an additional $2.00 per share special dividend and authorizing a new $500 million share repurchase program.
Our ability to deliver strong financial performance and provide extraordinary returns to stockholders is a direct result of focus and disciplined execution in our business by our NEOs and their success is reflected in their compensation for fiscal 2015.
1• | The reconciliation of such measure
Adjusted operating income increased $577 million to $1,808 million compared to $1,231 million last year(1); and the comparable figureoperating income rate increased by 580 basis points to 15.3%(1). |
Total stockholder return increased 77.6%.
(1)
| Earnings per share and operating income determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”) is included on page 23for L Brands were $3.00 and $1,580 million for fiscal 2020 and $(1.33) and $258 million for fiscal 2019. Gross profit rate increased 490 basis points and operating income rate was 13.3% for fiscal 2020 calculated according to GAAP. The reconciliation of the Company’s 2015 Annual Reportadjusted measure to the comparable GAAP figure is on Formpages 30 through 32 of the 2020 10-K. |
2015 Compensation Decisions Overview
NEO base salaries and short term performance-based incentive compensation targets for fiscal 2015
These results were
set in March 2015 based on fiscal 2014 performance and our goals for 2015. Fiscal 2015 compensation decision highlights include:Awarded Mr. Wexner performance-based stock awards in January 2016 with a target value of approximately $14.1 million based onachieved through the achievement of financial and strategic goals during fiscal 2015 and stock performance that ranks in the top threework of our peer companiesNEOs to provide a safe and exceedsengaging shopping experience for our customers, execute on our profit improvement plan, leverage speed in our supply chain, and increase fulfillment capacity and productivity in our direct channel.
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Governance Practices
We have continued the S&P 500 Indexfollowing compensation practices in accordance with our corporate governance principles:
No tax gross-ups for NEOs upon a change in control.
“No hedging” policy governing stock trading.
Adopted a policy that discourages pledging of Company stock and requires advance approval by 22 percentage points;our General Counsel. None of the Company’s stock held by our NEOs or Board members is pledged.
IncreasedNo re-pricing of stock options without stockholder approval.
No single-trigger vesting of equity awards upon a change in control.
Clawback policy as described under the heading “—Compensation Governance—Recovery of Compensation.”
Stock ownership guidelines set at five times base salary for eachour CEO and three times base salary for other NEOs. Members of the NEOs for the first time inour Board must maintain ownership of at least two years (seven years in the casenumber of Mr. Wexner) based on our growth and accomplishments in the last several fiscal years, including continued record-setting sales and earnings performance in 2013 and 2014;
Increased short term performance-based incentiveshares of Common Stock received as Board compensation targets for each of the NEOs to incent future performance and further leverage their compensation;
Increased the target value of performance-based RSUs awarded to NEOs other than Mr. Wexner in April 2015 to recognize our record-setting financial performance in fiscal 2014, provide significant retentive value for these NEOs and incent future performance;
Set short term incentive compensation goals at targets that require continued growth in operating income over record fiscal 2014 results; and
Continued the cumulative, long-term, relative performance measure required for NEOs to earn RSUs.
Pay for Performance
Our compensation program requires superior performance for our NEOs to earn performance-based incentives at target. While both total shareholder return and total CEO compensation have increased over the lastprevious four years asyears.
Stock plan that requires a
resultvesting period of
the Company’s outstanding performance, the Company’s increase in stockholder return, including reinvested dividends, exceeds the rate of increase in total CEO compensation (as disclosed in the 2015 Summary Compensation Table):Over the last five years (since the beginning of fiscal 2011) our shareholder return was 35% on an annualized basis (352% in the aggregate) while our CEO’s compensation increased 7% on an annualized basis; and
Over the lastat least one year, the total shareholder return was 19% while total CEO compensation increased 13%.
Our total shareholder return over the last five years is the best of the companies in our peer group and outperformed the S&P 500 Index by 26 percentage points. The following chart illustrates how the increase in stockholder returns exceeds the rate of increase in total CEO compensation:
The effectiveness of our compensation program at delivering pay for performance is further validated by an analysis conducted by the Compensation Committee’s independent compensation consultantsubject to determine the alignment of pay and performance. The consultant reported to the Compensation Committee that our NEO compensation is aligned with performance and appropriate based on the competitive market, achievement of performance goals and total returns delivered to our stockholders.
certain exceptions.
Stockholder Advisory VoteIn 2015, 91%
At our 2020 annual meeting, 90.9% of our stockholders voted in favor of our executive compensation program. The
CompensationHCC Committee considers this vote and other
stockholder/advisory groupstockholder feedback when making compensation decisions for NEOs.
Based on the strong support as well as feedback from ourWe have a policy of robust engagement with
stockholders, with continuing outreach to and dialogue with our major
stockholders, we did not make structural changes toinvestors on a range of issues, including executive compensation matters. As indicated by the high-level support for our executive compensation program in
2015.We have implemented2020, the followingfeedback from stockholders in 2020 regarding executive compensation practices in accordance with our corporate governance principles and/or in response to previously received stockholderindicated understanding and advisory group feedback:
| ü | | No tax gross-ups for NEOs upon a change in control.
|
| ü | | “No hedging” policy governing stock trading.
|
| ü | | Policy that discourages pledging of Company stock and requires advance approval by our General Counsel. None of our NEOs or Board members have pledged Company stock.
|
| ü | | No re-pricing of stock options without stockholder approval.
|
| ü | | Double trigger vesting of equity awards upon a change in control for all equity awards since 2011 (applicable to all unvested awards as of April 1, 2016) plus a policy that prohibits the future issuance of single trigger awards.
|
| ü | | Clawback policy as described under “—Compensation Governance—Recovery of Compensation.”
|
| ü | | Stock ownership guidelines set at five times base salary for our CEO, three times base salary for other NEOs and four times the annual stock retainer for Board members.
|
| ü | | Stock plan that requires a vesting period of at least one year:
|
| ü | | Three year minimum vesting period for RSUs that are based on the passage of time; and
|
| ü | | One year minimum vesting period for stock options and for RSUs that are earned based on performance.
|
| ü | | While these are the minimum requirements under the plan, stock options and performance-based RSUs awarded to our NEOs generally vest over five years.
|
Conclusion
We continue to deliver extraordinary returns and are committed to creating long term valuesupport for our stockholders. The Company’s fifth straight year of record-setting salescompensation outcomes. Notwithstanding the challenging environment in 2020 and earnings was led by our NEOs who are incented to perform bythe compensation-related actions that were taken, we believe that our compensation program and its connectioncontinues to results. Our performance in 2015 is reflected inreflect the pay forfeedback of our NEOs. Base salaries and targeted long term performance-based equity incentive compensation for the NEOs increased from fiscal 2014 to 2015 in recognition of their continued success in the difficult challenge of beating our best-ever results. Short term performance-based cash incentive compensation increased in connection with operating income performance that surpassed our stretch goals. In summary, we see alignment between our performance, our stockholders’ interests and our pay. Accordingly, we recommend stockholders vote FOR the executive compensation program as outlined in Proposal 4.stockholders.
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Executive Compensation Philosophy
The
CompensationHCC Committee
has builtoversees an executive compensation program
based on
the following clear
and purposeful guiding principles:
Compensation Component | | Our Principles |
Pay Level | | •
| • | | | Attract and retain superior leaders in thea highly competitive market for talent. | |
| | • | |
| | | •
| | Pay competitively and equitably. | |
| | • | |
| | | •
| | Recognize depth and scope of accountability and complexity of responsibility. | |
| | | |
Pay Mix | | •
| • | | | Emphasize performance-contingent, long term andlong-term equity-based compensation over fixed compensation. | |
| | | |
Pay for Performance | | •
| • | | | Recognize and reward enterprise, brand and individual performance. | |
| | • | |
| | | •
| | Align executives’ interests with stockholders’ interests. | |
| | • | |
| | | •
| | Require executives to own a significant amount of Common Stock. | |
| | • | |
| | | •
| | Set Spring and Fall goals tothat reflect the seasonal nature of our business and incentincentivize goal achievement in each season. | |
| | • | |
| | | •
| | Create long-term stockholder value through regular achievement of short-term goals while pursuing our longer-term strategy of growth in North America and internationally and increasing operating margins. internationally. | |
| | • | |
| | | •
| | Retain and incentincentivize high-performers through long-term equity incentive awards. | |
Connecting PerformancePay and PayPerformanceOur challenging
Two key elements of our program’s design connect pay to performance. First, our incentive goals
require superior performance, including substantial growth in operating income year over yearare designed to challenge our NEOs to achieve
a high level of performance to earn incentives at target
pay.levels. When our NEOs hit and exceed,
or fall short of, these goals, we compensate them accordingly.
To achieve
Second, to further connect our CEO’s pay forto performance and stockholder interests, we employ a pay mix philosophy that places greater emphasis on performance-based and equitylong-term, equity-based, compensation over base salary. In fact, until fiscal 2015, our CEO had not received an increase in base salary since 2008. The following charts illustratechart illustrates our pay mix philosophy which consists of a lower percentage of base salary compared to performance-based pay at target for 2015:target.
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To assess whether the Company’s compensation program delivers pay for performance as designed, the Compensation Committee’s independent compensation consultant, Towers Watson (which merged with Willis Group Holdings in January 2016 and is referred to as Willis Towers Watson hereafter), analyzed our performance-based long term equity and short term cash compensation for our NEOs across four key measures (operating income, earnings per share, total stockholder return and return on invested capital) relative to our peer group. The analysis shows that both pay and performance are in the top quartile of our peer group.
Based on this analysis, Willis Towers Watson and the Compensation Committee concluded that our NEO compensation is aligned with performance and appropriate based on the competitive market, achievement of performance goals and total returns delivered to our stockholders.
We compare our NEO compensation with publicly available data on executive
compensation.compensation, including the executive compensation paid by our peer companies, in order to appropriately establish incentives for our NEOs and retain top talent.
We define our peer group, with the help of Willis Towers Watson,
the HCC Committee’s independent compensation consultant, to generally include:
Businesses that are similar to ours in total revenue, market capitalization, global footprint, business and/or merchandise focus;
Retailers that compete with us for executive talent;
Specialty and department store retailers; and
Companies with brands that have emotional content;
content.Businesses that are generally similar to the Company in total revenue, market capitalization, global locations, business and/or merchandise focus; and
Retailers that compete with the Company for executive talent.
We review our peer group annually and removed Ann Inc.did not make any changes in 2015 when it was acquired by Ascena Retail Group. Following our review, ourfiscal 2020. Our peer group consists of the following companies:
| | | | |
Abercrombie & Fitch Co. | | The Gap, Inc. | | Ralph Lauren Corporation |
American Eagle Outfitters, Inc. | | J. C. Penney Company, Inc. | | Starbucks Corporation | Ross Stores, Inc. |
American Eagle Outfitters, Inc. | | | Kohl’s Corporation | | | Starbucks Corporation |
Avon Products, Inc. | | Kohl’s Corporation | Macy’s, Inc. | Target Corporation | | Tapestry Inc. |
Coach,Bed Bath & Beyond Inc. | | Macy’s, | NIKE, Inc. | | | The TJX Companies, Inc. |
DSW, Inc. | | NIKE, Inc. | | Williams-Sonoma, Inc. |
The Estee Lauder Companies Inc. | | | Nordstrom, Inc. | | | Williams-Sonoma, Inc. |
The Gap, Inc. | | | Ralph Lauren Corporation | | | |
We do not specifically
benchmarkset our NEOs’ compensation against our peer group. Instead, we consider peer
group comparisons
provided by Willis Towers Watson as one of several factors in applying our pay philosophy and setting the pay of our NEOs.
This peer group used for compensation comparisons differs from the peer group used to evaluate performance under performance stock units (“PSUs”) granted to our CEO. A description of the performance peer group is included under the heading “—CEO Compensation.”
Stock Ownership Guidelines The
CompensationHCC Committee encourages
NEO Common Stock ownership
by our NEOs through stock ownership guidelines which promote a
long termlong-term focus
on performance, discourage inappropriate risk-taking and align the interests of our NEOs with those of our stockholders. Stock ownership guidelines can be met through direct
or beneficial ownership of Common Stock
including Common Stock heldand indirect ownership through grants of stock under our stock
incentive and retirement plans.
Our CEO is required to
achieve and maintain ownership of Common Stock with a value of five times his base
salary. As the beneficial owner of 15.98% of Common Stock, Mr. Wexner’s ownership well exceeds this minimum requirement.Othersalary and our other NEOs are required to achieve and maintain beneficial ownership of Common Stock with a value of three times his or herthe NEO’s base salary. Our NEOs are required to maintain these ownership levels within five years of becoming subject to the ownership guideline. All of theseour NEOs have beneficial ownershipare either in excess ofcompliance with this guideline as ofor will be required to comply within the end of fiscal 2015.
required time frame.
Members of our Board must maintain ownership of at least the number of shares of Common Stock received as Board compensation over the previous four years. All members of our Board are in compliance with this policy.
Compensation Setting Process
The CompensationHCC Committee makes all decisions regarding CEO compensation with advisory input from its independent compensation consultant, Willis Towers Watson. Our CEO, with oversight from the HCC Committee, sets compensation for Mr. Wexner.the other NEOs. The CompensationHCC Committee oversees the evaluation process and compensation structure for the otherall NEOs and approves all NEOgrants of stock awards.awards to our NEOs. In making compensation decisions for our NEOs, the HCC Committee takes into consideration input, recommendations and market-based analyses provided by both management and Willis Towers Watson.
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Target compensation for the NEOs is reviewed annually and is designed to reward historical performance,
incentincentivize future performance and be competitive with the external market for talent.
The following fiscal 2014 accomplishments were considered in setting NEO target compensation for 2015:Increased sales 6% to $11.5 billion driven by a comparable store sales increase of 4%.
Increased earnings per share by 15% to $3.50.
Increased merchandise margin rate.
Improved operating income rate from 16.2% to 17.1% driven by growth in all segments.
Delivered total shareholder return of 69%.
Increased focus on our core categories by exiting most apparel categories at Victoria’s Secret Direct and the make-up business at Victoria’s Secret Stores.
Continued international expansion of our brands.
Returned value to stockholders through a combination of dividends and share repurchase programs.
When setting target compensation for 2015, the Compensation Committee also considered the Company’s future challenges and goals, including expectations of continued growth and improved margins against potential market challenges and continued international expansion efforts.
Compensation Components
The three principal elements of our executive compensation programs arehave historically been base salary, short termshort-term performance-based cash incentive compensation and long term performance-basedlong-term equity incentive compensation. OtherEach NEO’s base salary is set considering the factors below and all our NEOs, including our CEO, participate in the same short-term performance-based cash incentive compensation program.
In fiscal 2020, due to the significant uncertainty surrounding the separation of Bath & Body Works and VS NewCo, the COVID-19 pandemic and constraints on shares available for grant under the 2015 Stock Option and Performance Incentive Plan (the “2015 Plan”), we determined that it was not appropriate to grant long-term equity incentives (which are generally granted annually).
Instead, to ensure long-term retention of our ongoing leadership during particularly turbulent times for our business, special cash retention awards were approved by the HCC Committee for our NEOs, which are discussed below.
In addition to these three principal elements of compensation,
that may be paid tothe Company also provides our NEOs
include retirement and other post-employment benefits and perquisites.
Additional information about each compensation component is provided below.
The following factors are considered in determining base salary adjustments:
Scope and responsibility of the NEO’s position;
Achievement of seasonal and annual business goals;
Level of overall compensation paid by competitors for comparable positions;
Recruitment, retention and development of leadership talent;
The Company’s challenging expectations for future growth; and
The appropriate balancing of our NEOs’ base salary against their incentive compensation.
For the first time since 2008,
Mr. Wexner received an increase to his base salary. The other NEOs alsoMeslow and Mr. Burgdoerfer received base salary increasesadjustments in recognitionfiscal 2020 in connection with their promotions and increased scope of responsibility. Mr. Bersani’s base salary did not change from fiscal 2019. Ms. Rosen and Ms. Riley’s base salaries reflect the terms of their contributionsoffer of employment.
Mr. Meslow | | | 1,275,000 |
Mr. Burgdoerfer | | | 1,200,000 |
Mr. Bersani | | | 800,000 |
Ms. Rosen | | | 850,000 |
Ms. Riley | | | 750,000 |
The table reflects base salaries in effect at the end of fiscal 2020 and does not reflect the fact that Messrs. Meslow, Burgdoerfer and Bersani’s base pay was reduced 20% for approximately three months along with leaders at the Senior Vice President level and above to
the continued success of the Company. Mr. McGuigan’s increase also reflects his assumption of additional responsibilities and is intended to align his compensation with internal and external positions of similar scope and importance. Mr. Coe’s increase is based on his achievement of business goals for Bath & Body Works, recognizes his successful leadership and is intended to be highly competitive with the external market. | | | | | | | | | | | | |
| | | 2015 Base
Salary ($) | | | 2014 Base
Salary ($) | | | %
Increase | |
Mr. Wexner | | | 2,000,000 | | | | 1,924,000 | | | | 4.0 | % |
Ms. Turney | | | 1,500,000 | | | | 1,442,000 | | | | 4.0 | % |
Mr. McGuigan | | | 1,250,000 | | | | 978,500 | | | | 27.7 | % |
Mr. Coe | | | 1,000,000 | | | | 925,000 | | | | 8.1 | % |
Mr. Burgdoerfer | | | 852,800 | | | | 824,000 | | | | 3.5 | % |
conserve cash during store closures.
Short TermShort-Term Performance-Based Cash Incentive CompensationShort-term performance-based incentive compensation is paid pursuant to the 2015 Incentive Compensation Performance Plan (the “2015 ICPP”). This programcompensation component focuses on achievement of six-month goals, reflecting the seasonal nature of our business and the fact that achievement of our short term goals season after season creates long term value for our stockholders. Our operations consist of two principal selling seasons: Spring (the first and second quarters) and Fall (the third and fourth quarters). The Fall including theseason, which includes holiday season,sales, is weighted more heavily because of its importance to our profitability. The use of two six-month performance periods in our plan design reflects our belief that achievement of our short-term
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goals season after season creates long-term value for our stockholders. This structure proved to be beneficial during the COVID-19 crisis because it allowed for our HCC Committee to establish meaningful targets for the Fall season with a more clear understanding of the challenges of the retail environment, avoiding the need to make retroactive adjustment to performance goals.
The pre-established, objective financial goals for fiscal 2020 were based solely on adjusted operating income. Adjusted operating income is used because it is a performance measure over which executives can have significant impact and is also directly linked to the Company’s long-term growth plan and performance that drives stockholder value. While the 2015 ICPP provides for adjustment due to extraordinary items, both Spring and Fall payouts reflect the actual, quantitative results, without retroactive adjustment for the impact of the COVID-19 crisis. Adjusted operating income goals are set at the beginning of each six-month season based on:
An analysis of historical performance;
Income goals for that brand;
Overall economic environment including financial results of other comparable businesses; and
Progress toward achieving our strategic plan.
Performance goals for the Fall season were simplified to reflect the intended separation of Bath & Body Works and VS NewCo and the integration of international and sourcing functions into the brands which they support. The table below shows the adjusted operating income goals for each season required to earn short-term performance-based incentive compensation at target and actual performance:
Bath & Body Works(2) | | | $345 million | | | $400 million | | | $870 million | | | $1,408 million |
VS NewCo(2) | | | 65 million | | | (242) million | | | 40 million | | | 518 million |
Other(3) | | | (52) million | | | (173) million | | | N/A | | | N/A |
Total L Brands | | | 358 million | | | (15) million | | | N/A | | | N/A |
(1)
| The adjusted operating income goal target and the actual performance columns present operating income on an adjusted basis which removes certain special items which are not indicative of our ongoing operations due to their size and nature. The Company uses adjusted financial information as key performance measures of results for purposes of evaluating performance internally, which may not correspond to amounts reported externally. |
(2)
| Fiscal 2020 Spring season operating income goals and performance for Bath & Body Works and VS NewCo reflect North America operations and fiscal 2020 Fall season operating income goals and performance reflect total segment, including international operations. |
(2)
| Other includes business unit operating income that is an internal performance measure and does not correspond to amounts reported externally. |
Fall season goals for VS NewCo were set below prior year actual results to provide meaningful incentive in a challenging environment and to reflect the projected decline in store sales due to decreased store traffic and store closures, partially offset by projected growth in online sales and margin rates. Fall season goals for Bath & Body Works were set slightly below prior year actual results to account for capacity constraints on store traffic due to social distancing and the cost of investment in fulfillment of online sales and implementation of safety measures for our workforce and customers. When evaluating operating income goals, the HCC Committee compares the change in adjusted operating income relative to the change in the incentive payments to associates to ascertain the reasonableness of the potential payout.
Adjusted operating income goal ranges at threshold, target and maximum were significantly widened in fiscal 2020 due to the challenging and uncertain environment. We felt the widened ranges were necessary to provide meaningful and realistic incentives to participants in a year filled with uncertainty due to both the challenges created by the pandemic and uncertainty around the future division of the Company.
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The table below shows the range of performance goals as a percent of target for threshold and maximum payout:
Bath & Body Works | | | 87% | | | 107% | | | 89% | | | 111% |
VS NewCo | | | -154% | | | 177% | | | -313% | | | 488% |
Performance between threshold and target and target and maximum is interpolated to determine payout percentage beginning at 20% for threshold performance up to 200% at maximum performance.
Short-term performance-based cash incentive compensation targets are set
atas a percentage of base salary with the amount earned ranging from zero to double the target incentive, based on the extent to which financial goals are achieved or exceeded.
The financial incentive provided by the
short termshort-term performance-based incentive compensation plan is a key component in driving the
exceptional performance of the
Company and our NEOs to produce record-breaking success year after year. In 2015, target percentages for each of the NEOs were increased to incent future performance and place further emphasis on the performance-based component of their compensation package: | | | | | | | | |
| | | Fiscal 2015 Target | | | Fiscal 2014 Target | |
Mr. Wexner | | | 220 | % | | | 200 | % |
Ms. Turney | | | 200 | % | | | 190 | % |
Mr. McGuigan | | | 150 | % | | | 140 | % |
Mr. Coe | | | 160 | % | | | 150 | % |
Mr. Burgdoerfer | | | 150 | % | | | 135 | % |
The pre-established objective fiscal 2015 financial goals were based solely on operating income, subject to adjustment for extraordinary items pursuant to the 2015 Incentive Compensation Performance Plan (the “2015 ICPP”) and approved by the Compensation Committee. Operating income is used because it is a performance measure over which executives can have significant impact and is also directly linked to the Company’s long-range growth plan and to performance that drives stockholder value. When evaluating operating income goals, the Compensation Committee compares the increase in operating income relative to the change in the incentive payments to associates at target.
Operating income goals are set at the beginning of each six-month season based on:
An analysis of historical performance;
Income goals for that brand;
Financial results of other comparable businesses; and
Progress toward achieving our strategic plan.
| | | | | | |
NEO | | | | | | Short Term Performance Incentive Goal Weighting and Metric |
Mr. Wexner
| | }
| | | | 80% weighted average of major brand performance:
55% Victoria’s Secret operating income
|
Mr. Burgdoerfer
| | | | 30% Bath & Body Works operating income
15% Other operating income
|
Mr. McGuigan
| | | | 20% total L Brands operating income
|
Ms. Turney
| | | | 100% Victoria’s Secret operating income
|
Mr. Coe
| | | | 100% Bath & Body Works operating income
|
In fiscal 2015, the Compensation Committee set goals that challenged our NEOs to achieve outstanding performance in an uncertain economic environment and provided incentive to grow sales while maximizing margins and managing expenses. The goals generally require substantial growth in operating income over the record-setting results we achieved in fiscal 2014 and consider the difficulty in beating these best-ever results.
Spring season operating income goals for Victoria’s Secret when compared to actual results for fiscal 2014 are generally flat due to the projected decrease in operating income at Victoria’s Secret Direct resulting from the reduction in focus on the apparel merchandise category.
Company. The table below shows the operating income goals required to earn short term performance-based incentive compensation at target percent of base salary and actualthe performance by season:
goal weighting for each NEO:| | Mr. Meslow | Fiscal 2015 Spring Season | | 185% | Fiscal 2015 Fall Season | |
| | | Operating Income3% VS NewCo;
Goal | | | Actual94% Bath & Body Works;
Performance1 | | | Operating Income1% Other;
Goal | | | Actual
Performance1 | |
2% Total L BrandsBrands* | | $ | 745 million | | | $ | 775 million | | | $ | 1,325 million | | | $ | 1,417 million | |
Victoria’s Secret
| | | 575 million | | | | 588 million | | | | 745 million | | | | 805 million | |
13% VS NewCo;
87% Bath & Body Works | | | 205 million | | | | 233 million | | | | 559 million | | | | 603 million | |
Other2
| Mr. Burgdoerfer | | 85 million | 180% | | | 108 million48% VS NewCo;
24% Bath & Body Works;
10% Other;
18% Total L Brands* | | | 87% VS NewCo;
13% Bath & Body Works | 182 million |
| | Mr. Bersani | | | 203 million140% | | | 40% VS NewCo;
28% Bath & Body Works;
12% Other;
20% Total L Brands | | | 50% VS NewCo;
50% Bath & Body Works | |
| | Ms. Rosen | | | 115% | | | N/A | | | 100% Bath & Body Works | |
| | Ms. Riley | | | 80% | | | N/A | | | 100% Bath & Body Works | |
1*
| Actual performance presents operating incomeSpring payouts for Mr. Meslow and Mr. Burgdoerfer were pro-rated based on an adjusted basis which removes certain special items (subject to approval by the Compensation Committee) which are not indicativenumber of Company ongoing operations due todays each NEO served in each of their non-recurring and extraordinary nature. The Company uses adjusted financial information as key performance measures of results for purposes of evaluating performance internally, which may not correspond to amounts reported externally.
roles during the season. |
2 | Other includes business unit operating income that is an internal performance measure and does not correspond to amounts reported externally.
|
Performance goals required to earn threshold payout range from approximately 85% to 90% of target and performance goals required to earn maximum payout range from approximately 110% to 120% of target. Performance below threshold results in no payout and performance between threshold and target and target and maximum is interpolated to determine payout percentage beginning at 20% at threshold up to 200% at maximum.
Payouts for fiscal
20152020 performance are set forth below and in the “Non-Equity Incentive Plan Compensation” column of the
20152020 Summary Compensation
Table.Table below. Both Spring and Fall payouts reflect the actual, quantitative results originally set at the beginning of each season without adjustment for the impact of the COVID-19 crisis on results.
Total Fiscal 20152020 Incentive Payout
Mr. Meslow | | | 2,304,808 | | | 1,658,928 | | | 2,830,500 | | | 4,489,428 | | | 195% |
Mr. Burgdoerfer | | | 2,052,000 | | | 417,636 | | | 2,592,000 | | | 3,009,636 | | | 147% |
Mr. Bersani | | | 1,120,000 | | | 250,880 | | | 1,344,000 | | | 1,594,880 | | | 142% |
Ms. Rosen | | | 402,816 | | | N/A | | | 805,632 | | | 805,632 | | | 200% |
Ms. Riley | | | 360,000 | | | N/A | | | 720,000 | | | 720,000 | | | 200% |
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| | | | | | | | | | | | | | | | | | | | |
| | | Fiscal 2015 Target
Incentive | | | Fiscal 2015
Spring Incentive
Payout | | | Fiscal 2015
Fall Incentive
Payout | | | Total Fiscal 2015
Payout | | | % of Fiscal
2015 Target | |
Mr. Wexner | | $ | 4,400,000 | | | $ | 2,509,760 | | | $ | 4,239,840 | | | $ | 6,749,600 | | | | 153 | % |
Ms. Turney | | | 3,000,000 | | | | 1,417,200 | | | | 3,297,600 | | | | 4,714,800 | | | | 157 | % |
Mr. McGuigan | | | 1,875,000 | | | | 1,069,500 | | | | 1,806,750 | | | | 2,876,250 | | | | 153 | % |
Mr. Coe | | | 1,600,000 | | | | 1,280,000 | | | | 1,920,000 | | | | 3,200,000 | | | | 200 | % |
Mr. Burgdoerfer | | | 1,279,200 | | | | 729,656 | | | | 1,232,637 | | | | 1,962,293 | | | | 153 | % |
The pandemic had a material impact on our business. Our NEOs reacted quickly and creatively, enabling us to maximize online sales to help offset the decline resulting from store closures. In addition, their leadership resulted in good product acceptance and smart inventory management that allowed us to pull back on promotional activity and achieve better merchandise margin rates in both businesses. This resulted in adjusted operating income that significantly exceeded expectations and goals set at the beginning of each season.
Long Term Performance-BasedLong-Term Equity Incentive CompensationStock awards are made
In fiscal 2020, due to the significant uncertainty surrounding the separation of Bath & Body Works and VS NewCo and the COVID-19 pandemic, our HCC Committee decided not to grant annual long-term incentive compensation to our NEOs at the time of our normal grant cycle (March 2020). Accordingly, long-term equity incentives were only awarded as promotional awards for Mr. Meslow and hiring incentives for Ms. Rosen and Ms. Riley. We did not grant annual equity awards to NEOs or other leaders who were otherwise eligible according to our normal practice.
Stock awards made prior to May 2020 were made under the 2015 Plan and after May 2020 under the 2020 Stock OptionsOption and Performance Incentive Plan (the “2015“2020 Plan”). Our equity-based long term performance-based incentive program rewards past performance, which was approved at our 2020 stockholder meeting.
Time-Vested Restricted Stock Units
Time-vested restricted stock units (“RSUs”) are granted to ensure market competitiveness of the executive compensation package and encourages future performance with a challenging performance requirement for our NEOs. In addition, the vesting requirements increase the likelihood that we will be able to retain executives who are criticalover the long-term.
In connection with his promotion to
our success.IndividualCEO of Bath & Body Works in February 2020, Mr. Meslow was granted RSUs with a grant date value of $1,274,555 that cliff vest 100% after three years. Ms. Rosen and Ms. Riley each received RSUs as a hiring incentive and to make up for forfeited stock awards from their prior employers. Ms. Rosen’s RSUs have a grant date value of $849,986 and cliff vest 100% after three years from the grant date. Ms. Riley’s RSUs have a grant date value of $749,996 and vest 50% on each of the first and second anniversaries of her hire date.
Performance Stock Units
PSUs incentivize executive performance
(including contribution tothrough the achievement of
business goals, execution of retail fundamentalsgrowth and
accomplishment of talent and cultural objectives), competitive practice, the Company’s overall budget forprofitability metrics. Since we did not grant annual equity
compensation expense and stockholder dilution, internal equity and retention risk are all considered in determining the size of each NEO’s fiscal 2015 equity award.Stock Options
Stock options are intended to align executive interests with stockholder interests by creating a direct link between compensation and stockholder return, and to foster retention. Stock options granted to each NEO vest over five years, subject to continued employment. The exercise price is equal to the grant date closing price of Common Stock.
Performance-Based RSUs
Performance-based RSUs are intended to:
Incent achievement of key performance metrics (through the performance requirement);
Align executive rewards with those realized by stockholders (through the market value of our stock);
Retain superior executive talent (through the time vesting requirements); and
Reward exceptional individual performance (through annual determination of the size of the award).
Performance-based RSUs awarded to NEOs other than Mr. Wexner in April 2015 recognize record financial performanceawards in fiscal 20142020, Mr. Meslow is the only NEO who received a PSU award in fiscal 2020. Mr. Meslow’s PSUs were granted in connection with his promotion to CEO of L Brands and provide significant retentive value for NEOs. is described in detail below under the heading “CEO Compensation.”
Below is a summary of
the performance-based RSU awardslong-term equity incentive compensation, including RSUs, PSUs and stock options awarded in fiscal
2015: | | | | | | | | | | | | |
| | | Value of
Performance-
Based RSU Award | | | Value of Stock
Option Award | | | Total Fiscal
2015 Equity
Award Value | |
Mr. Wexner | | $ | 13,005,048 | | | $ | 3,998,333 | | | $ | 17,003,381 | |
Ms. Turney | | | 5,618,477 | | | | 534,079 | | | | 6,152,556 | |
Mr. McGuigan | | | 4,060,166 | | | | 254,325 | | | | 4,314,491 | |
Mr. Coe | | | 3,178,121 | | | | 203,455 | | | | 3,381,576 | |
Mr. Burgdoerfer | | | 2,710,253 | | | | 173,503 | | | | 2,883,756 | |
Note: While the performance requirement is the same, the amount2020.
Mr. Meslow | | | 11,056,000 | | | 1,274,555 | | | 12,330,555 |
Mr. Burgdoerfer | | | — | | | — | | | — |
Mr. Bersani | | | — | | | — | | | — |
Ms. Rosen | | | — | | | 849,986 | | | 849,986 |
Ms. Riley | | | — | | | 749,996 | | | 749,996 |
Cash Retention Awards and timing of Mr. Wexner’s equity award are determined on a different basis than thatOther Bonuses
To ensure long-term retention of our
other NEOs, as describedongoing leadership during a time of transition and significant uncertainty and in
detail below.In order for performance-based RSUsthe absence of a long-term equity incentive award in fiscal 2020, special cash retention awards were granted to Messrs. Meslow, Burgdoerfer and Bersani to be earned, the Company’s cumulative adjusted operating income, as a percentage of cumulative sales, must bepaid in the top one-thirdthree equal installments. The first of the S&P Retailing Index (also determinedretention payments was paid on a cumulativeJanuary 31, 2021 and adjusted basis) beginning with the fiscal year of the award through the fiscal year immediately preceding each vest date. While operating income is the sole performance metric used for our short term performance-based cash incentive compensation program, the use of operating income as a percentage of sales for our long term performance-based incentive program requires both operating income and sales performance and measures the efficiency of our sales. In addition, the relative metric requires that our performance significantly exceeds that of companies within our industry for the pre-determined performance goalremaining two installments are scheduled to be achieved. Furthermore,made on July 31, 2021 and January 31, 2022 if the cumulative performance metric requires sustained performance over the five-year vesting period reflecting long term performance of the Company.
Performance-based RSUs vest over five years, with 20% vestingexecutive is employed on each of those dates. In addition, under the second and third anniversariesterms of the grant date, and 30% onMs. Riley’s offer of employment, she will receive cash retention payments of $250,000 within 30 days of each of the fourthfirst and fifthsecond anniversaries of her hire date, subject to her continued employment.
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Mr. Meslow | | | 6,000,000 |
Mr. Burgdoerfer | | | 4,500,000 |
Mr. Bersani | | | 2,250,000 |
Ms. Rosen | | | N/A |
Ms. Riley | | | 500,000 |
Cash retention amounts are not disclosed in the 2020 Summary Compensation Table and will be disclosed in the table in the year in which the payment is earned and paid based on the executive’s continued service.
In connection with their offers of employment, Ms. Rosen also received in September 2020 a sign-on bonus of $1,000,000 and Ms. Riley will receive a sign-on bonus of $1,500,000 that will be payable in July 2021, in each case subject to the performance measures being satisfied andher continued employment. ToIn the extentevent either executive voluntarily resigns for any tranchereason or is terminated by the Company for cause within two years of her hire date, she will be required to reimburse the full amount of the award that is eligiblesign-on bonus.
The sign-on bonus amount for
performance-based vesting does not vest in any fiscal year, such tranche may vest in future years, subject to satisfaction of the cumulative performance measure. The cumulative performance metric requires any performance shortfall in any period to be made up on a cumulative basis in any subsequent periods for any vesting tranche to be earned. If the cumulative performance metricMs. Riley is not
met atdisclosed in the
end of the five-year performance period, all unvested performance-based RSUs2020 Summary Compensation Table and will be
forfeited.Equity awards are effectivedisclosed in the latertable in the year in which the amount is paid.
In recognition of
his extraordinary efforts leading the
dateReal Estate team during the
grant isCOVID-19 pandemic, and generating significant occupancy savings for the Company, the HCC Committee also approved
or the date of hire or other relevant effective date.a $250,000 bonus to Mr. Bersani.
Retirement and Other Post-Employment Benefits Retirement and other post-employment benefits consist of qualified and non-qualified defined contribution retirement plan benefits and termination benefits.
Qualified Defined Contribution Retirement Plan
The qualified plan is available to all associates who meet certain age and service requirements. Associates can contribute up to the amounts allowable under
Section 401 of the Internal Revenue Code of 1986,
as amended (the “Code”). The Company matches associates’ contributions according to a predetermined formula and contributes additional amounts based on a percentage of the associates’ eligible annual compensation and years of service. Associates’ contributions and Company matching contributions to the qualified plan vest immediately. Additional Company contributions and the related investment earnings are subject to vesting based on years of service.
Non-Qualified Defined Contribution
Deferred Compensation and Supplemental Retirement Plan
The
Company previously sponsored a non-qualified
supplemental retirement plan
is available to all(the “SRP”) for associates who
meetmet certain age, service, job level and compensation requirements. The non-qualified plan is an unfunded plan which provides benefits beyond the Code limits for qualified defined contribution plans. The Company
doeshas not set aside assets to fund liabilities of the non-qualified plan. Assets that may be used to satisfy such liabilities are general assets of the Company, subject to the claims of the Company’s creditors.
Associates can contribute
On June 27, 2020 (the “Termination Date”), the HCC Committee authorized the termination of the SRP. Any remaining benefits and obligations under the SRP are expected to
be paid out in full approximately one year following the
non-qualified plan upTermination Date. Pursuant to
a maximum percentageapplicable rules under the Code, certain other deferred compensation arrangements were simultaneously terminated and liquidated, including any remaining elective deferred stock units and deferral elections under the Company’s Stock Award and Deferred Compensation Plan for Non-Associate Directors. In addition, any retirement-eligible associates of
the Company who were eligible
compensation. The Company matches associates’ contributions and contributes additional amounts basedfor special pro rata vesting on any RSUs held by such associate will no longer receive pro rata vesting treatment on a
percentage ofretirement following the
associates’ eligible compensation and years of service.The plan also permits participating associates to defer additional compensation up to a maximum amount which the Company does not match.
Associates’ contributions to the non-qualified plan and the related interest accruals vest immediately. Company contributions and credits to the non-qualified plan and the related interest are subject to vesting based on years of service.
Termination Date.
Termination Benefits: Severance and Change in Control Agreements
We have entered into severance and change in control agreements with our NEOs other than Mr. Wexner.NEOs. See “Retirement and Other Post-Employment Benefits—Estimated Post-Employment Payments and Benefits” below for a description of estimated benefits in certain termination situations, including a change in control. On February 12, 2016
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Mr. McGuigan and Ms. Milano, whose positions were eliminated in connection with the planned separation of VS NewCo from L Brands, received severance benefits in fiscal 2020 according to their individual agreements. In addition, as a component of our senior management transition, Ms. Milano was asked to continue with the Company
announcedfor a period of four months and assist in the
resignationtransition. In exchange, in September 2020, Ms. Milano received a retention bonus of
Sharen Jester Turney$1,500,100 as
President and CEO of Victoria’s Secret. Ms. Turney transitioned outan enhancement of her
employment at the end of March 2016 and will be entitled to certain payments and benefits under the termsexisting severance protection benefit in recognition of her
employment agreement as described under “Retirement and Other Post-Employment Benefits—Estimated Post-Employment Payments and Benefits.”performance of expanded duties. Mr. Wexner was not covered by a severance agreement.
Upon a change in control,
equity awards will only vest if the executive’s employment is terminated by the executive for good reason or by the Company other than for cause within 24 months of the change in control.
None of our NEOs is entitled to a tax gross-up uponfor any excise taxes on compensation paid in connection with a change in control. It is the Company’s policy not to enter into any new arrangements providing for change in control excise tax gross-up payments.
We provide our NEOs with
minimallimited perquisites that the
CompensationHCC Committee has determined are reasonable and in the best interests of the Company and its stockholders. These perquisites
may include the reimbursement of financial planning costs of up to $9,500
per year and
for Ms. Turney, payment ofsupplemental disability and life insurance
policy premiums.CEO Compensation
Overview of CEO Pay
Mr. Wexner is a recognized unique talent: an innovator and leader in the retail industry. His long record of success in leadingcoverage provided by the Company is unmatched in scope and duration by any other retailer. In November 2015, Mr. Wexner was recognized by the Harvard Business Review as the best-performing CEO in the world based on total shareholder return during his tenure as our founder and CEO. The Compensation Committee has determined that his extraordinary contributions as the Company’s CEO deserve to be fully reflected in his compensation.
The Company’s performance, including significant increases in sales, operating income and adjusted earnings per share in fiscal 2015 over fiscal 2014, is reflected in Mr. Wexner’s short-term and long-term performance-based incentive compensation for fiscal 2015. The increase year over year from fiscal 2014 to 2015 is linked to an increase to Mr. Wexner’s base salary, an increase to his target short term performance-based incentive compensation, as well as performance that exceeded our stretch goals. The increases to Mr. Wexner’s base salary and target short term performance-based incentive compensation were made by the Compensation Committee in accordance with the Compensation Committee’s belief that Mr. Wexner should be rewarded for his continued ability to drive performance, growth and shareholder returns.
CEO Stock Award Determination Overview
Beginning with fiscal 2010, the Compensation Committee implemented an annual process in which Mr. Wexner’s stock grant would be a “split grant” delivered in two parts—one in the Springassociates at the same time other senior executives receive stock grants,Vice President level and one near the end of the Fall season when Mr. Wexner’s and the Company’s performance can be substantially determined for the fiscal year.
Spring 2015 Award
The value of the Spring stock award is set below the competitive market to provide a baseline award while imposing a performance requirement for the award to be earned. The Compensation Committee granted Mr. Wexner a stock award in Spring 2015 with a reported value of $2.9 million.
Fall 2015 Award
As the fiscal year draws to a close, the Compensation Committee assesses both Mr. Wexner’s and the Company’s performance, and if deemed appropriate, grants Mr. Wexner a performance-based stock award in January. This Fall stock award is intended to recognize financial, strategic and operational performance for the fiscal year and incent future performance.
For fiscal 2015, the Compensation Committee set the Fall stock award value range from zero at minimum, to $7.3 million at target and $17.8 million at maximum.
The range was set in recognition of Mr. Wexner’s standing as a top-performing CEO and in consideration of a benchmark of stock award values for CEOs in our peer group. The Compensation Committee also considered the importance of Mr. Wexner’s experience and leadership to the Company’s outstanding performance,above, including the delivery of high total shareholder return, which has increased at a much more rapid rate than his compensation.
The top of the range has been strategically positioned so that if all qualitative, objective and financial performance targets for the year are exceeded, and if the Company is among the highest performing of our peer companies, Mr. Wexner’s stock award value would be among the top of our peer group.
Conversely, if performance is below targeted levels, Mr. Wexner’s stock award value would be correspondingly lower or there would be no Fall stock award.
In addition to performance against pre-established financial targets, the Compensation Committee considers factors such as leadership talent development, the identification and development of new business opportunities, and success in fostering a high performance culture, in determining the size of Mr. Wexner’s Fall stock award. Once the size of the grant is determined, the Compensation Committee imposes a performance metric that the Company must achieve over the vesting period in order for Mr. Wexner to vest in the award.
In January 2016, the Compensation Committee granted Mr. Wexner a fiscal 2015 stock award with a reported value of $14.1 million based on the performance of the Company and his role and leadership in its accomplishments for the current fiscal year, including:
| • | | Increasing sales 6%, operating income 12%, adjusted net income1 14% and adjusted earnings per share1 14%;
|
Growth of the business in North America through compelling merchandise assortments, marketing and store and online experiences for our customers;
Management of fundamentals including controlling inventory, expenses and capital with discipline, faster execution and expense leverage;
Expansion of operations outside the United States and Canada including 149 new company-owned and franchised stores;
Accomplishment of talent and cultural objectives;
Optimization of capital structure, allowing the Company to pay cash out to shareholders, while maintaining a strong credit profile among lenders, landlords and suppliers; and
Return of value to stockholders that is the best among our peer companies, including annualized total shareholder returns of 19%, 30% and 35% over one, three and five years, respectively.
Both the Spring and Fall awards are delivered 75% in the form of performance-based RSUs and 25% in the form of stock options. Mr. Wexner’s RSU awards are subject to the same performance and vesting requirement as those of our other NEOs. The performance-based RSUs and stock options vest over five years, with 20% vesting on each of the second and third anniversaries of the grant date, and 30% on each of the fourth and fifth anniversaries. Performance-based RSUs must be earned based on achievement of adjusted operating income, as a percentage of cumulative sales, in the top one-third of the S&P Retailing Index (also determined on a cumulative and adjusted basis).
1 | The reconciliation of such measure to the comparable figure determined in accordance with GAAP is included on page 23 of the Company’s 2015 Annual Report on Form 10-K.
|
CEO Termination Benefits
Due to his unique role as the founder of the Company, Mr. Wexner is not covered by a severance or change in control agreement. However, consistent with the treatment for all stock plan participants under the terms of our 2015 Plan and prior plan, all of Mr. Wexner’s unvested stock options and RSUs will vest upon death. Subject to the achievement of pre-established performance conditions, RSUs will continue to vest upon Mr. Wexner’s total disability. Upon retirement, RSUs will vest pro-rata based on the fraction of whole months worked from the grant date over the full vesting period (i.e., one-fifth will vest if twelve full months are completed from the grant date for a grant that would otherwise vest over five years), subject to achievement of pre-established performance conditions. In the event of a change in control, unvested RSU awards will vest if Mr. Wexner’s employment is terminated other than for cause within 24 months of the change in control.
CEO Perquisites
The Board of Directors has approved a security program (the “Security Program”) that provides security services to Mr. Wexner and his family. The Security Program is required for the benefit of the Company and is appropriate given the risks associated with Mr. Wexner’s position. We periodically hire a third party to review our Security Program to verify that a bona fide business oriented security concern exists and that the Security
Program costs are reasonable and consistent with these concerns. The Security Program requires Mr. Wexner to use corporate provided aircraft, or private aircraft that is in compliance with the Security Program, whether the purpose of the travel is business or personal.
The cost of security services which are not business related have been reimbursed to the Company by Mr. Wexner. In addition, to the extent that corporate provided aircraft is used by Mr. Wexner or any NEO for personal purposes, he or shethe NEO has reimbursed the Company based on the greater of the amount established by the Internal Revenue Service (“IRS”(the “IRS”) as reasonable for personal use or the aggregate incremental cost associated with the personal use of the corporate owned aircraft as determined by an independent, third partythird-party aircraft costing service.
CEO Compensation
Overview of CEO Pay
The HCC Committee determined that Mr. Meslow’s track record of success at Bath & Body Works and the challenges facing the business make his leadership critical to the future of the Company. While his past successes speak for themselves, the challenges ahead are vast including replacing the leadership of our iconic founder, implementing a profit improvement plan at VS NewCo, separating the Victoria’s Secret and Bath & Body Works businesses, continuing to drive strong growth at Bath & Body Works and navigating a global pandemic that has forced us to be creative and agile, adopt new ways of working and implement best-in-class safety measures. With this in mind, Mr. Meslow’s compensation is designed to provide significant performance incentives while retaining his leadership over the long term.
CEO Compensation
Mr. Meslow’s compensation includes substantially the same compensation components as the other NEOs. He participates in the short-term, performance-based incentive compensation plan, cash retention program and retirement plan described above.
Mr. Meslow received two long-term equity incentive awards in fiscal 2020. Mr. Meslow first received a time- vested RSU award for 64,048 shares in February 2020 when he was promoted to CEO of Bath & Body Works that cliff vests 100% after three years. In connection with his promotion to CEO of L Brands, Mr. Meslow was awarded PSUs enabling Mr. Meslow to earn from zero to a maximum of 1,500,000 shares of Common Stock over a five-year performance period depending on the Company’s achievement of specified operating income margin targets as well as revenue growth measures and stockholder return measures relative to the performance of peers. A five-year performance period (vs. our usual three-year performance period) was used to drive longer-term performance and retention as well as recognize the overall magnitude of the award. As noted below, maximum payout will only occur through extraordinary performance, reflecting revenue growth that significantly exceeds our peer group and meaningful improvement in operating income rate. The RSU award granted in February 2020 will be deducted from any shares earned under the PSU award.
The PSUs incentivize the CEO through the achievement of challenging profitability, growth and return metrics. Two metrics weighted equally at 50% determine the initial payout: revenue growth relative to peers and cumulative
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operating income as a percent of cumulative sales (operating income margin). Payout is then adjusted up or down 20% based on total stockholder return relative to peers. These metrics were chosen by the HCC Committee because they align with the strategic direction of the Company and provide a balance between growth and profitability metrics as well as alignment with stockholders.
Performance will be evaluated based on three separate three-year periods over a total of five years:
40% of the award may be earned based on fiscal 2020 through 2022 performance and vests in 2023
30% of the award may be earned based on fiscal 2021 through 2023 performance and vests in 2024
30% of the award may be earned based on fiscal 2022 through 2024 performance and vests in 2025
The specific targets are as follows:
Threshold | | | 500,000 | | | 30th percentile | | | 16% |
Target | | | 1,000,000 | | | 50th percentile | | | 18% |
Maximum | | | 1,500,000 | | | 90th percentile | | | 22% |
Performance will be evaluated based on a scale, and payout will be interpolated between threshold, target and maximum.
Once performance is determined based on the above two metrics, the award will be adjusted up 20% if total stockholder return is above the 75th percentile and down 20% if total stockholder return is below the 40th percentile of the designated peer group. There is no adjustment for total stockholder return performance between the 40th and 75th percentile and the adjustment may not cause the number of shares earned under the award to be above maximum or below threshold.
The peer group used to determine relative revenue growth performance achievement and total stockholder return adjustment for the PSUs was selected, with the help of Willis Towers Watson, based on companies that are generally similar to Bath & Body Works in total revenue, market capitalization, business and/or merchandise focus. Due to the long-term nature of the award and the fact that it is expected that VS NewCo will be separated from L Brands and Bath & Body Works will be the remaining brand, the HCC Committee determined that it was appropriate to select companies based on Bath & Body Works as a standalone company. Accordingly, the companies that comprised the peer group are as follows:
Abercrombie & Fitch Co. | | | Hanesbrands Inc. | | | Sally Beauty Holdings Inc. |
American Eagle Outfitters Inc. | | | lululemon athletica inc. | | | Tapestry Inc. |
Big Lots, Inc. | | | Michael’s Co. Inc. | | | The Estee Lauder Companies Inc. |
Burlington Stores Inc. | | | Newell Brands Inc. | | | Tractor Supply Company |
Coty Inc. | | | Nu Skin Enterprises Inc. | | | Ulta Beauty Inc. |
Designer Brands Inc. | | | Ralph Lauren Corporation | | | Williams Sonoma Inc. |
Foot Locker Inc. | | | Revlon Inc. | | | |
CEO Termination Benefits
Mr. Meslow is entitled to severance protections similar to those covering other Company executives. In the event of a termination of his employment by the Company without cause or his resignation for good reason absent a change in control, he is entitled to receive cash severance of two years’ base salary and one year of incentive compensation based on actual results. In the event of a termination of his employment by the Company without cause or his resignation for good reason within two years following a change in control, he is entitled to receive cash severance of two years’ base salary and two years’ incentive compensation (at average historical levels), plus a pro rata payment of any unpaid retention payments. In addition, upon a termination of employment by the Company without cause or a resignation for good reason (whether or not in connection with a change in control), the Company will provide, at its expense, medical and dental benefits for a period of up to 18 months following the termination date.
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CEO Perquisites
The Board has approved Mr. Meslow’s use of corporate provided aircraft for personal purposes to promote the efficient and effective use of his time while travelling. In fiscal 2020, to the extent that corporate provided aircraft was used by Mr. Meslow for personal purposes, he has reimbursed the Company based on the aggregate incremental cost associated with the personal use of the corporate owned aircraft, resulting in no disclosure of a personal benefit in the All Other Compensation column of the 2020 Summary Compensation Table. In the future, the Board has approved reimbursement based on the IRS’s Standard Industrial Fare Level (“SIFL”) formula. To the extent that corporate aircraft is used by Mr. Meslow for personal purposes in the future, the difference between the reimbursement amount and the aggregate incremental cost to the Company of providing this benefit will be disclosed in the All Other Compensation column of the Summary Compensation Table.
In addition, the Board approved a security program (the “Security Program”) that provided security services to Mr. Wexner and his family during his tenure as our CEO. The Security Program was for the benefit of the Company and was appropriate given the risks associated with Mr. Wexner’s position as the CEO and Chairman of the Board of L Brands. To verify that a bona fide Company oriented security concern existed and that the Security Program costs were reasonable and consistent with these concerns, the Security Program was reviewed by a third party. The Security Program required Mr. Wexner to use corporate provided aircraft, or private aircraft that was in compliance with the Security Program, whether the purpose of the travel was business or personal. The Security Program expired in connection with Mr. Wexner stepping down as CEO and Chairman of the Board of L Brands, and the associates who served as members of Mr. Wexner’s security team terminated employment with L Brands effective June 30, 2020.
The cost of security services which were not business related have been reimbursed to the Company by Mr. Wexner. In addition, to the extent that corporate provided aircraft was used by Mr. Wexner during his tenure as CEO for personal purposes, he reimbursed the Company as noted above under the heading “—Compensation for NEOs—Limited Perquisites.”
Human Capital and Compensation Committee Our
programs, policies, practices and strategies relating to culture, talent, diversity and inclusion and executive compensation
program isare overseen by the
CompensationHCC Committee.
CompensationAll HCC Committee members are appointed by our Board and meet independence and other NYSE requirements.
CompensationHCC Committee members are selected based on their knowledge and experience in
human capital and compensation matters from both their professional experience and their roles on other boards.
As part of its self-evaluation process, the
CompensationHCC Committee considers prevailing best practices and compliance with the highest governance standards. During fiscal
2015,2020, the
CompensationHCC Committee also continued to engage with the full Board to maximize its effectiveness. The role of the
CompensationHCC Committee and information about its meetings are set forth in this proxy statement.
The
CompensationHCC Committee participated in the preparation of this CD&A and recommended to the Board that it be included in this proxy statement.
The
CompensationHCC Committee, together with the Company, also evaluates the Company’s compensation structure from the perspective of enterprise risk. The
CompensationCompany’s compensation structure includes risk mitigating factors such as a mix of pay that is balanced between long- and short-term, and fixed and variable payouts under the 2015 Plan, 2020 Plan and 2015 ICPP. Based on this evaluation, the HCC Committee believes that the Company’s compensation structures are appropriate and do not incentivize inappropriate taking of business risks.
The
Compensation Committee’sHCC Committee is governed by a charter
which is available on our website at
www.lb.com.
Committee Meetings and Delegation Members of Company management, including our CEO and CFO, attend the Chief Operating Officer and the Chief Financial Officer, attends CompensationHCC Committee meetings along with the Senior Vice President of Total Rewards,Chief Human Resources Officer, who generally prepares meeting materials, and the Corporate Secretary, who records the minutes of the meeting. Management,Members of Company management, including the CEO, doesdo not play a role in recommending CEO compensation. The CompensationHCC Committee regularly meets in executive session without management present.
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The
CompensationHCC Committee may delegate its authority to subcommittees or the Chair of the
CompensationHCC Committee. In accordance with its charter, the
CompensationHCC Committee has delegated to our
Chief Operating Officer, or his designee,Vice President, Compensation, the authority to make stock awards
in accordance withunder the
Company’s stock incentive planprovisions of the 2015 Plan and 2020 Plan with a value up to $400,000 in any year to any associate who is not a Section 16 officer of the Company or a senior leadership team member.
Independent Compensation Consultant As permitted by its charter, the
CompensationHCC Committee retained Willis Towers Watson as its independent executive compensation consultant and has the sole authority to retain and terminate any independent executive compensation consultant.
The
CompensationHCC Committee, considering recommendations from our management team, determines the work to be performed by the consultant. The consultant works with management to gather data required in preparing analyses for
CompensationHCC Committee review. Specifically, the services the consultant provides include:
Assisting in evaluation of and providing recommendations for CEO and other NEO compensation;
Informing the CompensationHCC Committee of changing market practices;
Consulting on our executive compensation strategy and program design;
Analyzing alignmentthe competitiveness of pay and performance;
executive pay;Assisting in the selection of our peer group; and
Assisting in the preparation and review of this disclosure.
In addition to the services provided at the request of the HCC Committee, a separate division of Willis Towers Watson
did not provide additionalprovides a call center tracking system for which we pay quarterly software usage fees and provides compensation survey reports. For fiscal 2020, these fees totaled $128,304. The fees paid to Willis Towers Watson for its services to the
Company exceeding $120,000 duringHCC Committee in fiscal 2020 were $250,616. Total fees paid to Willis Towers Watson for the fiscal
year.year were $378,920. The CompensationHCC Committee, in its sole discretion, engaged Willis Towers Watson; such engagement was not made or recommended by management. The HCC Committee did not participate in management’s decision to engage Willis Towers Watson for its call center tracking system. The HCC Committee has determined that the provision of this work by Willis Towers Watson is not material and does not impair the independence and objectivity of advice provided to the HCC Committee on executive compensation matters.
The HCC Committee reviews and approves the provision of additional services by Willis Towers Watson to the Company and evaluates the performance and independence of Willis Towers Watson, specifically considering independence factors identified by the
Commission.NYSE listing rules. This evaluation includes a review of written representations from Willis Towers Watson confirming their independence. Based on its evaluation, the
CompensationHCC Committee believes that there are no conflicts of interest that could impair Willis Towers Watson’s ability to provide independent, objective advice to the
CompensationHCC Committee regarding executive compensation matters.
In addition to consulting provided by Willis Tower Watson, the HCC Committee engaged David Kollat, who served as the Chair of the HCC Committee until May 2019, as an advisor to the HCC Committee until May 2020. Dr. Kollat’s services included consulting related to CEO compensation and establishment of short-term, performance-based incentive compensation goals for the fiscal 2020 Spring season.
Tax DeductibilityThe Compensation Committee seeks to structure tax-efficient executive compensation. The 2015 ICPP and the 2015 Plan are intended to qualify short term cash incentive payments and long term equity incentive compensation for tax deductibility under
Section 162(m) of the Code. To maintainCode generally does not allow a tax deduction to public companies for compensation paid to certain executive officers that is more than $1 million during the tax year. Section 162(m) of the Code provided an exemption from this deduction limitation for compensation that qualified as “performance-based compensation.” However, as part of the Tax Cuts and Jobs Act of 2017, this exemption was repealed, effective for taxable years beginning after December 31, 2017, subject to transition relief for certain arrangements in place as of November 2, 2017. The Company intends to administer grandfathered compensation in accordance with the transition relief to the extent reasonably practicable. Going forward, non-grandfathered annual compensation in excess of $1 million for our covered senior executives will generally not be deductible. The HCC Committee continues to have the flexibility to pay non-deductible compensation if it believes it is in structuring executive compensation, the Compensation Committee has not adopted a policy requiring all compensation to be tax deductible.best interests of the Company.
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Under the 2015 ICPP,
and the 2015 Plan
and the
Compensation2020 Plan, the HCC Committee has the power and authority to recover previously awarded bonuses or equity-based compensation or profits if (i) required by applicable law with respect to a participant, (ii) a participant engaged in fraudulent conduct or activities (or had knowledge of such conduct or activities) relating to the Company or (iii) a participant should have had knowledge of such conduct or activities based on his or her position, duties or responsibilities.
To assess the reasonableness of the compensation of our NEOs, the
CompensationHCC Committee annually reviews
a three-year history of all of the components of the NEOs’ compensation, including salary,
short termshort-term incentive compensation, realized and unrealized gains on stock options and RSUs, the cost to the Company of all perquisites, benefits earned and accrued under the Company’s non-qualified deferred compensation
plan and supplemental executive retirement plan, and potential payouts under several potential severance and change-in-control scenarios. Based on this review, the
CompensationHCC Committee concluded that compensation components individually and in aggregate are reasonable, encourage retention,
incentincentivize performance and are in the best interests of the Company and its stockholders.
Conclusion
In summary, fiscal 2015 was another year of record-setting performance and returns to stockholders that outpaced our peers and the general market. Our ability to deliver strong financial performance and provide extraordinary returns to stockholders is a direct result of focused and disciplined execution by our NEOs. Their success is reflected in their compensation for fiscal 2015 demonstrating our commitment to delivering pay for performance.
The effectiveness of our compensation program at providing pay for performance over time is further validated by our financial performance over the last five years relative to the increase in CEO pay. Since 2010, the average annual increase in adjusted sales, operating income, earnings per share and total shareholder return exceeds the average increase in CEO compensation over the same time period. Our compensation program is aligned with our performance over time, providing incentives that are in the best interest of our stockholders.
Based on the above, we recommend stockholders vote FOR the executive compensation program.
| | We are committed to aligning our executive compensation with our Company’s performance. In connection with the Company’s strong performance in fiscal 2020, our NEOs earned above-target short-term performance incentive payments according to the payout formulas established at the beginning of each six-month performance period without retroactive adjustment for the impact of the COVID-19 crisis on results. Long-term equity incentives were granted only to our CEO as a one-time incentive in connection with his promotion and to Ms. Rosen and Ms. Riley as hiring incentives in connection with their employment offers, and we did not otherwise grant annual equity awards to our NEOs during fiscal 2020. Substantially all of the long-term incentive to our CEO is subject to challenging performance requirements that will only be earned if the Company achieves rigorous growth, profitability and return metrics that provide incentive for a balance of growth and profitability, support the strategic direction of the Company, and alignment with stockholders. | |
| | | | | | |
| | In summary, there is alignment between our performance, our stockholders’ interests and our NEOs’ pay. Accordingly, we recommend stockholders vote FOR our executive compensation program as outlined in Proposal 3. | |
2015TABLE OF CONTENTS
2020 Summary Compensation Table
The following table sets forth information concerning total compensation earned by or paid to our CEO,
Chief Financial OfficerCFO and our three other most highly compensated NEOs during the fiscal year ended January 30,
2016. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | | Salary
($) | | | Bonus
($)(1) | | | Stock
Awards
($)(2)(3) | | | Option
Awards
($)(2)(3) | | | Non-Equity
Incentive
Plan
Compen-
sation ($)(4) | | | Change
in
Pension
Value
and
Non-
qualified
Deferred
Compen-
sation
Earnings
($)(5) | | | All Other
Compen-
sation
($)(6) | | | Total ($)
(1)(2)(3)
(4)(5)(6) | |
Leslie H. Wexner | | | 2015 | | | $ | 1,985,385 | | | $ | 0 | | | $ | 13,005,048 | | | $ | 3,998,333 | | | $ | 6,749,600 | | | $ | 498,794 | | | $ | 930,940 | | | $ | 27,168,100 | |
Chairman of the Board, CEO | | | 2014 | | | | 1,924,000 | | | | 0 | | | | 11,174,435 | | | | 3,410,577 | | | | 6,342,273 | | | | 448,922 | | | | 793,829 | | | | 24,094,036 | |
| | | 2013 | | | | 1,924,000 | | | | 0 | | | | 7,509,032 | | | | 2,256,513 | | | | 2,839,670 | | | | 410,405 | | | | 936,302 | | | | 15,875,922 | |
| | | | | | | | | |
Sharen J. Turney | | | 2015 | | | | 1,488,846 | | | | 0 | | | | 5,618,477 | | | | 534,079 | | | | 4,714,800 | | | | 305,512 | | | | 670,568 | | | | 13,332,282 | |
CEO/President, Victoria’s Secret | | | 2014 | | | | 1,442,000 | | | | 0 | | | | 3,397,860 | | | | 675,438 | | | | 4,636,838 | | | | 267,668 | | | | 493,062 | | | | 10,912,866 | |
| | | 2013 | | | | 1,433,923 | | | | 0 | | | | 3,342,816 | | | | 775,527 | | | | 1,427,580 | | | | 235,835 | | | | 578,653 | | | | 7,794,334 | |
| | | | | | | | | |
Charles C. McGuigan | | | 2015 | | | | 1,197,788 | | | | 0 | | | | 4,060,166 | | | | 254,325 | | | | 2,876,250 | | | | 79,210 | | | | 391,404 | | | | 8,859,143 | |
Chief Operating Officer, CEO/President, Mast Global | | | 2014 | | | | 978,500 | | | | 0 | | | | 2,259,482 | | | | 261,901 | | | | 2,257,869 | | | | 66,695 | | | | 315,018 | | | | 6,139,465 | |
| | | 2013 | | | | 973,019 | | | | 0 | | | | 3,055,714 | | | | 300,715 | | | | 988,128 | | | | 57,036 | | | | 385,589 | | | | 5,760,201 | |
| | | | | | | | | |
Nicholas Coe | | | 2015 | | | | 985,577 | | | | 0 | | | | 3,178,121 | | | | 203,455 | | | | 3,200,000 | | | | 19,137 | | | | 346,684 | | | | 7,932,974 | |
CEO/President, Bath & Body Works | | | 2014 | | | | 925,000 | | | | 0 | | | | 2,075,856 | | | | 247,587 | | | | 2,373,735 | | | | 10,815 | | | | 274,511 | | | | 5,907,504 | |
| | | 2013 | | | | 905,769 | | | | 0 | | | | 5,309,728 | | | | 284,272 | | | | 1,230,639 | | | | 4,111 | | | | 227,160 | | | | 7,961,679 | |
| | | | | | | | | |
Stuart B. Burgdoerfer | | | 2015 | | | | 847,262 | | | | 0 | | | | 2,710,253 | | | | 173,503 | | | | 1,962,293 | | | | 49,375 | | | | 309,802 | | | | 6,052,487 | |
Executive Vice President, Chief Financial Officer | | | 2014 | | | | 824,000 | | | | 0 | | | | 1,849,186 | | | | 220,550 | | | | 1,833,458 | | | | 40,300 | | | | 262,535 | | | | 5,030,029 | |
| | | 2013 | | | | 819,385 | | | | 0 | | | | 1,091,541 | | | | 253,235 | | | | 800,104 | | | | 33,226 | | | | 295,408 | | | | 3,292,899 | |
Andrew M. Meslow
Chief Executive Officer
| | | 2020 | | | $1,183,462 | | | $0 | | | $12,330,555 | | | $0 | | | $4,489,428 | | | $146,274 | | | $345,220 | | | $18,494,939 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Stuart B. Burgdoerfer
Executive Vice President,
Chief Financial Officer,
Interim Chief Executive Officer, VS NewCo
| | | 2020 | | | 1,068,462 | | | 0 | | | 0 | | | 0 | | | 3,009,636 | | | 100,128 | | | 241,317 | | | 4,419,543 |
| | 2019 | | | 900,000 | | | 0 | | | 1,260,644 | | | 238,495 | | | 1,114,884 | | | 89,235 | | | 303,913 | | | 3,907,171 |
| | 2018 | | | 900,000 | | | 0 | | | 1,748,530 | | | 117,737 | | | 1,411,578 | | | 79,008 | | | 260,080 | | | 4,516,933 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
James L. Bersani
President, Real Estate
| | | 2020 | | | 763,077 | | | 250,000 | | | 0 | | | 0 | | | 1,594,880 | | | 197,626 | | | 191,420 | | | 2,997,003 |
| | 2019 | | | 794,231 | | | 0 | | | 1,120,586 | | | 211,995 | | | 770,784 | | | 180,374 | | | 233,514 | | | 3,311,484 |
| | 2018 | | | 766,923 | | | 0 | | | 1,775,448 | | | 98,009 | | | 923,523 | | | 164,461 | | | 202,717 | | | 3,931,081 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Julie B. Rosen
President, Bath & Body Works
| | | 2020 | | | 277,885 | | | 1,000,000 | | | 849,986 | | | 0 | | | 805,632 | | | 0 | | | 870 | | | 2,934,373 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Deon N. Riley
Chief Human Resources Officer,
L Brands and Bath & Body Works
| | | 2020 | | | 54,808 | | | 0 | | | 749,996 | | | 0 | | | 720,000 | | | 0 | | | 209 | | | 1,525,013 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Leslie H. Wexner
Former Chief Executive Officer,
Chairman Emeritus
| | | 2020 | | | 318,461 | | | 0 | | | 0 | | | 0 | | | 188,308 | | | 637,061 | | | 410,379 | | | 1,554,209 |
| | 2019 | | | 900,000 | | | 0 | | | 794,107 | | | 126,676 | | | 1,032,300 | | | 676,394 | | | 253,744 | | | 3,783,221 |
| | 2018 | | | 1,000,000 | | | 0 | | | 952,729 | | | 244,137 | | | 1,383,900 | | | 638,289 | | | 334,255 | | | 4,553,310 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charles C. McGuigan
Former Chief Operating Officer,
CEO/President, Mast Global
| | | 2020 | | | 575,000 | | | 0 | | | 0 | | | 0 | | | 3,332,160 | | | 156,266 | | | 1,073,439 | | | 5,136,865 |
| | 2019 | | | 1,300,000 | | | 0 | | | 1,820,925 | | | 344,496 | | | 1,610,388 | | | 139,555 | | | 428,769 | | | 5,644,133 |
| | 2018 | | | 1,300,000 | | | 0 | | | 2,059,168 | | | 169,926 | | | 2,038,946 | | | 123,879 | | | 369,008 | | | 6,060,927 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shelley M. Milano
Former Chief Human Resources Officer, L Brands
| | | 2020 | | | 709,615 | | | 0 | | | 0 | | | 0 | | | 1,666,080 | | | 28,321 | | | 1,886,198 | | | 4,290,214 |
| | 2019 | | | 900,000 | | | 0 | | | 1,260,644 | | | 238,495 | | | 805,194 | | | 18,876 | | | 191,411 | | | 3,414,620 |
| | 2018 | | | 849,846 | | | 0 | | | 1,357,942 | | | 114,894 | | | 996,408 | | | 8,979 | | | 133,123 | | | 3,461,192 |
(1)
| Performance-based incentive compensation bonuses are disclosed in this table underin the Non-Equity“Non-Equity Incentive Plan CompensationCompensation” column. NoneThe bonus paid to Ms. Rosen was paid as a hiring incentive in connection with her employment offer. The bonus paid to Mr. Bersani was in recognition of our NEOs received a nonperformance-based award in fiscal 2015. his extraordinary efforts leading the Real Estate team during the COVID-19 pandemic, generating significant occupancy savings for the Company. |
(2)
| The value of stock and option awards reflects the aggregate grant date fair value, excluding estimated forfeitures, computed in accordance with Accounting Standards Codification (“ASC”) Topic 718 Compensation—Stock Compensation, for each award. PSUs granted to Mr. Meslow in fiscal 2020 include a specified market condition which can adjust the number of shares which vest under the award. The market condition compares total stockholder return to that of a designated peer group over the performance period. The award was valued using a Monte Carlo simulation model, which requires certain assumptions, including the risk-free interest rate, expected volatility and the estimated dividend yield. Assuming maximum achievement of performance conditions, the value of Mr. Meslow’s PSUs at the grant date was $16,584,000. Stock options are valued using the Black-Scholes option pricing model. See Note 1819 to the Company’s financial statements filed in the Company’s 2015 Annual Report on Form2020 10-K for the related assumptions for stock options granted during fiscal 2015, 20142019 and 20132018 and for a discussion of our assumptions in determining the aggregate grant date fair value of these awards. Awards vest over time and, therefore, are not realizable on an annual basis, nor is the ultimate value determinable without reference to future performance. |
(3)
| Stock and option awards were granted to each NEO under the Company’s 2011 Stock Option2015 Plan and Performance Incentive Plan (the “2011 Plan”) and the 20152020 Plan. Awards are long termlong-term compensation and generally vest over three to five years and are not realizable on an annual basis. |
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(4)
| Represents the aggregate of the non-equity performance-based incentive compensation for the applicable fiscal Spring and Fall selling seasons. Incentive compensation targets are set based on a percentage of base salary and are paid seasonally based on the achievement of adjusted operating income results. The following table illustrates the amount of the compensation which is paid in cash and voluntarily deferred: |
| | | | | | | | | | | | |
| | | Paid in
Cash
($) | | | Deferred
Cash
($) | | | Total
($) | |
Mr. Wexner | | $ | 6,547,112 | | | $ | 202,488 | | | $ | 6,749,600 | |
Ms. Turney | | | 4,571,510 | | | | 143,290 | | | | 4,714,800 | |
Mr. McGuigan | | | 2,790,701 | | | | 85,549 | | | | 2,876,250 | |
Mr. Coe | | | 3,101,412 | | | | 98,588 | | | | 3,200,000 | |
Mr. Burgdoerfer | | | 1,898,854 | | | | 63,439 | | | | 1,962,293 | |
Mr. Meslow | | | $4,489,428 | | | $0 | | | $4,489,428 |
Mr. Burgdoerfer | | | 3,002,098 | | | 7,538 | | | 3,009,636 |
Mr. Bersani | | | 1,581,188 | | | 13,692 | | | 1,594,880 |
Ms. Rosen | | | 795,286 | | | 10,346 | | | 805,632 |
Ms. Riley | | | 709,154 | | | 10,846 | | | 720,000 |
Mr. Wexner | | | 188,308 | | | 0 | | | 188,308 |
Mr. McGuigan | | | 3,332,160 | | | 0 | | | 3,332,160 |
Ms. Milano | | | 1,666,080 | | | 0 | | | 1,666,080 |
(5)
| The Company does not sponsor a defined benefit retirement plan (tax-qualified or non-qualified). For fiscal 2015,2020, the amounts shown represent the amount by which earnings on each NEO’s non-qualified plan balance at an annual effective rate of 4.23% exceed 120% of the applicable federal long term rate. long-term rate at the time the rate was set in October 2019. |
(6)
| The following table details all other compensation paid to each NEO during our last fiscal year: |
| | | | | | | | | | | | | | | | | | | | |
| | | Financial
planning
services
provided
to
executive
($) | | | Life
insurance
premiums
and
related tax
paid on
executive’s
behalf
($) | | | Cash
payout of
fractional
shares due
to special
dividend
stock
award
adjustment
($) | | | Company
contributions to
the executive’s
qualified and
non-qualified
retirement plan
account
($) | | | Total
($) | |
Mr. Wexner | | $ | 0 | | | $ | 0 | | | $ | 805 | | | $ | 930,135 | | | $ | 930,940 | |
Ms. Turney | | | 9,500 | | | | 14,919 | | | | 607 | | | | 645,542 | | | | 670,568 | |
Mr. McGuigan | | | 3,410 | | | | 0 | | | | 718 | | | | 387,276 | | | | 391,404 | |
Mr. Coe | | | 0 | | | | 0 | | | | 380 | | | | 346,304 | | | | 346,684 | |
Mr. Burgdoerfer | | | 9,500 | | | | 0 | | | | 391 | | | | 299,911 | | | | 309,802 | |
Mr. Meslow | | | $0 | | | $2,598 | | | $342,622 | | | $0 | | | $0 | | | $0 | | | $0 | | | $345,220 |
Mr. Burgdoerfer | | | 0 | | | 2,664 | | | 238,653 | | | 0 | | | 0 | | | 0 | | | 0 | | | 241,317 |
Mr. Bersani | | | 4,739 | | | 2,145 | | | 184,536 | | | 0 | | | 0 | | | 0 | | | 0 | | | 191,420 |
Ms. Rosen | | | 0 | | | 870 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 870 |
Ms. Riley | | | 0 | | | 209 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 209 |
Mr. Wexner | | | 0 | | | 659 | | | 217,272 | | | 0 | | | 0 | | | 80,543 | | | 111,905 | | | 410,379 |
Mr. McGuigan | | | 945 | | | 1,076 | | | 346,418 | | | 725,000 | | | 0 | | | 0 | | | 0 | | | 1,073,439 |
Ms. Milano | | | 0 | | | 1,800 | | | 193,913 | | | 190,385 | | | 1,500,100 | | | 0 | | | 0 | | | 1,886,198 |
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Grants of Plan-Based Awards for Fiscal
20152020
The following table provides information relating to plan-based awards and opportunities granted to the NEOs during the fiscal year ended January 30,
2016. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Grant
Date | | | Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards(1) | | | Estimated Future Payouts
Under Equity Incentive Plan
Awards(2) | | All
Other
Stock
Awards:
Number
of
Shares of
Stock
or Units
(#)(3) | | | All
Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(4) | | | Exercise
or Base
Price of
Option
Awards
($/Sh) | | | Grant
Date Fair
Value of
Stock and
Option
Awards
($)(5) | |
| | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | Target
(#) | | | Maximum
(#) | | | | |
Leslie H. Wexner | | | 4/2/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 25,693 | | | $ | 93.41 | | | $ | 691,912 | |
| | | 4/2/2015 | | | | | | | | | | | | | | | | | | 25,693 | | | | | | | | | | | | | | | | | | 2,179,280 | |
| | | 1/27/2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 127,700 | | | | 93.97 | | | | 3,306,421 | |
| | | 1/27/2016 | | | | | | | | | | | | | | | | | | 127,700 | | | | | | | | | | | | | | | | | | 10,825,768 | |
| | | | | | $ | 880,000 | | | $ | 4,400,000 | | | $ | 8,800,000 | | | | | | | | | | | | | | | | | | | | | | | | | |
Sharen J. Turney | | | 4/2/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 42,153 | | | | 93.41 | | | | 534,079 | |
| | | 4/2/2015 | | | | | | | | | | | | | | | | | | 24,087 | | | | | | | | | | | | | | | | | | 2,043,059 | |
| | | 4/2/2015 | | | | | | | | | | | | | | | | | | 42,153 | | | | | | | | | | | | | | | | | | 3,575,417 | |
| | | | | | | 600,000 | | | | 3,000,000 | | | | 6,000,000 | | | | | | | | | | | | | | | | | | | | | | | | | |
Charles C. McGuigan | | | 3/9/2015 | | | | | | | | | | | | | | | | | | | | | | | | 1,032 | | | | | | | | | | | | 87,452 | |
| | | 4/2/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,073 | | | | 93.41 | | | | 254,325 | |
| | | 4/2/2015 | | | | | | | | | | | | | | | | | | 26,764 | | | | | | | | | | | | | | | | | | 2,270,122 | |
| | | 4/2/2015 | | | | | | | | | | | | | | | | | | 20,073 | | | | | | | | | | | | | | | | | | 1,702,592 | |
| | | | | | | 375,000 | | | | 1,875,000 | | | | 3,750,000 | | | | | | | | | | | | | | | | | | | | | | | | | |
Nicholas Coe | | | 4/2/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 16,058 | | | | 93.41 | | | | 203,455 | |
| | | 4/2/2015 | | | | | | | | | | | | | | | | | | 21,411 | | | | | | | | | | | | | | | | | | 1,816,081 | |
| | | 4/2/2015 | | | | | | | | | | | | | | | | | | 16,058 | | | | | | | | | | | | | | | | | | 1,362,040 | |
| | | | | | | 320,000 | | | | 1,600,000 | | | | 3,200,000 | | | | | | | | | | | | | | | | | | | | | | | | | |
Stuart B. Burgdoerfer | | | 4/2/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,694 | | | | 93.41 | | | | 173,503 | |
| | | 4/2/2015 | | | | | | | | | | | | | | | | | | 18,259 | | | | | | | | | | | | | | | | | | 1,548,728 | |
| | | 4/2/2015 | | | | | | | | | | | | | | | | | | 13,694 | | | | | | | | | | | | | | | | | | 1,161,525 | |
| | | | | | | 255,840 | | | | 1,279,200 | | | | 2,558,400 | | | | | | | | | | | | | | | | | | | | | | | | | |
Andrew M. Meslow | | | 2/20/2020 | | | | | | | | | | | | | | | | | | | | | 64,048 | | | | | | | | | $1,274,555 |
| | | 5/14/2020 | | | | | | | | | | | | 500,000 | | | 1,000,000 | | | 1,500,000 | | | | | | | | | | | | 11,056,000 |
| | | | | | $460,962 | | | $2,304,808 | | | $4,609,616 | | | | | | | | | | | | | | | | | | | | | |
Stuart B. Burgdoerfer | | | | | | 410,400 | | | 2,052,000 | | | 4,104,000 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
James L. Bersani | | | | | | 224,000 | | | 1,120,000 | | | 2,240,000 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Julie B. Rosen | | | 9/8/2020 | | | | | | | | | | | | | | | | | | | | | 26,958 | | | | | | | | | 849,986 |
| | | | | | 195,500 | | | 977,500 | | | 1,955,000 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deon N. Riley | | | 12/29/2020 | | | | | | | | | | | | | | | | | | | | | 19,952 | | | | | | | | | 749,996 |
| | | | | | 120,000 | | | 600,000 | | | 1,200,000 | | | | | | | | | | | | | | | | | | | | | |
Leslie H. Wexner | | | | | | 750,000 | | | 1,500,000 | | | 3,000,000 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charles C. McGuigan | | | | | | 468,000 | | | 2,340,000 | | | 4,680,000 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shelley M. Milano | | | | | | 234,000 | | | 1,170,000 | | | 2,340,000 | | | | | | | | | | | | | | | | | | | | | |
(1)
| Non-Equity Incentive Plan Awards represent the Threshold, Target and Maximum opportunities under the 2015 ICPP for the 2015fiscal 2020 Spring and Fall seasons. The actual amount earned under this plan is disclosed in the 20152020 Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column. |
(2)
| Equity Incentive Plan Awards representwere granted pursuant to the Target payment2020 Plan. Awards granted to Mr. Meslow will vest at the end of performance-based RSUs for fiscal 2015. No amount is disclosed for Threshold and Maximum sincethe three-year performance period, with the number of performance-based RSUs earned does not fluctuateshares to be awarded determined based on performance. Units are earned at target, or not at all. the Company’s achievement of (i) revenue growth during the three year performance period relative to peers and (ii) cumulative operating income as a percentage of cumulative sales, in each case as set forth under the heading —Compensation for NEOs—“Long-Term Equity Compensation.” |
Stock Awards granted on April 2, 2015 are subject to the Company’s achievement of operating income as a percentage of sales ranking in the top one third of the S&P Retailing Index in each of fiscal 2015, 2016, 2017, 2018 and 2019, determined on a cumulative basis. Stock Awards granted to Mr. Wexner on January 27, 2016 are subject to the Company’s achievement of operating income as a percentage of sales ranking in the top one third of the S&P Retailing Index in each of fiscal 2016, 2017, 2018, 2019 and 2020, determined on a cumulative basis. If the performance condition is met, the RSUs will vest 20% on the second and third anniversaries of the grant date and 30% on the fourth and fifth anniversaries of the grant date, subject to continued employment.
(3)
| All Other Stock Awards were granted pursuant to the Company’s amended2015 Plan for grant dates prior to May 14, 2020 and restated 2011 Plan and 2015 Plan. |
The Stock Award granted on March 9, 2015 to Mr. McGuigan was made in connection with his election to receive a portion of his cash-based incentive compensation bonus in shares of Common Stock. This award was made based on the Fall 2014 bonus paid on March 9, 2015. This award vests 100% three years from the grant date, dependent on Mr. McGuigan retaining the stock paid in lieu of cash. This program was eliminated in 2015.
In each case, the vesting of these awards is subject to continued employment.
Dividends are not paid or accrued on stock awards or stock units until such shares vest.
(4) | Option Awards were granted pursuant to the Company’s amended and restated 20112020 Plan and 2015 Plan. Optionfor grant dates from May 14, 2020 on. Grant dates were established on the date the grants were approved by the Compensation Committee and the exercise price is the closing price of Common StockHCC Committee. Awards vest 100% on the third anniversary of the grant, date.
subject to continued employment. |
Option Awards vest 20% on the second and third anniversaries of the grant date and 30% on the fourth and fifth anniversaries of the grant date.
In each case, the vesting of these awards is subject to continued employment.
(5)(4)
| The value of stock and option awards reflects the grant date fair value under ASC Topic 718 Compensation—Stock Compensation for each award. Options are valued using the Black-Scholes option pricing model with the following weighted average assumptions as set forth in the Company’s financial statements filed in the Company’s 2015 Annual Report on Form 10-K: dividend yield of 2.7%, volatility of 26%, risk free interest rate of 1.1%RSUs and expected life of 4.5 years. RSUsPSUs are valued based on the fair market value of a share of Common Stock on the date of grant, adjusted for anticipated dividend yields. |
TABLE OF CONTENTS
Outstanding Equity Awards at Fiscal Year-End for Fiscal
20152020
The following table provides information relating to outstanding equity awards granted to the NEOs as of fiscal year end, January 30, 2016.2021.
Andrew M. Meslow | | | 3/29/2013 | | | 6,707 | | | 0 | | | 0 | | | 41.88 | | | 3/29/2023 | | | | | | | | | | | | | | | |
| | | 3/31/2014 | | | 7,117 | | | 0 | | | 0 | | | 54.21 | | | 3/31/2024 | | | | | | | | | | | | | | | |
| | | 4/02/2015 | | | 5,757 | | | 0 | | | 0 | | | 91.17 | | | 4/02/2025 | | | | | | | | | | | | | | | |
| | | 3/31/2016 | | | 5,978 | | | 2,563(1) | | | 0 | | | 87.81 | | | 3/31/2026 | | | | | | | | | | | | | | | |
| | | 3/31/2017 | | | 4,936 | | | 7,405(2) | | | 0 | | | 47.10 | | | 3/31/2027 | | | | | | | | | | | | | | | |
| | | 3/21/2018 | | | 10,174 | | | 5,087(3) | | | 0 | | | 39.42 | | | 3/21/2028 | | | | | | | | | | | | | | | |
| | | 3/28/2019 | | | 11,408 | | | 22,817(4) | | | 0 | | | 27.94 | | | 3/28/2029 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 7,688(6) | | | 313,363 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 22,215(7) | | | 905,483 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 34,287(8) | | | 1,397,538 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 61,068(9) | | | 2,489,132 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 2/20/2020 | | | 64,048(10) | | | 2,610,596 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 5/14/2020 | | | 0 | | | 0 | | | 1,000,000(11) | | | 40,760,000 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stuart B. Burgdoerfer | | | 3/31/2011 | | | 12,773 | | | 0 | | | 0 | | | 26.43 | | | 3/31/2021 | | | | | | | | | | | | | | | |
| | | 3/30/2012 | | | 17,329 | | | 0 | | | 0 | | | 41.54 | | | 3/30/2022 | | | | | | | | | | | | | | | |
| | | 3/29/2013 | | | 23,611 | | | 0 | | | 0 | | | 41.88 | | | 3/29/2023 | | | | | | | | | | | | | | | |
| | | 3/31/2014 | | | 22,797 | | | 0 | | | 0 | | | 54.21 | | | 3/31/2024 | | | | | | | | | | | | | | | |
| | | 4/02/2015 | | | 14,030 | | | 0 | | | 0 | | | 91.17 | | | 4/02/2025 | | | | | | | | | | | | | | | |
| | | 3/31/2016 | | | 5,978 | | | 2,563(1) | | | 0 | | | 87.81 | | | 3/31/2026 | | | | | | | | | | | | | | | |
| | | 3/31/2017 | | | 5,732 | | | 8,599(2) | | | 0 | | | 47.10 | | | 3/31/2027 | | | | | | | | | | | | | | | |
| | | 3/21/2018 | | | 3,519 | | | 14,080(5) | | | 0 | | | 39.42 | | | 3/21/2028 | | | | | | | | | | | | | | | |
| | | 3/28/2019 | | | 12,884 | | | 25,770(4) | | | 0 | | | 27.94 | | | 3/28/2029 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 0 | | | 0 | | | 9,396(12) | | | 382,981 |
| | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 0 | | | 0 | | | 25,160(13) | | | 1,025,522 |
| | | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 0 | | | 0 | | | 14,079(14) | | | 573,860 |
| | | | | | | | | | | | | | | | | | | | | 4/25/2018 | | | 0 | | | 0 | | | 35,533(15) | | | 1,448,325 |
| | | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 19,327(9) | | | 787,769 | | | 32,212(16) | | | 1,312,961 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
James L. Bersani | | | 3/30/2012 | | | 11,279 | | | 0 | | | 0 | | | 41.54 | | | 3/30/2022 | | | | | | | | | | | | | | | |
| | | 3/29/2013 | | | 11,638 | | | 0 | | | 0 | | | 41.88 | | | 3/29/2023 | | | | | | | | | | | | | | | |
| | | 3/31/2014 | | | 9,260 | | | 0 | | | 0 | | | 54.21 | | | 3/31/2024 | | | | | | | | | | | | | | | |
| | | 4/02/2015 | | | 5,757 | | | 0 | | | 0 | | | 91.17 | | | 4/02/2025 | | | | | | | | | | | | | | | |
| | | 3/31/2016 | | | 5,978 | | | 2,563(1) | | | 0 | | | 87.81 | | | 3/31/2026 | | | | | | | | | | | | | | | |
| | | 3/31/2017 | | | 4,777 | | | 7,166(2) | | | 0 | | | 47.10 | | | 3/31/2027 | | | | | | | | | | | | | | | |
| | | 3/21/2018 | | | 2,930 | | | 11,720(5) | | | 0 | | | 39.42 | | | 3/21/2028 | | | | | | | | | | | | | | | |
| | | 3/28/2019 | | | 11,453 | | | 22,906(4) | | | 0 | | | 27.94 | | | 3/28/2029 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 5,040(17) | | | 205,430 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 21,496(18) | | | 876,177 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 11,720(19) | | | 477,707 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 4/25/2018 | | | 39,030(20) | | | 1,590,863 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 17,180(9) | | | 700,257 | | | 28,633(16) | | | 1,167,081 |
TABLE OF CONTENTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Restricted Stock Awards | |
Name | | Grant
Date | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) | | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Grant
Date | | | Number
of Shares
or Units
of Stock
That
Have
Not
Vested
(#) | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(24) | | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) | | | Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(26) | |
Leslie H. Wexner | | | 3/31/2006 | | | | 113,998 | | | | 0 | | | | 0 | | | | 17.70 | | | | 3/31/2016 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/30/2007 | | | | 147,163 | | | | 0 | | | | 0 | | | | 18.86 | | | | 3/30/2017 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2008 | | | | 233,214 | | | | 0 | | | | 0 | | | | 12.37 | | | | 3/31/2018 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2009 | | | | 375,334 | | | | 0 | | | | 0 | | | | 6.30 | | | | 3/31/2019 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2010 | | | | 124,575 | | | | 0 | | | | 0 | | | | 18.53 | | | | 3/31/2020 | | | | | | | | | | | | | | | | | | | | | |
| | | 1/27/2011 | | | | 297,896 | | | | 0 | | | | 0 | | | | 24.22 | | | | 1/27/2021 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2011 | | | | 85,264 | | | | 0 | | | | 0 | | | | 27.08 | | | | 3/31/2021 | | | | | | | | | | | | | | | | | | | | | |
| | | 1/26/2012 | | | | 138,031 | | | | 59,158 | (1) | | | 0 | | | | 36.59 | | | | 1/26/2022 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/30/2012 | | | | 21,693 | | | | 32,545 | (2) | | | 0 | | | | 42.57 | | | | 3/30/2022 | | | | | | | | | | | | | | | | | | | | | |
| | | 1/31/2013 | | | | 31,535 | | | | 126,146 | (3) | | | 0 | | | | 46.14 | | | | 1/31/2023 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/29/2013 | | | | 10,760 | | | | 43,046 | (4) | | | 0 | | | | 42.91 | | | | 3/29/2023 | | | | | | | | | | | | | | | | | | | | | |
| | | 1/30/2014 | | | | 24,241 | | | | 96,969 | (5) | | | 0 | | | | 50.60 | | | | 1/30/2024 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2014 | | | | 0 | | | | 41,563 | (6) | | | 0 | | | | 55.55 | | | | 3/31/2024 | | | | | | | | | | | | | | | | | | | | | |
| | | 1/28/2015 | | | | 0 | | | | 121,549 | (7) | | | 0 | | | | 83.10 | | | | 1/28/2025 | | | | | | | | | | | | | | | | | | | | | |
| | | 4/2/2015 | | | | 0 | | | | 25,693 | (8) | | | 0 | | | | 93.41 | | | | 4/2/2025 | | | | | | | | | | | | | | | | | | | | | |
| | | 1/27/2016 | | | | 0 | | | | 127,700 | (9) | | | 0 | | | | 93.97 | | | | 1/27/2026 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 1/26/2012 | | | | 0 | | | | 0 | | | | 118,315 | (10) | | | 11,375,987 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | | 0 | | | | 0 | | | | 32,545 | (11) | | | 3,129,202 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 1/31/2013 | | | | 0 | | | | 0 | | | | 126,146 | (12) | | | 12,128,938 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | | 0 | | | | 0 | | | | 43,046 | (13) | | | 4,138,873 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 1/30/2014 | | | | 0 | | | | 0 | | | | 121,210 | (14) | | | 11,654,342 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | | 0 | | | | 0 | | | | 41,563 | (15) | | | 3,996,282 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 1/28/2015 | | | | 0 | | | | 0 | | | | 121,549 | (16) | | | 11,686,936 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 4/2/2015 | | | | 0 | | | | 0 | | | | 25,693 | (17) | | | 2,470,382 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 1/27/2016 | | | | 0 | | | | 0 | | | | 127,700 | (18) | | | 12,278,355 | |
Sharen J. Turney | | | 3/31/2009 | | | | 3 | | | | 0 | | | | 0 | | | | 6.30 | | | | 3/31/2019 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2010 | | | | 5,392 | | | | 0 | | | | 0 | | | | 18.53 | | | | 3/31/2020 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2011 | | | | 7,380 | | | | 37,811 | (19) | | | 0 | | | | 27.08 | | | | 3/31/2021 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/30/2012 | | | | 0 | | | | 51,800 | (2) | | | 0 | | | | 42.57 | | | | 3/30/2022 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/29/2013 | | | | 0 | | | | 70,573 | (4) | | | 0 | | | | 42.91 | | | | 3/29/2023 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2014 | | | | 0 | | | | 68,143 | (6) | | | 0 | | | | 55.55 | | | | 3/31/2024 | | | | | | | | | | | | | | | | | | | | | |
| | | 4/2/2015 | | | | 0 | | | | 42,153 | (8) | | | 0 | | | | 93.41 | | | | 4/2/2025 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2011 | | | | 37,810 | (20) | | | 3,635,432 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | | 0 | | | | 0 | | | | 51,802 | (11) | | | 4,980,762 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | | 0 | | | | 0 | | | | 253,724 | (11) | | | 24,395,563 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | | 0 | | | | 0 | | | | 70,573 | (13) | | | 6,785,594 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | | 0 | | | | 0 | | | | 68,143 | (15) | | | 6,551,949 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 4/2/2015 | | | | 0 | | | | 0 | | | | 42,153 | (17) | | | 4,053,011 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 4/2/2015 | | | | 0 | | | | 0 | | | | 24,087 | (17) | | | 2,315,965 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Restricted Stock Awards | |
Name | | Grant
Date | | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) | | | Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Grant
Date | | | Number
of Shares
or Units
of Stock
That
Have
Not
Vested
(#) | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(24) | | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) | | | Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(26) | |
Charles C. McGuigan | | | 3/31/2011 | | | | 0 | | | | 22,440 | (19) | | | 0 | | | | 27.08 | | | | 3/31/2021 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/30/2012 | | | | 0 | | | | 20,087 | (2) | | | 0 | | | | 42.57 | | | | 3/30/2022 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/29/2013 | | | | 0 | | | | 27,365 | (4) | | | 0 | | | | 42.91 | | | | 3/29/2023 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2014 | | | | 0 | | | | 26,422 | (6) | | | 0 | | | | 55.55 | | | | 3/31/2024 | | | | | | | | | | | | | | | | | | | | | |
| | | 4/2/2015 | | | | 0 | | | | 20,073 | (8) | | | 0 | | | | 93.41 | | | | 4/2/2025 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2011 | | | | 22,437 | (20) | | | 2,157,318 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | | 0 | | | | 0 | | | | 20,086 | (11) | | | 1,931,269 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | | 0 | | | | 0 | | | | 46,869 | (11) | | | 4,506,454 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | | 0 | | | | 0 | | | | 27,365 | (13) | | | 2,631,145 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | | 0 | | | | 0 | | | | 36,486 | (13) | | | 3,508,129 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 8/30/2013 | | | | 609 | (21) | | | 58,555 | | | | 0 | | | | 0 | �� |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/10/2014 | | | | 463 | (22) | | | 44,517 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | | 0 | | | | 0 | | | | 26,422 | (15) | | | 2,540,475 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | | 0 | | | | 0 | | | | 17,615 | (15) | | | 1,693,682 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 8/29/2014 | | | | 680 | (23) | | | 65,382 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/9/2015 | | | | 1,032 | (24) | | | 99,227 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 4/2/2015 | | | | 0 | | | | 0 | | | | 20,073 | (17) | | | 1,930,019 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 4/2/2015 | | | | 0 | | | | 0 | | | | 26,764 | (17) | | | 2,573,359 | |
Nicholas Coe | | | 3/30/2012 | | | | 5,809 | | | | 8,724 | (2) | | | 0 | | | | 42.57 | | | | 3/30/2022 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/29/2013 | | | | 6,466 | | | | 25,868 | (4) | | | 0 | | | | 42.91 | | | | 3/29/2023 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2014 | | | | 0 | | | | 24,977 | (6) | | | 0 | | | | 55.55 | | | | 3/31/2024 | | | | | | | | | | | | | | | | | | | | | |
| | | 4/2/2015 | | | | 0 | | | | 16,058 | (8) | | | 0 | | | | 93.41 | | | | 4/2/2025 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 7/4/2011 | | | | 9,109 | (25) | | | 875,830 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | | 0 | | | | 0 | | | | 8,722 | (11) | | | 838,620 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | | 0 | | | | 0 | | | | 23,257 | (11) | | | 2,236,161 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | | 0 | | | | 0 | | | | 25,869 | (13) | | | 2,487,304 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | | 0 | | | | 0 | | | | 86,228 | (13) | | | 8,290,822 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | | 0 | | | | 0 | | | | 24,978 | (15) | | | 2,401,635 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | | 0 | | | | 0 | | | | 16,652 | (15) | | | 1,601,090 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 4/2/2015 | | | | 0 | | | | 0 | | | | 16,058 | (17) | | | 1,543,977 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 4/2/2015 | | | | 0 | | | | 0 | | | | 21,411 | (17) | | | 2,058,668 | |
Stuart B. Burgdoerfer | | | 3/31/2011 | | | | 0 | | | | 12,468 | (19) | | | 0 | | | | 27.08 | | | | 3/31/2021 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/30/2012 | | | | 0 | | | | 16,914 | (2) | | | 0 | | | | 42.57 | | | | 3/30/2022 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/29/2013 | | | | 0 | | | | 23,045 | (4) | | | 0 | | | | 42.91 | | | | 3/29/2023 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/31/2014 | | | | 0 | | | | 22,250 | (6) | | | 0 | | | | 55.55 | | | | 3/31/2024 | | | | | | | | | | | | | | | | | | | | | |
| | | 4/2/2015 | | | | 0 | | | | 13,694 | (8) | | | 0 | | | | 93.41 | | | | 4/2/2025 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2011 | | | | 12,464 | (20) | | | 1,198,414 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | | 0 | | | | 0 | | | | 16,915 | (11) | | | 1,626,377 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/30/2012 | | | | 0 | | | | 0 | | | | 31,011 | (11) | | | 2,981,708 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/29/2013 | | | | 0 | | | | 0 | | | | 23,046 | (13) | | | 2,215,873 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | | 0 | | | | 0 | | | | 22,250 | (15) | | | 2,139,338 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 3/31/2014 | | | | 0 | | | | 0 | | | | 14,834 | (15) | | | 1,426,289 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 4/2/2015 | | | | 0 | | | | 0 | | | | 13,694 | (17) | | | 1,316,678 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 4/2/2015 | | | | 0 | | | | 0 | | | | 18,259 | (17) | | | 1,755,603 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Julie B. Rosen | | | | | | | | | | | | | | | | | | | | | 9/28/2020 | | | 26,958(21) | | | 1,098,808 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deon N. Riley | | | | | | | | | | | | | | | | | | | | | 12/29/2020 | | | 19,952(22) | | | 813,244 | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Leslie H. Wexner | | | 1/31/2013 | | | 161,559 | | | 0 | | | 0 | | | 45.03 | | | 5/14/2021 | | | | | | | | | | | | | | | |
| | | 3/29/2013 | | | 55,129 | | | 0 | | | 0 | | | 41.88 | | | 5/14/2021 | | | | | | | | | | | | | | | |
| | | 1/30/2014 | | | 124,191 | | | 0 | | | 0 | | | 49.38 | | | 5/14/2021 | | | | | | | | | | | | | | | |
| | | 3/31/2014 | | | 42,585 | | | 0 | | | 0 | | | 54.21 | | | 5/14/2021 | | | | | | | | | | | | | | | |
| | | 1/28/2015 | | | 124,539 | | | 0 | | | 0 | | | 81.11 | | | 5/14/2021 | | | | | | | | | | | | | | | |
| | | 4/02/2015 | | | 26,325 | | | 0 | | | 0 | | | 91.17 | | | 5/14/2021 | | | | | | | | | | | | | | | |
| | | 1/27/2016 | | | 91,588 | | | 0 | | | 0 | | | 91.71 | | | 5/14/2021 | | | | | | | | | | | | | | | |
| | | 3/31/2016 | | | 19,132 | | | 0 | | | 0 | | | 87.81 | | | 5/14/2021 | | | | | | | | | | | | | | | |
| | | 1/25/2017 | | | 37,834 | | | 0 | | | 0 | | | 61.85 | | | 5/14/2021 | | | | | | | | | | | | | | | |
| | | 3/31/2017 | | | 9,554 | | | 0 | | | 0 | | | 47.10 | | | 5/14/2021 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 1/27/2016 | | | 0 | | | 0 | | | 19,627(23) | | | 799,997 |
| | | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 0 | | | 0 | | | 3,189(24) | | | 129,984 |
| | | | | | | | | | | | | | | | | | | | | 1/25/2017 | | | 0 | | | 0 | | | 23,646(25) | | | 963,811 |
| | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 0 | | | 0 | | | 5,175(24) | | | 210,933 |
| | | | | | | | | | | | | | | | | | | | | 1/30/2019 | | | 0 | | | 0 | | | 10,224(26) | | | 416,730 |
| | | | | | | | | | | | | | | | | | | | | 1/29/2020 | | | 0 | | | 0 | | | 2,100(27) | | | 85,596 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charles C. McGuigan | | | 3/31/2014 | | | 27,071 | | | 0 | | | 0 | | | 54.21 | | | 7/4/2021 | | | | | | | | | | | | | | | |
| | | 4/02/2015 | | | 20,566 | | | 0 | | | 0 | | | 91.17 | | | 7/4/2021 | | | | | | | | | | | | | | | |
| | | 3/31/2016 | | | 7,772 | | | 0 | | | 0 | | | 87.81 | | | 7/4/2021 | | | | | | | | | | | | | | | |
| | | 3/31/2017 | | | 8,280 | | | 0 | | | 0 | | | 47.10 | | | 7/4/2021 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 3/31/2016 | | | 0 | | | 0 | | | 6,106(12) | | | 248,881 |
| | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 0 | | | 0 | | | 15,791(13) | | | 643,641 |
| | | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 0 | | | 0 | | | 6,350(28) | | | 258,826 |
| | | | | | | | | | | | | | | | | | | | | 4/25/2018 | | | 0 | | | 0 | | | 10,956(29) | | | 446,567 |
| | | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 775(9) | | | 31,589 | | | 19,387(30) | | | 790,214 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shelley M. Milano | | | 3/31/2016 | | | 5,381 | | | 0 | | | 0 | | | 87.81 | | | 11/7/2021 | | | | | | | | | | | | | | | |
| | | 3/31/2017 | | | 4,213 | | | 0 | | | 0 | | | 47.10 | | | 11/7/2021 | | | | | | | | | | | | | | | |
| | | 3/21/2018 | | | 2,759 | | | 0 | | | 0 | | | 39.42 | | | 11/7/2021 | | | | | | | | | | | | | | | |
| | | 5/16/2018 | | | 767 | | | 0 | | | 0 | | | 34.19 | | | 11/7/2021 | | | | | | | | | | | | | | | |
| | | 3/28/2019 | | | 12,884 | | | 0 | | | 0 | | | 27.94 | | | 11/7/2021 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 3/31/2017 | | | 7,783 | | | 317,235(31) | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 3/21/2018 | | | 4,369 | | | 178,080(32) | | | 0 | | | 0 |
| | | | | | | | | | | | | | | | | | | | | 5/16/2018 | | | 0 | | | 0 | | | 10,203(33) | | | 415,874 |
| | | | | | | | | | | | | | | | | | | | | 3/28/2019 | | | 10,200(9) | | | 415,752 | | | 17,001(16) | | | 692,961 |
(1)
| Options vestvested 100% on January 26, 2017. March 31, 2021. |
(2)
| Options vested 50% on March 31, 2021 and vest 50% on March 30, 2016 and31, 2022. |
(3)
| Options vested 100% on March 21, 2021. |
(4)
| Options vested 50% on March 30, 2017.28, 2021 and vest 50% on March 28, 2022. |
(3)(5)
| Options vest 25% on January 31, 2016, 37.5% on January 31, 2017 and 37.5% on January 31, 2018. |
(4) | Options vestvested 25% on March 29, 2016,21, 2021, vest 37.5% on March 29, 201721, 2022 and vest 37.5% on March 29, 2018.
21, 2023. |
TABLE OF CONTENTS
(5) | Options vest 25% on January 30, 2017, 37.5% on January 30, 2018 and 37.5% on January 30, 2019.
|
(6)
| Options vest 20%Shares vested 100% on March 31, 2016, 20%2021.
|
(7)
| Shares vested 50% on March 31, 2017, 30%2021 and vest 50% on March 31, 2018 and 30%2022. |
(8)
| Shares vested 100% on March 31, 2019.21, 2021. |
(7) | Options vest 20% on January 28, 2017, 20% on January 28, 2018, 30% on January 28, 2019 and 30% on January 28, 2020.
|
(8) | Options vest 20% on April 2, 2017, 20% on April 2, 2018, 30% on April 2, 2019 and 30% on April 2, 2020.
|
(9)
| OptionsShares vest 20%100% on January 27, 2018, 20% on January 27, 2019, 30% on January 27, 2020 and 30% on January 27, 2021.
March 28, 2022. |
(10)
| 50% vestedShares vest 100% on January 26, 2016, subject to achievement of a performance condition. Remaining shares vest on January 26, 2017, also subject to achievement of a performance condition.
February 20, 2023. |
(11)
| Subject to achievement of a performance condition, shares vest 40% on May 14, 2023, 30% on May 14, 2024 and 30% on May 14, 2025. |
(12)
| Subject to achievement of a performance condition, 100% of these shares vested on March 31, 2021. |
(13)
| Subject to achievement of a performance condition, shares vested 50% on March 30, 201631, 2021 and vest 50% on March 30, 2017.31, 2022. |
(12)(14)
| Subject to achievement of a performance condition, shares vested 25% on March 21, 2021, vest 37.5% on March 21, 2022 and vest 37.5% on March 21, 2023. |
(15)
| Subject to achievement of a performance condition, shares vest 25% on January 31, 2016,April 25, 2021, 37.5% on January 31, 2017April 25, 2022 and 37.5% on January 31, 2018.April 25, 2023. |
(13)(16)
| Subject to achievement of a performance condition, 100% of these shares vest on March 28, 2022. |
(17)
| Shares vested on March 31, 2021. |
(18)
| Shares vested 50% on March 31, 2021 and vest 50% on March 31, 2022. |
(19)
| Shares vested 25% on March 21, 2021, vest 37.5% on March 21, 2022 and vest 37.5% on March 21, 2023. |
(20)
| Shares vest 25% on March 29, 2016,April 25, 2021, 37.5% on March 29, 2017April 25, 2022 and 37.5% on MarchApril 25, 2023. |
(21)
| Shares vest 100% on September 28, 2023. |
(22)
| Shares vest 50% on December 29, 2018.2021 and 50% on December 29, 2022. |
(14)(23)
| 20%The time-based vesting conditions for 100% of these shares vested on January 30, 2016,27, 2021. However, the performance-based vesting restrictions are still subject to review and approval by our HCC Committee.
|
(24)
| Subject to achievement of a performance condition.condition, 100% of these shares vested on March 31, 2021. |
(25)
| The time-based vesting conditions for 100% of these shares vested on January 25, 2021. However, the performance-based vesting restrictions are still subject to review and approval by our HCC Committee. |
(26)
| The time-based vesting conditions for 80% of these shares vested on January 30, 2021. However, the performance-based vesting restrictions are still subject to review and approval by our HCC Committee. Remaining shares vest 20%100% on January 30, 2017, 30% on January 30, 20182022 and 30% on January 30, 2019,are also subject to achievement of a performance condition. |
(15)(27)
| Subject to achievement of a performance condition, 100% of these shares vest 20% on March 31, 2016, 20% on March 31, 2017, 30% on March 31, 2018 and 30% on March 31, 2019. January 29, 2023. |
(16)(28)
| Subject to achievement of a performance condition, 80% of these shares vestvested on March 30, 2021 and 20% on January 28, 2017, 20% on January 28, 2018, 30% on January 28, 2019 and 30% on January 28, 2020. March 21, 2022. |
(17)(29)
| Subject to achievement of a performance condition, 85.72% of these shares vest 20% on April 2, 2017, 20%25, 2021 and 14.28% on April 2, 2018, 30% on April 2, 2019 and 30% on April 2, 2020. 25, 2022. |
(18)(30)
| Subject to achievement of a performance condition, 100% of these shares vest 20% on January 27, 2018, 20% on January 27, 2019, 30% on January 27, 2020 and 30% on January 27, 2021. March 28, 2023. |
(19)(31)
| Options vest 100%Shares vested 94.74% on March 31, 2016.
|
(20) | Shares vest 100%2021 and 5.26% on March 31, 2016.
2022. |
(21)(32)
| Shares vest 100% on August 30, 2016. |
(22) | Shares vest 100%vested 63.15% on March 10, 2017.
|
(23) | Shares vest 100% on August 29, 2017.
|
(24) | Shares vest 100%21, 2021 and 36.85% on March 9, 2018.
21, 2022. |
(25)(33)
| Shares vest 100% on July 4, 2016.
|
(26) | Market value based on the $96.15 fair market valueSubject to achievement of a shareperformance condition, 70.59% of Common Stockthese shares vest on the last trading day of the fiscal year (January 29, 2016).
May 16, 2021 and 29.41% on May 16, 2022. |
TABLE OF CONTENTS
Option Exercises and Stock Vested Information for Fiscal
20152020
The following table provides information relating to
Option Awardsoption awards exercised and RSU
Awardsawards vested during the fiscal year ended January 30,
2016. | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Restricted Stock Awards | |
Name | | Number of
Shares
Acquired on
Exercise (#) | | | Value
Realized on
Exercise ($)(1) | | | Number of
Shares
Acquired on
Vesting (#) | | | Value
Realized on
Vesting ($)(2) | |
Leslie H. Wexner | | | 0 | | | $ | 0 | | | | 181,946 | | | $ | 16,609,564 | |
Sharen J. Turney | | | 107,801 | | | | 6,507,999 | | | | 433,657 | | | | 40,221,597 | |
Charles C. McGuigan | | | 35,967 | | | | 2,189,285 | | | | 62,118 | | | | 5,640,529 | |
Nicholas Coe | | | 0 | | | | 0 | | | | 47,791 | | | | 4,217,749 | |
Stuart B. Burgdoerfer | | | 37,801 | | | | 2,023,187 | | | | 34,199 | | | | 3,103,125 | |
Andrew M. Meslow | | | 0 | | | $0 | | | 21,427 | | | $238,762 |
Stuart B. Burgdoerfer | | | 0 | | | 0 | | | 27,606 | | | 292,624 |
James L. Bersani | | | 28,373 | | | 101,411 | | | 28,925 | | | 311,275 |
Julie B. Rosen | | | 0 | | | 0 | | | 0 | | | 0 |
Deon N. Riley | | | 0 | | | 0 | | | 0 | | | 0 |
Leslie H. Wexner | | | 0 | | | 0 | | | 117,668 | | | 1,277,193 |
Charles C. McGuigan | | | 95,299 | | | 1,042,992 | | | 50,104 | | | 854,967 |
Shelley M. Milano | | | 0 | | | 0 | | | 7,674 | | | 83,802 |
(1)
| Option Award Value Realized is calculated based on the difference between (a) the sale price and the option exercise price for shares that were sold upon exercise and (b) the closing price on the day prior to the date of exercise and the option exercise price for shares that were held upon exercise. price. |
(2)
| Restricted Stock Award Value Realized is calculated based on the closing stock price on the date the RSUs vested. |
TABLE OF CONTENTS
Retirement and Other Post-Employment Benefits
Non-qualified Deferred Compensation for Fiscal
20152020(1) | | | | | | | | | | | | | | | | | | | | |
Name | | Executive
Contributions
in Last Fiscal
Year ($)(2) | | | Registrant
Contributions
in Last Fiscal
Year ($)(3) | | | Aggregate
Earnings in
Last Fiscal
Year ($)(4) | | | Aggregate
Withdrawals/
Distributions
($)(5) | | | Aggregate
Balance at
Last Fiscal
Year End
($)(6) | |
Leslie H. Wexner | | $ | 257,846 | | | $ | 914,015 | | | $ | 1,364,202 | | | $ | 0 | | | $ | 26,707,109 | |
Sharen J. Turney | | | 474,607 | | | | 618,822 | | | | 1,162,088 | | | | 0 | | | | 24,629,989 | |
Charles C. McGuigan | | | 106,120 | | | | 360,556 | | | | 216,640 | | | | 0 | | | | 4,354,411 | |
Nicholas Coe | | | 109,794 | | | | 323,614 | | | | 52,340 | | | | 0 | | | | 1,181,160 | |
Stuart B. Burgdoerfer | | | 77,195 | | | | 273,191 | | | | 135,041 | | | | 0 | | | | 2,731,212 | |
Andrew M. Meslow | | | $183,218 | | | 314,138 | | | 309,370 | | | 0 | | | 7,739,824 |
Stuart B. Burgdoerfer | | | 23,958 | | | 210,169 | | | 211,770 | | | 0 | | | 5,271,529 |
James L. Bersani | | | 94,554 | | | 156,052 | | | 420,554 | | | 0 | | | 10,712,861 |
Julie B. Rosen | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 |
Deon N. Riley | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 |
Leslie H. Wexner | | | 16,525 | | | 200,188 | | | 1,347,385 | | | 37,380,867 | | | 0 |
Charles C. McGuigan | | | 36,807 | | | 317,934 | | | 330,502 | | | 0 | | | 8,222,681 |
Shelley M. Milano | | | 105,009 | | | 165,429 | | | 59,899 | | | 0 | | | 1,534,122 |
| | | | | | | | | | | | | | | |
(1)
| Amounts disclosed include non-qualified cash deferrals, Company matching contributions, retirement credits and earnings under the Company’s Supplemental Retirement PlanSRP (a non-qualified defined contribution plan) and stock deferrals and related reinvested dividend earnings under the Company’s amended and restated 1993 Stock Option and Performance Incentive Plan (the “1993 Plan”), the Company's 2011 Stock Option and Performance Incentive Plan (the “2011 Plan”) and 2015 Plan. Executive Contributions and related matching Registrant Contributions represent 20152020 calendar year deferrals and matches on incentive compensation payments earned based on performance for the Fall 20142019 season, which was paid in March 2015,2020, and for the Spring 20152020 season, which was paid in August 2015. 2020. |
(2)
| All of the contributions are reported in the 20152020 Summary Compensation Table under the “Salary” and/or “Non-Equity Incentive Plan Compensation” columns. |
(3)
| Reflects the Company’s 200% match of associate contributions of up to 3% of base salary and bonus above the IRS qualified plan maximum compensation limit and the Company’s retirement contribution of 6% for less than five years of service or 8% for five or more years of service of compensation above the IRS qualified plan maximum compensation limit. Associates become fully vested in these contributions after six years of service. These contributions are also included under the “All Other Compensation” column of the 20152020 Summary Compensation Table. |
(4)
| Non-qualified deferred cash compensation balances earn a fixed rate of interest determined prior to the beginning of each year. The portion of the earnings on deferred cash compensation that exceeds 120% of the applicable federal long term rate in the amount of $498,794, $305,512, $79,210, $19,137 and $49,375 for Mr. Wexner, Ms. Turney and Messrs. McGuigan, Coe and Burgdoerfer, respectively, is disclosed in the “Change in Pension Value and Non-qualified Deferred Compensation Earnings” column of the 2015 Summary Compensation Table. |
The portion of the earnings on deferred cash compensation that exceeds 120% of the applicable federal long-term rate in the amount of $146,274, $100,128, $197,626, $637,061, $156,266 and $28,321 for Mr. Meslow, Mr. Burgdoerfer, Mr. Bersani, Mr. Wexner, Mr. McGuigan and Ms. Milano, respectively, is disclosed in the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” column of the 2020 Summary Compensation Table.
Amount includes dividends earned on deferred stock and RSU balances in the amount of
$326,511$2,576 for
Ms. Turney.Mr. Bersani. Dividends are reinvested into additional stock units based on the closing market price of Common Stock on the dividend payment date.
(5)
| Participants may elect to receive the funds in a lump sum or in up to ten annual installments following termination of employment, but generally may not make withdrawals during their employment. Deferrals under the Supplemental Retirement Plan,SRP, the 1993 Plan, the 2011 Plan and the 2015 Plan are unfunded. |
(6)
| Balance includes the value of deferred stock and RSUs at calendar year-end in the amount of $8,097,122$354,713 for Ms. Turney.Mr. Bersani. Value is calculated based on a stock price of $96.15$40.76 per share of Common Stock on January 29, 2016. 2021. Balances for Mr. McGuigan and Ms. Milano will be paid out in 2021 in connection with their terminations of employment. |
Estimated Post-Employment Payments and Benefits
We have entered into certain agreements with our NEOs that will require us to provide compensation in the event of a termination of employment, including a termination following a change in control of our Company.
Mr. Wexner is not covered by such an agreement but is entitled to certain termination compensation under theterms of our benefit and stock plans. In connection with her resignation, Ms. Turney will be entitled to severance payments and benefits under the terms of her employment agreement.
The following tables set forth the expected benefits to be received by each of the other NEOs in the event of his termination resulting from various scenarios, assuming a termination date of January 30, 20162021 and a stock price of $96.15,$40.76, the price of our Common Stock on January 29, 2016.2021. Each scenario relates to the single termination event described and amounts are not cumulative in situations where multiple scenarios may apply.
On February 4, 2021 the Company announced that Stuart B. Burgdoerfer had communicated to the Board his desire to retire as CFO of L Brands and Interim CEO of the Victoria’s Secret business. Mr. Burgdoerfer will remain in his CFO role through August 2021.
TABLE OF CONTENTS
Assumptions and explanations of the numbers set forth in the tables below are set forth in additional text following the tables.
(1)Leslie H. Wexner
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Involuntary w/out Cause or
Voluntary w/Good Reason | | | Involuntary
w/out Cause
following
Change in
Control
($) | | | Death
($) | | | Disability
($) | | | Voluntary
Resignation/
Retirement
($) | |
| | | w/out
Release
($) | | | & Signed
Release
($) | | | | | |
Base Salary | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
Bonus(2) | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
Gain of Accelerated Stock Options(3) | | | 0 | | | | 0 | | | | 21,907,813 | | | | 21,907,813 | | | | 21,907,813 | | | | 0 | |
Value of Pro-rated or Accelerated RSUs(3) | | | 0 | | | | 25,973,673 | | | | 72,859,297 | | | | 72,859,297 | | | | 72,859,297 | | | | 25,973,673 | |
Benefits and Perquisites(4) | | | 355,370 | | | | 355,370 | | | | 355,370 | | | | 2,355,370 | | | | 1,080,370 | | | | 355,370 | |
Tax Gross-Up | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 355,370 | | | $ | 26,329,043 | | | $ | 95,122,480 | | | $ | 97,122,480 | | | $ | 95,847,480 | | | $ | 26,329,043 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Sharen J. Turney
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Involuntary w/out Cause or
Voluntary w/Good Reason | | | Involuntary
w/out Cause
following
Change in
Control
($) | | | Death
($) | | | Disability
($) | | | Voluntary
Resignation/
Retirement
($) | |
| |
| w/out
Release
($) |
| |
| & Signed
Release
($) |
| | | | |
Base Salary | | $ | 1,500,000 | | | $ | 3,000,000 | | | $ | 3,000,000 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
Bonus(2) | | | 0 | | | | 3,000,000 | | | | 9,351,638 | | | | 0 | | | | 0 | | | | 0 | |
Gain of Accelerated Stock Options(3) | | | 0 | | | | 0 | | | | 12,026,986 | | | | 12,026,986 | | | | 12,026,986 | | | | 0 | |
Value of Pro-rated or Accelerated RSUs(3) | | | 0 | | | | 27,340,541 | | | | 52,718,276 | | | | 52,718,276 | | | | 52,718,276 | | | | 27,340,541 | |
Benefits and Perquisites(4) | | | 295,427 | | | | 302,218 | | | | 302,218 | | | | 5,274,760 | | | | 1,785,242 | | | | 281,846 | |
Tax Gross-Up | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,795,427 | | | $ | 33,642,759 | | | $ | 77,399,118 | | | $ | 70,020,022 | | | $ | 66,530,504 | | | $ | 27,622,387 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Charles C. McGuigan
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Involuntary w/out Cause or
Voluntary w/Good Reason | | | Involuntary
w/out Cause
following
Change in
Control
($) | | | Death
($) | | | Disability
($) | | | Voluntary
Resignation/
Retirement
($) | |
| | | w/out
Release
($) | | | & Signed
Release
($) | | | | | |
Base Salary | | $ | 1,250,000 | | | $ | 2,500,000 | | | $ | 2,500,000 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
Bonus(2) | | | 0 | | | | 1,875,000 | | | | 5,134,119 | | | | 0 | | | | 0 | | | | 0 | |
Gain of Accelerated Stock Options(3) | | | 0 | | | | 0 | | | | 5,211,063 | | | | 5,211,063 | | | | 5,211,063 | | | | 0 | |
Value of Pro-rated or Accelerated RSUs(3) | | | 0 | | | | 10,836,393 | | | | 23,739,531 | | | | 23,739,531 | | | | 23,739,531 | | | | 10,836,393 | |
Benefits and Perquisites(4) | | | 162,930 | | | | 168,150 | | | | 168,150 | | | | 3,402,492 | | | | 782,602 | | | | 152,492 | |
Tax Gross-Up | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,412,930 | | | $ | 15,379,543 | | | $ | 36,752,863 | | | $ | 32,353,086 | | | $ | 29,733,196 | | | $ | 10,988,885 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Nicholas Coe
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Involuntary w/out Cause or
Voluntary w/Good Reason | | | Involuntary
w/out Cause
following
Change in
Control
($) | | | Death
($) | | | Disability
($) | | | Voluntary
Resignation/
Retirement
($)(5) | |
| | | w/out
Release
($) | | | & Signed
Release
($) | | | | | |
Base Salary | | $ | 1,000,000 | | | $ | 2,000,000 | | | $ | 2,000,000 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
Bonus(2) | | | 0 | | | | 1,600,000 | | | | 5,573,735 | | | | 0 | | | | 0 | | | | 0 | |
Gain of Accelerated Stock Options(3) | | | 0 | | | | 0 | | | | 2,902,821 | | | | 2,902,821 | | | | 2,902,821 | | | | 0 | |
Value of Pro-rated or Accelerated RSUs(3) | | | 0 | | | | 9,344,434 | | | | 22,334,107 | | | | 22,334,107 | | | | 22,334,107 | | | | 0 | |
Benefits and Perquisites(4) | | | 169,144 | | | | 174,364 | | | | 174,364 | | | | 2,341,116 | | | | 908,726 | | | | 0 | |
Tax Gross-Up | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,169,144 | | | $ | 13,118,798 | | | $ | 32,985,027 | | | $ | 27,578,044 | | | $ | 26,145,654 | | | $ | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Andrew M. Meslow
Base Salary | | | $1,275,000 | | | $2,550,000 | | | $2,550,000 | | | $0 | | | $0 | | | $0 |
Bonus(1) | | | 0 | | | 2,358,750 | | | 6,738,052 | | | 0 | | | 0 | | | 0 |
Cash Retention(2) | | | 0 | | | 0 | | | 497,608 | | | 0 | | | 0 | | | 0 |
Gain of Accelerated Stock Options(3) | | | 0 | | | 0 | | | 299,331 | | | 299,331 | | | 299,331 | | | 0 |
Value of Pro-rated or Accelerated PSUs/RSUs(3) | | | 0 | | | 9,862,738 | | | 48,476,113 | | | 48,476,113 | | | 48,476,113 | | | 0 |
Benefits and Perquisites(4) | | | 37,003 | | | 46,761 | | | 46,761 | | | 2,017,488 | | | 566,118 | | | 0 |
Tax Gross-Up | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A |
Total | | | $1,312,003 | | | $14,818,249 | | | $58,607,865 | | | $50,792,932 | | | $49,341,562 | | | $0 |
Stuart B. Burgdoerfer
Base Salary | | | $1,200,000 | | | $2,400,000 | | | $2,400,000 | | | $0 | | | $0 | | | $0 |
Bonus(1) | | | 0 | | | 2,160,000 | | | 4,124,520 | | | 0 | | | 0 | | | 0 |
Gain of Accelerated Stock Options(3) | | | 0 | | | 0 | | | 349,239 | | | 349,239 | | | 349,239 | | | 0 |
Value of Pro-rated or Accelerated PSUs/RSUs(3) | | | 0 | | | 3,097,842 | | | 5,531,417 | | | 5,531,417 | | | 5,531,417 | | | 306,352 |
Benefits and Perquisites(4) | | | 30,974 | | | 37,717 | | | 37,717 | | | 2,017,488 | | | 545,860 | | | 17,488 |
Tax Gross-Up | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A |
Total | | | $1,230,974 | | | $7,695,559 | | | $12,442,893 | | | $7,898,144 | | | $6,426,516 | | | $323,840 |
James L. Bersani
Base Salary | | | $800,000 | | | $1,600,000 | | | $1,600,000 | | | $0 | | | $0 | | | $0 |
Bonus(1) | | | 0 | | | 1,120,000 | | | 2,365,664 | | | 0 | | | 0 | | | 0 |
Gain of Accelerated Stock Options(3) | | | 0 | | | 0 | | | 309,360 | | | 309,360 | | | 309,360 | | | 0 |
Value of Pro-rated or Accelerated PSUs/RSUs(3) | | | 0 | | | 2,738,420 | | | 5,017,515 | | | 5,017,515 | | | 5,017,515 | | | 1,317,689 |
Benefits and Perquisites(4) | | | 31,142 | | | 37,969 | | | 37,969 | | | 2,017,488 | | | 445,902 | | | 17,488 |
Tax Gross-Up | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A |
Total | | | $831,142 | | | $5,496,389 | | | $9,330,508 | | | $7,344,363 | | | $5,772,777 | | | $1,335,177 |
TABLE OF CONTENTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Involuntary w/out Cause or
Voluntary w/Good Reason | | | Involuntary
w/out Cause
following
Change in
Control
($) | | | Death
($) | | | Disability
($) | | | Voluntary
Resignation/
Retirement
($)(5) | |
| | | w/out
Release
($) | | | & Signed
Release
($) | | | | | |
Base Salary | | $ | 852,800 | | | $ | 1,705,600 | | | $ | 1,705,600 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
Bonus(2) | | | 0 | | | | 1,279,200 | | | | 3,795,750 | | | | 0 | | | | 0 | | | | 0 | |
Gain of Accelerated Stock Options(3) | | | 0 | | | | 0 | | | | 3,935,376 | | | | 3,935,376 | | | | 3,935,376 | | | | 0 | |
Value of Pro-rated or Accelerated RSUs(3) | | | 0 | | | | 6,539,546 | | | | 14,660,279 | | | | 14,660,279 | | | | 14,660,279 | | | | 0 | |
Benefits and Perquisites(4) | | | 115,928 | | | | 122,626 | | | | 122,626 | | | | 1,808,130 | | | | 544,080 | | | | 0 | |
Tax Gross-Up | | | N/A | �� | | | N/A | | | | N/A | | | | N/A | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 968,728 | | | $ | 9,646,972 | | | $ | 24,219,631 | | | $ | 20,403,785 | | | $ | 19,139,735 | | | $ | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Julie B. Rosen
Base Salary | | | $0 | | | $1,700,000 | | | $1,700,000 | | | $0 | | | $0 | | | $0 |
Bonus(1) | | | 0 | | | 977,500 | | | 805,632 | | | 0 | | | 0 | | | 0 |
Gain of Accelerated Stock Options(3) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 |
Value of Pro-rated or Accelerated PSUs/RSUs(3) | | | 0 | | | 122,076 | | | 1,098,808 | | | 1,098,808 | | | 1,098,808 | | | 0 |
Benefits and Perquisites(4) | | | 13,116 | | | 42,011 | | | 42,011 | | | 1,713,116 | | | 455,433 | | | 0 |
Tax Gross-Up | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A |
Total | | | $13,116 | | | $2,841,587 | | | $3,646,451 | | | $2,811,924 | | | $1,554,241 | | | $0 |
Deon N. Riley
Base Salary | | | $0 | | | $1,500,000 | | | $1,800,000 | | | $0 | | | $0 | | | $0 |
Bonus(1) | | | 0 | | | 600,000 | | | 720,000 | | | 0 | | | 0 | | | 0 |
Gain of Accelerated Stock Options(3) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 |
Value of Pro-rated or Accelerated PSUs/RSUs(3) | | | 0 | | | 33,872 | | | 813,244 | | | 813,244 | | | 813,244 | | | 0 |
Benefits and Perquisites(4) | | | 13,116 | | | 41,920 | | | 41,920 | | | 1,513,116 | | | 429,217 | | | 0 |
Tax Gross-Up | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A |
Total | | | $13,116 | | | $2,175,792 | | | $3,075,164 | | | $2,326,360 | | | $1,242,461 | | | $0 |
(1)
| Assumes a termination date of January 30, 2016.
|
(2) | Bonus amounts assumed at target. Under “Involuntary w/outwithout Cause or Voluntary w/with Good Reason” termination scenarios, actual bonus payments would be equal to the bonus payment the NEO would have received if he or she had remained employed with the Company for a period of one year after the termination date of January 30, 2016.2021. Under an “Involuntary w/outWithout Cause following Change in Control” termination scenario, bonus payments for Ms. Turney and Messrs. McGuigan, Coe and Burgdoerfer will be equal to the sum of the last four seasonal bonus payments received. |
(2)
| Reflects the unpaid portion of cash retention bonus, pro-rated from the date of the agreement to termination date. |
(3)
| Reflects the value of unvested RSUs, PSUs at target and stock options that, subject to achievement of pre-established performance conditions, if applicable, would become vested based on the $96.15$40.76 fair market value of a share of Common Stock on the last trading day of the fiscal year (January 29, 2016)2021). |
(4)
| Estimates for benefits and perquisites include the pro rata value of retirement plan contributions on earnings accrued up to the termination date and the continuation of medical, dental and other insurance benefits. Under the “Death” and “Disability” scenarios, includes proceeds from life and disability insurance policies and the value of unvested retirement plan balances that would become vested. |
(5)
| Messrs. CoeGenerally, in the event of an NEO’s death, subject to the achievement of any underlying performance conditions, any time-vesting conditions are deemed satisfied. RSUs and Burgdoerfer havePSUs awarded to our other NEOs continue to be subject to continued vesting based on performance (except for RSUs granted to Mr. Bersani in March and April of 2018, which are not met the age and/or service requirementsubject to qualify for pro rata RSU vesting and retirement plan contributions under the retirement provisions of the 2011 Plan, the 2015 Plan and the qualified and non-qualified retirement plans.
performance conditions). |
Assumptions and Explanations of Numbers in Tables
The
CompensationHCC Committee retains discretion to provide, and in the past has provided, additional benefits to NEOs upon termination or resignation if it determines the circumstances so warrant.
The tables do not include the payment of the aggregate balance of the NEO’s non-qualified deferred compensation that is disclosed in the Non-qualified Deferred Compensation for Fiscal 20152020 table above.
TABLE OF CONTENTS
Confidentiality, Non-Competition and Non-Solicitation Agreements
As a condition to each NEO’s entitlement to receive certain severance payments and equity vesting acceleration upon certain termination scenarios, the NEO is required to execute a release of claims against us and shall be bound by the terms of certain restrictive covenants, including non-competition and non-solicitation agreements which prohibit the NEO from soliciting or diverting any current or potential employee, customer, or supplier or competing with any of our businesses in which he or she has been employed for a period of one year from the date of termination.
Termination Provisions—Definitions of Cause and Good Reason
The
employment agreements for all NEOs
other than Mr. Wexner, who does not have an employment agreement, contain customary definitions of cause and good reason. “Cause” generally means that
(1) for Messrs. Meslow and Burgdoerfer, the NEO
(1) willfully failed to perform his
or her duties with the Company (other than a failure resulting from the NEO’s incapacity due to physical or mental illness)
;, or for our other NEOs, he or she was grossly negligent in the performance of his or her duties with the Company; (2)
the NEO has
pleadpled “guilty” or “no contest” to or has been convicted of an act which is defined as a felony under federal or state law; or (3)
the NEO engaged in
willful misconduct in bad faith
(or, in Messrs. Meslow and Burgdoerfer’s case “willful misconduct”) which could reasonably be expected to materially harm the Company’s business or its reputation.
“Good
In addition, Messrs. Meslow and Burgdoerfer and Mses. Riley and Rosen have the right to resign for “Good Reason” in case of certain events. “Good Reason” generally means (1)
for Mr. Meslow, the failure to continue
byas CEO of the
NEOCompany (or, in the event of a change in control, the resulting ultimate parent company) and, for Mr. Burgdoerfer and Mses. Riley and Rosen, the NEO’s failure to continue in a capacity originally contemplated in the NEO’s
employment agreement; (2) the assignment to the NEO of any duties materially inconsistent with the NEO’s position, duties, authority, responsibilities or reporting requirements, as set out in his or her
employment agreement;agreement or, for Mr. Meslow, the assignment to another person of duties that would typically be performed by the CEO of the Company (or, in the event of a change in control, the resulting ultimate parent company); (3) a
material reduction
inof or a
material delay in payment of the NEO’s total cash compensation and benefits from those required to be
provided;provided or, for Mr. Meslow, a breach by the Company of his employment agreement or any RSU award agreement or other equity agreement; (4)
the requirement that, for Mr. Burgdoerfer and Mses. Riley and Rosen, the NEO be based outside of Columbus, Ohio, or, for Mr. Meslow, the requirement that the NEO be based outside of the United States,
in each case other than for travel that is reasonably required to carry out the NEO’s duties; or (5) the failure by the Company to obtain the assumption in writing of its obligation to perform the
employment agreement by a successor.
Payments Upon a Termination in Connection with a Change in Control
A
Change“Change in
ControlControl” of the Company will be deemed to have occurred upon the first
to occur of any of the following
events:events to occur:(a)
| a) | any person, together with all affiliates, becomes a beneficial owner of securities representing 33% or more of the combined voting power of the voting stock then outstanding; |
(b)
| b) | during any period of 24 consecutive months, individuals who at the beginning of such period constitute the Board (and any new director, whose election by the Board or nomination for election by the stockholders of the Company was approved by a vote of at least two-thirds of the directors then in office who either were directors at the beginning of the period or whose election or nomination for election was so approved) cease for any reason to constitute a majority of directors then constituting the Board; |
(c)
| c) | a reorganization, merger or consolidation of the Company is consummated, unless more than 50% of the outstanding shares of Common Stock are beneficially owned by individuals and entities who owned Common Stock just prior to such reorganization, merger or consolidation; or |
(d)
| d) | the consummation of a complete liquidation or dissolution of the Company. |
Participants in the 2015 Plan and the 2020 Plan receive accelerated vesting of equity awards upon a Change in Control in the event of the participant’s termination of employment (other than for Cause) within 24 months of the Change in Control (“double trigger” vesting).
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In the event of a termination following a Change in Control, none of our NEOs isare entitled to reimbursement or gross-up for any excise taxes that may be imposed under Section 280G of the Code.
Executive Summary
| | We are committed to aligning our executive compensation with our Company’s performance. In connection with the Company’s strong performance in fiscal 2020, our CEO earned above-target short-term performance incentive payments according to the payout formulas established at the beginning of each six-month performance period without retroactive adjustment for the impact of the COVID-19 crisis on results. Long-term equity incentives were granted to our CEO as a one-time incentive in connection with his promotion during 2020. Substantially all of the long-term incentive is subject to challenging performance requirements that will only be earned if the Company achieves rigorous growth, profitability and return metrics that provide incentive for a balance of growth and profitability, support the strategic direction of the Company, and alignment with stockholders. | |
| | | | | | |
| | In summary, there is alignment between our performance, our stockholders’ interests and our CEO’s pay. Accordingly, we recommend stockholders vote FOR our executive compensation program as outlined in Proposal 3. | |
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Fiscal
20152020 Director Compensation
The following table sets forth compensation earned by the individuals who served as directors of the Company during fiscal
2015(1)2020(1).
| | | | | | | | | | | | |
Name | | Fees Earned or
Paid in Cash
($)(2) | | | Stock
Awards
($)(3) | | | Total ($) | |
E. Gordon Gee | | $ | 121,900 | | | $ | 121,900 | | | $ | 243,800 | |
Dennis S. Hersch | | | 121,900 | | | | 121,900 | | | | 243,800 | |
Donna A. James | | | 164,400 | | | | 144,412 | | | | 308,812 | |
David T. Kollat | | | 171,900 | | | | 156,929 | | | | 328,829 | |
William R. Loomis, Jr. | | | 121,900 | | | | 121,900 | | | | 243,800 | |
Jeffrey H. Miro | | | 134,400 | | | | 134,417 | | | | 268,817 | |
Michael G. Morris | | | 124,400 | | | | 124,422 | | | | 248,822 | |
Stephen Steinour | | | 111,900 | | | | 111,905 | | | | 223,805 | |
Allan R. Tessler | | | 194,400 | | | | 169,446 | | | | 363,846 | |
Abigail S. Wexner | | | 141,900 | | | | 131,988 | | | | 273,888 | |
Raymond Zimmerman | | | 134,400 | | | | 134,417 | | | | 268,817 | |
Patricia S. Bellinger | | | $100,422 | | | $134,406 | | | $234,828 |
E. Gordon Gee(4) | | | 0 | | | 38,032 | | | 38,032 |
Donna A. James | | | 101,707 | | | 134,406 | | | 236,113 |
Michael G. Morris | | | 120,745 | | | 146,909 | | | 267,654 |
Sarah E. Nash(5)(6) | | | 272,970 | | | 449,406 | | | 722,376 |
Robert H. Schottenstein | | | 100,498 | | | 134,406 | | | 234,904 |
Anne Sheehan | | | 109,420 | | | 146,909 | | | 256,328 |
Stephen D. Steinour | | | 114,516 | | | 134,406 | | | 248,922 |
Allan R. Tessler(4)(5) | | | 75,000 | | | 47,936 | | | 122,936 |
Abigail S. Wexner | | | 84,832 | | | 111,905 | | | 196,737 |
Leslie H. Wexner(4) | | | 80,543 | | | 111,905 | | | 192,449 |
Raymond Zimmerman(4) | | | 0 | | | 38,032 | | | 38,032 |
(1)
| Directors who are also associates receive no additional compensation for their service as directors. Our current Board’s compensation plan does not provide for stock option awards, non-equity incentive plan compensation, pension or non-qualified deferred compensation. At the end of four years of membership on the Board, each member must maintain ownership of Common Stock equal to the amount of Common Stock received as director compensation over the four-year period. |
(2)
| Directors receive an annual cash retainer of $111,900; directors receive an additional annual cash retainer of $12,500 for membership on the Audit and CompensationHCC Committees and Special Committee on Stockholder Litigation and $10,000 for all other committee memberships; the Audit Committee Chair receivesand Special Committee on Stockholder Litigation Chairs receive an additional $20,000; the CompensationHCC Committee Chair and the Nominating & Governance Committee Chair each receivesreceive an additional $15,000; and other committee chairsChairs receive an additional $10,000; and the lead independent director received an additional cash retainer of $15,000 and the Board Chair receives an additional cash retainer of $15,000. $80,000. Cash compensation was suspended for the first quarter of 2020 in connection with store closures and the COVID-19 crisis. |
(3)
| Directors receive an annual stock retainer worth $111,900; directors receive an additional annual stock grant worth $12,500 for membership on the Audit and CompensationHCC Committees and worth $10,000 for other committee memberships; and the lead independent director receivesreceived an additional stock retainer of $15,000. Stock retainers were granted under the 20112015 Plan. The number of shares issued is calculated based on the fair market value of Common Stock on the date the shares were issued. The value of stock awards reflects the aggregate grant date fair value, excluding estimated forfeitures, computed in accordance with ASC Topic 718 Compensation—Stock Compensation, for each award. See Note 1819 to the Company’s financial statements filed in the Company’s 2015 Annual Report on Form2020 10-K for a discussion of our assumptions in determining the aggregate grant date fair value of these awards. |
Equity Compensation Plan Information
The following table summarizes share and exercise price information about the Company’s equity compensation plans as of January 30, 2016.
| | | | | | | | | | | | |
Plan category | | (a) Number of
securities to be issued
upon exercise of
outstanding options,
warrants and rights | | | (b) Weighted-average
exercise price of
outstanding options,
warrants and rights | | | (c) Number of securities
remaining available for
future issuance under
equity compensation
plan (excluding
securities reflected in
column (a)) | |
Equity compensation plans approved by security holders(1) | | | 11,989,870 | | | $ | 42.40 | (2) | | | 16,690,069 | |
Equity compensation plans not approved by security holders | | | 0 | | | | 0 | | | | 0 | |
Total | | | 11,989,870 | | | $ | 42.40 | | | | 16,690,069 | |
(1)(4)
| IncludesEffective May 14, 2020, Dr. Gee, Mr. Tessler and Mr. Zimmerman retired from the 2015 Plan, 2011 PlanBoard and in connection with his retirement as CEO, Mr. Wexner became a non-executive Board member as Chairman Emeritus. Stock and cash payments have been pro-rated based on the 1993 Plan (2009 Restatement). There are no shares remaining available for grant undernumber of days of Board service. Mr. Tessler was the 1993 Plan (2009 Restatement).
lead independent director prior to his retirement from the Board. |
(2)(5)
| Does not include outstanding rightsMs. Nash and Mr. Tessler each received cash payments of an additional $75,000 in connection with their significant contributions to receive Common Stock uponwork on the vestingagreement with Sycamore Partners for the sale of RSU awards or settlement55% of deferred stock units.
the VS NewCo business. |
(6)
| In recognition of Ms. Nash’s extraordinary commitment of time and effort following her appointment.as non-executive Chair of the Board, Ms. Nash was granted a stock award with a value of $225,000 that vests 30% after each of the one and two year anniversaries of the grant and 40% after three years, subject to continued service. Beginning in fiscal 2021, the Board determined that Ms. Nash’s total compensation for her service as non-executive Chair will be $700,000, with 50% paid in cash and 50% paid in stock. |
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HUMAN CAPITAL AND COMPENSATION COMMITTEE REPORT
The
CompensationHCC Committee of the Board is composed of
fourthree directors who are independent, as defined under the NYSE listing standards. Additionally, each member of the
CompensationHCC Committee is
an “outside director” within the meaning of Section 162(m) of the Code and a “non-employee director”
withwithin the meaning of Section 16b-3 under the Securities Exchange Act of 1934. The
CompensationHCC Committee reviews the CD&A on behalf of the Board.
The CompensationHCC Committee has reviewed and discussed the CD&A with management, and based on the review and discussions, the CompensationHCC Committee recommended to the Board that the CD&A be included in the Company’s annual report on Form2020 10-K for the year ended January 30, 2016 and the Company’s proxy statement.
| | | Human Capital and Compensation Committee |
| | | |
| | | Michael G. Morris, Chair |
| | | Patricia Bellinger |
| | | Robert H. Schottenstein |
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2020 PAY RATIO DISCLOSURE Pay Ratio
In accordance with the requirements of Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K (which we collectively refer to as the “Pay Ratio Rule”), we are providing the following estimated information for fiscal 2020:
the median of the annual total compensation of all our employees (except our CEO) was $9,876;
the annual total compensation of our CEO was $18,494,939; and
the ratio of these two amounts is 1,873 to 1. We believe that this ratio is calculated in a manner consistent with the requirements of the Pay Ratio Rule.
Methodology for Identifying Our “Median Employee”
Identifying and Adjusting our Employee Population
To identify the median of the annual total compensation of all of our employees (other than our CEO), we identified our total employee population as of January 30, 2021, the last day in our fiscal year. Our employee population consisted of full-time, part-time, seasonal and temporary employees globally.
Determining our Median Employee
To identify our median employee, we calculated the cash compensation paid during the fiscal year for the employee population, annualizing the cash compensation of any permanent employee who joined the Company during the fiscal year. We identified the median compensation amount using this compensation measure which was consistently applied to all our employees in the calculation. We then selected a reasonably representative employee with total compensation equal to the median compensation amount as our “median employee.”
Using the methodologies described above, we determined that our median employee was a part-time, hourly employee. The total compensation of the median employee was $9,876.
Determination of Annual Total Compensation Committeeof our Median Employee and our CEO
Once we identified our median employee, we then calculated such employee’s annual total compensation for 2020 using the same methodology we used for purposes of determining the annual compensation of our NEOs for 2020.
Our CEO’s annual total compensation for 2020 for purposes of the Pay Ratio Rule is equal to the amount reported in the “Total” column in the 2020 Summary Compensation Table.
The Commission’s rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and apply various assumptions and, as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies. Our median employee worked approximately 15 hours per week during fiscal 2020. If the total compensation per hour earned by the median employee was extrapolated to full-time employment, median compensation would be approximately $26,500 and the ratio would be 698 to 1.
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David T. Kollat, Chair
E. Gordon Gee
Jeffrey H. Miro
Michael G. Morris
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table shows certain information about the securities ownership of all directors
(and nominees) of the Company, the executive officers of the Company named in the
“2015“2020 Summary Compensation Table” above and all directors and executive officers of the Company as a group.
Name of Beneficial Owner
| | | Number of Shares of Common
Stock Beneficially
Owned(a) Owned(a)(b) | | | Percent of Class | |
Patricia S. Bellinger | | | 24,248(d) | | | * |
James Bersani | | | 211,022(c)(e) | | | * |
Stuart B. Burgdoerfer | | 63,925(c) | 200,472(c) | | * | * |
Nicholas Coe
| | 28,268(c) | | | * | |
E. Gordon Gee
| | 8,285(d) | | | * | |
Dennis S. Hersch
| | 10,322,318(d)(f) | | | 3.57 | % |
Donna A. James | | 42,551(d) | 78,717(d) | | * | * |
David T. Kollat
Francis A. Hondal | | 117,349 | 0 | | * | * |
William R. Loomis, Jr.
Danielle Lee | | 97,209(d) | 0 | | * | * |
Charles C. McGuigan | | 44,403(c)(h) | 186,852(c)(g) | | * | * |
Jeffrey H. Miro
Andrew M. Meslow | | 102,117(d) | 191,766(c) | | * | * |
Shelley B. Milano | | | 75,560(c) | | | * |
Michael G. Morris | | 14,395(d) | 30,187(d) | | * | * |
Sarah E. Nash | | | 26,735(d) | | | * |
Deon N. Riley | | | 0 | | | * |
Julie B. Rosen | | | 0 | | | * |
Robert H. Schottenstein | | | 28,843(d)(i) | | | * |
Anne Sheehan | | | 12,524(d) | | | * |
Stephen D. Steinour | | 11,058(d) | 29,439(d) | | * | * |
Allan R. Tessler
| | 82,186 | | | * | |
Sharen J. Turney
| | 539,643(c)(e) | | | * | |
Abigail S. Wexner | | 12,904,920(g) | 15,293,575(f) | | 4.46 | % 5.49% |
Leslie H. Wexner | | 46,259,019(c)(h)(i) | 44,299,816(c)(g)(h) | | 15.98 | % 15.91% |
Raymond Zimmerman
| | 124,643(d)(j) | | | * | |
All directors and executive officers as a group | | 47,607,228(c)-(j) | 45,395,181(c)-(i) | | 16.45 | % 16.31% |
(a)
| Unless otherwise indicated, each named person has voting and investment power over the listed shares and such voting and investment power is exercised solely by the named person or shared with a spouse. None of the listed shares have been pledged as security or otherwise deposited as collateral. |
(b)
| Reflects beneficial ownership of shares of Common Stock, and shares outstanding, as of January 30, 2016. 2021. |
(c)
| Includes the following number of shares issuable within 60 days of January 30, 2016,2021, upon the exercise or vesting of outstanding stock awards: Mr. Bersani, 102,320; Mr. Burgdoerfer, 14,219; Mr. Coe, 23,102;141,920; Mr. McGuigan, 16,884;63,689; Mr. Meslow, 127,919; Ms. Turney, 43,543;Milano, 26,004; Mr. Wexner, 1,662,275;692,436; and all directors and executive officers as a group, 1,760,023. 1,590,136. |
(d)
| Includes the following number of deferred stock units credited to directors’ accounts under the 2003 Stock Award and Deferred Compensation Plan for Non-Associate Directors that could be convertible into Common Stock within 60 days after termination from the Board: Dr. Gee, 7,329; Mr. Hersch, 71,177;Ms. Bellinger, 24,248; Ms. James, 30,188; Mr. Loomis, 86,945; Mr. Miro, 81,578;56,979; Mr. Morris, 4,285;20,077; Ms. Nash, 26,735; Mr. Schottenstein, 24,343; Ms. Sheehan, 11,839; Mr. Steinour, 1,058; Mr. Zimmerman, 91,285;6,614; and all directors as a group, 373,845.170,835. Mr. Morris has elected to receive pay-out of his deferred stock units over three years, and his total represents 1/3 of the units which he would be owed upon his termination from the Board. Mr. Steinour has elected to receive pay-out of his deferred stock units over five years, and his total represents 1/5 of the units which he would be owed upon his termination from the Board. |
(e)
| Includes the following number of deferred stock units credited to executives’ accounts under the Company’s Supplemental Retirement1993 Plan that could be convertible into Common Stock within 60 days after termination of employment with the Company: Ms. Turney, 84,213. Mr. Bersani, 8,702. |
(f)
| Includes 1,257,255 shares held by The Linden East Trust, for which Mr. Hersch is trustee and shares voting and investment power with Mr. Wexner and Mrs. Wexner, and 8,992,886 shares held by The Linden West Trust, for which Mr. Hersch is trustee and shares voting and investment power with Mr. Wexner.
|
(g) | Excludes 33,354,09929,006,241 shares beneficially owned by Mr. Wexner as to which Mrs. Wexner disclaims beneficial ownership. Includes 1,257,255127,567 shares held by The Linden East Trust, as to whichTrust; 2,081,741 shares held by The Wexner Family Charitable Fund; 191,515 shares held by The Beech Trust; 352,941 shares held by The Linden East II Trust; 352,941 shares held by The Linden West II Trust; 343,166 shares held by Pine Trust; 343,166 shares held by Willow Trust; 343,166 shares held by Cedar Trust; and 343,166 shares held by Rose Trust. Mrs. Wexner shares voting and investment power with Mr. Hersch; 1,441,741Wexner with respect to shares held by The Linden East Trust, The Wexner Family Charitable Fund; and 191,515 shares held byFund, The Beech Trust, in each case, as to which Mrs. WexnerThe Linden East II Trust, The Linden West II Trust, Pine Trust, Willow Trust, Cedar Trust and Rose Trust, and shares voting and investment power with Mr. Wexner.Dennis Hersch with respect to shares held by The Linden East Trust and The Linden East II Trust. Includes 10,014,40910,814,206 shares directly owned by Mrs. Wexner. |
(h)(g)
| Includes the following number of shares held in the Savings and Retirement Plan (as of January 30, 2016)2021), over which Messrs. McGuigan and Wexner have investment but not voting power: Mr. McGuigan, 4,265;5,128; and Mr. Wexner, 1,851,959. 1,945,002. |
(i)(h)
| Includes 1,257,255127,567 shares held by The Linden East Trust, 8,992,886Trust; 6,111,181 shares held by The Linden West Trust, 1,441,741Trust; 2,081,741 shares held by The Wexner Family Charitable Fund; and 191,515 shares held by The Beech Trust; 352,941 shares held by The Linden East II Trust; 352,941 shares held by The Linden West II Trust; 343,166 shares held by Pine Trust; 343,166 shares held by Willow Trust; 343,166 shares held by Cedar Trust; and 343,166 shares held by Rose Trust. Mr. Wexner shares voting and investment power with Mrs. Wexner with respect to shares held by The Linden East Trust, The Wexner Family Charitable Fund, and The Beech Trust, The Linden East II Trust, The Linden West II Trust, Pine Trust, Willow Trust, Cedar Trust and Rose Trust, and shares voting and investment power with Mr.Dennis Hersch with respect to the shares held by The Linden East Trust and The Linden West Trust. Includes 4,892,608 shares held by the Wexner Personal Holdings Corporation, of which Mr. Wexner is the sole stockholder, director and officer. Includes 10,014,40910,814,206 shares directly owned by Mrs. Wexner, as to which Mr. Wexner may be deemed to share voting and investment power. Includes 15,954,37115,365,014 shares directly owned by Mr. Wexner. |
(j)(i)
| Includes 2,8882,500 shares which are Mr. Zimmerman’s pro rata share of 8,664 shares ownedheld by a corporation ofthe Frances Schottenstein 2010 Irrevocable Trust, for which Mr. ZimmermanSchottenstein is presidentco-trustee and shares voting and investment power; and 2,000 shares held by the Irving Schottenstein Marital Trust 2, for which Mr. Schottenstein is co-trustee and has sole voting and investment power. Mr. Schottenstein has a 33% stockholder. financial interest in 500 of the foregoing shares held by the Irving Schottenstein Marital Trust 2. |
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DELINQUENT SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
The Company’s executive officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, must file reports of ownership and changes in ownership of the Company’s equity securities with the Commission. Copies of those reports must also be furnished to the Company. Based solely on a review of the copies of reports furnished to the Company and written representations of the Company’s executive officers and directors that no other reports were required, we believe that during fiscal 20152020 our executive officers, directors and greater than 10% beneficial owners complied with these filing requirements.requirements, other than Ms. Sheehan who was late in filing one Form 4 regarding one transaction.
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SHARE OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table sets forth the names of all persons who, as of the dates indicated below, were known by the Company to be the beneficial owners (as defined in the rules of the Commission) of more than 5% of the shares of Common Stock.
| | | | | | | | |
Name and Address of Beneficial Owner | | Amount
Beneficially
Owned | | | Percent
of
Class | |
Leslie H. Wexner(1) | | | 46,259,019 | | | | 15.98 | % |
Three Limited Parkway | | | | | | | | |
P.O. Box 16000 | | | | | | | | |
Columbus, OH 43216 | | | | | | | | |
| | |
PRIMECAP Management Company(2) | | | 19,232,221 | | | | 6.64 | % |
225 South Lake Ave., #400 | | | | | | | | |
Pasadena, CA 91101 | | | | | | | | |
| | |
FMR LLC(3) | | | 15,448,861 | | | | 5.34 | % |
245 Summer Street | | | | | | | | |
Boston, MA 02210 | | | | | | | | |
| | |
The Vanguard Group(4) | | | 14,739,270 | | | | 5.09 | % |
100 Vanguard Blvd. | | | | | | | | |
Malvern, PA 19355 | | | | | | | | |
Leslie H. Wexner(1)
Three Limited Parkway
P.O. Box 16000
Columbus, OH 43230
| | | 44,299,816 | | | 15.91% |
| | | | | | |
Lone Pine Capital LLC, David F. Craver, Brian F. Doherty, Mala Gaonkar,
Kelly A. Granat, Stephen F. Mandel, Jr. and Kerry A. Tyler(2)
Two Greenwich Plaza
Greenwich, CT 06830
| | | 26,265,094 | | | 9.4% |
| | | | | | |
The Vanguard Group(3)
100 Vanguard Blvd.
Malvern, PA 19355
| | | 23,127,478 | | | 8.32% |
| | | | | | |
Melvin Capital Management LP(4)
535 Madison Avenue, 22nd Floor
New York, NY 10022
| | | 20,913,640 | | | 7.5% |
| | | | | | |
Egerton Capital (UK) LLP(5)
5 Stratton Street
London, W1J 8LA, United Kingdom
| | | 15,819,746 | | | 5.7% |
| | | | | | |
Abigail S. Wexner(6)
Three Limited Parkway
P.O. Box 16000
Columbus, OH 43230
| | | 15,293,575 | | | 5.49% |
(1)
| As of January 30, 2016.2021. For a description of Mr. Wexner’s beneficial ownership, see “Security Ownership of Directors and Management” on pages 53 and 54.page 52. |
(2)
| As of December 31, 2015,2020, based solely on information set forth in the Schedule 13G/A filed February 12, 201616, 2021 by PRIMECAP Management Company. PRIMECAP Management CompanyLone Pine Capital LLC, David F. Craver, Brian F. Doherty, Mala Gaonkar, Kelly A. Granat, Stephen F. Mandel, Jr. and Kerry A. Tyler (each, a “Lone Pine Reporting Person”), each Lone Pine Reporting Person has soleshared dispositive power over 19,232,22126,265,094 shares and soleshared voting power over 4,411,54226,265,094 shares. |
(3)
| Based solely on information set forth in the Schedule 13G filed February 12, 2016 by FMR LLC. FMR LLC has sole dispositive power over 15,448,861 shares and sole voting power over 665,299 shares and Abigail P. Johnson has sole dispositive power over 15,448,861 shares. Abigail P. Johnson is a Director, the Vice Chairman, the Chief Executive Officer and the President of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC.
|
(4) | As of December 31, 2015,2020, based solely on information set forth in the Schedule 13G/A filed February 10, 20162021 by The Vanguard Group.Group, The Vanguard Group has sole dispositive power over 14,245,47122,292,258 shares and sole voting power over 469,1200 shares, and has shared dispositive power over 493,799835,220 shares and shared voting power over 25,400319,199 shares. |
(4)
| As of December 31, 2020, based solely on information set forth in the Schedule 13G/A filed February 16, 2021 by Melvin Capital Management LP, Melvin Capital Management LP has shared dispositive power over 20,913,640 shares and shared voting power over 20,913,640 shares. |
(5)
| As of December 31, 2020, based solely on information set forth in the Schedule 13G filed February 10, 2021 by Egerton Capital (UK) LLP, Egerton Capital (UK) LLP has sole dispositive power over 15,819,746 shares and sole voting power over 15,819,746 shares. |
(6)
| As of January 30, 2021. For a description of Mrs. Wexner’s beneficial ownership, see “Security Ownership of Directors and Management” on page 52. |
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REPORT OF THE AUDIT COMMITTEE
As provided in our written charter, the Audit Committee is instrumental in the Board’s fulfillment of its oversight responsibilities relating to (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the qualifications, independence and performance of the Company’s independent auditors and (iv) the performance of the Company’s internal audit function.
We have the sole authority to appoint, compensate, retain, oversee and terminate the Company’s independent auditors. We pre-approve the audit services and non-audit services to be provided by the Company’s independent auditors. In addition, we evaluate the independent auditors’ qualifications, performance and independence and present our conclusions with respect to the independent auditors to the full Board on at least an annual basis.It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the independent auditors. Furthermore, while we are responsible for reviewing the Company’s policies and practices with respect to risk assessment and management, it is the responsibility of the CEO and senior management to determine the appropriate level of the Company’s exposure to risk.
We have reviewed and discussed L Brands’ audited financial statements as of and for the year ended January 30,
20162021 and met with both management and our independent auditors to discuss the financial statements. Management has represented to us that the financial statements were prepared in accordance with generally accepted accounting principles. We have reviewed with the internal auditors and independent auditors the overall scope and plans for their respective audits. We also met with the internal auditors and independent auditors, with and without management present, to discuss the results of their examinations and their evaluations of the Company’s internal controls.
We have also discussed with the independent auditors
allthe matters required to be discussed
with audit committees underby the applicable
auditingrequirements of the Public Company Accounting Oversight Board (the “PCAOB”) and
regulatory standards.the Commission. The Company’s independent auditors also provided to us the written disclosures and the letter required by applicable requirements of the
Public Company Accounting Oversight BoardPCAOB regarding the independent auditor’s communications with the audit committee concerning independence, and we discussed with the independent auditors their independence from the Company. We considered whether the provision of non-audit services by the independent auditors to the Company is compatible with maintaining their independence.
Based on the reviews and discussions summarized in this Report, and subject to the limitations on our role and responsibilities, certain of which are referred to above and in the Audit Committee charter, we recommended to the Board that L Brands’ audited financial statements be included in our
annual report on Form2020 10-K
for the year ended January 30, 2016 for filing with the Commission.
We have appointed Ernst & Young LLP as L Brands’ independent registered public accountants.
Stephen D. Steinour, Chair
Donna A. James Chair
Michael G. Morris
Anne Sheehan
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David T. Kollat
Allan R. Tessler
Raymond Zimmerman
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
During our
20152020 fiscal year, Ernst & Young LLP served as the Company’s independent registered public accountants and in that capacity rendered an opinion on our consolidated financial statements as of and for the fiscal year ended January 30,
2016.2021. The Audit Committee
annually reviews the selection of independent registered public accountants and has selected Ernst & Young LLP as the Company’s independent registered public accountants for the current fiscal year.
The aggregate audit fees payable to Ernst
& Young&Young LLP for
the fiscal years
ended 20152020 and
20142019 were approximately
$4,243,000$6,790,000 and
$4,072,700,$5,080,000, respectively. These amounts include fees for professional services rendered by Ernst & Young LLP in connection with the audit of our consolidated financial statements and reviews of our unaudited consolidated interim financial statements as well as fees for services that generally only the independent auditor can reasonably be expected to provide, including comfort letters and consultation regarding financial accounting and/or reporting standards. These amounts also include fees for services rendered in connection with the audit of our internal control over financial reporting,
and fees for services rendered in connection with statutory audits of our international subsidiaries’ financial
statements.statements and fees for audit services in connection with the potential sale or spin-off of VS NewCo.
The aggregate fees for assurance and related services rendered by Ernst & Young LLP that were reasonably related to the audit of our consolidated financial statements for
the fiscal years
ended 20152020 and
20142019 were approximately
$258,000$367,000 and
$155,000,$319,000, respectively. The fees under this category are for assurance and related services that are traditionally performed by the independent auditor and include audits of employee benefit plans, agreed upon procedures and other attest engagements.
The aggregate fees for tax services rendered by Ernst & Young LLP for
the fiscal years
ended 20152020 and
20142019 were approximately
$110,000$151,000 and
$130,000,$199,000, respectively. Tax fees include tax compliance and advisory services.
All Other Fees
The aggregate
No fees for
all other services
rendered bywere paid to Ernst & Young LLP for
the fiscal years
ended 20152020 and
2014 were approximately $369,000 and $0, respectively. The fees under this category that were paid in the fiscal year ended 2015 were for compliance-related advisory services.2019.
Pre-approval Policies and Procedures
The Audit Committee pre-approves all audit and non-audit services to be provided by Ernst & Young LLP in a given fiscal year.
TABLE OF CONTENTS
The Board knows of no other matters to be brought before the annual meeting. However, if other matters should come before the meeting, each of the persons named as a proxy intends to vote in accordance with his or her judgment on such matters.
STOCKHOLDER PROPOSALS FOR NEXT YEAR
Stockholder Proposals Pursuant to Rule 14a-8
Proposals submitted for inclusion in the proxy statement for the
20172022 annual meeting must be received by the Secretary of the Company at our principal executive offices on or before December
9, 2016.10, 2021.
Stockholder Director Nominations for Inclusion in 2022 Proxy Statement
Written notice of stockholder nominations of persons for election as a director at the 2022 annual meeting that are to be included in our proxy statement for the 2022 annual meeting pursuant to the proxy access provisions in Section 2.05 of our Bylaws must be received by the Secretary of the Company at our principal executive offices no earlier than November 10, 2021 and no later than December 10, 2021. The notice must contain the information required by our Bylaws.
Other Stockholder Proposals
If a stockholder intends to present a proposal or nominate a person for election as a director at the
20172022 annual meeting other than as described above, the stockholder must comply with the requirements set forth in
Section 2.04 of our Bylaws. The Bylaws require, among other things, that the Secretary receive written notice of the intent to present a proposal or nomination no earlier than February
18, 201719, 2022 and no later than March
20, 2017.21, 2022. The notice must contain the information required by
theour Bylaws.
We are soliciting this proxy on behalf of our Board and will bear the solicitation expenses. Our directors or employees may solicit proxies by telephone, facsimile,
email and personal solicitation, in addition to the use of the mail. We will, upon request, reimburse banks, brokerage houses and other institutions, nominees, and fiduciaries for their expenses in forwarding proxy materials to beneficial owners.
|
| | By Order of the Board of Directors, |
| | | |
| | | /s/ Leslie H. WexnerSarah E. Nash |
Leslie H. Wexner
| | | |
Chairman
| | | Sarah E. Nash
Chair of the Board |
Appendix AL BRANDS, INC.
PROPOSED AMENDMENT TO THE CERTIFICATETABLE OF INCORPORATION TO REMOVE SUPERMAJORITY VOTING REQUIREMENTS
Articles EIGHTH and THIRTEENTH and Section 2 of Article FIFTH and Section 1 of Article ELEVENTH are hereby removed in their entirety, and the remaining articles of the Charter are hereby renumbered accordingly. Articles EIGHTH and THIRTEENTH and Section 2 of Article FIFTH and Section 1 of Article ELEVENTH, which are hereby repealed, are shown below:
FIFTH. Section 2.Amendment of Bylaws by the Stockholders. The bylaws shall not be made, repealed, altered, amended or rescinded by the stockholders of the Corporation except by the vote of the holders of not less than 75 percent of the outstanding shares of the Corporation entitled to vote thereon. Any amendment to the Certificate of Incorporation which shall contravene any bylaw in existence on the record date of the stockholders meeting at which such amendment is to be voted upon by the stockholders shall require the vote of the holders of not less than 75 percent of the outstanding shares entitled to vote thereon.
EIGHTH. The affirmative vote of the holders of not less than 75 percent of the outstanding shares of the Corporation entitled to vote thereon shall be required for the approval of any proposal that (1) the Corporation merge or consolidate with any other corporation or any affiliate of such other corporation if such other corporation and its affiliates singly or in the aggregate are directly or indirectly the beneficial owners of more than five percent of the outstanding shares of any class of stock of the Corporation entitled to vote in the election of directors (such other corporation and any affiliate thereof being herein referred to as a “Related Corporation”), or (2) the Corporation sell, lease or exchange all or substantially all of its assets or business to or with such Related Corporation, or (3) the Corporation issue or deliver any stock or other securities of its issue in exchange or payment for any properties or assets of any such Related Corporation or securities issued by any such Related Corporation or in a merger of any affiliate of the Corporation with or into any such Related Corporation, or (4) the Corporation dissolve, and to effect such transaction the approval of stockholders of the Corporation is required by law or by any agreement between the Corporation and any national securities exchange; provided, however, that the foregoing clauses (1), (2), (3) and (4) shall not apply (i) to any such merger, consolidation, sale, lease, or exchange, or issuance or delivery of assets or other securities which was approved by resolution of the Board of Directors of the Corporation prior to the acquisition of the beneficial ownership of more than five percent of the outstanding Common Stock by the Related Corporation, (ii) to any such transaction solely between the Corporation and another corporation 50 percent or more of the voting power of which is owned by the Corporation provided that the Certificate of Incorporation of the surviving corporation contains provisions substantially similar to those provided in Articles FIFTH, SIXTH, Section 1, SEVENTH, EIGHTH, NINTH, TENTH, and ELEVENTH, (iii) to any transaction between this Corporation and either (a) any stockholder who owned in excess of 10 percent of the Common Stock of the Corporation immediately after the merger of Limited Interim Ohio, Inc., an Ohio corporation, into The Limited Stores, Inc. an Ohio corporation or (b) any affiliate from time to time organized, established, or incorporated of a stockholder referred to in (iii) (a) above. For the purposes hereof, an “affiliate” is any person (including a corporation, partnership, association, trust, business entity, estate or individual) who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified; “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise; and in computing the percentage of outstanding Common Stock beneficially owned by any person, the shares outstanding and the shares owned shall be determined as of the record date fixed to determine the stockholders entitled to vote or express consent with respect to such proposal. The stockholder vote, if any, required for mergers, consolidations, sales, leases, or exchanges of assets or issuances of stock or other securities not expressly provided for in this Article, shall be such as may be required by applicable law.
ELEVENTH. Section 1.Amendment of Certain Articles. The provisions set forth in this Article ELEVENTH and in Article FIFTH (dealing with the amendment of bylaws), SIXTH, Section 1 (dealing with the classified Board), SEVENTH (dealing with the prohibition against stockholder action without meetings), EIGHTH (dealing with the 75 percent vote of stockholders required for certain reorganizations), NINTH (dealing with certain matters to be considered by the Board in evaluating certain offers), and TENTH (dealing with the removal of any director) may not be amended, altered, changed, or repealed in any respect unless such repeal or amendment is approved by the affirmative vote of the holders of not less than 75 percent of the outstanding shares of the Corporation entitled to vote thereon.
THIRTEENTH. The provisions set forth in Article TWELFTH and in this Article THIRTEENTH may not be amended, altered, changed or repealed in any respect unless such action is approved by the affirmative vote of the holders of not less than 75 percent of the outstanding shares of Voting Stock (as defined in Article TWELFTH) of the Corporation at a meeting of the stockholders duly called for the consideration of such amendment, alteration, change or repeal; provided, however, that if there is an Interested Person (as defined in Article TWELFTH), such action must also be approved by the affirmative vote of the holders of not less than 75 percent of the outstanding shares of Voting Stock held by the stockholders other than the Interested Person.
Articles TENTH and TWELFTH, and Section 2 of Article ELEVENTH are hereby amended as shown below (with deletions highlighted in strike-through text and additions highlighted in underlined text):
TENTH. Any director may be removed at any annual or special stockholders’ meeting upon theaffirmative vote of the holdersof a majority in voting interest of the stockholders present in person or by proxy and voting thereon, a quorum being present of not less than 75 percent of the outstanding shares of voting stock of the Corporation at that time entitled to vote thereon; provided, however, that such director may be removed only for cause and shall receive a copy of the charges against him, delivered to him personally or by mail at his last known address at least 10 days prior to the date of the stockholders’ meeting; provided further, that directors who shall have been elected by the holders of a series or class of Preferred Stock, voting separately as a class, shall be removed only pursuant to the provisions establishing the rights of such series or class to elect such directors.
TWELFTH. Section 1.Vote Required for Certain Business Combinations. The affirmative vote of the holders of not less than75 percent a majority of the outstanding shares of “Voting Stock” (as hereinafter defined) held by stockholders other than an “Interested Person” (as hereinafter defined) shall be required for the approval or authorization of any “Business Combination” (as hereinafter defined) of the Corporation with any Interested Person; provided, however, that the75 percent exclusion of “Interested Persons” from this voting requirement shall not be applicable if:
(a) the “Continuing Directors” (as hereinafter defined) of the Corporation by at least a two-thirds vote (i) have expressly approved in advance the acquisition of the outstanding shares of Voting Stock that caused such Interested Person to become an Interested Person, or (ii) have expressly approved such Business Combination either in advance of or subsequent to such Interested Person’s having become an Interested Person; or
(b) the cash or fair market value (as determined by at least two-thirds of the Continuing Directors) of the property, securities or “Other Consideration to be Received” (as hereinafter defined) per share by holders of Voting Stock of the Corporation in the Business Combination is not less than the “Fair Price” (as hereinafter defined) paid by the Interested Person in acquiring any of its holdings of the Corporation’s Voting Stock.
Section 2.Definitions. Certain words and terms as used in this Article TWELFTH shall have the meanings given to them by the definitions and descriptions in this Section.
2.1.Business Combination. The term “Business Combination” shall mean (a) any merger or consolidation of the Corporation or a subsidiary of the Corporation with or into an Interested Person, (b) any sale, lease, exchange, transfer or other disposition, including without limitation, a mortgage or any other
security device, of all or any “Substantial Part” (as hereinafter defined) of the assets either of the Corporation (including without limitation, any voting securities of a subsidiary) or of a subsidiary of the Corporation to an Interested Person, (c) any merger or consolidation of an Interested Person with or into the Corporation or a subsidiary of the Corporation, (d) any sale, lease, exchange, transfer or other disposition, including without limitation, a mortgage or other security device, of all or any Substantial Part of the assets of an Interested Person to the Corporation or a subsidiary of the Corporation, (e) the issuance or transfer by the Corporation or any subsidiary of any securities of the Corporation or a subsidiary of the Corporation to an Interested Person, (f) any reclassification of securities, recapitalization or other comparable transaction involving the Corporation that would have the effect of increasing the Voting power of any Interested Person with respect to Voting Stock of the Corporation, and (g) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Combination.
2.2.Interested Person. The term “Interested Person” shall mean and include any individual, corporation, partnership or other person or entity which, together with its “Affiliates” and “Associates” (as defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect at the date of the adoption of this Article TWELFTH by the stockholders of the Corporation), “Beneficially Owns” (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect at the date of the adoption of this Article TWELFTH by the stockholders of the Corporation) in the aggregate 20 percent or more of the outstanding Voting Stock of the Corporation, and any Affiliate or Associate of any such individual, corporation, partnership or other person or entity. Without limitation, any share of Voting Stock of the Corporation that any Interested Person has the right to acquire at any time (notwithstanding that Rule 13d-3 deems such shares to be beneficially owned only if such right may be exercised within 60 days) pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise, shall be deemed to be Beneficially Owned by the Interested Person and to be outstanding for purposes of this definition. An Interested Person shall be deemed to have acquired a share of the Voting Stock of the Corporation at the time when such Interested Person became the Beneficial Owner thereof. With respect to the shares owned by Affiliates, Associates or other persons whose ownership is attributed to an Interested Person under the foregoing definition of Interested Person, if the price paid by such Interested Person for such shares is not determinable by two-thirds of the Continuing Directors, the price so paid shall be deemed to be the higher of (a) the price paid upon the acquisition thereof by the Affiliate, Associate or other person or (b) the market price of the shares in question at the time when the Interested Person became the Beneficial Owner thereof.
2.3Voting Stock. The term “Voting Stock” shall mean all of the outstanding shares of Common Stock of the Corporation and any outstanding shares of Preferred Stock entitled to vote on each matter on which the holders of record of Common Stock shall be entitled to vote, and each reference to a proportion of shares of Voting Stock shall refer to such proportion of the votes entitled to be cast by such shares.
2.4Continuing Director. The term “Continuing Director” shall mean a Director who was a member of the Board of Directors of the Corporation immediately prior to the time that the Interested Person involved in a Business Combination became an Interested Person, or a Director who was elected or appointed to fill a vacancy after the date the Interested Person became an Interested Person by a majority of the then-current Continuing Directors.
2.5Fair Price. The term “Fair Price” shall mean the following: If there is only one class of capital stock of the Corporation issued and outstanding, the Fair Price shall mean the highest price that can be determined by a majority of the Continuing Directors to have been paid at any time by the Interested Person for any share or shares of that class of capital stock. If there is more than one class of capital stock of the Corporation issued and outstanding, the Fair Price shall mean with respect to each class and series of capital stock of the Corporation, the amount determined by a majority of the Continuing Directors to be the highest per share price equivalent of the highest price that can be determined to have been paid at any time by the Interested Person for any share or shares of any class or series of capital stock of the Corporation. In determining the Fair Price, all purchases by the Interested Person shall be taken into account regardless of whether the shares were purchased before or after the Interested Person became an Interested Person. Also,
the Fair Price shall include any brokerage commissions, transfer taxes and soliciting dealers’ fees paid by the Interested Person with respect to the shares of capital stock of the Corporation acquired by the Interested Person. In the case of any Business Combination with an Interested Person, a majority of the Continuing Directors shall determine the Fair Price for each class and series of the capital stock of the Corporation. The Fair Price shall also include interest compounded annually from the date an Interested Person became an Interested Person through the date the Business Combination is consummated at the publicly announced base rate of interest of Morgan Guaranty Trust Company of New York less the aggregate amount of any cash dividends paid, and the fair market value of any dividends paid in other than cash, on each share of capital stock in the same time period, in an amount up to but not exceeding the amount of interest so payable per share of capital stock.
2.6.Substantial Part. The term “Substantial Part” shall mean more than 20 percent of the fair market value as determined by two-thirds of the Continuing Directors of the total consolidated assets of the Corporation and its subsidiaries taken as a whole as of the end of its most recent fiscal year ended prior to the time the determination is being made.
2.7.Other Consideration to be Received. The term “Other Consideration to be Received” shall include, without limitation, Common Stock or other capital stock of the Corporation retained by its existing stockholders other than Interested Persons or other parties to such Business Combination in the event of a Business Combination in which the Corporation is the surviving corporation.
Section 3.Determinations by the Continuing Directors. In making any determinations, the Continuing Directors may engage such persons, including investment banking firms and the independent accountants who have reported on the most recent financial statements of the Corporation, and utilize employees and agents of the Corporation, who will, in the judgment of the Continuing Directors, be of assistance to the Continuing Directors. Any determinations made by the Continuing Directors, acting in good faith on the basis of such information and assistance as was then reasonably available for such purposes, shall be conclusive and binding upon the Corporation and its stockholders, including any Interested Person.
ELEVENTH.Section 2.Amendments Generally. Subject to the provisions of Section 1 of this Article ELEVENTH, tThe Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.
ADMITTANCE SLIP
2016 ANNUAL MEETING OF STOCKHOLDERS
Date, Time and Place of Meeting:
| | |
Date:
| | Thursday, May 19, 2016 |
| |
Time:
| | 8:30 a.m., Eastern Time |
| |
Place:
| | Three Limited Parkway |
| | Columbus, Ohio 43230 |
Attending the Meeting:
Stockholders who plan to attend the meeting in person must bring this admittance slip and a photo identification to gain access. Because of necessary security precautions, bags, purses and briefcases may be subject to inspection. To speed the admissions process, stockholders are encouraged to bring only essential items. Cameras, camcorders or videotaping equipment are not allowed. Photographs or videos taken by the Company at the meeting may be used by the Company. By attending, you waive any claim or rights to these photographs.
For more information about attending the annual meeting, please visit the website atwww.lb.com or contact Investor Relations at (614) 415-7585.
| | |
L BRANDS, INC.
ATTENTION: INVESTOR RELATIONS
P.O. BOX 16000
THREE LIMITED PARKWAY
COLUMBUS, OH 43230
| | 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 the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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 via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
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 the day before the cut-off date or meeting date.
Have your proxy card in hand when you call and then follow the instructions.
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.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: x
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
CONTENTS
| | | | | | | | |
The Board of Directors recommends you vote FOR |
the following: | | | | | | |
| | | |
1. Election of Directors
| | For | | Against | | Abstain |
| | | |
Nominees
| | | | | | |
| | | |
01 Dennis S. Hersch
| | ¨ | | ¨ | | ¨ |
| | | |
02 David T. Kollat
| | ¨ | | ¨ | | ¨ |
| | | |
03 Leslie H. Wexner
| | ¨ | | ¨ | | ¨ |
|
The Board of Directors recommends you vote FOR |
the following proposals: |
| | | |
2. Ratification of the appointment of
| | For | | Against | | Abstain |
independent registered public
| | | | | | |
accountants
| | ¨ | | ¨ | | ¨ |
| | | |
3. Proposal to amend the certificate of
| | | | | | |
incorporation to remove supermajority
| | | | | | |
voting requirements
| | ¨ | | ¨ | | ¨ |
| | | |
4. Advisory vote to approve named
| | | | | | |
executive officer compensation
| | ¨ | | ¨ | | ¨ |
| | | |
For address change/comments, mark here.
(see reverse for instructions)
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| | | | Yes | | No | | |
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Please indicate if you plan to attend this meeting | | ¨ | | ¨ | | |
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The Board of Directors recommends you vote AGAINST |
the following proposal: | | | | | | |
| | For | | Against | | Abstain |
| | | |
5. Stockholder proposal on proxy access
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Note:Such other business as may | | | | | | |
properly come before the
| | | | | | |
meeting or any
| | | | | | |
adjournment thereof.
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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.
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Signature [PLEASE SIGN WITHIN BOX] | | Date |
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Signature [Joint Owners]
| | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The COMBINED Annual Report
& Proxy Statement is/are available atwww.proxyvote.com.
TABLE OF CONTENTS
This Proxy is Solicited on behalf of the Board of Directors for the Annual Meeting of Stockholders
on May 19, 2016 8:30 AM
The undersigned hereby appoints Leslie H. Wexner and Stuart B. Burgdoerfer, and each of them, proxies, with full power of substitution, to vote for the undersigned all shares of Common Stock of L Brands, Inc. which the undersigned would be entitled to vote if personally present at the Annual Meeting of Stockholders to be held on May 19, 2016 at 8:30 a.m., Eastern Time, and at any adjournments thereof, upon the matters described in the accompanying Proxy Statement and upon any other business that may properly come before the meeting or any adjournments thereof.
SAID PROXIES ARE DIRECTED TO VOTE AS MARKED ON THE REVERSE SIDE AND IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THIS MEETING OR ANY ADJOURNMENTS THEREOF.
Address change/comments:
(If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.)
(Continued and to be signed
on reverse side)
