UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
| ☑ | Filed by the Registrant | ☐ | Filed by a |
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| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, | |
| ☑ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material | |
Hanesbrands Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
| PAYMENT OF FILING FEE (CHECK | |||
| ☑ | No fee | ||
| ☐ | Fee paid previously with preliminary | ||
| ☐ | |||
Notice of the 20202022 Annual Meeting
of Stockholders and Proxy Statement
April 28, 2020 – 8:26, 2022
Virtual Meeting at 9:00 a.m. EDT
www.virtualshareholdermeeting.com/ HBI2022
Forward-Looking Statements
This Proxy Statement contains “forward-looking” statements regarding Hanesbrands’ current expectations within the meaning of the applicable securities laws and regulations. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks and uncertainties include, but are not limited to, the risks detailed in the Company’s filings with the Securities and Exchange Commission, including the “Risk Factors” section of Hanesbrands’ Annual Report on Form 10-K for the fiscal year ended December 28, 2019.January 1, 2022. We assume no obligation to update any of these forward-looking statements.
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 | Message From Our Chairman and |  |
Dear Fellow Stockholders:
OverWe are rapidly creating a new Hanesbrands, focused on growth and serving our consumers like never before. As a result, our Company finished 2021 in a far stronger operational, business and financial position than before the past severalpandemic.
Our success is driven by our Full Potential growth plan. Launched in 2021, Full Potential is based on growing our global Champion brand, re-igniting innerwear growth, putting the consumer at the center of our Company and focusing our portfolio. Full Potential has gotten off to a very strong start. Based on our confidence in future growth and improved performance, we raised our 2024 financial targets nine months after launching the plan. We have much more to do to unlock the Full Potential of Hanesbrands, but we are pleased with the early progress and are more optimistic than ever in our future.
For more than 100 years, Hanesbrands has diversified its businessbuilt iconic brands and increased its global scale to providecreated outstanding products. Consumers around the world know that our brands stand for quality, style, value and innovation. As a path to significantly grow cash flow and generate higher stockholder returns. We saw the results of these efforts in 2019 as we delivered organic sales growth of more than two percent and generated record operating cash flow of over $800 million – our fourth consecutive year of operating cash flow in excess of $600 million. Our International businesses are outperforming, globalChampiongrowth continues, and we are thriving in the consumer-direct channels. We have also reduced our net debt by over half a billion dollars since this time a year ago. Looking forward, we believe our more consistent revenue growth and higher levels of operating cash flow combined with our disciplined capital allocation model will give us the ability to accelerate value creationresult, consumer demand for our stockholders inproducts remains strong. Our over 59,000 passionate associates around the years ahead.
At Hanesbrands, we strive to work hard and compete aggressively, but always doworld are highly focused on meeting this demand, despite the right thing.unprecedented challenges of the past two years. We are protective ofdeeply grateful for their commitment and hard work.
Hanesbrands built on our strong reputation forleadership in sustainability, corporate citizenship and social responsibility andin 2021. We are proud of our continuedlong-standing commitment to environmental stewardship, workplace quality and community building around the world. We callapproach sustainability from a broad perspective and focus our corporate social responsibility programHanes for Good– that’s because adheringefforts in areas addressed by the United Nations’ Sustainable Development Goals. In 2021, we continued our commitment to responsiblemake the world a more comfortable, liveable and sustainable business practices is good for our company, good for our employees, good for our communitiesinclusive place by establishing new, wide-ranging 2025/2030 global sustainability goals and good for our stockholders.launching a new sustainability website, www.HBISustains.com. Included on HBISustains.com are specific Taskforce on Climate-Related Financial Disclosures (TCFD) and Sustainability Accounting Standards Board (SASB) reports. Hanesbrands earned a leadership level A- score for the second consecutive yearpeer-leading “A-” in the 20192021 CDP Climate Change Report, placing us in the 94th percentile of the 13,000 reporting companies, and has been a U.S. Environmental Protection Agency Energy Star Sustained Excellence Award winner for tentwelve consecutive years. We are members of the Fair Labor Association and the Sustainable Apparel Coalition, The Sustainability Consortium and the Corporate Eco Forum andwe have been recognized for our socially responsible business practices by such organizations such as social compliance rating group, Free2Work, advocacy group The Ethical Corporation,Baptist World Aid the United Way, Corporate Responsibility magazine and others. We invite you to learn more about ourHanes for Goodcorporate responsibility initiatives atwww.HanesforGood.com.were also recognized as one of Ethisphere’s World’s most Ethical Companies in 2021.
We also take pride in our commitment to responsible corporate governance. Our Board is composed of a group of industry-leading experts with diverse ethnicities, genders, experiences and backgrounds who work with management to drive long-term, sustainable performance and create value for our stockholders. Half of our ten directors are considered diverse, with three women and two African-Americans. We’re very proud that our Board reflects our values in that way.
Our directors engage in the Company’s strategic planning and provide independent guidance and oversight on the economic, operational, legal and legalsustainability risks that we face. The Board has been active during the pandemic, holding a number of virtual and in-person meetings and receiving regular updates from management on the shifts in business and financial performance, as well as employee health and safety. Many Hanesbrands employees continue to work remotely with limited to no business disruption, demonstrating the effectiveness of the business continuity and cybersecurity plans regularly reviewed by the Board and the Audit Committee.
Our 20202022 Annual Meeting of Stockholders will be held on Tuesday, April 28, 2020,26, 2022, at 8:9:00 a.m., at the Company’s headquarters, located at 1000 East Hanes Mill Road, Winston-Salem, NC 27105. As part Eastern time. This year, our Annual Meeting of Stockholders will be held entirely online in order to allow for greater participation by all of our precautions regardingstockholders, regardless of their geographic location. Please see the coronavirus or COVID-19, we are planningNotice of Annual Meeting on page 12 for the possibility thatmore information about how to virtually attend and participate in the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decisionStockholders. Your vote is important. Whether or not you plan to do so in advance, and details on how to participate will be available atwww.Hanes.com/investors. This Proxy Statement will serve as your guide to the business to be conducted atattend the Annual Meeting. We invite you to attend and ask you toMeeting of Stockholders, please vote at your earliest convenience whether or not you plan to attend. Your vote is important.convenience.
We appreciate your confidence and continued support of Hanesbrands.
Sincerely yours,
  |   | |
| RONALD L. NELSON | STEPHEN B. BRATSPIES | |
| Chairman of the Board of Directors |
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HANESBRANDS INC. | 1
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| Item 1. |  | |
| Election of Directors | ||
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>> See page | ||
Director Nominees
| Hanesbrands Committees | ||||||||
| Name | Occupation | Age | Director Since | Independent | Other Current Directorships | A | C | G&N |
| Geralyn R. Breig | Chief Executive Officer of AnytownUSA.com | 57 | 2018 | YES | ●1-800-FLOWERS.com, Inc. ●Welch Foods Inc. | M | ||
| Gerald W. Evans, Jr. | Chief Executive Officer of Hanesbrands Inc. | 60 | 2016 | NO | ●Valvoline Inc. | |||
| Bobby J. Griffin | Former President, International Operations of Ryder System, Inc. | 71 | 2006 | YES | ●United Rentals, Inc. ●WESCO International, Inc. ●Atlas Air Worldwide Holdings, Inc. | M | M | |
| James C. Johnson | Former General Counsel of Loop Capital Markets LLC | 67 | 2006 | YES | ●Ameren Corporation ●Energizer Holdings, Inc. ●Edgewell Personal Care Company | M | C | |
| Franck J. Moison | Former Vice Chairman of the Colgate-Palmolive Company | 66 | 2015 | YES | ●United Parcel Service, Inc. ●SomaLogic, Inc. | M | ||
| Robert F. Moran | Former Chairman and Chief Executive Officer of PetSmart, Inc. | 69 | 2013 | YES | ●GNC Holdings, Inc. | C | ||
| Ronald L. Nelson* | Former Chairman and Chief Executive Officer of Avis Budget Group, Inc. | 67 | 2008 | YES | ●Viacom Inc. ●Wyndham Hotels & Resorts, Inc. | M | M | |
| Ann E. Ziegler | Former Chief Financial Officer of CDW Corporation | 61 | 2008 | YES | ●Groupon, Inc. ●Wolters Kluwer N.V. ●US Foods Holding Corp. | C | M | |
| A: Audit | *: Chairman of the Board | |||||||
| C: Compensation | C: Chair | |||||||
| G&N: Governance & Nominating | M: Member | |||||||
| Hanesbrands Committees | ||||||||||||||||
| Name | Occupation | Age | Director Since | Independent | Other Current Directorships | A | C | G&N | ||||||||
| Cheryl K. Beebe | Former Executive Vice President and Chief Financial Officer of Ingredion Incorporated | 66 | 2020 | YES | ● Packaging Corporation of America ● The Mosaic Company ● Goldman Sachs Asset Management | M | ||||||||||
| Stephen B. Bratspies | Chief Executive Officer of Hanesbrands Inc. | 54 | 2020 | NO | ||||||||||||
| Geralyn R. Breig | Former Chief Executive Officer of AnytownUSA.com | 59 | 2018 | YES | M | M | ||||||||||
| Bobby J. Griffin | Former President, International Operations of Ryder System, Inc. | 73 | 2006 | YES | ● United Rentals, Inc. ● WESCO International, Inc. ● Atlas Air Worldwide Holdings, Inc. | M | M | |||||||||
| James C. Johnson | Former General Counsel of Loop Capital Markets LLC | 69 | 2006 | YES | ● Ameren Corporation ● Energizer Holdings, Inc. ● Edgewell Personal Care Company | C | ||||||||||
| Franck J. Moison | Former Vice Chairman of the Colgate-Palmolive Company | 68 | 2015 | YES | ● United Parcel Service, Inc. | M | M | |||||||||
| Robert F. Moran | Chief Executive Officer of UNATION, Inc. | 71 | 2013 | YES | C | |||||||||||
| Ronald L. Nelson | Former Chairman and Chief Executive Officer of Avis Budget Group, Inc. | 69 | 2008 | YES | ● ViacomCBS Inc. ● Wyndham Hotels & Resorts, Inc. | M | M | |||||||||
| William S. Simon | Former Executive Vice President of Walmart Stores, Inc. and former President and CEO of Walmart U.S. | 62 | 2021 | YES | ● Darden Restaurants, Inc. | M | ||||||||||
| Ann E. Ziegler | Former Chief Financial Officer of CDW Corporation | 63 | 2008 | YES | ● Reynolds Consumer Products Inc. ● US Foods Holding Corp ● Wolters Kluwer N.V. | C | ||||||||||
| A: Audit | C: Chair | |||||||||||||||
| C: Compensation | M: Member | |||||||||||||||
| G&N: Governance & Nominating | ||||||||||||||||
HANESBRANDS INC. | 3
| Proxy Summary |
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Director Nominee Skills and QualificationsDiversity
| Cheryl K. Beebe | Stephen B. Bratspies | Geralyn R. Breig | Bobby J. Griffin | James C. Johnson | Franck J. Moison | Robert F. Moran | Ronald L. Nelson | William S. Simon | Ann E. Ziegler | |||||||||||
| Skills and Qualifications | ||||||||||||||||||||
| Chief Executive Officer Experience |  | ● | ● | ● | ● | |||||||||||||||
| Corporate Governance Experience |  | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||
| Risk Oversight/Management Experience |  | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||
| Financial Literacy |  | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||
| Industry Experience |  | ● | ● | ● | ● | ● | ● | ● | ||||||||||||
| International Business Experience |  | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||
| Chief Financial Officer Experience |  | ● | ● | ● | ● | |||||||||||||||
| Audit Committee Financial Expertise |  | ● | ● | |||||||||||||||||
| Extensive Knowledge of the Company’s Business | ● | |||||||||||||||||||
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| Women | ● | ● | ● | |||||||||||||||||
| Men | ● | ● | ● | ● | ● | ● | ● | |||||||||||||
| Race/Ethnicity | ||||||||||||||||||||
| African-American | ● | ● | ||||||||||||||||||
| White/Caucasian | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||
| Proxy Summary |
Corporate Governance Highlights
Independence
● | The majority of director nominees are independent 10) |
| ● | Independent Chairman of the Board |
Accountability
| ● | Annual election of directors |
| ● | Majority voting for directors |
| ● | Executive and director stock ownership guidelines |
| ● | Hedging and pledging of company stock is prohibited |
Effectiveness
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Diversity
| ● | Half of director nominees are considered diverse (5 of 10), including three female and two African American nominees |
Strategic Guidance
| ● | Board oversight of risk management |
| ● | Regular Board review of cybersecurity risks (at least twice annually), including the Company’s adherence to the NIST cybersecurity framework, plans to mitigate cybersecurity risks and respond to data breaches |
| ● | Board monitoring of the Company’s climate-related risks, sustainability initiatives and progress towards long-term sustainability goals |
| ● | Succession planning for CEO and key members of senior management |
| Item 2. | | ||
To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm | |||
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We are asking you to ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as our independent auditor for our | |||
>>See page | |||
| Item 3. |
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To approve, on an advisory basis, named executive officer compensation as disclosed in
Hanesbrands’ stockholders have the opportunity to cast a non-binding, advisory “say on pay” vote on our named executive officer compensation, as disclosed in this Proxy Statement. We ask for your approval of the compensation of our named executive officers. Before considering this proposal, please read our Compensation Discussion and Analysis and the executive compensation tables and related narrative disclosure in this Proxy Statement, which explain our executive compensation programs and the Compensation Committee’s compensation decisions. >>See page |
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HANESBRANDS INC. | 5 |
Business Strategies and PrioritiesHanesbrands is a socially responsible leading marketer of everyday basic innerwear and activewear apparel in the Americas, Europe, Australia and Asia/Pacific under some of the world’s strongest apparel brands, includingHanes, Champion, Bonds, DIM, Maidenform, Bali, Playtex, Lovable, Bras N Things, Nur Die/Nur Der, Alternative, L’eggs, JMS/Just My Size, Wonderbra, BerleiandGear for Sports. We have a long history of innovation, product excellence and brand recognition, and we take great pride in our reputation for ethical business practices and the success of our Hanes for Good corporate responsibility program for community and environmental improvement.
We operate in the global innerwear and global activewear apparel categories. These are stable, heavily branded categories where we have a strong consumer franchise based on a global portfolio of industry-leading brands that we have built over multiple decades, through hundreds of millions of direct interactions with consumers. Since our 2006 spinoff, we have refined and strengthened our business model by implementing various strategies based on our underlying operating philosophy of Sell More, Spend Less and Generate Cash. These strategies include: recapitalizing our supply chain; integrating our operations; reinvesting in our brands; leading the introduction of meaningful innovation to our categories; broadening our distribution to include all channels of trade, including the consumer-direct channel; divesting out of commodity products; and expanding both our international presence and our portfolio of leading brands through strategic acquisitions.
Over this time we have used strategic acquisitions to create a more diversified business with multiple paths to deliver consistent organic revenue growth, and we have continued to leverage our company-owned supply chain, our operational discipline and our global scale to generate higher levels of profitability and greater cash flow. Since 2007, we have increased revenue by $2.7 billion and generated over $5.8 billion of cash flow from operations. Since 2007, we have also returned $2.4 billion to stockholders through dividends and share repurchases.
Over the past year, we have utilized our strong cash flow generation to reduce our net debt by over a half a billion dollars, bringing us back within our target leverage range of two to three times net debt to adjusted EBITDA. Consistent with our disciplined, return-centric approach to capital allocation, we plan to utilize our strong cash flow generation in 2020 and beyond to fund capital investments and our regular dividend, as well as additional share repurchases and strategic acquisitions.
We have also made significant progress towards our sustainability goals. Between 2007 and 2018, we reduced our energy consumption by 23%, decreased carbon dioxide emissions by 36%, cut water usage by 31% and shifted 41% of our total energy consumption to renewable sources. Over the past decade, we have provided tens of thousands of employees, contractors and members of the community with free medical care, our employees have contributed over 500,000 volunteer hours to improve lives in their local communities and over 6,500 of our employees have earned high school diplomas, college degrees and professional certifications through our continuing education programs. Based on these accomplishments, we are setting even more ambitious goals for environmental performance and other sustainability initiatives over the next decade.
We believe our formula of strong brands, stable categories, scale leverage and disciplined capital allocation positions us to deliver strong returns over the next decade.
2019 Performance HighlightsDuring 2019, we continued to deliver on our key strategic priorities in a challenging and highly competitive global environment. Key financial and strategic highlights included:
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| Proxy Summary |
ESG AND SUSTAINABILITY HIGHLIGHTS
We believe it is important to protect the place we all call home. With this in mind, we are continuing our commitment to make the world a more comfortable, livable and inclusive place. We approach sustainability from a broad, holistic perspective and focus our efforts in areas addressed by the United Nations’ Sustainable Development Goals, such as: good health and well-being; quality education; gender equality; climate action; clean water and sanitation; affordable and clean energy; economic growth; reduced inequalities; and responsible consumption and production. In light of our commitment to sustainability, we have established wide-ranging 2025/2030 global sustainability goals, including:
| People: By 2030, improve the lives of at least 10 million people through health and wellness programs, diversity and inclusion initiatives, improved workplace quality, and philanthropic efforts that improve local communities. |
| ● | Planet: By 2030, reduce direct greenhouse gas emissions by 50% and indirect emissions by 30% to align with science-based targets, reduce water use by at least 25%, use 100% renewable electricity in Company-owned operations, and bring landfill waste to zero. | |
| ● | Product: By 2025, eliminate all single-use plastics and reduce packaging weight by at least 25%, while also moving to 100% recycled/biodegradable polyester and sustainably sourced cotton. |
We regularly report our progress against these goals and other key metrics on our sustainability website, www.HBISustains.com.
In working toward our climate and sustainability goals, we have established social programs like Green for Good, which provides education and growth opportunities for tens of thousands of our global employees and has donated millions to community needs in the form of funding and clothing donations. In recognition of our efforts, we are the only apparel company to have earned sustained excellence honors from the U.S. EPA Energy Star Partner program for 12 years in a row. We earned a peer-leading “A-” on the CDP Climate disclosure in 2021. We are also very proud to have been named by Ethisphere as one of the World’s Most Ethical Companies.
Under our ESG governance framework, the Governance and Nominating Committee takes the lead in coordinating the Board’s ESG oversight activities. In that role, the Governance and Nominating Committee provides oversight of management’s ESG strategy and communications, as well as our corporate governance policies and practices. In addition, the Governance and Nominating Committee assesses whether relevant ESG risks, opportunities and disclosure obligations are regularly reviewed and considered by the other Board committees. The Audit and Compensation Committees support the Governance and Nominating Committee in its oversight role by taking the relevant ESG risks, opportunities and disclosure obligations into account as part of the existing mandates under their respective charters. For example:
| ● | The Compensation Committee oversees the Company’s human capital policies and strategies, including diversity, equity and inclusion (DE&I), pay equity and talent management. | |
| ● | The Audit Committee considers the integrity of the Company’s ESG reporting frameworks and controls, including the accuracy and consistency of ESG reporting and disclosures and evaluates environmental risks as part of its oversight of the Company’s Global Enterprise Risk evaluation. |
COMPENSATION HIGHLIGHTS
Business Strategies and Priorities
We make everyday apparel that is known and loved by consumers around the world for comfort, style, quality, innovation and value. Among the Company’s iconic brands are Hanes, the leading basic apparel brand in the United States; Champion, an innovator at the intersection of lifestyle and athletic apparel; and Bonds, which is setting new standards for design and sustainability. We employ over 59,000 associates in 33 countries and have built a strong reputation for workplace quality and ethical business practices.
In 2021, we announced our Full Potential plan – a three-year growth plan designed to unlock the enormous opportunities of Hanesbrands, building on our iconic brands, world-class supply chain, deep consumer loyalty, broad channel distribution and global footprint. The Full Potential plan consists of four growth pillars: grow global Champion; re-ignite innerwear growth; drive consumer-centricity; and focus the portfolio. We have already made significant strides towards achieving these goals, as evidenced by our accelerated growth, the decision to sell our European Innerwear and U.S. Sheer Hosiery businesses; improvements in core e-commerce capabilities; a 30% reduction in SKUs; and our broad-based cost reduction program. We are also embarking on a number of initiatives designed to: enhance our global design and innovation capabilities to meet the needs of both current and new consumer segments; segment our supply chain to address the unique needs of each of our brands and increase speed-to-market; simplify our process and organization to make decisions faster; and modernize our technology and invest in our people and next-generation talent to accelerate results and deliver sustainable, profitable growth.
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| Proxy Summary |
Fiscal 2021 Performance1
| ● | We exited 2021 with a | |
| ● | We raised our 2024 Full Potential financial targets as a result of increased consumer demand for our brands globally, the traction of our Full Potential growth strategy and the proven ability of our global team to execute and consistently deliver results, particularly in | |
| ● | We also increased capital returns to shareholders. In addition to our regular quarterly cash dividend, we announced a new a three-year $600 million share repurchase program. Based on our Full Potential plan targets, we expect to repurchase shares quarterly, beginning with the first quarter of 2022. | |
| ● | Global Champion brand sales increased 25% and 20% compared to fourth-quarter and full-year 2019, respectively. The continued growth above pre-pandemic levels is driven by strong consumer demand across channels in the | |
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| ● | We continued the execution of |
Executive Compensation Philosophy and Framework
At Hanesbrands, we emphasize a “pay-for-performance” culture, linking a substantial percentage of an executive’s compensation to our performance and stockholders’ value growth. Specifically:
| ● | We provide annual incentives designed to reward our executive officers for the attainment of short-term goals, and long-term incentives designed to reward increasing stockholder value over the short, medium and long term. | |
| ● | Performance-based and at-risk compensation represents | |
| ● | Performance-based and at-risk compensation represents | |
| ● | In keeping with our pay-for-performance culture, we expect our executive officers to deliver overall results that exceed performance targets to receive above median market compensation. Below target performance is expected to result in below median market compensation. | |
| ● | Our compensation program is designed to reward exceptional and sustained performance. By combining a three-year vesting period for most equity awards with policies prohibiting hedging or pledging of | |
| ● | Outstanding equity awards | |
| ● | Our Clawback Policy permits us to recoup cash- and equity-based incentive compensation payments in the event we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. Additionally, the terms of both our cash- and equity-based incentive compensation plans permit the recovery of incentive awards if a participant violates our Global Code of Conduct or engages in other activities harmful to the interests of the Company. |
| 1 | For reconciliations of select GAAP and non-GAAP measures, see Appendix A. Unless otherwise noted, all 2019 comparisons are rebased to exclude the exited C9 Champion mass program and the DKNY intimate apparel license; see Appendix A. |
HANESBRANDS INC. | 7
| Proxy Summary |
Fiscal 2021 NEOs
Our named executive officers for our 2021 fiscal year were:
| Stephen B. Bratspies | Chief Executive Officer |
| Michael P. Dastugue | Chief Financial Officer |
| M. Scott Lewis | Chief Accounting Officer and Former Interim Chief Financial Officer |
| Joseph W. Cavaliere | Group President, Global Innerwear |
| Michael E. Faircloth | Group President, Global Operations |
| Jonathan Ram | Group President, Global Activewear |
Elements of 2019Fiscal 2021 Compensation
Our named executive officers’ total direct compensation for 2019fiscal 2021 consisted principally of the following elements:
Base Salary | ●Fixed compensation component ●Reflects the individual responsibilities, performance and experience of each named executive officer | ●Provides a foundation of cash compensation for the |
Annual Incentive Plan | ●Performance-based cash compensation ●Payout determined based on Company performance against pre-established | ●Motivates performance by linking compensation to the achievement of key annual objectives |
Long-Term | ●Performance-based and at-risk, time-vested compensation ●Performance Share Awards (“PSAs”) (50% of LTIP opportunity) ●Vesting on the third anniversary of the grant date ●Number of shares received ranges from 0% to 200% ofthe number of units granted based on ●Restricted Stock Unit Awards (“RSUs”) (50% of LTIP opportunity) ●Ratable vesting over a three-year service period | ●Encourages behavior that enhances the long-term growth, profitability and financial success of the Company, aligns executives’ interests with our stockholders and supports retention objectives |
In addition, we provide health, welfare and retirement plans that promote employee wellness and support employees in attaining financial security. We also provide severance benefits under limited circumstances. These severance benefits, which provide our named executive officers with income protection in the event employment is terminated without cause or terminated in certain situations following a change in control, support our executive retention goals and encourage our named executive officers’ independence and objectivity in considering potential change in control transactions. See “Post-Employment Compensation” on page 49 for additional details.
Fiscal 2021 Compensation Mix
The mix of compensation elements that we offer is intended to further our goals of:
| achieving key annual results and strategic long-term business objectives; | ||
| ● | using an appropriate mix of cash and equity; | |
| ● | emphasizing a “pay-for-performance” culture; | |
| ● | effectively managing the cost of pay programs; and | |
| ● | providing a balanced total compensation program to help ensure senior management is not encouraged to take unnecessary and excessive risks that may harm the Company. |
Executive Compensation Mix
Our emphasis on performance-based and at-risk pay is reflected in the following chart, which illustrates the average 2019fiscal 2021 total target direct compensation mix for our Chief Executive Officer and the average target direct compensation mix for our other named executive officers (“NEOs”).
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2019 Performance CriteriaThe Compensation Committee chose to use net sales growth, organic sales growth, diluted earnings per share, excluding actions (“EPS-XA”) growth and cash flow from operations as performance criteria for our named executive officers’ 2019 performance-based pay opportunities, as follows:
Proxy Summary |
| Fiscal 2021 Total Target Direct Compensation | |
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The percentage of our Chief Executive Officer’s performance-based and at-risk compensation is the highest of our named executive officers, reflecting the position’s highest level of responsibility and accountability for results. Performance-based and at-risk compensation comprises 74% of the average total target direct compensation of our other named executive officers. Because the value of such compensation depends on Hanesbrands’ achievement of key annual results and strategic long-term business objectives and/or is tied to changes in our stock price, our named executive officers’ actual compensation could be materially higher or lower than targeted levels.
| CEO Potential Compensation Scenarios (Percentage of Total Compensation) | |
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HANESBRANDS INC. | 9
| Proxy Summary |
Fiscal 2021 Performance Metrics
The Compensation Committee decided to move away from a single set of performance metrics for the 2021 AIP and LTIP awards and instead establish a separate set of metrics for each program. The Committee felt this design change would better align the Company’s compensation programs with current market practice.
The metrics for fiscal 2021 performance compensation were as follows for the AIP and LTIP:
| Annual Incentive Plan (AIP) Metrics | |
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| Long-Term Incentive Plan (LTIP) Metrics | |
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| Proxy Summary |
Fiscal 2021 Executive Compensation
Summary of Compensation
The following table sets forth a summary of compensation earned by or paid to our named executive officers for our 2019, 20182021, 2020 and 20172019 fiscal years, as applicable. This table is supplemental to, and not intended to replace, the Summary Compensation Table set forth on page 53, which contains all of the information set forth below, as well as further explanation and detail in the footnotes and related narrative disclosure.
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | �� | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||
| Stephen B. Bratspies | 2021 | $ | 1,100,000 | $ | — | $ | 7,049,994 | $ | — | $ | 2,691,130 | $ | — | $ | 190,125 | $ | 11,031,249 | ||||||||||
| Chief Executive Officer | 2020 | 458,333 | — | 2,812,505 | 655,689 | 803,150 | — | 99,388 | 4,829,065 | ||||||||||||||||||
| Michael P. Dastugue | 2021 | 500,000 | — | 1,013,319 | — | 815.494 | — | 70,463 | 2,399,276 | ||||||||||||||||||
| Chief Financial Officer | |||||||||||||||||||||||||||
| M. Scott Lewis | 2021 | 375,000 | 350,000 | 225,000 | — | 532,110 | — | 90,820 | 1,572,930 | ||||||||||||||||||
| Chief Accounting Officer and Former Interim Chief Financial Officer | 2020 | 361,790 | 700,000 | 175,001 | — | 439,009 | — | 40,564 | 1,716,363 | ||||||||||||||||||
| Joseph W. Cavaliere | 2021 | 623,719 | — | 1,519,996 | 1,017,278 | — | 264,618 | 3,425,611 | |||||||||||||||||||
| Group President, Global Innerwear | |||||||||||||||||||||||||||
| Jonathan Ram | 2021 | 637,500 | — | 1,520,000 | — | 779,816 | — | 89,418 | 3,026,734 | ||||||||||||||||||
| Group President, Global Activewear | |||||||||||||||||||||||||||
| Michael E. Faircloth | 2021 | 626,667 | 1,282,004 | — | 766,564 | — | 75,519 | 2,750,754 | |||||||||||||||||||
| Group President, Global Operations | 2020 | 588,511 | — | 1,282,009 | — | 415,187 | 31,843 | 75,202 | 2,392,753 | ||||||||||||||||||
| 2019 | 560,000 | — | — | — | 587,664 | 41,052 | 56,227 | 1,244,943 | |||||||||||||||||||
HANESBRANDS INC. | 11
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total Compensation* ($) | ||||||||
| Gerald W. Evans, Jr. Chief Executive Officer | 2019 | $1,100,000 | $— | $— | $2,308,680 | $361,586 | $186,059 | $3,956,325 | ||||||||
| 2018 | 1,100,000 | — | 6,249,987 | 1,303,170 | — | 179,551 | 8,832,708 | |||||||||
| 2017 | 1,100,000 | — | 6,250,014 | 1,889,250 | 164,848 | 177,874 | 9,581,985 | |||||||||
| Barry A. Hytinen Former Chief Financial Officer | 2019 | 727,790 | — | — | 797,646 | — | 68,623 | 1,594,059 | ||||||||
| 2018 | 600,000 | — | 1,499,993 | 402,798 | — | 178,645 | 2,681,436 | |||||||||
| 2017 | 127,693 | 250,000 | 2,200,017 | 124,277 | — | 44,058 | 2,746,045 | |||||||||
| W. Howard Upchurch Group President, Innerwear Americas | 2019 | 570,000 | — | — | 598,158 | 88,177 | 54,837 | 1,311,172 | ||||||||
| 2018 | 570,000 | — | 1,302,000 | 337,640 | — | 50,317 | 2,259,956 | |||||||||
| 2017 | 570,000 | — | 1,302,001 | 489,488 | 51,457 | 65,043 | 2,477,988 | |||||||||
| David L. Bortolussi Group President, Innerwear International | 2019 | 584,052 | 229,449 | — | 531,184 | — | 38,241 | 1,382,926 | ||||||||
| Joia M. Johnson Chief Administrative Officer, Chief Legal Officer, General Counsel and Corporate Secretary | 2019 | 550,000 | — | — | 654,126 | — | 59,327 | 1,263,453 | ||||||||
| 2018 | 550,000 | — | 1,182,008 | 369,232 | — | 55,116 | 2,156,356 | |||||||||
| 2017 | 550,000 | — | 1,181,999 | 535,288 | — | 67,358 | 2,334,644 | |||||||||
| Michael E. Faircloth Group President, Global Operations, American Casualwear and E-Commerce | 2019 | 560,000 | — | — | 587,664 | 41,052 | 56,227 | 1,244,943 | ||||||||
| 2018 | 560,000 | — | 1,205,012 | 331,716 | — | 51,270 | 2,147,998 | |||||||||
| 2017 | 540,000 | — | 1,205,002 | 463,725 | 22,927 | 60,987 | 2,292,641 |
Notice of the 20202022 Annual Meeting of Stockholders
WHEN:
Tuesday, April 28, 202026, 20228:9:00 a.m., Eastern time
WHERE:Hanesbrands Inc.1000 East Hanes Mill RoadWinston-Salem, NC 27105*
The Annual Meeting will be held exclusively online at www.virtualshareholdermeeting.com/HBI2022.
PURPOSE:
| 1. | to elect |
| 2. | to vote on a proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our |
| 3. | to approve, on an advisory basis, named executive officer compensation as disclosed in the Proxy Statement for our |
| and | |
| 4. |
|
to transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
RECORD DATE:
Stockholders of record at the close of business on February 18, 202015, 2022 are entitled to notice of, and to vote at, the Annual Meeting.
The Board of Directors is not aware of any matter that will be presented at the Annual Meeting that is not described above. If any other matter is properly presented at the Annual Meeting, the persons named as proxies on the proxy card will, in the absence of stockholder instructions to the contrary, vote the shares for which such persons have voting authority in accordance with their discretion on any such matter.
By Order of the Board of Directors
JOIA
TRACY M. JOHNSONChief Administrative Officer, Chief Legal Officer,
PRESTON
General Counsel, and Corporate Secretary and
Chief Compliance Officer
March 16, 202014, 2022
Winston-Salem, North Carolina
As part of our precautions regarding the coronavirus or COVID-19, we are planning for the possibility that the Annual Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be available atwww.Hanes.com/investors.
HOW TO VOTE:
Whether or not you plan to attend the meeting, we urge you to authorize a proxy to vote your shares via the toll-free telephone number or over the Internet, as described in the enclosed materials. If you requested and received a copy of the proxy card by mail, you may sign, date and mail the proxy card in the envelope provided.
  | BY TELEPHONE In the U.S. or Canada, you can authorize a proxy to vote your shares toll-free by calling 1-800-690-6903. |
  | BY INTERNET You can authorize a proxy to vote your shares online at |
  | BY MAIL You can authorize a proxy to vote by mail by marking, dating, and signing your proxy card or voting instruction form and returning it in the postage-paid envelope. |
ATTENDING THE MEETINGAn admission ticket (or
You can attend the 2022 Annual Meeting online, vote your shares, and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/HBI2022.
Please note that stockholders will need their unique 16-digit control number which appears on their Notice of Internet Availability of Proxy Materials, the proxy card (printed in the box and marked by the arrow), and the instructions that accompanied the proxy materials in order to attend, vote shares or ask questions prior to or at the Annual Meeting. If you are a beneficial owner and you do not have a control number, you must contact your broker or other proof of stock ownership) and some form of government-issued photo identification (such asfinancial institution to obtain a valid driver’s licensecontrol number or passport) will be required for admissionvoting instructions.
Prior to the Annual Meeting. Only stockholders who ownedMeeting, you may vote your shares of Hanesbrands common stock as ofand submit pre-meeting questions online by visiting proxyvote.com and following the close of businessinstructions on February 18, 2020your proxy card.
If you encounter any technical difficulties during check-in or during the Annual Meeting, please call the technical support number that will be entitled to attend the Annual Meeting.posted on www.virtualshareholdermeeting.com/HBI2022.
Important Notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 28, 2020.26, 2022.
The Annual Report and Proxy Statement are available atwww.proxyvote.com.www.proxyvote.com.
The Notice of Internet Availability of Proxy Materials, or this Notice of the 20202022 Annual Meeting of Stockholders, this Proxy Statement and our 20192021 Annual Report on Form 10-K are first being mailed to stockholders on or about March 16, 2020.14, 2022.
12 |
Corporate Governance at Hanesbrands
 | |||||
 | |||||
| Proposal | 1—Election of Directors | ||||
Our Board of Directors currently has nineten members. One of our current directors, David V. Singer, has not been nominated for re-election at the 2020 Annual Meeting and his term will expire at the 2020 Annual Meeting. Effective immediately prior to the Annual Meeting, the size of the Board will be reduced to eight members.
Each of our directors is elected to serve until the next annual meeting of stockholders and until his or her successor is duly elected and qualified. If a nominee is unavailable for election, proxy holders may vote for another nominee proposed by the Board or, as an alternative, the Board may reduce the number of directors to be elected at the Annual Meeting. Each nominee has agreed to serve on the Board if elected. Following is information regarding each of the nominees for election, which has been confirmed by the applicable nominee for inclusion in this Proxy Statement.
The eightten nominees for election at the Annual Meeting possess experience and qualifications that our Governance and Nominating Committee believes will allow them to make substantial contributions to the Board. In selecting nominees to the Board, we seek to ensure that our Board collectively has a balance of experience and expertise, including chief executive officer experience, chief financial officer experience, international expertise, deep experience in the consumer products industry, corporate governance expertise and expertise in other functional areas that are relevant to our business. For more information about the process by which the Governance and Nominating Committee identifies candidates for election to the Board, please see “Process for Nominating Potential Director Candidates” on page 17.
  | Our Board of Directors unanimously recommends a voteFORelection of these |
HANESBRANDS INC. | 13
| Corporate Governance at Hanesbrands |
Director Nominee Skills and QualificationsDiversity
Director Nominee Age
Director Nominee Tenure
| Cheryl K. Beebe | Stephen B. Bratspies | Geralyn R. Breig | Bobby J. Griffin | James C. Johnson | Franck J. Moison | Robert F. Moran | Ronald L. Nelson | William S. Simon | Ann E. Ziegler | |||||||||||
| Skills and Qualifications | ||||||||||||||||||||
| Chief Executive Officer Experience | ● | ● | ● | ● | ||||||||||||||||
| Corporate Governance Experience | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||
| Risk Oversight/Management Experience | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||
| Financial Literacy | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||
| Industry Experience | ● | ● | ● | ● | ● | ● | ● | |||||||||||||
| International Business Experience | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||
| Chief Financial Officer Experience | ● | ● | ● | ● | ||||||||||||||||
| Audit Committee Financial Expertise | ● | ● | ||||||||||||||||||
| Extensive Knowledge of the Company’s Business | ● | |||||||||||||||||||
| Gender | ||||||||||||||||||||
| Women | ● | ● | ● | |||||||||||||||||
| Men | ● | ● | ● | ● | ● | ● | ● | |||||||||||||
| Race/Ethnicity | ||||||||||||||||||||
| African-American | ● | ● | ||||||||||||||||||
| White/Caucasian | ● | ● | ● | ● | ● | ● | ● | ● |
14 |
| Corporate Governance at Hanesbrands |
Director Nominee Age
Director Nominee Tenure
HANESBRANDS INC. | 15
| Corporate Governance at Hanesbrands |
Nominees for Election as Directors for a One-Year Term Expiring in 20212023
| Cheryl K. Beebe | |||||
 |  | Former Executive Vice President and Chief Age: Director Since: Committee Membership: Independent Director
| |||
•Goldman Sachs Asset Management Former Directorships Within the •Convergys Corporation | |||||
Ms. Beebe served as Executive Vice President and Chief Financial Officer of Ingredion Incorporated (formerly named Corn Products International, Inc.), a manufacturer and seller of a number of ingredients to food and international customers, from 2004 to 2014. Ms. Beebe previously served Ingredion as Vice President, Finance from July 2002 to February 2004, as Vice President from February 1999 to 2004 and as Treasurer from 1997 to February 2004. She currently serves as a member and chair of the Board of Trustees for Goldman Sachs Asset Management GSTII funds and a member of the Board of Trustees of Fairleigh Dickinson University, New Jersey’s largest private university.
Specific Experience and Qualifications:
| |||||
Risk Oversight/ | Served in senior leadership positions with large organizations and has experience with corporate risk management issues | ||||
Financial Literacy | Has management experience preparing or overseeing the preparation of financial statements | ||||
| Chief Financial Officer Experience | Possesses financial acumen and an understanding of financial matters and the preparation and analysis of financial statements | ||||
International | Served in senior leadership positions with companies engaged in international business | ||||
|
| ||||
Corporate | Gained experience in corporate governance through service as a director of another public company | ||||
| Stephen B. Bratspies | |||||
 | |||||
 | Chief Executive Officer of Hanesbrands Inc. Age: Director Since: Committee Membership:None | ||||
Mr. Bratspies has served as our Chief Executive Officer since August 2020. Immediately prior to joining the company, Mr. Bratspies served as Chief Merchandising Officer since 2015 for Walmart Inc., a publicly traded multinational retail company that operates a chain of supercenters, discount stores, grocery stores and warehouse clubs. He served in various capacities at Walmart since 2005, including as Executive Vice President, Food, from 2014 to 2015 and as Executive Vice President, General Merchandise, from 2013 to 2014. Earlier in his career, he served as chief marketing officer for Specialty Brands, held various management positions at PepsiCo, Inc.’s Frito-Lay North America division, and was a management consultant with A.T. Kearney.
Specific Experience and Qualifications:
| |||||
| |||||
Risk Oversight/ | Served in senior leadership positions with large organizations and has experience with corporate risk management issues | ||||
Financial Literacy | Has management experience preparing or overseeing the preparation of financial statements | ||||
Chief Executive | Has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company | ||||
International | Served in senior leadership positions with companies engaged in international business | ||||
|
| ||||
Extensive | Has extensive knowledge of Hanesbrands’ business | ||||
| 16 | |||||
|
| ||||
| Corporate Governance at Hanesbrands |
| Geralyn R. Breig |
 | |||||
 | Former Age: Director Since: Committee Membership: Independent Director | ||||
Ms. Breig founded and served as Chief Executive Officer of AnytownUSA.com, an e-commerce marketplace, from 2018 to 2020. From 2014 to 2016, she served as President of Clarks, Americas Region, a division of the global, privately held footwear company C&J Clark Ltd. From 2008 to 2011, she served as President of Avon North America, a division of Avon Products Inc. She also served as Senior Vice President and Brand President of Avon’s Global Marketing Business Unit from 2005 to 2008. Ms. Breig held several executive positions at the Campbell Soup Company from 1995 to 2005, including as President, Godiva Chocolatier International. She began her career in brand management for the Beauty Care Division at The Procter & Gamble Company and also held several managerial positions at Kraft Foods, Inc.
Specific Experience and Qualifications:
| |||||
| |||||
Risk Oversight/ | Served in senior leadership positions with large organizations and has experience with corporate risk management issues | ||||
Financial Literacy | Has management experience preparing or overseeing the preparation of financial statements | ||||
| International Business Experience | Served in senior leadership positions with companies engaged in international business | ||||
| Industry Experience | Served in senior leadership positions with companies in the consumer products industry | ||||
| Corporate Governance Experience | Gained experience in corporate governance through service as a director of another public company | ||||
| Bobby J. Griffin |
 | Former President, International Operations of Ryder System, Inc. Age: 73 Director Since: 2006 Committee Membership:Compensation, Governance and Nominating Independent Director • United Rentals, Inc. •WESCO International, Inc. •Atlas Air Worldwide Holdings, Inc. |
Mr. Griffin served as President, International Operations of Ryder System, Inc., a global leader in transportation and supply chain management solutions, from 2005 to 2007. Beginning in 1986, Mr. Griffin served in various other management positions with Ryder System, including as Executive Vice President, International Operations from 2003 to 2005 and Executive Vice President, Global Supply Chain Operations from 2001 to 2003.
Specific Experience and Qualifications:
| Risk Oversight/ Management Experience | Served in senior leadership positions with large organizations and has experience with corporate risk management issues | |||
| Financial Literacy | Has management experience preparing or overseeing the preparation of financial statements | |||
| International Business Experience | Served in senior leadership positions with a company engaged in international business | |||
| Practical Expertise |
| Gained substantial experience in mergers and acquisitions, procurement and distribution, strategic planning, and transportation and security through service in senior leadership positions with a large international company | ||
Corporate | Gained experience in corporate governance through service as a director of other public companies | |||
| HANESBRANDS INC. | 17 |
| Corporate Governance at Hanesbrands | |||||
| James C. Johnson |
 |  | Former General Counsel of Loop Capital Markets LLC Age: Director Since:2006 Committee Membership: Independent Director
| |||
Mr. Johnson served as General Counsel of Loop Capital Markets LLC, a provider of a broad range of integrated capital solutions for corporate, governmental and institutional entities, from 2010 until 2013. Mr. Johnson previously served as Vice President and Assistant General Counsel of the Boeing Commercial Airplanes division of The Boeing Company, one of the world’s major aerospace firms, from 2007 until 2009. From 1998 until 2007, Mr. Johnson served as Vice President, Corporate Secretary and Assistant General Counsel of The Boeing Company. He currently serves as a trustee of the University of Pennsylvania and a Member of the Board of Overseers of the College of Arts and Sciences. In February 2018, Mr. Johnson completed the NACD Cyber-Risk Oversight Program and earned the CERT Certificate in Cybersecurity Oversight.
Specific Experience and Qualifications:
| |||||
| |||||
Risk Oversight/ | Served in senior leadership positions with large organizations and has experience with corporate risk management issues; reporting to the General Counsel, had responsibility for the staff and legal affairs for Boeing Commercial Airplanes, a business with annual revenue in excess of $20 billion | ||||
| Completed NACD Cyber-Risk Oversight Program and earned the CERT Certificate in Cybersecurity Oversight, demonstrating commitment to Board-level cybersecurity risk oversight | |||||
Financial Literacy | Served as Vice President, Corporate Secretary and Assistant General Counsel of The Boeing Company, where he gained practical expertise in significant business and financial issues | ||||
Corporate | Gained substantial experience in the oversight and administration of governance policies and programs through service as a director of other public companies, as well as through his position as Corporate Secretary of The Boeing Company; gained additional experience in executive compensation as a member of the compensation committee and as the chair of the compensation committee for two other public companies | ||||
| Franck J. Moison |
 | Former Vice Chairman of the Colgate-Palmolive Company Age: 68 Director Since: 2015 Committee Membership:Audit, Compensation Independent Director • United Parcel Service, Inc. |
Mr. Moison served as Vice Chairman of the Colgate- Palmolive Company, a leading consumer products company, from 2016 to 2018. He also served as Chief Operating Officer of Emerging Markets & Business Development for Colgate-Palmolive from 2010 to 2016. Beginning in 1978, Mr. Moison served in various management positions with Colgate-Palmolive, including as President, Global Marketing, Supply Chain & R&D from 2007 to 2010, and President, Western Europe, Central Europe and South Pacific from 2005 to 2007. He serves as a director of SES-imagotag, an electronic shelf labels retailer, as Chairman of the International Advisory Board of the EDHEC Business School (Paris, London, Singapore) and as a member of the International Board of the McDonough School of Business at Georgetown University.
Specific Experience and Qualifications:
| Risk Oversight/ Management Experience | Served in senior leadership positions with large organizations and has experience with corporate risk management issues |
| Financial Literacy | Has management experience preparing or overseeing the preparation of financial statements |
| International Business Experience | Served in senior leadership positions with companies engaged in international business |
| Industry Experience | Served in senior leadership positions with companies in the consumer products industry |
| Corporate Governance Experience | Gained experience in corporate governance through service as a director of other public companies |
| Corporate Governance at Hanesbrands |
| Robert F. Moran | |||||
 |  |
Age: Director Since: Committee Membership:Audit Independent Director Audit Committee Financial Expert Former Directorships Within the Past Five Years:
| |||
Mr. Moran has served as Chief Executive Officer of UNATION, Inc., an events and branding social media network, since 2021. From 2012 to 2013, he served as Chairman of the Board of PetSmart, Inc., a leading specialty provider of pet care products and services, and as Chief Executive Officer of PetSmart from 2009 to 2013. He joined PetSmart as President of North American Stores in 1999, and in 2001 he was appointed President and Chief Operating Officer. Mr. Moran also served as Chairman of GNC Holdings, Inc. (“GNC”), a leading global specialty retailer of health and wellness products, from 2017 to 2018 and as Interim Chief Executive Officer of GNC from 2016 to 2017. From 1998 to 1999, Mr. Moran was President of Toys “R” Us (Canada) Ltd., a subsidiary of former specialty toy retailer Toys “R” Us, Inc.
Specific Experience and Qualifications:
| |||||
| |||||
Risk Oversight/ | Served in senior leadership positions with large organizations and has experience with corporate risk management issues | ||||
Financial Literacy | Has management experience preparing or overseeing the preparation of financial statements | ||||
|
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|
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 | |||||
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| |||||
|
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| ||||
Chief Executive | Has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company | ||||
Chief Financial | Possesses financial acumen and an understanding of financial matters and the preparation and analysis of financial statements | ||||
International | Served in senior leadership positions with companies engaged in international business | ||||
Industry | Served in senior leadership positions with companies in the consumer products industry | ||||
Corporate | Gained experience in corporate governance through service as a director of other public companies | ||||
| Ronald L. Nelson |
 | |||||
 |
Age: 69 Director Since: 2008 Committee Membership:Compensation, Governance and Nominating Chairman of Other Current Directorships: • ViacomCBS, Inc. •Wyndham Hotels & Resorts, Inc. Former Directorships Within the Past Five Years: • Convergys Corporation | ||||
Mr. Nelson served as Executive Chairman of Avis Budget Group, Inc., which operates five major brands in the global vehicle rental industry through Avis, Budget, Budget Truck, Payless and Zipcar, from 2016 to 2018. From 2006 to 2015, Mr. Nelson served as Chairman and Chief Executive Officer of Avis Budget Group. Mr. Nelson was a director of Cendant Corporation (the predecessor of Avis Budget Group) from 2003 to 2006, Chief Financial Officer from 2003 until 2006 and President from 2004 to 2006. Mr. Nelson was also Chairman and Chief Executive Officer of Cendant Corporation’s Vehicle Rental business from January 2006 to August 2006. From 2005 to 2006, Mr. Nelson was interim Chief Executive Officer of Cendant Corporation’s former Travel Distribution Division.
Specific Experience and Qualifications:
| |||||
Risk Oversight/ | Served in senior leadership positions with large organizations and has experience with corporate risk management issues | ||||
Financial Literacy | Has management experience preparing or overseeing the preparation of financial statements | ||||
Chief Executive | Has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company | ||||
Chief Financial | Possesses financial acumen and an understanding of financial matters and the preparation and analysis of financial statements | ||||
International | Served in senior leadership positions with companies engaged in international business | ||||
Industry | Served in senior leadership positions with companies in the consumer products industry | ||||
Corporate | Gained experience in corporate governance through service as a director of other public companies | ||||
| HANESBRANDS INC. | 19 |
| Corporate Governance at Hanesbrands |
| William S. Simon |
 | |||||
 | Former Age: Director Since: Committee Membership: Independent Director Audit Committee Financial Expert
Former Directorships Within the Past Five Years: •
• GameStop Corp. | • Academy Sports and Outdoors, Inc. | |||
Mr. Simon has been Senior Advisor to KKR & Co., an investment firm, since 2014, and President of WSS Venture Holdings, LLC, a consulting and investment company, since 2014. Mr. Simon served as Executive Vice President of Wal-Mart Stores, Inc., a global retailer, and former President and CEO of Walmart U.S., the largest division of Wal-Mart Stores, Inc., which consists of retail department stores, from 2010 to 2014. Mr. Simon also served as Executive Vice President and COO of Walmart U.S. from 2007 to 2010 and Executive Vice President of Professional Services and New Business Development from 2006 to 2007. Prior to joining Walmart, Mr. Simon held senior executive positions at Brinker International, Inc., a casual dining restaurant company, Diageo North America, Inc., a multinational alcoholic beverages company, and Cadbury Schweppes plc, a multinational confectionery company. Mr. Simon also served as Secretary of the Florida Department of Management Services and served 25 years in the U.S. Navy and Naval Reserves.
Specific Experience and Qualifications:
| |||||
| |||||
Risk Oversight/ | Served in senior leadership positions with large organizations and has experience with corporate risk management issues | ||||
Financial Literacy | Has management experience preparing or overseeing the preparation of financial statements | ||||
| Chief Executive Officer Experience | Has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company | ||||
| International Business Experience | Served in senior leadership positions with companies engaged in international business | ||||
| Industry Experience | Served in senior leadership positions with companies in the retail and consumer products industries | ||||
| Corporate Governance Experience | Gained experience in corporate governance through service as a director of other public companies | ||||
| 20 |
| Corporate Governance at Hanesbrands |
| Ann E. Ziegler |
 | Former Chief Financial Officer of CDW Corporation Age: 63 Director Since: 2008 Committee Membership:Compensation (Chair) Independent Director Other Current Directorships: • Reynolds Consumer Products Inc. •Wolters Kluwer N.V. •US Foods Holding Corp. Former Directorships Within the Past Five Years: • Groupon Inc. |
Ms. Ziegler served as Senior Vice President and Chief Financial Officer and a member of the executive committee of CDW Corporation, a leading provider of technology solutions for business, government, healthcare and education, from 2008 until 2017. From 2005 until 2008, Ms. Ziegler served as Senior Vice President, Administration and Chief Financial Officer of Sara Lee Food and Beverage, a division of Sara Lee Corporation. From 2003 until 2005, she served as Chief Financial Officer of Sara Lee Bakery Group. From 2000 until 2003, she served as Senior Vice President, Corporate Development of Sara Lee.
Specific Experience and Qualifications:
| Risk Oversight/ Management Experience | Served in senior leadership positions with large organizations and has experience with corporate risk management issues | ||||
| Financial Literacy | Has management experience preparing or overseeing the preparation of financial statements | ||||
| Chief Financial Officer Experience | Possesses financial acumen and an understanding of financial matters and the preparation and analysis of financial statements | ||||
|
| ||||
Corporate | Gained experience in corporate governance through service as a director of other public companies | ||||
| HANESBRANDS INC. | |||||
| 21 | |||||
| Corporate Governance at Hanesbrands |
Process for Nominating Potential Director Candidates
The Governance and Nominating Committee is responsible for screening potential director candidates and recommending qualified candidates to the full Board of Directors for nomination. The Governance and Nominating Committee will consider director candidates proposed by the Chief Executive Officer, by any director or by any stockholder. From time to time, the Governance and Nominating Committee also retains search firms to assist it in identifying and evaluating a diverse slate of director nominees. Each of the nominees for election at the Annual Meeting, hasother than Mr. Simon, have been previously elected by our stockholders. The Board of Directors increased its number of members from nine to ten and elected Mr. Simon to the Board of Directors on June 10, 2021.
In evaluating potential director candidates, the Governance and Nominating Committee seeks to present candidates to the Board of Directors who have distinguished records of leadership and success in their arena of expertise and who will make substantial contributions to the Board of Directors. The Governance and Nominating Committee considers the qualifications listed in our Corporate Governance Guidelines, which include:
| ● | personal and professional ethics and integrity; | |
| ● | diversity among the existing Board members, including racial and ethnic background and gender; | |
| ● | specific business experience and competence, including whether the candidate has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company and whether the candidate has served in policy-making roles in business, government, education or other areas that are relevant to our global activities; | |
| ● | financial acumen, including whether the candidate, through education or experience, has an understanding of financial matters and the preparation and analysis of financial statements; | |
| ● | the ability to represent our stockholders as a whole; | |
| ● | professional and personal accomplishments, including involvement in civic and charitable activities; | |
| ● | experience with enterprise level risk management; | |
| ● | educational background; and | |
| ● | whether the candidate has expressed a willingness to devote sufficient time to carrying out his or her duties and responsibilities effectively and is committed to service on the Board of Directors. |
Any recommendation submitted by a stockholder to the Governance and Nominating Committee should include information relating to each of the qualifications outlined above concerning the potential candidate along with the other information required by our bylaws for stockholder nominations. The Governance and Nominating Committee applies the same standards in evaluating candidates submitted by stockholders as it does in evaluating candidates submitted by other sources. Suggestions regarding potential director candidates, together with the required information described above, should be submitted in writing to Hanesbrands Inc., 1000 East Hanes Mill Road, Winston-Salem, North Carolina 27105, Attention: Corporate Secretary. Stockholders who want to directly nominate a director for consideration at next year’s Annual Meeting should refer to the procedures described under “Stockholder Proposals and Director Nominations for Next Annual Meeting” on page 75.68.
Although we do not have a standalone policy regarding diversity in the nomination process, as noted above, diversity is one of the criteria that our Corporate Governance Guidelines require that our Governance and Nominating Committee consider in identifying and evaluating director nominees. In applying this criteria, the Governance and Nominating Committee and the Board consider diversity to also include differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to an active, effective Board. The Governance and Nominating Committee evaluates the effectiveness of its activities under this policy through its annual review of Board composition, which considers whether the current composition of the Board adequately reflects the balance of qualifications discussed above, including diversity, prior to recommending nominees for election. In this regard, the Board believes that its efforts have been effective based on the current composition of the Board.Board, half of which is considered diverse and which includes three female and two African-American directors.
Our Corporate Governance Guidelines provide that noa director may stand for re-election to the Board of Directors after he or she has reachedwho reaches the age of 72. However, our74 should submit a letter of resignation to the Governance and Nominating Committee, hason an annual basis, to be effective upon acceptance by the authorityBoard. Such letters of resignation will be considered by the Governance and Nominating Committee upon receipt. The Board will determine whether to extendaccept any such letter of resignation, taking into account the retirement agerecommendation of an individual director for up to two periods of one year each.the Governance and Nominating Committee.
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Director Independence
In order to assist our Board of Directors in making the independence determinations required by New York Stock Exchange (“NYSE”) listing standards, the Board of Directors has adopted categorical standards of independence. These standards, which are contained in our Corporate Governance Guidelines, are available on our corporate website,www.Hanes.com/investors(in the “Investors” section). The Board has determined that eightnine of the nineten current members of our Board of Directors, Ms. Beebe, Ms. Breig, Mr. Griffin, Mr. Johnson, Mr. Moison, Mr. Moran, Mr. Nelson, Mr. SingerSimon and Ms. Ziegler, are independent under NYSE listing standards and under our Corporate Governance Guidelines. In determining director independence, the Board of Directors did not discuss, and was not aware of, any related person transactions, relationships or arrangements that existed with respect to any of these directors.
Our Audit Committee’s charter requires that all of the members of the Audit Committee be independent under NYSE listing standards and the rules of the Securities Exchange Commission (“SEC”). The Board has determined that each of the current members of our Audit Committee is an independent director under NYSE listing standards and meets the enhanced standards of independence applicable to audit committee members under applicable SEC rules. The Board has also determined that each of Mr. MoranMs. Beebe and Mr. SingerMoran qualifies as an “audit committee financial expert” under applicable SEC rules.
Our Compensation Committee’s charter requires that all of the members of the Compensation Committee be independent under NYSE listing standards, including the enhanced independence requirements applicable to Compensation Committee members and “non-employee directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board has determined that each of the current members of our Compensation Committee is an independent director under NYSE listing standards and a non-employee director within the meaning of Rule 16b-3 under the Exchange Act.
Our Governance and Nominating Committee’s charter requires that all of the members of the Governance and Nominating Committee be independent under NYSE listing standards. The Board has determined that each of the current members of our Governance and Nominating Committee is an independent director under NYSE listing standards.
The Board’s Role and Responsibilities
Overview
The Board of Directors is elected by our stockholders to oversee their interests in the long-term health and the overall success of the Company’s business. The Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with our stockholders. The Board oversees the business of the Company, as conducted by the members of Hanesbrands’ senior management. In carrying out its responsibilities, the Board reviews and assesses Hanesbrands’ long-term strategy and its strategic, competitive and financial performance.
In 2019,2021, our Board of Directors met fivesix times and also held regularly scheduled executive sessions without management, presided over by our independent Chairman or Lead Director, as applicable.of the Board. In addition, during 20192021 our Audit Committee met fivesix times, our Compensation Committee met four times and our Governance and Nominating Committee met four times. Directors are expected to make every effort to attend the Annual Meeting, all Board meetings and the meetings of the Committees on which they serve. All of our directors at the time of our 20192021 Annual Meeting of Stockholders attended that Annual Meeting. In 2019,2021, each director also attended over 75% of the meetings of the Board and of the committees of which he or she was a member during the period that such director served on the Board or such committee.
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Risk Oversight
The Board as a whole is ultimately responsible for the oversight of our risk management function. The Board uses its committees to assist in its risk oversight function as follows: | |||||||
| The Boardhas delegated primary responsibility for the oversight of Hanesbrands’ risk management function to the Audit Committee. | |||||||
The Audit Committee discusses policies with respect to risk assessment and risk management, including significant financial risk exposures and the steps our management has taken to monitor, control and report such exposures. Management of Hanesbrands undertakes, and the Audit Committee reviews and discusses, an annual assessment of Hanesbrands’ risks on an enterprise-wide basis. Hanesbrands conducts a rigorous enterprise risk management program that is updated annually and is designed to bring to the Audit Committee’s attention Hanesbrands’ most material risks for evaluation, including strategic, operational, financial, | The Compensation Committeeis responsible for the oversight of risk associated with our compensation practices and policies. | The Governance and Nominating Committeeis responsible for the oversight of Board processes and corporate governance related risks. In addition, the Governance and Nominating Committee takes the lead in coordinating the Board’s ESG oversight activities. | |||||
Our Board of Directors maintains overall responsibility for oversight regarding the work of its various committees by receiving regular reports from the committee Chairs of the work performed by their respective committees. In addition, discussions with the Board about the Company’s strategic plan, consolidated business results, capital structure, acquisition-related activities and other business include consideration of the risks associated with the particular item under consideration. The Board Our Board also regularly receives reports from our Chief Executive Officer and Chief Sustainability Officer with respect to Hanesbrands’ climate-related risks, sustainability initiatives and our progress towards our long-term sustainability goals. | |||||||
Talent Management and Succession Planning
On an annual basis, our Board plans for succession to the position of Chief Executive Officer, as well as to certain other senior management positions. To assist the Board, our Chief Executive Officer annually provides the Board with an assessment of executives holding those senior management positions and of their potential to succeed him. Our Chief Executive Officer also provides the Board with an assessment of persons considered potential successors to those senior managers. The Board considers that information, their own impressions of senior management performance and their own knowledge of the external landscape for executive talent in planning for succession in key positions.
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Communicating with our Board of Directors
Any stockholders or interested parties who wish to communicate directly with our Board, with our non-management directors as a group or with our independent Chairman, may do so by writing to Hanesbrands Inc., 1000 East Hanes Mill Road, Winston-Salem,Winston- Salem, North Carolina 27105, Attention: Corporate Secretary. Stockholders or other interested parties also may communicate with members of the Board by sending an e-mail to our Corporate Secretary atcorporate.secretary@hanes.com. To ensure proper handling, any mailing envelope or e-mail containing the communication intended for the Board must contain a clear notation indicating that the communication is a “Stockholder/Board Communication” or an “Interested Party/Board Communication.”
The Governance and Nominating Committee has approved a process for handling communications received by the Company and addressed to the Board, the independent Chairman or to non-management directors. Under that process, our Corporate Secretary reviews all such correspondence and regularly forwards to the Board copies of all correspondence that, in her opinion, deals with the functions of the Board or its Committees or that she otherwise determines requires their attention. Advertisements, solicitations for business, requests for employment, requests for contributions, matters that may be better addressed by management or other inappropriate material will not be forwarded to our directors.
Board Leadership Structure
Our Board leadership structure consists of:
| ● | Chairman of the Board: Ronald L. Nelson; | |
| ● | Chief Executive Officer: | |
| ● | Fully independent Audit, Compensation and Governance and Nominating Committees. |
Our Corporate Governance Guidelines provide that the Governance and Nominating Committee will from time to time consider whether the positions of Chairman of the Board and Chief Executive Officer should be held by the same person or by different persons. The Board believes it is in the best interests of our Company to make this determination from time to time based on the position and direction of our Company and the constitution of the Board and management team rather than based on any self-imposed requirement, which the Board does not have. The Board determined to split the roles of Chairman and Chief Executive Officer in 2016.
Mr. Nelson has served as Chairman of the Board since 2019. He has served as a Hanesbrands director since 2008 and as Lead Director from 2015 to 2019. During his tenure, Mr. Nelson has actively served on all three Board Committees, including as Chairman of the Company’s Audit Committee. He currently serves as a member of the Company’s Compensation Committee and its Governance and Nominating Committee. The Board believes that Mr. Nelson brings significant experience and knowledge to the Chairman role. Due to his Board experience and leadership, Mr. Nelson is very well-suited to serve as the Board’s Chairman.
As detailed in the following summary, the Chairman of the Board has many important duties and responsibilities that enhance the independent oversight of management.
| The Chairman of the Board chairs all meetings of the non-management and independent directors in executive session and also has other authority and responsibilities, including: | |||
| ● | presiding at all meetings of the Board; | ||
| ● | advising the Corporate Secretary regarding the agendas for meetings of the Board of Directors; | ||
| ● | calling meetings of non-management and/or independent directors, with appropriate notice; | ||
| ● | advising the Board on the retention of advisors and consultants who report directly to the Board of Directors; | ||
| ● | advising the Chief Executive Officer, as appropriate, on issues discussed at executive sessions of non-management and/or independent directors; | ||
| ● | with the Chairman of the Compensation Committee, reviewing with the Chief Executive Officer the non-management directors’ annual evaluation of his performance; | ||
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| ● | serving as principal liaison between the non-management and/or independent directors, as a group, and the Chief Executive Officer, as necessary; | ||
| ● | serving as principal liaison between the Board of Directors and Hanesbrands’ stockholders, as appropriate, after consultation with the Chief Executive Officer; and | ||
| ● | selecting an interim chair or lead independent director to preside over meetings at which he cannot be present. |
Our independent directors take an active role in overseeing Hanesbrands’ management and key issues related to strategy, risk, integrity, compensation and governance. For example, only independent directors serve on the Audit Committee, Compensation Committee and Governance and Nominating Committee. Non-management and independent directors also regularly hold executive sessions outside the presence of our Chief Executive Officer and other Hanesbrands employees. If the Chairman of the Board is not an independent director, the Board will elect one of our independent directors to serve as Lead Director. The Lead Director will undertake all of the duties of the Chairman of the Board described above during any period when the Chairman of the Board is an officer or employee of the Company.
We believe our Board’s leadership structure is best suited to the needs of the Company at this time.
Board and Committee Evaluation ProcessThe Board has established a robust self-evaluation process for the Board and its committees.
Our Corporate Governance Guidelines require the Board to annually evaluate its own performance. In addition, the charters of each of the Audit Committee, Compensation Committee and Governance and Nominating Committee require the committee to conduct an annual performance evaluation. The Board engages in a robust written self-evaluation process to discharge these obligations. From time to time, the Board also engages a third party to conduct an external Board performance evaluation. The Governance and Nominating Committee oversees the annual self-assessmentassessment process on behalf of the Board and the implementation of the annual self-assessmentsassessments by the committees.
Each year, all Board members and all members of the Audit, Compensation and Governance and Nominating Committees complete a detailed confidential questionnaire. The questionnaire provides for quantitative ratings in key areas and also seeks comments from the directors. The Chair of the Governance and Nominating Committee reviews the responses with the Chairs of the Audit and Compensation Committees. The Chair of the Governance and Nominating Committee also discusses the Board self-evaluation responses with the full Board. Matters requiring follow-up are addressed by the Chair of the Governance and Nominating Committee or the Chairs of the Audit or Compensation Committee, as appropriate.
Committees of the Board of Directors
Our Board of Directors has three standing committees: the Audit Committee, the Compensation Committee and the Governance and Nominating Committee. The following is a list of current committee memberships, which is accompanied by a description of each committee. The directors who are nominated for election as directors at the Annual Meeting will, if re-elected, retain the committee memberships described in the following list immediately following the Annual Meeting, and the chairs of the Audit Committee, the Compensation Committee and the Governance and Nominating Committee will also remain the same.
| Committee Membership | |||||
| Audit Committee | Compensation Committee | Governance and Nominating Committee | |||
| Cheryl K. Beebe | Bobby J. Griffin | Geralyn R. Breig | |||
| Geralyn R. Breig | Franck J. | Bobby J. Griffin | |||
| Franck J. Moison | Ronald L. Nelson | James C. Johnson* | |||
| Robert F. Moran* | |||||
| Ann E. Ziegler* | Ronald L. Nelson | ||||
| William S. Simon | |||||
| * | Chair of the committee |
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| AUDIT COMMITTEE | |||||||
| Members: | Mr. Moran, Chair Ms. Beebe Ms. Breig Mr. Moison Mr. | The Audit Committee is responsible for assisting the Board of Directors in fulfilling its oversight of: ●the integrity of our financial statements, financial reporting process and systems of internal accounting and financial controls; ●our compliance with legal and regulatory requirements; ●the independent auditors’ qualifications and independence; and ●the performance of our internal audit function and independent auditor. The Audit Committee is also responsible for discussing policies with respect to risk assessment and risk management, including significant financial risk exposures and the steps our management has taken to monitor, control and report such exposures. | |||||
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Under SEC rules and the Audit Committee’s charter, the Audit Committee must prepare a report that is to be included in our Proxy Statement relating to the Annual Meeting of Stockholders or our Annual Report on Form 10-K. This report is provided under “Audit Committee Report” on page 27.32. In addition, the Audit Committee must review and discuss our annual audited financial statements and quarterly financial statements with management and the independent auditor and recommend, based on its review, that the Board of Directors include the annual financial statements in our Annual Report on Form 10-K.
COMPENSATION COMMITTEE | ||||||||||
| Members: | ||||||||||
| Ms. Ziegler, Chair Mr. Mr. Mr. | The Compensation Committee is responsible for assisting the Board of Directors in discharging its responsibilities relating to the compensation of our executive officers and the Chief Executive Officer performance evaluation process and for preparing a report on executive compensation that is to be included in our Proxy Statement relating to our Annual Meeting of Stockholders. This report is provided under “Compensation Committee Report” on page The Compensation Committee is also responsible for: ●reviewing and approving the total compensation philosophy covering our executive officers and other key executives and periodically reviewing an analysis of the competitiveness of our total compensation practices in relation to those of our peer group; ●with respect to our executive officers other than the Chief Executive Officer, reviewing and approving base salaries, target annual incentive award opportunities, the applicable standards of performance to be used in incentive compensation plans and the grant of equity incentives; ●recommending changes in non-employee director compensation to the Board of Directors; ●reviewing proposed stock incentive plans, other long-term incentive plans, stock purchase plans and other similar plans, and all proposed changes to such plans; ●reviewing the results of any stockholder advisory votes regarding our executive compensation and recommending to the Board how to respond to such votes; and ●recommending to the Board whether to have an annual, biannual or triennial advisory stockholder vote regarding executive compensation. The Chief Executive Officer’s compensation is approved by the independent members of the Board of Directors, upon the Compensation Committee’s recommendation. For information regarding the ability of the Compensation Committee to delegate its authority, and the role of our executive officers and the Compensation Committee’s compensation consultant in determining or recommending the amount or form of executive and director compensation, see the Compensation Discussion and Analysis that begins on page | |||||||||
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Compensation Committee Interlocks and Insider Participation.All members of the Compensation Committee during our 20192021 fiscal year were independent directors, and no member was an employee or former employee of Hanesbrands. During our 20192021 fiscal year, no member of the Compensation Committee had a relationship that must be described under SEC rules relating to disclosure of related party transactions and no interlocking relationship existed between our Board of Directors or Compensation Committee and the board of directors or compensation committee of any other company. During our 2021 fiscal year, Ann E. Ziegler, Ronald L. Nelson, Franck J. Moison, Bobby J. Griffin and James C. Johnson served on the Compensation Committee.
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GOVERNANCE AND NOMINATING COMMITTEE | ||||||
| Members: | ||||||
| Mr. Johnson, Chair Mr. Nelson Mr. Griffin Ms. | The Governance and Nominating Committee is responsible for: ●identifying individuals qualified to serve on the Board of Directors, consistent with criteria approved by the Board of Directors; ●recommending that the Board of Directors select a slate of director nominees for election by our stockholders at our annual meeting of stockholders, in accordance with our charter and bylaws and with Maryland law; ●recommending candidates to the Board of Directors to fill vacancies on the Board or on any committee of the Board in accordance with our charter and bylaws and with Maryland law; ●evaluating and recommending to the Board of Directors a set of corporate governance policies and guidelines to be applicable to the Company; ●re-evaluating periodically such policies and guidelines for the purpose of suggesting amendments to them as appropriate; and ●overseeing annual Board and committee self-evaluations in accordance with NYSE listing standards. In addition, the Governance and Nominating Committee receives an annual report on the Company’s sustainability and Global Ethics and Compliance programs, which includes information on the Company’s progress towards achieving its long-term sustainability goals. | |||||
How We Make Director Compensation Decisions
The Compensation Committee advised by its independent compensation consultant, is responsible for recommending changes in non-employee director compensation for approval by the Board of Directors. The Compensation Committee, with the assistance of its independent compensation consultant, annually reviews information about the compensation paid to non-employee directors at our peer group companies (our peer group companies are discussed in “How the Compensation Committee uses Peer Groups” on page 37)42) and relevant market trend data. The Compensation Committee considers this information as well as the scope of responsibilities of Board and committee members in recommending to the Board of Directors changes to non-employee director compensation tocompensation.
Annual Compensation
In December 2020, the Compensation Committee recommended, and the Board of Directors.
Annual CompensationWe compensated eachDirectors approved, the following compensation for non-employee directordirectors for service on our Board of Directors during 2019 as follows:fiscal 2021:
| ● | an annual cash retainer of | |
| ● | an additional annual cash retainer of $25,000 for the chair of the Audit Committee (Mr. Moran), | |
| ● | an additional annual cash retainer of $5,000 for each member of the Audit Committee other than the chair (Ms. Beebe, Ms. Breig, | |
| ● | an additional annual cash retainer of | |
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| ● | an additional annual cash retainer of | |
| ● | an additional annual cash retainer of | |
| ● | an annual grant of restricted stock units with a grant date fair value of approximately |
Mr. Noll and Ms. Mathews retired from the Board on April 23, 2019, and their cash retainers were prorated accordingly.
On April 23, 2019, Mr. Nelson was elected as Chairman of the Board and ceased serving as Lead Director. His additional cash retainers for service in those positions were also prorated accordingly.
Mr. Evans, our Chief Executive Officer, receives no additional compensation for serving as a director.
In December 2019, after reviewing information about the compensation paid to non-employee directors at our peer group companies and changes in the scope of responsibilities for various Board and committee members, the Compensation Committee recommended, and the Board of Directors approved, effective January 1, 2020: (i) an increase in the annual cash retainer from $100,000 to $105,000; (ii) an increase in the approximate grant date fair value of the annual grant of restricted stock units from $140,000 to $150,000; (iii) an increase in the additional cash retainer for the Chairman of the Board from $160,000 to $175,000; (iv) an additional cash retainer of $2,500 for each member of the Compensation Committee other than the Chair; (v) an additional cash retainer of $2,500 for each member of the Governance and Nominating Committee other than the Chair; and (vi) an increase in the additional cash retainer for the chair of the Compensation Committee from $20,000 to $25,000.
The annual grant of restricted stock units for 2019 was made on December 11, 2018 and was reflected in the non-employee directors’ compensation for 2018, as disclosed in our Proxy Statement for our 2019 Annual Meeting of Stockholders. In December 2019, the Compensation Committee decided to approve the annual grant of restricted stock units for 2020 with a grant date of January 28, 2020 in order to coincide with the grant date of equity awards for executive officers. Therefore, no restricted stock unit grants were made to non-employee directors during our 2019 fiscal year.
The following table summarizes the compensation paid to our non-employee directors during theour 2021 fiscal year ended December 28, 2019.year. Our Chief Executive Officer, Mr. Bratspies, did not receive any additional compensation for serving as a director.
Director Compensation — 2019Fiscal 2021
| Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | All Other Compensation ($) | Total ($) | Fees Earned or Paid in Cash ($) (1)(2) | Stock Awards ($) (2)(3) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||
| Ronald L. Nelson | $ | 220,222 | $ | — | $ | — | $ | 220,222 | $ | 285,000 | $ | 149,999 | $ | — | $ | 434,999 | ||||||||||||
| Ann E. Ziegler | 131,875 | 149,999 | — | 281,874 | ||||||||||||||||||||||||
| Robert F. Moran | 125,000 | — | — | 125,000 | 130,000 | 149,999 | — | 279,999 | ||||||||||||||||||||
| James C. Johnson | 120,000 | — | — | 120,000 | 126,875 | 149,999 | — | 276,874 | ||||||||||||||||||||
| Ann E. Ziegler | 120,000 | — | — | 120,000 | ||||||||||||||||||||||||
| Geralyn R. Breig | 105,000 | — | — | 105,000 | 110,625 | 149,999 | — | 260,624 | ||||||||||||||||||||
| Bobby J. Griffin | 110,000 | 149,999 | — | 259,999 | ||||||||||||||||||||||||
| Franck J. Moison | 105,000 | — | — | 105,000 | 110,625 | 149,999 | — | 260,624 | ||||||||||||||||||||
| David V. Singer (3) | 105,000 | — | — | 105,000 | ||||||||||||||||||||||||
| Bobby J. Griffin | 100,000 | — | — | 100,000 | ||||||||||||||||||||||||
| Richard A. Noll (4) | 100,000 | — | — | 100,000 | ||||||||||||||||||||||||
| Jessica T. Mathews (4) | 35,000 | — | — | 35,000 | ||||||||||||||||||||||||
| Cheryl K. Beebe | 110,000 | 149,999 | — | 259,999 | ||||||||||||||||||||||||
| William S. Simon (4) | 64,167 | 87,509 | — | 151,676 | ||||||||||||||||||||||||
| (1) | Directors who join or resign from the Board or whose Committee membership changes after the start of the calendar year receive a prorated cash retainer for that calendar year based on the number of months served. |
| (2) | Amounts shown include deferrals to the Hanesbrands Inc. Non-Employee Director Deferred Compensation Plan. In fiscal 2021, Mr. Griffin was the only director who elected to defer his annual cash retainer under the Non-Employee Director Deferred Compensation Plan. |
| The | |
| (4) | Mr. |
Director Deferred Compensation Plan
Under the Hanesbrands Inc. Non-Employee Director Deferred Compensation Plan (the “Director Deferred Compensation Plan”), a nonqualified, unfunded deferred compensation plan, our non-employee directors may defer receipt of all (but not less than all) of their cash retainers and/or awards of restricted stock units. None of the investment options available in the Director Deferred Compensation Plan provide for “above-market” or preferential earnings as defined in applicable SEC rules. The amount payable to a participant will be payable either on the distribution date elected by the participant or upon the occurrence of certain events as provided under the Director Deferred Compensation Plan.
Director Stock Ownership and Retention Guidelines
We believe that all of our directors should have a significant ownership position in Hanesbrands. To this end, our non-employee directors receive a substantial portion of their compensation in the form of restricted stock units. In addition, to promote equity ownership and further align the interests of these directors with our stockholders, we have adopted stock ownership and retention
guidelines for our non-employee directors. A non-employee director may not dispose of any shares of our common stock received (on a net after-tax basis) under our stock-based compensation plans until such director holds shares of common stock with a value equal to at least five times the current annual cash retainer (excluding any additional cash retainers paid for committee service or chairmanships), and may then only dispose of shares in excess of those with that value. In addition to vested shares directly held by a non-employee director, shares held for such director in the Director Deferred Compensation Plan (including hypothetical share equivalents held in that plan) will be counted for purposes of determining whether the ownership requirements are met. All of our directors are in compliance with these stock ownership and retention guidelines.
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2022 Director Compensation
In December 2021, after reviewing information provided by FW Cook, the Compensation Committee’s independent consultant, about the compensation paid to non-employee directors at our peer group companies, the Compensation Committee recommended, and the Board of Directors approved, effective January 1, 2022: (i) an increase in the annual cash retainer from $105,000 to $110,000; (ii) an increase in the grant date fair value of the annual equity retainer from $150,000 to $155,000; and (iii) an increase the additional cash retainer for the Chair of the Governance and Nominating Committee from $20,000 to $25,000.
Related Person Transactions
Our Board of Directors has adopted a written policy setting forth procedures to be followed in connection with the review, approval or ratification of “related person transactions.” For purposes of this policy, the phrase “related person transaction” refers to any financial transaction, arrangement or relationship where: (i) Hanesbrands or any of its subsidiaries is or will be a participant; (ii) any greater than five percent stockholder, director, nominee for director or executive officer, or any of their immediate family members or affiliated entities, either currently or at any time since the beginning of the last fiscal year, has a direct or indirect material interest; and (iii) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year; and (iv) disclosure would be required under Item 404 of Regulation S-K and related SEC rules.year.
Each director, director nominee and executive officer must promptly notify our Chief Executive Officer and our Corporate Secretary in writing of any material interest that such person or an immediate family member or affiliated entity of such person had, has or will have in a related person transaction. The Governance and Nominating Committee is responsible for the review and approval or ratification of all related person transactions involving a director, director nominee or executive officer. At the discretion of the Governance and Nominating Committee, the consideration of a related person transaction may be delegated to the full Board of Directors, another standing committee or to an ad hoc committee of the Board of Directors comprised of at least three members, none of whom has an interest in the transaction.
The Governance and Nominating Committee, or other governing body to which approval or ratification is delegated, may approve or ratify a transaction if it determines, in its business judgment, based on its review of the available information, that the transaction is fair and reasonable to us and consistent with our best interests. Factors to be taken into account in making a determination of fairness and reasonableness may include:
| ● | the business purpose of the transaction; | |
| ● | whether the transaction is entered into on an arm’s-length basis on terms fair to us; and | |
| ● | whether such a transaction would violate any provisions of our Global Code of Conduct. |
If the Governance and Nominating Committee decides not to approve or ratify a transaction, the transaction may be referred to legal counsel for review and consultation regarding possible further action, including, but not limited to, termination of the transaction on a prospective basis, rescission of such transaction or modification of the transaction in a manner that would permit it to be ratified and approved by the Governance and Nominating Committee.
During 2019,2021, there were no related person transactions requiring reporting under SEC rules.
Code of Ethics
Our Global Code of Conduct, which serves as our code of ethics, applies to all directors and officers and other employees of the Company and its subsidiaries. Any waiver of applicable requirements in the Global Code of Conduct that is granted to any of our directors, to our principal executive officer, to any of our senior financial officers (including our principal financial officer, principal accounting officer or controller) or to any other person who is an executive officer of Hanesbrands requires the approval of the Audit Committee. Any such waiver of or amendment to the Global Code of Conduct will be disclosed on our corporate website,www.Hanes.com/investors(in the “Investors” section) or in a Current Report on Form 8-K.
Corporate Governance Documents
Copies of the written charters for the Audit Committee, Compensation Committee and Governance and Nominating Committee, as well as our Corporate Governance Guidelines, Global Code of Conduct and other corporate governance information are available on our corporate website,www.Hanes.com/investors(in the “Investors” section).
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| Proposal 2 — | Ratification of Appointment of Independent Registered Public Accounting Firm | ||||
The Audit Committee is directly responsible for the appointment (subject to ratification by the Company’s stockholders), retention, compensation, evaluation, oversight and termination of the Company’s independent auditor. The Audit Committee has appointed PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as our independent registered public accounting firm for our 20202022 fiscal year. While not required by law, the Board of Directors is asking our stockholders to ratify the selection of PricewaterhouseCoopers as a matter of good corporate practice.
If the appointment of PricewaterhouseCoopers as our independent registered public accounting firm for our 20202022 fiscal year is not ratified by our stockholders, the adverse vote will be taken into consideration by the Audit Committee. However, because of the difficulty in making any substitution of our independent registered public accounting firm so long after the beginning of the current year, the appointment for our 20202022 fiscal year will stand, unless the Audit Committee finds other good reason for making a change.
PricewaterhouseCoopers has served as the Company’s independent registered public accounting firm since 2006. In order to ensure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of our independent registered public accounting firm. In addition, in conjunction with the mandated rotation of PricewaterhouseCoopers’ lead engagement partner, the Audit Committee oversees and confirms the selection of PricewaterhouseCoopers’ new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of PricewaterhouseCoopers as the Company’s independent registered public accounting firm is in the best interests of the Company and its stockholders.
Representatives of PricewaterhouseCoopers are expected to be present at the Annual Meeting, may make a statement if they desire to do so, and will be available to respond to appropriate questions. For additional information regarding our relationship with PricewaterhouseCoopers, please refer to “Relationship with Independent Registered Public Accounting Firm” on page 28.
  | Our Board of Directors unanimously recommends a voteFORratification of the appointment of PricewaterhouseCoopers as our independent registered public accounting firm for our |
| HANESBRANDS INC. | 31 |
| Audit Information |
Hanesbrands’ Audit Committee is composed solely of financially literate, independent directors meeting the requirements of applicable SEC rules and NYSE listing standards. Each of the members of the Audit Committee is independent and financially literate as required under applicable SEC rules and NYSE listing standards. In addition, theThe Board of Directors has determined that each of Mr. MoranMs. Beebe and Mr. SingerMoran possesses the experience and qualifications required of an “audit committee financial expert” as defined by the rules of the SEC. No member of the Audit Committee serves on the audit committees of more than three public companies.
The key responsibilities of the Audit Committee are set forth in its charter, a copy of which is available on our corporate website,www.Hanes.com/investors(in the “Investors” section). The purpose of the Audit Committee is to assist the Board of Directors in fulfilling its oversight of:
| ● | the integrity of the Company’s financial statements, financial reporting process and systems and internal control over financial reporting; | |
| ● | the Company’s compliance with legal and regulatory requirements; | |
| ● | the independent auditor’s qualifications and independence; and | |
| ● | the performance of the Company’s internal audit function and independent auditor. |
Management is primarily responsible for establishing and maintaining adequate internal financial controls, for preparing the financial statements and for the public reporting process. PricewaterhouseCoopers, the Audit Committee-appointed independent registered public accounting firm for the Company, is responsible for expressing an opinion on the conformity of Hanesbrands’ audited financial statements for the fiscal year ended December 28, 2019January 1, 2022 (the “2019“2021 Financial Statements”) with accounting principles generally accepted in the United States of America. In addition, PricewaterhouseCoopers expresses its opinion on the effectiveness of Hanesbrands’ internal control over financial reporting as of December 28, 2019.January 1, 2022.
In this context, the Audit Committee:
| ● | reviewed and discussed with management and PricewaterhouseCoopers the | |
| ● | discussed with PricewaterhouseCoopers the matters required to be discussed by Auditing Standard No. 1301,Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board; | |
| ● | received the written disclosures and the letter from PricewaterhouseCoopers required by | |
| ● | met with the senior members of the Company’s financial management team at each regularly scheduled meeting; | |
| ● | reviewed and discussed with management and PricewaterhouseCoopers the Company’s annual and quarterly reports on Form 10-K and Form 10-Q prior to filing with the SEC; | |
| ● | received periodic updates from management regarding management’s process to assess the adequacy of the Company’s internal control over financial reporting and management’s assessment of the effectiveness of the Company’s internal control over financial reporting; | |
| ● | reviewed and discussed with management, the internal auditors and PricewaterhouseCoopers, as appropriate, the plans for, and the scope of, the Company’s annual audit and other examinations; | |
| ● | met in periodic executive sessions with certain members of management, the internal auditors and PricewaterhouseCoopers to discuss the results of their examinations, their assessments of the Company’s internal control over financial reporting and the overall integrity of the Company’s financial statements; | |
| ● | reviewed and discussed with management the Company’s major financial risk exposures, the steps management has taken to monitor and control these exposures and the Company’s enterprise risk management activities generally; and | |
| ● | reviewed and discussed with management the overall adequacy and effectiveness of the Company’s policies with respect to risk assessment and risk management, including significant financial risk exposures and the steps management has taken to monitor, control and report such exposures. |
Based on the foregoing review and discussions, the Audit Committee recommended to the Board of Directors that the 20192021 Financial Statements as audited by PricewaterhouseCoopers be included in Hanesbrands’ Annual Report on Form 10-K as of and for the fiscal year ended December 28, 2019.January 1, 2022.
By the members of the
Audit Committee, consisting of:
  |   |   |   |  |
| Robert F. Moran, Chair | Cheryl K. Beebe | Geralyn R. Breig | Franck J. Moison | |
| |
| Audit Information |
Relationship with Independent Registered Public Accounting Firm
The following table sets forth the fees billed to us by PricewaterhouseCoopers for services in the fiscal years ended December 28, 2019January 1, 2022 and December 29, 2018:January 2, 2021.
| Fiscal Year Ended December 28, 2019 | Fiscal Year Ended December 29, 2018 | Fiscal Year Ended January 1, 2022 | Fiscal Year Ended January 2, 2021 | |||||
| Audit fees | $ | 6,147,691 | $ | 6,275,252 | $6,691,488 | $6,909,069 | ||
| Audit-related fees | 59,778 | 58,505 | 45,475 | 131,330 | ||||
| Tax fees | 197,030 | 320,995 | 197,725 | 303,067 | ||||
| All other fees | — | — | 2,900 | 4,500 | ||||
| Total fees | $ | 6,404,499 | $ | 6,654,752 | $6,937,588 | $7,347,966 | ||
In the above table, in accordance with applicable SEC rules, “Audit fees” include fees billed for professional services for the audit of our consolidated financial statements included in our Annual Report on Form 10-K and review of our financial statements included in our Quarterly Reports on Form 10-Q, fees billed for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements, fees related to services rendered in connection with securities offerings and fees for the audit of our internal control over financial reporting and consultations concerning financial accounting and reporting standards.
“Audit-related fees” are fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under the caption “Audit fees.” For the fiscal years ended December 28, 2019January 1, 2022 and December 29, 2018,January 2, 2021, these fees primarily relate to attestation services rendered in connection with regulatory filings in certain foreign jurisdictions and various other services.
“Tax fees” for the fiscal years ended December 28, 2019January 1, 2022 and December 29, 2018January 2, 2021 include tax consultation, preparation and compliance services for domestic and certain foreign jurisdictions and consulting related to research and development credits.
“Other fees” for the fiscal years ended January 1, 2022 and January 2, 2021 include license and subscription fees for research tools.
Our Audit Committee pre-approves all services, including both audit and non-audit services, provided by our independent registered public accounting firm. For audit services (including statutory audit engagements as required under local country laws), the independent registered public accounting firm provides management with an engagement letter outlining the scope of the audit services proposed to be performed during the year. The independent registered public accounting firm also submits an audit services fee proposal which is approved by the Audit Committee before the audit commences. The Audit Committee may delegate the authority to pre-approve audit and non-audit engagements and the related fees and terms with the independent auditors to one or more designated members of the Audit Committee, as long as any decision made pursuant to such delegation is presented to the Audit Committee at its next regularly scheduled meeting. All audit and permissible non-audit services provided by PricewaterhouseCoopers to us during the fiscal years ended December 28, 2019January 1, 2022 and December 29, 2018January 2, 2021 were pre-approved by the Audit Committee.
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Proposal 3 — | Advisory Vote to Approve Named Executive Officer Compensation | ||||
As required pursuant to Section 14A of the Exchange Act, Hanesbrands’ stockholders have the opportunity to cast a non-binding, advisory “say on pay” vote on our named executive officer compensation, as disclosed in this Proxy Statement. Based on the resultsAt our 2017 Annual Meeting of the stockholder advisoryStockholders, our stockholders were asked to vote on the frequency of our say on pay votes which wasand voted that such say on pay votes should be held aton an annual basis. Based on the 2017 Annual Meetingresult of Stockholders,this advisory say on pay frequency vote, and based on the Board of Directors’ recommendation, Hanesbrands currently intends to hold suchits say on pay votes on an annual basis, and the next advisory say on pay vote is expected to occur at our 20212023 Annual Meeting of Stockholders.
At our 2019 Annual Meeting of Stockholders, our stockholders approved the compensation of Hanesbrands’ named executive officers with over 95% support. Our Board of Directors, and the Compensation Committee in particular, considered several factors in determining that the fundamental characteristics of Hanesbrands’ executive compensation program should continue this year, including the strong support of our stockholders, the executive compensation programs of our peer group companies, our past operating performance and planned strategic initiatives.
|
This advisory vote is not intended to address any specific element of compensation; rather, it relates to the overall compensation of our named executive officers, as well as the compensation philosophy, practices and policies described in this Proxy Statement.
We believe that our executive compensation philosophy, practices and policies have three essential characteristics. They are: | ||
| ● | focused on aligning senior management and stockholder interests in a simple, quantifiable and unifying manner; | |
| ● | necessary to attract, retain and motivate the executive team to support the attainment of our business strategy and operating imperatives; and | |
| ● | competitive in comparison to our peer group companies. | |
Stockholders are encouraged to review the “Compensation Discussion and Analysis” section beginning on page 35 for more information on our executive compensation program. | ||
We are asking stockholders to approve the following advisory resolution:
“RESOLVED, that the stockholders approve the compensation of Hanesbrands’ named executive officers as disclosed in the Proxy Statement for Hanesbrands’ 20202022 Annual Meeting of Stockholders, including the Compensation Discussion and Analysis and the executive compensation tables and related footnotes and narrative.”
Because this vote is advisory, it will not be binding on us or our Board of Directors. The vote will also not overrule any decision made by the Board of Directors or the Compensation Committee or create or imply any additional duty for the Board. We recognize, nonetheless, that our stockholders have a fundamental interest in Hanesbrands’ executive compensation practices. Thus, the Compensation Committee may take into account the outcome of the vote when considering future executive compensation arrangements.
 | Our Board of Directors unanimously recommends a voteFORapproval, on an advisory basis, of the compensation of Hanesbrands’ named executive officers. |
The Compensation Committee reviews and approves Company compensation programs on behalf of the Board. In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and Hanesbrands’ Annual Report on Form 10-K for the fiscal year ended December 28, 2019.January 1, 2022.
By the members of the
Compensation Committee, consisting of:
  |   |   |   |
| Ann E. Ziegler, Chair | Bobby J. Griffin | Ronald L. Nelson | |
| |
Compensation Discussion and Analysis
Listed below are several terms that we frequently use in discussing our executive compensation program:
| Frequently Used Terms | ||
| AIP | Annual Incentive Plan | |
Committee) | Compensation Committee of the Board of Directors | |
| EPS XA | Diluted earnings per share from continuing operations, excluding actions and the tax effect on actions and excluding certain unusual or nonrecurring items and as adjusted to exclude the impact of businesses held for sale | |
| LTIP | Long-Term Incentive Program | |
| Net organic sales | Net sales excluding those derived from businesses acquired within the previous 12 months of a reporting date and as adjusted for businesses held for sale | |
| Operating Income XA | Operating income, excluding certain unusual or nonrecurring items and as adjusted to exclude the impact of businesses held for sale | |
| PSA | Performance Share Award | |
| RSU | Restricted Stock Unit | |
| SERP | Supplemental Employee Retirement Plan |
Business Strategies and Priorities
Hanesbrands makes everyday apparel that is known and loved by consumers around the world for comfort, style, quality, innovation and value. Among the Company’s iconic brands are Hanes, the leading basic apparel brand in the United States; Champion, an innovator at the intersection of lifestyle and athletic apparel; and Bonds, which is setting new standards for design and sustainability. We employ over 59,000 associates in 33 countries and have built a strong reputation for workplace quality and ethical business practices. The Company, a long-time leader in sustainability, launched aggressive 2025/2030 goals to improve the lives of people, protect the planet and produce sustainable products. Hanesbrands is building on its unmatched strengths to unlock its Full Potential and deliver long-term growth that benefits all of its stakeholders.
In 2021, we announced our Full Potential plan – a socially responsible leading marketerthree-year growth plan designed to unlock the enormous opportunities of everyday basicHanesbrands, building on our iconic brands, world-class supply chain, deep consumer loyalty, broad channel distribution and global footprint. The Full Potential plan consists of four growth pillars: grow global Champion; re-ignite innerwear growth; drive consumer-centricity; and activewear apparel infocus the Americas, Europe, Australia and Asia/Pacific under some of the world’s strongest apparel brands, includingHanes, Champion, Bonds, DIM, Maidenform, Bali, Playtex, Lovable, Bras N Things, Nur Die/Nur Der, Alternative, L’eggs, JMS/Just My Size, Wonderbra, BerleiandGear for Sports.portfolio. We have already made significant strides towards achieving these goals, as evidenced by the decision to sell our European Innerwear and U.S. Sheer Hosiery businesses; improvements in core e-commerce capabilities; a long history30% reduction in SKUs; and our broad-based cost reduction program. We are also embarking on a number of initiatives designed to: enhance our global design and innovation product excellencecapabilities to meet the needs of both current and brand recognition,new consumer segments; segment our supply chain to address the unique needs of each of our brands and we take great prideincrease speed-to-market; simplify our process and organization to make decisions faster; and modernize our technology and invest in our reputation for ethical business practicespeople and the success of our Hanes for Good corporate responsibility program for communitynext-generation talent to accelerate results and environmental improvement.deliver sustainable, profitable growth.
We operate in the global innerwear and global activewear apparel categories. These are stable, heavily branded categories where we have a strong consumer franchise based on a global portfolio of industry-leading brands that we have built over multiple decades, through hundreds of millions of direct interactions with consumers. Since our 2006 spinoff, we have refined and strengthened our business model by implementing various strategies based on our underlying operating philosophy of Sell More, Spend Less and Generate Cash. These strategies include: recapitalizing our supply chain; integrating our operations; reinvesting in our brands; leading the introduction of meaningful innovation to our categories; broadening our distribution to include all channels of trade, including the consumer-direct channel; divesting out of commodity products; and expanding both our international presence and our portfolio of leading brands through strategic acquisitions.
Over this time we have used strategic acquisitions to create a more diversified business with multiple paths to deliver consistent organic revenue growth, and we have continued to leverage our company-owned supply chain, our operational discipline and our global scale to generate higher levels of profitability and greater cash flow. Since 2007, we have increased revenue by $2.7 billion and generated over $5.8 billion of cash flow from operations. Since 2007, we have also returned $2.4 billion to stockholders through dividends and share repurchases.
Over the past year, we have utilized our strong cash flow generation to reduce our net debt by over a half a billion dollars, bringing us back within our target leverage range of two to three times net debt to adjusted EBITDA. Consistent with our disciplined, return-centric approach to capital allocation, we plan to utilize our strong cash flow generation in 2020 and beyond to fund capital investments and our regular dividend, as well as additional share repurchases and strategic acquisitions.
We have also made significant progress towards our sustainability goals. Between 2007 and 2018, we reduced our energy consumption by 23%, decreased carbon dioxide emissions by 36%, cut water usage by 31% and shifted 41% of our total energy consumption to renewable sources. Over the past decade, we have provided tens of thousands of employees, contractors and members of the community with free medical care, our employees have contributed over 500,000 volunteer hours to improve lives in their local communities and over 6,500 of our employees have earned high school diplomas, college degrees and professional certifications through our continuing education programs. Based on these accomplishments, we are setting even more ambitious goals for environmental performance and other sustainability initiatives over the next decade.
We believe our formula of strong brands, stable categories, scale leverage and disciplined capital allocation positions us to deliver strong returns over the next decade.Fiscal 2021 Performance (2)
| ● | We exited 2021 with a stronger business and financial foundation, as well as a more attractive long-term growth profile relative to our pre-pandemic position. Hanesbrands delivered meaningful growth above pre-pandemic levels with full-year 2021 net sales 13% above 2019, adjusted operating profit 14% higher than 2019 and adjusted earnings per share 26% above 2019. The balance sheet also strengthened with leverage declining to 2.7 times on a net debt-to-adjusted EBITDA basis. | |
| ● | We raised our 2024 Full Potential financial targets as a result of increased consumer demand for our brands globally, the traction of our Full Potential growth strategy and the proven ability of our global team to execute and consistently deliver results, particularly in one of the most challenging macro environments in decades. The Company increased its 2024 revenue target to approximately $8 billion, which includes an increase in global Champion brand sales to approximately $3.2 billion; an increase in adjusted operating margin to approximately 14.4%; and an increase in cumulative three-year free cash flow to approximately $1.6 billion. | |
| ● | We also increased capital returns to shareholders. In addition to our regular quarterly cash dividend, we announced a new a three-year $600 million share repurchase program. Based on our Full Potential plan targets, we expect to repurchase shares quarterly, beginning with the first quarter of 2022. |
| (2) | For reconciliations of select GAAP and non-GAAP measures, see Appendix A. Unless otherwise noted, all 2019 comparisons are rebased to exclude the exited C9 Champion mass program and the DKNY intimate apparel license; see Appendix A. |
| HANESBRANDS INC. | 35 |
| Compensation Discussion and Analysis |
2019 Performance HighlightsDuring 2019, we continued to deliver on our key strategic priorities in a challenging and highly competitive global environment. Key financial and strategic highlights included:
| ● | ||
| ● | ||
| ● | We continued the | |
| increased market share. The Company made the | ||
Executive Compensation Philosophy and Framework
At Hanesbrands, we emphasize a “pay-for-performance” culture, linking a substantial percentage of an executive’s compensation to our performance and stockholders’ value growth. Specifically:
| ● | We provide annual incentives designed to reward our executive officers for the attainment of short-term goals, and long-term incentives designed to reward increasing stockholder value over the short, medium and long term. | |
| ● | Performance-based and at-risk compensation represents | |
| ● | Performance-based and at-risk compensation represents | |
| ● | In keeping with our pay-for-performance culture, we expect our executive officers to deliver overall results that exceed performance targets to receive above median market compensation. Below target performance is expected to result in below median market compensation. | |
| ● | Our compensation program is designed to reward exceptional and sustained performance. By combining a three-year vesting period for most equity awards with policies prohibiting hedging or pledging of | |
| ● | Outstanding equity awards | |
| ● | Our Clawback Policy permits us to recoup cash- and equity-based incentive compensation payments in the event we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. Additionally, the terms of both our cash- and equity-based incentive compensation plans permit the recovery of incentive awards if a participant violates our Global Code of Conduct or engages in other activities harmful to the interests of the Company. |
| |
| Compensation Discussion and Analysis |
Elements of 2019Fiscal 2021 Compensation
Our named executive officers’ total direct compensation for 2019fiscal 2021 consisted principally of the following elements:
| Compensation Element | Key Features | Objectives | |||||
| Base Salary | ●Fixed compensation component ●Reflects the individual responsibilities, performance and experience of each named executive officer | ●Provides a foundation of cash compensation for the fulfillment of fundamental job responsibilities | |||||
| Annual Incentive Plan (“AIP”) Awards | ●Performance-based cash compensation ●Payout determined based on Company performance against pre-established | ●Motivates performance by linking compensation to the achievement of key annual objectives | |||||
| Long-Term | (“LTIP”) Awards | ●Performance-based and at-risk, time-vested compensation ●Performance Share Awards (“PSAs”) (50% of LTIP opportunity) | ● | ||||
●Vesting on the third anniversary of the grant date ●Number of shares received ranges from 0% to 200% of the number of units granted based on fiscal 2021 Company performance against pre-established targets | |||||||
●Restricted Stock Unit Awards (“RSUs”) (50% of LTIP opportunity) | |||||||
●Ratable vesting over a three-year service period |
In addition to the above, we provide health, welfare and retirement plans that promote employee wellness and support employees in attaining financial security. We also provide severance benefits under limited circumstances. These severance benefits, which provide our named executive officers with income protection in the event employment is terminated without cause or terminated in certain situations following a change in control, support our executive retention goals and encourage our named executive officers’ independence and objectivity in considering potential change in control transactions. See “Post-Employment Compensation” on page 4349 for additional details.
2019Fiscal 2021 Compensation Mix
The mix of compensation elements that we offer is intended to further our goals of:
| ● | achieving key annual results and strategic long-term business objectives; | |
| ● | using an appropriate mix of cash and equity; | |
| ● | emphasizing a “pay-for-performance” culture; | |
| ● | effectively managing the cost of pay programs; and | |
| ● | providing a balanced total compensation program to help ensure senior management is not encouraged to take unnecessary and excessive risks that may harm the Company. |
| 37 |
| Compensation Discussion and Analysis |
Our emphasis on performance-based and at-risk pay is reflected in the following chart, which illustrates the average 2019fiscal 2021 total target direct compensation mix for our Chief Executive Officer and the average fiscal 2021 target direct compensation mix for our other named executive officers (“NEOs”).
| Performance-Based and At-Risk Compensation: 89% | Performance-Based and At-Risk Compensation: 74% | ||
 |  | ||
|  | ||
The percentage of our Chief Executive Officer’s performance-based and at-risk compensation is the highest of our named executive officers, reflecting the position’s highest level of responsibility and accountability for results. Performance-based and at-risk compensation comprises over 70%74% of allthe average total target direct compensation of our other named executive officers’ average total target direct compensation.officers. Because the value of such compensation depends on Hanesbrands’ achievement of key annual results and strategic long-term business objectives and/or is tied to changes in our stock price, the compensation actually received by our named executive officers’ actual compensationofficers could be materially higher or lower than targeted levels.
The chart below sets forth the percentage of the CEO’s fiscal 2021 total direct compensation allocable to each compensation element (base salary, AIP, LTIP) assuming threshold, target, and maximum levels of performance with respect to his AIP and LTIP awards.
| CEO Potential Compensation Scenarios (Percentage of Total Compensation) | |
  | |
| 38 |
| Compensation Discussion and Analysis |
Fiscal 2021 Performance Metrics
The Committee decided to move away from a single set of performance metrics for the 2021 AIP and LTIP awards and instead establish a separate set of metrics for each program to support our growth pillars and better align the Company’s compensation programs with current market practice.
In establishing the AIP performance targets for 2021, the Committee considered the continuing operating and economic uncertainty resulting from the COVID-19 pandemic and the resulting difficulty in forecasting operating plans for the full 2021 fiscal year and decided to again split the annual performance period into two six-month periods, first and second quarter 2021 performance (“First Half 2021”) and third and fourth quarter 2021 performance (“Second Half 2021”), with the achievement percentage for First Half 2021 and Second Half 2021 weighted equally in determining the overall achievement percentage for the performance period. The Committee chose net organic sales, operating income (excluding actions) and net inventory as the performance metrics for both First Half 2021 and Second Half 2021 because the Committee believes these metrics are aligned with areas of strategic focus, key drivers of long-term sustainable stockholder value creation and fundamental elements of consistent, stable growth.
Due to the continuing economic and operational uncertainty resulting from the COVID-19 pandemic that make it difficult to forecast operating plans accurately over an extended period of time, the Committee decided to continue using a one-year performance period for the 2021 LTIP awards, combined with a three-year vesting period. However, the Company has since implemented a three-year performance period for all performance-based long term incentive awards, beginning in 2022. The Committee selected cash flow from operations and earnings per share (excluding actions) as the performance metrics for the 2021 LTIP because the Committee believes these metrics have the ability to align the performance of our named executive officers with stockholder value by incorporating aspects of growth, profitability and capital efficiency. In addition, the Committee believes strong cash flow from operations has the ability to enhance stockholder value in numerous ways, including strategic investment, dividends and stock repurchases.
The metrics for 2021 performance compensation were as follows for the AIP and LTIP. The metrics for the AIP were the same for both the First Half and the Second Half.
| Annual Incentive Plan (AIP) Metrics | ||
 | ||
| HANESBRANDS INC. | |
| Compensation Discussion and Analysis |
2019 Performance CriteriaThe Compensation Committee chose to use net sales growth, organic sales growth, diluted earnings per share, excluding actions (“EPS-XA”) growth, and cash flow from operations as performance criteria for our named executive officers’ 2019 performance-based pay opportunities, as follows:
2019 Results
As a result of our 2019 performance, each of our named executive officers earned, in the aggregate, 139.9% of the target amounts for their performance-based pay opportunities.Fiscal 2021 Executive Compensation
Best Practices in Executive Compensation
Hanesbrands’ executive compensation practices include a number of features we believe reflect responsible compensation and governance practices and promote the interests of stockholders.
 |  |  |  | |||
Our practices include:
| Our practices exclude:
| |||||
40 |
| Compensation Discussion and Analysis |
This Compensation Discussion and Analysis provides information about our compensation objectives and principles for our Chief Executive Officer, theeach individual who served as our Chief Financial Officer (including as Interim Chief Financial Officer) during 2019fiscal 2021, and our fourthree other most highly compensated executive officers for 2019fiscal 2021 (collectively, our “named executive officers”), which includes one highly compensated executive officer voluntarily disclosed to aid in the comparability of information year over year.. Our named executive officers for our 20192021 fiscal year were:
| Stephen B. Bratspies | Chief Executive Officer | |
| M. Scott Lewis | Chief Accounting Officer and Former Interim Chief Financial Officer | |
| Joseph W. | Cavaliere | Group President, Global Innerwear |
| Jonathan Ram | Group President, | |
| Michael E. Faircloth | Group President, Global Operations |
Our Compensation Discussion and Analysis also contains details about how and why significant compensation decisions were made and places in context the information contained in the tables that follow this discussion.
How We Make Executive Compensation Decisions
The Compensation Committee, advised by its independent compensation consultant, is responsible for overseeing and approving the executive compensation program for the Company’s executive officers, including our named executive officers. Pursuant to its charter, the Compensation Committee may delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees. However, the Compensation Committee made no such delegation in 2019.fiscal 2021.
Frederic W. Cook & Co., or “FW Cook,” serves as the Compensation Committee’s executive compensation consultant. FW Cook reports directly to the Compensation Committee, and the Committee has the sole authority to terminate or replace FW Cook at any time. FW Cook assists in the development of compensation programs for our executive officers and our non-employee directors by providing compensation information from our peer group companies (which are described in “How the Compensation Committee uses Peer Groups” on page 37)42), relevant market trend data, information on current issues in the regulatory and economic environment, recommendations for program design and best practices and corporate governance guidance.
The Compensation Committee realizes that it is essential to receive objective advice from its compensation advisors. Prior to the retention of a compensation consultant or any other external advisor, and from time to time as the Compensation Committee deems appropriate, the Compensation Committee assesses the independence of the advisor from management, taking into consideration all factors relevant to the advisor’s independence, including the factors specified in NYSE listing standards. The Compensation Committee has assessed the independence of FW Cook based on these criteria and concluded that FW Cook’s work for the Compensation Committee does not raise any conflict of interest.
At the direction of the Compensation Committee, our management has workedworks with FW Cook to prepare information about the compensation competitiveness of our executive officers. Our Chief Executive Officer uses this information to make recommendations to the Compensation Committee regarding compensation of these officers, other than himself, and FW Cook provides guidance to the Compensation Committee about those recommendations. FW Cook also makes independent recommendations to the Compensation Committee regarding the compensation of our Chief Executive Officer without the involvement of management. The Compensation Committee uses this information and considers these recommendations in making decisions about executive compensation for all of our executive officers. All decisions regarding compensation of executive officers (other than our Chief Executive Officer) are made solely by the Compensation Committee. The Chief Executive Officer’s compensation is approved by the independent members of the Board of Directors, after reviewing the Compensation Committee’s recommendation.
HANESBRANDS INC. | 41 |
| Compensation Discussion and Analysis |
In making compensation decisions, the Compensation Committee:
 |  |  |   |  | ||||||
| Determines the competitive market for total target direct compensation for each named executive officer | Evaluates the allocation among the various elements of compensation, including base salary, AIP and LTIP compensation | Determines the appropriate balance of at-risk, time-based and performance-based equity compensation within each named executive officer’s LTIP opportunity |
How the Compensation Committee uses Peer Groups
To determine what constitutes a “competitive” compensation package, the Compensation Committee generally considers total target direct compensation, as well as the allocation among the various elements of compensation, at our peer group companies. Because of significant differences in thecompanies, as well as general industry pay practices of our peer group companies, the Compensationlevels as gathered from publicly-available survey sources. The Committee does not view this market data as a prescriptive determinant of individual compensation. Rather, it is used by the Compensation Committee as a general guide in its decisions on the amount and mix of total target direct compensation. Ultimately, named executive officer compensation is based on the Compensation Committee’s judgment, taking into account factors described elsewhere in this Compensation Discussion and Analysis that are particular to Hanesbrands and our named executive officers, including, most importantly, actual performance.
The CompensationThe Committee, with assistance from FW Cook, establishes the Company’s peer group that is used for market comparison purposes.purposes.
 | We seek to identify peer group companies: that have comparable business models and strategy; | |||||
 |
with whom we compete for talent, capital and customers; and | |||||
 | that are of a similar size and complexity. | |||||
 |  |  |  |  |  In selecting new peer companies and evaluating the continued inclusion of current peers, the Compensation Committee also considers companies: | |||||
In apparel and/or other general consumer product (non-durable goods) industries | With multiple distribution channels, such as wholesale, retail and e-commerce | Of a similar revenue size, market capitalization and margins | That consider usto be a peer for compensation purposes, plus the peer companiesidentified by our apparel peer companies | Used by us for financial comparison purposes | Used in proxy advisory firm peer groups for purposes of the chief executive officer |
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In light of these parameters, for fiscal 2021 the Committee decided to modify the peer group used for purposes of determining compensation by replacing Hasbro, Inc. with Under Armour, Inc. In removing Hasbro, Inc., the Committee noted its size, its performance in recent years and the fact that it is not a direct business competitor of the Company. The Committee decided that Under Armour Inc.’s industry and business characteristics provided better overall alignment with the selection criteria. Thus, the peer group used by the Committee for purposes of determining fiscal 2021 compensation consisted of the following 17 companies:
| Fiscal 2021 Peer Group | |||
| Apparel Companies | Consumer Products Companies | ||
| American Eagle Outfitters, Inc. | The Clorox Company | ||
| Carter’s, Inc. | The Hershey Company | ||
| Foot Locker, Inc. | Newell Brands Inc. | ||
| Gildan Activewear, Inc. | Stanley Black & Decker, Inc. | ||
| L Brands, Inc. | |||
| lululemon athletica inc. | |||
| Levi Strauss & Co. | |||
| PVH Corp. | |||
| Ralph Lauren Corporation | |||
| Tapestry, Inc. | |||
| The Gap, Inc. | |||
| Under Armour, Inc. | |||
| V.F. Corporation | |||
Elements of Fiscal 2021 Executive Compensation
Total Target Direct Compensation
Using the methodology discussed under “How We Make Executive Compensation Decisions” on page 41, the Committee determined the total target direct compensation levels of our named executive officers for fiscal 2021, as well as the relative mix of base salary, AIP opportunity and LTIP opportunity for those executives.
Following a market review of pay practices at our peer group companies and considering changes to the scope of certain officers’ individual responsibilities, the Committee approved the following increases to the total target direct compensation levels for our named executive officers:
| • | Mr. Bratspies’ total target direct compensation for fiscal 2021 was increased by approximately 3.2%. His base salary and target AIP opportunity remained unchanged ($1,100,000 and 150% of base salary (or $1,650,000), respectively), and his target LTIP opportunity was increased from $6,750,000 to $7,050,000. | |
| • | Mr. Lewis’ total target direct compensation for fiscal 2021 was increased by approximately 7.0%. His base salary and target AIP opportunity remained unchanged ($375,000 and 45% of base salary (or $168,750), respectively), and his target LTIP opportunity was increased from $175,000 to $225,000. In addition, the Committee determined that Mr. Lewis was eligible to receive a quarterly fee of $175,000, as well as a proportionate increase in his annual incentive opportunity, during the period in which he served as interim Chief Financial Officer (which remained unchanged from fiscal 2020). | |
| • | Mr. Ram’s total target direct compensation for fiscal 2021 was increased by approximately 24.9% due to substantial movement in the market value of equivalent positions at our peer companies. His base salary was increased from $575,000 to $650,000, his target AIP opportunity was maintained at 75% of base salary (but increased from $431,250 to $478,125 as a result of his base salary increase), and his target LTIP opportunity was increased from $1,114,000 to $1,520,000. | |
| • | Mr. Faircloth’s total target direct compensation for fiscal 2021 was increased by approximately 1.4%. His base salary was increased from $610,000 to $630,000, his target AIP opportunity was maintained at 75% of base salary (but increased from $457,500 to $470,000 as a result of his base salary increase), and his target LTIP opportunity remained unchanged ($1,282,000). |
HANESBRANDS INC. | 43
| Compensation Discussion and Analysis |
In light of these parameters,connection with Mr. Cavaliere’s appointment as Group President, Global Innerwear effective February 8, 2021, the Compensation Committee decided to modify the peer group used for purposes of determining prior year compensation by replacing Fortune Brands Home & Security, Inc. with lululemon athletica inc. The Committee noted that Fortune Brands did not satisfy several of the Company’s selection criteria and felt that lululemon’s industry and business characteristics provided better overall alignment with the selection criteria. The peer group used by the Compensation Committee for purposes of determining 2019 compensation consisted ofapproved the following 17 companies:
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Elementscompensation for Mr. Cavaliere: an annual base salary of 2019 Executive Compensation$700,000, a target AIP opportunity equal to 100% of base salary (or $700,000), and a target LTIP opportunity of $1,520,000.
Total Target Direct Compensation
In connection with Mr. Dastugue’s appointment as Chief Financial Officer effective May 1, 2021, the Committee approved the following compensation for Mr. Dastugue: an annual base salary of $750,000, a target AIP opportunity equal to 100% of base salary (or $750,000), and a target LTIP opportunity of $1,520,000.
The following supplemental table shows base salary, AIP and LTIP compensation at the target level for each of our named executive officers for 2020, 20192022, 2021 and 20182020 as approved by our Compensation Committee. This table presents information that is supplemental to, and should not be considered a substitute for, the information contained in the Summary Compensation Table that appears under “Summary Compensation Table” on page 49.53 . This supplemental table is not required by SEC rules. However, we have chosenchose to include it to provide investors with information on the total target direct compensation levels of our named executive officers and the allocation among the various elements of compensation for the two most recent years reflected in our Summary Compensation Table and for the current year. No information is provided for Mr. BortolussiMessrs. Dastugue, Cavaliere or Ram for 2018fiscal 2020 because heeach first became a named executive officer in 2019. Mr. Hytinen resigned effective December 28, 2019, and therefore no total target directfiscal 2021.
For a discussion of 2022 compensation was approved for him for 2020.
In December 2018, usinginformation reflected in the methodology discussed under “How We Make Executivefollowing supplemental table, see “2022 Compensation Decisions” on page 36, the Compensation Committee determined the total target direct compensation levels of our named executive officers for 2019, as well as the relative mix of base salary, AIP opportunity and LTIP opportunity for those executives.51.
| Annual Compensation at Target | Long-Term Compensation at Target | |||||||||||||||||||||||||||
| Name | Year | Base Salary/% of Value of Total Target Direct Compensation | Value at Target of AIP Compensation/% of Value of Total Target Direct Compensation | Value at Target of LTIP Compensation/% of Value of Total Target Direct Compensation | Value of Total Target Direct Compensation | |||||||||||||||||||||||
| Stephen B. Bratspies(1) | 2022 | $ | 1,250,000 | 11.4 | % | $ | 2,000,000 | 18.2 | % | $ | 7,750,000 | 70.5 | % | $ | 11,000,000 | |||||||||||||
| 2021 | 1,100,000 | 11.2 | 1,650,000 | 16.8 | 7,050,000 | 72.0 | 9,800,000 | |||||||||||||||||||||
| 2020 | 1,100,000 | 11.6 | 1,650,000 | 17.4 | 6,750,000 | 71.1 | 9,500,000 | |||||||||||||||||||||
| Michael P. Dastugue(1) | 2022 | 750,000 | 21.4 | 750,000 | 21.4 | 2,000,000 | 57.1 | 3,500,000 | ||||||||||||||||||||
| 2021 | 750,000 | 24.8 | 750,000 | 24.8 | 1,520,000 | 50.3 | 3,020,000 | |||||||||||||||||||||
| M. Scott Lewis(2) | 2022 | 386,000 | 43.6 | 174,000 | 19.7 | 325,000 | 36.7 | 885,000 | ||||||||||||||||||||
| 2021 | 375,000 | 48.8 | 168,750 | 22.0 | 225,000 | 29.2 | 768,750 | |||||||||||||||||||||
| 2020 | 375,000 | 52.2 | 168,750 | 23.5 | 175,000 | 24.3 | 718,750 | |||||||||||||||||||||
| Joseph W. Cavaliere(1) | 2022 | 750,000 | 23.4 | 750,000 | 23.4 | 1,700,000 | 53.1 | 3,200,000 | ||||||||||||||||||||
| 2021 | 700,000 | 24.0 | 700,000 | 24.0 | 1,520,000 | 52.0 | 2,920,000 | |||||||||||||||||||||
| Jonathan Ram | 2022 | 650,000 | 22.4 | 488,000 | 16.8 | 1,762,000 | 60.8 | 2,900,000 | ||||||||||||||||||||
| 2021 | 650,000 | 24.5 | 478,125 | 18.3 | 1,520,000 | 57.2 | 2,648,125 | |||||||||||||||||||||
| Michael E. Faircloth | 2022 | 630,000 | 25.4 | 473,000 | 19.0 | 1,382,000 | 55.6 | 2,485,000 | ||||||||||||||||||||
| 2021 | 630,000 | 26.4 | 470,000 | 19.8 | 1,282,000 | 53.8 | 2,382,000 | |||||||||||||||||||||
| 2020 | 610,000 | 26.0 | 457,500 | 19.5 | 1,282,000 | 54.6 | 2,349,500 | |||||||||||||||||||||
When setting Mr. Evans’ total target direct compensation level for 2019, the Compensation Committee considered the total compensation opportunity for chief executive officers at our peer group companies, as well as our operating performance and returns to stockholders. Based on those factors, the Compensation Committee did not recommend any changes to Mr. Evans’ total target direct compensation for 2019.
Following a market review of pay practices at our peer group companies and consideration of the factors outlined above in this Compensation Discussion and Analysis, the Compensation Committee approved the following increases to the total target direct compensation levels for our other named executive officers:
| (2) | For comparability purposes, the amounts set forth in |
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| Compensation Discussion and Analysis |
No changes were made to the 2019 total target direct compensation levels for Mr. Upchurch, Ms. Johnson or Mr. Faircloth.
In prior years, the Compensation Committee has approved, at its December meeting, LTIP awards that are intended to serve as equity incentive compensation for the following fiscal year. The supplemental table below includes the target value of the 2018Metrics and 2019 LTIP awards in the rows for fiscal years 2018 and 2019, respectively, as this corresponds to the analysis undertaken by the Compensation Committee in determining total target direct compensation. Under SEC rules, however, we are required to include the grant date fair value of equity awards in the fiscal year in which the award is granted. Therefore, in the Summary Compensation Table on page 49, the grant date fair value for the 2018 and 2019 LTIP awards is included in the stock awards column for fiscal years 2017 and 2018, respectively.
In December 2019, the Compensation Committee decided to begin approving LTIP awards in January of each year so that the Committee can have the benefit of greater visibility to the financial results for the prior year and the operating plan for the upcoming year when making such decisions. On January 28, 2020, the Compensation Committee approved the 2020 LTIP awards. The PSAs and RSUs that comprise the 2020 LTIP awards were granted to our named executive officers on that date. Therefore, no LTIP awards were granted to our named executive officers during our 2019 fiscal year and no stock awards are shown for 2019 in the Summary Compensation Table on page 49 or the Grants of Plan-Based Awards in 2019 table on page 51.
For a discussion of 2020 compensation information reflected in the following supplemental table, see “2020 Compensation Decisions” on page 45.
| Annual Compensation at Target | Long-Term Compensation at Target | ||||||||||||||||||||||
| Name | Year | Base Salary/% of Value of Total Target Direct Compensation | Value at Target of AIP Compensation/% of Value of Total Target Direct Compensation | Value at Target of LTIP Compensation/% of Value of Total Target Direct Compensation | Value of Total Target Direct Compensation | ||||||||||||||||||
| Gerald W. Evans, Jr. | 2020 | $ | 1,100,000 | 12.2 | % | $ | 1,650,000 | 18.3 | % | $ | 6,250,000 | 69.4 | % | $ | 9,000,000 | ||||||||
| 2019 | 1,100,000 | 12.2 | 1,650,000 | 18.3 | 6,250,000 | 69.4 | 9,000,000 | ||||||||||||||||
| 2018 | 1,100,000 | 12.2 | 1,650,000 | 18.3 | 6,250,000 | 69.4 | 9,000,000 | ||||||||||||||||
| Barry A. Hytinen | 2020 | — | — | — | — | — | — | — | |||||||||||||||
| 2019 | 675,000 | 24.6 | 573,750 | 20.9 | 1,500,000 | 54.6 | 2,748,750 | ||||||||||||||||
| 2018 | 600,000 | 26.0 | 510,000 | 22.1 | 1,200,000 | 51.9 | 2,310,000 | ||||||||||||||||
| W. Howard Upchurch | 2020 | 620,000 | 25.3 | 465,000 | 19.0 | 1,365,000 | 55.7 | 2,450,000 | |||||||||||||||
| 2019 | 570,000 | 24.8 | 427,500 | 18.6 | 1,302,000 | 56.6 | 2,299,500 | ||||||||||||||||
| 2018 | 570,000 | 24.8 | 427,500 | 18.6 | 1,302,000 | 56.6 | 2,299,500 | ||||||||||||||||
| David L. Bortolussi(1) | 2020 | 672,756 | 29.2 | 405,109 | 17.6 | 1,000,000 | 43.5 | 2,300,950 | |||||||||||||||
| 2019 | 643,643 | 33.9 | 386,186 | 20.3 | 637,000 | 33.5 | 1,900,238 | ||||||||||||||||
| Joia M. Johnson | 2020 | 600,000 | 25.5 | 510,000 | 21.7 | 1,240,000 | 52.8 | 2,300,865 | |||||||||||||||
| 2019 | 550,000 | 25.0 | 467,500 | 21.3 | 1,182,000 | 53.7 | 2,199,500 | ||||||||||||||||
| 2018 | 550,000 | 25.0 | 467,500 | 21.3 | 1,182,000 | 53.7 | 2,199,500 | ||||||||||||||||
| Michael E. Faircloth | 2020 | 610,000 | 26.0 | 457,500 | 19.5 | 1,282,000 | 54.6 | 2,349,500 | |||||||||||||||
| 2019 | 560,000 | 25.6 | 420,000 | 19.2 | 1,205,000 | 55.1 | 2,185,000 | ||||||||||||||||
| 2018 | 560,000 | 25.6 | 420,000 | 19.2 | 1,205,000 | 55.1 | 2,185,000 | ||||||||||||||||
Criteria and MetricsTargets for our Compensation Program
A significant portion of the compensation that our named executive officers may earn is subject to the achievement of Company-wide performance metrics. We believe that the performance of our named executive officers is best viewed through their contributions to long-term stockholder value as reflected by achievement of annual performance metrics that our Compensation Committee believes to be drivers of our strategic business plans and stockholder returns. We use quantifiable performance criteriametrics that are easily calculated and easily understood and that reinforce teamwork and internal alignment.
For 2019,fiscal 2021, the elements of our executive compensation program subject to the achievement of performance metrics consisted of:
| • | the AIP; and | |
| • | the PSA portion of LTIP compensation. |
| Percentage Payout of Target Incentive Compensation | |
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ExecutiveGenerally, executive officers can earn incentive compensation equal to 25% of their targeted amount for performance at the threshold level, 100% of their targeted amount for performance at the target level and 200% of their targeted amount for performance at or above the maximum level. No incentive compensation is payable if performance is below the threshold level, and incentive compensation is capped at 200% of the target amount. Incentive compensation is payable on a straight line basis for performance between the threshold level and the target level, as well as between the target level and the maximum level.
| In keeping with our pay for performance culture, we expect our named executive officers to deliver overall results that exceed the target level of performance in order to receive above median market compensation. Performance below the target level of performance is expected to result in below median market compensation. |
| CEO Potential Compensation Scenarios | |
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The amounts earned by our named executive officers under the performance-based elements of our compensation program are based solely on our performance against pre-established criteria and metrics. The Compensation Committee selects criteria and metrics that have generally remained constant from year to year and that it considers to be key performance drivers that are important to our stockholders and aligned with our long-term business strategy, supplementing those criteria and metrics from time to time as the Compensation Committee deems necessary.
HANESBRANDS INC. | 45
The performance criteria and metrics approved by the Compensation Committee for 2019 were as follows:
2019 Performance Criteria and Metrics
| Criteria | Weighting | Threshold | Target | Maximum | FY2019 Results | |||||
| Net Sales(growth compared to prior year) | 10% | 0% | 1% | 2% | 2.4% | |||||
| Organic Sales(growth compared to prior year)(1) | 10% | 0% | 1% | 2% | 2.1% | |||||
| EPS-XA(growth compared to prior year)(2)(3) | 40% | 0% | 3% | 6% | 2.9% | |||||
| Cash Flow from Operations | 40% | $500 million | $700 million | $900 million | $803 million |
As a result of our 2019 performance, each of our named executive officers earned, in the aggregate, 139.9% of the target amounts for their performance-based pay opportunities.
Base Salary
We pay base salary to attract talented executives and to provide a fixed base of cash compensation for fulfillmentfulfilment of fundamental job responsibilities. The base salaries for our named executive officers are determined based on their experience and the scope of their responsibilities, both on an individual basis and in relation to the experience and scope of responsibilities of other executives. The Compensation Committee also considers the practices of the companies in our peer group in setting our named executive officers’ base salary. These factors result in different compensation levels among the named executive officers. Base salaries are adjusted periodically (but generally not every year) as part of the Compensation Committee’s annual review of total target direct compensation to reflect individual responsibilities, performance and experience, as well as market compensation levels.
Annual Incentive Plan (AIP)
The AIP is designed to motivate performance by linking a portion of our named executive officers’ compensation to the achievement of key annual results. As discussed in “Fiscal 2021 Performance Metrics” on page 39, the performance metrics for the AIP for fiscal 2021 were net organic sales (weighted at 40%), operating income-XA (weighted at 40%), and net inventory (weighted at 20%). Consistent with the approach taken in 2020 after considering the impact of the COVID-19 pandemic on the Company’s operations, the Committee split the annual performance period into two six-month periods: (1) first and second quarter fiscal 2021 performance and (2) third and fourth quarter fiscal 2021 performance.
On January 25, 2021, Committee established performance targets under the AIP for the first two quarters of 2021 (“First Half”). The targets for the First Half were set in consideration of our operating plan and the expected economic environment in the upcoming year. The threshold, target, and maximum performance levels for each metric, as well as the performance results for such metrics during the First Half are set forth below:
First Half Targets – Weighted 50%
| Metric | Weighting | Threshold (25% Payout) | Target (100% Payout) | Maximum (200% Payout) | First Half FY2021 Results | Metric Achievement (% of Target) | Weighted Metric Achievement (% of Target) | |||||||
| Net Organic Sales ($MM)* | 40% | $2,726 | $2,870 | $3,013 | $3,234 | 200% | 80% | |||||||
| Operating Income-XA ($MM)* | 40% | $337 | $375 | $412 | $447 | 200% | 80% | |||||||
| Net Inventory ($MM)* | 20% | $1,777 | $1,677 | $1,577 | $1,490 | 200% | 40% | |||||||
| First Half - Total Weighted Achievement (% of Target) | 200% | |||||||||||||
On May 17, 2021, the Committee established the following performance targets under the AIP for the second two quarters of 2021 (the “Second Half”). The Second Half targets were set in alignment with the updated operating plan and in consideration of the economic recovery shown during the First Half. The threshold, target, and maximum performance levels for each metric, as well as the performance results for such metrics during the Second Half are set forth below:
Second Half Targets – Weighted 50%
| Metric | Weighting | Threshold (25% Payout) | Target (100% Payout) | Maximum (200% Payout) | Second Half FY2021 Results | Metric Achievement (% of Target) | Weighted Metric Achievement (% of Target) | |||||||
| Net Organic Sales ($MM)* | 40% | $3,218 | $3,387 | $3,557 | $3,511 | 173% | 69% | |||||||
| Operating Income XA ($MM)* | 40% | $420 | $466 | $513 | $486 | 143% | 57% | |||||||
| Net Inventory ($MM)* | 20% | $1,454 | $1,354 | $1,254 | $1,584 | 0% | 0% | |||||||
| Second Half - Total Weighted Achievement (% of Target) | 126% | |||||||||||||
| * | Threshold, target, and maximum goals and achievement results for these metrics reflect adjustments to eliminate the impact of businesses held for sale during the fiscal year in accordance with the design approved by the Committee in January 2021. |
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| Compensation Discussion and Analysis |
Based on the performance results for the First Half and the Second Half set forth above, the fiscal 2021 overall performance achievement as a percentage of target was 163.09%.
The threshold, target, maximum and actual payout levels for each named executive officer under the AIP are set forth below:
| Name | Threshold | Target | Maximum | Actual | ||||
| Stephen B. Bratspies | $412,500 | $1,650,000 | $3,300,000 | $2,691,130 | ||||
| Michael P. Dastugue (1) | $125,000 | $500,000 | $1,000,000 | $815,494 | ||||
| M. Scott Lewis (2) | $81,563 | $326,250 | $652,500 | $532,110 | ||||
| Joseph W. Cavaliere (1) | $155,930 | $623,719 | $1,247,438 | $1,017,278 | ||||
| Jonathan Ram | $119,531 | $478,125 | $956,250 | $779,816 | ||||
| Michael E. Faircloth | $117,500 | $470,000 | $940,000 | $766,564 |
| (1) | The amounts for Mr. Dastugue and Mr. Cavaliere are prorated based on their hire dates. |
| (2) | Mr. Lewis received additional cash compensation of $175,000 per quarter in connection with his service as Interim CFO, which amounts were included with base salary in calculating Mr. Lewis’ 2021 AIP payout opportunities. |
As discussed in “Criteria and Metrics for our Compensation Program” on page 40, the performance criteria for the AIP for 2019 were net sales growth, organic sales growth, EPS-XA growth and cash flow from operations. As a result of our 2019 performance, each of our named executive officers earned AIP payments at 139.9% of their target amounts.
Long-Term Incentive Program (LTIP)
The Compensation Committee currently uses equity grants as the primary means of providing long-term incentives to our named executive officers. These LTIP awards are designed to encourage behaviors that drive the long-term growth, profitability and financial success of the Company, align executives’ interests with our stockholders and support retention objectives. As discussed in “Criteria and Metrics for our Compensation Program” on page 40, the performance criteria for the PSAs included in the LTIP awards for 2019 were net sales growth, organic sales growth, EPS-XA growth and cash flow from operations.
For 2019,fiscal 2021, two types of LTIP grants were awarded to our named executive officers:
| Performance Share Awards (PSAs); and | ||
| • | time-vested |
HANESBRANDS INC. | 47
| Compensation Discussion and Analysis |
For 2019,fiscal 2021, 50% of the targeted value of the LTIP opportunity consisted of PSAs and 50% of the targeted value consisted of RSUs.*The terms of these awards are described below:
| * | The actual value realized by our named executive officers as result of their |
The performance metrics for the PSA portion of the fiscal 2021 LTIP awards were cash flow from operations and EPS-XA. The threshold, target, and maximum performance levels for each metric, as well as the performance results for such metrics during the 2021 fiscal year are set forth below. The target for the cash flow from operations metric was established as a range in order to address uncertainty and volatility in the environment at the time the goal was established.
| Metric | Weighting | Threshold (25% Payout) | Target (100% Payout) | Maximum (200% Payout) | FY2021 Results | Metric Achievement (% of Target) | Weighted Metric Achievement (% of Target) | |||||||
| Cash Flow from Operations ($MM) | 50% | $250 | $400-450 | $600 | $623 | 200% | 100% | |||||||
| EPS-XA ($MM)* | 50% | $1.37 | $1.52 | $1.67 | $1.84 | 200% | 100% | |||||||
| Total Weighted Achievement (% of Target) | 200% | |||||||||||||
| * |
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| Compensation Discussion and Analysis |
Post-Employment Compensation
In prior years, our Compensation Committee has approved, at its December meeting, LTIP awards that are intended to serve as equity incentive compensation for the following fiscal year. On December 11, 2018, the Compensation Committee approved the 2019 LTIP awards, and the PSAs and RSUs that comprise the 2019 LTIP awards were granted to theOur named executive officers on such date. Pursuant to SEC rules we are required to include in our Summary Compensation Table the grant date fair value of equity awards in the fiscal year in which the award is granted. Therefore, in the Summary Compensation Table on page 49, the grant date fair value for the 2019 LTIP awards is included in the stock awards column for fiscal year 2018.
In December 2019, the Compensation Committee decided to begin approving LTIP awards in January of each year so that the Committee can have the benefit of greater visibility to the financial results for the prior year and the operating plan for the upcoming year when making such decisions. On January 28, 2020, the Compensation Committee approved the 2020 LTIP awards. The PSAs and RSUs that comprise the 2020 LTIP awards were granted to our named executive officers on that date. Therefore, no LTIP awards were granted to our named executive officers during our 2019 fiscal year and no stock awards are shown for 2019 in the Summary Compensation Table on page 49 or the Grants of Plan-Based Awards in 2019 table on page 51.
The Compensation Committee believes that setting performance criteria and metrics annually for performance-based equity awards, with a three-year vesting period, is the most effective approach for our LTIP. As a large multinational apparel company, Hanesbrands’ operating results can be significantly impacted by changing macroeconomic and regional economic factors. These economic factors, as well as the rapidly evolving retail industry, make it difficult to forecast operating plans accurately over an extended period of time. By combining a three-year vesting period for LTIP awards with policies prohibiting hedging or pledging of such shares, the value of our executives’ LTIP awards are tied to changes in our stock price, and therefore at-risk, for a significant period of time. The Compensation Committee believes this design provides an effective way to link executive compensation to long-term stockholder returns.
Post-Employment CompensationOur U.S.-based named executive officers (Mr. Evans, Mr. Hytinen, Mr. Upchurch, Ms. Johnson and Mr. Faircloth) are eligible to receive post-employment compensation pursuant to the Hanesbrands Inc. Pension Plan (the “Pension Plan”) and/or our defined contribution retirement program, which consists of the Hanesbrands Inc. Retirement Savings Plan (the “401(k) Plan”) and the Hanesbrands Inc. Supplemental Employee Retirement Plan (the “SERP”), and pursuant to Severance/Change in Control Agreements, or “Severance Agreements.Agreements,” or (in the case of Mr. Bortolussi is eligible to receive post-employment compensation pursuant toLewis) the terms of his employment agreement and under a superannuation fund administered by the government of Australia.Hanesbrands Inc. Salaried Employee Severance Pay Plan. Each of these arrangements is discussed below.
Pension Plan
The Pension Plan is a defined benefit pension plan under which benefits have been frozen since December 31, 2005, intended(intended to be qualified under Section 401(a) of the Internal Revenue Code, thatCode) under which benefits have been frozen since December 31, 2005. The Pension Plan provides the benefits that had accrued for any of our U.S.-based employees including our named executive officers, as of December 31, 2005 under a plan maintained by our former parent company prior to our becoming an independent public company. Mr. Faircloth is the only named executive officer currently participating in the Pension Plan. Because the Pension Plan is frozen, no additional employees became participants in the Pension Plan after December 31, 2005, and existing participants in the Pension Plan do not accrue any additional benefits after December 31, 2005.
Defined Contribution Plans
Our defined contribution retirement program for U.S.-based employees consists of the 401(k) Plan and the SERP.
Under the 401(k) Plan, our U.S.-based named executive officers (Mr. Evans, Mr. Hytinen, Mr. Upchurch, Ms. Johnson and Mr. Faircloth) and generally all full-time domestic exempt and non-exempt U.S.-based salaried employees may contribute a portion of their compensation to the plan on a pre-tax basis and receive a matching employer contribution of up to a possible maximum of 4% of their eligible compensation not in excess of certain dollar limits mandated by the Internal Revenue Code. In addition, we may make a discretionary employer contribution to exempt and non-exempt salaried employees of up to an additional 4% of their eligible compensation.
The SERP is a nonqualified supplemental retirement plan that provides two types of benefits:
| ● | The “Defined Contribution Component” of the SERP provides for employer matching and discretionary contributions to U.S.-based employees whose compensation exceeds a threshold set by the Internal Revenue Code. Although, as described |
| above, the 401(k) Plan provides for employer contributions to our | ||
| ● | The “Defined Benefit Component” of the SERP provides benefits consisting of those supplemental retirement benefits that had been accrued as of December 31, 2005 under a plan maintained by our former parent company prior to our becoming an independent public company. |
Mr. Bortolussi participates in a defined contribution plan in Australia called a “superannuation plan.” Pursuant to this plan, we contributed $17,382 to Mr. Bortolussi’s account in 2019.
Severance Arrangements
We have entered into Severance Agreements with alleach of our U.S.-based named executive officers, (Mr. Evans,other than Mr. Hytinen, Mr. Upchurch, Ms. Johnson and Mr. Faircloth).Lewis. Severance Agreements help us attract and retain key talent and also provide important protections to us by discouraging our key executives from competing with us or soliciting our customers or employees for a specified period of time following termination. The Severance Agreements provide our named executive officers with benefits upon the involuntary termination of their employment other than for wrongful behavior or misconduct. The Severance Agreements also contain change in control benefits for these officers to help keep them focused on their work responsibilities during the uncertainty that accompanies a potential change in control and provide benefits for a period of time after a change in control transaction. We believe the levels of benefits offered by the Severance Agreements are appropriate and competitive. Compensation that could potentially be paid to our named executive officers pursuant to the Severance Agreements is described under “Potential Payments upon Termination or Change in Control” on page 50.60. Each agreement continues
| HANESBRANDS INC. | 49 |
| Compensation Discussion and Analysis |
in effect unless we give at least 18 months’ prior written notice that the agreement will not be renewed. In addition, if a change in control occurs during the term of the agreement, the agreement will automatically continue for two years after the end of the month in which the change in control occurs.
We have alsonot entered into an employment agreementin a Severance Agreement with Mr. Bortolussi. EmploymentLewis, as we generally only enter into such agreements are customarywith certain members of our senior leadership team. Instead, Mr. Lewis participates in the Hanesbrands Inc. Salaried Employee Severance Pay Plan. Pursuant to the Hanesbrands Inc. Salaried Employee Severance Pay Plan, if Mr. Lewis is terminated for executives in Australia and, like our Severance Agreements, benefit us by discouraging key executives from competing with us or soliciting our customers or employees for a specified period of time following termination. Mr. Bortolussi’s employment agreement also provides for benefits upon the involuntary termination of his employmentany reason other than for wrongful behavior or misconduct. Compensation that could potentially be paidcause (as defined in the Plan), he is entitled to Mr. Bortolussi upon his terminationreceive a severance benefits in an amount equal to four weeks of employment is described under “Potential Payments upon Termination or Change in Control” on page 56. Mr. Bortolussi’s employment agreement continues in effect unless either party gives six months’ prior written noticebase salary for each year of termination or we terminate the agreement on the basisservice, with a minimum severance period of Mr. Bortolussi’s breach26 weeks and a maximum severance period of the agreement, bankruptcy, wrongful behavior or misconduct.52 weeks.
Benefit Plans and Arrangements
Our U.S.-based named executive officers (Mr. Evans, Mr. Hytinen, Mr. Upchurch, Ms. Johnson and Mr. Faircloth) are eligible to participate in certain of our other employee benefits plans and arrangements. These consist of the Hanesbrands Inc. Executive Deferred Compensation Plan (the “Executive Deferred Compensation Plan”), the Hanesbrands Inc. Executive Life Insurance Plan (the “Life Insurance Plan”) and the Hanesbrands Inc. Executive Disability Plan (the “Disability Plan”). In general, these benefits are designed to provide a safety net of protection against the financial catastrophes that can result from illness, disability or death and to enable executives to save for future financial needs in a tax efficient manner.
Under the Executive Deferred Compensation Plan, a group of approximately 235240 U.S.-based employees, generally at the director level and above, including our named executive officers, may defer receipt of cash and equity compensation. This benefit offers tax advantages to eligible employees, permitting them to defer payment of their compensation and defer taxation on that compensation until a future date. The amount of compensation that may be deferred is determined in accordance with the Executive Deferred
Compensation Plan based on elections by each participant. Amounts deferred under the Executive Deferred Compensation Plan may, at the election of the executive, (i) earn a fixed rate of interest, which was 3.47%0.62% for 2019;2021; (ii) be deemed to be invested in a stock equivalent account (the “HBI Stock Fund”) and earn a return based on the total shareholder return of Hanesbrands’ stock; or (iii) be deemed to be invested in one of a number of other investment funds designated by us from time to time. The amount payable to participants will be payable either on the withdrawal date elected by the participant or upon the occurrence of certain events as provided under the Executive Deferred Compensation Plan. A participant may designate one or more beneficiaries to receive any portion of the obligations payable in the event of death; however, neither participants nor their beneficiaries may transfer any right or interest in the Executive Deferred Compensation Plan.
The Life Insurance Plan provides life insurance benefits to a group of approximately 7580 U.S.-based employees, generally at the level of vice president or above, including our named executive officers, who contribute materially to our continued growth, development and future business success. The Life Insurance Plan, which includes both a death benefit and a cash value, provides life insurance coverage during active employment in an amount equal to three times annual base salary, and, depending on the performance of investments in the plan, may offer continuing coverage following retirement. The Life Insurance Plan also provides executives with the opportunity to make voluntary, after-tax contributions that may be allocated by the executive into a range of investment options.
The Disability Plan provides long-term disability benefits for a group of approximately 7580 U.S.-based employees, generally at the level of vice president and above, including our named executive officers. If an eligible employee becomes totally disabled, the program will provide a monthly disability benefit equal to 1/12 of the sum of (i) 75% of the employee’s annual base salary up to an amount not in excess of $500,000 and (ii) 50% of the three-year average of the employee’s annual short-term incentive payments up to an amount not in excess of $250,000. The maximum monthly disability benefit is $41,667 and is reduced by any disability benefits that an employee is entitled to receive under Social Security, workers’ compensation, a state compulsory disability law or another plan of Hanesbrands providing benefits for disability.
Mr. Bortolussi also receives an annual car allowance, which was $20,859 for 2019.
2020 Compensation DecisionsUsing the methodology discussed under “How We Make Executive Compensation Decisions” on page 36, the Compensation Committee determined the total target direct compensation levels of our executive officers for 2020, as well as the relative mix of base salary, AIP opportunity and LTIP opportunity for those executives.
When setting Mr. Evans’ total target direct compensation level for 2020, the Compensation Committee considered the total compensation opportunity for chief executive officers at our peer group companies, as well as our operating performance and returns to stockholders. Based on those factors, the Compensation Committee recommended no changes to Mr. Evans’ total target direct compensation for 2020.
Following a market review of pay practices at our peer group companies and considering changes to the scope of certain officers’ individual responsibilities, the Compensation Committee approved the following increases to the total target direct compensation levels for certain of our other named executive officers:
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No total target direct compensation was established for Mr. Hytinen for 2020 because he resigned effective December 28, 2019.
In January 2020, the Compensation Committee approved the 2020 AIP and LTIP awards, continuing the overall structure of the AIP and LTIP from prior years.
The Compensation Committee also approved performance criteria and metrics for 2020 that will be used to determine the amounts earned by our named executive officers under their performance-based pay opportunities. Our named executive officers can earn performance-based compensation equal to 25% of their targeted amount for performance at the threshold level, 100% of their targeted amount for performance at the target level and 200% of their targeted amount for performance at or above the maximum level. No performance-based compensation is payable if performance is below the threshold level, and incentive compensation is capped at 200% of the target amount. Performance-based compensation is payable on a straight-line basis for performance between the threshold level and the target level, as well as between the target level and the maximum level.
The Compensation Committee again selected performance criteria and metrics that are key drivers of the Company’s long-term business strategy and that require consistent year over year improvement in Company performance rather than performance based on negotiated targets relative to the Company’s annual operating plan or public guidance. The performance criteria and metrics for 2020 are as follows:
| Criteria | Weighting | Threshold | Target | Maximum | ||||
| Net Sales(growth compared to prior year) | 20% | 2% | 3% | 4% | ||||
| EPS-XA(growth compared to prior year) | 40% | 13% | 16% | 19% | ||||
| Cash flow from operations | 40% | $600 million | $750 million | $900 million |
In establishing the performance metrics for 2020, the Compensation Committee considered the Company’s continued focus on sales growth and cash flow generation, as well as the exit of a significant retail program and a licensing arrangement at the end of 2019. The Committee determined to: (i) increase the sales growth target from the 2019 target of 1% to 3%, (ii) increase the EPS-XA target from the 2019 target of 3% to 16%, and (iii) increase the cash flow from operations target from the 2019 target of $700 million to $750 million. The Committee also determined to measure the achievement of the 2020 performance metrics based on a rebased business that excludes prior year sales from exited retail and licensing programs, as well as exclude from the measurement of EPS-XA for 2020 the effects of any share repurchases in excess of $200 million during the 2020 fiscal year.
| Compensation Discussion and Analysis |
2022 Compensation Decisions
Using the methodology discussed under “How We Make Executive Compensation Decisions” on page 41, in December 2021, the Committee (and, with respect to Mr. Bratspies’ compensation, the full Board of Directors (excluding Mr. Bratspies)) determined the total target direct compensation levels of our executive officers for 2022, as well as the relative mix of base salary, AIP opportunity and LTIP opportunity for those executives. Material increases to the fiscal 2022 compensation targets for our named executive officers (set forth below) from their fiscal 2021 compensation targets were generally intended to more closely align with the market for equivalent positions. Those amounts approved for 2022 for the named executive officers are set forth below (with the base salary increases taking effect March 1, 2022):
| Named Executive Officer | 2022 Base Salary ($) | 2022 AIP Target ($) | 2022 LTIP Target ($) | 2022 Total Target Direct Compensation ($) | ||||
| Stephen B. Bratspies | $ 1,250,000 | $ 2,000,000 (160% of base salary | $ 7,750,000 | $ 11,000,000 | ||||
| Michael P. Dastugue | 750,000 | 750,000 (100% of base salary) | 2,000,000 | 3,500,000 | ||||
| M. Scott Lewis | 386,000 | 174,000 (45% of base salary) | 325,000 | 885,000 | ||||
| Joseph W. Cavaliere | 750,000 | 750,000 (100% of base salary) | 1,700,000 | 3,200,000 | ||||
| Jonathan Ram | 650,000 | 488,000 (75% of base salary) | 1,762,000 | 2,900,000 | ||||
| Michael E. Faircloth | 630,000 | 473,000 (75% of base salary) | 1,382,000 | 2,485,000 |
On January 24, 2022, the Committee approved the fiscal 2022 AIP and LTIP awards.
The fiscal 2022 AIP performance metrics for our named executive officers, as approved by the Committee, consist of net organic sales (weighted 40%), operating income (excluding actions) (weighted 40%) and net inventory (weighted 20%). The Committee also approved a new diversity, equity and inclusion modifier (+/- 5%) for the AIP related to the representation of People of Color (including Black, Hispanic, Asian, Pacific Islander, Native American, Alaskan native and Hawaiian native associates) within our composition of the U.S. workforce at the senior manager level and above.
Awards to our named executive officers under our fiscal 2022 LTIP program, as approved by the Committee, once again consist of both RSUs and PSAs, each targeted at 50% of the total LTIP opportunity. The RSUs generally vest 33%, 33% and 34% on the first, second and third anniversaries of the grant date, respectively. The PSAs are once again subject to a three-year (rather than one-year) performance period, and the performance metrics for the PSAs include earnings per share (excluding actions) growth (weighted 50%) and cash flow from operations (weighted 50%). The PSAs will vest (subject to achievement of the applicable performance goals) on the last business day of February 2025.
The performance metrics for our 2022 AIP and 2022 LTIP were generally tied to key points in our Full Potential plan. We expect to provide additional detail regarding the 2022 AIP and LTIP awards, and other decisions with respect to our 2022 executive compensation program, in future executive compensation disclosures.
Additional Information
Consideration of Prior Stockholder Advisory Vote on Executive Compensation
At our 20192021 Annual Meeting of Stockholders, our stockholders had the opportunity to cast an advisory “say on pay” vote on our executive compensation. Our stockholders approved the compensation of our named executive officers as disclosed in the Proxy Statement for that meeting with over 95%94% support. Our Board of Directors, and the Compensation Committee in particular, consideredGiven this strong level of support, as well as the executiveCommittee did not make any changes to our compensation programspolicies or practices that were specifically driven by the result of our peer group of companies, our past operating performance and planned strategic initiatives, in making the determination that the fundamental characteristics of our executive compensation program should continue this year.“say on pay” vote.
No Tax Gross-Ups
We do not increase payments to any executive officer to cover non business-related personal income taxes, other than the personal income taxes due on relocation reimbursements, which is provided under a broad-based program. Beginning December 1, 2010, we eliminated excise tax gross-ups with respect to new or amended Severance Agreements.
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Clawbacks and Recoupment
The Compensation Committee has adopted a clawback policy in order to further align the interests of employees with the interests of our stockholders and strengthen the link between total compensation and the Company’s performance. Under this policy, in the event we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws, we may, in the discretion of the Compensation Committee (as it applies to current or former executive officers) or the Chief Executive Officer (as it applies to any other employee), seek to recover, from any employee who received cash-or equity-based incentive compensation during the three-year period preceding the date on which we are required to prepare an accounting restatement, the amount by which such person’s cash- or equity-based incentive compensation for the relevant period exceeded the lower payment that would have been made based on the restated financial results.
Additionally, the documents governing both our cash-based AIP and our equity-based LTIP provide that if an employee violates our Global Code of Conduct or engages in certain activities that are harmful to the interests of the Company, we may recover any incentive compensation paid to that person within the 12-month period immediately preceding such wrongful conduct.
Stock Ownership and Retention Guidelines
We believe that our executives should have a significant ownership position in Hanesbrands. To promote such equity ownership and further align the economic interests of our executives with our stockholders, we have adopted stock ownership guidelines for our key executives, including our named executive officers.
Our Chief Executive Officer (Mr. Evans)Bratspies) is required to own Hanesbrands stock valued at six times his annual base salary; all other named executive officers are generally required to own Hanesbrands stock valued at two times (in the case of Mr. Bortolussi, Mr. UpchurchFaircloth and Mr. Faircloth)Ram) or three times (in the case of Mr. HytinenCavaliere and Ms. Johnson)Mr. Dastugue) his or her base salary. Mr. Lewis, who is serving as Chief Financial Officer in an interim capacity, is required to own Hanesbrands stock equal to his base salary. Until the requirements of the stock ownership guidelines are met, an executive is required to retain 50% of any shares received (on a net after-tax basis) under our stock-based compensation plans. Our named executive officers and other key executives have a substantial portion of their incentive compensation paid in the form of our common stock. In addition to shares directly held by a key executive, unvested RSUs, shares held for such executive in the 401(k) Plan, the Executive Deferred Compensation Plan and the SERP, including hypothetical share equivalents held in the latter two plans, are counted for purposes of determining whether the ownership requirements are met. All of our named executive officers are in compliance with these stock ownership and retention guidelines.
Prohibitions on Pledging, Hedging and Other Derivative Transactions
Under our insider trading policy, directors and executive officers, including our named executive officers, are required to clear in advance all transactions in our securities with Hanesbrands’ law department. Further, no director, executive officer or other employee is permitted to (i) pledge or margin our securities as collateral for a loan obligation, (ii) engage in “short sales” or “sales against the box” or trade in puts, calls or other options on our securities or (iii) purchase any financial instrument or contract that is designed to hedge or offset any risk of decrease in the market value of our securities. These provisions are part of our overall program to prevent any of our directors, officers or employees from trading on material non-public information.
Compensation Risk Assessment
The Compensation Committee, in consultation with FW Cook, annually reviews our current compensation policies and practices and believes that, in light of their overall structure, the risks arising from such compensation policies and practices are not reasonably likely to have a material adverse effect on us.
Some of the key factors supporting the Compensation Committee’s conclusion include: (i) a reasonable degree of balance with respect to the mix of cash and equity compensation and short-term and longer-term performance focus; (ii) the use of multiple performance criteriametrics in our AIP and LTIP awards; (iii) multiple year vesting for equity awards; (iv) robust executive and non-employee director stock ownership guidelines; (v) an insider trading policy that includes prohibitions on hedging and pledging of our stock; and (vi) an incentive compensation clawback policy.
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Tax Treatment of Certain CompensationSection 162(m) of the Internal Revenue Code limits the tax deductibility of certain compensation paid to our Chief Executive Officer and certain of our other named executive officers (and, beginning in 2018, certain former executive officers) to $1 million per year. Historically, compensation that qualified as “performance-based compensation” under Section 162(m) of the Internal Revenue Code could be excluded from this $1 million limit. As a result, we have historically adopted policies and practices that were intended to qualify certain awards as performance-based compensation under Section 162(m) and qualify for the maximum possible tax deduction.
On December 22, 2017, the U.S. federal government enacted tax reform legislation commonly referred to as the Tax Cuts and Jobs Act, which substantially modified the Internal Revenue Code and, among other things, eliminated the performance-based compensation exception under Section 162(m). As a result, we are generally no longer able to deduct compensation amounts over $1 million paid to our Chief Executive Officer and certain current or former executive officers unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
In making decisions about executive compensation, we continue to consider the impact of other regulatory provisions, including the provisions of Section 409A of the Internal Revenue Code regarding non-qualified deferred compensation and the “golden parachute” provisions of Section 280G of the Internal Revenue Code. We also consider how various elements of compensation will impact our financial results. In this regard, we consider the impact of applicable stock compensation accounting rules, which determine how we recognize the cost of employee services received in exchange for awards of equity instruments.
Summary of Compensation
The following table sets forth a summary of compensation earned by or paid to our named executive officers for our 2019, 20182021, 2020 and 20172019 fiscal years, as applicable.
Fiscal 2021 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) (1) | Bonus ($) (2) | Stock Awards ($) (3) (4) | Non-Equity Incentive Plan Compensation ($) (1) (5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (6) | All Other Compensation ($) (7) | Total Compensation ($) | |||||||||||||||
| Gerald W. Evans, Jr. Chief Executive Officer | 2019 | $ | 1,100,000 | — | $— | $ | 2,308,680 | $ | 361,586 | $ | 186,059 | $ | 3,956,325 | ||||||||||
| 2018 | 1,100,000 | — | 6,249,987 | 1,303,170 | — | 179,551 | 8,832,708 | ||||||||||||||||
| 2017 | 1,100,000 | — | 6,250,014 | 1,889,250 | 164,848 | 177,874 | 9,581,985 | ||||||||||||||||
| Barry A. Hytinen Former Chief Financial Officer | 2019 | 727,790 | (8) | — | — | 797,646 | — | 68,623 | 1,594,059 | ||||||||||||||
| 2018 | 600,000 | — | 1,499,993 | 402,798 | — | 178,645 | 2,681,436 | ||||||||||||||||
| 2017 | 127,693 | 250,000 | 2,200,017 | 124,277 | — | 44,058 | 2,746,045 | ||||||||||||||||
| W. Howard Upchurch Group President, Innerwear Americas | 2019 | 570,000 | — | — | 598,158 | 88,177 | 54,837 | 1,311,172 | |||||||||||||||
| 2018 | 570,000 | — | 1,302,000 | 337,640 | — | 50,317 | 2,259,956 | ||||||||||||||||
| 2017 | 570,000 | — | 1,302,001 | 489,488 | 51,457 | 65,043 | 2,477,988 | ||||||||||||||||
| David L. Bortolussi (9) Group President, Innerwear International | 2019 | 584,052 | 229,449 | — | 531,184 | — | 38,241 | 1,382,926 | |||||||||||||||
| Joia M. Johnson Chief Administrative Officer, Chief Legal Officer, General Counsel and Corporate Secretary | 2019 | 550,000 | — | — | 654,126 | — | 59,327 | 1,263,453 | |||||||||||||||
| 2018 | 550,000 | — | 1,182,008 | 369,232 | — | 55,116 | 2,156,356 | ||||||||||||||||
| 2017 | 550,000 | — | 1,181,999 | 535,288 | — | 67,358 | 2,334,644 | ||||||||||||||||
| Michael E. Faircloth Group President, Global Operations, American Casualwear and E-Commerce | 2019 | 560,000 | — | — | 587,664 | 41,052 | 56,227 | 1,244,943 | |||||||||||||||
| 2018 | 560,000 | — | 1,205,012 | 331,716 | — | 51,270 | 2,147,998 | ||||||||||||||||
| 2017 | 540,000 | — | 1,205,002 | 463,725 | 22,927 | 60,987 | 2,292,641 | ||||||||||||||||
| Name and Principal Position | Fiscal Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(1)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(7) | All Other Compensation ($)(8) | Total ($) | ||||||||||||||||||||
| Stephen B. Bratspies | 2021 | $ | 1,100,000 | $ | — | $ | 7,049,994 | $ | — | $ | 2,691,130 | $ | — | $ | 190,125 | $ | 11,031,249 | ||||||||||||
| Chief Executive Officer | 2020 | 458,333 | — | 2,812,505 | 655,689 | 803,150 | — | 99,388 | 4,829,065 | ||||||||||||||||||||
| Michael P. Dastugue | 2021 | 500,000 | — | 1,013,319 | — | 815,494 | — | 70,463 | 2,399,276 | ||||||||||||||||||||
| Chief Financial Officer | |||||||||||||||||||||||||||||
| M. Scott Lewis | 2021 | 375,000 | 350,000 | 225,000 | 532,110 | (6) | — | 90,820 | 1,572,930 | ||||||||||||||||||||
| Chief Accounting Officer | 2020 | 361,790 | 700,000 | 175,001 | — | 439,009 | (6) | — | 40,564 | 1,716,363 | |||||||||||||||||||
| and Former Interim Chief | |||||||||||||||||||||||||||||
| Financial Officer | |||||||||||||||||||||||||||||
| Joseph W. Cavaliere | 2021 | 623,719 | — | 1,519,996 | — | 1,017,278 | — | 264,618 | 3,425,611 | ||||||||||||||||||||
| Group President, Global | |||||||||||||||||||||||||||||
| Innerwear | |||||||||||||||||||||||||||||
| Jonathan Ram | 2021 | 637,500 | — | 1,520,000 | — | 779,816 | — | 89,418 | 3,026,734 | ||||||||||||||||||||
| Group President, Global | |||||||||||||||||||||||||||||
| Activewear | |||||||||||||||||||||||||||||
| Michael E. Faircloth | 2021 | 626,667 | — | 1,282,004 | 766,564 | — | 75,519 | 2,750,754 | |||||||||||||||||||||
| Group President, | 2020 | 588,511 | — | 1,282,009 | — | 415,187 | 31,843 | 75,202 | 2,392,753 | ||||||||||||||||||||
| Global Operations | 2019 | 560,000 | — | — | (4) | — | 587,664 | 41,052 | 56,227 | 1,244,943 | |||||||||||||||||||
| (1) | The amounts shown include deferrals to the 401(k) Plan and the Executive Deferred Compensation Plan. |
| (2) | |
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| Compensation Discussion and Analysis |
| The amounts shown reflect the aggregate grant date fair value of awards during the year shown, computed in accordance with Topic 718 of the FASB Accounting Standards Codification. The assumptions we used in valuing these awards are described in Note 6, “Stock-Based Compensation,” to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended |
| Year | Grant Date Fair Value of PSAs | Grant Date Fair Value of RSUs | Total Grant Date Fair Value of Stock Awards | ||||||
| Gerald W. Evans, Jr. | 2019 | $ — | $ — | $ — | |||||
| 2018 | 3,124,993 | 3,124,993 | 6,249,987 | ||||||
| 2017 | 3,125,007 | 3,125,007 | 6,250,014 | ||||||
| Barry A. Hytinen | 2019 | — | — | — | |||||
| 2018 | 749,997 | 749,997 | 1,499,993 | ||||||
| 2017 | 600,008 | 1,600,009 | 2,200,017 | ||||||
| W. Howard Upchurch | 2019 | — | — | — | |||||
| 2018 | 651,000 | 651,000 | 1,302,000 | ||||||
| 2017 | 651,000 | 651,000 | 1,302,001 | ||||||
| David L. Bortolussi | 2019 | — | — | — | |||||
| Joia M. Johnson | 2019 | — | — | — | |||||
| 2018 | 591,004 | 591,004 | 1,182,008 | ||||||
| 2017 | 591,000 | 591,000 | 1,181,999 | ||||||
| Michael E. Faircloth | 2019 | — | — | — | |||||
| 2018 | 602,506 | 602,506 | 1,205,012 | ||||||
| 2017 | 602,501 | 602,501 | 1,205,002 |
| Fiscal Year | Grant Date Fair Value of PSAs ($) | Grant Date Fair Value of RSUs ($) | Total Grant Date Fair Value of Stock Awards ($) | |||||||||||||
| Stephen B. Bratspies | 2021 | $ | 3,525,000 | $ | 3,524,995 | $ | 7,049,994 | |||||||||
| 2020 | 1,406,253 | 1,406,253 | 2,812,505 | |||||||||||||
| Michael P. Dastugue | 2021 | 506,659 | 506,659 | 1,013,319 | ||||||||||||
| M. Scott Lewis | 2021 | 112,501 | 112,499 | 225,000 | ||||||||||||
| 2020 | 87,500 | 87,500 | 175,001 | |||||||||||||
| Joseph W. Cavaliere | 2021 | 760,004 | 759,993 | 1,519,996 | ||||||||||||
| Jonathan Ram | 2021 | 760,004 | 759,996 | 1,520,000 | ||||||||||||
| Michael E. Faircloth | 2021 | 641,001 | 641,003 | 1,282,004 | ||||||||||||
| 2020 | 641,005 | 641,005 | 1,282,009 | |||||||||||||
| 2019 | — | — | — | |||||||||||||
| As | |
| The amounts shown above for PSAs represent the grant date value based on the probable outcome of the performance conditions. The value of such awards at the grant date assuming that the maximum level of performance conditions was achieved was as follows: for Mr. | |
| The amount shown under “Option Awards” includes an inducement equity grant for Mr. Bratspies consisting of three tranches of stock options: (1) options to purchase 83,333 shares with a per share exercise price equal to 100% of the closing price of Hanesbrands’ common stock on the grant date ($14.32) that vested on the first anniversary of the grant date; (2) options to purchase 83,333 shares with a per share exercise price equal to 120% of the closing price of Hanesbrands’ common stock on the grant date ($17.18) that vest on the second anniversary of the grant date; and (3) options to purchase 83,334 shares with a per share exercise price equal to 140% of the closing price of Hanesbrands’ common stock on the grant date ($20.05) that vest on the third anniversary of the grant date. | |
| (4) | In December 2019, the Compensation Committee decided to begin approving LTIP awards in January of each year so that the Committee can have the benefit of greater visibility to the financial results for the prior year and the operating plan for the upcoming year when making such decisions. In January 2020, the Compensation Committee approved the 2020 LTIP awards. Therefore, no LTIP awards were granted to our named executive officers during our 2019 fiscal year and no stock awards are shown for Mr. Faircloth in 2019 in the Summary Compensation Table above. |
| (5) | The amount shown reflects the amount earned for such year under the AIP, which amount was paid after the end of such year. |
| (6) | Mr. Lewis received additional cash compensation of $175,000 per quarter in which he served as Interim CFO, which amounts were included with base salary in calculating Mr. Lewis’ 2020 and 2021 AIP awards. |
| (7) | Neither the Executive Deferred Compensation Plan nor the SERP provide for “above-market” or preferential earnings as defined in applicable SEC rules. Increases in pension values are determined for the periods presented; because the defined benefit arrangements are frozen, the amounts shown in this column represent solely the increase in the actuarial value of pension benefits previously accrued as of December 31, 2005. The amount reported for Mr. Faircloth in 2021 is $0 due to the fact that the present value of his accumulated benefits under the Pension Plan decreased by $7,010 in 2021. |
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| Compensation Discussion and Analysis |
Grants of Plan-Based Awards
The following table sets forth a summary of grants of plan-based awards to our named executive officers during our 20192021 fiscal year.
Grants of Plan-Based Awards in 2019Fiscal 2021
| Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards (1) | All Other Stock Awards: Number of Shares of Stock or Units (1) (#) | Grant Date Fair Value of Stock and Option Awards ($) | ||||||||||||||||||
| Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||
| Gerald W. Evans, Jr. | 1/29/2019 | (2) | $ | 412,500 | $ | 1,650,000 | $ | 3,300,000 | — | — | — | — | $ | — | |||||||||
| Barry A. Hytinen | 1/29/2019 | (2) | 143,438 | 573,750 | 1,147,500 | — | — | — | — | — | |||||||||||||
| W. Howard Upchurch | 1/29/2019 | (2) | 106,875 | 427,500 | 855,000 | — | — | — | — | — | |||||||||||||
| David L. Bortolussi (3) | 1/29/2019 | (2) | 94,908 | 379,634 | 759,268 | — | — | — | — | — | |||||||||||||
| Joia M. Johnson | 1/29/2019 | (2) | 116,875 | 467,500 | 935,000 | — | — | — | — | — | |||||||||||||
| Michael E. Faircloth | 1/29/2019 | (2) | 105,000 | 420,000 | 840,000 | — | — | — | — | — | |||||||||||||
| All Other Stock | All Other Option Awards: | ||||||||||||||||||||||||||||||||||||||
| Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Awards: Number | Number of Securities | Exercise or Base Price | Grant Date Fair Value of Stock | ||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | of Shares of Stock or Units | Underlying Options (#) | of Option Awards ($/Sh) | and Option Awards ($) (1) | ||||||||||||||||||||||||||||
| Stephen B. Bratspies | 1/25/2021 (2) | $ 412,500 | $ | 1,650,000 | $ | 3,300,000 | — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||
| 2/11/2021 (3) | — | — | — | 47,713 | 190,850 | 381,700 | — | — | — | 3,525,000 | (4) | ||||||||||||||||||||||||||||
| 1/25/2021 (5) | — | — | — | — | — | — | 227,419 | — | — | 3,524,995 | |||||||||||||||||||||||||||||
| Michael P. Dastugue | 5/3/2021 (2) | 125,000 | 500,000 | 1,000,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| 5/3/2021 (3) | — | — | — | 5,950 | 23,798 | 47,596 | — | — | — | 506,659 | (4) | ||||||||||||||||||||||||||||
| 5/3/2021 (5) | — | — | — | — | — | — | 23,798 | — | — | 506,659 | |||||||||||||||||||||||||||||
| M. Scott Lewis | 1/25/2021 (2) | 81,563 | 326,250 | 652,500 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| 2/11/2021 (3) | — | — | — | 1,523 | 6,091 | 12,182 | — | — | — | 112,501 | (4) | ||||||||||||||||||||||||||||
| 1/25/2021 (5) | — | — | — | — | — | — | 7,258 | — | — | 112,499 | |||||||||||||||||||||||||||||
| Joseph W. Cavaliere | 2/8/2021 (2) | 155,930 | 623,719 | 1,247,438 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| 2/11/2021 (3) | — | — | — | 10,287 | 41,148 | 82,296 | — | — | — | 760,004 | (4) | ||||||||||||||||||||||||||||
| 2/8/2021 (5) | — | — | — | — | — | — | 47,559 | — | — | 759,993 | |||||||||||||||||||||||||||||
| Jonathan Ram | 1/25/2021 (2) | 119,531 | 478,125 | 956,250 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| 2/11/2021 (3) | — | — | — | 10,287 | 41,148 | 82,296 | — | — | — | 760,004 | (4) | ||||||||||||||||||||||||||||
| 1/25/2021 (5) | — | — | — | — | — | — | 49,032 | — | — | 759,996 | |||||||||||||||||||||||||||||
| Michael E. Faircloth | 1/25/2021 (2) | 117,500 | 470,000 | 940,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| 2/11/2021 (3) | — | — | — | 8,676 | 34,705 | 69,410 | — | — | — | 641,001 | (4) | ||||||||||||||||||||||||||||
| 1/25/2021 (5) | — | — | — | — | — | — | 41,355 | — | — | 641,003 | |||||||||||||||||||||||||||||
| (1) | |
| (2) | This award is the AIP award for the |
| (3) | |
| (4) | Represents the grant date fair value of the portion of the LTIP award for fiscal 2021 that consists of the PSA, assuming achievement at |
| (5) | This award represents the portion of the LTIP award for fiscal |
| HANESBRANDS INC. | |
| Compensation Discussion and Analysis |
Outstanding Equity Awards
The following table sets forth certain information with respect to outstanding equity awards at the end of our 20192021 fiscal year for each of our named executive officers.
Outstanding Equity Awards at Fiscal 20192021 Year End
| Option Awards | Stock Awards | |||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) (1) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity | ||||||||||||
| Gerald W. Evans, Jr. | (3) | — | — | $— | — | 293,850 | $ | 4,357,796 | — | $ | — | |||||||||
| (4) | — | — | — | — | 140,709 | 2,086,714 | — | — | ||||||||||||
| (5) | — | — | — | — | 117,811 | 1,747,137 | — | — | ||||||||||||
| (6) | — | — | — | — | 50,717 | 752,133 | — | — | ||||||||||||
| (7) | 78,800 | — | 6.79 | 12/6/2020 | — | — | — | — | ||||||||||||
| Barry A. Hytinen | (8) | — | — | — | — | — | — | — | — | |||||||||||
| W. Howard Upchurch | (3) | — | — | — | — | 61,215 | 907,818 | — | — | |||||||||||
| (4) | — | — | — | — | 29,313 | 434,712 | — | — | ||||||||||||
| (5) | — | — | — | — | 24,542 | 363,958 | — | — | ||||||||||||
| (6) | — | — | — | — | 10,566 | 156,694 | — | — | ||||||||||||
| (7) | 36,036 | — | 6.79 | 12/6/2020 | — | — | — | — | ||||||||||||
| David L. Bortolussi | (3) | — | — | — | — | 30,480 | 452,018 | — | — | |||||||||||
| (4) | — | — | — | — | 14,596 | 216,459 | — | — | ||||||||||||
| (5) | — | — | — | — | 9,678 | 143,525 | — | — | ||||||||||||
| (6) | — | — | — | — | 4,168 | 61,811 | — | — | ||||||||||||
| Joia M. Johnson | (3) | — | — | — | — | 55,573 | 824,148 | — | — | |||||||||||
| (4) | — | — | — | — | 26,612 | 394,656 | — | — | ||||||||||||
| (5) | — | — | — | — | 22,280 | 330,412 | — | — | ||||||||||||
| (6) | — | — | — | — | 9,592 | 142,249 | — | — | ||||||||||||
| Michael E. Faircloth | (3) | — | — | — | — | 56,655 | 840,194 | — | — | |||||||||||
| (4) | — | — | — | — | 27,129 | 402,323 | — | — | ||||||||||||
| (5) | — | — | — | — | 22,714 | 336,849 | — | — | ||||||||||||
| (6) | — | — | — | — | 9,779 | 145,023 | — | — | ||||||||||||
| (7) | 6,132 | — | 6.79 | 12/6/2020 | — | — | — | — | ||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (1) | ||||||||||||||||||||||||||
| Stephen B. Bratspies | (2) | — | — | $ | — | — | 381,700 | $ | 6,382,024 | — | — | |||||||||||||||||||||||
| (3) | — | — | — | — | 227,419 | 3,802,446 | — | — | ||||||||||||||||||||||||||
| (4) | — | — | — | — | 65,796 | 1,100,109 | — | — | ||||||||||||||||||||||||||
| (5) | 83,333 | — | 14.32 | 8/3/2030 | — | — | — | — | ||||||||||||||||||||||||||
| (6) | — | 83,333 | 17.18 | 8/3/2030 | — | — | — | — | ||||||||||||||||||||||||||
| (7) | — | 83,334 | 20.05 | 8/3/2030 | — | — | — | — | ||||||||||||||||||||||||||
| Michael P. Dastugue | (2) | — | — | — | — | 47,596 | 795,805 | — | — | |||||||||||||||||||||||||
| (3) | — | — | — | — | 23,798 | 397,903 | — | — | ||||||||||||||||||||||||||
| M. Scott Lewis | (2) | — | — | — | — | 12,182 | 203,683 | — | — | |||||||||||||||||||||||||
| (3) | — | — | — | — | 7,258 | 121,354 | — | — | ||||||||||||||||||||||||||
| (4) | — | — | — | — | 4,120 | 68,886 | — | — | ||||||||||||||||||||||||||
| Joseph W. Cavaliere | (2) | — | — | — | — | 82,296 | 1,375,989 | — | — | |||||||||||||||||||||||||
| (3) | — | — | — | — | 47,559 | 795,186 | — | — | ||||||||||||||||||||||||||
| Jonathan Ram | (2) | — | — | — | — | 82,296 | 1,375,989 | — | — | |||||||||||||||||||||||||
| (3) | — | — | — | — | 49,032 | 819,815 | — | — | ||||||||||||||||||||||||||
| (4) | — | — | — | — | 26,226 | 438,499 | — | — | ||||||||||||||||||||||||||
| Michael E. Faircloth | (2) | — | — | — | — | 69,410 | 1,160,535 | — | — | |||||||||||||||||||||||||
| (3) | — | — | — | — | 41,355 | 691,456 | — | — | ||||||||||||||||||||||||||
| (4) | — | — | — | — | 30,181 | 504,626 | — | — | ||||||||||||||||||||||||||
| (1) | |
| Calculated by multiplying | |
| This award was granted on | |
| This award was granted on | |
| This award was granted on | |
| These stock options were granted on | |
| Compensation Discussion and Analysis |
Option Exercises and Stock Vested
The following table sets forth certain information with respect to options exercised and stock awards vested during our 20192021 fiscal year with respect to the named executive officers.
Option Exercises and Stock Vested in 2019Fiscal 2021
| Option Awards | Stock Awards | |||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized Upon Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
| Gerald W. Evans, Jr. | 162,712 | $ | 1,599,459 | 313,712 | $ | 4,616,150 | ||||
| Barry A. Hytinen | — | — | 40,384 | 620,714 | ||||||
| W. Howard Upchurch | 69,152 | 698,601 | 63,496 | 930,714 | ||||||
| David L. Bortolussi | — | — | 22,309 | 328,572 | ||||||
| Joia M. Johnson | — | — | 57,346 | 840,645 | ||||||
| Michael E. Faircloth | — | — | 58,525 | 857,912 | ||||||
| Option Awards | Stock Awards | |||||||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||
| Stephen B. Bratspies | — | — | 32,406 | $605,344 | ||||||||||||
| Michael P. Dastugue | — | — | — | — | ||||||||||||
| M. Scott Lewis | — | — | 10,795 | 185,090 | ||||||||||||
| Joseph W. Cavaliere | — | — | — | — | ||||||||||||
| Jonathan Ram | — | — | 100,716 | 1,751,316 | ||||||||||||
| Michael E. Faircloth | — | — | 85,287 | 1,464,827 | ||||||||||||
Pension BenefitsCertain of
Only one our named executive officers, participateMr. Faircloth, participates in the Pension Plan and the SERP.Plan. The Pension Plan is a frozen, defined benefit pension plan, intended to be qualified under Section 401(a) of the Internal Revenue Code, that provides the benefits that had accrued for our U.S.-based employees, including certain of our named executive officers, as of December 31, 2005 under a plan maintained by our former parent company prior to our becoming an independent public company. A participant’s total benefit payable pursuant to the Pension Plan consists of two parts: a pension benefit and a retirement benefit. Different optional forms of payment are available for each benefit. The Defined Benefit Component of the SERP is an unfunded deferred compensation plan that, in part, will provide the nonqualified supplemental pension benefits that had accrued for certain of our U.S.-based employees, including certain of our named executive officers, under a plan maintained by our former parent company.
Normal retirement age is age 65 for purposes of both the Pension Plan and the Defined Benefit Component of the SERP.Plan. With respect to the Defined Benefit Component of the SERP and the pension benefit under the Pension Plan, participants who have attained at least age 55 and completed at least 10 years of service are eligible for unreduced benefits at age 62; participants who choose to commence benefits between ages 55 and 61 are eligible for proportionally reduced benefits based on actuarial tables. With respect to the retirement benefit under the Pension Plan, participants who have attained at least age 55 and completed at least 10 years of service are eligible for unreduced benefits at age 65; participants who choose to commence benefits between ages 55 and 64 are eligible for proportionally reduced benefits based on actuarial tables. The only named executive officers to have any portion of their Pension Plan benefit determined under the retirement benefit are Mr. Evans and Mr. Upchurch. Other than Mr. Evans and Mr. Upchurch, noneNone of our named executive officers is currently eligible for early retirement under the Pension Plan or the SERP.Plan. The normal form of benefits under the Pension Plan is a life annuity for single participants and a qualified joint and survivor annuity for married participants. The normal form of benefits under the SERP is a lump sum.
At the end of 2008, we provided all active participants in the SERP with an election to receive the accrued Defined Benefit Component of their SERP benefit in the form of a lump sum payment in 2009 or 2010. We offered this election as part of the required changes mandated by Section 409A of the Internal Revenue Code, and eligible participants could make this election in addition to or instead of any election with respect to the Defined Contribution Component of the SERP. The value of the lump sum payment with respect to the Defined Benefit Component of the SERP was calculated based on the participant’s age 65 SERP Defined Benefit Component benefit and an interest rate of 5.25%. The lump sum amounts do not include the value of any early retirement subsidies and accordingly may be significantly less valuable than the amount the participant could have received if the participant had been eligible for early retirement (at least age 55 with 10 years of service) when the participant’s employment with us terminates. Any SERP participant who elected to receive this lump sum payment will not be entitled to any additional payments with respect to the Defined Benefit Component of the SERP. Mr. Upchurch and Mr. Faircloth elected to receive a lump sum payment in 2009; none of the other executive officers elected to receive a lump sum payment from the Defined Benefit Component of the SERP.
| HANESBRANDS INC. | |
| Compensation Discussion and Analysis |
The following table sets forth certain information with respect to the value of pension benefits accumulated by our named executive officers at the end of 2019.fiscal 2021.
Pension Benefits — 2019Fiscal 2021
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) (1) | Payments During Last Fiscal Year ($) | ||||||
| Gerald W. Evans, Jr. | Pension Plan | 22.50 | $742,464 | $ | — | |||||
| SERP | 22.50 | 1,451,333 | — | |||||||
| Barry A. Hytinen (2) | — | — | — | — | ||||||
| W. Howard Upchurch | Pension Plan | 18.33 | 420,919 | — | ||||||
| David L. Bortolussi (2) | — | — | — | — | ||||||
| Joia M. Johnson (2) | — | — | — | — | ||||||
| Michael E. Faircloth | Pension Plan | 8.58 | 184,971 | — | ||||||
| Name | Plan Name | Number of Years Credited Service (#) (1) | Present Value of Accumulated Benefit ($) (2) | Payments During Last Fiscal Year ($) | |||||||||||
| Stephen B. Bratspies | — | — | — | — | |||||||||||
| Michael P. Dastugue | — | — | — | — | |||||||||||
| M. Scott Lewis | — | — | — | — | |||||||||||
| Joseph W. Cavaliere | — | — | — | — | |||||||||||
| Jonathan Ram | — | — | — | — | |||||||||||
| Michael E. Faircloth | Pension Plan | 8.5833 | 209,804 | — | |||||||||||
| (1) | Note that the Pension Plan was frozen at the end of 2005, so any years of service after such date were not credited. Only Mr. Faircloth was eligible to accrue benefits under Pension Plan prior to December 2005. |
| (2) | Present values for the Pension Plan are computed as of |
|
| Compensation Discussion and Analysis |
Nonqualified Deferred Compensation
The following table sets forth certain information with respect to contributions to and withdrawals from two nonqualified deferred compensation plans by our named executive officers during our 20192021 fiscal year, and the aggregate balance at fiscal year-end. For more information regarding theseThese nonqualified deferred compensation plans see “Defined Contribution Plans”are the Executive Deferred Compensation Plan and “Benefit Plans and Arrangements” on pages 43 and 44, respectively.the SERP.
Nonqualified Deferred Compensation — 2019Fiscal 2021
| Name | Plan | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) (1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | ||||||||||
| Gerald W. Evans, Jr. | Executive Deferred Compensation Plan | $ — | $ — | $ — | $ — | $ — | ||||||||||
| SERP | — | 112,069 | (2) | — | 27,143 | (3) | 84,927 | (4) | ||||||||
| Barry A. Hytinen | Executive Deferred Compensation Plan | — | — | — | — | — | ||||||||||
| SERP | — | 38,517 | (2) | (1,373 | ) | 24,076 | (3) | 34,024 | (5) | |||||||
| W. Howard Upchurch | Executive Deferred Compensation Plan | — | — | — | — | — | ||||||||||
| SERP | — | 32,950 | (2) | — | 7,845 | (3) | 25,106 | (4) | ||||||||
| David L. Bortolussi | Executive Deferred Compensation Plan | — | — | — | — | — | ||||||||||
| SERP | — | — | — | — | — | |||||||||||
| Joia M. Johnson | Executive Deferred Compensation Plan | — | — | — | — | — | ||||||||||
| SERP | — | 33,672 | (2) | — | 8,103 | (3) | 25,569 | (4) | ||||||||
| Michael E. Faircloth | Executive Deferred Compensation Plan | — | — | — | — | — | ||||||||||
| SERP | — | 31,956 | (2) | — | 7,487 | (3) | 24,469 | (4) |
| Name | Plan | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) (1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | ||||||||||||||||
| Stephen B. Bratspies | Executive Deferred Compensation Plan | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
| SERP | — | 67,993 | (2) | (1,797) | 693 | 72,435 | (3) | |||||||||||||||
| Michael P. Dastugue | Executive Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
| SERP | — | 8,400 | (2) | — | — | 8,400 | (3) | |||||||||||||||
| M. Scott Lewis | Executive Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
| SERP | — | 67,225 | (2) | — | 12,793 | 62,960 | (3) | |||||||||||||||
| Joseph W. Cavaliere | Executive Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
| SERP | — | 13,349 | (2) | — | — | 13,349 | (3) | |||||||||||||||
| Jonathan Ram | Executive Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
| SERP | — | 45,968 | (2) | 333 | 46,065 | 40,266 | (3) | |||||||||||||||
| Michael E. Faircloth | Executive Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
| SERP | — | 47,898 | (2) | — | 53,471 | 30,074 | (3) | |||||||||||||||
| (1) | No portion of these earnings were included in the Summary Compensation Table because neither the Executive Deferred Compensation Plan nor the SERP provides for “above-market” or preferential earnings as defined in applicable SEC rules. |
| (2) | This amount represents Company contributions to the SERP during |
| (3) | |
| This amount represents the SERP balance as of | |
| 2021. Although amounts in this column were reported as compensation for 2021 in the Summary Compensation Table on page 53, no amounts in this column were reported as compensation for prior fiscal years in our summary compensation tables, other than $6,239 for Mr. |
Under the Executive Deferred Compensation Plan, a group of approximately 240 U.S.-based employees, generally at the director level and above, including our named executive officers, may defer receipt of cash and equity compensation. This benefit offers tax advantages to eligible employees, permitting them to defer payment of their compensation and defer taxation on that compensation until a future date. The amount payable to participants will be payable either on the withdrawal date elected by the participant or upon the occurrence of certain events as provided under the Executive Deferred Compensation Plan. A participant may designate one or more beneficiaries to receive any portion of the obligations payable in the event of death; however, neither participants nor their beneficiaries may transfer any right or interest in the Executive Deferred Compensation Plan.
The SERP is a nonqualified supplemental retirement plan that provides two types of benefits: (1) a “Defined Contribution Component” and (2) a “Defined Benefit Component.” The Defined Contribution Component of the SERP provides for employer matching and discretionary contributions to U.S.-based employees whose compensation exceeds a threshold set by the Internal Revenue Code. We distribute the accrued vested portion of the Defined Contribution Component of the SERP directly to participants in cash on an annual basis. Any unvested portions of the Defined Contribution Component are credited to the participant’s SERP account and distributed to the participant upon vesting. Each of our named executive officers receive benefits under this portion of the SERP. The “Defined Benefit Component” of the SERP provides benefits consisting of those supplemental retirement benefits that had been accrued as of December 31, 2005 under a plan maintained by our former parent company prior to our becoming an independent public company. None of our executive officers has an unpaid benefit under this portion of the SERP.
For more detailed information regarding these plans, see “Defined Contribution Plans” and “Benefit Plans and Arrangements” on pages 49 and 50, respectively.
| HANESBRANDS INC. | |
| Compensation Discussion and Analysis |
Potential Payments upon Termination or Change in Control
The termination benefits provided to our named executive officers, upon their voluntary termination of employment due to resignation or retirement, or termination due to death or total and permanent disability, do not discriminate in scope, terms or operation in favor of these officers compared to the benefits offered to all salaried employees. The following describes the potential payments to these officers upon an involuntary severance or a termination of employment in connection with a change in control. The information presented in this section is computed assuming that the triggering event took place on December 27, 2019,31, 2021, the last business day of our 20192021 fiscal year, and that the value of a share of our common stock is $14.83,$16.72, the closing price per share of our common stock on December 27, 2019.31, 2021.
Termination or Change in Control Payments
| Voluntary Termination | Involuntary Termination | ||||||||||||||||
| Resignation (1) | Retirement (2) | For Cause (1) | Not For Cause | Change in Control | |||||||||||||
| Gerald W. Evans, Jr. | Severance | $— | $— | $— | $ | 2,200,000 | (3) | $ | 8,250,000 | (4) | |||||||
| LTIP | — | 8,943,780 | — | — | 8,943,780 | (5) | |||||||||||
| Benefits and perquisites | — | — | — | 108,729 | (6) | 540,425 | (7) | ||||||||||
| Tax gross-up/reduction | — | — | — | — | — | (8) | |||||||||||
| Total | — | 8,943,780 | — | 2,308,729 | 17,734,205 | ||||||||||||
| Barry A. Hytinen (9) | Severance | — | — | — | 675,000 | (3) | 2,497,500 | (4) | |||||||||
| LTIP | — | — | — | — | 2,245,084 | (5) | |||||||||||
| Benefits and perquisites | — | — | — | 22,657 | (6) | 175,512 | (7) | ||||||||||
| Tax gross-up/reduction | — | — | — | — | — | (8) | |||||||||||
| Total | — | — | — | 697,657 | 4,918,096 | ||||||||||||
| W. Howard Upchurch | Severance | — | — | — | 1,140,000 | (3) | 2,086,439 | (4) | |||||||||
| LTIP | — | 1,863,182 | — | — | 1,863,182 | (5) | |||||||||||
| Benefits and perquisites | — | — | — | 22,930 | (6) | 117,778 | (7) | ||||||||||
| Tax gross-up/reduction | — | — | — | — | — | (8) | |||||||||||
| Total | — | 1,863,182 | — | 1,162,930 | 4,067,399 | ||||||||||||
| David L. Bortolussi (10) | Severance | — | — | — | 862,172 | (3) | 862,172 | (4) | |||||||||
| LTIP | — | 873,813 | — | — | 873,813 | (5) | |||||||||||
| Benefits and perquisites | — | — | — | — | (6) | — | (7) | ||||||||||
| Tax gross-up/reduction | — | — | — | — | — | (8) | |||||||||||
| Total | — | 873,813 | — | 862,172 | 1,735,985 | ||||||||||||
| Joia M. Johnson | Severance | — | — | — | 1,100,000 | (3) | 2,090,509 | (4) | |||||||||
| LTIP | — | 1,691,465 | — | — | 1,691,465 | (5) | |||||||||||
| Benefits and perquisites | — | — | — | 30,729 | (6) | 128,020 | (7) | ||||||||||
| Tax gross-up/reduction | — | — | — | — | — | (8) | |||||||||||
| Total | — | 1,691,465 | — | 1,130,729 | 3,909,994 | ||||||||||||
| Michael E. Faircloth | Severance | — | — | — | 1,120,000 | (3) | 1,988,883 | (4) | |||||||||
| LTIP | — | 1,724,388 | — | — | 1,724,388 | (5) | |||||||||||
| Benefits and perquisites | — | — | — | 27,864 | (6) | 143,906 | (7) | ||||||||||
| Tax gross-up/reduction | — | — | — | — | — | (8) | |||||||||||
| Total | — | 1,724,388 | — | 1,147,864 | 3,857,177 | ||||||||||||
| Voluntary Termination (1) | Involuntary Termination (1) | ||||||||||||||||
| Retirement (2) | Death/Disability | Not For Cause | Change in Control | ||||||||||||||
| Stephen B. Bratspies | Severance | — | 1,100,000 | (3) | 8,250,000 | (4) | |||||||||||
| LTIP (5) | — | 11,284,579 | — | 11,284,579 | |||||||||||||
| Benefits and perquisites | — | 6,500 (6) | 378,675 | ||||||||||||||
| Total | — | 11,284,579 | 1,106,500 | 19,913,254 | |||||||||||||
| Michael P. Dastugue | Severance | — | 750,000 | (3) | 3,000,000 | (4) | |||||||||||
| LTIP (5) | — | 1,193,708 | — | 1,193,708 | |||||||||||||
| Benefits and perquisites | — | 56,150 | 238,191 | ||||||||||||||
| Total | — | 1,193,708 | 806,150 | 4,431,899 | |||||||||||||
| M. Scott Lewis | Severance | — | 375,000 | (3) | 375,000 | (4) | |||||||||||
| LTIP (5) | 393,923 | 393,923 | — | 393,923 | |||||||||||||
| Benefits and perquisites | — | 12,795 | (6) | 12,795 | |||||||||||||
| Total | 393,923 | 393,923 | 387,795 | 781,718 | |||||||||||||
| Joseph W. Cavaliere | Severance | — | 700,000 | (3) | 2,800,000 | (4) | |||||||||||
| LTIP (5) | — | 2,171,176 | — | 2,171,176 | |||||||||||||
| Benefits and perquisites | — | 54,000 | (6) | 217,558 | |||||||||||||
| Total | — | 2,171,176 | 754,000 | 5,188,733 | |||||||||||||
| Jonathan Ram | Severance | — | 650,000 | (3) | 2,275,000 | (4) | |||||||||||
| LTIP (5) | — | 2,634,303 | — | 2,634,303 | |||||||||||||
| Benefits and perquisites | — | 32,650 | (6) | 193,329 | |||||||||||||
| Total | — | 2,634,303 | 682,650 | 5,102,632 | |||||||||||||
| Michael E. Faircloth | Severance | — | 1,260,000 | (3) | 2,205,000 | (4) | |||||||||||
| LTIP (5) | 2,356,617 | 2,356,617 | — | 2,356,617 | |||||||||||||
| Benefits and perquisites | — | 27,864 | (6) | 152,268 | |||||||||||||
| Total | 2,356,617 | 2,356,617 | 1,287,864 | 4,713,885 | |||||||||||||
| (1) | A named executive officer who is terminated by us for cause, or who voluntarily resigns (other than at our request) |
| (2) | Under the terms of all outstanding stock awards granted to employees prior to January 1, 2020, including those granted to our named executive officers, if the employee ceases active employment with us on or after attaining age 50 or older and completing at least 10 years of service, the outstanding stock award will continue to vest in accordance with the vesting schedule set forth in the applicable award agreement, so long as the employee has entered into a written release of claims against us and complies with restrictive covenants relating to non-competition, non-solicitation, confidentiality and non-disparagement through the vesting period. For stock awards granted after January 1, 2020, if an employee who ceases active employment with us on or after attaining age 50 or older and completing at least 10 years of service (i) provides us with a least six months’ prior written notice of his or her intended retirement date, (ii) remains actively employed during such notice period, (iii) completes certain transition duties and responsibilities and (iv) enters into a written release of claims against us, all restrictions on the outstanding equity awards requiring continued employment through a vesting date will lapse upon the employee’s retirement and the award will be paid to the employee not later than two and one-half months following the end of the calendar year in which he or she retires. The employee is required to cooperate with us regarding matters arising out of his or her employment and continue to comply with restrictive covenants relating to non-competition, non-solicitation, confidentiality and non-disparagement through the third anniversary of the grant date of the award. |
Compensation Discussion and Analysis |
| (3) |
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| (4) |
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| (5) | All outstanding stock awards granted to employees prior to January 1, 2019, including those granted to our named executive officers, fully vest upon a change in control regardless of whether a termination of employment occurs. For stock awards granted after January 1, 2019, vesting of awards will accelerate only if there is a qualifying termination within two years after the change in control or if the surviving entity does not provide qualifying replacement awards. |
| (6) | Reflects health and welfare benefits continuation ($ |
| (7) | Reflects health and welfare benefits continuation ($ |
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| HANESBRANDS INC. | |
Overview
Hanesbrands is a large multinational apparel company, manufacturing and marketing innerwear and activewear primarily in the Americas, Europe, Australia and Asia/Pacific. We conduct our business globally and have nearly 63,000over 59,000 employees, over 87%88% of whom (approximately 55,000)52,000) are located outside the United States. Nearly 80%Over 83% of our workforce (approximately 50,00049,000 employees) is employed in our large-scale supply chain facilities located primarily in Central America, the Caribbean Basin and Asia.
Our various compensation programs include the payment of market-based wages and the provision of competitive employee benefits. The programs vary from region to region and among our various consolidated subsidiaries in each region, from country to country. The vast majority of our employees (approximately 80%84%) are compensated on an hourly basis.
Methodology
To identify our global median employee, we utilized the following methodology:
| ● | We determined that, as of October 31, |
| ● | In order to consistently measure the compensation of |
| ● | For purposes of this analysis, we converted all cash compensation paid in foreign currency to U.S. dollars using the applicable exchange rate on |
Calculation
Our global median employee identified on the Determination Date is a productiondry cleaning operator located in Honduras,one of our supply chain facilities in the Dominican Republic, whose 20192021 total cash compensation was $5,784.$6,179. We identified and calculated the elements of that employee’s compensation for 20192021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $7,076. The difference between the median employee’s cash compensation and the median employee’s annual total compensation represents the estimated value of the employee’s life insurance benefits, transportation benefits and meal subsidies.$7,055.
The annual total compensation of Mr. Evans,Bratspies, our CEO, for the 20192021 fiscal year was $3,956,325,$11,031,249, which is the amount reported for 20192021 in the “Total Compensation” column of our Summary Compensation Table provided on page 49.53. Based on this information, for the 20192021 fiscal year, the ratio of the annual total compensation of our CEO to the median annual total compensation of all employees other than the CEO was 5591,564 to 1. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions summarized above.
In prior years, the Compensation Committee has approved, at its December meeting, LTIP awards that are intended to serve as equity incentive compensation for the following fiscal year. However, in December 2019, the Compensation Committee decided to begin approving LTIP awards in January of each year so that the Committee can have the benefit of greater visibility to the financial results for the prior year and the operating plan for the upcoming year when making such decisions. The 2020 LTIP awards were granted to our named executive officers on January 28, 2020; therefore no LTIP awards were granted to Mr. Evans during our 2019 fiscal year. This significantly lowers Mr. Evans’ 2019 compensation as compared to the prior year and correspondingly reduced our CEO pay ratio.62 |
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On February 24, 2020 upon recommendation by the Compensation Committee, our Board of Directors unanimously approved and adopted, subject to the approval of our stockholders at the Annual Meeting, the Hanesbrands Inc. 2020 Omnibus Incentive Plan (the “2020 Plan”) to replace the Hanesbrands Inc. Omnibus Incentive Plan (As Amended and Restated) (the “Prior Plan”).
Our Board of Directors is recommending that the Company’s stockholders vote in favor of the 2020 Plan, which will succeed the Prior Plan. The 2020 Plan will continue to afford the Compensation Committee the ability to design compensatory awards that are responsive to the Company’s needs and includes authorization for a variety of awards designed to advance the interests and long-term success of the Company by encouraging stock ownership among officers and other employees of the Company and its subsidiaries, certain consultants or other service providers to the Company and its subsidiaries, and non-employee directors of the Company. You are being asked to approve the 2020 Plan.
Stockholder approval of the 2020 Plan would constitute approval of 11,000,000 shares of common stock, par value $0.01 per share, of the Company (“Stock”), plus any shares of Stock remaining available under the Prior Plan, being made available for awards under the 2020 Plan, as described below and in the 2020 Plan, with such amount subject to adjustment, including under the 2020 Plan’s share counting rules. Our Board of Directors recommends that you vote to approve the 2020 Plan. If the 2020 Plan is approved by our stockholders, it will be effective as of the day of the Annual Meeting, and no further grants will be made on or after such date under the Prior Plan. Outstanding awards under the Prior Plan, however, will continue in effect in accordance with their terms. If the 2020 Plan is not approved by our stockholders, no awards will be made under the 2020 Plan, and the Prior Plan will remain in effect.
Why We Believe You Should Vote for this Proposal
The 2020 Plan authorizes the Compensation Committee to provide cash awards and equity-based compensation in the form of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), deferred stock units (“DSUs”), performance shares, performance cash awards, dividend equivalents, and certain other awards, including those denominated or payable in, or otherwise based on, Stock, for the purposes of (i) promoting the interests of the Company and its subsidiaries and its stockholders by strengthening the ability of the Company and its subsidiaries to attract and retain highly competent officers and other key employees, and (ii) providing a means to encourage Stock ownership and proprietary interest in the Company. Some of the key features of the 2020 Plan that reflect our commitment to effective management of equity and incentive compensation are set forth below.
We believe our future success depends in part on our ability to attract, motivate, and retain high quality employees and directors and that the ability to provide equity-based and incentive-based awards under the 2020 Plan is critical to achieving this success. We would be at a competitive disadvantage if we could not use Stock-based awards to recruit and compensate our employees and directors. The use of Stock as part of our compensation program is also important because equity-based awards are an essential component of our compensation program for key employees, as they help link compensation with long-term stockholder value creation and reward participants based on service and/or performance.
As of February 18, 2020, 6,311,068 shares of Stock remained available for issuance under the Prior Plan. If the 2020 Plan is not approved, we may be compelled to increase significantly the cash component of our employee and director compensation over time, which approach may not necessarily align employee and director compensation interests with the investment interests of our stockholders. Replacing equity awards with cash also would increase cash compensation expense and use cash that could be better utilized if reinvested in our business or returned to our stockholders.
The following includes aggregated information regarding our view of the overhang and dilution associated with the Prior Plan and the potential dilution associated with the 2020 Plan. This information is as of February 18, 2020. As of that date, there were 357,883,586 shares of Stock outstanding:
Based on the closing price on the New York Stock Exchange for our Stock on February 18, 2020 of $14.51 per share, the aggregate market value as of February 18, 2020 of the 11,000,000 additional shares of Stock requested under the 2020 Plan was $159,610,000.
In fiscal years 2017, 2018, and 2019, we granted awards under the Prior Plan covering 1,217,752 shares, 1,747,095 shares and 21,495 shares, respectively. Based on our basic weighted average shares of Stock outstanding for those three fiscal years of 367,680,247, 363,512,783, and 364,708,752, respectively, for the three-fiscal-year period 2017-2019, our average burn rate, not taking into account forfeitures, was 0.27% (our individual fiscal years’ burn rates were 0.33% for fiscal 2017, 0.48% for fiscal 2018 and 0.01% for fiscal 2019).
In determining the number of shares to request for approval under the 2020 Plan, our management team worked with the Compensation Committee and FW Cook to evaluate a number of factors, including our recent share usage and criteria expected to be utilized by institutional proxy advisory firms in evaluating our proposal for the 2020 Plan.
If the 2020 Plan is approved, we intend to utilize the shares authorized under the 2020 Plan to continue our practice of incentivizing key individuals through equity grants. We currently anticipate that the shares requested in connection with the approval of the 2020 Plan will last for about nine years, based on our historic grant rates, target performance metric achievement and the approximate current Stock price, but could last for a different period of time if actual practice does not match recent rates or our performance metric achievement or our Stock price changes materially. As noted below, our Compensation Committee retains full discretion under the 2020 Plan to determine the number and amount of awards to be granted under the 2020 Plan, subject to the terms of the 2020 Plan, and future benefits that may be received by participants under the 2020 Plan are not determinable at this time.
We believe that we have demonstrated a commitment to sound equity compensation practices in recent years. We recognize that equity compensation awards dilute stockholders’ equity, so we have carefully managed our equity incentive compensation. Our equity compensation practices are intended to be competitive and consistent with market practices, and we believe our historical share usage has been responsible and mindful of stockholder interests, as described above.
In evaluating this proposal, stockholders should consider all of the information in this proposal.
Below are certain highlights of the 2020 Plan. These features of the 2020 Plan are designed to reinforce alignment between equity compensation arrangements awarded pursuant to the 2020 Plan and stockholders’ interests, consistent with sound corporate governance practices:
Reasonable 2020 Plan LimitsThe aggregate number of shares of our Stock reserved for awards under the 2020 Plan will equal (i) 11,000,000 shares of Stock plus (ii) the number of shares of Stock available for grant under the Prior Plan (but which have not yet been made subject to awards under the Prior Plan) as of the date of stockholder approval of the 2020 Plan (the “Effective Date”). Any Stock issued under the 2020 Plan may be either authorized and unissued Stock or issued Stock reacquired by the Company.
The 2020 Plan also provides that, subject as applicable to adjustment as provided in the 2020 Plan, the aggregate number of shares of Stock actually issued or transferred upon the exercise of stock options intended to meet the requirements of Section 422 of the Internal Revenue Code (“Incentive Stock Options”) will not exceed 11,000,000 shares of Stock.
Limited Share Recycling ProvisionsSubject to certain exceptions described in the 2020 Plan, if any award granted under the 2020 Plan or the Prior Plan (in whole or in part) is canceled or forfeited, expires, is terminated, is settled for cash, or is unearned, the Stock associated with the cancelled, forfeited, expired, terminated, cash-settled or unearned portion of the award will again be available under the 2020 Plan. The following shares of Stock will not be added (or added back, as applicable) to the aggregate share limit under the 2020 Plan: (1) shares withheld by us, tendered or otherwise used in payment of the exercise price of a stock option granted under the 2020 Plan; (2) shares withheld by the Company, tendered or otherwise used to satisfy tax withholding; (3) shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of stock options granted under the 2020 Plan; and (4) shares subject to a Stock-settled SAR that are not actually issued in connection with the settlement of the SAR on exercise.
Minimum Vesting PeriodAwards granted under the 2020 Plan will vest no earlier than after a minimum one-year vesting period or one-year performance period, as applicable. However, an aggregate of up to 5% of the Stock available for awards under the 2020 Plan, as may be adjusted under the 2020 Plan’s terms, may be used for awards that do not at grant comply with such minimum vesting provisions. Notwithstanding the foregoing, the Compensation Committee may (i) provide for continued vesting or accelerated vesting for any award under the 2020 Plan upon certain events, including in connection with or following a participant’s death, disability, or termination of service or a change in control or (ii) exercise its acceleration authority (as described below) following the grant of an award.
Non-Employee Director Compensation LimitThe 2020 Plan provides that no non-employee director of the Company in any one calendar year will be granted compensation for such service having an aggregate maximum value (measured at the date of grant as applicable, and calculating the value of any 2020 Plan awards based on the grant date fair value for financial reporting purposes) in excess of $1 million.
No Repricing Without Stockholder ApprovalOutside of certain corporate transactions or adjustment events described in the 2020 Plan or in connection with a “change in control,” the exercise or base price of stock options and SARs cannot be reduced, nor can “underwater” stock options or SARs be cancelled in exchange for cash, replaced with stock options or SARs with a lower exercise or base price, or replaced with other awards, without stockholder approval under the 2020 Plan. The 2020 Plan provides that these repricing restrictions will not be amended without stockholder approval.
Change in Control DefinitionThe 2020 Plan includes a non-liberal definition of “change in control,” which is described below.
Exercise or Base Price LimitationThe 2020 Plan also provides that, except with respect to certain converted, assumed or substituted awards as described in the 2020 Plan, no stock options or SARs will be granted with an exercise or base price less than the fair market value of a share of Stock on the date of grant.
Dividends and Dividend EquivalentsThe Compensation Committee may provide that any awards under the 2020 Plan other than stock options or SARs earn dividends or dividend equivalents and interest on such dividends or dividend equivalents. However, any such dividends or dividend equivalents (and any related interest) will be deferred until, and paid contingent upon, the vesting of the related award (or portion thereof) to which they relate. Stock options and SARs granted under the 2020 Plan may not provide for dividends or dividend equivalents.
Section 162(m) of the Internal Revenue Code (the “Code”) generally disallows a deduction for certain compensation paid to certain executive officers (and certain former executive officers) to the extent that compensation to a covered employee exceeds $1 million for such year. Compensation qualifying for a performance-based exception as “qualified performance-based compensation” under Section 162(m) of the Code was historically not subject to the deduction limit if the compensation satisfied the requirements of Section 162(m) of the Code. This exception has now been repealed, effective for taxable years beginning after December 31, 2017, unless certain transition relief for certain compensation arrangements in place as of November 2, 2017 is available. The Company will not be able to make any grants under the 2020 Plan that will be intended to qualify for the performance-based exception. To be clear, stockholders are not being asked to approve the 2020 Plan (or any of its provisions) for purposes of Section 162(m) of the Code or the performance-based exception.
Summary of Other Material Terms of the 2020 Plan
The following description of the 2020 Plan is only a summary of its principal terms and provisions. The summary is qualified in its entirety by reference to the 2020 Plan, a copy of which is attached as Appendix B.
Eligible ParticipantsEligible participants include all employees of the Company and its subsidiaries (including any person who has agreed to commence serving in such capacity within 90 days of the grant of the award), non-employee directors of the Company, and other persons, including consultants, who provide services to the Company or a subsidiary that are equivalent to those typically provided by an employee (in each case, other than individuals who do not satisfy the Form S-8 definition of an “employee” or are located in a country in which the Stock or the 2020 Plan have not been registered in accordance with applicable requirements). The Compensation Committee has the authority to select participants and to determine the type and amount of their awards under the 2020 Plan. As of February 18, 2020, there were approximately 63,000 employees and 1,000 consultants of the Company and its subsidiaries, and we have eight non-employee directors. Approximately 115 employees and all eight of our current non-employee directors received awards intended to serve as equity incentive compensation for 2019 under the Prior Plan. Consultants were not permitted to participate in the Prior Plan. The basis for participation in the 2020 Plan is selection for participation by the 2020 Plan administrator.
Types of AwardsThe following types of awards may be made pursuant to the 2020 Plan:
Payment of awards under the 2020 Plan may be in the form of cash, Stock, other awards or combinations thereof as the Compensation Committee determines. No participant will have any rights as a stockholder of the Company with respect to any Stock subject to awards granted to him under the 2020 Plan prior to the date as of which he or she is actually recorded as the holder of such Stock upon the share records of the Company.
Performance GoalsAwards under the 2020 Plan may be made subject to the attainment of performance criteria, which are measurable performance objectives that may be based on factors including, but not limited to, any of the following (or an equivalent metric): revenue; revenue growth; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; operating income; pre- or after-tax income; net operating profit after taxes; economic value added; ratio of operating earnings to capital spending; cash flow (before or after dividends); cash flow per share (before or after dividends); net earnings; net sales; sales
growth; share price performance; return on assets or net assets; return on equity; return on capital (including return on total capital or return on invested capital); cash flow return on investment; total shareholder return; improvement in or attainment of expense levels; improvement in or attainment of working capital levels, gross profit margin, operating profit margin, net income margin and leverage ratio. Performance criteria that are financial metrics may be determined in accordance with United States Generally Accepted Accounting Principles (“GAAP”) or may be financial metrics based on, or able to be derived from, GAAP, and may be adjusted when established (or at any time thereafter) to include or exclude any items otherwise includable or excludable under GAAP.
If the Compensation Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the performance criteria unsuitable, the Compensation Committee may in its discretion modify such performance criteria or the goals or actual levels of achievement regarding the performance criteria, in whole or in part, as the Compensation Committee deems appropriate and equitable.
Notwithstanding attainment of any performance criteria, the Compensation Committee may adjust the number of shares issued under a performance share award or the amount to be paid under a performance cash award on the basis of such further consideration as the Compensation Committee in its sole discretion shall determine.
Clawback and ForfeitureUnless otherwise determined by the Compensation Committee, awards granted under the 2020 Plan will be subject to the Company’s clawback policy as in effect on the Effective Date, as the same may be amended from time to time. Awards may also be subject to any other clawback policy of the Company or other provisions as the Compensation Committee determines appropriate, including, among other things, provisions intended to comply with federal or state securities laws and stock exchange requirements (including under Section 10D of the Exchange Act), understandings or conditions as to the participant’s employment, requirements or inducements for continued ownership of Stock after exercise or vesting of awards, or forfeiture or clawback of awards or any shares of Stock issued under and/or any other benefit related to an award, in the event of termination of employment shortly after exercise or vesting, breach of noncompetition or confidentiality agreements following termination of employment, or other detrimental activity before or after employment, or other provisions intended to have a similar effect.
AdministrationThe 2020 Plan will generally be administered by the Compensation Committee. The Compensation Committee may from time to time delegate all or any part of its authority under the 2020 Plan to a subcommittee. To the extent permitted by applicable law, the Compensation Committee may delegate to one or more of its members or to one or more officers, or to one or more agents or advisors of the Company, such administrative duties or powers as it deems advisable (including but not limited to duties to determine a participant’s eligibility for benefits and powers to establish rules, procedures and requirements necessary or appropriate to carry out the terms of the 2020 Plan). To the extent permitted by law, the Compensation Committee or the Board of Directors may authorize one or more officers of the Company to select employees to participate in the 2020 Plan and to determine the number and type of awards to be granted to such participants, except with respect to awards to officers subject to Section 16 of the Exchange Act or to non-employee directors of the Company.
The Compensation Committee has the authority to interpret the 2020 Plan, to prescribe, amend and rescind rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the 2020 Plan. The determinations of the Compensation Committee pursuant to its authority under the 2020 Plan shall be conclusive and binding.
Amendment and TerminationOur Board of Directors or the Compensation Committee will have the right and power to amend or terminate the 2020 Plan; however, unless expressly provided in an award or in the 2020 Plan, neither the Board of Directors nor the Compensation Committee may amend the 2020 Plan in a manner which would materially reduce the amount of an existing award or materially and adversely change the terms and conditions thereof without the participant’s consent. However, the Compensation Committee may unilaterally substitute SARs which can be settled only in Stock for outstanding stock options, require an award to be deferred as provided in the 2020 Plan or amend or terminate an award to comply with changes in law. In addition, stockholder approval will be obtained for any amendment to the 2020 Plan if required by law, regulation or listing rules. No award may be made under the 2020 Plan more than 10 years after Effective Date.
If permitted by Section 409A of the Code and subject to certain other limitations set forth in the 2020 Plan, including in the case of termination of employment or service, or in the case of unforeseeable emergency or other circumstances or in the event of a change in control, the Compensation Committee may provide for continued vesting or accelerate the vesting of certain awards granted under the 2020 Plan or waive any other limitation or requirement under any such award.
Change in ControlThe treatment of outstanding awards upon the occurrence of a change in control shall be determined by the Compensation Committee. In general, except as may be otherwise prescribed by the Compensation Committee in an evidence of award, a change in control will be deemed to have occurred upon the occurrence (after the Effective Date) of any of the following events (subject to certain exceptions and limitations as further described in the 2020 Plan): (i) the acquisition by any person, directly or indirectly, of at least 20% of the combined voting power of our outstanding securities; (ii) the consummation of certain reorganizations, mergers and consolidations involving us; (iii) the consummation of the sale or other disposition of all or substantially all of our assets; (iv) the consummation of a plan of complete liquidation or dissolution; or (v) a majority of our Board of Directors is made up of directors who are not “Initial Directors,” meaning directors who were members of the Board of Directors on the Effective Date or were elected or nominated by a majority of the Initial Directors then on the Board of Directors, as described in the 2020 Plan.
AdjustmentsThe Compensation Committee will make or provide for such adjustments in: (i) the number of and kind of shares of Stock covered by outstanding awards granted under the 2020 Plan; (ii) if applicable, the number of and kind of shares of Stock covered by Other Awards granted pursuant to the 2020 Plan; (iii) the exercise price or base price provided in outstanding stock options and SARs, respectively; (iv) performance cash awards; and (v) other award terms, as the Compensation Committee in its sole discretion, exercised in good faith determines to be equitably required in order to prevent dilution or enlargement of the rights of participants that otherwise would result from (a) any extraordinary cash dividend, stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company; (b) any merger, consolidation, spin-off, spin-out, split-off, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities; or (c) any other corporate transaction or event having an effect similar to any of the foregoing.
In the event of any such transaction or event, or in the event of a change in control of the Company, the Compensation Committee may provide in substitution for any or all outstanding awards under the 2020 Plan such alternative consideration (including cash), if any, as it may in good faith determine to be equitable under the circumstances and will require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code. In addition, for each stock option or SAR with an exercise price or base price, respectively, greater than the consideration offered in connection with any such transaction or event or change in control of the Company, the Compensation Committee may in its discretion elect to cancel such stock option or SAR without any payment to the person holding such stock option or SAR. The Compensation Committee will make or provide for such adjustments to the numbers of shares of Stock available under the 2020 Plan and the share limits of the 2020 Plan as the Compensation Committee in its sole discretion may in good faith determine to be appropriate to reflect such transaction or event. However, any adjustment to the limit on the number of shares of Stock that may be issued upon exercise of Incentive Stock Options will be made only if and to the extent such adjustment would not cause any stock option intended to qualify as an Incentive Stock Option to fail to so qualify.
Substitution and Assumption of AwardsWithout affecting the number of shares reserved or available under the 2020 Plan (to the extent permitted under applicable stock exchange rules), either the Board of Directors or the Compensation Committee may authorize the issuance of awards under the 2020 Plan in connection with the assumption of, conversion of, or substitution for, outstanding awards previously granted to individuals who become our employees or employees of any of our subsidiaries as the result of any merger, consolidation, acquisition of property or stock or reorganization, upon such terms and conditions as it deems appropriate. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of the 2020 Plan, and may account for Stock substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the applicable transaction.
Assumed PlansIf a company acquired by or combined with the Company or a subsidiary has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the stockholders in such transaction) may be used for awards under the 2020 Plan, and will not reduce the shares authorized under the 2020 Plan. Any such awards may not, however, be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and may be made only to individuals who were not employees or directors of Hanesbrands or a subsidiary prior to such acquisition or combination. No shares of Stock subject to an award that is granted by or becomes an obligation of the Company as described in this paragraph will be added (or added back) the number of shares available under the 2020 Plan.
NontransferabilityExcept as otherwise determined by the Compensation Committee in the case of stock options, and subject to compliance with Section 409A of the Code, each award granted under the 2020 Plan shall not be transferable other than by will or the laws of descent and distribution, and each stock option and SAR shall be exercisable during the participant’s lifetime only by the participant or, in the event of disability, by the participant’s personal representative. In no event will any such award granted under this 2020 Plan be transferred for value. In the event of the death of a participant, exercise of any award or payment with respect to any award shall be made only by or to the beneficiary, executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant’s rights under the award will pass by will or the laws of descent and distribution.
Tax WithholdingTo the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by a participant or other person under the 2020 Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes or other amounts required to be withheld, which arrangements (in the discretion of the Compensation Committee) may include relinquishment of a portion of such benefit. If a participant’s benefit is to be received in the form of Stock, unless otherwise determined by the Compensation Committee, such withholding requirement will be satisfied by retention by the Company of a portion of the Stock to be delivered to the participant. The Stock used for tax or other withholding will be valued at an amount equal to the fair market value of such Stock on the date the benefit is to be included in participant’s income. In no event will the fair market value of the Stock to be withheld and delivered pursuant to the 2020 Plan exceed the minimum amount required to be withheld, unless (1) an additional amount can be withheld and not result in adverse accounting consequences and (2) such additional withholding amount is authorized by the Compensation Committee. Participants will also make such arrangements as the Company may require for the payment of any withholding tax or other obligation that may arise in connection with the disposition of Stock acquired upon the exercise of stock options.
Certain Federal Income Tax Consequences
The following is a brief summary of certain of the Federal income tax consequences of certain transactions under the 2020 Plan based on Federal income tax laws in effect. This summary, which is presented for the information of stockholders considering how to vote on this proposal and not for 2020 Plan participants, is not intended to be complete and does not describe Federal taxes other than income taxes (such as Medicare and Social Security taxes), or state, local or foreign tax consequences.
There are generally no income tax consequences for us or the option holder upon the grant of either an incentive stock option or a nonqualified stock option. In general, when a nonqualified stock option is exercised, the participant will recognize ordinary income equal to the excess of the fair market value of the shares of Stock for which the option is exercised on the date of exercise over the aggregate exercise price. Upon the sale of shares acquired from exercising an option, the participant will realize a capital gain (or loss) equal to the difference between the proceeds received and the fair market value of the shares on the date of exercise. The capital gain (or loss) will be a long-term capital gain (or loss) if the participant held the shares for more than a year after the exercise of the option, or otherwise a short-term capital gain (or loss).
In general, when an incentive stock option is exercised, the option holder does not recognize income. If the participant holds the shares acquired upon exercise for at least two years after the grant date and at least one year after exercise, the participant’s gain, if any, upon a subsequent disposition of such shares will be long-term capital gain. (Conversely, a loss will be a long-term capital loss.) The measure of the gain (or loss) is the difference between the proceeds received on disposition and the participant’s basis in the shares. In general, the participant’s basis equals the exercise price.
If a participant disposes of shares acquired by exercising an incentive stock option before satisfying the one and two-year holding periods described above (a “disqualifying disposition”), then:
When a SAR is granted, there are no income tax consequences for us or the recipient. When a SAR is exercised, the participant normally will be required to include as taxable ordinary income in the year of exercise an amount equal to the amount of cash received and the fair market value of any unrestricted Stock received on exercise.
The federal income tax consequences of a grant of restricted stock depend on whether the participant elects to be taxed at the time of grant (an “83(b) election,” named for Section 83(b) of the Code). If the participant does not make an 83(b) election, the participant will not realize taxable income at the time of grant. When the shares are no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Code, the participant will realize ordinary income equal to the fair market value of the restricted stock at that time. If the participant timely makes an 83(b) election, the participant will realize ordinary income at the time of grant in an amount equal to the fair market value of the shares at that time, determined without regard to any of the restrictions. If shares are forfeited before the restrictions lapse, the participant will not be entitled to a deduction or any other adjustment. If an 83(b) election has not been made, any dividends received with respect to restricted stock that is subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Code generally will be treated as compensation that is taxable as ordinary income to the participant.
Upon the sale of restricted stock, the participant will realize a capital gain or loss equal to the difference between the sale proceeds and the income previously realized with respect to the shares. The capital gain (or loss) will be a long-term capital gain (or loss) if the participant held the shares for more than one year after realizing income attributable to the shares, or otherwise a short-term capital gain (or loss).
Restricted stock units, performance shares, performance cash and other awards will not have tax consequences for us or the recipient at the time of grant. Income will be realized when the awards vest and are paid in cash or shares of Stock. At that time, the participant will realize ordinary income equal to the fair market value of the shares or cash paid to the participant.
Upon the sale of shares received in settlement of restricted stock units, performance shares and other Stock awards, the participant will realize a capital gain or loss equal to the difference between the sale proceeds and income previously realized with respect to the shares. The capital gain (or loss) will be a long-term capital gain (or loss) if the participant held the shares for more than one year after realizing income attributable to the shares, or otherwise a short-term capital gain (or loss).
Tax Consequences to the Company and SubsidiariesTo the extent that a participant recognizes ordinary income in the circumstances described above, the Company or the subsidiary for which the participant performs services will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code and is not disallowed by the $1 million limitation on certain executive compensation under Section 162(m) of the Code.
We intend to file a Registration Statement on Form S-8 relating to the issuance of Stock under the 2020 Plan with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the 2020 Plan by our stockholders.
The approval of the 2020 Plan requires that the votes cast in favor of the proposal exceed the votes cast against the proposal. New York Stock Exchange rules require that the total votes cast on this proposal represent greater than 50% of all shares entitled to vote on this proposal. For purposes of this proposal, the New York Stock Exchange considers an abstention as a vote against approval. Because your bank, broker or other holder of record does not have discretionary voting authority to vote your shares on this proposal absent specific instructions from you, broker non-votes could create a situation where the total votes cast do not exceed 50% of all shares entitled to vote on this proposal. It is therefore important that you vote, or direct the holder of record to vote, on this proposal.
|
Equity Compensation Plan Information
The following table provides information about our equity compensation plans as of December 28, 2019. All amounts are listed in thousands, except per share data.
| Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (2) | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (1) | ||||
| Plan Category | (amounts in thousands, except per share data) | |||||
| Equity compensation plans approved by security holders | 3,072 | $0.96 | 14,685 | |||
| Equity compensation plans not approved by security holders | — | — | — | |||
| Total | 3,072 | $0.96 | 14,685 | |||
Share Ownership of Major Stockholders, Management and Directors
The following table sets forth information, as of February 18, 2020,15, 2022, regarding beneficial ownership by (i) each person who is known by us to beneficially own more than 5% of our common stock, (ii) each director, director nominee and named executive officer and (iii) all of our directors, director nominees and executive officers as a group. The address of each director and executive officer shown in the table below is c/o Hanesbrands Inc., 1000 East Hanes Mill Road, Winston-Salem, North Carolina 27105.
On February 18, 202015, 2022 there were 357,883,586348,649,757 shares of our common stock outstanding.
| Amount and Nature of Beneficial Ownership | Other (1) | ||||||||||
| Name and Address of Beneficial Owner | Beneficial | Percentage of Class | Restricted Stock Units | Stock Equivalent Units in SERP and Deferred Compensation Plans | Total | ||||||
| Vanguard Group, Inc.(3) | 43,717,286 | 12.2 | % | — | — | 43,717,286 | |||||
| BlackRock, Inc.(4) | 25,942,910 | 7.2 | — | — | 25,942,910 | ||||||
| State Street Corporation(5) | 21,402,063 | 6.0 | — | — | 21,402,063 | ||||||
| Gerald W. Evans, Jr.(6) | 1,345,531 | * | 822,693 | — | 2,168,224 | ||||||
| Joia M. Johnson(7) | 428,906 | * | 157,627 | — | 586,533 | ||||||
| W. Howard Upchurch | 370,459 | * | 173,598 | — | 544,057 | ||||||
| Michael E. Faircloth | 199,394 | * | 161,323 | — | 360,717 | ||||||
| Ronald L. Nelson(8) | 155,012 | * | 10,541 | 160,731 | 326,284 | ||||||
| David L. Bortolussi | 47,854 | * | 94,059 | — | 141,913 | ||||||
| David V. Singer(9) | 40,687 | * | 10,541 | — | 51,228 | ||||||
| Ann E. Ziegler(10) | 40,144 | * | 10,541 | 109,810 | 160,495 | ||||||
| Barry A. Hytinen | 30,000 | * | — | — | 30,000 | ||||||
| James C. Johnson(11) | 24,913 | * | 10,541 | 144,747 | 180,201 | ||||||
| Franck J. Moison | 22,861 | * | 10,541 | — | 33,402 | ||||||
| Robert F. Moran | 18,469 | * | 10,541 | 25,951 | 54,961 | ||||||
| Bobby J. Griffin | — | * | 10,541 | 283,253 | 293,794 | ||||||
| Geralyn R. Breig | — | * | 10,541 | 12,704 | 23,245 | ||||||
| All directors, director nominees and executive officers as a group (16 persons)(6) (12) | 2,769,630 | * | |||||||||
| Amount and Nature of Beneficial Ownership | Other (1) | |||||
| Name and Address of Beneficial Owner | Beneficial Ownership of Our Common Stock | Percentage of Class | Restricted Stock Units | Stock Equivalent Units in SERP and Deferred Compensation Plans | Total | |
| BlackRock, Inc. (2) | 36,584,207 | 10.49% | — | — | 36,584,207 | |
| Vanguard Group, Inc. (3) | 34,184,652 | 9.80% | — | — | 34,184,652 | |
| Diamond Hill Capital Management, Inc. (4) | 21,912,308 | 6.28% | — | — | 21,912,308 | |
| Michael E. Faircloth | 283,845 | * | 154,853 | — | 438,698 | |
| Ronald L. Nelson (5) | 241,238 | * | 9,515 | 194,089 | 444,842 | |
| Stephen B. Bratspies | 142,795 | * | 837,743 | 473 | 981,011 | |
| Jonathan Ram | 110,016 | * | 182,539 | 640 | 293,195 | |
| Joseph W. Cavaliere | 41,930 | * | 166,340 | — | 208,270 | |
| James C. Johnson (6) | 40,714 | * | 9,515 | 148,515 | 198,744 | |
| M. Scott Lewis (4) | 38,627 | * | 29,111 | — | 67,738 | |
| Robert F. Moran | 34,024 | * | 19,118 | 23,014 | 76,156 | |
| Franck J. Moison | 33,202 | * | 9,515 | — | 42,717 | |
| Ann E. Ziegler (7) | 30,261 | * | 9,515 | 118,602 | 158,378 | |
| Cheryl K. Beebe | 11,250 | * | 9,515 | 9,603 | 30,368 | |
| Bobby J. Griffin | — | * | 9,515 | 342,338 | 351,853 | |
| Michael P. Dastugue | — | * | 132,781 | — | 132,781 | |
| Geralyn R. Breig | — | * | 9,515 | 34,212 | 43,727 | |
| William S. Simon | — | * | 14,099 | — | 14,099 | |
| All directors, director nominees and executive officers as a group (18 persons) (4) (8) | 1,023,152 | * | ||||
| * | Less than 1%. | |
| (1) | While the amounts in the “Other” column for restricted stock units and stock equivalent units in our SERP and deferred compensation plans do not represent a right of the holder to receive our common stock within 60 days, these amounts are being disclosed because we believe they further our goal of aligning senior management and stockholder interests. The value of the restricted stock units fluctuates based on changes in Hanesbrands’ stock price. Similarly, the value of stock equivalent units held in the SERP, the Executive Deferred Compensation Plan and the Director Deferred Compensation Plan fluctuates based on changes in Hanesbrands’ stock price. | |
| (2) |
| Information in this table and footnote regarding this beneficial owner is based on Amendment No. | ||
| Information in this table and footnote regarding this beneficial owner is based on Amendment No. 9 to Schedule 13G filed February | ||
| Information in this table and footnote regarding this beneficial owner is based on Amendment No. 1 to Schedule 13G, as amended, filed February 9, 2022 by Diamond Hill Capital Management, Inc. (“Diamond Hill”) with the | ||
| Includes 5,000 shares of common stock held by a trust of which Mr. Nelson’s wife is the trustee. Mr. Nelson disclaims beneficial ownership of the trust. | ||
| Includes 24,913 shares of common stock held by a trust. | ||
| Includes 22,912 shares of common stock held by a trust. | ||
| (8) | Includes: Greg L. Hall, our Chief Consumer Officer; Kristin L. Oliver, our Chief Human Resources Officer; and Tracy M. |
HANESBRANDS INC. | 63
Will I receive a printed copy of this Proxy Statement?
You will not receive a printed copy of this Proxy Statement or our Annual Report on Form 10-K in the mail unless you request a printed copy. As permitted by the SEC, we are delivering our Proxy Statement and Annual Report via the Internet. On March 16, 2020,14, 2022, we mailed to our stockholders a notice of annual meeting and Internet availability of proxy materials containing instructions on how to access our Proxy Statement and Annual Report and authorize a proxy to vote their shares. If you wish to request a printed copy of this Proxy Statement and our Annual Report, you should follow the instructions included in the notice of annual meeting and Internet availability of proxy materials. The notice of annual meeting and Internet availability of proxy materials is not a proxy card or ballot.
Who is entitled to vote at the Annual Meeting?
If you were a stockholder of Hanesbrands at the close of business on February 18, 202015, 2022 (the “Record Date”), you are entitled to notice of, and to vote at, the Annual Meeting. Each share of Hanesbrands common stock outstanding at the close of business on the Record Date has one vote on each matter that is properly submitted to a vote at the Annual Meeting, including shares:
| ● | held directly in your name as the stockholder of record; or | |
| ● | held for you in an account with a broker, bank or other nominee. |
Shares held in an account with a broker, bank or other nominee may include shares:
| ● | represented by your interest in the HBI Stock Fund in the 401(k) Plan; or | |
| ● | credited to your account in the Hanesbrands Inc. Employee Stock Purchase Plan of 2006. |
On the Record Date, there were 357,883,586348,649,757 shares of Hanesbrands common stock outstanding and entitled to vote at the Annual Meeting. Common stock is the only outstanding class of voting securities of Hanesbrands.
Who may attend the Annual Meeting?Only
In order to allow for greater participation by all of our stockholders, who owned sharesregardless of Hanesbrandstheir geographic location, the Annual Meeting will be held in a virtual only meeting format. Stockholders will not be able to physically attend the Annual Meeting.
If you are a registered stockholder or beneficial owner of our common stock as ofat the close of business on the Record Date will be entitled toFebruary 15, 2022, you may attend the virtual Annual Meeting. An admission ticket (or other proofMeeting by visiting www.virtualshareholdermeeting.com/HBI2022. You will need the 16-digit control number found on your Notice of stock ownership) and some form of government-issued photo identification (such as a valid driver’s licenseInternet Availability, your proxy card or passport) will be required for admissionon the instructions that accompany your proxy materials to the Annual Meeting.
No cameras, recording devices or large packages will be permitted in the meeting room. Bags will be subject to a search.
As part of our precautions regarding the coronavirus or COVID-19, we are planning for the possibility that the Annual Meeting mayand vote your shares electronically. If your shares are held in the name of a bank, broker or other holder of record, you should follow the instructions provided by your bank, broker or other holder of record to be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on howable to participate in the meeting.
You may log into www.virtualshareholdermeeting.com/HBI2021 beginning at 8:45 a.m. Eastern time on April 26, 2022. The Annual Meeting will begin promptly at 9:00 a.m. Eastern time on April 26, 2022. If you experience any technical difficulties during the meeting, a toll free number will be available on our virtual shareholder meeting site for assistance.
This year’s stockholders question and answer session will include questions submitted in advance of the Annual Meeting and questions submitted live during the virtual meeting. You may submit a question in advance of the meeting atwww.Hanes.com/investorswww.proxyvote.com after logging in with your control number. Questions may be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/HBI2022.
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| Questions and Answers About the Annual Meeting and Voting |
How many shares of Hanesbrands common stock must be present to hold the Annual Meeting?
The presence, in person or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting constitutes a quorum for the transaction of business. Your shares of Hanesbrands common stock are counted as present at the Annual Meeting if:
| ● | you are present in person at the Annual Meeting and your shares are registered in your name or you have a proxy from your bank, broker or other nominee to vote your shares; or | |
| ● | you have properly executed and submitted a proxy card, or authorized a proxy over the telephone or the Internet, prior to the Annual Meeting. |
Abstentions and broker non-votes are counted for purposes of determining whether a quorum is present at the Annual Meeting.
If a quorum is not present when the Annual Meeting is convened, the Annual Meeting may be adjourned by the chairman of the meeting.
What are broker non-votes?
If you have shares of Hanesbrands common stock that are held by a broker, you may give the broker voting instructions, and the broker must vote as you direct. If you do not give the broker any instructions, the broker may vote at its discretion on all routine matters (such as the ratification of our independent registered public accounting firm). For non-routine matters (such as the election of directors and the advisory vote regarding executive compensation and the approval of the Hanesbrands Inc. 2020 Omnibus Incentive Plan)compensation) however, the broker may not vote using its discretion. A broker’s failure to vote on a matter under these circumstances is referred to as a broker non-vote.
How many votes are required to approve each proposal?
| ● | The election of directors will be determined by a majority of the votes cast at the Annual Meeting. Accordingly, each of the | |
| ● | The ratification of the appointment of PricewaterhouseCoopers as Hanesbrands’ independent registered public accounting firm for our | |
| ● | The approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement requires approval by a majority of the votes cast | |
How do I vote?
You may vote in person atyour shares during the Annual Meeting at www.virtualshareholdermeeting.com/HBI2022 or you may authorize a proxy to vote on your behalf. There are three ways to authorize a proxy:
Internet:By accessing the Internet atwww.proxyvote.comand following the instructions on the proxy card or in the notice of annual meeting and Internet availability of proxy materials.
Telephone:By calling toll-free 1-800-690-6903 and following the instructions on the proxy card or in the notice of annual meeting and Internet availability of proxy materials.
Mail:If you requested and received your proxy materials by mail, by signing, dating and mailing the enclosed proxy card.
HANESBRANDS INC. | 65
| Questions and Answers About the Annual Meeting and Voting |
If you authorize a proxy to vote your shares over the Internet or by telephone, you shouldnotreturn your proxy card. The notice of annual meeting and Internet availability of proxy materials isnota proxy card or ballot.
Each share of Hanesbrands common stock represented by a proxy properly authorized over the Internet or by telephone or by a properly completed written proxy will be voted at the Annual Meeting in accordance with the stockholder’s instructions specified in the proxy, unless such proxy has been revoked. If no instructions are specified, such shares will be votedFORthe election of each of the nominees for director,FORratification of the appointment of PricewaterhouseCoopers as Hanesbrands’ independent registered public accounting firm for our 20202022 fiscal year,FORapproval of named executive officer compensationFORapproval of the Hanesbrands Inc. 2020 Omnibus Incentive Plan and in the discretion of the proxy holder on any other business that may properly come before the Annual Meeting.
If you participate in the 401(k) Plan and have contributions invested in the HBI Stock Fund in the 401(k) Plan as of the close of business on the Record Date, you will receive a proxy card (or a notice of annual meeting and Internet availability of proxy materials containing instructions on how to authorize a proxy to vote your shares), which will serve as voting instructions for the trustee of the 401(k) Plan. You must return your proxy card to Broadridge Financial Solutions, Inc. (“Broadridge”) or authorize a proxy to vote your shares over the Internet or by telephone on or prior to April 23, 2020.21, 2022. If you have not authorized a proxy to vote your shares over the Internet or by telephone or if your proxy card is not received by Broadridge by that date, or if you sign and return your proxy card without instructions marked in the boxes, the trustee of the 401(k) Plan will vote shares attributable to your investment in the HBI Stock Fund in the 401(k) Plan in the same proportion as other shares held in the HBI Stock Fund for which the trustee received timely instructions. If no participants vote their shares, then the trustee will not vote any of the shares in the 401(k) Plan.
How can I revoke a previously submitted proxy?
You may revoke (cancel) a proxy at any time before the Annual Meeting by (i) giving written notice of revocation to the Corporate Secretary of Hanesbrands with a date later than the date of the previously submitted proxy, (ii) properly authorizing a new proxy with a later date by mail, Internet or telephone or (iii) attending the Annual Meeting and voting in person.at www.virtualshareholdermeeting.com/HBI2022. Attendance at the Annual Meeting will not, by itself, constitute revocation of a proxy. Any notice of revocation should be sent to: Hanesbrands Inc., 1000 East Hanes Mill Road, Winston-Salem, North Carolina 27105, Attention: Corporate Secretary.
What does it mean if I receive more than one notice of annual meeting and Internet availability of proxy materials?
If you receive more than one notice of annual meeting and Internet availability of proxy materials, it means your shares of Hanesbrands common stock are not all registered in the same way (for example, some are registered in your name and others are registered jointly with your spouse) or are in more than one account. In order to ensure that you vote all of the shares that you are entitled to vote, you should authorize a proxy to vote utilizing all proxy cards or Internet or telephone proxy authorizations to which you are provided access.
How is the vote tabulated?
Hanesbrands has a policy that all proxies, ballots and votes tabulated at a meeting of stockholders are confidential, and the votes will not be revealed to any Hanesbrands employee or anyone else, other than to the non-employee tabulator of votes or an independent election inspector, except (i) as necessary to meet applicable legal requirements or (ii) in the event a proxy solicitation in opposition to the election of the Board or in opposition to any other proposal to be voted on is filed with the SEC. Broadridge will tabulate votes for the Annual Meeting and will provide an independent election inspector for the Annual Meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
The notice of annual meeting, Proxy Statement and Annual Report on Form 10-K for the fiscal year ended December 28, 2019January 1, 2022 are available at:www.proxyvote.com.www.proxyvote.com.
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| Other Information |
Other Information About Hanesbrands
We will provide without charge to each person solicited pursuant to this Proxy Statement, upon the written request of any such person, a copy of our Annual Report on Form 10-K for the fiscal year ended December 28, 2019,January 1, 2022, including the financial statements and the financial statement schedules required to be filed with the SEC, or any exhibit to that Annual Report on Form 10-K. Requests should be in writing and directed to Hanesbrands Inc., 1000 East Hanes Mill Road, Winston-Salem, North Carolina 27105, Attention: Corporate Secretary.By referring to our website,www.Hanes.com/investors,we do not incorporate our website or its contents into this Proxy Statement.
Matters Raised at the Annual Meeting not Included in this Proxy Statement
We do not know of any matters to be acted upon at the Annual Meeting other than those discussed in this Proxy Statement. If any other matter is properly presented at the Annual Meeting, proxy holders will vote on the matter in their discretion.
We will pay the cost of soliciting proxies by use of this Proxy Statement for the Annual Meeting, including the cost of mailing. The Company is making this solicitation by mail and may also use telephone or in person contacts, using the services of a number of regular employees of Hanesbrands at nominal cost. We will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for expenses incurred in sending proxy materials to beneficial owners of shares of Hanesbrands common stock. We have engaged D.F. King & Co., Inc. to solicit proxies and to assist with the distribution of proxy materials for a fee of $8,000 plus reasonable out-of-pocket expenses.
Stockholders residing in the same household who hold their stock through a bank or broker may receive only one notice of annual meeting and Internet availability of proxy materials (or Proxy Statement, for those who receive a printed copy of the Proxy Statement) in accordance with a notice sent earlier by their bank or broker. This practice of sending only one copy of proxy materials is called “householding,” and saves us money in printing and distribution costs. This practice will continue unless instructions to the contrary are received by your bank or broker from one or more of the stockholders within the household.
If you hold your shares in “street name” and reside in a household that received only one copy of the proxy materials, you can request to receive a separate copy in the future by following the instructions sent by your bank or broker. If your household is receiving multiple copies of the proxy materials, you may request that only a single set of materials be sent by following the instructions sent by your bank or broker or by contacting us in writing at Hanesbrands Inc., 1000 East Hanes Mill Road, Winston-Salem, North Carolina 27105, Attention: Corporate Secretary, or by telephone at 336-519-8080. We will also promptly deliver a separate copy of one notice of annual meeting and Internet availability of proxy materials (or Proxy Statement, as applicable) to any stockholder residing at an address to which only one copy was delivered. Requests for additional copies should be directed to us in writing or by telephone using the contact information listed above.
HANESBRANDS INC. | 67
| Other Information |
Stockholder Proposals and Director Nominations for Next Annual Meeting
If you want to make a proposal for consideration at next year’s Annual Meeting and have it included in our proxy materials, Hanesbrands must receive your proposal no later thanNovember 14, 2022, which is the 120th day prior to the anniversary of the date of this Proxy Statement, November 16, 2020, and the proposal must comply with the rules of the SEC.
If you want to make a proposal or nominate a director for consideration at next year’s Annual Meeting without having the proposal included in our proxy materials, you must comply with the then current advance notice provisions and other requirements set forth in our bylaws, which are filed with the SEC. Under our current bylaws, a stockholder may nominate a director or submit a proposal for consideration at an Annual Meeting by giving adequate notice to our Corporate Secretary. To be adequate, that notice must contain information specified in our bylaws and be received by us not earlier than the 150th day nor later than 5:00 p.m., Eastern time, on the 120th day prior to the first anniversary of the date of the Proxy Statement for the preceding year’s Annual Meeting. If, however, the date of the Annual Meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s Annual Meeting, notice by the stockholder to be timely must be so delivered not earlier than the 150th day prior to the date of such Annual Meeting and not later than 5:00 p.m., Eastern time, on the later of the 120th day prior to the date of such Annual Meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. Therefore, Hanesbrands must receive your nomination or proposal on or after October 17, 202015, 2022 and prior to 5:00 p.m., Eastern time, on November 16, 202014, 2022 unless the date of the Annual Meeting is advanced or delayed by more than 30 days from the anniversary date of the 20202022 Annual Meeting.
If Hanesbrands does not receive your proposal or nomination by the appropriate deadline, then it may not be brought before the 20212023 Annual Meeting of Stockholders even if it meets the other proposal or nomination requirements. The fact that we may not insist upon compliance with these requirements should not be construed as a waiver of our right to do so at any time in the future.
In addition to satisfying the requirements under our bylaws, if a you intend to comply with the SEC's universal proxy rules and to solicit proxies in support of director nominees other than the Company's nominees, you must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act, which notice must be postmarked or transmitted electronically to us at our principal executive offices no later than 60 calendar days prior to the one-year anniversary date of the Annual Meeting (for the 2023 Annual Meeting of Stockholders, no later than February 25, 2023). If the date of the 2023 Annual Meeting of Stockholders is changed by more than 30 calendar days from such anniversary date, however, then you must provide notice by the later of 60 calendar days prior to the date of the 2023 Annual Meeting of Stockholders and the 10th calendar day following the date on which public announcement of the date of the 2023 Annual Meeting of Stockholders is first made.
You should address your proposals or nominations to Hanesbrands Inc., 1000 East Hanes Mill Road, Winston-Salem, North Carolina 27105, Attention: Corporate Secretary.
By Order of the Board of Directors
HANESBRANDS INC.
Joia
Tracy M. JohnsonChief Administrative Officer, Chief Legal Officer, Preston
General Counsel, and Corporate Secretary & Chief Compliance Officer
March 16, 202014, 2022
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Table 1
Hanesbrands Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
| Quarters Ended | Years Ended | |||||||||||||||||||||||
| January 1, 2022 | January 2, 2021 | % Change | January 1, 2022 | January 2, 2021 | % Change | |||||||||||||||||||
| Net sales | $ | 1,752,349 | $ | 1,689,145 | 3.7 | % | $ | 6,801,240 | $ | 6,127,161 | 11.0 | % | ||||||||||||
| Cost of sales | 1,084,621 | 1,589,946 | 4,149,541 | 4,524,461 | ||||||||||||||||||||
| Gross profit | 667,728 | 99,199 | 573.1 | % | 2,651,699 | 1,602,700 | 65.5 | % | ||||||||||||||||
| As a % of net sales | 38.1 | % | 5.9 | % | 39.0 | % | 26.2 | % | ||||||||||||||||
| Selling, general and administrative expenses | 512,162 | 495,706 | 1,853,971 | 1,560,034 | ||||||||||||||||||||
| As a % of net sales | 29.2 | % | 29.3 | % | 27.3 | % | 25.5 | % | ||||||||||||||||
| Operating profit (loss) | 155,566 | (396,507 | ) | (139.2 | )% | 797,728 | 42,666 | 1,769.7 | % | |||||||||||||||
| As a % of net sales | 8.9 | % | (23.5 | )% | 11.7 | % | 0.7 | % | ||||||||||||||||
| Other expenses | 47,359 | 5,003 | 53,586 | 20,655 | ||||||||||||||||||||
| Interest expense, net | 35,307 | 43,636 | 163,067 | 164,238 | ||||||||||||||||||||
| Income (loss) from continuing operations before income tax expense | 72,900 | (445,146 | ) | 581,075 | (142,227 | ) | ||||||||||||||||||
| Income tax expense (benefit) | 4,946 | (152,948 | ) | 60,107 | (109,940 | ) | ||||||||||||||||||
| Income (loss) from continuing operations | 67,954 | (292,198 | ) | (123.3 | )% | 520,968 | (32,287 | ) | (1,713.6 | )% | ||||||||||||||
| Loss from discontinued operations, net of tax | (7,921 | ) | (39,966 | ) | (443,744 | ) | (43,292 | ) | ||||||||||||||||
| Net income (loss) | $ | 60,033 | $ | (332,164 | ) | $ | 77,224 | $ | (75,579 | ) | ||||||||||||||
| Earnings (loss) per share - basic: | ||||||||||||||||||||||||
| Continuing operations | $ | 0.19 | $ | (0.83 | ) | $ | 1.48 | $ | (0.09 | ) | ||||||||||||||
| Discontinued operations | (0.02 | ) | (0.11 | ) | (1.26 | ) | (0.12 | ) | ||||||||||||||||
| Net income (loss) | $ | 0.17 | $ | (0.95 | ) | $ | 0.22 | $ | (0.21 | ) | ||||||||||||||
| Earnings (loss) per share - diluted: | ||||||||||||||||||||||||
| Continuing operations | $ | 0.19 | $ | (0.83 | ) | $ | 1.48 | $ | (0.09 | ) | ||||||||||||||
| Discontinued operations | (0.02 | ) | (0.11 | ) | (1.26 | ) | (0.12 | ) | ||||||||||||||||
| Net income (loss) | $ | 0.17 | $ | (0.95 | ) | $ | 0.22 | $ | (0.21 | ) | ||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||
| Basic | 351,052 | 350,807 | 351,028 | 352,766 | ||||||||||||||||||||
| Diluted | 352,323 | 350,807 | 352,078 | 352,766 | ||||||||||||||||||||
HANESBRANDS INC. | 69
| Appendix A |
| Year Ended December 29, 2018 | |||||||||||||||||
| Reported Net Sales | Acquisitions (1) | Organic Net Sales | Organic $ Change | % Change | |||||||||||||
| Segment net sales: | |||||||||||||||||
| Innerwear | $ | 2,379,675 | $ — | $ | 2,379,675 | $ | (83,201 | ) | -3.4 | % | |||||||
| Activewear | 1,792,280 | 54,188 | 1,738,092 | 83,814 | 5.1 | % | |||||||||||
| International | 2,344,115 | 122,399 | 2,221,716 | 167,052 | 8.1 | % | |||||||||||
| Other | 287,885 | — | 287,885 | (11,707 | ) | -3.9 | % | ||||||||||
| Total | $ | 6,803,955 | $ | 176,587 | $ | 6,627,368 | $ | 155,958 | 2.4 | % | |||||||
| Year Ended December 28, 2019 | |||||||||||||||||
| Reported Net Sales | Acquisitions (1) | Organic Net Sales | Organic $ Change | % Change | |||||||||||||
| Segment net sales: | |||||||||||||||||
| Innerwear | $ | 2,302,632 | $ — | $ | 2,302,632 | $ | (77,043 | ) | -3.2 | % | |||||||
| Activewear | 1,854,704 | — | 1,854,704 | 62,424 | 3.5 | % | |||||||||||
| International | 2,529,375 | 17,515 | 2,511,860 | 167,745 | 7.2 | % | |||||||||||
| Other | 280,212 | — | 280,212 | (7,673 | ) | -2.7 | % | ||||||||||
| Total | $ | 6,966,923 | $ | 17,515 | $ | 6,949,408 | $ | 145,453 | 2.1 | % | |||||||
Hanesbrands Inc.
Supplemental Financial Information
Impact of Foreign Currency
(in thousands, except per share data)
(Unaudited)
| Quarter Ended January 1, 2022 | ||||||||||||||||||||||||
| As Reported | Impact from Foreign Currency (1) | Constant Currency | Quarter Ended January 2, 2021 | % Change, As Reported | % Change, Constant Currency | |||||||||||||||||||
| As reported under GAAP: | ||||||||||||||||||||||||
| Net sales | $ | 1,752,349 | $ | (9,455 | ) | $ | 1,761,804 | $ | 1,689,145 | 3.7 | % | 4.3 | % | |||||||||||
| Gross profit | 667,728 | (4,573 | ) | 672,301 | 99,199 | 573.1 | 577.7 | |||||||||||||||||
| Operating profit (loss) | 155,566 | (1,343 | ) | 156,909 | (396,507 | ) | (139.2 | ) | (139.6 | ) | ||||||||||||||
| Diluted earnings (loss) per share from continuing operations | $ | 0.19 | $ | 0.00 | $ | 0.20 | $ | (0.83 | ) | (122.9 | )% | (124.1 | )% | |||||||||||
| As adjusted: (2) | ||||||||||||||||||||||||
| Net sales | $ | 1,752,349 | $ | (9,455 | ) | $ | 1,761,804 | $ | 1,689,145 | 3.7 | % | 4.3 | % | |||||||||||
| Gross profit | 673,227 | (4,573 | ) | 677,800 | 681,989 | (1.3 | ) | (0.6 | ) | |||||||||||||||
| Operating profit | 220,123 | (1,343 | ) | 221,466 | 228,829 | (3.8 | ) | (3.2 | ) | |||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.44 | $ | 0.00 | $ | 0.45 | $ | 0.42 | 4.8 | % | 7.1 | % | ||||||||||||
| Year Ended January 1, 2022 | ||||||||||||||||||||||||
| As Reported | Impact from Foreign Currency (1) | Constant Currency | Year Ended January 2, 2021 | % Change, As Reported | % Change, Constant Currency | |||||||||||||||||||
| As reported under GAAP: | ||||||||||||||||||||||||
| Net sales | $ | 6,801,240 | $ | 92,762 | $ | 6,708,478 | $ | 6,127,161 | 11.0 | % | 9.5 | % | ||||||||||||
| Gross profit | 2,651,699 | 51,011 | 2,600,688 | 1,602,700 | 65.5 | 62.3 | ||||||||||||||||||
| Operating profit | 797,728 | 15,885 | 781,843 | 42,666 | 1,769.7 | 1,732.5 | ||||||||||||||||||
| Diluted earnings (loss) per share from continuing operations | $ | 1.48 | $ | 0.04 | $ | 1.44 | $ | (0.09 | ) | (1,744.4 | )% | (1,700.0 | )% | |||||||||||
| As adjusted: (2) | ||||||||||||||||||||||||
| Net sales | $ | 6,801,240 | $ | 92,762 | $ | 6,708,478 | $ | 6,127,161 | 11.0 | % | 9.5 | % | ||||||||||||
| Gross profit | 2,661,797 | 51,011 | 2,610,786 | 2,273,318 | 17.1 | 14.8 | ||||||||||||||||||
| Operating profit | 929,438 | 15,885 | 913,553 | 776,862 | 19.6 | 17.6 | ||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 1.83 | $ | 0.04 | $ | 1.79 | $ | 1.40 | 30.7 | % | 27.9 | % | ||||||||||||
| (1) |
| Last Twelve Months | ||||||||||
| December 28, 2019 | December 29, 2018 | |||||||||
| EBITDA: | ||||||||||
| Net income | $ 600,720 | $ 539,666 | ||||||||
| Interest expense, net | 178,579 | 194,675 | ||||||||
| Income tax expense | 79,007 | 103,915 | ||||||||
| Depreciation and amortization | 130,967 | 131,796 | ||||||||
| Total EBITDA | 989,273 | 970,052 | ||||||||
| Total action and other related charges (excluding tax effect on actions) | 63,486 | 80,162 | ||||||||
| Stock compensation expense | 9,277 | 21,416 | ||||||||
| Total EBITDA, as adjusted | $ | 1,062,036 | $ | 1,071,630 | ||||||
| Net debt: | ||||||||||
| Debt (current and long term debt and Accounts Receivable Securitization Facility) | $ | 3,367,784 | $ | 3,974,767 | ||||||
| Notes payable | 4,244 | 5,824 | ||||||||
| (Less) Cash and cash equivalents | (328,876 | ) | (433,022 | ) | ||||||
| Net debt | $ | 3,043,152 | $ | 3,547,569 | ||||||
| Net debt/EBITDA, as adjusted | 2.9 | 3.3 | ||||||||
| Years Ended | ||||||||||
| EPS-XA | December 29, 2018 | December 29, 2018 (As Revised) | December 29, 2018 (As Previously Reported) | |||||||
| Diluted earnings per share, as reported under GAAP(1) | $ | 1.64 | $ | 1.48 | $ | 1.52 | ||||
| Restructuring and other action-related charges | 0.11 | 0.19 | 0.19 | |||||||
| Diluted earnings per share, as adjusted | $ | 1.76 | $ | 1.67 | $ | 1.71 | ||||
| Results |
HANESBRANDS INC. 2020 OMNIBUS INCENTIVE PLAN
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| Appendix |
Table 2-B
Hanesbrands Inc.
Supplemental Financial Information
Impact of Foreign Currency
(in thousands, except per share data)
(Unaudited)
| Quarter Ended January 1, 2022 | ||||||||||||||||||||||||
| As Reported | Impact from Foreign Currency (1) | Constant Currency | Quarter Ended December 28, 2019 | % Change, As Reported | % Change, Constant Currency | |||||||||||||||||||
| As reported under GAAP: | ||||||||||||||||||||||||
| Net sales | $ | 1,752,349 | $ | 13,004 | $ | 1,739,345 | $ | 1,610,012 | 8.8 | % | 8.0 | % | ||||||||||||
| Gross profit | 667,728 | 8,052 | 659,676 | 633,129 | 5.5 | 4.2 | ||||||||||||||||||
| Operating profit | 155,566 | 3,001 | 152,565 | 230,006 | (32.4 | ) | (33.7 | ) | ||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.19 | $ | 0.01 | $ | 0.18 | $ | 0.43 | (55.8 | )% | (58.1 | )% | ||||||||||||
| As adjusted: (2) | ||||||||||||||||||||||||
| Net sales | $ | 1,752,349 | $ | 13,004 | $ | 1,739,345 | $ | 1,522,077 | 15.1 | % | 14.3 | % | ||||||||||||
| Gross profit | 673,227 | 8,052 | 665,175 | 620,853 | 8.4 | 7.1 | ||||||||||||||||||
| Operating profit | 220,123 | 3,001 | 217,122 | 227,866 | (3.4 | ) | (4.7 | ) | ||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.44 | $ | 0.01 | $ | 0.43 | $ | 0.39 | 12.8 | % | 10.3 | % | ||||||||||||
| Year Ended January 1, 2022 | ||||||||||||||||||||||||
| As Reported | Impact from Foreign Currency (1) | Constant Currency | Year Ended December 28, 2019 | % Change, As Reported | % Change, Constant Currency | |||||||||||||||||||
| As reported under GAAP: | ||||||||||||||||||||||||
| Net sales | $ | 6,801,240 | $ | 77,897 | $ | 6,723,343 | $ | 6,425,716 | 5.8 | % | 4.6 | % | ||||||||||||
| Gross profit | 2,651,699 | 44,020 | 2,607,679 | 2,428,702 | 9.2 | 7.4 | ||||||||||||||||||
| Operating profit | 797,728 | 13,800 | 783,928 | 850,685 | (6.2 | ) | (7.8 | ) | ||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 1.48 | $ | 0.04 | $ | 1.44 | $ | 1.57 | (5.7 | )% | (8.3 | )% | ||||||||||||
| As adjusted: (2) | ||||||||||||||||||||||||
| Net sales | $ | 6,801,240 | $ | 77,897 | $ | 6,723,343 | $ | 6,006,269 | 13.2 | % | 11.9 | % | ||||||||||||
| Gross profit | 2,661,797 | 44,020 | 2,617,777 | 2,354,289 | 13.1 | 11.2 | ||||||||||||||||||
| Operating profit | 929,438 | 13,800 | 915,638 | 818,341 | 13.6 | 11.9 | ||||||||||||||||||
| Diluted earnings per share from continuing operations | $ | 1.83 | $ | 0.03 | $ | 1.80 | $ | 1.45 | 26.2 | % | 24.1 | % | ||||||||||||
| (1) |
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| (2) |
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HANESBRANDS INC. | 71
| Appendix |
Table 3-A
Hanesbrands Inc.
Supplemental Financial Information
By Business Segment
(in thousands)
(Unaudited)
| Quarters Ended | Years Ended | |||||||||||||||||||||||
| January 1, 2022 | January 2, 2021 | % Change | January 1, 2022 | January 2, 2021 | % Change | |||||||||||||||||||
| Segment net sales: | ||||||||||||||||||||||||
| Innerwear (1) | $ | 666,086 | $ | 668,193 | (0.3 | )% | $ | 2,719,788 | $ | 2,978,009 | (8.7 | )% | ||||||||||||
| Activewear | 448,948 | 403,113 | 11.4 | 1,679,639 | 1,184,413 | 41.8 | ||||||||||||||||||
| International (2) | 544,582 | 525,714 | 3.6 | 2,066,249 | 1,711,432 | 20.7 | ||||||||||||||||||
| Other | 92,733 | 92,125 | 0.7 | 335,564 | 253,307 | 32.5 | ||||||||||||||||||
| Total net sales | $ | 1,752,349 | $ | 1,689,145 | 3.7 | % | $ | 6,801,240 | $ | 6,127,161 | 11.0 | % | ||||||||||||
| Segment operating profit: | ||||||||||||||||||||||||
| Innerwear | $ | 112,615 | $ | 160,848 | (30.0 | )% | $ | 573,852 | $ | 718,923 | (20.2 | )% | ||||||||||||
| Activewear | 58,587 | 35,718 | 64.0 | 236,400 | 67,643 | 249.5 | ||||||||||||||||||
| International | 103,866 | 92,782 | 11.9 | 339,317 | 249,718 | 35.9 | ||||||||||||||||||
| Other | 8,528 | 2,123 | 301.7 | 30,922 | (10,140 | ) | (405.0 | ) | ||||||||||||||||
| General corporate expenses/other | (63,473 | ) | (62,642 | ) | 1.3 | (251,053 | ) | (249,282 | ) | 0.7 | ||||||||||||||
| Total operating profit before restructuring and other action-related charges | | | 220,123 | | | | 228,829 | | | | (3.8 | ) | | | 929,438 | | | | 776,862 | | | | 19.6 | |
| Restructuring and other action-related charges | (64,557 | ) | (625,336 | ) | (89.7 | ) | (131,710 | ) | (734,196 | ) | (82.1 | ) | ||||||||||||
| Total operating profit (loss) | $ | 155,566 | $ | (396,507 | ) | (139.2 | )% | $ | 797,728 | $ | 42,666 | 1,769.7 | % | |||||||||||
| (1) |
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| (2) | |||
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| Quarters Ended | Years Ended | |||||||||||||||||||||||
| January 1, 2022 | January 2, 2021 | Basis Points Change | January 1, 2022 | January 2, 2021 | Basis Points Change | |||||||||||||||||||
| Segment operating margin: | ||||||||||||||||||||||||
| Innerwear | 16.9 | % | 24.1 | % | (717 | ) | 21.1 | % | 24.1 | % | (304 | ) | ||||||||||||
| Activewear | 13.0 | 8.9 | 419 | 14.1 | 5.7 | 836 | ||||||||||||||||||
| International | 19.1 | 17.6 | 142 | 16.4 | 14.6 | 183 | ||||||||||||||||||
| Other | 9.2 | 2.3 | 689 | 9.2 | (4.0 | ) | 1,322 | |||||||||||||||||
| General corporate expenses/other | (3.6 | ) | (3.7 | ) | 9 | (3.7 | ) | (4.1 | ) | 38 | ||||||||||||||
| Total operating margin before restructuring and other action-related charges | 12.6 | 13.5 | (99 | ) | 13.7 | 12.7 | 99 | |||||||||||||||||
| Restructuring and other action-related charges | (3.7 | ) | (37.0 | ) | 3,334 | (1.9 | ) | (12.0 | ) | 1,005 | ||||||||||||||
| Total operating margin | 8.9 | % | (23.5 | )% | 3,235 | 11.7 | % | 0.7 | % | 1,103 | ||||||||||||||
72 |
| Appendix |
Table 3-B
Hanesbrands Inc.
Supplemental Financial Information
By Business Segment
(in thousands)
(Unaudited)
| Quarters Ended | Years Ended | |||||||||||||||||||||||
| January 1, 2022 | December 28, 2019 Rebased (1) | % Change | January 1, 2022 | December 28, 2019 Rebased (1) | % Change | |||||||||||||||||||
| Segment net sales: | ||||||||||||||||||||||||
| Innerwear | $ | 666,086 | $ | 558,302 | 19.3 | % | $ | 2,719,788 | $ | 2,244,478 | 21.2 | % | ||||||||||||
| Activewear | 448,948 | 376,363 | 19.3 | 1,679,639 | 1,493,411 | 12.5 | ||||||||||||||||||
| International | 544,582 | 495,798 | 9.8 | 2,066,249 | 1,930,828 | 7.0 | ||||||||||||||||||
| Other | 92,733 | 91,614 | 1.2 | 335,564 | 337,552 | (0.6 | ) | |||||||||||||||||
| Total net sales | $ | 1,752,349 | $ | 1,522,077 | 15.1 | % | $ | 6,801,240 | $ | 6,006,269 | 13.2 | % | ||||||||||||
| Segment operating profit: | ||||||||||||||||||||||||
| Innerwear | $ | 112,615 | $ | 137,945 | (18.4 | )% | $ | 573,852 | $ | 505,839 | 13.4 | % | ||||||||||||
| Activewear | 58,587 | 52,849 | 10.9 | 236,400 | 196,612 | 20.2 | ||||||||||||||||||
| International | 103,866 | 85,148 | 22.0 | 339,317 | 331,322 | 2.4 | ||||||||||||||||||
| Other | 8,528 | 10,112 | (15.7 | ) | 30,922 | 33,439 | (7.5 | ) | ||||||||||||||||
| General corporate expenses/other | (63,473 | ) | (58,188 | ) | 9.1 | (251,053 | ) | (248,871 | ) | 0.9 | ||||||||||||||
| Total operating profit before restructuring and other action-related charges | 220,123 | 227,866 | (3.4 | ) | 929,438 | 818,341 | 13.6 | |||||||||||||||||
| Restructuring and other action-related charges | (64,557 | ) | (19,067 | ) | 238.6 | (131,710 | ) | (62,515 | ) | 110.7 | ||||||||||||||
| Total operating profit | $ | 155,566 | $ | 208,799 | (25.5 | )% | $ | 797,728 | $ | 755,826 | 5.5 | % | ||||||||||||
| Quarters Ended | Years Ended | |||||||||||||||||||||||
| January 1, 2022 | December 28, 2019 Rebased (1) | Basis Points Change | January 1, 2022 | December 28, 2019 Rebased (1) | Basis Points Change | |||||||||||||||||||
| Segment operating margin: | ||||||||||||||||||||||||
| Innerwear | 16.9 | % | 24.7 | % | (780 | ) | 21.1 | % | 22.5 | % | (144 | ) | ||||||||||||
| Activewear | 13.0 | 14.0 | (99 | ) | 14.1 | 13.2 | 91 | |||||||||||||||||
| International | 19.1 | 17.2 | 190 | 16.4 | 17.2 | (74 | ) | |||||||||||||||||
| Other | 9.2 | 11.0 | (184 | ) | 9.2 | 9.9 | (69 | ) | ||||||||||||||||
| General corporate expenses/other | (3.6 | ) | (3.8 | ) | 20 | (3.7 | ) | (4.1 | ) | 45 | ||||||||||||||
| Total operating margin before restructuring and other action-related charges | 12.6 | 15.0 | (241 | ) | 13.7 | 13.6 | 4 | |||||||||||||||||
| Restructuring and other action-related charges | (3.7 | ) | (1.3 | ) | (243 | ) | (1.9 | ) | (1.0 | ) | (90 | ) | ||||||||||||
| Total operating margin | 8.9 | % | 13.7 | % | (484 | ) | 11.7 | % | 12.6 | % | (85 | ) | ||||||||||||
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HANESBRANDS INC.| 73
| Appendix |
Table 4 Hanesbrands Inc. Condensed Consolidated Balance Sheets (in thousands) (Unaudited)
74 |
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| Appendix |
Table 5 Hanesbrands Inc. Condensed Consolidated Statements of Cash Flows(1) (in thousands) (Unaudited) HANESBRANDS INC. | 75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Appendix |
| Quarters Ended | Years Ended | |||||||||||||||
| January 1, 2022 | January 2, 2021 | January 1, 2022 | January 2, 2021 | |||||||||||||
| Change in cash, cash equivalents and restricted cash | (329,815 | ) | 178,049 | (349,974 | ) | 580,680 | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 890,444 | 732,554 | 910,603 | 329,923 | ||||||||||||
| Cash, cash equivalents and restricted cash at end of period | 560,629 | 910,603 | 560,629 | 910,603 | ||||||||||||
| Less restricted cash at end of period | — | 1,166 | — | 1,166 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 560,629 | $ | 909,437 | $ | 560,629 | $ | 909,437 | ||||||||
| Balances included in the Condensed Consolidated Balance Sheets: | ||||||||||||||||
| Cash and cash equivalents | $ | 536,277 | $ | 900,615 | $ | 536,277 | $ | 900,615 | ||||||||
| Cash and cash equivalents included in current assets held for sale | 24,352 | 8,822 | 24,352 | 8,822 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 560,629 | $ | 909,437 | $ | 560,629 | $ | 909,437 | ||||||||
76 |
| Appendix |
Table 6-A Hanesbrands Inc. Supplemental Financial Information Reconciliation of Select GAAP Measures to Non-GAAP Measures (in thousands, except per share data) (Unaudited) HANESBRANDS INC. | 77 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||
|
| ||
| ||
|
| Appendix |
| Year Ended January 1, 2022 | ||||||||||||||||||||||||||||||||
| Gross Profit | Selling, General and Administrative Expenses | Operating Profit | Other Expenses | Income From Continuing Operations Before Income Tax Expense | Income Tax Expense | Income From Continuing Operations | Diluted Earnings Per Share From Continuing Operations (1) | |||||||||||||||||||||||||
| As reported | $ | 2,651,699 | $ | (1,853,971 | ) | $ | 797,728 | $ | (53,586 | ) | $ | 581,075 | $ | (60,107 | ) | $ | 520,968 | $ | 1.48 | |||||||||||||
| As a percentage of net sales | 39.0 | % | 27.3 | % | 11.7 | % | ||||||||||||||||||||||||||
| Restructuring and other action- related charges: | ||||||||||||||||||||||||||||||||
| Full Potential Plan: | ||||||||||||||||||||||||||||||||
| Professional services | — | 44,617 | 44,617 | — | 44,617 | — | 44,617 | 0.13 | ||||||||||||||||||||||||
| Loss on classification of assets held for sale | — | 38,364 | 38,364 | — | 38,364 | — | 38,364 | 0.11 | ||||||||||||||||||||||||
| Operating model | 2,397 | 20,794 | 23,191 | — | 23,191 | — | 23,191 | 0.07 | ||||||||||||||||||||||||
| Impairment of intangible assets | — | 7,302 | 7,302 | — | 7,302 | — | 7,302 | 0.02 | ||||||||||||||||||||||||
| Supply chain segmentation | 7,815 | (2,396 | ) | 5,419 | — | 5,419 | — | 5,419 | 0.02 | |||||||||||||||||||||||
| Technology | — | 4,617 | 4,617 | — | 4,617 | — | 4,617 | 0.01 | ||||||||||||||||||||||||
| Other | (114 | ) | 8,314 | 8,200 | — | 8,200 | — | 8,200 | 0.02 | |||||||||||||||||||||||
| Early extinguishment and refinancing of debt | — | — | — | 45,699 | 45,699 | — | 45,699 | 0.13 | ||||||||||||||||||||||||
| Discrete tax benefits | — | — | — | — | — | (27,147 | ) | (27,147 | ) | (0.08 | ) | |||||||||||||||||||||
| Tax effect on actions | — | — | — | — | — | (26,518 | ) | (26,518 | ) | (0.08 | ) | |||||||||||||||||||||
| Total restructuring and other action-related charges | 10,098 | 121,612 | 131,710 | 45,699 | 177,409 | (53,665 | ) | 123,744 | 0.35 | |||||||||||||||||||||||
| As adjusted | $ | 2,661,797 | $ | (1,732,359 | ) | $ | 929,438 | $ | (7,887 | ) | $ | 758,484 | $ | (113,772 | ) | $ | 644,712 | $ | 1.83 | |||||||||||||
| As a percentage of net sales | 39.1 | % | 25.5 | % | 13.7 | % | ||||||||||||||||||||||||||
| ||
| (1) |
| |
| ||
| ||
|
Including the unfavorable foreign currency impact of $7 million, global Champion sales excluding C9 Champion increased approximately 10% in the fourth quarter of 2021 compared to the fourth quarter of 2020. On a constant currency basis, global Champion sales excluding C9 Champion increased approximately 12% in the fourth quarter of 2021 compared to the fourth quarter of 2020. Including the favorable foreign currency impact of $3 million, global Champion sales excluding C9 Champion increased approximately 25% in the fourth quarter of 2021 compared to the fourth quarter of 2019. On a constant currency basis, global Champion sales excluding C9 Champion increased approximately 25% in the fourth quarter of 2021 compared to the fourth quarter of 2019. 78 | | |
|
| Appendix A |
Table 6-B
Hanesbrands Inc.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| Quarter Ended January 2, 2021 | ||||||||||||||||||||||||||||
| Gross Profit | Selling, General and Administrative Expenses | Operating Profit (Loss) | Income (Loss) From Continuing Operations Before Income Tax Expense | Income Tax Benefit (Expense) | Income (Loss) From Continuing Operations | Diluted Earnings (Loss) Per Share From Continuing Operations (1) | ||||||||||||||||||||||
| As reported | $ | 99,199 | $ | (495,706 | ) | $ | (396,507 | ) | $ | (445,146 | ) | $ | 152,948 | $ | (292,198 | ) | $ | (0.83 | ) | |||||||||
| As a percentage of net sales | 5.9 | % | 29.3 | % | (23.5 | )% | ||||||||||||||||||||||
| Restructuring and other action-related charges: | ||||||||||||||||||||||||||||
| Supply chain actions | 836 | — | 836 | 836 | — | 836 | 0.00 | |||||||||||||||||||||
| Other | (63 | ) | 515 | 452 | 452 | — | 452 | 0.00 | ||||||||||||||||||||
| COVID-19 related charges: | ||||||||||||||||||||||||||||
| Goodwill | — | 25,173 | 25,173 | 25,173 | — | 25,173 | 0.07 | |||||||||||||||||||||
| Full Potential Plan: | ||||||||||||||||||||||||||||
| Inventory SKU rationalization | 192,704 | — | 192,704 | 192,704 | — | 192,704 | 0.55 | |||||||||||||||||||||
| PPE inventory write-off | 362,913 | — | 362,913 | 362,913 | — | 362,913 | 1.03 | |||||||||||||||||||||
| PPE vendor commitments | 26,400 | — | 26,400 | 26,400 | — | 26,400 | 0.08 | |||||||||||||||||||||
| Write-off of acquisition tax asset | — | 16,858 | 16,858 | 16,858 | — | 16,858 | 0.05 | |||||||||||||||||||||
| Discrete tax benefits | — | — | — | — | (66,515 | ) | (66,515 | ) | (0.19 | ) | ||||||||||||||||||
| Tax effect on actions | — | — | — | — | (118,133 | ) | (118,133 | ) | (0.34 | ) | ||||||||||||||||||
| Total restructuring and other action-related charges | 582,790 | 42,546 | 625,336 | 625,336 | (184,648 | ) | 440,688 | 1.25 | ||||||||||||||||||||
| As adjusted | $ | 681,989 | $ | (453,160 | ) | $ | 228,829 | $ | 180,190 | $ | (31,700 | ) | $ | 148,490 | $ | 0.42 | ||||||||||||
| As a percentage of net sales | 40.4 | % | 26.8 | % | 13.5 | % | ||||||||||||||||||||||
HANESBRANDS INC. | 79
| Appendix A |
| Year Ended January 2, 2021 | ||||||||||||||||||||||||||||
| Gross Profit | Selling, General and Administrative Expenses | Operating Profit | Income (Loss) From Continuing Operations Before Income Tax Expense | Income Tax Benefit (Expense) | Income (Loss) From Continuing Operations | Diluted Earnings (Loss) Per Share From Continuing Operations (1) | ||||||||||||||||||||||
| As reported | $ | 1,602,700 | $ | (1,560,034 | ) | $ | 42,666 | $ | (142,227 | ) | $ | 109,940 | $ | (32,287 | ) | $ | (0.09 | ) | ||||||||||
| As a percentage of net sales | 26.2 | % | 25.5 | % | 0.7 | % | ||||||||||||||||||||||
| Restructuring and other action- related charges: | ||||||||||||||||||||||||||||
| Supply chain actions | 19,636 | — | 19,636 | 19,636 | — | 19,636 | 0.06 | |||||||||||||||||||||
| Program exit costs | 9,387 | 467 | 9,854 | 9,854 | — | 9,854 | 0.03 | |||||||||||||||||||||
| Other | (440 | ) | 8,203 | 7,763 | 7,763 | — | 7,763 | 0.02 | ||||||||||||||||||||
| COVID-19 related charges: | ||||||||||||||||||||||||||||
| Supply chain re-startup | 45,149 | 3,459 | 48,608 | 48,608 | — | 48,608 | 0.14 | |||||||||||||||||||||
| Bad debt | — | 9,418 | 9,418 | 9,418 | — | 9,418 | 0.03 | |||||||||||||||||||||
| Inventory | 14,869 | — | 14,869 | 14,869 | — | 14,869 | 0.04 | |||||||||||||||||||||
| Goodwill | — | 25,173 | 25,173 | 25,173 | — | 25,173 | 0.07 | |||||||||||||||||||||
| Full Potential Plan: | ||||||||||||||||||||||||||||
| Inventory SKU rationalization | 192,704 | — | 192,704 | 192,704 | — | 192,704 | 0.55 | |||||||||||||||||||||
| PPE inventory write-off | 362,913 | — | 362,913 | 362,913 | — | 362,913 | 1.03 | |||||||||||||||||||||
| PPE vendor commitments | 26,400 | — | 26,400 | 26,400 | — | 26,400 | 0.07 | |||||||||||||||||||||
| Write-off of acquisition tax asset | — | 16,858 | 16,858 | 16,858 | — | 16,858 | 0.05 | |||||||||||||||||||||
| Discrete tax benefits | — | — | — | — | (69,628 | ) | (69,628 | ) | (0.20 | ) | ||||||||||||||||||
| Tax effect on actions | — | — | — | — | (135,714 | ) | (135,714 | ) | (0.38 | ) | ||||||||||||||||||
| Total restructuring and other action-related charges | 670,618 | 63,578 | 734,196 | 734,196 | (205,342 | ) | 528,854 | 1.50 | ||||||||||||||||||||
| As adjusted | $ | 2,273,318 | $ | (1,496,456 | ) | $ | 776,862 | $ | 591,969 | $ | (95,402 | ) | $ | 496,567 | $ | 1.40 | ||||||||||||
| As a percentage of net sales | 37.1 | % | 24.4 | % | 12.7 | % | ||||||||||||||||||||||
| (1) | Amounts may not be additive due to rounding. |
80 |
| Appendix A |
Table 6-C
Hanesbrands Inc.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| Quarter Ended December 28, 2019 | ||||||||||||||||||||||||||||||||
| Net Sales | Gross Profit | Selling, General and Administrative Expenses | Operating Profit | Income From Continuing Operations Before Income Tax Expense | Income Tax Expense | Income From Continuing Operations | Diluted Earnings Per Share From Continuing Operations (1) | |||||||||||||||||||||||||
| As reported | $ | 1,610,012 | $ | 633,129 | $ | (403,123 | ) | $ | 230,006 | $ | 182,142 | $ | (23,528 | ) | $ | 158,614 | $ | 0.43 | ||||||||||||||
| Less exited | (87,935 | ) | (30,514 | ) | 9,307 | (21,207 | ) | (21,207 | ) | 1,241 | (19,966 | ) | (0.05 | ) | ||||||||||||||||||
| programs (2) | ||||||||||||||||||||||||||||||||
| As rebased | 1,522,077 | 602,615 | (393,816 | ) | 208,799 | 160,935 | (22,287 | ) | 138,648 | 0.38 | ||||||||||||||||||||||
| As a percentage of net sales | 39.6 | % | 25.9 | % | 13.7 | % | ||||||||||||||||||||||||||
| Restructuring and other action-related charges: | ||||||||||||||||||||||||||||||||
| Supply chain actions | — | 13,622 | — | 13,622 | 13,622 | — | 13,622 | 0.04 | ||||||||||||||||||||||||
| Program exit costs | — | 4,616 | — | 4,616 | 4,616 | — | 4,616 | 0.01 | ||||||||||||||||||||||||
| Other | — | — | 829 | 829 | 829 | — | 829 | 0.00 | ||||||||||||||||||||||||
| Tax effect on actions | — | — | — | — | — | (16,032 | ) | (16,032 | ) | (0.04 | ) | |||||||||||||||||||||
| Total restructuring and other action-related charges | — | 18,238 | 829 | 19,067 | 19,067 | (16,032 | ) | 3,035 | 0.01 | |||||||||||||||||||||||
| As adjusted | $ | 1,522,077 | $ | 620,853 | $ | (392,987 | ) | $ | 227,866 | $ | 180,002 | $ | (38,319 | ) | $ | 141,683 | $ | 0.39 | ||||||||||||||
HANESBRANDS INC. | 81
| Appendix A |
Table 6-C
Hanesbrands Inc.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| Quarter Ended December 28, 2019 | ||||||||||||||||||||||||||||||||
| Net Sales | Gross Profit | Selling, General and Administrative Expenses | Operating Profit | Income From Continuing Operations Before Income Tax Expense | Income Tax Expense | Income From Continuing Operations | Diluted Earnings Per Share From Continuing Operations (1) | |||||||||||||||||||||||||
| As a percentage of net sales | 40.8 | % | 25.8 | % | 15.0 | % | ||||||||||||||||||||||||||
| Year Ended Dec 28, 2019 | ||||||||||||||||||||||||||||||||
| Net Sales | Gross Profit | Selling, General and Administrative Expenses | Operating Profit | Income From Continuing Operations Before Income Tax Expense | Income Tax Expense | Income From Continuing Operations | Diluted Earnings Per Share From Continuing Operations (1) | |||||||||||||||||||||||||
| As reported | $ | 6,425,716 | $ | 2,428,702 | $ | (1,578,017 | ) | $ | 850,685 | $ | 643,560 | $ | (70,236 | ) | $ | 573,324 | $ | 1.57 | ||||||||||||||
| Less exited programs (2) | (419,447 | ) | (131,861 | ) | 37,002 | (94,859 | ) | (94,859 | ) | 11,629 | (83,230 | ) | (0.23 | ) | ||||||||||||||||||
| As rebased | 6,006,269 | 2,296,841 | (1,541,015 | ) | 755,826 | 548,701 | (58,607 | ) | 490,094 | 1.34 | ||||||||||||||||||||||
| As a percentage of net sales | 38.2 | % | 25.7 | % | 12.6 | % | ||||||||||||||||||||||||||
| Restructuring and other action-related charges: | ||||||||||||||||||||||||||||||||
| Supply chain actions | — | 52,832 | — | 52,832 | 52,832 | — | 52,832 | 0.14 | ||||||||||||||||||||||||
| Program exit costs | — | 4,616 | — | 4,616 | 4,616 | — | 4,616 | 0.01 | ||||||||||||||||||||||||
| Other | — | — | 5,067 | 5,067 | 5,067 | — | 5,067 | 0.01 | ||||||||||||||||||||||||
| Tax effect on actions | — | — | — | — | — | (22,159 | ) | (22,159 | ) | (0.06 | ) | |||||||||||||||||||||
| Total restructuring and other action-related charges | — | 57,448 | 5,067 | 62,515 | 62,515 | (22,159 | ) | 40,356 | 0.11 | |||||||||||||||||||||||
| As adjusted | $ | 6,006,269 | $ | 2,354,289 | $ | (1,535,948 | ) | $ | 818,341 | $ | 611,216 | $ | (80,766 | ) | $ | 530,450 | $ | 1.45 | ||||||||||||||
| As a percentage of net sales | 39.2 | % | 25.6 | % | 13.6 | % | ||||||||||||||||||||||||||
| (1) | Amounts may not be additive due to rounding. |
| (2) | Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license. |
82 |
| Appendix A |
Table 6-D
Hanesbrands Inc.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| Quarter Ended December 28, 2019 | ||||||||||||||||||||
| As Reported | Less: Exited Programs (1) | Adjusted for Exited Programs | Less: Restructuring and other action-related charges | Rebased | ||||||||||||||||
| Segment net sales: | ||||||||||||||||||||
| Innerwear | $ | 569,630 | $ | 11,328 | $ | 558,302 | $ | — | $ | 558,302 | ||||||||||
| Activewear | 452,970 | 76,607 | 376,363 | — | 376,363 | |||||||||||||||
| International | 495,798 | — | 495,798 | — | 495,798 | |||||||||||||||
| Other | 91,614 | — | 91,614 | — | 91,614 | |||||||||||||||
| Total net sales | $ | 1,610,012 | $ | 87,935 | $ | 1,522,077 | $ | — | $ | 1,522,077 | ||||||||||
| Segment operating profit: | ||||||||||||||||||||
| Innerwear | $ | 140,368 | $ | 2,423 | $ | 137,945 | $ | — | $ | 137,945 | ||||||||||
| Activewear | 71,633 | 18,784 | 52,849 | — | 52,849 | |||||||||||||||
| International | 85,148 | — | 85,148 | — | 85,148 | |||||||||||||||
| Other | 10,112 | — | 10,112 | — | 10,112 | |||||||||||||||
| General corporate expenses/other | (58,188 | ) | — | (58,188 | ) | — | (58,188 | ) | ||||||||||||
| Restructuring and other action-related charges | (19,067 | ) | — | (19,067 | ) | (19,067 | ) | — | ||||||||||||
| Total operating profit | $ | 230,006 | $ | 21,207 | $ | 208,799 | $ | (19,067 | ) | $ | 227,866 | |||||||||
| Year Ended December 28, 2019 | ||||||||||||||||||||
| As Reported | Less: Exited Programs (1) | Adjusted for Exited Programs | Less: Restructuring and other action-related charges | Rebased | ||||||||||||||||
| Segment net sales: | ||||||||||||||||||||
| Innerwear | $ | 2,302,632 | $ | 58,154 | $ | 2,244,478 | $ | — | $ | 2,244,478 | ||||||||||
| Activewear | 1,854,704 | 361,293 | 1,493,411 | — | 1,493,411 | |||||||||||||||
| International | 1,930,828 | — | 1,930,828 | — | 1,930,828 | |||||||||||||||
| Other | 337,552 | — | 337,552 | — | 337,552 | |||||||||||||||
| Total net sales | $ | 6,425,716 | $ | 419,447 | $ | 6,006,269 | $ | — | $ | 6,006,269 | ||||||||||
| Segment operating profit: | ||||||||||||||||||||
| Innerwear | $ | 515,991 | $ | 10,152 | $ | 505,839 | $ | — | $ | 505,839 | ||||||||||
| Activewear | 281,319 | 84,707 | 196,612 | — | 196,612 | |||||||||||||||
| International | 331,322 | — | 331,322 | — | 331,322 | |||||||||||||||
| Other | 33,439 | — | 33,439 | — | 33,439 | |||||||||||||||
| General corporate expenses/other | (248,871 | ) | — | (248,871 | ) | — | (248,871 | ) | ||||||||||||
| Restructuring and other action-related charges | (62,515 | ) | — | (62,515 | ) | (62,515 | ) | — | ||||||||||||
| Total operating profit | $ | 850,685 | $ | 94,859 | $ | 755,826 | $ | (62,515 | ) | $ | 818,341 | |||||||||
| (1) | Includes the results for the exited C9 Champion mass program and the DKNY intimate apparel license. |
HANESBRANDS INC. | 83
| Appendix A |
Table 6-E
Hanesbrands Inc.
Supplemental Financial Information
Reconciliation of Select GAAP Measures to Non-GAAP Measures
(in thousands, except per share data)
(Unaudited)
| Last Twelve Months | ||||||||
| January 1, 2022 | January 2, 2021 | |||||||
| EBITDA (1): | ||||||||
| Income (loss) from continuing operations | $ | 520,968 | $ | (32,287 | ) | |||
| Interest expense, net | 163,067 | 164,238 | ||||||
| Income tax expense (benefit) | 60,107 | (109,940 | ) | |||||
| Depreciation and amortization | 110,130 | 114,967 | ||||||
| Total EBITDA | 854,272 | 136,978 | ||||||
| Total restructuring and other action-related charges (excluding tax effect on actions) | 177,409 | 734,196 | ||||||
| Stock compensation expense | 16,405 | 18,507 | ||||||
| Total EBITDA, as adjusted | $ | 1,048,086 | $ | 889,681 | ||||
| Net debt: | ||||||||
| Debt (current and long-term debt) | $ | 3,351,091 | $ | 4,003,370 | ||||
| (Less) Cash and cash equivalents | (536,277 | ) | (900,615 | ) | ||||
| Net debt | $ | 2,814,814 | $ | 3,102,755 | ||||
| Net debt/EBITDA, as adjusted | 2.7 | 3.5 | ||||||
| (1) | Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. |
| Quarters Ended | Years Ended | |||||||||||||||
| January 1, 2022 | January 2, 2021 | January 1, 2022 | January 2, 2021 | |||||||||||||
| Free cash flow (1): | ||||||||||||||||
| Net cash from operating activities | $ | 96,033 | $ | 217,247 | $ | 623,409 | $ | 448,469 | ||||||||
| Capital expenditures | (13,952 | ) | (4,702 | ) | (69,272 | ) | (53,735 | ) | ||||||||
| Free cash flow | $ | 82,081 | $ | 212,545 | $ | 554,137 | $ | 394,734 | ||||||||
| (1) | Free cash flow includes the results from continuing and discontinued operations. |
Table 7
Hanesbrands Inc.
Supplemental Financial Information
Reconciliation of GAAP Outlook to Adjusted Outlook
(in thousands, except per share data)
(Unaudited)
| Quarter Ended | Year Ended | ||
| April 2, 2022 | December 31, 2022 | ||
| Operating profit outlook, as calculated under GAAP | $120,000 to $150,000 | $780,000 to $850,000 | |
| Restructuring and other action-related charges | $15,000 | $60,000 | |
| Operating profit outlook, as adjusted | $135,000 to $165,000 | $840,000 to $910,000 | |
| Diluted earnings per share from continuing operations, as calculated under GAAP (1) | $0.20 to $0.27 | $1.50 to $1.67 | |
| Restructuring and other action-related charges | $0.04 | $0.14 | |
| Diluted earnings per share from continuing operations, as adjusted | $0.24 to $0.31 | $1.64 to $1.81 |
| (1) | The company expects approximately 353 million diluted weighted average shares outstanding for both the quarter ended April 2, 2022 and the year ended December 31, 2022. |
Hanesbrands is unable to reconcile projections of financial performance beyond 2022 without unreasonable efforts, because the Company cannot predict, with a reasonable degree of certainty, the type and extent of certain items that would be expected to impact these figures in 2023 and beyond, such as net sales, operating profit, tax rates and action related charges.
84 |
1000 EAST HANES MILL ROAD
WINSTON-SALEM, NC 27105
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