SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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Abercrombie & Fitch Co.
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Abercrombie & Fitch Co. |
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Abercrombie & Fitch Co.
6301 Fitch Path
New Albany, Ohio 43054
(614)
April
29, 2019Dear Fellow Stockholders:
You are cordially invited25, 2022
TO OUR FELLOW STOCKHOLDERS:
We invite you to attendjoin us for the 20192022 Annual Meeting of Stockholders (the “Annual Meeting”) of Abercrombie & Fitch Co. (the “Company,” “we” or “our”) to be held at 10:00 a.m., Eastern Daylight Time, on Wednesday, June 12, 2019, at our offices located at 6301 Fitch Path, New Albany, Ohio 43054. We hope that you8, 2022. The Annual Meeting will be ableheld as a virtual meeting, to attend andbe conducted exclusively via webcast at www.virtualshareholdermeeting.com/ANF2022. Details regarding how to participate in the webcast of the Annual Meeting at which time we will have the opportunity to review the business and operations of our Company.Details of the business to be conducted at the Annual Meeting are provided in the accompanying Notice of Annual Meeting of Stockholders (the “Notice”) and Proxy Statement,Statement.
In Fiscal 2021, we continued to work stronger, smarter, faster, and more agile. With the launch of Social Tourist and the evolution of the Gilly Hicks brand, we now have five clearly defined brands, all of which youwe believe have global growth opportunity. Additionally, we have made significant progress on our transformation initiatives, which include: optimizing our global store network; enhancing our digital and omnichannel capabilities; increasing the speed and efficiency of our concept-to-customer lifecycle; and improving customer engagement. As we continued to navigate the ongoing challenges of the COVID-19 pandemic, our strong balance sheet has enabled us to double-down on our transformation initiatives. As a result, today, we are urgedfirmly in our growth phase.
In Fiscal 2021, even as stores reopened, roughly half of our sales were digital, compared to
read carefully.about a third in Fiscal 2018. We have electedthoughtful plans in place to take advantagecontinue to invest in digital and omnichannel capabilities and enhancements to create best-in-class customer experiences while growing profitably across channels. On our path to strategically refine our global footprint, since Fiscal 2018, we have removed 1.5 million gross square feet, or 23% of Securitiesour global base, reflecting the closure of 228 locations, including 14 flagship stores. We have closed oversized and Exchange Commission (“SEC”) rules that allow usunproductive locations, and found new ways to furnish proxy materials to certain stockholders on the Internet. On or about April 29, 2019,meet our customers through enhanced shopping experiences, both in stores and through our digital channels. In terms of customer engagement, with our clearly defined brand purposes and competitive positioning, our teams have evolved how we began mailing a Notice of Internet Availability of Proxy Materials to stockholders of record at thestay close of business on April 15, 2019. At the same time, we provided those stockholders with access to our online proxy materialscustomers and filedtheir ever-changing needs.
We are proud of our proxy materials with the SEC.Fiscal 2021 accomplishments. We believe furnishing proxy materialsdelivered our best reported and adjusted operating margin(1) in over a decade, maintained a strong balance sheet, and prioritized returning excess cash to our stockholders onshareholders, repurchasing 10.2 million shares for $377 million during Fiscal 2021. Although we were faced with many unexpected challenges throughout the Internet allowsyear, including the rise of new COVID-19 variants and supply chain disruption, we again successfully navigated the headwinds. We will continue to expect ongoing unknowns, and we look forward to thoughtfully executing to our long-term view of strategic, global growth across our brands.
Whether or not you plan to join us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact offor the Annual Meeting. If you have received the Notice of Internet Availability of Proxy Materials, you will not receive a printed copy of the proxy materials unless you requestMeeting, it by following the instructions for requesting such materials contained in the Notice of Internet Availability of Proxy Materials.It is important that your shares be represented at the Annual Meeting whether or notrepresented. We encourage you are personally able to attend. Accordingly, after reading the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement, please promptly submit your proxy by telephone, Internetby mail, or mail as describedby logging in to
www.proxyvote.com after reading the Notice and Proxy Statement. If you submit your proxy over the Internet, you will have the opportunity to agree to receive future stockholder documents electronically viae-mail, and we encourage you to do so.If you have any questions or require any assistance with voting your shares, please contact Innisfree M&AIncorporated, our proxy solicitor, toll-free at(888) 750-5834 or directly at(412) 232-3651. Banks and brokers may call collect at(212) 750-5833.
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Fran Horowitz
| | Terry L. Burman
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Chief Executive Officer
| | Non-ExecutiveChairman of the Board
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TABLE OF CONTENTS
Always Forward,
2019 PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in the Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
Annual Meeting of Stockholders
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• Time and Date
| | 10:00 a.m., Eastern Daylight Time, June 12, 2019 |
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• Place
| | 6301 Fitch Path
New Albany, Ohio 43054
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• Record Date
| | April 15, 2019 |
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• Voting
| | Stockholders as of the record date are entitled to one vote per share. Each share of Class A Common Stock, $0.01 par value per share (the “Common Stock”), is entitled to one vote for each director nominee and one vote with respect to each of the other proposals to be voted on. |
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• How to Cast Your Vote
| | Even if you plan to attend the Annual Meeting in person, please vote as soon as possible and, in any event, prior to 11:59 p.m., Eastern Daylight Time, on June 11, 2019. You can vote in one of the following ways prior to the date of the Annual Meeting: |
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 Internet
| |  Telephone
| |  Mail
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Go towww.proxyvote.com:You can use the Internet 24 hours a day to transmit your voting instructions. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you access the web site and follow the instructions. | | Call1-800-690-6903: You can use any touch-tone telephone. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you call and follow the instructions. | | If you received a printed copy of the proxy materials, you may submit your vote by completing, signing and dating your proxy card and returning it in thepostage-paid envelope to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. |
Meeting Agenda and Voting Matters
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| | Board Vote Recommendation |
Election of Ten Directors | | FOR EACH OF THE BOARD’S
NOMINEES |
Other Management Proposals: | | |
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• Advisory Resolution to Approve Executive Compensation
| | FOR |
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• Approval of Amendment to the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates to Authorize 2,200,000 Additional Shares
| | FOR |
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• Ratification of Appointment of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm for the Fiscal Year Ending February 1, 2020
| | FOR |
Abercrombie & Fitch Leadership
The Company’s leadership has evolved considerably in recent years following the elevation of Fran Horowitz to Chief Executive Officer and Joanne C. Crevoiserat to Chief Operating Officer effective February 1, 2017. Scott Lipesky subsequently rejoined the Company as Chief Financial Officer effective October 2, 2017 and the Board appointed Terry L. Burman asNon-Executive Chairman of the Board effective February 3, 2018.
In late Fiscal 2018, we took steps to optimize the leadership of our brands, Hollister and Abercrombie & Fitch/abercrombie kids, and align the strategic direction of both brands with our global strategy. On November 28, 2018, Kristin Scott, previously Brand President — Hollister, was elevated to the position of President, Global Brands and Stacia Andersen, previously Brand President — Abercrombie & Fitch/abercrombie kids, left the Company on November 30, 2018. These changes will solidify our leadership team as we continue to progress on our transformation initiatives and increase the efficiency of our business in an ever-changing consumer environment.
On September 30, 2018, Robert E. Bostrom left the role of Senior Vice President, General Counsel and Secretary of the Company, and continued to serve as Senior Vice President and Special Counsel of the Company until January 22, 2019. Immediately following Mr. Bostrom’s transition, Gregory J. Henchel began employment with the Company in the role of Senior Vice President, General Counsel and Corporate Secretary, effective October 1, 2018.
Fiscal 2018 Financial Results
The Company ended Fiscal 2018 on a strong note by keeping our customer at the center of everything we do and continuing to improve the customer experience with ongoing investments in our loyalty programs, stores and omnichannel capabilities. The Company recorded our second consecutive full year of sales growth and, in the fourth quarter, our sixth consecutive quarter of positive comparable sales. In Fiscal 2018, overall Company net sales and comparable sales both increased 3%, and the Company exceeded $1 billion in annual digital net sales. Importantly, while delivering thistop-line growth, the Company drove gross profit rate improvement and operating expense leverage, resulting in operating income margin expansion and net income improvement for the full year.
Election of Directors toOne-Year Term
Director Election: Ten directors are to be elected at the Annual Meeting. Each director nominee is to be elected to our Board for anone-year term and will be eligible forre-election to our Board in 2020.
Majority Vote Standard Applies: The Annual Meeting is expected to be uncontested with respect to the election of directors. As a result, each director nominee must be elected by a majority of the votes cast (i.e., the votes cast for such nominee’s election must exceed the votes cast against such nominee’s election). Brokernon-votes and abstentions will not be treated as votes cast.
Upon the unanimous recommendation of our Nominating and Board Governance Committee, the Board has unanimously nominated and unanimously recommends a vote“FOR” each of the following nominees for election as directors at the Annual Meeting:
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Name
| Fran Horowitz
Chief Executive Officer | Age
| | | Director
Since
. Terry L. Burman
Independent Chairperson of the Board |
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(1)Please refer to Appendix A to this Proxy Statement for information regarding the use of non-GAAP measures in this Proxy Statement.
Notice of Annual Meeting of Stockholders
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Kerrii B. Anderson
Chair of the Audit and Finance Committee
Independent Director
| | | 61 | | | February 2018 |
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| DATE & TIME | | | | LOCATION | | | | RECORD DATE |
June 8, 2022 10:00 a.m., Eastern Daylight Time | | | Via webcast: www.virtualshareholdermeeting.com/ANF2022 The meeting will be conducted virtually, and you will not be able to attend the meeting in person. | | | April 11, 2022 |
Items of Business
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| Proposal | | Our Board’s Voting Recommendation |
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James B. Bachmann
Independent Director
| | | 76 | | | July 2003 |
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Terry L. Burman
Non-Executive Chairman1
| Elect the eleven director nominees named in the Proxy Statement to serve until the 2023 Annual Meeting of the Board
Chair of the Executive Committee
Independent DirectorStockholders | | a | 73 | | | January 2014FOR
each director nominee |
| 2 | | | | | | |
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Sarah M. Gallagher
Independent Director
| | | 67 | | | June 2014 |
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Michael E. Greenlees
Chair of the Compensation and Organization
Committee
Independent Director
| | | 72 | | | February 2011 |
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Archie M. Griffin
Chair of the Corporate Social Responsibility
Committee
Independent Director
| | | 64 | | | August 2000 |
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Fran Horowitz
Chief Executive Officer
| | | 55 | | | February 2017 |
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Helen E. McCluskey
Independent Director
| | | 64 | | | February 2019 |
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Charles R. Perrin
Chair of the Nominating and Board Governance
Committee
Independent Director
| | | 73 | | | January 2014 |
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Nigel Travis
Independent Director
| | | 69 | | | February 2019 |
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Please see the description of the respective backgrounds of the Nominees beginningApprove, on page 22 of the Proxy Statement under the caption“Nominees.” We believe that the Nominees bring particular expertise, leadership skills and institutional knowledge that make them invaluable to the Company. In particular:
Ms. Anderson serves as the Chair of our Audit and Finance Committee (serving in this capacity since March 4, 2019). She is a practiced board director and audit committee chair with chief executive officer, chief financial officer and consumer products experience, most recently serving as President and Chief Executive Officer of Wendy’s International, Inc. (now The Wendy’s Company) during a transformative time at that company. She has a strong record of leadership in operations and strategy as well as extensive corporate governance experience through her service on other public company
| boards. Her extensive experience in accounting and financial reporting and analysis and prior experience as a chief executive officer of a public company and chief financial officer of several public companies, in addition to other public company board service, make Ms. Anderson a valuable asset to the Board and our Audit and Finance Committee.
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Mr. Bachmann serves as a member of our Audit and Finance Committee (having served as Chair until March 4, 2019) and our Corporate Social Responsibility Committee. He served as the Lead Independent Director and a member of the Audit Committee of Lancaster Colony Corporation until November 2018. His significant public company accounting and financial expertise, thorough review of the financial and risk management issues applicable to the Company and diligent engagement with management have helped the Company navigate the increasingly complex financial and risk management issues we face. In addition, his operational experience as the Managing Partner of the Columbus, Ohio office of Ernst & Young LLP provides the Company with valuable operational insights.
Mr. Burman serves as theNon-Executive Chairman of the Board of the Company and Chair of our Executive Committee (serving in these capacities since February 3, 2018). Prior thereto, he served as the Lead Independent Director of the Company from March 2017 to February 2018. In addition to his prior service as the Lead Independent Director of the Company, he previously served as the Chair of our Nominating and Board Governance Committee from June 2015 to February 2018 and as a member of our Compensation and Organization Committee from February 2014 to February 2018. Mr. Burman currently serves as Chairman of the Board of Tuesday Morning Corporation, a closeout retailer of upscale decorative home accessories, housewares, seasonal goods and famous-maker gifts in the United States. His experience as a chief executive officer in the retail industry, his significant international management experience, and his general business and financial acumen are very valuable to the Company and provide the Board with important insight into specialty retail industries as well as strategy and business development.
Ms. Gallagher serves as a member of our Corporate Social Responsibility Committee and our Nominating and Board Governance Committee. She most recently served as Executive Chairperson of the Rebecca Taylor woman’s fashion brand. Ms. Gallagher’s over 40 years of retail experience, including more than 30 years with Fortune 500 brands, and status as one of the early movers in thee-commerce space with more than 15 years of service in that aspect of the retail business, bring valuable expertise and insight to the Board as the Company continues to expand our focus ondirect-to-consumer business opportunities, both within the United States and internationally.
Mr. Greenlees serves as the Chair of our Compensation and Organization Committee and as a member of our Audit and Finance Committee. He is currently Chairman of Scoota, a privately-held programmatic advertising business based in the United Kingdom. Until April 30, 2016, Mr. Greenlees served as a member of the Board of Directors and as an Executive Director of Ebiquity plc, a U.K.-based company that provides data-driven insights to the global media and marketing community, after having served as Chief Executive Officer of Ebiquity plc from 2007 to December 2015. Mr. Greenlees’ experience within the global media and marketing community, and his service with several public companies, are very valuable to the Company. In addition, as a U.K. native and current resident, Mr. Greenlees adds to the Company’s international experience and profile.
Mr. Griffin serves as the Chair of our Corporate Social Responsibility Committee and as a member of our Nominating and Board Governance Committee. Mr. Griffin retired from The Ohio State University on June 30, 2017 and most recently served as Senior Advisor within the Office of Advancement at The Ohio State University from July 2015 until his retirement. Mr. Griffin is one of the most well-respected and well-recognized individuals in the State of Ohio. Mr. Griffin’s experience on the Board and institutional knowledge of the Company are also valuable.
Ms. Horowitz serves as the Chief Executive Officer of the Company and as a member of our Executive Committee. As the Principal Executive Officer of the Company, Ms. Horowitz brings to the Board not only more than 30 years of retail experience but also critical knowledge of the Company’s operations.
| In electing Ms. Horowitz as Chief Executive Officer and a director of the Company, the Board recognized the leadership she had shown in the turnaround for the Company’s Hollister brand and in energizing the Company’s associates around important cultural values, a customer-centric mindset and a commitment to ensuring the Company’s success. Her efforts have earned her the respect of both the Board and associates throughout the Company’s global operations which has served the Company and the Board well as she leads the Company forward.
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Ms. McCluskey serves as a member of our Compensation and Organization Committee. She served as President, Chief Executive Officer and a director of The Warnaco Group, Inc. from February 2012 until its acquisition in February 2013 by PVH Corporation. With her broad background in strategy, business planning and operations derived from a career spanning over 30 years with leading consumer goods companies, Ms. McCluskey brings valuable skills and insights to the Company. Her experience as chief executive officer of a global public company provides her with significant expertise in global business matters, corporate leadership and management, allowing her to bring valuable insight to the management of the Company’s strategic direction and growth, and management development. Additionally, having built women’s brands globally for sale through all channels of distribution worldwide, she brings a valuable blend of branding, merchandising, marketing and international expertise to the Company.
Mr. Perrin serves as the Chair of our Nominating and Board Governance Committee and as a member of our Compensation and Organization Committee and our Executive Committee. He served as thenon-executive Chairman of The Warnaco Group, Inc., from March 2004 to February 2013. He served as a director of Campbell Soup Company from 1999 until 2017. Mr. Perrin brings to the Board substantial experience in and perspective on consumer marketing, business operations and the packaged goods industry. Mr. Perrin served in leadership positions at not only The Warnaco Group, Inc. but also Avon Products, Inc. and Duracell International, Inc. His extensive background in retail, sales and marketing are very valuable to the Company.
Mr. Travis serves as a member of our Audit and Finance Committee. He has served asNon-Executive Chairman of Dunkin’ Brands Group, Inc., a quick-service restaurant franchisor, since January 2019. Previously, he served Dunkin’ Brands Group, Inc. as Executive Chairman from July 2018 to December 2018, and as Chief Executive Officer from January 2009 to July 2018, adding the responsibility of Chairman of the Board in May 2013. Mr. Travis brings significant international, retail, human resources and operations experience to the Board, and as a former public company chief executive officer, he provides perspectives on leadership and strategy. In addition, Mr. Travis’ particular knowledge of and extensive experience in senior management of manufacturing and consumer product businesses are very valuable to the Company.
| • | | Advisory Resolution to Approve Executive Compensation: We are asking stockholders to approve annon-binding, advisory resolution onbasis, the compensation of the Company’sour named executive officers as disclosed in this Proxy Statement. The Board recommends for Fiscal 2021 (“Say on Pay”)
| | a vote“FOR” this proposal because we believe the Company’s executive compensation policies and practices are effective in aligning the interests of our executive officers with the achievement of our financial goals and the creation of long-term stockholder value. | FOR |
| 3 | • | | Approval of AmendmentApprove an amendment to the Abercrombie & Fitch Co.our 2016 Long-Term Incentive Plan for Associates to Authorize 2,200,000 Additional Shares:We are asking stockholders to approve an amendment toincrease the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates (the “2016 Associates LTIP”) to authorize 2,200,000 additional shares of Common Stock. The Board recommends a vote“FOR” this proposal to enable the Company to continue to pay competitively and assist in attracting, retaining and motivating highly talented executives and associates. Additional shares are needed to continue to make grants consistent with historic grant practices. No changes to the 2016
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| Associates LTIP are proposed for consideration by the stockholders at the Annual Meeting other than the increase in the authorized number of authorized shares of Common Stock.
| | a | FOR |
| 4 | • | | Ratification of Appointment of Independent Registered Public Accounting Firm: As a matter of good governance, we are asking stockholders to ratifyRatify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending February 1, 2020. The Board recommends Fiscal 2022
| | a vote“FOR” this proposal. | FOR |
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Ongoing Stockholder Engagement
The Company continued to have extensive dialogue with our stockholdersProxy Statement describes each of these items in the fiscal year ended February 2, 2019 (“Fiscal 2018”). During the period, the Company participated in six conferences, conducted threenon-deal roadshows, hosted three store tours, welcomed two groups to visit our offices and held an Investor Day. These efforts resulted in discussions with approximately 50% of our top ten actively managed stockholders. The Company expects to continue such discussions prior todetail. In addition, we will transact any other business that may properly come before the Annual Meeting, and as a matter of policy and practice, fosters and encourages engagement with our stockholders on compensation and other matters on an ongoing basis.
at any adjournments or postponements thereof.Executive Compensation Highlights
Important Voting InformationWe believe that our executive compensation policies and practices appropriately align the interests of our executive officers with the achievement of our financial goals and the creation of long-term stockholder value. They reflect a continued focus on performance and supporting the evolution of our business as we respond
Even if you plan to changes in the global macroeconomic and consumer environment. We offer compensation opportunities that are: (i) competitive with those offered by similar specialty retail organizations and other companies with which the Company competes for high caliber executive talent; and (ii) delivered in a mix of programs and vehicles that emphasize “at risk” components of pay, that are only earned upon the achievement of rigorous performance goals.In evaluating this year’s “Say on Pay” proposal, we recommend that you review our“COMPENSATION DISCUSSION AND ANALYSIS” section that begins on page 57 of the Proxy Statement, which explains how and why our Compensation and Organization Committee arrived at its executive compensation decisions for Fiscal 2018 and beyond.
We made modest changes to our executive compensation program in Fiscal 2018 after no changes were made to the program in Fiscal 2017. The changes made to our compensation structure in Fiscal 2018 included: (i) the elimination of the Strategic Driver Scorecard and the Individual Performance Factor modifiers that allowed for the discretionary modification of individual payoutsparticipate in the Annual Cash Incentive Program; and (ii) the recalibrationMeeting, we urge you to
vote as soon as possible in one of the goals and payoutsfollowing ways: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Vote online by going to: www.proxyvote.com
| | | Vote by calling toll-free U.S., U.S. Territories, and Canada Call 1-800-690-6903 | | | Vote by mail(if you received a printed copy of the proxy materials): complete, sign, and date your proxy card and return it in the enclosed postage-paid envelope |
Participating in the market-based performance share awards (“PSAs”)Annual Meeting
All stockholders are invited to attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/ANF2022. Our goal is to ensure that are earned based on Relative Total Stockholder Return (“TSR”) versusstockholders have the S&P Retail Select Industry Index. Changessame rights and opportunities to our Fiscal 2018 compensation structure were intendedparticipate in the Annual Meeting as you would at an in-person meeting. You will be able to further align our incentive plans with key financial metrics and also served asattend the meeting online, examine a meaningful retention tool for memberslist of our leadership team. An overview of our compensation programs for Fiscal 2018 is shown below:Base salaries are reviewed annually in Marchstockholders, vote your shares electronically, and upon a significant change in an executive officer’s role.
For Fiscal 2018, our named executive officers received increases to base salary ranging from 3.3% to 8.3% in March 2018.
Upon Kristin Scott’s elevation to President, Global Brands in November 2018, she received an additional 15.6% increase in her base salary.
Annual Cash Incentive Program
Company performance undersubmit questions during the Annual Cash Incentive Program is based on a retrospective assessment of Adjusted EBIT performance (weighted 30% for Spring season and 70% for Fall season,meeting. To do so, you will need the same basis as is used for the broad-based associate population).
For the leadership team (including our named executive officers), the annual cash incentive is paid out annually following the end of the fiscal year, with the annual payout level derived based on the weighted average of results for the Spring (30%) and Fall (70%) seasons.
For Fiscal 2018, the Compensation and Organization Committee eliminated the Strategic Driver Scorecard metrics and the Individual Performance Factor from the Annual Cash Incentive Program. The Strategic Driver Scorecard metrics previously allowed the Company financial score to be adjusted up or down based upon an assessment of forward-looking, strategic drivers linked to the Company’s strategic pillars. The Individual Performance Factor previously allowed for further modifications of individual payouts based upon individual performance. These components were eliminated in order to reinforce our“one-team” culture and to more directly align annual cash incentive payouts with the Company’s Adjusted EBIT results, which we consider to be a long-term driver of value creation.
Long-term incentive awards to the named executive officers for Fiscal 2018 were granted 50%unique 16-digit control number printed in the formbox on your Notice of PSAs and 50% in the formInternet Availability of time-vested RSUs.
ChangesProxy Materials or proxy card. Please see page 91 for Fiscal 2019
The Compensation and Organization Committee has approved the following changes for the Fiscal 2019 long-term incentive design:
The long-term incentive mix for members of our leadership team will shift from 50% PSAs and 50% RSUs to 60% PSAs and 40% RSUs to provide additional alignment between leadership team pay and multi-year financial results;
Total Net Sales will be added as a third, equally-weighted metric for PSA grants (in addition to Average ROIC and Relative TSR) as we seek to align our performance-based compensation with our goal to accelerate the growth of our brands; and
The vesting schedule for time-vested RSUs granted to members of our leadership team will be reduced from four years to three years (vesting ratably) to more closely reflect competitive practice among our peer group ofsimilarly-sized,information. specialty retailers against whom we compete for talent.
Pay for Performance Alignment
As discussed beginning on page 58 of the Proxy Statement under the caption“COMPENSATION DISCUSSION AND ANALYSIS— Executive Summary—Pay for Performance Culture,” during Fiscal 2018, the Company continued to focus on performance and supporting the evolution of our business as we respond to changes in the global macroeconomic and consumer environment.
The Company remains committed to aligning the outcomes of the Company’s short-term and long-term compensation programs with the Company’s performance. The Company’s pay for performance culture is evidenced by the following incentive outcomes for Fiscal 2018:
Strong Adjusted EBIT performance during the Fiscal 2018 Spring season resulted in corporate funding at 143.0% of target (the Spring season is weighted 30%). Fiscal 2018 Fall season Adjusted EBIT fell just short of target and resulted in corporate funding at 91.0% of target (the Fall season is weighted 70%). For the leadership team (including our named executive officers), the annual cash incentive is paid out annually following the end of the fiscal year, with the annual payout level derived based on the weighted average of results for the Spring (30%) and Fall (70%) seasons. Taking into account the weightings of the Spring and Fall seasons, full-year annual cash incentive payouts based on weighted-average Company financial performance were funded at 106.6% of target.
| • | | All Average ROIC-based PSAs
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By Order of the Board of Directors, Gregory J. Henchel Executive Vice President, General Counsel and Corporate Secretary Abercrombie & Fitch Co. 6301 Fitch Path, New Albany, Ohio 43054
April 25, 2022 | | | | |
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| | YOUR VOTE IS IMPORTANT | |
| | Please carefully review the proxy materials for the Fiscal 2016 – Fiscal 2018 cycle were forfeited, as our Compensation2022 Annual Meeting and Organization Committee determined that threshold performance for this tranche of the awards was not achieved. A payout of 20.0% of target was achieved on the Relative TSR tranche of the PSA awards for the Fiscal 2016 – Fiscal 2018 cycle, as our Compensation and Organization Committee determined that the Company’s performance was at the 36th percentile of the S&P Retail Select Industry Index.cast your vote. | |
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In addition, our outstanding PSA cycles are trending at levels ranging from target to maximum, which reflects the sensitivity of our pay programs and goal-setting to our ongoing business transformation.
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| IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING | |
| We have elected to furnish our Proxy Statement and our 2021 Annual Report (the “Annual Report”) which includes our Annual Report on Form 10-K for Fiscal 2018 2021 (our “Fiscal 2021 Form 10-K”) to certain of our stockholders over the Internet pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules, which allows us to reduce costs associated with the Annual Meeting.
Beginning on April 25, 2022, we will first release to certain stockholders a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”), containing instructions on how to access the Proxy Statement and Annual Report online. The Notice of Internet Availability contains instructions as to how you may elect to receive printed copies of the Proxy Statement and the Annual Report. All other stockholders will receive printed copies of the Proxy Statement and Annual Report, which will first be mailed to such stockholders on or about April 25, 2022.
The Notice of Internet Availability, Proxy Statement, and Annual Report are available online, free of charge, at www.proxyvote.com, a site that does not have “cookies” that identify visitors to the site. Our proxy materials also are available on our corporate website at corporate.abercrombie.com/investors.
Only stockholders who held our Class A Common Stock, par value $0.01 per share (the “Common Stock”), as of the close of business on April 11, 2022 (the “Record Date”), are entitled to receive notice of, and vote at, the Annual Meeting.
Please vote as soon as possible. Submitting your proxy now will not prevent you from voting your shares at the Annual Meeting, as your proxy is revocable at your option. If you do not plan on voting at the Annual Meeting, please submit your proxy prior to 11:59 p.m., Eastern Daylight Time, on June 7, 2022. | |
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Forward-Looking Statements
The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Proxy Statement involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the Company’s control. Words such as “approximate,” “outlook,” “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “goal,” “should,” and similar expressions may identify forward-looking statements. The following factors, in addition to those disclosed in “ITEM 1A. RISK FACTORS” of our Fiscal 2021 Form 10-K and in our other filings made with the SEC could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements included in this Proxy Statement: the ongoing impact of COVID-19 to our business; changes in global economic and financial conditions and the resulting impact on consumer confidence and consumer spending; failure to anticipate customer demand and changing fashion trends and manage our inventory commensurately; failure to operate effectively in a highly competitive industry; the impact of government sanctions, conflict, war, social unrest, civil disturbance, or disobedience; the impact of extreme weather; failure to successfully develop and/or successfully invest in customer, digital, and omnichannel initiatives; failure to appropriately address emerging environmental, social, and governance matters, including new and emerging government regulations designed to address climate change; failure to protect our reputation; cyber- and data privacy-related risks; adverse conditions affecting our supply chain; or ability to attract or retain talent. There can be no assurance that the forward-looking statements included in this Proxy Statement will prove to be accurate. Except as may be required by applicable law, the Company assumes no obligation to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
Incorporation by Reference
Neither the Report of the Compensation and Human Capital Committee on Executive Compensation nor the Report of the Audit and Finance Committee included herein shall be deemed soliciting material or filed with the SEC and neither of them shall be deemed incorporated by reference into any prior or future filings made by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that we specifically incorporate such information by reference.
In addition, this document includes several website addresses. These website addresses are intended to provide inactive, textual references only. The information on these websites is not part of this Proxy Statement.
Other Information
References in this Proxy Statement to “Abercrombie,” “the Company,” “we,” “our,” and “us” refer to Abercrombie & Fitch Co., a Delaware corporation. References to “Fiscal 2021” refer to our fiscal year ended January 29, 2022, and references to “Fiscal 2022” refer to our fiscal year ending January 28, 2023. Further, references to “Fiscal 2019” refer to our fiscal year ended February 1, 2020, and references to “Fiscal 2020” refer to our fiscal year ended January 30, 2021. References to “GAAP” refer to generally accepted accounting principles in the United States.
Table of Contents
| | | Status of Outstanding PSA Cycles (as of February 2, 2019)
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Proxy Statement Summary
ABOUT ABERCROMBIE & FITCH CO.
| | | Fiscal 2016 —
Fiscal 2018
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| | • 3-yr Relative TSR (50%)
• 3-yr Average ROIC (50%)
Relative TSR tranche earned at 20.0% of target;
Average ROIC tranche forfeited
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We are a global, digitally-led omnichannel retailer offering a broad assortment of apparel, personal care products, and accessories for men, women, and kids through our five brands: Abercrombie & Fitch, abercrombie kids, Hollister, Gilly Hicks, and Social Tourist. The brands share a commitment to offering unique products of enduring quality and exceptional comfort that allow customers around the world to express their own individuality and style. We operate primarily in North America, Europe, and Asia.
OUR GLOBAL BRANDS | | | Fiscal 2017 —
Fiscal 2019
| |  | | • 3-yr Relative TSR (50%)
• 3-yr Average ROIC (50%)
Relative TSR tranche trending at maximum;
Average ROIC tranche trending at maximum
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• Company Adjusted EBIT results for Spring season (30% weighting) were between target
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Since 1892, the brand has been a specialty retailer of quality apparel, outerwear and maximum at 143.0%,fragrance - designed to inspire our global customers to feel confident, be comfortable and for Fall season (70% weighting) were between threshold and target at 91.0%• No adjustments were made for strategic, operational or individual performance
• Forface their Fierce.
BRAND PURPOSE We believe that every day should feel as exceptional as the leadership team (including our named executive officers), the annual cash incentive is paid out annually following the endstart of the fiscallong weekend. | | | abercrombie kids is a global specialty retailer of quality, comfortable, made-to-play favorites.
BRAND PURPOSE we see the world through kids’ eyes, where play is life and every day is an opportunity to be anything and better everything. |
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The quintessential apparel brand of the global Gen Z consumer. At Hollister, summer isn’t just a season, it’s a state of mind. Hollister creates carefree style designed to make everyone feel celebrated and comfortable in their own skin, so they can live in a summer mindset all year long, whatever the season.
BRAND PURPOSE We believe in liberating the spirit of an endless summer inside everyone. | | | Gilly Hicks was reintroduced in 2021. Gilly Hicks focuses on underwear, loungewear, and activewear designed to give all Gen Z customers their daily dose of happy.
BRAND PURPOSE Everyone has their own unique happy place. We exist to help you find yours. | | | We introduced our fifth brand in 2021. Social Tourist is the creative vision of Hollister and social media personalities Dixie and Charlie D’Amelio. The lifestyle brand creates trend forward apparel that allows youth to experiment with their style, while exploring the annual payout level derived basedduality of who they are both on social media and in real life.
BRAND PURPOSE when ur in that life stage where every single thing you do is social, both irl & digitally, we exist to help u feel connected to all of it – the world, ur friends & urself |
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| 2022 Proxy Statement | 1 | Abercrombie & Fitch Co. |
CORPORATE CULTURE HIGHLIGHTS
Corporate Purpose
In 2021, we introduced our corporate purpose. We arrived at our corporate purpose after conducting listening sessions with our associates and our customers, and by weaving in key themes from each of our brand purposes. Our corporate purpose informs our mission, shapes our vision, and supports our brand positioning. It’s our North Star and “why” we do what we do every day.
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| We are here for you on the weighted average of resultsjourney to being and becoming who you are. | |
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2021 Recognitions
We are proud to be recognized in 2021 for our strong corporate culture and our associates’ workplace experience:
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Designated as a best place to work for the Spring (30%)LGBTQ+ community for the 16th consecutive year by the Human Rights Campaign |
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| Named one of the Best Workplaces in Retail™ by Fortune magazine |
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| Became a Great Place to Work-Certified™ organization |
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Recognized by Forbes as a Best Employer for Diversity and Fall (70%) seasonsa Best Employer for Women |
CORPORATE GOVERNANCE HIGHLIGHTS
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Fiscal 2018 —
Fiscal 2020
| | | | • 3-yr Relative TSR (50%)
• 3-yr Average ROIC (50%)
Relative TSR tranche trending between target and maximum; Average ROIC tranche trending between target and maximum
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Our Commitment to Best Practices in Corporate Governance
PracticesIn addition to the changes in our organization and in our executive compensation programs discussed above, we have made many changes to our policies and practices related to corporate governance and executive compensation and
We consistently seek to follow best practices in corporate governance.
By way of example, we have:Embraced diversity at all levelsSome of our Company, including at the leadership level, where women hold four seats oncorporate governance practices are highlighted:
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| Board and Committee Independence |
| a | All director nominees are independent, except our CEO | a | All committee members are independent (except the Executive Committee, which only meets on an as-needed basis) |
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| Board and Committee Diversity |
| a | 64% of directors self-identify as diverse as to gender or race/ethnicity | a | Three of five committee chairs self-identify as female |
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| a | Our Corporate Governance Guidelines require that any director search include women and minorities among the pool of potential new director candidates | a | We publicly disclose diversity information on an individual director basis |
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| Other Board and Committee Practices |
| a | Separate Chairperson and CEO positions | a | Meaningful stock ownership guidelines |
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| a | Overboarding policy limiting other public company board and audit committee service | a | Robust annual Board, Board committee, and peer director evaluations |
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| a | Regular executive sessions of non-associate directors | a | Active succession planning by Board |
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| a | Continuing education opportunities and reimbursement for outside educational programs | a | Stringent Code of Business Conduct and Ethics that requires waivers to be approved by the independent directors and publicly disclosed |
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| Stockholder Rights |
| a | Declassified Board with annual election of directors | a | Majority voting for director elections, with resignation policy |
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| a | Proxy access for director candidates nominated by stockholders, reflecting market standards | a | No poison pill |
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| Abercrombie & Fitch Co. | 2 | 2022 Proxy Statement |
Board and serve inCommittee Refreshment
Our Nominating and Board Governance Committee (sometimes referred to herein as the three highest-paid executive positions.“Nominating Committee”) is charged with the responsibility of evaluating each incumbent director’s qualifications, performance, and ability to continue to contribute productively to help ensure the appropriate composition and tenure of the Board.
DemonstratedOver the past several years, the Nominating Committee has recommended to the Board the nomination of directors who we believe bring fresh perspectives and certain specialized skills or expertise, which we believe are well balanced by the contributions of our directors with longer tenures who have over time gained significant institutional knowledge. Our commitment to bringing fresh ideas and perspectives to the Board refreshment with three newis demonstrated by our current Board composition. Six of our ten independent directors joining ourjoined the Board since the beginning of Fiscal 2018.
Engaged, with oversight by2019. Additionally, in recognition of our Nominatingcommitment to maintaining the appropriate balance of tenure and specialized experience on our Board, Governance Committee, in an annualself-assessment processwe do not believe that establishing arbitrary term limits based on age or years of service for the Board and its committees designed to ensure that they are best equipped to create value for the Company’s stockholders.
Enhanced the disclosureour directors is in the Proxy Statement regarding the skills, knowledge, background and experience of our directors, including the addition of graphic matrix summaries.
Expanded the scope of persons considered to be “related persons” subject to the Abercrombie & Fitch Co. Related Person Transaction Policy to include, in addition to executive officers, directors and director nominees of the Company (as well as their immediate family members), other associatesbest interest of the Company or our stockholders. Such limits may force the Company to lose the contribution of onedirectors who have over time gained significant institutional knowledge and/or who provide certain specialized skills or expertise to the Board.
Our Nominating Committee is also responsible for evaluating and making recommendations to our Board regarding Board committee assignments. In June 2021, following the departure of two former directors, our Nominating Committee evaluated the Board committees’ composition. Following such evaluation, the Nominating Committee recommended, and the Board approved, the refreshment of the Company’s subsidiaries determined bymembership of our Audit and Finance Committee (sometimes referred to herein as the Company’s General Counsel, with input from the Company’s Chief Ethics“Audit Committee”) and Compliance Officer, to significantly influence the management or operating policies of the Company (as wellour Environmental, Social, and Governance Committee (formerly known as their immediate family members).
Adopted amendments to our Amended and Restated Bylaws to implement “proxy access.”
Adopted majority voting in uncontested director elections.
Established an Enterprise Risk Management Committee comprised of senior management of the Company.
Appointed a Corporate Social Responsibility Committee, comprised of independent directors.
Adopted a director resignation policy.
Adopted a director retirement policy.
Adopted a director confidentiality policy.
Implemented a stringent “clawback” policy that allows the Companyand sometimes referred to seek repayment of any incentive amounts that were erroneously paid, without any requirement of misconduct on the part of the plan participant.
Implemented a comprehensive derivatives and hedging policy as well as an anti-pledging policy that prohibits directors and officers, among others, from hedging and pledging any equity securities of the Company held by them.
Adopted stock ownership guidelines for executive officers and directors.
Enhanced the indemnification protection provided for the Company’s executive officers and directors through indemnification agreements that supplement the indemnification provisions in the Company’s organizational documents, as permitted under the Delaware General Corporation Law.
Recommended, and our stockholders adopted, an annual “Say on Pay” vote.
Implemented the “Notice & Access” framework for delivery of proxy materials to stockholders in connection with the solicitation of proxies on behalf of our Board for use at each Annual Meeting of Stockholders since 2016.
Accelerated the expiration of the Company’s preferred stock purchase rights from the close of business on July 16, 2018 to the close of business on January 28, 2014.
Abercrombie & Fitch Co.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 29, 2019
TO OUR STOCKHOLDERS:
The 2019 Annual Meeting of Stockholders (the “Annual Meeting”) of Abercrombie & Fitch Co. (the “Company,” “we” or “our”) will be held at the offices of the Company located at 6301 Fitch Path, New Albany, Ohio 43054, on Wednesday, June 12, 2019, at 10:00 a.m., Eastern Daylight Time, for the following purposes:
1. To elect ten directors, each to serve for a term of one year to expire at the 2020 Annual Meeting of Stockholders.
2. To vote on an advisory resolution to approve executive compensation.
3. To approve an amendment to the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates to authorize 2,200,000 additional shares.
4. To ratify the appointment of PricewaterhouseCoopers LLPherein as the Company’s independent registered public accounting firm for“ESG Committee”).
Board Snapshot
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| 2022 Proxy Statement | 3 | Abercrombie & Fitch Co. |
Director Nominee Overview
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| Name | Primary Occupation | Director Since | Independent | Committee Membership | Other Public Company Boards |
| AFC | CHCC | NBGC | ESGC | EC |
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| Kerrii B. Anderson | Former President and CEO Wendy’s International, Inc. | 2018 | a | © | | l | | | 3 |
| Terry L. Burman | Chairperson of the Board Abercrombie & Fitch Co. | 2014 | a | | | | | © | 0 |
| Felix J. Carbullido | EVP, Chief Marketing Officer Williams-Sonoma, Inc. | 2019 | a | | l | | l | | 0 |
| Susie Coulter | Founder and CEO
Arq Botanics LLC | 2020 | a | | | | © | | 0 |
| Sarah M. Gallagher | Former Executive Chairperson
Rebecca Taylor | 2014 | a | | | l | l | | 1 |
| James A. Goldman | Senior Advisor
Eurazeo SE | 2020 | a | | l | l | | | 1 |
| Michael E. Greenlees | Chairman
Scoota Inc. | 2011 | a | | l | | | | 0 |
| Fran Horowitz | CEO
Abercrombie & Fitch Co. | 2017 | | | | | | l | 1 |
| Helen E. McCluskey | Former President and CEO
The Warnaco Group, Inc. | 2019 | a | l | © | | | | 1 |
| Kenneth B. Robinson | Former SVP, Audit Services, Exelon Corporation; Former Senior Finance Executive, The Procter & Gamble Company | 2021 | a | l | | | l | | 1 |
| Nigel Travis | Former Chairman
Dunkin’ Brands Group, Inc. | 2019 | a | l | | © | | l | 1 |
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| AFC | Audit and Finance Committee | | | | | l | Member | |
| CHCC | Compensation and Human Capital Committee | | | | © | Committee Chair |
| NBGC | Nominating and Board Governance Committee | | | |
| ESGC | Environmental, Social, and Governance Committee | | | | | | | | |
| EC | Executive Committee | | | | | | | | |
Stockholder Engagement
In Fiscal 2021, despite the fiscal year ending February 1, 2020.5. To transact any other business which properly may be brought before the Annual Meeting.
The Proxy Statement accompanying this Notice of Annual Meeting of Stockholders describes each of these items in detail. The Company has not received notice of any other matters that properly may be presented at the Annual Meeting.
Only stockholders of record at the close of business on April 15, 2019, the date establishedongoing challenges posed by the Company’s BoardCOVID-19 pandemic, we engaged in active dialogues with sell-side analysts and buy-side investors.
These efforts included engagement with our top actively-managed stockholders and conversations with new investors. As a matter of Directors aspolicy and practice, we foster and encourage engagement with our stockholders on progress against the record date, are entitledkey transformation initiatives that will enable us to receive notice of, and vote at, the Annual Meeting. All stockholders are invited to attend the Annual Meeting, although only stockholders of record will be entitled to vote at the Annual Meeting.We began mailing a Notice of Internet Availability of Proxy Materials on or about April 29, 2019 to stockholders of record at the close of business on April 15, 2019. The Notice of Internet Availability of Proxy Materials contains information on how to access our Proxy Statement, our Annual Report on Formdrive strategic, global growth.
10-K
for the fiscal year ended February 2, 2019, and the form of proxy on the Internet, as well as instructions on how to request a paper copy of the proxy materials. | | | | | | | | |
Abercrombie & Fitch Co. |
Gregory J. Henchel
4 |
Senior Vice President, General Counsel
and Corporate Secretary
2022 Proxy Statement |
Before you vote, access the proxy materials in one of the following ways prior to the Annual Meeting:
To view Online: Have available the information that is printed in the box marked by the arrow
provided in your Notice of Internet Availability of Proxy Materials and visit:www.proxyvote.com. You may visitwww.proxyvote.com 24 hours a day, seven days a week, prior to 11:59 p.m., Eastern Daylight Time, on June 11, 2019.
To request and receive a PAPER orE-MAIL copy:
YouMUST REQUEST a paper ore-mail copy of the proxy materials. There is NO charge for requesting a copy. Please choose one of the following methods to make your request:
PROXY STATEMENT SUMMARY
ENVIRONMENTAL AND SOCIAL HIGHLIGHTS
Environmental and Social Practices
We operate and invest in our business with a focus on the long term, which requires taking into consideration environmental and social matters that are important to our stakeholders, including our customers, our associates, and our partners. In our efforts to create positive impacts within our organization and within communities we operate in, we have implemented practices and established targets to promote inclusion and diversity, community involvement, and environmental and social stewardship. A few environmental and social highlights from Fiscal 2021 are as follows:
| | www.proxyvote.com | | | | | | |
(2) By Telephone:
Inclusion and Diversity | | 1-800-579-1639 |
(3) ByE-Mail*:
a | Hosted our inaugural Inclusion and Diversity Month: a month-long associate enrichment, inclusive-leadership, and educational initiative reaching associates globally across our home offices, stores, and distribution centers |
| sendmaterial@proxyvote.com | |
| a | * | If you request proxy materials bye-mail, please send a blanke-mail includingHeld our first HBCU Summit, with student attendees represented from the top six Historically Black colleges and universities in the subject lineUnited States
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| a | Continued investments in, and expansion of, our associate resource groups (“ARGs”), including: •Ongoing programming for our BIPOC and LGBTQIA+ communities and allies through our BIPOC ARG and Pride ARG •Establishing a new associate resource group for families, parents, and caregivers (Families ARG) |
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| a | Deployed brand inclusion and diversity training for our brands’ global merchandising, marketing, and design teams |
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| a | Launched our third installment of the information that is printedAbercrombie & Fitch brand’s “For Justice” collection: a gender-inclusive, purpose-led product capsule designed by members of our BIPOC ARG |
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| a | Launched capsule collections celebrating Pride: •Hollister launched a gender-inclusive product collection co-created with GLSEN’s National Student Council Members •Abercrombie & Fitch and abercrombie kids each launched gender-inclusive collections co-created with The Trevor Project |
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| Environmental and Sustainability | |
| a | Participant in the box marked byUnited Nations Global Compact (“UNGC”) and reaffirmed our commitment to the arrow providedUNGC’s Ten Principles |
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| a | Trained third-party factory workers on anti-human trafficking, gender equality, and health and safety |
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| a | Made progress against our previously published sustainability goals and established additional goals |
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| Global Giving and Community Involvement | |
| a | Donated over $5.8 million to charitable causes and $3.0 million through in-kind giving in your NoticeFiscal 2021, with the help of Internet Availability of Proxy Materials. Requests, instructionsour partners, our customers, and other inquiries sentour associates |
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| a | Our global associates remained committed to thise-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before May 29, 2019 to facilitate timely delivery of the proxy materials.our communities, volunteering approximately 14,000 hours |
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Abercrombie & Fitch Co.
6301 Fitch Path
New Albany, Ohio 43054
(614)283-6500
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| 2022 Proxy Statement | 5 | Abercrombie & Fitch Co. |
PROXY STATEMENT
Dated April 29, 2019
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 12, 2019
This Proxy Statement is furnished in connection with SUMMARY
EXECUTIVE COMPENSATION HIGHLIGHTS
For a detailed discussion of our executive compensation program, please see the solicitation“Compensation Discussion and Analysis”section of proxies on behalf of the Board of Directors (the “Board”) of Abercrombie & Fitch Co. (the “Company,” “we” or “our”) for use at the 2019 Annual Meeting of Stockholders to be held at the offices of the Company located at 6301 Fitch Path, New Albany, Ohio 43054, on Wednesday, June 12, 2019, at 10:00 a.m., Eastern Daylight Time (the “Annual Meeting” or the “2019 Annual Meeting”). On or about April 29, 2019, we began mailing to holders of record of shares of Class A Common Stock, par value $0.01 per share (the “Common Stock”), of the Company at the close of business on April 15, 2019, a Notice of Internet Availability of Proxy Materials containing instructions on how to access the Notice of Annual Meeting of Stockholders, this Proxy Statement the form of proxy and our Annual Report 2018 (which covers the fiscal year ended February 2, 2019 (“Fiscal 2018”)) over the Internet.If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor using the contact information listed below:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders May Call Toll-Free:(888) 750-5834 (from the United States and Canada)
Stockholders May Call:(412) 232-3651 (from other locations)
Banks and Brokers May Call Collect:(212) 750-5833
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
When and where will the Annual Meeting be held?
The Annual Meeting will be heldbeginning on Wednesday, June 12, 2019, at 10:00 a.m., Eastern Daylight Time, at our offices located at 6301 Fitch Path, New Albany, Ohio 43054. Thepage 41. For purposes of the Annual Meeting are set forthProxy Statement (other than in the Notice of Annual Meeting of Stockholders accompanying this Proxy Statement. All references“Compensation Discussion and Analysis”section), our Compensation and Human Capital Committee is sometimes referred to as the “Compensation Committee.”
Compensation Practices
The following compensation practices demonstrate how we believe our executive compensation program reflects best practices and reinforces our culture and values:
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| a | Practices We Employ | | | X | Practices We Avoid |
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| a | Emphasis on at-risk pay | | | X | Excise tax gross-up payments |
| a | Rigorous performance metrics | | | X | Derivatives or hedging of equity securities |
| a | Robust stock ownership guidelines | | | X | Pledging of equity securities |
| a | Incentive compensation clawback policy | | | X | Liberal share recycling provisions |
| a | Benchmark NEO pay against a compensation peer group | | | X | Multi-year employment agreements with NEOs |
| a | Compensation Committee retains an independent compensation consultant | | | X | Modification of out-of-the money stock options or stock appreciation rights |
| a | Annual “say on pay” vote | | | X | Dividend equivalents on certain equity awards |
| a | Conservative compensation risk profile | | | | |
| a | Double-trigger equity vesting in the event of a change of control | | | | |
Fiscal 2021 Compensation Program Elements
The following table summarizes the compensation elements provided for our named executive officers (sometimes referred to herein as our “NEOs”) in this Proxy Statement to the “Company,” “we,” “us,” “our” or “Abercrombie & Fitch”Fiscal 2021:
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| Element | | Purpose | Metric |
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| Base Salary | | Fixed annual cash compensation to attract and retain executive officers | Established after review of base salaries for executive officers at companies in our compensation peer group and the performance of each of our NEOs |
| Annual Cash Incentive Program | | Performance-based variable pay that delivers cash incentives when the Company meets or exceeds key financial results | Based on an assessment of Adjusted EBIT(1) performance against pre-established goals (seasonal based measurement means that goals are weighted 30% for Spring and 70% for Fall) |
| Long-Term Equity Incentive Awards | | Performance-based and service-based equity compensation to reward our executive officers for a balanced combination of the Company meeting or exceeding key financial results and creating long-term stockholder value | 50% Performance-based Performance Share Awards (“PSAs”) measure a three-year period spanning Fiscal 2021 to Fiscal 2023 and are based on the following measures: •33.33% on Net Sales Compound Annual Growth Rate (“CAGR”) •33.33% on Average EBIT Margin %(1) •33.34% on Relative Total Shareholder Return (“TSR”)
50% Service-based Restricted Stock Units (“RSUs”) that vest in equal installments over three years from the grant date |
(1)These are non-GAAP measures. Please refer to Abercrombie & Fitch Co.Why am I being provided with access to this Proxy Statement?
We are required by the Securities and Exchange Commission (the “SEC”) to give you, or provide you accessAppendix A to this Proxy Statement because our Board is soliciting your proxy to vote your sharesfor additional detail on these performance metrics.
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| Abercrombie & Fitch Co. | 6 | 2022 Proxy Statement |
Recent Evolution of Common StockOur Compensation Program and Changes in Fiscal 2021
As a result of the ongoing pandemic, the future state of the economy remained highly uncertain at the
Annual Meeting. The Proxy Statement summarizesstart of Fiscal 2021. However, after having focused on actions to generate cash flow and preserve liquidity through the
information you need in order to vote at the Annual Meeting.What is a proxy?
A proxy is your designation of another person to vote shares of Common Stock you own. If you designate someone as your proxy in a written document, that document is also called a proxy, a form of proxy or a proxy card. When you designate a proxy, you also may direct the proxy how to vote your shares. Scott Lipesky and Gregory J. Henchel have been designated on behalfearly days of the Board asCOVID-19 pandemic in Fiscal 2020, the proxies to cast the vote of the Company’s stockholders at the Annual Meeting.
What are the voting requirements for the proposals to be acted upon at the Annual Meeting and discussed in this Proxy Statement?
At the Annual Meeting, stockholders will act upon the matters outlinedCompensation Committee decided that it was in the Noticebest interests of Annual Meeting of Stockholders accompanying this Proxy Statement. Specifically, stockholders will be asked to: (1) elect ten directors to the Board; (2) approve the advisory resolution to approve executive compensation; (3) approve an amendment to the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates to authorize 2,200,000 additional shares; and (4) ratify the appointment of PricewaterhouseCoopers LLP as the independent registered accounting firm of the Company for the fiscal year ending February 1, 2020 (“Fiscal 2019”).
Proposal 1 — Election of Directors
The Company and our stockholders have implemented majority votingto return to a more steady-state, pre-pandemic incentive program design for uncontested director elections,Fiscal 2021 that:
•was similar to the design used in Fiscal 2019;
•measured profitability in the annual cash incentive program; and
•based achievement of the long-term incentive awards on a mix of sales growth, profitability, and stock price performance over a three-year period. We elected to measure profitability margin instead of returning to average return on invested capital (“Average ROIC”) in support of our focus on long-term profitable growth.
| | | | | | | | | | | | | | | | | |
| Program | | Feature | FY19 Design | FY20 Design | FY21 Design |
| | | | | |
| Annual Cash Incentive Program | | Metric | Adjusted EBIT | Operating Cash Flow | Adjusted EBIT(1) |
| Cadence | 30% Spring
70% Fall | 100% Annual | 30% Spring
70% Fall |
| Long-Term Equity Incentive Awards | | Vehicle Mix | PSAs (60%)
RSUs (40%) | PSAs (50%)
RSUs (50%) | PSAs (50%)
RSUs (50%) |
| PSA Metrics | Net Sales CAGR (33.33%) Average ROIC (33.33%)(1) Relative TSR (33.34%) | Relative TSR (100%) | Net Sales CAGR (33.33%) Average EBIT Margin % (33.33%)(1) Relative TSR (33.34%) |
| TSR Comparators | S&P Select Retail Industry Index | Primary peer group | Primary peer group |
Compensation Program Changes for Fiscal 2022
The actions taken by management in recent years to transform our business, along with decisions made in Fiscal 2020 and Fiscal 2021 to respond to the COVID-19 pandemic, resulted in Fiscal 2021 net sales that exceeded Fiscal 2019 levels and delivered our best reported and adjusted operating margin(2) in over a decade, establishing a strong foundation for further growth and value creation. With this in mind, our Compensation Committee approved the addition of a Net Sales metric to the Fiscal 2022 annual cash incentive program with a 20% weighting (the Adjusted EBIT metric will be reduced to 80%). With the addition of the Net Sales metric, a sales-related performance metric will be included in both the short-term and long-term incentive plans, which reinforces management’s commitment to growing our business in the Board expectsnear-term, while simultaneously positioning the Company for successful long-term growth. No changes were made to be the case atlong-term equity incentive programs for Fiscal 2022.
Ongoing Commitment to Pay-for-Performance
We are committed to aligning the Annual Meeting. In an uncontested electionoutcomes of directors, each nominee must be elected by aour executives’ compensation programs with the Company’s financial performance. For our NEOs, the majority of their total compensation opportunity is at-risk, or contingent upon our financial performance and appreciation in the votes cast (i.e.,market price of our Common Stock.
| | | | | |
| Percentage of Chief Executive Officer’s compensation that was at-risk in Fiscal 2021 | 88 | % |
| Percentage of other NEOs’ compensation (on average) that was at-risk in Fiscal 2021 | 74 | % |
Say on Pay Results
Our approach to executive compensation has driven high levels of support for our “Say on Pay” proposal over the votes castpast several years.
| | | | | |
| Percentage of stockholder votes in favor of our executive compensation program at our 2021 Annual Meeting of Stockholders | 98 | % |
(1)These are non-GAAP measures. Please refer to Appendix A to this Proxy Statement for such nominee’s election must exceedadditional detail on these performance metrics.
(2)Adjusted operating margin is a non-GAAP measure. Please refer to Appendix A to this Proxy Statement for additional detail on adjusted results and other important information regarding the votes cast against such nominee’s election). Brokeruse of non-GAAP or adjusted measures.
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| 2022 Proxy Statement | 7 | Abercrombie & Fitch Co. |
non-votesVOTING MATTERS AND RECOMMENDATIONS and abstentions will not be treated as votes cast.Proposal 2 — Vote on Advisory Resolution to Approve Executive Compensation
This advisory vote is
| | | | | | | | | | | | | | |
| Proposal | Our Board’s Voting Recommendation | Page |
| | | | |
| 1 | | Elect the eleven director nominees named in this Proxy Statement to serve until the 2023 Annual Meeting of Stockholders | FOR
each director nominee | |
| 2 | | Approve, on a non-binding, advisory basis, the compensation of our named executive officers for Fiscal 2021 (“Say on Pay”) | FOR | |
| 3 | | Approve an amendment to our 2016 Long-Term Incentive Plan for Associates to increase the number of authorized shares | FOR | |
| 4 | | Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for Fiscal 2022 | FOR | |
ADDITIONAL INFORMATION
non-binding but the Board and our Compensation and Organization Committee will give careful considerationRefer to the
results of voting on this proposal. The approval of the advisory resolution to approve executive compensation requires the affirmative vote of a majority in voting interest of the stockholders present in person or by proxy and voting thereon. Brokernon-votes will not be treated as votes cast. Abstentions will not be counted as votes“FOR”or “AGAINST”the proposal.Proposal 3 — Approval of an Amendment to the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates to Authorize 2,200,000 Additional Shares
The approval of the proposed amendment to the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates (also referred to as the “2016 Associates LTIP”) to authorize 2,200,000 additional shares of Common Stock requires the affirmative vote of a majority in voting interest of the stockholders present in person or by proxy and voting thereon. Brokernon-votes will not be treated as votes cast. Abstentions will treated as votes cast and will have the effect of a vote“AGAINST” the proposal.
Proposal 4 — Ratification of Appointment of Independent Registered Public Accounting Firm
The ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for Fiscal 2019 requires the affirmative vote of a majority in voting interest of the stockholders present in person or by proxy and voting thereon. Abstentions will not be counted as votes“FOR”or “AGAINST”the proposal.
What are the Board’s recommendations for the proposals to be acted upon at the“Additional Information About Our Annual Meeting and how will my shares be voted?
Subject to revocation, all forms of proxy that are properly completed and timely received will be voted in accordance with the instructions you give. If no instructions are given (except in the case of brokernon-votes), the persons named as proxies will vote the shares of Common Stock in accordance with the recommendations of the Board. The Board’s recommendations are set forth together with the description of each proposal in this Proxy Statement. In summary, the Board recommends a vote:
| • | | “FOR” the election of each of the ten director nominees listed under the caption“PROPOSAL 1 — ELECTION OF DIRECTORS,”beginning on page 21 of this Proxy Statement;
|
| • | | “FOR” the approval of the advisory resolution to approve executive compensation, as described under the caption“PROPOSAL 2 — ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION,” beginning on page 56 of this Proxy Statement;
|
| • | | “FOR” the approval of the proposed amendment of the 2016 Associates LTIP, as described under the caption“PROPOSAL 3 — APPROVAL OF AMENDMENT TO THE ABERCROMBIE & FITCH CO. 2016 LONG-TERM INCENTIVE PLAN FOR ASSOCIATES TO AUTHORIZE 2,200,000 ADDITIONAL SHARES,” beginning on page 96 of this Proxy Statement; and
|
| • | | “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for Fiscal 2019, as described under the caption“PROPOSAL 4 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM,”beginning on page 114 of this Proxy Statement.
|
Who can vote at the Annual Meeting?
Only holders of shares of the Company’s Common Stock of record at the close of business on April 15, 2019 (the “Record Date”) or such stockholders’ proxies are entitled to receive notice of, and vote at, the Annual Meeting. At the close of business on the Record Date, there were 66,617,373 shares of Common Stock outstanding and entitled to vote. There are no other voting securities of the Company outstanding. Each stockholder is entitled to one vote on each matter voted upon at the Annual Meeting for each share of Common Stock held. To be able to vote your shares at the Annual Meeting, the records of the Company must show that you held your shares at the close of business on the Record Date.
How do I attend the Annual Meeting?
The Annual Meeting will be held on Wednesday, June 12, 2019 at 10:00 a.m., Eastern Daylight Time, at our offices located at 6301 Fitch Path, New Albany, Ohio 43054. When you arrive, signs will direct you to the appropriate room. Please note that the doors to the meeting room will not be open until 9:00 a.m., Eastern Daylight Time. You should be prepared to present valid government-issued photo identification, such as a driver’s license or passport, for admittance. In addition, if you are a stockholder of record, your name will be verified against the list of stockholders of record prior to admittance to the Annual Meeting. If you are a beneficial owner, you must provide proof of beneficial ownership on the record date, such as your account statement showing that you owned our Common Stock as of April 15, 2019, a copy of the voting instruction form provided by your brokerage firm, bank or other nominee, or other similar evidence of ownership. If you do not provide valid government-issued photo identification and comply with the other procedures outlined above, you will not be admitted to the Annual Meeting. You do not need to attend the Annual Meeting to vote. Even if you plan to attend the Annual Meeting, please submit your vote in advance as instructed in this Proxy Statement.
What is a Notice of Internet Availability of Proxy Materials?
In accordance with rules adopted by the SEC, instead of mailing a printed copy of our proxy materials to each stockholder of record, we are permitted to furnish our proxy materials, including the Notice of Annual Meeting of Stockholders, this Proxy Statement and our Annual Report 2018, which includes our Annual Report on Form10-K for Fiscal 2018 (our “Fiscal 2018 Form10-K”), by providing access to such documents on the Internet. Generally, stockholderswillnot receive printed copies of the proxy materialsunless they request them.
A Notice of Internet Availability of Proxy Materials that provides instructions for accessing our proxy materials on the Internet was mailed directly to registered stockholders. The Notice of Internet Availability of Proxy Materials also provides instructions regarding how registered stockholders may vote their shares on the Internet. Registered stockholders who prefer to receive a paper ore-mail copy of our proxy materials must follow the instructions provided in the Notice of Internet Availability of Proxy Materials for requesting such materials.
The Notice of Internet Availability of Proxy Materials only identifies the items to be voted on at the Annual Meeting. You cannot vote by marking the Notice of Internet Availability of Proxy Materials and returning it. The Notice of Internet Availability of Proxy Materials provides instructions on how to cast your vote.
A notice that directs beneficial owners of our shares to the website where they can access our proxy materials is to be forwarded to each beneficial stockholder by the brokerage firm, bank or other holder of record who is considered the registered owner with respect to the shares of the beneficial stockholder. Such brokerage firm, bank or other holder of record should also provide each beneficial owner of our shares with instructions on how the beneficial stockholder may request a paper ore-mail copy of our proxy materials.
To enroll in the electronic delivery service for future stockholder meetings, use your Notice of Internet Availability of Proxy Materials (or proxy card, if you received printed copies of the proxy materials) to register online atwww.proxyvote.com and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
What is the difference between holding shares as a holder of record and as a beneficial owner?
If, at the close of business on April 15, 2019, your shares were held in an account at a brokerage firm, bank or other similar organization, then you are the beneficial owner of shares held in “street name” and a notice directing you to the website where you can access our proxy materials is being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct that organization how to vote the shares in your account. If that organization is not given specific direction, shares held in the name of that organization may not be voted and will not be considered as present and entitled to vote on any matter to be considered at the Annual Meeting other than the ratification of the appointment of the Company’s independent registered public accounting firm.Please direct your broker how to vote your shares following the instructions provided by your broker.
How do I vote my shares?
If you are a registered stockholder (i.e., you hold your shares of record), you may vote your shares using one of the following methods (please also see the information provided above and below concerning the difference in how to vote if you hold shares beneficially through a brokerage firm, bank or other nominee instead of as the registered holder — beneficial holders should follow the voting instructions provided by their respective nominees):
| • | | Over the Internet. Go to www.proxyvote.com.
|
You can use the Internet 24 hours a day, seven days a week, to submit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Daylight Time, on June 11, 2019. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you access the web site and follow the instructions to obtain your records and create an electronic voting instruction form.
| • | | By telephone. Call1-800-690-6903.
|
You can use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Daylight Time, on June 11, 2019. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you call and follow the instructions.
| • | | By mail. If you received a printed copy of the proxy materials, you may submit your vote by completing, signing and mailing your proxy card and returning it in thepostage-paid envelope to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. Sign your name exactly as it appears on the proxy card. Proxy cards submitted by mail must be received no later than June 11, 2019 to be voted at the Annual Meeting.
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| • | | In person at the Annual Meeting. Registered stockholders are invited to attend the Annual Meeting and vote in person at the Annual Meeting. If you are a beneficial owner of shares, you must obtain a legal proxy from the brokerage firm, bank or other holder of record of your shares to be entitled to vote those shares in person at the meeting.
|
If you vote via the Internet or by telephone, your electronic vote authorizes the named proxies in the same manner as if you signed, dated and returned a proxy card.If you vote via the Internet or by telephone, do not return a proxy card.
If I am a stockholder holding shares in “street name,” how do I vote?
If you hold your shares in “street name” with a brokerage firm, bank or other nominee, the holder of record will send you instructions as to how to instruct the holder of record to vote your shares.Your broker is permitted to vote your shares with respect the “routine” proposal to ratify the appointment of the Company’s independent registered public accounting firm without your instruction as to how to vote but will not be permitted to vote your shares with respect to any of the other proposals at the Annual Meeting without your instructions as to how to vote.
If you hold your shares in “street name,” you should have received a Notice of Internet Availability of Proxy Materials or voting instructions from the brokerage firm, bank or other nominee holding your shares. You should follow the instructions in the Notice of Internet Availability of Proxy Materials or voting instructions provided by your broker or other nominee in order to instruct your broker or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the broker or other nominee.
What is a “brokernon-vote”?
A “brokernon-vote” occurs when a stockholder holds our shares of Common Stock in “street name” through a broker or similar organization, and the stockholder does not provide the broker or other organization with instructions within the required timeframe before the Annual Meeting as to how to vote the shares on“non-routine” matters. The only proposal this year which is considered “routine” is the ratification of the appointment of the Company’s independent registered public accounting firm. Under the rules of the New York Stock Exchange (“NYSE”) set forth in the NYSE Listed Company Manual (the “NYSE Rules”), your broker cannot vote your shares onnon-routine matters unless your broker receives instructions from you as to how to vote.
How can I revoke my proxy or change my vote?
If you are a registered stockholder, you may revoke your proxy at any time before it is actually voted at the Annual Meeting by:
signing and returning a new proxy card with a later date — only your latest proxy card received by June 11, 2019, will be counted;
submitting a late-dated vote by telephone or via the Internet — only your latest telephone or Internet proxy received by 11:59 p.m., Eastern Daylight Time, on June 11, 2019, will be counted;
attending the Annual Meeting and voting by ballot in person; or
delivering a written revocation to our Corporate Secretary at 6301 Fitch Path, New Albany, Ohio 43054, to be received no later than June 11, 2019.
If you hold your shares in “street name,” you must contact the broker or other nominee holding your shares and follow the instructions of the broker or other nominee for revoking or changing your vote.
Who is paying for the cost of this proxy solicitation?
This solicitation of proxies is made by and on behalf of our Board. In addition to mailing the Notice of Internet Availability of Proxy Materials (or, if applicable, paper copiesVoting” section of this Proxy Statement beginning on page 91 for important information about the Notice ofproxy materials, voting, the Annual Meeting, of Stockholders,Company documents, communications and the proxy card and our Annual Report 2018)deadlines to registered stockholders as of the close of business on the Record Date, the brokers, bankssubmit stockholder proposals, and other nominees holding our shares for beneficial owners must provide a notice as to where the beneficial owners can access our proxy materials to the beneficial owners for whom they hold our shares in order that such sharespertinent information.
Additional questions about voting may be
voted. Solicitation may also be made by our directors, officers and select other Company employees or, as referreddirected to
by the Company, “associates” of the Company telephonically, electronically or by other means of communications. Directors, officers and associates who help us in the solicitation will not be specially compensated for those services, but they may be reimbursed for theirout-of-pocket expenses incurred in connection with the solicitation. In addition, the Company has retained Innisfree M&A Incorporated (“Innisfree”)
to aid in the solicitation of proxies for a fee of $15,000, plusout-of-pocket expenses.The Company will reimburse Innisfree, as well as brokerage firms, banks and other custodians, fiduciaries and nominees, who are record holders of shares of our Common Stock not beneficially owned by them for their reasonable costs in sending proxy materials to stockholders who beneficially own our shares. The Company will bear the costs incurred in connection with the solicitation of proxies on behalf of the Board, other than the Internet access or telephone usage fees which may be charged to stockholders.
Are there any cumulative voting rights in the election of directors?
No.
What constitutes a quorum to hold and transact business at the Annual Meeting?
A quorum for the Annual Meeting isone-third of the outstanding shares of Common Stock. If you are a registered stockholder and submit a proxy, your shares of Common Stock will be counted to determine whether we have a quorum even if you abstain or fail to provide voting instructions on any of the proposals described in this Proxy Statement and listed on the form of proxy. If your shares of Common Stock are held in the name of your broker or other nominee, and you do not instruct your broker or other nominee how to vote your shares of Common Stock, these shares will still be counted for purposes of determining the presence or absence of a quorum for the transaction of business if your broker or other nominee submits a proxy.
How are votes tabulated?
The results of stockholder voting will be tabulated by the inspectors of election appointed for the Annual Meeting.
What should I do if I have other questions?
If you have any questions or require any assistance with voting your shares, please contact, our proxy solicitor, Innisfree M&A Incorporated, toll-free at(888) 750-5834 or directly at(412) 232-3651. Banks and brokers may call collect at(212) 750-5833.
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| Abercrombie & Fitch Co. | 8 | 2022 Proxy Statement |
PROPOSAL 1 — ELECTION OF DIRECTORS
Election of Directors
Our directors are elected annually for one-year terms. Notwithstanding the expiration date of his or her term, each director holds office until his or her successor is elected and qualified.
There are currently ten11 directors serving on the Board, all of whose terms expire at the Annual Meeting. On January 17, 2019,The Board is pleased to nominate all 11 current directors to stand for re-election at the Annual Meeting.
The persons named as proxies will vote for each of the nominees named, unless you vote against or abstain from voting for or against one or more of them. The 11 director nominees have agreed to serve if elected, and the Board
uponhas no reason to believe that any director nominee will be unavailable to serve. In the
unanimous recommendation of our Nominating and Board Governance Committee, unanimously approved the increase in the size of the Board from eight to ten directors and unanimously elected Helen E. McCluskey and Nigel Travis to fill the vacancies created by the increase, each of which actions was effective February 3, 2019. Ms. McCluskey and Mr. Travis had been recommended to our Nominating and Board Governance Committee as a result ofevent that a director
search conducted by the third-party global executive search firm retained by our Nominating and Board Governance Committee.On July 3, 2018, Bonnie R. Brooks informed the Company that she had decidednominee is unable or declines to resign from the Board for personal reasons. On July 6, 2018, by unanimous written consent, the Board took action to reduce the number of directors from nine to eight, in order to reflect the number of directors servingserve on the Board following the July 3, 2018 effective date of Ms. Brooks’ resignation.
On January 19, 2018, Arthur C. Martinez informed the Company that he had decided not to stand forre-election to the Board at the 2018 Annual Meetingtime of Stockholders (the “2018 Annual Meeting”) but would serve out his remaining term. At its meeting on April 9, 2018, the Board took action to reduce the number of directors from ten to nine, effective upon the expiration of the terms of the directors of the Company immediately prior to the 2018 Annual Meeting.As a result, nine directors were elected at the 2018 Annual Meeting.
Upon the unanimous recommendation of our Nominating and Board Governance Committee, the Board has unanimously nominated Kerrii B. Anderson, James B. Bachmann, Terry L. Burman, Sarah M. Gallagher, Michael E. Greenlees, Archie M. Griffin, Fran Horowitz, Helen E. McCluskey, Charles R. Perrin and Nigel Travis (altogether, the “Nominees”) for election as directors at the Annual Meeting. Directors elected at the Annual Meeting, will hold office for anone-year term expiring atthen the 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”) or until their respective successors are elected and qualified, subject to prior death, resignation or removal. The individualspersons named as proxies in the form of proxy solicited by the Board intend to vote the shares of Common Stock represented by the proxies received under this solicitation for the Nominees, unless otherwise instructed on the form of proxy. It is expected that all of the Nominees will be able to serve. However, if before the election, one or more of the Nominees are unable to serve or for good cause will not serve, the proxy holders will vote the proxies for the remaining Nominees and for anya substitute nominees chosendirector nominee proposed by the Board, unless the Board reducesdecides to reduce the number of directors todirectors. Each director nominee must be elected. If any substitute nominees are designated, we will file an amended proxy statement that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in the revised proxy statement and to serve if elected and includes certain biographical and other information about such nominees required by the rulesa majority of the SEC. The individuals named as proxies cannot vote for more than ten nominees for election as directors at the Annual Meeting.
The Board recommends that you vote “FOR” each of the Nominees tovotes cast “for”, and votes may not be elected for anone-year term expiring at the 2020 Annual Meeting or until his or her successor is electedcumulated.
Under our Amended and
qualified.Majority Vote StandardRestated Bylaws (“Bylaws”), in Uncontested Director Election
In an uncontested election of directors, which we expect to be the case at the Annual Meeting, each director nominee must be elected by a majority of the votes cast (i.e., the votes cast for such nominee’s election must exceed the votes cast against such nominee’s election).cast. Brokernon-votes and abstentions will not be treated as votes cast. Proxies may not cast votes for more than ten nominees.
The Board has adopted a resignation policy, included in the Company’sUnder our Corporate Governance Guidelines, which requires thatif an incumbent director who receives less thandoes not receive a majority of the votes cast in an uncontested election, he or she must tender his or her resignation and outlinesto the procedures by which the Board will considerBoard. In determining whether to accept reject such resignation. The resignation, policy provides:
an incumbent director who fails to receive the required number of votes forre-election must offer to resign;
our Nominating and Board Governance Committee and the Board (without participation by the impacted director) will evaluate any suchthe resignation in light of the best interests of the Company and our stockholders in determining whether to accept or reject the resignation, or whether other action should be taken, and may consider any factors they deem relevant in making such determination;
ifstockholders. If the Board does not accept the resignation, the director who offered to resign will continue to serve on the Board until the next annual meeting of stockholders andor until the director’s successor is elected and qualified, subject to the director’s prior death, resignation, or removal;
ifremoval. If the Board accepts the resignation, our Nominating and Board Governance Committee will recommend to the Board whether to fill the resulting vacancy or to reduce the size of the Board; and
theBoard. The Board will publicly disclose its decision regarding the resignation within 90 days after the results of the election are certified.
Nominees
The information set forth in the table below concerning the principal occupation, other affiliations and business experience of each Nominee, during at least the past five fiscal years of the Company, has been furnished to the Company by such Nominee. The information has been furnished as of April 15, 2019, except as otherwise noted.
| | | | | | | | | | | |
Name (Age)
| | Business Experience and
Other Information
| | Director
Since |
| YOUR VOTE IS IMPORTANT | The Board unanimously recommends that you vote FOR each of the nominees identified below. | |
| | | |
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| 2022 Proxy Statement | 9 | Abercrombie & Fitch Co. |
PROPOSAL 1 - ELECTION OF DIRECTORS
We believe that our directors should satisfy a number of qualifications, including demonstrated integrity, a record of personal accomplishments, a commitment to participation in Board activities, and other attributes discussed below in “Nominees for Our Board of Directors.” We also endeavor to have a Board that represents a range of qualifications, skills, and depth of experience in areas that are relevant to and contribute to the Board’s oversight of the Company’s business, enterprise risks, and strategic priorities.
We describe below the key experiences, qualifications, skills, and attributes that each director nominee brings to the Board that, for reasons discussed below, are important to our businesses and structure. The Nominating Committee and the Board considered these key experiences, qualifications, skills, attributes, and the nominees’ other attributes, including diversity, in determining that they be nominated.
KEY EXPERIENCE, QUALIFICATIONS, AND ATTRIBUTES OF OUR NOMINEES
Director Skills Matrix
The Company has identified the following key experience, qualifications, and skills from questionnaires completed by each director nominee. We believe that this reflects the balanced mix of experience, qualifications, and attributes of the Board as a whole. This high-level summary is not intended to be an exhaustive list of each director nominee’s skills or contributions to the Board. No individual experience, qualification, or attribute is solely dispositive of becoming a member of our Board, and we believe that each nominee has a broad array of knowledge, experience, and skills.
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| Abercrombie & Fitch Co. | 10 | 2022 Proxy Statement |
PROPOSAL 1 - ELECTION OF DIRECTORS
Director Diversity and Tenure Matrix
As described in our Corporate Governance Guidelines, the Board and the Nominating Committee consider, among other important factors, diversity with respect to race, ethnicity, gender, age, and experience when identifying and selecting nominees for our Board. Our directors’ tenure, age, and self-identified diversity traits (disclosed as of February 16, 2022) are shown in the matrix below.
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| | | | | | | | | | | | | | |
| | | Kerrii
Anderson | Terry
Burman | Felix
Carbullido | Susie
Coulter | Sarah
Gallagher | James
Goldman | Michael
Greenlees | Fran
Horowitz | Helen
McCluskey | Kenneth
Robinson | Nigel
Travis | |
| | | | | | | | | | | | | | |
| TENURE | |
| Years on Board | | 4 | 8 | 3 | 2 | 8 | 2 | 11 | 5 | 3 | 1 | 3 | |
| | | | | | | | | | | | | | |
| AGE | |
| Age of Director | | 64 | 76 | 55 | 56 | 70 | 63 | 75 | 58 | 67 | 67 | 72 | |
| | | | | | | | | | | | | | |
| RACE/ ETHNICITY | |
| Black or African American | | | | | | | | | | | a | | |
| Native Hawaiian or Pacific Islander | | | | a | | | | | | | | | |
| White | | a | a | | a | a | a | a | a | a | | a | |
| | | | | | | | | | | | | | |
| GENDER | |
| Female | | a | | | a | a | | | a | a | | | |
| Male | | | a | a | | | a | a | | | a | a | |
| | | | | | | | | | | | | | |
| NATIONALITY | |
| Born Outside of the United States | | | | | a | | | a | | | | a | |
| | |
| | | | | | | | |
| 2022 Proxy Statement | 11 | Abercrombie & Fitch Co. |
PROPOSAL 1 - ELECTION OF DIRECTORS
| | |
| Nominees for Our Board of Directors |
|
|
| Information regarding each director nominee is set forth below. We believe that each of the director nominees has a reputation for the highest character and integrity; works cohesively and constructively with the other members of our Board and with management of the Company; and demonstrates business acumen and an ability to exercise sound judgment. |
| | | | | | | | | | | | | | |
Kerrii B. Anderson (61)
AGE | 64 INDEPENDENT DIRECTOR SINCE | 2018 COMMITTEES | AFC (Chair); NBGC | | Ms. Anderson has been a private investor and board advisor since 2008. Prior to that time, she served as | Executive Roles |
| | •Former President and Chief Executive Officer of Wendy’s International, Inc. (now(n/k/a The Wendy’s Company), a restaurant operating and franchising company, from November 2006 until September 2008 when that companyWendy’s merged with a subsidiary of Triarc Companies, Inc. to form Wendy’s/Arby’s Group, Inc. She served as a director of Wendy’s International, Inc. from 2001 until(November 2006 to September 2008, and as Wendy’s Interim Chief Executive Officer and President from April to November 2006 and as its Executive Vice President and Chief Financial Officer from 2000 to April 2006. Previously, Ms. Anderson served as Senior Vice President and Chief Financial Officer of M/I Schottenstein Homes, Inc. (now known as M/I Homes, Inc.), a builder of single-family homes, from 1987 to 2000. Ms. Anderson has served as a member of the Board of Directors of 2008) |
| | Other Public Company Boards |
| | •Laboratory Corporation of America®America Holdings (NYSE: LH), a global life sciences company since May(May 2006 where she is Chair of itsto present), Audit Committee and a member of its(Chair); Nominating and Governance Committee; and as a member of the Board of Directors of Committee •Worthington Industries, Inc. (NYSE: WOR), a diversified metalsan industrial manufacturing company since September(September 2010 where she is a member of itsto present), Audit Committee and of itsCommittee; Compensation Committee. On April 17, 2019, Ms. Anderson was elected as a director of Committee •The Sherwin-Williams Company (NYSE: SHW), a company engaged in the development, manufacture, distribution and sale of paint, coatings and related products at that company’s Annual Meeting of Shareholders. Previously, she served as a member of the Board of Directors of Chiquita Brands International, Inc. from 2009(April 2019 to January 2015, including service as Chairwoman of the Board from October 2012 to January 2015, as Chair of itspresent), Compensation and Management Development Committee (Chair); Nominating and Corporate Governance Committee |
| | Previous Public Company Boards (Past Five Years): None |
| | | |
| | Key Qualifications |
| | •Technology and as a member of itsInformation Security •Environmental and Social •Finance, Audit, Committee until January 2015 when Chiquita was acquired by Cavendish and Accounting •Global LimitedBusiness Experience •Marketing •Risk Management and became a private company.Compliance | •Supply Chain and Logistics •Public Company Board Experience •Corporate Governance •Executive Leadership Experience •Consumer Facing Business
|
| February
2018
| | |
| | | | | | | | |
Name (Age)
Abercrombie & Fitch Co. | 12 | Business Experience2022 Proxy Statement
|
PROPOSAL 1 - ELECTION OF DIRECTORS
| | | | | | | | | | | | | | |
Terry L. Burman Chairperson of the Board
AGE | 76 INDEPENDENT DIRECTOR SINCE | 2014 COMMITTEE | EC (Chair) | | | Company Roles |
| | •Chairperson of the Board of the Company (since February 2018) and Chair of the Company’s Executive Committee (since February 2018), former Lead Independent Director of the Company (March 2017 to February 2018), former Chair of the Company’s Nominating and Board Governance Committee (June 2015 to February 2018), and former member of the Company’s Compensation Committee (February 2014 to February 2018) |
| | Executive Roles |
| | •Former Chief Executive Officer of Signet Jewelers Limited, a specialty jewelry retailer (March 2000 to January 2011) and former Chief Executive Officer and Chairman of Sterling Jewelers, Inc., the U.S. division of Signet Jewelers Limited (1995 to January 2006) |
| | Other Information | | Director
SincePublic Company Boards: None |
| | |
| | Ms. Anderson currently serves as the Chair of our Audit and Finance Committee. She is a practiced board director and audit committee chair with chief executive officer, chief financial officer and consumer products experience, most recently at Wendy’s International, Inc. (now The Wendy’s Company) during a transformative time at that company. She has a strong record of leadership in operations and strategy as well as extensive corporate governance experience through her service on other public company boards. Her extensive experience in accounting and financial reporting and analysis and prior experience as a chief executive officer of a public company and chief financial officer of several public companies, in addition to other public company board service, make Ms. Anderson a valuable asset to the Board and our Audit and Finance Committee. | | Previous Public Company Boards (Past Five Years) |
| | |
James B. Bachmann (76)
| | Mr. Bachmann is a retired Managing Partner of the Columbus, Ohio office of Ernst & Young LLP (“EY”), having served in various management and audit engagement partner roles with the firm. Mr. Bachmann served on the Board of Directors of Lancaster Colony Corporation, a company which manufactures and markets food products, from 2003 to November 2018, including service as Lead Independent Director from 2007 to 2008 and as a member of its Audit Committee from 2003 to 2017 (serving as Chair from 2004 to 2017). He has also served as a director of Nationwide Insurance, a mutual insurance company.
Mr. Bachmann currently serves as a member of our Audit and Finance Committee and our Corporate Social Responsibility Committee. He previously served as the Chair of our Audit and Finance Committee from August 2005 to June 2017 and from August 2017 to March 2019, as a member of our Compensation and Organization Committee from July 2018 to February 2019 and as a member of our Executive Committee from June 2016 to June 2017. His significant public company accounting and financial expertise, thorough review of the financial and risk management issues applicable to the Company and diligent engagement with management have helped the Company navigate the increasingly complex financial and risk management issues we face. In addition, his operational experience as the Managing Partner of EY’s Columbus, Ohio office provides us with valuable operational insights.
| | July
2003
|
| | |
Terry L. Burman (73)
| | Mr. Burman is the
Non-Executive• Chairman of the Board of the Company.Mr. Burman has served as a director of Tuesday Morning Corporation (Nasdaq: TUEM), a closeout retailer of upscale decorative home accessories, housewares, seasonal goods, and famous-maker gifts in the United States since(February 2013 and as itsto December 2020), Chairman of the Board since(December 2015 to December 2015. He has been a director2020); Nominating and Governance Committee (Chair) (September 2015 to December 2020)
|
| | Other Leadership Roles |
| | •Director of Learning Care Group, a privately-held company operating over 900 learning and daycare centers in the United States since July 2014. He has been a board member(July 2014 to present) •Member of the St. Jude Children’s Research Hospital Board of Governors since July(July 2004 and served asto present), Chairman of the Board | | January
2014
|
| | | | |
Name (Age)
| | Business Experience and
Other Information
| | Director
Since |
| | from July (July 2013 to June 2015. Mr. Burman has served as a board2015; July 2020 to June 2021)
•Board member of ALSAC, the fundraising organization of St. Jude since July 2004. He has served on(July 2004 to present) •Member of the Board of Trustees of the Norman Rockwell Museum since September 2016.Mr. Burman served as a director and Chairman of the Board of Zale Corporation, a specialty retailer of fine jewelry in North America, from May 2013(September 2016 to May 2014. He served on the Board of Directors of YCC Holdings LLC, a retailer of candles, fragrances and other products, from October 2007 to October 2013, and on the Board of Directors of ACCESS, an organization providing housing, food and counseling to homeless women and their children in Akron, Ohio, from 1996 to 2012.
present) |
| | | |
| | Key Qualifications |
| | Mr. Burman was the Chief •Risk Management and Compliance •Public Company Board Experience •Retail Business Experience •Corporate Governance
| •Finance, Audit, and Accounting •Merchandising •Global Business Experience •Executive Officer of Signet Jewelers
Limited, a specialty jewelry retailer, from 2000 to 2011. Mr. Burman
joined Signet Jewelers Limited in 1995 as Chairman and Chief
Executive Officer of Sterling Jewelers, Inc., a U.S. division of
Signet Jewelers Limited. He served as a director of Signet Jewelers
Limited from 1996 to 2011. Prior to joining Signet Jewelers Limited,
Mr. Burman held various senior executive positions of increasing
responsibility with Barry’s Jewelers, Inc., which now does business
as Samuels Jewelers, from 1980 to 1995, including President and
Chief Executive Officer from 1993 to 1995. Prior to that,
Mr. Burman was a partner with Roberts Department Stores, a
regional department store chain specializing in apparel. | | Leadership Experience |
| | |
| | Mr. Burman has served as theNon-Executive Chairman of the
Board of the Company since February 3, 2018. Prior thereto, he
served as the Lead Independent Director of the Company from
March 2017 to February 2018. In addition to serving as the
Non-Executive Chairman of the Board of the Company, Mr. Burman
currently serves as the Chair of our Executive Committee. In
addition to his prior service as the Lead Independent Director of the
Company, he previously served as the Chair of our Nominating and
Board Governance Committee from June 2015 to February 2018 and
as a member of our Compensation and Organization Committee
from February 2014 to February 2018. Mr. Burman’s experience as
a chief executive officer in the retail industry, his significant
international management experience, and his general business and
financial acumen are very valuable to the Company and provide the
Board with important insight into specialty retail industries as well
as strategy and business development. | | |
| | | | | | | | | | | | | | |
Name (Age)
Felix J. Carbullido
AGE | 55 INDEPENDENT DIRECTOR SINCE | 2019 COMMITTEES | CHCC; ESGC | | Business Experience
| Executive Roles |
| | •Executive Vice President and Chief Marketing Officer for Williams-Sonoma, Inc. (“WSM”), a specialty retailer of home products (August 2014 to present), where he oversees marketing strategy and operations across all seven WSI Brands – Pottery Barn, PB Kids, Pottery Barn Teen, Williams-Sonoma, West Elm, Rejuvenation, and Mark and Graham •Former Senior Vice President of Pottery Barn Direct, overseeing all aspects of the online and catalog business and former Vice President, Pottery Barn E-Commerce (April 2009 to August 2014) •Former Senior Vice President of Smith & Hawken, responsible for Retail and Direct-to-Consumer channels and overseeing all aspects of merchandising, marketing and creative (February 2006 to November 2008) |
| | Other Information | | Director
Since | Public Company Boards/Previous Public Company Boards (Past Five Years): None |
| | |
| | Other Leadership Roles |
| | •Executive sponsor of WSI’s Inclusion and Diversity programs (February 2015 to December 2019) •Member of Gap Inc.’s Diversity Council (January 2004 to December 2005) |
| | | |
| | Key Qualifications |
| | •Environmental and Social •Retail Business Experience •Executive Leadership Experience
| •Merchandising •Marketing •Consumer Facing Business
|
| | | |
| | | | | | | | |
| 2022 Proxy Statement | 13 | Abercrombie & Fitch Co. |
PROPOSAL 1 - ELECTION OF DIRECTORS
| | | | | | | | | | | | | | |
Susie Coulter
AGE | 56 INDEPENDENT DIRECTOR SINCE | 2020 COMMITTEE | ESGC (Chair) | | | Executive Roles |
| | •Founder of Arq Botanics LLC, a personal care company specializing in all-natural skin care products (January 2021 to present) •Co-Founder and Chief Executive Officer of Bronty Beauty LLC, a beauty company specializing in all-natural skin care products (January 2017 to December 2020) •Former President, Beauty – Victoria’s Secret Beauty, L Brands, Inc. (n/k/a Victoria’s Secret & Co., which was separated from L Brands, Inc. in 2021), the beauty division of a specialty retailer of women’s intimate and other apparel (November 2012 to March 2016) •Former President, Polo Ralph Lauren Retail Stores, a subsidiary of an apparel retailer (November 2007 to October 2012) |
| | Other Public Company Boards/Previous Public Company Boards (Past Five Years): None |
| | | |
| | | |
| | Key Qualifications |
| | •Supply Chain and Logistics •Retail Business Experience •Marketing •Global Business Experience | •Merchandising •Executive Leadership Experience •Consumer Facing Business
|
| | | |
| | | | | | | | | | | | | | |
Sarah M. Gallagher (67)
AGE | 70 INDEPENDENT DIRECTOR SINCE | 2014 COMMITTEES | NBGC; ESGC | | From August | Executive Roles |
| | •Former Executive Chairperson of Rebecca Taylor, a women’s apparel division of Kellwood Company (August 2014 to August 2015, Ms. Gallagher served as Executive Chairperson of the Rebecca Taylor woman’s fashion brand. In this role, she was acting as interim chief executive officer with responsibility for the wholesale, stores and2015) e-commerce• businesses. Ms. Gallagher served asFormer President of Ralph Lauren North Americae-Commerce, from April a subsidiary of a lifestyle brand (April 2007 to April 2013 and as2013)
•Former President of Ralph Lauren Media LLC, Polo.com from Novembera subsidiary of a lifestyle brand (November 2001 to March 2007, where she led the strategic vision of Polo.com. Ms. Gallagher joined Ralph Lauren Media in 2001, when Ralph Lauren2007) |
| | Other Public Company Boards |
| | e-Commerce• was a joint venture with NBC and Ralph Lauren Corporation, a global designer, manufacturer, distributor and retailer of lifestyle products. Under Ms. Gallagher’s leadership, the Ralph Laurene-Commerce business became an industry leader and consistently outpaced the industry growth rate. After establishing Ralph Lauren’s web presence, including RalphLauren.com and Rugby.com in the United States, Ms. Gallagher and the U.S. digital team collaborated with the European digital team to oversee Ralph Lauren’s expansion into the European markets, including successful launches ofe-commerce sites in the United Kingdom, Germany and France. Prior to her tenure with the Ralph Lauren organization, Ms. Gallagher served from 1997 to 2001, as Senior Vice President, Banana Republic Direct and Senior Vice President, Gap Direct, divisions of Gap, Inc., an international retailer offering clothing, accessories and personal care products under the Gap, Banana Republic and Old Navy brand names, where she was directly responsible for the launch of the Banana Republic catalog, website and all aspects of itse-commerce business. Prior to joining Gap, Inc., Ms. Gallagher served as Vice President, Apparel, Jewelry and Accessories, from 1996 to 1997 for Avon Products, Inc., a direct seller of beauty and related products; Vice President and General Merchandise Manager, Intimate Apparel from 1985 to 1995 and then Executive Vice President, Merchandising from 1995 to 1996, of Victoria’s Secret Catalogue, a direct sales channel for Victoria’s Secret Stores; and in various roles from 1971 to 1985 with Lord & Taylor, an upscale, specialty retail department store chain in the United States, including serving as Divisional Merchandise Manager, Intimate Apparel, from 1983 to 1985. Since August 2016, Ms. Gallagher has served as a director and a member of the Compensation Committee and the Nominating and Governance Committee of La-Z-Boy Incorporated (NYSE: LZB), a leading residential furniture manufacturer with wholesale and retail distribution. In addition, since Augustdistribution (August 2016 she has served as an Executive Advisor at FitForCommerce, a boutique consultancy focused on helping retailersto present), Compensation and brands navigate the provider landscape. Since September 2018, she has served as a member of the Board of Advisors for Action IQ, a company providing scalable enterprise customer data platforms.Talent Management Committee; Nominating and Governance Committee
|
| |
| June
2014
|
Previous Public Company Boards (Past Five Years): None |
| | |
| | Ms. Gallagher currently serves as a member of our Corporate Social Responsibility Committee and our Nominating and Board Governance Committee. Ms. Gallagher’s over 40 years of retail experience, including more than 30 years with Fortune 500 brands, and status as oneOther Leadership Roles |
| | •Member of the early movers in theAdvisory Board of ActionIQ, Inc., a customer data platform service provider (September 2018 to present) e-commerce• spaceExecutive Advisor of FitforCommerce, retail consultants (August 2016 to present)
|
| | | |
| | Key Qualifications |
| | •Public Company Board Experience •Retail Business Experience •Marketing •Executive Leadership Experience | •Merchandising •Corporate Governance •Consumer Facing Business
|
| | | | |
| | | | | | | | |
Name (Age)
Abercrombie & Fitch Co. | 14 | Business Experience and
Other Information
2022 Proxy Statement |
PROPOSAL 1 - ELECTION OF DIRECTORS
| | Director
Since | | | | | | | | | | | | |
James A. Goldman
AGE | 63 INDEPENDENT DIRECTOR SINCE | 2020 COMMITTEES | CHCC; NBGC | | | Executive Roles |
| | with more than 15 years•Senior Advisor at Eurazeo SE, a global investment firm listed on the Paris Stock Exchange (December 2016 to present), and serves on the Boards of serviceDirectors of several of its privately-held portfolio companies: Q Mixers, a beverage company specializing in that aspectpremium branded mixers (April 2019 to present), Waterloo Sparkling Water Corp., a company specializing in carbonated sparkling water products (September 2020 to present), and Dewey’s Bakery, a company specializing in premium cookie and cracker products (October 2020 to present) •Former Chief Executive Officer and member of the retail business, bring valuable expertiseBoard of Directors of Godiva Chocolatier, Inc., an international premium chocolate company and insightretailer (February 2004 to the Board as theMay 2014) •Former President of Food & Beverage Division at Campbell Soup Company, continuesa manufacturer and marketer of soup, sauces, beverages, biscuits, confectionary and prepared branded consumer food products (September 2001 to expand our focus onFebruary 2004) |
| | Other Public Company Boards |
| | direct-to-customer• business opportunities, both within the United StatesDomino’s Pizza, Inc. (NYSE: DPZ), a global restaurant and internationally.pizza corporation (March 2010 to present), Nominating and Corporate Governance Committee (Chair); Audit Committee
|
| | Previous Public Company Boards (Past Five Years): None |
| | | |
| | Key Qualifications |
| | •Public Company Board Experience •Corporate Governance •Executive Leadership Experience •Consumer Facing Business •Merchandising | •Global Business Experience •Marketing •Finance, Audit, and Accounting •Supply Chain and Logistics
|
| | | | |
| | | | | | | | | | | | | | |
Michael E. Greenlees (72)
AGE | 75 INDEPENDENT DIRECTOR SINCE | 2011 COMMITTEE | CHCC | | Mr. Greenlees is currently the | Executive Roles |
| | •Chairman of Scoota Inc, a privately-held programmatic advertising business based in the United Kingdom. Until April 30, 2016, Mr. Greenlees served as aKingdom (August 2013 to present) •Former member of the Board of Directors and as an Executive Director of Ebiquity plc, a U.K.-based company that providesproviding data-driven insights to the global media and marketing community and is listed on the London Stock Exchange’s AIM market. He previously served asmarket (December 2015 to April 2016) •Former Chief Executive Officer of Ebiquity plc from(October 2007 to December 2015. Mr. Greenlees was one2015) •Former Executive Vice President of the original founding partners of Gold Greenlees Trott plc., or The GGT Group plc, an international advertising and marketing group. The GGT Group plc was listed on the London Stock Exchange in 1986 at which time Mr. Greenlees became Chairman and Chief Executive Officer, a role he occupied for over 10 years until the company’s sale to Omnicom Group Inc., a holding company for a number of advertising and marketing services businesses in 1998. At that time, Mr. Greenlees joined the Board of Directors of Omnicom Group Inc. and served as President and Chief Executive Officer of TBWA Worldwide Inc., a subsidiary with offices in nearly 70 countries. In(March 2001 Mr. Greenlees became Executive Vice President of Omnicom Group Inc. and served in that role until 2003. From 2004 to 2006, he served as Chief Executive Officer of FastChannel Network, Inc., a software solutions business targeting the advertising and media community. Mr. Greenlees has served on the boards of several public companies, including Gold Greenlees Trott plc., Omnicom Group Inc., Hewitt Associates Inc. and Ebiquity plc.March 2003) |
| |
| February
2011
|
Other Public Company Boards/Previous Public Company Boards (Past Five Years): None |
| | |
| | Mr. Greenlees currently serves as the Chair of our Compensation
and Organization Committee and as a member of our Audit and
Finance Committee. Mr. Greenlees’ experience within the global
media and marketing community, and his service with several
public companies, are very valuable to the Company. In addition,
as a U.K. native and current resident, Mr. Greenlees adds to the
Company’s international experience and profile. | | | |
| | | |
Archie M. Griffin (64)
| | Mr. Griffin retired from The Ohio State University on June 30, 2017. Prior to his retirement, Mr. Griffin had served as Senior Advisor within the Office of Advancement at The Ohio State University since July 2015. From July 2010 until June 2015, Mr. Griffin served as the Senior Vice President of Alumni Relations at The Ohio State University. Mr. Griffin also served as PresidentKey Qualifications |
| | •Technology and Chief Information Security •Retail Business Experience •Corporate Governance •Executive Officer of The Ohio State University Alumni Association, Inc. from January 2004 until June 2015 and as anLeadership Experience ex-officio
member of the
| •Consumer Facing Business •Public Company Board of Directors of The Ohio State University Foundation from January 2004 until June 2015. Mr. Griffin served as the Associate Director of Athletics at The Ohio State University from 1994 to 2003, after serving moreExperience •Global Business Experience •Marketing
|
| |
| August
2000
|
|
| | | | | | |
Name (Age)
| | Business Experience and
Other Information
| | Director
Since | |
| 2022 Proxy Statement | 15 | than nine years in various positions within the Athletic and Employment Services Departments at The Ohio State University. Mr. Griffin has served as a director of Motorists Mutual Insurance Company since 1991 and the Ohio Auto Club since 1992. Mr. Griffin has also served as a member of the Board of the Columbus Youth Foundation (Vice Chair) since 1991, as a member of the Board of the National Football Foundation since 2006 and as a member of the Board of the College Football Hall of Fame since 2006.Abercrombie & Fitch Co. |
PROPOSAL 1 - ELECTION OF DIRECTORS
| | | | | | | | | | | | | | |
| | |
| | Mr. Griffin currently serves as the Chair of our Corporate Social Responsibility Committee and as a member of our Nominating and Board Governance Committee. Mr. Griffin is one of the most well-respected and well-recognized individuals in the State of Ohio. Mr. Griffin’s experience on the Board and institutional knowledge of the Company are also valuable. | Fran Horowitz Chief Executive Officer
AGE | 58 NOT INDEPENDENT DIRECTOR SINCE | 2017 COMMITTEE | EC | | | Executive Roles |
| | |
Fran Horowitz (55)
| | Ms. Horowitz has served as the •Chief Executive Officer of the Company since February 2017. In addition, Ms. Horowitz has beenand Principal Executive Officer of the Company since February 2017. Prior thereto, she had served as(February 2017 to present) •Former President &and Chief Merchandising Officer for all brands of the Company since December(December 2015 and was ato February 2017), former member of the Office of the Chairman of the Company from December(December 2014 to February 2017. Ms. Horowitz held the position of2017) and former Brand President of Hollister from October(October 2014 to December 2015. Before joining Hollister, from October 20132015) |
| | Other Public Company Boards |
| | •Conagra Brands, Inc. (NYSE: CAG), one of North America’s leading branded food companies (July 2021 to October 2014, Ms. Horowitz served as the Presidentpresent), Audit/Finance Committee |
| | Previous Public Company Boards (Past Five Years): None |
| | | |
| | Other Leadership Roles |
| | •Member of Ann Taylor Loft, a division of Ascena Retail Group, the parent company of specialty retail fashion brands in North America. Prior to her time with Ann Taylor Loft, from February 2005 to October 2012, Ms. Horowitz held various roles at Express, Inc., a specialty apparel and accessories retailer of women’s and men’s merchandise, rising to the position of Executive Vice President of Women’s Merchandising and Design from May 2010 to November 2012. Before her time with Express, Inc., Ms. Horowitz spent 13 years at Bloomingdale’s in various merchandising roles, prior to which she served in various positions at Bergdorf Goodman, Bonwit Teller and Saks Fifth Avenue. Since March 2017, Ms. Horowitz has served on the Board of Directors of SeriousFun Children’s Network, Inc., a Connecticutnon-profit corporation that provides specially-adapted camp experiences for children with serious illnesses and their families, free of charge. Ms. Horowitz is also a membercharge (March 2017 to present) •Member of the Columbus Partnership,Board of Directors of Chief Executives for Corporate Purpose (CECP), anon-profit organization of chief executive officers from leading businesses and institutions in Columbus, Ohio, with the goal of improving economic development in the city CEO-led coalition that is homehelps companies transform their social strategy by providing customized resources (October 2019 to the Company. | |
| February
2017
|
present) |
| | | |
| | Ms. Horowitz currently serves as a member of our Key Qualifications |
| | •Public Company Board Experience •Global Business Experience •Executive Committee. As the Principal Executive Officer of the Company, Ms. Horowitz brings to the Board not only more than 30 years of retail experience but also critical knowledge of the Company’s operations. In electing Ms. Horowitz as Chief Executive Officer and a director of the Company, the Board recognized theLeadership Experience
| •Retail Business Experience •Marketing •Merchandising
|
| | | |
| | | | | | |
Name (Age)
| | Business Experience and
Other Information
| | Director
Since | |
| | leadership she had shown in the turnaround of the Company’s Hollister brand and in energizing the Company’s associates around important cultural values, a customer-centric mindset and a commitment to ensuring the Company’s success. Her efforts have earned her the respect of both the Board and associates throughout the Company’s global operations which has served the Company and the Board well as she leads the Company forward. | | | | | |
Helen E. McCluskey
AGE | 67 INDEPENDENT DIRECTOR SINCE | 2019 COMMITTEES | CHCC (Chair); AFC | | | Executive Roles |
Helen E. McCluskey (64)
| | Ms. McCluskey was
•Former independent director of PVH Corporation, which position she assumed following the acquisition of The Warnaco Group, Inc. (February 2013 to June 2014) •Former President, Chief Executive Officer and a member of the Board of Directors of The Warnaco Group, Inc., a company which designed, sourced, marketed, licensed, and distributed a broad line of intimate apparel, sportswear, and swimwear products worldwide from(February 2012 to February 2012 until the acquisition2013) •Former Chief Operating Officer of The Warnaco Group, Inc. in February 2013 by PVH Corporation. She served as an independent director of PVH Corporation from February 2013 until June 2014, which position she assumed following the acquisition of The Warnaco Group, Inc. Ms. McCluskey joined The Warnaco Group, Inc. in July 2004, serving in leadership roles as its Chief Operating Officer from September(September 2010 to February 20122012) |
| | Other Public Company Boards |
| | •Signet Jewelers Limited (NYSE: SIG), a retailer of diamond jewelry (August 2013 to present), Governance and as Group President from July 2004 to September 2010. Prior to joining The Warnaco Group, Inc., Ms. McCluskey held various positions of increasing responsibility with Firestone Tire & RubberTechnology Committee (Chair); Audit Committee; Finance Committee |
| | Previous Public Company (1977 to 1983), Playtex Apparel, Inc. (1983 to 2001) (which was acquired by Sara Lee Corporation in 1991) and Liz Claiborne Inc. (now Fifth & Pacific Companies Inc.) (2001 to 2004). During herBoards (Past Five Years) |
| | 18-year• tenure with Sara Lee Corporation’s intimate apparel units, she held executive positions in marketing, operations and general management, including President of Playtex Apparel from 1999 to 2001. Ms. McCluskey has served as a member of the Board of Directors of Dean Foods Company, since Novemberfood and beverage company (November 2015 and is a member of itsto May 2020), Audit Committee and its Compensation Committee; has served as a member of the Board of Directors of
•Avon Products, Inc. since July(NYSE: AVP), beauty products company (July 2014 and is chair of itsto January 2020), Compensation and Management Development Committee;Committee (Chair) |
| | | |
| | Key Qualifications |
| | •Risk Management and has served as a director of Signet Jewelers Limited since August 2013Compliance •Supply Chain and is chair of its NominationLogistics •Public Company Board Experience •Retail Business Experience •Marketing
| •Environmental and Corporate Governance CommitteeSocial •Finance, Audit, and a member of its Audit Committee.Ms. McCluskey currently serves as a member of our Compensation and Organization Committee. With her broad background in strategy, business planning and operations derived from a career spanning over 30 years with leading consumer goods companies, Ms. McCluskey brings valuable skills and insight to the Company. Her experience as a chief executive officer of a global public company provides her with significant expertise in global business matters, corporate leadership and management, allowing her to bring valuable insight to the management of the Company’s strategic direction and growth, and management development. Additionally, having built women’s brands globally for sale through all channels of distribution worldwide, she brings a valuable blend of branding, merchandising, marketing and international expertise to the Company.
Accounting •Merchandising •Global Business Experience •Executive Leadership Experience
|
| |
| February
2019
|
|
| | | | |
Name (Age)
| | Business Experience and
Other Information
| | Director
Since |
Charles R. Perrin (73)
Abercrombie & Fitch Co. | 16 | Mr. Perrin served as2022 Proxy Statement
|
PROPOSAL 1 - ELECTION OF DIRECTORS
| | | | | | | | | | | | | | |
Kenneth B. Robinson
AGE | 67 INDEPENDENT DIRECTOR SINCE | 2021 COMMITTEES | AFC; ESGC | | | Executive Roles |
| | •Former Senior Vice President, Audit and Controls for Exelon Corporation, a Fortune 100 energy company with thenon-executive Chairman largest number of electricity and natural gas customers in the United States (August 2016 to March 2020) •Former Vice President, Global Diversity & Inclusion (July 2015 to June 2016); Former Vice President, Finance; Global Internal Audit & Governance, Risk & Compliance Leader (July 2006 to June 2015); and Former Chief Audit Executive (July 2002 to June 2006) with The Warnaco Group, Inc.Procter & Gamble Company, a leading consumer goods company |
| | Other Public Company Boards |
| | •Paylocity Holding Corporation (Nasdaq: PCTY), a company which designed, sourced, marketed, licensedleading provider of payroll and distributed a broad line of intimate apparel, sportswear and swimwear products worldwide, from March 2004human capital management software solutions (March 2020 to February 2013. He served as a director of Campbell Souppresent), Audit Committee |
| | Previous Public Company which manufactures and markets soup, sauces, beverages, biscuits, confectionary and prepared branded consumer food products, from 1999 until 2017. He previously served as a Trustee of Save the Children U.S. and is currently serving as a Trustee of The New School and The Perrin Family Foundation.Mr. Perrin currently serves as the Chair of our Nominating and Board Governance Committee and as a member of our Compensation and Organization Committee and our Executive Committee. Mr. Perrin previously served as a member of our Audit and Finance Committee from February 2014 to June 2018. Mr. Perrin brings to the Board substantial experience in and perspective on consumer marketing, business operations and the packaged goods industry. In January 1998, he joined Avon Products, Inc., a global manufacturer and marketer of beauty and related products, as Vice Chairman and Chief Operating Officer, and served as Chief Executive Officer of that company from June 1998 to November 1999. From 1994 to 1996, he was Chairman and Chief Executive Officer of Duracell International, Inc., a manufacturer and marketer of various battery types primarily under the DURACELL® brand. He joined Duracell as President of Duracell USA, and later held a number of other executive positions, including President and Chief Operating Officer of Duracell International, Inc. from 1992 to 1994. He previously worked at Chesebrough Pond’s, Inc., where he held a series of sales, marketing and general management positions and served as President of the Packaged Food Division. Mr. Perrin began his business career at General Foods Corporation. His extensive background in retail, sales and marketing are very valuable to the Company.
| | January
2014
Boards (Past Five Years): None |
| | |
| | Other Leadership Roles |
| | •Member of Board of Directors of Morgan Stanley US Banks, National Association, national banks (August 2015 to present), Audit Committee (Chair); Risk Committee |
| | | |
| | Key Qualifications |
| | •Technology and Information Security •Environmental and Social •Finance, Audit, and Accounting •Global Business Experience •Executive Leadership Experience
| •Risk Management and Compliance •Supply Chain and Logistics •Public Company Board Experience •Corporate Governance •Consumer Facing Business |
| | | | |
| | | | | | | | | | | | | | |
Nigel Travis (69)
AGE | 72 INDEPENDENT DIRECTOR SINCE | 2019 COMMITTEES | NBGC (Chair); AFC; EC | | Mr. Travis has served as | Executive Roles |
| | •Former Non-Executive Chairman of the Board of Dunkin’ Brands Group, Inc., a quick-service restaurant franchisor since January 2019. Previously, he served as(January 2019 to December 2020) •Former Executive Chairman of the Board of Dunkin’ Brands Group, Inc. from July 2018(May 2013 to December 20182018) and asformer Chief Executive Officer of Dunkin’ Brands Group, Inc. from January(January 2009 to July 2018) |
| | Other Public Company Boards |
| | •Advance Auto Parts, Inc. (NYSE: AAP), automotive aftermarket parts provider (August 2018 adding the responsibility as Chairman of the Board in May 2013. From 2005 through 2008, Mr. Travis served as Presidentto present), Compensation Committee, Nominating and Chief Executive Officer of Papa John’s International, Inc., an internationalCorporate Governance Committee (Chair) |
| | Previous Public Company Boards (Past Five Years) |
| | take-out• and delivery pizza restaurant chain. From 1994 to 2004, he had executive roles in Europe, International and Retail divisions of Blockbuster, Inc., culminating with the role of President and Chief Operating Officer from 2001 to 2004. Mr. Travis previously held numerous senior positions at Burger King Holdings, Inc. In addition to serving on the Board of Directors of Dunkin’ Brands Group, Inc. since 2009, Mr. Travis has served on the(Nasdaq: DNKN) (July 2011 to December 2020)
•Office Depot, Inc. (now known as The ODP Corporation) (Nasdaq: ODP), provider of business services and supplies, products and technology solutions (March 2012 to May 2020), Audit Committee; Compensation Committee |
| | | |
| | Key Qualifications |
| | •Technology and Information Security •Environmental and Social •Public Company Board ofExperience •Global Business Experience •Marketing •Consumer Facing Business | •Risk Management and Compliance •Supply Chain and Logistics •Retail Business Experience •Corporate Governance •Executive Leadership Experience |
| February
2019
| | | |
| | | | |
Name (Age)
| | Business Experience and
Other Information
| | Director
Since |
| 2022 Proxy Statement | 17 | DirectorsAbercrombie & Fitch Co.
|
Corporate Governance
The following section discusses our corporate governance, including the role of Advance Auto Parts, Inc. since August 2018 and is a member of its Audit Committee; and has served on the Board of Directors of Office Depot, Inc. since March 2012 and is a member of its Audit Committee and its Compensation Committee. Mr. Travis’ previous board service includes Lorillard, Inc. from 2008 to 2012, Papa John’s International, Inc. from 2005 to 2008, Bombay Company from 2000 to 2007, and Limelight Group from 1996 to 2000.Mr. Travis currently serves as a member of our Audit and Finance Committee. Mr. Travis brings significant international, retail, human resources and operations experience to our Board and as a former public company chief executive officer, he provides perspectives on leadership and strategy. In addition, Mr. Travis’ particular knowledge of and extensive experience in senior management of manufacturing and consumer product businesses are very valuable to the Company.
| | THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE
NOMINEES IDENTIFIED ABOVE.
Certain Relationships and Related Person Transactions
Review, Approval or Ratification of Transactions with Related Persons
The Board has adopted the Abercrombie & Fitch Co. Related Person Transaction Policy (the “Related Person Transaction Policy”), which is administered by our Nominating and Board committees. Our Corporate Governance Committee andGuidelines, which were adopted to promote the Company’s General Counsel. A copyeffective functioning of the Related Person Transaction Policy is posted on the “Corporate Governance” page within the “Our Company” sectionBoard and Board committees and to reflect our commitment to high standards of the Company’s website atcorporate.abercrombie.com. The Related Person Transaction Policy applies to any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which the Company or one of its subsidiaries participates or will participate, the amount involved exceeds or is expected to exceed $120,000, and a “related person” had, has or will have a direct or indirect interest. Pursuant to the Related Person Transaction Policy, a “related person” is any person:
who is or was an executive officer, a director or a director nominee of the Company, or another associate of the Company or one of its subsidiaries determinedcorporate governance, are periodically reviewed by the Company’s General CounselBoard to significantly influenceverify they reflect the management or operatingBoard’s evolving corporate governance practices, policies, of the Company (a “key influencer”), or an immediate family member of any of such individuals, at any time since the beginning of the Company’s last fiscal year; or
who, at the time of the occurrence or at any time during the existence of the transaction, is the beneficial owner of more than 5% of the Company’s outstanding shares of Common Stock, or an immediate family member of a beneficial owner of more than 5% of the Company’s outstanding Common Stock.
Each director, each director nominee or each executive officer of the Company as well as each key influencer is to provide the Company’s General Counsel with a written list (updated when necessary) of such individual’s immediate family members and associated entities (as defined in the Related Person Transaction Policy) and, to the extent actually known by such individual, each associated entity of any immediate family member. Each director, each director nominee or each executive officer of the Company as well as each key influencer must notify the Company’s General Counsel in writing of any interest that such individual or, to the extent actually known by such individual, an immediate family member or associated entity of such individual or of such individual’s immediate family member had, has or may have, in a related person transaction. Each director, each director nominee and each executive officer of the Company and each key influencer also completes a questionnaire on at least an annual basis designed to elicit information about potential related person transactions.procedures. In addition, any related person transaction proposed to be entered into by the Company or one of its subsidiaries must be reported by the Company’s management to the Company’s General Counsel. Any potential related person transaction that is raised will be analyzed by the Company’s General Counsel, in consultation with the Company’s management and with outside counsel, as appropriate, to determine whether the transaction, arrangement or relationship does, in fact, constitutewe have a related person transaction requiring compliance with the Related Person Transaction Policy.
Pursuant to the Related Person Transaction Policy, all related person transactions (other than those deemed to bepre-approved or ratified under the terms of the Related Person Transaction Policy) will be referred to our Nominating and Board Governance Committee for approval (or disapproval), ratification, revision or termination. Whenever practicable, a related person transaction is to be reviewed and approved or disapproved by our Nominating and Board Governance Committee prior to the effective date or consummation of the transaction. If the Company’s General Counsel determines that advance consideration of a related person transaction is not practicable under the circumstances, our Nominating and Board Governance Committee will review and, in its discretion, may ratify the transaction at that Committee’s next meeting. The Company’s General Counsel may present a related person transaction arising between meetings of our Nominating and Board Governance Committee to the Chair of that Committee, who will review and may approve or disapprove the transaction, subject to ratification by our Nominating and Board Governance Committee at its next meeting, if appropriate. If the Company becomes aware of a related person transaction not previously approved under the Related Person Transaction Policy, our Nominating and Board Governance Committee will promptly review the
transaction, including the relevant facts and circumstances, and evaluate all options available to the Company, including ratification, revision, termination or rescission of the transaction, and take the course of action that our Nominating and Board Governance Committee deems appropriate under the circumstances.
No director may participate in any approval or ratification of a related person transaction in which the director or an immediate family member of the director is involved. Our Nominating and Board Governance Committee may only approve or ratify those transactions that our Nominating and Board Governance Committee determines to be in the Company’s best interests. In making this determination, our Nominating and Board Governance Committee will review and consider all relevant information available to it, including:
the interest of the related person (or, if applicable, an associated entity of the related person) in the transaction;
the approximate dollar value of the transaction;
the approximate dollar value of the interest of the related person (or, if applicable, an associated entity of the related person) in the transaction without considering the amount of any profit or loss;
whether the transaction was undertaken in the ordinary course of the business of the Company or the applicable subsidiary of the Company;
whether the terms of the transaction are no less favorable to the Company or the applicable subsidiary of the Company than terms that could be reached with an unrelated third party;
the methodology used in the valuation of the transaction;
the purpose of the transaction and its potential benefits to the Company or the applicable subsidiary of the Company;
the impact of the transaction on the related person’s independence; and
any other information regarding the transaction or the related person (or, if applicable, an associated entity of the related person) that would be material to investors in light of the circumstances.
Any related person transaction previously approved or ratified by our Nominating and Board Governance Committee or otherwise already existing that is ongoing in nature is to be reviewed by our Nominating and Board Governance Committee annually.
Pursuant to the terms of the Related Person Transaction Policy, the following related person transactions are deemed to bepre-approved or ratified (as appropriate) by our Nominating and Board Governance Committee even if the aggregate amount involved would exceed $120,000:
interests arising solely from ownership of the Company’s Common Stock if all stockholders receive the same benefit on a pro rata basis;
compensation to an executive officer of the Company, as long as the executive officer is not an immediate family member of another executive officer or director of the Company or a key influencer and the compensation has been approved, or recommended to the Board for approval, by our Compensation and Organization Committee;
compensation to a director of the Company for services as a director if the compensation is required to be reported in the Company’s proxy statement;
interests deriving solely from a related person’s position as a director of another corporation or organization that is a party to the transaction;
interests deriving solely from the related person’s direct or indirect ownership of less than 10% of the equity interest (other than a general partnership interest) and less than 100% of the voting interest in another person that is a party to the transaction; and
transactions involving competitive bids.
The Code of Business Conduct and Ethics, adopted by the Board also addresses the potential conflicts of interest which may arise when a director, an officer or an associate has an interest in a transactionapplies to which the Company or one of its subsidiaries is a party. If a potential conflict of interest arises concerning an officer or a directorall associates and directors worldwide (including members of the Company, all information regarding the issue isBoard) and incorporates an additional Code of Ethics applicable to be reported to the Company’s Chief Ethics and Compliance Officer and the Company’s General Counsel for review and, if appropriate or required under the Company’s policies (including the Company’s Related Person Transaction Policy), submitted to our Nominating and Board Governance Committee for review and disposition.
Transactions with Related Persons in Fiscal 2018
In Schedule 13G/A filings made with the SEC, FMR LLC reported that it beneficially owned more than 5% of the Company’s outstanding Common Stock as of December 31, 2017 but ceased to do so in September of 2018. Fidelity Investments Institutional Operation, Inc., an affiliate of FMR LLC, provides record-keeping and administration services for the Abercrombie & Fitch Co. Associate Stock Purchase Plan, the Abercrombie & Fitch Co. Directors’ Deferred Compensation Plan, the Company’s long-term incentive plans, the Abercrombie & Fitch Co. Savings and Retirement Plan (the Company’s 401(k) plan) and the Abercrombie & Fitch Nonqualified Savings and Supplemental Retirement Plan. The agreements with Fidelity Investments Institutional Operation, Inc. were negotiated inarm’s-length transactions and the beneficial ownership by FMR LLC of shares of the Company’s Common Stock has played no role in the business relationship between the Company and Fidelity Investments Institutional Operation, Inc. In addition, the Company believes the respective agreements represent standard terms and conditions for record-keeping and administration services. For providing these services, Fidelity Investments Institutional Operation, Inc. received fees during the period from February 4, 2018 to September 30, 2018 totaling approximately $580,740. These services were reviewed and approved in accordance with the Related Person Transaction Policy.
Effective October 1, 2018, Gregory J. Henchel joined the Company as our Senior Vice President, General Counsel and Corporate Secretary. Mr. Henchel’s wife is a partner in the law firm of Jones Day, which provided legal services to the Company and its subsidiaries during Fiscal 2018 and continues to do so, and had periodically provided legal services to the Company and its subsidiaries for several years prior to Fiscal 2018. For providing these services, Jones Day received fees in Fiscal 2018 totaling approximately $361,000, of which fees aggregating approximately $113,400 were paid for legal services rendered to the Company and its subsidiaries after Mr. Henchel joined the Company, and fees in Fiscal 2019 through March 27, 2019 totaling approximately $18,575. Mr. Henchel’s wife does not receive any direct compensation from the fees paid to Jones Day by the Company, her ownership in Jones Day is significantly less than 1%, and the fees paid by the Company to Jones Day in Fiscal 2018 were less than 1% of Jones Day’s annual revenues. The engagement of Jones Day was reviewed and approved in accordance with the Related Person Transaction Policy.
The Company currently has a five-year arrangement with SeriousFun Children’s Network, Inc. (“SFCN”) in which the Company committed a total pledge of no less than $7,500,000 over a five-year period from January 2016 to December 2020,in-kind products donations and a donation of service hours. In Fiscal 2018, the Company donated $3,596,604 to SFCN representing proceeds from the A&F Challenge andin-store campaigns and $1,214,239 in goods and services. Of this donation to SFCN, $840,219 in cash and $80,186 ofin-kind products were distributed to Flying Horse Farms, Inc. (“FHF”), a member camp of SFCN. Ms. Horowitz joined the Board of Directors of SFCN in March 2017 and her husband joined the Board of Directors of FHF in April 2017. Under the Company’s Related Person Transaction Policy, any transaction where the related person’s interest derives solely from her or his position as a director of another corporation or organization that is a party to the transaction is consideredpre-approved. To address any potential conflict of interest concerns, Ms. Horowitz has been advised not to participate, directly or indirectly, in any future discussions, negotiations or decisions by the Company’s Board, the Philanthropy Committee or any other persons associated with the Company with respect to contributions or donations proposed to be made to SFCN or FHF by or on behalf of the Company.
Indemnification Arrangements with Directors and Executive Officers
The Company indemnifies the directors and the executive officers of the Company to the fullest extent permitted by the laws of Delaware against personal liability in connection with their service to the Company. This indemnification is required under the Company’s Amended and Restated Certificate of Incorporation and the Company’s Amended and RestatedBy-Laws, and we have entered into agreements with these individuals contractually obligating us to provide this indemnification to them.
Director Independence
The Board has reviewed, considered and discussed each current director’s relationships, both direct and indirect, with the Company in order to determine whether such director meets the independence requirements of the applicable NYSE Rules. The Board has determined that nine of the ten current directors of the Company qualify as independent under the applicable NYSE Rules. Specifically, the Board has determined that each of Kerrii B. Anderson, James B. Bachmann, Terry L. Burman, Sarah M. Gallagher, Michael E. Greenlees, Archie M. Griffin, Helen E. McCluskey, Charles R. Perrin, and Nigel Travis has no commercial, industrial, banking, consulting, legal, accounting, charitable, familial or other relationship with the Company, either directly or indirectly, that would be inconsistent with a determination of independence under the applicable NYSE Rules. In the course of reaching these determinations, the Board considered among other things:
Mr. Bachmann is a former partner with EY, having retired in 2003. The Company and its subsidiaries from time to time engage EY fornon-audit services, primarily in the nature of tax compliance services, information technology consulting, staff augmentation, and consulting in respect of discrete nominal compliance and accounting projects. In Fiscal 2018, the fiscal year ended February 3, 2018 (“Fiscal 2017”) and the fiscal year ended January 28, 2017 (“Fiscal 2016”), the Company and its subsidiaries paid EY and its affiliate Ernst & Young (China) Advisory Limited the aggregate amount of approximately $192,200, $358,600 and $580,400, respectively, in fees. As a retired partner with respect to EY, Mr. Bachmann has no direct or indirect interest in the business relationship or transactions between EY or any of EY’s affiliates and the Company and its subsidiaries.
Mr. Griffin retired as Senior Advisor within the Office of Advancement at The Ohio State University on June 30, 2017, and previously served as the Senior Vice President of Alumni Relations at The Ohio State University, President and Chief Executive Officer, our Chief Financial Officer, and other designated financial associates. Additional information regarding corporate governance (including a copy of our Corporate Governance Guidelines), a copy of the charter of each of our Board committees, and a copy of our Code of Business Conduct and Ethics, may be found on our corporate website at corporate.abercrombie.com on the “Corporate Governance” page. The Ohio State University Alumni Association, Inc.Company will provide copies of its Corporate Governance Guidelines, Code of Business Conduct and anex-officio memberEthics, and any of the Board committee charters to any stockholder, free of Directors of The Ohio State University Foundation until June 30, 2015. The Company facilitated gifts totaling $10,000,000 over aten-year period (2007charge, upon written request to 2016, with approximately $341,547 paid in Fiscal 2016 and fulfilling the $10,000,000 commitment) to The Ohio State University Foundation, which gifts were allocated to The Ohio State University Wexner Medical Center. Mr. Griffin was not involved, directly or indirectly, in the solicitation of these gifts to The Ohio State University Foundation. Since the beginning of Fiscal 2016, the Company has paid The Ohio State University fees associated with severalon-campus associate recruitment activities and consulting services, the aggregate amount of which has not exceeded $45,000 over the three-year period beginning with Fiscal 2016. Mr. Griffin was not personally involved, directly or indirectly, in the determination as to whether to participate in these activities.
Mr. Travis has served on the Board of Directors of Office Depot, Inc. since 2012. The Company and its subsidiaries have, from time to time, had ordinary course business transactions with Office Depot, Inc. and subsidiaries of Office Depot, Inc., in both the United States and the United Kingdom. In these transactions, the Company and its subsidiaries have made payments that in the aggregate have not exceeded $164,500 in any year since the beginning of Fiscal 2016. Mr. Travis’ only interest in the underlying business relationship arises from his service as a director of Office Depot, Inc. The service by Mr. Travis on the Board while also serving as a director of Office Depot, Inc., which has a business relationship with the Company, was approved by our Nominating and Board Governance Committee.
Since the beginning of Fiscal 2016, the Company has made other charitable contributions to certain charitable organizations with which one or more of the independent directors of the Company or their immediate family members are affiliated. None of these charitable contributions has exceeded $50,000 in any year within this period.
Ms. Horowitz does not qualify as independent because she is an executive officer of the Company.
There are no family relationships among any of the current directors and executive officers of the Company. Please see the text under the caption “EXECUTIVE OFFICERS OF THE REGISTRANT” at the end of “ITEM 1. BUSINESS” in Part I of the Company’s Fiscal 2018 Form10-K for information about the Company’s executive officers.
The Board previously reviewed, considered and discussed the relationships, both direct and indirect, between the Company and each of Arthur C. Martinez and Bonnie R. Brooks, who served as directors of the Company during Fiscal 2018 from February 4, 2018 to June 14, 2018 and from February 4, 2018 to July 3, 2018, respectively, in order to determine whether they met the independence requirements of the NYSE Rules during their respective periods of service as a director in Fiscal 2018. The Board determined that each of Mr. Martinez and Ms. Brooks had no commercial, industrial, banking, consulting, legal, accounting, charitable, financial or other relationship with the Company, either directly or indirectly, that would be inconsistent with a determination of independence under the applicable NYSE Rules.
Meetings of and Communications with the Board
The Board held ten regularly-scheduled meetings of the full Board and 13 meetings of thenon-management directors (in the form of executive sessions scheduled as agenda items at regularly-scheduledin-person meetings of the Board as well as separate meetings of thenon-management directors) during Fiscal 2018. In addition, the Board held two special meetings during Fiscal 2018. All of the incumbent directors attended at least 75% of the Board and Board committee meetings they were eligible to attend during Fiscal 2018.
Although the Company does not have a formal policy requiring members of the Board to attend annual meetings of the stockholders, the Company encourages all incumbent directors and director nominees to attend each annual meeting of stockholders. All of the nine then incumbent directors attended the Company’s last annual meeting of stockholders held on June 14, 2018.
In accordance with the Company’s Corporate Governance Guidelines and applicable NYSE Rules, thenon-management directors of the Company meet (without management present) at regularly-scheduled executive sessions at least twice per year and at such other times as the directors deem necessary or appropriate. Executive sessions of thenon-management directors are scheduled as an agenda item at each regularly-scheduledin-person meeting of the Board. All meetings ofnon-management or independent directors are presided over by the Company Chairman. If thenon-management directors include directors who are not independent, then at least once a year, the independent directors of the Company will meet in executive session and the Company Chairman will preside at each executive session.
The Board believes it is important for stockholders and other interested parties to have a process to send communications to the Board and its individual members. Accordingly, stockholders and other interested parties who wish to communicate with the Board, thenon-management directors as a group, the independent directors as a group, theNon-Executive Chairman of the Board or a particular director may do so by sending a letter to such individual or individuals, in care of the Company’s Corporate Secretary to the Company’s offices at 6301 Fitch Path, New Albany, Ohio 43054.
GOVERNANCE PRINCIPLES
Our Board and executive team believe that strong and effective corporate governance is essential to our overall success. Our Board reviews our major governance policies, practices, and processes regularly in the context of current corporate governance trends, investor feedback, regulatory changes, and recognized best practices. The mailing envelope must containfoundation of our corporate governance program is providing transparent disclosure to all stakeholders on an ongoing and consistent basis, with a clear notation indicatingfocus on delivering long-term stockholder value. The following chart provides an overview of our corporate governance structure and processes, including key aspects of our Board operations.
| | | | | | | | | | | |
| Governance Principles | | Our Practice |
| | | |
| 1 | Accountability to stockholders | | •All directors are elected annually •Eligible stockholders may include their director nominees in our proxy materials |
| | | |
| 2 | Appropriate stockholder voting rights | | •Proxy access for director candidates nominated by stockholders, reflecting market standards •We do not have a “poison pill” |
| | | |
| 3 | Regular and proactive stockholder engagement | | •Our investor relations team maintains an active, ongoing dialogue with investors and portfolio managers year-round on matters of business performance and results •Our directors are available to participate in stockholder engagement when it is helpful or required |
| | | |
| 4 | Independent Board leadership structure | | •We separate the roles of Chairperson of the Board and CEO and require that our Board be led by an independent director to aid in the Board’s oversight of management •All members of the Audit Committee, Compensation Committee, and Nominating Committee are independent of the Company and our management |
| | | |
| 5 | Effective Board policies and practices | | •Our Corporate Governance Guidelines require a majority of our directors to be independent; 10 of our 11 director nominees are independent of the Company and our management •Our Board is composed of accomplished professionals with deep and diverse experiences, skills, and knowledge relevant to our business, resulting in a high-functioning and engaged Board (the Director Skills Matrix is presented above under Proposal 1 – Election of Directors) •The Board seeks to achieve diversity among its members •Each standing Board committee has a charter that is publicly available on our corporate website, meets applicable legal requirements, and reflects good corporate governance •The Nominating Committee reviews the Company’s governance policies and practices annually and makes recommendations to the Board |
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| Abercrombie & Fitch Co. | 18 | 2022 Proxy Statement |
ROLE OF THE BOARD
The business and affairs of the enclosed letterCompany are managed by, and under the direction of, our Board, which serves as the ultimate decision-making body of the Company, except for those matters reserved to (or shared with) our stockholders. Our Board is a “Stockholder/Interested Party —Non-Management Director Communication,” “Stockholder/Interested Party —responsible for overseeing management, who is, in turn, responsible for the operations of the Company. Our Board’s primary areas of focus are strategy, risk management, corporate governance, and compliance, as well as evaluating management and guiding changes as circumstances warrant. In many of these areas, significant responsibilities are delegated to Board Communication,” “Stockholder/Interested Party — Independent Director Communication,” or “Stockholder/Interested Party —Non-Executive Chairmancommittees, which are responsible for reporting to the Board on their activities and actions. Refer to the “Corporate Governance – Committees of the Board Communication,” as appropriate. All such letters must identify the author as a stockholder or other interested party and clearly state whether the intended recipients are all membersMeeting Attendance” section of this Proxy Statement beginning on page 23 for additional information on the Board allnon-managementcommittees. directors, all independent directors or certain specified individual directors. Copies of all such letters will be circulated to the appropriate director or directors. Correspondence marked “personal and confidential” will be delivered to the intended recipient without opening. There is no screening process in respect of communications from stockholders or other interested parties. Board Leadership Structure
The Company’s
BOARD LEADERSHIP STRUCTURE
Our Board is currently
comprisedcomposed of
nineten non-associate directors, all of whom are independent
under applicable New York Stock Exchange (“NYSE”) listing standards, and Fran Horowitz, the Company’s Chief Executive
Officer.Officer (“CEO”). The
ChairmanChairperson of the Board
of the Company (also known as the Company Chairman) is selected from the independent members of the Board and elected annually by a majority of the independent directors of the Company.
Terry L. Burman has served as the Company’sNon-Executive ChairmanChairperson of the Board since February 3, 2018.
The Board has adopted a written description
Separation of
the duties and responsibilities of the Company Chairman which include the areas of Board leadership, management liaison and stockholder outreach. In particular, in his role as the Company Chairman, Mr. Burman has the following duties and responsibilities:calling and presiding over all meetingsChairperson of the Board having set in advanceand CEO
We separate the agenda which should take into account issues and concernsroles of all Board members;
presiding over executive sessionsChairperson of the independent directors, without management present, and facilitating productive and focused discussions;
organizing Board discussion items and workflow;
establishing procedures to govern the Board’s work, including the annual schedule of the Board;
establishing agendas for all Board meetings, in collaboration with our Chief Executive Officer;
consulting with all directors concerning Board agendas and information provided to the Board;
overseeing the distribution of information to directors to enable the Board’s monitoring of the Company’s performance and the performance of management of the Company;
promoting effective communications between the Board and management of the Company on developments occurring betweenCEO and require that our Board meetings;
working with the Chair of our Nominating and Board Governance Committee with respectbe led by an independent director to the recruitment, selection and orientation of new Board members and Board committee composition;
leadingaid in the Board’s reviewoversight of the succession plan for our Chief Executive Officer and other key senior executives;
discussing the Company’s executive compensation program with the Company’s large institutional stockholders, including input and advice from the Chair of our Compensation and Organization Committee and our Compensation and Organization Committee’s independent consultant, and reporting any feedback to our Compensation and Organization Committee;
coordinating the Board’s self-assessment and evaluation process and ensuring that Board members continually update their skills and knowledge required to fulfill their roles on the Board and on Board committees;
coordinating periodic Board input and review of management’s strategic plan for the Company;
facilitating the communication between and among the independent directors and management of the Company;
briefing our Chief Executive Officer on issues and concerns arising in the executive sessions of the independent directors;
coordinating and chairing the annual Board performance review of our Chief Executive Officer and communicating the results to our Chief Executive Officer;
providing strategic advice to our Chief Executive Officer on operational and financial matters, as necessary;
presiding over annual and special meetings of the Company’s stockholders;
facilitating communications with investors on Wall Street, in collaboration with our Chief Executive Officer;
ensuring that views of major investors in the Company’s Common Stock are communicated to the Board, in collaboration with our Chief Executive Officer;
being available for consultation and direct communication with the Company’s stockholders; and
performing such other duties as the Board delegated to him.
The Company believesmanagement. We believe that the service of Mr. Burman as theNon-Executive Chairman of the Boardour independent Chairperson and Ms. Horowitz as our Chief Executive OfficerCEO has allowed for effective management of the Company’s business. In addition, the Company believeswe believe that the independent Company Chairman,Chairperson, together with a Board whose members (other than Ms. Horowitz) all qualify as independent including the chairs for each of our Board committees, represents the most appropriate Board leadership structure for the Company. Regularly scheduledCompany at this time. Regularly-scheduled executive sessions of the independent directors, as well as written duties and responsibilities for the Company Chairmanour independent Chairperson and for each of our standing Board committees, support this Board leadership structure.
This structure demonstrates to all
Responsibilities of Chairperson of the Board
As the Chairperson, Mr. Burman has the primary responsibility for presiding over meetings of the Board and executive sessions of our stakeholders, includingindependent directors and for managing the Board. The Chairperson’s specific duties and responsibilities are specified in our associates,Corporate Governance Guidelines, and include, the following principal responsibilities:
•organizing Board discussion items and workflow;
•establishing procedures to govern the Board’s work and agendas for all Board meetings;
•facilitating the communication between and among the independent directors and management of the Company;
•leading the Board’s review of the succession plan for our customersCEO and other key members of senior management; and
•coordinating periodic Board input and review of management’s strategic plan for the Company and our stockholders, thatongoing transformation.
BOARD REFRESHMENT AND TENURE
Our Nominating Committee and our Board isare committed to engaged,ongoing Board refreshment. We believe that the best evidence of our commitment to Board refreshment is demonstrated by our current Board composition. Six of our ten independent leadershipdirectors joined the Board since the beginning of Fiscal 2019: Felix J. Carbullido, Susie Coulter, James A. Goldman, Helen E. McCluskey, Kenneth B. Robinson, and the performanceNigel Travis. In addition to years of the Board’s responsibilities. Experienced and independent Board members oversee the Company’s operations, risks, performance and business strategy. The Board believes that its strong corporate governance practices provide an appropriate balance among strategy development, operational execution and independent oversight of the Company.Committees of the Board
The Board has five standing committees — the Audit and Finance Committee, the Compensation and Organization Committee, the Corporate Social Responsibility Committee, the Executive Committee and the Nominating and Board Governance Committee. The current members of these committees are identifiedexperience as executives in the following table.
| | | | | | | | | | |
| Committees of the Board |
| | | | | |
Director | | Audit and
Finance | | Compensation
and Organization | | Corporate Social
Responsibility | | Executive | | Nominating and
Board Governance |
Kerrii B. Anderson | | Chair | | | | | | | | |
James B. Bachmann | | X | | | | X | | | | |
Terry L. Burman | | | | | | | | Chair | | |
Sarah M. Gallagher | | | | | | X | | | | X |
Michael E. Greenlees | | X | | Chair | | | | | | |
Archie M. Griffin | | | | | | Chair | | | | X |
Fran Horowitz | | | | | | | | X | | |
Helen E. McCluskey | | | | X | | | | | | |
Charles R. Perrin | | | | X | | | | X | | Chair |
Nigel Travis | | X | | | | | | | | |
Fiscal 2018 Meetings | | 15 | | 8 | | 3 | | 0 | | 8 |
Auditretail or consumer products industries, these individuals bring fresh perspectives to the Board.
Our Board also benefits from having directors with a range of tenures, and Finance CommitteeOur Audit and Finance Committee was established in accordancewe believe
fresh perspectives are well balanced by the contributions of directors with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)longer tenures. Kerrii B. Anderson, James B. Bachmann and Michael E. Greenlees served as members of our Audit and Finance Committee throughout Fiscal 2018, with Mr. Bachmann serving as the Chair of our Audit and Finance CommitteeAccordingly, the Board does not believe it is advisable to establish arbitrary term limits for all of Fiscal 2018. Nigel Travis was appointed to our Audit and Finance Committeedirectors based on February 22, 2019. Ms. Anderson was appointed as the Chair of our Audit and Finance Committee effective March 4, 2019, succeeding Mr. Bachmann in that position. Charles R. Perrin served as a member of our Audit and Finance Committee during Fiscal 2018 from February 4, 2018 until June 14, 2018. The Board has determined that each member of our Audit and Finance Committee qualifies, and that during his periodage or years of service, in Fiscal 2018, Charles R. Perrin qualified, as an independent director undersuch limits may at times force the applicable NYSE Rules and under SEC Rule10A-3. The Board has also determined that each member of our Audit and Finance Committee is “financially literate” underCompany to lose the applicable NYSE Rules and qualifies as an “audit committee financial expert” under applicable SEC rules by virtuecontribution of their respective experience which is described in the section captioned “Nominees” beginning on page 22 of this Proxy Statement. The Board believes that each member of our Audit and Finance Committee is highly qualified to discharge his or her duties on behalf
| | | | | | | | |
| 2022 Proxy Statement | 19 | Abercrombie & Fitch Co. |
directors who have, over time, developed invaluable institutional knowledge of the Company and its
subsidiaries.Our Auditoperations, and Financewho provide continuity. At the same time, the Board recognizes that incumbent directors should not expect to be renominated automatically or continually. To this end, the Nominating Committee is organizedrequired to evaluate each incumbent director’s qualifications, performance, and conducts its business pursuantability to continue to contribute productively before recommending the nomination of that director for an additional term. This evaluation includes a written charter, a copy of which is posted on the “Corporate Governance” page within the “Our Company” sectionreview of the Company’s website atcorporate.abercrombie.com. At least annually, our Audit and Finance Committee, in consultation with our Nominating and Board Governance Committee, reviews and reassesses the adequacy of its charter and recommends any proposed changes to the full Board as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.
The duties and responsibilities of our Audit and Finance Committee are set forth in its charter. The primary functions of our Audit and Finance Committee are to assist the Board in the oversight of:
the integrityresults of the Board’s evaluation process, including the results of any peer evaluations, prior years’ voting results, and the Company’s financial statements;
needs at a particular point in time. Our Nominating Committee continues to assess the effectiveness of this policy through monitoring the Company’s systems of disclosure controlschanges in our Board’s composition.
| | | | | | | | |
| | |
n 0-2 Years n 2-5 Years n 5-10 Years n 10+ Years
| | |
| 4.55 YEARS |
| Average tenure of our
director nominees. |
| |
Our Board and proceduresour Nominating Committee believe that, as a group, the directors should have diverse backgrounds and internal control over financial reporting;
qualifications. We believe that the compliance by the Company and its subsidiaries with legal and regulatory requirements;
the qualifications and independencemembers of the Company’s independent registered public accounting firm;
Board, as a group, have such diversity in terms of background, including varied race, ethnicity, nationality, gender, age, experience, and other attributes. During the performancepast few years, our Nominating Committee has focused on ensuring continued diversity in terms of backgrounds and qualifications during refreshment activities by requiring that director candidate pools include diverse individuals meeting the recruitment criteria. In November 2021, the Board formalized its commitment to diversity by revising the Corporate Governance Guidelines to include a policy that the Nominating Committee and/or any search firm that the Nominating Committee engages for a new director search must include women and minority candidates in the pool from which the Nominating Committee selects director candidates.
| | | | | | | | | | | | | | | | | |
| | |
| n Racially/Ethnically Diverse | | | n 55-60 Years | |
| n Gender Diverse | | | n 61-65 Years | |
|
| | | n 66-70 Years | |
| | | | n > 71 Years | |
| | | | | |
| | | | | | | | | | | | | | |
| 64% | | 65.7 Years | |
| A majority of our director nominees are diverse as to gender or race/ethnicity. | | Average age of our director nominees. | |
| | | | | | | | |
| Abercrombie & Fitch Co. | 20 | 2022 Proxy Statement |
DIRECTOR NOMINATIONS
Identifying Director Candidates
Our Nominating Committee is responsible for identifying and recommending qualified nominees for election or, in the case of a vacancy, appointment to the Board. The Board, taking into account the recommendations of the Company’s internal audit function andNominating Committee, is the Company’s independent registered public accounting firm;
compliance withfinal arbiter for the Company’s Codeselection of Business Conduct and Ethics;
enterprise risk issues and enterprise risk management policies, guidelines and programs;
nominees to the annual independent audit ofBoard.
Our Nominating Committee considers candidates for the Company’s financial statements; and
the review of the financial plans and policies of the Company.
At least annually, our Audit and Finance Committee authorizes the appointment, compensation and retention of the Company’s independent registered public accounting firm and then oversees that firm’s work, including the resolution of disagreements between managementBoard recommended by stockholders of the Company, and does not evaluate candidates differently based on the Company’s independent registered public accountingsource of the recommendation. The process for seeking and vetting additional director candidates is ongoing and is not dependent upon the existence of a vacancy on the Board. The Board believes that this ongoing pursuit of qualified candidates functions as an appropriate director succession plan. Pursuant to its charter, our Nominating Committee has the authority to retain consultants and search firms to assist in the process of identifying and evaluating candidates and to approve the fees and other retention terms for any such consultant or search firm. Any search firm regarding financial reporting. Our Auditthat is engaged for a new director search must include women and Financeminority candidates in its pool of candidates.
In prior years, we have used third-party search firms to help identify and evaluate director candidates. Kenneth B. Robinson was appointed to the Board in Fiscal 2021. Mr. Robinson’s candidacy was brought to the attention of our Nominating Committee also reviewsas a result of a director search conducted by a third-party global search firm retained by the Nominating Committee.
Director Time Commitment Considerations
In evaluating nominees to serve on our Board, the Nominating Committee and discusses with managementthe Board consider whether a director nominee has the ability to effectively fulfill his or her duties as a director of the Company, andespecially with respect to the Company’s independent registereddirector nominee’s expected time commitments with respect to his or her occupation and/or service as a director of other public accounting firm the Company’s financial statements and the related disclosures to be made in the Company’s periodic reports filed with the SEC, and discusses any other matters required to be communicated to our Audit and Finance Committee by the Company’s independent registered public accounting firm under applicable Public Company Accounting Oversight Board (“PCAOB”) standards. At least annually, our Audit and Finance Committee also reviews and discusses with management of the Company, the Company’s General Counsel, the Company’s Chief Ethics and Compliance Officer, the Company’s Chief Audit Executive and the Company’s independent registered public accounting firm, the Company’s processes regarding compliance with legal and regulatory requirements and communication of and compliance with the Company’scompanies.
Our Corporate Governance Guidelines set forth guidelines regarding the number of public company boards and Code of Business Conduct and Ethics.
Our Audit and Finance Committee’s annual report relating to Fiscal 2018 beginsaudit committees on page 110 of this Proxy Statement.
Compensation and Organization Committee
Our Compensation and Organization Committee provides overall guidance for the Company’s executive compensation policies and approves the amounts and elements of compensation for the Company’s executive officers. Michael E. Greenlees and Charles R. Perrin served aswhich members of our Compensation and Organization Committee throughout Fiscal 2018, with Mr. Greenlees serving as the Chair of our Compensation and Organization Committee for all of Fiscal 2018. Helen E. McCluskey was appointed to our Compensation and Organization Committee on February 22, 2019. James B. Bachmann served as a member of our Compensation and Organization Committee from July 16, 2018 to February 22, 2019. Bonnie R. Brooks served as a member of our Compensation and Organization Committee during Fiscal 2018 from February 4, 2018 to July 3, 2018. The Board has determined that each member of our Compensation and Organization Committee qualifies, and that during his or her period of service in Fiscal 2018, each of James B. Bachmann and Bonnie R. Brooks qualified, as an independent director under the applicable NYSE Rules, including those specifically applicable to members of our Compensation and Organization Committee.
Our Compensation and Organization Committee is organized and conducts its business pursuant to a written charter, a copy of which is posted on the “Corporate Governance” page within the “Our Company” section of the Company’s website atcorporate.abercrombie.com. At least annually, our Compensation and Organization Committee reviews and reassesses the adequacy of its charter, in consultation with our Nominating and Board Governance Committee, and recommends any proposed changes to the full Board as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.
Our Compensation and Organization Committee’s charter sets forth the duties and responsibilities of our Compensation and Organization Committee. The primary functions of our Compensation and Organization Committee are to assist the Board in:
overseeing the Company’s overall compensation structure, policies and programs, discharging the Board’s responsibilities relating to our Chief Executive Officer and other officers of the Company identified in Rule16a-1(f) under the Exchange Act (the “Section 16 Officers”), including the Company’s executive officers, as well as other officers as determined by our Compensation and Organization Committee;
assessing the results of the most recent advisory vote(s) on executive compensation by the Company’s stockholders;
making recommendations to our Nominating and Board Governance Committee regarding compensation of thenon-associate directors of the Company;
reviewing and monitoring the Company’s organizational development strategies and practices;
reviewing succession plans for our Chief Executive Officer and other Section 16 Officers, including the executive officers of the Company; and
overseeing any and all welfare and retirement benefit plans for associates of the Company.
At least annually, our Compensation and Organization Committee assesses the independence of consultants, outside counsel and other advisors (whether retained by our Compensation and Organization Committee or by management of the Company) that provide advice to our Compensation and Organization Committee and whether the work performed by compensation consultants or other advisors who are involved in determining or recommending executive or director compensation has raised any conflict of interest that is required to be disclosed in the Company’s annual proxy statement.
Our Compensation and Organization Committee’s processes and procedures to determine executive compensation, including the use of compensation consultants and the role of executive officers in making
recommendations relating to executive compensation, are described in the section captioned“COMPENSATION DISCUSSION AND ANALYSIS” beginning on page 57 of this Proxy Statement.
Corporate Social Responsibility Committee
Our Corporate Social Responsibility Committee provides oversight of the Company’s attention to issues of social responsibility, including diversity and inclusion, health and safety, human rights, environmental and philanthropy and the Company’s policies, practices and progress with respect to such issues. James B. Bachmann, Sarah M. Gallagher and Archie M. Griffin served as members of our Corporate Social Responsibility Committee throughout Fiscal 2018, with Mr. Griffin serving as the Chair of our Corporate Social Responsibility Committee for all of Fiscal 2018.
Our Corporate Social Responsibility Committee is organized and conducts its business pursuant to a written charter, a copy of which is posted on the “Corporate Governance” page within the “Our Company” section of the Company’s website atcorporate.abercrombie.com. At least annually, our Corporate Social Responsibility Committee reviews and reassesses the adequacy of its charter, in consultation with our Nominating and Board Governance Committee, and recommends any proposed changes to the full Board as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.
Executive Committee
Terry L. Burman and Fran Horowitz served as members of our Executive Committee throughout Fiscal 2018, with Mr. Burman serving as Chair for all of Fiscal 2018. Charles R. Perrin was appointed to our Executive Committee on June 14, 2018. Arthur C. Martinez served as a member of our Executive Committee during Fiscal 2018 from February 4, 2018 to June 14, 2018.
Our Executive Committee is organized and conducts its business pursuant to a written charter, a copy of which is posted on the “Corporate Governance” page within the “Our Company” section of the Company’s website atcorporate.abercrombie.com. Periodically, our Executive Committee reviews and reassesses the adequacy of its charter, in consultation with our Nominating and Board Governance Committee, and recommends any proposed changes to the full Board as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.
Our Executive Committee is to act on behalf of the Board in between Board meetings with respect to matters that, in the opinion of the Company Chairman, should not be postponed until the next scheduled meeting of the Board, subject to such limitations as the Board and/or applicable law may impose. In addition, our Executive Committee has been appointed by the Board to take any action deemed necessary under exigent circumstances when a quorum of the Board cannot be satisfied, subject to any limitation imposed under applicable law.
Nominating and Board Governance Committee
Sarah M. Gallagher and Archie M. Griffin served as members of our Nominating and Board Governance Committee throughout Fiscal 2018. Charles R. Perrin was appointed as the Chair and a member of our Nominating and Board Governance Committee on February 23, 2018. Terry L. Burman resigned as the Chair and a member of our Nominating and Board Governance Committee effective February 23, 2018, in connection with his election asNon-Executive Chairman of the Board of the Company. Bonnie R. Brooks served as a member of our Nominating and Board Governance Committee during Fiscal 2018 from February 4, 2018 to July 3, 2018. The Board has determined that each member of our Nominating and Board Governance Committee qualifies, and during their respective periods of service during Fiscal 2018, each of Bonnie R. Brooks and Terry L. Burman qualified, as an independent director under the applicable NYSE Rules.
Our Nominating and Board Governance Committee is organized and conducts its business pursuant to a written charter, a copy of which is posted on the “Corporate Governance” page within the “Our Company”
section of the Company’s website atcorporate.abercrombie.com. At least annually, our Nominating and Board Governance Committee reviews and reassesses the adequacy of its charter and recommends any proposed changes to the full Board as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.
The purpose of our Nominating and Board Governance Committee is to provide oversight on a broad range of issues surrounding the composition and operation of the Board, including identifying individuals qualified to become Board members, recommending to the Board director nominees for the next annual meeting of stockholders and developing and recommending to the Board a set of corporate governance principles applicable to the Company. Our Nominating and Board Governance Committee also has responsibility for making recommendations to the Board and the Chairman of the Board in the area of committee membership selection, including Board committee chairs, and overseeing the evaluation of the Board. Our Nominating and Board Governance Committee is also to annually review, receive recommendations from our Compensation and Organization Committee and make recommendations to the Board regarding the compensation for the Company’snon-associate directors. Our Nominating and Board Governance Committee also has responsibility for the implementation of the Company’s Related Person Transaction Policy.
Director Qualifications and Consideration of Director Candidates
Under the Company’s Corporate Governance Guidelines, no director is to be nominated by the Board to stand for election orre-election after reaching age 75. However, the Board may nominate such a director for election orserve:
re-election• if the Board believes that such director’s service on the Board is in the best interests of the Company and our stockholders. On April 8, 2019, based on a recommendation from our Nominating and Board Governance Committee, the Board unanimously approved the nomination of James B. Bachmann forre-election to the Board and believes his continued service is in the best interests of the Company and our stockholders.As described above, the Company has a standing Nominating and Board Governance Committee that has responsibility for providing oversight on a broad range of issues surrounding the composition and operation of the Board, including identifying candidates qualified to become directors and recommending director nominees to the Board.
When considering candidates for the Board, our Nominating and Board Governance Committee evaluates the entirety of each candidate’s credentials and, other than the age guidelines mentioned above, does not have specific eligibility requirements or minimum qualifications that must be met by a candidate. However, the Company’s Corporate Governance Guidelines provide that noNo member of the Board may simultaneously serve on the boards of directors of more than three public companies, other than the CompanyCompany’s Board, unless the Board has determined, upon recommendation by our Nominating and Board Governance Committee, that the aggregate number of directorships held by the individual would not interfere with the individual’s ability to carry out his or her responsibilities as a director of the Company.
•In recognition of the enhanced time commitments associated with membership on a public company’s audit committee, the Board has adopted a policy that no member of the Audit Committee may serve simultaneously on the audit committees of more than two public companies other than the Company, unless a waiver of this requirement is affirmatively granted by the Board.
Stockholder Recommendations for Director Candidates
Stockholders may recommend director candidates for consideration by our Nominating Committee by giving written notice of the recommendation to the Chair of our Nominating Committee, in care of the Company, at the Company’s principal executive offices at 6301 Fitch Path, New Albany, Ohio 43054. In considering candidates recommended by stockholders, our Nominating Committee will take into consideration the needs of the Board and the qualifications of each candidate.
In addition, following thoughtful engagement with our stockholders, the Board adopted a “Proxy Access” bylaw for director nominations that permits a stockholder, or group of up to 20 stockholders, that has owned continuously for at least three years, shares of the Company’s Common Stock representing an aggregate of at least 3% of our outstanding shares, to nominate and include in the Company’s proxy materials director nominees constituting up to 25% of the Board, provided that the stockholder(s) and nominee(s) satisfy the requirements in Section 2.04 of our Bylaws. See page 91 in our “Additional Information About Our Annual Meeting and Voting” section of this Proxy Statement for more information. | | | | | | | | |
| 2022 Proxy Statement | 21 | Abercrombie & Fitch Co. |
DIRECTOR QUALIFICATIONS AND CONSIDERATION OF DIRECTOR CANDIDATES
When considering candidates for the Board, our Nominating Committee evaluates the entirety of each candidate’s credentials and does not have specific eligibility requirements or minimum qualifications that must be met by a candidate.
In considering director candidates, our Nominating
and Board Governance Committee considers those factors it deems appropriate
in light of the needs of the Board, including:
•the nominee’s independence, judgment, strength of character, ethics, and integrity;
•the nominee’s business or other relevant experience and skills and knowledge useful to the oversight of the Company’s business;
and•the Company’s strong commitment to diversity and inclusion at all levels of the Company;Company, including diversity with respect to race, ethnicity, nationality, gender, age, and
experience.such other factors as the members of our Nominating and Board Governance Committee conclude are appropriate in light of the needs of the Board.
The Company believes that the Board as a whole should have competency in the following areas:
audit, accounting and finance;
| | | | | | | | | | | |
| | | |
| •High character and integrity •Audit, accounting and finance •Management experience | •Industry knowledge •Leadership •Strategy/vision | |
| | | |
Depending on the current needs of the Board, our Nominating and Board Governance Committee may weigh certain factors more or less heavily. Our Nominating and Board Governance Committee does, however, believe that all members of the Board should have the highest character and integrity, a reputation for working constructively with others, sufficient time to devote to Board matters, and no conflict of interest that would interfere with performance as a director.
Board Tenure
Directors who have served for a varied amount of time on our Board contribute to a range of perspectives. We have a good mix of new and long-standing directors that ensures the sharing of knowledge and experience. The Board recognizes the importance of Board refreshment to ensure that
| | | | | | | | |
| Abercrombie & Fitch Co. | 22 | 2022 Proxy Statement |
COMMITTEES OF THE BOARD AND MEETING ATTENDANCE
During Fiscal 2021, the Board
benefits from new perspectives. Our commitment to Board refreshment is demonstrated byheld twelve regularly-scheduled meetings and held three special meetings. In accordance with the
fact that three new independent directors have joined our Board since the beginning of Fiscal 2018. The Board also benefits from directors having a range of tenures as this provides continuityCompany’s Corporate Governance Guidelines and
institutional knowledge. The tenures of our current Board members range from less than one year to 19 years asapplicable rules of the
dateNYSE set forth in the NYSE Listed Company Manual (the “NYSE Rules”), the non-associate directors of the
2019 Annual Meeting.
Board Member Skills Matrix
Company meet (without management present) at regularly-scheduled executive sessions at least twice per year and at such other times as the directors deem necessary or appropriate. The following bar graph provides information regarding the members of our Board, including certain types of knowledge, experience and skills held by one or morenon-associate directors met alone without management present nine times during Fiscal 2021 in executive sessions. Executive sessions of the non-associate directors which our Board believes are important to our Company. The list below is not exhaustiveregularly scheduled as each director has a broad arrayagenda items at meetings of knowledge, experience and skills.
Board Diversity
During the past few years, our Nominating and Board Governance Committee has focused on ensuring continued diversity on the Board during refreshment activities by requiring that director candidate pools include diverse individuals meeting the recruitment criteria. Our director nominees range from 55 to 76 with the average age being 67.
While the Board, and our Nominatingall meetings of non-associate or independent directors are presided over by the Chairperson of the Board.
All of the incumbent directors attended at least 75% of the Board and Board Governance Committeecommittee meetings they were eligible to attend during Fiscal 2021. While we do not have specific eligibility requirements, other thana formal policy on director attendance at annual meetings, we strongly encourage our directors to attend our Annual Meeting of Stockholders. All incumbent directors then standing for re-election virtually attended the age guidelines mentioned above, and do not, as a matter of course, weigh anyCompany’s 2021 Annual Meeting.
Committees of the factors they deem appropriate more heavily than others, bothBoard
The Board has five standing committees, each of which is described below. The responsibilities of each standing Board committee are set forth in a written charter. Committee charters are reviewed annually by the Nominating Committee and the Board. The Board may form new committees, disband existing committees, and delegate additional responsibilities to a committee.
Our Nominating Committee is responsible for evaluating and making recommendations to our Board regarding Board committee assignments. In June 2021, following the departure of two former directors, our Nominating Committee evaluated the Board committees’ composition. Following such evaluation, our Nominating Committee recommended, and the Board approved, the refreshment of the membership of our Audit Committee and our Nominating and Board GovernanceESG Committee believe that, as a group, the directors should have diverse backgrounds and.
qualifications. The Company believes that the members of the Board, as a group, have such backgrounds and qualifications, although the Board and our Nominating and Board Governance Committee continue to actively seek candidates who possess varied gender, racial, ethnicity, age, experience and other attributes.
Our Nominating and Board Governance Committee considers candidates for the Board from any reasonable source, including stockholder recommendations, and does not evaluate candidates differently based on the source of the recommendation. The process for seeking and vetting additional director candidates is ongoing and is not dependent upon the existence of a vacancy on the Board. Accordingly, the Board believes that this ongoing pursuit of qualified candidates functions as an appropriate director succession plan. Pursuant to its charter, our Nominating and Board Governance Committee has the authority to retain consultants and search firms to assist in the process of identifying and evaluating candidates and to approve the fees and other retention terms for any such consultant or search firm. In the retention of any third-party global executive search firm to assist in the search for Board candidates, the Company emphasizes that diversity is a priority. In Fiscal 2018, our Nominating and Board Governance Committee used a third-party global executive search firm to help identify and evaluate director candidates. Helen E. McCluskey and Nigel Travis were recommended to our Nominating and Board Governance Committee by the third-party global executive search firm retained by such Committee.
Information regarding each of our directors is set forth above under the caption“Nominees.” In addition to the specific information presented with respect to such individual, the Company believes that each of our directors has a reputation for the highest character and integrity and that our directors have worked cohesively and constructively with each other and with management of the Company. They have each demonstrated business acumen and an ability to exercise sound judgment.
Board Succession Planning
| | | | | | | | | | | |
| | | |
| All standing committee charters are available on our website at corporate.abercrombie.com. | |
| | |
| | | |
| The Board’s five standing committees and their current members are as follows: | |
| | | | | | | | | | | | | | | | | | | | |
| Director | Audit
Committee | Compensation Committee | Nominating Committee | ESG Committee | Executive Committee |
| | | | | | |
| Kerrii B. Anderson | ©Ⓕ | | l | | |
| Terry L. Burman | | | | | © |
| Felix J. Carbullido | | l | | l | |
| Susie Coulter | | | | © | |
| Sarah M. Gallagher | | | l | l | |
| James A. Goldman | | l | l | | |
| Michael E. Greenlees | | l | | | |
| Fran Horowitz | | | | | l |
| Helen E. McCluskey | lⒻ | © | | | |
| Kenneth B. Robinson | lⒻ | | | l | |
| Nigel Travis | lⒻ | | © | | l |
| © | Committee Chair | | | |
| l | Member | | | | | |
| Ⓕ | Financial Expert | | | | | |
| | | | | | | | |
| 2022 Proxy Statement | 23 | Abercrombie & Fitch Co. |
| | | | | | | | | | | | | | |
| Audit and Finance Committee |
| | | | |
MET 12 TIMES IN FISCAL 2021
COMMITTEE MEMBERS •Kerrii B. Anderson (Chair) •Helen E. McCluskey •Kenneth B. Robinson –Became a member February 4, 2021 •Nigel Travis
Michael E. Greenlees served as a member during Fiscal 2021 until June 9, 2021.
| | | Primary Responsibilities |
| | The primary responsibilities of the Audit Committee are to oversee: •the integrity of our consolidated financial statements •the effectiveness of our systems of disclosure controls and procedures and internal control over financial reporting, including reviewing and discussing any significant deficiency or any material weakness in the design of our internal controls and any steps taken to resolve such issue •compliance with legal and regulatory requirements, including the financial reporting and disclosure process •monitoring legal and regulatory matters, including Company litigation •compliance with our Code of Business Conduct and Ethics •the qualifications and independence of the Company’s independent registered public accounting firm •the Company’s enterprise risk issues and enterprise risk management framework •the annual independent audit of our consolidated financial statements •the review and approval, as appropriate, of our financial plans and policies •risks related to information technology and cybersecurity
In addition, the Audit Committee is responsible for: •evaluating the performance of the internal audit function and the independent registered public accounting firm •determining the appointment, compensation, and retention of both the independent registered public accounting firm and the chief audit executive who leads the Company’s internal audit function |
FINANCIAL EXPERTISE AND INDEPENDENCE The Board has determined that each current member of the Audit Committee meets, and during his period of service in Fiscal 2021, Michael E. Greenlees met, all applicable independence and financial literacy and expertise requirements under the NYSE Rules and applicable SEC rules. |
| | | | |
| | | | | | | | |
| Abercrombie & Fitch Co. | 24 | 2022 Proxy Statement |
| | | | | | | | | | | | | | |
| Compensation and Human Capital Committee |
| | | | |
MET 9 TIMES IN FISCAL 2021 COMMITTEE MEMBERS •Helen E. McCluskey (Chair) •Felix J. Carbullido •James A. Goldman •Michael E. Greenlees
Charles R. Perrin, a former director, served as a member during Fiscal 2021 until June 9, 2021.
| | | Primary Responsibilities |
| | The primary responsibilities of the Compensation Committee are: •overseeing the Company’s overall compensation structure, policies, and programs •evaluating the performance of the CEO in consultation with independent directors, and reviewing and approving the compensation for the CEO based on such evaluation •approving compensation for the officers of the Company other than the CEO (as determined by the Compensation Committee), with input from the CEO •reviewing and approving the metrics to be used for the determination of payouts under cash-based and equity-based incentive programs, and the administration of such programs •recommending to the Board the compensation of non-associate directors of the Board •reviewing and monitoring the Company’s human capital management strategies, programs, policies, and practices relating to organizational structure and key reporting relationships, as well as recruitment, retention and development of the Company’s associates •reviewing the succession plans for our CEO and other select other officers of the Company •overseeing associate welfare and retirement benefit plans |
INDEPENDENCE The Board has determined that each member of the Compensation Committee meets, and during his period of service in Fiscal 2021, Charles R. Perrin met, all applicable independence requirements under the NYSE Rules and applicable SEC rules, including the enhanced independent standards for compensation committee members under the NYSE Rules. Each member of the Compensation Committee also has been determined to be a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act. |
| | | | |
| | | | | | | | |
| 2022 Proxy Statement | 25 | Abercrombie & Fitch Co. |
| | | | | | | | | | | | | | |
| Nominating and Board Governance Committee |
| | | | |
MET 5 TIMES IN FISCAL 2021 COMMITTEE MEMBERS •Nigel Travis (Chair) •Kerrii B. Anderson •Sarah M. Gallagher •James A. Goldman
Charles R. Perrin, a former director, served as a member during Fiscal 2021 until June 9, 2021.
| | | Primary Responsibilities |
| | The primary responsibilities of the Nominating Committee are: •identifying, evaluating, and recommending director nominees for election, re-election or to fill any vacancies to or on the Board •making recommendations to the Board on committee memberships, including chair positions •overseeing the self-evaluation processes of the Board and Board committees •reviewing regularly our governance structure and corporate governance matters and processes •developing and recommending to the Board a set of corporate governance principles (the Corporate Governance Guidelines) •reviewing and assessing any stockholder proposals submitted to the Company •overseeing the Company’s stockholder engagement process •reviewing our Related Person Transaction Policy and approving such related person transactions in accordance with the policy and applicable NYSE and SEC requirements •reviewing and making recommendations to the Board regarding orientation for new directors and continuing education for all directors •reviewing and approving the use of Company funds or property by any associate or officer, including our CEO, in support of any political party, organization or committee, or any candidate for public office, as permitted by law |
INDEPENDENCE The Board has determined that each member of the Nominating and Board Governance Committee meets, and during his period of service in Fiscal 2021, Charles R. Perrin met, all applicable independence requirements under the NYSE Rules and applicable SEC rules. |
| | | | |
| | | | | | | | |
| Abercrombie & Fitch Co. | 26 | 2022 Proxy Statement |
| | | | | | | | | | | | | | |
| Environmental, Social, and Governance Committee |
| | | | |
MET 3 TIMES IN FISCAL 2021 COMMITTEE MEMBERS •Susie Coulter (Chair) –Became Chair June 9, 2021 •Felix J. Carbullido •Sarah M. Gallagher •Kenneth B. Robinson –Became a member June 9, 2021
Archie M. Griffin, a former director, served as a member during Fiscal 2021 until June 9, 2021. | | | Primary Responsibilities |
| | The primary responsibilities of the ESG Committee are: •overseeing environmental and social issues and trends, and reviewing and making recommendations on related strategies, policies, practices, and programs •overseeing our governance and risk management of environmental and social matters •reviewing with management any external reporting related to environmental and social matters •monitoring significant programs and activities aimed at enhancing our global communications, crisis management, media relations, and community relations •reviewing and monitoring the community investment support by the Company of charitable, educational, community, and business organizations
|
COMMITTEE REFRESHMENT AND NAME CHANGE In June 2021, following the departure from the Board of committee Chair Archie M. Griffin, our Nominating Committee evaluated the composition of the ESG Committee. Following such evaluation, upon the Nominating Committee’s recommendation, the Board appointed Susie Coulter as Chair and appointed Kenneth B. Robinson as a member of the ESG Committee. In August 2021, in connection with the committee refreshment and the annual review of its charter, the Board approved changes to the committee charter to clarify the committee’s oversight role with respect to the Company’s ESG initiatives and approved the change of the name of the committee from the Corporate Social Responsibility Committee to the Environmental, Social, and Governance Committee. |
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| Executive Committee |
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DID NOT MEET IN FISCAL 2021 COMMITTEE MEMBERS •Terry L. Burman (Chair) •Fran Horowitz •Nigel Travis | | | Primary Responsibilities |
| | The primary responsibilities of the Executive Committee are: •acting on behalf of the Board in between Board meetings with respect to matters that, in the opinion of our Chairperson of the Board, should not be postponed until the next scheduled meeting of the Board, subject to such limitations as the Board and/or applicable law may impose •taking any action deemed necessary under exigent circumstances when a quorum of the Board cannot be satisfied, subject to any limitation imposed under applicable law or by the Board |
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| 2022 Proxy Statement | 27 | Abercrombie & Fitch Co. |
BOARD EVALUATION PROCESS
On an annual basis, the members of the Board and each Board committee conduct a confidential assessmentself-assessment of theirthe Board’s performance and committee performance, which entails a multwo-partti-part evaluation evaluation process managed by outside counsel. Our Nominating Committee oversees the evaluation process and reviews the procedures, which may vary from year to year. The assessment includes both a written questionnaire and a supplemental interview conducted by an independent third party. As partBoard believes it is important to assess its overall performance, the performance of the evaluation process,Board committees, and the individual performance of each director. In order to serve the best interests of our stockholders and position the Company for future success, the Board reviews its overall composition, including director tenure, Board leadership structure, diversity, and individual skill sets as part of the evaluation process. Based on feedback provided during the evaluation process and based on additional discussions last year, we increased the frequency of ESG Committee meetings held during Fiscal 2021.
Summary of Fiscal 2021 Board Evaluation Process
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| | | BACKGROUND | | | |
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| Our Nominating Committee approved the self-assessment process and the form of questionnaires used. | Ü | An outside law firm collected the completed questionnaires and conducted one-on-one follow up calls with each director to solicit supplemental comments. | Ü | Our Chairperson conducted one-on-one follow up calls with each director, focusing on general Board feedback and peer assessments. | Ü | The Chair of our Nominating Committee conducted one-on-one calls with each director, focusing on the evaluation of the Chairperson of the Board. | |
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| | | POST-EVALUATION | | | |
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| Results were reviewed by the Chairs of the applicable Board committee, the Nominating Committee, and the Chairperson of the Board. | Ü | Results of the peer assessment were provided to the subject director for director development purposes. | Ü | The Board and each Board Committee discussed the results of the assessments. The outside law firm participated in discussions with the Nominating Committee and the Board. | Ü | The Board and management will take steps to address or to improve upon any issues or opportunities disclosed during the evaluation process. | |
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Description of Evaluation Process Changes for Fiscal 2021
In Fiscal 2021, in response to ensurefeedback from directors, we enhanced our self-assessment process to include more robust questions on peer evaluations. This peer feedback was provided to directors verbally by our Chairperson, as described in the chart above.
BOARD ROLE IN RISK OVERSIGHT
The Board has primary responsibility for risk oversight and, in this capacity, oversees the management of risks related to the operation of our Company. The Board executes its oversight duties in part by assigning responsibility to committees of the Board to oversee the management of risks that fall within their respective areas. In performing this function, each Board committee has full access to management, as well as the ability to engage advisors. The Chair of each Board committee reports on the applicable committee’s activities at Board meetings and has the opportunity to discuss risk management with the full Board serves the best interestsat that time.
Enterprise Risk Management
The Company primarily manages enterprise risk through our management-led Enterprise Risk Management Committee (the “ERM Committee”). The ERM Committee is comprised of our stockholders and positionsa group of cross-functional senior members of management across the Company, and is co-chaired by our General Counsel and our Chief Financial Officer.
The ERM Committee meets on a quarterly basis to review, prioritize, and address mitigation strategies for future success.major risk exposures. The resultsERM Committee also considers new and emerging risks, and, as needed, a smaller subset of the assessments are then summarized and communicated backERM Committee meets in between the quarterly meetings to discuss emerging or growing risks. As part of its risk oversight role, the appropriateAudit Committee chairs,receives quarterly reports from representatives of the full Nominating and Board GovernanceERM Committee and the Company Chairman. After the evaluations,on our enterprise risk management program.
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| Abercrombie & Fitch Co. | 28 | 2022 Proxy Statement |
Key Areas of Risk Oversight
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| Board | •Strategy •Operational Risks •Capital Allocation •Significant Reputational Risk •Global pandemics, including COVID-19 |
| Audit Committee | •Accounting and Financial Disclosure •Oversight of ERM Committee •Information Technology and Cybersecurity Risks •Financing Strategy •Ethics and Compliance Program •Litigation |
| Compensation Committee | •Executive Compensation Design •Company Incentive Plans •Human Capital Management •Director Compensation |
| Nominating Committee | •Board Succession Planning •Nominee Identification and Selection •Board Evaluations and Refreshment •Corporate Governance |
| ESG | •Environmental Matters, including Sustainability •Social Matters, including Diversity and Inclusion |
The above list does not include all areas of risk management overseen by the Board and the Board committees.
COVID-19 Risk Oversight
Throughout Fiscal 2021, the Board and relevant Board committees received regular updates from management
workon COVID-19’s impact to
improve upon any issues disclosed during the
evaluation process.Ourbusiness. The Board is committedcontinues to effective Board succession planningreceive updates and refreshment, including having honestwill continue to address COVID-19-related risks as part of its management of risks related to the operation of our Company.
Information Technology and difficult conversations with individual directors, if necessary. We may have these conversations in connection with ongoing self-evaluations, refreshment processes, and the considerationCybersecurity Risk Oversight
Management of the
annual slateCompany manages cybersecurity as an enterprise risk and provides updates and reports to the ERM Committee. Additionally, members of
Board nominees.Director Nominations
The Board, taking into accountmanagement responsible for information technology and cybersecurity areas report multiple times a year to the recommendationsAudit Committee and to the Board. As part of the management of cybersecurity as an enterprise risk, we perform various external information risk assessments each year, including formal audits of our NominatingPayment Card Industry (PCI) and Board Governance Committee, selects nominees for electionSarbanes-Oxley Act (SOX) obligations. Our global home office, stores, and distribution center associates are trained on cybersecurity matters on an ongoing basis, including regarding the handling of customer data and privacy best practices. We provide additional training to individual teams on privacy compliance best practices and emerging risks as directors at each annual meeting of stockholders. Stockholders may recommend director candidates for consideration by our Nominatingneeded. Targeted training occurs frequently throughout the year and Board Governance Committee by giving written notice ofregular audiences include associates on the recommendation toCompany’s marketing, data analytics, and user experience teams. In addition, we conduct ongoing, Company-wide training on email phishing. Additionally, in Fiscal 2021, the Chair of our Audit Committee completed the NACD Cyber-Risk Oversight Program and earned the CERT Certificate in Cybersecurity Oversight.
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| 2022 Proxy Statement | 29 | Abercrombie & Fitch Co. |
Environmental, Social, and Governance Risk Oversight
The Board has primary responsibility for ESG oversight and, in this capacity, oversees the management of risks related to ESG matters. The Board executes its oversight duties in part by assigning responsibility to committees of the Board to oversee the management of ESG and ESG risks that fall within their respective areas.
Our ESG Committee is responsible for overseeing our strategies, policies, and practices regarding environmental and social issues and trends, as well as the governance and risk management of such matters. These environmental and social issues, trends, and matters include: diversity and inclusion initiatives; health and safety matters; human rights and ethical business practices; sustainability and climate change matters; significant philanthropic and community investment matters; and significant community relations. The ESG Committee was established as our Corporate Social Responsibility Committee in Fiscal 2009.
Our Nominating Committee is responsible for matters related to the corporate governance of the Company and the Board, including the composition of our Board and Board Governancerefreshment and succession planning.
Our Compensation Committee in careis responsible for human capital management and matters related to compensation and benefits.
Our Audit Committee is responsible for our audit practices, for risk oversight of cybersecurity and information technology programs, and for our Ethics and Compliance Program.
Compensation Programs Risk Assessment
Management of the Company and our Compensation Committee have assessed the Company’s compensation programs and based upon all of the facts and circumstances available to the Company at the time of the filing of this Proxy Statement, management of the Company and our Compensation Committee have concluded that there are no risks arising from the Company’s principalcompensation policies and practices that are reasonably likely to have a material adverse effect on the Company. This assessment was overseen by our Compensation Committee in consultation with its independent counsel and its independent compensation consultant. This assessment considered, among other factors:
•Our compensation policies and practices in effect for our executive officers, members of senior management, and our associates (e.g., metrics selected and the weighting of those metrics, performance measurement periods for incentive compensation, mix of pay, stock ownership guidelines).
•Features built into our compensation programs to discourage excessive risk-taking (e.g., incentive caps, clawback provisions).
•The Compensation Committee’s review of market data for our designated officers when making all related pay decisions.
•The Compensation Committee’s approval of all annual cash incentive program and performance-based equity awards goals and metrics, and the Compensation Committee’s associated certification of performance achievement at the conclusion of the performance period.
•The Company’s enterprise risks, the degree to which those enterprise risks may be exacerbated by compensation, and the associated controls to manage enterprise risks.
Our performance-based executive compensation program, as described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement beginning on page 41, coupled with our stock ownership guidelines and implemented clawback provisions, aligns the interests of our executive officers with those of our stockholders by encouraging long-term superior performance without encouraging excessive or unnecessary risk-taking. | | | | | | | | |
| Abercrombie & Fitch Co. | 30 | 2022 Proxy Statement |
ENVIRONMENTAL AND SOCIAL MATTERS
We operate and invest in our business with a focus on the long term, which requires taking into consideration environmental and social matters that are important to our stakeholders, including our stockholders, our customers, our associates, and our partners. In our efforts to create positive impacts within our organization and within communities we operate in, we have implemented practices and established targets to promote inclusion and diversity, community involvement, and environmental and social stewardship.
Environmental and Sustainability Matters
We know it is our collective responsibility to prioritize the environment and make sustainable choices. We strive to create a positive impact on our community by advancing sustainability efforts in our global home offices, at 6301 Fitch Path,stores network, and supply chain.
Since March 2019, we have been a participant in the United Nations Global Compact (“UNGC”), the world’s largest corporate citizenship and sustainability initiative. As part of our participation, we publicly committed to the UNGC’s Ten Principles in the areas of human rights, labor, environment, and anti-corruption. We did so to make the UNGC principles a part of our strategy, culture, and day-to-day operations, and to engage in collaborative projects that will help advance the broader development goals of the UNGC.
As part of our commitment to the UNGC, in August 2019, we announced specific sustainability targets that build on our existing global social and environmental sustainability programs, some of which we have had in place for almost 20 years. These targets align with the United Nation’s Sustainable Development Goals, which address global challenges such as poverty, inequality, climate change, environmental degradation, prosperity and peace, and justice.
In Fiscal 2020, we reaffirmed our commitment to the UNGC’s Ten Principles, and we achieved several of our previously announced sustainability targets ahead of our 2025 timelines. We also established additional sustainability targets through 2030. In furtherance of our overall energy goals, in Fiscal 2020, we signed a 13-year, 100% renewable energy supply agreement for our global home office and two distribution centers in New Albany, Ohio, 43054. The recommendation must includewhich is expected to begin in 2023.
In Fiscal 2021, we reaffirmed our commitment to the candidate’s name, age, business address, residence addressUNGC’s Ten Principles, and principal occupation. The recommendation must also describewe tracked our performance against our previously announced sustainability targets. Specific actions we took in Fiscal 2021 include:
•Established additional sustainability targets, including the qualifications, attributes, skills or other qualities possessedgoals of reducing global store Scope 1 and 2 GHG emissions by 35% and reducing total Scope 1 and 2 GHG emissions by 47%, in each case by 2030.
•Implemented the Carbon Leadership Program (CLP) by the recommendedApparel Impact Institute (Aii), with the goal of helping to drive carbon reduction in our supply chain.
•Furthered water usage savings by continuing to adopt eco wash in denim washing.
•Continued efforts to reduce waste at our global home office in New Albany, Ohio, including by implementing composting in our kitchens.
We know there is no finish line to these efforts, and we aspire to raise the bar for ourselves and our peers as we continue to make further progress across our global operations.
Outside of our global store network and global home offices, we continue to invest in improving our supply chain processes by partnering with vendors, suppliers, manufacturers, contractors, and subcontractors and their respective agents who respect local laws and have committed to follow the standards set forth in our Vendor Code of Conduct. Our Vendor Code of Conduct details our intentions to employ leading practices in labor and social rights, environmental responsibility, and workplace safety. We also support empowerment programs such as P.A.C.E. (Personal Advancement & Career Enhancement) to provide opportunities for women in the supply chain to advance their career, education, and life skills. In addition, we partner with PALS (Pacific Links), Better Work, and BRAC to train third-party factory workers on a variety of topics, including anti-human trafficking, gender equality, and health and safety management.
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| 2022 Proxy Statement | 31 | Abercrombie & Fitch Co. |
Global Giving and Community Involvement
We give back to the global communities in which we do business by providing support to organizations in the form of cash donations, volunteerism, and in-kind support. We have also co-created product collections with our community partners, we facilitate fundraising through customer round-up programs, and we amplify our community partners’ voices through features on our websites and social media pages. We are proud to support community partners serving youth, teens, and young adults with a focus on mental health and wellness, empowerment, and inclusion and diversity. Additionally, to continue our progress in inclusion and diversity in support of social justice and equity, we have made financial commitments and developed programs with organizations serving our global BIPOC communities. We also continue our historical support of our global LGBTQIA+ communities, furthering education, resources, and suicide prevention efforts through our product campaigns, cash donations, and programming.
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Our Community Meet the global giving partners we work with and support. |
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| In 2020, we committed to our partnership with The Academy Group. Together, we provide academic support, mentoring and work experience to youth from the most resilient communities across the U.S. | | We first teamed up with GLSEN in 2017.
GLSEN is a leading national education organization making K-12 schools safe and affirming for all, regardless of sexual orientation, gender identity or expression. | | A 365-days-a-year people-powered initiative dedicated to helping all teens feel their most confident, comfortable, and capable. We provide grants to global causes that connect to this mission and champion confidence and wellness in teens. |
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| A non-profit organization supporting suicide prevention and mental health for LGBTQ young people. We’re proud to continue our decade-long partnership and ongoing annual initiatives. | | We launched our partnership with SFCN in 2016. SFCN helps children with serious illnesses and their families experience the magic of summer camp by creating opportunities to discover joy, confidence, and a new world of possibilities. | | We started a partnership with The Steve Fund in 2020. The Steve Fund is the nation’s leading non-profit organization specifically devoted to the mental health and emotional well-being of young people of color. |
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Our associates are highly motivated and community minded, and in Fiscal 2021, our global associates volunteered approximately 14,000 hours. We support our associates in giving back to the community by offering our associates the opportunity to use a paid day to volunteer each year for eligible volunteer work. With the help of our partners, our customers, and our associates, in Fiscal 2021, we donated over $5.8 million to charitable causes and donated $3.0 million through in-kind giving.
Human Capital and Corporate Culture
We strive to create a culture that drives strategic and key business priorities forward, and also encourages associates to create a positive impact in their global communities. We believe that the strength of our unique culture is a competitive advantage, and we intend to continue building upon that culture to improve performance across our business. Therefore, we believe that the attraction, retention, and management of qualified talent representing diverse backgrounds, experiences, and skill sets, and fostering a diverse, equitable, and inclusive work environment are integral to our success.
We are proud to be recognized in 2021 for our strong corporate culture and our associates’ workplace experience:
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| Designated as a best place to work for the LGBTQ+ community by the Human Rights Campaign, receiving a 100% rating on their corporate equality index for the 16th consecutive year |
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| Named one of the Best Workplaces in Retail™ by Fortune magazine |
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| Became a Great Place to Work-Certified™ organization |
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| Recognized by Forbes as a Best Employer for Diversity and a Best Employer for Women |
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| Abercrombie & Fitch Co. | 32 | 2022 Proxy Statement |
Below are highlights of our key human capital management programs and efforts:
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| Corporate Purpose | a | Introduced a new corporate purpose of “Being here for you on the journey to being and becoming who you are” after conducting listening sessions with our associates and our customers, and by weaving in key themes from each of our brand purposes. |
| Compensation and Benefits | a | Offers competitive compensation and benefits, including cash-based and equity-based incentive awards in order to align the interests of our associates and our stockholders. In the second half of Fiscal 2021, we expanded the pool of associates eligible to receive cash-based incentive awards by extending eligibility to additional associates across various job levels, roughly doubling the size of our eligible population. |
| a | Continues to evolve our approach to work flexibility, including supporting remote work arrangements for key roles and “work from anywhere days and weeks” for our corporate home office associates where feasible. |
| Associate Engagement | a | Improves associate engagement through open communication channels with a focus on development. |
| a | Regularly holds all-company meetings to communicate with our associates. |
| a | Collects feedback through engagement surveys to better understand associate experience and drive improvements, with the most recent organization-wide survey conducted in August 2021. |
| Developing Associates | a | Fosters associate development by providing a wide variety of growth and development opportunities throughout our associates’ careers. This includes stretch assignments, internal career pathing, self-awareness exercises, and active coaching. |
| a | Uses leadership standards to help associates identify the core behaviors essential for their career growth, as well as personal growth, on their journey with us. |
| Inclusion and Diversity | a | Embraces diversity and inclusion in all forms, including gender, race, ethnicity, disability, nationality, religion, age, veteran, LGBTQIA+ status, and other factors. |
| a | Continuously reviews representation, pay, and promotion among associates with diverse backgrounds, including those in senior leadership positions. |
| a | Encourages associates to enhance their understanding of diversity and inclusion through our various associate resource groups which allow associates from different business functions around the world to discuss relevant topics and help address region-specific needs. |
| a | Invests in year-round competency building training for associates on topics of bias, allyship, and advocacy. |
| Community Involvement | a | Encourages community involvement of our associates by promoting various charitable, philanthropic, and social awareness programs, which we believe fosters a collaborative and rewarding work environment. |
| a | Offers associates a paid volunteer day each year for eligible volunteer work. |
| Health and Safety | a | Focuses on the health and safety of our associates by investing in various wellness programs that are designed to enhance the physical, financial, and mental well-being of our associates globally. |
| a | Provides our benefits-eligible associates and their families with access to free and confidential counseling through our Employee Assistance Program, as well as free access to Headspace, a meditation and mindfulness app. We also provide regular programming on financial planning and mental health. |
| a | Continues the use of health and safety measures to address the risks of the COVID-19 pandemic, continued to allow certain associates to work remotely, and, after thoughtful planning, implemented phased return-to-office protocols. |
| a | Provided access to vaccinations by hosting multiple vaccine and booster clinics for our global home office and distribution center associates. |
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| 2022 Proxy Statement | 33 | Abercrombie & Fitch Co. |
DIRECTOR INDEPENDENCE AND RELATED PERSON TRANSACTIONS
Independence Determinations
Our Board has reviewed, considered, and discussed the relationships with the Company, both direct and indirect, of (i) each current director
candidate. A written statement from the candidate consenting to serveand (ii) each of Archie M. Griffin and Charles R. Perrin, who each served as a director
if elected, must accompany anyduring Fiscal 2021 until June 9, 2021, in order to determine whether such
recommendation.In addition, stockholders wishing to formally nominate a candidate for electionindividual meets the independence requirements of the applicable NYSE Rules. The Board has determined that ten of the eleven current directors of the Company as well as Archie M. Griffin and Charles R. Perrin qualify as independent under the applicable NYSE Rules. Specifically, the Board has determined that each of Kerrii B. Anderson, Terry L. Burman, Felix J. Carbullido, Susie Coulter, Sarah M. Gallagher, James A. Goldman, Michael E. Greenlees, Helen E. McCluskey, Kenneth B. Robinson, and Nigel Travis has, and that during each of their periods of service as a director may do so provided they comply with the notice procedures set forth in Section 2.04 of the Company’s Amended and
Restated Bylaws. A nominating stockholder must be a stockholder of record on both the date of the giving of the required notice of proposed nomination and the record date for determining the stockholders entitled to notice of and to vote at the relevant meeting of the stockholders.
The notice of a nominating stockholder in respect of an annual meeting of stockholders must be in writing and delivered in person or by U.S. certified mail, postage prepaid, and received by the Corporate Secretary of the Company, atArchie M. Griffin and Charles R. Perrin had, no commercial, industrial, banking, consulting, legal, accounting, charitable, familial or other relationship with the principalCompany, either directly or indirectly, that would be inconsistent with a determination of independence under the applicable NYSE Rules. Fran Horowitz does not qualify as independent because she is an executive officesofficer of the Company,Company.
Below is the relationship that was considered in connection with the independence determinations. The relationship described below was not less than 120 days nor more than 150 days prior toconsidered a material relationship that impacted the anniversary datenamed director’s independence.
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| Director | Description of Relationship |
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| Nigel Travis | Mr. Travis served on the Board of Directors of Office Depot, Inc. (now known as The ODP Corporation) from March 2012 to May 2020. The Company and our subsidiaries have, from time to time, had ordinary course business transactions with The ODP Corporation and its subsidiaries, in both the United States and the United Kingdom. In these transactions, the Company and its subsidiaries made payments that in the aggregate have not exceeded $122,500 in any year since the beginning of Fiscal 2019. Mr. Travis’ only interest in the underlying business relationship arose from his service as a director of Office Depot, Inc. The service by Mr. Travis on our Board while also serving as a director of Office Depot, Inc. was approved by our Nominating Committee. |
There are no family relationships among any of the immediately preceding annual meeting of stockholders, which, for purposescurrent directors, director nominees and executive officers of the Company. Please see the text under the caption “INFORMATION ABOUT OUR EXECUTIVE OFFICERS” within “ITEM 1. BUSINESS” in Part I of our Fiscal 2021 Form 10-K for information about the Company’s 2020 Annual Meeting, means no earlier thanexecutive officers.
Related Person Transaction Policy and Process and Conflicts of Interest
The Board has adopted the close of business on January 14, 2020 and no later than the close of business on February 13, 2020. The Corporate Secretary of the Company will deliver any stockholder nominations received in a timely manner for reviewAbercrombie & Fitch Co. Related Person Transaction Policy (the “RPT Policy”), which is administered by our Nominating Committee and Board Governance Committee.the Company’s General Counsel. A copy of the RPT Policy is posted on the “Corporate Governance” page of our corporate website at
corporate.abercrombie.com. The informational requirements for stockholder noticesRPT Policy applies to any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which the Company or one of our subsidiaries participates or will participate, the amount involved exceeds or is expected to exceed $120,000, and a “related person” had, has or will have a direct or indirect interest. Each year our directors (including any director nominees), executive officers and key influencers complete a questionnaire designed to elicit information about potential related person transactions. Any potential related person transaction that is raised will be analyzed by our General Counsel, in consultation with respectmanagement and outside counsel, as appropriate, to determine whether the transaction, arrangement or relationship constitutes a related person transaction requiring compliance with the RPT Policy.
Pursuant to the
nomination of director candidates are detailed and include the disclosure ofRPT Policy, all
derivative and synthetic instruments and short interests held by the nominating stockholder and such stockholder’s affiliates or associates as well as by any proposed nominee.A stockholder providing notice of any nomination proposedrelated person transactions (other than those deemed to be made at an annual meeting of stockholders must update and supplement such notice, if necessary, so thatpre-approved or ratified under the information provided is true and correct asterms of the record dateRPT Policy) will be referred to our Nominating Committee for determining the stockholders entitledapproval (or disapproval), ratification, revision, or termination. Our Nominating Committee may only approve or ratify those transactions that our Nominating Committee determines to receive notice for the annual meeting of stockholders. Such update and supplement must be delivered either in person or by U.S. certified mail, postage prepaid, and received by the Corporate Secretary of the Company, at the principal executive offices of the Company, not later than five business days after the record date for the annual meeting of stockholders at issue.
No person may be elected as a director unless he or she has been nominated by a stockholder in the manner just describedCompany’s best interests. In making this determination, our Nominating Committee will review and consider all relevant information available. Any related person transaction previously approved or ratified by our Nominating Committee or otherwise already existing that is ongoing in nature is to be reviewed by our Nominating Committee annually.
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| Abercrombie & Fitch Co. | 34 | 2022 Proxy Statement |
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| Transactions with Related Persons in Fiscal 2021 |
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| SeriousFun Children’s Network, Inc. (“SFCN”) |
The Company had an arrangement with SFCN, in which we committed a total pledge of no less than $7,500,000 over a five-year period from January 2016 to December 2020, including in-kind products donations and a donation of service hours. Due to the COVID-19 pandemic, the arrangement was extended through December 2021. In Fiscal 2021, we donated approximately $1,662,000 to SFCN representing proceeds from the A&F Challenge, our annual fundraising campaign, and in-store campaigns and approximately $975,000 in goods and services. Of this donation to SFCN, approximately $551,000 in cash was distributed to Flying Horse Farms, Inc. (“FHF”), a member camp of SFCN. In Fiscal 2021, we donated approximately $5,000 of goods and services to FHF. Ms. Horowitz joined the Board of Directors of SFCN in March 2017. Her spouse joined the Board of Directors of FHF in April 2017. Under the RPT Policy, any transaction where the related person’s interest derives solely from her position as a director of another corporation or organization that is a party to the transaction is considered pre-approved. To address any potential conflict of interest concerns, Ms. Horowitz was advised not to participate in any discussions, negotiations or decisions by our Board, our ESG Committee or any other persons associated with the Company with respect to contributions or donations proposed to be made to SFCN or FHF by or on behalf of the Company or our subsidiaries. |
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| Gregory J. Henchel, Executive Vice President, General Counsel and Corporate Secretary |
| Gregory J. Henchel serves as our Executive Vice President, General Counsel and Corporate Secretary. Mr. Henchel’s spouse is a partner in the law firm of Jones Day, which provided legal services to the Company and our subsidiaries in Fiscal 2021 and continues to do so. For providing these services, Jones Day received fees in Fiscal 2021 totaling approximately $181,500 and fees in Fiscal 2022 through March 24, 2022 totaling approximately $23,000. Mr. Henchel’s spouse does not receive any direct compensation from the fees paid to Jones Day by us, her ownership in Jones Day is significantly less than 1%, and the fees paid by us to Jones Day in Fiscal 2021 were less than 1% of Jones Day’s annual revenues. The engagement of Jones Day was reviewed and approved in accordance with the RPT Policy. |
Our Code of Business Conduct and Ethics, which was adopted by the Board,
also addresses the potential conflicts of interest which may arise when a director, an officer, or an associate has an interest in a transaction to which the Company or one of our subsidiaries is a party. If a potential conflict of interest arises concerning an officer or a
committee ofdirector, all information regarding the
Board.Nominations of Individuals for Election as Directors at the 2020 Annual Meeting Using Proxy Access
A stockholder, or group of upissue is to 20 stockholders, that has owned continuously for at least three years shares ofbe reported to the Company’s Common Stock representing an aggregate of at least 3% of our outstanding shares, may nominateChief Ethics and include inCompliance Officer and the Company’s proxy materials director nominees constituting upGeneral Counsel for review and, if appropriate or required under the Company’s policies (including the Company’s RPT Policy), submitted to 25%our Nominating Committee for review and disposition.
Indemnification Arrangements with Directors and Executive Officers
We indemnify our directors and our executive officers to the fullest extent permitted by the laws of
Delaware against personal liability in connection with their service to the
Board, provided that the stockholder(s) and nominee(s) satisfy the requirements in Section 2.04 of the Company’sCompany. This indemnification is required under our Amended and Restated
Bylaws. For purposesCertificate of
the Company’s 2020 Annual Meeting, notice of proxy access nominees must be received no earlier than the close of business on January 14, 2020Incorporation and
no later than the close of business on February 13, 2020.our Bylaws, and we have entered into agreements with these individuals contractually obligating us to provide this indemnification to them.
OTHER CORPORATE GOVERNANCE MATTERS
Directors Who Substantially Change Their Job Responsibility
A director must inform our Chairperson of the Company Chairman or the Lead Independent Director, as applicable,Board and the Chair of our Nominating and Board Governance Committee as promptly as feasible, in advance, if the director is contemplating a change in employment, membership on another public company board of directors or any other board membership, or other change in status or circumstances that might cause the Board to conclude that the director is no longer independent, is no longer qualified to serve on the Board, or might not be able to continue to serve effectively, or that such service otherwise is no longer appropriate. Such prior notice is intended to permit management of the Company to conduct a preliminary analysis of the potential impact of the proposed change on the director’s independence and/or service, and for the Company Chairman or the Lead Independent Director, if applicable, and the Chair of our Nominating and Board Governance Committee to consider that analysis and, as appropriate, to consult with the director before the director commits to the proposed change.service. If the determination is made that the potential change constitutes a conflict of interest or interferes with the director’s ability to carry out his or her responsibilities as a director of the Company, the director must immediately submit a letter of resignation or not proceed with the potential change.
If sufficient prior notice cannot be given, the director must immediately submit a letter of resignation to our Chairperson of the Company Chairman or the Lead Independent Director, if applicable,Board and the Chair of our Nominating and Board Governance Committee. Upon receipt of such a letter of resignation, our Chairperson of the Company Chairman or the Lead Independent Director, if applicable,Board and the Chair of our Nominating and Board Governance Committee will duly consider the matter and make a timely recommendation to the full Board of the appropriate action, if any, to be taken with respect to the resignation.
It
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| 2022 Proxy Statement | 35 | Abercrombie & Fitch Co. |
Anti-Hedging Policy
The Company’s Policy Statement Regarding Trading in Company Securities and Compliance with Federal Securities Laws (the “Insider Trading Policy”) applies to directors, officers, and certain associates, or “insiders,” designated by the Company’s General Counsel. Under the Insider Trading Policy, transactions that shift the economic consequences of ownership of Company securities to any third party, including the purchase or sale of puts, calls, or listed options and hedging transactions, such as caps and collars, are prohibited. In addition, under the Company’s Associate Handbook, associates, whether or not considered an insider, may not at any time engage in transactions which shift the economic consequences of ownership of Company securities to any third party, including the purchase or sale of puts or calls, or hedging transactions, such as caps and collars.
Communications with the Board
Communications by stockholders and other interested parties to individual directors or the Board can be addressed to 6301 Fitch Path, New Albany, Ohio 43054, Attention: Corporate Secretary.
All such letters must identify the author as a stockholder or other interested party and clearly state the intended recipient. Copies of all such letters will be circulated to the appropriate director or directors. The mailing envelope must contain a clear notation indicating that the enclosed letter is not the sensea “Stockholder/Interested Party — Non-Management Director Communication,” “Stockholder/Interested Party — Board Communication,” “Stockholder/Interested Party — Independent Director Communication,” or “Stockholder/Interested Party — Chairperson of the Board thatCommunication,” as appropriate.
Correspondence marked “personal and confidential” will be delivered to the intended recipient without opening. There is no screening process in
every instance a director who is contemplating a change in the director’s job responsibilityrespect of communications from stockholders or other
status should leave the Board. There should, however, be an opportunity for the Board, through the Company Chairman or the Lead Independent Director, if applicable, and the Chair of our Nominating and Board Governance Committee, to review the effect, if any, of the proposed change on the interests of the Company.Board Role in Risk Oversight
The Board oversees the management of risks related to the operation of our Company. As part of its oversight, the Board receives periodic reports from members of our Enterprise Risk Management Committee, which is comprised of senior management of the Company, on various aspects of risk, including our enterprise risk management program. The committees of the Board also oversee the management of risks that fall within their respective areas of responsibility. In performing this function, each Board committee has full access to management, as well as the ability to engage advisors. The Chair of each Board committee reports on the applicable committee’s activities at each Board meeting and has the opportunity to discuss risk management with the full Board at that time.
Our Audit and Finance Committee oversees our policies with respect to risk assessment and risk management, as required under its charter and by applicable NYSE Rules. As an extension of this role, our Audit and Finance Committee oversees the Company’s enterprise risk management framework, the risk tolerance of the Company, the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. Our Audit and Finance Committee also receives quarterly reports from our Enterprise Risk Management Committee and the Company’s General Counsel on various issues of risk and risk management programs. In addition, our Audit and Finance Committee meets privately on a regular basis with representatives of the Company’s independent registered public accounting firm to discuss the Company’s auditing and accounting processes and management.
Our Compensation and Organization Committee assesses the incentives and risks arising from or related to the Company’s compensation programs and plans. Our Compensation and Organization Committee receives a risk assessment from its independent compensation consultant that analyzes the risks represented by each component of our executive compensation program, as well as mitigating factors, as discussed in further detail below.
Our Nominating and Board Governance Committee reviews issues related to the Company’s governance structure, corporate governance matters and processes and risks arising from related person transactions.
Our Corporate Social Responsibility Committee reviews issues related to diversity and inclusion, human rights and environmental and philanthropic matters.
Risk Assessment in Compensation Programs
Consistent with SEC disclosure requirements, management of the Company and our Compensation and Organization Committee have assessed the Company’s compensation programs. Based upon all of the facts and circumstances available to the Company at the time of the filing of this Proxy Statement, management of the Company and our Compensation and Organization Committee have concluded that there are no risks arising from the Company’s compensation policies and practices that are reasonably likely to have a material adverse effect on the Company. This assessment was overseen by our Compensation and Organization Committee, in consultation with its independent counsel and independent compensation consultant.
interested parties. We reviewed the compensation policies and practices in effect for our executive officers, our senior management and our associates and assessed the features we have built into the compensation programs to discourage excessive risk-taking. These features include, among other things, a balance between different elements of compensation and use of different time periods and performance metrics for different elements of compensation. The annual cash incentive program under the Abercrombie & Fitch Co. Short-Term Cash Incentive Compensation Performance Plan (the “Short-Term Cash Incentive Plan”) for the leadership team reflects performance on Adjusted EBIT goals. The annual cash incentive program under the Short-Term Cash Incentive Plan for associates below the leadership team level reflected corporate and brand-based performance measures for Fiscal 2018. The Company has also imposed stock ownership guidelines on senior management and included clawback provisions in our cash-based incentive plans and our equity-based incentive plans which are applicable to all participating associates.
Base Salary
Each job held by an associate below the leadership team level is assessed against the competitive market, and a range of base pay (within an overall salary grade structure) is assigned.
| • | | Individual merit pay decisions are constrained by a grid which relates the size of a pay increase to a given level of individual performance and/or competitive market position, subject to aggregate caps (i.e., the merit increase budget).
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| Abercrombie & Fitch Co. | 36 | 2022 Proxy Statement |
At the leadership team level and for certain other designated officers, the Company reviews market data for the applicable position, and all pay decisions are reviewed and approved by our Compensation and Organization Committee.
Annual Cash Incentive Compensation
In Fiscal 2018, annual cash incentive payments under the Short-Term Cash Incentive Plan to all leadership team members other than Kristin Scott and Stacia Andersen were determined by overall Company performance on Adjusted EBIT goals, a critical measure of the overall operating results of the business. In the case of Ms. Scott and Ms. Andersen, in their roles as Brand Presidents, their annual cash incentive payouts were based on both overall Company results and the results of their respective Brands.
Our Compensation and Organization Committee approves all goals for the annual cash incentive program and reviews and certifies performance achievement at the conclusion of the fiscal year.
The ability for a single individual to affect overall corporate EBIT is limited to a handful of the most senior executives.
Individual awards are capped for every associate, and are subject to Compensation and Organization Committee approval and, if necessary, our Compensation and Organization Committee’s negative discretion.
Long-Term Equity-Based Incentive Plans
In Fiscal 2018, the Company granted a mix of market-based performance share awards (“PSAs”) and restricted stock units (“RSUs”) under the 2016 Associates LTIP. For leadership team members, including the named executive officers, the mix was 50% in PSAs and 50% in time-vested RSUs. Lower management levels received time-vested RSUs.
These RSU awards vest over three or four years subsequent to grant, and provide a significant retention “hold” on associates, who would forfeit considerable value should they leave the Company prior to vesting.
In Fiscal 2018, the design of the PSAs granted to the named executive officers provided for vesting based upon two performance metrics linked to the Company’s operating and stockholder return goals: Average Return on Invested Capital (“Average ROIC”) and Relative Total Stockholder Return (“TSR”) versus the S&P Retail Select Industry Index (“Relative TSR”).
For PSAs, the time frame for measuring performance extends over three years, and three-year cliff vesting applies.
Our Compensation and Organization Committee approves all PSA goals and reviews and certifies performance achievement at the conclusion of the three-year performance cycle.
Use of complementary metrics for annual cash incentives and PSAs, as well as a variety of time frames, serves to further mitigate risk.
The Compensation and Organization Committee has approved the following changes to the Fiscal 2019 long-term incentive design: (i) the long-term incentive mix for our leadership team will shift from 50% PSAs and 50% RSUs to 60% PSAs and 40% RSUs to provide additional alignment between leadership team pay and multi-year financial results; (ii) Total Net Sales will be added as a third, equally-weighted metric for PSA grants (in addition to Average ROIC and Relative TSR) as we seek to align our performance-based compensation with our goal to accelerate the growth of our brands; and (iii) the vesting schedule for time-vested RSUs granted to members of our leadership team will be reduced from four years to three years (vesting ratably) to more closely reflect competitive practice among our peer group ofsimilarly-sized, specialty retailers against whom we compete for talent.
Compensation of Directors
Our
The Board believes that compensation paid to ournon-employee non-associate directors should be competitive with other retailers of comparable size and should enable us to attract and retain individuals of the highest quality to serve as our directors. In Fiscal 2018, the independent compensation consultant to our Compensation and Organization Committee reviewed and evaluated the Company’s compensation program for thenon-employee directors. The Board believes that a significant portion ofnon-employee director compensation shouldTo align director interests with the long-term interests of our stockholders. Accordingly,non-employeestockholders, non-associate directors receive a combination of cash and equity-based compensation for their service. Additionally, we believe
Non-Associate Director Compensation Program
In February 2021, the independent compensation consultant to our Compensation Committee reviewed and evaluated the Company’s compensation program for the non-associate directors and determined that, compensation for ournon-employee directors should be commensurate with the relative workload of the Board and individual Board members. As a result,at that time, average director compensation for ourthe Board was positioned 14% abovewithin a competitive range of median for our peer group. As such, the medianCompensation Committee did not recommend changes to the non-associate director compensation program for Fiscal 2021. In February 2022, the independent compensation consultant to our Compensation Committee reviewed and evaluated the Company’s compensation program for the non-associate directors. Following this review and consideration by the Compensation Committee, the Board, upon the recommendation of the Compensation Committee, approved an increase to the annual cash retainer for non-associate directors. Effective immediately following the 2022 Annual Meeting, the annual cash retainer received by non-associate directors will increase to $80,000, which will maintain the positioning of our non-associate director compensation program within a competitive range of median for our peer group in Fiscal 2018, primarily due to the relative frequency of our Board and Board committee meetings.Annual Compensation
group.
Any officer of the Company who is also a director receives no additional compensation for services rendered as a director.
For Fiscal 2018, directors who are not associates of the Company or its subsidiaries(“non-associate directors”) were entitled to receive and they continue to be entitled to receive:anThe annual cash retainer program for Fiscal 2021 was structured as follows (cash retainers were pro-rated for directors who did not serve the full year during Fiscal 2021):
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| Board Annual Cash Retainer Program |
| |
| Non-associate director | $65,000 |
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| Board Committee Annual Cash Retainer Program | Chair | Member |
| | |
| Audit Committee | $40,000 | $25,000 |
| Compensation Committee | $30,000 | $12,500 |
| Nominating Committee, ESG Committee, or Executive Committee | $25,000 | $12,500 |
Each of $65,000 for Board service (paid quarterly in arrears);
an additional annualthe cash retainer for each standing committee Chair and member: (i) the Chair and the members of our Audit and Finance Committee are to receive an additional annual cash retainer of $40,000 and $25,000, respectively; (ii) the Chair and the members of our Compensation and Organization Committee are to receive an additional annual cash retainer of $30,000 and $12,500, respectively; and (iii) the Chairs and the members of all other standing committees are to receive an additional annual cash retainer of $25,000 and $12,500, respectively. In each case, the retainers areis paid quarterly in arrears;
| • | | an additional annual cash retainer for ourNon-Executive Chairman of the Board as described below under the caption for “Terry L. Burman –Non-Executive Chairman of the Board Compensation”;
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arrears. In addition to cash retainers, all non-associate directors receive an annual grant of RSUs to be grantedas follows (pro-rated for a year of partial service):
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| Annual Grant of RSUs |
| |
Grant date fair value(1) | $150,000 |
(1)Granted on the date of the Company’s annual meeting of stockholders or upon the appointment of the Company (if thenon-associate directors continue to serve after the annual meeting of stockholders) and which will vestdirector. These RSUs become fully vested on the earlier of (i) the first anniversary of the grant date or (ii) the date of the next regularly scheduled annual meeting of stockholders of the Company after the grant date; in each case, subject to earlier vesting in the event of anon-associate director’s death or total disability or upon termination of service in connection with a change of control of the Company.
The market valueCompany also maintains two deferred compensation plans referred to collectively as the “Directors’ Deferred Compensation Plan.” Under the Directors’ Deferred Compensation Plan, a non-associate director may voluntarily elect to defer all or a part of his or her retainers and stock-based incentives the Company would otherwise pay him or her and/or the shares of our Common Stock he or she would otherwise receive upon settlement of his or her RSUs. The amount deferred by a non-associate director under the Directors’ Deferred Compensation Plan is credited to a deferred stock unit account where it is converted into a share equivalent. Dividend equivalents will be credited on the shares of Common Stock underlyingcredited to a non-associate director’s bookkeeping account (at the annual grantsame rate as cash dividends are paid in respect of RSUs on the grant date is to be $150,000. This grant,outstanding shares of Common Stock) and converted into a share equivalent.
| based on the market value of the shares of Common Stock underlying the RSUs to be granted, aligns with market practice and results in a consistent market value for the RSUs granted each year; and
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| 2022 Proxy Statement | 37 | Abercrombie & Fitch Co. |
| • | | an additional grant of RSUs for ourNon-Executive Chairman of the Board as described below under the caption for “Terry L. Burman –Non-Executive Chairman of the Board Compensation.”
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Arthur C. Martinez
In connection with
COMPENSATION OF DIRECTORS
Participating non-associate directors may elect the resignationtime of deferral and whether distribution of the deferred amounts will be in the form of a single lump-sum transfer or annual installments. If a non-associate director makes no election, all amounts deferred under the Directors’ Deferred Compensation Plan will be distributed upon termination of service and in a lump sum. Regardless of any election made by Arthur C. Martinez froma non-associate director, all amounts deferred will be distributed in a single lump sum in the roleevent of Executive Chairmana change in control of the Company.
All non-associate directors are reimbursed for their expenses for attending meetings of the Board
and Board committees and receive the discount on purchases of the
Company’s merchandise extended to all Company
effective April 2, 2018 (the execution date by Mr. Martinez), the Company and Mr. Martinez entered into an agreement to set forth the terms of Mr. Martinez’s cash and equity compensation for his service as anon-associate director of the Company for the period from February 4, 2018 through the 2018 Annual Meeting held on June 14, 2018. The portion of the Executive Chairman Cash Retainer ($179,945), which would have been paid to Mr. Martinez for the period from February 4, 2018 through June 14, 2018, was forfeited. Mr. Martinez instead received (i) apro-rated amount of the standard $65,000 annual cash retainer fornon-associate directors in the amount of $23,393 and (ii) apro-rated amount of the $12,500 annual cash retainer for members of our Executive Committee in the amount of $4,499, in each case for his service from February 4, 2018 through June 14, 2018. Mr. Martinez also received apro-rated portion of the standard RSU grant fornon-associate directors for the period from February 4, 2018 through June 14, 2018 covering 4,309 shares. Apro-rated portion of Mr. Martinez’s Executive Chairman RSU Retainer (which had been granted on the date of the 2017 Annual Meeting of Stockholders), covering 24,413 shares, for the period between February 4, 2018 and June 14, 2018, was forfeited.Terry L. Burman –Non-Executive Chairman of the Boardassociates.
Chairperson Compensation
In connection with Mr. Burman’s assumption of the role ofNon-Executive Chairman of the Board on February 3, 2018 and his resignation as the Chair of our Nominating and Board Governance Committee effective February 23, 2018, his compensation as Chair of our Nominating and Board Governance Committee waspro-rated for the period from June 15, 2017 through February 23, 2018 to reflect his service in that role during Fiscal 2018.
In his capacity as theNon-Executive Chairman of the Board of the Company, Mr. Burman’s compensation was immediately adjusted to reflect the scope of his new role. Mr. Burman’s additional pay asNon-Executive Chairman of the Board was set to reflect the increased demands of the role given the Board’s large workload and high meeting frequency during the Company’s ongoing transformation.
Mr. Burman
received and will continue to receive the following compensation:anreceives additional annual cash retainer of $100,000 (the“Non-Executive Chairman Cash Retainer”), paid quarterly in arrears, with the amount of theNon-Executive Chairman Cash Retainerpro-rated for the period from February 3, 2018 through the date of the 2018 Annual Meeting so that Mr. Burman received $35,989 for such period; and
an additional annual grant of RSUs, with a grant date value of $100,000 (the“Non-Executive Chairman RSU Retainer”), with theNon-Executive Chairman RSU Retainerpro-rated for the period from February 3, 2018 through the date of the 2018 Annual Meeting. These additional RSUs for thepro-rated period were granted to Mr. Burman in February of 2018, with an approximate market value of $35,989, and vested on the date of the 2018 Annual Meeting.
Mr. Burman’s compensation for his role as theNon-Executive ChairmanChairperson of the Board was intentionally set at the high endBoard. His scope of the competitive market range to reflect:responsibilities include: (i) his active Board leadership and collaboration with management during the Company’s ongoing transformation; (ii) his role in Board leadership continuity as we transition from the “Stabilizing while Transforming” phase of our strategic plan to the critical “Growing while Transforming” phase; and (iii)(ii) the Board’s large workload and high meeting frequency as a result of the Company’s continued commitment to proactive and strong governance practices.
Accordingly, and keeping in line with our philosophy thatnon-associate director The additional compensation should be commensurate with the Board’s relative workload, Mr. Burman received and he continues to be entitled to
receive the full amount of the annualNon-Executive Chairman Cash Retainer (paid to him quarterly in arrears) and the annual grant of theNon-Executive Chairman RSU Retainer subject to the following provisions:
Chairperson for Fiscal 2021 was unchanged from last year and structured as follows:RSUs representing the full amount of the
| | | | | |
| Chairperson Compensation |
| |
| Additional Annual Cash Retainer | $100,000 |
Additional Annual Grant of RSUs, Grant date fair value(1) | $100,000 |
Non-Executive(1) Chairman RSU Retainer are to be grantedGranted on the date of the Company’s annual meeting of stockholders of the Company;
stockholders. These RSUs will vestbecome fully vested on the earlier of (i) the first anniversary of the grant date or (ii) the date of the next regularly scheduled annual meeting of stockholders of the Company after the grant date; in each case, subject to earlier vesting in the event of Mr. Burman’s death or total disability or upon termination of service in connection with a change of control of the Company; and
Company.if Mr. Burman’s service asNon-Executive Chairman of the Board ends for any reason other than his death or total disability, apro-rata portion of unvested RSUs subject to theNon-Executive Chairman RSU Retainer will vest to reflect the portion of the year that has elapsed between the grant date and the date on which his service asNon-Executive Chairman of the Board ends.
Allnon-associate directors are reimbursed for their expenses for attending meetings of the Board of Directors and Board committees and receive the discount on purchases of the Company’s merchandise extended to all Company associates.
Directors’ Deferred Compensation Plan
The Company has maintained the Directors’ Deferred Compensation Plan since October 1, 1998. The Directors’ Deferred Compensation Plan was split into two plans (Plan I and Plan II) as of January 1, 2005 to comply with Internal Revenue Code Section 409A. The terms of Plan I govern “amounts deferred” (within the meaning of Section 409A) in taxable years beginning before January 1, 2005 and any earnings thereon. The terms of Plan II govern “amounts deferred” in taxable years beginning on or after January 1, 2005 and any earnings thereon. Voluntary participation in the Directors’ Deferred Compensation Plan enables anon-associate director of the Company to defer all or a part of his or her retainers, meeting fees (which are no longer paid) and stock-based incentives (including options, restricted shares of Common Stock and RSUs). The deferred compensation is credited to a bookkeeping account where it is converted into a share equivalent. Stock-based incentives deferred pursuant to the Directors’ Deferred Compensation Plan are credited as shares of Common Stock. Amounts otherwise payable in cash are converted into a share equivalent based on the fair market value of the Company’s Common Stock on the date the amount is credited to anon-associate director’s bookkeeping account. Dividend equivalents will be credited on the shares of Common Stock credited to anon-associate director’s bookkeeping account (at the same rate as cash dividends are paid in respect of outstanding shares of Common Stock) and converted into a share equivalent. Eachnon-associate director’s only right with respect to his or her bookkeeping account (and the amounts allocated thereto) will be to receive distribution of the amount in the account in accordance with the terms of the Directors’ Deferred Compensation Plan. Distribution of the deferred amount is made in the form of a singlelump-sum transfer of the whole shares of Common Stock represented by the share equivalents in thenon-associate director’s bookkeeping account (plus cash representing the value of fractional shares) or annual installments in accordance with the election made by thenon-associate director. Shares of Common Stock will be distributed under the Company’s 2016 Directors LTIP in respect of deferred compensation allocated tonon-associate directors’ bookkeeping accounts on or after June 16, 2016, under the Company’s 2005 Long-Term Incentive Plan (the “2005 LTIP”) in respect of deferred compensation allocated tonon-associate directors’ bookkeeping accounts between August 1, 2005 and June 15, 2016, under the Company’s 2003 Stock Plan forNon-Associate Directors in respect of deferred compensation allocated tonon-associate directors’ bookkeeping accounts between May 22, 2003 and July 31, 2005 and under the 1998 Restatement of the Company’s 1996 Stock Plan forNon-Associate Directors in respect of deferred compensation allocated tonon-associate directors’ bookkeeping accounts prior to May 22, 2003.
Fiscal 2021 Director Compensation Table
Table*
The following table summarizes the compensation paid to, awarded to or earned by, each individual who served as anon-associate director of the Company at any time during Fiscal 20182021 for service on the Board.
Helen E. McCluskey | | | | | | | | | | | |
Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2) | Total ($) |
| | | |
Kerrii B. Anderson(3) | 117,500 | 150,000 | 267,500 |
| Terry L. Burman | 190,000 | 250,000 | 440,000 |
| Felix J. Carbullido | 90,000 | 150,000 | 240,000 |
| Susie Coulter | 85,570 | 150,000 | 235,570 |
| Sarah M. Gallagher | 90,000 | 150,000 | 240,000 |
| James A. Goldman | 90,000 | 150,000 | 240,000 |
| Michael E. Greenlees | 86,360 | 150,000 | 236,360 |
Archie M. Griffin(4) | 31,896 | — | 31,896 |
| Helen E. McCluskey | 120,000 | 150,000 | 270,000 |
Charles R. Perrin(4) | 31,896 | — | 31,896 |
Kenneth B. Robinson(5) | 97,081 | 150,000 | 247,081 |
| Nigel Travis | 127,500 | 150,000 | 277,500 |
*The aggregate value of the perquisites and Nigel Travis areother personal benefits received by each of the individuals named in this table for Fiscal 2021 was less than $10,000 and is not included in this table because they did not serve as directors of the Company during Fiscal 2018, having been elected as directors of the Company effective February 3, 2019. The Company’s Chief Executive Officer table.
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| Abercrombie & Fitch Co. | 38 | 2022 Proxy Statement |
COMPENSATION OF DIRECTORS
(1)Fran Horowitz is not included in thisthe table because,above since, as an officer of the Company, she receives no compensation for her services as a director. The compensation received by Ms. Horowitz as an officerdirector of the CompanyCompany. Ms. Horowitz’s compensation is shownreflected in the“Fiscal 2018 “Fiscal 2021 Summary Compensation Table” beginning on page 7656 of this Proxy Statement and discussed in (2)Each of the text and tables included under the section captioned“EXECUTIVE OFFICER COMPENSATION” beginning on page 76 of this Proxy Statement.Director Compensation for Fiscal 2018
| | | | | | | | | | | | | | | | | | | | |
Name | | Fees Earned
or Paid in
Cash | | | Stock
Awards | | | Option
Awards(1) | | | All Other
Compensation(2) | | | Total | |
Kerrii B. Anderson(3) | | $ | 82,830 | | | $ | 190,278 | (4)(5) | | $ | — | | | | N/A | | | $ | 273,108 | |
James B. Bachmann | | $ | 124,437 | | | $ | 145,378 | (5) | | $ | — | | | | N/A | | | $ | 269,815 | |
Bonnie R. Brooks(6) | | $ | 37,088 | | | $ | 145,378 | (5) | | $ | — | | | | N/A | | | $ | 182,466 | |
Terry L. Burman | | $ | 190,000 | | | $ | 278,303 | (5)(7) | | $ | — | | | | N/A | | | $ | 468,303 | |
Sarah M. Gallagher | | $ | 90,000 | | | $ | 145,378 | (5) | | $ | — | | | | N/A | | | $ | 235,378 | |
Michael E. Greenlees | | $ | 120,000 | | | $ | 145,378 | (5) | | $ | — | | | | N/A | | | $ | 265,378 | |
Archie M. Griffin | | $ | 102,500 | | | $ | 145,378 | (5) | | $ | — | | | | N/A | | | $ | 247,878 | |
Arthur C. Martinez(8) | | $ | 27,891 | | | $ | — | | | $ | — | | | | N/A | | | $ | 27,891 | |
Charles R. Perrin | | $ | 134,229 | | | $ | 145,378 | (5) | | $ | — | | | | N/A | | | $ | 279,607 | |
(1) | None of the individuals named in this table held outstanding options at February 2, 2019.
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(2) | The aggregate value of the perquisites and other personal benefits received by each of the individuals named in this table for Fiscal 2018 was less than $10,000.
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(3) | Ms. Anderson became a director on February 23, 2018.
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(4) | Ms. Anderson was granted RSUs covering 2,186 shares of Common Stock on February 23, 2018. The amount of $44,900 included in the total amount shown in this column for Ms. Anderson is reported using the grant date fair value of the award, as computed in accordance with U.S. generally accepted accounting principles (“GAAP”), of $20.54 per RSU, based upon the closing price of the Company’s Common Stock on the grant date ($20.93) and adjusted for anticipated dividend payments during the vesting period. See “Note 12. Share-Based Compensation” of the Notes to Consolidated Financial Statements included in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of the Company’s Fiscal 2018 Form10-K, for the assumptions used in the calculation of the amount shown and information regarding the Company’s share-based compensation. The award of RSUs granted to Ms. Anderson on February 23, 2018 vested in accordance with its terms on the date of the 2018 Annual Meeting.
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(5) | Each of the currentcurrent non-associate directors, other than Ms. McCluskey and Mr. Travis who were not then serving asnon-associate directors was granted an award of RSUs covering 5,862 shares of Common Stock on June 14, 2018, the date of the 2018 Annual Meeting. In addition, Bonnie R. Brooks, who was then serving as anon-associate director of the Company was also granted an award of RSUs covering 5,862 shares of Common Stock on June 14, 2018. The amount of $145,378 shown in this column for the currentnon-associate directors (other than Ms. McCluskey and Mr. Travis) and for Ms. Brooks is reported using the grant date fair value of the award, as computed in accordance with GAAP, of $24.80 per RSU, based upon the closing price of the Company’s Common Stock on the grant date ($25.59) and adjusted for anticipated dividend payments during theone-year vesting period. See “Note 12. Share-Based Compensation” of the Notes to Consolidated Financial Statements included in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of the Company’s Fiscal 2018 Form10-K, for the assumptions used in the calculation of the amounts shown and information regarding the Company’s share-based compensation. Each award of RSUs granted on the date of the 2018 Annual Meeting remained outstanding at February 2, 2019, except the award of RSUs granted to Ms. Brooks, which was forfeited upon her resignation from the Board.
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(6) | Ms. Brooks served as a director during Fiscal 2018 from February 4, 2018 to July 3, 2018.
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(7) | Mr. Burman was granted RSUs covering 1,753 shares of Common Stock on February 23, 2018. The amount of $36,007 included in the total amount shown in this column for Mr. Burman is reported using the grant date fair value of the award, as computed in accordance with GAAP, of $20.54 per RSU, based on the closing price of the Company’s Common Stock on the grant date ($20.93) and adjusted for anticipated dividend payments during the four-month vesting period. See “Note 12. Share-Based Compensation” of the Notes to Consolidated Financial Statements included in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of the Company’s Fiscal 2018 Form10-K, for the assumptions used in the calculation of the amount shown and information regarding the Company’s share-based compensation. The award of RSUs granted to Mr. Burman on February 23, 2018 vested on the date of the 2018 Annual Meeting.
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Mr. Burman was granted an additional award of RSUs covering 3,9083,615 shares of Common Stock on June 9, 2021, the date of the 20182021 Annual Meeting. The amount of $150,000 included in the total amount shown in this column for each of the current non-associate directors is reported using the grant date fair value of the award, as computed in accordance with GAAP, of $41.50 per RSU, based upon the closing price of the Company’s Common Stock on the grant date ($41.50) and adjusted for anticipated dividend payments during the one-year vesting period. See “Note 14. Share-Based Compensation” of the Notes to Consolidated Financial Statements included within “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of our Fiscal 2021 Form 10-K for the assumptions used in calculating the amounts shown and information regarding the Company’s share-based compensation. Each award of RSUs granted on the date of the 2021 Annual Meeting remained outstanding at January 29, 2022. Messrs. Griffin and Perrin were not granted an award of RSUs since they no longer served as directors of the Company after the 2021 Annual Meeting.
Mr. Burman was granted RSUs covering an additional 2,410 shares of Common Stock on June 9, 2021, the date of the 2021 Annual Meeting. The amount of
$96,918$100,000 included in the total amount shown in this column for Mr. Burman is reported using the grant date fair value of the award, as computed in accordance with GAAP, of
$24.80$41.50 per RSU, based
onupon the closing price of the Company’s Common Stock on the grant date ($
25.59)41.50) and adjusted for anticipated dividend payments during the
one-year vesting period. See “Note
12.14. Share-Based Compensation” of the Notes to Consolidated Financial Statements included
inwithin “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of
the Company’sour Fiscal
20182021 Form
10-K for the assumptions used in
the calculation ofcalculating the amount shown and information regarding the Company’s share-based compensation.
TheThis award of RSUs granted to Mr. Burman on the date of the
20182021 Annual Meeting remained outstanding at
February 2, 2019.(8) | Mr. Martinez served as a director during Fiscal 2018 from February 4, 2018 to June 14, 2018.
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Corporate Governance Guidelines
In accordance with applicable NYSE Rules,January 29, 2022.
The aggregate number of RSUs outstanding as of January 29, 2022 held by each individual who served as a non-associate director of the Company at any time during Fiscal 2021 is provided under the table captioned “Directors’ Outstanding RSUs” below.
(3)During Fiscal 2021, Ms. Anderson deferred $29,375 of her retainer, pursuant to the Directors’ Deferred Compensation Plan. The deferred portion of Ms. Anderson’s retainer is included in the amount shown in the “Fees Earned or Paid in Cash” column.
(4)The terms of Messrs. Griffin and Perrin as directors of the Company ended immediately prior to the Company’s 2021 Annual Meeting.
(5)Mr. Robinson first became a director of the Company upon his election by the Board has adopted the Abercrombie & Fitch Co. Corporate Governance Guidelines to promote the effective functioningon February 4, 2021.
Directors’ Outstanding RSUs
The following table summarizes outstanding RSUs as of January 29, 2022 held by each individual who served as a non-associate director of the
Board and its committees and to reflect the Company’s commitment to the highest standards of corporate governance. The Board, with the assistance of our Nominating and Board Governance Committee, periodically reviews the Corporate Governance Guidelines to ensure they reflect changes in legal or regulatory requirements, evolving corporate governance practices and the Board’s policies and procedures. The Corporate Governance Guidelines are available on the “Corporate Governance” page within the “Our Company” section of the Company’s websiteCompany at
corporate.abercrombie.com.Code of Business Conduct and Ethics
In accordance with applicable NYSE Rules, the Board has adopted the Abercrombie & Fitch Co. Code of Business Conduct and Ethics, a copy of which any time during Fiscal 2021.
| | | | | |
Name(1) | Number of Outstanding RSUs |
| |
| Kerrii B. Anderson | 3,615 |
| Terry L. Burman | 6,025 |
| Felix J. Carbullido | 3,615 |
| Susie Coulter | 3,615 |
| Sarah M. Gallagher | 3,615 |
| James A. Goldman | 3,615 |
| Michael E. Greenlees | 3,615 |
| Archie M. Griffin | — |
| Helen E. McCluskey | 3,615 |
| Charles R. Perrin | — |
| Kenneth B. Robinson | 3,615 |
| Nigel Travis | 3,615 |
(1)Fran Horowitz is available on the “Corporate Governance” page within the “Our Company” section of the Company’s website atcorporate.abercrombie.com. The Code of Business Conduct and Ethics, which is applicable to all associates, managers, officers and directors worldwide (including members of the Board), incorporates an additional Code of Ethics applicable to the Chief Executive Officer, the Chief Financial Officer, Controllers, the Treasurer, all Vice Presidentsnot included in the Finance Department and other designated financial associates. The Company intends to satisfy any disclosure requirements regarding any amendment of, or waiver from, a provision of the Code of Business Conduct and Ethics by posting such information on the “Corporate Governance” page within the “Our Company” section of the Company’s website atcorporate.abercrombie.com.Compensation and Organization Committee Interlocks and Insider Participation
With respect to Fiscal 2018 and from February 3, 2019 through the date of this Proxy Statement, there were no interlocking relationships between any executivetable above since, as an officer of the Company, and any entity, one of whose executive officers serves or served on our Compensation and Organization Committee or the Board, or any other relationship required to be disclosed in this section under the applicable SEC rules.
Our Compensation and Organization Committee is currently comprised of Michael E. Greenlees (Chair), Helen E. McCluskey and Charles R. Perrin. Each of Messrs. Greenlees and Perrin servedshe receives no compensation for her services as a member of our Compensation and Organization Committee throughout Fiscal 2018. Ms. McCluskey was appointed to our Compensation and Organization Committee on February 22, 2019. James B. Bachmann served as a member of our Compensation and Organization Committee from July 16, 2018 to February 22, 2019. Bonnie R. Brooks served as a member of our Compensation and Organization Committee from February 4, 2018 to July 3, 2018.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table furnishes, with respect to each person who is known to the Company to be the beneficial owner of more than 5%director of the outstanding shares of Common Stock of the Company, the name and address of such beneficial owner, the number of shares of Common Stock reported as beneficially owned (as determined in accordance with RuleCompany. 13d-3 under the Exchange Act) by such beneficial ownerMs. Horowitz’s compensation is reflected in the most recent Schedule 13G/A filed with the SEC and the percentage such shares comprised“Fiscal 2021 Summary Compensation Table” beginning on page 56 of the outstanding shares of Common Stock of the Company as of April 15, 2019.
| | | | | | | | |
Name and Address of Beneficial Owner | | Amount and
Nature of Beneficial
Ownership | | | Percent of
Class(1) | |
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | | | 11,772,019 | (2) | | | 17.7 | % |
| | |
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | | 9,748,353 | (3) | | | 14.6 | % |
| | |
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, TX 78746 | | | 5,693,249 | (4) | | | 8.5 | % |
(1) | The percent of class is based upon 66,617,373 shares of Common Stock outstanding on April 15, 2019.
| | | | | | | |
(2)2022 Proxy Statement | Based on information contained in a Schedule 13G/A filed by The Vanguard Group, Inc. with the SEC on February 11, 2019 to report beneficial ownership of shares of the Company’s Common Stock as of December 31, 2018, and, consequently, the beneficial ownership of The Vanguard Group, Inc. may have changed prior to the printing of this Proxy Statement. In the Schedule 13G/A, The Vanguard Group, Inc. reported that it is deemed to be the beneficial owner of 11,772,019 shares of Common Stock. The Vanguard Group, Inc. reported sole voting power as to 67,139 shares of Common Stock, shared voting power as to 12,185 shares of Common Stock, sole dispositive power as to 11,700,551 shares of Common Stock and shared dispositive power as to 71,468 shares of Common Stock.
|
Vanguard Fiduciary Trust Company (“VFTC”), a wholly-owned subsidiary of The Vanguard Group, Inc., was reported to be the beneficial owner of 59,283 shares of Common Stock (0.09% of the shares outstanding on April 15, 2019) as a result of VFTC serving as investment manager of collective trust accounts.
Vanguard Investments Australia, Ltd. (“VIA”), a wholly-owned subsidiary of The Vanguard Group, Inc., was reported to be the beneficial owner of 20,041 shares of Common Stock (0.03% of the shares outstanding on April 15, 2019) as a result of VIA serving as investment manager of Australian investment offerings.
(3)39 | Based on information contained in a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 24, 2019 to report beneficial ownership of shares of the Company’s Common Stock as of December 31, 2018, and, consequently, the beneficial ownership of BlackRock, Inc. may have changed prior to the printing of this Proxy Statement. In the Schedule 13G/A, BlackRock, Inc. reported that, through its subsidiaries (BlackRock Life Limited; BlackRock Advisors, LLC; BlackRock (Netherlands) B.V.; BlackRock Fund Advisors (which was reported to beneficially own 5% or more of the outstanding shares of Common Stock); BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock JapanAbercrombie & Fitch Co., Ltd.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; and BlackRock Investment Management (Australia) Limited), it is deemed to be the beneficial owner of 9,748,353 shares of Common Stock. BlackRock, Inc. reported sole voting power as to 9,555,192 shares of Common Stock and sole dispositive power as to 9,748,353 shares of Common Stock.
|
(4) | Based on information contained in a Schedule 13G/A filed by Dimensional Fund Advisors LP, a registered investment adviser, with the SEC on February 8, 2019 to report beneficial ownership of shares of the Company’s Common Stock as of December 31, 2018, and, consequently, the beneficial ownership of Dimensional Fund Advisors LP may have changed prior to the filing of this Proxy Statement. The Schedule 13G/A reported that Dimensional Fund Advisors LP had sole voting power as to 5,432,859 shares of Common Stock and sole dispositive power as to 5,693,249 shares of Common Stock, all of which shares of Common Stock were held in portfolios of four registered investment companies to which Dimensional Fund Advisors LP furnishes investment advice and of certain other commingled funds, group trusts and separate accounts for which Dimensional Fund Advisors LP or one of its subsidiaries serves as investment manager orsub-adviser. The shares of Common Stock reported were owned by the investment companies, commingled funds, group trusts and separate accounts and Dimensional Fund Advisors LP disclaimed beneficial ownership of the reported shares of Common Stock.
|
The following table furnishes the number of shares of Common Stock of the Company beneficially owned (as determined in accordance with Rule
13d-3
under the Exchange Act) by each of the current directors, by each of the Nominees, by each of the named executive officers, and by all of the current directors and executive officers as a group, as of April 15, 2019. | | | | | | | | |
Name of Beneficial Owner | | Amount and
Nature of Beneficial
Ownership(1)(2) | | | Percent of
Class(3) | |
Stacia Andersen(4) | | | 18,521 | | | | * | |
Kerrii B. Anderson | | | 12,548 | | | | * | |
James B. Bachmann | | | 56,113 | | | | * | |
Robert E. Bostrom(5) | | | 31,410 | | | | * | |
Terry L. Burman | | | 51,429 | | | | * | |
Joanne C. Crevoiserat | | | 206,159 | | | | * | |
Sarah M. Gallagher(6) | | | 26,025 | | | | * | |
Michael E. Greenlees(6) | | | 1,500 | | | | * | |
Archie M. Griffin(6) | | | 15,473 | | | | * | |
Gregory J. Henchel | | | 0 | | | | * | |
Fran Horowitz | | | 321,939 | | | | * | |
Scott Lipesky | | | 7,509 | | | | * | |
Helen E. McCluskey | | | 2,444 | | | | * | |
Charles R. Perrin(6) | | | 51,292 | | | | * | |
Kristin Scott | | | 62,102 | | | | * | |
Nigel Travis | | | 5,361 | | | | * | |
Current directors and executive officers as a group (14 persons) | | | 819,894 | | | | 1.2 | % |
(1) | Unless otherwise indicated, each individual has voting and dispositive power over the listed shares of Common Stock and such voting and dispositive power is exercised solely by the named individual or shared with a spouse.
|
| Includes the following number of shares of Common Stock issuable by June 14, 2019 upon vesting of RSUs or the exercise of outstanding in-the-money stock appreciation rights (“SARs”) which are currently exercisable or will become exercisable by June 14, 2019: Ms. Anderson — 5,862 shares; Mr. Bachmann — 5,862 shares; Mr. Burman — 9,770 shares; Ms. Crevoiserat — 54,054 shares; Ms. Gallagher — 5,862 shares; Ms. Horowitz — 67,568 shares; Ms. McCluskey — 2,444 shares; Mr. Perrin — 5,862 shares; Mr. Travis — 2,444 shares; and all current directors and executive officers as a group — 159,728 shares. The Company has included for this purpose the gross number of shares of Common Stock deliverable upon vesting of RSUs or the exercise of outstanding in-the-money SARs, but the actual number of shares received will be less as a result of the payment of applicable withholding taxes. The numbers reported do not include any unvested RSUs or any unvested in-the-money SARs held by directors or executive officers (other than those specified in this footnote).
|
(2) | The actual number of shares of Common Stock that would be acquired upon exercise of the SARs will vary depending on the fair market value of the Company’s Common Stock at the time of exercise and the payment of applicable withholding taxes.
|
Not included in the table are shares underlying SARs which are currently exercisable or will become exercisable by June 14, 2019 but as
PROPOSAL 2
Non-Binding, Advisory Vote to
which the base price is greater than the $26.90 fair market value of a share of Common Stock at April 15, 2019: | (a) | for Ms. Crevoiserat, 90,000 gross shares subject to SARs with a base price of $37.14, which is greater than the $26.90 fair market value of a share of Common Stock at April 15, 2019.
|
| (b) | for Ms. Horowitz, 24,483 gross shares subject to SARs with a base price of $28.81, which is greater than the $26.90 fair market value of a share of Common Stock at April 15, 2019.
|
The numbers reported do not include any unvested options or SARs held by executive officers (other than those specified in this footnote).
(3) | The percent of class is based upon the sum of 66,617,373 shares of Common Stock outstanding on April 15, 2019 and the number of shares of Common Stock, if any, as to which the named individual or group has the right to acquire beneficial ownership by June 14, 2019, either (i) through the vesting of RSUs or (ii) upon the exercise of SARs which are currently exercisable or will become exercisable by June 14, 2019, assuming the $26.90 fair market value of a share of Common Stock at April 15, 2019 and base prices of the SARs in excess of such fair market value (computed as net common shares to be received upon exercise of SARs in the same manner as in footnote (2) to this table).
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(4) | Ms. Andersen left the Company effective November 30, 2018. Prior thereto, she served as Brand President – Abercrombie & Fitch/abercrombie kids.
|
Approve Named Executive Officer Compensation (5) | Mr. Bostrom left the role of Senior Vice President, General Counsel and Secretary of the Company on September 30, 2018 and continued to serve as Senior Vice President and Special Counsel of the Company until January 22, 2019.
|
(6) | The “Amount and Nature of Beneficial Ownership” does not include the following number of shares of Common Stock credited to the bookkeeping accounts of the following directors under the Directors’ Deferred Compensation Plan or that will be credited to such bookkeeping accounts by June 14, 2019 as a result of the deferral of RSUs which are to vest by June 14, 2019: Ms. Gallagher — 12,158 shares; Mr. Greenlees — 48,788 shares; Mr. Griffin — 73,008 shares; Mr. Perrin — 5,290 shares; and all current directors as a group — 139,244 shares. While the directors have an economic interest in these shares, each director’s only right with respect to his or her bookkeeping account (and the amounts allocated thereto) is to receive a distribution of the whole shares of Common Stock represented by the share equivalent credited to his or her bookkeeping account (plus cash representing the value of fractional shares) in accordance with the terms of the Directors’ Deferred Compensation Plan.
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Section 16(a) Beneficial Ownership Reporting Compliance
To the Company’s knowledge, based solely on a review of the forms furnished to the Company and written representations that no other forms were required, during Fiscal 2018, all directors, officers and beneficial owners of greater than 10% of the outstanding shares of Common Stock timely filed the reports required by Section 16(a) of the Exchange Act.
PROPOSAL 2 — ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION
We are asking stockholders to approve, anon a non-binding, advisory resolutionbasis, the compensation paid to approve the Company’sour named executive compensationofficers as reported in this Proxy Statement. As described below in
We urge stockholders to read the“COMPENSATION DISCUSSION AND ANALYSIS” “Compensation Discussion and Analysis” section of this Proxy Statement beginning on page 57, the Company made modest changes to our executive compensation program in Fiscal 2018 after no changes were made to the program in Fiscal 2017. The changes made to our Fiscal 2018 compensation structure were intended to further align our incentive plans with key financial metrics and also served as a meaningful retention tool for members of our leadership team.Stockholders are urged to read the“COMPENSATION DISCUSSION AND ANALYSIS” beginning on page 57 of this Proxy Statement, which41, w
hich describes in more detail how the Company’sour executive compensation policies and procedures achieve the Company’sare designed to align our compensation objectives with our financial goals and the creation of long-term stockholder value, as well as how and why our Compensation and Organization Committee arrived atmade its executive compensation decisions for Fiscal 20182021 and beyond. Stockholders areWe also encouragedencourage stockholders to review the“Fiscal 2018 “Fiscal 2021 Summary Compensation Table” beginning on page 7656 of this Proxy Statement and the related compensation tables, notes, and narrative, which provide detailed information on the compensation of theour named executive officers. In accordance with
the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as implemented by Rule 14a-21(a) under the Exchange Act,
Rule14a-21(a), and as a matter of good corporate governance,
the Company iswe are asking stockholders to approve the following
non-binding advisory resolution at the Annual Meeting:
RESOLVED, that the stockholders of Abercrombie & Fitch Co. (the “Company”) approve, on
ana non-binding, advisory basis, the compensation of the Company’s named executive officers disclosed in the Compensation Discussion and Analysis, the Fiscal
20182021 Summary Compensation Table, and the related compensation tables, notes, and narrative in the Proxy Statement for the Company’s
20192022 Annual Meeting of Stockholders.
This advisory resolution, commonly referred to as a “Say on Pay” vote, is
non-binding on the Board. Although
non-binding, the Board and our Compensation
and Organization Committee will carefully review and consider the voting results when evaluating our executive compensation programs for Fiscal
20202023 and future years. The Board’s current policy is to include
ana non-binding advisory resolution regarding approval of the compensation of our named executive officers
annually.THE COMPENSATION AND ORGANIZATION COMMITTEE AND THE FULL BOARD UNANIMOUSLY RECOMMEND THAT YOU VOTE“FOR”
THE APPROVAL OF THE ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION.
Required Vote
as an agenda item for each annual meeting of stockholders. The approval of the advisory resolution to approvevote on executive compensation requireswill occur every year until the affirmativenext vote on the frequency of a majority in voting interest ofstockholder votes on executive compensation, which will occur at the stockholders present in person or by proxy2023 Annual Meeting.
| | | | | | | | | | | |
| | | |
| YOUR VOTE IS IMPORTANT | Our Compensation and Human Capital Committee and the full Board unanimously recommend that you vote FOR approval, on a non-binding, advisory basis, of the compensation of our named executive officers. | |
| | | |
| | | | | | | | |
| Abercrombie & Fitch Co. | 40 | 2022 Proxy Statement |
Compensation Discussion and voting thereon. Under applicable NYSE Rules, brokernon-votes will not be treated as votes cast. Abstentions will not be counted as votes“FOR” or“AGAINST” the proposal.Analysis
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis provides important information on our executive compensation programs and on the amounts shown in the executive compensation tables that follow. In this Proxy Statement, the term “named executive officers” (sometimes referred to asor “NEOs”) means the individual executive officersindividuals named in the executive compensation tables that follow (andand who are listed below). The compensation programs are governed by our Compensation and Organization Committee, which is comprised solely of independent directors of the Company.
The Company’s NEOs include the following individuals:
below. | | | | | |
NEO | | Position During Fiscal 2018 2021 |
| |
| Fran Horowitz | | Chief Executive Officer |
Scott Lipesky(1) | | SeniorExecutive Vice President, and Chief Financial Officer |
Joanne C. Crevoiserat
Kristin Scott | President, Global Brands |
Samir Desai(2) | Executive Vice President, Chief Digital and Chief OperatingTechnology Officer |
Kristin Scott(1)
| | President, Global Brands; Former Brand President — Hollister |
Gregory J. Henchel(2)(3) | | SeniorExecutive Vice President, General Counsel and Corporate Secretary |
Stacia Andersen(3)
| | Former Brand President — Abercrombie & Fitch/abercrombie kids |
Robert E. Bostrom(4)
| | Former Senior Vice President, General Counsel and Corporate Secretary |
(1) | Ms. Scott was appointed President, Global Brands of the Company on November 28, 2018. Prior thereto, she served as Brand President — Hollister.
|
(2) | Mr. Henchel began employment with the Company on October 1, 2018.
|
(3) | Ms. Andersen left the Company on November 30, 2018. Prior thereto, she served as Brand President — Abercrombie & Fitch/abercrombie kids.
|
(4) | Mr. Bostrom left the role of Senior Vice President, General Counsel and Secretary of the Company on September 30, 2018 and continued to serve as Senior Vice President and Special Counsel of the Company until January 22, 2019.
|
Executive Summary
Abercrombie & Fitch Leadership
The Company’s leadership has evolved considerably in recent years following the elevation of Ms. Horowitz to Chief Executive Officer and Ms. Crevoiserat to Chief Operating Officer effective February 1, 2017.
(1)Mr. Lipesky subsequently rejoined the Company to become Chief Financial Officer effective October 2, 2017 and the Board appointed Terry L. Burman asNon-Executive Chairman of the Board effective February 3, 2018.In late Fiscal 2018, we took steps to optimize the leadership of our brands, Hollister and Abercrombie & Fitch/abercrombie kids, and align the strategic direction of both brands with our global strategy. On November 28, 2018, Ms. Scott, previously Brand President — Hollister, was elevated to the position ofExecutive Vice President Global Brands and Ms. Andersen, previously Brand President — Abercrombie & Fitch/abercrombie kids, left the Company on November 30, 2018. These changes will solidify our leadership team as we continue to progress on our transformation initiatives and increase the efficiency of our business in an ever-changing consumer environment.
On September 30, 2018, Mr. Bostrom left the role offrom Senior Vice President General Counsel and Secretary of the Company, and continuedin April 2021.
(2)Mr. Desai was hired July 19, 2021.
(3)Mr. Henchel was elevated to serve asExecutive Vice President from Senior Vice President and Special Counselin September 2021.
EXECUTIVE SUMMARY
Fiscal 2021 Financial Results
We are proud of the Company until January 22, 2019. Immediately following Mr. Bostrom’s transition, Mr. Henchel began employment with the Companyprogress our global brands continue to make in the roleever-evolving and complicated global retail landscape, and we believe that our performance during Fiscal 2021 is a testament to the fundamental changes we have made to strengthen our foundation and improve our profitability. For the second consecutive year, the COVID-19 pandemic challenged our team to pivot and develop a more agile business. Despite the challenges from new variants of Senior Vice President, General CounselCOVID-19, supply chain disruption and Corporate Secretary, effective October 1, 2018. Belowrising freight costs, and store closures, we provide a timelineexecuted our key transformational initiatives and improved profitability. Fiscal 2021 results included:
•Net sales of $3.7 billion, with 47% of our Board leadershipsales in digital, compared to 33% in Fiscal 2019;
•Double-digit growth in average unit retail;
•Reported and management transitions:
adjusted operating income
(1) of $343 million and $355 million, respectively, roughly 330% above Fiscal 2019 levels; and •An operating margin of 9.2% on a reported basis and 9.6% on an adjusted(1) basis, our highest in over a decade.
A few other initiatives that we benefited from in Fiscal 2021 included our multi-year effort to re-position our brands through enhanced product development and quality; improved marketing, brand voice, and imagery across brands; and refined store and digital experiences. Our multi-year effort to further rightsize our global stores footprint from Fiscal 2018 Financial ResultsThe Company endedthrough Fiscal 20182021 has resulted in a 23% reduction in square footage, with 228 store closures over that period. Savings from our transformation activities, including savings on a strong note by keeping our customer at the center of everything we dostore occupancy expenses and continuingthoughtful expense control, have created opportunities to improve the customer experience with ongoingallocate resources towards key investments and further fund an offensive mindset in our loyalty programs, stores and omnichannel capabilities. The Company recorded our second consecutive full year of sales growth and, in the fourth quarter, our sixth consecutive quarter of positive comparable sales. In Fiscal 2018, overall Company net sales and comparable sales both increased 3%, and the Company exceeded $1 billion in annual digital net sales. Importantly, while delivering this2022.
top-line
growth, the Company drove gross profit rate improvement and operating expense leverage, resulting in
(1)Adjusted operating income and adjusted operating margin expansionare non-GAAP measures. Please refer to Appendix A attached to this Proxy Statement for additional detail on adjusted results and net income improvement forother important information regarding the full year.Pay for Performance Culture
During Fiscal 2018, the Company continued to focus on performance and supporting the evolutionuse of our business as we respond to changes in the global macroeconomic and consumer environment. Under the stewardship of our leadership team, our transformation initiatives are gaining traction and keeping us on track to deliver our previously disclosed Fiscal 2020 goals. In Fiscal 2018, we continued to build a strong foundation for growth, which included our expansion ofdirect-to-consumernon-GAAP or adjusted measures. and omnichannel capabilities, comparable store sales growth of 3% and a total stockholder return of 8%. Further, we remain committed to: (i) creating
sustainable, long-term value for stockholders by increasing accountability for the performance of the Company’s brands; and (ii) aligning the outcomes of the Company’s short-term and long-term compensation programs with the Company’s performance.
The Company’s pay for performance culture is evidenced by the following incentive outcomes for Fiscal 2018:
Strong Adjusted EBIT performance during the Fiscal 2018 Spring season resulted in corporate funding at 143.0% of target (the Spring season is weighted 30%). Fiscal 2018 Fall season Adjusted EBIT fell just short of target and resulted in corporate funding at 91.0% of target (the Fall season is weighted 70%). For the leadership team (including the NEOs), the annual cash incentive is paid out annually following the end of the fiscal year, with the annual payout level derived based on the weighted average of results for the Spring (30%) and Fall (70%) seasons. Taking into account the weightings of the Spring and Fall seasons, full-year annual cash incentive payouts based on weighted-average Company financial performance were funded at 106.6% of target.
| • | | All Average ROIC-based PSAs for the Fiscal 2016 – Fiscal 2018 cycle were forfeited, as our Compensation and Organization Committee determined that threshold performance for this tranche of the awards was not achieved. A payout of 20.0% of target was achieved on the Relative TSR tranche of the PSA awards for the Fiscal 2016 – Fiscal 2018 cycle, as our Compensation and Organization Committee determined that the Company’s performance was at the 36th percentile of the S&P Retail Select Industry Index.
|
In addition, our outstanding PSA cycles are trending at levels ranging from target to maximum, which reflects the sensitivity of our pay programs and goal-setting to our ongoing business transformation.
| | | | | | | | |
| 2022 Proxy Statement | 41 | |
Fiscal 2018 Annual Cash Incentive Program
| | | | Status of Outstanding PSA Cycles (as of February 2, 2019)
|
| | | | Fiscal 2016 —
Fiscal 2018
| |
| | • 3-yr Relative TSR (50%)
• 3-yr Average ROIC (50%)Relative TSR tranche earned
at 20.0% of target;
Average ROIC tranche
forfeited
|
| | | Fiscal 2017 —
Fiscal 2019
| |
| | • 3-yr Relative TSR (50%)
• 3-yr Average ROIC (50%)Relative TSR tranche trending
at maximum;
Average ROIC tranche
trending at maximum
|
• Company Adjusted EBIT results for Spring season (30% weighting) were between target and maximum at 143.0%, and for Fall season (70% weighting) were between threshold and target at 91.0%
• No adjustments were made for strategic, operational or individual performance
• For the leadership team (including the NEOs), the annual cash incentive is paid out annually following the end of the fiscal year, with the annual payout level derived based on the weighted average of results for the Spring (30%) and Fall (70%) seasons
| | | | Fiscal 2018 —
Fiscal 2020
| |
| | • 3-yr Relative TSR (50%)
• 3-yr Average ROIC (50%)
Relative TSR tranche trending between target and maximum; Average ROIC tranche trending between target and maximum
Abercrombie & Fitch Co. |
Stockholder Outreach
COMPENSATION DISCUSSION AND ANALYSIS
Recent Evolution of Our Compensation Program and Changes for Fiscal 2021
In early Fiscal 2020, the Compensation and Human Capital Committee (for purposes of this Compensation Discussion and Analysis section, the “Committee”) was necessarily focused on
“Sayactions to generate cash flow and preserve liquidity, and thus based short-term compensation on
Pay” VoteAsthe achievement of operating cash flow measures and long-term equity compensation on total stockholder return (“TSR”).
At the beginning of Fiscal 2021, while the macroenvironment remained largely uncertain due to the ongoing and significant impact of COVID-19 on our business and industry, the Committee nonetheless determined to return to a result ofmore steady-state incentive design that was similar to the Company’s extensive stockholder outreach efforts and responsiveness to stockholder concerns, stockholders representing over 96% of the votes cast (excluding abstentions) voted in favor of the Company’s executive compensation program at the 2018 Annual Meeting. The Company annually reviews and considers feedback from stockholders and,design used in Fiscal 2018, we continued2019, as follows:
•Our Fiscal 2021 annual cash incentive program returned to have extensive dialogue withmeasuring profitability based on Adjusted EBIT; and
•Our Fiscal 2021 long-term equity incentive compensation was set based on achievement of an equally-weighted mix of net sales growth, profitability, and relative TSR performance over a three-year period. We elected to measure profitability margin instead of returning to Average ROIC in support of our stockholders, although no specificfocus on long-term profitable growth. As in Fiscal 2020, long-term equity incentive awards were evenly weighted between performance shares (“PSAs”) and restricted stock units (“RSUs”). No changes were made to the existing vesting schedule for RSUs.
The following table summarizes our historical incentive-based compensation programs for Fiscal 2019 and Fiscal 2020, as well as program designs for our Fiscal 2021 program.
| | | | | | | | | | | | | | | | | |
| Program | | Feature | FY19 Design | FY20 Design | FY21 Design |
| | | | | |
| Annual Cash Incentive Program | | Metric | Adjusted EBIT | Operating Cash Flow | Adjusted EBIT(1) |
| Cadence | 30% Spring
70% Fall | 100% Annual | 30% Spring
70% Fall |
| Long-Term Equity Incentive Awards | | Vehicle Mix | PSAs (60%)
RSUs (40%) | PSAs (50%)
RSUs (50%) | PSAs (50%)
RSUs (50%) |
| PSA Metrics | Net Sales CAGR (33.33%) Average ROIC (33.33%)(1) Relative TSR (33.34%) | Relative TSR (100%) | Net Sales CAGR (33.33%) Average EBIT Margin % (33.33%)(1) Relative TSR (33.34%) |
| TSR Comparators | S&P Select Retail Industry Index | Primary peer group | Primary peer group |
Compensation Program Changes for Fiscal 2022
The actions taken by management in recent years to transform our business, along with decisions made in Fiscal 2020 and Fiscal 2021 to respond to the COVID-19 pandemic, resulted in Fiscal 2021 net sales that exceeded Fiscal 2019 levels and delivered our best reported and adjusted operating margin(2) in over a decade, establishing a strong foundation for further growth and value creation.
With this in mind, the Committee approved the addition of a Net Sales metric to the Fiscal 2022 annual cash incentive program with a 20% weighting (the Adjusted EBIT metric will be reduced to 80%). With the addition of the Net Sales metric, a sales-related performance metric will be included in both the short-term and long-term incentive plans, which reinforces management’s commitment to growing our business in the near-term, while simultaneously positioning the Company for successful long-term growth. No changes were made to the long-term equity incentive programs for Fiscal 2022.
(1)These are non-GAAP measures. Please refer to Appendix A to this Proxy Statement for additional detail on these performance metrics.
(2)Adjusted operating margin is a non-GAAP measure. Please refer to Appendix A to this Proxy Statement for additional detail on adjusted results and other important information regarding the use of non-GAAP or adjusted measures.
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| Abercrombie & Fitch Co. | 42 | 2022 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
Summary of Fiscal 2021 Compensation Program
| | | | | | | | | | | |
| Element | | Purpose | Metric |
| | | |
| Base Salary | | Fixed annual cash compensation to attract and retain executive officers | Established after review of base salaries for executive officers at companies in our compensation peer group and the performance of each of our NEOs |
| Annual Cash Incentive Program | | Performance-based variable pay that delivers cash incentives when the Company meets or exceeds key financial results | Based on an assessment of Adjusted EBIT performance against pre-established goals (seasonal based measurement means that goals are weighted 30% for Spring and 70% for Fall) |
| Long-Term Equity Incentive Awards | | Performance-based and service-based equity compensation to reward our executive officers for a balanced combination of the Company meeting or exceeding key financial results and creating long-term stockholder value | 50% Performance-based PSAs measure a three-year period spanning Fiscal 2021 to Fiscal 2023 and are based on the following measures: •33.33% on Net Sales CAGR •33.33% on Average EBIT Margin % •33.34% on Relative TSR
50% Service-based RSUs that vest in equal installments over three years from the grant date |
Pay-for-Performance Culture and Summary of Fiscal 2021 Results
We are committed to aligning the outcomes of our executives officers’ compensation with the Company’s financial performance. For our NEOs, the majority of their total compensation opportunity is at-risk, or contingent upon our financial performance and appreciation in the market price of our Common Stock.
| | | | | |
| Percentage of Chief Executive Officer’s compensation that was at-risk in Fiscal 2021 | 88 | % |
| Percentage of other NEOs’ compensation (on average) that was at-risk in Fiscal 2021 | 74 | % |
We believe the Company’s pay-for-performance culture is evidenced by the Fiscal 2021 incentive outcomes described below.
In Fiscal 2021, under our annual cash incentive program we delivered Adjusted EBIT performance that exceeded Fiscal 2019 levels and that exceeded the target Fiscal 2021 performance level established by the Committee. This resulted in the following Fiscal 2021 annual cash incentive program achievement:
| | | | | |
| Fiscal 2021 Annual Cash Incentive Program Achievement |
| |
Overall Adjusted EBIT(1) (100% weighting) | 177.6 | % |
Our successes during Fiscal 2021 also helped drive, with respect to the PSAs granted by the Committee in Fiscal 2019, achievement of Average ROIC that reached the maximum goal established by the Committee; Net Sales CAGR performance, which was negatively impacted by the COVID-19 pandemic over the course of the performance period, above the threshold goal (but below the target goal); and Relative TSR at the 60th percentile of the comparator group, resulting in an above-target payout. The combination of the three components led to the following weighted average Fiscal 2019 to Fiscal 2021 PSA achievement:
| | | | | |
| Fiscal 2019 to Fiscal 2021 PSA Achievement |
| |
Fiscal 2019 to Fiscal 2021 Average ROIC(1) (33.33% weighting) | 200 | % |
| Fiscal 2019 to Fiscal 2021 Net Sales CAGR (33.33% weighting) | 6 | % |
| Fiscal 2019 to Fiscal 2021 Relative TSR vs. S&P Retail Select Index (33.34% weighting) | 120 | % |
| Weighted Average | 108.7 | % |
(1)These are non-GAAP measures. Please refer to Appendix A to this Proxy Statement for additional detail on these performance metrics.
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| 2022 Proxy Statement | 43 | Abercrombie & Fitch Co. |
COMPENSATION DISCUSSION AND ANALYSIS
Strong performance execution has also driven share price performance as of Fiscal 2021 year-end above the 80th percentile of our Relative TSR comparator in our Fiscal 2020 to Fiscal 2022 and Fiscal 2021 to Fiscal 2023 PSAs, resulting in the following trending performance relative to the respective PSA goals:
| | | | | | | | | | | |
| Trending Performance of Outstanding PSA Cycles |
| | | |
| Performance Period | Net Sales CAGR Tranche | Average EBIT Margin %(1) Tranche | Relative TSR Tranche |
| Fiscal 2020 to Fiscal 2022 | N/A | N/A | Trending at maximum |
| Fiscal 2021 to Fiscal 2023 | Trending at maximum | Trending at maximum | Trending at maximum |
(1)This is a non-GAAP measure. Please refer to Appendix A to this Proxy Statement for additional detail on these performance metrics.
Say on Pay Results and Stockholder Feedback
The Committee reviews and considers the outcome of the “Say on Pay” vote and will consider feedback from stockholders and the investment community on our executive compensation program
and practices. In light of our stockholders’ continued strong support for our executive compensation program, no changes were made as a
direct result of the “Say on Pay”
vote. Duringvote at the
period, the Company participated in six conferences, conducted threenon-deal roadshows, hosted three store tours, welcomed two groups2021 Annual Meeting. Our approach to
visit our offices and held an Investor Day. These efforts resulted in discussions with approximately 50%executive compensation has driven high levels of
our top ten actively managed stockholders. The Company expects to continue such discussions prior to the Annual Meeting and, as a matter of policy and practice, fosters and encourages engagement with our stockholders on compensation and other matters on an ongoing basis.Compensation Structure in Fiscal 2018
We made modest changes to our program in Fiscal 2018 after no changes were made to the program in Fiscal 2017. The changes made to our compensation structure in Fiscal 2018 included: (i) the elimination of the Strategic Driver Scorecard and the Individual Performance Factor modifiers that allowed for the discretionary modification of individual payouts in the Annual Cash Incentive Program; and (ii) the recalibration of the goals and payouts in theTSR-based PSAs. Changes to our Fiscal 2018 compensation structure were intended to further
align our incentive plans with key financial metrics and also served as a meaningful retention toolsupport for our leadership team. An overview of our compensation programs for Fiscal 2018 is shown below:
“Say on Pay” proposal over the past several years. | | | | | |
Base Salary
Percentage of stockholder votes in favor of our executive compensation program at the 2021 Annual Meeting | 98 | % |
Base salaries are reviewed annually in March and upon a significant change in an executive officer’s role.
For Fiscal 2018, our NEOs received increases to base salary ranging from 3.3% to 8.3% in March 2018.
Upon Ms. Scott’s elevation to President, Global Brands in November 2018, she received an additional 15.6% increase in her base salary.
COMPENSATION STRUCTURE AND HIGHLIGHTS |
Annual Cash Incentive Program
|
Company performance under the Annual Cash Incentive Program is based on a retrospective assessment of Adjusted EBIT performance (weighted 30% for Spring season and 70% for Fall season, the same basis as is used for the broad-based associate population).
For the leadership team (including the NEOs), the annual cash incentive is paid out annually following the endKey Objectives of the fiscal year, with the annual payout level derived based on the weighted average of results for the Spring (30%) and Fall (70%) seasons.
For Fiscal 2018, the Compensation and Organization Committee eliminated the Strategic Driver Scorecard metrics and the Individual Performance Factor from the Annual Cash Incentive Program. The Strategic Driver Scorecard metrics previously allowed the Company financial score to be adjusted up or down based upon an assessment of forward-looking, strategic drivers linked to the Company’s strategic priorities. The Individual Performance Factor previously allowed for further modifications of individual payouts based upon individual performance. These components were eliminatedProgram
We operate in order to reinforce our“one-team” culture and to more directly align annual cash incentive payouts with our Adjusted EBIT results, which we consider to be a long-term driver of value creation.
Long-term incentive awards to the NEOs for Fiscal 2018 were granted 50% in the form of PSAs and 50% in the form of time-vested RSUs.
The Compensation and Organization Committee has approved the following changes for the Fiscal 2019 long-term incentive design:
The long-term incentive mix for members of our leadership team will shift from 50% PSAs and 50% RSUs to 60% PSAs and 40% RSUs to provide additional alignment between leadership team pay and multi-year financial results;
Total Net Sales will be added as a third, equally-weighted metric for PSA grants (in addition to Average ROIC and Relative TSR) as we seek to align our performance-based compensation with our goal to accelerate the growth of our brands; and
The vesting schedule for time-vested RSUs granted to members of our leadership team will be reduced from four years to three years (vesting ratably) to more closely reflect competitive practice among our peer group ofsimilarly-sized, specialty retailers against whom we compete for talent.
Best Practices
The following compensation decisions and practices demonstrate how the Company’s executive compensation program reflects best practices and reinforces the Company’s culture and values:
| • | | Emphasis onAt-Risk Pay — For NEOs, the majority of their total compensation opportunity is contingent upon the Company’s financial performance and appreciation in the market price of the Company’s Common Stock.
|
| • | | Rigorous Performance Metrics — Both the annual cash incentive payouts and the PSA awards are earned based on meeting challenging financial results. Annual cash incentive payouts earned are based on single-year Adjusted EBIT results and PSAs earned are based on Relative TSR and Average ROIC over a three-year period. Further, our Relative TSR must be at the 55th percentile versus the S&P Retail Select Industry Index in order for our RelativeTSR-based PSAs to pay out at target.
|
| • | | No Excise TaxGross-Up Payments — None of the NEOs are entitled togross-up payments in the event that any payments or benefits provided to her or him by the Company are subject to the golden parachute excise tax under Sections 280G and 4999 of the Internal Revenue Code.
|
| • | | Stock Ownership Guidelines — Executive officers and directors are subject to stock ownership guidelines that align their long-term financial interests with those of the Company’s stockholders.
|
| • | | Clawback Policy — Each of the plans pursuant to which annual and long-term incentive compensation may be paid to the Company’s executive officers includes a stringent “clawback” provision, which allows the Company to seek repayment of any incentive amounts that were erroneously paid, without any requirement of misconduct on the part of the plan participant.
|
| • | | Derivatives and Hedging Policy — The Company prohibits associates (including the NEOs) and directors from engaging in hedging transactions with respect to any equity securities of the Company held by them.
|
| • | | Policy Against Pledging — The Company prohibits associates (including the NEOs) and directors from pledging any equity securities of the Company held by them.
|
| • | | Policy AgainstRe-Pricing — The Company prohibits“re-pricing” of stock options or SARs without stockholder approval.
|
Compensation Process and Objectives
Our Compensation and Organization Committee, in consultation with management of the Company and our Compensation and Organization Committee’s independent advisors, oversees the executive compensation and benefits program for the Company’s NEOs. The compensation program is comprised of a combination of base salary, annual incentive compensation, long-term incentives and associate benefits.
The Company operates in the fast-paced and highly-competitive arena of specialty retail.retail environment that is experiencing transformational disruption. To be successful, the Companywe must attract and retain key creative and management talents who thrive in this environment. The Company setsWe set high goals and expectsexpect superior performance from these individuals. The Company’sWe design the structure of the executive compensation structure is designedprogram to support this culture, encourage a high degree of teamwork, and reward individuals for achieving challenging financial and operational objectives that we believe lead to the creation of sustained, long-term stockholder value. As such, the Company’sprimary objectives of our executive compensation and benefit programs are designed to:
Drive high performance to achieve financial goals and create long-term stockholder value;
Reflect the
| | | | | | | | | | | | | | | | | | | | |
| a | | | a | | | a |
| Drive high performance to achieve financial goals and create long-term stockholder value | | | Reflect our strong team-based culture | | | Provide compensation opportunities that are competitive with those offered by similar specialty retailers and other companies that we compete with for high caliber executive talent |
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| Abercrombie & Fitch Co. | 44 | 2022 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Program Best Practices
The following compensation decisions and practices demonstrate how the Company’s executive compensation program reflects best practices and reinforces the Company’s culture and values:
| | | | | |
| a | Practices We Employ |
| |
| a | Emphasis on At-Risk Pay |
| For NEOs, the majority of their total compensation opportunity is contingent upon our financial performance and appreciation in the market price of our Common Stock. |
|
| a | Rigorous Performance Metrics |
Our annual cash incentive payouts and PSAs are earned based on us meeting challenging financial results. Fiscal 2021 annual cash incentive payouts were based on single-year Adjusted EBIT results and Fiscal 2021 to Fiscal 2023 PSAs were based on Net Sales CAGR, Average EBIT Margin %, and Relative TSR over a three-year period (with the Relative TSR target set at the 55th percentile versus the compensation peer group). |
| |
| a | Robust Stock Ownership Guidelines |
| Executive officers and directors are subject to stock ownership guidelines that align their long-term financial interests with those of our stockholders. |
| |
| a | Incentive Compensation Clawback Policy |
| Each of the plans pursuant to which annual and long-term incentive compensation may be paid to our executive officers includes a stringent “clawback” provision, which allows us to seek repayment of amounts that were erroneously paid, without a requirement of misconduct by the plan participant. |
| |
| a | Benchmark NEO Pay Against a Compensation Peer Group |
| The Committee reviews external market data when making compensation decisions and annually reviews our peer group with its independent compensation consultant. |
| |
| a | Committee Retains an Independent Compensation Consultant |
| The Committee retains an independent compensation consultant to provide executive and director compensation consulting and advisory service. The only services that the independent compensation consultant perform for us are at the direction of the Committee. |
| |
| a | Annual “Say on Pay” Vote |
| We seek an annual non-binding advisory vote from our stockholders to approve our executive compensation programs. |
| |
| a | Conservative Compensation Risk Profile |
| We review our compensation programs on an annual basis. Our performance-based executive compensation program, coupled with our stock ownership guidelines and clawback provisions, aligns the interests of our NEOs with those of our stockholders by encouraging long-term superior performance without encouraging excessive or unnecessary risk-taking. |
| |
| a | Double-Trigger Equity Vesting in Event of a Change of Control |
| Double-trigger change of control provisions that limit acceleration of equity in a change-in-control unless the NEO is also terminated without cause. |
| |
| | | | | |
| X | Practices We Avoid |
| |
| X | Excise Tax Gross-Up Payments |
| None of the NEOs are entitled to gross-up payments in the event that any payments or benefits provided to the NEO by us are subject to the golden parachute excise tax under Sections 280G and 4999 of the Internal Revenue Code. |
| |
| X | Derivatives or Hedging of Equity Securities |
| We prohibit associates (including the NEOs) and directors from engaging in hedging transactions with respect to any equity securities of the Company held by them. |
| |
| X | Pledging of Equity Securities |
| We prohibit associates (including the NEOs) and directors from pledging any equity securities of the Company held by them. |
| |
| X | Liberal Share Recycling Provisions |
| No liberal share recycling of shares of Common Stock withheld by the Company (or tendered by an associate) to cover taxes related to stock options or SARs. |
| |
| X | Multi-Year Employment Agreements with NEOs |
| We do not have employment agreements with any of our NEOs that guarantee employment. |
| |
| X | Modification of Out-of-the-Money Stock Options or SARs |
| We prohibit “repricing” of stock options or stock appreciation rights (“SARs”) and any other modification of out-of-the-money awards without stockholder approval. |
| |
| X | Dividend Equivalents on Certain Equity Awards |
| We do not pay dividend equivalents on stock options and unvested RSUs. |
| |
| | | | | | | | |
| 2022 Proxy Statement | 45 | Abercrombie & Fitch Co. |
COMPENSATION DISCUSSION AND ANALYSIS
BASE SALARY
We provide a base salary to each NEO to deliver a fixed component of compensation that reflects the NEO’s position and responsibilities.
The Committee reviews the base salaries of the Company;
SupportNEOs annually in the transition to a brand-based organizational model; and
Provide compensation opportunities that are competitivefirst quarter of the fiscal year, with those offered by similar specialty retail organizations and other companies with which the Company competes for high caliber executive talent.
Fiscal 2018 Compensation Actions
Base Salary
additional reviews upon significant changes in an individual’s role. The base salaries of the NEOs reflect the Company’s operating philosophy, culture and business direction, with each base salaryare determined based upon an annual assessment of a number of factors, including the individual’s current base salary, job responsibilities, internal pay equity considerations, impact on development and achievement of business strategy, labor market compensation data, individual performance relative to job requirements, the Company’s ability to attract and retain critical executive officers, and base salaries paid for comparable positions within an identifieda compensation peer group. No specific goals or weightings are applied to the factors considered in setting the level ofThe Committee established Fiscal 2021 base salary and, thus, the process relies on the subjective exercise of our Compensation and Organization Committee’s judgment.
The base salaries of the NEOs are reviewed annually by our Compensation and Organization Committee in March, with additional reviews upon significant changes in an executive officer’s role. Fiscal 2018 base salaries were established with reference to market data published by numerous sources includingthe companies in the peer group described below and surveys published by Equilar. For Fiscal 2018, our NEOs received
The Committee approved increases to
the base salaries for Messrs. Lipesky and Henchel and Ms. Scott in Fiscal 2021 ranging from 2.7% to 15.4%, as reflected in the table below, and maintained the base salary
ranging from 3.3% to 8.3% in March 2018.for Ms.
Horowitz received an 8.3% increase in base salary to recognize the Company’s strong performance towards the objectives of the transformation plan in her first year as Chief Executive Officer.Mr. Henchel’s base salary was established at $550,000 upon his appointment effective October 1, 2018. Ms. Scott’s base salary was established at $800,000 in March 2018 and was increased to $925,000 upon her elevation to President, Global Brands effective November 28, 2018.
Horowitz. Base salaries as in effect at the end of Fiscal 20182020 and Fiscal 2021 are shown in the table below.
| | | | | | | | | | | | |
NEO | | Fiscal 2017 Base Salary | | | Fiscal 2018 Base Salary | | | Percent Change | |
Fran Horowitz | | $ | 1,200,000 | | | $ | 1,300,000 | | | | 8.3 | % |
Scott Lipesky | | $ | 550,000 | | | $ | 575,000 | | | | 4.5 | % |
Joanne C. Crevoiserat | | $ | 850,000 | | | $ | 900,000 | | | | 5.9 | % |
Kristin Scott(1) | | $ | 750,000 | | | $ | 925,000 | | | | 23.3 | % |
Gregory J. Henchel | | | N/A | | | $ | 550,000 | | | | N/A | |
Stacia Andersen(2) | | $ | 750,000 | | | $ | 775,000 | | | | 3.3 | % |
Robert E. Bostrom(3) | | $ | 600,000 | | | $ | 620,000 | | | | 3.3 | % |
| | | | | | | | | | | |
| NEO | Fiscal 2020 Base Salary ($) | Fiscal 2021 Base Salary ($) | Percent Change (%) |
| | | |
| Fran Horowitz | 1,300,000 | 1,300,000 | — | |
Scott Lipesky(1) | 650,000 | 750,000 | 15.4 | |
| Kristin Scott | 925,000 | 950,000 | 2.7 | |
Samir Desai(2) | N/A | 650,000 | N/A |
| Gregory J. Henchel | 575,000 | 600,000 | 4.3 | |
(1)The larger increase to Mr. Lipesky’s base salary in comparison to the other NEOs was made in connection with his elevation to the Executive Vice President level at the beginning of Fiscal 2021.
(2)Mr. Desai was hired on July 19, 2021; his actual base salary received in Fiscal 2021 is shown in the “Fiscal 2021 Summary Compensation Table” beginning on page 56 of this Proxy Statement.
ANNUAL CASH INCENTIVE PROGRAM
(1) | Ms. Scott’s base salary for Fiscal 2018 was established at $800,000 in March of 2018. Upon her elevation to President, Global Brands on November 28, 2018, Ms. Scott’s base salary was increased to $925,000.
| |
(2) | Ms. Andersen left the Company on November 30, 2018.
|
(3) | Mr. Bostrom left the roleMeasurement of Senior Vice President, General Counsel and Secretary of the Company on September 30, 2018 and continued to serve as Senior Vice President and Special Counsel of the Company until January 22, 2019.
|
Annual Cash Incentive Program
For Fiscal 2021, the leadership team (includingCommittee believed it was appropriate to return to an annual incentive compensation program design similar to the NEOs),design used in Fiscal 2019, after having focused on actions to generate cash flow and preserve liquidity through the early days of the COVID-19 pandemic in Fiscal 2020. To that end, the annual cash incentive is paid out annually following the end of the fiscal year, with the annual payout level derived based on the weighted average of resultsprogram returned to measuring seasonal profitability in Fiscal 2021.
| | | | | | | | | | | |
| Change for Fiscal 2021 | | Rationale |
| | | |
| a | Returned to Adjusted EBIT after measuring Operating Cash Flow in Fiscal 2020 | | Returned focus to pre-pandemic priority of profitable growth following a focus on liquidity and expense management in the early days of the COVID-19 pandemic and throughout Fiscal 2020 |
| | | |
| | | |
| a | Returned to seasonal measurement (30% Spring, 70% Fall) after measuring Fiscal 2020 on an annual basis | | Returned to pre-pandemic design that emphasizes strong operational and financial performance in our Spring and Fall seasons (weighted based on their approximate contributions to full-year results) |
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| Abercrombie & Fitch Co. | 46 | 2022 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
Fiscal 2021 Achievement
The Committee seeks to establish threshold, target, and maximum goals for the Spring (30%) and Fall (70%) seasons. The Fiscal 2018 Annual Cash Incentive Program measured Adjusted EBIT relative to established targets for each of the Company’s two seasons. As previously mentioned, the Compensation and Organization Committee determined to eliminate the Strategic Driver Scorecard metrics and the Individual Performance Factor from the Annual Cash Incentive Program. The Strategic Driver Scorecard metrics previously allowed the Company financial score to be adjusted up or down based upon an assessment of forward-looking, strategic drivers linked to the Company’s strategic pillars. The Individual Performance Factor previously allowed for further modifications of individual payouts based upon individual performance. These components were eliminated in order to reinforce our“one-team” culture and to more directly align annual cash incentive payouts withplan that are rigorous and reflect the Company’s Adjusted EBIT results, which we consider to be a long-term driver of value creation.In the case of Ms. Scott and Ms. Andersen in their roles as Brand Presidents, the Fiscal 2018 Annual Cash Incentive Program was based 50% on overall Company results and 50% on the results of their respective Brands (Hollister and Abercrombie/abercrombie kids, respectively). The Fiscal 2018 Annual Cash Incentive Program for all other leadership team members (including our other NEOs) was based solely on overall Company results. Following Ms. Scott’s elevation to President, Global Brands on November 28, 2018, it was determined that her payment under the Annual Cash Incentive Program for Fiscal 2018 would be based 50% on overall Company results and 50% on Hollister results and in Fiscal 2019 will be based solely on overall Company results.
Actual Company Adjusted EBIT results forunderlying operating environment. When the Spring season exceededtargets were approved in March 2021, the targetCompany anticipated ongoing macroeconomic challenges and uncertainty related to the COVID-19 pandemic, and such goals were approved prior to the announcement of additional federal stimulus and thepre-established performance range, while Company Adjusted EBIT results availability of COVID-19 vaccines. Following a strong Spring season, the Committee established targets for the Fall season exceededthat required results above Fiscal 2019 levels to earn a target payout. In both the thresholdSpring and fell just shortFall seasons, the Committee sought to account for the higher degree of uncertainty in the macroeconomic environment by establishing a wider performance range from threshold-to-target and target-to-maximum than had been established in Fiscal 2019 or Fiscal 2018.
pre-established target. Further,In its assessment of the achievement of the Company’s financial performance against the Adjusted EBIT
resultsperformance metrics, the Committee also discussed the quality and sustainability of the financial results. | | | | | | | | | | | | | | | | | |
Fiscal 2021 Adjusted EBIT(1) Goals and Achievement | Threshold ($MM) | Target ($MM) | Maximum ($MM) | Actual ($MM) | Payout
Percentage (%) |
| | | | | |
| Spring 2021 (30% weighting) | (75) | (40) | 0 | 194 | 200 |
| Fall 2021 (70% weighting) | 105 | 181 | 241 | 222 | 168 |
| Weighted Average | | | | | 177.6 |
(1)This is a non-GAAP measure. Please refer to Appendix A to this Proxy Statement for bothadditional detail on this performance metric.
Determination of Fiscal 2021 NEO Award Amounts
We provide the annual cash incentive award opportunities to certain of our eligible associates (including the NEOs) under the Amended and Restated Abercrombie & Fitch/abercrombie kids brand and the Hollister brand met or exceeded targets under the AnnualFitch Co. Short-Term Cash Incentive Program during the Spring seasonCompensation Performance Plan (the “Short-Term Cash Incentive Plan”). The Committee approved annual incentive target opportunities as a percentage of Fiscal 2018. In the Fall season, Adjusted EBIT resultsbase salary for the Hollister brand exceededNEOs in March 2021.
Each NEO is eligible to receive an award opportunity established as a percentage of base salary. Maximum award opportunities historically have been capped at two times target while resultslevels, as was the case for the Abercrombie & Fitch/abercrombie kids brand fell short of threshold. | | | | | | | | | | | | | | | | | | | | |
| | | |
| | | Total Company Financial Performance: Adjusted EBIT ($000) | | | | |
| | | | | | |
| Performance Period | | Threshold | | | Target | | | Maximum | | | Actual
Result(1) | | | Payout
Percentage | |
| | | | | | |
Spring Season (30% weighting) | | $ | (50,393 | ) | | $ | (19,689 | ) | | $ | 3,339 | | | $ | (9,758 | ) | | | 143.0 | % |
| | | | | | |
Fall Season (70% weighting) | | $ | 153,648 | | | $ | 204,864 | | | $ | 245,837 | | | $ | 198,541 | | | | 91.0 | % |
| | |
Payout Percentage for Weighted-Average Company Financial Performance | | | | 106.6 | % |
| | |
Payout Percentage for Weighted-Average Hollister Financial Performance | | | | 116.7 | % |
| | |
Payout Percentage for Weighted-Average Abercrombie & Fitch/abercrombie kids Financial Performance | | | | 69.1 | % |
(1) | Adjustments to reported GAAP EBIT may include items related to foreign currency exchange rate fluctuations, restructurings, legal settlements or impairment charges.
|
Fiscal 2021 awards. Potential award opportunities, and actual payouts,
for the NEOs in Fiscal 20182021 are detailed below. Maximum award opportunities continued to be capped at twice target levels.Target amounts are determined commensurate with the NEO’s role with the Company, her or his performance, market pay data, and considerations of the competitiveness of her or his overall compensation package. The annual cash incentive compensation awards made toreceived by the NEOs who participated in the Annual Incentive Compensation Program in Fiscal 2018 are listed in the“Fiscal 2018 “Fiscal 2021 Summary Compensation Table”beginning on page 7656 of this Proxy Statement in the column captioned“Non-Equity “Non-Equity Incentive Plan Compensation.” | | | | | | | | | | | | | | | | | | | | |
| | | Fiscal 2018 Payout as a % of Base Salary | |
NEO | | Threshold
Performance
Level | | | Target
Performance
Level | | | Maximum
Performance
Level | | | Actual
Payout (%) | | | Actual
Payout ($) | |
Fran Horowitz | | | 0 | % | | | 150 | % | | | 300 | % | | | 159.9 | % | | $ | 2,078,700 | |
Scott Lipesky | | | 0 | % | | | 75 | % | | | 150 | % | | | 80.0 | % | | $ | 459,713 | |
Joanne C. Crevoiserat | | | 0 | % | | | 100 | % | | | 200 | % | | | 106.6 | % | | $ | 959,400 | |
Kristin Scott | | | 0 | % | | | 100 | % | | | 200 | % | | | 116.7 | %(1) | | $ | 960,531 | |
Gregory J. Henchel | | | 0 | % | | | 60 | % | | | 120 | % | | | 22.1 | %(2) | | $ | 121,770 | |
Stacia Andersen | | | 0 | % | | | 100 | % | | | 200 | % | | | 56.9 | %(3) | | $ | 441,047 | |
Robert E. Bostrom | | | 0 | % | | | 60 | % | | | 120 | % | | | 64.0 | % | | $ | 396,552 | |
(1) | Ms. Scott’s potential award opportunities as a percentage of base salary did not change upon her elevation to President, Global Brands. Ms. Scott’s base salary used in the actual payout calculation waspro-rated for the portion of Fiscal 2018 prior to and after her elevation to President, Global Brands on November 28, 2018.
|
(2) | Mr. Henchel received apro-rata payout based on the October 1, 2018 date he began employment with the Company as Senior Vice President, General Counsel and Corporate Secretary.
|
(3) | Ms. Andersen received apro-rata payout based on the November 30, 2018 date of her separation from service with the Company.
|
Long-Term Equity Incentives
Long-term equity incentives are used to balance | | | | | | | | | | | |
| NEO | Target Award
(% of Base Salary) | Actual Payout
(% of Target) | Actual Payout ($) |
| | | |
| Fran Horowitz | 175 | | 177.6 | | 4,040,400 |
| Scott Lipesky | 100 | | 177.6 | | 1,332,000 |
| Kristin Scott | 125 | | 177.6 | | 2,109,000 |
Samir Desai(1) | 100 | | 177.6 | | 621,600 |
| Gregory J. Henchel | 75 | | 177.6 | | 799,200 |
(1)Mr. Desai received a pro-rata payout from July 19, 2021, the annual focusdate he began employment with the Company.
Effective March 21, 2021, the Board adopted and approved an amendment and restatement of the Short-Term Cash Incentive Plan. Amendments to the Short-Term Cash Incentive Plan included: (i) increasing the cap on a participating associate’s potential annual incentive compensation target opportunity from 150% to 175% of that participating associate’s base salary; and (ii) expanding the definition of performance goals to include, in addition to those business criteria that had been specifically identified in the Short-Term Cash Incentive Plan, any other objective or subjective performance criteria set by our Compensation Committee. These changes were adopted to ensure our Compensation Committee’s continued ability to provide market competitive short-term cash incentive opportunities and to establish metrics in the Short-Term Cash Incentive Plan that are aligned to our strategic, operational, and financial objectives and priorities.
| | | | | | | | |
| 2022 Proxy Statement | 47 | Abercrombie & Fitch Co. |
COMPENSATION DISCUSSION AND ANALYSIS
LONG-TERM EQUITY INCENTIVES
We provide long-term equity incentive awards to the NEOs to balance the focus of the annual cash incentive program by tying a significant portion of total compensation to performance achieved by the Company over multi-year periods. UnderWhile the 2016 Associates LTIP,annual cash incentive program rewards the NEOs for the achievement of annual financial goals, the long-term equity incentive awards encourage the NEOs to deliver long-term financial results and to create and sustain stockholder value over longer periods. The structure and design of our Compensationlong-term equity incentive awards directly link the value of the awards granted to the NEOs with the Company’s long-term financial performance and Organizationincreases in stockholder value.
Award Mix
We granted long-term equity incentive awards to our NEOs for Fiscal 2021 in the form of 50% PSAs and 50% service-based RSUs. The Committee may grant a varietybelieves it is important for at least half of long-term equity incentive vehicles, including stock options, SARs, RSUs and PSAs. As noted above, in opportunities to be based on achieving explicit performance objectives.
| | | | | |
| Fiscal 2021 Long-Term Equity Incentive Award Mix |
| |
| PSAs | 50% |
| Service-based RSUs | 50% |
Fiscal
2018, the Company granted a combination of PSAs and time-vested RSUs.2021 Long-Term Equity Incentive Award Opportunities
The aggregate grant date fair value of the long-term incentivesequity incentive awards granted to the NEOs as part of the annual grant infor Fiscal 2018 and the target mix of such awards2021 is shown below. The aggregate grant date fair values representvalue represents each NEO’s annual equity grant, determined based on her or his performance, market pay data, and considerationconsiderations of the competitiveness of her or his overall compensation package. Long-term incentives
| | | | | |
| NEO | Target Long-Term Equity Incentive Award ($) |
| |
| Fran Horowitz | 7,470,357 |
| Scott Lipesky | 1,641,852 |
| Kristin Scott | 3,283,704 |
| Samir Desai | 1,315,392 |
| Gregory J. Henchel | 656,741 |
Performance Share Award Measurement
The PSAs granted in Fiscal 2021 may be earned based on the achievement of Net Sales CAGR, Average EBIT Margin %, and Relative TSR objectives for membersthe three-year performance period, Fiscal 2021 to Fiscal 2023.
| | | | | |
| Fiscal 2021 to 2023 PSA Metrics | Weighting |
| |
| Net Sales CAGR | 33.33 | % |
| Average EBIT Margin % | 33.33 | % |
Relative TSR vs. compensation peer group (excluding L Brands, Inc.(1)) | 33.34 | % |
(1)L Brands, Inc. was excluded from the TSR comparator group due to Bath & Body Works, a primary business unit of L Brands, Inc. at the time, being considered an essential retailer, which did not align with the remainder of the leadership team, other than Mr. Henchel, were granted 50% inpeer group composed of specialty retailers.
As previously noted, the form of PSAs and 50% in the form of time-vested RSUs. Mr. Henchel’s long-term incentives were granted 100% in the form of time-vested RSUs that represented an inducement grant awarded to him when he joined the Company. Our Compensation and Organization Committee determined to return to an incentive design for Fiscal 2021 that this mix of awards effectively balances critical performance metrics and objectives for retention and stability aswas similar to the Company continues its transformation. Beginningdesign used in Fiscal 2019, after having focused on actions to generate cash flow and preserve liquidity through the long-term incentiveearly days of the COVID-19 pandemic in Fiscal 2020. To that end, the PSA program returned to measuring a mix for membersof sales growth, profitability, and stock price performance over a three-year period beginning with Fiscal 2021.
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| Abercrombie & Fitch Co. | 48 | 2022 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
| | | | | | | | |
| Change for Fiscal 2021 | Rationale |
| | |
| a | Reintroduced sales component, with Net Sales CAGR (1/3 weighting) | Returned focus on pre-pandemic priority of profitable growth |
| | |
| | |
| a | Added Average EBIT Margin % (1/3 weighting) | Returned focus on pre-pandemic priority of profitable growth |
In support of our
leadership team will shift from 50%pay-for-performance philosophy, we sought to set aggressive goals for the PSA program awards in Fiscal 2021. In order to achieve a target payout for the PSAs,
the Company must achieve mid-single digit sales growth beyond Fiscal 2021, with EBIT margins (as adjusted) that double Fiscal 2019 actuals by Fiscal 2023, and
50% time-vested RSUs to 60% PSAs and 40% time-vested RSUs to provide additional alignment between leadership team pay and multi-year financial results. | | | | | | | | | | | | |
NEO | | Aggregate
Grant Date
Fair Value | | | PSA % | | | RSU % | |
Fran Horowitz | | $ | 5,054,578 | | | | 50 | % | | | 50 | % |
Scott Lipesky | | $ | 781,656 | | | | 50 | % | | | 50 | % |
Joanne C. Crevoiserat | | $ | 2,292,797 | | | | 50 | % | | | 50 | % |
Kristin Scott | | $ | 2,084,366 | | | | 50 | % | | | 50 | % |
Gregory J. Henchel | | $ | 132,161 | | | | 0 | % | | | 100 | % |
Stacia Andersen(1) | | $ | 1,615,383 | | | | 50 | % | | | 50 | % |
Robert E. Bostrom(2) | | $ | 521,104 | | | | 50 | % | | | 50 | % |
(1) | Ms. Andersen left the Company on November 30, 2018.
|
(2) | Mr. Bostrom left the role of Senior Vice President, General Counsel and Secretary of the Company on September 30, 2018 and continued to serve as Senior Vice President and Special Counsel of the Company until January 22, 2019.
|
Performance Share Awards. PSAs are based 50% on Average ROIC achievement and 50% onthree-year Relative TSR achievement againstthat exceeds the S&P Retail Select Industry Index.55th percentile of the compensation peer group. We believe that Average ROIC is highly
correlated with long-termthese challenging performance goals will guide the execution of our updated operating playbook, and if achieved, will create value creation, while Relative TSR appropriately aligns pay programs with the stockholder experience. As such, we have set an aggressive Average ROIC target of 14.3% for Fiscal 2018 – Fiscal 2020 and require Relative TSR performance at a percentile placed above median against the S&P Retail Select Industry Index for a target payout. our stockholders.
The number of Average ROIC-based PSAs earned will rangedepend on the Company’s level of achievement with respect to each equally-weighted metric (Average EBIT Margin %, Net Sales CAGR, and Relative TSR performance), ranging from 0%25% of target for performance at or below threshold up to 200% of target for performance at maximum. The numberNo PSAs will be earned if performance falls below the threshold level of RelativeTSR-based PSAs earned will range from 25% of targetperformance for all three metrics. If the performance atlevel falls between threshold and 0% for performance below threshold, up to 200% for performance at maximum.target or between target and maximum, the level of payout is determined through linear interpolation. PSA payouts are capped at target if absolute TSR is negative across the three-year performance period. A summaryperiod, to ensure that awards align pay for the NEOs with value creation for our stockholders.
When deemed appropriate, the Committee considers any unusual circumstances that are likely to have a material impact on PSA performance measures as it sets the relevant targets after considering input from the Committee’s independent advisors as well as the other independent directors and management of the
financial targets approved byCompany. We repurchase shares of our
CompensationCommon Stock from time to time, dependent on market and
Organization Committee for PSAs granted in Fiscal 2018 is presented below: | | | | |
Payout Level Under Performance Metric
| | Total Stockholder Return
vs. the S&P Retail Select Industry Index
for Fiscal 2018 through Fiscal 2020* | | Average Return on Invested
Capital for Fiscal 2018
through Fiscal 2020* |
Maximum
| | At or Above 80th Percentile | | 14.7% or Above |
Target
| | 55th Percentile | | 14.3% |
Threshold
| | Above 30th Percentile | | Above 13.9% |
| * | If the performance level falls between “Threshold” and “Target” or between “Target” and “Maximum,” the level of payout is determined through interpolation. Average Return On Invested Capital (ROIC) is anon-GAAP measure calculated as adjusted EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent) divided by Total Average Invested Capital (comprising Gross Property and Equipment, Capitalized Value of Operating Leases, Receivables, Merch Inventory, and Prepaid and Other Current Assets; less Accounts Payable and Accrued Liabilities).
|
Performance periodsbusiness conditions, with the objectives of returning excess cash to stockholders and offsetting dilution from issuances of Common Stock associated with the outstanding Fiscal 2017 – Fiscal 2019exercise of associate SARs and Fiscal 2018 – Fiscal 2020 PSA cycles have not been completed. The final measurement period for the Fiscal 2016 – Fiscal 2018 PSA cycle was completed in Fiscal 2018. Our Compensation and Organization Committee determined that threshold performance for the Average ROIC tranche of the PSAs was not achieved (actual of 11.2% for the Fiscal 2016 – Fiscal 2018 period versus a threshold value of 11.9%), and all underlying Average ROIC-based PSAs were forfeited. Our Compensation and Organization Committee also determined that the Company’s Relative TSR performance against the S&P Retail Select Industry Index was at the 36th percentile for the Fiscal 2016 – Fiscal 2018 period. As such, 20.0% of the target number of underlying RelativeTSR-based PSAs vested. A summary of the actual or trending performance (as of February 2, 2019) for the annual PSA awards granted in Fiscal 2016 through Fiscal 2018 is shown below:
| | | | |
| | |
Performance Period
| | Relative TSR Tranche
| | Average ROIC Tranche
|
| | |
Fiscal 2016 —
Fiscal 2018
| | Achieved at 36th percentile
20.0% of target earned
| | Did not achieve threshold
Tranche forfeited
|
| | |
Fiscal 2017 —
Fiscal 2019
| | Trending at maximum | | Trending at maximum |
| | |
Fiscal 2018 —
Fiscal 2020
| | Trending between target and maximum | | Trending between target and maximum |
Beginning in Fiscal 2019, Total Net Sales will be added as a third, equally-weighted metric for PSA grants (in addition to Average ROIC and Relative TSR) as we seek to align our performance-based compensation with our goal to accelerate the growth of our brands.
Restricted Stock Units.Subject to continued employment with the Company, time-vested RSUs granted to the NEOs in Fiscal 2018 will vest 25% a year over a four-year period beginning on March 27 of the immediately following calendar year. Beginning in Fiscal 2019, the vesting schedule for time-vested RSUs granted to members of our leadership team will be reduced from four years to three years to more closely reflect competitive practice among our peer group ofsimilarly-sized, specialty retailers against whom we compete for talent.
Special New Hire Award to Mr. Henchel.As stated above, the Company granted an inducement award of “New Hire” RSUs to Mr. Henchel when he joined the Company. The awardRSUs. We do not believe that share repurchases have had an approximate grant date value of $150,000 and will vest 25% a year over a four-year period beginning on November 19 of the immediately following calendar year.
Special Promotional Awards to Ms. Horowitz and Ms. Crevoiserat.In Fiscal 2017, the Company granted each of Ms. Horowitz and Ms. Crevoiserat an award of Promotional RSUs in addition to the Fiscal 2017 annual equity grant that each received. Our Compensation and Organization Committee and the Board believed that it was important to recognize Ms. Horowitz and Ms. Crevoiserat for their individual strong performances, their ongoing contributions to the operations of the Company, their criticality to the Company’s turnaround efforts in both the near-term and the long-term, and their role in influencing leadership continuity over the coming years. The target value of each award was $4,000,000 and $3,000,000, respectively.
Fifty percent (50%) of the Promotional RSUs (the “Service-Vested Promotional RSUs”) are subject to a total three-year vesting schedule, under which 25% of the Service-Vested Promotional RSUs will vest on each of the first and second anniversaries of the grant date, and 50% of the Service-Vested Promotional RSUs will vest on the third anniversary of the grant date. The remaining fifty percent (50%) of the Promotional RSUs (the “Performance-Based Promotional RSUs”) will be earned dependingmaterial impact on the level of achievement with respect to the Relative TSR performance goalmeasures associated with our PSA awards and the repurchases did not affect the manner in which the Committee set the relevant targets for awards granted under our long-term equity incentive programs or the determination of whether such targets were achieved.
Completed and Outstanding Performance Share Award Cycles
The final measurement period for the Fiscal 2019 to Fiscal 2021 PSA cycle was completed as of the end of Fiscal 2021. A summary of Average ROIC, Net Sales CAGR, and Relative TSR achievement and payouts for the Fiscal 2019 to Fiscal 2021 PSAs is presented below:
| | | | | | | | | | | | | | | | | |
Fiscal 2019 to Fiscal 2021
PSA Achievement | Threshold | Target | Maximum | Actual | Payout Percentage |
| | | | | |
Average ROIC(1) (33.33% weighting) | 13.9% | 14.5% | 15.1% | 15.2% | 200% |
Net Sales CAGR(2) (33.33% weighting) | 1.00% | 3.25% | 4.00% | 1.13% | 6% |
| Relative TSR vs. S&P Retail Select Index (33.34% weighting) | 30TH PERCENTILE | 55TH PERCENTILE | 80TH PERCENTILE | 60TH PERCENTILE | 120% |
| Weighted Average | | | | | 108.7% |
(1)This is a non-GAAP measure. Please refer to Appendix A to this Proxy Statement for additional detail on this performance metric.
(2)The Net Sales CAGR performance metric was measured as the compound annual growth rate of net sales as reported in accordance with GAAP as in effect on the date of grant (March 26, 2019) in the Company’s consolidated financial statements for the three years in the performance period. The Net Sales CAGR formula is equal to ((Fiscal 2021 net sales/ Fiscal 2018 net sales)^(1/3 Years)) – 1) * 100.
Performance periods associated with the outstanding Fiscal 2020 to Fiscal 2022 and Fiscal 2021 to Fiscal 2023 PSA cycles have not been completed. We will continue to evaluate performance for these awards based on cumulative comparable store salesthe goals that were established at the time of grant. A summary of trending performance (as of the end of Fiscal 2021) for the three-fiscal-yearFiscal 2020 and Fiscal 2021 PSA grants is shown below:
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| 2022 Proxy Statement | 49 | Abercrombie & Fitch Co. |
COMPENSATION DISCUSSION AND ANALYSIS
| | | | | | | | | | | |
| Performance Period | Net Sales CAGR(1) Tranche | Average EBIT Margin %(2) Tranche | Relative TSR Tranche |
| | | |
| Fiscal 2020 to Fiscal 2022 | N/A | N/A | Trending at maximum |
| Fiscal 2021 to Fiscal 2023 | Trending at maximum | Trending at maximum | Trending at maximum |
(1)The Net Sales CAGR performance metric will be measured as the straight three-year average of the growth rate in GAAP Net Sales in each fiscal year of the three-year 2021 to 2023 performance period, comprised ofin each case calculated in comparison to the GAAP Net Sales for Fiscal 2017 and2020, where GAAP Net Sales reflects net sales as reported in the two succeeding fiscal yearsCompany’s consolidated financial statements in accordance with GAAP as in effect on March 29, 2021.
(2)This is a non-GAAP measure. Please refer to Appendix A to this Proxy Statement for additional detail on this performance metric.
Restricted Stock Units
Service-based RSUs granted to the NEOs in Fiscal 2021 vest in three equal installments over a three-year period, subject to continued employment, beginning on the first anniversary of the grant date.
New Hire Inducement RSU Grant to Mr. Desai
Upon hire, the Company
(the “Three-Year Performance Period”).granted Mr. Desai an inducement equity award. The award had a grant date fair value of approximately $1,000,000, and was in the form of RSUs. The actual number of RSUs granted was based on the closing share price on the date of the grant, August 18, 2021. The RSUs will vest in three equal installments over a three-year period, subject to continued employment, beginning on the first anniversary of the grant date. APPROVED COMPENSATION DESIGN CHANGES FOR FISCAL 2022
| | |
| |
Award Tranche
| | Description
|
| |
Service-Based (50%)
| | 25% of the underlying shares vest on the first and second anniversaries of grant date; 50% of the underlying shares vest on the third anniversary of grant date |
| |
Performance-Based (50%)
| | Payout is based upon cumulative comparable store sales for the Fiscal 2017 — Fiscal 2019 Three-Year Performance Period
A target payout will be achieved for comparable store sales of + 6%; while threshold is achieved for comparable store sales of + 5%
For any payout (threshold or target), cumulative EBITDA must grow at least 35% for each dollar value of cumulative comparable store sales described above
Payout for the Performance-Based Promotional RSUs is trending at target
|
The threshold levelactions taken by management in recent years to transform our business, along with decisions made in Fiscal 2020 and Fiscal 2021 to respond to the COVID-19 pandemic, resulted in Fiscal 2021 net sales that exceeded Fiscal 2019 levels and delivered our best reported and adjusted operating margin(1)performance in over a decade, establishing a strong foundation for further growth and value creation. With this in mind, the Committee approved the addition of performance results in a 50% payoutNet Sales metric to the Fiscal 2022 annual cash incentive program with a 20% weighting (the Adjusted EBIT metric will be reduced to 80%). With the addition of the Performance-Based Promotional RSUsNet Sales metric, a sales-related performance metric will be included in both the short-term and requires achievement of at least +5% cumulative comparable sales overlong-term incentive plans, which reinforces management’s commitment to growing our business in the Three-Year Performance Period. The target level of performance results in a 100% payout and requires achievement of at least +6% cumulative comparable sales over the Three-Year Performance Period. Payout for the achievement of the cumulative comparable sales performance goal is also contingent uponnear-term, while simultaneously positioning the Company achievingfor successful long-term growth. No changes were made to the long-term equity incentive programs for Fiscal 2022.
(1) Adjusted operating margin is apre-established minimum cumulative EBITDA growth of 35% for the corresponding incremental revenue over the Three-Year Performance Period. No payout above 100% is available under the Performance-Based Promotional RSUs.See the“Promotional RSUs” section under“EXECUTIVE OFFICER COMPENSATION — Potential Payments Upon Termination or Change of Control”beginning on page 83 of non-GAAP measure. Please refer to Appendix A to this Proxy Statement for a descriptionadditional detail on adjusted results and other important information regarding the use of the treatment of the Promotional RSUs following various employment termination scenarios.
non-GAAP or adjusted measures. Equity Grant Policy
Our Compensation and Organization
EQUITY GRANT POLICY
The Committee follows an Equity Grant Policy pursuant to which
our Compensation and Organizationthe Committee reviews and approves individual grants for the NEOs, as well as the total number of shares covered by PSAs, RSUs and, if applicable, SARs granted to all associates. The annual equity grants typically are reviewed and approved at
our Compensation and Organizationthe Committee’s regular
March meeting
during the first quarter of the fiscal year, although
sign-on equity awards are generally approved by the
Compensation and Organization Committee at the time an executive officer commences employment with the Company. The grant date for the annual equity grants is the date of
our Compensation and Organizationthe Committee meeting at which they are approved. Administration of
PSA,PSAs and RSU and SAR awards is managed by the Company’s human resources department with specific instructions related to the timing of grants given by
our Compensation and Organizationthe Committee. The Company has no intention, plan or practice to select annual grant dates for
awards to NEOs in coordination with the release of material,
non-public information, or to time the release of such information because of award
grant dates.
Benefits
BENEFITS
As associates of the Company, the NEOs are eligible to participate in all of the broad-based Company-sponsored benefits programs on the same basis as other full-time associates.
In addition to the qualified Abercrombie & Fitch Co. Savings and Retirement Plan (the “401(k) Plan”), the Company haswe have a nonqualified deferred compensation plan, the Abercrombie & Fitch Nonqualified Savings and Supplemental Retirement Plan (the “Nonqualified
| | | | | | | | |
| Abercrombie & Fitch Co. | 50 | 2022 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
Savings and Supplemental Retirement Plan”), that allows members of senior managementeligible associates to defer a portion of their compensation over and above the Internal Revenue Service (“IRS”) limits imposed on the Company’s 401(k) Plan. The Company also makes matching contributions to the Nonqualified Savings and Supplemental Retirement Plan and, prior to January 1, 2016, made retirement contributions for certain participants who began participation prior to January 1, 2014. Company contributions have a five-year vesting schedule from the date of employment by the Company. The Nonqualified Savings and Supplemental Retirement Plan allows participants the opportunity to save and invest their own money on a similar basis (as a percentage of their compensation) as other associates under the 401(k) Plan. Furthermore, the Nonqualified Savings and Supplemental Retirement Plan is competitive with members of the Company’s identifiedour compensation peer group and other companies with whom the Company competeswhich we compete for talent, and the Company’s contribution element provides retention value. The Company’stalent. Our Nonqualified Savings and Supplemental Retirement Plan is further described, and Company contributions and the individual account balances for the NEOs are disclosed, under the section captioned“EXECUTIVE OFFICER COMPENSATION — Nonqualified “Nonqualified Deferred Compensation” beginning on page 8261 of this Proxy Statement.The Company offers We previously provided matching contributions to Nonqualified Savings and Supplemental Retirement Plan participants but ceased to provide such matching contributions for base salary earned after December 31, 2019 and with respect to bonus payments for periods ending after the end of Fiscal 2019.
We offer a life insurance benefit for all full-time associates
in the United States. Starting in Fiscal 2021, for associates below Vice President, the benefit is equal to
two times base salary. For Vice Presidents and above, the death benefit is set at fourone times base salary, up to a maximum of
$1,000,000, and for Vice Presidents and above, the benefit is equal to two times base salary, up to a maximum of $2,000,000.
The Company offers
We offer a long-term disability benefit to all full-time associates
in the United States which covers 60% of base salary for the disability period. In addition,
the Company offerswe offer an Executive Long-Term Disability Plan for all associates earning over $200,000 in base salary which covers an additional 10% of base salary and 70% of target annual cash incentive opportunity for the disability period.
The Company does
We generally do not offer perquisites to our executive officers that are not widely available to all full-time associates.
Role of the Compensation and Organization Committee
PROCESS OF OUR COMPENSATION AND HUMAN CAPITAL COMMITTEE
Decisions regarding the compensation of the NEOs are made by our Compensation and Organizationthe Committee, although it does receivewhich considers input from itsthe Committee’s independent advisors as well as the other independent directors of the Company and management of the Company. The Company ChairmanOur Chairperson of the Board also provides input (in his
capacity as a director) with respect to the recommended compensation of the NEOs. Our Compensation and OrganizationThe Committee often requests certain Company executive officers to be present at Compensation and Organization Committee meetings where executive compensation and Company and individual performance are discussed and evaluated so they can provide input into the decision-making process. Executive officers may provide insight, suggestions, or recommendations regarding executive compensation during periods of general discussion, but are not present and do not have a vote in any decision-making.
when compensation actions are determined.
In Fiscal
2018,2021, Semler Brossy Consulting Group, LLC (“
SBCG”Semler Brossy”) served as
our Compensation and Organizationthe Committee’s independent compensation consultant. Additionally, in Fiscal
2018,2021, Gibson, Dunn & Crutcher LLP (“Gibson Dunn”) served as the Committee’s independent outside counsel. The only services that
SBCGSemler Brossy and Gibson Dunn perform for the Company are at the direction of
our Compensation and Organizationthe Committee. Neither
SBCGSemler Brossy nor Gibson Dunn provided any services to the Company in Fiscal
20182021 other than executive and director compensation consulting and advisory services. In this regard,
our Compensation and Organizationthe Committee has adopted a policy regarding the use of outside compensation consultants that provides as follows:
“If the Committee retains a compensation consultant to provide advice, information and other services to the Committee relating to the compensation of the Company’s Chief Executive Officer, its officers identified in
Rule 16a-1(f) under the Exchange Act, or its
non-associate directors or other matters within the responsibility of the Committee, such consultant may only provide services to, or under the direction of, the Committee and is prohibited from providing any other services to the Company.
Our Compensation and Organization”
The Committee has the right to terminate the services of the outside counselindependent compensation consultant and the compensation consultantoutside counsel at any time. While our Compensation and Organizationthe Committee retains Semler Brossy and Gibson Dunn directly, Semler Brossy and SBCG directly, Gibson Dunn and SBCG interact with our Chairperson of the Company Chairman, Board, the Company’s Senior Vice President, Head of Global Human Resources,and the Company’s General Counsel and the Company’s Chief Operating Officer and their respective staffs in carrying out assignments in order to obtain compensation and performance data for the executive officers and the Company. In addition, our Compensation and Organizationthe Committee’s advisors may, at their discretion, seek input and feedback from management of the Company regarding theirthe advisors’ respective work product prior to presentation to our Compensation and Organizationthe Committee in order to confirm information is accurate or address other similar issues. A representative from SBCGSemler Brossy is generally present at all Compensation and Organization Committee meetings, and generally attends executive sessions of our Compensation and Organizationthe Committee. Both Semler Brossy and Gibson Dunn and SBCG provide independent perspectives on any management proposals. In Fiscal 2018, our Compensation and Organization2021, the Committee reviewed and considered the factors specified inindependence standards prescribed by the SEC and NYSE corporate governance standards and determined that each of SBCGSemler Brossy and Gibson Dunn was independent and their respective work did not raise any conflict of interest.In selecting SBCG, our Compensation and Organization Committee considered the independence standards prescribed by the SEC and NYSE, and concluded that SBCG was independent and that its work would not raise any conflict of interest. The services SBCG provides are at the discretion of our Compensation and Organization Committee. As our Compensation and Organization Committee’s independent compensation consultant, SBCG reviewed the design and operation of the Company’s executive andnon-associate director compensation programs and made recommendations regarding the Company’s compensation practices for Fiscal 2018.
Compensation and Benefits Structure
| | | | | | | | |
| 2022 Proxy Statement | 51 | Abercrombie & Fitch Co. |
COMPENSATION DISCUSSION AND ANALYSIS
SETTING EXECUTIVE COMPENSATION
Pay Level — Determination of the appropriateAppropriate Pay Opportunity
The Committee approves the pay opportunityPay levels for allof certain associates of the Company includingdesignated by the Committee, which includes each of the NEOs listed in the“Fiscal 2018 “Fiscal 2021 Summary Compensation Table” beginning on page 7656 of this Proxy Statement,Statement. Pay levels for these individuals are established based on a number of factors, including each individual’s role and responsibilities within the Company, current compensation, experience and expertise, pay levels in the competitive market for similar positions, internal pay equity relationships, including those among the executive officers and the performance of the individual her/his area of responsibility and the Company as a whole. Our Compensation and Organization Committee approves the pay levels for all the
executive officers. In determining the pay levels, our Compensation and OrganizationThe Committee considers all elements of compensation and benefits.
2018benefits when determining pay levels for the associates.
2021 Compensation Peer Group
The Company considers data from a compensation peer group to better understand market pay levels and comparativecompetitive pay practices in executivefor the NEOs and non-associate directors. The Committee reviews the compensation generally. This peer group is reviewed periodically and, where appropriate, is adjustedadjusts the compensation peer group to ensure robust market comparisons.
For Fiscal
2018, Kate Spade & Company was removed2021, the Committee approved the removal of J. Crew Group, Inc. and Ascena Retail Group, Inc. from the
compensation peer group
following that company’s acquisition by Coach, Inc. and the subsequent change in the name of the combined companydue to
Tapestry, Inc.both companies filing for bankruptcy during 2020. The peer retail companies used by
our Compensation and Organizationthe Committee in determining the “competitive market” with respect to Fiscal
20182021 compensation decisions are included in the table
below:below. | | | | | | | | |
| Fiscal 2021 Compensation Peer Group Companies |
| | |
• American Eagle Outfitters, Inc.
| Guess? Inc. | • Ralph Lauren Corporation
|
| Carter’s, Inc. | L Brands, Inc. | Tapestry, Inc. |
| Chico’s FAS, Inc. | |
• Ascena Retail Group, Inc.
| | • Levi Strauss & Co.
|
| |
• Carter’s, Inc.
| | • lululemon athletica inc.
|
| |
• Chico’s FAS, Inc.
| | • Ralph Lauren Corporation
|
| |
• Express, Inc.
| | • Signet Jewelers Limited
|
| |
• Fossil Group, Inc.
| | • Tapestry, Inc.
|
| |
• Guess?, Inc.
| | • The Children’s Place, Inc.
|
| Express, Inc. | lululemon athletica inc. | Urban Outfitters, Inc. |
| Fossil Group, Inc. | | |
• J Crew Group, Inc.
| | • Urban Outfitters, Inc.
|
The compensation peer group is constructed fromincludes companies in the retail and apparel space of a comparable size. For purposes of determining comparable size, with a preference is given to revenue over(as compared to market capitalization given thecapitalization) to reflect our ongoing business transformation. Additionally, the Company giveswe give preference to companies that are key talent competitors, have a mall-centric store strategy, have a significante-commerce business, and have material international operations. At the time the compensation peer group was determined the Company’sfor Fiscal 2021, our revenues approximated the median of the compensation peer group median.group.
In addition to the peer
group companies’ public proxy statement-disclosed information, we also reference Equilar survey data for the compensation peer group
companies that participate in Equilar’s surveys when establishing pay levels.
Executive Severance Agreements For each of our NEOs for whom we consider Equilar survey data, we reference data for positions that have similar responsibilities to those of our NEOs.
For Fiscal 2022, the Committee approved the additions of Capri Holdings Limited and
Change-in-Control BenefitsOur Compensation and Organization Victoria’s Secret & Co., which was separated from L Brands, Inc. in 2021. L Brands, Inc. was renamed Bath & Body Works, Inc., which is not included in the Fiscal 2022 compensation peer group.
| | | | | | | | |
| Abercrombie & Fitch Co. | 52 | 2022 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SEVERANCE AGREEMENTS AND CHANGE-IN-CONTROL BENEFITS
The Committee carefully considers the use and conditions of employment agreements.
Our Compensation and OrganizationThe Committee recognizes that, in certain circumstances, formal written employment
contractsagreements are necessary in order to successfully recruit and retain senior executive officers. Consistent with this approach, in connection with their commencement of employment with the Company, each of the NEOs entered into an offer letter with the Company that provided for certain benefits upon termination of employment and/or upon a change in control of the Company.
Our Compensation and OrganizationThe Committee believed that it was in the best interest of the Company to enter into these offer letters as a means of securing the employment of each of these
individuals and to provide them with a degree of security given the transition occurring at the Company.On May 10, 2017, Abercrombie & Fitch Management Co., a subsidiaryindividuals. Each of the Company (“A&F Management”), executed and entered into executive severance agreements with a number of the Company’s executive officers, including Fran Horowitz, Joanne C. Crevoiserat, Kristin Scott, Stacia Andersen and Robert E. Bostrom (the “May 2017 Agreements”). In anticipation of his rejoining the Company, effective as of September 7, 2017, A&F Management executed andNEOs has also entered into an executive severance agreement with Scott Lipesky (the “Lipesky Agreement”). In anticipation of his joining the Company effective as of September 13, 2018, A&F Management executed and entered into an executive severance agreement with Gregory J. Henchel
((collectively, the “Henchel Agreement” and, collectively with the May 2017 Agreements and the Lipesky Agreement, the “Executive“Severance Agreements”).
In addition, all associates who participate in the Company’s stock-based compensation plans, including the NEOs, are entitled to certain benefits in the event of termination due to death or disability or in connection with a change of control as set forth in the plan documents for the Company’s stock-based compensation plans. The terms and conditions of these arrangements are discussed in further detail in the section captioned“EXECUTIVE OFFICER COMPENSATION — Potential “Potential Payments Upon Termination or Change of Control”beginning on page 83 of this Proxy Statement.The discussionpag
e 63. Discussion of the terms of the ExecutiveSeverance Agreements appears later in this Proxy Statement in the section captioned“EXECUTIVE OFFICER COMPENSATION—Potential “Potential Payments Upon Termination or Change of Control — Executive Severance Agreements”Control” beginning on page 83 of this Proxy Statement, does not include Ms. Andersen or Mr. Bostrom. The consequences of Ms. Andersen’s separation from service as an associate of the Company are discussed separately under the section below captioned“Andersen Separation from Service.” The consequences of Mr. Bostrom’s separation from service as an associate of the Company are discussed separately under the section below captioned“Bostrom Separation from Service.”Andersen Separation from Service
Effective November 30, 2018 (the “Andersen Termination Date”), Stacia Andersen left the Company. Since Ms. Andersen executed a release of claims acceptable to the Company, which release was effective by its terms on December 19, 2018 (the “Release Effective Date”), as contemplated by her Executive Agreement:
63. the Company will continue to pay Ms. Andersen’s base salary inbi-weekly installments for 18 months following the Andersen Termination Date, with suchbi-weekly installment payments to aggregate $1,162,500;
the Company paid to Ms. Andersen, at the time those executives who are actively employed with the Company received payments under the Short-Term Cash Incentive Plan, apro-rated portion of Ms. Andersen’s annual cash incentive opportunity under the Short-Term Cash Incentive Plan, based on actual performance during Fiscal 2018 and the number of days in Fiscal 2018 that had elapsed through the Andersen Termination Date;
CLAWBACK POLICYthe Company will reimburse Ms. Andersen during the 18 months following the Andersen Termination Date for 100% of the monthly premium costs, less applicable withholding taxes on such reimbursement, of continuation coverage under COBRA, subject to Ms. Andersen’s election of such coverage and the additional eligibility requirements set forth in her Executive Agreement; and
the outstanding equity awards held by Ms. Andersen will vest (if at all) in accordance with the terms of her award agreements and the applicable equity compensation plan.
Ms. Andersen remains subject to the covenants under her Executive Agreement, including thenon-competition,non-solicitation,non-disparagement and confidentiality covenants, in accordance with their terms in Ms. Andersen’s Executive Agreement. Thenon-competition covenant prohibits Ms. Andersen from engaging in certain activities with identified competitors of the Company for a period of 12 months following the Andersen Termination Date. Thenon-solicitation covenant prohibits Ms. Andersen from engaging in certain solicitation activities for a period of 24 months after the Andersen Termination Date.
Bostrom Separation from Service
Mr. Bostrom left the Company on the Bostrom Separation Date (January 22, 2019). Since Mr. Bostrom executed a release of claims acceptable to the Company, as contemplated by his Executive Agreement, as amended by the Bostrom Separation Agreement:
the Company will continue to pay the Bostrom Base Salary inbi-weekly installments for 18 months following the Bostrom Separation Date, with suchbi-weekly installment payments to aggregate $930,000;
the Company paid to Mr. Bostrom, at the time those executives who are actively employed with the Company received payments under the Short-Term Cash Incentive Plan, Mr. Bostrom’s annual cash incentive opportunity under the Short-Term Cash Incentive Plan, based on actual performance during Fiscal 2018;
the Company will reimburse Mr. Bostrom during the 18 months following the Bostrom Separation Date for 100% of the monthly premium costs, less applicable withholding taxes on such reimbursement, of continuation coverage under COBRA, subject to Mr. Bostrom’s election of such coverage and the additional eligibility requirements set forth in his Executive Agreement; and
the outstanding equity awards held by Mr. Bostrom will vest (if at all) in accordance with the terms of his award agreements and the applicable equity compensation plan.
Mr. Bostrom remains subject to the covenants under his Executive Agreement, including thenon-competition,non-solicitation,non-disparagement and confidentiality covenants, in accordance with their terms in Mr. Bostrom’s Executive Agreement. Thenon-competition covenant prohibits Mr. Bostrom from engaging in certain activities with identified competitors of the Company for a period of 12 months following the Bostrom Separation Date. Thenon-solicitation covenant prohibits Mr. Bostrom from engaging in certain solicitation activities for a period of 24 months after the Bostrom Separation Date.
Clawback Policy
Each of the plans pursuant to which annual and long-term incentive compensation is or will be paid to the Company’sour executive officers (i.e.(i.e., the Short-Term Cash Incentive Plan, the Abercrombie & Fitch Co. Long-Term Cash Incentive Compensation Performance Plan, the Abercrombie & Fitch Co. 2005 LTIP,Long-Term Incentive Plan (the “2005 LTIP”), the Amended and Restated Abercrombie & Fitch Co. 2007 Long-Term Incentive Plan (the “2007 LTIP”) and the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates LTIP)(the “2016 Associates LTIP”)) includes a stringent “clawback” provision, which allows the Companyus to seek repayment of any incentive amounts that were erroneously paid. Each of the plans provides that if (i) a participant (including one or more NEOs) has received payments under the plan pursuant to the achievement of a performance goal and (ii) our Compensation and Organizationthe Committee determines that the earlier determination as to the achievement of the performance goal was based on incorrect data and in fact the performance goal had not been achieved or had been achieved to a lesser extent than originally determined and a portion of such payment would not have been made given the correct data, then such portion of any such payment made to the participant must be repaid by such participant to the Company,us, without any requirement of misconduct on the part of the participant.
Stock Ownership Guidelines
As disclosed above In addition, an amendment included in the Short-Term Cash Incentive Plan expands the clawback provision to allow the Committee to clawback payouts under additional circumstances, including pursuant to any clawback policies that may be adopted from time to time by the caption“Executive Summary — Best Practices” on page 62 of this Proxy Statement,Board or the Committee.
STOCK OWNERSHIP GUIDELINES
The Board believes it is important that the executive officers and the directors have, and are recognized both internally and externally as having, long-term financial interests that are aligned with those of the Company’sour stockholders. Accordingly, the Board adopted stock ownership guidelines for all directorsexecutive officers and executive officersdirectors effective as of November 12, 2009, which were furthermost recently amended effective as of December 15, 2015. The Company’sAugust 18, 2021. We post the stock ownership guidelines are posted on the “Corporate Governance” page within the “Our Company” section of the Company’scorporate website atcorporate.abercrombie.com. Ownership multiples for NEOs and directors are: | | | | | | | | |
Population | Multiple | Multiple
Includes |
| | Includes
|
| Chief Executive Officer | | 5x current annual base salary | | • Shares owned directly by the executive officer or director or his/herher/ his immediate family members in the same household
•
Shares held in trust for the benefit of the executive officer or director or his/herher/ his immediate family members
•
Shares obtained through the vesting of restricted stock or time-vested RSUs vested or unvested
• Shares of stock-settled SARs which are vested and
in-the-money
• Shares credited to bookkeeping accounts pursuant to one of the Company’s deferred compensation plans
|
| | |
| Other Executive Officers, including NEOs | | 2x current annual base salary |
| | |
| | |
| | |
Non-associate director | Non-Associate Directors | 5x current annual cash retainer |
| | | | | | | | |
| 2022 Proxy Statement | 53 | |
| | Abercrombie & Fitch Co. |
The guidelines are initially calculated using the executive officer’s base salary as of the later of the date the guidelines were most recently amended (i.e., December 15, 2015) or the date the person was first designated as an executive officer by the Board. The guidelines may bere-calculated, in the discretion of our Nominating and Board Governance Committee, when an individual changes pay grade (e.g., from senior vice president to executive vice president) and otherwise from time to time.
COMPENSATION DISCUSSION AND ANALYSIS
Until the
amount contemplated by the guidelinesapplicable guideline is achieved,
thean executive officer is required to retain an amount equal to 50% of the net shares received as a result of the exercise of stock options or stock-settled SARs or the vesting of restricted stock or RSUs. “Net shares” for purposes of the guidelines are those shares that remain after shares are sold or netted to pay (i) the exercise price of stock options or SARs (if applicable) and any withholding taxes associated with such exercise or (ii) withholding or other taxes payable upon vesting of restricted stock or RSUs.
Failure to meet or, in unique circumstances, to show sustained progress toward meeting the stock ownership guidelines may be a factor considered by
our Compensation and Organizationthe Committee in determining future long-term incentive equity grants and/or appropriate levels of incentive compensation.
Executive officers who are subject to the stock ownership guidelines are to be notified each fiscal year as to the status of their compliance with the guidelines based on information available to the Company’s human resources department. Each executive officer may provide supplemental information regarding shares held in street name, individual brokerage accounts or owned by a spouse or other immediate family member, if such information would be relevant to the calculation of such executive officer’s compliance with the stock ownership guidelines.
At the time of the Company’s Fiscal 20182021 annual review of stock ownership compliance, all executive officers and non-associate directors either: (i) had satisfied their applicable guideline; (ii) were on track to satisfy their applicable guideline; or (iii) were otherwise compliant with the Company’s policies (i.e.(i.e., were in compliance with the applicable retention requirement until such time that their ownership guideline wascan be met).
Required ownership fornon-associate
directors is calculated using the annual retainer as of the later of the date the guidelines were most recently amended (i.e., December 15, 2015) and the date the director is elected to the Board. It is anticipated that directors should be able to achieve the guideline within three years of joining the Board.
Compensation Considerations Related to Tax Deductibility under Internal Revenue Code Section 162(m)
Prior to December 22, 2017, when the Tax Cuts and Jobs Act (the “TCJA”) was signed into law,
TAX DEDUCTIBILITY OF COMPENSATION UNDER INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally disalloweddisallows a tax deduction to publicly-held companies (such as the Company) for compensation paid to certain “covered employees” in excess of $1,000,000 per covered employee in any year, except toyear.
Neither the
extent that the compensation in excess of the limit qualified as performance-based.Under the TCJA, the performance-based exception has been repealed and the $1,000,000 deduction limit now applies to (i) anyone serving as the chief executive officer or the chief financial officer at any time during the taxable year, (ii) the top three other highest compensated executive officers serving at the end of the taxable year, and (iii) any individual who had been a covered employee for any taxable year of the Company that started after December 31, 2016. However, the new rules do not apply to remuneration provided pursuant to a written binding contract in effect on November 2, 2017 that is not modified in any respect after that date. Because of the ambiguities and uncertainties as to the application and interpretation of this transition relief, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) will avoid the deduction limit. The Company believes that the amount of compensation paid to the Company’s executive officers that can be deducted will decrease compared to prior years.
Neither our Compensation and Organization Committee nor the full Board has adopted a formal policy regarding tax deductibility of compensation paid to the Company’s executive officers. While our Compensation and Organizationthe Committee carefully considers the net cost and value to the Company of maintaining the deductibility of all compensation, it also desires the flexibility to reward the Company’s executive officers in a manner that enhances the Company’s ability to attract and retain individuals as well as to create longer term value for our stockholders. Thus, income tax deductibility is only one of several factors our Compensation and Organizationthe Committee considers in making decisions regarding the Company’s executive compensation program. Our Compensation and OrganizationThe Committee may authorize compensation that might not be deductible, if our Compensation and Organizationthe Committee determines that such compensation decision is in the best interest of the Company.
Compensation Considerations Related to Accounting
COMPENSATION CONSIDERATIONS RELATED TO ACCOUNTING
When determining amounts of long-term equity incentive grants to executive officers and other associates, our Compensation and Organizationthe Committee examines the accounting cost associated with the grants. Under GAAP, grants of options, SARs, RSUs, PSAs, and other share-based payments result in an accounting charge being taken by the Company. Our Compensation and OrganizationThe Committee considers the accounting implications of the executive compensation program, including the estimated cost for financial reporting purposes of equity compensation as well as the aggregate grant date fair value of equity compensation computed in accordance with FASB ASC Topic 718.
REPORT OF THE COMPENSATION AND ORGANIZATION
COMMITTEE ON EXECUTIVE COMPENSATION
The
| | | | | | | | |
| Abercrombie & Fitch Co. | 54 | 2022 Proxy Statement |
Report of the Compensation and OrganizationHuman Capital Committee on Executive Compensation
Our Compensation and Human Capital Committee has reviewed the“COMPENSATION DISCUSSION AND ANALYSIS” “Compensation Discussion and Analysis” section of this Proxy Statement, and discussed it with management of the Company. Based on such review and discussion, theour Compensation and OrganizationHuman Capital Committee recommended to the full Board that the “COMPENSATION DISCUSSION AND ANALYSIS” “Compensation Discussion and Analysis” be included in this Proxy Statement. Submitted by the Compensation and
OrganizationHuman Capital Committee:
Helen E. McCluskey, Chair
Felix J. Carbullido
James A. Goldman
Michael E. Greenlees
| | | | | | | | |
Michael E. Greenlees (Chair)2022 Proxy Statement | 55 | James B. Bachmann
(ceased to be member
as of February 22, 2019)
| | Helen E. McCluskey
(member since
February 22, 2019)
| | Charles R. PerrinAbercrombie & Fitch Co. |
EXECUTIVE OFFICER COMPENSATION
Summary
Executive Compensation
TableTables
FISCAL 2021 SUMMARY COMPENSATION TABLE
The following table below summarizes the compensation paid to, awarded to, or earned by theour NEOs for Fiscal 2018,2021, and, to the extent applicable, Fiscal 20172020 and Fiscal 20162019.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position
During Fiscal 2021 | Fiscal
Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($)(6) |
| | | | | | | | |
| Fran Horowitz | 2021 | 1,300,000 | — | 7,470,357 | 4,040,400 | 12,557 | 28,085 | 12,851,399 |
Chief Executive Officer
| 2020 | 1,143,667 | — | 6,864,973 | 3,900,000 | 14,443 | 26,608 | 11,949,691 |
| 2019 | 1,297,000 | — | 5,641,102 | 1,384,500 | 5,228 | 61,197 | 8,389,027 |
| Scott Lipesky | 2021 | 730,769 | — | 1,641,852 | 1,332,000 | 6,916 | 18,054 | 3,729,591 |
Executive Vice President,
Chief Financial Officer | 2020 | 600,500 | — | 2,862,578 | 1,300,000 | 5,172 | 17,587 | 4,785,837 |
| 2019 | 631,760 | — | 1,025,668 | 364,832 | 1,125 | 44,969 | 2,068,354 |
| Kristin Scott | 2021 | 945,192 | — | 3,283,704 | 2,109,000 | 11,794 | 23,039 | 6,372,729 |
President, Global Brands
| 2020 | 857,404 | — | 5,270,161 | 2,127,500 | 11,828 | 19,770 | 8,286,663 |
| 2019 | 922,865 | — | 3,076,956 | 656,750 | 3,750 | 63,135 | 4,723,456 |
| Samir Desai | 2021 | 325,000 | 600,000 | 2,315,409 | 621,600 | — | 100,997 | 3,963,006 |
Executive Vice President, Chief Digital and Technology Officer(7) | | | | | | | | |
| | | | | | | |
| Gregory J. Henchel | 2021 | 595,192 | — | 656,741 | 799,200 | — | 4,335 | 2,055,468 |
Executive Vice President,
General Counsel and Corporate Secretary | 2020 | 534,308 | — | 1,045,038 | 862,500 | — | 2,417 | 2,444,263 |
| 2019 | 567,308 | — | 512,834 | 214,674 | — | 2,640 | 1,297,456 |
(1)The amount shown in this column for Mr. Desai in Fiscal 2021 reflects a sign-on bonus payment of $600,000. Cash bonus payments that are contingent on achieving pre-established and communicated goals, including payments under the Company’s annual cash incentive program, appear in the column titled “Non-Equity Incentive Plan Compensation.”
(2)The amounts shown in this column represent the grant date fair value of the PSAs and RSUs granted to each NEO, computed in accordance with FASB ASC Topic 718 using the rules promulgated by the SEC.Fiscal 2018 Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position During Fiscal 2018 | | Fiscal
Year | | | Salary | | | Bonus(1) | | | Stock
Awards(2) | | | Option
Awards
and
SARs | | | Non-Equity
Incentive Plan
Compensation(3) | | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(4) | | | All Other
Compensation(5) | | | Total(6) | |
Fran Horowitz | | | 2018 | | | $ | 1,281,731 | | | $ | — | | | $ | 5,054,578 | | | $ | — | | | $ | 2,078,700 | | | $ | 1,455 | | | $ | 65,278 | | | $ | 8,481,742 | |
Chief Executive Officer(7) | | | 2017 | | | $ | 1,197,308 | | | $ | — | | | $ | 6,994,992 | | | $ | — | | | $ | 2,010,600 | | | $ | 1,645 | | | $ | 58,204 | | | $ | 10,262,749 | |
| | | 2016 | | | $ | 1,100,000 | | | $ | — | | | $ | 3,593,793 | | | $ | — | | | $ | — | | | $ | 705 | | | $ | 65,915 | | | $ | 4,760,413 | |
Scott Lipesky | | | 2018 | | | $ | 569,202 | | | $ | — | | | $ | 781,656 | | | $ | — | | | $ | 459,713 | | | $ | 158 | | | $ | 33,245 | | | $ | 1,843,974 | |
Senior Vice President and Chief Financial Officer(8) | | | 2017 | | | $ | 169,231 | | | $ | 240,000 | | | $ | 200,002 | | | $ | — | | | $ | 146,053 | | | $ | 712 | | | $ | 18,463 | | | $ | 774,461 | |
|
Joanne C. Crevoiserat | | | 2018 | | | $ | 878,846 | | | $ | — | | | $ | 2,292,797 | | | $ | — | | | $ | 959,400 | | | $ | 9,719 | | | $ | 84,951 | | | $ | 4,225,713 | |
Executive Vice President and Chief Operating Officer(9) | | | 2017 | | | $ | 848,654 | | | $ | — | | | $ | 4,123,200 | | | $ | — | | | $ | 949,450 | | | $ | 9,890 | | | $ | 49,902 | | | $ | 5,981,096 | |
| | | 2016 | | | $ | 800,000 | | | $ | — | | | $ | 1,844,999 | | | $ | — | | | $ | — | | | $ | 5,295 | | | $ | 98,611 | | | $ | 2,748,905 | |
Kristin Scott | | | 2018 | | | $ | 813,452 | | | $ | — | | | $ | 2,084,366 | | | $ | — | | | $ | 960,531 | | | $ | 753 | | | $ | 77,721 | | | $ | 3,936,823 | |
President, Global Brands; Former | | | 2017 | | | $ | 750,000 | | | $ | — | | | $ | 1,308,403 | | | $ | — | | | $ | 891,000 | | | $ | 20 | | | $ | 29,938 | | | $ | 2,979,361 | |
Brand President — Hollister(10) | | | 2016 | | | $ | 360,577 | | | $ | — | | | $ | 1,609,032 | | | $ | — | | | $ | — | | | $ | 17 | | | $ | 10,806 | | | $ | 1,980,432 | |
Gregory J. Henchel | | | 2018 | | | $ | 190,385 | | | $ | — | | | $ | 132,161 | | | $ | — | | | $ | 121,770 | | | $ | — | | | $ | 623 | | | $ | 444,939 | |
Senior Vice President, General Counsel and Corporate Secretary(11) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stacia Andersen | | | 2018 | | | $ | 636,154 | | | $ | — | | | $ | 1,615,383 | | | $ | — | | | $ | 441,047 | | | $ | 726 | | | $ | 1,232,416 | | | $ | 3,925,726 | |
Former Brand President — | | | 2017 | | | $ | 750,000 | | | $ | — | | | $ | 1,308,403 | | | $ | — | | | $ | 706,875 | | | $ | 37 | | | $ | 30,602 | | | $ | 2,795,917 | |
Abercrombie & Fitch/ abercrombie kids(12) | | | 2016 | | | $ | 461,539 | | | $ | 100,000 | | | $ | 1,758,515 | | | $ | — | | | $ | — | | | $ | 32 | | | $ | 26,238 | | | $ | 2,346,324 | |
Robert E. Bostrom | | | 2018 | | | $ | 500,077 | | | $ | — | | | $ | 521,104 | | | $ | — | | | $ | 396,552 | | | $ | 880 | | | $ | 984,187 | | | $ | 2,402,800 | |
Former Senior Vice President, | | | 2017 | | | $ | 595,192 | | | $ | — | | | $ | 436,148 | | | $ | — | | | $ | 402,120 | | | $ | 295 | | | $ | 59,994 | | | $ | 1,493,749 | |
General Counsel and Corporate Secretary(13) | | | 2016 | | | $ | 568,269 | | | $ | — | | | $ | 532,608 | | | $ | — | | | $ | — | | | $ | 257 | | | $ | 27,081 | | | $ | 1,128,216 | |
(1) | The amount included for Scott Lipesky in Fiscal 2017 reflects aassumptions described in “Note 14. Share-Based Compensation”sign-on bonus payment of $240,000. The amount included for Stacia Andersen in Fiscal 2016 reflects a relocation bonus payment of $100,000.
|
(2) | The amounts included in the “Stock Awards” column represent the grant date fair value related to PSAs and RSUs granted to the NEOs, computed in accordance with GAAP. The actual number of PSAs and RSUs granted in Fiscal 2018 is shown in the“Fiscal 2018 Grants of Plan-Based Awards” table on page 78 of this Proxy Statement. Pursuant to applicable SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. The maximum grant date fair value related to the PSAs granted in Fiscal 2018 (the NEOs can earn from 0% to 200% of target) was as follows: (a) Fran Horowitz — $5,653,890; (b) Scott Lipesky — $874,336; (c) Joanne C. Crevoiserat — $2,564,650; (d) Kristin Scott — $2,331,506; (e) Gregory J. Henchel — $0; (f) Stacia Andersen - $1,806,916; and (g) Robert E. Bostrom — $582,890. Grant date fair values for the PSAs and RSUs that were granted to the NEOs will only deliver monetary value if the performance-based criteria to which they are subject are achieved. For a discussion of valuation assumptions, see “Note 12. Share-Based Compensation” of the Notes to Consolidated Financial Statements included in “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of the Company’s Fiscal 2018Form 10-K.
|
(3) | For Fiscal 2018, all NEOs earned performance-based incentive cash compensation, and their payments were as follows: (a) Fran Horowitz — $2,078,700; (b) Scott Lipesky — $459,713; (c) Joanne C. Crevoiserat — $959,500; (d) Kristin Scott — $960,531; (e) Gregory J. Henchel — $121,770; (f) Stacia Andersen — $441,047 (pro-rated based on the November 30, 2018 date of her separation from service with the Company); and (g) Robert E. Bostrom — $396,552.
|
For Fiscal 2017, all NEOs who were active as of the payment date earned performance-based incentive cash compensation,Notes to the Consolidated Financial Statements included within “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of our Fiscal 2021 Form 10-K. The actual number of PSAs and their payments were as follows: (a) Fran Horowitz — $2,010,600; (b) Scott Lipesky — $146,053; (c) Joanne C. Crevoiserat — $949,450; (d) Kristin Scott — $891,000; (e) Stacia Andersen — $706,875; and (f) Robert E. Bostrom — $402,120.
ForRSUs granted in Fiscal 2016, none of2021 to each NEO is shown in the NEOs earned performance-based incentive cash compensation.
(4) | The amounts shown in this column for Fiscal 2018, Fiscal 2017 and Fiscal 2016 represent the above-market earnings on the NEOs’ respective Nonqualified Savings and Supplemental Retirement Plan balances. Above market-earnings is defined as earnings in excess of 120% of the monthly applicable federal long-term rate (APR). The APR for February 2019 was 3.45%.
|
(5) | The amounts shown in this column reflect All Other Compensation which included the following for Fiscal 2018:
|
All Other Compensation Table
| | | | | | | | | | | | | | | | | | | | |
Name | | Company
Contributions to
401(k) Plan(a) | | | Company
Contributions to
Nonqualified
Savings and
Supplemental
Retirement Plan(b) | | | Life and
Long-Term
Disability
Insurance
Premiums
Paid(c) | | | Severance | | | Total
($) | |
Fran Horowitz | | $ | 14,123 | | | $ | 38,423 | | | $ | 12,732 | | | | N/A | | | $ | 65,278 | |
Scott Lipesky | | $ | 13,792 | | | $ | 17,106 | | | $ | 2,347 | | | | N/A | | | $ | 33,245 | |
Joanne C. Crevoiserat | | $ | 16,814 | | | $ | 55,494 | | | $ | 12,643 | | | | N/A | | | $ | 84,951 | |
Kristin Scott | | $ | 17,201 | | | $ | 53,076 | | | $ | 7,444 | | | | N/A | | | $ | 77,721 | |
Gregory J. Henchel | | $ | — | | | $ | — | | | $ | 623 | | | | N/A | | | $ | 623 | |
Stacia Andersen | | $ | 24,452 | | | $ | 19,976 | | | $ | 4,852 | | | $ | 1,183,136 | (d) | | $ | 1,232,416 | |
Robert E. Bostrom | | $ | 13,096 | | | $ | — | | | $ | 11,179 | | | $ | 959,912 | (e) | | $ | 984,187 | |
| (a) | For each NEO, the amount shown in this column represents the aggregate amount of Company matching contributions to her or his accounts under the Company’s 401(k) Plan during Fiscal 2018.
|
| (b) | For each NEO, the amount shown in this column represents the aggregate amount of Company matching and supplemental contributions to her or his accounts under the Company’s Nonqualified Savings and Supplemental Retirement Plan during Fiscal 2018.
|
| (c) | For each NEO, the amount shown in this column represents life and long-term disability insurance premiums paid for by the Company during Fiscal 2018.
|
| (d) | The amount shown in this column for Stacia Andersen represents the aggregate amount she is to receive under her Executive Agreement, relating to the continued payment of her base salary for 18 months and the value relating to the continuation of Ms. Andersen’s medical, dental and other associate welfare benefits for a period of 18 months after the Andersen Termination Date.
|
| (e) | The amount shown in this column for Robert E. Bostrom represents the aggregate amount he is to receive under his Executive Agreement, as amended by the Bostrom Separation Agreement, relating to the continued payment of his base salary for 18 months and the value relating to the continuation of Mr. Bostrom’s medical, dental and other associate welfare benefits for a period of 18 months after the Bostrom Termination Date.
|
(6) | The amounts shown in this column for each fiscal year may differ from the sum of the amounts shown in the other columns for such fiscal year due to the rounding convention used.
|
(7) | On February 1, 2017, Ms. Horowitz was elected as Chief Executive Officer of the Company. Ms. Horowitz had served as President & Chief Merchandising Officer for all brands of the Company from December 21, 2015 to January 31, 2017.
|
(8) | On October 2, 2017, Mr. Lipesky rejoined the Company to become Senior Vice President and Chief Financial Officer. As a result, the table shows information for Mr. Lipesky for Fiscal 2018 and Fiscal 2017 only.
|
(9) | On February 1, 2017, Ms. Crevoiserat was elected as Chief Operating Officer of the Company and continued to hold her position as Executive Vice President of the Company. From May 5, 2014 until October 1, 2017, Ms. Crevoiserat also served as Chief Financial Officer of the Company. Ms. Crevoiserat served as Interim Principal Executive Officer from June 13, 2016 to January 31, 2017.
|
(10) | On November 28, 2018, Ms. Scott was appointed President, Global Brands of the Company. Ms. Scott had served as Brand President — Hollister from August 30, 2016 to November 28, 2018.
|
(11) | On October 1, 2018, Mr. Henchel began employment with the Company as Senior Vice President, General Counsel and Corporate Secretary. As a result, the table shows information for Mr. Henchel for Fiscal 2018 only.
|
(12) | Ms. Andersen left the Company effective November 30, 2018. Prior thereto, she served as Brand President — Abercrombie & Fitch/abercrombie kids since June 16, 2016.
|
(13) | Mr. Bostrom left the role of Senior Vice President, General Counsel and Secretary of the Company on September 30, 2018 and continued to serve as Senior Vice President and Special Counsel of the Company until January 22, 2019.
|
“Fiscal 2021 Grants of Plan-Based Awards
Awards” table on page 58 of this Proxy Statement.
Pursuant to the applicable SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. The amounts reported in this column reflect the accounting cost for these awards and do not necessarily correspond to the actual economic value that may be received by the NEOs.
| | | | | | | | |
| Abercrombie & Fitch Co. | 56 | 2022 Proxy Statement |
EXECUTIVE COMPENSATION TABLES
The maximum grant date fair value related to the PSAs granted in Fiscal 2021 (the NEOs can earn from 0% to 200% of target) was as follows:
| | | | | |
| Name | Maximum Grant Date Fair Value ($) |
| |
| Fran Horowitz | 4,057,852 |
| Scott Lipesky | 891,844 |
| Kristin Scott | 1,783,688 |
| Samir Desai | 715,374 |
| Gregory J. Henchel | 356,738 |
(3)The annual cash incentive compensation award for Fiscal 2021 for Mr. Desai was pro-rated based on his July 19, 2021 hire date.
(4)The amounts shown in this column for Fiscal 2021, Fiscal 2020, and Fiscal 2019 represent the above-market earnings on the NEOs’ respective Nonqualified Savings and Supplemental Retirement Plan balances. Above-market earnings is defined as earnings in excess of 120% of the monthly applicable federal long-term rate (APR). The APR for January 2022 was 2.16%.
(5)The amounts shown in this column included the following for Fiscal 2021:
| | | | | | | | | | | | | | |
| NEO | Company Contributions to 401(k) Plan ($)(a) | Life and Long-Term Disability Insurance Premiums Paid ($)(b) | Relocation ($)(c) | Total ($) |
| | | | |
| Fran Horowitz | 14,500 | 13,585 | | 28,085 |
| Scott Lipesky | 14,663 | 3,391 | | 18,054 |
| Kristin Scott | 14,343 | 8,696 | | 23,039 |
| Samir Desai | 0 | 997 | 100,000 | 100,997 |
| Gregory J. Henchel | 0 | 4,335 | | 4,335 |
(a)For each NEO, the amount shown in this column represents the aggregate amount of Company matching contributions to her or his accounts under the Company’s 401(k) Plan during Fiscal 2021.
(b)For each NEO, the amount shown in this column represents life and long-term disability insurance premiums paid for by the Company during Fiscal 2021.
(c)For Mr. Desai, this amount reflects a $100,000 relocation bonus.
(6)The amounts shown in this column for each fiscal year may differ from the sum of the amounts shown in the other columns for such fiscal year due to the rounding convention used.
(7)On July 19, 2021, Mr. Desai began employment with the Company as Executive Vice President, Chief Digital and Technology Officer. As a result, the table shows information for Mr. Desai for Fiscal 2021 only.
| | | | | | | | |
| 2022 Proxy Statement | 57 | Abercrombie & Fitch Co. |
EXECUTIVE COMPENSATION TABLES
FISCAL 2021 GRANTS OF PLAN-BASED AWARDS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Grant Date | Estimated Future Payouts under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value per Share of Stock Awards ($) | Grant Date Fair Value of Stock Awards ($)(3) |
| Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
| | | | | | | | | | |
Fran
Horowitz | Fiscal 2021 | 568,750 | 2,275,000 | 4,550,000 | | | | | | |
| 3/23/2021 | | | | | | | 107,379 | 31.78 | 3,412,505 |
| 3/23/2021 | | | | — | 107,379 | 214,758 | | 37.79 | 4,057,852 |
| Scott Lipesky | Fiscal 2021 | 187,500 | 750,000 | 1,500,000 | | | | | | |
| 3/23/2021 | | | | | | | 23,600 | 31.78 | 750,008 |
| 3/23/2021 | | | | — | 23,600 | 47,200 | | 37.79 | 891,844 |
| Kristin Scott | Fiscal 2021 | 296,875 | 1,187,500 | 2,375,000 | | | | | | |
| 3/23/2021 | | | | | | | 47,200 | 31.78 | 1,500,016 |
| 3/23/2021 | | | | — | 47,200 | 94,400 | | 37.79 | 1,783,688 |
| Samir Desai | Fiscal 2021 | 162,500 | 650,000 | 1,300,000 | | | | | | |
| 8/18/2021 | | | | | | | 27,663 | 36.15 | 1,000,017 |
| 8/18/2021 | | | | | | | 16,598 | 36.15 | 600,018 |
| 8/18/2021 | | | | — | 16,598 | 33,196 | | 43.10 | 715,374 |
Gregory J.
Henchel | Fiscal 2021 | 112,500 | 450,000 | 900,000 | | | | | | |
| 3/23/2021 | | | | | | | 9,440 | 31.78 | 300,003 |
| 3/23/2021 | | | | — | 9,440 | 18,880 | | 37.79 | 356,738 |
(1)These columns show the potential cash payouts under the Company’s Short-Term Cash Incentive Plan for Fiscal 2021. These estimated future payouts reflect the full annualized amounts. Refer to the discussion beginning at page 46 of this Proxy Statement for the performance metrics related to the annual cash incentive program for Fiscal 2021. If threshold performance was not satisfied, then the payouts for all associates, including the NEOs, would be zero. (2)Represents the threshold, target, and maximum number of PSAs granted under the Company’s 2016 Associates LTIP, which could be earned depending upon the Company’s achievement against the three-year performance metrics of Net Sales CAGR, Average EBIT Margin %, and Relative TSR compared to the compensation peer group (excluding L Brands, Inc.).
(3)Represents the grant date fair value of the RSU or PSA, as appropriate, determined in accordance with FASB ASC Topic 718. The grant date fair values for service-based RSUs and performance-based PSAs are calculated using the closing price of the Company’s Common Stock on the grant date adjusted for anticipated dividend payments during the vesting period. The grant date fair values for market-based PSAs are based on the probable outcome of the performance conditions and are calculated using a Monte Carlo simulation.
| | | | | | | | |
| Abercrombie & Fitch Co. | 58 | 2022 Proxy Statement |
EXECUTIVE COMPENSATION TABLES
OUTSTANDING EQUITY AWARDS AT FISCAL 2021 YEAR-END
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| SAR Awards | Stock Awards |
| Name | SAR Grant Date | Number of Shares Underlying Unexercised SARs Exercisable (#) | Number of Shares Underlying Unexercised SARs Unexercisable (#) | SAR Exercise Price ($) | SAR Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) |
| | | | | | | | | | |
| Fran Horowitz | 12/3/2014 | 24,483 | — | $28.81 | 12/3/2024 | | | | | |
| 3/24/2015 | 67,568 | — | $22.46 | 3/24/2025 | | | | | |
| | | | | 3/27/2018 | 25,700(2) | 937,793 | | |
| | | | | 3/26/2019 | 141,517(3) | 5,163,955 | | |
| | | | | 3/26/2019 | 28,940(4) | 1,056,021 | | |
| | | | | 3/24/2020 | 160,468(4) | 5,855,477 | | |
| | | | | 8/28/2020 | 50,096(4) | 1,828,003 | | |
| | | | | 8/28/2020 | | | 253,859(5) | 9,263,315 |
| | | | | 3/23/2021 | 107,379(4) | 3,918,260 | | |
| | | | | 3/23/2021 | | | 107,379(6) | 3,918,260 |
| Scott Lipesky | | | | | | 3/27/2018 | 3,975(2) | 145,048 | | |
| | | | | 3/26/2019 | 25,732(3) | 938,961 | | |
| | | | | 3/26/2019 | 5,262(4) | 192,010 | | |
| | | | | 3/24/2020 | 36,470(4) | 1,330,790 | | |
| | | | | 8/28/2020 | 6,770(4) | 247,037 | | |
| | | | | 8/28/2020 | 121,853(7) | 4,446,416 | | |
| | | | | 8/28/2020 | | | 50,772(5) | 1,852,670 |
| | | | | 3/23/2021 | 23,600(4) | 861,164 | | |
| | | | | 3/23/2021 | | | 23,600(6) | 861,164 |
| Kristin Scott | | | | | | 3/27/2018 | 10,598(2) | 386,721 | | |
| | | | | 3/26/2019 | 77,191(3) | 2,816,700 | | |
| | | | | 3/26/2019 | 15,786(4) | 576,031 | | |
| | | | | 3/24/2020 | 87,528(4) | 3,193,897 | | |
| | | | | 8/28/2020 | 16,248(4) | 592,890 | | |
| | | | | 8/28/2020 | 162,470(7) | 5,928,530 | | |
| | | | | 8/28/2020 | | | 121,853(5) | 4,446,416 |
| | | | | 3/23/2021 | 47,200(4) | 1,722,328 | | |
| | | | | 3/23/2021 | | | 47,200(6) | 1,722,328 |
| Samir Desai | | | | | | 8/18/2021 | 27,663(4) | 1,009,423 | | |
| | | | | 8/18/2021 | 16,598(4) | 605,661 | | |
| | | | | 8/18/2021 | | | 16,598(6) | 605,661 |
| Gregory J. Henchel | | | | | | 11/19/2018 | 2,335(2) | 85,204 | | |
| | | | | 3/26/2019 | 12,865(3) | 469,444 | | |
| | | | | 3/26/2019 | 2,631(4) | 96,005 | | |
| | | | | 3/24/2020 | 14,588(4) | 532,316 | | |
| | | | | 8/28/2020 | 2,708(4) | 98,815 | | |
| | | | | 8/28/2020 | 40,618(7) | 1,482,151 | | |
| | | | | 8/28/2020 | | | 20,309(5) | 741,075 |
| | | | | 3/23/2021 | 9,440(4) | 344,466 | | |
| | | | | 3/23/2021 | | | 9,440(6) | 344,466 |
| | | | | | | | |
| 2022 Proxy Statement | 59 | Abercrombie & Fitch Co. |
EXECUTIVE COMPENSATION TABLES
(1)Market value represents the product of the closing price of a share of the Company’s Common Stock on January 28, 2022 (the last business day of Fiscal 2021), which was $36.49, multiplied by the number of RSUs or PSAs.
(2)Each of these RSU awards vests in four equal annual installments beginning on the first anniversary of the grant date, subject to the NEO’s continued employment with the Company.
(3)Each of these PSAs granted for the Fiscal 2019 to Fiscal 2021 performance period, which are deemed to be earned because the performance condition was achieved at the end of Fiscal 2021, are included in this column even though the stock had not yet vested. The stock underlying the PSAs vested on April 4, 2022.
(4)Each of these RSU awards vests in three equal annual installments beginning on the first anniversary of the grant date, subject to the NEO’s continued employment with the Company.
(5)The number shown assumes that the PSAs granted for the Fiscal 2020 to Fiscal 2022 performance period will be earned at the target number based on the Company achieving the target metrics for Relative TSR.
(6)The number shown assumes that the PSAs granted for the Fiscal 2021 to Fiscal 2023 performance period will be earned at the target number based on the Company achieving the target metrics for Net Sales Growth CAGR, Average EBIT Margin %, and Relative TSR. See the “Estimated Future Payouts under Equity Incentive Plan Awards” columns of the “Fiscal 2021 Grants of Plan-Based Awards” table on page 58 of this Proxy Statement for the threshold, target, and maximum numbers of PSAs that can be earned. (7)Each of these RSU awards vests on the third anniversary of the grant date, subject to the NEO’s continued employment with the Company.
| | | | | | | | |
| Abercrombie & Fitch Co. | 60 | 2022 Proxy Statement |
EXECUTIVE COMPENSATION TABLES
FISCAL 2021 OPTION EXERCISES AND STOCK VESTED TABLE
The following table sets forth
information regarding cashthe gross number of shares received and
stock-based incentive awards granted to the NEOs during Fiscal 2018.Fiscal 2018 Grants of Plan-Based Awards
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Estimated Future Payouts
under Non-Equity Incentive
Plan Awards(1) | | | Estimated Future Payouts
under Equity Incentive Plan
Awards | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units | | | All Other
Option/
SAR
Awards:
Number of
Shares
Underlying
Options/
SARs(2) | | | Exercise
or Base
Price of
Option/
SAR
Awards | | | Grant
Date Fair
Value
per Share
of Stock
Awards
and Option/
SAR
Awards | | | Grant
Date
Fair
Value of
Stock
Awards
and
Option/
SAR
Awards(3) | |
Name | | Grant
Date | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | |
Fran Horowitz | | Fiscal 2018 | | $ | 0 | | | $ | 1,950,000 | | | $ | 3,900,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 3/27/2018 | | | | | | | | | | | | | | | 0 | (4) | | | 102,798 | (4) | | | 205,596 | (4) | | | | | | | | | | | | | | $ | 27.50 | | | $ | 2,826,945 | |
| | 3/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | 102,798 | (5) | | | | | | | | | | $ | 21.67 | | | $ | 2,227,633 | |
Scott Lipesky | | Fiscal 2018 | | $ | 0 | | | $ | 431,250 | | | $ | 862,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 3/27/2018 | | | | | | | | | | | | | | | 0 | (4) | | | 15,897 | (4) | | | 31,794 | (4) | | | | | | | | | | | | | | $ | 27.50 | | | $ | 437,168 | |
| | 3/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,897 | (5) | | | | | | | | | | $ | 21.67 | | | $ | 344,488 | |
Joanne C. Crevoiserat | | Fiscal 2018 | | $ | 0 | | | $ | 900,000 | | | $ | 1,800,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 3/27/2018 | | | | | | | | | | | | | | | 0 | (4) | | | 46,630 | (4) | | | 93,260 | (4) | | | | | | | | | | | | | | $ | 27.50 | | | $ | 1,282,325 | |
| | 3/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | 46,630 | (5) | | | | | | | | | | $ | 21.67 | | | $ | 1,010,472 | |
Kristin Scott | | Fiscal 2018 | | $ | 0 | | | $ | 925,000 | | | $ | 1,850,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 3/27/2018 | | | | | | | | | | | | | | | 0 | (4) | | | 42,391 | (4) | | | 84,782 | (4) | | | | | | | | | | | | | | $ | 27.50 | | | $ | 1,165,753 | |
| | 3/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | 42,391 | (5) | | | | | | | | | | $ | 21.67 | | | $ | 918,613 | |
Gregory J. Henchel | | Fiscal 2018 | | $ | 0 | | | $ | 330,000 | | | $ | 660,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 11/19/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,340 | (6) | | | | | | | | | | $ | 14.15 | | | $ | 132,161 | |
Stacia Andersen | | Fiscal 2018 | | $ | 0 | | | $ | 775,000 | | | $ | 1,550,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 3/27/2018 | | | | | | | | | | | | | | | 0 | (4) | | | 32,853 | (4) | | | 65,706 | (4) | | | | | | | | | | | | | | $ | 27.50 | | | $ | 903,458 | |
| | 3/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | 32,853 | (5) | | | | | | | | | | $ | 21.67 | | | $ | 711,925 | |
Robert E. Bostrom | | Fiscal 2018 | | $ | 0 | | | $ | 372,000 | | | $ | 744,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 3/27/2018 | | | | | | | | | | | | | | | 0 | (4) | | | 10,598 | (4) | | | 21,196 | (4) | | | | | | | | | | | | | | $ | 27.50 | | | $ | 291,445 | |
| | | 3/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,598 | (5) | | | | | | | | | | $ | 21.67 | | | $ | 229,659 | |
(1) | These columns show the potential cash payouts under the Company’s Short-Term Cash Incentive Plan for Fiscal 2018. These estimated future payments reflect the full annualized amounts. Refer to the discussion beginning at page 64 of this Proxy Statement for the performance metrics related to the Annual Incentive Compensation Program for Fiscal 2018. If threshold performance criteria were not satisfied, then the payouts for all associates, including the NEOs, would be zero.
|
(2) | There were no options or SARs granted in Fiscal 2018 to the Company’s NEOs.
|
(3) | Represents the grant date fair value of the RSU or PSA award, as appropriate, determined in accordance with GAAP. The grant date fair values for RSU and performance-based PSA awards are calculated using the closing price of the Company’s Common Stock on the grant date adjusted for anticipated dividend payments during the vesting period. The grant date fair values for market-based PSA awards are calculated using a Monte Carlo simulation.
|
(4) | Represents the threshold, target and maximum number of PSAs granted under the Company’s 2016 Associates LTIP, which could be earned depending upon the Company’s achievement against the three-year performance metrics of Relative TSR vs. the S&P Retail Select Industry Index and Average ROIC.
|
(5) | Represents RSUs granted in Fiscal 2018 under the Company’s 2016 Associates LTIP, that will vest in four equal installments, beginning in March 2019.
|
(6) | Represents RSUs granted in Fiscal 2018 under the Company’s 2016 Associates LTIP, that will vest in four equal installments, beginning in November 2019.
|
Offer Letter with Mr. Henchel
In connection with the commencement of his employment with the Company, Gregory J. Henchel entered into an offer letter (the “Henchel Offer Letter”) with the Company (which Mr. Henchel executed on September 3, 2018) which addresses compensation and benefits he is to receive as Senior Vice President, General Counsel of the Company. The Henchel Offer Letter provides that Mr. Henchel will receive an annual base salary of $550,000 (which will be reviewed in March 2020) and his target annual incentive opportunity under theShort-Term Cash Incentive Plan will be 60% of his base salary (his maximum annual incentive opportunity will
be 120% of his base salary). Mr. Henchel’s annual incentive opportunity under theShort-Term Cash Incentive Plan for Fiscal 2018 waspro-rated based on his first day of employment with the Company.
As contemplated by the Henchel Offer Letter, Mr. Henchel received an inducement grant (the “Henchel Inducement Grant”) of 9,340 RSUs with an approximate grant date value of $150,000. Please see the“Fiscal 2018 Grants of Plan-Based Awards” table beginning on page 78 of this Proxy Statement for more information on the terms of the Henchel Inducement Grant. In addition, as part of the Fiscal 2019 annual grants by the Company (made on March 26, 2019), Mr. Henchel was to and did receive a grant of RSUs with an approximate grant date value of $500,000 (this grant will be further described in the Proxy Statement for the 2020 Annual Meeting of Stockholders of the Company).
Mr. Henchel is also entitled to participate in the Company’s benefit plans and receive limited perquisites consistent with those provided to other senior executives of the Company.
In consideration of (and as a condition of) the Henchel Offer Letter and the continued employment of Mr. Henchel, effective as of September 13, 2018, Mr. Henchel entered into an executive severance agreement with A&F Management, which is described under the caption“Potential Payments Upon Termination or Change of Control—Executive Severance Agreements” beginning on page 83 of this Proxy Statement.
Separation Agreement with Mr. Bostrom
On July 26, 2018, the Company reported that Robert E. Bostrom, the then Senior Vice President, General Counsel and Corporate Secretary of the Company, would be leaving that role on September 30, 2018 and would continue to serve as Senior Vice President and Special Counsel of the Company through March 31, 2019, or such earlier date after December 31, 2018 as Mr. Bostrom elected in writing — the date Mr. Bostrom elected was January 22, 2019 (the “Bostrom Separation Date”).
Under the terms of the Separation Agreement, entered into between A&F Management and Mr. Bostrom, effective as of July 25, 2018 (the “Bostrom Separation Agreement”), Mr. Bostrom continued to be compensated in his capacity as Senior Vice President, General Counsel and Secretary during the transition period through September 30, 2018 at his current base salary as of July 25, 2018 or an annualized rate of $620,000 (the “Bostrom Base Salary”). During the period beginning on October 1, 2018 and ending on the Bostrom Separation Date, Mr. Bostrom continued his employment with the Company on a part-time basis with a change in role to an advisor to the Company, and was compensated at an annualized rate of 50% of the Bostrom Base Salary. As of the Bostrom Separation Date, Mr. Bostrom’s employment with the Company ended and pursuant to the terms of the Bostrom Separation Agreement, Mr. Bostrom is entitled to receive the severance benefits contemplated by his Executive Agreement, as modified by the Bostrom Separation Agreement. Please see“COMPENSATION DISCUSSION AND ANALYSIS — Compensation and Benefits Structure —Bostrom Separation from Service” on page 72 of this Proxy Statement for a description of Mr. Bostrom’s severance benefits.
Outstanding Equity Awards
The following table sets forth information regarding the outstanding equity awards held by the NEOs at the end of Fiscal 2018.
Outstanding Equity Awards at Fiscal 2018Year-End
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option/SAR Awards | | | Stock Awards | |
Name | | Option/
SAR
Grant Date | | | Number of
Shares
Underlying
Unexercised
Options/SARs
Exercisable | | | Number of
Shares
Underlying
Unexercised
Options/SARs
Unexercisable | | | Option/
SAR
Exercise
Price | | | Option/
SAR
Expiration
Date | | | Stock
Award
Grant
Date | | | Number of
Shares or
Units of
Stock That
Have Not
Vested | | | Market
Value of
Shares or
Units
of Stock
That Have
Not
Vested | | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested | | | Equity
Incentive
Plan
Awards:
Market
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested(11) | |
Fran Horowitz | | | 12/3/2014 | | | | 24,483 | | | | 0 | | | $ | 28.81 | | | | 12/3/2024 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/24/2015 | | | | 50,676 | | | | 16,892 | (1) | | $ | 22.46 | | | | 3/24/2025 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | 3/24/2015 | | | | | | | | | | | | 6,250 | (3) | | $ | 133,563 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/22/2016 | | | | | | | | | | | | 28,307 | (4) | | $ | 604,921 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 185,915 | (6) | | $ | 3,973,004 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 131,235 | (7) | | $ | 2,804,492 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 139,437 | (8) | | $ | 2,979,769 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 174,978 | (9) | | $ | 3,739,280 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/27/2018 | | | | | | | | | | | | 102,798 | (10) | | $ | 2,196,793 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/27/2018 | | | | 102,798 | (2) | | $ | 2,196,793 | | | | | | | | | |
Scott Lipesky | | | | | | | | | | | | | | | | | | | | | | | 10/11/2017 | | | | | | | | | | | | 11,220 | (8) | | $ | 239,771 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/27/2018 | | | | | | | | | | | | 15,897 | (10) | | $ | 339,719 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/27/2018 | | | | 15,897 | (2) | | $ | 339,719 | | | | | | | | | |
Joanne C. Crevoiserat | | | 5/29/2014 | | | | 90,000 | | | | 0 | | | $ | 37.14 | | | | 5/29/2024 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/24/2015 | | | | 40,540 | | | | 13,514 | (1) | | $ | 22.46 | | | | 3/24/2025 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | 3/24/2015 | | | | | | | | | | | | 5,000 | (3) | | $ | 106,850 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/22/2016 | | | | | | | | | | | | 14,963 | (4) | | $ | 319,759 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 83,115 | (6) | | $ | 1,776,168 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 98,426 | (7) | | $ | 2,103,364 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 62,337 | (8) | | $ | 1,332,142 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 131,234 | (9) | | $ | 2,804,471 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/27/2018 | | | | | | | | | | | | 46,630 | (10) | | $ | 996,483 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/27/2018 | | | | 46,630 | | | $ | 996,483 | | | | | | | | | |
Kristin Scott | | | | | | | | | | | | | | | | | | | | | | | 8/30/2016 | | | | | | | | | | | | 17,328 | (5) | | $ | 370,299 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 65,617 | (6) | | $ | 1,402,235 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 49,213 | (8) | | $ | 1,051,682 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/27/2018 | | | | | | | | | | | | 42,391 | (9) | | $ | 905,896 | |
| | | | | | | | | | | | | | | | | | | | | | | 3/27/2018 | | | | 42,391 | (2) | | $ | 905,896 | | | | | | | | | |
Gregory J. Henchel | | | | | | | | | | | | | | | | | | | | | | | 11/19/2018 | | | | 9,340 | (2) | | $ | 199,596 | | | | | | | | | |
Stacia Andersen | | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 40,063 | (6) | | $ | 856,146 | |
Robert E. Bostrom | | | 1/6/2014 | | | | 15,000 | | | | 0 | | | $ | 32.59 | | | | 4/23/2019 | | | | | | | | | | | | | | | | | | | | | |
| | | 3/24/2015 | | | | 13,513 | | | | 0 | | | $ | 22.46 | | | | 4/23/2019 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | 3/21/2017 | | | | | | | | | | | | 14,409 | (6) | | $ | 307,920 | |
(1) | Each of these SAR awards vests in four equal annual installments beginning on March 15, 2016, subject to the NEO’s continued employment with the Company.
|
(2) | Each of these RSU awards vests in four equal annual installments beginning on the first anniversary of the grant date, subject to the NEO’s continued employment with the Company.
|
(3) | Each of these RSU awards vests in four equal annual installments beginning on March 15, 2016, contingent upon the Company’s achievement of at least $1.00 of GAAP net income at the end of the fiscal year immediately preceding the date that the tranche vests. The NEO has the opportunity to earn back one or more installments of this award if the cumulative performance hurdles are met in a subsequent year, subject to the NEO’s continued employment with the Company.
|
(4) | Each of these RSU awards vests in four equal annual installments beginning on March 15, 2017, contingent upon the Company’s achievement of at least $1.00 of GAAP net income at the end of the fiscal year immediately preceding the date that the tranche vests. The NEO has the opportunity to earn back one or more installments of this award if the cumulative performance hurdles are met in a subsequent year, subject to the NEO’s continued employment with the Company.
|
(5) | Each of these RSU awards vests in four equal annual installments beginning on the first anniversary of the grant date, contingent upon the Company’s achievement of at least $1.00 of GAAP net income at the end of the fiscal year immediately preceding the date that the tranche vests. The NEO has the opportunity to earn back one or more installments of this award if the cumulative performance hurdles are met in a subsequent year, subject to the NEO’s continued employment with the Company.
|
(6) | The number shown assumes that the PSAs granted for the Fiscal 2017 to Fiscal 2019 performance period will be earned at the targetnumber based on the Company achieving the targetmetrics for Relative TSR and Average ROIC.
|
(7) | Each of these Service-Vested Promotional RSU awards granted to Ms. Horowitz and Ms. Crevoiserat vested as totwenty-five percent of the Service-Vested Promotional RSUs on each of March 21, 2018 and March 21, 2019. The remaining fifty percent of theService-Vested Promotional RSUs will vest on March 21, 2020, subject to the continued employment of Ms. Horowitz or Ms. Crevoiserat, as appropriate, on the applicable vesting date.
|
(8) | Each of these RSU awards vests in four equal annual installments beginning on the first anniversary of the grant date, contingent upon the Company’s achievement of positive EBIT at the end of the fiscal year immediately preceding the date that the tranche vests. The NEO has the opportunity to earn back one or more installments of this award if the cumulative performance hurdles are met in a subsequent year, subject to the NEO’s continued employment with the Company.
|
(9) | Each of these Performance-Based Promotional RSU awards granted to Ms. Horowitz and Ms. Crevoiserat will be earned depending on the level of achievement with respect to the performance goal based on cumulative comparable store sales for the three-fiscal-year performance period comprised of Fiscal 2017, Fiscal 2018 and Fiscal 2019, subject to the NEO’s continued employment with the Company.
|
(10) | The number shown assumes that the PSAs granted for the Fiscal 2018 to Fiscal 2020 performance period will be earned at the target number based on the Company achieving the target metrics for Relative TSR and Average ROIC. See the “Estimated Future Payouts under Equity Incentive Plan Awards” columns of the“Fiscal 2018 Grants of Plan-Based Awards” table on page 78 of this Proxy Statement for the threshold, target, and maximum numbers of PSAs that can be earned.
|
(11) | Market value represents the product of the closing price of a share of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018), which was $21.37, multiplied by the number of RSUs or PSAs.
|
Stock Options and Stock Appreciation Rights Exercised and Restricted Stock Units Vested and Performance Share Awards Earned
The following table provides information regarding the aggregate dollar value realized by the NEOs in connection with the vesting of RSUs during Fiscal 2018 and the earning of PSAs granted for the Fiscal 2016 to Fiscal 2018 performance period.2021. No stock options or SARs were exercised by any of the NEOs during Fiscal 2018.
2021.
| | | | | | | | |
| Stock Awards |
| Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2)(3) |
| | |
| Fran Horowitz | 254,867 | 8,435,875 |
| Scott Lipesky | 42,092 | 1,388,936 |
| Kristin Scott | 114,663 | 3,766,669 |
| Samir Desai | — | — |
| Gregory J. Henchel | 13,614 | 471,055 |
(1)The number of RSU shares shown reflects the gross number of shares received upon the vesting of RSUs during Fiscal 2021. The number of shares earned in connection with the Fiscal 2019 to Fiscal 2021 PSAs appear in the “Outstanding Equity Awards at Fiscal 2021 Year-End” table on page 59 of this Proxy Statement as those awards did not vest until April 4, 2022. (2)Value realized on the vesting of RSU awards is calculated by multiplying the number of shares of the Company’s Common Stock underlying the vested portion of each RSU award by the closing price of a share of Common Stock on the vesting date. The number of shares actually received by the NEOs on the vesting of RSU awards was reduced in each case by the withholding of shares to pay income taxes associated with the value realized on the vesting of the RSU awards, with the net number of shares received by each of the NEOs as follow:
| | | | | |
| NEO | Net Shares Received on Vesting |
| |
| Fran Horowitz | 140,556 |
| Scott Lipesky | 23,210 |
| Kristin Scott | 62,701 |
| Samir Desai | 0 |
| Gregory J. Henchel | 7,505 |
(3)The PSAs granted for the Fiscal 2018 Restricted Stock Units Vestedto Fiscal 2020 performance period were settled during Fiscal 2021 and Performance Share Awards Earned | | | | | | | | |
| | | Stock Awards | |
Name | | Number of Shares
Acquired on Vesting/
Being Earned(1) | | | Value Realized
Upon Vesting/
Being Earned(2) | |
Fran Horowitz | | | 142,319 | | | $ | 3,315,347 | |
Scott Lipesky | | | 3,739 | | | $ | 67,265 | |
Joanne C. Crevoiserat | | | 88,899 | | | $ | 2,169,433 | |
Kristin Scott | | | 63,189 | | | $ | 1,453,285 | |
Gregory J. Henchel | | | 0 | | | | N/A | |
Stacia Andersen | | | 65,283 | | | $ | 1,647,625 | |
Robert E. Bostrom | | | 10,120 | | | $ | 250,798 | |
NONQUALIFIED DEFERRED COMPENSATION
(1) | Includes for each NEO the following: (a) for Ms. Horowitz – 136,658 shares of Common Stock underlying vested RSUs and 5,661 shares of Common Stock underlying earned PSAs; (b) for Mr. Lipesky — 3,739 shares of Common Stock underlying vested RSUs; (c) for Ms. Crevoiserat — 86,068 shares of Common Stock underlying vested RSUs and 2,831 shares of Common Stock underlying earned PSAs; (d) for Ms. Scott — 59,723 shares of Common Stock underlying vested RSUs and 3,466 shares of Common Stock underlying earned PSAs; (e) for Ms. Andersen — 61,858 shares of Common Stock underlying vested RSUs and 3,425 shares of Common Stock underlying earned PSAs; and (f) for Mr. Bostrom – 9,319 shares of Common Stock underlying vested RSUs and 801 shares of Common Stock underlying earned PSAs.
| |
(2) | Value realized upon the vesting of RSU awards is calculated by multiplying the number of shares of the Company’s Common Stock underlying the vested portion of each RSU award by the closing price of a share of Common Stock on the vesting date. Value realized upon the earning of PSA awards is calculated by multiplying the number of shares of Common Stock underlying the earned portion of
|
| each PSA award by the closing price of a share of Common Stock on April 3, 2019, the date on which the Compensation and Organization Committee determined the level of performance achieved (and the number of PSAs earned) for the Fiscal 2016 to Fiscal 2018 performance period against thepre-established Average ROIC and Relative TSR goals. |
Nonqualified Deferred Compensation
Nonqualified Savings and Supplemental Retirement Plan
The Company maintains the Nonqualified Savings and Supplemental Retirement Plan for associates, with participants generally at management levels and above, including the NEOs. The Nonqualified Savings and Supplemental Retirement Plan allows a participant to defer up to 75% of base salary each year and up to 75% of cash payouts to be received by the participant under the Company’s Short-Term Cash Incentive Plan.
The Company will match the first 3% that the participant defers on adollar-for-dollar basis. While additional benefits are available under the Nonqualified Savings and Supplemental Retirement Plan for individuals who commenced employment prior to January 1, 2014, none of the current NEOs is eligible to receive these additional benefits because each joined the Company after January 1, 2014.The Nonqualified Savings and Supplemental Retirement Plan allows for a variable earnings rate on participant account balances as determined by the committee which administers the Nonqualified Savings and Supplemental Retirement Plan. The earnings rate for all account balances was fixed at
4%5% per annum for Fiscal
2018.2021. Participants are 100% vested in their deferred contributions, and earnings on those contributions, at all times.
Participants who most recently began participation prior to January 1, 2014 become vested in Companybi-weekly matching contributions and earnings on those matching contributions ratably over a five-year period from date of hire. Participants who most recently began participation on or after January 1, 2014 become vested in Companybi-weekly matching contributions and earnings on those matching contributions after five years of service (i.e., there is a five-year cliff vesting period). All of the NEOs began participation in the Nonqualified Savings and Supplemental Retirement Plan after January 1, 2014.The following table provides information regarding the participation by the NEOs in the portion ofNonqualified Savings and Supplemental Retirement Plan.
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| 2022 Proxy Statement | 61 | Abercrombie & Fitch Co. |
EXECUTIVE COMPENSATION TABLES
Nonqualified Deferred Compensation for Fiscal 2021
| | | | | | | | | | | | | | |
| Name | Executive Contributions in Fiscal 2021 ($)(1) | Aggregate Earnings in Fiscal 2021 ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate balance as of January 29, 2022 ($)(3) |
| | | | |
| Fran Horowitz | 39,000 | 22,107 | — | 516,593 |
| Scott Lipesky | 117,885 | 12,176 | — | 312,746 |
| Kristin Scott | 92,181 | 20,764 | — | 490,305 |
| Samir Desai | — | — | — | — |
| Gregory J. Henchel | — | — | — | — |
(1)The amounts shown in this column reflect the base salary and Short-Term Cash Incentive Plan payouts for Fiscal 2021 which were deferred by NEOs participating in the Nonqualified Savings and Supplemental Retirement Plan providingin Fiscal 2021. All amounts in this column are included in the “Salary” and/or the “Non-Equity Incentive Plan Compensation” column totals for participantFiscal 2021 reported in the “Fiscal 2021 Summary Compensation Table” beginning on page 56 of this Proxy Statement. (2)Nonqualified deferred compensation balances earn fixed rates of interest. The rate for all account balances was fixed at 5% per annum for Fiscal 2021. The portion of the Fiscal 2021 earnings with respect to amounts credited to the NEOs’ accounts under the Nonqualified Savings and Supplemental Retirement Plan as a result of their respective deferral contributions which are above-market for purposes of the applicable SEC rules are included in the “Change in Pension Value and Company matching contributions, for Fiscal 2018.Nonqualified Deferred Compensation Earnings” column totals for Fiscal 2018 — Executive Contributions2021 reported in the “Fiscal 2021 Summary Compensation Table” beginning on page 56 of this Proxy Statement. These amounts are included as part of the aggregate earnings reported in the “Aggregate Earnings in Fiscal 2021” column in the table above for: (a) Ms. Horowitz – $12,557; (b) Mr. Lipesky – $6,916; (c) Ms. Scott – $11,794; (d) Mr. Desai – $0; and
Company Matching Contributions
| | | | | | | | | | | | | | | | | | | | |
Name | | Executive
Contributions
in Fiscal 2018(1) | | | Company
Contributions
in Fiscal 2018(2) | | | Aggregate Earnings
in Fiscal 2018(3) | | | Aggregate
Withdrawals/
Distributions | | | Aggregate
Balance as of
February 2, 2019(4) | |
Fran Horowitz | | $ | 38,423 | | | $ | 38,423 | | | $ | 10,584 | | | $ | — | | | $ | 310,261 | |
Scott Lipesky | | $ | 23,250 | | | $ | 17,106 | | | $ | 1,150 | | | $ | — | | | $ | 50,428 | |
Joanne C. Crevoiserat | | $ | 652,802 | | | $ | 55,494 | | | $ | 70,682 | | | $ | — | | | $ | 1,985,850 | |
Kristin Scott | | $ | 50,990 | | | $ | 53,076 | | | $ | 5,474 | | | $ | — | | | $ | 173,310 | |
Gregory J. Henchel | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Stacia Andersen | | $ | 41,182 | | | $ | 19,976 | | | $ | 5,277 | | | $ | — | | | $ | 159,003 | |
Robert E. Bostrom | | $ | — | | | $ | — | | | $ | 6,400 | | | $ | — | | | $ | 163,509 | |
(1) | The amounts shown in this column reflect the base salary and Short-Term Cash Incentive Plan payouts for Fiscal 2018 which were deferred by NEOs participating the Nonqualified Savings and Supplemental Retirement Plan in Fiscal 2018. All amounts in this column are included in the “Salary” and/or the“Non-Equity (e) Mr. Henchel – $0. Incentive Plan Compensation” column totals for Fiscal 2018 reported in the“Fiscal 2018 Summary Compensation Table” beginning on page 76 of this Proxy Statement.
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(2) | The amounts shown in this column reflect the aggregate Company contributions which accrued during Fiscal 2018 and were credited to the NEOs’ respective accounts in Fiscal 2018. These amounts are included in the “All Other Compensation” column totals for Fiscal 2018 reported in the“Fiscal 2018 Summary Compensation Table” beginning on page 76 of this Proxy Statement.
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(3) | Nonqualified deferred compensation balances earn fixed rates of interest. The rate for all account balances was fixed at 4% per annum for Fiscal 2018. The portion of the Fiscal 2018 earnings with respect to amounts credited to the NEOs’ accounts under the Nonqualified Savings and Supplemental Retirement Plan as a result of their respective deferral contributions and Company matching contributions (which were made in Fiscal 2018 and prior fiscal years) which are above-market for purposes of the applicable SEC rules are included in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column totals for Fiscal 2018 reported in the“Fiscal 2018 Summary Compensation Table” beginning on page 76 of this Proxy Statement. These amounts are included as part of the aggregate earnings reported in the “Aggregate Earnings in Fiscal 2018” column in the table above for: (a) Ms. Horowitz – $1,455; (b) Mr. Lipesky – $158; (c) Ms. Crevoiserat – $9,719; (d) Ms. Scott – $753; (e) Mr. Henchel - $0; (f) Ms. Andersen – $726; and (g) Mr. Bostrom – $880.
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(4) | These amounts are as of February 2, 2019 and do not take into account the amounts in the “Company Contributions in Fiscal 2018” column in the table above that were accrued during Fiscal 2018 but were credited to the NEOs’ respective accounts in Fiscal 2019. The following amounts are included in the balance as of February 2, 2019 and previously were reported as compensation to the NEOs in the Summary Compensation Tables for past fiscal years: (a) Ms. Horowitz – $147,396; (b) Mr. Lipesky – $21,768; (c) Ms. Crevoiserat – $186,728; (d) Ms. Scott – $84,146; (e) Mr. Henchel - $0; (f) Ms. Andersen – $76,961; and (g) Mr. Bostrom – $18,427.
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(3)The following amounts are included in the balance as of January 29, 2022 and previously were reported as compensation to the NEOs in the Summary Compensation Tables for past fiscal years: (a) Ms. Horowitz – $215,624; (b) Mr. Lipesky – $63,378; (c) Ms. Scott – $185,652; (d) Mr. Desai – $0; and (e) Mr. Henchel – $0.
Payouts under the Nonqualified Savings and Supplemental Retirement Plan are based on the participant’s election at the time of deferral and may be made in a single lump sum or in annual installments over a five-year or
ten-year period. If there is no distribution election on file, the payment will be made in ten annual installments. Regardless of the election on file, if the participant terminates employment with the Company before retirement, dies or becomes disabled, the benefit will be paid in a single lump sum. However, if the participant dies while receiving annual installments, the beneficiary will continue to receive the remaining installment payments. The committee which administers the Nonqualified Savings and Supplemental Retirement Plan may permit hardship withdrawals from a participant’s account under the Nonqualified Savings and Supplemental Retirement Plan in accordance with defined guidelines, including the IRS definition of an unforeseeable emergency.
Participants’ rights to receive their account balances from the Company are not secured or guaranteed. However, during the third quarter of Fiscal 2006, the Company established
an irrevocable rabbi trust,its Rabbi Trust, the purpose of which is to be a source of funds to match respective funding obligations to participants in the Nonqualified Savings and Supplemental Retirement Plan and the Supplemental Executive Retirement Plan for the Company’s former Chief Executive
Officer Michael S. Jeffries.Officer.
In the event of a change in control of the Company, the
Company’s Board has the authority to terminate the Nonqualified Savings and Supplemental Retirement Plan and accelerate the payment of the aggregate balance of each participant’s account.
The Nonqualified Savings and Supplemental Retirement Plan is subject to requirements affecting deferred compensation under Section 409A of the Internal Revenue Code
(“Section 409A”) and is being administered in compliance with the applicable regulations under Section 409A.
Potential Payments Upon Termination or Change of Control
The following tables describe: (i) the approximate payments that would have been made to the current NEOs pursuant to agreements, plans or individual award agreements in effect on February 2, 2019, the last day of Fiscal 2018, in the event of the termination of employment of these NEOs under the circumstances described below, assuming such termination took place on February 2, 2019; (ii) the approximate payments that have been and will be made to Stacia Andersen as a result of her separation from service as an associate of the Company; and (iii) the approximate payments that have been and will be made to Robert E. Bostrom as a result of his separation from service as an associate of the Company. The table captioned“Outstanding Equity Awards at Fiscal 2018Year-End” beginning on page 80 of this Proxy Statement contains more information regarding the vested SARs held by the NEOs as of the end of Fiscal 2018.
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| Abercrombie & Fitch Co. | 62 | 2022 Proxy Statement |
EXECUTIVE COMPENSATION TABLES
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
Executive Severance Agreements
On May 10, 2017, Abercrombie & Fitch Management Co., a subsidiary of the Company (“A&F ManagementManagement”), executed and entered into executive severance agreements with a number of the Company’s executive officers, including Fran Horowitz Joanne C. Crevoiserat,and Kristin Scott
Stacia Andersen and Robert E. Bostrom (the “May 2017 Agreements”). In anticipation of his rejoining the Company, effective as of September 7, 2017, A&F Management executed and entered into an executive severance agreement with Scott Lipesky (the “Lipesky Agreement”). In anticipation of his joining the Company, effective as of September 13, 2018, A&F Management executed and entered into an executive severance agreement with Gregory J. Henchel (the “Henchel Agreement”). In anticipation of his joining the Company, effective as of May 24, 2021, A&F Management executed and entered into an executive severance agreement with Samir Desai (the “Desai Agreement” and, collectively with the May 2017 Agreements, and the Lipesky Agreement, and the “ExecutiveHenchel Agreement, the “Severance Agreements”).
The
ExecutiveSeverance Agreements have an
intialinitial two-year term, followed by automatic renewal on an annual basis, unless otherwise determined by the Company or the NEO by providing notice to the contrary at least 90 days prior to the date on which the additional term would have automatically begun. However, if a change of control (as defined in the
ExecutiveSeverance Agreements) occurs during the original term or an additional term, the term of the
ExecutiveSeverance Agreements will extend until the later of the expiration of the original term or the additional term, as applicable, or the
18-month anniversary of such change in control.
The
ExecutiveSeverance Agreements impose various restrictive covenants on the NEOs, including
non-competition,non-solicitation, non-disparagement and confidentiality covenants. The
non-competition covenant prohibits the NEOs from engaging in certain activities with identified competitors of the Company during their employment and for a period of 12 months after the termination of their employment. The
non-solicitation covenant prohibits the NEOs from engaging in certain solicitation activities during their employment and for a period of 24 months after the termination of their employment.
The discussion of the terms of the Executive Agreements which follows does not include Ms. Andersen or Mr. Bostrom. The consequences of Ms. Andersen’s separation from service as an associate of the Company are discussed separately under the section captioned“Andersen Separation from Service” within“COMPENSATION DISCUSSION AND ANALYSIS — Compensation and Benefits Structure” on page 71 of this Proxy Statement. The consequences of Mr. Bostrom’s separation from service as an associate of the Company are discussed separately under the section captioned“Bostrom Separation from Service” within“COMPENSATIONDISCUSSION AND ANALYSIS — Compensation and Benefits Structure” on page 72 of this Proxy Statement.
If the employment of an NEO terminates during the term of the NEO’s
ExecutiveSeverance Agreement, the Company will, in all cases, pay to the NEO all accrued but unpaid compensation earned by the NEO through the date of the NEO’s termination.
If the employment of an NEO is terminated by the Company without “cause” (as defined in the
ExecutiveSeverance Agreements) or by the NEO for
���good“good reason” (as defined in the
ExecutiveSeverance Agreements) during the term (other than during the three months prior to, or the 18 months following, a change of control of the Company) and the NEO executes a release of claims acceptable to the Company:
the•The Company will continue to pay the NEO’s base salary inbi-weekly installments for 18 months following the termination date;
the•The Company will pay the NEO, at the time specified in the NEO’s ExecutiveSeverance Agreement, apro-rated portion of the NEO’s bonus under the short-term cash bonus plan of the Company in which the NEO would have been eligible to participate in the year of the NEO’s termination date, based on the Company’s actual performance during the applicable bonus period and the number of days in such bonus period that would have elapsed prior to the termination date;
the•The Company will reimburse the NEO during the 18 months following the termination date for 100% of the monthly premium costs of continuation coverage under COBRA, subject to the NEO’s election of such coverage and satisfaction of the additional eligibility requirements set forth in the NEO’s ExecutiveSeverance Agreement; and
the•The outstanding equity awards held by the NEO will vest (if at all) in accordance with the terms of the NEO’s award agreements.
If the employment of an NEO is terminated by the Company without cause (other than as a result of the NEO’s death or disability) or by the NEO for good reason during the three months prior to, or the 18 months following, a change of control of the Company and the NEO executes a release of claims acceptable to the Company:
in•In the case of Ms. Horowitz, and Ms. Crevoiserat, the Company will continue to pay their respectiveher base salariessalary inbi-weekly installments for 18 months following the termination date;
in•In the case of Mr. Lipesky, Ms. Scott, Mr. Desai, and Mr. Henchel, the Company will pay them, at the time specified in their respective ExecutiveSeverance Agreements, alump-sum amount equal to 18 months of their respective base salaries;
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| 2022 Proxy Statement | 63 | Abercrombie & Fitch Co. |
EXECUTIVE COMPENSATION TABLES
•The Company will pay the NEO, at the time specified in the NEO’s ExecutiveSeverance Agreement, alump-sum payment in an amount equal to 1.5 times the NEO’s target bonus opportunity under the Company’s short-term cash bonus plan in which the NEO would have been entitled to participate in respect of the Company’s fiscal year in which the termination date occurred;
the•The Company will reimburse the NEO during the 18 months following the termination date for 100% of the monthly premium costs of continuation coverage under COBRA, subject to the NEO’s election of such coverage and satisfaction of the additional eligibility requirements set forth in the NEO’s ExecutiveSeverance Agreement; and
the•The outstanding equity awards held by the NEO will vest (if at all) in accordance with the terms of the NEO’s award agreements.
In the case of Ms. Horowitz,
and Ms. Crevoiserat, these change of control benefits will be provided in lieu of the amounts payable under
their respectiveher offer
lettersletter with respect to a “Change of Control.”
If the employment of an NEO is terminated by reason of the NEO’s disability, the NEO will be entitled to receive any benefits available under the Company’s long-term disability plan (if any). If the employment of an NEO is terminated by the Company for cause, by the NEO without good reason or by reason of the NEO’s death or disability, the outstanding equity awards held by the NEO would vest (if at all) in accordance with the terms of the NEO’s award agreements.
Promotional RSUs
If either Ms. Horowitz or Ms. Crevoiserat resigns or her employment is terminated by the Company for cause, the unvested portions of all of her Promotional RSUs will be forfeited. If the employment of either Ms. Horowitz or Ms. Crevoiserat is terminated by the Company without cause, her Performance-Based Promotional RSUs will be forfeited, and her Service-Based Promotional RSUs will vestpro-rata for time served, but with consideration for the back-loaded vesting schedule. By way of explanation, if the employment of either Ms. Horowitz or Ms. Crevoiserat had been terminated without cause six months after the grant date of the Promotional RSUs, 12.5% of the Service-Based Promotional RSUs originally granted to the affected individual would have vested (half of the first tranche). If either Ms. Horowitz or Ms. Crevoiserat were to be terminated eighteen months after the grant date, 37.5% would vest (all of the first tranche and half of the second tranche); or thirty months after the grant date, 75% would vest (all of the first two tranches and half of the third tranche).
If the Company undergoes a change in control (as that term is defined in the 2016 Associates LTIP), a double trigger involving an involuntary termination of her employment is required for accelerated vesting of the Promotional RSUs held by each of Ms. Horowitz and Ms. Crevoiserat. In such event, (i) vesting of the Service-Based Promotional RSUs will be accelerated at the level associated with the next tranche due to vest and (ii) the applicable performance conditions will be waived for the Performance-Based Promotional RSUs and vesting will be accelerated such that the portion of Performance-Based Promotional RSUs vested will be equal to the portion of Service-Based Promotional RSUs vested. By way of explanation, if a change in control were to occur between the first anniversary and the second anniversary of the grant date of the Promotional RSUs and the employment
of either Ms. Horowitz or Ms. Crevoiserat were to be involuntarily terminated at that time, (i) the next 25% of the Service-Based Promotional RSUs originally granted to the affected individual would vest and (ii) a total of 50% of the Performance-Based Promotional RSUs originally granted to the affected individual would vest.
Other Arrangements
If the employment of an NEO is terminated by reason of the NEO’s disability, the NEO will be entitled to receive any benefits available under the Company’s long-term disability plan (if any). If the employment of an NEO is terminated by the Company for cause, by the NEO without good reason, or by reason of the NEO’s death or disability, the outstanding equity awards held by the NEO will vest (if at all) in accordance with the terms of the NEO’s award agreements. Our typical treatment of unvested equity awards upon various termination scenarios is captured in the table below (although individual equity awards may be subject to different treatment under their respective award agreements):
| | | | | | | | | | | | | | | | | |
Award Type | Voluntary Resignation | Voluntary
Involuntary Termination
(Without Cause) | Death/ Disability | Involuntary
Termination
(Without Cause)
| | Death/Disability
| | For Good Reason | | Change of Control (Double-Trigger)
/ Double-Trigger |
| | | | | |
| PSAs | Forfeited | Pro-Rated | Accelerated | Forfeited | | Pro-Rated | | Accelerated | | Forfeited | | Pro-Rated(1) |
| RSUs | Forfeited | Forfeited | Accelerated | Forfeited | Accelerated(2) |
| SARs | Forfeited | Forfeited | Accelerated | | Forfeited | | Accelerated |
Options/
SARs
| | Forfeited | | Forfeited | | Accelerated | | Forfeited | | Accelerated(2) |
Each NEO will receive
(1)In the valuecase of the NEO’s accrued benefits under the Company’s 401(k) Plan and the Company’s Nonqualified Savings and Supplemental Retirement Plan in thea “double-trigger” event, of anydefined as an involuntary termination of employment (e.g.,without cause, within three months prior to or 18 months after a change of control (excluding voluntary resignation, retirement, and termination due to death disability, terminationor disability), outstanding PSAs with respect to which more than 50% of the performance period has elapsed as of the date of the change of control would be paid, on a pro-rated basis, based on the performance achieved by the Company through a date occurring within three months of the change of control, as determined by our Compensation Committee prior to the change of control.
Outstanding PSAs with
or without cause or voluntary termination byrespect to which less than 50% of the
NEO).performance period has elapsed as of the date of the change of control would be paid, on a pro-rated basis, at the target level of achievement.
(2)In the case of a “double-trigger” event, defined as an involuntary termination of employment without cause, within three months prior to or 18 months after a change of control (excluding voluntary resignation, retirement, and termination due to death or disability), in addition to the benefits under the plans mentioned in the preceding paragraph following this table, the vesting of outstanding SARs and RSUs held by the NEO would accelerate.
Each NEO will receive the value of the NEO’s accrued benefits under the Company’s 401(k) Plan and the Company’s Nonqualified Savings and Supplemental Retirement Plan in the event of any termination of employment (e.g., death, disability, termination by the Company with or without cause, or voluntary termination by the NEO).
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| Abercrombie & Fitch Co. | 64 | 2022 Proxy Statement |
EXECUTIVE COMPENSATION TABLES
The following table describes the approximate payments that would have been made to the NEOs pursuant to agreements, plans or individual award agreements in effect on January 29, 2022, the last day of Fiscal 2021, in the event of the termination of employment of these NEOs under the circumstances described below, assuming such termination took place on January 29, 2022. The table captioned “Outstanding Equity Awards at Fiscal 2021 Year-End” beginning on page 59 of this Proxy Statement contains more information regarding the vested SARs held by the NEOs as of the end of Fiscal 2021. | | | | | | | | | | | | | | | | | |
| Voluntary Resignation ($) | Involuntary Termination
(Without Cause) ($) | Death (1) / Disability (2) ($) | For Good Reason ($) | Change of Control / Double-Trigger ($) |
| | | | | |
| Fran Horowitz | | | | | |
Cash Severance(3) | — | | 5,990,400 | | — | | 5,990,400 | | 5,362,500 | ⁽⁴⁾ |
Benefits Continuation(5) | — | | 43,809 | | — | | 43,809 | | 43,809 | |
| Equity Value | — | | 12,640,361 | ⁽⁷⁾ | 31,941,084 | ⁽⁶⁾ | — | | 26,235,914 | ⁽⁸⁾ |
Retirement Plan Value(9) | 858,917 | | 858,917 | | 858,917 | | 858,917 | | 858,917 | |
| Total | 858,917 | | 19,533,487 | | 32,800,001 | | 6,893,126 | | 32,501,140 | |
| Scott Lipesky | | | | | |
Cash Severance(3) | — | | 2,457,000 | | — | | 2,457,000 | | 2,250,000 | ⁽⁴⁾ |
Benefits Continuation(5) | — | | 28,549 | | — | | 28,549 | | 28,549 | |
| Equity Value | — | | 2,460,037 | ⁽⁷⁾ | 10,875,261 | ⁽⁶⁾ | — | | 9,682,502 | ⁽⁸⁾ |
Retirement Plan Value(9) | 522,534 | | 522,534 | | 522,534 | | 522,534 | | 522,534 | |
| Total | 522,534 | | 5,468,120 | | 11,397,795 | | 3,008,083 | | 12,483,585 | |
| Kristin Scott | | | | | |
Cash Severance(3) | — | | 3,534,000 | | — | | 3,534,000 | | 3,206,250 | ⁽⁴⁾ |
| Benefits Continuation | — | | 36,493 | | — | | 36,493 | | 36,493 | |
| Equity Value | — | | 6,352,675 | ⁽⁷⁾ | 21,385,840 | ⁽⁶⁾ | — | | 18,753,072 | ⁽⁸⁾ |
Retirement Plan Value(9) | 658,638 | | 658,638 | | 658,638 | | 658,638 | | 658,638 | |
| Total | 658,638 | | 10,581,806 | | 22,044,478 | | 4,229,131 | | 22,654,453 | |
| Samir Desai | | | | | |
Cash Severance(3) | — | | 1,596,600 | | — | | 1,596,600 | | 1,950,000 | |
| Benefits Continuation | — | | 24,962 | | — | | 24,962 | | 24,962 | |
| Equity Value | — | | 201,517 | | 2,220,745 | | — | | 1,816,601 | |
Retirement Plan Value(9) | 20,281 | | 20,281 | | 20,281 | | 20,281 | | 20,281 | |
| Total | 20,281 | | 1,843,360 | | 2,241,026 | | 1,641,843 | | 3,811,844 | |
| Gregory J. Henchel | | | | | |
Cash Severance(3) | — | | 1,699,200 | | — | | 1,699,200 | | 1,575,000 | ⁽⁴⁾ |
| Benefits Continuation | — | | 18,521 | | — | | 18,521 | | 18,521 | |
| Equity Value | — | | 1,077,879 | ⁽⁷⁾ | 4,193,942 | ⁽⁶⁾ | — | | 3,716,836 | ⁽⁸⁾ |
Retirement Plan Value(9) | — | | — | | — | | — | | — | |
| Total | — | | 2,795,600 | | 4,193,942 | | 1,717,721 | | 5,310,357 | |
(1)Although not shown in the above table, the NEOs participate in the Company’s life insurance plan which is generally available to all salaried associates. The plan pays out a multiple of base salary up to a maximum of $2,000,000. Under the provisions of the life insurance plan, if an NEO passed away, the NEO’s beneficiaries would receive $2,000,000. In addition, outstanding PSAsthe Company maintains an accidental death and dismemberment plan for all salaried associates. If an NEO’s death were accidental as defined by the plan, the NEO’s beneficiaries would receive an additional $2,000,000.
(2)Although not shown in the above table, the NEOs also participate in the Company’s Long-Term Disability Plan, which is generally available to all full-time associates, and the Executive Long-Term Disability Plan, which is generally available to all salaried associates whose annual base salary is more than $200,000. The Company’s Long-Term Disability Plan and the Executive Long-Term Disability Plan would together pay an annual benefit of $330,000 for each of Ms. Horowitz and Ms. Scott and $240,000 for the remaining NEOs for the duration of the disability period.
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| 2022 Proxy Statement | 65 | Abercrombie & Fitch Co. |
EXECUTIVE COMPENSATION TABLES
(3)Under her or his Severance Agreement, if the employment of an NEO is terminated by the Company without cause or by an NEO for good reason, subject to the NEO executing an acceptable release of claims, the Company would be required to continue the NEO’s base salary for a period of 18 months. The Company would also be required to pay the NEO a pro-rated portion of the NEO’s annual cash incentive opportunity under the Short-Term Cash Incentive Plan (as in effect on January 29, 2022) based on actual performance in the year of termination, subject to the discretion of our Compensation Committee.
(4)Under her or his Severance Agreement, if the employment of an NEO is terminated by the Company without cause or by an NEO for good reason, during the three months prior to, or the 18 months following, a change of control, subject to the NEO executing an acceptable release of claims, the Company would be required, with respect to which moreeach NEO other than 50% ofMs. Horowitz, to pay the performance period has elapsed as of the date of the change of control would be paid, onNEO apro-rated basis, based on the performance achieved through a date occurring within three lump-sum payment equal to 18 months of the changeNEO’s base salary or, in the case of control, as determined by our CompensationMs. Horowitz, to continue to pay her base salary in bi-weekly installments for 18 months following the termination date. The Company would also be required to pay the NEO a lump-sum payment equal to 1.5 times the NEO’s target annual cash incentive opportunity under the Short-Term Cash Incentive Plan (as in effect on January 29, 2022).
(5)Under her or his Severance Agreement, the Company would be required to continue an NEO’s medical, dental, and Organization Committee priorother associate welfare benefits for a time period of 18 months, subject to the changeNEO’s election of control. Outstandingsuch coverage and the additional eligibility requirements set forth in the NEO’s Severance Agreement.
(6)The value of equity holdings relates to unvested RSUs and unearned PSAs with respect to which less than 50%at January 29, 2022 and is calculated as the sum of: (a) the product of (i) the number of unvested RSUs multiplied by (ii) $36.49 (the market price of the performance period has elapsedCompany’s Common Stock as of January 28, 2022 (the last business day of Fiscal 2021)) plus (b) the dateproduct of (i) the number of unearned target PSAs multiplied by (ii) $36.49 (the market price of the changeCompany’s Common Stock as of control would be paid, on aJanuary 28, 2022 (the last business day of Fiscal 2021)).
pro-rated(7) basis,The value of equity holdings relates to unearned PSAs at January 29, 2022 and is calculated as the product of: (a) the number of pro-rated unearned target levelPSAs multiplied by (b) $36.49 (the market price of achievement.Fran Horowitz
| | | | | | | | | | | | | | | | | | | | |
Normal Course of Business | | Cash
Severance(3) | | | Benefits
Continuation(5) | | | Equity
Value | | | Retirement
Plan Value(10) | | | Total | |
Voluntary Termination | | $ | — | | | $ | — | | | $ | — | | | $ | 297,072 | | | $ | 297,072 | |
Death(1) | | $ | — | | | $ | — | | | $ | 18,628,615 | (6) | | $ | 452,202 | | | $ | 19,080,817 | |
Not for Cause | | $ | 4,028,700 | | | $ | 42,463 | | | $ | 4,206,383 | (7) | | $ | 297,072 | | | $ | 8,574,618 | |
Good Reason | | $ | 4,028,700 | | | $ | 42,463 | | | $ | 817,014 | (8) | | $ | 297,072 | | | $ | 5,185,249 | |
Disability(2) | | $ | — | | | $ | — | | | $ | 18,628,615 | (6) | | $ | 452,202 | | | $ | 19,080,817 | |
| | | | | |
Double-Trigger Change of Control | | Cash
Severance(4) | | | Benefits
Continuation(5) | | | Equity
Value(9) | | | Retirement
Plan Value(10) | | | Total | |
| | $ | 4,875,000 | | | $ | 42,463 | | | $ | 12,567,865 | | | $ | 452,202 | | | $ | 17,937,530 | |
(8)The value of equity holdings relates to unvested RSUs and unearned PSAs at January 29, 2022 and is calculated as the sum of: (a) the product of (i) the number of unvested RSUs multiplied by (ii) $36.49 (the market price of the Company’s Common Stock as of January 28, 2022 (the last business day of Fiscal 2021)) plus (b) the product of (i) the number of pro-rated unearned target PSAs multiplied by (ii) $36.49 (the market price of the Company’s Common Stock as of January 28, 2022 (the last business day of Fiscal 2021)).
(9)Represents the present value of the vested accumulated retirement benefits under the Company’s 401(k) Plan and the Company’s Nonqualified Savings and Supplemental Retirement Plan.
(1) | Although not shown in the above table, Ms. Horowitz also participates in the Company’s life insurance plan which is generally available to all salaried associates. The plan pays out a multiple of base salary up to a maximum of $2,000,000. Under the provisions of the life insurance plan, if Ms. Horowitz passed away, her beneficiaries would receive $2,000,000. In addition, the Company maintains an
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| Abercrombie & Fitch Co. | 66 | 2022 Proxy Statement |
EXECUTIVE COMPENSATION TABLES
CEO PAY RATIO
| accidental death and dismemberment plan for all salaried associates. If Ms. Horowitz’s death were accidental as defined by the plan, her beneficiaries would receive an additional $2,000,000. | |
(2) | Although not shown in the above table, Ms. Horowitz also participates in the Company’s Long-Term Disability Plan, which is generally available to all full-time associates, and the Executive Long-Term Disability Plan, which is generally available to all salaried associates whose annual base salary is more than $200,000. The Company’s Long-Term Disability Plan and the Executive Long-Term Disability Plan would together pay an annual benefit of $330,000 for the duration of the disability period.
|
(3) | Under her Executive Agreement, if the employment of Ms. Horowitz is terminated by the Company without cause or by Ms. Horowitz for good reason, subject to Ms. Horowitz executing a Release, the Company would be required to continue her base salary for a period of 18 months. The Company would also be required to pay Ms. Horowitz apro-rated portion of her annual cash incentive opportunity under the Short-Term Cash Incentive Plan, based on actual performance in the year of termination, subject to the discretion of our Compensation and Organization Committee.
|
(4) | Under her Executive Agreement, if the employment of Ms. Horowitz is terminated by the Company without cause or by Ms. Horowitz for good reason, during the three months prior to, or the 18 months following, a change of control, subject to Ms. Horowitz executing a Release, the Company would be required to continue Ms. Horowitz’s base salary for a period of 18 months. The Company would also be required to pay Ms. Horowitz alump-sum payment equal to 1.5 times Ms. Horowitz’s target annual cash incentive opportunity under the Short-Term Cash Incentive Plan.
|
(5) | Under her Executive Agreement, the Company would be required to continue Ms. Horowitz’s medical, dental and other associate welfare benefits for a time period of 18 months, subject to her election of such coverage and the additional eligibility requirements set forth in her Executive Agreement.
|
(6) | The value of Ms. Horowitz’s equity holdings is calculated as $18,628,615 and relates to unvested RSUs, unearned PSAs and unvested SARs at February 2, 2019. This $18,628,615 is the sum of: (a) the number of unvested RSUs (other than the Promotional RSUs)multipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (b) the number of unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (c) the number of unvested Service-Vested Promotional RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (d) the number of unearned target Performance-Based Promotional RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (e) thein-the-money value of the unvested SARs on February 1, 2019 (the last business day of Fiscal 2018). None of the vested SARs at the end of Fiscal 2018 were in the money.
|
(7) | The value of Ms. Horowitz’s equity holdings is calculated as $4,206,383 and relates to unearned PSAs and unvested Service-Vested Promotional RSUs at February 2, 2019. This $4,206,383 is the sum of: (a) the number ofpro-rated unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)) plus (b) the number of unvested Service-Vested Promotional RSUs in the next vesting tranchemultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
|
(8) | The value of Ms. Horowitz’s equity holdings is calculated as $817,014 and relates to unvested Service-Vested Promotional RSUs at February 2, 2019. This $817,014 is the product of the number of unvested Service-Vested Promotional RSUs in the next vesting tranchemultipliedby a fraction where the numerator is the number of days that have elapsed since the most recent vesting date and the denominator is 365multipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
|
(9) | The value of Ms. Horowitz’s equity holdings is calculated as $12,567,865 and relates to unvested RSUs, unearned PSAs and unvested SARs at February 2, 2019. This $12,567,865 is the sum of: (a) the number of unvested RSUs (other than Promotional RSUs)multipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (b) the number ofpro-rated unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (c) the number ofpro-rated unvested Service-Vested Promotional RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (d) the number ofpro-rated unearned target Performance-Based Promotional RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (e) thein-the-money value of the unvested SARs on February 1, 2019 (the last business day of Fiscal 2018). None of the vested SARs at the end of Fiscal 2018 were in the money. The value shown in the above table assumes that all unvested RSUs (other than Promotional RSUs) vest in connection with a change of control.
|
(10) | Represents the present value of the vested accumulated retirement benefits under the Company’s 401(k) Plan and the Company’s Nonqualified Savings and Supplemental Retirement Plan.
|
Scott Lipesky
| | | | | | | | | | | | | | | | | | | | |
Normal Course of Business | | Cash
Severance(3) | | | Benefits
Continuation(5) | | | Equity
Value | | | Retirement
Plan Value(9) | | | Total | |
Voluntary Termination | | $ | — | | | $ | — | | | $ | — | | | $ | 109,764 | | | $ | 109,764 | |
Death(1) | | $ | — | | | $ | — | | | $ | 919,209 | (6) | | $ | 109,764 | | | $ | 1,028,973 | |
Not for Cause | | $ | 1,322,213 | | | $ | 26,902 | | | $ | 113,239 | (7) | | $ | 109,764 | | | $ | 1,572,118 | |
Good Reason | | $ | 1,322,213 | | | $ | 26,902 | | | $ | — | | | $ | 109,764 | | | $ | 1,458,879 | |
Disability(2) | | $ | — | | | $ | — | | | $ | 919,209 | (6) | | $ | 109,764 | | | $ | 1,028,973 | |
| | | | | |
Double-Trigger Change of Control | | Cash
Severance(4) | | | Benefits
Continuation(5) | | | Equity
Value(8) | | | Retirement
Plan Value(9) | | | Total | |
| | $ | 1,509,375 | | | $ | 26,902 | | | $ | 692,730 | | | $ | 109,764 | | | $ | 2,338,771 | |
(1) | Although not shown in the above table, Mr. Lipesky also participates in the Company’s life insurance plan which is generally available to all salaried associates. The plan pays out a multiple of base salary up to a maximum of $2,000,000. Under the provisions of the life insurance plan, if Mr. Lipesky passed away, his beneficiaries would receive $2,000,000. In addition, the Company maintains an accidental death and dismemberment plan for all salaried associates. If Mr. Lipesky’s death were accidental as defined by the plan, his beneficiaries would receive an additional $2,000,000.
|
(2) | Although not shown in the above table, Mr. Lipesky also participates in the Company’s Long-Term Disability Plan, which is generally available to all full-time associates. The Company’s Long-Term Disability Plan would pay a maximum annual benefit of $240,000 for the duration of the disability period.
|
(3) | Under his Executive Agreement, if the employment of Mr. Lipesky is terminated by the Company without cause or by Mr. Lipesky for good reason, subject to Mr. Lipesky executing a Release, the Company would be required to continue his base salary for a period of 18 months. The Company would also be required to pay Mr. Lipesky apro-rated portion of his annual cash incentive opportunity under the Short-Term Cash Incentive Plan based on actual performance in the year of termination, subject to the discretion of our Compensation and Organization Committee.
|
(4) | Under his Executive Agreement, if the employment of Mr. Lipesky is terminated by the Company without cause or by Mr. Lipesky for good reason, during the three months prior to, or the 18 months following, a change of control, subject to Mr. Lipesky executing a Release, the Company would be required to pay Mr. Lipesky alump-sum payment equal to 18 months of his base salary. The Company would also be required to pay Mr. Lipesky alump-sum payment equal to 1.5 times Mr. Lipesky’s target annual cash incentive opportunity under the Short-Term Cash Incentive Plan.
|
(5) | Under his Executive Agreement, the Company would be required to continue Mr. Lipesky’s medical, dental and other associate welfare benefits for a time period of 18 months, subject to his election of such coverage and the additional requirements set forth in his Executive Agreement.
|
(6) | The value of Mr. Lipesky’s equity holdings is calculated as $919,209 and relates to unvested RSUs and unearned PSAs at February 2, 2019. This $919,209 is the sum of: (a) the number of unvested RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (b) the number of unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
|
(7) | The value of Mr. Lipesky’s equity holdings is calculated as $113,239 and relates to unearned PSAs at February 2, 2019. This $113,239 is the sum of the number ofpro-rated unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
|
(8) | The value of Mr. Lipesky’s equity holdings is calculated as $692,730 and relates to unvested RSUs and unearned PSAs at February 2, 2019. This $692,730 is the sum of: (a) the number of unvested RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (b) the number ofpro-rated unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
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(9) | Represents the present value of the vested accumulated retirement benefits under the Company’s 401(k) Plan and the Company’s Nonqualified Savings and Supplemental Retirement Plan.
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Joanne C. Crevoiserat
| | | | | | | | | | | | | | | | | | | | |
Normal Course of Business | | Cash
Severance(3) | | | Benefits
Continuation(5) | | | Equity
Value | | | Retirement
Plan Value(10) | | | Total | |
Voluntary Termination | | $ | — | | | $ | — | | | $ | — | | | $ | 1,993,735 | | | $ | 1,993,735 | |
Death(1) | | $ | — | | | $ | — | | | $ | 10,435,720 | (6) | | $ | 2,167,983 | | | $ | 12,603,703 | |
Not for Cause | | $ | 2,309,400 | | | $ | 42,465 | | | $ | 2,132,806 | (7) | | $ | 1,993,735 | | | $ | 6,478,406 | |
Good Reason | | $ | 2,309,400 | | | $ | 42,465 | | | $ | 612,765 | (8) | | $ | 1,993,735 | | | $ | 4,958,365 | |
Disability(2) | | $ | — | | | $ | — | | | $ | 10,435,720 | (6) | | $ | 2,167,983 | | | $ | 12,603,703 | |
| | | | | |
Double-Trigger Change of Control | | Cash
Severance(4) | | | Benefits
Continuation(5) | | | Equity
Value(9) | | | Retirement
Plan Value(10) | | | Total | |
| | $ | 2,700,000 | | | $ | 42,465 | | | $ | 6,725,425 | | | $ | 2,167,983 | | | $ | 11,635,873 | |
(1) | Although not shown in the above table, Ms. Crevoiserat also participates in the Company’s life insurance plan which is generally available to all salaried associates. The plan pays out a multiple of base salary up to a maximum of $2,000,000. Under the provisions of the life insurance plan, if Ms. Crevoiserat passed away, her beneficiaries would receive $2,000,000. In addition, the Company maintains an accidental death and dismemberment plan for all salaried associates. If Ms. Crevoiserat’s death were accidental as defined by the plan, her beneficiaries would receive an additional $2,000,000.
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(2) | Although not shown in the above table, Ms. Crevoiserat also participates in the Company’s Long-Term Disability Plan, which is generally available to all full-time associates, and the Executive Long-Term Disability Plan, which is generally available to all salaried associates whose annual base salary is more than $200,000. The Company’s Long-Term Disability Plan and the Executive Long-Term Disability Plan would together pay an annual benefit of $330,000 for the duration of the disability period.
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(3) | Under her Executive Agreement, if the employment of Ms. Crevoiserat is terminated by the Company without cause or by Ms. Crevoiserat for good reason, subject to Ms. Crevoiserat executing a Release, the Company would be required to continue her base salary for a period of 18 months. The Company would also be required to pay Ms. Crevoiserat apro-rated portion of her annual cash incentive opportunity under the Short-Term Cash Incentive Plan based on actual performance in the year of termination, subject to the discretion of our Compensation and Organization Committee.
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(4) | Under her Executive Agreement, if the employment of Ms. Crevoiserat is terminated by the Company without cause or by Ms. Crevoiserat for good reason, during the three months prior to, or the 18 months following, a change of control, subject to Ms. Crevoiserat executing a Release, the Company would be required to continue Ms. Crevoiserat’s base salary for a period of 18 months. The Company would also be required to pay Ms. Crevoiserat alump-sum payment equal to 1.5 times Ms. Crevoiserat’s target annual cash incentive opportunity under the Short-Term Cash Incentive Plan.
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(5) | Under her Executive Agreement, the Company would be required to continue Ms. Crevoiserat’s medical, dental and other associate welfare benefits for a time period of 18 months, subject to her election of such coverage and the additional requirements set forth in her Executive Agreement.
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(6) | The value of Ms. Crevoiserat’s equity holdings is calculated as $10,435,720 and relates to unvested RSUs, unearned PSAs and unvested SARs at February 2, 2019. This $10,435,720 is the sum of: (a) the number of unvested RSUs (other than the Promotional RSUs)multipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (b) the number of unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (c) the number of unvested Service-Vested Promotional RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (d) the number of unearned target Performance-Based Promotional RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (e) thein-the-money value of the unvested SARs on February 1, 2019 (the last business day of Fiscal 2018). None of the vested SARs at the end of Fiscal 2018 were in the money.
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(7) | The value of Ms. Crevoiserat’s equity holdings is calculated as $2,132,806 and relates to unearned PSAs and unvested Service-Vested Promotional RSUs at February 2, 2019. This $2,132,806 is the sum of: (a) the number ofpro-rated unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (b) the number of unvested Service-Vested Promotional RSUs in the next vesting tranchemultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
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(8) | The value of Ms. Crevoiserat’s equity holdings is calculated as $612,765 and relates to unvested Service-Vested Promotional RSUs at February 2, 2019. This $612,765 is the product of the number of unvested Service-Vested Promotional RSUs in the next vesting tranchemultipliedby a fraction where the numerator is the number of days that have elapsed since the most recent vesting date and the denominator is 365multipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
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(9) | The value of Ms. Crevoiserat’s equity holdings is calculated as $6,725,425 and relates to unvested RSUs, unearned PSAs and unvested SARs at February 2, 2019. This $6,725,425 is the sum of: (a) the number of unvested RSUs (other than Promotional RSUs)multipliedby
|
| $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (b) the number ofpro-rated unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (c) the number ofpro-rated unvested Service-Vested Promotional RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (d) the number ofpro-rated unearned target Performance-Based Promotional RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (e) thein-the-money value of the unvested SARs on February 1, 2019 (the last business day of Fiscal 2018). None of the vested SARs at the end of Fiscal 2018 were in the money. The value shown in the above table assumes that all unvested RSUs (other than Promotional RSUs) vest in connection with a change of control. |
(10) | Represents the present value of the vested accumulated retirement benefits under the Company’s 401(k) Plan and the Company’s Nonqualified Savings and Supplemental Retirement Plan.
|
Kristin Scott
| | | | | | | | | | | | | | | | | | | | |
Normal Course of Business | | Cash
Severance(3) | | | Benefits
Continuation(5) | | | Equity
Value | | | Retirement
Plan Value(9) | | | Total | |
Voluntary Termination | | $ | — | | | $ | — | | | $ | — | | | $ | 129,710 | | | $ | 129,710 | |
Death(1) | | $ | — | | | $ | — | | | $ | 4,636,008 | (6) | | $ | 216,365 | | | $ | 4,852,373 | |
Not for Cause | | $ | 2,348,031 | | | $ | 35,089 | | | $ | 1,239,763 | (7) | | $ | 129,710 | | | $ | 3,752,593 | |
Good Reason | | $ | 2,348,031 | | | $ | 35,089 | | | $ | — | | | $ | 129,710 | | | $ | 2,512,830 | |
Disability(2) | | $ | — | | | $ | — | | | $ | 4,636,008 | (6) | | $ | 216,365 | | | $ | 4,852,373 | |
| | | | | |
Double-Trigger Change of Control | | Cash
Severance(4) | | | Benefits
Continuation(5) | | | Equity
Value(8) | | | Retirement
Plan Value(9) | | | Total | |
| | $ | 2,775,000 | | | $ | 35,089 | | | $ | 3,564,666 | | | $ | 216,365 | | | $ | 6,591,120 | |
(1) | Although not shown in the above table, Ms. Scott also participates in the Company’s life insurance plan which is generally available to all salaried associates. The plan pays out a multiple of base salary up to a maximum of $2,000,000. Under the provisions of the life insurance plan, if Ms. Scott passed away, her beneficiaries would receive $2,000,000. In addition, the Company maintains an accidental death and dismemberment plan for all salaried associates. If Ms. Scott’s death were accidental as defined by the plan, her beneficiaries would receive an additional $2,000,000.
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(2) | Although not shown in the above table, Ms. Scott also participates in the Company’s Long-Term Disability Plan, which is generally available to all full-time associates, and the Executive Long-Term Disability Plan, which is generally available to all salaried associates whose annual base salary is more than $200,000. The Company’s Long-Term Disability Plan and the Executive Long-Term Disability Plan would together pay an annual benefit of $330,000 for the duration of the disability period.
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(3) | Under her Executive Agreement, if the employment of Ms. Scott is terminated by the Company without cause or by Ms. Scott for good reason, subject to Ms. Scott executing a Release, the Company would be required to continue her base salary for a period of 18 months. The Company would also be required to pay Ms. Scott apro-rated portion of her annual cash incentive opportunity under the Short-Term Cash Incentive Plan based on actual performance in the year of termination, subject to the discretion of our Compensation and Organization Committee.
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(4) | Under her Executive Agreement, if the employment of Ms. Scott is terminated by the Company without cause or by Ms. Scott for good reason, during the three months prior to, or the 18 months following, a change of control, subject to Ms. Scott executing a Release, the Company would be required to pay Ms. Scott alump-sum payment equal to 18 months of her base salary. The Company would also be required to pay Ms. Scott alump-sum payment equal to 1.5 times Ms. Scott’s target annual cash incentive opportunity under the Short-Term Cash Incentive Plan.
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(5) | Under her Executive Agreement, the Company would be required to continue Ms. Scott’s medical, dental and other associate welfare benefits for a time period of 18 months, subject to her election of such coverage and the additional requirements set forth in her Executive Agreement.
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(6) | The value of Ms. Scott’s equity holdings is calculated as $4,636,008 and relates to unvested RSUs and unearned PSAs at February 2, 2019. This $4,636,008 is the sum of: (a) the number of unvested RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (b) the number of unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
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(7) | The value of Ms. Scott’s equity holdings is calculated as $1,239,763 and relates to unearned PSAs at February 2, 2019. This $1,239,763 is the sum of the number ofpro-rated unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
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(8) | The value of Ms. Scott’s equity holdings is calculated as $3,564,666 and relates to unvested RSUs and unearned PSAs at February 2, 2019. This $3,564,666 is the sum of: (a) the number of unvested RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018))plus (b) the number ofpro-rated unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
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(9) | Represents the present value of the vested accumulated retirement benefits under the Company’s 401(k) Plan and the Company’s Nonqualified Savings and Supplemental Retirement Plan.
|
Gregory J. Henchel
| | | | | | | | | | | | | | | | | | | | |
Normal Course of Business | | Cash
Severance(3) | | | Benefits
Continuation(5) | | | Equity
Value(6) | | | Retirement
Plan Value(7) | | | Total | |
Voluntary Termination | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Death(1) | | $ | — | | | $ | — | | | $ | 199,596 | | | $ | — | | | $ | 199,596 | |
Not for Cause | | $ | 946,770 | | | $ | 15,478 | | | $ | — | | | $ | — | | | $ | 962,248 | |
Good Reason | | $ | 946,770 | | | $ | 15,478 | | | $ | — | | | $ | — | | | $ | 962,248 | |
Disability(2) | | $ | — | | | $ | — | | | $ | 199,596 | | | $ | — | | | $ | 199,596 | |
| | | | | |
Double-Trigger Change of Control | | Cash
Severance(4) | | | Benefits
Continuation(5) | | | Equity
Value(6) | | | Retirement
Plan Value(7) | | | Total | |
| | $ | 1,320,000 | | | $ | 15,478 | | | $ | 199,596 | | | $ | — | | | $ | 1,535,074 | |
(1) | Although not shown in the above table, Mr. Henchel also participates in the Company’s life insurance plan which is generally available to all salaried associates. The plan pays out a multiple of base salary up to a maximum of $2,000,000. Under the provisions of the life insurance plan, if Mr. Henchel passed away, his beneficiaries would receive $2,000,000. In addition, the Company maintains an accidental death and dismemberment plan for all salaried associates. If Mr. Henchel’s death were accidental as defined by the plan, his beneficiaries would receive an additional $2,000,000.
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(2) | Although not shown in the above table, Mr. Henchel also participates in the Company’s Long-Term Disability Plan, which is generally available to all full-time associates. The Company’s Long-Term Disability Plan would pay a maximum annual benefit of $240,000 for the duration of the disability period.
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(3) | Under his Executive Agreement, if the employment of Mr. Henchel is terminated by the Company without cause or by Mr. Henchel for good reason, subject to Mr. Henchel executing a Release, the Company would be required to continue his base salary for a period of 18 months. The Company would also be required to pay Mr. Henchel apro-rated portion of his annual cash incentive opportunity under the Short-Term Cash Incentive Plan based on actual performance in the year of termination, subject to the discretion of our Compensation and Organization Committee.
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(4) | Under his Executive Agreement, if the employment of Mr. Henchel is terminated by the Company without cause or by Mr. Henchel for good reason, during the three months prior to, or the 18 months following, a change of control, subject to Mr. Henchel executing a Release, the Company would be required to pay Mr. Henchel alump-sum payment in an amount equal to 18 months of his base salary. The Company would also be required to pay Mr. Henchel alump-sum payment equal to 1.5 times Mr. Henchel’s target annual cash incentive opportunity under the Short-Term Cash Incentive Plan.
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(5) | Under his Executive Agreement, the Company would be required to continue Mr. Henchel’s medical, dental, and other associate welfare benefits for a time period of 18 months, subject to his election of such coverage and the additional eligibility requirements set forth in his Executive Agreement.
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(6) | The value of Mr. Henchel’s equity holdings is calculated as $199,596 and relates to unvested RSUs at February 2, 2019. This $199,596 is the sum of the number of unvested RSUsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
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(7) | Represents the present value of the vested accumulated retirement benefit under the Company’s 401(k) Plan and the Company’s Nonqualified Savings and Supplemental Retirement Plan.
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Stacia Andersen
| | | | | | | | | | | | | | | | | | | | |
| | | Cash
Severance(1) | | | Benefits
Continuation(2) | | | Equity
Value(3) | | | Retirement
Plan Value(4) | | | Total | |
Payments Due to Separation from Service | | $ | 1,603,547 | | | $ | 20,636 | | | $ | 856,146 | | | $ | 79,502 | | | $ | 2,559,831 | |
(1) | Under her Executive Agreement, the Company is required to continue her base salary for a period of 18 months after the Andersen Termination Date. The Company is also required to pay Ms. Andersen apro-rated portion of her annual cash incentive opportunity under the Short-Term Cash Incentive Plan based on actual performance in Fiscal 2018, subject to the discretion of our Compensation and Organization Committee.
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(2) | Under her Executive Agreement, the Company is required to continue Ms. Andersen’s medical, dental and other associate welfare benefits for a period of 18 months after the Andersen Termination Date, subject to her election of such coverage and the additional requirements set forth in her Executive Agreement.
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(3) | The value of Ms. Andersen’s equity holdings is calculated as $856,146 and relates to unearned PSAs at February 2, 2019. This $856,146 is the sum of the number ofpro-rated unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
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(4) | Represents the present value of the vested accumulated retirement benefits under the Company’s 401(k) Plan and the Company’s Nonqualified Savings and Supplemental Retirement Plan.
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Robert E. Bostrom
| | | | | | | | | | | | | | | | | | | | |
| | | Cash
Severance(1) | | | Benefits
Continuation(2) | | | Equity
Value(3) | | | Retirement
Plan Value(4) | | | Total | |
Payments Due to Separation from Service | | $ | 1,326,552 | | | $ | 29,912 | | | $ | 307,920 | | | $ | 339,959 | | | $ | 2,004,343 | |
(1) | Under his Executive Agreement as amended by the Bostrom Separation Agreement, the Company is required to continue his base salary for a period of 18 months after the Bostrom Separation Date. The Company is also required to pay Mr. Bostrom his annual cash incentive opportunity under the Short-Term Cash Incentive Plan, based on actual performance in Fiscal 2018, subject to the discretion of our Compensation and Organization Committee.
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(2) | Under his Executive Agreement as amended by the Bostrom Separation Agreement, the Company is required to continue Mr. Bostrom’s medical, dental and other associate welfare benefits for a period of 18 months after the Bostrom Separation Date, subject to his election of such coverage and the additional requirements set forth in his Executive Agreement, as amended by the Bostrom Separation Agreement.
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(3) | The value of Mr. Bostrom’s equity holdings is calculated as $307,920 and relates to unearned PSAs at February 2, 2019. This $307,920 is the sum of the number ofpro-rated unearned target PSAsmultipliedby $21.37 (the market price of the Company’s Common Stock as of February 1, 2019 (the last business day of Fiscal 2018)).
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(4) | Represents the present value of the vested accumulated retirement benefits under the Company’s 401(k) Plan and the Company’s Nonqualified Savings and Supplemental Retirement Plan.
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CEO Pay Ratio
The following information about the relationship between the compensation of our associates and the compensation of Ms. Horowitz, our Chief Executive Officer, is provided in compliance with the requirements of Item 402(u) of SEC RegulationS-K (“Item 402(u)”). In Fiscal 2018,2021, the estimated median of the annual total compensation of our associates,median-compensated associate, excluding Ms. Horowitz, was $2,317.
$3,915.
In identifying the
median of the annual total compensation of all our associates,median-compensated associate, we used the following methodology, which was identical to the steps we took in Fiscal
2017.2017, Fiscal 2018, Fiscal 2019, and Fiscal 2020. We determined that, as of
November 4, 2018,October 31, 2021, the first day of our fourth fiscal quarter, our associate population was equal to
43,53931,675 individuals.
These numbers includeThis number includes all
the individuals determined to be associates,
for federal income tax purposes, whether
full-time,part-time, or temporary as of that date.
Next, we identified the associate receiving the median amount of compensation in our associate population. To do this, we compared the amount of wages and other compensation received by each associate, other than Ms. Horowitz, as reflected in our payroll records and reported to the applicable taxing authority in each country from which we operate, for the calendar year ended December 31, 2018.2021. Compensation values were not annualized formid-year hires, as we do not use a “standard hour” staffing model in many of our operating jurisdictions. Compensation values for our foreign associates were converted to U.S.United States dollars by using the foreign currency exchange rate on December 31, 2018.2021. The medianmedian-compensated associate we identified for Fiscal 20182021 was a different associate from the one identified for Fiscal 2017.2020. As required by Item 402(u), we measured our median associate’s annual total compensation for Fiscal 20182021 by adding together the same elements of compensation that are included in Ms. Horowitz’s total Fiscal 20182021 compensation, as reported in the“Fiscal 2018 “Fiscal 2021 Summary Compensation Table” (beginning on page 7656 of this Proxy Statement). Ms. Horowitz’s total compensation for Fiscal 2018,2021, as reported in the“Fiscal 2018 “Fiscal 2021 Summary Compensation Table”, was $8,481,742.$12,851,399.
The resulting estimated ratio of the annual total compensation of Ms. Horowitz to the median of the annual total compensation of all associatesour median-compensated associate was 3,6603,282 to 1, which was calculated in a manner consistent with Item 402(u). As additional context, the magnitude of our ratio is influenced by our store staffing model which relies on
a significant number of part-time, temporary, and seasonal associates. This approach to store staffing provides flexible, entry-level employment opportunities to students — many of whom are among our core customer demographic — that can become the foundation for a career at Abercrombie & Fitch.the Company. As a result, we maintain a “promote from within” mentality, and we provide opportunities for students to shape themselves into top candidates and potential future leaders of the Company. Students and young professionals who are motivated, creative, and strategic are natural leaders to drive results in our team-based culture. For reference, our median associate is a part-time associate and full-time student who worked for, on average, eighttwenty hours a week for a period of sevenfive months.
Further, other public companies will use methods and assumptions that differ from those we have chosen, but that are appropriate for their circumstances. Therefore, it may be difficult, for this and other reasons, to compare our reported pay ratio to pay ratios reported by other companies.
EQUITY COMPENSATION PLANS
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| 2022 Proxy Statement | 67 | Abercrombie & Fitch Co. |
Ownership of Our Shares
The following table furnishes, with respect to each person who is known to the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock of the Company, the name and address of such beneficial owner, the number of shares of Common Stock reported as beneficially owned (as determined in accordance with Rule 13d-3 under the Exchange Act) by such beneficial owner in the most recent Schedule 13G/A filed with the SEC and the percentage such shares comprised of the outstanding shares of Common Stock of the Company as of April 11, 2022.
| | | | | | | | |
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(1) |
| | |
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055 | 9,334,889(2) | 18.52% |
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 | 7,294,800(3) | 14.47% |
Dimensional Fund Advisors LP
Building One
6300 Bee Cave Road
Austin, TX 78746 | 4,239,410(4) | 8.41% |
(1)The percent of class is based upon 50,414,864 shares of Common Stock outstanding on April 11, 2022.
(2)Based on information contained in a Schedule 13G/A, filed by BlackRock, Inc. with the SEC on February 7, 2022, to report beneficial ownership of shares of the Company’s Common Stock as of December 31, 2021, and, consequently, the beneficial ownership of BlackRock, Inc. may have changed prior to the printing of this Proxy Statement. In the Schedule 13G/A, BlackRock, Inc. reported that, through its subsidiaries (BlackRock Life Limited; Aperio Group, LLC; BlackRock Advisors, LLC; BlackRock (Netherlands) B.V.; BlackRock Fund Advisors (which was reported to beneficially own 5% or more of the outstanding shares of Common Stock); BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock Investment Management (Australia) Limited; and BlackRock Fund Managers Ltd), BlackRock, Inc. is deemed to be the beneficial owner of 9,334,889 shares of Common Stock. BlackRock, Inc. reported sole voting power as to 9,165,394 shares of Common Stock and sole dispositive power as to 9,334,889 shares of Common Stock.
(3)Based on information contained in a Schedule 13G/A, filed by The Vanguard Group with the SEC on February 9, 2022, to report beneficial ownership of shares of the Company’s Common Stock as of December 31, 2021, and, consequently, the beneficial ownership of The Vanguard Group may have changed prior to the printing of this Proxy Statement. In the Schedule 13G/A, The Vanguard Group reported shared voting power as to 61,526 shares of Common Stock, sole dispositive power as to 7,180,828 shares of Common Stock, and shared dispositive power as to 113,972 shares of Common Stock.
(4)Based on information contained in a Schedule 13G/A, filed by Dimensional Fund Advisors LP, a registered investment adviser, with the SEC on February 8, 2022, to report beneficial ownership of shares of the Company’s Common Stock as of December 31, 2021, and, consequently, the beneficial ownership of Dimensional Fund Advisors LP may have changed prior to the filing of this Proxy Statement. The Schedule 13G/A reported that Dimensional Fund Advisors LP had sole voting power as to 4,153,063 shares of Common Stock and sole dispositive power as to 4,239,410 shares of Common Stock, all of which shares of Common Stock were held in portfolios of four registered investment companies to which Dimensional Fund Advisors LP or one of its subsidiaries furnishes investment advice and of certain other commingled funds, group trusts and separate accounts for which Dimensional Fund Advisors LP or one of its subsidiaries serves as investment manager or sub-adviser. The shares of Common Stock reported were owned by the investment companies, commingled funds, group trusts and separate accounts and Dimensional Fund Advisors LP disclaimed beneficial ownership of the reported shares of Common Stock.
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| Abercrombie & Fitch Co. | 68 | 2022 Proxy Statement |
The following table furnishes the number of shares of Common Stock of the Company beneficially owned (as determined in accordance with Rule 13d-3 under the Exchange Act) by each of the current directors, by each of the director nominees, by each of the named executive officers, and by all of the current directors and executive officers as a group, as of April 11, 2022.
| | | | | | | | |
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1)(2) | Percent of Class(3) |
| | |
Kerrii B. Anderson(4) | 42,217 | * |
| Terry L. Burman | 95,877 | * |
Felix J. Carbullido(4) | 24,343 | * |
| Susie Coulter | 19,690 | * |
| Samir Desai | — | * |
Sarah M. Gallagher(4) | 29,489 | * |
James A. Goldman(4) | 16,820 | * |
Michael E. Greenlees(4) | 14,964 | * |
| Gregory J. Henchel | 28,347 | * |
| Fran Horowitz | 766,089 | 1.52% |
| Scott Lipesky | 68,521 | * |
| Helen E. McCluskey | 29,113 | * |
| Kenneth B. Robinson | 3,615 | * |
| Kristin Scott | 149,199 | * |
| Nigel Travis | 32,030 | * |
| Current directors and executive officers as a group (15 persons) | 1,320,314 | 2.62% |
* Less than 1%.
(1)Unless otherwise indicated, each individual has voting and dispositive power over the listed shares of Common Stock and such voting and dispositive power is exercised solely by the named individual or shared with a spouse.
Includes the following number of shares of Common Stock issuable by June 10, 2022 upon vesting of RSUs by June 10, 2022 or the exercise of outstanding in-the-money SARs which are currently exercisable or will become exercisable by June 10, 2022:
| | | | | |
| Name of Beneficial Owner | Aggregate Number of Shares of Common Stock Issuable(a) |
| |
| Kerrii B. Anderson | 3,615 |
| Terry L. Burman | 6,025 |
| Felix J. Carbullido | 3,615 |
| Susie Coulter | 3,615 |
| Samir Desai | — |
| Sarah M. Gallagher | 3,615 |
| James A. Goldman | 3,615 |
| Michael E. Greenlees | 3,615 |
| Gregory J. Henchel | — |
| | | | | | | | |
| 2022 Proxy Statement | 69 | Abercrombie & Fitch Co. |
| | | | | |
| Name of Beneficial Owner | Aggregate Number of Shares of Common Stock Issuable(a) |
| |
| Fran Horowitz | 92,051 |
| Scott Lipesky | — |
| Helen E. McCluskey | 3,615 |
| Kenneth B. Robinson | 3,615 |
| Kristin Scott | — |
| Nigel Travis | 3,615 |
| Current directors and executive officers as a group (15 persons) | 130,611 |
(a)The Company has included for this purpose the gross number of shares of Common Stock deliverable upon the vesting of RSUs or the exercise of outstanding in-the-money SARs, but the actual number of shares received will be less as a result of the payment of applicable withholding taxes. The numbers reported do not include any unvested RSUs or any unvested in-the-money SARs held by directors or executive officers (other than those specified in this footnote).
(2)The actual number of shares of Common Stock that would be acquired upon exercise of SARs will vary depending on the fair market value of the Company’s Common Stock at the time of exercise and the payment of applicable withholding taxes.
(3)The percent of class is based upon the sum of 50,414,864 shares of Common Stock outstanding on April 11, 2022 and the number of shares of Common Stock, if any, as to which the named individual or group has the right to acquire beneficial ownership by June 10, 2022, either (i) through the vesting of RSUs or (ii) upon the exercise of SARs which are currently exercisable or will become exercisable by June 10, 2022, assuming the $32.24 fair market value of a share of Common Stock at April 11, 2022 and base prices of the SARs is less than such fair market value.
(4)The “Amount and Nature of Beneficial Ownership” does not include the following number of shares of Common Stock credited to the bookkeeping accounts of the following directors under the Directors’ Deferred Compensation Plan or that will be credited to such bookkeeping accounts by June 10, 2022 as a result of the deferral of RSUs which are to vest by June 10, 2022: Ms. Anderson — 2,151 shares; Mr. Carbullido — 2,151 shares; Ms. Gallagher — 26,073 shares; Mr. Goldman — 3,771 shares; Mr. Greenlees — 64,710 shares; and all current directors as a group — 98,856 shares. While the directors have an economic interest in these shares, each director’s only right with respect to his or her bookkeeping account (and the amounts allocated thereto) is to receive a distribution of the whole shares of Common Stock represented by the share equivalent credited to his or her bookkeeping account (plus cash representing the value of fractional shares) in accordance with the terms of the Directors’ Deferred Compensation Plan.
Delinquent Section 16(a) Reports
To our knowledge, based solely on our review of the Section 16(a) forms filed electronically with the SEC during Fiscal 2021 and written representations that no other forms were required, with the exception of one inadvertently late Form 4 filing, reporting one transaction, for each of Kerrii B. Anderson, Terry L. Burman, Felix J. Carbullido, Susie Coulter, Sarah M. Gallagher, James A. Goldman, Michael E. Greenlees, Helen E. McCluskey, Nigel Travis, Archie M. Griffin, and Charles R. Perrin, all reporting persons timely complied with the filing requirements of Section 16(a) of the Exchange Act.
| | | | | | | | |
| Abercrombie & Fitch Co. | 70 | 2022 Proxy Statement |
Equity Compensation Plans
The Company has two primary share-based compensation plans: (i) the 2016 Long-Term Incentive Plan for Directors LTIP(the “2016 Directors LTIP”) (with 750,000900,000 shares of the Company’s Common Stock currently authorized for issuance), under which the Company is authorized to grant stock options, SARs, restricted stock, RSUs and deferred stock awards tonon-associate directors of the Company; and (ii) the 2016 Associates LTIP (with 6,900,00010,350,000 shares of the Company’s Common Stock currently authorized for issuance), under which the Company is authorized to grant stock options, SARs, restricted stock, RSUs, and PSAs to associates of the Company and its subsidiaries. The Company also has four other share-based compensation plans under which the Company granted stock options, SARs, RSUs, and PSAs to associates of the Company and itsour subsidiaries and stock options and RSUs tonon-associate directors of the Company in prior years: (i) the 1996 Stock Plan forNon-Associate Directors (1998 Restatement) (the “1998 Director Stock Plan”); (ii) the 2003 Stock Plan forNon-Associate Directors (the “2003 Director Stock Plan”); (iii) the 2005 LTIP; and (iv) the 2007 LTIP. Since June 16, 2016, the Company has only issued awards under the 2016 Associates LTIP and the 2016 Directors LTIP. Any shares of Common Stock distributable in respect of amounts deferred bynon-associate directors under the Directors’ Deferred Compensation Plan will be distributed: (i) under the 2016 Directors LTIP in respect of deferred compensation allocated tonon-associate directors’ bookkeeping accounts on and after June 16, 2016; (ii) under the 2005 LTIP in respect of deferred compensation allocated tonon-associate directors’ bookkeeping accounts between August 1, 2005 and June 15, 2016; (iii) under the 2003 Director Stock Plan in respect of deferred compensation allocated tonon-associate directors’ bookkeeping accounts between May 22, 2003 and July 31, 2005; and (iv) under the 1998 Director Stock Plan in respect of deferred compensation allocated to thenon-associate directors’ bookkeeping accounts prior to May 22, 2003. The following table summarizes equity compensation plan information forfor the 1998 Director Stock Plan, the 2005 LTIP, the 2007 LTIP, the 2016 Associates LTIP and the 2016 Directors LTIP, all stockholder-approved plans, as a group, and for the 2003 Director Stock Plan, anon-stockholder-approved plan, in each case as of February 2, 2019: | | | | | | | | | | | | |
| | | Equity Compensation Plan Information | |
Plan category | | Number of shares
underlying outstanding
options, restricted stock
units and rights(a) | | | Weighted-average exercise
price of shares
underlying outstanding
options and rights(b) | | | Number of shares
remaining available for future
issuance under equity
compensation plans
(excluding shares reflected
in(a))(c) | |
Equity compensation plans approved by stockholders(1) | | | 4,427,779 | (3) | | $ | 37.81 | (4) | | | 3,370,970 | (5) |
Equity compensation plans not approved by stockholders(2) | | | 2,442 | (6) | | $ | 0.00 | (7) | | | — | (8) |
Total | | | 4,430,221 | | | $ | 37.81 | | | | 3,370,970 | |
(1) | January 29, 2022: | | | | | | | | | | | | | Plan Category | Number of Shares to be Issued Upon Exercise/Vesting of Outstanding Options, Restricted Stock Units, Warrants, and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights (b) ($) | Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares Reflected in column (a)) (c) | | | | | Equity compensation plans approved by stockholders (1) | 4,015,434 | ⁽³⁾ | 32.55 | ⁽⁴⁾ | 3,848,272 | ⁽⁵⁾ | Equity compensation plans not approved by stockholders (2) | 2,604 | ⁽⁶⁾ | — | ⁽⁷⁾ | — | ⁽⁸⁾ | | Total | 4,018,038 | | 32.55 | | 3,848,272 | |
(1)The 1998 Director Stock Plan was terminated as of May 22, 2003 in respect of future grants of options and issuances and distributions of shares of Common Stock other than issuances of shares of Common Stock upon the exercise of options granted under the 1998 Director Stock Plan which remained outstanding as of May 21, 2003 and issuances and distributions of shares of Common Stock in respect of deferred compensation allocated to non-associate directors’ bookkeeping accounts under the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) as of May 21, 2003. As of January 29, 2022, no options granted under the 1998 Director Stock Plan remained outstanding. The 2005 LTIP was terminated as of June 15, 2015 in respect of future grants of awards and issuances and distributions of shares of Common Stock other than issuances of shares of Common Stock upon the exercise of options and SARs and the vesting of RSUs and PSAs granted under the 2005 LTIP which remained outstanding as of June 15, 2015 and issuances and distributions of shares of Common Stock in respect of deferred compensation allocated to non-associate directors’ bookkeeping accounts under the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) as of June 15, 2016 and distributable in the form of shares of Common Stock. The 2007 LTIP was terminated as of June 16, 2016 in respect of future grants of awards and issuances and distributions of shares of Common Stock other than issuances of shares of Common Stock upon the exercise of options and SARs and the vesting of RSUs and PSAs granted under the 2007 LTIP which remained outstanding as of June 16, 2016. (2)The 2003 Director Stock Plan was terminated as of June 13, 2007 in respect of future grants of awards and issuances and distributions of shares of Common Stock other than: (a) issuances of shares of Common Stock upon the exercise of options or the vesting of stock units granted under the 2003 Director Stock Plan; and (b) issuances and distributions of shares of Common Stock in respect of deferred compensation allocated to non-associate directors’ bookkeeping accounts under the Directors’ Deferred Compensation Plan (and dividends applied to previous | | | | | | | | | | 2022 Proxy Statement | 71 | Abercrombie & Fitch Co. |
EQUITY COMPENSATION PLANS deferrals) as of July 31, 2005 and distributable in the form of shares of Common Stock. As of January 29, 2022, no options or stock units granted under the 2003 Director Stock Plan remained outstanding. (3)Represents the number of underlying shares of Common Stock associated with outstanding SARs, RSUs, PSAs, and share equivalents under stockholder-approved plans and includes 2,539 share equivalents attributable to compensation deferred by a former non-associate director participating in the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) and distributable in the form of shares of Common Stock under the 1998 Director Stock Plan, 24,483 SARs granted under the 2005 LTIP, 80,854 share equivalents attributable to compensation deferred by non-associate directors participating in the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) and distributable in the form of shares of Common Stock under the 2005 LTIP, 1,560 RSUs granted under the 2007 LTIP, 211,656 SARs granted under the 2007 LTIP, 2,515,316 RSUs granted under the 2016 Associates LTIP, 1,020,333 PSAs granted under the 2016 Associates LTIP (including 283,200 PSAs granted in Fiscal 2019 for the Fiscal 2019 to Fiscal 2021 PSA cycle (the Relative TSR tranche of these PSAs was earned at 120% of target, the Average ROIC tranche was earned at 200% of target, and the Net Sales CAGR tranche was earned at 6% of target but the PSAs earned were not distributed as of January 29, 2022)), 15,364 RSUs granted under the 2016 Directors LTIP and 143,329 share equivalents attributable to compensation deferred by non-associate directors participating in the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) and distributable in the form of shares of Common Stock under the 2016 Directors LTIP. Outstanding PSAs granted under the 2016 Associates LTIP reflect actual or target award amounts as of January 29, 2022. Of the PSAs that were outstanding as of January 29, 2022, a maximum of 1,655,084 PSAs can be earned under the 2016 Associates LTIP. (4)Represents the weighted-average exercise price of SARs outstanding under the 2005 LTIP, the 2007 LTIP, and the 2016 Associates LTIP and the weighted-average price of share equivalents attributable to compensation deferred by non-associate directors participating in the Directors’ Deferred Compensation Plan distributable in the form of shares of Common Stock under the 1998 Director Plan, the 2005 LTIP, or the 2016 Directors LTIP. See footnote (3) above with respect to RSUs and PSAs granted under the 2005 LTIP, the 2007 LTIP, the 2016 Associates LTIP, and the 2016 Directors LTIP. The weighted-average exercise price does not take these awards into account. (5)Represents the number of shares of Common Stock remaining available for future issuance under stockholder-approved equity compensation plans and is comprised of 3,618,052 shares of Common Stock remaining available under the 2016 Associates LTIP and 230,220 shares of Common Stock other than issuances of Common Stock upon the exercise of options granted under the 1998 Director Stock Plan which remained outstanding as of May 21, 2003 and issuances and distributions of shares of Common Stock in respect of deferred compensation allocated tonon-associate directors’ bookkeeping accounts under the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) as of May 21, 2003. As of February 2, 2019, no options granted under the 1998 Director Stock Plan remained outstanding. The 2005 LTIP was terminated as of June 15, 2015 in respect of future grants of awards and issuances and distributions of shares of Common Stock other than issuances of Common Stock upon the exercise of options and SARs and the vesting of RSUs and PSAs granted under the 2005 LTIP which remained outstanding as of June 15, 2015 and issuances and distributions of shares of Common Stock in respect of deferred compensation allocated tonon-associate directors’ bookkeeping accounts under the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) as of June 15, 2016 and distributable in the form of shares of Common Stock. The 2007 LTIP was terminated as of June 16, 2016 in respect of future grants of awards and issuances and distributions of shares of Common Stock other than issuances of Common Stock upon the exercise of options and SARs and the vesting of RSUs and PSAs granted under the 2007 LTIP which remained outstanding as of June 16, 2016. |
(2) | The 2003 Director Stock Plan was terminated as of June 13, 2007 in respect of future grants of awards and issuances and distributions of shares of Common Stock other than: (a) issuances of shares of Common Stock upon the exercise of options or the vesting of stock units
|
| granted under the 2003 Director Stock Plan; and (b) issuances and distributions of shares of Common Stock in respect of deferred compensation allocated tonon-associate directors’ bookkeeping accounts under the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) as of July 31, 2005 and distributable in the form of shares of Common Stock. As of February 2, 2019, no options or stock units granted under the 2003 Director Stock Plan remained outstanding. |
(3) | Represents the number of underlying shares of Common Stock associated with outstanding SARs, RSUs, PSAs and share equivalents under stockholder-approved plans and includes 2,381 share equivalents attributable to compensation deferred bynon-associate directors participating in the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) and distributable in the form of shares of Common Stock under the 1998 Director Stock Plan, 454,233 SARs granted under the 2005 LTIP, 80,137 share equivalents attributable to compensation deferred bynon-associate directors participating in the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) and distributable in the form of shares of Common Stock under the 2005 LTIP, 323,990 RSUs granted under the 2007 LTIP, 112,338 PSAs granted in Fiscal 2016 under the 2007 LTIP for the Fiscal 2016 — Fiscal 2018 PSA cycle (the Relative TSR tranche of these PSAs was earned at 20.0% of target but not distributed as of February 2, 2019 and the Average ROIC tranche of these PSAs was forfeited but such forfeiture was not processed as of February 2, 2019), 587,634 SARs granted under the 2007 LTIP, 1,651,098 RSUs granted under the 2016 Associates LTIP, 1,125,159 PSAs granted under the 2016 Associates LTIP (including 34,451 PSAs granted in Fiscal 2016 for the Fiscal 2016 — Fiscal 2018 PSA cycle (the Relative TSR tranche of these PSAs was earned at 20.0% of target but not distributed as of February 2, 2019 and the Average ROIC tranche of these PSAs was forfeited but such forfeiture was not processed as of February 2, 2019)), 44,942 RSUs granted under the 2016 Directors LTIP and 45,867 share equivalents attributable to compensation deferred bynon-associate directors participating in the Directors’ Deferred Compensation Plan (and dividends applied to previous deferrals) and distributable in the form of shares of Common Stock under the 2016 Directors LTIP. Outstanding PSAs granted under the 2007 LTIP and the 2016 Associates LTIP reflect actual or target award amounts as of February 2, 2019. Of the PSAs that were outstanding as of February 2, 2019, a maximum of 224,676 PSAs and 1,914,424 PSAs can be earned under the 2007 LTIP and the 2016 Associates LTIP, respectively.
|
(4) | Represents the weighted-average exercise price of SARs outstanding under the 2005 LTIP, the 2007 LTIP and the 2016 Associates LTIP and the weighted-average price of share equivalents attributable to compensation deferred bynon-associate directors participating in the Directors’ Deferred Compensation Plan distributable in the form of shares of Common Stock under the 1998 Director Plan, the 2005 LTIP or the 2016 Directors LTIP. See note (3) above with respect to RSUs and PSAs granted under the 2005 LTIP, the 2007 LTIP, the 2016 Associates LTIP and the 2016 Directors LTIP. The weighted-average exercise price does not take these awards into account.
|
(5) | Represents the number of shares remaining available for future issuance under stockholder-approved equity compensation plans and is comprised of 2,990,514 shares remaining available under the 2016 Associates LTIP and 380,456 shares remaining available under the 2016 Directors LTIP. Under the 2016 Associates LTIP and the 2016 Directors LTIP, shares available for future issuance are reduced by the maximum number of PSAs which may be earned under each outstanding award.
|
| Under the 2016 Associates LTIP and the 2016 Directors LTIP, shares available for future issuance are measured net of shares expected to be retained by the Company to cover tax withholdings upon vesting or exercise, which have been calculated using an estimated tax rate of 33%. On a net basis, as of February 2, 2019, there were 3,906,679 shares available for future issuance under the 2016 Associates LTIP and 380,456 shares available for future issuance under the 2016 Directors LTIP.
|
| Except as described in footnote (3) to this table, no further shares of Common Stock may be issued or distributed under the 1998 Director Stock Plan, the 2005 LTIP or the 2007 LTIP.
|
(6) | Includes 2,442 outstanding share equivalents attributable to compensation deferred bynon-associate directors participating in the Directors’ Deferred Compensation Plan (and dividends applied to pervious deferrals) and distributable in the form of shares of Common Stock under the 2003 Director Stock Plan.
|
(7) | Represents the weighted-average price of share equivalents attributable to compensation deferred bynon-associate directors participating in the Directors’ Deferred Compensation Plan distributable in the form of shares of Common Stock under the 2003 Director Stock Plan.
|
(8) | Except as described in footnote (6) to this table, no further shares of Common Stock may be issued or distributed under the 2003 Director Stock Plan.
|
PROPOSAL 3 — APPROVAL OF AMENDMENT TO THE
ABERCROMBIE & FITCH CO. 2016 LONG-TERM INCENTIVE PLAN FOR
ASSOCIATES TO AUTHORIZE 2,200,000 ADDITIONAL SHARES
On April 4, 2016, the Board unanimously adopted, subject to approval by our stockholders, the 2016 Associates LTIP. At the 2016 Annual Meeting, our stockholders approved the 2016 Associates LTIP, as proposed, including approval of a reserve of 3,500,000 shares of Common Stock available for future issuance are reduced by the grantmaximum number of awardsPSAs which may be earned under the 2016 Associates LTIP. On August 31, 2016, the Board amendedeach outstanding award.
Under the 2016 Associates LTIP
and the 2016 Directors LTIP, shares of Common Stock available for future issuance are measured net of shares of Common Stock expected to
allow our Compensation and Organization Committeebe retained by the Company to
delegate authority to grant awardscover tax withholdings upon vesting or exercise, which have been calculated using an estimated tax rate of 35%. On a net basis, as of January 29, 2022, there were 5,204,527 shares of Common Stock available for future issuance under the 2016 Associates LTIP
within limits established by our Compensation and
Organization Committee and subject to the other requirements of the 2016 Associates LTIP. On April 3, 2017, the Board unanimously adopted, subject to approval by our stockholders, amendments to the 2016 Associates LTIP authorizing 1,200,000 additional230,220 shares of Common Stock
and explicitly prohibiting the current payment of dividends in any form on unvested equity awards. At the 2017 Annual Meeting, our stockholders approved the proposed amendments. On April 9, 2018, the Board unanimously adopted, subject to approval by our stockholders, an amendment to the 2016 Associates LTIP authorizing 2,200,000 additional shares of Common Stock. At the 2018 Annual Meeting, our stockholders approved the proposed amendment. The 2016 Associates LTIP is the only stock incentive plan maintained by the Company under which associates of the Company and its subsidiaries are eligible to receiveavailable for future
equity awards.Additional shares are neededissuance under the 2016 Associates LTIP Directors LTIP.
Except as described in footnote (3) to continue to make grants to associates of the Company and its subsidiaries consistent with historic grant practices. On April 8, 2019, based upon the recommendation of our Compensation and Organization Committee, the Board unanimously adopted, subject to approval by our stockholders, an amendment to the 2016 Associates LTIP which would authorize additional this table, no further shares of Common Stock for delivery in connection with awardsmay be issued or distributed under the 2016 Associates1998 Director Stock Plan, the 2005 LTIP, or the 2007 LTIP. No changes
(6)Includes 2,604outstanding share equivalents attributable to the 2016 Associates LTIP are proposed for considerationcompensation deferred by our stockholders at the Annual Meeting other than the increasea former non-associate director participating in the authorized numberDirectors’ Deferred Compensation Plan (and dividends applied to previous deferrals) and distributable in the form of shares of Common Stock under the 2003 Director Stock Plan.
(7)Represents the weighted-average price of share equivalents attributable to compensation deferred by 2,200,000 additional sharesa former non-associate director participating in the Directors’ Deferred Compensation Plan distributable in the form of Common Stock.As of April 5, 2019, shares of Common Stock which may be delivered under all six of the Company’s equity compensation plans, including (i) the 1998 Director Stock Plan; (ii) the 2003 Director Stock Plan; (iii)Plan.
(8)Except as described in footnote (6) to this table, no further shares of Common Stock may be issued or distributed under the 2005 LTIP; (iv) the 2007 LTIP; (v)2003 Director Stock Plan.
| | | | | | | | |
| Abercrombie & Fitch Co. | 72 | 2022 Proxy Statement |
PROPOSAL 3
Approve an Amendment to the 2016 Directors LTIP; and (vi) theLong-Term Incentive Plan for Associates to Authorize 315,000 Additional Shares
BACKGROUND OF THE ABERCROMBIE & FITCH CO. 2016
AssociatesASSOCIATES LTIP
are shown below: | | |
| |
Use of Shares Which May Be Delivered Under
All Equity Compensation Plans | | Number of Shares as of
April 5, 2019 |
| |
• Total outstanding SARs, with a weighted-average exercise price of $38.82 per share and a weighted-average remaining term of 3.38 years — SARs are held solely by associates
| | 982,529 |
| |
• Total outstanding full value awards, including time-vested RSUs, performance-based RSUs (reflecting the maximum number of performance-based RSUs which may be earned under each outstanding award) and PSAs (reflecting the maximum number of PSAs which may be earned under each outstanding award) — performance-based RSUs and PSAs are held solely by associates
| | 4,461,271 |
| |
• Total shares available for grant under the 2016 Directors LTIP
| | 375,563 |
• Total shares available for grant under the 2016 Associates LTIP
| | 1,998,975 |
As of the end of Fiscal 2018, the Company’s three-year average burn rate was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Fiscal Year | | Time-Vested
RSUs Granted | | | Performance-
Based RSUs
Granted | | | PSAs Earned | | | Weighted Avg.
# Shares
Outstanding | | | Burn
Rate | | | Burn Rate
(ISS methodology)(1) | |
| | | | | | | |
2018 | | | 796,624 | | | | — | | | | 18,125 | | | | 67,350,065 | | | | 1.21% | | | | 1.81 | % |
| | | | | | | |
2017 | | | 1,698,803 | | | | — | | | | 7,185 | | | | 68,390,913 | | | | 2.49% | | | | 3.74 | % |
| | | | | | | |
2016 | | | 1,182,198 | | | | — | | | | — | | | | 67,878,485 | | | | 1.74% | | | | 2.61 | % |
| | | | | | |
| | | | | | | | | | | | | |
| 3-Year
Average: |
| | | 1.82% | | | | 2.72 | % |
(1) | Multiplies the number of time-vested RSUs, performance-based RSUs and PSAs by a factor of 1.5 when calculating burn rate.
|
Purpose
The purpose of the 2016 Associates LTIP is to promote our long-term financial success and increase stockholder value by continuing to motivate performance by our employees, or, as we call them, “associates”associates through incentive compensation. We believe that equity-based awards are a competitive necessity in our industry and are essential to our continued ability to recruit and retain the individuals needed to successfully execute our business plan. The 2016 Associates LTIP serves these purposes by making equity-based awards available for grant to eligible participants in the form of:
of (i) nonqualified stock options to purchase shares of Common Stock (“NQSOs”);
Incentive, (ii) incentive stock options to purchase shares of Common Stock (“ISOs” and, together with NQSOs, “Options”);
, (iii) SARs, (iv) restricted shares of Common Stock (“Restricted Stock”);, and
in each case, together with related rights and interestinterests therein.
Corporate Governance Practices
We are asking our stockholders to approve an amendment to the 2016 Associates LTIP to increase the number of shares authorized for issuance thereunder by 315,000 shares.
The 2016 Associates LTIP includes a number of provisions that we believe reflect best practices and protect the interests of our stockholders. These provisions include:
•No Discounted Options or SARs - Options and SARs may not be granted with an exercise price less than the fair market value of our Common Stock on the date of grant. On April 15, 2019, the closing price per share of our Common Stock on NYSE was $26.90.
•No Repricing Without Stockholder Approval - At any time when the exercise price of an Option or an SAR is above the market price of our Common Stock, we cannot, without stockholder approval, “reprice” such Option or SAR by reducing the exercise price or exchanging such Option or SAR for cash or other awards (including a new Option or SAR) at a reduced exercise price.
•Independent Committee Administration - The 2016 Associates LTIP is administered by our Compensation and Organization Committee, whose members satisfy the NYSE Rules for independence, the disinterested administration requirements of Rule16b-3 under the Exchange Act, and the “outside director” requirements of Section 162(m).
•Minimum Vesting Requirements
- All Restricted Stock and RSUs must meet minimum vesting requirements, subject to certain limited exceptions. For Restricted Stock or RSUs that are performance-based, performance must be measured over a period of at least one year and Restricted Stock or RSUs that are not performance-based must vest over a period of at least three years, in each case with certain limited exceptions. For example, vesting may occur earlier in the event of an associate’s death or total disability or termination of an associate’s employment in connection with a change of control of the Company. In addition, up to 5% of the shares of Common Stock reserved under the 2016 Associates LTIP may be issued with a shorter vesting schedule.
Section 162(m) Eligibility
Prior to the TCJA becoming effective, our Compensation and Organization Committee had the flexibility to approve awards eligible for treatment as “performance-based compensation” under Section 162(m).
•No Annual “Evergreen” Provision - The 2016 Associates LTIP provides a specific maximum share limitation and does not provide for an annual, automatic increase in the number of shares of Common Stock available for future awards.
•Annual Limit on Awards to Participants - Participants under the 2016 Associates LTIP are subject to an annual limitation on the value of awards that may be granted to them.
Summary
| | | | | | | | |
| 2022 Proxy Statement | 73 | Abercrombie & Fitch Co. |
PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016 ASSOCIATES LTIP
Certain milestones of the 2016 Associates LTIP are as Proposedfollows:
•On April 4, 2016, the Board unanimously adopted, subject to approval by our stockholders, the 2016 Associates LTIP. At the 2016 Annual Meeting, our stockholders approved the 2016 Associates LTIP, as proposed, including approval of a reserve of 3,500,000 shares of Common Stock available for the grant of awards under the 2016 Associates LTIP.
•On August 31, 2016, the Board amended the 2016 Associates LTIP to allow our Compensation Committee to delegate authority to grant awards under the 2016 Associates LTIP within limits established by our Compensation Committee and subject to the other requirements of the 2016 Associates LTIP.
•On April 3, 2017, the Board unanimously adopted, subject to approval by our stockholders, amendments to the 2016 Associates LTIP authorizing 1,200,000 additional shares of Common Stock and explicitly prohibiting the current payment of dividends (or dividend equivalents) in any form on unvested equity awards. At the 2017 Annual Meeting, our stockholders approved the proposed amendments.
•On April 9, 2018, the Board unanimously adopted, subject to approval by our stockholders, an amendment to the 2016 Associates LTIP authorizing 2,200,000 additional shares of Common Stock. At the 2018 Annual Meeting, our stockholders approved the proposed amendment.
•On April 8, 2019, the Board unanimously adopted, subject to approval by our stockholders, an amendment to the 2016 Associates LTIP authorizing 2,200,000 additional shares of Common Stock. At the 2019 Annual Meeting, our stockholders approved the proposed amendment.
•On March 28, 2020, the Board unanimously adopted, subject to approval by our stockholders, an amendment to the 2016 Associates LTIP authorizing 150,000 additional shares of Common Stock. At the 2020 Annual Meeting, our stockholders approved the proposed amendment.
•On April 17, 2021, the Board unanimously adopted, subject to approval by our stockholders, an amendment to the 2016 Associates LTIP authorizing 1,100,000 additional shares of Common Stock. At the 2021 Annual Meeting, our stockholders approved the proposed amendment.
If the proposed amendment to authorize an additional 315,000 shares of Common Stock is approved by our stockholders at the Annual Meeting, there will be Amendedan aggregate of 10,665,000 shares of
Common Stock available for the grant of awards under the 2016 Associates LTIP, which may consist of: (i) treasury shares; (ii) authorized but unissued shares of Common Stock not reserved for any other purpose; or (iii) shares of Common Stock purchased by us in the open market for such purpose. REASONS TO APPROVE THE AMENDMENT TO THE 2016 ASSOCIATES LTIP
Additional shares of Common Stock are needed under the 2016 Associates LTIP to continue to make grants to associates of the Company and our subsidiaries consistent with historic grant practices. Effective April 18, 2022, based upon the recommendation of our Compensation Committee, the Board unanimously adopted, subject to approval by our stockholders, an amendment to the 2016 Associates LTIP which would authorize 315,000 additional shares of Common Stock for delivery in connection with awards under the 2016 Associates LTIP.
No changes to the 2016 Associates LTIP are proposed for consideration by our stockholders at the Annual Meeting other than the increase in the authorized number of shares of Common Stock by 315,000 additional shares of Common Stock.
Determination of Request for Shares
In determining the amount of additional shares to request for authorization for issuance under our 2016 Associates LTIP, the Board considered a number of factors, including the following:
•Historical Burn Rate. As of the end of Fiscal 2021, our three-year average annual equity grant rate, or “burn rate,” was 2.60%. Our burn rate calculated based on our understanding of the methodology utilized by the Proxy Advisory Services division of Institutional Shareholder Services, Inc. (“ISS”), was 3.78%. See the table below for additional details. These amounts are not necessarily indicative of the shares that might be awarded in the future under the 2016 Associate LTIP.
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PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016 ASSOCIATES LTIP
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| Fiscal Year | Service-Vested RSUs Granted | PSAs Granted | PSAs Earned | Weighted Average Number of Shares Outstanding | Burn Rate (As Granted) | Burn Rate (ISS methodology)(1) |
| | | | | | |
| 2021 | 730,446 | 236,472 | 100,634 | 59,596,651 | 1.62% | 2.09% |
| 2020 | 2,299,339 | 519,905 | 831,751 | 62,550,955 | 4.51% | 7.51% |
| 2019 | 731,886 | 350,222 | 18,125 | 64,427,620 | 1.68% | 1.75% |
| 3-Year Average | | | | | 2.60% | 3.78% |
(1) Multiplies the number of service-vested RSUs (when granted) and PSAs (when earned/vested) by a factor of 1.5 when calculating burn rate.
•Overhang Percentage. As of April 11, 2022, unvested RSUs and unearned/unvested PSAs held by associates and directors and total outstanding SARs held by associates represented 8.31% of diluted shares of Common Stock. Total shares remaining available for grant to our associates under the 2016 Associate LTIP as of April 11, 2022 represented an additional 5.42% of diluted shares of Common Stock, and total shares remaining available for grant to our non-associate directors under the 2016 Directors LTIP as of April 11, 2022 represented an additional 0.45% of diluted shares of Common Stock. The aforementioned shares combine for a total overhang from the 2016 Associate LTIP and 2016 Directors LTIP of 5.83% of diluted shares of Common Stock, as of April 11, 2022. The requested additional 315,000 shares would represent incremental dilution of 0.55% of Common Shares outstanding as of April 11, 2022. The following table details the number of shares outstanding used for the above overhang calculation:
| | | | | |
| Overhang Calculation | As of April 11, 2022 |
| |
| Full value awards outstanding | 4,365,510 |
| SARS outstanding | 202,839 |
| Weighted average exercise price of outstanding SARs | $29.24 |
| Weighted average remaining term of outstanding SARs (in years) | 2.45 |
| Total shares available for future grants under the 2016 Associates LTIP | 2,891,307 |
| Total shares available for future grants under the 2016 Directors LTIP | 230,220 |
| Additional shares requested under the 2016 Associates LTIP | 315,000 |
| Shares of Common Stock outstanding | 50,414,864 |
Shares Under All Equity Compensation Plans
As of April 11, 2022, shares of Common Stock which may be delivered under all six of the Company’s equity compensation plans, including (i) the 1998 Director Stock Plan; (ii) the 2003 Director Stock Plan; (iii) the 2005 LTIP; (iv) the 2007 LTIP; (v) the 2016 Directors LTIP; and (vi) the 2016 Associates LTIP, are shown below: | | | | | |
| Use of Shares Which May Be Delivered Under All Equity Compensation Plans | Number of Shares as of April 11, 2022 |
| |
| Total outstanding SARs, with a weighted-average exercise price of $29.24 per share and a weighted-average remaining term of 2.5 years — SARs are held solely by associates | 202,839 |
| Total unvested RSUs and PSAs, reflecting the maximum number of shares which may be earned under each award — performance-based PSAs are held solely by associates | 4,365,510 |
| Total shares available for future grants under the 2016 Directors LTIP | 230,220 |
| Total shares available for future grants under the 2016 Associates LTIP | 2,891,307 |
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PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016 ASSOCIATES LTIP
SUMMARY OF THE 2016 ASSOCIATES LTIP, AS PROPOSED TO BE AMENDED
The material features of the 2016 Associates LTIP, as it is proposed to be amended, are summarized below. This summary is qualified in its entirety by reference to the complete text of the 2016 Associates LTIP, as it is proposed to be amended, which is attached to this Proxy Statement asAppendix AB.
Administration
Our Compensation Committee administers the 2016 Associates LTIP. Our Compensation Committee is comprised of at least three directors, each of whom must be independent under the applicable NYSE Rules, an “outside director” (within the meaning of Section 162 (m)) and a “non-employee” director (within the meaning of Rule 16b-3 under the Exchange Act).
In its capacity as plan administrator, our Compensation Committee determines which participants are granted awards, the type of each award granted and the terms and conditions of each award. Our Compensation Committee also has full power and authority to: (i) establish, amend, and rescind rules and regulations relating to the 2016 Associates LTIP; (ii) interpret the 2016 Associates LTIP and all related award agreements; and (iii) make any other determinations that our Compensation Committee deems necessary or desirable for the administration of the 2016 Associates LTIP. Any action taken by our Compensation Committee is final, binding and conclusive on all persons interested in the 2016 Associates LTIP.
The 2016 Associates LTIP specifies the conditions under which our Compensation Committee may act through subcommittees or delegate the administration of the 2016 Associates LTIP to one or more officers or associates of the Company.
With respect to each award granted under the 2016 Associates LTIP, the Company has entered and will continue to enter into a written or electronic award agreement with the participant which describes the terms and conditions of the award, including: (i) the type of award and when and how it may be exercised or earned; (ii) any exercise price associated with the award; (iii) how the award will or may be settled; and (iv) any other applicable terms and conditions affecting the award.
Available Shares of Common Stock
Subject to the adjustments discussed below, the aggregate number of shares of Common Stock available for the grant of awards under the 2016 Associates LTIP, if the proposed amendment to authorizeauthorize an additional 2,200,000315,000 shares of Common Stock is approved by our stockholders at the Annual Meeting, will be 9,100,00010,665,000 shares of CommonCommon Stock. Shares of Common Stock issued under the 2016 Associates LTIP may consist of: (i) treasury shares; (ii) authorized but unissued shares of Common Stock not reserved for any other purpose; or (iii) shares of Common Stock purchased by us in the open market for such purpose. Our Compensation and Organization Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting, and make adjustments as described below. Except as described below, to the extent that an award grantedfollowing shares of Common Stock will not be counted against the number of shares available for the grant of awards under the 2016 Associates LTIPLTIP:
•Shares retained by the Company, or tendered by an associate, in connection with an award that expires or is forfeited, cancelled, surrendered, or otherwise terminated without issuance of shares to anthe associate, settled only in cash, or settled by the issuance of fewer shares than the number underlying the award, the shares retained by or tendered to the Company will be available under the 2016 Associates LTIP. award;
•Shares that are withheld from an award of Restricted Stock or RSUs granted under the 2016 Associates LTIP to cover withholding tax obligations related to that award or shares that are separately tendered by an associate (either by delivery or attestation) in payment of such taxes will be deemed to constitute shares not delivered totaxes; and
•Shares issued or issuable in connection with an award granted through the associate and will be availableassumption of, or in substitution for, future grants underan outstanding award granted by a company or business acquired by the 2016 Associates LTIP. Company or a subsidiary or affiliate of the Company or with which the Company or a subsidiary or affiliate of the Company merges, consolidates, or enters into a similar corporate transaction.
Shares that are withheld, or that are tendered by an associate (either by delivery or attestation), in connection with an award of Options or SARs granted under the 2016 Associates LTIP to cover withholding tax obligations related to that award or the exercise price of that award, will be deemed to constitute shares delivered to the associate and will not be available for future grants under the 2016 Associates LTIP. For purposes of clarity, upon the exercise of an Option or SAR, the gross number of shares exercised, and not solely the net number of shares delivered upon such exercise, will be treated as issued pursuant to the 2016 Associates LTIP and the shares subject to the exercised Option or SAR that are not issued or delivered upon such exercise
will not be available for future grants under the 2016 Associates LTIP. Additionally, in the case of any award granted through the assumption of, or in substitution for, an outstanding award granted by a company or business acquired by the Company or a subsidiary or affiliate of the Company or with which the Company or a subsidiary or affiliate of the Company merges, consolidates or enters into a similar corporate transaction, shares issued or issuable in connection with such substitute award will not be counted against the number of shares reserved under the
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PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016
Associates LTIP.ASSOCIATES LTIP
The minimum vesting and minimum exercisability conditions described below with respect to each type of award need not apply with respect to up to an aggregate of 5% of the shares authorized under the 2016 Associates LTIP, which may be granted (or regranted upon forfeiture) in any form permitted under the 2016 Associates LTIP without regard to such minimum vesting or minimum exercisability requirements.
During any calendar year during any part of which the 2016 Associates LTIP is in effect, our Compensation
and Organization Committee may not grant any participant one or more awards of any type covering more than 1,000,000 shares of Common Stock.
In the event of any Common Stock dividend, Common Stock split, recapitalization, merger, reorganization, consolidation, combination,
spin-off, special and
non-recurring distribution of assets to stockholders, exchange of shares of Common Stock, or any other corporate transaction or event affecting the Common Stock, our Compensation
and Organization Committee will make such substitutions and adjustments as our Compensation
and Organization Committee deems equitable and appropriate to: (i) the number of shares of Common Stock that may be issued under the 2016 Associates LTIP; (ii) any Common Stock-based limits imposed under the 2016 Associates LTIP; and (iii) the exercise price, number of shares of Common Stock and other terms or limitations applicable to outstanding awards.
In addition, our Compensation
and Organization Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, awards in recognition of unusual or
non-recurring events or in response to changes in applicable laws, regulations, or accounting principles.
However, no such adjustment may be made if and to the extent the existence of the authority to make the same would cause an award intended to qualify as “performance-based compensation” under Section 162(m) to fail to do so.Administration
Eligibility
Our Compensation
and Organization Committee administers the 2016 Associates LTIP. Our Compensation and Organization Committee is comprised of at least two directors, each of whom must be independent under the applicable NYSE Rules, an “outside director” (within the meaning of Section 162(m)) and a“non-employee” director (within the meaning of Rule16b-3 under the Exchange Act).In its capacity as plan administrator, our Compensation and Organization Committee determines which participants are granted awards, the type of each award granted and the terms and conditions of each award. Our Compensation and Organization Committee also has full power and authority to: (i) establish, amend and rescind rules and regulations relating to the 2016 Associates LTIP; (ii) interpret the 2016 Associates LTIP and all related award agreements; and (iii) make any other determinations that our Compensation and Organization Committee deems necessary or desirable for the administration of the 2016 Associates LTIP. Any action taken by our Compensation and Organization Committee is final, binding and conclusive on all persons interested in the 2016 Associates LTIP.
The 2016 Associates LTIP specifies the conditions under which our Compensation and Organization Committee may act through subcommittees or delegate the administration of the 2016 Associates LTIP to one or more officers or associates of the Company.
With respect to each award granted under the 2016 Associates LTIP, the Company has entered and will continue to enter into a written or electronic award agreement with the participant which describes the terms and
conditions of the award, including: (i) the type of award and when and how it may be exercised or earned; (ii) any exercise price associated with the award; (iii) how the award will or may be settled; and (iv) any other applicable terms and conditions affecting the award.
Eligibility
Our Compensation and Organization Committee may select any of our associates and those of itsthe Company’s subsidiaries or affiliates to receive awards under the 2016 Associates LTIP. As of April 15, 2019,11, 2022, there were approximately 1,100270 associates of the Company and itsour subsidiaries or affiliates eligible to participate in the 2016 Associates LTIP.
Because executive officers are eligible to participate in the 2016 Associates LTIP, they may be deemed to have a substantial interest in this Proposal 3.
OPTIONS
Our Compensation and Organization Committee may grant Options at any time during the term of the 2016 Associates LTIP in such number, and upon such terms and conditions, as our Compensation and Organization Committee determines. The exercise price of any Option will be at least equal to the fair market value of the underlying shares of Common Stock (i.e.(i.e., the closing price per share of the Common Stock on NYSE)NYSE, which was $32.24 as of April 11, 2022) on the date the Option is granted, and may be paid: (i) in cash; (ii) by tendering previously-acquired shares of Common Stock; (iii) by a cashless exercise; (iv) by tendering other awards previously granted under the 2016 Associates LTIP or under other plans of the Company or any subsidiary or affiliate of the Company; and/or (v) through any other method approved by our Compensation and Organization Committee. Our Compensation and Organization Committee will also determine the term of the Option (which may not exceed a period of ten years from the grant date), the vesting terms and conditions (subject to a minimum vesting period of one year), and any other terms and conditions of the Option, all of which will be reflected in the related award agreement. The award agreement will specify whether the Option is intended to be an ISO or aan NQSO. Our Compensation and Organization Committee may grant up to 500,000 of the shares of Common Stock available for issuance under the 2016 Associates LTIP with respect to ISOs. However, ISOs will be subject to certain additional restrictions, including, without limitation, compliance with the requirements of Section 422 of the Internal Revenue Code. As of April 11, 2022, no Options have been granted under the 2016 Associates LTIP.
Our Compensation
and Organization Committee may grant SARs at any time during the term of the 2016 Associates LTIP in such number, and upon such terms and conditions, as our Compensation
and Organization Committee determines. SARs may be granted by our Compensation
and Organization Committee to a participant either as a freestanding award under the 2016 Associates LTIP or in tandem with or as a component of another award under the 2016 Associates LTIP. The exercise price of any SAR will be at least equal to the fair market value of the underlying shares of Common Stock on the date the SAR is granted. Our Compensation
and Organization Committee will also determine the term of the SAR (which may not exceed a period of ten years from the grant date), the vesting terms and conditions (subject to a minimum vesting period of one year), and any other terms and conditions of the SAR, all of which will be reflected in the related award agreement. Upon exercise of an SAR, a participant will be entitled to receive an amount equal to the difference between: (i) the fair market value of a share of Common Stock on the exercise date; and (ii) the exercise price per share of Common Stock, multiplied by the number of shares of Common Stock with respect to which the SAR is exercised. Each SAR will be settled in shares of Common Stock.
Restricted Stock and
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PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016 ASSOCIATES LTIP
RESTRICTED STOCK AND RSUs
Our Compensation and Organization Committee may grant shares of Restricted Stock or RSUs at any time during the term of the 2016 Associates LTIP in such number, and upon such termsandterms and conditions, as our Compensation and Organization Committee determines. Restricted Stock consists of shares of Common Stock and RSUs consist of units, each of which represents a share of Common Stock. Both Restricted Stock and RSU awards are issued to a participant subject to forfeiture based upon satisfaction of certain terms, conditions and restrictions which may include, without limitation: (i) a requirement that theparticipantthe participant pay a purchase price for
each share of Restricted Stock or RSU; (ii) restrictions based on the achievement of specific performance goals; (iii) time-based restrictions; or (iv) holding requirements or sale restrictions upon vesting and settlement. Our Compensation and Organization Committee will determine the terms, conditions and restrictions applicable to each Restricted Stock and/or RSU award, all of which will be reflected in the related award agreement. Except as otherwise set forth in the 2016 Associates LTIP or described in the related award agreement, in connection with a participant’s termination due to death, disability or Retirement (as such term is defined in the 2016 Associates LTIP): (i) no condition on vesting of Restricted Stock or RSUs that is based upon the achievement of specified performance goals may be based on performance over a period of less than one year; and (ii) no condition on vesting of Restricted Stock or RSUs that is based upon continued employment or the passage of time may provide for vesting in full of the award more quickly than in pro rata installments over a period of three years from the date of grant, with the first installment vesting no sooner than the first anniversary of the date of grant of the Restricted Stock or RSUs.
During the period that shares of Restricted Stock remain subject to forfeiture: (i) we may retain the certificates representing such shares; (ii) a participant may not sell or otherwise transfer such shares; and (iii) unless otherwise provided in the related award agreement, a participant will generally be entitled to exercise full voting rights and receive all dividends paid with respect to such shares (except that receipt of any such dividends will be subject to the same terms, conditions and restrictions as apply to such shares). During the period that RSUs remain subject to forfeiture, a participant will have no rights as a stockholder
(e.g.(e.g., no right to vote or receive dividends), unless our Compensation
and Organization Committee grants dividend equivalent rights as part of the RSU award.
At the end of the restriction period: (i) the participant will forfeit the shares of Restricted Stock and/or the RSUs if all terms, conditions and restrictions specified in the related award agreement have not been met; or (ii) we will distribute the shares of Restricted Stock to the participant and/or settle the RSUs if all terms, conditions and restrictions specified in the related award agreement have been met.
Performance-Based Awards
PERFORMANCE-BASED AWARDS
Under the terms of the 2016 Associates LTIP, our Compensation
and Organization Committee may grant performance-based Restricted Stock and RSUs for which the grant, vesting, exercisability and/or settlement of such performance-based awards are conditioned on the attainment of performance goals during a specified performance period. Our Compensation
and Organization Committee will base the performance goals on one or more of the
following performance criteria enumerated in the 2016 Associates
LTIP:LTIP.gross sales, net sales, comparable store sales or comparable sales;
gross margin, cost of goods sold,mark-ups or mark-downs;
selling, general and administrative expenses;
operating income, earnings from operations, earnings before or after taxes, or earnings before or after interest, depreciation, amortization, or extraordinary or special items;
net income or net income per common share (basic or diluted);
inventory turnover or inventory shrinkage;
return on assets, return on investment, return on capital, or return on equity;
cash flow, free cash flow, cash flow return on investment, or net cash provided by operations;
economic profit or economic value created;
stock price or total stockholder return; and
market penetration, geographic expansion or new concept development; customer satisfaction; staffing; diversity; training and development; succession planning; associate satisfaction; or acquisitions or divestitures of subsidiaries, affiliates or joint ventures.
As determined by our Compensation and Organization Committee, the selected performance criteria (i) may relate to the individual participant, the Company, one or more subsidiaries or affiliates of the Company and/or one or more divisions or business units of the Company, itsour subsidiaries or affiliates, (ii) may be measured either annually or cumulatively over a period of years, and (iii) may be applied on an absolute basis and/or be relative to one or more peer group companies or indices.
Our Compensation
and Organization Committee will establish in writing the applicable performance goals, performance period, and formula for computing the performance-based award while the outcome of the applicable performance goals is substantially uncertain. After the end of each performance period, our Compensation
and Organization Committee will certify in writing whether the performance goals and other material terms imposed on the performance-based award have been satisfied. Our Compensation
and Organization Committee has the authority to exercise negative discretion and reduce (but, to the extent that a performance-based award may be deductible under Section 162(m), as amended by the
TCJA,Tax Cuts and Jobs Act, not increase) the amount of a performance-based award actually paid to a participant.
No Dividends Payable with Respect to Unvested Awards
The 2016 Associates LTIP prohibits the payment of dividends or dividend equivalents with respect to any shares of Common Stock underlying an award granted under the 2016 Associates LTIP until such underlying shares of Common Stock have vested.
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PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016 ASSOCIATES LTIP
If at any time after the date on which a 2016 Associates LTIP participant has been granted or becomes vested in an award pursuant to the achievement of a performance goal, our Compensation
and Organization Committee determines that the earlier determination as to the achievement of the performance goal was based on incorrect data and that in fact the performance goal had not been achieved or had been achieved to a lesser extent than originally determined and a portion of such award would not have been granted, vested or paid, given the correct data, then (i) such portion of the award that was granted will be forfeited and any related shares of the Company’s Common Stock (or if such shares were disposed of, the cash equivalent) will be returned to the Company as provided by our Compensation
and Organization Committee, (ii) such portion of the award that became vested will be deemed to not be vested and any related shares of the Company’s Common Stock (or if such shares were disposed of, the cash equivalent) must be returned to the Company as provided by our Compensation
and Organization Committee, and (iii) such portion of the award paid to the 2016 Associates LTIP participant must be repaid by the participant to the Company upon notice from the Company as provided by our Compensation
and Organization Committee.
Termination of Employment
Our Compensation
and Organization Committee will determine the extent to which each award granted under the 2016 Associates LTIP will vest and the extent to which a participant will have the right to exercise and/or settle the award in connection with a participant’s termination of employment. Such provisions, which will be reflected in the related award agreement, need not be uniform among all awards and may reflect distinctions based on the reasons for termination. The minimum vesting and minimum exercisability conditions described above with respect to each type of award need not apply in the case of the death, disability, or retirement of an associate or termination of employment of an associate in connection with a change of control.
Additional Forfeiture Provisions
Each award granted under the 2016 Associates LTIP is subject to additional restrictions contained in the plan document. These restrictions are applicable during the time of a participant’s employment by the Company or a subsidiary or affiliate of the Company, and during theone-year period following termination of the participant’s employment. These additional restrictions include: (i) a covenant that includesnon-competition
with the Company or any subsidiary or affiliate of the Company, as well asnon-solicitation of customers, associates, and suppliers of the Company or any subsidiary or affiliate of the Company; (ii) a covenant to protect any confidential or proprietary information of the Company or any subsidiary or affiliate of the Company; (iii) a covenant to cooperate with the Company or any subsidiary or affiliate of the Company with regard to any action, suit or proceeding arising during the participant’s employment; and (iv) a covenant not to interfere with or harm the relationship of the Company or any subsidiary or affiliate of the Company with any person who at any time was a customer or supplier of, or otherwise had a business relationship with, the Company or any subsidiary or affiliate of the Company.
To the extent that a participant violates one or more of the additional restrictions described above, unless otherwise determined by our Compensation
and Organization Committee, the following will apply to any award granted under the 2016 Associates LTIP:
•The unexercised portion of each Option and each SAR held by the participant, whether or not vested, and any other award not then settled will be immediately forfeited and cancelled; and
•The participant will be obligated to repay to the Company, in cash, the total amount of any gain realized by the participant upon each exercise of an Option or an SAR or settlement of an award that occurred within any of the timeframes described in the 2016 Associates LTIP.
Except as otherwise provided by the Board or by our Compensation
and Organization Committee in the related award agreement or at any time prior to a Change of Control (as such term is defined in the 2016 Associates LTIP), in the event of a Change of Control, with respect to an Option, an SAR, shares of Restricted Stock or RSUs, the exercisability, vesting and/or settlement of which is based solely upon continued employment or passage of time, which (i) is assumed by the acquiring or surviving company upon the Change of Control and there is an involuntary termination without cause of a participant within the three months prior to or 18 months following the Change of Control or (ii) is not assumed by the acquiring or surviving company upon the Change of Control:
•In the case of an Option or SAR, the participant will have the ability to exercise such Option or SAR, including any portion of the Option or SAR not previously exercisable, until the earlier of (a) the expiration of the Option or SAR under its original
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PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016 ASSOCIATES LTIP
term, and (b) the date that is two years (or such longer post-termination exercisability term as may be specified in the Option or SAR) following any involuntary termination without cause of the participant; and
•In the case of Restricted Stock or RSUs, the award will become fully vested and will be settled in full.
Except as otherwise provided in the related award agreement, in the event of a Change of Control, with respect to any Restricted Stock or RSU, the grant, issuance, retention, vesting and/or settlement of which is based in whole or in part on the performance criteria and level of achievement versus such criteria, the following will apply:
•In the case of an award in which fifty percent (50%) or more of the performance period applicable to the award has elapsed as of the date of the Change of Control, the participant will be entitled to payment, vesting or settlement of such award based upon performance through a date occurring within three months prior to the date of the Change of Control, as determined by our Compensation and Organization Committee prior to the Change of Control, andpro-rated based upon the percentage of the performance period that has elapsed between the date such award was granted and the date of the Change of Control; and
•In the case of an award in which less than fifty percent (50%) of the performance period applicable to the award has elapsed as of the date of the Change of Control, the participant will be entitled to payment, vesting or settlement of the target amount of such award, as determined by our Compensation and Organization Committee prior to the Change of Control,pro-rated based upon the percentage of the performance period that has elapsed between the date such award was granted and the date of the Change of Control.
Transferability
Transferability
Except as otherwise provided in a related award agreement: (i) a participant may not sell, transfer, pledge, assign, or otherwise alienate or hypothecate an award, except by will or the laws of descent and distribution; and (ii) during a participant’s lifetime, only the participant or his or her guardian or legal representative may exercise an award. Any award or other right (other than ISOs and SARs in tandem therewith) may be transferred to one or more transferees during the life of a participant, and may be exercised by such transferee(s) in accordance with the terms of the award, but only if and to the extent such transfer is permitted by our Compensation and Organization Committee, subject to any terms and conditions as our Compensation and Organization Committee may impose on such transfer in the applicable award agreement.
Tax Withholding and Tax Offset Payments
The Company and any subsidiary or affiliate of the Company is authorized to withhold from awards and related payments (including Common Stock distributions) amounts of withholding and other taxes due or potentially payable in connection with any transaction or event involving an award by withholding Common Stock or other property, requiring a participant to remit to the Company an amount in cash or other property (including Common Stock) to satisfy such withholding requirements or by taking certain other actions. The Company can delay the delivery to a participant of Common Stock under any award to allow the Company to determine the amount of withholding to be collected and to collect and process such withholding.
Awards to Participants Outside the United States
Our Compensation
and Organization Committee may modify the terms of any award under the 2016 Associates LTIP made to or held by a participant who is then resident or primarily employed outside of the United States in any manner deemed by our Compensation
and Organization Committee to be necessary or appropriate in order that such award will conform to the laws, regulations, and customs of the country in which the participant is then resident or primarily employed, or so that the value and other benefits of the award to the participant, as affected by foreign tax laws and other restrictions applicable as a result of the participant’s residence or employment abroad, will be comparable to the value of such an award to a participant who is resident or primarily employed in the United States. An award may be modified in a manner that is inconsistent with the express terms of the 2016 Associates LTIP, so long as such modification will not contravene any applicable law or regulation or result in actual liability under Section 16(b) of the Exchange Act for the participant whose award is modified.
No Rights as a Stockholder
Except as otherwise provided in the 2016 Associates LTIP or in a related award agreement, a participant will not have any rights as a stockholder with respect to shares of Common Stock covered by an award unless and until the participant becomes the record holder of such shares of Common Stock.
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PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016 ASSOCIATES LTIP
The 2016 Associates LTIP expressly prohibits the Board or our Compensation and Organization Committee, without stockholder approval, from amending or replacing previously granted Options or SARs in a transaction that constitutes a “repricing,” meaning any reduction in exercise price, cancellation of Options or SARs in exchange for other Options or SARs with a lower exercise price, cancellation of Options or SARs for cash, or cancellation of Options or SARs for another grant if the exercise price of the cancelled Options or SARs is greater than the fair market value of the shares of Common Stock subject to the cancelled Options or SARs at the time of cancellation, other than in conjunction with a change of control or other adjustment expressly permitted under the 2016 Associates LTIP, or any other “repricing” as that term is used in Section 303A.08 of the NYSE Listed Company Manual.
The 2016 Associates LTIP became effective on June 16, 2016 upon the approval of the 2016 Associates LTIP by our stockholders at the 2016 Annual Meeting. Unless earlier terminated by the Board, the authority of our Compensation
and Organization Committee to make grants under the 2016 Associates LTIP will terminate on the date that is ten years after the latest date upon which stockholders of the Company have approved the 2016 Associates LTIP. Approval of the proposed amendment
to the 2016 Associates LTIP at the
2019 Annual Meeting will extend the term of the 2016 Associates LTIP for ten years after the date of the
2019 Annual
Meeting.Meeting (June 8, 2032).
The Board may amend, suspend, or terminate the 2016 Associates LTIP at any time, except that no amendment or termination may be made without stockholder approval if: (i) such approval is required by any federal or state law or regulation or NYSE Rules or the rules of any other stock exchange or automated quotation system on which the Common Stock of the Company may then be listed or quoted; (ii) the amendment would materially increase the number of shares reserved for issuance and delivery under the 2016 Associates LTIP; (iii) the amendment would alter the provisions of the 2016 Associates LTIP restricting the Company’s ability to grant Options or SARs with an exercise price that is less than the fair market value of the underlying shares of Common Stock; or (iv) in connection with any action to amend or replace previously granted Options or SARs in a transaction that constitutes a
“re-pricing” “re-pricing” as such term is used in Section 303A.08 of the NYSE Listed Company Manual (or a successor provision).
New Benefits Under the 2016 Associates LTIP
The associates to be granted awards and the amount and nature of awards to be granted to a particular associate under the 2016 Associates LTIP are within the discretion of our Compensation
and Organization Committee. Therefore, the associates who will become participants in the 2016 Associates LTIP in the future and the amount and nature of awards to be granted to any individual participant cannot be determined at this time.
Aggregate Past Grants Under the 2016 Associates LTIP
From the inception of the 2016 Associates LTIP (on June 16, 2016 following approval by the Company’s stockholders) through February 2, 2019, grants of RSUs and PSAs (reflecting the maximum number of PSAs which may be earned under each award) have been granted to the following individuals and indicated groups under the 2016 Associates LTIP: (i) Fran Horowitz, Chief Executive Officer and a director - 463,692RSUs and 752,404PSAs; (ii) Scott Lipesky, Senior Vice President and Chief Financial Officer - 30,856RSUs and 31,794 PSAs; (iii) Joanne C. Crevoiserat, Executive Vice President and Chief Operating Officer - 260,979RSUs and 390,724PSAs; (iv) Kristin Scott, President, Global Brands - 177,318RSUs and 222,948PSAs; (v) Gregory J. Henchel, Senior Vice President, General Counsel and Corporate Secretary - 9,340 RSUs; (vi) Stacia Andersen, Former Brand President — Abercrombie & Fitch/abercrombie kids - 171,196RSUs and 208,026PSAs; (vii) Robert E. Bostrom, Former Senior Vice President, General Counsel and Corporate Secretary - 32,471 RSUs and 64,942 PSAs; (viii) all current executive officers as a group - 942,185RSUs and 1,397,870PSAs; and (ix) all associates, excluding current executive officers, as a group - 1,321,465RSUs and 336,565PSAs.
From February 3, 2019 through April 5, 2019, grants of RSUs and PSAs (reflecting the maximum number of PSAs which may be earned under each award) have been granted to the following individuals and indicated groups under the 2016 Associates LTIP: (i) Fran Horowitz, Chief Executive Officer and a director - 86,820RSUs and 260,458PSAs; (ii) Scott Lipesky, Senior Vice President and Chief Financial Officer - 15,786RSUs and 47,356 PSAs; (iii) Joanne C. Crevoiserat, Executive Vice President and Chief Operating Officer - 34,728RSUs and 104,184PSAs; (iv) Kristin Scott, President, Global Brands - 47,356RSUs and 142,068PSAs; (v) Gregory J. Henchel, Senior Vice President, General Counsel and Corporate Secretary - 7,893 RSUs and 23,678PSAs; (vi) Stacia Andersen, Former Brand President — Abercrombie & Fitch/abercrombie kids - no awards; (vii) Robert E. Bostrom, Former Senior Vice President, General Counsel and Corporate Secretary - no awards; (viii) all current executive officers as a group - 192,583RSUs and 577,744PSAs; and (ix) all associates, excluding current executive officers, as a group - 402,233RSUs and 113,660PSAs.
None of the currentnon-associate directors has been or will be granted any awards under the 2016 Associates LTIP.
Because awards
Existing Plan Benefits
The following table lists the number of PSAs and RSUs granted under the 2016 Associates LTIP will be granted at the discretionas of our Compensation and Organization Committee, past awards under theJanuary 29, 2022 (whether or not outstanding, vested, or forfeited, as applicable).
| | | | | | | | |
| Name and Position | PSAs | RSUs |
| | |
Fran Horowitz, Chief Executive Officer | 995,779 | 973,735 |
Scott Lipesky, Executive Vice President, Chief Financial Officer | 107,600 | 256,955 |
Kristen Scott, President, Global Brands | 364,843 | 590,007 |
Samir Desai, Executive Vice President, Chief Digital Technology Officer | 16,598 | 44,261 |
Gregory J. Henchel, Executive Vice President, General Counsel and Corporate Secretary | 42,614 | 93,235 |
| All current executive officers as a group | 1,527,434 | 1,958,193 |
| All current non-employee directors and director nominees as a group | — | — |
| Each associate of the above-mentioned executive officers, directors, and director nominees | — | — |
| Each other person who received or is to receive 5% of such PSAs and RSUs | — | — |
| All employees as a group (excluding executive officers) | 4,426,954 | 404,716 |
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| 2022 Proxy Statement | 81 | Abercrombie & Fitch Co. |
PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016
AssociatesASSOCIATES LTIP
may not be reflective of future awards under the 2016 Associates LTIP.U.S. Federal Income Tax Consequences
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the general
U.S.United States federal income tax consequences relating to participation in the 2016 Associates LTIP. This summary is based on
U.S.United States federal tax laws and Treasury Regulations in effect on the date of this Proxy Statement and does not purport to be a complete description of the
U.S.United States federal income tax laws. In addition, this summary does not constitute tax advice or describe federal employment, state, local or foreign tax consequences. Each participant will be advised to consult with his or her tax advisor concerning the
U.S.United States federal income tax and other tax consequences of participating in the 2016 Associates LTIP.
The Company intends for ISOs to qualify for the special treatment available under Section 422 of the Internal Revenue Code. A participant will not recognize taxable income when an ISO is granted, and we will not receive a deduction at that time. A participant will not recognize ordinary income upon the exercise of an ISO, provided that the participant was, without a break in service, an associate of the Company or a subsidiary of the Company during the period beginning on the grant date of the ISO and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant’s employment is terminated due to
disability)disability or death).
If a participant does not sell or otherwise dispose of the shares of Common Stock acquired upon the exercise of an ISO within two years from the grant date of the ISO or within one year after the participant receives the shares, then, upon disposition of such shares of Common Stock, any amount realized in excess of the exercise price will be taxed to the participant as a capital gain, and we will not be entitled to a corresponding deduction. The participant generally will recognize a capital loss to the extent that the amount realized is less than the exercise price.
If the foregoing holding period requirements are not met, the participant generally will recognize ordinary income at the time of the disposition of the shares of Common Stock in an amount equal to the lesser of: (i) the excess of the fair market value of the shares on the date of exercise over the exercise price; or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price. We will be entitled to a corresponding deduction (subject to the limitation described under
“Section “Section 162(m)” below). Any amount realized in excess of the value of the shares of Common Stock on the date of exercise will be taxed as a capital gain. If the amount realized is less than the exercise price, the participant generally will recognize a capital loss equal to the excess of the exercise price over the amount realized upon the disposition of the shares.
The rules that generally apply to ISOs do not apply when calculating any alternative minimum tax liability. The rules affecting the application of the alternative minimum tax are complex, and their effect depends on individual circumstances, including whether a participant has items of adjustment other than those derived from ISOs.
Nonqualified Stock Options
A participant will not recognize any income when an NQSO is granted, and we will not receive a deduction at that time. However, when an NQSO is exercised, a participant will recognize ordinary income equal to the excess, if any, of the fair market value of the shares of Common Stock that the participant purchased on the date
of exercise over the exercise price. If a participant uses shares of Common Stock or a combination of shares and cash to pay the exercise price of an NQSO, the participant will recognize ordinary income equal to the value of the excess of the number of shares that the participant purchases over the number of shares that the participant surrenders, less any cash the participant uses to pay the exercise price. When an NQSO is exercised, we will be entitled to a deduction equal to the ordinary income that the participant recognizesrecognized (subject to the limitation described under“Section “Section 162(m)” below).
If the amount a participant receives upon disposition of the shares of Common Stock that the participant acquired by exercising an NQSO is greater than the sum of the aggregate exercise price that the participant paid plus the amount of ordinary income recognized by the participant upon exercise, the excess will be treated as a long-term or short-term capital gain, depending on whether the participant held the shares for more than one year after the participant acquired them by exercising the NQSO. Conversely, if the amount a participant receives upon disposition of the shares of Common Stock that the participant acquired by exercising an NQSO is less than the sum of the aggregate exercise price the participant paid plus the amount of ordinary income recognized by the participant upon exercise, the difference will be treated as a long-term or short-term capital loss, depending on whether the participant held the shares for more than one year after the participant acquired them by exercising the NQSO.
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| Abercrombie & Fitch Co. | 82 | 2022 Proxy Statement |
PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016 ASSOCIATES LTIP
Stock Appreciation Rights
A participant will not recognize taxable income when an SAR is granted, and we will not receive a deduction at that time. When an SAR is exercised, a participant will recognize ordinary income equal to the excess of the cash and/or the fair market value of the shares of Common Stock the participant receives over the aggregate exercise price of the SAR, if any, and we will be entitled to a corresponding deduction (subject to the limitation described under
“Section “Section 162(m)”below). If the amount a participant receives upon disposition of the shares of Common Stock that the participant acquired by exercising an SAR is greater than the sum of the aggregate exercise price that the participant paid plus the amount of ordinary income recognized by the participant upon exercise, the excess will be treated as a long-term or short-term capital gain, depending on whether the participant held the shares for more than one year after the participant acquired them by exercising the SAR. Conversely, if the amount a participant receives upon disposition of the shares of Common Stock that the participant acquired by exercising an SAR is less than the sum of the aggregate exercise price that the participant paid plus the amount of ordinary income recognized by the participant upon exercise, the difference will be treated as a long-term or short-term capital loss, depending on whether the participant held the shares for more than one year after the participant acquired them by exercising the SAR.
Unless a participant makes an election under Section 83(b) of the Internal Revenue Code (a “Section 83(b) Election”), the participant generally will not recognize taxable income when Restricted Stock is granted, and we will not receive a deduction at that time. Instead, a participant will recognize ordinary income when the Restricted Stock vests
(i.e.(i.e., when the underlying shares of Common Stock are freely transferable or not subject to a substantial risk of forfeiture) equal to the fair market value of the shares of Common Stock that the participant receives when the terms, conditions and restrictions have been met, less any consideration paid for the Restricted Stock. We generally will be entitled to a deduction equal to the income that the participant
recognizesrecognized (subject to the limitation described under
“Section “Section 162(m)” below).
If the amount a participant receives upon disposition of these shares of Common Stock is greater than the fair market value of the shares when the Restricted Stock vested, the excess will be treated as a long-term or short-term capital gain, depending on whether the participant held the shares for more than one year after the Restricted Stock vested. Conversely, if the amount the participant receives upon disposition of these shares of Common Stock is less than the fair market value of the shares when the Restricted Stock vested, the difference will be treated as a long-term or short-term capital loss, depending on whether the participant held the shares for more than one year after the Restricted Stock vested.
If a participant makes a Section 83(b) Election, the participant will recognize ordinary income on the grant date equal to the fair market value of the shares of Common Stock subject to the Restricted Stock award on the grant date, and we will be entitled to a deduction equal to the income that the participant recognizesrecognized at that time (subject to the limitation described under“Section “Section 162(m)” below). However, the participant will not recognize income when (and if) the Restricted Stock vests. If a participant who has made a Section 83(b) Election earns the shares of Common Stock subject to a Restricted Stock award, any appreciation between the grant date and the date the participant disposes of the shares will be treated as a long-term or short-term capital gain, depending on whether the participant held the shares for more than one year after the grant date. Conversely, if the amount the participant receives upon disposition of these shares of Common Stock is less than the fair market value of the shares on the grant date, the difference will be treated as a long-term or short-term capital loss, depending on whether the participant held the shares for more than one year after the grant date. Also, if a participant forfeits his or her Restricted Stock, the participant cannot take a tax deduction in connection with the forfeiture of the Restricted Stock subject to a Section 83(b) Election.
A participant will not recognize taxable income when
ana RSU is granted, and we will not receive a deduction at that time. When
ana RSU vests and is settled, the participant will recognize ordinary income equal to the cash and/or the fair market value of the shares of Common Stock the participant receives at the time of settlement, and we will be entitled to a corresponding deduction (subject to the limitation described under
“Section “Section 162(m)” below).
If the amount a participant receives upon disposition of the shares of Common Stock received upon settlement of ana RSU is greater than the fair market value of the shares of Common Stock at the time the participant recognizesrecognized ordinary income with respect to the RSU, the excess will be treated as a long-term or short-term capital gain, depending on whether the participant held the shares of Common Stock for more than one year after that time. Conversely, if the amount the participant receives upon disposition of these
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| 2022 Proxy Statement | 83 | Abercrombie & Fitch Co. |
PROPOSAL 3 - APPROVE AN AMENDMENT TO THE 2016 ASSOCIATES LTIP
shares of Common Stock is less than the fair market value of the shares of Common Stock at the time the participant
recognizesrecognized ordinary income with respect to the RSU, the difference will be treated as a long-term or short-term capital loss, depending on whether the participant held the shares of Common Stock for more than one year after that time.
Section 162(m)
Historically, as described
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to publicly-traded companies for compensation, including stock awards, in
more detail beginning on page 74excess of
this Proxy Statement, awards to$1,000,000 for certain “covered employees”
had been designed to qualify as “performance-based compensation” for purposes of Section 162(m) so that any compensation expense related to such awards would be fully deductible by the Company. Effective December 22, 2017, when the TCJA was signed into law, the performance-based compensation exception was generally eliminated with respect to future compensatory awards. There is an exception for remuneration provided pursuant to a written binding contract in effect on November 2, 2017 that is not modified in any
respect after that date. Because of the ambiguities and uncertainties as to the application and interpretation of this transition relief, no assurance can be given that historic awards under the 2016 Associate LTIP will avoid the deduction limit.year. The Company expects that a portion of the compensation expense related to
future awards under the 2016 Associate LTIP will not be
deductible, even if performance-based.deductible.
Section 409A of the Internal Revenue Code imposes certain restrictions on amounts deferred undernon-qualified deferred compensation plans and a 20% additional tax on amounts that are subject to, but do not comply with, Section 409A. Section 409A includes a broad definition ofnon-qualified deferred compensation plans, which includes certain types of equity incentive compensation. The Company intends for the awards granted under the 2016 Associates LTIP to comply with or be exempt from the requirements of Section 409A and the Treasury Regulations promulgated thereunder.
REGISTRATION WITH THE COMPENSATION AND ORGANIZATION COMMITTEE AND THE FULL BOARD
UNANIMOUSLY RECOMMEND THAT YOU VOTE “FOR” THE APPROVAL
OF THE PROPOSED AMENDMENT TO THE 2016 ASSOCIATES LTIP.
Required Vote
The approvalSEC
We intend to file a Registration Statement on Form S-8 relating to the issuance of the amendment to the 2016 Associates LTIP to authorize 2,200,000 additional shares of Common Stock requiresunder the affirmative vote2016 Associates LTIP, as it is proposed to be amended, with the SEC pursuant to the Securities Act of a majority in voting interest1933, as amended, as soon as practicable after approval of the stockholders present in person or2016 Associates LTIP, as it is proposed to be amended, by proxyour stockholders.
| | | | | | | | | | | |
| | | |
| YOUR VOTE IS IMPORTANT | Our Compensation and Human Capital Committee and the full Board unanimously recommend that you vote FOR the approval of the proposed amendment to the 2016 Associates LTIP. | |
| | | |
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| Abercrombie & Fitch Co. | 84 | 2022 Proxy Statement |
Audit and voting thereon. Under applicable NYSE Rules, brokernon-votes will not be treated as votes cast. Abstentions will be treated as votes cast and will have the effect of a vote“AGAINST” the proposal.Finance Committee Matters
AUDIT AND FINANCE COMMITTEE MATTERS
Report of the Audit and Finance Committee for Fiscal
20182021
The Audit and Finance Committee, which was established in accordance with Section 3(a)(58)(A) of the Exchange Act, is organized and conducts its business pursuant to a written charter, that was revised by the Board on December 15, 2015, a copy of which is posted on the “Corporate Governance” page within the “Our Company” section of the Company’sour corporate website atcorporate.abercrombie.com. The Audit
and Finance Committee currently consists of four independent directors, each of whom has been determined by the Board to meet the heightened independence and financial literacy
and expertise criteria for Audit
and Finance Committee members under the
NYSE Rules and applicable SEC
rules and the NYSE Rules.rules. The Board has also designated each
memberof the four members of the Audit
and Finance Committee as an “audit committee financial expert” as defined under the
applicable SEC rules.
The Audit
and Finance Committee’s responsibility is to provide independent, objective oversight of:
•the integrity of the Company’s consolidated financial statements;
statements, including the qualificationsreview of major issues regarding accounting principles and independencefinancial statement presentation;
•the effectiveness of the Company’s independent registered public accounting firm PricewaterhouseCoopers LLP (“PwC”);
the performance of the Company’s internal audit function and the Company’s independent registered public accounting firm;
the annual independent audit of the Company’s consolidated financial statements;
the compliance by the Company and its subsidiaries with legal and regulatory requirements;
the Company’s systems of disclosure controls and procedures and internal control over financial reporting;
reporting, including reviewing and discussing with management, the Company’s independent registered public accounting firm PricewaterhouseCoopers LLP (“PwC”), and the Company’s Chief Audit Executive (the head of the Internal Audit department), significant deficiencies and material weaknesses in the design or operation of the Company’s internal controls, and any special audit steps adopted in response to such significant deficiencies or material weaknesses;•compliance by the Company and our subsidiaries with legal and regulatory requirements, including the financial reporting and disclosure process;
•monitoring legal and regulatory matters, including Company litigation;
•compliance with the Company’s Code of Business Conduct and Ethics;
enterprise risk issues•the qualifications and independence of our independent registered public accounting firm;
•the Company’s enterprise risk management policies, guidelinesframework, the risk tolerance of the Company, the Company’s major financial risk exposures, including those related to information technology and programs;cybersecurity, and the steps management had taken to monitor and control such exposures;
•the annual independent audit of the Company’s consolidated financial statements; and
•the review and approval, as appropriate, of the Company’s financial plans and policies.
In addition, the Audit Committee is responsible for:
•evaluating the performance of the internal audit function and the Company’s independent registered public accounting firm, including the resolution of disagreements between management of the Company and the Company’s independent registered public accounting firm regarding financial reporting; and
•determining the appointment, compensation, and retention of both the independent registered public accounting firm and Chief Audit Executive.
In fulfilling its oversight responsibilities, the Audit Committee engages in the review of the financial planspresentation of non-GAAP measures and metrics to understand how they are used to evaluate performance and whether they are consistently prepared and presented from period to period in accordance with the Company’s related policies of the Company.and disclosure controls and procedures and in compliance with SEC rules and interpretations.
Management of the Company has the responsibility for the preparation, presentation, and integrity of the Company’s consolidated financial statements, for the appropriateness of the accounting principles and reporting policies that are used by the Company, and for the establishment and maintenance of systems of disclosure controls and procedures and internal control over financial reporting.
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| 2022 Proxy Statement | 85 | Abercrombie & Fitch Co. |
AUDIT AND FINANCE COMMITTEE MATTERS
The Audit Committee is responsible for authorizing the appointment, compensation, and retention of, and overseeing the work of, the Company’s independent registered public accounting firm. On an annual basis, the Audit Committee evaluates the qualifications, performance, tenure, and independence of PwC and determines, after also considering the impact of a change in the Company’s independent registered public accounting firm, whether to re-engage PwC. PwC has been the Company’s independent
auditorregistered public accounting firm since 1996. PwC rotates its lead audit engagement partner every five years and the Audit
and Finance Committee takes a lead role in the process for evaluating and selecting the new
lead audit
engagement partner.
PwC’s lead audit engagement partner rotated in Fiscal 2021. The Audit
and Finance Committee believes there are benefits to having an independent
auditorregistered public accounting firm with an extensive history with the Company, including higher quality audit work and accounting advice due to PwC’s institutional knowledge of the Company’s business and operations, accounting policies and financial systems, and internal control framework, as well as operational efficiencies.
PwC is subject to independence controls that mitigate the risks that may be associated with long auditor tenure. The Audit
and Finance Committee has received the written disclosures and the letter from PwC required by applicable requirements of the
PCAOBPublic Company Accounting Oversight Board (“PCAOB”) regarding PwC’s communications with the Audit
and Finance Committee concerning independence, and has discussed with PwC that firm’s independence. The Audit
and Finance Committee has
concluded thatconsidered PwC’s provision of permitted
non-audit services to the Company and
itsour subsidiaries
isand concluded that the provision of such services has been compatible with maintaining PwC’s independence.
PwC is responsible for auditing and reporting on the Company’s annual consolidated financial statements included in the Company’s Annual Report on Form10-K and the effectiveness of the Company’s internal control over financial reporting, and for reviewing the Company’s unaudited interim condensed consolidated financial statements included in the Company’s Quarterly Reports on Form10-Q.
In fulfilling its oversight responsibilities, the Audit and Finance Committee met with management of the Company, the Company’s Chief Audit Executive, and PwC throughout the year. The Audit and Finance Committee met with the Company’s Chief Audit Executive and PwC, with and without management of the Company present, to discuss the overall scope of their respective annual audit plans, the results of their respective audits, the effectiveness of the Company’s internal control over financial reporting, including management’s and PwC’s reports thereon and the bases for the conclusions expressed in those reports, and the overall quality of the Company’s financial reporting. In addition, the Audit and Finance Committee met with the Company’s Chief Financial Officer to review the process undertaken to evaluate the accuracy and fair presentation of the Company’s consolidated financial statements. Throughout that period, theThe Audit and Finance Committee reviewed management’s plan for documenting and testing controls, the results of their documentation and testing, and any significant deficiencies or material weaknesses discovered, and the resulting remediation of the deficiencies.if applicable. In addition, the Audit and Finance Committee reviewed and discussed with PwC all matters required by PCAOB standards.
and SEC standards, including PwC’s audit report and expected critical audit matter (“CAM”) to understand the nature of the CAM, PwC’s basis for determining the CAM, and the expected description of the CAM in PwC’s audit report.
Management of the Company and PwC have represented to the Audit
and Finance Committee that the Company’s audited consolidated financial statements as of
the end of and for the fiscal year ended
February 2, 2019January 29, 2022 were prepared in accordance with
accounting principles generally accepted in the United States,GAAP, and the Audit
and Finance Committee has reviewed and discussed those audited consolidated financial statements with management of the Company and PwC.
As previously disclosed within “ITEM 9A. CONTROLS AND PROCEDURES” of the Company’s Annual Report on Form 10-K for Fiscal 2020 (the “Fiscal 2020 Form 10-K”), management of the Company evaluated the effectiveness of the Company’s internal control over financial reporting and concluded that a material weakness existed in the Company’s internal control over financial reporting as of January 30, 2021. The Company did not design and maintain effective controls over the presentation and disclosure of activities in its Consolidated Statements of Cash Flows. Specifically, the Company did not design and maintain controls to research and apply relevant accounting guidance in assessing the appropriate classification of cash flow activities associated with new transaction types. As a result of the identified material weakness, the Company restated its Condensed Consolidated Statements of Cash Flows in the Condensed Consolidated Financial Statements for the interim periods ended May 2, 2020, August 1, 2020, and October 31, 2020. For information regarding the restatement, please refer to “Note 21. Correction of Error in Previously Reported Interim Financial Statements (Unaudited)” of the Notes to Consolidated Financial Statements included within “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA” of the Fiscal 2020 Form 10-K.
During Fiscal 2021, the Audit Committee met with management, the Company’s Chief Audit Executive, and PwC, with and without management of the Company present, to discuss the material weakness, including discussion of remediation efforts. The Audit Committee monitored management’s efforts to remediate the material weakness, receiving regular updates on the status of the
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AUDIT AND FINANCE COMMITTEE MATTERS
remediation efforts from management and PwC. Such remediation efforts included designing and implementing new procedures to research and apply relevant accounting guidance regarding the classification of cash flow activities associated with new transaction types and to document conclusions of the Company’s management with respect to such analysis. The remediation efforts, including review of the testing and validation of the operating effectiveness of the implemented controls, were completed by management in the second quarter of Fiscal 2021. As disclosed in “Item 4. Controls and Procedures” of the Company’s Quarterly Report on Form 10-Q for the period ended July 31, 2021, management concluded that the material weakness was remediated as of July 31, 2021.
Based on the Audit
and Finance Committee’s
(i) discussions with management of the Company and PwC and
the Audit and Finance Committee’s(ii) review of the report of PwC to the Audit
and Finance Committee, the Audit
and Finance Committee unanimously recommended to the Board that the Company’s audited consolidated financial statements be included (and the Board approved such inclusion) in the Company’s Fiscal
20182021 Form 10-K filed
with the SEC on
April 1, 2019.March 28, 2022.
Submitted by the Audit and Finance Committee:
Kerrii B. Anderson, Chair
Helen E. McCluskey
Kenneth B. Robinson
Nigel Travis
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Kerrii B. Anderson (Chair)2022 Proxy Statement | 87 | James B. Bachmann | | Michael E. Greenlees | | Nigel Travis |
| | (served as Chair until
March 4, 2019) | | | | (member since
February 22, 2019)Abercrombie & Fitch Co. |
Pre-Approval Policy
Under applicable SEC rules, our Audit and Finance Committee is required topre-approve the audit andnon-audit services performed by the Company’s independent registered public accounting firm (also referred to as the “Company’s independent audit firm”) in order to ensure that the provision of these services does not impair the independence of the Company’s independent audit firm from the Company and its subsidiaries. The SEC rules specify the types ofnon-audit services that an independent audit firm may not provide to its audit client and establish our Audit and Finance Committee’s responsibility for administration of the engagement of the Company’s independent audit firm.
Annually, the Company’s management and the Company’s independent audit firm are to jointly submit to our Audit and Finance Committee aNon-Audit Services Matrix (the “Matrix”) of the types of audit andnon-audit services that are permitted under the Sarbanes-Oxley Act of 2002 and the rules of the SEC and the PCAOB and of which the Company may wish to avail itself. Our Audit and Finance Committee will review the Matrix and either approve or reject the specific categories of services. The approval of the Matrix is merely an approval of the types of services permitted by our Audit and Finance Committee, subject topre-approval of specific services. The Matrix will then be revised to include only those categories of services approved by our Audit and Finance Committee and distributed by the Company’s management to appropriate personnel and by the Company’s independent audit firm to its partners serving the Company.
Annually, the Company’s management and the Company’s independent audit firm must jointly submit to our Audit and Finance Committee an AnnualPre-Approval Request (the“Pre-Approval Request”) listing all
known and/or anticipated audit andnon-audit services for the upcoming fiscal year. ThePre-Approval Request is to list the services by category in accordance with the Matrix, describe the services in reasonable detail and include an estimated budget (or budgeted range) of fees.
Our Audit and Finance Committee will review eachPre-Approval Request with both the Company’s management and the Company’s independent audit firm. A final list of AnnualPre-ApprovedNon-Audit Services and budgeted fees will then be prepared and distributed by the Company’s management to appropriate personnel and by the Company’s independent audit firm to its partners who provide services to the Company. Thepre-approval of audit andnon-audit services contained in thePre-Approval Request is merely an authorization for the Company’s management to potentially utilize the Company’s independent audit firm for the approved services and allowable services. Once our Audit and Finance Committee haspre-approved the audit andnon-audit services, the Company’s management has the discretion to either engage the Company’s independent audit firm or another provider for each listed service. Additionally, our Audit and Finance Committee, in concert with the Company’s management, has the responsibility to set the terms of the engagement, negotiate the fees (within the approved budget range) and execute the letter of engagement with respect to services provided by the Company’s independent audit firm.
During the course of the year, there may be additional audit ornon-audit services that are identified by the Company’s management and are desired but were not contained in the annualPre-Approval Request. Our Audit and Finance Committee will designate one or more of its members to have the authority topre-approve interim requests for additional audit ornon-audit services. Prior to engaging the Company’s independent audit firm for services, the Company’s management is to submit a request for approval of the audit ornon-audit services to the designated Audit and Finance Committee member(s). The designated Audit and Finance Committee member(s) are to act upon the request as expeditiously as possible by either approving or rejecting the request and notifying the Company’s management. These interimpre-approval procedures are to be used only for audit ornon-audit services that are less than $100,000. Requests for audit ornon-audit services greater than $100,000 must be approved by the full Audit and Finance Committee.
At each subsequent Audit and Finance Committee meeting, the designated Audit and Finance Committee member(s) are to report any interim audit ornon-audit servicepre-approvals since the last Audit and Finance Committee meeting. At each Audit and Finance Committee meeting, the Company’s management and the Company’s independent audit firm are to provide our Audit and Finance Committee with a summary description of ongoing projects and ayear-to-date report of the actual expenditures as compared to thepre-approved budget for audit ornon-audit services and an updated estimate of expenditures for the full year.
Fees
AUDIT AND FINANCE COMMITTEE MATTERS
PROPOSAL 4
Ratification of Independent Registered Public Accounting Firm
Fees billed for services rendered by For Fiscal 2022
The Audit Committee annually evaluates the selection of our independent registered accounting firm and has reappointed PwC for each of Fiscal 2018 and Fiscal 2017 were as follows: | | | | | | | | |
| | | Fiscal 2018 | | | Fiscal 2017* | |
Audit Fees | | $ | 3,596,236 | | | $ | 3,260,201 | |
Audit-Related Fees | | | — | | | | 8,110 | |
Tax Fees | | | 18,623 | | | | 16,373 | |
All Other Fees | | | 31,605 | | | | 29,858 | |
| | | | | | | | |
Total | | $ | 3,646,464 | | | $ | 3,314,542 | |
| | | | | | | | |
(*) | The previously presented Fiscal 2017 fees were revised to reflect actual fees incurred associated with the Company’s Fiscal 2017 services.
|
Audit Fees represent fees for professional services rendered by PwC in connection with the integrated audit of the Company’s annual consolidated financial statements and reviews of the unaudited interim consolidated financial statements included in the Company’s Quarterly Reports on Form10-Q of $2,321,445 and $1,931,788,
statutory audits of $1,268,470 and $1,320,813, and other services provided in connection with statutory and regulatory filings or engagements of $6,321 and $7,600, for Fiscal 2018 and Fiscal 2017, respectively.
Audit-Related Fees for Fiscal 2017 represent fees for financial attest services that are not required by statute or regulation.
Tax Fees for Fiscal 2018 and Fiscal 2017 represent fees relating to tax compliance matters.
All Other Fees for Fiscal 2018 and Fiscal 2017 represent fees for services and products other than those included above, includingnon-financial attest services and payments made to PwC related to the use of accounting regulatory and disclosure databases.
All of the services rendered by PwC to the Company and its subsidiaries during Fiscal 2018 and Fiscal 2017 werepre-approved by our Audit and Finance Committee.
PROPOSAL 4 — RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As noted above, PwC served as the Company’s independent registered public accountingaccounting firm during Fiscal 2018 and, in that capacity, rendered a report on(an independent audit firm) to examine the Company’s consolidated financial statements as of the Company and our subsidiaries for the fiscal year ended February 2, 2019 and internal control over financial reporting as of February 2, 2019. On an annual basis inFiscal 2022.
In deciding whether to retain our current independent registered public accounting firm or engage a different independent registered public accounting firm (also referred to as the “Company’s independent audit firm,firm”), our Audit and Finance Committee reviews the Company’s current independent audit firm’s qualifications, performance, and independence in accordance with regulatory requirements and guidelines. As part of this evaluation, factors considered by our Audit and Finance Committee include: PwC’s capabilities and expertise; the recent performance of PwC on the Company’s audit; management’s assessment of PwC’s performance; external data on audit quality, including results of recent PCAOB reports on PwC and its peers; PwC’s independence; the terms of the audit engagement; and the quality and candor of PwC’s communications to our Audit and Finance Committee. Subject to ratification by the stockholders of the Company, our Audit and Finance Committee
PwC has unanimously reappointed PwCacted as the Company’s independent registered public accountingaudit firm to audit the Company’s consolidated financial statements and internal control over financial reporting for Fiscal 2019.since 1996. Although the Company’s governing documents do not require the submission of PwC’s appointment to the Company’s stockholders for ratification, the Company believes itthat soliciting stockholders’ input is desirable to do so.a matter of good corporate governance. If the appointment of PwC is not ratified, our Audit and Finance Committee will reconsider the appointment.appointment; however, it is not required to do so. Even if PwC’s appointment is ratified, the Audit Committee may select a different independent audit firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and our stockholders.
Representatives of PwC are expected to be present at the Annual Meeting. They will be available to respond to appropriate questions and may make a statement if they so desire.
THE AUDIT AND FINANCE COMMITTEE AND THE FULL BOARD UNANIMOUSLY RECOMMEND THAT YOU VOTE“FOR” THE RATIFICATION OF THE APPOINTMENT OF PwC.
Required Vote
The
Subject to ratification by the stockholders of the appointment ofCompany, our Audit Committee has unanimously reappointed PwC as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements and internal control over financial reporting for Fiscal 2019 requires2022.
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| YOUR VOTE IS IMPORTANT | Our Audit and Finance Committee and the full Board unanimously recommend that you vote FOR the ratification of the appointment of PwC as our independent registered public accounting firm for Fiscal 2022. | |
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AUDIT AND FINANCE COMMITTEE MATTERS
Audit Fees
Fees billed for services rendered by PwC for each of Fiscal 2021 and Fiscal 2020 were as follows:
| | | | | | | | |
| Type of Service | Fiscal 2021 ($) | Fiscal 2020(4) ($) |
| | |
Audit Fees(1) | 3,131,566 | 3,486,726 |
| Audit-Related Fees | — | — |
Tax Fees(2) | 20,143 | 19,455 |
All Other Fees(3) | 34,971 | 24,493 |
| Total | 3,186,680 | 3,530,674 |
(1)Audit Fees represent fees for Fiscal 2021 and Fiscal 2020 for professional services rendered by PwC in connection with the affirmative vote of a majority in voting interestintegrated audit of the stockholders presentCompany’s annual consolidated financial statements included in person or by proxythe Company’s Annual Reports on Form 10-K and voting thereon. Abstentions will not be treated as votes cast.
STOCKHOLDER PROPOSALS FOR 2020 ANNUAL MEETING
Any stockholderreviews of the unaudited interim consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q of $1,899,700 and $2,195,318, respectively; statutory audits of $1,224,300 and $1,281,342, respectively; and other services provided in connection with statutory and regulatory filings or engagements of $7,566 and $10,066, respectively.
(2)Tax Fees for Fiscal 2021 and Fiscal 2020 represent fees relating to tax compliance matters.
(3)All Other Fees for Fiscal 2021 and Fiscal 2020 represent fees for services other than those included above, including non-financial attestation services and payments made to PwC related to the use of accounting regulatory and disclosure databases.
(4)The previously presented Fiscal 2020 fees were revised to reflect the actual fees associated with the services rendered by PwC to the Company and our subsidiaries for Fiscal 2020.
Under applicable SEC rules, our Audit Committee is required to pre-approve the audit and non-audit services performed by the Company’s independent audit firm in order to ensure that the provision of these services does not impair the independence of the Company’s independent audit firm from the Company and our subsidiaries. Annually, the Company’s management and the Company’s independent audit firm must jointly submit to our Audit Committee an Annual Pre-Approval Request (the “Pre-Approval Request”) listing all known and/or anticipated audit and non-audit services for the upcoming fiscal year. Our Audit Committee reviews each Pre-Approval Request with both the Company management and the independent audit firm.
During the course of the year, there may be additional audit or non-audit services that are identified by the Company management and are desired but were not contained in the annual Pre-Approval Request. Our Audit Committee has designated one or more of its members to have the authority to pre-approve interim requests for additional audit or non-audit services. These interim pre-approval procedures are to be used only for services that are less than $100,000 and requests for services greater than $100,000 must be approved by the full Audit Committee.
All of the services rendered by PwC to the Company and our subsidiaries during Fiscal 2021 and Fiscal 2020 were pre-approved by our Audit Committee.
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Stockholder Proposals for 2023 Annual Meeting
Any stockholder seeking to present a proposal pursuant to Exchange Act Rule
14a-8 to be considered for inclusion in the Company’s proxy statement for the
20202023 Annual Meeting, must submit the proposal in accordance with Exchange Act Rule
14a-8 and deliver it to
the Company at the address set forth below no later than the close of business on
Monday, December
31, 2019.26, 2022. Only those proposals that comply with the requirements of Exchange Act Rule
14a-8 will be included in the Company’s proxy statement for the
20202023 Annual Meeting.
Stockholders of the Company seeking to bring business before the 20202023 Annual Meeting outside of Exchange Act Rule14a-8, or to nominate candidates for election as directors at the 20202023 Annual Meeting, must provide timely written notice to the Company and comply with certain other requirements specified in the Company’s Amended and Restatedour Bylaws. The notice of a proposing stockholder must be in writing and delivered in person or by United States certified mail, postage prepaid, and received by theour Corporate Secretary, of the Company, at the address set forth below, not less than 120 days nor more than 150 days prior to the June 12, 20208, 2023 anniversary date of the 2019 Annual Meeting. As a result, notices with respect to proposed business outside of Rule14a-8 under the Exchange Act Rule 14a-8, or nominations for election as directors, for the 20202023 Annual Meeting must be received no earlier than the close of business on Monday, January 14, 20209, 2023 and not later than the close of business on Wednesday, February 13, 2020. 8, 2023. The notice requirements applicable to nominations are described above in the section captioned“PROPOSAL 1 — ELECTION OF DIRECTORS“Corporation Governance — Director Nominations” section of this Proxy Statement beginning on page 44 of this Proxy Statement.21.
Under Section 1.09 of
the Company’s Amended and Restatedour Bylaws, a stockholder wishing to bring business (other than nominations for election to the Board) before the
20202023 Annual Meeting must be a stockholder of record on both the date of the giving of the required notice of proposed business and the record date for determining the stockholders entitled to notice of and to vote at the
20202023 Annual Meeting.
The notice to be submitted by a proposing stockholder must include the following information:
•as to each matter the stockholder proposes to bring before the 20202023 Annual Meeting (other than nominations for election to the Board), a brief description of the business desired to be brought before the 20202023 Annual Meeting, including the complete text of any resolutions to be presented, and the reasonreasons for conducting such business at the 20202023 Annual Meeting;
•as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is being made:
–the name and address of each such person;
–(A) the class and number of all shares of the Company owned beneficially or of record by such person and any affiliates or associates of such person; (B) the name of each nominee holder of Company shares of the Company owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such Company shares of the Company held by each such nominee holder; (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to the shares of the Company;Company shares; and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of the Company)Company shares) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of which is to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to shares of the Company;
Company shares;–a description of all agreements, arrangements or understandings (written or oral) between or among such person, or any affiliates or associates of such person, and any other person or persons
(including their names) in connection with the proposal of such business and any material interest of such person, or any affiliates or associates of such person, in such business, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; | (including their names) in connection with the proposal of such business and any material interest of such person, or any affiliates or associates of such person, in such business, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person;
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–a representation that the stockholder giving notice intends to appear in person or by proxy at the 20202023 Annual Meeting to bring the business described in the stockholder’s notice; and
–any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by such person with respect to the proposed business to be brought by such person pursuant to the SEC’s proxy rules.
Proposals by stockholders intended to be presented at the 20202023 Annual Meeting and/or considered for inclusion in the Company’s proxy statement for the 20202023 Annual Meeting must be delivered or mailed to Abercrombie & Fitch Co., 6301 Fitch Path, New Albany, Ohio 43054, Attention: Corporate Secretary.
DELIVERY OF PROXY MATERIALS TO HOUSEHOLDS
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Additional Information About Our Annual Meeting and Voting
When will the Annual Meeting be held?
The Annual Meeting will be held virtually via a live webcast on Wednesday, June 8, 2022, at 10:00 a.m., Eastern Daylight Time.
Why am I being provided with access to this Proxy Statement?
We are required by the SEC has implemented rules regardingto give you, or provide you access to, this Proxy Statement because the deliveryBoard is soliciting your proxy to vote your shares of Common Stock at the Annual Meeting. This Proxy Statement summarizes the information you need in order to vote at the Annual Meeting.
What is a proxy?
A proxy is your designation of another person to vote shares of Common Stock you own. If you designate someone as your proxy in a written document, that document is also called a proxy, a form of proxy, materials (i.e.or a proxy card. When you designate a proxy, you also may direct the proxy how to vote your shares. Scott Lipesky and Gregory J. Henchel have been designated on behalf of the Board as the proxies to cast the vote of the Company’s stockholders at the Annual Meeting.
What are the voting requirements for the proposals to be acted upon at the Annual Meeting and discussed in this Proxy Statement?
The Company is incorporated in the State of Delaware and our shares are listed on the NYSE. As a result, the Delaware General Corporation Law (“DGCL”) and NYSE listing standards govern the voting standards applicable to actions taken by our stockholders.
Under our Bylaws:
•a majority of votes cast is required to approve Proposal 1 (election of directors)
•the affirmative vote of the holders of a majority of the shares present in person or by proxy at the Annual Meeting and voting thereon is required to approve Proposals 2, 3, and 4 as set forth below.
Please see the below chart for a summary of the required votes, as well as the impacts of abstentions and broker non-votes, for Proposals 1, 2, 3, and 4 as set forth below:
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| Proposal | | Voting Standard | Effect of Abstentions(1) | Effect of Broker Non-Votes(2) |
| | | | | |
| 1 | Elect the eleven director nominees named in this Proxy Statement to serve until the 2023 Annual Meeting of Stockholders | | Majority of votes cast | No effect | No effect |
| 2 | Approve, on a non-binding, advisory basis, the compensation of our named executive officers for Fiscal 2021 (“Say on Pay”)(3) | | Majority of votes present in person or by proxy and voting thereon | No effect | No effect |
| 3 | Approve an amendment to our 2016 Long-Term Incentive Plan for Associates to increase the number of authorized shares | | Majority of votes present in person or by proxy and voting thereon | No effect | No effect |
| 4 | Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for Fiscal 2022 | | Majority of votes present in person or by proxy and voting thereon | No effect | Your broker, bank or nominee may vote in its discretion |
(1)You may “abstain” from voting for Proposals 1, 2, 3, and 4. Abstentions will be excluded entirely from the vote and will have no effect.
(2)Under NYSE Rules, Proposal 4 is considered a “routine” proposal on which brokers are permitted to vote in their discretion even if the beneficial owners do not provide voting instructions. However, Proposals 1 through 3 are not considered to be routine matters and brokers will not be entitled to vote thereon unless beneficial owners provide voting instructions.
(3)As an advisory vote, the proposal to approve executive compensation is not binding upon the Company but the Board and our Compensation Committee will give careful consideration to the results of voting on this proposal.
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ADDITIONAL INFORMATION ABOUT OUR ANNUAL MEETING AND VOTING
What are the Board’s recommendations for the proposals to be acted upon at the Annual Meeting and how will my shares be voted?
Subject to revocation, all forms of proxy that are properly completed and timely received will be voted in accordance with the instructions you give. If no instructions are given (except in the case of broker non-votes), annual reportsthe persons named as proxies will vote the shares of Common Stock in accordance with the recommendations of the Board. The Board’s recommendations are set forth together with the description of each proposal in this Proxy Statement. The Board’s recommendations are summarized in the table below.
| | | | | | | | | | | |
| Proposal | Board Vote Recommendation | For More Information,
See Page |
| | | |
| 1 | Elect the eleven director nominees named in this Proxy Statement to serve until the 2023 Annual Meeting of Stockholders | FOR
each director nominee | |
| 2 | Approve, on a non-binding, advisory basis, the compensation of our named executive officers for Fiscal 2021 (“Say on Pay”) | FOR | |
| 3 | Approve an amendment to our 2016 Long-Term Incentive Plan for Associates to increase the number of authorized shares | FOR | |
| 4 | Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for Fiscal 2022 | FOR | |
Who can vote at the Annual Meeting?
Only holders of shares of the Company’s Common Stock of record at the close of business on April 11, 2022 or such stockholders’ proxies are entitled to receive notice of, and vote at, the Annual Meeting. At the close of business on April 11, 2022, there were 50,414,864 shares of Common Stock outstanding and entitled to vote. There are no other voting securities of the Company outstanding. Stockholders as of the record date are entitled to one vote per share. Each share of Common Stock is entitled to one vote for each director nominee and one vote with respect to each of the other matters to be voted upon at the Annual Meeting. To be able to vote your shares at the Annual Meeting, the records of the Company must show that you held your shares at the close of business on April 11, 2022.
How do I attend the Annual Meeting?
You can attend the Annual Meeting online by visiting www.virtualshareholdermeeting.com/ANF2022. You will not be able to attend the Annual Meeting in person. The live webcast of the Annual Meeting will begin promptly at 10:00 a.m., Eastern Daylight Time, on Wednesday, June 8, 2022. All stockholders proxy statementsmay attend and Noticeslisten to the live webcast of the Annual Meeting. If you are a stockholder of record, you may electronically vote your shares and submit questions at the Annual Meeting by using the 16-digit control number that is printed in the box on your Notice of Internet Availability of Proxy Materials)Materials or proxy card (if you received a printed copy of the proxy materials). We recommend that you log in at least 15 minutes before the Annual Meeting to households. ensure ample time to complete the check-in procedures. A replay of the Annual Meeting audio webcast will be available on our website for approximately one year following the Annual Meeting.
You do not need to attend the Annual Meeting to vote. Even if you plan to attend the Annual Meeting, please submit your vote in advance as instructed in this Proxy Statement.
What is a Notice of Internet Availability of Proxy Materials?
In accordance with rules adopted by the SEC, instead of mailing a printed copy of our proxy materials to each stockholder of record, we are permitted to furnish our proxy materials, including the Notice of Annual Meeting of Stockholders, this Proxy Statement, and our Annual Report, by providing access to such documents over the Internet. Generally, stockholders will not receive printed copies of the proxy materials unless they request them.
We began mailing a Notice of Internet Availability of Proxy Materials on April 25, 2022, to holders of record of shares of our Common Stock at the close of business on April 11, 2022. At the same time, we provided those stockholders with access to our online proxy materials and filed our proxy materials with the SEC. The Notice of Internet Availability of Proxy Materials contains
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ADDITIONAL INFORMATION ABOUT OUR ANNUAL MEETING AND VOTING
information on how to access the Notice of Annual Meeting of Stockholders, the Proxy Statement, the form of proxy, and our Annual Report, over the Internet, as well as instructions on how to request a paper copy of the proxy materials. Registered stockholders who prefer to receive a paper or e-mail copy of our proxy materials must follow the instructions provided in the Notice of Internet Availability of Proxy Materials for requesting such materials.
The Notice of Internet Availability of Proxy Materials only identifies the items to be voted on at the Annual Meeting. You cannot vote by marking the Notice of Internet Availability of Proxy Materials and returning it. The Notice of Internet Availability of Proxy Materials provides instructions on how to cast your vote. If you wish to request proxy materials by e-mail, please send a blank e-mail to sendmaterial@proxyvote.com including in the subject line the information that is printed in the box on your Notice of Internet Availability of Proxy Materials. Requests, instructions, and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before May 25, 2022 to facilitate timely delivery of the proxy materials.
A notice that directs beneficial owners of our shares to the website where they can access our proxy materials is to be forwarded to each beneficial stockholder by the brokerage firm, bank or other holder of record that is considered the registered owner with respect to the shares of the beneficial stockholder. Such brokerage firm, bank or other holder of record is to also provide each beneficial owner of our shares with instructions on how the beneficial stockholder may request a paper or e-mail copy of our proxy materials.
To enroll in the electronic delivery service for future stockholder meetings, use your Notice of Internet Availability of Proxy Materials (or proxy card, if you received printed copies of the proxy materials) to register online at www.proxyvote.com and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
What is the difference between holding shares as a holder of record and as a beneficial owner?
If, at the close of business on April 11, 2022, your shares were registered directly in your name with our transfer agent, American Stock Transfer and Trust Company, LLC (“AST”), you are considered a holder of record with respect to those shares, and the Notice of Internet Availability of Proxy Materials was sent directly to you. As a holder of record, you may vote your shares electronically at the Annual Meeting or by proxy.
If, at the close of business on April 11, 2022, your shares were held in an account at a brokerage firm, bank or other similar organization, then you are the beneficial owner of shares held in “street name” and a notice directing you to the website where you can access our proxy materials is being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct that organization how to vote the shares in your account. If that organization is not given specific direction, shares held in the name of that organization may not be voted and will not be considered as present and entitled to vote on any matter to be considered at the Annual Meeting other than the ratification of the appointment of the Company’s independent registered public accounting firm. Please direct your broker how to vote your shares following the instructions provided by your broker.
How do I vote my shares?
If you are a registered stockholder (i.e., you hold your shares of record), you may vote your shares using one of the following methods (please also see the information provided above and below concerning the difference in how to vote if you hold shares beneficially through a brokerage firm, bank or other nominee instead of as the registered holder — beneficial holders should follow the voting instructions provided by their respective nominees):
•Over the Internet.Go to www.proxyvote.com.Have available the information that is printed in the box on your Notice of Internet Availability of Proxy Materials and visit www.proxyvote.com. You can use the Internet 24 hours a day, seven days a week, to submit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Daylight Time, on June 7, 2022. Have your proxy card (if you requested a printed copy of the proxy materials) or Notice of Internet Availability of Proxy Materials in hand when you access the website and follow the instructions to obtain your records and create an electronic voting instruction form.
•By telephone.Call 1-800-690-6903. You can use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Daylight Time, on June 7, 2022. Have your proxy card (if you requested a printed copy of the proxy materials) or Notice of Internet Availability of Proxy Materials in hand when you call and follow the instructions.
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ADDITIONAL INFORMATION ABOUT OUR ANNUAL MEETING AND VOTING
•By mail. If you received a printed copy of the proxy materials, you may submit your vote by completing, signing, dating, and mailing your proxy card and returning it in the postage-paid envelope to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. Sign your name exactly as it appears on the proxy card. Proxy cards submitted by mail must be received no later than June 7, 2022 to be voted at the Annual Meeting.
•During the Annual Meeting. Visit www.virtualshareholdermeeting.com/ANF2022. Registered stockholders may attend the Annual Meeting via the Internet and vote electronically during the Annual Meeting. Have available the information that is printed in the box on your Notice of Internet Availability of Proxy Materials or your proxy card (if you requested a printed copy of the proxy materials) in hand when you access the website and follow the instructions to vote during the Annual Meeting.
If, prior to the Annual Meeting, you vote over the Internet or by telephone, your electronic vote authorizes the named proxies in the same manner as if you signed, dated, and returned a proxy card. If, prior to the Annual Meeting, you vote over the Internet or by telephone, do not return a proxy card unless you intend to revoke your previously submitted proxy.
If I am a stockholder holding shares in “street name,” how do I vote?
If you hold your shares in “street name” with a brokerage firm, bank or other nominee, the holder of record will send you instructions as to how to instruct the holder of record to vote your shares. Your broker is permitted to vote your shares with respect to the “routine” proposal to ratify the appointment of the Company’s independent registered public accounting firm without your instruction as to how to vote but will not be permitted to vote your shares with respect to any of the other proposals at the Annual Meeting without your instructions as to how to vote.
If you hold your shares in “street name,” you should have received a Notice of Internet Availability of Proxy Materials or voting instructions from the brokerage firm, bank or other nominee holding your shares. You should follow the instructions in the Notice of Internet Availability of Proxy Materials or voting instructions provided by your broker or other nominee in order to instruct your broker or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of your broker or other nominee.
What is a “broker non-vote”?
A “broker non-vote” occurs when a stockholder holds our shares of Common Stock in “street name” through a broker or similar organization, and the stockholder does not provide the broker or other organization with instructions within the required timeframe before the Annual Meeting as to how to vote the shares on “non-routine” matters. The only proposal this year which is considered “routine” is the ratification of the appointment of the Company’s independent registered public accounting firm. Under NYSE Rules, your broker cannot vote your shares on non-routine matters unless your broker receives instructions from you as to how to vote.
How can I revoke my proxy or change my vote?
If you are a registered stockholder, you can revoke your proxy at any time before it is actually voted at the Annual Meeting by:
•Signing and returning a new proxy card with a later date — only your latest-dated proxy card received by June 7, 2022, will be counted;
•Submitting a later-dated vote by telephone or over the Internet — only your latest telephone or Internet proxy received by 11:59 p.m., Eastern Daylight Time, on June 7, 2022, will be counted;
•Participating in the Annual Meeting live via the Internet and voting again; or
•Delivering a written revocation to our Corporate Secretary at 6301 Fitch Path, New Albany, Ohio 43054, to be received no later than June 7, 2022.
If you hold your shares in “street name,” you must contact the broker or other nominee holding your shares and follow the instructions of the broker or other nominee for revoking or changing your vote.
Who is paying for the cost of this proxy solicitation?
This methodsolicitation of delivery, often referredproxies is made by and on behalf of the Board. In addition to mailing the Notice of Internet Availability of Proxy Materials (or, if applicable, paper copies of this Proxy Statement, the Notice of Annual Meeting of Stockholders, the proxy card, and
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ADDITIONAL INFORMATION ABOUT OUR ANNUAL MEETING AND VOTING
our Annual Report) to registered stockholders as of the close of business on April 11, 2022, the brokers, banks and other nominees holding our shares for beneficial owners must provide a notice as to where the beneficial owners can access our proxy materials to the beneficial owners for whom they hold our shares in order that such shares may be voted. Solicitation may also be made by our directors, officers and select other Company associates telephonically, electronically or by other means of communications. Directors, officers and associates who help us in the solicitation will not be specially compensated for those services, but they may be reimbursed for their out-of-pocket expenses incurred in connection with the solicitation. In addition, the Company has retained Innisfree to aid in the solicitation of proxies for a fee of $15,000, plus out-of-pocket expenses.
The Company will reimburse Innisfree, as well as brokerage firms, banks and other custodians, fiduciaries and nominees, who are record holders of shares of our Common Stock not beneficially owned by them for their reasonable costs in sending proxy materials to stockholders who beneficially own our shares. The Company will bear the costs incurred in connection with the solicitation of proxies on behalf of the Board, other than the Internet access or telephone usage fees which may be charged to stockholders.
What is householding?
In order to reduce expenses, we are taking advantage of certain SEC rules, commonly known as “householding,”
permits the Companythat permit us to send: (i) a single annual report
(including our Annual Report) and/or a single proxy statement or (ii) a single Notice of Internet Availability of Proxy Materials to multiple registered stockholders who share an
address. In each case, each registered stockholder at the shared address,
must consent to the householding process in accordance with applicable SEC rules. Each registered stockholder would continue to receive a separate proxy card with proxy materials delivered by mail ore-mail.Only one copy of this Proxy Statement and the Company’s Annual Report 2018 or one copy of the Notice of Internet Availability of Proxy Materials is being delivered to multiple registered stockholders at a shared address whounless we have affirmatively consented, in writing, to the householding process, unless the Company has subsequently received contrary instructions from one or more of such registeredthe stockholders. A separate proxy card is being included for each account at the shared address to which paper copies of this Proxy Statement and the Company’s Annual Report 2018 have been delivered. The Company will promptly deliver, upon written or oral request, a separate copy of this Proxy Statement and the Company’s Annual Report 2018 or a separate copy of the Notice of Internet Availability of Proxy Materials to a registered stockholder at a shared address to which a single copy of these documents was delivered. A registered stockholder at a shared address may contact the Company’s transfer agent, American Stock Transfer & Trust Company, LLC, by calling1-800-937-5449,call Broadridge, toll free, 1-866-540-7095, or by forwarding a written requestwrite to American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn,Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11219,11717, to: (i) request additional copies of this Proxy Statement, and the Company’sour Annual Report, 2018 or the Notice of Internet Availability of Proxy Materials; or (ii) notify the Company that such registered stockholder wishes to receive a separate annual report to stockholders,including our Annual Report, proxy statement, or Notice of Internet Availability of Proxy Materials, as applicable, in the future.
Registeredfuture; or (iii) notify the Company that such registered stockholders who sharesharing an address may request delivery ofwhich to receive a single copy of annual reports to stockholders, proxy statements or Notices of Internet Availability of Proxy Materials, as applicable, in the future, if they are currently receiving multiple copies, by contacting the Company’s transfer agent as described in the preceding paragraph.
Many brokerage firms, banks and other holders of record have also instituted “householding.” If your family or others with a shared address have one or more “street name” accounts under which you beneficially own shares of Common Stock, you may have received householding information from your brokerage firm, bank or other nominee in the past. Please contact the holder of record directly if you have questions, require additional copies of this Proxy Statement andreport including our Annual Report, 2018proxy statement, or the Notice of Internet Availability of Proxy Materials, or wish toif such stockholders are currently receiving multiple copies. If you hold shares of Common Stock in street name, you may revoke your decisionconsent to householdhouseholding by notifying your broker.
Are there any cumulative voting rights in the election of directors?
No.
What constitutes a quorum to hold and thereby receive multiple copies. You should also contacttransact business at the holderAnnual Meeting?
A quorum for the Annual Meeting is one-third of recordthe outstanding shares of Common Stock. If you are a registered stockholder and submit a proxy, your shares of Common Stock will be counted to determine whether we have a quorum even if you wishabstain or fail to institute householding.
FORWARD-LOOKING STATEMENTS
We caution thatprovide voting instructions on any forward-looking statements (as such term is defined inof the Private Securities Litigation Reform Act of 1995) containedproposals described in this Proxy Statement and listed on the form of proxy. If your shares of Common Stock are held in the name of your broker or made by us, our managementother nominee, and you do not instruct your broker or our spokespeople involve risksother nominee how to vote your shares of Common Stock, these shares will still be counted for purposes of determining the presence or absence of a quorum for the transaction of business if your broker or other nominee submits a proxy.
How many votes do I have?
Stockholders as of the record date are entitled to one vote per share. Each share of Common Stock is entitled to one vote for each director nominee and uncertainties andone vote with respect to each of the other proposals to be voted on.
How are subject to change based on various factors, manyvotes tabulated?
The results of
which maystockholder voting will be
beyond our control. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend” and similar expressions may identify forward-looking statements. Except as may be required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements.Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. The following factors, categorizedtabulated by the primary natureinspectors of election appointed for the Annual Meeting.
How do I nominate a director using the “Proxy Access” provisions under the Company’s Bylaws?
The Company’s “Proxy Access” for director nominations bylaw permits a stockholder, or group of up to 20 stockholders, that has owned continuously for at least three years shares of the
associated risk, could affectCompany’s Common Stock representing an aggregate of at least 3% of our
financial performanceoutstanding shares, to nominate and
could cause actual resultsinclude in the Company’s proxy materials director nominees constituting up to
differ materially from those expressed or implied in any25% of the
forward-looking statements.MacroeconomicBoard, provided that the stockholder(s) and industry risks include:
Changesnominee(s) satisfy the requirements in global economic and financial conditions,Section 2.04 of the Company’s Bylaws.
A nominating stockholder must be a stockholder of record on both the date of the giving of the required notice of proposed nomination and the resulting impact on consumer confidencerecord date for determining the stockholders entitled to notice of and consumer spending,to vote at the relevant meeting of the
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| 2022 Proxy Statement | 95 | Abercrombie & Fitch Co. |
ADDITIONAL INFORMATION ABOUT OUR ANNUAL MEETING AND VOTING
stockholders. The recommendation must include the candidate’s name, age, business address, residence address and principal occupation. The recommendation must also describe the qualifications, attributes, skills or other qualities possessed by the recommended director candidate. A written statement from the candidate consenting to serve as a director, if elected, must accompany any such recommendation.
The informational requirements for stockholders with respect to the nomination of director candidates are detailed and include the disclosure of all derivative and synthetic instruments and short interests held by the nominating stockholder and such stockholder’s affiliates or associates as well as by any proposed nominees.
The notice of a nominating stockholder in respect of an annual meeting of stockholders must be in writing and delivered in person or by United States certified mail, postage prepaid, and received by the Corporate Secretary of the Company, at the Company’s principal executive offices at 6301 Fitch Path, New Albany, Ohio 43054, not less than 120 days nor more than 150 days prior to the anniversary date of the immediately preceding annual meeting of stockholders, which, for purposes of the Company’s 2023 Annual Meeting, means no earlier than the close of business on Monday, January 9, 2023 and no later than the close of business on Wednesday, February 8, 2023.
A stockholder providing notice of any nomination proposed to be made at an annual meeting of stockholders must update and supplement such notice, if necessary, so that the information provided is true and correct as of the record date for determining the stockholders entitled to receive notice of and vote at the relevant annual meeting of stockholders, with such update and supplement to be received by the Company’s Corporate Secretary, at the Company’s principal executive offices, not later than five business days after such record date.
What should I do if I have other changes in consumer discretionary spending habits, couldquestions regarding voting or require any assistance with voting my shares?
If you have a material adverse effect onany questions or require any assistance with voting your shares, please contact Innisfree, our business, results of operationsproxy solicitor, using the contact information listed below:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders May Call Toll-Free: (888) 750-5834 (from the United States and liquidity;Canada)
Failure to anticipate customer demandStockholders May Call: (412) 232-3651 (from other locations)
Banks and changing fashion trends and to manage our inventory commensurately could adversely impact our sales levels and profitability;Brokers May Call Collect: (212) 750-5833
Our market share mayWhat should I do if I require technical support during the Annual Meeting?
If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please call the technical support number that will be negatively impacted by increasing competition and pricing pressures from companies with brands or merchandise competitive with ours;
Fluctuations in foreign currency exchange rates could adversely impact our financial condition and results of operations;
Our ability to attract customers to our stores depends, in part,provided on the success of the shopping malls or area attractions that our stores are located in or around; and
Annual Meeting website log-in page.The impact of war, acts of terrorism or civil unrest could have a material adverse effect on our operating results and financial condition.
Strategic risks include:
The expansion of ourdirect-to-consumer sales channels and omnichannel initiatives are significant components of our growth strategy, and the failure to successfully develop our position across all channels could have an adverse impact on our results of operations;
Our international growth strategy and ability to conduct business in international markets may be adversely affected by legal, regulatory, political and economic risks; and
Failure to successfully implement our strategic plans could have a negative impact on our growth and profitability.
Operational risks include:
Failure to protect our reputation could have a material adverse effect on our brands;
Our business could suffer if our information technology systems are disrupted or cease to operate effectively;
We may be exposed to risks and costs associated with cyber-attacks, data protection, credit card fraud and identity theft that would cause us to incur unexpected expenses and reputation loss;
Our reliance on distribution centers makes us susceptible to disruptions or adverse conditions affecting our supply chain;
Changes in cost, availability and quality of raw materials, labor, transportation, and trade relations could cause manufacturing delays and increase our costs;
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| Abercrombie & Fitch Co. | 96 | 2022 Proxy Statement |
We depend upon independent third parties for the manufacture and delivery of all our merchandise, and a disruption of the manufacture or delivery of our merchandise could result in lost sales and could increase our costs;
We rely on the experience and skills of our senior executive officers and associates, the loss of whom could have a material adverse effect on our business; and
Other MattersExtreme weather conditions, including natural disasters, pandemic disease and other unexpected events, could negatively impact our facilities, systems and stores, as well as the facilities and systems of our vendors and manufacturers, which could result in an interruption to our business and adversely affect our operating results.
Legal, tax, regulatory and compliance risks include:
Fluctuations in our tax obligations and effective tax rate may result in volatility in our results of operations;
Our litigation exposure could have a material adverse effect on our financial condition and results of operations;
Failure to adequately protect our trademarks could have a negative impact on our brand image and limit our ability to penetrate new markets;
Changes in the regulatory or compliance landscape and compliance with changing regulations for accounting, corporate governance and public disclosure could adversely affect our business, results of operations and reported financial results; and
Our Asset-Based Revolving Credit Agreement and our Term Loan Agreement include restrictive covenants that limit our flexibility in operating our business.
The factors listed above are not our only risks. Additional risks may arise and current evaluations of risks may change, which could lead to material, adverse effects on our business, operating results and financial condition.
OTHER MATTERS
As of the date of this Proxy Statement, the Board knows of no matter that will be presented for action by the stockholders at the Annual Meeting other than those discussed in this Proxy Statement. If any other matter requiring a vote of the stockholders properly comes before the Annual Meeting, the individuals acting under the proxies solicited by the Board will vote and act according to their best judgments in light of the conditions then prevailing, to the extent permitted under applicable law.
If you have any questions or require any assistance with voting your shares, please contact Innisfree M&A Incorporated, toll-free at(888) 750-5834 or directly at(412) 232-3651. Banks and brokers may call collect at(212) 750-5833.
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April 29, 2019
2022 Proxy Statement | 97 | By Order of the Board of Directors,
Abercrombie & Fitch Co. |
Gregory J. Henchel
Senior Vice President, General Counsel
Appendix A — Non-GAAP Measures
This Proxy Statement includes references to certain adjusted non-GAAP financial measures, including adjusted operating income and Corporate Secretaryadjusted operating margin. We believe that the use of the non-GAAP financial measures presented are useful to investors as they provide a measure of the Company’s operating performance excluding the effect of certain items which we believe do not reflect our future operating outlook. Non-GAAP financial measures should be used supplemental to, and not as an alternative to, our GAAP financial results, and may not be calculated in the same manner as similar measures presented by other companies.
Adjusted Operating Income and Adjusted Operating Margin Reconciliation
| | | | | | | | | | | | | | |
| | | |
| (in thousands) | | | |
| | 2021 | | |
| Net sales | $ | 3,712,768 | | | |
| | | | |
| | 2021 | | |
| Operating income | $ | 343,084 | | | (1) Excluded items consist of pre-tax store asset impairment charges of $12.1 million. |
| Excluded items(1) | $ | (12,100) | | |
| Adjusted operating income | $ | 355,184 | | |
| | | |
Performance Metrics
We also use non-GAAP measures for certain of our performance metrics, including: (i) Adjusted EBIT, the performance metric used in our annual cash incentive performance plan, (ii) Average ROIC, a performance metric used in connection with our performance share awards, and (iii) Average EBIT Margin %, a performance metric used in connection with our performance share awards. The definitions of, and explanations of items excluded from the calculations of, these performance measures are included here.
Annual Cash Incentive Program
Adjusted EBIT
Adjusted EBIT is a performance metric used in the Company’s annual cash incentive program. “Adjusted EBIT” reflects GAAP net income (loss), excluding interest and taxes for each measurement season, and may include certain non-GAAP adjustments such as restructurings, discontinued operations and all items of gain, loss or expense determined to be unusual in nature and/or infrequent in occurrence or related to the disposal of a segment of a business, and/or as otherwise determined by the Compensation Committee in its sole discretion.
In Fiscal 2021:
•30% of the Adjusted EBIT metric was determined based on Spring financial results, which included first and second fiscal quarter combined GAAP net income (loss) excluding interest and taxes less non-GAAP adjustments.
•70% of the Adjusted EBIT metric was determined based on Fall financial results, which included third and fourth fiscal quarter combined GAAP net income (loss) excluding interest and taxes less non-GAAP adjustments.
•The Adjusted EBIT metric excluded the effect of bonuses payable under the annual cash incentive program and foreign currency exchange rate fluctuations, as well as pre-tax store asset impairment charges of $12.1 million.
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| Abercrombie & Fitch Co. | A-1 | 2022 Proxy Statement |
APPENDIX A
- NON-GAAP MEASURES
Long-Term Equity Incentive Awards
Average ROIC
Average ROIC is a performance metric used in the Company’s performance share awards for the Fiscal 2019 to Fiscal 2021 cycle.
The Average ROIC performance metric is measured as the three-year average of the Return on Invested Capital results for each of the three years (respectively) of the performance period, where “Return on Invested Capital” is defined as EBITDAR divided by Invested Capital for each such year.
“EBITDAR” is defined as net income less depreciation, amortization, rent costs, interest and taxes as reported in the Company’s consolidated financial statements for each such year in accordance with GAAP as in effect on the date of grant (March 26, 2019).
“Invested Capital” is defined as working capital less cash, current portion of deferred lease credits, and income taxes payable plus gross property and equipment and a 6x multiple of annual operating lease expense as reported in the Company’s consolidated financial statements for each such year in accordance with GAAP as in effect on the date of grant (March 26, 2019).
Certain exclusions and adjustments were approved by the Compensation Committee at the beginning of the performance period. The measurement of the level of achievement relative to the Average ROIC performance metric for the Fiscal 2019 to Fiscal 2021 cycle excluded or adjusted for the impact of the following: changes in lease accounting; items of gain, loss, and expense for the performance period related to exit activities (flagship store closures and related liquidation activity); and impairment of long-lived assets.
Average EBIT Margin %
EBIT Margin % is a performance metric used in the Company’s performance share awards for the Fiscal 2021 to Fiscal 2023 cycle.
Average EBIT Margin % will be equal to the straight average of the EBIT Margin % results for each of the performance years of Fiscal 2021, Fiscal 2022, and Fiscal 2023.
EBIT Margin % is equal to the EBIT for each fiscal year of the three-year performance period, divided by the corresponding fiscal year’s net sales, as reported in the Company’s consolidated financial statements in accordance with GAAP as in effect on March 29, 2021, and expressed as a percentage.
Certain exclusions and adjustments were approved by the Compensation Committee at the beginning of the performance period. The measure of EBIT Margin % will exclude or adjust for the impact of the following: impact of changes in accounting principles (i.e., cumulative effect of GAAP changes); impact from changes in accounting policies that were not contemplated in the initial targets; impacts from changes in tax structures or statutory rates that result in a cumulative EBIT impact of greater than $5.0 million for the performance period; all items of gain, loss or expense for the performance period related to an exit activity (including flagship closures); impairment of long-lived assets, finite or indefinite lived intangible assets, or goodwill; impacts from total legal settlements in excess of a cumulative amount of $5.0 million over the performance period; impacts from charges or gains from the early extinguishment of funded debt obligations and/or lease obligations; and impacts of direct and incremental effects of acquisitions of business(es), and direct and incremental effects of intangible asset acquisitions.
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| 2022 Proxy Statement | A-2 | Abercrombie & Fitch Co. |
Appendix B — 2016 Associates LTIP
2016 LONG-TERM INCENTIVE PLAN FOR ASSOCIATES
(as (as proposed to be amended)
[NOTE:NOTE: Strike-out text in Section 4(a) proposed to be deleted; double-text
bolded and underlined text in Section 4(a) proposed to be added.]
1. Purpose.Purpose.The purpose of this 2016 Long-Term Incentive Plan for Associates (the “Plan”) is to aid Abercrombie & Fitch Co., a Delaware corporation (together with its successors and assigns, the “Company”), in attracting, retaining, motivating and rewarding certain associates of the Company or its subsidiaries or affiliates, to provide for equitable and competitive compensation opportunities, to recognize individual contributions and reward achievement of Company goals, and to promote the creation of long-term value for stockholders of the Company by closely aligning the interests of Participants with those of stockholders. The Plan authorizes equity-based incentives for Participants.
2.Definitions. In addition to the terms defined in Section 1 above and elsewhere in the Plan, the following capitalized terms used in the Plan have the respective meanings set forth in this Section: (a)“Annual Limit” shall have the meaning specified in Section 5(b). (b)“Award” means any Option, SAR, Restricted Stock or Restricted Stock Unit, together with any related right or interest, granted to a Participant under the Plan. (c)“Beneficiary” means the legal representative of the Participant’s estate entitled by will or the laws of descent and distribution to receive the benefits under a Participant’s Award upon a Participant’s death,provided that,, if and to the extent authorized by the Committee, a Participant may be permitted to designate a Beneficiary, in which case the “Beneficiary” instead will be the person, persons, trust or trusts (if any are then surviving) which have been designated by the Participant in his or her most recent written and duly filed beneficiary designation to receive the benefits specified under the Participant’s Award upon such Participant’s death. (d)“Board” means the Company’s Board of Directors. (e)“Change of Control” has the meaning specified in Section 9. (f)“Code” means the Internal Revenue Code of 1986, as amended. References to any provision of the Code or regulation thereunder shall include any successor provisions and regulations, and reference to regulations includes any applicable guidance or pronouncement of the Department of the Treasury and the Internal Revenue Service. (g)“Committee” means the Compensation and Organization Committee of the Board, the composition and governance of which is established in the Committee’s charter as approved from time to time by the Board and subject to Section 303A.05 of the Listed Company Manual of the New York Stock Exchange, and other corporate governance documents of the Company. No action of the Committee shall be void or deemed to be without authority due to the failure of any member, at the time the action was taken, to meet any qualification standard set forth in the Committee’s charter or the Plan. The full Board may perform any function of the Committee hereunder except to the extent limited under Section 303A.05 of the Listed Company Manual of the New York Stock Exchange, in which case the term “Committee” shall refer to the Board. (h)“Covered Associate” means an Eligible Person who is a Covered Associate as specified in Section 11(j).
(i)“Effective Date” means the effective date specified in Section 11(q).
(j)“Eligible Person” has the meaning specified in Section 5. (k)“Exchange Act” means the Securities Exchange Act of 1934, as amended. References to any provision of the Exchange Act or rule (including a proposed rule) thereunder shall include any successor provisions and rules. (l)“Fair Market Value” means the fair market value of Stock, Awards or other property as determined in good faith by the Committee or under procedures established by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of Stock shall be the closing price per share of Stock reported on a consolidated basis for securities listed on the principal stock exchange or market on which Stock is traded on the day as of which such Fair Market Value is being determined or, if there is no closing price on that day, then the closing price on the last previous day on which a closing price was reported. | | | | | | | | |
| Abercrombie & Fitch Co. | B-1 | 2022 Proxy Statement |
APPENDIX B - 2016 ASSOCIATES LTIP
(m)“Incentive Stock Option” or “ISO” means any Option designated as an incentive stock option within the meaning of Code Section 422 and qualifying thereunder. (n)“Option” means a right, granted under the Plan, to purchase Stock. (o)“Participant” means a person who has been granted an Award under the Plan which remains outstanding, including a person who is no longer an Eligible Person. (p)“Restricted Stock” means Stock granted under the Plan which is subject to certain restrictions and to a risk of forfeiture. (q)“Restricted Stock Unit” or “RSU” means a right, granted under the Plan, to receive Stock, cash or other Awards or a combination thereof at the end of a specified deferral period. (r)“Retirement” means, unless otherwise stated by the Committee (or the Board) in an applicable Award agreement, a Participant’s voluntary termination of employment after achieving 65 years of age. (s)“Rule16b-3” means Rule16b-3, as from time to time in effect and applicable to Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act. (t)“Share Pool” has the meaning specified in Section 4. (u)“Stock” means the Company’s Class A Common Stock, par value $0.01 per share, and any other equity securities of the Company or another issuer that may be substituted or resubstituted for Stock pursuant to Section 11(c). (v)“Stock Appreciation Right” or “SAR” means a right granted to a Participant under Section 6(c). (a)Authority of the Committee. The Plan shall be administered by the Committee, which shall have full and final authority, in each case subject to and consistent with the provisions of the Plan, to select Eligible Persons to become Participants; to grant Awards; to determine the type and number of Awards, the dates on which Awards may be exercised and on which the risk of forfeiture shall lapse or terminate, the acceleration of any such dates, the expiration date of any Award, whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Stock, other Awards, or other property, and other terms and conditions of, and all other matters relating to, Awards; to prescribe documents evidencing or setting terms of Awards (such Award documents need not be identical for each Participant), amendments thereto, and rules and regulations for the administration of the Plan and amendments thereto
(including (including outstanding Awards); to construe and interpret the Plan and Award documents and correct defects, supply omissions or reconcile inconsistencies therein; and to make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan. Decisions of the Committee with respect to the administration and interpretation of the Plan shall be final, conclusive and binding upon all persons interested in the Plan, including Participants, Beneficiaries, transferees under Section 11(b) and other persons claiming rights from or through a Participant, and stockholders of the Company.
(b)Manner of Exercise of Committee Authority. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may act through subcommittees, including for purposes of perfecting exemptions under Rule16b-3 or qualifying Awards under Code Section 162(m) as “performance-based compensation”, in which case the subcommittee shall be subject to and have authority under the charter applicable to the Committee, and the acts of the subcommittee shall be deemed to be acts of the Committee hereunder. The Committee may delegate the administration of the Plan to one or more officers or associates of the Company, and such administrator(s) may have the authority to grant Awards under the Plan, as may be determined by the Committee from time to time, to execute and distribute Award agreements or other documents evidencing or relating to Awards granted by the Committee under the Plan, to maintain records relating to Awards, to process or oversee the issuance of Stock under Awards, to interpret and administer the terms of Awards and to take such other actions as may be necessary or appropriate for the administration of the Plan and of Awards under the Plan,provided that in no case shall any such administrator be authorized (i) to take any action that would result in the loss of an exemption under Rule16b-3 for Awards granted to or held by Participants who at the time are subject to Section 16 of the Exchange Act in respect of the Company or that would cause Awards intended to qualify as “performance-based compensation” under Code Section 162(m) to fail to so qualify, (ii) to take any action inconsistent with Section 157 and other applicable provisions of the Delaware General Corporation Law, or (iii) to make any determination required to be made by the Committee under the New York Stock Exchange corporate governance standards applicable to listed company compensation committees (currently, Rule 303A.05). Any action by any such administrator within the scope of its delegation shall be deemed for all purposes to have been taken by the Committee and, except as otherwise specifically provided, references in the Plan to the Committee shall include any such administrator. The Committee established pursuant to Section 3(a) and, to the extent it so provides, any
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| 2022 Proxy Statement | B-2 | Abercrombie & Fitch Co. |
APPENDIX B - 2016 ASSOCIATES LTIP
subcommittee, shall have sole authority to determine whether to review any actions and/or interpretations of any such administrator, and if the Committee shall decide to conduct such a review, any such actions and/or interpretations of any such administrator shall be subject to approval, disapproval or modification by the Committee.
(c)Limitation of Liability.The Committee and each member thereof, and any person acting pursuant to authority delegated by the Committee, shall be entitled, in good faith, to rely or act upon any report or other information furnished by any executive officer, other officer or associate of the Company or a subsidiary or affiliate of the Company, the Company’s independent auditors, consultants or any other agents assisting in the administration of the Plan. Members of the Committee, any person acting pursuant to authority delegated by the Committee, and any officer or associate of the Company or a subsidiary or affiliate of the Company acting at the direction or on behalf of the Committee or a delegee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination. (a)Overall Number of Shares Available for Delivery. The total number of shares of Stock reserved and available for delivery in connection with Awards under the Plan shall be9,100,0006,900,000“Share“Share Pool”). Subject to limitations provided in Section 6(b)(iv), up to 500,000 authorized shares may be granted as ISOs under the Plan. The total number of shares available is subject to adjustment as provided in Section 11(c). Any shares of Stock delivered under the Plan shall consist of authorized and unissued shares or treasury shares.
(b)Share Counting Rules. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments in accordance with this Section 4(b). (i) Except as set forth below, to the extent that an Award granted under the Plan expires or is forfeited, cancelled, surrendered or otherwise terminated without issuance of shares to the Participant, settled only in cash or settled by the issuance of fewer shares than the number underlying the Award, the shares retained by or tendered to the Company will be available under the Plan. (ii) Shares that are withheld from an Award of Restricted Stock or RSUs granted under the Plan to cover withholding tax obligations related to that Award or shares that are separately tendered by the Participant (either by delivery or attestation) in payment of such taxes shall be deemed to constitute shares not delivered to the Participant and will be available for future grants under the Plan. (iii) Shares that are withheld from, or that are tendered by a Participant (either by delivery or attestation) in connection with, an Award of Options or SARs granted under the Plan to cover withholding tax obligations related to that Award or the exercise price of that Award, shall be deemed to constitute shares delivered to the Participant and shall not be available for future grants under the Plan. For purposes of clarity, upon the exercise of an Option or SAR, the gross number of shares exercised, and not solely the net number of shares delivered upon such exercise, shall be treated as issued pursuant to the Plan and the shares subject to the exercised Option or SAR that are not issued or delivered upon such exercise will not be available for future grants under the Plan. (iv) In addition, in the case of any Award granted through the assumption of, or in substitution for, an outstanding award granted by a company or business acquired by the Company or a subsidiary or affiliate of the Company or with which the Company or a subsidiary or affiliate of the Company merges, consolidates or enters into a similar corporate transaction, shares issued or issuable in connection with such substitute Award shall not be counted against the Share Pool.
5.Eligibility;Per-Person Award Limitations. (a)Eligibility. Awards may be granted under the Plan only to Eligible Persons. For purposes of the Plan, an “Eligible Person” means an associate of the Company or any subsidiary or affiliate of the Company, including any person who has been offered employment by the Company or a subsidiary or affiliate of the Company,provided that such prospective associate may not receive any payment or exercise any right relating to an Award until such person has commenced employment with the Company or a subsidiary or affiliate of the Company. An associate on leave of absence may be considered as still in the employ of the Company or a subsidiary or affiliate of the Company for purposes of eligibility for participation in the Plan, if so determined by the Committee. For purposes of the Plan, a joint venture in which the Company or a subsidiary of the Company has a substantial direct or indirect equity investment shall be deemed an affiliate, if so determined by the Committee. Holders of awards granted by a company or business acquired by the Company or a subsidiary or affiliate of the Company, or with which the Company or a subsidiary or affiliate of the Company merges, consolidates or enters into a similar corporate transaction, who will become Eligible Persons are eligible for grants of substitute awards granted through the assumption of, or in substitution for, such outstanding awards previously granted, under the Plan in connection with such transaction, if so determined by the Committee. (b)Per-Person Award Limitations.
During any calendar year during any part of which the Plan is in effect, an Eligible Person may be granted Awards under Section 6(b), Section 6(c), Section 6(d), or Section 6(e) up to the Annual Limit (such Annual Limit to apply in the aggregate for all types of Award authorized under the Plan). A Participant’s Annual Limit, in any calendar year during any part of which the Participant is then eligible under the Plan, shall equal 1,000,000 shares, subject to adjustment as provided in Section 11(c). | | | | | | | | |
| Abercrombie & Fitch Co. | B-3 | 2022 Proxy Statement |
APPENDIX B - 2016 ASSOCIATES LTIP
6.Specific Terms of Awards. (a)General. Awards may be granted on the terms and conditions set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 11(e) and Section 11(k)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment or service by the Participant and terms permitting a Participant to make elections relating to his or her Award. The Committee shall retain full power and discretion with respect to any term or
condition of an Award that is not mandatory under the Plan, subject to Section 11(k). The Committee shall require the payment of lawful consideration for an Award to the extent necessary to satisfy the requirements of the Delaware General Corporation Law, and may otherwise require payment of consideration for an Award except as limited by the Plan. The minimum vesting and minimum exercisability conditions described below need not apply (i) in the case of the death, disability or Retirement of the Participant or termination of employment of a Participant in connection with a Change of Control, and (ii) with respect to up to an aggregate of 5% of the shares of Stock authorized under the Plan, which may be granted (or regranted upon forfeiture) in any form permitted under the Plan without regard to such minimum vesting or minimum exercisability requirements.
(b)Options. The Committee is authorized to grant Options to Participants on the following terms and conditions: (i)Exercise Price.The exercise price per share of Stock purchasable under an Option (including both ISOs andnon-qualified Options) shall be determined by the Committee,provided that,, notwithstanding anything contained herein to the contrary, such exercise price shall be (A) fixed as of the grant date, and (B) not less than the Fair Market Value of a share of Stock on the grant date. Notwithstanding the foregoing, any substitute award granted through the assumption of, or in substitution for, an outstanding award granted by a company or business acquired by the Company or a subsidiary or affiliate of the Company, or with which the Company or a subsidiary or affiliate of the Company merges, consolidates or enters into a similar corporate transaction, may be granted with an exercise price per share of Stock other than as required above. (ii)No Repricing.Without the approval of stockholders of the Company, the Committee will not amend or replace previously granted Options in a transaction that constitutes a “repricing,” meaning any reduction in exercise price, cancellation of an Option or exchange for another Option with a lower exercise price, cancellation of an Option for cash, or cancellation of an Option for another grant if the exercise price of the cancelled Option is greater than the Fair Market Value of the shares of Stock subject to the cancelled Option at the time of cancellation, other than in conjunction with a Change of Control or other adjustment under Section 11(c), or any other “repricing” as that term is used in Section 303A.08 of the Listed Company Manual of the New York Stock Exchange (or any successor provision). (iii)Option Term; Time and Method of Exercise.The Committee shall determine the term of each Option,provided that in no event shall the term of any Option exceed a period of ten years from the date of grant. The Committee shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part,provided that,, notwithstanding anything contained herein to the contrary, the sole and exclusive basis for determining both the vesting and exercisability of an Option will be the passage of a specific period of time (which at a minimum shall be a period of one year) or the occurrence ornon-occurrence of certain specific performance related ornon-performance related events (e.g.(e.g., death, disability or termination of employment in connection with a Change of Control). In addition, the Committee shall determine the methods by which such exercise price may be paid or deemed to be paid and the form of such payment (subject to Section 11(k) and Section 11(l)), including, without limitation, cash, Stock (including by withholding Stock deliverable upon exercise), other Awards or awards granted under other plans of the Company or any subsidiary or affiliate of the Company, or other property (including through broker-assisted “cashless exercise” arrangements, to the extent permitted by applicable law), and the methods by or forms in which Stock will be delivered or deemed to be delivered in satisfaction of Options to Participants. (iv)ISOs.Notwithstanding anything to the contrary in this Section 6, in the case of the grant of an Option intending to qualify as an ISO: (A) if the Participant owns stock possessing more than 10 percent of the combined voting power of all classes of stock of the Company (a “10% Stockholder”), the purchase price of such Option must be at least 110 percent of the Fair Market Value of the Common Stock on the date of grant and the Option must expire within a period of not more than
five years from the date of grant, and (B) termination of employment will occur when the person to whom an Award was granted ceases to be an associate (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the Company and its subsidiaries. Notwithstanding anything in this Section 6 to the contrary, Options designated as ISOs shall not be eligible for treatment under the Code as ISOs to the extent that either (X) the aggregate Fair Market Value of shares of Common Stock (determined as of the time of grant) with respect to which such Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000, taking Options into account in the
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| 2022 Proxy Statement | B-4 | Abercrombie & Fitch Co. |
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order in which they were granted, or (Y) such Options otherwise remain exercisable but are not exercised within three months of termination of employment (or such other period of time provided in Section 422 of the Code).
(c)Stock Appreciation Rights. The Committee is authorized to grant SARs to Participants on the following terms and conditions: (i)Right to Payment.An SAR shall confer on the Participant to whom the SAR is granted a right to receive, upon exercise thereof, shares of Stock having a value equal to the excess of (A) the Fair Market Value of one share of Stock on the date of exercise (or, in the case of a “Limited SAR,” the Fair Market Value determined by reference to the Change of Control Price, as defined under the applicable award agreement) over (B) the exercise or settlement price of the SAR as determined by the Committee. Stock Appreciation Rights may be granted to Participants from time to time either in tandem with or as a component of other Awards granted under the Plan (“tandem SARs”) or not in conjunction with other Awards (“freestanding SARs”) and may, but need not, relate to a specific Option granted under Section 6(b)6 (b). The per share price for exercise or settlement of SARs (including both tandem SARs and freestanding SARs) shall be determined by the Committee, but in the case of SARs that are granted in tandem with an Option shall not be less than the exercise price of the Option and in the case of freestanding SARs shall be (X) fixed as of the grant date, and (Y) not less than the Fair Market Value of a share of Stock on the grant date. (ii)No Repricing.Without the approval of stockholders of the Company, the Committee will not amend or replace previously granted SARs in a transaction that constitutes a “repricing,” meaning any reduction in exercise price, cancellation of an SAR in exchange for another SAR with a lower exercise price, cancellation of an SAR for cash, or cancellation of an SAR for another grant if the exercise price of the cancelled SAR is greater than the Fair Market Value of the shares of Stock subject to the cancelled SAR at the time of cancellation, other than in conjunction with a Change of Control or other adjustment under Section 11(c), or any other “repricing” as that term is used in Section 303A.08 of the Listed Company Manual of the New York Stock Exchange (or any successor provision). (iii)Other Terms.The Committee shall determine the term of each SAR,provided that in no event shall the term of an SAR exceed a period of ten years from the date of grant. The Committee shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which an SAR may be exercised in whole or in part (including based on future service requirements which at a minimum shall be a period of one year), the method of exercise, method of settlement, method by or forms in which Stock will be delivered or deemed to be delivered to Participants, and whether or not an SAR shall be freestanding or in tandem or combination with any other Award. Limited SARs, that may only be exercised in connection with a Change of Control or termination of service following a Change of Control as specified by the Committee, may be granted on such terms, not inconsistent with this Section 6(c), as the Committee may determine. The Committee may require that an outstanding Option be exchanged for an SAR exercisable for Stock having vesting, expiration and other terms substantially the same as the Option, so long as such exchange will not result in additional accounting expense to the Company.
(d)Restricted Stock. The Committee is authorized to grant Restricted Stock to Participants on the following terms and conditions:
(i)Grant and Restrictions.Subject to Section 6(d)(ii), Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance conditions and/or future service requirements), in such installments or otherwise and under such other circumstances as the Committee may determine at the date of grant or thereafter. Except to the extent restricted under the terms of the Plan and any Award document relating to the Restricted Stock, a Participant granted Restricted Stock shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Committee). Upon any forfeiture of Restricted Stock, a Participant shall cease to have any rights of a stockholder of the Company and shall return any certificates representing such Restricted Stock to the Company. (ii)Limitation on Vesting. The grant, issuance, retention, vesting and/or settlement of Restricted Stock shall occur at such time and in such installments as determined by the Committee or under criteria established by the Committee. Subject to Section 10, the Committee shall have the right to make the timing of the grant and/or the issuance, ability to retain, vesting and/or settlement of Restricted Stock subject to continued employment, passage of time and/or such performance conditions as deemed appropriate by the Committee;provided that the grant, issuance, retention, vesting and/or settlement of a Restricted Stock Award that is based in whole or in part on performance conditions and/or the level of achievement versus such performance conditions shall be subject to a performance period of not less than one year, and any Award based solely upon continued employment or the passage of time shall vest over a period of not less than three years from the date the Award is made,provided that such vesting may occur in pro rata installments over the three-year period, with the first installment vesting no sooner than the first anniversary of the date of grant of such Award. | | | | | | | | |
| Abercrombie & Fitch Co. | B-5 | 2022 Proxy Statement |
APPENDIX B - 2016 ASSOCIATES LTIP
(iii)Certificates for Stock.Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock. (iv)Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the Committee may require that any dividends paid on a share of Restricted Stock shall be either (A) paid with respect to such Restricted Stock at the dividend payment date in cash, in kind, or in a number of shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or (B) automatically reinvested in additional Restricted Stock or held in kind, which shall be subject to the same terms as applied to the original Restricted Stock to which they relate. Unless otherwise determined by the Committee, Stock distributed in connection with a Stock split or Stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Stock or other property has been distributed. (e)Restricted Stock Units.Units.The Committee is authorized to grant RSUs to Participants, subject to the following terms and conditions: (i)Award and Restrictions.Subject to Section 6(e)(ii), RSUs shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance conditions and/or future service requirements), in such installments or otherwise and under such other circumstances as the Committee may determine at the
date of grant or thereafter. A Participant granted RSUs shall not have any of the rights of a stockholder of the Company, including the right to vote, until Stock shall have been issued in the Participant’s name pursuant to the RSUs, except that the Committee may provide for dividend equivalents pursuant to Section 6(e)(iii) below.
(ii)Limitation on Vesting. The grant, issuance, retention, vesting and/or settlement of RSUs shall occur at such time and in such installments as determined by the Committee or under criteria established by the Committee. Subject to Section 10, the Committee shall have the right to make the timing of the grant and/or the issuance, ability to retain, vesting and/or settlement of RSUs subject to continued employment, passage of time and/or such performance conditions as deemed appropriate by the Committee;provided that the grant, issuance, retention, vesting and/or settlement of an RSU that is based in whole or in part on performance conditions and/or the level of achievement versus such performance conditions shall be subject to a performance period of not less than one year, and any Award based solely upon continued employment or the passage of time shall vest over a period of not less than three years from the date the Award is made,provided that such vesting may occur in pro rata installments over the three-year period, with the first installment vesting no sooner than the first anniversary of the date of grant of such Award. (iii)Dividend Equivalents.Unless otherwise determined by the Committee, dividend equivalents on the specified number of shares of Stock covered by an Award of RSUs shall be either (A) paid with respect to such RSUs at the dividend payment date in cash or in shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such RSUs, either as a cash deferral or with the amount or value thereof automatically deemed reinvested in additional RSUs, other Awards or other investment vehicles having a Fair Market Value equal to the amount of such dividends, as the Committee shall determine or permit a Participant to elect. 7.Performance-Based Compensation. (a)Performance Goals Generally. If the Committee specifies that any Restricted Stock or RSU Award is intended to qualify as “performance-based compensation” for purposes of Code Section 162(m), the grant, issuance, vesting and/or settlement of such Award shall be contingent upon achievement ofpre-established performance goals and other terms set forth in this Section 7. The performance goal for such Awards shall consist of one or more business criteria and the level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 7. The performance goal shall be an objective business criteria enumerated under Section 7(c) and shall otherwise meet the requirements of Code Section 162(m) and regulations thereunder, including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being “substantially uncertain”. Performance goals may differ for Awards granted to any one Participant or to different Participants. (b)Timing for Establishing Performance Conditions. A performance goal shall be established not later than the earlier of (i) 90 days after the beginning of any performance period applicable to such performance-based Award or (ii) the time 25% of such performance period has elapsed. (c)Business Criteria.For purposes of the Plan, a “performance goal” shall mean any one or more of the following business criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or subsidiary, either
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| 2022 Proxy Statement | B-6 | Abercrombie & Fitch Co. |
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individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee:
(i)gross sales, net sales, comparable store sales or comparable sales; (ii)gross margin, cost of goods sold,mark-ups or mark-downs; (iii)selling, general and administrative expenses;
(iv)operating income, earnings from operations, earnings before or after taxes, or earnings before or after interest, depreciation, amortization, or extraordinary or special items;
(v)net income or net income per common share (basic or diluted); (vi)inventory turnover or inventory shrinkage; (vii)return on assets, return on investment, return on capital, or return on equity; (viii)cash flow, free cash flow, cash flow return on investment, or net cash provided by operations; (ix)economic profit or economic value created; (x)stock price or total stockholder return; and (xi)market penetration, geographic expansion or new concept development; customer satisfaction; staffing; diversity; training and development; succession planning; associate satisfaction; or acquisitions or divestitures of subsidiaries, affiliates or joint ventures. (d)Written Determinations. Determinations by the Committee as to the establishment of performance conditions, the amount potentially payable in respect of performance-based Awards, the level of actual achievement of the specified performance conditions relating to such Awards, and the amount of any final Award shall be recorded in writing in the case of Awards intended to qualify under Code Section 162(m). Specifically, the Committee shall certify in writing, in a manner conforming to applicable regulations under Code Section 162(m), prior to settlement of each such Award granted to a Covered Associate, that the performance objective relating to the performance-based Award and other material terms of the Award upon which settlement of the Award was conditioned have been satisfied. (e)Settlement of Performance-Based Awards; Other Terms. Settlement of performance-based Awards shall be in cash or Stock, in the Committee’s discretion. The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with such Awards. Any settlement which changes the form of payment from that originally specified shall be implemented in a manner such that the Award and other related Awards do not, solely for that reason, fail to qualify as “performance-based compensation” for purposes of Code Section 162(m). The Committee shall specify the circumstances in which such Awards shall be paid or forfeited in the event of a Participant’s death, disability or Retirement, in connection with a Change of Control or, subject to theone-year performance condition set forth in Section 6(d)(ii) and Section 6(e)(ii), in connection with any other termination of employment prior to the end of a performance period or settlement of such Awards. (f)Right of Recapture. If at any time after the date on which a Participant has been granted or becomes vested in an Award pursuant to the achievement of a performance goal under Section 7(c), the Committee determines that the earlier determination as to the achievement of the performance goal was based on incorrect data and that in fact the performance goal had not been achieved or had been achieved to a lesser extent than originally determined and a portion of an Award would not have been granted, vested or paid, given the correct data, then (i) such portion of the Award that was granted shall be forfeited and any related shares (or if such shares were disposed of, the cash equivalent) shall be returned to the Company as provided by the Committee, (ii) such portion of the Award that became vested shall be deemed to be not vested and any related shares (or if such shares were disposed of, the cash equivalent) shall be returned to the Company as provided by the Committee, and (iii) such portion of the Award paid to the Participant shall be paid by the Participant to the Company upon notice from the Company as provided by the Committee. 8.Certain Provisions Applicable to Awards. (a)Stand-Alone, Additional, and Tandem Awards. Awards granted under the Plan may, in the Committee’s discretion, be granted either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any subsidiary or affiliate of the Company, or any business entity to be acquired by the Company or a subsidiary or affiliate of the Company, or any other right of a Participant to receive payment from the Company or any subsidiary or affiliate of the Company. Awards
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| Abercrombie & Fitch Co. | B-7 | 2022 Proxy Statement |
APPENDIX B - 2016 ASSOCIATES LTIP
granted in addition to or in tandem with other Awards or awards may be granted either as of the same time as or a different time from the grant of such other Awards or awards.
(b)Term of Awards. The term of each Award shall be for such period as may be determined by the Committee, subject to the express limitations set forth in Section 6(b)(iii) and Section 6(c)(iii) or elsewhere in the Plan. (c)Form and Timing of Payment under Awards. Subject to the terms of the Plan (including Section 11(k) and Section 11(l)) and any applicable Award document, payments to be made by the Company or a subsidiary or affiliate of the Company upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including, without limitation, cash, Stock, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. The settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such settlement, in the Committee’s discretion or upon occurrence of one or more specified events, subject to Section 6(b)(iv), Section 11(k) and Section 11(l). (d)No Dividends Payable with Respect to Unvested Awards.Notwithstanding anything in the Plan to the contrary, with respect to any Award under the Plan, no dividends (or dividend equivalents) shall be payable with respect to any shares of Stock underlying an Award until such underlying shares of Stock have vested. (a)Impact of Event. Unless the Board or the Committee provides otherwise (either at the time of grant of an Award or thereafter) prior to a Change of Control, this Section 9(a) shall govern the treatment of any Option, SAR, Restricted Stock or RSU, the exercisability, vesting and/or settlement of which is based solely upon continued employment or passage of time. In the case of an Award subject to this Section 9(a) that the acquiring or surviving company in the Change of Control assumes upon and maintains following the Change of Control (which Award shall be adjusted as to the number and kind of shares as may be determined appropriate by the Committee prior to the Change of Control), if there occurs an involuntary termination without cause of the Participant holding such Award (excluding voluntary resignation, death, disability or Retirement) within three months prior to or eighteen months following the Change of Control, such Award shall be treated as provided in clause (i) or clause (ii) of this Section 9(a), as applicable. In the case of an Award subject to this Section 9(a) that the acquiring or surviving company in the Change of Control does not assume upon the Change of Control, immediately prior to the Change of Control, such Award shall be treated as provided in clause (i) or clause (ii) of this Section 9(a)9 (a), as applicable. The treatment provided for under this Section 9(a) is as follows: (i)in the case of an Option or SAR, the Participant shall have the ability to exercise such Option or SAR, including any portion of the Option or SAR not previously exercisable, until the earlier of the expiration of the Option or SAR under its original term and a date that is two years (or such longer post-termination exercisability term as may be specified in the Option or SAR) following such date of termination of employment; and (ii)in the case of Restricted Stock or RSUs, the Award shall become fully vested and shall be settled in full. The Committee may also, through the terms of an Award or otherwise, provide for an absolute or conditional exercise, payment or lapse of conditions or restrictions on an Award which shall only be effective if, upon the announcement of a transaction intended to result in a Change of Control, no provision is made in such transaction for the assumption and continuation of outstanding Awards.
(b)Effect of Change of Control upon Performance-Based Awards. Unless the Committee specifies otherwise in the terms of an Award prior to a Change of Control, this Section 9(b) shall control the treatment of
any Restricted Stock or RSU if, at the time of the Change of Control, the grant, issuance, retention, vesting and/or settlement of such Award is based in whole or in part on performance criteria and level of achievement versus such criteria. In the case of an Award subject to this Section 9(b) in which fifty percent (50%) or more of the performance period applicable to the Award has elapsed as of the date of the Change of Control, the Participant shall be entitled to payment, vesting or settlement of such Award based upon performance through a date occurring within three months prior to the date of the Change of Control, as determined by the Committee prior to the Change of Control, andpro-rated based upon the percentage of the performance period that has elapsed between the date such Award was granted and the date of the Change of Control. In the case of an Award subject to this Section 9(b) in which less than fifty percent (50%) of the performance period applicable to the Award has elapsed as of the date of the Change of Control, the Participant shall be entitled to payment, vesting or settlement of the target amount of such Award, as determined by the Committee prior to the Change of Control,pro-rated based upon the percentage of the performance period that has elapsed between the date such Award was granted and the date of the Change of Control. The Committee may determine either in advance or at the time of the Change of Control the treatment of thepro-rata portion of an Award attributable to the portion of the performance period occurring after the date of the Change of Control.
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| 2022 Proxy Statement | B-8 | Abercrombie & Fitch Co. |
APPENDIX B - 2016 ASSOCIATES LTIP
Notwithstanding the foregoing, in no event shall the treatment specified in Section 9(a) and Section 9(b) apply with respect to an Award prior to the earliest to occur of (i) the date such amounts would have been distributed in the absence of the Change of Control, (ii) a Participant’s “separation from service” (as defined under Section 409A of the Code) with the Company (or six months thereafter for “specified associates”), (iii) the Participant’s death or “disability” (as defined in Section 409A(a)(2)(C) of the Code), or (iv) a “change in the ownership or effective control” of the Company or in the “ownership of a substantial portion of the assets” of the Company within the meanings ascribed to such terms in Treasury Department regulations issued under Section 409A of the Code, if and to the extent that the Committee determines, in its sole discretion, that the effect of such treatment prior to the time specified in this Section 9(b)(i), (ii), (iii) or (iv) would be the imposition of the additional tax under Section 409A(a)(1)(B) of the Code on a Participant holding such Award.
(c)Definition of Change of Control.Control. For purposes of the Plan, the term “Change of Control” shall mean, unless otherwise defined in an Award agreement, an occurrence of a nature that would be required to be reported by the Company in response to Item 6(e) of Schedule 14A of Regulation 14A issued under the Exchange Act. Without limiting the inclusiveness of the definition in the preceding sentence, a Change of Control of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions is satisfied: (i)any person is or becomes the “beneficial owner” (as that term is defined in Rule13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities; or (ii)any of the following occur: (A) any merger or consolidation of the Company, other than a merger or consolidation in which the voting securities of the Company immediately prior to the merger or consolidation continue to represent (either by remaining outstanding or being converted into securities of the surviving entity) 80% or more of the combined voting power of the Company or surviving entity immediately after the merger or consolidation with another entity; (B) any sale, exchange, lease, mortgage, pledge, transfer or other disposition (in a single transaction or a series of related transactions) of assets or earning power aggregating more than 50% of the assets or earning power of the Company on a consolidated basis; (C) any complete liquidation or dissolution of the Company; (D) any reorganization, reverse stock split or recapitalization of the Company that would result in a Change of Control as otherwise defined herein; or (E) any transaction or series of related transactions having, directly or indirectly, the same effect as any of the foregoing. 10.Additional Award Forfeiture Provisions. (a)Forfeiture of Options and Other Awards and Gains Realized Upon Prior Option Exercises or Award Settlements. Unless otherwise determined by the Committee, each Award granted shall be subject to the
following additional forfeiture conditions, to which the Participant, by accepting an Award hereunder, agrees. If any of the events specified in Section 10(b)(i), (ii), (iii) or (iv) occurs (a “Forfeiture Event”), all of the following forfeitures will result:
(i)The unexercised portion of each Option held by the Participant, whether or not vested, and any other Award not then settled will be immediately forfeited and canceled upon the occurrence of the Forfeiture Event; and (ii)The Participant will be obligated to repay to the Company, in cash, within five business days after demand is made therefor by the Company, the total amount of Award Gain (as defined herein) realized by the Participant upon each exercise of an Option or settlement of an Award that occurred on or after (A) the date that is six months prior to the occurrence of the Forfeiture Event, if the Forfeiture Event occurred while the Participant was employed by the Company or a subsidiary or affiliate of the Company, or (B) the date that is six months prior to the date the Participant’s employment by the Company or a subsidiary or affiliate of the Company terminated, if the Forfeiture Event occurred after the Participant ceased to be so employed. For purposes of this Section 10, the term “Award Gain” shall mean (X) in respect of a given Option exercise, the product of (1) the Fair Market Value per share of Stock at the date of such exercise (without regard to any subsequent change in the market price of shares) minus the exercise price times (2) the number of shares as to which the Option was exercised at that date, and (Y) in respect of any other settlement of an Award granted to the Participant, the Fair Market Value of the cash or Stock paid or payable to the Participant (regardless of any elective deferral) less any cash or the Fair Market Value of any Stock or property (other than an Award or award which would have itself then been forfeitable hereunder and excluding any payment of tax withholding) paid by the Participant to the Company as a condition of or in connection such settlement. (b)Events Triggering Forfeiture.The forfeitures specified in Section 10(a) will be triggered upon the occurrence of any one of the following Forfeiture Events at any time during a Participant’s employment by the Company or a subsidiary or affiliate of the Company, or during theone-year period following termination of such employment: | | | | | | | | |
| Abercrombie & Fitch Co. | B-9 | 2022 Proxy Statement |
APPENDIX B - 2016 ASSOCIATES LTIP
(i)The Participant, acting alone or with others, directly or indirectly, (A) engages, either as employee (associate), employer, consultant, advisor, or director, or as an owner, investor, partner, or stockholder unless the Participant’s interest is insubstantial, in any business in an area or region in which the Company or a subsidiary or affiliate of the Company conducts business at the date the event occurs, which is directly in competition with a business then conducted by the Company or a subsidiary or affiliate of the Company; (B) induces any customer or supplier of the Company or a subsidiary or affiliate of the Company, with which the Company or a subsidiary or affiliate of the Company has a business relationship, to curtail, cancel, not renew, or not continue his or her or its business with the Company or any subsidiary or affiliate of the Company; or (C) induces, or attempts to influence, any associate of or service provider to the Company or a subsidiary or affiliate of the Company to terminate such employment or service. The Committee shall, in its discretion, determine which lines of business the Company and the subsidiaries and affiliates of the Company conduct on any particular date and which third parties may reasonably be deemed to be in competition with the Company or a subsidiary or affiliate of the Company. For purposes of this Section 10(b)(i), a Participant’s interest as a stockholder is insubstantial if it represents beneficial ownership of less than five percent of the outstanding class of stock, and a Participant’s interest as an owner, investor, or partner is insubstantial if it represents ownership, as determined by the Committee in its discretion, of less than five percent of the outstanding equity of the entity;entity.
(ii)The Participant discloses, uses, sells, or otherwise transfers, except in the course of employment with or other service to the Company or any subsidiary or affiliate of the Company, any confidential or proprietary information of the Company or any subsidiary or affiliate of the Company, including but not limited to information regarding the Company’s and its subsidiaries’ and affiliates’ current and potential customers, organization, associates, finances, and methods of operations and investments, so long as such information has not otherwise been disclosed to the public or is not
otherwise in the public domain (other than by the Participant’s breach of this provision), except as required by law or pursuant to legal process, or the Participant makes statements or representations, or otherwise communicates, directly or indirectly, in writing, orally, or otherwise, or takes any other action which may, directly or indirectly, disparage or be damaging to the Company or any of its subsidiaries or affiliates or their respective officers, directors, associates, advisors, businesses or reputations, except as required by law or pursuant to legal process; or
process.
(iii)The Participant fails to cooperate with the Company or any subsidiary or affiliate of the Company in any way, including, without limitation, by making himself or herself available to testify on behalf of the Company or such subsidiary or affiliate of the Company in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, or otherwise fails to assist the Company or any subsidiary or affiliate of the Company in any way, including, without limitation, in connection with any such action, suit, or proceeding by providing information and meeting and consulting with members of management of, other representatives of, or counsel to, the Company or such subsidiary or affiliate, as reasonably requested. (iv)The Participant, alone or in conjunction with another person, (A) interferes with or harms, or attempts to interfere with or harm, the relationship of the Company or any subsidiary or affiliate of the Company with any person who at any time was a customer or supplier of the Company or any subsidiary or affiliate of the Company or otherwise had a business relationship with the Company or any subsidiary or affiliate of the Company; or (B) hires, solicits for hire, aids in or facilitates the hire, or causes to be hired, either as an employee, contractor or consultant, any person who is currently employed, or was employed at any time during thesix-month period prior thereto, as an employee, contractor or consultant of the Company or any subsidiary or affiliate of the Company. (c)Agreement Does Not Prohibit Competition or Other Participant Activities. Although the conditions set forth in this Section 10 shall be deemed to be incorporated into an Award, a Participant is not thereby prohibited from engaging in any activity set forth in Section 10(b)(i), including but not limited to competition with the Company and its subsidiaries and affiliates. Thenon-occurrence of the Forfeiture Events set forth in Section 10(b)10 (b) is a condition to the Participant’s right to realize and retain value from his or her compensatory Options and Awards, and the consequence under the Plan if the Participant engages in an activity giving rise to any such Forfeiture Event are the forfeitures specified herein. The Company and a Participant shall not be precluded by this provision or otherwise from entering into other agreements concerning the subject matter of Section 10(a) and Section 10(b)10 (b). (d)Committee Discretion. The Committee may, in its discretion, waive in whole or in part the Company’s right to forfeiture under this Section 10, but no such waiver shall be effective unless evidenced by a writing signed by a duly authorized officer of the Company. In addition, the Committee may impose additional conditions on Awards, by inclusion of appropriate provisions in the document evidencing or governing any such Award. (a)Compliance with Legal and Other Requirements. The Company may, to the extent deemed necessary or advisable by the Committee and subject to Section 11(k), postpone the issuance or delivery of Stock or payment of other benefits under any Award until completion of such registration or qualification of such Stock or other required action under any federal or state law, rule or regulation, listing or other
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| 2022 Proxy Statement | B-10 | Abercrombie & Fitch Co. |
APPENDIX B - 2016 ASSOCIATES LTIP
required action with respect to any stock exchange or automated quotation system upon which the Stock or other securities of the Company are listed or quoted, or compliance with any other obligation of the Company, as the Committee may consider appropriate, and may require any Participant to make such representations, furnish such information and comply with or be subject to such other conditions as the Committee may consider appropriate in connection with the issuance or delivery of Stock or payment of other benefits in compliance with applicable laws, rules, and regulations, listing requirements, or other obligations. The foregoing notwithstanding, in connection with a
Change of Control, the Company shall take or cause to be taken no action, and shall undertake or permit to arise no legal or contractual obligation, that results or would result in any postponement of the issuance or delivery of Stock or payment of benefits under any Award or the imposition of any other conditions on such issuance, delivery or payment, to the extent that such postponement or other condition would represent a greater burden on a Participant than existed on the 90th90th day preceding the Change of Control.
(b)Limits on Transferability; Beneficiaries.No Award or other right or interest of a Participant under the Plan shall be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of such Participant to any party (other than the Company or a subsidiary or affiliate thereof), or assigned or transferred by such Participant otherwise than by will or the laws of descent and distribution or to a Beneficiary upon the death of a Participant, and such Awards or rights that may be exercisable shall be exercised during the lifetime of the Participant only by the Participant or his or her guardian or legal representative, except that Awards and other rights (other than ISOs and SARs in tandem therewith) may be transferred to one or more transferees during the lifetime of the Participant, and may be exercised by such transferees in accordance with the terms of such Award, but only if and to the extent such transfers are permitted by the Committee, subject to any terms and conditions which the Committee may impose thereon (which may include limitations the Committee may deem appropriate in order that offers and sales under the Plan will meet applicable requirements of registration forms under the Securities Act of 1933 specified by the Securities and Exchange Commission). A Beneficiary, transferee, or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award document applicable to such Participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate by the Committee. (c)Adjustments.In the event that any large, special andnon-recurring dividend or other distribution (whether in the form of cash or property other than Stock), recapitalization, forward or reverse Stock split, Stock dividend, reorganization, merger, consolidation,spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects the Stock, then the Committee shall, in an equitable manner as determined by the Committee, adjust any or all of (i) the number and kind of shares of Stock or other securities of the Company or other issuer which are subject to the Plan, including the share limits, (ii) the number and kind of shares of Stock or other securities of the Company or other issuer by which annualper-person Award limitations are measured under Section 5, (iii) the number and kind of shares of Stock or other securities of the Company or other issuer subject to or deliverable in respect of outstanding Awards and (iv) the exercise price, settlement price or purchase price relating to any Award or, if deemed appropriate, the Committee may make provision for a payment of cash or property to the holder of an outstanding Option (subject to Section 11(k) and Section 11(l)) or other Award. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including performance-based Awards and performance goals and any hypothetical funding pool relating thereto) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence, as well as acquisitions and dispositions of businesses and assets affecting any performance conditions), or in response to changes in applicable laws, regulations, or accounting principles;provided that no such adjustment shall be authorized or made if and to the extent that the existence of such authority (i) would cause Options, SARs, Restricted Stock or RSUs granted under the Plan to Participants designated by the Committee as Covered Associates and intended to qualify as “performance-based compensation” under Code Section 162(m) and regulations thereunder to otherwise fail to qualify as “performance-based compensation” under Code Section 162(m) and regulations thereunder, or (ii) would cause the Committee to be deemed to have authority to change the targets, within the meaning of Treasury Regulation1.162-27(e)(4)(vi), under the performance goals relating to Options or SARs granted to Covered Associates and intended to qualify as “performance-based compensation” under Code Section 162(m) and regulations thereunder. (i)Withholding.The Company and any subsidiary or affiliate of the Company is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a
distribution of Stock, or any payroll or other payment to a Participant, amounts of withholding and other taxes due or potentially payable in connection with any transaction or event involving an Award, or to require a Participant to remit to the Company an amount in cash or other property (including Stock) to satisfy such withholding before taking any action with respect to an Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Participant’s withholding obligations, either on a mandatory or elective basis in the discretion of the Committee, or in satisfaction of other tax obligations. The Company can delay the delivery to a Participant
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| Abercrombie & Fitch Co. | B-11 | 2022 Proxy Statement |
APPENDIX B - 2016 ASSOCIATES LTIP
of Stock under any Award to the extent necessary to allow the Company to determine the amount of withholding to be collected and to collect and process such withholding.
(ii)Required Consent to and Notification of Code Section 83(b) Election.No election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Code Section 83(b)) or under a similar provision of the laws of a jurisdiction outside the United States may be made unless expressly permitted by the terms of the Award document or by action of the Committee in writing prior to the making of such election. In any case in which a Participant is permitted to make such an election in connection with an Award, the Participant shall notify the Company of such election within ten days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b) or other applicable provision. (iii)Requirement of Notification Upon Disqualifying Disposition Under Code Section 421(b). If any Participant shall make any disposition of shares of Stock delivered pursuant to the exercise of an ISO under the circumstances described in Code Section 421(b) (i.e.(i.e., a disqualifying disposition), such Participant shall notify the Company of such disposition within ten days thereof. (e)Changes to the Plan.The Board may amend, suspend or terminate the Plan or the Committee’s authority to grant Awards under the Plan without the consent of stockholders of the Company or Participants;provided, however, that any amendment to the Plan shall be submitted to the Company’s stockholders for approval not later than the earliest annual meeting for which the record date is at or after the date of such Board action: (i)if such stockholder approval is required by any federal or state law or regulation or the rules of the New York Stock Exchange or any other stock exchange or automated quotation system on which the Stock may then be listed or quoted; or (ii)if such amendment would materially increase the number of shares reserved for issuance and delivery under the Plan; or (iii)if such amendment would alter the provisions of the Plan restricting the Company’s ability to grant Options or SARs with an exercise price that is not less than the Fair Market Value of Stock; or (iv)in connection with any action to amend or replace previously granted Options or SARs in a transaction that constitutes a “repricing,” as such term is used in Section 303A.08 of the Listed Company Manual of the New York Stock Exchange. The Board may otherwise, in its discretion, determine to submit other amendments to the Plan to stockholders of the Company for approval; andprovided further, that,, without the consent of an affected Participant, no such Board (or any Committee) action may materially and adversely affect the rights of such Participant under any outstanding Award (for this purpose, actions that alter the timing of federal income
taxation of a Participant will not be deemed material unless such actions result in an income tax penalty on the Participant). With regard to other terms of Awards, the Committee shall have no authority to waive or modify any such Award term after the Award has been granted to the extent the waived or modified term would be mandatory under the Plan for any Award newly granted at the date of the waiver or modification.
(f)Right of Setoff.The Company or any subsidiary or affiliate of the Company may, to the extent permitted by applicable law, deduct from and set off against any amounts the Company or a subsidiary or affiliate of the Company may owe to the Participant from time to time (including amounts payable in connection with any Award, owed as wages, fringe benefits, or other compensation owed to the Participant), such amounts as may be owed by the Participant to the Company, including but not limited to amounts owed under Section 10(a), although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff. By accepting any Award granted hereunder, the Participant agrees to any deduction or setoff under this Section 11(f). (g)Unfunded Status of Awards; Creation of Trusts.To the extent that any Award is deferred compensation, the Plan is intended to constitute an “unfunded” plan for deferred compensation with respect to such Award. With respect to any payments not yet made to a Participant or obligation to deliver Stock pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company;provided that the Committee may authorize the creation of trusts and deposit therein cash, Stock, other Awards or other property, or make other arrangements to meet the Company’s obligations under the Plan. Such trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines with the consent of each affected Participant. (h)Nonexclusivity of the Plan.Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements, apart from the Plan, as it may deem desirable, including incentive arrangements and awards which do not qualify under Code Section 162(m), and such other arrangements may be either applicable generally or only in specific cases. | | | | | | | | |
| 2022 Proxy Statement | B-12 | Abercrombie & Fitch Co. |
APPENDIX B - 2016 ASSOCIATES LTIP
(i)Payments in the Event of Forfeitures; Fractional Shares.Unless otherwise determined by the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid cash consideration, the Participant shall be repaid the amount of such cash consideration. In addition, nothing herein shall prevent the Committee from authorizing the payment in cash of any amounts with respect to forfeited Awards. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. (j)Compliance with Code Section 162(m).It is the intent of the Company that Options and SARs granted to Covered Associates and other Awards designated as Awards to Covered Associates subject to Section 7 shall constitute qualified “performance-based compensation” within the meaning of Code Section 162(m) and regulations thereunder, unless otherwise determined by the Committee at the time of allocation of an Award. Accordingly, the terms of Section 7, including the definitions of Covered Associate and other terms used therein, shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder. The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Participant will be a Covered Associate with respect to a fiscal year that has not yet been completed, the term Covered Associate as used herein shall mean only a person designated by the Committee as likely to be a Covered Associate with respect to a specified fiscal year. If any provision of the Plan or any Award document relating to an Award that is designated as intended to comply with Code Section 162(m) does not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Committee or any other person discretion to increase the amount of compensation otherwise payable in connection with any such Award upon attainment of the applicable performance objectives.
(k)Certain Limitations on Awards to Ensure Compliance with Code Section 409A. Notwithstanding anything herein to the contrary, any Award that is deferred compensation within the meaning of Code Section 409A shall be automatically modified and limited to the extent that the Committee determines necessary to avoid the imposition of the additional tax under Section 409A(a)(1)(B) of the Code on a Participant holding such Award.
(l)Certain Limitations Relating to Accounting Treatment of Awards.Other provisions of the Plan notwithstanding, the Committee’s authority under the Plan (including under Section 8(c), Section 11(c) and Section 11(d)) is limited to the extent necessary to ensure that any Option or other Award of a type that the Committee has intended to be subject to “equity” accounting with a measurement date at the date of grant under applicable accounting standards shall not become subject to “liability” accounting solely due to the existence of such authority, unless the Committee specifically determines that the Award shall remain outstanding despite such “liability” accounting. (m)Governing Law.The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan and any Award document shall be determined in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable provisions of federal law. (n)Awards to Participants Outside the United States.The Committee may modify the terms of any Award under the Plan made to or held by a Participant who is then resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, regulations, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions applicable as a result of the Participant’s residence or employment abroad shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States. An Award may be modified under this Section 11(n) in a manner that is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) of the Exchange Act for the Participant whose Award is modified. (o)Limitation on Rights Conferred under Plan.Neither the Plan nor any action taken thereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or a subsidiary or affiliate of the Company, (ii) interfering in any way with the right of the Company or a subsidiary or affiliate of the Company to terminate any Eligible Person’s or Participant’s employment at any time (subject to the terms and provisions of any separate written agreements), (iii) giving an Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and associates, or (iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award or an Option is duly exercised. Except as expressly provided in the Plan and an Award document, neither the Plan nor any Award document shall confer on any person other than the Company and the Participant any rights or remedies thereunder. | | | | | | | | |
| Abercrombie & Fitch Co. | B-13 | 2022 Proxy Statement |
APPENDIX B - 2016 ASSOCIATES LTIP
(p)Severability; Entire Agreement.If any of the provisions of the Plan or any Award document is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability, and the remaining provisions shall not be affected thereby;provided, that,, if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision shall be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder. The Plan and any agreements or documents designated by the Committee as setting forth the terms of an Award contain the entire agreement of the parties with respect to the subject matter thereof and supersede all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter thereof.
(q)Plan Effective Date and Termination.The Plan shall become effective if, and at such time as, the stockholders of the Company have approved the Plan in accordance with applicable law and stock exchange requirements (such date, the “Effective Date”). Unless earlier terminated by action of the Board, the authority of the Committee to make grants under the Plan shall terminate on the date that is ten years after the latest date upon which stockholders of the Company have approved the Plan, and the Plan will remain in effect until such time as no Stock remains available for delivery under the Plan or as set forth above and the Company has no further rights or obligations under the Plan with respect to outstanding Awards under the Plan.
Abercrombie & Fitch
ABERCROMBIE & FITCH CO.
P.O. BOX 182168
COLUMBUS, OH 43218
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VOTE BY INTERNET -www.proxyvote.com |
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Daylight Time, on June 11, 2019. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS |
If you would like to reduce the costs incurred by Abercrombie & Fitch Co. in mailing proxy materials, you can consent to receiving or accessing all future proxy statements, proxy cards, annual reports and Notices of Internet Availability of Proxy Materials, as applicable, electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically for future meetings.
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VOTE BY PHONE -1-800-690-6903 |
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Daylight Time, on June 11, 2019. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you call and then follow the instructions.
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VOTE BY MAIL |
If you received a printed copy of the proxy materials, mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E77312-P22400 KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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| | ABERCROMBIE & FITCH CO. | | | | |
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| | A. | | Election of Directors | | | | | | |
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| | The Board of Directors recommends you vote “FOR” the election of each of the following nominees:
| | For | | Against | | Abstain |
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| | | | 1a. | | Kerrii B. Anderson | | ☐ | | ☐ | | ☐ |
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| | | | 1b. | | James B. Bachmann | | ☐ | | ☐ | | ☐ |
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| | | | 1c. | | Terry L. Burman | | ☐ | | ☐ | | ☐ |
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| | | | 1d. | | Sarah M. Gallagher | | ☐ | | ☐ | | ☐ |
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| | | | 1e. | | Michael E. Greenlees | | ☐ | | ☐ | | ☐ |
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| | | | 1f. | | Archie M. Griffin | | ☐ | | ☐ | | ☐ |
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| | | | 1g. | | Fran Horowitz | | ☐ | | ☐ | | ☐ |
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| | | | 1h.
| | Helen E. McCluskey
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| | For address changes and/or comments, please check this box and write them on the back where indicated.
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| | Please indicate if you plan to attend the Annual Meeting.
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| | | | | | | | Yes | | No | | |
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| 2022 Proxy Statement | B-14 | | | | | | | |
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| | For | | Against | | Abstain | | |
1i. Charles R. Perrin
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1j. Nigel Travis
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B. Proposals
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The Board of Directors recommends you vote “FOR” the proposals under Items 2, 3 and 4:
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2. Approval of advisory resolution to approve executive compensation.
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3. Approval of an amendment to the Abercrombie & Fitch Co. 2016 Long-Term Incentive Plan for Associates to authorize 2,200,000 additional shares.
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4. Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending February 1, 2020.
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary,
please give full title as such. Joint owners must each sign personally. All holders must sign. If a corporation, partnership or
other entity, please sign in full entity name by a duly authorized officer.
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Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | Signature (Joint Owners) | | Date | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders of Abercrombie & Fitch Co. to be Held on June 12, 2019: Letter to Stockholders, Abercrombie & Fitch Co.’sNotice of Annual Meeting of Stockholders and Proxy Statement, and the Abercrombie & Fitch Co. Annual Report 2018 are available atwww.proxyvote.com.
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E77313-P22400
ABERCROMBIE & FITCH CO.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 2019
The undersigned holder(s) of shares of Class A Common Stock of Abercrombie & Fitch Co. (the “Company”) hereby constitute(s) and appoint(s)Scott Lipesky and Gregory J. Henchel, or either of them, the proxy or proxies of the undersigned, with full power of substitution in each, to attend the Annual Meeting of Stockholders (the “Annual Meeting”) of the Company to be held on Wednesday, June 12, 2019, at the Company’s offices located at6301 Fitch Path, New Albany, Ohio 43054, at 10:00 a.m., Eastern Daylight Time, and to vote all of the shares which the undersigned is/are entitled to vote at suchAnnual Meeting as directed on the reverse side with respect to the matters set forth on the reverse side, and to vote such shares with discretionary authority on all other business that may properly come before the Annual Meeting.
This proxy, when properly executed, will be voted in the manner you specify. If no specification is made, except in the case of broker non-votes, the persons named herein as proxies will vote “FOR” the election of each of the director nominees listed in Item 1, “FOR” the approval of the advisory resolution to approve executive compensation under Item 2, and “FOR” the proposals under Items 3 and 4, and in accordance with the recommendations of the Company’s Board of Directors. All proxies previously given or executed by the undersigned are hereby revoked.
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Address Changes/Comments:
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(If you noted any Address Changes/Comments above, please mark the corresponding box on the reverse side.)
Continued and to be signed and dated on the reverse side
