| | NOMINATING COMMITTEE | | | | The function of the Nominating Committee is to aid the Board in meeting its responsibilities with regard to: • the organization and operation of the Board; • selection of nominees for election to the preparationBoard; • the evaluation of Board procedures and filing of director stock ownership forms withperformance; and • social corporate responsibility, sustainability, and other corporate governance matters. The Nominating Committee developed and reviews annually our Corporate Governance Guidelines, which were adopted by the SEC. We also reimburse travel expenses to attend Board and Committee meetings and director continuing education expenses. The Compensation Committee is charged with reviewing and making recommendations toare available under the Board regarding director compensation. In making its recommendations, the Compensation Committee considers the overall size“Corporate Governance” section of our website at investors.ae.com. All members of the Board, the significant time committed by each of our directors to the performance of their duties, as well as peer data and input from the Compensation Committee’sNominating Committee are independent compensation consultant. In the past, the Compensation Committee has engaged FW Cook to conduct comprehensive reviews and competitive assessments of the Company’snon-employee director compensation program. The Board did not make any changes to its director compensation program during Fiscal 2018.under NYSE listing standards. | | Sujatha Chandrasekaran | | | | | | | | | | | | | Fiscal 2018 Director Compensation(1) | | | Name | | Fees Earned or Paid in Cash(2) | | | Stock Awards(3) | | | Total | | Sujatha Chandrasekaran | | $ | 81,400 | | | $ | 130,400 | | | $ | 211,800 | | Thomas R. Ketteler | | $ | 152,500 | | | $ | 150,000 | | | $ | 302,500 | | Cary D. McMillan | | $ | 175,000 | | | $ | 150,000 | | | $ | 325,000 | | Janice E. Page | | $ | 170,000 | | | $ | 150,000 | | | $ | 320,000 | | David M. Sable | | $ | 97,500 | | | $ | 150,000 | | | $ | 247,500 | | Noel J. Spiegel | | $ | 245,000 | | | $ | 150,000 | | | $ | 395,000 | |
Deborah A. Henretta (1) | Fiscal 2018 refers to thefifty-twoThomas R. Ketteler Cary D. McMillan Janice E. Page (Chair) David M. Sable Noel J. Spiegel
| | 7 |
Stockholder Outreach We welcome feedback and value regular dialogue with our stockholders. On a regular basis, we invite stockholders to meet with senior management. In Fiscal 2020, the Company continued to have extensive engagement with our stockholders. Throughout the year, our CEO and senior management held numerous meetings with investors and participated in several virtual investor conferences, during which we met with current and prospective stockholders. These meetings were generally focused on Company performance, specific measures to successfully manage through the COVID-19 pandemic and long-term strategic initiatives aimed at driving growth and stockholder returns. Additionally, management hosted a virtual investor meeting in January 2021 during which we presented our Real Power. Real Growth value creation plan and unveiled our long-term financial outlook. The content of these meetings and discussions were reported to the Board, and management and the Board discussed comments and business insights provided by these stockholders. We expect to continue such discussions prior to the 2021 Annual Meeting and, as a matter of policy and practice, foster and encourage engagement with our stockholders on an ongoing basis. Communications with the Board The Board provides a process for stockholders and all interested parties to send communications to the independent members of the Board, as described on our Investors website at investors.ae.com. Stockholders wishing to communicate with the Board may send an email to boardofdirectors@ae.com or write to: American Eagle Outfitters, Inc. at our principal executive offices located at 77 Hot Metal Street, Pittsburgh, PA 15203, c/o the Corporate Secretary. Communications intended for a specific director or directors (such as the Lead Independent Director or independent directors) should be addressed to his, her or their attention c/o the Corporate Secretary at this address. Communications received from stockholders are provided directly to Board members following receipt of the communications (other than spam, junk mail, mass mailings, solicitations, resumes, job inquiries, or other matters unrelated to the Company). Director Attendance During Fiscal 2020, the Board met nineteen times and each member of the Board attended no fewer than 75% of the total number of meetings of the Board and of the Committee(s) on which such director served for the period of such service. It is our expectation, but not a requirement, that all current directors attend the Annual Meeting of Stockholders. All members of the Board virtually attended our 2020 Annual Meeting. | | | | | | 36 | | | | |  |
| CORPORATE GOVERNANCE week period ended February 2, 2019. Ms. Henretta did not join the Board until February 14, 2019 and, thus, did not receive Fiscal 2018 compensation from the Company for her services on the Board. |
(2) | Amounts represent fees earned or paid during Fiscal 2018. The table below sets forth the annual director cash fees, which are payable in installments on the first business day of each calendar quarter.
Corporate Citizenship & ESG An integral component of our Company culture is driving positive change without compromising who we are: a REAL brand that our customers and associates are proud to support. Our purpose is to show the world that there is REAL power in the optimism of youth. Throughout Fiscal 2020, we continued a strong emphasis on sustainability, philanthropy, and associate engagement, consistent with AEO’s REAL culture in the areas of human capital management – including I&D – as well as charitable giving and sustainability. Human Capital Management Our values of People, Innovation, Passion, Integrity, and Teamwork are the backbone of our Company and are at the center of every decision, every product and every interaction - they represent the foundation of our REAL culture. We all have a vital role to play in creating an environment in which everyone feels respected and empowered while we continue to grow as a community that promotes individuality and difference. We celebrate the diversity of one through the inclusion of many. To evaluate our REAL culture, we look holistically at all the beliefs, values and behaviors that reflect how our best work is done. We aim to ensure that there is alignment between what is espoused and what is practiced. Our consistently positive culture internal employee satisfaction scores, exit survey data, and external Glassdoor ratings demonstrate the achievement of this goal. Listening, Observing, Supporting, and Informing comprises our culture model by: Listening to our associates, customers and candidates through reviews of culture surveys, exit surveys, Glassdoor reporting, LinkedIn responses, and hotline reporting; we also conduct open door engagement, Company-wide town halls, and roundtables on a periodic basis. Observing who we are and what our associates are doing by studying our demographic data and turnover. Supporting a positive Company culture through programs and processes that promote our strong values and address leadership development opportunities, work-life integration, well-being initiatives, fair pay initiatives, family support, and inclusion and diversity programs. Informing and clearly communicating our values, modeling the behaviors we expect, and providing training and feedback. Our Board plays an important role in the oversight of our talent and culture and devotes time each quarter to receiving updates from senior management on employee engagement, turnover, and retention, I&D, talent development, leadership, and succession planning initiatives. During Fiscal 2020, we included I&D and health and safety objectives in our corporate annual incentive compensation goals, reinforcing the Company’s priorities to Protect our People. Talent Management Programs We utilize an integrated set of talent management tools and programs, rooted in our values that thread through the entire talent lifecycle. Consistent talent reviews, performance evaluations and succession planning have contributed to a full-time voluntary turnover rate, including our store associates, of approximately 19% for Fiscal 2020, which is consistent with our retail peer group and compares to a 24% five-year AEO average. We also have a full-time promotion rate of approximately 15% for Fiscal 2020. Associate development is supported through numerous programs, including AEO Academy, an online training platform that provides associates with continuous learning opportunities. Over 1,300 modules gained over 2.7 million views through this platform during Fiscal 2020. Inclusion & Diversity We believe that truly diverse workplace is a result of an inclusive culture. It is about more than simply bringing together people who are different; it is about celebrating what makes us REAL. Our values are at the center of every decision, product, and interaction. This means making sure that all people are respected and feel that being their authentic selves will not be a barrier to personal or professional fulfillment and growth. We are a global company with people from many different backgrounds. In the U.S. alone, as of January 30, 2021, approximately 40% of our associates self-identified as a POC. Specifically, our U.S. population is approximately 59% White, 23% Hispanic, 9% Black, 4% Asian, 4% two or more races or other, and 1% not reported. Globally, 78% of our associates self-identified as women. | | | | | 2021 Proxy Statement | | | | | 37 |
We have three I&D pillars: | | | | | | | | | Hiring | | Culture | | Development | | Focuses on increasing the representation of diverse candidates and new hires by developing and executing inclusive recruitment and hiring practices and strategies. | | Focuses on the continued development of an inclusive workplace through the expansion and support of associate groups, promoting educational opportunities, and building awareness around cultural celebrations and community partnerships. | | Focuses on equipping our leaders and our associates with the necessary resources to create and maintain an inclusive workplace while advancing the careers of associates from historically marginalized groups. |
During Fiscal 2020, we believe that we made significant strides in I&D efforts, including: Inclusive leadership and functional I&D trainings and incorporation of training and educational content into our Learning Management System; Announcement of the Real Change Scholarship for Social Justice, a $5 million commitment created to advance educational opportunities for full- and part-time AEO associates, who are actively driving anti-racism, equality and social justice initiatives; Appointment of the Company’s first Chief Inclusion & Diversity Officer; Expanding on the ethnic diversity of our Board; Implementation of a hiring policy designed to increase candidate and new hire diversity; Outreach to HBCUs and Minority Student Groups through retail education and co-mentoring programs as well as the establishment with peers of a dedicated program to educate diverse students about career opportunities within the retail industry, the REP; and, Inclusion of I&D progress in our Fiscal 2020 annual incentive plan metrics to drive accountability for our commitments. Total Rewards Our compensation and benefits programs serve to reinforce the Company’s values and culture and they work in tandem to deliver a competitive, equitable, and relevant overall package that supports, attracts and retains our talented teams. Our compensation programs are designed to attract and retain highly skilled, performance-oriented associates who live our brands and embody the spirit of authenticity and innovation that we cultivate. We focus on delivering simple, straightforward compensation programs that our associates can easily understand ensuring that our teams are rewarded for delivering results is a key priority. We reinforce the importance of each individual’s contributions towards achieving our larger company goals and share in our success as a team. We aspire to compensation decisions that are fair and equitable, consistently evaluating compensation through both an internal and external lens. We focus on internal pay equity and conduct regular benchmarking to ensure competitiveness to the external market. Our compensation programs are composed of three key elements: Competitive base pay rates, which are aligned to specific roles and skills, local market rates, and relevant experience; Incentive bonuses for full-time associates that are structured to deliver financial rewards for the delivery of monthly, quarterly, or annual results; and Annual stock awards for over 300 leaders throughout areas of the business, including the senior management team, that provide a commonality of interest between our leaders and stockholders. We recognize that benefits are highly personal, and we offer a broad suite of benefits to our workforce, recognizing the varied needs and priorities of our associates. Our full-time associates have access to a variety of medical, dental and vision plan offerings, ensuring that associates can select plans that satisfy their individual and family needs. In the U.S., our largest market, we also offer the following benefits to our workforce: We recognize the importance of many aspects of health and wellness and focus on plans that support physical, medical, and financial health. All associates have access to digital behavioral health therapy, a gym/online fitness discount program, AEO’s Employee Stock Purchase Plan, pet insurance, discounts on merchandise, and 401(k) benefits with Company match; | | | | | | 38 | | | | | |
All associates that are enrolled in our medical insurance have access to: 100% employer-paid behavioral telehealth and medical telemedicine to ensure consistent access to convenient care; behavioral health programs to support mental health; fertility management benefits for our associates who are focused on expanding their families; digital management programs for chronic conditions and digital physical therapy; prescription drug savings programs; and access to second opinions, surgical and medical decision support and claims advocacy; and All full-time associates have the following additional employer-paid benefits: paid time off; life insurance, short-term and long-term disability insurance; well-being programs, inclusive of access to health coaches and lifestyle programs to assist with managing chronic conditions, nutrition, smoking cessation and weight loss; employee assistance programs; flexible spending accounts; benefits to support parents of children with disabilities and/or challenges brought forth by the pandemic; mobile apps for fertility, maternity, and parenting; support for nursing mothers on business travel; and additional caregiver programs. In light of the COVID-19 pandemic, we introduced additional caregiver benefits to support those working at home and/or trying to support children attending school virtually by providing access to subsidized back-up care through calendar 2021. Health and Safety The health and safety of our workforce and customers is deeply rooted in our culture and business. Our response to the COVID-19 pandemic was immediate and deliberate. We put our people first and we implemented the following health and safety measures to care for our associates, customers and partners: We instituted industry-leading safety protocols across our operations, including the procurement of masks and personal protective equipment (“PPE”) for all teams, the hiring of an AEO medical consultant, physical construction to enable social distancing mandates, temperature check stations, installing infrared lighting and air filtration systems in the distribution centers, new breakroom and cafeteria protocols, creating training and videos to explain new safety measures and expectations, and on-site nurses. After temporary store closures in the spring, we drafted and deployed a comprehensive global store re-opening playbook (ensuring customer safety, managing capacity restrictions, reduced operating hours, curbside pickup, and touchless checkout). During Fiscal 2020, we created the COVID-19 Associate Relief Fund to provide grants to eligible AEO associates who have been adversely impacted by COVID-19; distributed AEO Foundation grants to non-profits in local communities; and donated over $1 million nationally to COVID-19 relief efforts, including donating gift cards and more than one million masks to front-line workers in cities most in need. Charitable Giving We are committed to showing the world that there is REAL power in the optimism of youth by supporting causes that empower teens and young adults and by rolling up our sleeves to make a REAL difference in our communities. In 1999, we established the AEO Foundation to maximize the impact of our efforts and to formalize our commitment to giving back. AEO Foundation board members and officers consist of associates across the organization who bring a wealth of knowledge and experience on charitable giving. Cary McMillan, a member of the AEO Board of Directors also joined the AEO Foundation Board in Fiscal 2019. Management provides updates quarterly to the Nominating Committee on various philanthropic topics and activities involving AEO and the AEO Foundation including national charity partnerships, customer engagement activations, major community initiatives, and associate activities. In Fiscal 2020, AEO, the AEO Foundation, and our customers donated more than $5.4 million to causes that are important to our associates and customers. Aerie continued to promote body acceptance as well as health and wellness among its customers through partnerships with the National Eating Disorders Association, Bright Pink and the Special Olympics’ Global Week of Inclusion: Aerie proudly partnered once again with the National Eating Disorders Association to support prevention and reduce the stigma associated with eating disorders. Aerie’s 2020 campaign raised more than $200,000 through a limited-edition body confidence T-shirt with 100% of sales benefiting NEDA, customer donations in stores, and a $1 donation for every unretouched photo shared on social media with #AerieREAL. | | | | | 2021 Proxy Statement | | | | | 39 |
Fiscal 2020 marked the 11th year that Aerie has honored Breast Cancer Awareness Month and joined forces with Bright Pink, a non-profit dedicated to saving lives from breast and ovarian cancers by empowering women to be proactive about their health at a young age. Aerie celebrated Special Olympics’ Global Week of Inclusion and raised $245,000 for Special Olympics via a limited-edition Better Together T-shirt with 100% of sales being donated and in partnership with customer donations. American Eagle empowered its customers to support causes they care about including equality, the fight against hunger, voter registration and mental health. In partnership with Aerie and the AEO Foundation, we pledged $500,000 in support to the NAACP Legal Defense and Educational Fund, Inc., which fights for criminal justice reform, voting rights protections, education equity, economic justice and an end to systemic bias and racism. For Pride, we are proud to partner with It Gets Better Project, an organization that uplifts, empowers and connects LGBTQ+ youth around the world. Since our partnership launch in 2017, American Eagle and our customers have donated more than $1.8 million including sales of our AE Pride Collection. During the holiday season, AE and Aerie partnered with Feeding America to help in the fight to end hunger. American Eagle, Aerie and our customers raised enough funds to provide more than 15.8 million meals to those in need. In 2020, AE launched This Is Our Time, a campaign mobilizing customers and associates to register to vote in the presidential election. The initiative included a partnership with HeadCount, a non-partisan organization that uses the power of music to register young people to vote and participate in democracy. Thanks to support from AE and Aerie, HeadCount more than doubled its goal of voter registrations during this election cycle by registering more than 432,000 Americans to vote. In addition, AE, Aerie and our customers stepped up in a huge way by raising more than $400,000 to support Headcount’s work. Throughout Fiscal 2020, we partnered with Crisis Text Line, a 24/7 support line for those in crisis, to help provide access to free, confidential support. To commemorate the 50th anniversary of Earth Day, AE and Aerie partnered with One Tree Planted to underwrite and plant 5,000 trees. Together, with our AE and Aerie customers, we have enabled One Tree Planted to plant more than 160,000 trees across the U.S. and Canada since 2019. COVID-19 Assistance The COVID-19 pandemic impacted every person in our AEO family and in our communities. Together, with the AEO Foundation, American Eagle and Aerie, AEO has contributed more than $1 million to COVID-19 relief efforts and has donated more than one million facemasks. In addition, 2,200 American Eagle and Aerie gift cards were distributed to boost morale of medical personnel. The AEO Foundation established a COVID-19 Assistance Fund for associates and their family members who have been impacted by COVID-19. Additionally, the AEO Foundation issued grants and much needed protective masks and gloves to first responders and local medical centers in our distribution center communities. Sustainability Doing the right thing, continually innovating and caring about the global community are foundational to AEO’s culture. Environmental In Fiscal 2019, AEO introduced a comprehensive plan to be carbon-neutral in our own operations by 2030 with a commitment to water reduction, energy reduction, and the use of more sustainable raw materials as follows: Achieve carbon neutrality in all of AEO’s owned and operated facilities (offices, stores, and distribution centers) and employee business travel by 2030. Reduce carbon emissions 40% by 2030 and 60% by 2040 in AEO’s manufacturing from a 2018 base year. Implement the following throughout the supply chain by 2023: | o | Increase the amount of water being recycled by our laundries to 50%. |
| o | Reduce water usage in jeans production by 30%. |
| | | | | | 40 | | | | | |
| o | Ensure that wastewater from water-intensive facilities is free from hazardous chemicals. |
| o | All cotton used in products will be 100% sustainably sourced. |
| o | Use 50% sustainable polyester. |
| o | Ensure that 100% of viscose is from non-endangered forests and increase sourcing of sustainably produced viscose fibers. |
AEO’s commitment to sustainability is ongoing and we will continue to: Work together as an industry leader to build partnerships in order to contribute to broad changes within garment manufacturing. Reduce the use of plastic in stores, offices, and throughout the supply chain, and shift to recycled plastic content where possible. Strategically partner with industry initiatives and multi-stakeholder organizations to influence policy change. Uphold a commitment to recycling and paper reduction in our owned facilities. Encourage customers to reduce apparel waste through jeans recycling in American Eagle stores and bra recycling in Aerie stores. During Fiscal 2020, we also shared that we: | • | | Adopted a Climate Policy in December 2020 that can be found at www.aeo-inc.com/sustainability/; |
Joined RE100, a global initiative run by The Climate Group in partnership with CDP that brings together industry-leading businesses committed to the use of renewable power; Signed the UN Fashion Industry Charter for Climate Action to drive the fashion industry to net-zero emissions no later than 2050; Developed Science Based Targets (greenhouse gas reduction goals aligned with climate science) and submitted these targets to the SBTi, an NGO consortium that validates company commitments; and Launched REAL GOOD, an offering of the most sustainable items in our collection. Supply Chain We are also committed to responsibly sourcing and creating the products that our customers love to wear. During Fiscal 2020, we launched REAL GOOD, an offering of the most sustainable items in our collection. Real Good styles include feel-good, good for the planet materials that have been sustainably produced and/or sourced, such as: recycled polyester; recycled nylon; and cotton that’s recycled, organic and/or sustainably sourced through the Better Cotton initiative. Real Good jeans are made in factories that meet expectations for our Water Leadership Program. Those expectations include water reduction and management, wastewater without restricted or hazardous chemicals, and water recycling. Our jeans factories are saving more than one billion gallons of water each year and we’ve used the equivalent of sixty million plastic bottles through recycled polyester. We are dedicated to the highest level of social responsibility. Our Vendor Code of Conduct is based on international labor standards and implemented in all of our manufacturing facilities. We believe that our compliance program focus should be about engagement and capacity building, and not just strictly following the law. We are members of the Accord on Fire and Building Safety in Bangladesh and have worked with our suppliers and factories there to improve safety conditions, and have taken that experience to focus deeply on safety in other countries. We have conducted worker surveys in many of our strategic factories in order to hear from workers directly and understand their needs and concerns and ensure that their voices can also be heard by factory management. Finally, we have invested, with our factories, in the HERproject, a program that focuses on training women on health, financial planning, and gender equality. | | | | | 2021 Proxy Statement | | | | | 41 |
ESG Oversight Structure The full Board ensures that the ESG risks and opportunities are integrated into the Company’s long-term strategy. Each of the Committees has responsibility for the oversight of our ongoing ESG-related activities as outlined below and provide regular reports to the full Board. Annual Retainer
| | | | | | | | | ENVIRONMENTAL | | SOCIAL | | GOVERNANCE | | | | | Climate change (NGCSR) | | Culture / Workplace Inclusion and Diversity (AC) | | Executive compensation (CC) | | | | | Energy management (NGCSR) | | Human Capital Management (CC ) | | Business Ethics (AC) | | | | | Water use and sourcing (NGCSR) | | Human Rights (NGCSR) | | Compliance (AC) | | | | | Natural resources scarcity (NGCSR) | | Health and Wellness (CC) | | Board Structure (NGCSR) | | | | | Environmental impact of product portfolio (NGCSR) | | Product Safety (NGCSR) | | Board composition and diversity (NGCSR) | | | | | Emissions (NGCSR) | | Labor Practices (CC) | | Shareholder rights (NGCSR) | | | | | Raw material sourcing(NGCSR) | | Privacy and Data Security (AC) | | Anti-Corruption, Bribery (AC) | | | | | Packaging material and waste (NGCSR) | | Charitable Giving (NGCSR) | | |
$
65,000
| ✓ | Compensation Committee (CC) |
| ✓ | Nominating, Governance and Corporate Social Responsibility Committee (NGCSR) |
Related Party Transactions We have a Related Party Transaction Policy (the “Policy”) to allow us to identify, document, and properly disclose related party transactions. The Policy applies to our directors and executive officers, as well as all associates who have authority to enter into commitments on behalf of the Company. Under the Policy, a related party transaction is any transaction to which we or any of our subsidiaries is a participant and in which a related party has a direct or indirect material interest. Examples of transactions include the purchase or sale of goods, the provision of services, the rental of property, or the licensing of intellectual property rights. Additionally, the following constitute related party transactions: (1) transactions where a related party or a member of such related party’s immediate family is a supplier of goods or services, owns or is employed by a business that supplies us; (2) the employment of a member of such related party’s immediate family by us; or (3) an applicable related party’s service on the board of directors of a business that supplies goods or services to us. Certain related party transactions must be approved in advance by the Audit Committee if they involve a significant stockholder, director, or executive officer. All other related party transactions must be disclosed in writing to, and approved in advance by, our General Counsel and our Chief Financial Officer. Each quarter, each individual covered by the Policy is required to certify that any related party transaction has been fully and accurately disclosed in our filings with the SEC. In the ordinary course of business, we have entered into agreements with affiliates of Jay L. Schottenstein, our Executive Chairman of the Board and Chief Executive Officer. We believe that each of these agreements is on terms at least as favorable to us as could be obtained in an arm’s length transaction with an unaffiliated third party. The material terms of these transactions are described below. In each case, the transaction was approved in advance by the Audit Committee in accordance with our Policy. | | | | | | 42 | | | | | |
Additional Annual Retainer for Committee Service (per Committee)
| | $
| 20,000
| | Additional Annual Retainer for Committee Chairs
| | | | | Audit Committee
| | $
| 40,000
| | Compensation Committee
| | $
| 20,000
| | Nominating and Corporate Governance Committee
| | $
| 15,000
| | Additional Annual Retainer for Lead Independent Director
| | $
| 50,000
| |
| The Board has a per meeting fee of $2,500 for any Board and/or Committee meetings attended by anon-employeeCORPORATE GOVERNANCE director in excess of the planned number of meetings for the fiscal year. The additional meeting fees are payable quarterly following the end of the previous quarter. For Fiscal 2018, the amounts above under theFees Earned or Paid in Cashcolumn include the following additional meeting fees: Ms. Chandrasekaran —$7,500; Mr. Ketteler—$27,500; Mr. McMillan—$30,000; Ms. Page—$30,000; Mr. Sable—$12,500; and Mr. Spiegel—$30,000. |
|
(3) | Amounts include stock awards granted in Fiscal 2018 valued on the date of grant.Non-employee directors receive an automatic, fully vested stock grant of a number of shares equal in value to $37,500 based on the closing sale price per share of our stock on the first day of each calendar quarter under our 2017 Stock Award and Incentive Plan, as Amended and Restated Effective March 14, 2018 (the “2017 Plan”). Directors may defer receipt of up to 100% of the shares payable under the quarterly stock grant in the form of share units. Messrs. Ketteler, McMillan and Spiegel elected to defer their quarterly share retainers during calendar 2018 and 2019. Ms. Henretta and Mr. Sable also elected to defer their quarterly share retainer during calendar 2019.
Leases During Fiscal 2016, we entered into a store lease for an AE flagship store in Las Vegas with SG Island Plaza LLC (“SG Island Plaza”), an entity in which an affiliate of Mr. Schottenstein has a 25% interest. Pursuant to that lease, we paid rent and other expenses (net of COVID-19 rent abatements) of approximately $2.5 million during Fiscal 2020. In addition to these charges, we also may incur an annual payment equal to a percentage of the applicable store’s gross sales in excess of specified thresholds. The Company did not incur any such percentage rent payments related to this lease in Fiscal 2020. The lease expires in September 2027. In April 2018, we entered into a store lease for an Aerie store in Las Vegas with SG Island Plaza. Pursuant to that lease, we paid rent and other expenses (net of COVID-19 rent abatements) of approximately $1.5 million during Fiscal 2020. In addition to these charges, we also may incur an annual payment equal to a percentage of the applicable store’s gross sales in excess of specified thresholds. The Company did not incur any such percentage rent payments related to this lease in Fiscal 2020. The lease expires in January 2029. During Fiscal 2020, we entered into leases for three open air lifestyle stores with wholly owned subsidiaries of Schottenstein Realty LLC, an affiliate of Mr. Schottenstein. Pursuant to the leases, we incur rent equal to 5% of the applicable store’s gross sales plus other expenses. An immaterial amount of rent was incurred for these leases during Fiscal 2020 due to the stores opening just prior to year end. The Company currently anticipates that rent incurred from these leases will exceed $120,000 during Fiscal 2021. These leases have terms expiring in January 2023 and January 2026 and each has a renewal option. |
| See“Ownership of Our Shares” for information about stock ownership guidelines applicable to our Board.
|
Compensation of Executive Chairman of the Board
Jay L. Schottenstein, our Chief Executive Officer, also serves as our Executive Chairman of the Board and does not receive additional compensation for this role. Mr. Schottenstein’s Fiscal 2018 compensation is set forth under the section titled “Compensation Tables and Related Information.”
| | | | | 28 | | |
| | 
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PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP (“EY”) as our independent registered public accounting firm for the fiscal year ending February 1, 2020. In the event the stockholders do not ratify the appointment of EY, the Audit Committee will reconsider its appointment. In addition, even if the stockholders ratify the appointment of EY, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that a change is in the best interest of the Company.
Representatives of EY are expected to be present at the Annual Meeting to respond to appropriate questions and to make a statement if such representatives so desire.
The Board recommends that the stockholders vote “FOR” the ratification of
the appointment of Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending February 1, 2020.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees our financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report for the year ended February 2, 2019 with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Audit Committee reviewed and discussed with the independent registered public accounting firm, who is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, its judgments as to the quality, not just acceptability, of our accounting principles and such other matters as are required to be discussed relating to the conduct of the audit under the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301 (Communications with Audit Committees). In addition, the Audit Committee has received the written disclosures and the letter from the independent accountant required by the PCAOB and has discussed with the independent registered public accounting firm its independence from management and the Company, including the matters in the written disclosures required by Rule 3526 of the PCAOB, Communication with Audit Committees Concerning Independence, and considered the compatibility of nonaudit services with the firm’s independence.
The Audit Committee discussed with our internal auditors and our independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting. The Audit Committee also carried out the additional responsibilities and duties as outlined in its charter.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report onForm 10-K for the year ended February 2, 2019 for filing with the Securities and Exchange Commission.
This report is not soliciting material, is not deemed to be filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities Act, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
This report has been furnished by the Audit Committee of the Board of Directors.
Noel J. Spiegel (Chair)
Sujatha Chandrasekaran | Steven A. Davis | Deborah A. Henretta | Thomas R. Ketteler | Cary D. McMillan | Janice E. Page | David M. Sable | Noel J. Spiegel |
In particular, the Board affirmatively determined that none of these directors had relationships that would cause them not to be independent under the specific criteria of Section 303A.02 of the NYSE Listed Company Manual. The Board also determined that each member of the Audit Committee meets the heightened independence standards required for audit committee members under the NYSE listing standards and applicable SEC rules, and considered the additional factors under the NYSE listing standards relating to members of the Compensation Committee before determining that each member of the Compensation Committee is independent. In making these determinations, the Board took into account all factors and circumstances that it considered relevant, including the following: Whether the director is currently, or at any time during the last three years was, an employee of the Company or any of its subsidiaries; | | | | | 2019 Proxy Statement
Whether any immediate family member of the director is currently, or at any time during the last three years was, an executive officer of the Company or any of its subsidiaries; Whether the director is an employee or any immediate family member of the director is an executive officer of a company that has made payments to, or received payments from, the Company or any of its subsidiaries for property or services in an amount that is in excess of the greater of $1 million, or 2% of such other company’s consolidated fiscal gross revenues in the current year or any of the past three fiscal years; Whether the director is an executive officer of a charitable organization that received contributions from the Company or any of its subsidiaries in the past three years in an amount that exceeds the greater of $1 million, or 2% of the charitable organization’s consolidated gross revenues; Whether the director or any of the director’s immediate family members is, or has been in the past three years, employed by a company that has or had, during the same period, an executive officer of the Company on its compensation committee; Whether the director or any of the director’s immediate family members is, or has been in the past three years, a partner or employee of the Company’s independent registered public accounting firm; and Whether the director or any of the director’s immediate family members accepted any payment from the Company or any of its subsidiaries in excess of $120,000 during the current fiscal year or any of the past three fiscal years, other than compensation for Board or board committee service and pension or other forms of deferred compensation for prior service. Mr. Schottenstein is not independent because he is an executive officer of the Company. See “Related Party Transactions” for information regarding our policy on related party transactions and transactions with affiliates of Mr. Schottenstein, who is our sole employee director. | | |
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICESDuring Fiscal 2018, EY served as our independent registered public accounting firm and, in that capacity, rendered an unqualified opinion on our consolidated financial statements as of and for the year ended February 2, 2019.
The following table sets forth the aggregate fees billed to us by our independent registered public accounting firm in each of the last two fiscal years:
| | | | | | | | | | Description of Fees | | Fiscal 2018 | | | Fiscal 2017 | | Audit Fees | | $ | 1,698,800 | | | $ | 1,666,140 | | Audit-Related Fees | | | 26,250 | | | | 25,000 | | Tax Fees | | | 381,487 | | | | 438,832 | | All Other Fees | | | 2,000 | | | | 2,000 | | Total Fees | | $ | 2,108,537 | | | $ | 2,131,972 | |
“Audit Fees” include fees billed for professional services rendered in connection with (1) the audit of our consolidated financial statements, including the audit of our internal control over financial reporting, and the review of our interim consolidated financial statements included in quarterly reports; (2) statutory audits of foreign subsidiaries; and (3) services that generally only the independent registered public accounting firm can reasonably be expected to provide, including comfort letters, consents, assistance with the review of registration statements filed with the SEC and consultation regarding financial accounting and/or reporting standards. “Audit-Related Fees” include fees billed for internal control reviews and audits of the Company’s employee benefit plan. “Tax Fees” primarily include fees billed related to federal, state and local tax compliance and consulting. “All Other Fees” include fees billed for accounting research software.
The Audit Committee has adopted a policy that requirespre-approval of all auditing services and permittednon-audit services to be performed by the independent registered public accounting firm, subject to thede minimis exceptions fornon-audit services as described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit Committee prior to the completion of the audit. The Audit Committee may form and delegate the authority to grantpre-approvals of audit and permittednon-audit services to subcommittees consisting of one or more members when it deems appropriate, provided that decisions of such subcommittee shall be presented to the full Audit Committee at its next scheduled meeting. All audit andnon-audit services provided to the Company by EY during Fiscal 2018 werepre-approved by the Audit Committee in accordance with such policy.
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Board Leadership Structure The current leadership structure of our Board consists of a combined Executive Chairman and Chief Executive Officer position that is held by Mr. Schottenstein and a Lead Independent Director appointed annually by the independent directors. The Board has determined that combining the positions of Executive Chairman and Chief Executive Officer is most appropriate for the Company at this time. Having Mr. Schottenstein in this combined position provides unified leadership and direction to the Company and strengthens his ability to develop and implement strategic initiatives. His duties include presiding over meetings of the Board, setting meeting agendas and schedules of the Board in collaboration with the Lead Independent Director, and providing strategic insight and guidance to the Board. Our Board believes that the current Board composition, along with an emphasis on Board independence, provides effective independent oversight of management. Mr. Spiegel served as our Lead Independent Director for Fiscal 2020. Our Corporate Governance Guidelines establish robust and well-defined duties for our Lead Independent Director. Our Board’s support of the current leadership structure is premised on these duties being transparently disclosed, comprehensive in nature, and actively exercised. The Lead Independent Director is responsible for: Presiding over the meetings of independent directors; Serving as a liaison between the Executive Chair and independent directors; Having input on information sent to the Board; Collaborating with the Executive Chair on meeting agendas for the Board; and Approving meeting schedules to ensure that there is sufficient time for discussion of all agenda items. The Lead Independent Director also has the authority to call meetings of the independent directors, and, if requested by major stockholders, is available, when appropriate, for consultation and direct communication with our stockholders. We believe that this leadership structure provides our Board with the greatest depth of leadership and experience, while also providing independent oversight of the Company. Mr. Spiegel also meets regularly with members of Management across the Company between Board and Committee meetings. Board Practices Meetings of Independent Directors The Board’s policy is to have the independent directors meet separately in executive session in connection with each regularly scheduled Board meeting (at least four times annually). During each meeting of the independent directors, the Lead Independent Director will preside and lead the discussion. Self-Assessments We annually evaluate the performance of the Board and its Committees. The Board believes it is important to assess both its overall performance and the performance of its Committees, and to solicit and act upon feedback received, where appropriate. As part of the Board’s self-assessment process, directors consider various topics related to Board composition, structure, effectiveness, and responsibilities, as well as the overall mix of director skills, experience, and backgrounds. Director Education/Orientation Our Board believes that director education is vital to the ability of directors to fulfill their roles, and supports Board members in their continuous learning. The Board encourages directors to participate annually in external continuing director education programs, and we reimburse directors for their expenses associated with this participation. Our directors also attend professional development forums and industry-leading conferences convened by the NACD, external accounting firms, and retail/brand organizations focused on topics that are relevant to their duties as a director. Continuing director education is also provided during Board meetings and other Board discussions as part of the formal meetings, and as stand-alone information sessions outside of meetings. In March 2020 we held a two-day educational program covering topics such as business developments and strategy, sustainability, evolving retail trends, and leadership. Throughout Fiscal 2020, our Board participated in roundtable discussions with our advisors on topics including governance matters, executive compensation, regulatory developments, and workplace culture and anti-harassment. The Board also participated in learning opportunities with management on numerous subjects, including those related to our stockholder engagement activities, regulatory developments, technology, crisis management, and cybersecurity matters. | | | | | PROPOSAL THREE: ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS 2021 Proxy Statement
As required by Section 14A
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All new directors also participate in our director orientation program during their first six months on our Board. The Board believes that it is important for each newly elected director to have an understanding of our Company, the specialty retail industry, and his or her duties as a director. We provide this initial information through a combination of reference materials, formal meetings with business leaders and in years past, tours of our facilities/store locations. The orientation program is designed to familiarize new directors with the Company’s businesses, strategies and challenges. We believe this on-boarding approach over the first six months of Board service, coupled with participation in regular Board and Committee meetings, provides new directors with a strong foundation in our Company’s businesses, connects directors with members of management with whom they will interact and oversee, and accelerates their effectiveness to engage fully in Board deliberations. Board Committees The Board has a standing Audit Committee, a standing Compensation Committee and a standing Nominating Committee. These Committees are governed by written charters, which were approved by the Board and are available on our Investors website at investors.ae.com. The following sets forth Committee memberships as of the date of this Proxy Statement. | | | | | | | | | | | | | | |  | | = Member | |  | | = Committee Chair | |  | | = Audit Committee Financial Expert |
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| | | | | | | | | | | | | | | Board Committee Responsibilities | | | | | | | Responsibilities | | Committee Members | | Meetings in Fiscal 2020 | | | | | | | | | AUDIT COMMITTEE | | | | The primary function of the Audit Committee is to assist the Board with an advisory vote onoversight of: • the overall compensationintegrity of the financial statements; • the qualifications, performance and independence of the independent registered public accounting firm; • the performance of the internal audit function; and • our named executive officers. Incompliance with regulatory and legal requirements, including the financial reporting and disclosure process. The Audit Committee also reviews, approves, and monitors the terms of any new related party transactions, as required, in accordance with the resultspolicy developed and approved by the Audit Committee. The Board has determined that each member of the stockholder vote atAudit Committee meets all applicable independence and financial literacy requirements under the 2017 Annual Meeting, advisory votes on the overall compensationNYSE listing standards. | | Sujatha Chandrasekaran Steven A. Davis * Deborah A. Henretta * Thomas R. Ketteler * Cary D. McMillan * Janice E. Page * David M. Sable Noel J. Spiegel (Chair)* * Audit Committee financial experts | | 10 | | | | | | | | | COMPENSATION COMMITTEE | | | | The primary function of our named executive officers are held every year, and there will be another such vote at the 2020 Annual Meeting. As discussed in the “Compensation Discussion and Analysis” section below, our executive compensation program is based on four core principles: performance, competitiveness, affordability and simplicity. We believe that our program design implements these principles and provides the framework for alignment between executive compensation opportunities and long-term strategic growth. Based on the advisory vote at the 2018 Annual Meeting on our executive compensation program, which was approved by approximately 97% of the votes cast, we are confident that our stockholders agree.
We have an ongoing commitment to ensuring that our executive compensation plans are aligned with our principles and evolve as the industry and business changes. We continue to engage with our stockholders to gain an understanding of their key perspectives on all aspects of the business and the broader industry, including compensation programs. We continue to evaluate and enhance plan design to align with leading practices in executive compensation.
We urge our stockholders to read the following“Compensation Discussion and Analysis” for information on our executive compensation program.
In summary, we believe that our executive compensation program has provided and continues to provide appropriate incentives and remains responsive to our stockholders’ views. Accordingly, the following resolution will be submitted for a stockholder vote at the 2019 Annual Meeting:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, as set forth in the Proxy Statement for the Annual Meeting.”
As an advisory vote, your vote will not be binding on the Company or the Board. However, our Board and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the compensation paid to our NEOs, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessaryis to address those concerns.aid the Board in meeting its responsibilities with regard to oversight and determination of executive compensation. Among other matters, the Compensation Committee:
• reviews, recommends, and approves salaries and other compensation of executive officers; • administers our stock award and incentive plans (including reviewing, recommending, and approving stock award grants to executive officers); and • reviews and makes recommendations to the Board regarding director compensation. • The Compensation Committee has the authority to retain a compensation consultant after taking into consideration all factors relevant to the adviser’s independence from management, including those specified in Section 303A.05(c) of the NYSE Listed Company Manual. The Compensation Committee has the authority to delegate its authority to subcommittees, including subcommittees consisting solely of one or more persons, other Board members, and/or officers. Additionally, the Compensation Committee may delegate to the CEO the authority to review and grant equity awards to employees who are not executive officers. All members of the Compensation Committee are independent under applicable NYSE listing standards. | | Sujatha Chandrasekaran Deborah A. Henretta Thomas R. Ketteler Cary D. McMillan (Chair) Janice E. Page David M. Sable Noel J. Spiegel | | 10 |
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| | | | | | | | | | | | | | | Board recommends that the stockholders vote “FOR” theCommittee Responsibilities | | | | | | | Responsibilities | | Committee Members | | Meetings in Fiscal 2020 | | | | | | | | | approvalNOMINATING
COMMITTEE | | | | The function of the compensationNominating Committee is to aid the Board in meeting its responsibilities with regard to: • the organization and operation of the Board; • selection of nominees for election to the Board; • the evaluation of Board procedures and performance; and • social corporate responsibility, sustainability, and other corporate governance matters. The Nominating Committee developed and reviews annually our Corporate Governance Guidelines, which were adopted by the Board and are available under the “Corporate Governance” section of our named executive officers as set forthwebsite at investors.ae.com. All members of the Nominating Committee are independent under NYSE listing standards. | | Sujatha Chandrasekaran Deborah A. Henretta Thomas R. Ketteler Cary D. McMillan Janice E. Page (Chair) David M. Sable Noel J. Spiegel | | 7 |
Stockholder Outreach We welcome feedback and value regular dialogue with our stockholders. On a regular basis, we invite stockholders to meet with senior management. In Fiscal 2020, the Company continued to have extensive engagement with our stockholders. Throughout the year, our CEO and senior management held numerous meetings with investors and participated in several virtual investor conferences, during which we met with current and prospective stockholders. These meetings were generally focused on Company performance, specific measures to successfully manage through the COVID-19 pandemic and long-term strategic initiatives aimed at driving growth and stockholder returns. Additionally, management hosted a virtual investor meeting in January 2021 during which we presented our Real Power. Real Growth value creation plan and unveiled our long-term financial outlook. The content of these meetings and discussions were reported to the Board, and management and the Board discussed comments and business insights provided by these stockholders. We expect to continue such discussions prior to the 2021 Annual Meeting and, as a matter of policy and practice, foster and encourage engagement with our stockholders on an ongoing basis. Communications with the Board The Board provides a process for stockholders and all interested parties to send communications to the independent members of the Board, as described on our Investors website at investors.ae.com. Stockholders wishing to communicate with the Board may send an email to boardofdirectors@ae.com or write to: American Eagle Outfitters, Inc. at our principal executive offices located at 77 Hot Metal Street, Pittsburgh, PA 15203, c/o the Corporate Secretary. Communications intended for a specific director or directors (such as the Lead Independent Director or independent directors) should be addressed to his, her or their attention c/o the Corporate Secretary at this address. Communications received from stockholders are provided directly to Board members following receipt of the communications (other than spam, junk mail, mass mailings, solicitations, resumes, job inquiries, or other matters unrelated to the Company). Director Attendance During Fiscal 2020, the Board met nineteen times and each member of the Board attended no fewer than 75% of the total number of meetings of the Board and of the Committee(s) on which such director served for the period of such service. It is our expectation, but not a requirement, that all current directors attend the Annual Meeting of Stockholders. All members of the Board virtually attended our 2020 Annual Meeting. | | | | | | 36 | | | | | |
| Proxy Statement for the Annual Meeting.CORPORATE GOVERNANCE |
Corporate Citizenship & ESG An integral component of our Company culture is driving positive change without compromising who we are: a REAL brand that our customers and associates are proud to support. Our purpose is to show the world that there is REAL power in the optimism of youth. Throughout Fiscal 2020, we continued a strong emphasis on sustainability, philanthropy, and associate engagement, consistent with AEO’s REAL culture in the areas of human capital management – including I&D – as well as charitable giving and sustainability. Human Capital Management Our values of People, Innovation, Passion, Integrity, and Teamwork are the backbone of our Company and are at the center of every decision, every product and every interaction - they represent the foundation of our REAL culture. We all have a vital role to play in creating an environment in which everyone feels respected and empowered while we continue to grow as a community that promotes individuality and difference. We celebrate the diversity of one through the inclusion of many. To evaluate our REAL culture, we look holistically at all the beliefs, values and behaviors that reflect how our best work is done. We aim to ensure that there is alignment between what is espoused and what is practiced. Our consistently positive culture internal employee satisfaction scores, exit survey data, and external Glassdoor ratings demonstrate the achievement of this goal. Listening, Observing, Supporting, and Informing comprises our culture model by: Listening to our associates, customers and candidates through reviews of culture surveys, exit surveys, Glassdoor reporting, LinkedIn responses, and hotline reporting; we also conduct open door engagement, Company-wide town halls, and roundtables on a periodic basis. | | | | | 2019Observing who we are and what our associates are doing by studying our demographic data and turnover. Supporting a positive Company culture through programs and processes that promote our strong values and address leadership development opportunities, work-life integration, well-being initiatives, fair pay initiatives, family support, and inclusion and diversity programs. Informing and clearly communicating our values, modeling the behaviors we expect, and providing training and feedback. Our Board plays an important role in the oversight of our talent and culture and devotes time each quarter to receiving updates from senior management on employee engagement, turnover, and retention, I&D, talent development, leadership, and succession planning initiatives. During Fiscal 2020, we included I&D and health and safety objectives in our corporate annual incentive compensation goals, reinforcing the Company’s priorities to Protect our People. Talent Management Programs We utilize an integrated set of talent management tools and programs, rooted in our values that thread through the entire talent lifecycle. Consistent talent reviews, performance evaluations and succession planning have contributed to a full-time voluntary turnover rate, including our store associates, of approximately 19% for Fiscal 2020, which is consistent with our retail peer group and compares to a 24% five-year AEO average. We also have a full-time promotion rate of approximately 15% for Fiscal 2020. Associate development is supported through numerous programs, including AEO Academy, an online training platform that provides associates with continuous learning opportunities. Over 1,300 modules gained over 2.7 million views through this platform during Fiscal 2020. Inclusion & Diversity We believe that truly diverse workplace is a result of an inclusive culture. It is about more than simply bringing together people who are different; it is about celebrating what makes us REAL. Our values are at the center of every decision, product, and interaction. This means making sure that all people are respected and feel that being their authentic selves will not be a barrier to personal or professional fulfillment and growth. We are a global company with people from many different backgrounds. In the U.S. alone, as of January 30, 2021, approximately 40% of our associates self-identified as a POC. Specifically, our U.S. population is approximately 59% White, 23% Hispanic, 9% Black, 4% Asian, 4% two or more races or other, and 1% not reported. Globally, 78% of our associates self-identified as women. | | | | | 2021 Proxy Statement | | | | | 37 |
We have three I&D pillars: | | | | | | | | | | | | Hiring | | Culture | | Development | | Focuses on increasing the representation of diverse candidates and new hires by developing and executing inclusive recruitment and hiring practices and strategies. | | Focuses on the continued development of an inclusive workplace through the expansion and support of associate groups, promoting educational opportunities, and building awareness around cultural celebrations and community partnerships. | | Focuses on equipping our leaders and our associates with the necessary resources to create and maintain an inclusive workplace while advancing the careers of associates from historically marginalized groups. |
During Fiscal 2020, we believe that we made significant strides in I&D efforts, including: Inclusive leadership and functional I&D trainings and incorporation of training and educational content into our Learning Management System; Announcement of the Real Change Scholarship for Social Justice, a $5 million commitment created to advance educational opportunities for full- and part-time AEO associates, who are actively driving anti-racism, equality and social justice initiatives; Appointment of the Company’s first Chief Inclusion & Diversity Officer; Expanding on the ethnic diversity of our Board; Implementation of a hiring policy designed to increase candidate and new hire diversity; Outreach to HBCUs and Minority Student Groups through retail education and co-mentoring programs as well as the establishment with peers of a dedicated program to educate diverse students about career opportunities within the retail industry, the REP; and, Inclusion of I&D progress in our Fiscal 2020 annual incentive plan metrics to drive accountability for our commitments. Total Rewards Our compensation and benefits programs serve to reinforce the Company’s values and culture and they work in tandem to deliver a competitive, equitable, and relevant overall package that supports, attracts and retains our talented teams. Our compensation programs are designed to attract and retain highly skilled, performance-oriented associates who live our brands and embody the spirit of authenticity and innovation that we cultivate. We focus on delivering simple, straightforward compensation programs that our associates can easily understand ensuring that our teams are rewarded for delivering results is a key priority. We reinforce the importance of each individual’s contributions towards achieving our larger company goals and share in our success as a team. We aspire to compensation decisions that are fair and equitable, consistently evaluating compensation through both an internal and external lens. We focus on internal pay equity and conduct regular benchmarking to ensure competitiveness to the external market. Our compensation programs are composed of three key elements: Competitive base pay rates, which are aligned to specific roles and skills, local market rates, and relevant experience; Incentive bonuses for full-time associates that are structured to deliver financial rewards for the delivery of monthly, quarterly, or annual results; and Annual stock awards for over 300 leaders throughout areas of the business, including the senior management team, that provide a commonality of interest between our leaders and stockholders. We recognize that benefits are highly personal, and we offer a broad suite of benefits to our workforce, recognizing the varied needs and priorities of our associates. Our full-time associates have access to a variety of medical, dental and vision plan offerings, ensuring that associates can select plans that satisfy their individual and family needs. In the U.S., our largest market, we also offer the following benefits to our workforce: We recognize the importance of many aspects of health and wellness and focus on plans that support physical, medical, and financial health. All associates have access to digital behavioral health therapy, a gym/online fitness discount program, AEO’s Employee Stock Purchase Plan, pet insurance, discounts on merchandise, and 401(k) benefits with Company match;
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COMPENSATION DISCUSSION AND ANALYSISCORPORATE GOVERNANCEThis Compensation Discussion and Analysis (“CD&A”) describes our compensation philosophy, objectives, policies, and practices with respect to our NEOs for Fiscal 2018. The following officers comprise our Fiscal 2018 NEOs:
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All associates that are enrolled in our medical insurance have access to: 100% employer-paid behavioral telehealth and medical telemedicine to ensure consistent access to convenient care; behavioral health programs to support mental health; fertility management benefits for our associates who are focused on expanding their families; digital management programs for chronic conditions and digital physical therapy; prescription drug savings programs; and access to second opinions, surgical and medical decision support and claims advocacy; and All full-time associates have the following additional employer-paid benefits: paid time off; life insurance, short-term and long-term disability insurance; well-being programs, inclusive of access to health coaches and lifestyle programs to assist with managing chronic conditions, nutrition, smoking cessation and weight loss; employee assistance programs; flexible spending accounts; benefits to support parents of children with disabilities and/or challenges brought forth by the pandemic; mobile apps for fertility, maternity, and parenting; support for nursing mothers on business travel; and additional caregiver programs. In light of the COVID-19 pandemic, we introduced additional caregiver benefits to support those working at home and/or trying to support children attending school virtually by providing access to subsidized back-up care through calendar 2021. Health and Safety The health and safety of our workforce and customers is deeply rooted in our culture and business. Our response to the COVID-19 pandemic was immediate and deliberate. We put our people first and we implemented the following health and safety measures to care for our associates, customers and partners: | • Jay L. Schottenstein, our Chief Executive Officer (the “CEO”);
We instituted industry-leading safety protocols across our operations, including the procurement of masks and personal protective equipment (“PPE”) for all teams, the hiring of an AEO medical consultant, physical construction to enable social distancing mandates, temperature check stations, installing infrared lighting and air filtration systems in the distribution centers, new breakroom and cafeteria protocols, creating training and videos to explain new safety measures and expectations, and on-site nurses. After temporary store closures in the spring, we drafted and deployed a comprehensive global store re-opening playbook (ensuring customer safety, managing capacity restrictions, reduced operating hours, curbside pickup, and touchless checkout). During Fiscal 2020, we created the COVID-19 Associate Relief Fund to provide grants to eligible AEO associates who have been adversely impacted by COVID-19; distributed AEO Foundation grants to non-profits in local communities; and donated over $1 million nationally to COVID-19 relief efforts, including donating gift cards and more than one million masks to front-line workers in cities most in need. Charitable Giving We are committed to showing the world that there is REAL power in the optimism of youth by supporting causes that empower teens and young adults and by rolling up our sleeves to make a REAL difference in our communities. In 1999, we established the AEO Foundation to maximize the impact of our efforts and to formalize our commitment to giving back. AEO Foundation board members and officers consist of associates across the organization who bring a wealth of knowledge and experience on charitable giving. Cary McMillan, a member of the AEO Board of Directors also joined the AEO Foundation Board in Fiscal 2019. Management provides updates quarterly to the Nominating Committee on various philanthropic topics and activities involving AEO and the AEO Foundation including national charity partnerships, customer engagement activations, major community initiatives, and associate activities. In Fiscal 2020, AEO, the AEO Foundation, and our customers donated more than $5.4 million to causes that are important to our associates and customers. Aerie continued to promote body acceptance as well as health and wellness among its customers through partnerships with the National Eating Disorders Association, Bright Pink and the Special Olympics’ Global Week of Inclusion: Aerie proudly partnered once again with the National Eating Disorders Association to support prevention and reduce the stigma associated with eating disorders. Aerie’s 2020 campaign raised more than $200,000 through a limited-edition body confidence T-shirt with 100% of sales benefiting NEDA, customer donations in stores, and a $1 donation for every unretouched photo shared on social media with #AerieREAL. | | | | | 2021 Proxy Statement | | | | | 39 | • Robert L. Madore, our Executive Vice President, Chief Financial Officer (the “CFO”);
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| | CORPORATE GOVERNANCE | • Charles F. Kessler, our Global Brand President, American Eagle (the “Global Brand President, AE”);
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Fiscal 2020 marked the 11th year that Aerie has honored Breast Cancer Awareness Month and joined forces with Bright Pink, a non-profit dedicated to saving lives from breast and ovarian cancers by empowering women to be proactive about their health at a young age. Aerie celebrated Special Olympics’ Global Week of Inclusion and raised $245,000 for Special Olympics via a limited-edition Better Together T-shirt with 100% of sales being donated and in partnership with customer donations. American Eagle empowered its customers to support causes they care about including equality, the fight against hunger, voter registration and mental health. In partnership with Aerie and the AEO Foundation, we pledged $500,000 in support to the NAACP Legal Defense and Educational Fund, Inc., which fights for criminal justice reform, voting rights protections, education equity, economic justice and an end to systemic bias and racism. For Pride, we are proud to partner with It Gets Better Project, an organization that uplifts, empowers and connects LGBTQ+ youth around the world. Since our partnership launch in 2017, American Eagle and our customers have donated more than $1.8 million including sales of our AE Pride Collection. During the holiday season, AE and Aerie partnered with Feeding America to help in the fight to end hunger. American Eagle, Aerie and our customers raised enough funds to provide more than 15.8 million meals to those in need. In 2020, AE launched This Is Our Time, a campaign mobilizing customers and associates to register to vote in the presidential election. The initiative included a partnership with HeadCount, a non-partisan organization that uses the power of music to register young people to vote and participate in democracy. Thanks to support from AE and Aerie, HeadCount more than doubled its goal of voter registrations during this election cycle by registering more than 432,000 Americans to vote. In addition, AE, Aerie and our customers stepped up in a huge way by raising more than $400,000 to support Headcount’s work. Throughout Fiscal 2020, we partnered with Crisis Text Line, a 24/7 support line for those in crisis, to help provide access to free, confidential support. To commemorate the 50th anniversary of Earth Day, AE and Aerie partnered with One Tree Planted to underwrite and plant 5,000 trees. Together, with our AE and Aerie customers, we have enabled One Tree Planted to plant more than 160,000 trees across the U.S. and Canada since 2019. COVID-19 Assistance The COVID-19 pandemic impacted every person in our AEO family and in our communities. Together, with the AEO Foundation, American Eagle and Aerie, AEO has contributed more than $1 million to COVID-19 relief efforts and has donated more than one million facemasks. In addition, 2,200 American Eagle and Aerie gift cards were distributed to boost morale of medical personnel. The AEO Foundation established a COVID-19 Assistance Fund for associates and their family members who have been impacted by COVID-19. Additionally, the AEO Foundation issued grants and much needed protective masks and gloves to first responders and local medical centers in our distribution center communities. Sustainability Doing the right thing, continually innovating and caring about the global community are foundational to AEO’s culture. Environmental In Fiscal 2019, AEO introduced a comprehensive plan to be carbon-neutral in our own operations by 2030 with a commitment to water reduction, energy reduction, and the use of more sustainable raw materials as follows: Achieve carbon neutrality in all of AEO’s owned and operated facilities (offices, stores, and distribution centers) and employee business travel by 2030. Reduce carbon emissions 40% by 2030 and 60% by 2040 in AEO’s manufacturing from a 2018 base year. Implement the following throughout the supply chain by 2023: | • Jennifer M. Foyle, our Global Brand President, Aerie (the “Global Brand President, Aerie”); and
| • Michael R. Rempell, our Executive Vice President, Chief Operations Officer (the “COO”)
| o | Increase the amount of water being recycled by our laundries to 50%. |
| o | This CD&AReduce water usage in jeans production by 30%.
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| o | Ensure that wastewater from water-intensive facilities is organizedfree from hazardous chemicals. |
| o | All cotton used in products will be 100% sustainably sourced. |
| o | Use 50% sustainable polyester. |
| o | Ensure that 100% of viscose is from non-endangered forests and increase sourcing of sustainably produced viscose fibers. |
AEO’s commitment to sustainability is ongoing and we will continue to: Work together as an industry leader to build partnerships in order to contribute to broad changes within garment manufacturing. Reduce the use of plastic in stores, offices, and throughout the supply chain, and shift to recycled plastic content where possible. Strategically partner with industry initiatives and multi-stakeholder organizations to influence policy change. Uphold a commitment to recycling and paper reduction in our owned facilities. Encourage customers to reduce apparel waste through jeans recycling in American Eagle stores and bra recycling in Aerie stores. During Fiscal 2020, we also shared that we: | • | | Adopted a Climate Policy in December 2020 that can be found at www.aeo-inc.com/sustainability/; |
Joined RE100, a global initiative run by The Climate Group in partnership with CDP that brings together industry-leading businesses committed to the use of renewable power; Signed the UN Fashion Industry Charter for Climate Action to drive the fashion industry to net-zero emissions no later than 2050; Developed Science Based Targets (greenhouse gas reduction goals aligned with climate science) and submitted these targets to the SBTi, an NGO consortium that validates company commitments; and Launched REAL GOOD, an offering of the most sustainable items in our collection. Supply Chain We are also committed to responsibly sourcing and creating the products that our customers love to wear. During Fiscal 2020, we launched REAL GOOD, an offering of the most sustainable items in our collection. Real Good styles include feel-good, good for the planet materials that have been sustainably produced and/or sourced, such as: recycled polyester; recycled nylon; and cotton that’s recycled, organic and/or sustainably sourced through the Better Cotton initiative. Real Good jeans are made in factories that meet expectations for our Water Leadership Program. Those expectations include water reduction and management, wastewater without restricted or hazardous chemicals, and water recycling. Our jeans factories are saving more than one billion gallons of water each year and we’ve used the equivalent of sixty million plastic bottles through recycled polyester. We are dedicated to the highest level of social responsibility. Our Vendor Code of Conduct is based on international labor standards and implemented in all of our manufacturing facilities. We believe that our compliance program focus should be about engagement and capacity building, and not just strictly following the law. We are members of the Accord on Fire and Building Safety in Bangladesh and have worked with our suppliers and factories there to improve safety conditions, and have taken that experience to focus deeply on safety in other countries. We have conducted worker surveys in many of our strategic factories in order to hear from workers directly and understand their needs and concerns and ensure that their voices can also be heard by factory management. Finally, we have invested, with our factories, in the HERproject, a program that focuses on training women on health, financial planning, and gender equality. | | | | | 2021 Proxy Statement | | | | | 41 |
ESG Oversight Structure The full Board ensures that the ESG risks and opportunities are integrated into the Company’s long-term strategy. Each of the Committees has responsibility for the oversight of our ongoing ESG-related activities as outlined below and provide regular reports to the full Board. | | | | | | | | | ENVIRONMENTAL | | SOCIAL | | GOVERNANCE | | | | | Climate change (NGCSR) | | Culture / Workplace Inclusion and Diversity (AC) | | Executive compensation (CC) | | | | | Energy management (NGCSR) | | Human Capital Management (CC ) | | Business Ethics (AC) | | | | | Water use and sourcing (NGCSR) | | Human Rights (NGCSR) | | Compliance (AC) | | | | | Natural resources scarcity (NGCSR) | | Health and Wellness (CC) | | Board Structure (NGCSR) | | | | | Environmental impact of product portfolio (NGCSR) | | Product Safety (NGCSR) | | Board composition and diversity (NGCSR) | | | | | Emissions (NGCSR) | | Labor Practices (CC) | | Shareholder rights (NGCSR) | | | | | Raw material sourcing(NGCSR) | | Privacy and Data Security (AC) | | Anti-Corruption, Bribery (AC) | | | | | Packaging material and waste (NGCSR) | | Charitable Giving (NGCSR) | | |
| ✓ | Compensation Committee (CC) |
| ✓ | Nominating, Governance and Corporate Social Responsibility Committee (NGCSR) |
Related Party Transactions We have a Related Party Transaction Policy (the “Policy”) to allow us to identify, document, and properly disclose related party transactions. The Policy applies to our directors and executive officers, as well as all associates who have authority to enter into commitments on behalf of the Company. Under the Policy, a related party transaction is any transaction to which we or any of our subsidiaries is a participant and in which a related party has a direct or indirect material interest. Examples of transactions include the purchase or sale of goods, the provision of services, the rental of property, or the licensing of intellectual property rights. Additionally, the following constitute related party transactions: (1) transactions where a related party or a member of such related party’s immediate family is a supplier of goods or services, owns or is employed by a business that supplies us; (2) the employment of a member of such related party’s immediate family by us; or (3) an applicable related party’s service on the board of directors of a business that supplies goods or services to us. Certain related party transactions must be approved in advance by the Audit Committee if they involve a significant stockholder, director, or executive officer. All other related party transactions must be disclosed in writing to, and approved in advance by, our General Counsel and our Chief Financial Officer. Each quarter, each individual covered by the Policy is required to certify that any related party transaction has been fully and accurately disclosed in our filings with the SEC. In the ordinary course of business, we have entered into agreements with affiliates of Jay L. Schottenstein, our Executive Chairman of the Board and Chief Executive Officer. We believe that each of these agreements is on terms at least as favorable to us as could be obtained in an arm’s length transaction with an unaffiliated third party. The material terms of these transactions are described below. In each case, the transaction was approved in advance by the Audit Committee in accordance with our Policy. | | | | | | 42 | | | | | |
Leases During Fiscal 2016, we entered into a store lease for an AE flagship store in Las Vegas with SG Island Plaza LLC (“SG Island Plaza”), an entity in which an affiliate of Mr. Schottenstein has a 25% interest. Pursuant to that lease, we paid rent and other expenses (net of COVID-19 rent abatements) of approximately $2.5 million during Fiscal 2020. In addition to these charges, we also may incur an annual payment equal to a percentage of the applicable store’s gross sales in excess of specified thresholds. The Company did not incur any such percentage rent payments related to this lease in Fiscal 2020. The lease expires in September 2027. In April 2018, we entered into a store lease for an Aerie store in Las Vegas with SG Island Plaza. Pursuant to that lease, we paid rent and other expenses (net of COVID-19 rent abatements) of approximately $1.5 million during Fiscal 2020. In addition to these charges, we also may incur an annual payment equal to a percentage of the applicable store’s gross sales in excess of specified thresholds. The Company did not incur any such percentage rent payments related to this lease in Fiscal 2020. The lease expires in January 2029. During Fiscal 2020, we entered into leases for three open air lifestyle stores with wholly owned subsidiaries of Schottenstein Realty LLC, an affiliate of Mr. Schottenstein. Pursuant to the leases, we incur rent equal to 5% of the applicable store’s gross sales plus other expenses. An immaterial amount of rent was incurred for these leases during Fiscal 2020 due to the stores opening just prior to year end. The Company currently anticipates that rent incurred from these leases will exceed $120,000 during Fiscal 2021. These leases have terms expiring in January 2023 and January 2026 and each has a renewal option. Agreement for Media Services The Company has an agreement with Retail Entertainment Design, LLC (“R.E.D.”) for in-store music program services. A majority of R.E.D. is owned by Jubilee-RED LLC, which is indirectly owned by trusts for which Mr. Schottenstein serves as trustee. Mr. Schottenstein does not receive any remuneration for serving as trustee of the trusts. Payments by the Company to R.E.D. during Fiscal 2020 under the agreements totaled approximately $800,000. Inventory Purchases During Fiscal 2020, the Company entered into transactions with TACKMA LLC (“TACKMA”) for the purchase of American Eagle inventory totaling $160,000 and design services of $100,000. TACKMA is indirectly owned by a trust benefitting Jeffrey Schottenstein, Mr. Schottenstein’s son. During Fiscal 2020, the Company entered into a transaction with SB360 Capital Partners, an entity in which an affiliate of Mr. Schottenstein has a 47% interest, for the purchase of hand sanitizer totaling $276,000, of which $163,000 was approved in advance by the Audit Committee. The product was available for sale in both American Eagle and Aerie stores. | | | | | 2021 Proxy Statement | | | | | 43 |
Director Compensation Directors who are employees of the Company do not receive additional compensation for serving as directors. The table below sets forth the compensation for non-employee directors during Fiscal 2020. In addition, we pay attorneys’ fees related to the preparation and filing of director stock ownership forms with the SEC. We also reimburse reasonable travel expenses to attend Board and Committee meetings and director continuing education expenses. The Compensation Committee is charged with reviewing and making recommendations to the Board regarding director compensation. In making its recommendations, the Compensation Committee considers the overall size of the Board, the significant time committed by each of our directors to the performance of their duties, as well as peer data and input from the Compensation Committee’s independent compensation consultant. In the past, the Compensation Committee has engaged FW Cook to conduct comprehensive reviews and competitive assessments of the Company’s non-employee director compensation program. The Board did not make any changes to its director compensation program during Fiscal 2020. | | | | | | | | | | | | | | | | | | | | Fiscal 2020 Director Compensation(1) | | | | | | | | | | | | | Fees Earned or Paid in Cash(2) | | | Stock Awards(3) | | | Total | | | | | | | | | | Sujatha Chandrasekaran | | | $177,500 | | | $ | 150,000 | | | $ | 327,500 | | | | | | | | | | | Steven A. Davis (4) | | | $35,833 | | | $ | 50,000 | | | $ | 85,833 | | | | | | | | | | | Deborah A. Henretta | | | $180,000 | | | $ | 150,000 | | | $ | 330,000 | | | | | | | | | | | Thomas R. Ketteler | | | $180,000 | | | $ | 150,000 | | | $ | 330,000 | | | | | | | | | | | Cary D. McMillan | | | $200,000 | | | $ | 150,000 | | | $ | 350,000 | | | | | | | | | | | Janice E. Page | | | $195,000 | | | $ | 150,000 | | | $ | 345,000 | | | | | | | | | | | David M. Sable | | | $180,000 | | | $ | 150,000 | | | $ | 330,000 | | | | | | | | | | | Noel J. Spiegel | | | $270,000 | | | $ | 150,000 | | | $ | 420,000 | | | | | |
| (1) | Fiscal 2020 refers to the 52-week period ended January 30, 2021. |
| (2) | Amounts represent fees earned or paid during Fiscal 2020. The table below sets forth the annual director cash fees, which are payable in installments on the first business day of each calendar quarter. |
| | | | | | | | Annual Retainer | | $ | 65,000 | | | | Additional Annual Retainer for Committee Service (per Committee) | | $ | 20,000 | | | | Additional Annual Retainer for Committee Chairs | | | | | | | Audit Committee | | $ | 40,000 | | | | Compensation Committee | | $ | 20,000 | | | | Nominating and Corporate Governance Committee | | $ | 15,000 | | | | Additional Annual Retainer for Lead Independent Director | | $ | 50,000 | |
| The Board has a per meeting fee of $2,500 for any Board and/or Committee meetings attended by a non-employee director in excess of the planned number of meetings for the fiscal year. The additional meeting fees are payable quarterly following the end of the previous quarter. In Fiscal 2020, the Board held 46 meetings, representing a 60% increase over the number of meetings held during Fiscal 2019. |
| (3) | Amounts include stock awards granted in Fiscal 2020 valued on the date of grant. Non-employee directors receive an automatic, fully-vested stock grant of a number of shares equal in value to $37,500 based on the closing sale price per share of our stock on the first day of each calendar quarter under our 2017 Stock Award and Incentive Plan, as follows: (i)Amended and Restated, effective March 14, 2018 (the “2017 Plan”) and the 2020 Stock Award and Incentive Plan (the “2020 Plan”). The 2020 Plan was approved by stockholders at our 2020 Annual Meeting and replaces the 2017 Plan. Directors may defer receipt of up to 100% of the shares payable under the quarterly stock grant in the form of share units. Messrs. Davis, Ketteler, McMillan and Spiegel and Ms. Henretta elected to defer their quarterly share retainers during calendar years 2020 and 2021. Mr. Sable elected to defer his quarterly share retainers during calendar year 2020. |
| See “Ownership of Our Shares” for information about stock ownership guidelines applicable to our Board. |
| (4) | Mr. Davis was appointed to the Board effective October 1, 2020. |
Compensation of Executive Chairman of the Board Jay L. Schottenstein, our Chief Executive Officer, also serves as our Executive Chairman of the Board and does not receive additional compensation for this role. Mr. Schottenstein’s Fiscal 2020 compensation is set forth under the section titled “Compensation Tables and Related Information.” | | | | | | 44 | | | | | |
PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee has appointed EY as our independent registered public accounting firm for the fiscal year ending January 29, 2022. Although stockholder ratification is not required by our bylaws or otherwise, the Board believes it is advisable to provide stockholders an opportunity to ratify this selection and is submitting the selection of EY to our stockholders for ratification as a matter of good corporate practice. In the event the stockholders do not ratify the appointment of EY, the Audit Committee will reconsider its appointment; however, the Audit Committee will have no obligation to select a new independent registered public accounting firm. In addition, even if the stockholders ratify the appointment of EY, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that a change is in the best interest of the Company. Representatives of EY are expected to be present at the 2021 Annual Meeting to respond to appropriate questions and to make a statement if such representatives so desire. The Board recommends that the stockholders vote “FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending January 29, 2022. REPORT OF THE AUDIT COMMITTEE The Audit Committee oversees our financial reporting process on behalf of the Board. Management has the primary responsibility for the consolidated financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited consolidated financial statements included in the Annual Report as of and for the year ended January 30, 2021 with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the consolidated financial statements. The Audit Committee reviewed and discussed with the independent registered public accounting firm, who is responsible for expressing an opinion on the conformity of those audited consolidated financial statements with generally accepted accounting principles, its judgments as to the quality, not just acceptability, of our accounting principles and such other matters as are required to be discussed relating to the conduct of the audit under the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301 (Communications with Audit Committees). In addition, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the PCAOB and has discussed with the independent registered public accounting firm its independence from management and the Company, including the matters in the written disclosures required by Rule 3526 of the PCAOB, Communication with Audit Committees Concerning Independence, and considered the compatibility of nonaudit services with the firm’s independence. The Audit Committee discussed with our internal auditors and our independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting. The Audit Committee also carried out the additional responsibilities and duties as outlined in its charter. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Annual Report on Form 10-K as of and for the year ended January 30, 2021 for filing with the Securities and Exchange Commission. This report is not soliciting material, is not deemed to be filed with the SEC, and is not to be incorporated by reference in any filing of the Company under the Securities Act, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. This report has been furnished by the Audit Committee of the Board of Directors. Noel J. Spiegel (Chair) Sujatha Chandrasekaran Steven A. Davis Deborah A. Henretta Thomas R. Ketteler Cary D. McMillan Janice E. Page David M. Sable | | | | | 2021 Proxy Statement | | | | | 45 |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES During Fiscal 2020, EY served as our independent registered public accounting firm and, in that capacity, rendered an unqualified opinion on our consolidated financial statements as of and for the year ended January 30, 2021. The following table sets forth the aggregate fees billed to us by our independent registered public accounting firm in each of the last two fiscal years: | | | | | | | | | Description of Fees | | Fiscal 2020 | | | Fiscal 2019 | | Audit Fees | | $ | 2,250,375 | | | $ | 1,881,500 | | Audit-Related Fees | | | 28,000 | | | | 26,250 | | Tax Fees | | | 476,667 | | | | 467,434 | | All Other Fees | | | 5,200 | | | | 4,000 | | Total Fees | | $ | 2,760,242 | | | $ | 2,379,184 | |
“Audit Fees” include fees billed for professional services rendered in connection with (1) the audit of our consolidated financial statements, including the audit of our internal control over financial reporting, and the review of our interim consolidated financial statements included in quarterly reports; (2) statutory audits of foreign subsidiaries; and (3) services that generally only the independent registered public accounting firm can reasonably be expected to provide, including comfort letters, consents, assistance with the review of registration statements filed with the SEC and consultation regarding financial accounting and/or reporting standards. “Audit-Related Fees” include fees billed for audits of the Company’s employee benefit plan. “Tax Fees” primarily include fees billed related to federal, state, and local tax compliance and consulting. “All Other Fees” include fees billed for accounting research software. The Audit Committee has adopted a policy that requires pre-approval of all audit services and permitted non-audit services to be performed by the independent registered public accounting firm, subject to the de minimis exceptions for non-audit services as described in Section 10A(i)(1)(B) of the Exchange Act that are approved by the Audit Committee prior to the completion of the audit. The Audit Committee may form and delegate the authority to grant pre-approvals of audit and permitted non-audit services to subcommittees consisting of one or more members when it deems appropriate, provided that decisions of such subcommittee shall be presented to the full Audit Committee at its next scheduled meeting. All audit and non-audit services provided to the Company by EY during Fiscal 2020 were pre-approved by the Audit Committee in accordance with such policy. | | | | | | 46 | | | | | |
PROPOSAL THREE: ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS As required by Section 14A of the Exchange Act, we are providing stockholders with an advisory vote on the overall compensation of our named executive officers. In accordance with the results of the stockholder vote at the 2017 Annual Meeting, advisory votes on the overall compensation of our named executive officers are held every year, and there will be another vote on the frequency of the say on pay vote at the 2023 Annual Meeting. As discussed in the “Compensation Discussion and Analysis” section below, our executive compensation program is based on four core principles: performance, competitiveness, affordability, and transparency. We believe that our program design implements these principles and provides the framework for alignment between executive compensation opportunities and long-term strategic growth. Based on the advisory vote at the 2020 Annual Meeting on our executive compensation program, which was approved by approximately 98% of the votes cast, we are confident that our stockholders agree. We have an ongoing commitment to ensuring that our executive compensation plans are aligned with our principles and evolve as the industry and business changes. During Fiscal 2020 our Compensation Committee reacted to unprecedented challenges by evolving our compensation program to ensure it continued to motivate, retain and reward our executives and associates while enabling our strategic growth plans. We continued to engage with our stockholders to gain an understanding of their key perspectives on all aspects of the business and the broader industry, including compensation programs. We continued to evaluate and enhance plan design to align with leading practices in executive compensation, and we believe our plan in 2020 helped lead to the strong results and stockholder returns we delivered. We urge our stockholders to read the following “Compensation Discussion and Analysis” section for information on our executive compensation program. In summary, we believe that our executive compensation program has provided and continues to provide appropriate incentives and remains responsive to our stockholders’ views. Accordingly, the following resolution will be submitted for a stockholder vote at the 2020 Annual Meeting: “RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, as set forth in the Proxy Statement for the 2021 Annual Meeting.” As an advisory vote, your vote will not be binding on the Company or the Board. However, our Board and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the compensation paid to our named executive officers (“NEOs”), we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. The Board recommends that the stockholders vote “FOR” the approval of the compensation of our named executive officers as set forth in this Proxy Statement for the Annual Meeting. | | | | | 2021 Proxy Statement | | | | | 47 |
COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis (“CD&A”) describes our compensation philosophy, objectives, policies, and practices with respect to our NEOs for Fiscal 2020. The following officers comprise our Fiscal 2020 NEOs: | | • Jay L. Schottenstein, our Chief Executive Summary setting forth our Business & Leadership Overview for Fiscal 2018, our focus for Fiscal 2019, our Compensation Program Objectives and Philosophy, andOfficer (the “CEO”); | | • Michael A. Mathias, our Executive Compensation Highlights; (ii) a discussion ofVice President, Chief Financial Officer (the “CFO”), effective April 20, 2020; | | • Jennifer M. Foyle, our Chief Creative Officer, AEO Inc. & Global Brand President, Aerie (the “Chief Creative Officer”); | | • Charles F. Kessler, our Global Brand President, American Eagle (the “Global Brand President, AE”); | | • Michael R. Rempell, our Executive Compensation Program, includingVice President, Chief Operations Officer (the “COO”); and | | • Robert L. Madore, our Fiscal 2018 Goal Setting Processformer Executive Vice President, Chief Financial Officer (the “Former CFO”) who left the EVP-CFO role effective April 20, 2020 and Compensation Considerations, Compensation Benchmarking, and details regarding each element of our annual compensation; and (iii) additional compensation information, including tax considerations and change in control and other arrangements.left the Company effective September 25, 2020. |
This CD&A is organized as follows: 
| | | | | | 48 | | | | | |
| | COMPENSATION DISCUSSION AND ANALYSIS |
EXECUTIVE SUMMARY Fiscal 2018 Business & Leadership OverviewNavigating the Challenges of COVID-19
The past year was filled with unprecedented challenges, yet ultimately led us to learn, grow, and become even stronger as a Company. Our highly-performing management team led AEObusiness in Fiscal 2020 was significantly impacted by the disruptions caused by the COVID-19 pandemic, including the mandated closure of our stores in March 2020, followed by continued capacity restrictions and pressure on mall traffic throughout the year. In response to achieve strongthe global health crisis, we took quick, decisive actions to (1) protect our associates, customers and communities; (2) reduce spending, cut inventory and create efficiencies to preserve financial strength; and (3) innovate to prepare for a new future of retail. This strategy, which we termed our “Pandemic Pillars,” delivered results in Fiscal 2018. By executing on their strategic vision,2020 and, we believe, has positioned us for future growth. Our response to the team successfully grew the AE brand to be the #1 denim retailerCOVID-19 pandemic was immediate and deliberate. On March 17, 2020, we closed all American Eagle and Aerie stores in the nation for women, accelerated Aerie growthUnited States and Canada. While store closures helped keep our communities and associates safe, they also led to post a 29% annual comparable sales increase for the brand,very difficult decision of temporarily furloughing store, field, and improved customer experiences through innovative marketing, digital and field talent initiatives. The result was a record $4 billionsome corporate associates beginning April 5, 2020. During this time, in annual revenue with increased operating profit. AEO posted its fourth straight year and sixteenth consecutive quarter of positive comparable sales, achieving 8% comparable growth in Fiscal 2018 on toprecognition of the 4% increase from last year. Net income was $1.47 per diluted share this year, comparedhardships imposed on our associates as a result of store closures and other impacts of the pandemic to $1.13 per diluted share last year. On an adjusted basis, net income per diluted share this year increased 28%our associates, customers, and communities, we continued to $1.48, compared to adjusted net income per diluted share of $1.16 last year.(1) Financial highlights of Fiscal 2018 are as follows:put our people first and implemented the following actions:
TotalWe maintained benefits for furloughed associates and continued to fund 100% of the health premiums for eligible employees impacted by these measures.
We instituted industry-leading safety protocols across our operations, including the procurement of masks and PPE for all teams, the hiring of an AEO medical consultant, physical construction to enable social distancing mandates, temperature check stations, installing infrared lighting and air filtration systems in the distribution centers, new breakroom and cafeteria protocols, creating training and videos to explain new safety measures and expectations, and on-site nurses. After temporary store closures in the spring, we drafted and deployed a comprehensive global store re-opening playbook (ensuring customer safety; managing capacity restrictions and reduced operating hours; and implementing curbside pickup and touchless checkout). We created the COVID-19 Associate Relief Fund to provide grants to eligible AEO associates who were adversely impacted by COVID-19; distributed AEO Foundation grants to non-profits in local communities; and donated over $1 million nationally to COVID-19 relief efforts, including donating gift cards and more than one million masks to front-line workers in cities most in need. Despite the profound challenges of operating during a global pandemic and the impact of COVID-19 to apparel retailers – with three companies in our peer group filing for bankruptcy during the year – we ended Fiscal 2020 with performance that significantly outperformed peers. Our success in 2020 was driven by the commitment and innovation of our most important asset – our people. We are grateful for their dedication to our Company, our customers and each other in an incredibly challenging year. As a result of this extraordinary performance, all eligible associates received an annual incentive bonus for Fiscal 2020 representing 200% of the target bonus amount. 2020 Performance Highlights After a difficult start with the abrupt closure of all stores during the first quarter of Fiscal 2020, we ended fiscal 2020 with a strong fourth quarter and momentum going into 2021, as evidenced by the following: Our online business accelerated throughout the year, rising 36% on a year-over-year basis to $1.7 billion, with revenue grew 6%up across all of our brands fueled by strong customer demand. Aerie reached a record $1 billion milestone and continued to approximately $4 billion;generate double-digit growth – a truly extraordinary accomplishment in light of the pandemic. We successfully operated our stores with leading health and safety measures, and our business strengthened each quarter throughout Fiscal 2020. | • | 
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* | Compounded annual growth rateIn the fourth quarter of Fiscal 2020, we achieved a meaningful recovery, posting $106 million in adjusted operating income(1), a 38% increase from 2019, with margins increasing across brands. We ended the year in strong financial condition, with $850 million in cash and approximately $1.2 billion in total liquidity.
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| (1) | See Appendix A of this Proxy Statement for additional detail on comparable sales, adjusted results and other important information regarding the use ofnon-GAAP or adjusted measures. |
| | | | | 2021 Proxy Statement | | | | | 49 |
| | COMPENSATION DISCUSSION AND ANALYSIS |
Key Operating Highlights: TSR That Significantly Outperformed Peers. Based on our competitive strengths and exciting growth opportunities for our brands, Aerie and American Eagle, we were pleased to see AEO’s total stockholder return (“TSR”) exceed those of our retail peers. Our Fiscal 2020 TSR was approximately 59%, significantly above our peer group median of 15%. Our three-year TSR of 36% and five-year TSR of 70% were each significantly above the peer group medians, which were negative 8% and 0%, respectively. 
Digital Sales Accelerated. During Fiscal 2020, online revenues grew by $450 million, or 36% year-over-year, to $1.7 billion and represented 45% of our total revenue. Driven by strong customer demand, we saw digital growth across all of our brands, with Aerie rising 85% and American Eagle up 17% for Fiscal 2020 compared to Fiscal 2019. Our digital channel generated strong profit margins and posted positive sales metrics, including traffic and transaction value. 
| | | | | 3250 | | | | | |
| | COMPENSATION DISCUSSION AND ANALYSIS |
Fiscal 2018 represented our fourth consecutive year of comparable sales growth, with consolidated comparable sales rising by 8%;
| • |  | Continued Aerie Momentum. During Fiscal 2020, Aerie’s revenue rose 24% year-over-year, to $1 billion. Demand for the brand has been very consistent over the past several years, with the fourth quarter of Fiscal 2020 marking the 25th consecutive quarter of double-digit growth. New customer growth was strong, and sales rose across channels and all major categories. |
The Company’s store performance strengthened throughout the year, and AEO successfully capitalized on talent initiatives, improved mall trends and stronger merchandise collections to register positivebrick-and-mortar comparable sales increases at both AE and Aerie throughout the year. AEO’s digital sales continued to increase, expanding by 13% for the year. At over $1.1 billion in annual sales and strong profit margins, our digital channel now represents 28% of our sales;
| • | | We endedSequential Margins and Profitability Strength. During Fiscal 20182020, margins and profitability strengthened sequentially, with $425fourth quarter 2020 adjusted operating profit(1) of $106 million in cash up 38% from the fourth quarter of Fiscal 2019, and short-term investments and no debt, even after investing $189 million into capital projects and returning approximately $242 million to stockholders through share repurchases and cash dividends, which included a 10% dividend increasethe second half of Fiscal 2020 posting adjusted operating profit(1) of $209 million. After the abrupt closure of our stores in March 2018. Operating2020, our team took quick, decisive action to reduce inventory, cut spending and Free Cash Flow(1)find efficiencies. The stores team redesigned the store experience to reopen locations when it was safe to do so and with leading safety protocols in place. Through feedback from our customers and associates, as well as national recognition in various publications, we are confident that these efforts were appreciated. Although store traffic remained under pressure in 2020 due to continued to expand in Fiscal 2018, reaching $457 millionconcerns about COVID-19 as well as ongoing capacity restrictions, demand strengthened throughout the year, driving sequential quarterly sales and $267 million, respectively; andprofit improvement.
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| (1) | See Appendix A of this Proxy Statement for additional detail on comparable sales, adjusted results and other important information regarding the use ofnon-GAAP or adjusted measures. |
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| | COMPENSATION DISCUSSION AND ANALYSIS |
Strong Balance Sheet and Commitment to Cash Returns. We continue to outperformended Fiscal 2020 with $850 million in cash and approximately $1.2 billion in total liquidity. Excluding net proceeds from our April 2020 convertible note issuance, we ended Fiscal 2020 with $444 million in cash, up 7% from Fiscal 2019. Early in the retail sector. Ouryear, we took actions to preserve our financial strength, which allowed us to generate free cash flow in the second half of Fiscal 2018 TSR was 20%,2020 in line with last year despite the reduction in revenue related to COVID-19. The recovery in cash flow enabled us to pay our previously deferred first quarter 2020 cash dividend in December 2020, and our three-year relative TSR is aton March 3, 2021 we announced the topreinstatement of our proxy peer group.regularly quarterly cash dividend and unsuspended our share repurchase program. |  |
We believe our compensation practices align the interests of our executives with those of our stockholders. Further, the executive compensation-related decisions made by the Compensation Committee during the past year contributed to our significant performance milestones and will position us to continue to drive consistent results in an increasingly dynamic retail environment. Specifically:
IncreasesOutstanding Stock Price Performance. As of April 2021, AEO’s stock price performance was up over 300% from a year ago, fueled by a significant and consistent recovery in compensation to reflectour business after the changing scopeabrupt COVID-19 related store closures in the first quarter of responsibilities taken on by2020. Through the seniorteam’s swift actions and strong management, team, as well as to better positionwe saw sequential improvement in our executivesvis-à-vis their retail peers, led to better compensation alignment;sales, margins and profit in each quarter of 2020. Aerie grew revenue 24% for the year, digital increased 36% and we ended 2020 with strong liquidity and cash flow. In January 2021, we also unveiled our Real Power. Real Growth value creation plan and long-term financial targets, providing investors with greater transparency into our future growth plans.
A significant amount of “at risk” executive compensation incentivizes sustained high performance;
An annual incentive bonus payout that was earned at 120% of target for Fiscal 2018 appropriately recognizes consistent industry leading results;
An annual distribution of a mix of long-term incentive vehicles rewards the achievement of industry-leading TSR and longer term financial goals; and
A long-term retention grant of equity to our Brand Presidents, CFO and COO promotes leadership collaboration to achieve our strategic business initiatives and supports leadership continuity.
Our Focus for Fiscal 2019AEO Stock Price Performance
We have significant momentum going into Fiscal 2019, and we believe that our brands are well positioned for future growth.
Planned areas of focus for 2019 include:
| 1) | ✓ | Continuing to fuel AE growth, capitalizingSee Appendix A of this Proxy Statement for additional detail on its leading position in jeansadjusted results and bottoms with innovative new products that deliver both quality and value.
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| ✓ | Taking Aerie to $1 billion in sales, celebrating female empowerment and body positivity while offering merchandise women feel good wearing.
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| ✓ | Providing shopping experiences that our customers love, bothin-stores and online, as we continue to invest in omni-channel capabilities, data analytics and interactive communication that deepens our customers’ relationships with our brands.
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| ✓ | Keeping it REAL and staying true to our corporate purpose: to showother important information regarding the world that there is REAL power in the optimismuse of youth.
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| ✓ | Continuing to create value for all of our stakeholders, including by generating continued strong stockholder returns.non-GAAP or adjusted measures.
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Our talented leadership team hasLook Forward Unveiled Real Power. Real Growth Strategy Plan. The unforeseen events of 2020 accelerated the ability pace of global change and expertiseinnovation. In response to deliver onthe challenges posed by the COVID-19 pandemic and the continued success of Aerie and acceleration in our strategic initiativesdigital channel, we refocused our priorities and drive future valuein January, 2021 unveiled our “Real Power. Real Growth” strategy plan aimed at fueling AEO for allfurther growth and profitability. The Real Power. Real Growth long-term plan leverages the power of our stakeholders. people, brands and operations and the momentum we have generated in 2021. The pillars of Real Power. Real Growth. include the following goals: Double Aerie to $2 billion in revenue; Reignite American Eagle for profit growth; Leverage customer-focused capabilities; Strengthen ROI discipline; and Embrace the power of our people, culture and purpose. Fiscal 2020 Compensation Takeaways The results achieved in Fiscal 2020 were a direct result of the decisive actions taken by our CEO, executives, and Board, as well as the resilience of our most important asset – our people. The innovation, collaboration, speed, and agility demonstrated by our teams delivered industry-leading performance, including record online revenue growth, double-digit growth in Aerie, and a strong focus on inventory optimization and execution in AE that led to margin growth and a strong year-end cash position. We are excited for 2019believe that the decisions made by the Compensation Committee in the face of the COVID-19 challenges motivated our leaders to produce results, and beyond!that our compensation practices and our pay-for-performance philosophy aligns the interests of our executives with those of our stockholders. Specifically: | • | | No routine changes to base salaries: The Compensation Committee did not increase base salaries of our NEOs for Fiscal 2020, other than two promotional base salary increases. For our CEO, this represents the fifth year of no change to his base compensation. As a result, a significant amount of NEO compensation for Fiscal 2020 was “at risk,” which we believe appropriately incentivizes our NEOs with respect to Company performance. During Fiscal 2020, only approximately 20% of our NEO compensation, on average, was guaranteed. |
| • | | Agility in our annual incentive bonus program and recognition of our leadership: To remain responsive to the unprecedented business challenges posed by the COVID-19 pandemic, our Compensation Committee developed an annual incentive bonus structure for Fiscal 2020 that recognized the need to motivate and focus our teams and measure performance in a different way than we have historically. This structure focused on measuring results based upon both our qualitative strategic business pillars – protecting our people, preserving cash, and preparing for a new future – as well as quantitative financial results. The focus on our qualitative strategic goals resulted in exceptional quantitative financial achievements, ultimately generating a payout of 200% of the target annual incentive bonus for all eligible associates and executives, including NEO’s, for Fiscal 2020. The Compensation Committee also awarded recognition bonuses to reflect the significant competitive landscape, strong leadership, and exceptional execution on our initiatives by our executives, including the NEOs, during Fiscal 2020. |
| • | | No adjustments or modifications to previously-granted long-term equity incentive awards: As previously disclosed in our 2019 proxy statement, performance shares (“PSUs”) previously granted in Fiscal 2018 vested based on cumulative performance results at the end of a three-year performance period that ended in Fiscal 2020. Despite the business impact of COVID-19 on Company performance during Fiscal 2020, the Compensation Committee did not exercise discretion to adjust the performance criteria applicable to the Fiscal 2018 PSUs. Based on these unadjusted results during the performance period, the Compensation Committee determined that the Fiscal 2018 PSUs would payout at a 50% level of achievement. |
| • | | Fiscal 2020 long-term equity incentive awards: In addition to a unique annual incentive bonus structure for Fiscal 2020, the Compensation Committee slightly modified our long-term incentive awards for Fiscal 2020, while remaining true to the historic performance-oriented nature of the program. Historically, the Compensation Committee has granted long-term equity awards in the form of 50% PSUs, 25% restricted stock units (“RSUs”) and 25% stock options. The Fiscal 2020 long-term equity program maintained the same equity components and the strong performance orientation, while altering the mix slightly. Accordingly, our Fiscal 2020 long-term incentive program delivered an aggregate mix composed of 42% RSUs, 33% PSUs, and 25% stock options. Effective for Fiscal 2021, the Compensation Committee has changed the long-term incentive equity mix to be 50% PSUs, 30% stock options, and 20% RSUs to provide for an even stronger performance orientation. |
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Fiscal 2020 Compensation Program Objectives and Philosophy The overall philosophy of our executive compensation program is to attract and retain highly skilled, performance-oriented executives who live our brand and embody its spirit of authenticity and innovation, andinnovation. Our goal is to incentivize themour executives to achieve outstanding results for all stakeholders within the framework of a principles-based compensation program. We focus on the following core principles in structuring an effective compensation program that meets ourthis stated philosophy: | | | Performance | | • We align executive compensation with the achievement of measureable operationalqualitative and financial results andquantitative goals that we expect to drive increases in stockholder value. • Our program includes significant performance-basedfocuses on “at-risk” compensation, with remuneration that creates a meaningful retention aspect, as well as an incentive to achieve challenging performance objectives. • Our program featuresNEOs receive a substantial long-term incentive component, which aligns executivetheir interests with those of our stockholders and serves to retain executive talent through a multi-year vesting schedule. • Long-termOur long-term incentive design that varies actual compensation above or below the targeted compensation opportunity based on the degree to which performance goals and changes in stockholder value are attained over time. | Competitiveness | | • Executive compensation is structured to be competitive relative to a group of retail peers, taking into consideration company size relative to peers and recognizing our highly-competitive industry as well as our emphasis on performance-based compensation. • Target total compensation for individual NEOs varies based on a variety of factors, including the executive’s skill set and experience, historic performance, expected future contributions, and the importance of each position to us.our success. | Affordability | | • Our compensation program is designed to limit fixed compensation expense and tie realized compensation costs to the degree to which budgeted financial objectives are attained. • We structure our incentive plans to maximize financial efficiency by establishing programs that are intended to be tax deductible (whenever it is reasonably possible to do so while meeting our compensation objectives) and accounting efficient by striving to make performance-based payments aligned with expense. | SimplicityTransparency
| | • We focus on simple, straightforward compensation programs that our associates and stockholders can easily understand. |
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Executive Compensation Highlights Our compensation program design provides a framework for alignment betweenaligning executive compensation and our long-term Company objectives and financial performance. We continually review leading practices in corporate governance and executive compensation andcompensation. As appropriate we consider changes to our program to align withembrace best practices, ensure competitiveness in order to attract and retain experienced executivesremain competitive in our industry, and reinforce the alignment between pay and performance.pay-for-performance alignment. The following table highlights the Company’s practices relating to our executive compensation program. | American Eagle Outfitters’ Executive Compensation Checklist | | | ✓ A Compensation Committee composed entirely of independent directors oversees the Company’s executive compensation policies and decisions | | | ✓ The Compensation Committee utilizes an independent compensation consulting firm, FW Cook, which does not provide any other services to the Company | | | ✓ We havemaintain robust executive stock ownership guidelines (six times base salary for our CEO, and three times base salary for our other NEOs) | | | ✓ We pay for performance. The majority of our NEOs’ total compensation opportunities are performance-based and“at-risk”“at-risk” | | | ✓ Our long-term incentive plan does not allow for the payment of dividends or dividend equivalents on unearned PSU awards or unvested RSU awards | | | ✓ We do not maintain (i) employment contracts of defined length with our CEO or NEOs, or (ii) multi-year guarantees for base salary increases, bonuses, or long-term incentives | | | ✓ We have a robust clawback policy with respect to both cash and equity incentive awards | | | ✓ We have anmaintain a stringent anti-hedging and anti-pledging policy, applicable to all employees and non-employee directors | | | ✓ We do not provide only limitedsignificant perquisites | | | ✓ We do not provide taxgross-ups onchange-in-control benefits | | ✓ We have not repriced stock options nor are we able to do so without stockholder approval
| | | ✓ We have double-trigger cash severance and long-term incentive vesting in the event of achange-in-control | | | ✓ NoWe discourage excessive risk-taking. Therisk-taking by having our Compensation Committee closely monitorsmonitor the risks associated with our executive compensation program and individual executive compensation decisions to determine that they do not encourage excessive risk-taking |
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OUR EXECUTIVE COMPENSATION PROGRAM Fiscal 20182020 Goal Setting Process and Compensation Considerations Goal Setting: We areremain committed to setting incentive goals that are aligned with delivering strong financial performance and returns to our stockholders, while also enabling the successful execution of our strategy. This includes building a solid foundation for long-term growth while consistently delivering near-term results. During Fiscal 2018, management was focused on growingAgainst the AE brand by becoming the #1 jeans retailer in the nation, accelerating the growth of Aerie, and improving the customer experience with innovative digital andin-store initiatives to increase key sales metrics. Specific 2018 achievements include the continued growthbackdrop of the AE brand to be the #1 denim destination for women in the United States, the emergence of Aerie as onesignificant and unanticipated impacts of the most influential brands in the market, coupled with industry-leading financial results,COVID-19 pandemic on our business and the introduction of new product categories, talent initiativesindustry and innovative marketing campaigns that fueled both ourin-store and digital sales. Compensation Considerations:
The Compensation Committee considered a variety of factors when making compensation decisions in Fiscal 2018, including our performance relative topre-established goals, our consistently strong delivery of results, our corporate governance practices, and our financial and operational performance relative to peers in the context of a highly competitive retail environment.
In early Fiscal 2018,ongoing uncertainty, the Compensation Committee setintroduced qualitative goals to the 2020 annual cash incentive plan target goals, measured on Earnings Before Interest and Taxes (“EBIT”), at levels that represented a significant challenge for the Company. Our strong performance not only met target level performance, but exceeded it, resulting in a 120% of target cash incentive bonus payout even in lightprogram and based the quantitative financial performance component of these aggressivethe annual incentive bonus program on performance goals.during the third and fourth quarters of Fiscal 2020.
The
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Timing of Award Grants: Traditionally, the Compensation Committee also setsets performance goals for our annual grantincentive program and equity-based grants at the end of performance-based equity awards. The goals for this grant cycle, spanning a performance periodthe first fiscal quarter of Fiscal 2018 –the year. During Fiscal 2020, will be measuredthis timing aligned with the initial impacts of the COVID-19 pandemic on Earnings Before Taxes (“EBT”). In addition to financialour industry and operational performance,business, which were both immediate and severe. Accordingly, the timing of setting our annual bonus goals and long-term incentives was delayed until the Compensation Committee felt that appropriate realistic qualitative and management also considered alignment with our compensation program principles, as well as corporate governance best practices, when making compensation decisions.quantitative goals could be set.
| • | | First quarter of Fiscal 2020. |
| o | Qualitative Goals for Fiscal 2020 Annual Incentive Bonus: At the onset of the COVID-19 pandemic, the leadership team quickly established a key set of strategic business priorities: protect our people and business; preserve cash; and prepare for a new future. These near term priorities informed our focus for Fiscal 2020 and subsequently were accordingly approved as the qualitative goals for the annual incentive bonus in the second quarter of Fiscal 2020. |
| o | Annual Approval of Long Term Incentive Grants (RSUs and Options): Typically our long term incentives are awarded in the first quarter of Fiscal 2020. Accordingly, in March 2020, the Compensation Committee chose to grant time-based RSUs to all eligible associates including the NEOs, as well as a partial grant of the annual stock options historically given to NEOs as part of their total compensation. The Compensation Committee was mindful of the remaining share balance available under the 2017 Stock Award and Incentive Plan, as amended (the “2017 Plan”). At the 2020 Annual Meeting, stockholders were asked to approve the adoption of the American Eagle Outfitters, Inc. 2020 Stock Award and Incentive Plan (the “2020 Plan”) to serve as the successor to the 2017 Plan. On June 4, 2020, stockholders overwhelmingly approved the 2020 Plan, which made an additional 10.2 million shares of Company stock available for grant as equity awards to our associates and executives. |
| o | Quantitative Goals for Fiscal 2020: Given the significant impact of store closures during the first and second quarters of Fiscal 2020 and the related disruption to our business, the Compensation Committee believed that the most prudent course of action was to wait until the third quarter of Fiscal 2020 to establish the quantitative financial performance goal for the 2020 annual incentive program. The Compensation Committee did not believe that it was in a position to adequately assess business projections or establish well-informed and challenging financial goals with respect to Fiscal 2020 until such date. During the third quarter of Fiscal 2020, the Compensation Committee set the EBIT goals for the annual incentive bonus based on what it believed would be challenging, yet attainable goals for the balance of the year, and in particular, focusing on the executives on recouping as much of the financial loss suffered by the Company in the first half of Fiscal 2020 as possible. Achievement of the EBIT levels set by the Compensation Committee required significant sales and margin improvement from forecasts at the time the goals were set, as well as expense reduction. |
| o | Annual Approval of Long Term Incentive Grants (PSUs, RSUs and Options). Given continued uncertainties in the retail industry, the Compensation Committee granted Fiscal 2020 PSU awards using relative TSR as the performance metric in lieu of historic financial goals. The Committee also awarded additional stock option awards in June 2020 as well as an RSU award to the executives. |
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Role of Our Compensation Committee: The Board has delegated authority to the Compensation Committee to develop and approve the overall compensation program for our NEOs, including the authority to establish and award annual base salaries, annual incentive bonuses, and long-term incentive awards pursuant to our stockholder-approved incentive plans.plan. Furthermore, the Compensation Committee reviews and approves changes to our compensation peer group, as appropriate. In making its decisions, the Compensation Committee takes into consideration a variety of factors, including suggestions made by the CEO, compensation consultants, and the Company’s external advisory firms. The Compensation Committee acts in accordance with its charter, which can be found on our Investors website atinvestors.ae.com.. Role of Executive Officers in Compensation Decisions: Our CEO annually reviews the performance of each NEO and makes recommendations to the Compensation Committee with respect to each element of executive compensation for the NEOs, excluding himself. The CEO considers Company, brand, and individual performance and market positioning in his recommendations to the Compensation Committee with regard to total compensation for all NEOs. The Compensation Committee makes the final determination of individual compensation levels and awards, taking into consideration the CEO’s recommendations. CEO compensation is determined with input from the compensation consultant, FW Cook, informed by market benchmarking, and ultimately approved by the Compensation Committee. Role of Compensation Consultants: The Compensation Committee has the authority under its charter to retain outside consultants or advisors for assistance. In accordance with this authority, during Fiscal 2018,2020, the Compensation Committee continued to retain the services of FW Cook as its outside independent compensation consultant to advise on matters related to CEO and other executive compensation. The services provided by FW Cook are subject to a written agreement with the Compensation Committee. The Compensation Committee has sole authority to terminate the relationship. The Compensation Committee reviewed its relationship with FW Cook and determined that there are no conflicts of interest pursuant to applicable SEC and NYSE requirements. FW Cook does not provide any other services to the Company. The Compensation Committee may engage other consultants as needed in order to provide analysis,analyses, recommendations, or other market data. | | | | | 2019 Proxy Statement
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Under the direction of the Compensation Committee, FW Cook interacts with members of the senior management team to provide insights into market practices and ensure that management is aware of emerging best practices and market trends. In Fiscal 2018,2020, representatives from FW Cook contributed to this CD&A, evaluated the Company’s peer group and assisted with a review of incentive plan design, various matters related to executive compensation and an evaluation of the compensation peer group.compensation. During Fiscal 2018,2020, management also engaged Korn Ferry to advise on the structuremarket practices and amount of the 2018 Equity Retention Awards grantedprovide market benchmarking relative to Messrs. Kessler, Madore and Rempell and Ms. Foyle.executive compensation. Response to 20182020 Advisory Vote on Executive Compensation: At our 20182020 Annual Meeting of Stockholders, approximately 97%98% of shares present and voting supported, on an advisory basis, the compensation of our NEOs.NEOs in Fiscal 2019. While this vote demonstrated a very high level of support for our compensation program, our executive team remained engaged with stockholders throughout Fiscal 20182020. We welcome feedback and value regular dialogue with our stockholders. On a regular basis, we invite stockholders to obtainmeet with senior management. In Fiscal 2020, the Company continued to have extensive engagement with our stockholders. Throughout the year, our CEO and senior management held numerous meetings with investors and participated in several virtual investor conferences, during which we met with current and prospective stockholders. These meetings were generally focused on Company performance, specific measures to successfully manage through the COVID-19 pandemic as well as long-term strategic initiatives aimed at driving growth and stockholder returns. Additionally, management hosted a virtual investor meeting in January 2021 during which we presented our Real Power. Real Growth value creation plan and unveiled our long-term financial outlook. The content of these meetings and discussions were reported to the Board, and management and the Board discussed comments and business insights provided by these stockholders. We expect to continue such discussions prior to the 2021 Annual Meeting and, as a matter of policy and practice, foster and encourage engagement with our stockholders on an understanding of their views on a variety of issues.ongoing basis. As a result of this engagement and the high level of support evidenced by our stockholders’ vote at the 20182020 Annual Meeting of Stockholders, the Compensation Committee determined that our compensation incentive programs are achieving their respective goals and did not take any specific action in response to the 2018say-on-pay2020 say on pay vote or such engagement. | | | | | 2021 Proxy Statement | | | | | 57 |
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Compensation Benchmarking The nature of the retail industry is highly competitive for talent. The challenges presented in Fiscal 2020 further intensified the competitive landscape. Talented leaders with proven capability and experience delivering results, like those on our team, became in higher demand than ever before. In 2020, the core group of competitors for talent was expanded beyond those in the specialty retail space to include retailers in the “essential” category who could benefit from the proven experience of the members of our leadership team. The retention of this talent is a primary element of our success and delivery of results to stockholders. In determining NEO compensation, the Compensation Committee reviews and takes into account the compensation practices of comparable companies. The Compensation Committee considers three key factors in choosing the companies that comprisecompose our peer group: Talent – Companies with which we compete for executive-level talent; Size – Companies with comparable revenue; and Comparability – Companies within the retail industry with which we compete for customers and investors. Other selection criteria includee-commerce omni-channel retailing and a review of those companies listed as our peers by proxy advisory firms. We evaluate our peer group on an annual basis and propose changes when appropriate. For Fiscal 2018,2020, our peer group consisted of 1920 companies. We approximate the median of the peer group based on revenue, with our market capitalization within the second quartile of the peer group’s range. Peer group data also is supplemented as needed with additional data from various retail and general industry market surveys, as adjusted to reflect our revenue scope. There were no changes made to In the peer group infourth quarter of Fiscal 2018. The2020, the Compensation Committee approved one changechanges to our peer group effective for Fiscal 2019,2021, based upon an analysis performedcompleted by FW Cook. One company, Levi Strauss,Kontoor Brands, was added to the peer group and nothree companies were removed increasing the peer group sizedue to 20 for Fiscal 2019 while maintaining ourbankruptcy (Ascena Retail Group, J. Crew Group, Inc., and Tailored Brands). The Company’s relative size, position near the median in terms of revenuesrevenue and in the second quartile in terms of market capitalization.capitalization is maintained in the 2021 peer group.
 
* | Levi Strauss & Co. will be added in 2019
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How We Pay Our Executives and Why: Elements of Annual Compensation Our executive annual compensation program includes fixed components (base salary, benefits, and limited executive perquisites) and variable components (annual bonus and long-term incentive awards), with the heaviest weight generally placed on the variable, or“at-risk” “at-risk,” components. For Fiscal 2018,2020, a significant majority of our NEOs’ target annual direct compensation, which includes base salary, target annual bonus, and long-term incentives, was weighted towardat-risk compensation, as shown by the charts below.  
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Standard Elements of Compensation: The compensation for our NEOs is (i) balanced to provide a mix of cash and long-term incentive awards and (ii) focused on both annual and long-term performance to ensure that executives are held accountable and rewarded for achievement of both annual and long-term financial and strategic objectives. | | | | | | | | | | | | Element of
Compensation | | Form and Objective | | Fiscal 20182020 Information | | Alignment to Strategic Plan | | | | | | | | | Base Salary | | • Delivered in cash. • Provides a baseline compensation level that delivers cash income to each NEO, and reflects his or her job responsibilities, experience, skill set, and contribution to the Company. | | • Our CEO did not receive a base salary increase for Fiscal 2018.2020, for the fifth year in a row. • Other NEOs received salary increases that ranged between3-10%, based upon their individual performance and market position. NoneThe balance of our NEOs receivedthe NEO’s did not receive a base salary increase in 2020, with the exception of promotional increases for Fiscal 2017.Ms. Foyle and Mr. Mathias. | | • Base salaries set at competitive market levels that enable us to attract and retain qualified, high caliberhigh-caliber executive officers to lead and implement our strategy. | | | | | | | | | Annual Incentive Bonus | | • Delivered in cash. • Provides an opportunity for additional income to NEOs ifpre-established annual performance goals are attained, which focuses our NEOs on key annual objectives. | | • For Fiscal 2018,2020, the annual incentive bonus was based 50% upon the Company achieving quantitative second half EBIT goals atpre-determined threshold, target and stretch performance levels and 50% upon the achievement of qualitative business objectives at target and stretch performance levels. • Performance was realized between targetat stretch levels on both the quantitative and stretch,qualitative objectives, resulting in a 120%payout at 200% of target payout.target. | | • Annually, the Compensation Committee establishes performance metrics and goals that align with our strategic plan. • The selection of EBITas the performance measure2020 Annual Incentive Bonus structure, combining and equally weighting both quantitative and qualitative elements for Fiscal 2018 reflects a continued focus2020 reflected the Compensation Committee’s responsiveness to the unique challenges, risks and uncertainties of the COVID-19 pandemic and its impact on profitable growth.the business. | | | | | | | | | Annual Long-Term Incentive Awards | | • Delivered in PSUs, RSUs, and stock options. • Aligns our NEOs’ financial interests closely with those of our stockholders. • Links compensation to the achievement of multi-year financial or relative TSR goals. | | • PSUs represent 50%represented 33% of the annual target grant values for Fiscal 2020 equity awards and vest between threshold and stretch level only to the extent that thepre-established, three-year performance goals are met. If performance falls below the threshold, the award is forfeited in full. • RSUs represent 25%represented 42% of the annual equity grant target value andfor Fiscal 2020 equity awards. 60% of RSUs were granted in March 2020. These RSUs vest ratably over three years from the grant date based on continued service. Approximately 40% of RSUs were granted in June 2020. These RSUs cliff vest in March 2023, based upon continued service. In each case, these RSUs serve as a retention tool for our NEOs. • StockIn 2020, stock options represent 25% of the annual equity grant target value, vest ratably over three years from the grant date and provide compensation only to the extent that our share price appreciates. | | • Aligns NEO compensation with our longer-term performance objectives and changes in stockholder value over time. • In 2020, the long-term incentive award mix was modified in response to the unique challenges to the business and our compensation structure presented by the COVID-19 pandemic. The Compensation Committee determined to modify the traditional PSU value of 50% and increase the relative number of RSUs granted. The Compensation Committee believes that this equity delivery mix served to maintain a strong performance focus while also delivering a long-term focus on retention to ensure leadership continuity. • In 2021, the long-term incentive award mix will be an equity blend of 50% PSUs, 30% stock options, and 20% RSUs. |
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Fiscal 20182020 Compensation The following provides additional details aroundregarding our compensation components and related decisions for Fiscal 2018.2020. Our executive compensation program places a considerable amount of compensation at risk to cultivate apay-for-performance environment. Base Salary Base salaries, typicallyon average, represent approximately 16% to 29%20% of each NEO’s target total direct compensation and are reviewedcompensation. The Compensation Committee reviews NEO’s base salaries annually after considering the following factors: The scope and responsibility of the NEO’s position; The achievement of strategic and operational business goals; The climate in the retail industry, general economic conditions, and other factors; Each NEO’s experience, knowledge, skills, and personal contributions; The level of overall compensation paid by competitors for similar positions in the retail industry; and The appropriate balancing of base salary against “at risk” compensation. Base salary increases, where applicable, typically are effective in the first quarter of the new fiscal year. For Fiscal 2018, the2020, our CEO did not receive a base salary increase.increase for the fifth year in a row. The balance of the NEOs did not receive a base salary increase for Fiscal 2020, with the NEOs were as follows: CFO:exception of a 3%promotional base salary increase to reflect improved reporting, expense managementfor Ms. Foyle and financial planningMr. Mathias. Please see “Fiscal 2020 Promotions,” below, for an additional description of Ms. Foyle’s and analytics instituted by Mr. Madore;Mathias’s base salary increases during Fiscal 2020.
COO: a 9% increase to reflect new responsibilities for corporate strategy and strong results in digital and sourcing initiatives led by Mr. Rempell;
Global Brand President, AE: a 6% increase to reflect new responsibilities for brand marketing and strong brand performance for AE led by Mr. Kessler; and
Global Brand President, Aerie: a 10% increase to reflect new responsibilities for brand marketing and strong brand performance for Aerie led by Ms. Foyle.
Fiscal 20182020 Annual Incentive Bonus Our NEOs are eligible for annual cash incentive awards, the achievement of which is based upon the Company meetingpre-established performance goals. The Compensation Committee believes that setting these goals that focusfocuses the executive team on key annual objectives. Consistent with these objectives, and business drivers that support a disciplined growth in revenue and profits. Thethe Compensation Committee selected EBIT asconsidered the performance measure because it reflects both sales growthimpact of the COVID-19 pandemic and expense management initiatives, is controllable byrelated uncertainties on the NEOsCompany’s operations and is also directly linkedthe retail industry in general and determined that certain adjustments to the Company’s long-term growthFiscal 2020 Annual Incentive Bonus design were necessary in order to continue to provide an appropriate incentive for performance as well as to motivate and stockholder value. The Compensation Committee establishes each NEO’s annual incentive bonus opportunity as a percentage of his or her base salary. The resulting target bonus award opportunities constitute about 25% to 28% of each NEO’s target total direct compensation. During Fiscal 2018,focus the target bonus award opportunities for the NEOs were as follows:team. These adjustments include:
CEO: 175%Bifurcating the performance goals based on achievement of base salary;
CFO: 90%qualitative performance goals (50%) and a quantitative performance goal of base salary;
Global Brand President, AE: 130% of base salary;EBIT (50%); and
Global Brand President, Aerie: 130% of base salary.
Based upon pre-established goals andEvaluating achievement of EBIT based solely on performance during the same, actual annual incentive bonus payments each year are calculated as follows (with straight-line interpolation between points):
0% payout for below threshold performance;second half of Fiscal 2020.
25% of the targeted percentage amount at the threshold level of performance;
100% of the targeted percentage amount at the target level of performance; and
200% of the targeted percentage amount if we achieve goals that are substantially above our business plan for the fiscal year.
For Fiscal 2018, the Compensation Committee established a performance goal for the annual incentive bonus payouts based upon the financial metric of the Company’s achievement of a minimum EBIT of $307M for a threshold payout, $336M (6% growth from prior year) for a target payout, and $366M (representing 15% growth from prior year) for a stretch payout, with performance between percentiles interpolated. EBIT was used because it is a performance measure over which executives can have significant impact, reflects both sales growth and expense management initiatives, and is also directly linked to the Company’s long-term growth and stockholder value.
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Understanding the unique challenges and uncertainties faced during the year and the need to focus on innovative operational solutions and cash preservation as much as generating EBIT, the Compensation Committee chose to implement a blended annual incentive metric approach that included qualitative performance metrics. During Fiscal 2020, management was focused on our “Pandemic Pillars,” which consisted of the three strategic business priorities described below and represented the goals for the qualitative portion of the Fiscal 2020 annual bonus program: | | | 
PROTECT OUR PEOPLE + BUSINESS | | • Protect AEO’s long-term interests in the face of global disruptions. • Implement best-in-class health and safety measures to care for our associates, customers and partners. • Manage critical relationships with landlords and vendors. • Prioritize inclusion and diversity efforts to ensure a strong and diverse organization. | 
PRESERVE CASH | | • Ensure AEO has ample cash to manage through 2020 and beyond. • Create a corporate culture that prioritizes cash returns on investments. • Invest wisely and align merchandise expense with adjusted sales plans. • Reduce short-term discretionary spend where possible and leverage learnings to make improvements in cost structure. | 
PREPARE FOR A NEW FUTURE | | • Fuel Aerie, strengthen AE, and seek opportunities to accelerate growth. • Lean into our digital channel, while optimizing the store business through technology and leading customer experience. • Leverage lease flexibility to evaluate future store needs. • Innovate supply chain capabilities to increase speed and flexibility, while ensuring adequate staffing levels and continued productivity. |
As is our practice,in prior years, EBIT was chosen as the quantitative financial measure for the annual bonus as it reflects both sales growth and expense management initiatives. The Compensation Committee also believes that the selection of EBIT as a performance measure directly links the Company’s long-term growth with stockholder value. For 2020, EBIT was measured during the third and fourth quarters of Fiscal 20182020. Setting Target Bonus Opportunities Early in the year, the Compensation Committee establishes each NEO’s annual incentive bonus goalsopportunity as a percentage of the NEO’s base salary. For 2020, there were no increases to target bonus opportunities for any of the NEOs, with the exception of a target bonus increase for Ms. Foyle and Mr. Mathias consistent with their significant promotions during the year. Ms. Foyle’s target bonus increased from 130% to 140% of base salary and Mr. Mathias’s target bonus increased from 40% to 65% of base salary. Target bonus award opportunities typically constitute over 18% of each NEO’s target total direct compensation for the year. During Fiscal 2020, the target bonus award opportunities for the NEOs were set early in the year at relatively aggressive levels. Our EBIT performance for the year of $342M exceeded the target incentive bonus goals and, accordingly, a payout of 120% was earned.as follows: | | | | | | | | | Executive Officer | | 2018 Target Annual Incentive
Awards | | | 2018 Actual Annual Incentive
Award Payouts(1) | | CEO | | $ | 2,625,000 | | | $ | 3,150,000 | | CFO | | $ | 787,500 | | | $ | 937,731 | | Global Brand President, AE | | $ | 1,170,000 | | | $ | 1,383,168 | | Global Brand President, Aerie | | $ | 1,105,000 | | | $ | 1,294,517 | | COO | | $ | 720,000 | | | $ | 845,100 | |
| | | Executive Officer | | Target (as a Percentage of Base Salary) | CEO | | 175% | CFO | | 65% | Chief Creative Officer | | 140% | Global Brand President, AE | | 130% | COO | | 90% | Former CFO(1) | | — |
| (1) | 2018The Former CFO was ineligible for a Fiscal 2020 Annual Incentive Award Payouts are calculated based up on fiscal year earnings versus current salariesAward.
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| | COMPENSATION DISCUSSION AND ANALYSIS |
Setting of Fiscal 20182020 Performance Goals Based upon pre-established goals and achievement of the same, actual annual incentive bonus payments for Fiscal 2020 were calculable as follows, with straight-line interpolation between points for the quantitative EBIT goal: 
Quantitative Bonus Opportunity As discussed above, EBIT was chosen as the quantitative financial measure as it reflects both sales performance and expense management initiatives, is controllable by the NEOs, and directly links the Company’s long-term growth with stockholder value. The Compensation Committee established the following EBIT performance goals, with threshold, target, and stretch goals linked to payouts of 12.5%, 50%, and 100% of target bonus amounts, respectively. The goals were designed to be challenging in context of the need to preserve cash and generate EBIT. These goals also were set against the backdrop of the Company’s COVID-19 impacted EBIT loss of $202 million for the first and second quarters of Fiscal 2020 and the expectation that a quantitative incentive bonus would not be paid unless the Company produced profitable results for the second half of Fiscal 2020. Achievement of these EBIT levels required both sales and margin improvement from trends at the time the goals were set, as well as expense reduction. | | | | | | | Fiscal 2020 EBIT Performance Goals(1)(2) | | Threshold | | Target | | Stretch | | | | $10 million | | $40 million | | $100 million |
| (1) | Measured based on Company performance during the third and fourth quarters of Fiscal 2020. |
| (2) | Performance between levels interpolated. |
Our EBIT performance for the third and fourth quarters of Fiscal 2020 of $214 million far exceeded our expectations and exceeded stretch-level goals. Qualitative Bonus Opportunity The Company tracked progress against its strategic pandemic pillars throughout Fiscal 2020, and management shared all of the specific business and operational achievements from fiscal 2020 with the Compensation Committee so that they could evaluate what level of payout was achieved. The Compensation Committee assessed the nature of the initiatives, the speed with which they were realized, the innovation applied and ultimately, the quality and business impact of each of the primary goals described below under “Fiscal 2020 Annual Incentive Payout” when making the determination that a stretch level of payout was earned. Mr. Schottenstein did not participate in any discussions relating to the achievement of goals relating to his performance or bonus payout. | | | | | 2021 Proxy Statement | | | | | 63 |
| | COMPENSATION DISCUSSION AND ANALYSIS |
Fiscal 2020 Annual Incentive Payout Quantitative Half of Fiscal 2020 Annual Incentive Bonus Back-half 2020 performance period (Aug 2020-Jan 2021) 
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| | COMPENSATION DISCUSSION AND ANALYSIS |
Based on the above performance results, the NEOs received the below 2020 annual incentive payouts. | | | | | | | | | Executive Officer | | 2020 Target Annual Incentive Awards | | | 2020 Actual Annual Incentive Award Payouts | | CEO | | $ | 2,625,000 | | | $ | 5,250,000 | | CFO | | $ | 360,125 | | | $ | 720,250 | | Chief Creative Officer | | $ | 1,303,885 | | | $ | 2,607,769 | | Global Brand President, AE | | $ | 1,222,000 | | | $ | 2,444,000 | | COO | | $ | 751,500 | | | $ | 1,503,000 | | Former CFO (1) | | | — | | | | — | |
| (1) | The Former CFO was ineligible for a Fiscal 2020 Annual Incentive Award. |
Recognition Bonuses The Compensation Committee approved recognition bonuses to the NEOs in Fiscal 2020 to acknowledge their significant and extraordinary contributions to stabilize the business, quickly produce innovative solutions to complicated business challenges, and lead their teams through unprecedented times. The payments were also made with consideration for the incredibly competitive retail landscape that existed in 2020 from both our traditional peer frame and also companies from an expanded group of competitors in the essential retail space. The Compensation Committee believes that each NEO has a key role in the achievement of our short and long-term business objectives, and it determined that these grants were necessary to retain their continued service. Our impressive results in 2020 were driven by our talented teams, whose retention is critical for our success. These grants also were designed to reward the superior performance described above during Fiscal 2020. For the amounts payable to the NEOs during Fiscal 2020, please refer to the “Bonus” column in the Summary Compensation Table on page 73. Fiscal 2020 Promotions During Fiscal 2020, Ms. Foyle was promoted to Chief Creative Officer, AEO, and Global Brand President, Aerie, and Mr. Mathias was promoted to EVP-Chief Financial Officer. In connection with her promotion, Ms. Foyle received a 12% increase to her base salary to recognize her significantly expanded scope and also received an RSU grant valued at $1,000,000 in connection with her elevation to her current position. Mr. Mathias received a 66% base salary increase as part of his promotion to his current role, which includes significantly expanded responsibilities, and his base salary now approximates the 25th percentile of the peer group. Mr. Mathias’s equity awards were granted partially in the first fiscal quarter of the year prior to his promotion. The balance of his equity awards were granted in the second fiscal quarter based upon his new role. Fiscal 2020 Long-Term Incentive Awards Overview and Mix of Awards We utilize a combination ofat-risk and time- and performance-based long-term incentive awards, which are granted on an annual basis, to focus management on long-term corporate performance and sustainable earnings growth. Long-term incentive awards generally comprise approximately 44% to 56%constitute the majority of a NEO’s target total direct compensation. In Fiscal 2018,Historically, we have awarded a combination of PSUs (50%), RSUs (25%), and stock options (25%) to our NEOs. We believe this mix maintains a heavy emphasis on In Fiscal 2020, the Compensation Committee modified the equity tied to performance,blend of our long-term incentive awards, as the NEOs’ PSUfollows: Stock options still represented 25% of total long-term equity awards; PSUs represented 33% (at target) of total long-term equity awards; and stock option awards comprise, in the aggregate, 75% RSUs represented 42% of the overalltotal long-term equity grant value. awards. The Compensation Committee determined to increase the portion of RSU awards for Fiscal 2020 in recognition of (i) the significant uncertainty surrounding the Company’s business and industry at the time of grant and (ii) the retentive nature of these awards. Sixty percent of RSUs were delivered in March 2020 in an award with a three-year ratable vesting schedule and 40% of RSUs were delivered in June 2020 in an award that cliff-vests in March 2023, subject in each case to continued employment. In connection with Mr. Mathias’s transition and promotion during the year, his equity distribution for Fiscal 2020 differed slightly from that of the other NEOs, and was composed of 15% stock options, 33% PSUs, and 52% RSUs. | | | | | 2021 Proxy Statement | | | | | 65 |
| | COMPENSATION DISCUSSION AND ANALYSIS |
This mix is representative for all NEO’s other than Mr. Mathias. Fiscal 2020 Long-Term Incentive Award Grants The Compensation Committee established the following Fiscal 20182020 target regular cycle long-term incentive opportunities for each NEO based on his or her overall responsibilities, contributions to the business, and market position. With respect to Mr. Schottenstein, the Compensation Committee determined his long term incentive award grant value within the context of his expertise, sizeable contributions to the success of the business, overall compensation position relative to peers, and lack of a target annual cash compensation increase in both 2017 and 2018. | | | | | | | | | | | | | | | | | Executive Officer | | 2018 Target Long-Term Incentive: PSU Awards | | | 2018 Long-Term Incentive: RSU Awards | | | 2018 Long-Term Incentive: Stock Option Awards | | | 2018 Target Total Long-Term Incentive Award | | CEO | | $ | 2,687,500 | | | $ | 1,343,750 | | | $ | 1,343,750 | | | $ | 5,375,000 | | CFO | | $ | 500,000 | | | $ | 250,000 | | | $ | 250,000 | | | $ | 1,000,000 | | Global Brand President, AE | | $ | 1,250,000 | | | $ | 625,000 | | | $ | 625,000 | | | $ | 2,500,000 | | Global Brand President, Aerie | | $ | 1,250,000 | | | $ | 625,000 | | | $ | 625,000 | | | $ | 2,500,000 | | COO | | $ | 750,000 | | | $ | 375,000 | | | $ | 375,000 | | | $ | 1,500,000 | |
PSUs: PSUs represented approximately 50% of the value of each NEO’s overall annualthrough 2020. The following table summarizes Fiscal 2020 long-term incentive award for Fiscal 2018.grants.
| | | | | | | | | | | | | | | | | | | | | Executive Officer | | 2020 Target Long-Term Incentive: PSU Awards | | | 2020 Long-Term Incentive: RSU Awards (March 2023 Cliff
Vest) | | | 2020 Long-Term Incentive: RSU Awards (Three year
Ratable Vesting) | | | 2020 Long-Term Incentive: Stock Option Awards | | | 2020 Target Total Long-Term Incentive Award | | CEO | | $ | 2,125,000 | | | $ | 1,062,500 | | | $ | 1,593,750 | | | $ | 1,593,750 | | | $ | 6,375,000 | | CFO | | $ | 333,333 | | | $ | 166,667 | | | $ | 350,000 | | | $ | 150,000 | | | $ | 1,000,000 | | Chief Creative Officer | | $ | 1,016,667 | | | $ | 508,333 | | | $ | 1,762,500 | | | $ | 762,500 | | | $ | 4,050,000 | | Global Brand President, AE | | $ | 1,016,667 | | | $ | 508,333 | | | $ | 762,500 | | | $ | 762,500 | | | $ | 3,050,000 | | COO | | $ | 833,333 | | | $ | 416,667 | | | $ | 625,000 | | | $ | 625,000 | | | $ | 2,500,000 | | Former CFO (1) | | | — | | | | — | | | | — | | | | — | | | | — | |
| (1) | All equity awards for our Former CFO were forfeited upon his separation from service. |
PSUs The grant of PSUs supports the Compensation Committee’s desire to create a stronger and more visible link between executive pay and Company performance and further aligns our executives’ interests with those of our stockholders. We determine the number of target PSUs based on the overall dollar grant value of the award divided by the closing price per shareestimated fair value of our common stock utilizing a Monte Carlo simulation on the grant date.date of the grant. Dividend equivalents on the PSUs are reinvested in additional units and paid out only to the extent that the associated PSUs vest. Annual PSU grants cliff vest, if at all, at the end of a three-year performance period. Fiscal 2018 PSUs vestperiod upon achievement ofpre-established goals. For Fiscal 2020, the Compensation Committee selected relative TSR, measured against the S&P 1500 Specialty Retail Index, over a three-year EBT growth goals. Performance goals are expressedperformance period as the performance metric for PSUs. The selection of a percentage of EBT growth per year for threshold, target and stretch vesting levels, with the annual growth rate for eachrelative performance level established at the outset of the three-year period. We believemetric ensures that the selection of EBT growthrecipients will be measured against industry performance and provides for diversificationan additional diversity of metrics betweenamong the annual incentive bonus and the PSU plan. If threshold performance is not met, the PSUs do not vest and all underlying shares are forfeited. Vesting based on the three-year goal ranges from 0% of the target amount for below threshold performance, to 25% of the target amount at threshold performance, to 100% of the target amount at target performance, to 150% of the target amount if we achieve goals that are substantially above our long- range business plan for the performance period, with performance between levels interpolated.
We will disclose the performance metrics for the Fiscal 2018 PSU awards at the end of the performance period, as the goals represent confidential information, disclosure of which would cause substantial competitive harm. The Compensation Committee deemed the Fiscal 2018 PSU award goals to be challenging but achievable.long-term incentive awards.
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RSUs: RSU awards represent approximately 25%Vesting of the valuePSUs ranges from 0% of each NEO’s annual long-termthe target amount for below threshold performance, 50% of the target amount at threshold performance, 100% of the target amount at target performance, and 150% of the target amount if we achieve stretch goals. Threshold performance is attained at the 25th percentile of the peer group, target is attained at the 50th percentile and stretch is attained at the 75th percentile or higher. If threshold performance is met or exceeded, performance and award pay-outs will be determined through interpolation. If the Company’s absolute TSR is negative over the three year period, vesting is capped at target (100%), regardless of performance relative to the peer index.
RSUs RSUs are subject to time-based vesting and provide a retention incentive award. Annual RSU grants vest ratably over three years from the grant date, assuming continued employment. for our NEOs and an incentive to increase stockholder value. We determine the number of RSUs in each grant based on the overall dollar grant value of the award divided by the closing price per share of our common stock on the grant date. Dividend equivalents on RSUs are reinvested in additional RSUs and paid only to the extent that the associated RSUs vest. In March 2020, 60% of RSUs were delivered in an award with a three-year ratable vesting schedule and, in June 2020, 40% of RSUs were delivered with awards that cliff-vest in March 2023, subject in each case to continued employment. Stock Options:Options The grant of stock options supports the Compensation Committee’s philosophy that stock price appreciation should be a significant determinant of the economic return received by our executives from equity compensation. Stock options represent approximately 25% of the value of aan NEO’s annual long-term incentive award. We determine the number of stock options for each grant based on the overall dollar grant value of the award divided by the estimated fair value of our common stock, utilizing the Black Scholes option pricing model on the grant date. Annual stock option grants have an exercise price per share equal to the fair market value of a share of stock on the grant date and vest ratably over three years from the grant date, assuming continued employment, and provide compensation to NEOs only to the extent that our share price appreciates from grant date to exercise date. Fiscal 2018 Annual Incentive Bonus and Fiscal 2016 PSU Payouts
The Fiscal 2018 Annual Incentive Bonus, measured on EBIT, paid out at 120% of target.
| | | | | | | Fiscal 2018 Annual Incentive Bonus
(One-year performance period ended
February 2, 2019)
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| | COMPENSATION DISCUSSION AND ANALYSIS |
Fiscal 2018 PSU Payouts In Fiscal 2016,2018, the Compensation Committee granted Messrs. Schottenstein, Mathias, Kessler, and Rempell and Ms. Foyle PSUs that cliff-vested at the end of a three-year performance period ending February 2, 2019.January 30, 2021. Payout of the Fiscal 20162018 PSUs was subject to the achievement of adjusted cumulative EBIT(1).Earnings Before Taxes (EBT) Growth. The chart and detail set forth below represent the goal detail,applicable performance goals, realized performance and resulting payout amounts for the Fiscal 20162018 PSUs. The Compensation Committee did not adjust this target or the Company’s achievement of the same, including as a result of the impact of the COVID-19 pandemic on the Company’s business. | | | | | | | Fiscal 2016 PSUs
(Three-year performance period ended
February 2, 2019)
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(1) | Adjusted cumulative EBIT is defined as earnings from continuing operations before interest and taxes and excludes (1) any accruals for restructuring programs, including lease buyout charges related to store closures and/or (2) asset impairment charges, as determined by the Compensation Committee.
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Based upon the performance achieved as shown in the above chart, Messrs. Schottenstein, Mathias, Kessler, and Rempell and Ms. Foyle received the following vesting ofpayouts with respect to their Fiscal 20162018 PSU awards, which represented a 32%50% of target vesting: | NEO | | Target 2016 PSU Award (No. of Shares) | | | 2016 PSU Payout (No. of Shares)(1) | | Target 2018 PSU Award (# of Shares) | | 2018 PSU Payout (# of Shares)(1) | CEO | | | 152,268 | | | 53,350 | | | 137,117 | | | | 70,031 | | CFO | | | | 4,861 | | | | 2,585 | | Chief Creative Officer | | | | 63,776 | | | | 33,968 | | Global Brand President, AE | | | 110,452 | | | 38,498 | | | 63,776 | | | | 33,968 | | Global Brand President, Aerie | | | 110,452 | | | 38,498 | | COO | | | 43,587 | | | 15,253 | | | 38,265 | | | | 20,381 | | Former CFO (2) | | | | | — | | | | | — | |
| (1) | PSU Payout (No.(# of Shares) includes accrued dividends. |
2018 Equity Retention Awards
Our continued growth in a challenging retail climate results, in large part, from a talented leadership team that continues to deliver on our strategic plan and achieve stockholder returns, as evidenced by the record revenues posted for Fiscal 2018 and ourtop-of-class TSR performance. We continue to believe that the retention of this team is critical to promote leadership continuity and the sustained delivery of industry leading results, viewed against the backdrop of the tight competition that we face for executive talent. Within that context, in August 2018 the Compensation Committee approved the granting of retention stock awards under the 2017 Plan to Messrs. Kessler, Madore and Rempell and Ms. Foyle. The award values were determined in consultation with FW Cook based on a review of industry data. The levels selected were deemed sufficient to increase the equity holding power for each executive and retain each of the NEOs in their current positions. Award sizes were identical for each of Messrs. Kessler, Madore and Rempell and Ms. Foyle to reinforce the team-based, collaborative approach to the long-term financial success of our Company.
The awards are composed of two equity grants, as follows:
The first award consists of time-based RSUs with a $1.0 million grant value, which will cliff-vest three years from the grant date, contingent upon continued employment.
| (2) | All equity awards for our Former CFO were forfeited upon his separation from service. |
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COMPANY COMPENSATION POLICIES AND PRACTICES • | | The second award is denominated in PSUs with a $1.0 million grant value at target. The performance metric for the award is Relative Total Shareholder Return (“RTSR”) measured against the S&P 1500 Specialty Retail Index. The selection of a relative performance metric ensures that the recipients will be measured against industry performance and provides for additional diversity of metrics among the annual incentive bonus, long-term incentive awards and the performance-based retention awards. Vesting based on the three-year goal ranges from 0% of the target amount for below threshold performance, 75% of the target amount at threshold performance, 100% of the target amount at target performance, and 125% of the target amount if we achieve stretch goals. Threshold performance is attained at the 25th percentile of the peer group, target is attained at the 50th percentile and stretch is attained at the 75th percentile or higher. If threshold performance is met or exceeded, performance and awardpay-outs will be determined through interpolation. If the Company’s absolute TSR is negative over the three year period, vesting is capped at target (100%), regardless of performance relative to the peer index.
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Our NEOs (other than Mr. Schottenstein) were also eligible for, and received, recognition cash bonuses representing approximately 3% of each NEO’s total SEC reported compensation for Fiscal 2018. The bonus awards were representative of a portion of the recognition bonus earned in Fiscal 2017 and were awarded in the form of recognition payments only to the extent that the NEOs remained employed through Fiscal 2018. These amounts are reflected in the “Bonus” column of our Summary Compensation Table.
Other Practices and Policies Clawback Policy: Recovery and Adjustments to Award The Compensation Committee believes that it is appropriate that our cash and long-term incentive awards be subject to financial penalties or clawbacks in the event of misconduct. Pursuant to our incentive plans, equity and cash awards are subject to additional forfeiture conditions. Forfeiture and recovery will be determined by the Compensation Committee and triggered in the event of misconduct related to:to (a) acts in competition with the Company;Company, (b) disclosure of confidential or proprietary information;information, (c) failure to cooperate with the Company in regard to a legal suit;suit, or (d) restatement of financial statements. The forfeiture will be triggered upon the occurrence of any of the aforementioned events at any time during active employment and resulting in termination of employment, or during theone-year period following termination. If any of the above events occur, the unexercised portion (vested or unvested) of an option, and any other award not settled, will immediately cancel and forfeit. Additionally, the NEO will be required to repay to the Company the total amount of the award gain realized upon each exercise of an option or award settlement that occurred on or after the date that isone-year one year prior to either (a) the forfeiture event or (b) the termination date. Prohibition Against Hedging Transactions and Pledging Employees (including our executive officers) and members of the Board are prohibited from engaging in transactions in financial instruments designed to hedge or offset any decrease in the market value of our stock. Our policy prohibits transactions in such instruments as prepaid variable forward contracts, equity swaps, collars or exchange funds, as well as any other hedging instrument. Employees and members of the Board are also prohibited from holding our stock in a margin account as collateral for a margin loan or otherwise pledging our stock as collateral. Benefits and Perquisites Executives generally are eligible for the same health and welfare plans as other full-time Company employees, including medical, dental, life and disability insurance, and retirement plans. We also provide a security benefit tolimited perquisites for our CEO,NEOs, as set forth in the Summary Compensation Table.Table, which we believe are reasonable and justified by market practice, personal safety and convenience that enhances productivity. Perquisites historically have consisted of a security benefit to Mr. Schottenstein. In the past, NEOs have also made limited use of Company-owned or chartered airplanes for personal trips. In light of the COVID-19 pandemic and travel concerns, there was limited personal aircraft use during Fiscal 2020. We believe that the perquisites we provide our NEOs are consistent with market practices and are reasonable and consistent with our compensation objectives. Compensation Risk Assessment Annually, the Compensation Committee, together with management, conducts an analysis to determine whether any risks arising from compensation policies and practices are reasonably likely to have a material adverse effect on the Company in light of our overall business, strategy, and objectives. Management, in concert with the Compensation Committee, reviews and evaluates both cash and equity incentive plans across executive and non-executive employee populations, as well as other compensation-related policies to which our employees are subject. This assessment evaluates both (i) material enterprise risks related to our business that may be exacerbated by compensation policies and practices and (ii) the potential risks arising from attributes in our compensation practices, performance criteria, pay mix, and verification of performance results. Based on this assessment, the Compensation Committee has determined that the risks arising from the Company’s compensation plans and policies are not reasonably likely to have a material adverse effect on the Company. Management Stock Ownership Requirements Management have stock ownership requirements to establish a commonality of interest between the teams and stockholders. Eligible members of Management are required to own the equivalent value of a multiple of their salary. For Mr. Schottenstein, the multiple is six times and for the other NEOs three times. The requirement can be met through various forms of equity, including personal holdings and equity incentive awards such as restricted stock units. Executives not meeting their requirement must retain 50% of their after tax shares acquired through stock sales until the requirement is reached. The CEO and NEOs are in compliance with their requirements. Additional information regarding stock ownership requirements can be found on page 84. | | | | | 2021 Proxy Statement | | | | | 69 |
| | COMPENSATION DISCUSSION AND ANALYSIS |
Change in Control and Other Agreements Our NEOs are entitled to receive consideration upon the termination of the executive’s employment with us under specified circumstances; including a change in control (“CIC”) related termination. These arrangements provide essential protections to the NEO to assist us in attracting and retaining qualified executives in a competitive environment. At the same time, we obtain certain agreements that preserve our valuable assets by imposingnon-competition andnon-solicitation restrictions, confidentiality obligations, and cooperation covenants on our NEOs. Change in Control Provisions The Company has entered into change in controlCIC agreements (each, a “CIC Agreement”) with all of our NEOs, with the exception of Mr. Schottenstein, whichour CEO. The CIC Agreements are designed to motivate executives to continue to work for the best interests of the Company and our stockholders in a potential CIC situation. The CIC Agreements contain “double-trigger” provisions for severance and other benefits. In the event of a CIC, and within 18 months of such event, if ana NEO’s employment is terminated by the Company other | | | | | 2019 Proxy Statement
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| COMPENSATION DISCUSSION AND ANALYSIS |
than for Cause, Disability, or as a result of the NEO’s death, or if the executive terminates his or her employment for Good Reason (each capitalized term as defined in the applicable CIC Agreement), the NEO is entitled to receive: alump-sum cash payment of all earned and determinable, but unpaid, current salary and unused paid time off; alump-sum severance payment equal to one and one-half times the NEO’s base salary, annualized for any partial year amount, and annual incentive cash bonus amount, at target; a prorated amount of the NEO’s then-current annual incentive cash bonus, at target; and upon the NEO’s timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the paymentreimbursement by the Company of the portion of premiums of the executive’s group health insurance, including coverage for eligible dependents, for the period that the executive is entitled to coverage under COBRA, not to exceed 12 months. The CIC Agreements also provide that any unvested or restricted awards, including stock options, RSUs, and PSUs, will vest and become exercisable to the extent set forth in the applicable award agreement. Severance Payments Mr. Madore and Ms. Foyle areis eligible to receive post-employment payments. For a description and quantification of these severance benefits, please refer to the“Post-Employment Compensation” section. Generally, if the executive’sMs. Foyle’s employment is involuntarily terminated without “cause”“Cause” by the Company and not due to death or disability,Disability, in exchange for the executive’sMs. Foyle’s execution andnon-revocation of a general release of claims in a form provided by the Company, the executiveMs. Foyle’s will be entitled to a severance payment.
Additionally, in the event of termination of employment, Messrs. Schottenstein, Kessler, and Rempell and Ms. Foyle who have executednon-competition agreements with the Company (each, a“Non-Compete “Non-Compete Agreement”) may be eligible to receive apro-rata portion of their PSUs following termination of employment, based on actual days worked and performance goals being met for the full performance period, but not at an amount above the “target” award level. For a description and quantification of these severance benefits, please refer to the “Post-Employment Compensation” section. The NEOs also agreed to certain provisions under theNon-Compete Agreement, including the following: (i) agreement not to use trade secrets, intellectual property, and other confidential or proprietary information of the Company for his or her own benefit, or for the benefit of any third party, including a competitor; (ii) agreement to provide the Company with at least 30 daysdays’ written notice of any resignation; (iii) an18-monthnon-solicit 18-month non-solicit provision following any termination of employment; (iv) a waiver relating to the development of intellectual property during the executive’s tenure with the Company; and (v) anon-compete provision following any termination of employment (12 months for Messrs. Schottenstein, and MadoreMathias. and 24 months for Messrs. Kessler and Rempell and Ms. Foyle). The breach of any of the foregoing provisions may result in the executiveNEO forfeiting unvested equity awards. Mr. Madore was also eligible for post-employment payments upon his departure from the Company, which are described in detail on page 81. | | | | | | 70 | | | | | |
| | COMPENSATION DISCUSSION AND ANALYSIS |
Tax Matters Prior to the passage of the Tax Cuts and Jobs Act (the “Tax Act”) in December 2017, Section 162(m) of the Internal Revenue Code (“Section 162(m)”) had generally disallowedlimits deductibility of compensation that a tax deduction for any publicly held corporation for individual compensation exceedingtraded company pays to certain “covered employees,” up to $1 million in any taxable yearper year. Covered employees for a company’s chief executive officer and itsthis purpose include the Company’s Chief Executive Officer, Chief Financial Officer, the next three other most highly compensated executive officers, other than its chief financial officer (each, aand any such “covered officer”), excluding qualifying performance-based compensation. Under the Tax Act, the performance-based compensation exception to Section 162(m) was repealed for tax years beginning in 2018. As a result, compensation paid to our covered officers in excess of $1 million will not be deductible unless such compensation is eligibleemployee” for a grandfathering rule that preserves the performance-based compensation exemption for certain arrangements and awards in place as of November 2, 2017.year after 2016.
The Compensation Committee believes in the importance of retaining flexibility to approve compensation arrangements that promote the objectives of our compensation program, even if such arrangements may not qualify for full or partial tax deductibility. Accordingly, the Compensation Committee reserves the right to continue to award or approve compensation that is not tax deductible or otherwise limited as to tax deductibility in order to provide competitive levels of total compensation to our executive officers in a manner designed to incentivize achievement of our strategic goals and objectives and in furtherance of our compensation principles described above. | | | | | 462021 Proxy Statement | | | | | |
COMPENSATION COMMITTEE REPORT The Compensation Committee has adopted and implemented core principles that form the basis for our executive compensation program: performance, competitiveness, affordability, and simplicity.transparency. We believe that our executive compensation program supports our financial and strategic goals, aligns executive pay with stockholder value creation, and appropriately discourages unnecessary or excessive risk taking. The Committee has reviewed and discussed the Compensation Discussion and Analysis with management, which describes the Committee’s decisions regarding our named executives’ compensation for Fiscal 20182020 and how those decisions support and implement our principles. Based on such review and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. This report is not soliciting material, is not deemed to be filed with the SEC and is not to be incorporated by reference in any filing of American Eagle Outfitters, Inc. under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. This report has been furnished by the Compensation Committee of the Board of Directors. Cary D. McMillan (Chair) Sujatha Chandrasekaran Deborah A. Henretta Thomas R. Ketteler Janice E. Page David M. Sable Noel J. Spiegel | | | | | 2019 Proxy Statement72 | | | | | 47 |
COMPENSATION TABLES AND RELATED INFORMATION General The following table sets forth information concerning the compensation awarded to, earned by, or paid to our NEOs for the years indicated below: | | | | | | 1) Mr. Schottenstein, our Chief Executive Officer; | | | 2) Mr. Madore,Mathias, our Executive Vice President – Chief Financial Officer; | | | 3) Ms. Foyle, our Chief Creative Officer, AEO Inc. and Global Brand President, Aerie; | | | 4) Mr. Kessler, our Global Brand President – AE; | | | 4) Ms. Foyle,5) Mr. Rempell, our Global Brand President – Aerie;Chief Operations Officer; and
| | | | 5)6) Mr. Rempell,Madore, our Former Executive Vice President – Chief OperationsFinancial Officer.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Summary Compensation Table | | Name and Principal Position | | Fiscal
Year(1) | | Base Salary | | Bonus(2) | | Stock
Awards(3) | | Option
Awards(4) | | Non-Equity
Incentive Plan
Compensation(5) | | All Other
Compensation(6) | | Total | Jay L. Schottenstein Principal Executive Officer | | | | 2018 | | | | $ | 1,500,000 | | | | | — | | | | $ | 4,031,248 | | | | $ | 1,343,749 | | | | $ | 3,150,000 | | | | $ | 186,183 | | | | $ | 10,211,180 | | | | | 2017 | | | | $ | 1,500,000 | | | | $ | 1,312,500 | | | | $ | 2,624,995 | | | | $ | 875,005 | | | | | — | | | | $ | 175,098 | | | | $ | 6,487,598 | | | | | 2016 | | | | $ | 1,500,000 | | | | | — | | | | $ | 3,499,993 | | | | | — | | | | $ | 2,362,500 | | | | $ | 147,176 | | | | $ | 7,509,669 | | Robert L. Madore Chief Financial Officer | | | | 2018 | | | | $ | 875,000 | | | | $ | 166,175 | | | | $ | 2,749,976 | | | | $ | 250,001 | | | | $ | 937,731 | | | | $ | 10,167 | | | | $ | 4,989,050 | | | | | 2017 | | | | $ | 850,000 | | | | $ | 361,250 | | | | $ | 637,502 | | | | $ | 212,501 | | | | | — | | | | $ | 207,132 | | | | $ | 2,268,385 | | | | | 2016 | | | | $ | 199,423 | | | | $ | 500,000 | | | | | — | | | | | — | | | | $ | 152,599 | | | | $ | 40,377 | | | | $ | 892,359 | | Charles F. Kessler Global Brand President, AE | | | | 2018 | | | | $ | 900,000 | | | | $ | 244,490 | | | | $ | 3,875,012 | | | | $ | 624,999 | | | | $ | 1,383,168 | | | | $ | 32,470 | | | | $ | 7,060,139 | | | | | 2017 | | | | $ | 850,400 | | | | $ | 531,500 | | | | $ | 1,875,003 | | | | $ | 625,003 | | | | | — | | | | $ | 9,938 | | | | $ | 3,891,844 | | | | | 2016 | | | | $ | 842,646 | | | | | — | | | | $ | 2,499,989 | | | | $ | 1,499,799 | | | | $ | 947,977 | | | | $ | 9,396 | | | | $ | 5,799,807 | | Jennifer M. Foyle Global Brand President, Aerie | | | | 2018 | | | | $ | 850,000 | | | | $ | 222,824 | | | | $ | 3,875,012 | | | | $ | 624,999 | | | | $ | 1,294,517 | | | | $ | 10,152 | | | | $ | 6,877,504 | | | | | 2017 | | | | $ | 775,040 | | | | $ | 484,400 | | | | $ | 1,875,003 | | | | $ | 625,003 | | | | | — | | | | $ | 9,938 | | | | $ | 3,769,384 | | | | | 2016 | | | | $ | 763,495 | | | | | — | | | | $ | 2,499,989 | | | | $ | 1,499,799 | | | | $ | 858,932 | | | | $ | 10,153 | | | | $ | 5,632,368 | | Michael R. Rempell Chief Operations Officer | | | | 2018 | | | | $ | 800,000 | | | | $ | 152,145 | | | | $ | 3,124,982 | | | | $ | 374,999 | | | | $ | 845,100 | | | | $ | 10,123 | | | | $ | 5,307,349 | | | | | 2017 | | | | $ | 735,000 | | | | $ | 330,750 | | | | $ | 750,004 | | | | $ | 250,002 | | | | | — | | | | $ | 9,938 | | | | $ | 2,075,694 | | | | | 2016 | | | | $ | 729,615 | | | | | — | | | | $ | 999,988 | | | | $ | 1,499,950 | | | | $ | 590,988 | | | | $ | 10,038 | | | | $ | 3,830,579 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Summary Compensation Table | | Name and Principal Position | | Fiscal Year(1) | | Base Salary(2) | | Bonus(3) | | Stock Awards(4) | | Option Awards(5) | | Non-Equity Incentive Plan Compensation(6) | | All Other Compensation(7) | | Total | Jay L. Schottenstein Chief Executive Officer | | | | 2020 | | | | $ | 1,500,000 | | | | | 1,500,000 | | | | $ | 4,781,254 | | | | $ | 1,593,750 | | | | | 5,250,000 | | | | | $ 159,284 | | | | $ | 14,784,288 | | | | | 2019 | | | | $ | 1,500,000 | | | | | — | | | | $ | 4,781,249 | | | | $ | 1,593,751 | | | | | — | | | | | $ 211,131 | | | | $ | 8,086,131 | | | | | 2018 | | | | $ | 1,500,000 | | | | | — | | | | $ | 4,031,248 | | | | $ | 1,343,749 | | | | $ | 3,150,000 | | | | | $ 186,183 | | | | $ | 10,211,180 | | Michael A. Mathias Chief Financial Officer | | | | 2020 | | | | $ | 554,038 | | | | $ | 250,000 | | | | $ | 849,991 | | | | $ | 150,002 | | | | $ | 720,250 | | | | | $ 10,639 | | | | $ | 2,534,920 | | Jennifer M. Foyle Chief Creative Officer, AEO Inc. and Global Brand President, Aerie | | | | 2020 | | | | $ | 931,346 | | | | | 750,000 | | | | $ | 3,287,498 | | | | $ | 762,500 | | | | | 2,607,769 | | | | | $ 10,240 | | | | $ | 8,349,353 | | | | | 2019 | | | | $ | 895,000 | | | | | — | | | | $ | 2,287,488 | | | | $ | 762,502 | | | | | — | | | | | $ 10,067 | | | | $ | 3,955,057 | | | | | 2018 | | | | $ | 850,000 | | | | $ | 222,824 | | | | $ | 3,875,012 | | | | $ | 624,999 | | | | $ | 1,294,517 | | | | | $ 10,152 | | | | $ | 6,877,504 | | Charles F. Kessler Global Brand President, AE | | | | 2020 | | | | $ | 940,000 | | | | | 200,000 | | | | $ | 2,287,499 | | | | $ | 762,500 | | | | | 2,444,000 | | | | | $ 145,635 | | | | $ | 6,779,634 | | | | | 2019 | | | | $ | 940,000 | | | | | — | | | | $ | 2,287,488 | | | | $ | 762,502 | | | | | — | | | | | $ 25,410 | | | | $ | 4,015,400 | | | | | 2018 | | | | $ | 900,000 | | | | $ | 244,490 | | | | $ | 3,875,012 | | | | $ | 624,999 | | | | $ | 1,383,168 | | | | | $ 32,470 | | | | $ | 7,060,139 | | Michael R. Rempell Chief Operations Officer | | | | 2020 | | | | $ | 835,000 | | | | | 450,000 | | | | $ | 1,875,006 | | | | $ | 624,998 | | | | | 1,503,000 | | | | | $ 9,938 | | | | $ | 5,297,942 | | | | | 2019 | | | | $ | 835,000 | | | | | — | | | | $ | 1,590,011 | | | | $ | 530,000 | | | | | — | | | | | $ 10,038 | | | | $ | 2,965,049 | | | | | 2018 | | | | $ | 800,000 | | | | $ | 152,145 | | | | $ | 3,124,982 | | | | $ | 374,999 | | | | $ | 845,100 | | | | | $ 10,123 | | | | $ | 5,307,349 | | Robert L. Madore Former Chief Financial Officer | | | | 2020 | | | | $ | 630,000 | | | | | — | | | | $ | — | | | | $ | — | | | | | — | | | | | $1,011,813 | | | | $ | 1,641,813 | | | | | 2019 | | | | $ | 910,000 | | | | | — | | | | $ | 918,741 | | | | $ | 306,251 | | | | | — | | | | | $ 10,207 | | | | $ | 2,145,199 | | | | | 2018 | | | | $ | 875,000 | | | | $ | 166,175 | | | | $ | 2,749,976 | | | | $ | 250,001 | | | | $ | 937,731 | | | | | $ 10,167 | | | | $ | 4,989,050 | |
| (1) | 20182020 refers to Fiscal 2018, thefifty-two week 52-week period ended February 2, 2019.January 30, 2021.
|
| (2) | For Fiscal 2018, these amounts represent recognition cash bonuses awarded toBoth Mr. Mathias and Ms. Foyle were promoted in 2020. This amount represents total base salary earned for the NEOs (other than the CEO).year.
|
| (3) | For 2020, these amounts represent cash recognition bonuses awarded to the NEOs. |
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| | COMPENSATION TABLES AND RELATED INFORMATION |
| (4) | Amounts in this column for Fiscal 20182020 consist of PSU and RSU awards based on the aggregate grant date fair value determined in accordance with Accounting Standards Codification 718, Compensation-Stock Compensation (“ASC 718”). For assumptions used in determining these values, see Note 12 of the Consolidated Financial Statements contained in our Fiscal 20182020 Annual Report on Form10-K. Amounts shown in this column for Fiscal 20182020 include the following, with the values of the PSU awards shown at target: |
| | | | 2018 RSU
Awards(a) | | | 2018 PSU Awards (At Target) (a) | | | 2018 RSU Equity Retention
Award (b) | | | 2018 PSU Equity Retention
Award (At Target) (b) | | | 2020 RSU Awards (a) | | | 2020 PSU Awards (At Target) (a) | | Jay L. Schottenstein | | $ | 1,343,755 | | | $ | 2,687,493 | | | | — | | | | — | | | $ | 2,656,253 | | | $ | 2,125,001 | | Michael A. Mathias | | | $ | 516,663 | | | $ | 333,328 | | Jennifer M. Foyle | | | $ | 2,270,827 | | | $ | 1,016,671 | | Charles F. Kessler | | | $ | 1,270,828 | | | $ | 1,016,671 | | Michael R. Rempell | | | $ | 1,041,670 | | | $ | 833,336 | | Robert L. Madore | | $ | 249,990 | | | $ | 499,996 | | | $ | 1,000,001 | | | $ | 999,989 | | | $ | — | | | $ | — | | Charles F. Kessler | | $ | 625,012 | | | $ | 1,250,010 | | | $ | 1,000,001 | | | $ | 999,989 | | | Jennifer M. Foyle | | $ | 625,012 | | | $ | 1,250,010 | | | $ | 1,000,001 | | | $ | 999,989 | | | Michael R. Rempell | | $ | 374,998 | | | $ | 749,994 | | | $ | 1,000,001 | | | $ | 999,989 | | |
| | | | | 48 | | |
| |
|
| COMPENSATION TABLES AND RELATED INFORMATION |
| | (a) | Represents Fiscal 20182020 long-term incentive awards granted to the NEOs in March 20182020 (with respect to PSUs)RSUs) and June 20182020 (with respect to PSUs and RSUs). The maximum value of the PSU awards granted in March 2018June 2020 is $4,031,250$3,187,501 for Mr. Schottenstein, $749,994$499,992 for Mr. Madore, $1,875,014Mathias, $1,525,006 each for Mr. Kessler and Ms. Foyle, and $1,125,001$1,250,003 for Mr. Rempell. |
| (b) | Represents the 2018 equity retention awards granted to the NEOs (other than Mr. Schottenstein) in August 2018. The maximum value of the PSU awards granted in August 2018 is $1,249,999 for Messrs. Madore, Kessler, and Rempell and Ms. Foyle.
|
(4)(5) | The value of the time-based stock option awards included in the Summary Compensation Table is based on the aggregate grant date fair value computed in accordance with ASC 718. Additional information regarding assumptions are available in Note 12 of the Consolidated Financial Statements contained in our Fiscal 20182020 Annual Report onForm 10-K. |
(5)(6) | For Fiscal 2018,2020, non-equity incentive plan compensation represents the annual incentive bonus paid to each NEO. |
(6)(7) | For Fiscal 2018:2020: |
| | (a) | For Mr. Schottenstein, the amount represents the aggregate incremental cost to the Company of security arrangements in addition to those provided during working days and for business travel. We provide a comprehensive security benefit to the CEO, a portion of which, based upon the disclosure rules, is deemed to be personal, although we believe there is a legitimate business reason for providing such a benefit. |
| | (b) | For Mr. Madore,Mathias, the amount consists of $10,167$10,639 in employer contributions to the 401(k) plan. |
| (c) | For Ms. Foyle, the amount consists of $10,240 in employer contributions to the 401(k) plan. |
| | (c) | For Mr. Kessler, the amount consists of $10,079$9,938 in employer contributions to the 401(k) plan and $22,391$134,697 for personal use of the companyCompany aircraft and/or chartered jet expenses. Incremental cost of use of our aircraft is calculated pursuant to a formula that takes into account costs to us, including fuel costs, mileage, trip-related maintenance, landing/ramp fees and other miscellaneous costs. |
| | (d) | For Ms. Foyle,Mr. Rempell, the amount consists of $10,152$9,938 in employer contributions to the 401(k) plan. |
| | (e) | For Mr. Rempell,Madore, the amount consists of $10,123$910,000 in paid and accrued severance, $73,500 in earned paid time-off balance payout, $21,000 in paid and accrued COBRA reimbursement and $7,312 in employer contributions to the 401(k) plan. |
| | | | | 2019 Proxy Statement
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| | 49 |
| COMPENSATION TABLES AND RELATED INFORMATION |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Grants of Plan-Based Awards – Fiscal 2018 | | | | | | | | | | | Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards | | | Estimated Future Payout Under Equity Incentive Plan
Awards | | | All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | | Exercise
or Base
Price of
Option
Awards
($/Sh) | | | Grant Data
Fair Value
of Stock and
Option
Awards ($)(7) | | | Name | | | | | Grant
Date | | | Threshold
($) | | | Target ($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | Jay L. Schottenstein | | | (1) | | | | — | | | $ | 656,250 | | | $ | 2,625,000 | | | $ | 5,250,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | (2) | | | | 3/14/2018 | | | | — | | | | — | | | | — | | | | 34,279 | | | | 137,117 | | | | 205,676 | | | | — | | | | — | | | | — | | | $ | 2,687,493 | | | | | (3) | | | | 6/6/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 55,596 | | | | — | | | | — | | | $ | 1,343,755 | | | | | | (4) | | | | 3/14/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 235,526 | | | $ | 19.60 | | | $ | 1,343,749 | | Robert L. Madore | | | (1) | | | | — | | | $ | 196,875 | | | $ | 787,500 | | | $ | 1,575,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | (2) | | | | 3/14/2018 | | | | — | | | | — | | | | — | | | | 6,378 | | | | 25,510 | | | | 38,265 | | | | — | | | | — | | | | — | | | $ | 499,996 | | | | | (3) | | | | 6/6/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,343 | | | | — | | | | — | | | $ | 249,990 | | | | | (4) | | | | 3/14/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 43,819 | | | $ | 19.60 | | | $ | 250,001 | | | | | (5) | | | | 8/6/2018 | | | | — | | | | — | | | | — | | | | 27,263 | | | | 36,350 | | | | 45,438 | | | | — | | | | — | | | | — | | | $ | 999,989 | | | | | | (6) | | | | 8/6/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38,432 | | | | — | | | | — | | | $ | 1,000,001 | | Charles F. Kessler | | | (1) | | | | — | | | $ | 292,500 | | | $ | 1,170,000 | | | $ | 2,340,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | (2) | | | | 3/14/2018 | | | | — | | | | — | | | | — | | | | 15,944 | | | | 63,776 | | | | 95,664 | | | | — | | | | — | | | | — | | | $ | 1,250,010 | | | | | (3) | | | | 6/6/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,859 | | | | — | | | | — | | | $ | 625,012 | | | | | (4) | | | | 3/14/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 109,547 | | | $ | 19.60 | | | $ | 624,999 | | | | | (5) | | | | 8/6/2018 | | | | — | | | | — | | | | — | | | | 27,263 | | | | 36,350 | | | | 45,438 | | | | — | | | | — | | | | — | | | $ | 999,989 | | | | | | (6) | | | | 8/6/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38,432 | | | | — | | | | — | | | $ | 1,000,001 | | Jennifer M. Foyle | | | (1) | | | | — | | | $ | 276,250 | | | $ | 1,105,000 | | | $ | 2,210,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | (2) | | | | 3/14/2018 | | | | — | | | | — | | | | — | | | | 15,944 | | | | 63,776 | | | | 95,664 | | | | — | | | | — | | | | — | | | $ | 1,250,010 | | | | | (3) | | | | 6/6/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,859 | | | | — | | | | — | | | $ | 625,012 | | | | | (4) | | | | 3/14/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 109,547 | | | $ | 19.60 | | | $ | 624,999 | | | | | (5) | | | | 8/6/2018 | | | | — | | | | — | | | | — | | | | 27,263 | | | | 36,350 | | | | 45,438 | | | | — | | | | — | | | | — | | | $ | 999,989 | | | | | | (6) | | | | 8/6/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38,432 | | | | — | | | | — | | | $ | 1,000,001 | | Michael R. Rempell | | | (1) | | | | — | | | $ | 180,000 | | | $ | 720,000 | | | $ | 1,440,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | (2) | | | | 3/14/2018 | | | | — | | | | — | | | | — | | | | 9,566 | | | | 38,265 | | | | 57,398 | | | | — | | | | — | | | | — | | | $ | 749,994 | | | | | (3) | | | | 6/6/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15,515 | | | | — | | | | — | | | $ | 374,998 | | | | | (4) | | | | 3/14/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 65,728 | | | $ | 19.60 | | | $ | 374999 | | | | | (5) | | | | 8/6/2018 | | | | — | | | | — | | | | — | | | | 27,263 | | | | 36,350 | | | | 45,438 | | | | — | | | | — | | | | — | | | $ | 999,989 | | | | | | (6) | | | | 8/6/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38,432 | | | | — | | | | — | | | $ | 1,000,001 | |
(1) | Amount represents the Fiscal 2018 annual incentive cash bonus established under our 2017 Plan.
|
(2) | Amount represents a grant of PSUs under our 2017 Plan with earnout based on achievement of EBT performance goals.
|
(3) | Amount represents a grant of time-based RSUs with a three-year vesting period under our 2017 Plan.
|
(4) | Amount represents a grant of time-based stock options with a three-year vesting period under our 2017 Plan.
|
(5) | Amount represents a grant of PSUs under our 2017 Plan with earnout based on achievement of RTSR performance goals.
|
(6) | Amount represents a grant of time-based RSUs under our 2017 Plan, with cliff vesting on the third anniversary of the grant date, based on continued employment.
|
(7) | Amounts have been calculated based on aggregate grant date fair value determined in accordance with ASC 718 for the respective award types.
|
| | | | | 5074 | | | | | |
| | COMPENSATION TABLES AND RELATED INFORMATION |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Grants of Plan-Based Awards – Fiscal 2020 | | | | | | | | Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards | | Estimated Future Payout Under Equity Incentive Plan
Awards | | All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#) | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | Exercise
or Base
Price of
Option
Awards
($/Sh) | | Grant Date
Fair Value
of Stock and
Option
Awards ($)(8) | Name | | | | Grant
Date | | Threshold
($) | | Target ($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | Jay L. Schottenstein | | | | (1) | | | | | — | | | | $ | 656,250 | | | | $ | 2,625,000 | | | | $ | 5,250,000 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (2) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | 66,282 | | | | | 132,564 | | | | | 198,846 | | | | | — | | | | | — | | | | | — | | | | $ | 2,125,001 | | | | | | (3) | | | | | 3/26/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 184,890 | | | | | — | | | | | — | | | | $ | 1,593,752 | | | | | | (4) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 86,172 | | | | | — | | | | | — | | | | $ | 1,062,501 | | | | | | (5) | | | | | 3/26/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 347,142 | | | | $ | 8.62 | | | | $ | 637,500 | | | | | | | (6) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 258,000 | | | | $ | 12.33 | | | | $ | 956,250 | | Michael A. Mathias | | | | (1) | | | | | — | | | | $ | 90,031 | | | | $ | 360,125 | | | | $ | 720,249.40 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (2) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | 10,397 | | | | | 20,794 | | | | | 31,191 | | | | | — | | | | | — | | | | | — | | | | $ | 333,328 | | | | | | (3) | | | | | 3/26/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,603 | | | | | — | | | | | — | | | | $ | 349,998 | | | | | | (4) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 13,517 | | | | | — | | | | | — | | | | $ | 166,665 | | | | | | | (6) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,471 | | | | $ | 12.33 | | | | $ | 150,002 | | Jennifer M. Foyle | | | | (1) | | | | | — | | | | $ | 325,971 | | | | $ | 1,303,884 | | | | $ | 2,607,768.80 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (2) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | 31,712 | | | | | 63,423 | | | | | 95,135 | | | | | — | | | | | — | | | | | — | | | | $ | 1,016,671 | | | | | | (3) | | | | | 3/26/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 88,457 | | | | | — | | | | | — | | | | $ | 762,499 | | | | | | (4) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 41,227 | | | | | — | | | | | — | | | | $ | 508,329 | | | | | | (7) | | | | | 10/8/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 64,683 | | | | | — | | | | | — | | | | $ | 999,999 | | | | | | (5) | | | | | 3/26/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 166,084 | | | | $ | 8.62 | | | | $ | 305,001 | | | | | | | (6) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 123,435 | | | | $ | 12.33 | | | | $ | 457,499 | | Charles F. Kessler | | | | (1) | | | | | — | | | | $ | 305,500 | | | | $ | 1,222,000 | | | | $ | 2,444,000 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (2) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | 31,712 | | | | | 63,423 | | | | | 95,135 | | | | | — | | | | | — | | | | | — | | | | $ | 1,016,671 | | | | | | (3) | | | | | 3/26/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 88,457 | | | | | — | | | | | — | | | | $ | 762,499 | | | | | | (4) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 41,227 | | | | | — | | | | | — | | | | $ | 508,329 | | | | | | (5) | | | | | 3/26/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 166,084 | | | | $ | 8.62 | | | | $ | 305,001 | | | | | | | (6) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 123,435 | | | | $ | 12.33 | | | | $ | 457,499 | | Michael R. Rempell | | | | (1) | | | | | — | | | | $ | 187,875 | | | | $ | 751,500 | | | | $ | 1,503,000 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (2) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | 25,993 | | | | | 51,986 | | | | | 77,979 | | | | | — | | | | | — | | | | | — | | | | $ | 833,336 | | | | | | (3) | | | | | 3/26/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 72,506 | | | | | — | | | | | — | | | | $ | 625,002 | | | | | | (4) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 33,793 | | | | | — | | | | | — | | | | $ | 416,668 | | | | | | (5) | | | | | 3/26/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 136,134 | | | | $ | 8.62 | | | | $ | 250,000 | | | | | | | (6) | | | | | 6/4/2020 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 101,176 | | | | $ | 12.33 | | | | $ | 374,998 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding Equity Awards at Fiscal 2018 Year – End | | | | | | | | Option Awards | | | Stock Awards (1) | | | | | | | | Number of Securities
Underlying
Unexercised
Options (#)
Exercisable | | | Number of Securities
Underlying
Unexercised
Options (#) Unexer- cisable | | | Equity
Incentive
Plan
Awards:
Number of Securities
Underlying
Unexercised
Unearned
Options (#) | | | Option
Exercise
Price ($) | | | Option
Expiration
Date | | | Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#) | | | Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested ($) | | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested ($) | | Jay L. Schottenstein | | | (2) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 53,350 | | | $ | 1,116,616 | | | | — | | | | — | | | | | (3) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 23,818 | | | $ | 498,512 | | | | — | | | | — | | | | | (10) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 127,405 | | | $ | 2,666,607 | | | | | (11) | | | | 75,979 | | | | 151,958 | | | | — | | | $ | 14.59 | | | | 3/8/24 | | | | — | | | | — | | | | — | | | | — | | | | | (12) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 52,854 | | | $ | 1,106,229 | | | | — | | | | — | | | | | (13) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 140,608 | | | $ | 2,942,928 | | | | | (14) | | | | — | | | | 235,526 | | | | — | | | $ | 19.60 | | | | 3/14/25 | | | | — | | | | — | | | | — | | | | — | | | | | | (15) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 56,644 | | | $ | 1,185,558 | | | | — | | | | — | | Robert L. Madore | | | (10) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 30,942 | | | $ | 647,616 | | | | | (11) | | | | 18,452 | | | | 36,904 | | | | — | | | $ | 14.59 | | | | 3/8/24 | | | | — | | | | — | | | | — | | | | — | | | | | (12) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,836 | | | $ | 268,668 | | | | — | | | | — | | | | | (13) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,160 | | | $ | 547,519 | | | | | (14) | | | | — | | | | 43,819 | | | | — | | | $ | 19.60 | | | | 3/14/25 | | | | — | | | | — | | | | — | | | | — | | | | | (15) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,538 | | | $ | 220,560 | | | | — | | | | — | | | | | (16) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 36,832 | | | $ | 770,885 | | | | | | (17) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38,941 | | | $ | 815,038 | | | | — | | | | — | | Charles F. Kessler | | | (2) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,957 | | | $ | 271,190 | | | | — | | | | — | | | | | (3) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,785 | | | $ | 121,075 | | | | — | | | | — | | | | | (4) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,542 | | | $ | 534,594 | | | | — | | | | — | | | | | (5) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,404 | | | $ | 238,691 | | | | — | | | | — | | | | | (6) | | | | — | | | | 140,427 | | | | — | | | $ | 15.72 | | | | 5/23/23 | | | | — | | | | — | | | | — | | | | — | | | | | (10) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 91,004 | | | $ | 1,904,719 | | | | | (11) | | | | — | | | | 108,542 | | | | — | | | $ | 14.59 | | | | 3/8/24 | | | | — | | | | — | | | | — | | | | — | | | | | (12) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 37,753 | | | $ | 790,164 | | | | — | | | | — | | | | | (13) | | | | — | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 65,400 | | | $ | 1,368,818 | | | | | (14) | | | | — | | | | 109,547 | | | | — | | | $ | 19.60 | | | | 3/14/25 | | | | — | | | | — | | | | — | | | | — | | | | | (15) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,346 | | | $ | 551,431 | | | | — | | | | — | | | | | (16) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 36,832 | | | $ | 770,885 | | | | | | (17) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38,941 | | | $ | 815,038 | | | | — | | | | — | | Jennifer M. Foyle | | | (2) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,957 | | | $ | 271,190 | | | | — | | | | — | | | | | (3) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,785 | | | $ | 121,075 | | | | — | | | | — | | | | | (4) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,542 | | | $ | 534,594 | | | | — | | | | — | | | | | (5) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,404 | | | $ | 238,691 | | | | — | | | | — | | | | | (6) | | | | — | | | | 140,427 | | | | — | | | $ | 15.72 | | | | 5/23/23 | | | | — | | | | — | | | | — | | | | — | | | | | (10) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 91,004 | | | $ | 1,904,719 | | | | | (11) | | | | — | | | | 108,542 | | | | — | | | $ | 14.59 | | | | 3/8/24 | | | | — | | | | — | | | | — | | | | — | | | | | (12) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 37,753 | | | $ | 790,164 | | | | — | | | | — | | | | | (13) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 65,400 | | | $ | 1,368,818 | | | | | (14) | | | | — | | | | 109,547 | | | | — | | | $ | 19.60 | | | | 3/14/25 | | | | — | | | | — | | | | — | | | | — | | | | | (15) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,346 | | | $ | 551,431 | | | | — | | | | — | | | | | (16) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 36,832 | | | $ | 770,885 | | | | | | (17) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38,941 | | | $ | 815,038 | | | | — | | | | — | | Michael R. Rempell | | | (2) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,957 | | | $ | 271,190 | | | | — | | | | — | | | | | (3) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,785 | | | $ | 121,075 | | | | — | | | | — | | | | | (7) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,298 | | | $ | 48,097 | | | | — | | | | — | | | | | (8) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,026 | | | $ | 21,478 | | | | — | | | | — | | | | | (9) | | | | — | | | | 138,675 | | | | — | | | $ | 15.89 | | | | 6/2/23 | | | | — | | | | — | | | | — | | | | — | | | | | (10) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 36,402 | | | $ | 761,887 | | | | | (11) | | | | 21,708 | | | | 43,417 | | | | — | | | $ | 14.59 | | | | 3/8/24 | | | | — | | | | — | | | | — | | | | — | | | | | (12) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15,102 | | | $ | 316,087 | | | | — | | | | — | | | | | (13) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 39,239 | | | $ | 821,278 | | | | | (14) | | | | — | | | | 65,728 | | | | — | | | $ | 19.60 | | | | 3/14/25 | | | | — | | | | — | | | | — | | | | — | | | | | (15) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15,807 | | | $ | 330,850 | | | | — | | | | — | | | | | (16) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 36,832 | | | $ | 770,885 | | | | | | (17) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38,941 | | | $ | 815,038 | | | | — | | | | — | |
| (1) | Amount represents the Fiscal 2020 annual incentive cash bonus established under our 2020 Plan. |
| (2) | Amount represents a grant of PSUs under our 2020 Plan with vesting based on achievement of RTSR performance goals. |
| (3) | Amount represents a grant of time-based RSUs with a three-year vesting period under our 2017 Plan. |
| (4) | Amount represents a grant of time-based RSU with a three-year cliff vesting under our 2020 Plan. |
| (5) | Amount represents a grant of time-based stock options with a three-year vesting period under our 2017 Plan. |
| (6) | Amount represents a grant of time-based stock options with a three-year vesting period under our 2020 Plan. |
| (7) | Amount represents a grant of time-based RSUs with a three-year vesting period under our 2020 Plan. |
| (8) | Amounts have been calculated based on aggregate grant date fair value determined in accordance with ASC 718 for the respective award types. |
| | | | | 20192021 Proxy Statement | | | | | 5175 |
| | COMPENSATION TABLES AND RELATED INFORMATION |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding Equity Awards at Fiscal 2020 Year – End | | | | | | Option Awards | | Stock Awards (1) | | | | | | Number of Securities
Underlying
Unexercised
Options (#)
Exercisable | | Number of Securities
Underlying
Unexercised
Options (#) Unexer- cisable | | Equity
Incentive
Plan
Awards: Number of Securities
Underlying
Unexercised
Unearned
Options (#) | | Option
Exercise
Price ($) | | Option
Expiration
Date | | Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#) | | Market
Value of
Shares or
Units of
Stock
That Have
Not
Vested ($) | | Equity
Incentive Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#) | | Equity
Incentive Plan
Awards:
Market or
Payout
Value of
Unearned Shares,
Units or Other
Rights That
Have Not
Vested ($) | Jay L. Schottenstein | | | | (4) | | | | | 227,937 | | | | | — | | | | | — | | | | | $14.59 | | | | | 3/8/24 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (5) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 146,062 | | | | $ | 3,314,135 | | | | | — | | | | | — | | | | | | (6) | | | | | 157,017 | | | | | 78,509 | | | | | — | | | | | $19.60 | | | | | 3/14/25 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (8) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 19,614 | | | | $ | 445,042 | | | | | — | | | | | — | | | | | | (11) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 154,653 | | | | $ | 3,509,080 | | | | | | (12) | | | | | 88,906 | | | | | 177,813 | | | | | — | | | | | $21.41 | | | | | 3/26/26 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (13) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 62,414 | | | | $ | 1,416,167 | | | | | — | | | | | — | | | | | | (14) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 186,154 | | | | $ | 4,223,838 | | | | | — | | | | | — | | | | | | (15) | | | | | — | | | | | 347,142 | | | | | — | | | | | $8.62 | | | | | 3/26/27 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (16) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 38,260 | | | | $ | 868,120 | | | | | | (17) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 86,761 | | | | $ | 1,968,611 | | | | | — | | | | | — | | | | | | | (18) | | | | | — | | | | | 258,000 | | | | | — | | | | | $12.33 | | | | | 6/4/27 | | | | | — | | | | | — | | | | | — | | | | | — | | Michael A. Mathias | | | | (5) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 4,077 | | | | $ | 92,499 | | | | | — | | | | | — | | | | | | (7) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 1,094 | | | | $ | 24,831 | | | | | — | | | | | — | | | | | | (8) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 1,460 | | | | $ | 33,136 | | | | | — | | | | | — | | | | | | (11) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 4,852 | | | | $ | 110,095 | | | | | | (13) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 3,917 | | | | $ | 88,867 | | | | | — | | | | | — | | | | | | (14) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,881 | | | | $ | 927,581 | | | | | — | | | | | — | | | | | | (16) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 20,936 | | | | $ | 475,042 | | | | | | (17) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 13,609 | | | | $ | 308,798 | | | | | — | | | | | — | | | | | | | (18) | | | | | — | | | | | 40,471 | | | | | — | | | | | $12.33 | | | | | 3/26/27 | | | | | — | | | | | — | | | | | — | | | | | — | | Jennifer M. Foyle | | | | (2) | | | | | 140,427 | | | | | — | | | | | — | | | | | $15.72 | | | | | 5/23/23 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (4) | | | | | 54,271 | | | | | — | | | | | — | | | | | $14.59 | | | | | 3/8/24 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (5) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 67,936 | | | | $ | 1,541,474 | | | | | — | | | | | — | | | | | | (6) | | | | | 36,516 | | | | | 36,516 | | | | | — | | | | | $19.60 | | | | | 3/14/25 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (8) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 9,124 | | | | $ | 207,015 | | | | | — | | | | | — | | | | | | (9) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 38,260 | | | | $ | 868,120 | | | | | | (10) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,451 | | | | $ | 917,843 | | | | | — | | | | | — | | | | | | (11) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 73,991 | | | | $ | 1,678,845 | | | | | | (12) | | | | | 42,535 | | | | | 85,072 | | | | | — | | | | | $21.41 | | | | | 3/26/26 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (13) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 29,861 | | | | $ | 677,547 | | | | | — | | | | | — | | | | | | (14) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 89,062 | | | | $ | 2,020,813 | | | | | — | | | | | — | | | | | | (15) | | | | | — | | | | | 166,084 | | | | | — | | | | | $8.62 | | | | | 3/26/27 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (16) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 63,857 | | | | $ | 1,448,907 | | | | | | (17) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 41,509 | | | | $ | 941,837 | | | | | — | | | | | — | | | | | | (18) | | | | | — | | | | | 123,435 | | | | | — | | | | | $12.33 | | | | | 6/4/27 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | (19) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 65,125 | | | | $ | 1,477,692 | | | | | — | | | | | — | | Charles F. Kessler | | | | (2) | | | | | 140,427 | | | | | — | | | | | — | | | | | $15.72 | | | | | 5/23/23 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (5) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 67,936 | | | | $ | 1,541,474 | | | | | — | | | | | — | | | | | | (6) | | | | | 73,031 | | | | | 36,516 | | | | | — | | | | | $19.60 | | | | | 3/14/25 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (8) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 9,124 | | | | $ | 207,015 | | | | | — | | | | | — | | | | | | (9) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 38,260 | | | | $ | 868,120 | | | | | | (10) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,451 | | | | $ | 917,843 | | | | | — | | | | | — | | | | | | (11) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 73,991 | | | | $ | 1,678,845 | | | | | | (12) | | | | | 42,535 | | | | | 85,072 | | | | | — | | | | | $21.41 | | | | | 3/26/26 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (13) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 29,861 | | | | $ | 677,547 | | | | | — | | | | | — | | | | | | (14) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 89,062 | | | | $ | 2,020,813 | | | | | — | | | | | — | | | | | | (15) | | | | | — | | | | | 166,084 | | | | | — | | | | | $8.62 | | | | | 3/26/27 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (16) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 63,857 | | | | $ | 1,448,907 | | | | | | (17) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 41,509 | | | | $ | 941,837 | | | | | — | | | | | — | | | | | | | (18) | | | | | — | | | | | 123,435 | | | | | — | | | | | $12.33 | | | | | 6/4/27 | | | | | — | | | | | — | | | | | — | | | | | — | | Michael R. Rempell | | | | (3) | | | | | 138,675 | | | | | — | | | | | — | | | | | $15.89 | | | | | 6/2/23 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (4) | | | | | 65,125 | | | | | — | | | | | — | | | | | $14.59 | | | | | 3/8/24 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (5) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,761 | | | | $ | 924,870 | | | | | — | | | | | — | | | | | | (6) | | | | | 43,818 | | | | | 21,910 | | | | | — | | | | | $19.60 | | | | | 3/14/25 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (8) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 5,474 | | | | $ | 124,209 | | | | | — | | | | | — | | | | | | (9) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 38,260 | | | | $ | 868,120 | | | | | | (10) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 40,451 | | | | $ | 917,843 | | | | | — | | | | | — | | | | | | (11) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 51,430 | | | | $ | 1,166,951 | | | | | | (12) | | | | | 29,565 | | | | | 59,132 | | | | | — | | | | | $21.41 | | | | | 3/26/26 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (13) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 20,757 | | | | $ | 470,971 | | | | | — | | | | | — | | | | | | (14) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 73,002 | | | | $ | 1,656,410 | | | | | — | | | | | — | | | | | | (15) | | | | | — | | | | | 136,134 | | | | | — | | | | | $8.62 | | | | | 3/26/27 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | | (16) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 133,470 | | | | $ | 3,028,443 | | | | | | (17) | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | | | | | 34,024 | | | | $ | 772,006 | | | | | — | | | | | — | | | | | | | (18) | | | | | — | | | | | 101,176 | | | | | — | | | | | $12.33 | | | | | 6/4/27 | | | | | — | | | | | — | | | | | — | | | | | — | |
| | | | | | 76 | | | | | |
| | COMPENSATION TABLES AND RELATED INFORMATION |
| (1) | All stock awards include dividend equivalents. The market value was determined by multiplying the closing market price for AEO common stock on February 1, 2019January 29, 2021 ($20.93)22.69), the last trading day of Fiscal 2020, by the number of shares underlying the award. |
| (2) | Amount represents a grant on March 9, 2016 under our 2014 Stock Award and Incentive Plan (the “2014 Plan”). The Compensation Committee established performance goals based on cumulative EBIT by the end of Fiscal 2018. Vesting of the PSUs ranged from 0% of the shares if threshold performance was not attained, to 25% of the shares at threshold performance, to 100% of the shares at target performance and 150% of the shares at the maximum goal achievement. On March 13, 2019, the Compensation Committee certified vesting at 32% of target.
|
(3) | Amount represents a grant of time-based RSUs under our 2014 Plan with a three-year vesting period. On March 9, 2019, the final third of the RSUs plus respective dividends vested.
|
(4) | Amount represents a grant on May 23, 2016 under our 2014 Plan. The Compensation Committee established performance goals based on cumulative EBIT by the end of Fiscal 2018. Vesting of the PSUs ranged from 0% of the shares if threshold performance was not attained, to 25% of the shares at threshold performance, to 100% of the shares at target performance and 150% of the shares at the maximum goal achievement. On March 13, 2019, the Compensation Committee certified a vesting of 32% of target.
|
(5) | Amount represents a grant on May 23, 2016 of time-based RSUs under our 2014 Plan with a three-year vesting period. On May 23, 2018, the second third of the RSUs, plus respective dividends, vested. The remainingone-third will vest in accordance with its terms on the third anniversary of the grant date.
|
(6) | Amount represents an award of time-based stock options granted on May 23, 2016 under our 2014 Plan which optionsthat are exercisable at the fair market value on the grant date and vest ratably over three years. |
(7)(3) | Amount represents a grant on June 2, 2016 under our 2014 Plan. The Compensation Committee established performance goals based on cumulative EBIT by the end of Fiscal 2018. Vesting of the PSUs ranged from 0% of the shares if threshold performance was not attained, to 25% of the shares at threshold performance, to 100% of the shares at target performance and 150% of the shares at the maximum goal achievement. On March 13, 2019, the Compensation Committee certified vesting at 32% of target.
|
(8) | Amount represents a grant on June 2, 2016 of time-based RSUs under our 2014 Plan with a three-year vesting period. On June 2, 2018, the second third of the RSUs plus respective dividends vested. The remainingone-third will vest in accordance with its terms on the third anniversary of the grant date.
|
(9) | Amount represents an award of time-based stock options granted on June 2, 2016 under our 2014 Plan which optionsthat are exercisable at the fair market value on the grant date and vest ratably over three years. |
(10)(4) | Amount represents an award of time-based stock options granted under our 2014 Plan that are exercisable at the fair market value on the grant date and vest ratably over three years. |
| (5) | Amount represents a grant on March 8, 201714, 2018 under our 20142017 Plan. The Compensation Committee established performance goals based on Net Income GrowthEBT by the end of Fiscal 2019.2020. Vesting of the PSUsPSU ranges from 0% of the shares if threshold performance is not attained, to 25% of the shares at threshold performance, to 100% of the shares at target performance and 150% of the shares at the maximum goal achievement. On March 2, 2021, the Compensation Committee certified a payout of 50% of target. |
(11)(6) | Amount represents an award of time-based stock options granted on March 8, 2017 under our 20142017 Plan which optionsthat are exercisable at the fair market value on the grant date and vest ratably over three years. |
(12)(7) | Amount represents a grant on June 1, 2017 of time-based RSUs under our 2017 Plan with a three-year vesting period. On June 1, 2018, theone-third of the RSUs plus respective dividends vested. The remainingtwo-thirds will vest in accordance with its terms on the second and third anniversaries of the grant date. |
(13) | Amount represents a grant on March 14,6, 2018 under our 2017 Plan. The Compensation Committee established performance goals based on EBT by the end of Fiscal 2020. Vesting of the PSUsPSU ranges from 0% of the shares if threshold performance is not attained, to 25% of the shares at threshold performance, to 100% of the shares at target performance and 150% of the shares at the maximum goal achievement. On March 2, 2021, the Compensation Committee certified a payout of 50% of target.
|
(14)(8) | Amount represents an award of time-based stock options granted on March 14, 2018 under our 2017 Plan, which options are exercisable at the fair market value on the grant date and vest ratably over three years.
|
(15) | Amount represents a grant on June 6, 2018 of time-based RSUs under our 2017 Plan with a three-year vesting period. TheOn June 6, 2020, the second third of the RSUs plus respective dividends vested. The remaining one-third will vest in accordance with its terms on the first, second and third anniversariesanniversary of the grant date. |
(16)(9) | Amount represents a grant on August 6, 2018 under our 2017 Plan. The Compensation Committee established performance goals based on AEOs TSR relative to the average TSR of the members of the S&P 1500 Specialty Retail (Industry) Index by July 1, 2021. Vesting of the PSU ranges from 0% of the shares if threshold performance is not attained, to 75% of the shares at threshold performance, to 100% of the shares at target performance and 125% of the shares at the maximum goal achievement. |
(17)(10) | Amount represents a grant on August 6, 2018 of time-based RSUs under our 2017 Plan with full vestinga three-year cliff vesting. The RSUs plus respective dividends will vest in accordance with its terms on the third anniversary of the grant date,date. |
| (11) | Amount represents a grant on March 26, 2019 under our 2017 Plan. The Compensation Committee established performance goals based on continued employment.EBT by the end of Fiscal 2021. Vesting of the PSU ranges from 0% of the shares if threshold performance is not attained, to 25% of the shares at threshold performance, to 100% of the shares at target performance and 150% of the shares at the maximum goal achievement. |
| (12) | Amount represents an award of time-based stock options granted under our 2017 Plan that are exercisable at the fair market value on the grant date and vest ratably over three years. |
| (13) | Amount represents a grant on June 6, 2019 of time-based RSUs under our 2017 Plan with a three-year vesting period. One June 6, 2020, the first third of the RSUs plus respective dividends vested. The remaining two-thirds will vest in accordance with its terms on the second and third anniversary of the grant date. |
| (14) | Amount represents a grant on March 26, 2020 of time-based RSUs under our 2017 Plan with a three-year vesting period. The RSUs plus respective dividends will vest in accordance with its terms on the first, second and third anniversaries of the grant date. |
| (15) | Amount represents an award of time-based stock options granted under our 2017 Plan which are exercisable at the fair market value on the grant date and vest ratably over three years. |
| (16) | Amount represents a grant on June 4, 2020 under our 2020 Plan. The Compensation Committee established performance goals based on RTSR over a three-year performance period. Vesting of the PSU ranges from 0% of the shares if threshold performance is not attained, to 50% of the shares at threshold performance, to 100% of the shares at target performance and 150% of the shares at the maximum goal achievement. |
| (17) | Amount represents a grant on June 4, 2020 of time-based RSUs under our 2020 Plan with a three-year cliff vesting. The RSUs plus respective dividends will vest in accordance with their terms on March 1, 2023. |
| (18) | Amount represents an award of time-based stock options granted under our 2020 Plan that are exercisable at the fair market value on the grant date and vest ratably over three years. |
| (19) | Amount represents a grant on October 8, 2020 of time-based RSUs under our 2020 Plan with a three-year vesting period. The RSUs plus respective dividends will vest in accordance with their terms on the first, second and third anniversaryanniversaries of the grant date. |
| | | | | 522021 Proxy Statement | | | | | |
| | COMPENSATION TABLES AND RELATED INFORMATION |
The following table sets forth the actual value received by the NEOs upon exercise of stock options or vesting of stock awards in 2018.2020. | Option Exercises and Stock Vested – Fiscal 2018 | | | Option Exercises and Stock Vested – Fiscal 2020 | | Option Exercises and Stock Vested – Fiscal 2020 | | | | Option Awards(1) | | | Stock Awards(2) | | | Option Awards (1) | | Stock Awards (2) | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) | | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) | Jay L. Schottenstein | | | — | | | | — | | | | 198,676 | | | $ | 4,314,331 | | | | | — | | | | | — | | | | | 133,825 | | | | $ | 1,751,657 | | Michael A. Mathias | | | | | — | | | | | — | | | | | 3,275 | | | | $ | 44,041 | | Jennifer M. Foyle | | | | | — | | | | | — | | | | | 83,844 | | | | $ | 1,093,287 | | Charles F. Kessler | | | | | 108,542 | | | | $ | 588,775 | | | | | 83,844 | | | | $ | 1,093,287 | | Michael R. Rempell | | | | | | | | | | | 39,528 | | | | $ | 517,647 | | Robert L. Madore | | | — | | | | — | | | | 6,096 | | | $ | 142,083 | | | | | 84,568 | | | | $ | 162,891 | | | | | 29,915 | | | | $ | 390,652 | | Charles F. Kessler | | | 335,123 | | | $ | 2,217,653 | | | | 133,404 | | | $ | 2,934,264 | | | Jennifer M. Foyle | | | 335,123 | | | $ | 2,429,698 | | | | 99,666 | | | $ | 2,206,399 | | | Michael R. Rempell | | | 277,349 | | | $ | 2,298,876 | | | | 85,177 | | | $ | 1,853,251 | | |
| (1) | Amounts represent the number of shares acquired upon exercise of stock options. The amounts shown in the Value Realized on Exercise column are calculated based on the difference between the market price of the stock underlying the options at the time of exercise and the option exercise price. For Mr. Kessler, and Ms. Foyle, the amount represents stock option exercises from 2016 and 2017 awards. For Mr. Rempell,Madore, the amount represents a stock option exerciseexercises from a 2016 award.2017 and 2018 awards. |
| (2) | Amounts represent the number of shares and related value for Stock Awards that vested on applicable vesting dates, prior to the withholding of shares to satisfy taxes. The amounts shown in the Value Realized on Vesting column are calculated based on the closing market price of the stock on the date the RSUs vested. Values include the vesting of RSU awards granted in 2015, 20162017, 2018, and 2017,2019, as well as PSU awards granted in 2015.2017. |
| Nonqualified Deferred Compensation |
We have a nonqualified deferred compensation program that allows eligible participants to defer a portion of their salary and/or bonus on an annual basis into the plan. Participants can defer up to 90% of their annual salary (with a minimum annual deferral of $2,000) and up to 100% of their annual performance-based bonus into the plan. Distributions from the plan automatically occur upon retirement, termination of employment, disability, or death during employment. Participants may also choose to receive a scheduled distribution payment while they are still employed. In 2018,2020, there were no NEOs participating in the nonqualified deferred compensation plan. Post-Employment Compensation Except as described below, the following tables set forth the expected benefit to be received by each of the respective NEOs in the event of his or her termination resulting from various scenarios, assuming a termination date of February 1, 2019,January 29, 2021, the last business day of Fiscal 2018,2020, and a closing stock price per share of $20.93$22.69 on that date. For each NEO, the payments and benefits detailed in the tables below are in addition to any payments and benefits under our plans and arrangements that are offered or provided generally to all salaried employees on anon-discriminatory basis and any accumulated vested benefits for each NEO, including any stock options vested as of February 1, 2019January 29, 2021 (which are set forth in the “Outstanding Equity Awards at Fiscal 20182020 Year-End” table). The tables assume that each executive will take all action necessary or appropriate for such person to receive the maximum available benefit, such as execution of a release of claims. In the event of a CIC, if an acquiring entity does not assume or issue substitute awards for outstanding equity awards, the vesting of all outstanding equity awards will be accelerated on the CIC date and performance-based awards will be paid, either based on performance to the CIC date or based on the target level value, depending on the portion of the performance period completed prior to the CIC. For a description of our change in control benefits and the restrictive covenants and other obligations of the NEOs, please refer to the section above titled “Compensation Discussion and Analysis – Change in Control and Other Agreements.” | | | | | 2019 Proxy Statement78 | | | | | 53 |
| | COMPENSATION TABLES AND RELATED INFORMATION |
Jay L. Schottenstein | | | | Death or
Disability | | | Retirement | | | Termination
without
Cause | | | Termination
for Cause | | | Change in
Control
(Double-
Trigger)(5) | | | Death or
Disability | | | Retirement | | | Termination
without
Cause | | | Termination
for Cause | | | Change in
Control
(Double-
Trigger)(5) | | Cash Payments | | | | | | | | | | | | | | | | | | | | | Base | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Bonus(1) | | $ | 3,150,000 | | | | — | | | $ | 3,150,000 | | | | — | | | | — | | | $ | 5,250,000 | | | | — | | | $ | 5,250,000 | | | | — | | | | — | | Stock Option Vesting(2) | | $ | 1,758,370 | | | $ | 1,758,370 | | | $ | 1,758,370 | | | | — | | | $ | 1,758,370 | | | $ | 8,027,361 | | | $ | 8,027,361 | | | $ | 8,027,361 | | | | — | | | $ | 8,027,361 | | RSU vesting (3) | | $ | 1,080,469 | | | $ | 1,080,469 | | | $ | 1,080,469 | | | | — | | | $ | 2,790,304 | | | RSU Vesting (3) | | | $ | 2,420,161 | | | $ | 2,420,161 | | | $ | 2,420,161 | | | | — | | | $ | 8,053,659 | | PSU Vesting (4) | | $ | 6,726,149 | | | $ | 6,726,149 | | | $ | 6,726,149 | | | | — | | | $ | 6,726,149 | | | $ | 8,194,591 | | | $ | 8,194,591 | | | $ | 8,194,591 | | | | — | | | $ | 8,194,591 | | Total | | $ | 12,714,988 | | | $ | 9,564,988 | | | $ | 12,714,988 | | | | — | | | $ | 11,274,823 | | | $ | 23,892,113 | | | $ | 18,642,113 | | | $ | 23,892,113 | | | | — | | | $ | 24,275,611 | |
| (1) | In the event of a termination following a death or disability or termination without cause,Cause, this assumes that the Compensation Committee will pay the annual incentive bonus to the extent that the performance goals were met. |
| (2) | In the event of a termination following a change in control (i.e., double trigger) and in the event of Deathdeath or Disability, the Company is obligated to immediately vest any unvested non-qualified stock options (“NSOs”).NSO. In the event of a retirementVoluntary Retirement or terminationTermination without cause,Cause, given Mr. Schottenstein’s retirement eligibility under the definition in the plan, unvested options continue to vest on their regular schedule. |
| (3) | Amount reflects a prorated RSU vesting for death or disability, retirementDisability, Voluntary Retirement or termination w/out causeTermination without Cause and a full vesting in the event of a double-trigger changeChange in control.Control. |
| (4) | Amount assumes thatbased upon 50% vesting of the Compensation Committee vested the 20162018 PSUs, toreflecting the extent that the performance goals are met, which was 32% of target.were met. Any remaining PSUs outstanding are assumed at target. If the performance goals aregoal is not achieved, the PSUs will forfeit. |
| (5) | Although Mr. Schottenstein does not have a change in control agreement, the amounts shown represent what he would be entitled to pursuant to the terms of our 20142017 Plan and 20172020 Plan. |
Robert L. MadoreMichael A. Mathias
| | | | Death or
Disability | | | Voluntary
Separation | | Termination
without
Cause | | | Termination
for Cause | | | Change in
Control
(Double-
Trigger) | | | Death or
Disability | | | Voluntary
Separation | | Termination
without
Cause | | | Termination
for Cause | | | Change in
Control
(Double-
Trigger) | | Cash Payments | | | | | | | | | | | | | | | | | | | | | Base (1) | | | — | | | — | | $ | 875,000 | | | | — | | | $ | 2,493,750 | | | | — | | | — | | $ | 600,000 | | | | — | | | $ | 1,485,000 | | Bonus (2) | | $ | 937,731 | | | — | | $ | 937,731 | | | | — | | | $ | 787,500 | | | $ | 720,250 | | | — | | $ | 720,250 | | | | — | | | $ | 360,125 | | Stock Option Vesting (3) | | $ | 292,251 | | | — | | | — | | | | — | | | $ | 292,251 | | | $ | 419,280 | | | — | | | — | | | | — | | | $ | 419,280 | | RSU Vesting(4) | | $ | 271,754 | | | — | | | — | | | | — | | | $ | 815,035 | | | $ | 387,296 | | | — | | | — | | | | — | | | $ | 927,581 | | PSU Vesting (5) | | $ | 1,966,018 | | | — | | | — | | | | — | | | $ | 1,966,018 | | | $ | 643,802 | | | — | | | — | | | | — | | | $ | 643,802 | | Health-Care Coverage (6) | | | — | | | — | | $ | 21,500 | | | | — | | | $ | 21,500 | | | | — | | | — | | $ | 20,918 | | | | — | | | $ | 20,918 | | Total | | $ | 3,467,753 | | | — | | $ | 1,834,231 | | | | — | | | $ | 6,376,053 | | | $ | 2,170,628 | | | — | | $ | 1,341,168 | | | | — | | | $ | 3,856,706 | |
| (1) | Amount represents one year of base salary.salary in the event of termination without Cause. In the event of a termination following a change in control (i.e., double-trigger), the amount represents one andone-half times the sum of base salary and annual incentive bonus at target. |
| (2) | In the event of a termination following a death or disabilityDisability or termination without cause,Cause, this amount assumes that the Compensation Committee will pay the annual incentive bonus to the extent that the performance goals were met. In the event of termination following a change in control (i.e., double-trigger), the amount represents Mr. Mathias’s annual incentive bonus at target. |
| (3) | In the event of a termination following a change in control (i.e., double trigger) and in the event of death or Disability, the Company is obligated to immediately vest any unvested NSO. |
| (4) | Amount reflects the vesting of the June 6, 2018, June 6, 2019, March 26, 2020 and June 4, 2020 RSU awards, prorated based on service in the event of death or Disability. In the event of a termination following a change in control (i.e., double-trigger), the Company is obligated to fully vest any outstanding RSUs. |
| (5) | In the event of death, Disability or change in control, this amount is based upon 50% vesting of the 2018 PSUs, reflecting the extent that the performance goals were met. Any remaining PSUs outstanding are assumed at target. If the performance goal is not achieved, the PSUs will forfeit. In the event of voluntary termination or termination without Cause, awards will forfeit. |
| | | | | 2021 Proxy Statement | | | | | 79 |
| | COMPENSATION TABLES AND RELATED INFORMATION |
| (6) | The amounts shown in this row represent 12 months of health-care coverage determined on the basis of the coverage elections made by the executive officer, assuming that such elections were made at the maximum rate. |
Jennifer M. Foyle | | | | | | | | | | | | | | | | | | | | | | | | Death or
Disability | | | Voluntary
Separation | | | Termination
without
Cause | | | Termination
for Cause | | | Change in
Control
(Double-
Trigger) | | Cash Payments | | | | | | | | | | | | | | | | | | | | | Base (1) | | | — | | | | — | | | $ | 1,000,000 | | | | — | | | $ | 3,600,000 | | Bonus (2) | | $ | 2,607,769 | | | | — | | | $ | 2,607,769 | | | | — | | | $ | 1,303,884 | | Stock Option Vesting (3) | | $ | 3,837,315 | | | | — | | | | — | | | | — | | | $ | 3,837,315 | | RSU Vesting (4) | | $ | 2,068,966 | | | | — | | | | — | | | | — | | | $ | 6,242,747 | | PSU Vesting (5) | | $ | 4,766,609 | | | $ | 2,095,172 | | | $ | 2,095,172 | | | | — | | | $ | 4,766,609 | | Health-Care Coverage (6) | | | — | | | | — | | | $ | 20,918 | | | | — | | | $ | 20,918 | | Total | | $ | 13,280,660 | | | $ | 2,095,172 | | | $ | 5,723,859 | | | | — | | | $ | 19,771,473 | |
| (1) | Amount represents one year of base salary in the event of termination without Cause. In the event of a termination following a change in control (i.e., double-trigger), the amount represents one and one-half times the sum of base salary and annual incentive bonus at target. |
| (2) | In the event of a termination following a death or Disability or termination without Cause, the amount assumes that the Compensation Committee will pay the annual incentive bonus to the extent the performance goals were met. In the event of termination following a change in control (i.e., double-trigger), the amount represents Mr. Madore’sMs. Foyle’s annual incentive bonus at target. |
| (3) | In the event of a termination following a change in control (i.e., double-trigger)double trigger) and in the event of Deathdeath or Disability, the Company is obligated to immediately vest any unvested NSO. |
| (4) | Amount reflects the vesting of the June 1, 2017,6, 2018 , August 6, 2018, June 6, 2018,2019, March 26, 2020, June 4, 2020 and August 6, 2018October 8, 2020 RSU awards; prorated based on service in the event of death or disability. In the event of a termination following a change in control (i.e., double-trigger), the Company is obligated to fully vest any outstanding RSUs. |
| (5) | Amount assumesIn the event of death, Disability or change in control, this amount is based upon 50% vesting of the 2018 PSUs, reflecting the extent that the performance goals were met, and any remaining PSUs outstanding PSUs vestare assumed at target. If the performance goal is not achieved, the PSUs will forfeit. In the event of a voluntary termination or termination without cause,Cause, annual awards will be prorated based on service in the performance period, with the exception of the August 6, 2018 award, which will forfeit.
|
| (6) | The amounts shown in this row represent 12 months of health-care coverage determined on the basis of the coverage elections made by the executive officer, assuming that such elections were made at the maximum rate. |
Charles F. Kessler | | | | | | | | | | | | | | | | | | | | | | | | Death or
Disability | | | Voluntary
Separation | | | Termination
without
Cause | | | Termination
for Cause | | | Change in
Control
(Double-
Trigger) | | Cash Payments | | | | | | | | | | | | | | | | | | | | | Base (1) | | | — | | | | — | | | $ | 940,000 | | | | — | | | $ | 3,243,000 | | Bonus (2) | | $ | 2,444,000 | | | | — | | | $ | 2,444,000 | | | | — | | | $ | 1,222,000 | | Stock Option Vesting (3) | | $ | 3,837,315 | | | | — | | | | — | | | | — | | | $ | 3,837,315 | | RSU Vesting (4) | | $ | 1,915,128 | | | | — | | | | — | | | | — | | | $ | 4,765,055 | | PSU Vesting (5) | | $ | 4,766,609 | | | $ | 2,095,172 | | | $ | 2,095,172 | | | | — | | | $ | 4,766,609 | | Health-Care Coverage (6) | | | — | | | | — | | | $ | 20,918 | | | | — | | | $ | 20,918 | | Total | | $ | 12,963,053 | | | $ | 2,095,172 | | | $ | 5,500,090 | | | | — | | | $ | 17,854,897 | |
| (1) | Amount represents one year of base salary in the event of termination without Cause. In the event of death, disability ora termination following a change in control (i.e., double-trigger), the amount represents one and one-half times the sum of base salary and annual incentive bonus at target. |
| (2) | In the event of a target vesting for all outstanding PSUs.termination following a death or Disability or termination without Cause, this amount assumes that the Compensation Committee will pay the annual incentive bonus to the extent that the performance goals were met. In the event of termination following a change in control (i.e., double-trigger), the amount represents Mr. Kessler’s annual incentive bonus at target. |
| | | | | 5480 | | | | | |
| | COMPENSATION TABLES AND RELATED INFORMATION |
(6) | The amounts shown in this row represent 12 months of health-care coverage determined on the basis of the coverage elections made by the executive officer, assuming such elections were made at the maximum rate.
|
Charles F. Kessler
| | | | | | | | | | | | | | | | | | | | | | | | Death or
Disability | | | Voluntary
Separation | | | Termination
without
Cause | | | Termination
for Cause | | | Change in
Control
(Double-
Trigger) | | Cash Payments | | | | | | | | | | | | | | | | | | | | | Base (1) | | | — | | | | — | | | $ | 900,000 | | | | — | | | $ | 3,105,000 | | Bonus (2) | | $ | 1,383,168 | | | | — | | | $ | 1,383,168 | | | | — | | | $ | 1,170,000 | | Stock Option Vesting (3) | | $ | 1,565,478 | | | | — | | | | — | | | | — | | | $ | 1,565,478 | | RSU Vesting (4) | | $ | 794,523 | | | | — | | | | — | | | | — | | | $ | 2,516,393 | | PSU Vesting (5) | | $ | 4,850,193 | | | $ | 2,393,220 | | | $ | 2,393,220 | | | | — | | | $ | 4,850,193 | | Health-Care Coverage(6) | | | — | | | | — | | | $ | 21,500 | | | | — | | | $ | 21,500 | | Total | | $ | 8,593,362 | | | $ | 2,393,220 | | | $ | 4,697,888 | | | | — | | | $ | 13,228,564 | |
(1) | Amount represents one year of base salary. In the event of a termination following a change in control (i.e., double-trigger), amount represents one andone-half times the sum of base salary and annual incentive bonus at target.
|
(2) | In the event of a termination following a death or disability or termination without cause, amount assumes that the Compensation Committee will pay the annual incentive bonus to the extent the performance goals were met. In the event of termination following a change in control (i.e., double-trigger), amount represents Mr. Kessler’s annual incentive bonus at target.
|
| (3) | In the event of a termination following a change in control (i.e., double trigger) and in the event of Deathdeath or Disability, the Company is obligated to immediately vest any unvested NSO. |
| (4) | Amount reflects the vesting of the March 9, 2016, May 23, 2016, June 1, 2017, June 6, 2018 and, August 6, 2018, June 6, 2019, March 26, 2020 and June 4, 2020 RSU awards;awards, prorated based on service in the event of death or disability.Disability. In the event of a termination following a change in control (i.e., double-trigger), the Company is obligated to fully vest any outstanding RSUs. |
| (5) | Amount assumes thatIn the Compensation Committee vestedevent of death, Disability or change in control, this amount is based upon 50% vesting of the 20162018 PSUs, toreflecting the extent that the performance goals were met and any remaining PSUs outstanding are met, which was 32% ofassumed at target. If the performance goal is not achieved, the PSUs will forfeit. In the event of a voluntary termination or termination without cause,Cause, annual awards will be prorated based on service in the performance period, with the exception of the August 6, 2018 award, which will forfeit. In the event of death, disability or change in control the amount represents a target vesting for all outstanding PSUs.
|
| (6) | The amounts shown in this row represent 12 months of health-care coverage determined on the basis of the coverage elections made by the executive officer, assuming that such elections were made at the maximum rate. |
Jennifer M. FoyleMichael R. Rempell
| | | | Death or
Disability | | | Voluntary
Separation | | | Termination
without
Cause | | | Termination
for Cause | | | Change in
Control
(Double-
Trigger) | | | Death or Disability | | | Voluntary Separation | | | Termination without Cause | | | Termination for Cause | | | Change in Control (Double- Trigger) | | Cash Payments | | | | | | | | | | | | | | | | | | | | | Base (1) | | | — | | | | — | | | $ | 850,000 | | | | — | | | $ | 2,932,500 | | | | — | | | | — | | | $ | 835,000 | | | | — | | | $ | 2,379,750 | | Bonus (2) | | $ | 1,294,517 | | | | — | | | $ | 1,294,517 | | | | — | | | $ | 1,105,000 | | | $ | 1,503,000 | | | | — | | | $ | 1,503,000 | | | | — | | | $ | 751,500 | | Stock Option Vesting (3) | | $ | 1,565,478 | | | | — | | | | — | | | | — | | | $ | 1,565,478 | | | $ | 3,106,980 | | | | — | | | | — | | | | — | | | $ | 3,106,980 | | RSU Vesting (4) | | $ | 794,523 | | | | — | | | | — | | | | — | | | $ | 2,516,393 | | | $ | 1,633,748 | | | | — | | | | — | | | | — | | | $ | 3,941,439 | | PSU Vesting (5) | | $ | 4,850,193 | | | $ | 2,393,220 | | | $ | 2,393,220 | | | | — | | | $ | 4,850,193 | | | $ | 3,685,134 | | | $ | 1,425,431 | | | $ | 1,425,431 | | | | — | | | $ | 3,685,134 | | Health-Care Coverage (6) | | | — | | | | — | | | $ | 21,500 | | | | — | | | $ | 21,500 | | | | — | | | | — | | | $ | 20,918 | | | | — | | | $ | 20,918 | | Total | | $ | 8,504,711 | | | $ | 2,393,220 | | | $ | 4,559,237 | | | | — | | | $ | 12,991,064 | | | $ | 9,928,862 | | | $ | 1,425,431 | | | $ | 3,784,349 | | | | — | | | $ | 13,885,721 | |
| (1) | Amount represents one year of base salary. In the event of a termination following a changesalary in control (i.e., double-trigger), amount represents one andone-half times the sum of base salary and annual incentive bonus at target. |
| | | | | 2019 Proxy Statement
| | |
| | 55 |
| COMPENSATION TABLES AND RELATED INFORMATION |
(2) | In the event of a termination following a death or disability or termination without cause, amount assumes that the Compensation Committee will pay the annual incentive bonus to the extent the performance goals were met. In the event of termination following a change in control (i.e., double-trigger), amount represents Ms. Foyle’s annual incentive bonus at target.
|
(3) | In the event of a termination following a change in control (i.e., double trigger) and in the event of death or disability, the Company is obligated to immediately vest any unvested NSO.
|
(4) | Amount reflects the vesting of the March 9, 2016, May 23, 2016, June 1, 2017, June 6, 2018, and August 6, 2018 RSU awards; prorated based on service in the event of death or disability.without Cause. In the event of a termination following a change in control (i.e., double-trigger), the Company is obligated to fully vest any outstanding RSUs.
|
(5) | Amount assumes that the Compensation Committee vested the 2016 PSUs to the extent that the performance goals are met, which was 32% of target. If the performance goal is not achieved, the PSUs will forfeit. In the event of a voluntary termination or termination without cause, annual awards will be prorated based on service in the performance period. In the event of death, disability or change in control the amount represents a target vesting for all outstanding PSUs.
|
(6) | The amounts shown in this row represent 12 months of health-care coverage determined on the basis of the coverage elections made by the executive officer, assuming such elections were made at the maximum rate.
|
Michael R. Rempell
| | | | | | | | | | | | | | | | | | | | | | | | Death or
Disability | | | Voluntary
Separation | | | Termination
without
Cause | | | Termination
for Cause | | | Change in
Control
(Double-
Trigger) | | Cash Payments | | | | | | | | | | | | | | | | | | | | | Base (1) | | | — | | | | — | | | $ | 800,000 | | | | — | | | $ | 2,280,000 | | Bonus (2) | | $ | 845,000 | | | | — | | | $ | 845,100 | | | | — | | | $ | 720,000 | | Stock Option Vesting (3) | | $ | 1,061,604 | | | | — | | | | — | | | | — | | | $ | 1,061,604 | | RSU Vesting (4) | | $ | 435,908 | | | | — | | | | — | | | | — | | | $ | 1,604,515 | | PSU Vesting (5) | | $ | 2,673,305 | | | $ | 1,035,303 | | | $ | 1,035,303 | | | | — | | | $ | 2,673,305 | | Health-Care Coverage(6) | | | — | | | | — | | | $ | 21,500 | | | | — | | | $ | 21,500 | | Total | | $ | 5,015,817 | | | $ | 1,035,303 | | | $ | 2,701,903 | | | | — | | | $ | 8,360,924 | |
(1) | Amount represents one year of base salary. In the event of a termination following a change in control (i.e., double-trigger), amount represents one andone-half times the sum of base salary and annual incentive bonus at target.
|
| (2) | In the event of a termination following a death or disabilityDisability or termination without cause,Cause, this amount assumes that the Compensation Committee will pay the annual incentive bonus to the extent that the performance goals were met. In the event of termination following a change in control (i.e., double-trigger), the amount represents Mr. Rempell’s annual incentive bonus at target. |
| (3) | In the event of a termination following a change in control (i.e., double trigger) and in the event of death or disability,Disability, the Company is obligated to immediately vest any unvested NSO. |
| (4) | Amount reflects the vesting of the March 9, 2016, June 1, 2016, June 1, 2017, June 6, 2018, and August 6, 2018, June 6, 2019, March 26, 2020 and June 4, 2020 RSU awards;awards, prorated based on service in the event of death or disability.Disability. In the event of a termination following a change in control (i.e., double-trigger), the Company is obligated to fully vest any outstanding RSUs. |
| (5) | Amount assumes thatIn the Compensation Committee vestedevent of death, Disability or change in control, this amount is based upon 50% vesting of the 20162018 PSUs, toreflecting the extent that the performance goals were met and any remaining PSUs outstanding are met, which was 32% ofassumed at target. If the performance goal is not achieved, the PSUs will forfeit. In the event of a voluntary termination or termination without cause,Cause, annual awards will be prorated based on service in the performance period, . Inwith the eventexception of death, disability or change in control the amount represents a target vesting for all outstanding PSUs.August 6, 2018 award, which will forfeit.
|
| (6) | The amounts shown in this row represent 12 months of health-care coverage determined on the basis of the coverage elections made by the executive officer, assuming that such elections were made at the maximum rate. |
Robert L. Madore Mr. Madore separated from the Company effective September 29, 2020 (the “Separation Date”). Pursuant to the terms of Mr. Madore’s offer letter dated September 21, 2016, the Company provided him with severance payments and benefits of 12 months’ base salary, or $910,000, paid in bi-weekly installments, and reimbursement of COBRA premiums for a period of up to 12 months following his departure, in exchange for a customary release of claims against the Company. Mr. Madore agreed to confidentiality and protection of intellectual property covenants and, for one year following his departure from the Company, not to solicit the Company’s employees or provide services to a competitor of the Company. All unvested equity forfeited as of the Separation Date, and Mr. Madore had 90 days from his separation to exercise outstanding vested stock options. | | | | | 2021 Proxy Statement | | | | | 81 |
| | COMPENSATION TABLES AND RELATED INFORMATION |
CEO Pay Ratio American Eagle Outfitters, Inc. is a multi-national apparel company with associates in the Americas and Asia. We conduct business globally and focus on ensuring the delivery of market-based compensation and benefit offerings for our associates. We also create a work environment that allows flexibility to ensure that our teams can balance their work and life. As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of RegulationS-K, we are providing the ratio of the annual total compensation of our CEO, Mr. Schottenstein, to that of our median employee. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) ofRegulation S-K. | | | | | 56 | | |
| |
|
| COMPENSATION TABLES AND RELATED INFORMATION |
We believeSEC rules provide that there have been no changes in our employee population or our compensation arrangements in Fiscal 2018 that would result in a material change in our pay ratio disclosure or our median employee. However, we did notmay use the same median employee for three years before identifying a new median employee. In Fiscal 20182020, we identified a new median employee as we did in Fiscal 2017, becausehad used the Fiscal 2017 mediansame employee received a significant increase to their hourly rate to recognize expanded responsibilities. In Fiscal 2017, we used a statistical sampling approach to calculate our median employee. As such, we were able to selector a similarly situated employee based on our initial 2017 statistical sample for Fiscal years 2017, 2018 and 2019. Additionally, SEC rules allow us to select methodologies, employ certain exemptions, and make adjustments or assumptions for identifying our median employee in a manner that is most appropriate based on our size, organizational structure, and compensation plans, policies and procedures. Below is a brief explanation of the same methodologymethodologies, exemptions and adjustments we used for calculating our Fiscal 2020 median employee:
We excluded employees who were active in our payroll system on January 29, 2021, the determination date (which is within the last three months of our last completed fiscal year) but did not earn any wages from AEO in Fiscal 20172020. On January 29, 2021, our global employee population was approximately 36,000 but only 35,454 of those employees earned wages in the fiscal year. Given our number of part-time and seasonal employees, we believe this methodology was reasonable for purposes of identifying the median employee. For the compensation measure, we used annual “gross compensation” as reflected in our payroll records (excluding Mr. Schottenstein). For this purpose, “gross compensation” is taxable wages for Fiscal 2020. Additionally, for the compensation measure, we annualized the compensation of permanent employees employed with us on January 29, 2021 but who worked for less than the full fiscal year. For our permanent employees, we also accounted for any time that our stores were closed due to calculatelocal COVID-19 restrictions by making adjustments to Fiscal 2020 compensation to account for the ratio below:period of closure when permanent employees were furloughed by the Company. As allowed by SEC regulations, we excluded all of our non-U.S. employees in Fiscal 2017,Mexico, Hong Kong and China who make up less than 5% of our total employee population. All of our Canadian employees were included in the analysis as they make up more than 5% of our total employee population. We then identified our 2020 median associate from our associate population using this compensation measure, which was consistently applied to all our associates included in the calculation. Based on the methodologies, adjustments and exclusions described above, the median employee is a part-time retail associate locatedemployed in a store in the United States. The median employee works an average of less than 15 hours per week and is able to take advantage of scheduling flexibility. We calculated all of the elements of the median employee’s compensation for Fiscal 20182020 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our Fiscal 2020 Summary Compensation Table. The estimated values are as follows for Fiscal 2018:2020: Mr. Schottenstein’s annual total compensation: $10,211,180$14,784,288. Our median employee’s annual total compensation: $7,332$6,536. Ratio of Mr. Schottenstein’s annual total compensation to our median employee’s annual total compensation: 1,393:12,262:1. This pay ratio may not be comparable to our peer companies’ reported pay ratios due to differences in organizational structure and the assumptions and methodologies in calculating the ratio. Equity Compensation Plan Information
| | | | | | | | | | Column (a) | | Column (b) | | Column (c) | | | | Number of securities
to be issued upon
exercise of outstanding
options,
warrants and rights | | Weighted-average
exercise price of
outstanding options,
warrants and rights | | Number of securities
remaining available
for issuance under
equity compensation
plans (excluding
securities reflected
in column (a)) | Equity compensation plans approved by stockholders(1) | | 1,911,931 | | $16.75 | | 6,832,199 | Equity compensation plan not approved by stockholders(2) | | — | | — | | 5,182,085 | Total | | 1,911,931 | | $16.75 | | 12,014,284 |
(1) | Equity compensation plans approved by stockholders include the 2017 and 2014 Plans.
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(2) | Equity compensation plan not approved by stockholders includes the Employee Stock Purchase Plan, which was instituted prior to the NYSE listing requirement for stockholder approval of such plans and related to the open market purchase of Company stock by our employees through payroll deductions with a Company match of 15% on contributions up to $100 per payroll period as elected by such participating employees and pursuant to the terms of such plan.
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| | | | | 2019 Proxy Statement82 | | | | | 57 |
OWNERSHIP OF OUR SHARES The following table shows, as of April 1, 2019,2021, unless otherwise noted, certain information with regard to the beneficial ownership of our common stock by: (i) each person known by us to own beneficially more than 5% of the outstanding shares of common stock; (ii) each of our directors; (iii) each named executive officer listed in the Summary Compensation Table; and (iv) all directors and current executive officers as a group. | | | | Shares Beneficially Owned | | | Shares Beneficially Owned | | | | Common Stock(1) | | | Right to Acquire(2) | | | Total | | | Percent(3) | | | Common Stock(1) | | Right to Acquire(2) | | Total | | Percent(3) | 5% Beneficial Owners | | | | | | | | | | | | | | | | | | | | | BlackRock, Inc.(4) | | | 20,755,434 | | | | — | | | | 20,755,434 | | | | 12.1 | % | | The Vanguard Group(5) | | | 19,116,721 | | | | — | | | | 19,116,721 | | | | 11.1 | % | | Jay L. Schottenstein(6) | | | 10,953,610 | | | | 230,466 | | | | 11,184,076 | | | | 6.5 | % | | Directors and Executive Officers(7) | | | | | | | | | | FMR LLC (4) | | | | 24,958,328 | | | | | — | | | | 24,958,328 | | | | 14.9 | % | BlackRock, Inc.(5) | | | | 16,402,031 | | | | | — | | | | 16,402,031 | | | | 9.8 | % | The Vanguard Group(6) | | | | 13,386,409 | | | | | — | | | | 13,386,409 | | | | 8.0 | % | Jay L. Schottenstein(7) | | | | 10,957,960 | | | | 756,990 | | | | 11,714,950 | | | | 7.0 | % | Cooke & Bieler LP(8) | | | | 10,759,643 | | | | | — | | | | 10,759,643 | | | | 6.4 | % | Melvin Capital Management LP (9) | | | | 9,000,000 | | | | | — | | | | 9,000,000 | | | | 5.4 | % | Directors and Executive Officers(10) | | | | | | | | | | | | | | Sujatha Chandrasekaran | | | 8,948 | | | | — | | | | 8,948 | | | | * | | | | 30,580 | | | | | — | | | | 30,580 | * | | | | Steven A. Davis | | | | | — | | | | 5,708 | | | | 5,708 | * | | | | Jennifer M. Foyle | | | 89,957 | | | | 242,614 | | | | 332,571 | | | | * | | | | 102,956 | | | | 408,136 | | | | 511,092 | * | | | | Deborah A. Henretta | | | — | | | | 2,650 | | | | 2,650 | | | | * | | | | | — | | | | 24,744 | | | | 24,744 | * | | | | Charles F. Kessler | | | 136,191 | | | | 231,213 | | | | 367,404 | | | | * | | | | 98,568 | | | | 249,980 | | | | 348,548 | * | | | | Thomas R. Ketteler | | | 9,014 | | | | 42,304 | | | | 51,318 | | | | * | | | | 9,014 | | | | 66,131 | | | | 75,145 | * | | | | Robert L. Madore | | | 4,243 | | | | 51,510 | | | | 55,753 | | | | * | | | Robert L. Madore (11) | | | | TBD | | | | TBD | | | | TBD | * | | | | Michael A. Mathias | | | | 15,144 | | | | | — | | | | 15,144 | * | | | | Cary D. McMillan | | | — | | | | 106,814 | | | | 106,814 | | | | * | | | | | — | | | | 133,458 | | | | 133,458 | * | | | | Janice E. Page | | | 47,451 | | | | 3,080 | | | | 50,531 | | | | * | | | | 69,083 | | | | 3,215 | | | | 72,298 | * | | | | Michael R. Rempell | | | 135,692 | | | | 65,325 | | | | 201,017 | | | | * | | | | 183,663 | | | | 308,913 | | | | 492,576 | * | | | | David M. Sable | | | 26,013 | | | | 21,613 | | | | 47,626 | | | | * | | | | 29,171 | | | | 41,369 | | | | 70,540 | * | | | | Noel J. Spiegel | | | — | | | | 79,611 | | | | 79,611 | | | | * | | | | 10,000 | | | | 105,067 | | | | 115,067 | * | | | | All current directors and current executive officers as a group (15 persons in group) | | | 11,438,483 | | | | 1,097,648 | | | | 12,536,131 | | | | 7.2 | % | | All current directors and current executive officers as a group (16 persons in group) | | | | 11,550,406 | | | | 2,278,556 | | | | 13,828,962 | | | | 8.2 | % |
| * | Represents less than 1% of our shares of common stock. |
| (1) | Unless otherwise indicated, each of the stockholders has sole voting power and power to sell with respect to the shares of common stock beneficially owned. |
| (2) | Includes (a) shares for options exercisable within 60 days of April 1, 20192021 and (b) total deferred share units as well as the respective dividend equivalents. |
| (3) | Percent is based upon the 171,865,389167,214,693 shares outstanding at April 1, 20192021 and the shares that such director or executive officer has the right to acquire upon options exercisable within 60 days of April 1, 2019,2021, share units and dividend equivalents, if applicable. |
| (4) | In a Schedule 13G/A filed with the SEC on January 24, 2019,February 10, 2021, FMR LLC reported beneficial ownership and sole dispositive power of an aggregate amount of 24,958,328 shares. FMR LLC has sole voting power with respect to 1,340,704 shares and shared voting power and shared dispositive power with respect to 0 shares. The address for FMR LLC is 245 Summer Street, Boston, Massachusetts 02210. |
| (5) | In a Schedule 13G/A filed with the SEC on February 5, 2021, BlackRock, Inc. reported beneficial ownership and sole dispositive power of an aggregate amount of 20,755,43416,694,487 shares. BlackRock, Inc. has sole voting power with respect to 20,074,95816,402,031 shares, shared voting power with respect to 0 shares, sole dispositive power with respect to 20,755,434 shares, and shared dispositive power with respect to 0 shares. The address for BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
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(5)(6) | In a Schedule 13G/A filed with the SEC on February 11, 2019,10, 2021, The Vanguard Group reported beneficial ownership of an aggregate amount of 19,116,72113,386,409 shares. The Vanguard Group has sole voting power with respect to 317,3790 shares, shared voting power with respect to 20,462154,494 shares, sole dispositive power with respect to 18,793,96713,106,859 shares, and shared dispositive power with respect to 322,754279,550 shares. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
(6)(7) | For Mr. Schottenstein, the 11,184,07611,914,950 shares disclosed in the table above consist of the following for which he has voting power: (1) sole power to vote and dispose as trustee of a trust that owns 6,300 shares and a revocable trust that owns 1,053,9011,258,251 shares; (2) shared power to vote and dispose for trusts that own 3,593,903 shares; (3) sole power to vote 230,466756,990 shares for options exercisable within 60 days of April 1, 2019;2021; (4) 2,971,202 shares held by SEI, Inc. Mr. Schottenstein serves as Chairman of SEI, Inc. and has or shares voting power for 60.6% of SEI, Inc.; (5) 2,611,235 shares held by Schottenstein SEI, LLC. Mr. Schottenstein has or shares the voting power for 60.6% of Schottenstein |
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| SEI, LLC and serves as Chairman of SEI, Inc., its sole member; and (6) sole power to vote 717,069517,069 shares held by family members pursuant to the terms of a share exchange agreement that are included under his name in the table. Excluded from the table are an aggregate of 4,835,370 shares held by various family trusts and a limited liability company of which Mr. Schottenstein’s wife, Jean R. Schottenstein, has or shares voting power and of which Mr. Schottenstein is not deemed the beneficial owner. Together, Mr. and Mrs. Schottenstein are deemed the beneficial owners of 16,019,44616,750,320 shares or 9.3%10% of the Company’s common stock as of April 1, 2019.2021. |
(7)(8) | In a Schedule 13G filed with the SEC on February 16, 2021, Cooke & Bieler LP reported beneficial ownership and shared dispositive power of an aggregate amount of 10,759,643 shares. Cooke & Bieler LP has sole voting power with respect to 0 shares, shared voting power with respect to 8,805,053 shares, and sole dispositive power with respect to 0 shares. The address for Cooke & Bieler LP is 2001 Market Street, Suite 4000, Philadelphia, PA 19103. |
| (9) | In a Schedule 13G/A filed with the SEC on February 16, 2021, Melvin Capital Management LP reported beneficial ownership, shared voting power and shared dispositive power of an aggregate amount of 9,000,000 shares. Melvin Capital Management LP has sole voting power and sole dispositive power with respect to 0 shares. The address for Melvin Capital Management LP is 535 Madison Avenue, 22nd Floor, New York, NY 10022. |
| (10) | The address of each director and executive officer shown in the table above is c/o American Eagle Outfitters, Inc., 77 Hot Metal Street, Pittsburgh, PA 15203. Executive officers and directors are subject to stock ownership requirements. Please see the “Stock Ownership Requirements” section for a discussion of executive officer and director stock ownership requirements. |
| (11) | Mr. Madore, former Chief Financial Officer, ceased serving as an executive officer effective April 20,2020. Shares of common stock were calculated based on the Company’s stock records as of April 20, 2020. No further ownership information was available to the Company after Mr. Madore ceased to be a Section 16 reporting person. |
Stock Ownership Requirements Board of Directors Our Board has determined that each director should own common stock of the Company and has established the following ownership guidelines. Within five years of joining the Board, each director must hold stock of the Company worth at least five times the current annual cash base retainer amount of $65,000, or $325,000. The following forms of equity interests in the Company count toward the stock ownership requirement: shares purchased on the open market; shares obtained through stock option exercise; shares held as deferred stock units; shares held in benefit plans; shares held in trust for the economic benefit of the director or spouse or dependent children of the director; and shares owned jointly or separately by the spouse or dependent children of the director. Stock options do not count toward the stock ownership requirement. As of the end of Fiscal 2020, each director owned shares in excess of the applicable guideline or was within the five year ramp-up period. Management We have adopted stock ownership requirements to establish commonality of interest between management and stockholders, as well as to encourage executives to think and act like owners. By encouraging executives to accumulate and hold a minimum level of ownership, our compensation program ensures that pay remains at risk not only with regard to outstanding awards but also with regard to appreciation of vested awards. Eligible executives are required to own the equivalent value of a multiple of their salary. For Mr. Schottenstein, this multiple is six times and for the other NEOs, three times. This requirement can be met through various forms of equity, including personal holdings and equity incentive awards such as restricted stock units. Executives not meeting their requirement must retain 50% of theirafter-tax shares acquired through stock sales until the requirement is reached. The CEO considers compliance with the ownership requirements when recommending annual long termlong-term incentive awards for the executives, including the NEOs, to the Compensation Committee. If an executive does not hold half ofafter-tax gains in our stock, he or she jeopardizes eligibility for future stock grants or awards. The CEO and NEOs are in compliance with their requirement, with the exception of Mr. Madore, who is newly hired. Mr. Madore is on track to meet the requirement within a reasonable timeline and is subject to trading restrictions until the requirement has been met.requirement.
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Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our executive officers, directors or persons who are beneficial owners of more than ten percent of our common stock (“reporting persons”) to file reports of ownership and changes in ownership with the SEC. Reporting persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms filed by them. Based on our review of the copies of the Section 16(a) forms received by us, we believe that during Fiscal 2018,2020, all reporting persons complied with the applicable filing requirements. In addition, allrequirements with the exception of Jennifer M. Foyle inadvertently filing one late Form 4 reporting one transaction. All reports in Fiscal 20192021 have been filed on a timely basis as of April 24, 2019.14, 2021. | | | | | 20192021 Proxy Statement | | | | | 5985 |
INFORMATION ABOUT THIS PROXY STATEMENT AND THE ANNUAL MEETING We are furnishing this Proxy Statement in connection with the solicitation of proxies by the Board for use at the Annual Meeting of Stockholders to be held on June 6, 2019, at 11:00 a.m., local time, at Langham Place, New York, located at 400 Fifth Avenue, New York, New York and at any adjournments or postponements thereof. It is being made available to the stockholders on April 24, 2019.
Who is entitled to vote? Stockholders of record at the close of business on April 10, 2019,7, 2021, the record date for the 2021 Annual Meeting, are entitled to vote at the 2021 Annual Meeting. As of the record date, there were 171,869,746167,214,693 shares of common stock, par value $0.01 per share, outstanding and entitled to vote. Each share that you own entitles you to one vote. How does the Board recommend I vote on these proposals? The Board recommends a vote: FOR the nominees for Class IIIII director listed in this Proxy Statement; FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending February 1, 2020; andJanuary 29, 2022; FOR the approval, on ana non-binding, advisory basis, of the compensation of our named executive officers. Why did I receive a Notice of Internet Availability of Proxy Materials? In order to both save money and protect the environment, we have elected to provide access to our proxy materials and Fiscal 20182020 Annual Report on Form10-K (“Annual Report”) on the Internet, instead of mailing the full set of printed proxy materials, in accordance with the rules of the SEC for the electronic distribution of proxy materials. On April 24, 2019,21, 2021, we mailed to most of our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to gain access to our Proxy Statement and Annual Report and how to vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you request it. Instead, the Notice instructs you on how to obtain and review all of the important information contained in the Proxy Statement and Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice. How do I vote my shares? We encourage stockholders to vote before the 2021 Annual Meeting. If your shares are registered directly in your name (i.e., you are a “registered stockholder”), you received a Notice. You should follow the instructions on the Notice in order to ensure that your vote is counted. Alternatively, you may attend and vote in person at the Annual Meeting.virtual annual meeting. If you are a beneficial owner of shares registered in the name of your broker, bank or other agent (i.e., your shares are held in “street name”), you should receive either a Notice or a voting instruction form (“VIF”) along with a Proxy Statement. You should follow the instructions on the Notice or the voting instruction formVIF in order to ensure that your vote is counted. To vote in person atHave your Notice, proxy card or voting instruction form available when you access the Annual Meeting, you must obtain a legal proxy from the broker, bank or agent that holds your shares to present at the meeting.virtual meeting website. Can I change or revoke my proxy? Yes. If you are a registered stockholder, you may revoke your proxy at any time before it is voted by delivering written notice of revocation to the Company (Attention: Jennifer B. Stoecklein, Corporate Secretary). Such written notice should be received by the Company prior to the 2021 Annual Meeting. You may also change or revoke your proxy by submitting a properly executed proxy bearing a later date or by attending the meeting virtually and voting in person.on-line. If your shares are held in street name, you may revoke your proxy by submitting new voting instructions to your broker or, if you have obtained a legal proxy from your broker, by virtually attending the 2021 Annual Meeting and voting in person.on-line. | | | | | 6086 | | | | | |
| | INFORMATION ABOUT THIS PROXY STATEMENT AND THE ANNUAL MEETING |
What constitutes a quorum? A quorum of stockholders is necessary to transact business at the 2021 Annual Meeting. A quorum will be present if a majority of the outstanding shares of the Company’s common stock, as of the close of business on the record date, are represented by stockholders present at the meeting or by proxy. At the close of business on the record date, there were 171,869,746167,214,693 shares of common stock outstanding and entitled to vote. Abstentions and brokernon-votes will count as present in determining whether there is a quorum. Brokernon-votes occur when brokers, who hold their customers’ shares in street name, sign and submit proxies for such shares and vote such shares on some matters but not others. This would occur when brokers have not received any instructions from their customers, in which case the brokers, as the holders of record, are permitted to vote on “routine” matters, which include the ratification of the appointment of an independent registered public accounting firm, but not on“non-routine” “non-routine” matters, such as the election of directors, or the non-binding, advisory approval of the compensation of our named executive officers. Therefore, if you do not instruct your broker how to vote on Proposals 1 and 3, your shares will not be counted for those proposals. Therefore, weWe urge you to give voting instructions to your broker on all voting items. What vote is required to approve each proposal? The Company is incorporated in the State of Delaware. As a result, the Delaware General Corporation Law and the NYSE listing standards govern the voting standards applicable to actions taken by our stockholders. The following discussion outlines the voting requirements applicable to each proposal being submitted for stockholder approval at the 2021 Annual Meeting, as well as the impact of abstentions and brokernon-votes. Once a quorum is established:established, the following voting requirements and related effect of abstentions and broker non-votes on each item for stockholder proposal apply. Item 1. Each Director
| | | | | | | | | | | Voting Options | | Board
Recommendation | | Vote Required to Adopt the
Proposal | | Effect of Abstentions and
Broker Non-Votes | | Item 1 – Election of Class II Directors | | “For,” “Against,” or “Abstain” for each nominee | | FOR each nominee | | Majority of the votes cast | | None | | Item 2 – Ratify the appointment of EY as independent registered public accounting firm for Fiscal 2021 | | “For,” “Against,” or “Abstain” | | FOR | | Majority of shares present at the meeting, in person or by proxy, and entitled to vote | | Abstentions are treated as votes “against.” Brokers have discretion to vote on this item. | | Item 3 – Advisory Approval of Named Executive Officer Compensation for Fiscal 2020 | | “For,” “Against,” or “Abstain” | | FOR | | Majority of shares present at the meeting, in person or by proxy, and entitled to vote | | Abstentions are treated as votes “against.” Broker non-votes have no effect. |
How can I participate in the virtual Annual Meeting? Due to concerns relating to COVID-19, the 2021 Annual Meeting will be electedvirtual-only. You will be able to attend the virtual meeting by first registering at http://viewproxy.com/ae/2021/htype.asp. You will receive a majoritymeeting invitation by e-mail with your unique join link along with a password prior to the meeting date. Stockholders will be able to listen, vote and submit questions during the virtual meeting. We have created and implemented the virtual format in order to facilitate stockholder attendance and participation by enabling stockholders to participate fully, and equally, from any location around the world, at no cost. However, you will bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. A virtual Annual Meeting makes it possible for more stockholders (regardless of size, resources or physical location) to have direct access to information more quickly, while saving the company and our stockholders time and money, especially as physical attendance at meetings has dwindled. We also believe that the online tools we have selected will increase stockholder communication. For | | | | | 2021 Proxy Statement | | | | | 87 |
| | INFORMATION ABOUT THIS PROXY STATEMENT AND THE ANNUAL MEETING |
example, the virtual format allows stockholders to communicate with us in advance of, and during, the Annual Meeting so they can ask questions of our Board or management. During the live Q&A session of the votes castAnnual Meeting, we may answer questions as they come in respectand address those asked in advance, to that director’s election. Item 2. Appointment of Ernst & Young LLP as our independent registered public accounting firm is ratified by the affirmative vote of a majorityextent relevant to the business of the sharesAnnual Meeting and as time permits.
Both stockholders of common stock present atrecord and street name stockholders will be able to attend the Annual Meeting via live audio webcast, submit their questions during the meeting in person or by proxy, and entitled to vote on the matter. Brokers have discretion to vote on this item. Item 3. The advisory approval on the compensation of our named executive officers requires the affirmative vote of a majority of thetheir shares of common stock present at the meeting, in person or by proxy, and entitled to vote on the matter.
For any other item that is properly submitted to stockholders for approvalelectronically at the Annual Meeting.
If you are a registered holder, your virtual control number will be on your Notice of Internet Availability of Proxy Materials or proxy card. If you hold your shares beneficially through a bank or broker, you must provide a legal proxy from your bank or broker during registration and you will be assigned a virtual control number in order to vote your shares during the annual meeting. If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the 2021 Annual Meeting an affirmative(but will not be able to vote your shares) so long as you demonstrate proof of a majoritystock ownership. Instructions on how to connect and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at http://viewproxy.com/ae/2021/htype.asp. On the day of the shares of common stock present atannual meeting, you may only vote during the meeting by e-mailing a copy of your legal proxy to virtualmeeting@viewproxy.com in person or proxy, and entitled to vote onadvance of the matter is required for approval.meeting. For purposes of determining the number of shares of common stock voting on a matter (other than for Item 1, for which abstentions will have no impact), abstentions are counted and will have the effect of a negative vote. Brokernon-votes will have no impact on the vote for any item to be presented atHow can I request technical assistance during the Annual Meeting.Meeting?
There will be technicians ready to assist you with any technical difficulties you may have accessing the annual meeting live audio webcast. Please be sure to check in by 10:45 a.m. ET on June 3, 2021, (15 minutes prior to the start of the meeting is recommended) the day of the meeting, so that any technical difficulties may be addressed before the annual meeting live audio webcast begins. If you encounter any difficulties accessing the webcast during the check-in or meeting time, please email VirtualMeeting@viewproxy.com or call 866-612-8937. Who bears the costs of this solicitation? The Company bears the cost of the solicitation of proxies, including the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of stock. Our representatives may solicit proxies by mail, telephone, or personal interview. To solicit proxies, we request the assistance of banks, brokerage houses, and other custodians, and, upon request, reimburse such organizations for their reasonable expenses in forwarding soliciting materials to beneficial owners and in obtaining authorization for the execution of proxies. Could other matters be decided at the Annual Meeting? We do not know of any other matters that will be considered at the Annual Meeting. If any matter other than those described in this Proxy Statement arises at the Annual Meeting, the proxies will be voted at the discretion of the proxy holders. Where and when will I be able to find the voting results? You can find the official results of the voting at the Annual Meeting in our Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If the official results are not available at that time, we will provide preliminary voting results in the Form 8-K and will provide the final results in an amendment to the Form 8-K as soon as they become available. | | | | | ��2019 Proxy Statement88 | | | | | 61 |
SUBMISSION OF DIRECTOR NOMINATIONS AND STOCKHOLDER PROPOSALS FOR THE 2019 ANNUAL MEETING Can I nominate someone for election to the Board? Yes, for election at the 20202022 Annual Meeting. You may do so by delivering to the Corporate Secretary, no earlier than March 8, 20205, 2022 and no later than April 7, 2020,4, 2022, a notice stating: (i) the name and address of the stockholder who intends to make the nomination; (ii) the name, age, business address and, if known, residence address of each nominee; (iii) the principal occupation or employment of each nominee; (iv) the number of shares of stock of the Company that are beneficially owned by each nominee and the nominating stockholder; and (v) the other information specified in Article Tenth (b) of our Certificate of Incorporation. Our Certificate of Incorporation is available on our Investor website atinvestors.ae.com. Additionally, you may recommend a nominee for consideration by our Nominating Committee. Recommendations should be submitted to our Nominating Committee in accordance with the procedures described below. In order for stockholder recommendations regarding possible candidates for director to be considered by the Nominating Committee: Such recommendations must be submitted to the Nominating Committee in care of: Corporate Secretary at our principal executive offices at American Eagle Outfitters, Inc., 77 Hot Metal Street, Pittsburgh, PA 15203; • | | To be timely, a stockholder’s notice generally must be delivered not earlier than the close of business on the 90th day, and not later than the close of business on the 60th day, prior to the first anniversary of the preceding year’s annual meeting (i.e., with respect to the 2020 Annual Meeting, no earlier than March 8, 2020 and no later than April 7, 2020).
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To be timely, a stockholder’s notice generally must be delivered not earlier than the close of business on the 90th day, and not later than the close of business on the 60th day, prior to the first anniversary of the preceding year’s annual meeting (i.e., with respect to the 2021 Annual Meeting, no earlier than March 5, 2022 and no later than April 4, 2022); The nominating stockholder must meet the eligibility requirements to submit a valid stockholder proposal under Rule14a-8 of the Exchange Act of 1934;1934, as amended; and The stockholder must describe the qualifications, attributes, skills or other qualities of the recommended director candidate. May I submit a stockholder proposal for next year’s Annual Meeting? Yes. Stockholder proposals to be included in the proxy statement for the 20202022 Annual Meeting of Stockholders must be received by the Company (addressed to the attention of the Corporate Secretary) by December 26, 201922, 2021 at our principal executive offices at American Eagle Outfitters, Inc., 77 Hot Metal Street, Pittsburgh, PA 15203. We may omit from the proxy statement and form of proxy any proposals that are not received by the Corporate Secretary by December 26, 201922, 2021 at our principal executive offices as specified herein. Any stockholder proposal submitted outside the processes of Rule14a-8 under the Exchange Act for presentation at our 20202022 Annual Meeting will be considered untimely under our Bylaws if notice thereof is received before March 8, 20205, 2022 or after April 7, 2020.4, 2022. To be submitted at the meeting, any such proposal must be a proper subject for stockholder action under the laws of the State of Delaware, and must otherwise conform to applicable requirements of the proxy rules of the SEC and our Certificate of Incorporation and Bylaws. | | | | | 622021 Proxy Statement | | | | | |
OTHER MATTERS The only business that management intends to present at the meeting consists of the matters set forth in this statement. Management knows of no other matters to be brought before the meeting by any other person or group. If any other matter should properly come before the meeting, the proxy enclosed confers upon the persons designated herein authority to vote thereon in their discretion. HOUSEHOLDING In order to reduce expenses, we are taking advantage of certain SEC rules, commonly known as “householding,” that permit us to deliver, in certain cases, only one Notice, Annual Report or Proxy Statement, as applicable, to multiple stockholders sharing the same address, unless we have received contrary instructions from one or more of the stockholders. If you received a householded mailing this year and would like to have additional copies of the Notice, Annual Report, Proxy Statement or other proxy materials sent to you, please submit your request directed to our Corporate Secretary, at our principal executive offices located at 77 Hot Metal Street, Pittsburgh, Pennsylvania 15203,(412) 432-3300 and we will deliver the requested materials promptly. If you hold your stock in street name, you may revoke your consent to householding at any time by notifying your broker. If you are currently a stockholder sharing an address with another of our stockholders and wish to have your future proxy statements and annual reports householded, or if your materials are currently householded and you would prefer to receive separate materials in the future, please contact our Corporate Secretary at the above address or telephone number. ADDITIONAL INFORMATION We will furnish without charge to each person whose proxy is being solicited, upon request of any such person, a copy of the Company’s Annual Report on Form10-K for Fiscal 2017,2020, as filed with the SEC, including the financial statements and schedules thereto. In addition, such report is available, free of charge, under “Financials & Filings – SEC Filings” on our investors website atinvestors.ae.com. A request for a copy of such report should be directed to Judy Meehan, our Senior Vice President of Corporate Communications and Investor Relations, at our principal executive offices located at 77 Hot Metal Street, Pittsburgh, Pennsylvania 15203,(412) 432-3300. | | | | | 2019 Proxy Statement90 | | | | | 63 |
APPENDIX A Description and Reconciliation ofNon-GAAP Measures This Proxy Statement and stockholder letter include information onnon-GAAP financial measures(“ (“non-GAAP” or “adjusted”), including comparable sales, free cash flow and earnings per share information and the consolidated results of operationsadjusted operating income, excludingnon-GAAP items. These financial measures are not based on any standardized methodology prescribed by U.S. generally accepted accounting principles (“GAAP”) and are not necessarily comparable to similar measures presented by other companies. Non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The Company believes that thisnon-GAAP information is useful as an additional means for investors to evaluate the Company’s operating performance, when reviewed in conjunction with the Company’s GAAP consolidated financial statements. These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company’s business and operations. Comparable sales (i) excludes (a) stores that have a gross square footage increaseADJUSTED OPERATING INCOME
GAAP TO NON-GAAP RECONCILIATION (Dollars in thousands) (unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Q1 | | | Q2 | | | Q3 | | | Q4 | | | | | 2020 | | | 2019 | | | 2020 | | | 2019 | | | 2020 | | | 2019 | | | 2020 | | | 2019 | | Operating Income | | $ | (358,240 | ) | | $ | 47,846 | | | $ | (12,237 | ) | | $ | 81,922 | | | $ | 95,551 | | | $ | 103,102 | | | $ | 3,584 | | | $ | 476 | | Adjustment (1) | | | 155,619 | | | | 1,543 | | | | 14,611 | | | | 2,728 | | | | 6,955 | | | | — | | | | 102,639 | | | | 76,223 | | Adjusted Operating Income | | $ | (202,621 | ) | | $ | 49,389 | | | $ | 2,374 | | | $ | 84,650 | | | $ | 102,506 | | | $ | 103,102 | | | $ | 106,223 | | | $ | 76,699 | |
| (1) • | For Q1 2020, $155.6 million of pre-tax impairment and restructuring charges. For Q1 2019, $1.5 million of pre-tax corporate restructuring charges. |
For Q2 2020, $14.6 million of 25% or greater due to a remodelCOVID-19 related expenses and (b) sales from licensed stores;restructuring charges. For Q2 2019, $2.7 million of pre-tax corporate restructuring charges. For Q3 2020, $7.0 million of COVID-19 related expenses and (ii) includes (x) sales from company-owned storesrestructuring charges. For Q4 2020, $102.6 million of pre-tax impairment charges & COVID-19 related expenses. For Q4 2019, $76.2 million pre-tax impairment and (y) sales from AEO Direct, our e-commerce platform.restructuring charges. FREE CASH FLOW GAAP TONON-GAAP RECONCILIATION (Dollars in thousands) (unaudited) | | | | | | | | | | | | | | | | 2016 | | | 2017 | | | 2018 | | Net cash provided by operating activities | | $ | 365,596 | | | $ | 394,426 | | | $ | 456,645 | | Capital Expenditures | | | (161,494 | ) | | | (169,469 | ) | | | (189,021 | ) | Acquisition of Intangible Assets | | | (1,528 | ) | | | (2,681 | ) | | | (672 | ) | Free Cash Flow | | $ | 202,574 | | | $ | 222,276 | | | $ | 266,952 | |
2018 NET INCOME PER DILUTED SHARE
GAAP TONON-GAAP RECONCILIATION
(unaudited)
| | | | | | | Diluted Earnings
per Common
Share | | GAAP Basis
| | | $1.47
| | Add: Restructuring Related Charges(1)
| | | 0.01
| | Non-GAAP Basis
| | | $1.48
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(1) | - $1.6 million forpre-tax corporate charges, primarily consisting of corporate severance charges
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Q1 | | | Q2 | | | Q3 | | | Q4 | | | | | 2020 | | | 2019 | | | 2020 | | | 2019 | | | 2020 | | | 2019 | | | 2020 | | | 2019 | | Net Cash provided by operating activities from continuing operations | | $ | (209,894 | ) | | $ | 7,719 | | | $ | 173,475 | | | $ | 109,878 | | | $ | 26,025 | | | $ | 60,603 | | | $ | 212,892 | | | $ | 237,216 | | Capital Expenditures | | | (33,910 | ) | | | (36,574 | ) | | | (27,492 | ) | | | (55,219 | ) | | | (31,189 | ) | | | (58,073 | ) | | | (35,384 | ) | | | (60,494 | ) | Acquisition of Intangible Assets | | | (190 | ) | | | (203 | ) | | | (182 | ) | | | (91 | ) | | | (139 | ) | | | (160 | ) | | | (459 | ) | | | (308 | ) | | | | (34,100 | ) | | | (36,777 | ) | | | (27,674 | ) | | | (55,310 | ) | | | (31,328 | ) | | | (58,233 | ) | | | (35,843 | ) | | | (60,802 | ) | Free Cash Flow | | $ | (243,994 | ) | | $ | (29,058 | ) | | $ | 145,801 | | | $ | 54,568 | | | $ | (5,303 | ) | | $ | 2,370 | | | $ | 177,049 | | | $ | 176,414 | |
| | | | | 20192021 Proxy Statement | | | | | A-1 |
2017 NET INCOME PER DILUTED SHARE
GAAP TONON-GAAP RECONCILIATION
(unaudited)
| | | | | | | | Diluted Earnings
per Common
Share
| GAAP Basis
| | | | $1.13
| | Add: Restructuring Related Charges (1)
| | | | 0.08
| | Add: Joint Business Venture Charges (2)
| | | | 0.03
| | Less: U.S. Tax Reform Impact (3)
| | | | (0.08)
| | Non-GAAP Basis
| | | | $1.16
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(1) | - $22.3 millionpre-tax restructuring charges, consisting of:
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Inventory charges related to the restructuring of the United Kingdom, Hong Kong, and China ($1.7 million), recorded as a reduction of Gross Profit
Lease buyouts, store closure charges and severance and related charges ($20.6 million), which includes charges for the United Kingdom, Hong Kong, and China and corporate overhead reductions, recorded within Restructuring Charges.
(2) | - $8.0 million of netpre-tax charges related to the exit of a joint business venture, recorded within Other (expense) income, net.
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(3) | - $14.9 million ofafter-tax benefit resulting from the estimated impact of U.S. tax legislation enacted on December 22, 2017, referred to as the Tax Cuts and Jobs Act and related actions, specifically:
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The benefit of a lower blended U.S. corporate tax rate in Fiscal 2017
The net benefit from there-measurement of deferred tax balances and theone-time transition tax on undistributed earnings of foreign subsidiaries
The acceleration of certain deductions into Fiscal 2017
| | | | | A-2 | | |
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AEO INC. PROXY REPORT 2021
AMERICAN EAGLE OUTFITTERS, INC. The undersigned Stockholder of American Eagle Outfitters, Inc. hereby appoints Robert L. Madore,Michael A. Mathias, Stacy B. Siegal, and Jennifer B. Stoecklein, and eachor any of them individually, as attorneys and proxies with the power to act without the other and with thefull power of substitution asattorneys-in-fact and proxies, and hereby authorizes eachto vote all of them to represent and vote, as provided on the other side of this card, all the shares of common stockCommon Stock of American Eagle Outfitters, Inc. thatwhich the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come beforeat the Annual Meeting of Stockholders of American Eagle Outfitters, Inc. to be held at Langham Place, New York, located at 400 Fifth Avenue, New York, New Yorkvia virtual meeting on Thursday, June 6, 20193, 2021 at 11:00 a.m., local time,Eastern Daylight Savings Time, and at any adjournment or postponement thereof, with alladjournments thereof. In order to attend the powers whichmeeting, you must register at http://viewproxy. com/ae/2021/htype.asp by 11:59 PM ET on May 31, 2021. On the undersigned would possessday of the Annual Meeting of Stockholders, if presentyou have properly registered, you may enter the meeting by clicking on the link provided and the password you received via email in your registration confirmations. Further instructions on how to attend and vote at the Annual Meeting of Stockholders are contained in the Proxy Statement in the section titled “Information About This Proxy Statement and the Annual Meeting.” This proxy is solicited on behalf of the Board of Directors of American Eagle Outfitters, Inc.Directors. (Continued, and to be dated and signed, on the other side) p• PLEASE DETACH PROXY CARD HERE p•
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held June 6, 2019.3, 2021. The Proxy Statement and our Fiscal 20182020 Annual Report are available at: at: http://www.viewproxy.com/viewproxy.com/ae/20192021/
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE | | ☒ | | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH NOMINEE IN PROPOSAL 1 AND “FOR” PROPOSALS 2 AND 3. | | | | | | | | | | | | | | | | | | | | | | | | | FOR | | AGAINST | | ABSTAIN | | 1. | | Proposal One. Election of Class III Directors. | | | | | | 2. | | Proposal Two. Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending February 1, 2020. | | ☐ | | ☐ | | ☐ | | | | | | | FOR | | AGAINST | | ABSTAIN | | | | | | | | | | | 01 | | Deborah A. Henretta | | ☐ | | ☐ | | ☐ | | | | | | | | | | | 02 | | Thomas R. Ketteler | | ☐ | | ☐ | | ☐ | | | | | | | | | | | 03 | | Cary D. McMillan | | ☐ | | ☐ | | ☐ | | 3. | | Proposal Three. Approve, on an advisory basis, the compensation of our named executive officers. | | ☐ | | ☐ | | ☐ | | | DO NOT PRINT IN THIS AREA (Shareholder Name & Address Data) | | | | IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR” PROPOSALS 1, 2, AND 3. | | | | | Please sign and date this Proxy below and return in the enclosed envelope. | | | | | I plan on attending the meeting☐ | | | | | | | | | | | | | | | | Signature(s) must agree with the name(s) printed on this proxy. If signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. | | | | | | | | | | | | | Date | | | | , 2019 | | | | | | | CONTROL NUMBER | | | | | | | | |  | | | | | | (Signature) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Signature of joint owner) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒ | | | | | | | | 1. ProposalOne. Election of Directors. | | | | | | | | FOR | | AGAINST | | ABSTAIN | 01 Janice E. Page 02 David M. Sable 03 Noel J. Spiegel | | FOR ☐ ☐ ☐ | | AGAINST ☐ ☐ ☐ | | ABSTAIN ☐ ☐ ☐ | | | | 2. Proposal Two. Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending January 29, 2022. 3. Proposal Three. Hold an advisory vote on the compensation of our named executive officers. | | ☐ ☐ | | ☐ ☐ | | ☐ ☐ | | | | | | | | | | | | | | | | | IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED “FOR” PROPOSALS 1, 2, AND 3. | | | | | | | | | | | | | | | | | Please sign and date this Proxy below and return in the enclosed envelope. | | | | | | | | | | | | | | | | | Signature(s) must agree with the name(s) printed on this proxy. If signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. |
| | | | | | | | | | | | p PLEASE DETACH PROXY CARD HERE p Date | | , | | 2021 |
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| | (Signature) | | | | | | | | | | | (Signature of joint owner) |
| | | | | | |  | | | | | | | | | | CONTROL NUMBER | | | | | | | | | | | | | | |
• PLEASE DETACH PROXY CARD HERE •
PROXYVOTINGINSTRUCTIONS Please have your 11 digit control number ready when voting by Internet or Telephone, or when voting during the Virtual Annual Meeting | | | | | | | | | 
INTERNET Vote Your Proxy on the Internet: Go to www.AALvote.com/AEO Have your proxy card available when you access the above website. Follow the prompts to vote your shares. | | | | 
TELEPHONE Vote Your Proxy by Phone: Call 1 (866) 804- 9616 Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. | | | | 
| INTERNETMAIL
| | | | TELEPHONE | | | | MAIL | Vote Your Proxy on the Internet: | | | | Vote Your Proxy by Phone: | | | | Vote Your Proxy by Mail: | | | | | | Go towww.AALvote.com/AEO | | | | Call 1 (866)804-9616 | | | | | | | | | | Have your proxy card available when you access the above website. Follow the prompts to vote your shares. | | | | Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. | | | | Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. |
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