UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
|
| |
Filed by the Registrant | ||
Check the appropriate box: | ||
| Preliminary Proxy Statement | |
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| Definitive Proxy Statement | |
| Definitive Additional Materials | |
| Soliciting Material Pursuant to §240.14a-12 |
THE CONTAINER STORE GROUP, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
|
|
| ||
Payment of Filing Fee (Check the appropriate box): | ||||
| No fee required. | |||
| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
| (1) | Title of each class of securities to which transaction applies: | ||
| | | ||
| (2) | Aggregate number of securities to which transaction applies: | ||
| | | ||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
| | | ||
| (4) | Proposed maximum aggregate value of transaction: | ||
| | | ||
| (5) | Total fee paid: | ||
| | | ||
| Fee paid previously with preliminary materials: | |||
| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
| (1) | Amount previously paid: | ||
| | | ||
| (2) | Form, Schedule or Registration Statement No.: | ||
| | | ||
| (3) | Filing Party: | ||
| | | ||
| (4) | Date Filed: |
|
|
| |
| |
| |
| |
The Container Store Group, Inc. | |
| |
NOTICE & PROXY STATEMENT | |
| |
Annual Meeting of Shareholders | |
| |
10:30 a.m. (Central Time) | |
| |
THE CONTAINER STORE GROUP, INC.
500 FREEPORT PARKWAY, COPPELL, TEXAS 75019
July 7, 202013, 2021
To Our Shareholders:
You are cordially invited to attend the 20202021 Annual Meeting of Shareholders of The Container Store Group, Inc. at 10:30 a.m. Central Time, on Wednesday, August 26, 2020,September 1, 2021, via live webcast.
As in 2019,2020, the 20202021 Annual Meeting of Shareholders will be a virtual meeting. We believe the virtual meeting technology provides expanded shareholder access while providing shareholders the same rights and opportunities to participate as they would have at an in-person meeting. During the virtual meeting, you may ask questions and will be able to vote your shares electronically. To participate in the Annual Meeting, you will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or on your proxy card. We encourage you to allow ample time for online check-in, which will begin at 10:15 a.m. Central Time. Please note that there is no in-person annual meeting for you to attend.
The Notice of Meeting and Proxy Statement on the following pages describe the matters to be presented at the Annual Meeting.
Whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. Therefore, I urge you to promptly vote and submit your proxy by phone, via the Internet, or, if you received paper copies of these materials, by signing, dating, and returning the enclosed proxy card in the enclosed envelope, which requires no postage if mailed in the United States. If you have previously received our Notice of Internet Availability of Proxy Materials, then instructions regarding how you can vote are contained in that notice. If you have received a proxy card, then instructions regarding how you can vote are contained on the proxy card. You may also vote your shares online during the Annual Meeting even if you have previously submitted your proxy. Instructions on how to vote while participating in the meeting live via the Internet are provided in the accompanying proxy statement and posted at www.virtualshareholdermeeting.com/TCS2020.TCS2021.
Thank you for your support.
Sincerely,
Melissa ReiffSatish Malhotra
Chief Executive Officer President and Chairwoman of the Board of DirectorsPresident
|
|
Notice of Annual Meeting of Shareholders
To Be Held Wednesday, August 26, 2020September 1, 2021
THE CONTAINER STORE GROUP, INC.
500 FREEPORT PARKWAY, COPPELL, TEXAS 75019
The 20202021 Annual Meeting of Shareholders (the “Annual Meeting”) of The Container Store Group, Inc., a Delaware corporation (the “Company”), will be held on Wednesday, August 26, 2020,September 1, 2021, at 10:30 a.m. Central Time, via live webcast, for the following purposes:
● | To elect |
● | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending April |
● | To approve, on an advisory (non-binding) basis, the compensation of our named executive officers. |
We will also transact such other business as may properly come before the Annual Meeting or any continuation, postponement, or adjournment of the Annual Meeting.
Holders of record of our common stock at the close of business on July 2, 20208, 2021 are entitled to notice of and to vote at the Annual Meeting, or any continuation, postponement or adjournment of the Annual Meeting. A complete list of these shareholders will be available for examination of any shareholder (i) for a period of ten days prior to the Annual Meeting for a purpose germane to the meeting by sending an email to Jodi Taylor, Chief Financial Officer, Chief Administrative OfficerMichael Lambeth, Vice President, Treasurer and Secretary, at jltaylor@containerstore.com,mlambeth@containerstore.com, stating the purpose of the request and providing proof of ownership of Company stock and (ii) during the Annual Meeting, via the Internet at www.virtualshareholdermeeting.com/TCS2020.TCS2021. The Annual Meeting may be continued or adjourned from time to time without notice other than by announcement at the Annual Meeting.
It is important that your shares be represented regardless of the number of shares you may hold. Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares via the toll-free telephone number or over the Internet, as described in the materials that follow. If you received a copy of the proxy card by mail, you may alternatively sign, date and mail the proxy card in the accompanying return envelope. Note that, in light of possible disruptions in mail service related to the COVID-19 pandemic, we encourage stockholders to submit their proxy via telephone or online. Submitting your proxy now will not prevent you from voting your shares during the Annual Meeting if you desire to do so, as your proxy is revocable at your option.
By Order of the Board of Directors,
Jodi Taylor,Michael Lambeth, Secretary
Coppell, Texas
July 7, 202013, 2021
|
|
TABLE OF CONTENTS
|
|
| Page |
1 | |
1 | |
2 | |
2 | |
2 | |
Questions and Answers about the | 4 |
| |
| |
PROPOSAL 2 Ratification of Appointment of Independent Registered Public Accounting Firm |
|
| |
| |
Independent Registered Public Accounting Firm Fees and Other Matters |
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Security Ownership of Certain Beneficial Owners and Management |
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
i
|
|
THE CONTAINER STORE GROUP, INC.
500 FREEPORT PARKWAY, COPPELL, TEXAS 75019
This proxy statement is furnished in connection with the solicitation by the Board of Directors of The Container Store Group, Inc. (the “Board of Directors” or “Board”) of proxies to be voted at our Annual Meeting of Shareholders to be held on Wednesday, August 26, 2020September 1, 2021 (the “Annual Meeting”), at 10:30 a.m. Central Time, via live webcast, and at any continuation, postponement, or adjournment of the Annual Meeting.
Holders of record of shares of our common stock, $0.01 par value (“Common Stock”), at the close of business on July 2, 20208, 2021 (the “Record Date”), will be entitled to notice of and to vote at the Annual Meeting and any continuation, postponement, or adjournment of the Annual Meeting. As of the Record Date, there were approximately 50,362,52050,527,102 shares of Common Stock issued and outstanding and entitled to vote at the Annual Meeting. Each share of Common Stock is entitled to one vote on any matter presented to shareholders at the Annual Meeting.
This proxy statement and the Company’s Annual Report to Shareholders for the fiscal year ended March 28, 2020April 3, 2021 (the “2019“2020 Annual Report”) will be released on or about July 7, 202013, 2021 to our shareholders on the Record Date.
In this proxy statement, “we,” “us,” “our,” the “Company” and “The Container Store” refer to The Container Store Group, Inc. and “The Container Store, Inc.” refers to The Container Store, Inc., a Texas corporation and our wholly-owned subsidiary.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON WEDNESDAY, AUGUST 26, 2020SEPTEMBER 1, 2021
This proxy statement and our 20192020 Annual Report to Shareholders are available at http://www.proxyvote.com/.
The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/TCS2020.TCS2021.
At the Annual Meeting, our shareholders will be asked:
● | To elect |
● | To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending April |
● | To approve, on an advisory (non-binding) basis, the compensation of our named executive officers. |
We will also transact such other business as may properly come before the Annual Meeting or any continuation, postponement, or adjournment of the Annual Meeting. We know of no other business that will be presented at the Annual Meeting. If any other matter properly comes before the shareholders for a vote at the Annual Meeting, however, the proxy holders named on the Company’s proxy card will vote your shares in accordance with their best judgment.
The Board of Directors, or Board, recommends that you vote your shares as indicated below. If you return a properly completed proxy card, or vote your shares by telephone or Internet, your shares of Common Stock will be voted on your behalf as you direct. If not otherwise specified, the shares of Common Stock represented by the proxies will be voted, and the Board of Directors recommends that you vote:
● | FOR the election of |
● | FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending April |
● | FOR the approval, on an advisory (non-binding) basis, of |
Information About This Proxy Statement
Why you received this proxy statement. You are viewing or have received these proxy materials because The Container Store’s Board of Directors is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement includes information that we are required to provide to you under the rules of the Securities and Exchange Commission (“SEC”) and that is designed to assist you in voting your shares.
Notice of Internet Availability of Proxy Materials. As permitted by SEC rules, The Container Store is making this proxy statement and its 20192020 Annual Report available to its shareholders electronically via the Internet. On or about July 7, 2020,13, 2021, we mailed to our shareholders a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) containing instructions on how to access this proxy statement and our 20192020 Annual Report and vote online. If you received an Internet Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you specifically request them. Instead, the Internet Notice instructs you on how to access and review all of the important information contained in the proxy statement and 20192020 Annual Report. The Internet Notice also instructs you on how you may submit your proxy over the Internet. If
2
you received an Internet Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Internet Notice.
2
Printed Copies of Our Proxy Materials. If you received printed copies of our proxy materials, then instructions regarding how you can vote are contained on the proxy card included in the materials.
Householding. The SEC’s rules permit us to deliver a single set of proxy materials to one address shared by two or more of our shareholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one set of proxy materials to multiple shareholders who share an address, unless we received contrary instructions from the impacted shareholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the proxy materials, as requested, to any shareholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of the proxy materials, contact Broadridge Financial Solutions, Inc. (“Broadridge”) at (866) 540-7095 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
If you are currently a shareholder sharing an address with another shareholder and wish to receive only one set of proxy materials for your household, please contact Broadridge at the above phone number or address.
3
|
|
QUESTIONS AND ANSWERS ABOUT THE 20202021 ANNUAL MEETING OF SHAREHOLDERS
WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
The Record Date for the Annual Meeting is July 2, 2020.8, 2021. You are entitled to vote at the Annual Meeting only if you were a shareholder of record at the close of business on that date, or if you hold a valid proxy for the Annual Meeting. Each outstanding share of Common Stock is entitled to one vote for all matters before the Annual Meeting. At the close of business on the Record Date, there were 50,362,52050,527,102 shares of Common Stock issued and outstanding and entitled to vote at the Annual Meeting.
WHAT IS THE DIFFERENCE BETWEEN BEING A “RECORD HOLDER” AND HOLDING SHARES IN “STREET NAME”?
A record holder holds shares in his or her name. Shares held in “street name” means shares that are held in the name of a bank or broker on a person’s behalf.
AM I ENTITLED TO VOTE IF MY SHARES ARE HELD IN “STREET NAME”?
Yes. If your shares are held by a bank or a brokerage firm, you are considered the “beneficial owner” of those shares held in “street name.” If your shares are held in street name, these proxy materials are being provided to you by your bank or brokerage firm, along with a voting instruction card if you received printed copies of our proxy materials. As the beneficial owner, you have the right to direct your bank or brokerage firm how to vote your shares, and the bank or brokerage firm is required to vote your shares in accordance with your instructions.
HOW MANY SHARES MUST BE PRESENT TO HOLD THE ANNUAL MEETING?
A quorum must be present at the Annual Meeting for any business to be conducted. The presence at the Annual Meeting, via live webcast or by proxy, of the holders of a majority in voting power of the Common Stock issued and outstanding and entitled to vote on the Record Date will constitute a quorum.
WHO CAN ATTEND THE ANNUAL MEETING?
You may attend the Annual Meeting only if you are a The Container Store shareholder who is entitled to vote at the Annual Meeting, or if you hold a valid proxy for the Annual Meeting. The Annual Meeting will be held entirely online to allow greater participation. You will be able to attend the Annual Meeting online and submit your questions by visiting www.virtualshareholdermeeting.com/TCS2020.TCS2021. You will also be able to vote your shares electronically at the Annual Meeting.
To participate in the Annual Meeting, you will need the 16-digit control number included in your Internet Notice, on your proxy card or on the instructions that accompanied your proxy materials. The meeting webcast will begin promptly at 10:30 a.m., Central Time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 10:15 a.m., Central Time, and you should allow ample time for the check-in procedures. If your shares are held in street name and you did not receive a 16-digit control number, you may gain access to and vote at the Annual Meeting by logging in to your bank or brokerage firm’s website and selecting the shareholder communications mailbox to access the meeting. The control number will automatically populate. Instructions should also be provided on the voting instruction card provided by your bank or brokerage firm. If you lose your 16-digit control number, you may join the Annual Meeting as a
4
“Guest,” but you will not be able to vote, ask questions, or access the list of stockholders as of the Record Date.
WHAT IF DURING THE CHECK-IN TIME OR DURING THE ANNUAL MEETING I HAVE TECHNICAL DIFFICULTIES OR TROUBLE ACCESSING THE VIRTUAL MEETING?
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting log in page.
WILL THERE BE A QUESTION AND ANSWER SESSION DURING THE ANNUAL MEETING?
As part of the Annual Meeting, we will hold a live Q&A session, during which we intend to answer appropriate questions submitted by stockholders during or prior to the meeting that are pertinent to the Company and the meeting matters, as time permits after the completion of the Annual Meeting. Only stockholders that have accessed the Annual Meeting as a stockholder (rather than a “Guest”) by following the procedures outlined above in “Who can attend the 2021 Annual Meeting of Stockholders?” will be permitted to submit questions during the Annual Meeting. Each stockholder is limited to no more than two questions. Questions should be succinct and only cover a single topic. We will not address questions that are, among other things:
● | irrelevant to the business of the Company or to the business of the Annual Meeting; |
● | related to material non-public information of the Company, including the status or results of our business since our last Quarterly Report on Form 10-Q; |
● | related to any pending, threatened or ongoing litigation; |
● | related to personal grievances; |
● | derogatory references to individuals or that are otherwise in bad taste; |
● | substantially repetitious of questions already made by another stockholder; |
● | in excess of the two-question limit; |
● | in furtherance of the stockholder’s personal or business interests; or |
● | out of order or not otherwise suitable for the conduct of the Annual Meeting as determined by the Chair or Secretary in their reasonable judgment. |
Additional information regarding the Q&A session will be available in the “Rules of Conduct” available on the Annual Meeting webpage for stockholders that have accessed the Annual Meeting as a stockholder (rather than a “Guest”) by following the procedures outlined above in “Who can attend the 2021 Annual Meeting of Stockholders?”.
WHAT IF A QUORUM IS NOT PRESENT AT THE ANNUAL MEETING?
If a quorum is not present at the scheduled time of the Annual Meeting, the chairperson of the Annual Meeting may adjourn the Annual Meeting.
5
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE INTERNET NOTICE OR MORE THAN ONE SET OF PROXY MATERIALS?
It means that your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of your shares. To ensure that all of your shares are voted, for each Internet Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or, if you received printed copies of the proxy materials, by signing, dating and returning the enclosed proxy card in the enclosed envelope.
HOW DO I VOTE?
Shareholders of Record
We recommend that shareholders vote by proxy even if they plan to attend participate in the online Annual Meeting and vote electronically. If you are a shareholder of record, there are three ways to vote by proxy:
● | by Internet—You can vote over the Internet at www.proxyvote.com by following the instructions on the Internet Notice or proxy card; |
● | by Telephone—You can vote by telephone by calling 1-800-690-6903 and following the instructions on the proxy card; or |
● | by Mail—You can vote by mail by signing, dating and mailing the proxy card, which you may have received by mail. |
Internet and telephone voting facilities for shareholders of record will be available 24 hours a day and will close at 11:59 p.m., Eastern Time, on August 25, 2020. In light of possible disruptions in mail service related to the novel coronavirus, or COVID-19 pandemic, we encourage shareholders to submit their proxy via the Internet or telephone.31, 2021. Shareholders of record may vote during the Annual Meeting by visiting www.virtualshareholdermeeting.com/TCS2020TCS2021 and entering the 16-digit control number included in your Internet Notice, on your proxy card or on the instructions that accompanied your proxy materials. The meeting webcast will begin promptly at 10:30 a.m., Central Time on August 26, 2020.September 1, 2021.
Beneficial Owners
If your shares are held in street name through a bank or broker, you will receive instructions on how to vote from the bank or broker. You must follow their instructions in order for your shares to be voted. Internet and telephone voting also may be offered to shareholders owning shares through certain banks and brokers. If your shares are held in street name and you would like to vote at the Annual Meeting, you may visit
5
www.virtualshareholdermeeting.com/TCS2020TCS2021 and enter the 16-digit control number included in the voting instruction card provided to you by your bank or brokerage firm. If you hold your shares in street name and you did not receive a 16-digit control number, you may need to log in to your bank or brokerage firm’s website and select the shareholder communications mailbox to access the meeting and vote. Instructions should also be provided on the voting instruction card provided by your bank or brokerage firm.
CAN I CHANGE MY VOTE AFTER I SUBMIT MY PROXY?
Yes.
If you are a registered shareholder, you may revoke your proxy or change your vote:
● | by submitting a duly executed proxy bearing a later date; |
● | by granting a subsequent proxy through the Internet or telephone; |
6
● | by giving written notice of revocation to the Secretary of The Container Store prior to the Annual Meeting; or |
● | by attending and voting during the Annual Meeting live webcast. |
Your most recent proxy card or Internet or telephone proxy is the one that is counted. Your attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of revocation to the Secretary before your proxy is voted or you vote at the Annual Meeting.
If your shares are held in street name, you may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker, or you may vote at the Annual Meeting by following the procedures described above.
WHO WILL COUNT THE VOTES?
A representative of Broadridge Financial Solutions, Inc., our inspector of election, will tabulate and certify the votes.
WHAT IF I DO NOT SPECIFY HOW MY SHARES ARE TO BE VOTED?
If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the recommendations of the Board of Directors. The Board of Directors’ recommendations are indicated on page page��2 of this proxy statement, as well as with the description of each proposal in this proxy statement.
WILL ANY OTHER BUSINESS BE CONDUCTED AT THE ANNUAL MEETING?
We know of no other business that will be presented at the Annual Meeting. If any other matter properly comes before the shareholders for a vote at the Annual Meeting, however, the proxy holders named on the Company’s proxy card will vote your shares in accordance with their best judgment.
67
HOW MANY VOTES ARE REQUIRED FOR THE APPROVAL OF THE PROPOSALS TO BE VOTED UPON AND HOW WILL ABSTENTIONS AND BROKER NON-VOTES BE TREATED?
|
|
|
|
|
PROPOSAL |
| Votes required |
| Effect of Votes Withheld / |
PROPOSAL 1: ELECTION OF DIRECTORS | | The plurality of the votes cast. This means that the three nominees receiving the highest number of affirmative “FOR” votes will be elected as Class | | Votes withheld and broker non-votes will have no effect. |
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | The affirmative vote of the holders of a majority in voting power of the shares of Common Stock of the Company which are present via live webcast or by proxy and entitled to vote on the proposal. | | Abstentions will have the same effect as votes against the proposal. We do not expect any broker non-votes on this proposal. |
PROPOSAL 3: APPROVAL, ON AN ADVISORY (NON-BINDING) BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | | The affirmative vote of the holders of a majority in voting power of the shares of Common Stock of the Company which are present via live webcast or by proxy and entitled to vote on the proposal. | | Abstentions will have the same effect as votes against the proposal. Broker non-votes will have no effect on the proposal. |
WHAT IS AN ABSTENTION AND HOW WILL VOTES WITHHELD AND ABSTENTIONS BE TREATED?
A “vote withheld,” in the case of the proposal regarding the election of directors, or an “abstention,” in the case of each other proposal before the Annual Meeting, represents a shareholder’s affirmative choice to decline to vote on a proposal. Votes withheld and abstentions are counted as present and entitled to vote for purposes of determining a quorum. Votes withheld have no effect on the election of directors. Abstentions have the same effect as votes against on each other proposal before the Annual Meeting.
WHAT ARE BROKER NON-VOTES AND DO THEY COUNT FOR DETERMINING A QUORUM?
Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker (1) has not received voting instructions from the beneficial owner and (2) lacks discretionary voting power to vote those shares. A broker is entitled to vote shares held for a beneficial owner on routine matters, such as the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm, without instructions from the beneficial owner of those shares. On the other hand, each other proposal to be voted on at the Annual Meeting is a non-routine matter and, absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on such matters. Broker non-votes count for purposes of determining whether a quorum is present.
WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
We plan to announce preliminary voting results at the Annual Meeting and we will report the final results in a Current Report on Form 8-K, which we intend to file with the SEC shortly after the Annual Meeting.
78
|
|
PROPOSAL 1 Election of Directors
At the Annual Meeting, three Class III Directors are to be elected to hold office until the Annual Meeting of Shareholders to be held in 20232024 and until each such director’s respective successor is duly elected and qualified or until each such director’s earlier death, resignation or removal.
We currently have nine Directors on our Board.Board, including three Class II Directors. Our current Class II Directors are J. Kristofer Galashan, Melissa Reiff and Rajendra (“Raj”) Sisodia. The proposal regardingBoard has nominated three director candidates for election as Class II Directors at the election of directors requiresAnnual Meeting: J. Kristofer Galashan, Anthony Laday and Nicole Otto. Ms. Reiff and Mr. Sisodia have not been nominated for re-election as Class II Directors at the approval ofAnnual Meeting. Proxies cannot be voted for a plurality of the votes cast. This means that the three nominees receiving the highestgreater number of affirmative “FOR” votes will be elected as Class I Directors. Votes withheld and broker non-votes will have no effect onpersons than the outcomenumber of the vote onnominees named in this proposal.
Our Board of Directors is currently divided into three classes with staggered, three-year terms. At each annual meeting of shareholders, the successor to each director whose term then expires will be elected to serve from the time of election and qualification until the third annual meeting of shareholders following election or such director’s death, resignation or removal, whichever is earliest to occur. The current class structure is as follows: Class I, whose term expires at the 2023 Annual Meeting of Shareholders; Class II, whose term currently expires at the Annual Meeting and whose subsequent term will expire at the 2023 Annual Meeting of Shareholders; Class II, whose term will expire at the 20212024 Annual Meeting of Shareholders; and Class III, whose term will expire at the 2022 Annual Meeting of Shareholders. The current Class I Directors are Robert E. Jordan, Jonathan D. Sokoloff and Caryl Stern; the current Class II Directors are J. Kristofer Galashan, Melissa Reiff and Rajendra (“Raj”) Sisodia; and the current Class III Directors are Timothy J. Flynn, Walter RobbSatish Malhotra and Wendi Sturgis.
As indicated in our Amended and Restated Certificate of Incorporation, our Board of Directors consists of such number of directors as determined from time to time by resolution adopted by a majority of the total number of authorized directors. Any additional directorships resulting from an increase in the number of directors may be filled only by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Because Leonard Green & Partners (“LGP”) controls a majority of the voting power of our Common Stock, we expect that LGP will control the election of our directors.
If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote the shares of Common Stock represented by the proxy for the election as Class III Directors the persons whose names and biographies appear below. All of the persons whose names and biographies appear below are currently serving as our directors.directors, except Anthony Laday and Nicole Otto, who are both Class II Director nominees. In the event any of the nominees should become unable to serve or for good cause will not serve as a director, it is intended that votes will be cast for a substitute nominee designated by the Board of Directors or the Board may elect to reduce its size. The Board of Directors has no reason to believe that the nominees named below will be unable to serve if elected. Each of the nominees has consented to being named in this proxy statement and to serve if elected.
VOTE REQUIRED
The proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the three nominees receiving the highest number of affirmative “FOR” votes will be elected as Class III Directors. Votes withheld and broker non-votes will have no effect on the outcome of the vote on this proposal.
89
RECOMMENDATION OF THE BOARD OF DIRECTORS
| |
| The Board of Directors unanimously recommends a vote FOR the election of the below Class |
CLASS III DIRECTOR NOMINEES (SUBSEQUENT TERMS TO EXPIRE AT THE 20232024 ANNUAL MEETING)
The nominees for election to the Board of Directors as Class II Directors are as follows:
|
| |
| Served as a |
| |
Name | | Age | | Director Since | | Positions with The Container Store |
J. Kristofer Galashan |
| 43 |
| 2007 |
| Director |
Anthony Laday | | 54 | | - | | - |
Nicole Otto | | 50 | | - | | - |
The principal occupations and business experience, for at least the past five years, of each Class II Director nominee are as follows:
J. KRISTOFER GALASHAN | Age 43 |
J. Kristofer Galashan has served on our Board of Directors since August 2007. Mr. Galashan is currently a Partner with LGP, a private equity firm, which he joined in 2002. Prior to joining LGP he had been in the Investment Banking Division of Credit Suisse First Boston (“CSFB”) in Los Angeles which he joined in 2000 following CSFB’s acquisition of Donaldson, Lufkin & Jenrette (“DLJ”). Mr. Galashan had been with DLJ since 1999. Mr. Galashan serves on the board of Union Square Hospitality Group Acquisition Corp., and of private companies Union Square Hospitality Group, LLC, Shade Store, Mister Car Wash, Life Time Fitness, Troon Golf and Pure Gym. Mr. Galashan previously served on the Board of Directors of BJ’s Wholesale Club, Inc. and Tourneau. Mr. Galashan was selected to our Board of Directors because he possesses particular knowledge and experience in accounting, finance and capital structure, strategic planning and leadership of complex organizations, retail businesses and board practices of other major corporations.
ANTHONY LADAY | Age 54 |
Since 2014, Anthony Laday has served as the Chief Financial Officer of Fogo de Chão, where he leads the Accounting, Finance, IT and Supply Chain functions. In 2015, Mr. Laday was instrumental in the successful completion of Fogo de Chão’ s initial public offering on Nasdaq. He also helped navigate a go-private transaction in April 2018 when Rhône Capital acquired Fogo de Chão in an all-cash transaction valued at $650 million. Mr. Laday has held finance roles of increasing responsibility for a number of prominent brands prior to Fogo de Chão including Brinker International, FedEx Office, and American Airlines. We believe Mr. Laday is qualified to serve on our Board of Directors because of his experience serving as a public company executive and his strong background in finance and accounting.
NICOLE OTTO | Age 50 |
Nicole Otto most recently served as the VP of Nike Direct North America from January 2018 to June 2021. In this role, she oversaw Nike’s integrated physical and digital ecosystem that delivers seamless shopping journeys, online-to-offline services and experiences, and deep connections with Nike consumers. This ecosystem includes Nike digital commerce, Nike activity apps, Nike owned and partner stores and the Nike value marketplace throughout the United States and Canada. Through these touchpoints, Ms. Otto and her team built personal, one-to-one relationships with Nike members at scale. Ms. Otto joined Nike in 2005 and throughout her career at Nike, Ms. Otto played a central role in building and leading high-performing teams and defining pinnacle mono-brand retail experiences. Ms. Otto held several leadership roles at Nike within the
10
digital business, both overseas and on Nike’s global team. These roles included serving as VP/GM of Digital Commerce in Europe from July 2016 to December 2017, VP/GM of Nike.com Global Store from January 2015 to July 2016, VP of Global Digital Commerce Operations from April 2013 to April 2015 and VP of Consumer Digital Tech from December 2010 to April 2013. We believe Ms. Otto is qualified to serve on our Board due to her executive-level experience in the retail industry, particularly in the area of digital commerce.
CONTINUING MEMBERS OF THE BOARD OF DIRECTORS:
CLASS I DIRECTORS (TERMS TO EXPIRE AT THE 2023 ANNUAL MEETING)
The current members of the Board of Directors who are Class I Directors are as follows:
| | | | | | | ||||||
|
| |
| Served as a |
| |
| |
| Served as a |
| |
Name | | Age | | Director Since | | Positions with The Container Store | | Age | | Director Since | | Positions with The Container Store |
Robert E. Jordan |
| 59 |
| 2013 |
| Director |
| 60 |
| 2013 | | Director |
Jonathan D. Sokoloff |
| 62 |
| 2007 |
| Director |
| 63 |
| 2007 | | Director |
Caryl Stern | | 62 | | 2014 | | Director | | 63 | | 2014 | | Director |
The principal occupations and business experience, for at least the past five years, of each Class I Director nominee are as follows:
ROBERT E. JORDAN | Age |
Robert E. Jordan was appointed as a director to the Board of Directors in October 2013. Mr. Jordan is the Executive Vice President of Corporate Services and incoming Chief Executive Officer of Southwest Airlines, a commercial airline company. Mr. Jordan joined Southwest Airlines in 1988 and has served in a number of roles including Executive Vice President & Chief Commercial Officer and President of AirTran Airways, Executive Vice President Strategy & Planning, Executive Vice President Strategy & Technology, Senior Vice President Enterprise Spend Management, Vice President Technology, Vice President Purchasing, Controller, Director Revenue Accounting, and Manager Sales Accounting. Mr. Jordan has led a number of significant initiatives including the acquisition of AirTran Airways, the development of the new e-commerce platform and the all new loyalty program. Mr. Jordan was selected to our Board because he brings financial experience and possesses particular knowledge and experience in strategic planning and leadership of complex organizations.
JONATHAN D. SOKOLOFF | Age 63 |
Jonathan D. Sokoloff has served on our Board of Directors since August 2007. Mr. Sokoloff is currently a Managing Partner with LGP, a private equity firm, which he joined in 1990. Before joining LGP, he was a Managing Director in Investment Banking at Drexel Burnham Lambert. Mr. Sokoloff also serves on the board of Shake Shack Inc., where he is also a member of the compensation committee, on the board of the private parent holding companies of Advantage Solutions, Inc., and Jetro Cash & Carry and on the board of private companies Union Square Hospitality Group, LLC, and Jo Ann Stores, Inc. Mr. Sokoloff previously served on the Board of Directors of Whole Foods Market, Inc., Top Shop/Top Man Limited, BJ’s Wholesale Club, Inc., Signet Jewelers Limited, and J. Crew Group, Inc. He co-chairs the Endowment Committee for Private Equity at his alma mater, Williams College. Mr. Sokoloff was selected to our Board of Directors because he possesses particular knowledge and experience in accounting, finance and capital structure, strategic planning and leadership of complex organizations, retail businesses and board practices of other major corporations.
CARYL STERN | Age |
Caryl Stern was appointed to the Board of Directors in October 2014. Ms. Stern was appointed Executive Director of the Walton Family Foundation in December 2019. Prior to that, she served as President and Chief
11
Executive Officer of the U.S. Fund for UNICEF, a child welfare organization, from June 2007 to December 2019. Ms. Stern has three decades of non-profit and education experience including serving as the Chief Operating Officer and Senior Associate National Director of the Anti-Defamation League; the founding Director of ADL’s A WORLD OF DIFFERENCE Institute; and the Dean of Students at Polytechnic University. She has served on numerous non-profit Boards including the United Nations International School, Mercy College, and the Martin Luther King Memorial Foundation. Currently, she serves on the Board of the WE ARE FAMILY Foundation. Ms. Stern is the author of I BELIEVE IN ZERO: Learning from the World’s Children. Ms. Stern was selected to our Board because of her global business perspective and her organizational leadership, operational and financial expertise.
| ||
|
|
Jonathan D. Sokoloff has served on our Board of Directors since August 2007. Mr. Sokoloff is currently a Managing Partner with LGP, a private equity firm and our majority shareholder, and joined in 1990. Before joining LGP, he was a Managing Director in Investment Banking at Drexel Burnham Lambert. Mr. Sokoloff also serves on the board of Shake Shack Inc., where he is also a member of the compensation committee, on the board of the private parent holding companies of Advantage Solutions, Inc., and Jetro Cash & Carry and on the board of private companies Union Square Hospitality Group, LLC, J.Crew Group, Inc., Jo Ann Stores, Inc., and Signet Jewelers Limited. Mr. Sokoloff previously served on the Board of Directors of Whole
9
Foods Market, Inc., Top Shop/Top Man Limited, and BJ’s Wholesale Club, Inc. He co-chairs the Endowment Committee for Private Equity at his alma mater, Williams College. Mr. Sokoloff was selected to our Board of Directors because he possesses particular knowledge and experience in accounting, finance and capital structure, strategic planning and leadership of complex organizations, retail businesses and board practices of other major corporations.
CONTINUING MEMBERS OF THE BOARD OF DIRECTORS:
CLASS II DIRECTORS (TERMS TO EXPIRE AT THE 2021 ANNUAL MEETING)
The current members of the Board of Directors who are Class II Directors are as follows:
| | | | | | |
|
| |
| Served as a |
| |
Name | | Age | | Director Since | | Positions with The Container Store |
J. Kristofer Galashan |
| 42 |
| 2007 |
| Director |
Melissa Reiff |
| 65 |
| 2007 |
| Chairwoman of the Board, Chief Executive |
Rajendra (“Raj”) Sisodia |
| 62 |
| 2013 |
| Director |
The principal occupations and business experience, for at least the past five years, of each Class II Director are as follows:
|
|
J. Kristofer Galashan has served on our Board of Directors since August 2007. Mr. Galashan is currently a Partner with LGP, a private equity firm and our majority shareholder, and joined the firm in 2002. Prior to joining LGP he had been in the Investment Banking Division of Credit Suisse First Boston (“CSFB”) in Los Angeles which he joined in 2000 following CSFB’s acquisition of Donaldson, Lufkin & Jenrette (“DLJ”). Mr. Galashan had been with DLJ since 1999. Mr. Galashan serves on the board of private companies Union Square Hospitality Group, LLC, Shade Store, Mister Car Wash, Life Time Fitness, Troon Golf, and Pure Gym. Mr. Galashan previously served on the Board of Directors of BJ’s Wholesale Club, Inc. and Tourneau. Mr. Galashan was selected to our Board of Directors because he possesses particular knowledge and experience in accounting, finance and capital structure, strategic planning and leadership of complex organizations, retail businesses and board practices of other major corporations.
|
|
Melissa Reiff has served as our Chief Executive Officer since July 2016 and as our Chairwoman of the Board and President since August 2019. Previously, Ms. Reiff served as our President and Chief Operating Officer from March 2013 to July 2016, and as our President from 2006 to 2016. She has also served on our Board of Directors since August 2007 (and on the Board of Directors of The Container Store, Inc. since February 2006). Ms. Reiff joined The Container Store in 1995 as Vice President of Sales and Marketing, and assumed the role of Executive Vice President of Stores and Marketing in 2003. She is a member of the International Women’s Foundation and C200, an organization of leading women in business dedicated to fostering growth and increasing opportunities for women entrepreneurs and corporate leaders worldwide. Ms. Reiff has served on the Board of Directors of Etsy since April 2015, where she is also a member of the compensation committee. She also serves on Southern Methodist University’s Cox School of Business Executive Board and is a sustaining member of the Junior League of Dallas. Ms. Reiff was honored with the 2012-2013 SMU Cox School of Business Distinguished Alumna award. Ms. Reiff was selected to our Board of Directors because she possesses particular knowledge and experience in retail, marketing, merchandising, operations, communication and leadership.
10
|
|
Rajendra (“Raj”) Sisodia was appointed to the Board of Directors in September 2013. Mr. Sisodia has been the FW Olin Distinguished Professor of Global Business at Babson College since September 2013. Previously, Mr. Sisodia taught marketing at Bentley University from September 1998 to August 2013. He has also taught marketing at George Mason University and Boston University. He has authored and co-authored seven books, including Firms of Endearment and Conscious Capitalism. Mr. Sisodia is Co-Chairman and Trustee of Conscious Capitalism, Inc., a non-profit whose focus is fostering businesses that function in a different way than the norm by valuing the deeper purpose of the organization and creating value for all stakeholders. Mr. Sisodia was selected to our Board of Directors because of the teaching, researching and consulting he has done with businesses during his career as well as the role he has played in developing and refining the principles of Conscious Capitalism.
We believe that all of our current Board members possess the professional and personal qualifications necessary for Board service and have highlighted particularly noteworthy attributes for each Board member and nominee in the individual biographies included in this proxy statement.
CLASS III DIRECTORS (TERMS TO EXPIRE AT THE 2022 ANNUAL MEETING)
The current members of the Board of Directors who are Class III Directors are as follows:
| | | | | | | | | | | | |
|
| |
| Served as a |
| |
| |
| Served as a |
| |
Name | | Age | | Director Since | | Positions with The Container Store | | Age | | Director Since | | Positions with The Container Store |
Timothy J. Flynn |
| 47 |
| 2007 |
| Director |
| 48 |
| 2007 | | Director |
Walter Robb |
| 66 |
| 2013 |
| Director | ||||||
Satish Malhotra | | 46 | | 2021 | | Chief Executive Officer and President | ||||||
Wendi Sturgis |
| 53 |
| 2019 |
| Director |
| 54 |
| 2019 | | Director |
The principal occupations and business experience, for at least the past five years, of each Class III Director are as follows:
TIMOTHY J. FLYNN | Age |
Timothy J. Flynn has served on our Board of Directors since August 2007. Mr. Flynn is currently a Partner with LGP, a private equity firm, and our majority shareholder, andwhich he joined the firm in 2003. Prior to joining LGP, he had been a Director in the Investment Banking Department of Credit Suisse First Boston (“CSFB”) in Los Angeles, which he joined in 2000 following CSFB’s acquisition of DLJ. Mr. Flynn had been with DLJ since 1996 and had previously worked in the Mergers and Acquisitions group at Paine Webber Inc. in New York. Mr. Flynn also serves on the Board of Directors of Advantage Solutions, Inc., Insight Global, Pye Barker, Veritext and The Wrench Group. Mr. Flynn previously served on the Board of Directors of CCC Information Services, Inc., United States Infrastructure, Inc., Del Taco, and Tank Holdings. Mr. Flynn was selected to our Board of Directors because he possesses particular knowledge and experience in accounting, finance and capital structure, strategic planning and leadership of complex organizations, retail businesses and board practices of other major corporations.
| Age |
Walter RobbSatish Malhotra has served on our Board of Directors and as our Chief Executive Officer and President since September 2013.February 2021. Mr. Robb joined Whole Foods Market,Malhotra previously served in a national grocer specializing in natural and organic products, in 1991 operating the Mill Valley, CA store until he became Presidentvariety of the Northern Pacific Region in 1993 where he grew the regionkey leadership roles with increasing responsibility at Sephora from twoNovember 1999 to 17 stores. He became Executive Vice President of Operations in 2000,January 2021, ultimately progressing to Chief Operating Officer from 2016 to 2019 and to Chief Retail and Operating Officer from 2019 until his departure. In his latest role, Mr. Malhotra was responsible for supporting Sephora’s growth by expanding the in-store client experience and services, increasing points of distribution and building scalable infrastructures. Mr. Malhotra received his Bachelor of Science in 2001Business Administration from the Haas School of Business at the University of California, Berkeley. Mr. Malhotra also holds an inactive Certified Public Accountant’s license from the State of California. Mr. Malhotra was selected to our Board due to his extensive leadership experience in the retail industry and Co-Presidenthis operational expertise, including in 2004. He served as Co-CEOthe areas of Whole Foods Market from 2010 to 2016. Mr. Robb also currently serves on the Board of Directors of Aphria, Inc., where he is also a member of the compensation committee,in-store experience, store development, technology, supply chain and also serves on the Board of Directors of private companies Union Square Hospitality Group, LLC, Heat Genie, Apeel Sciences, New Barn Organics, and Food Maven. Mr. Robb previously served on thefinance.
1112
Board of Directors of Whole Foods Market, Whole Kids Foundation, Whole Planet and Whole Cities Foundation. Mr. Robb was selected to our Board because he brings financial and risk assessment experience as well as his retail, entrepreneurial and management experience.
WENDI STURGIS | Age |
Wendi Sturgis has served on our Board of Directors since August 2019. WendiMs. Sturgis currently serves as President of Lyte, Inc., an event ticketing technology platform company. Ms. Sturgis served as Chief Revenue Officer at Lyte, Inc. from January 2021 to March 2021, at which time she was promoted to her current position. Previously, Ms. Sturgis served as President and Chief Executive Officer of Yext, Europe at Yext, Inc., a New York based technology company operating in the area of on-line brand management, a position that she has held since April 2019. Ms. Sturgis joined Yext in 2011, and has held a variety of executive roles, including Executive Vice President of Sale and Services from August 2011 to December 2016 and Chief Client Officer from December 2016 to August 2019. Ms. Sturgis previously ran the North America Account Management team at Yahoo! Inc., where she was responsible for an 800 person800-person organization and $1.4 billion in revenue. She has also previously held executive positions at Price Waterhouse, Oracle, Scient, Gartner and Right Media, and served as a director of Student Transportation of America, where she gained experience in cybersecurity leading the company’s annual cybersecurity risk review. Ms. Sturgis also serves on the board of directors of TPG Pace Tech Opportunities Corp. and Sabre Corporation and of private companies Georgia Tech Foundation and Kustomer, Inc. Ms. Sturgis was selected to our Board of Directors because of her leadership experience in the technology, digital transformation and marketing fields.
We believe that all of our current Board members possess the professional and personal qualifications necessary for Board service and have highlighted particularly noteworthy attributes for each Board member and nominee in the individual biographies included in this proxy statement.
1213
|
|
PROPOSAL 2 Ratification of Appointment of Independent Registered Public Accounting Firm
Our Audit Committee has appointed Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending April 3, 2021.2, 2022. Our Board has directed that this appointment be submitted to our shareholders for ratification. Although ratification of our appointment of Ernst & Young LLP is not required, we value the opinions of our shareholders and believe that shareholder ratification of our appointment is a good corporate governance practice.
Ernst & Young LLP also served as our independent registered public accounting firm for the fiscal year ended March 28, 2020.April 3, 2021. Neither the accounting firm nor any of its members has any direct or indirect financial interest in or any connection with us in any capacity other than as our auditors, providing audit and non-audit related services. A representative of Ernst & Young LLP is expected to attend the Annual Meeting via live webcast and be available to respond to appropriate questions from shareholders.
In the event that the appointment of Ernst & Young LLP is not ratified by the shareholders, the Audit Committee will consider this fact when it appoints the independent auditors for the fiscal year ending April 2, 2022.1, 2023. Even if the appointment of Ernst & Young LLP is ratified, the Audit Committee retains the discretion to appoint a different independent auditor at any time if it determines that such a change is in the interests of The Container Store.
VOTE REQUIRED
This proposal requires the approval of the affirmative vote of the holders of a majority in voting power of the shares of Common Stock of the Company which are present via live webcast or by proxy and entitled to vote thereon. Abstentions will have the same effect as a vote against this proposal. Because brokers have discretionary authority to vote on the ratification of the appointment of Ernst & Young LLP, we do not expect any broker non-votes in connection with this proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS
| The Board of Directors unanimously recommends a vote FOR the Ratification of the Appointment of Ernst & Young LLP as our Independent Registered Public Accounting Firm. |
1314
|
PROPOSAL 3 Approval, on an Advisory (Non-Binding) Basis, of the Compensation of our Named Executive Officers
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and Rule 14a-21 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company requests that our shareholders cast a non-binding, advisory vote to approve the compensation of the Company’s named executive officers identified in the section titled “Executive and Director Compensation” set forth below in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement.
Accordingly, we ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s shareholders hereby approve, on an advisory (non-binding) basis, the compensation of the Company’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC, including the section titled “Executive and Director Compensation,” the Summary Compensation Table and the other related tables and disclosures.”
We believe that our compensation programs and policies for the fiscal year ended March 28, 2020April 3, 2021 were an effective incentive for the achievement of the Company’s goals, aligned with shareholders’ interest and worthy of continued shareholder support. Additional details concerning how we structure our compensation programs to meet the objectives of our compensation program are provided in the section titled “Executive and Director Compensation” set forth below in this proxy statement. In particular, we discuss how we design performance-based compensation programs and set compensation targets and other objectives to maintain a close correlation between executive pay and Company performance.
This vote is merely advisory and will not be binding upon the Company, the Board or the Culture and Compensation Committee, nor will it create or imply any change in the duties of the Company, the Board or the Culture and Compensation Committee. The Culture and Compensation Committee will, however, take into account the outcome of the vote when considering future executive compensation decisions. The Board values constructive dialogue on executive compensation and other significant governance topics with the Company’s shareholders and encourages all shareholders to vote their shares on this important matter. In accordance with the advisory vote regarding the frequency of “say-on-pay” votes held at the 2019 Annual Meeting of Shareholders, the Company has determined to continue to hold the “say-on-pay” advisory vote every year until the next such “say-on-pay” frequency advisory vote. The next “say-on-pay” advisory vote will occur at the 20212022 Annual Meeting of Shareholders.
VOTE REQUIRED
This proposal requires the approval of the affirmative vote of the holders of a majority in voting power of the shares of Common Stock of the Company which are present via live webcast or by proxy and entitled to vote thereon. Abstentions will have the same effect as a vote against this proposal. Broker non-votes will have no effect on the proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS
| |
The Board of Directors unanimously recommends a vote FOR the approval, on an advisory (non-binding) basis, of the compensation of our named executive officers. |
1415
|
|
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee has reviewed The Container Store’s audited financial statements for the fiscal year ended March 28, 2020April 3, 2021 and has discussed these financial statements with management and The Container Store’s independent registered public accounting firm. The Audit Committee has also received from, and discussed with, The Container Store’s independent registered public accounting firm various communications that such independent registered public accounting firm is required to provide to the Audit Committee, including the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC.
The Container Store’s independent registered public accounting firm also provided the Audit Committee with a formal written statement required by PCAOB Rule 3526 (Communications with Audit Committees Concerning Independence) describing all relationships between the independent registered public accounting firm and The Container Store, including the disclosures required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence. In addition, the Audit Committee discussed with the independent registered public accounting firm its independence from The Container Store. Based on its discussions with management and the independent registered public accounting firm, and its review of the representations and information provided by management and the independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in The Container Store’s Annual Report on Form 10-K for the fiscal year ended March 28, 2020.April 3, 2021.
Robert E. Jordan (Chair)
Rajendra (“Raj”) Sisodia
Caryl Stern
1516
|
|
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND OTHER MATTERS
The following table summarizes the fees of Ernst & Young LLP, our independent registered public accounting firm, billed to us for each of the last two fiscal years for audit services and billed to us in each of the last two fiscal years for other services:
| | | | | | | |||||||
Fee Category |
| Fiscal 2019 |
| Fiscal 2018 |
| Fiscal 2020 |
| Fiscal 2019 |
| ||||
Audit Fees | | $ | 1,621,759 | | $ | 1,700,945 | | $ | 1,457,125 | | $ | 1,621,759 | |
Audit-Related Fees | |
| — | |
| — | | | — | | | — | |
Tax Fees | | $ | 148,573 | | $ | 150,095 | | $ | 336,299 | | $ | 148,573 | |
All Other Fees | | $ | 1,445 | | $ | 3,394 | | $ | 2,719 | | $ | 1,445 | |
Total Fees | | $ | 1,771,777 | | $ | 1,854,434 | | $ | 1,796,143 | | $ | 1,771,777 | |
AUDIT FEES
Audit fees consist of fees for the audit of our consolidated financial statements, the review of the unaudited interim financial statements included in our quarterly reports on Form 10-Q and other professional services provided in connection with statutory and regulatory filings or engagements.
AUDIT-RELATED FEES
Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit and the review of our financial statements and which are not reported under “Audit Fees.”
TAX FEES
Tax fees comprise fees for a variety of permissible services relating to international tax compliance, tax planning, and tax advice.
ALL OTHER FEES
All other fees were paid for an online technical research tool.
AUDIT COMMITTEE PRE-APPROVAL POLICY AND PROCEDURES
Our Audit Committee’s charter provides that the Audit Committee, or the chair of the committee, must pre-approve any audit or non-audit service provided to us by our independent registered public accounting firm, unless the engagement is entered into pursuant to appropriate pre-approval policies established by the Audit Committee or if the service falls within available exceptions under SEC rules. Without limiting the foregoing, the Audit Committee may delegate authority to one or more independent members of the committee to grant pre-approvals of audit and permitted non-audit services. Any such pre-approvals must be presented to the full Audit Committee at its next scheduled meeting.
1617
|
|
EXECUTIVEOFFICERSEXECUTIVE OFFICERS
The following table identifies our current executive officers:
|
|
|
|
|
Name |
| Age |
| Position |
Melissa Reiff 1 | |
| | Chairwoman of the Board |
Satish Malhotra 2 | | 46 | | Chief Executive Officer and President |
| |
| | Chief Financial Officer |
Melissa Collins | |
| | Chief Marketing Officer |
John Gehre | |
| | Chief Merchandising Officer |
Dhritiman Saha 6 | | 49 | | Chief Information Officer |
1 | Melissa Reiff has served on our Board of Directors since August 2007 (and on the Board of Directors of The Container Store, Inc. since February 2006) and as our Chairwoman of the Board since August 2019. Previously, Ms. Reiff served as our Chief Executive Officer from July 2016, and President from August 2019, until her retirement from these roles in February 2021. Previously, Ms. Reiff served as our President and Chief Operating Officer from March 2013 to July 2016, and as our President from 2006 to July 2016. Ms. Reiff joined The Container Store in 1995 as Vice President of Sales and Marketing and assumed the role of Executive Vice President of Stores and Marketing in 2003. She is a member of the International Women’s Foundation and C200, an organization of leading women in business dedicated to fostering growth and increasing opportunities for women entrepreneurs and corporate leaders worldwide. Ms. Reiff has served on the Board of Directors of Etsy since April 2015, where she is also a member of the compensation committee, and on the Board of Directors of Cricut Inc. since 2021, where she is also a member of the audit committee. She also serves on Southern Methodist University’s Cox School of Business Executive Board and is a sustaining member of the Junior League of Dallas. Ms. Reiff was honored with the 2012-2013 SMU Cox School of Business Distinguished Alumna award. Ms. Reiff was selected to our Board of Directors because she possesses particular knowledge and experience in retail, marketing, merchandising, operations, communication and leadership. |
2 | See biography on page |
|
|
| Melissa Collins has been with The Container Store for |
| John Gehre has served as our Chief Merchandising Officer since August 2019 and, prior to that, as Executive Vice President of Merchandising and Planning since May 2018, with responsibility for product assortment, inventory allocation, global sourcing initiatives and private label strategy. Prior to joining The Container Store, Mr. Gehre served as the Vice President of General Merchandise, Global Sourcing, and |
18
Front End from February 2007 to January 2018 at H-E-B, an American supermarket chain. Mr. Gehre previously gained experience in merchandise planning, product development, omni-channel marketing, and supply chain with BJ’s Wholesale, Linens ‘n Things, Saks Fifth Avenue and Federated. |
6 | Dhritiman Saha joined The Container Store as our Executive Vice President and Chief Information Officer in May 2021, bringing more than 27 years of expertise in P&L, leading and managing multi-billion dollar ecommerce transformation & growth, digital marketing, subscription business, omnichannel customer experience, technology and global operations. Prior to joining The Container Store, Mr. Saha served as the Chief Digital Officer at GameStop from February 2021 to April 2021 and led e-commerce business, digital marketing & customer experience, online assortment expansion, digital and omnichannel technology & product management. Prior to GameStop, Mr. Saha served as Global Chief Customer and Digital Officer at Bodybuilding.com from December 2018 to February 2020 and as Senior Vice President of Digital for JCPenny from April 2014 to December 2018. Throughout Mr. Saha’s extensive career, he has also served in a variety of leadership roles driving technology and omnichannel business transformation at other chain retailers such as Target and Kohls. Mr. Saha received his MBA from Johns Hopkins University and completed his bachelors degree in Electronics and Telecommunications Engineering in Jalandhar, India. |
1719
|
|
Our Board of Directors has adopted Corporate Governance Guidelines, a Code of Business Conduct and Ethics and charters for our Nominating and Corporate Governance Committee, Audit Committee and Culture and Compensation Committee to assist the Board in the exercise of its responsibilities and to serve as a framework for the effective governance of The Container Store. You can access our current committee charters, our Corporate Governance Guidelines and our Code of Business Conduct and Ethics in the “Corporate Governance” section of the “Investor Relations” page of our website located at www.containerstore.com, or by writing to our Secretary at our offices at 500 Freeport Parkway, Coppell, Texas 75019.
Our Board of Directors currently consists of nine members: Timothy J. Flynn, J. Kristofer Galashan, Robert E. Jordan, Satish Malhotra, Melissa Reiff, Walter Robb, Rajendra (“Raj”) Sisodia, Jonathan D. Sokoloff, Caryl Stern and Wendi Sturgis. As indicated in our Amended and Restated Certificate of Incorporation, our Board of Directors consists of such number of directors as determined from time to time by resolution adopted by a majority of the total number of authorized directors. Any additional directorships resulting from an increase in the number of directors or any vacancies in the Board resulting from death, resignation, retirement, disqualification, removal from office or other cause, may be filled only by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors.
Our Board of Directors is currently divided into three classes with staggered, three-year terms. At each annual meeting of shareholders, the successor to each director whose term then expires will be elected to serve from the time of election and qualification until the third annual meeting following election or such director’s death, resignation or removal, whichever is earliest to occur. Because LGP controls a majority of the voting power of our Common Stock, we expect that LGP will control the election of our directors.
Certain affiliates of LGP control a majority of the voting power of our outstanding Common Stock. As a result, we are a “controlled company” under the rules of the New York Stock Exchange (“NYSE”). As a controlled company, we are not required to comply with certain corporate governance requirements, including the following requirements: that a majority of ourOur Board of Directors consists of “independent directors,”has nominated Anthony Laday and Nicole Otto for election as defined underClass II Directors at the NYSE rules; that weAnnual Meeting to succeed Mr. Sisodia and Ms. Reiff, who have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressingnot been nominated for re-election at the committee’s purpose and responsibilities; that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and that we conduct an annual performance evaluation of our Nominating and Corporate Governance Committee and Culture and Compensation Committee.
Currently, a majority of the directors on our Board are independent and our Nominating and Corporate Governance Committee consists entirely of independent directors. However, in reliance on the exemption available to “controlled companies” from the compensation committee independence requirements under NYSE rules, our Culture and Compensation Committee consists of a majority of independent directors. For so long as we remain a “controlled company,” we may continue to avail ourselves of the exemptions available to “controlled companies”.
18
If at any time we cease to be a “controlled company” under the NYSE rules, our Board intends to take any action that may be necessary to comply with the NYSE rules, subject to a permitted “phase-in” period.Annual Meeting.
Our Board of Directors has affirmatively determined that each of Timothy J. Flynn, J. Kristofer Galashan, Robert E. Jordan, Anthony Laday, Nicole Otto, Rajendra (“Raj”) Sisodia, Jonathan Sokoloff, Caryl Stern and Wendi Sturgis is an “independent director,” as defined under NYSE rules. In evaluating and determining the independence of the directors, the Board considered that The Container Store may have certain relationships with its directors. Specifically, the Board considered that Messrs. Flynn, Galashan and Sokoloff are affiliated with LGP, which owns approximately 55.1%31.1% of our outstanding Common Stock as of July 2, 2020.8, 2021. The Board determined that this relationship does not impair their independence from us and our management. The Board also considered that Messrs. Flynn and Sokoloff serve on the board of directors of Advantage Solutions, Inc. (“Advantage”), a company that provides online advertising services to the Company, and that LGP owns approximately 33%29.4% of Advantage’s common stock. Since the beginning of fiscal 2019,2020, the Company paid approximately $320,976$235,000 in fees to Advantage. The Board has determined that the Company’s relationship with Advantage does not impair the independence of Messrs. Flynn and Sokoloff from us and our management.
20
The Nominating and Corporate Governance Committee is responsible for identifying and reviewing the qualifications of potential director candidates and recommending to the Board those candidates to be nominated for election to the Board, subject to any obligations and procedures governing the nomination of directors to the Board of Directors that may be included in any stockholders agreement to which we are a party.
To facilitate the search process for director candidates, the Nominating and Corporate Governance Committee may solicit our current directors and executives for the names of potentially qualified candidates or may ask directors and executives to pursue their own business contacts for the names of potentially qualified candidates. The Nominating and Corporate Governance Committee may also consult with outside advisors or retain search firms to assist in the search for qualified candidates or consider director candidates recommended by our shareholders. In fiscal 2020, the Nominating and Corporate Governance Committee engaged a search firm to assist in the identification and evaluation of director candidates.
Once potential candidates are identified, the Nominating and Corporate Governance Committee reviews the backgrounds of those candidates, evaluates candidates’ independence from us and potential conflicts of interest and determines if candidates meet the qualifications desired by the committee of candidates for election as director.
In accordance with our Corporate Governance Guidelines, in evaluating the suitability of individual candidates, the Nominating and Corporate Governance Committee will consider (i) minimum individual qualifications, including strength of character, mature judgment, industry knowledge or experience and an ability to work collegially with the other members of the Board and (ii) all other factors it considers appropriate, which may include age, gender and ethnic and racial background, existing commitments to other businesses, potential conflicts of interest with other pursuits, legal considerations such as antitrust issues, corporate governance background, relevant business or government acumen, financial and accounting background, executive compensation background and the size, composition and combined expertise of the existing Board. In particular, experience, qualifications or skills in the following areas are particularly relevant: retail merchandising; marketing and advertising; consumer goods; sales and distribution; accounting, finance, and capital structure; strategic planning and leadership of complex organizations; legal/regulatory and government affairs; people management; communications and interpersonal skills and board practices of other major corporations. Our Corporate Governance Guidelines provide that the Board should monitor the mix of specific experience, qualifications and skills of its directors in order to assure that the Board, as a whole, has the necessary tools to perform its oversight function effectively in light of the Company’s business and structure.
19
Shareholders may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential Director candidates by submitting the names of the recommended individuals, together with appropriate biographical information and background materials, to the Nominating and Corporate Governance Committee, c/o Secretary, The Container Store Group, Inc., 500 Freeport Parkway, Coppell, Texas 75019. In the event there is a vacancy, and assuming that appropriate biographical and background material has been provided on a timely basis, the Committee will evaluate shareholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.
Communications from Interested Parties
Anyone who would like to communicate with, or otherwise make his or her concerns known directly to the lead director, chairperson of any of the Audit, Nominating and Corporate Governance, and Culture and Compensation Committees, or to the non-management or independent directors as a group, may do so by addressing such communications or concerns to the Secretary of the Company, 500 Freeport Parkway, Coppell, Texas 75019, who will forward such communications to the appropriate party. Such communications may be done confidentially or anonymously.
21
Board Leadership Structure and Role in Risk Oversight
Our Corporate Governance Guidelines provide that the roles of Chairperson of the Board and Chief Executive Officer may be separated or combined, and our Board of Directors exercises its discretion in combining or separating these positions as it deems appropriate in light of prevailing circumstances. Currently, Melissa Reiff serves as both our Chief Executive Officer and Chairwoman of the Board and is expected to serve in these roles untilSatish Malhotra serves as our Chief Executive Officer. Ms. Reiff’s employment agreement with the conclusionCompany provides that her term as Chairwoman of the Board will conclude at the end of the Annual Meeting of Shareholders in 2021. and Ms. Reiff has not been nominated for re-election as a Class II director at the Annual Meeting.
The Board has carefully considered its leadership structure in light of Ms. Reiff’s upcoming departure from our Board and determined that combiningcontinuing to separate the positions of Chief Executive Officer and Chairperson of the Board currently servesfollowing the Annual Meeting will serve the best interests of the Company and its shareholders. Specifically, the Board believes thatseparation of the Chief Executive Officer and Chairperson positions will provide Mr. Malhotra, who succeeded Ms. Reiff is best situated to serve as Chairperson duringour Chief Executive Officer and President in February 2021, with the transitionary period following William A. “Kip” Tindell’s retirement in August 2019 given her deep knowledge of our business and strategy and ability to draw on that experience in order to provide the Board, in coordination with the Lead Director, leadershipcontinue to focus its discussions, review and oversight ofon the Company’s strategy, business, and operating and financial performance.
Accordingly, the Board has appointed Robert E. Jordan as the Chairperson of the Board, effective at the conclusion of the Annual Meeting. The Board believes that Mr. Jordan is best situated to serve as Chairperson at this time due to his deep knowledge of our Company and his experience serving as lead independent director of the Board. We believe that we, like many U.S. companies, are well-served by a flexible leadership structure. Our Board of Directors will continue to consider whether the positions of Chairperson of the Board and Chief Executive Officer should be separated or combined at any given time as part of our succession planning process.
Our Corporate Governance Guidelines provide that whenever our Chairperson of the Board is also our Chief Executive Officer or is a director that does not otherwise qualify as an independent director, the independent directors will elect a lead director whose responsibilities include presiding over all meetings of the Board at which the Chairperson is not present, including any executive sessions of the independent directors or the non-management directors; assisting in scheduling Board meetings and approving meeting schedules; communicating and collaborating with the Chief Executive Officer on various matters; and acting as the liaison between the independent or non-management directors and the Chairperson of the Board, as appropriate. The full list of responsibilities of our lead director may be found in Annex A to our Corporate Governance Guidelines. Our independent directors have elected Robert E. Jordan to serve as our lead director until the 2020 Annual Meeting of Shareholders, at which time the independent directors intend to elect a lead director to serve until the 2021 Annual Meeting of Shareholders. Because Mr. Jordan will assume the role of Chairperson of the Board following the Annual Meeting, the independent directors have not elected a new lead independent director.
Our Board of Directors is responsible for overseeing our risk management process. Our Board of Directors focuses on our general risk management strategy, the most significant risks facing us, including cybersecurity and risks relating to the ongoing COVID-19 pandemic, and oversees the implementation of risk mitigation strategies by management. Our Board of Directors is also apprised of particular risk management matters in
20
connection with its general oversight and approval of corporate matters and significant transactions. The Board does not believe that its role in the oversight of our risks affects the Board’s leadership structure.
We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. A copy of the code is available on our website located at www.containerstore.com in the “Corporate Governance” section of the “Investor Relations” page. We expect that any amendments to the code, or any waivers of its requirements, that are required to be disclosed by SEC or NYSE rules will be disclosed on our website.
22
Our Board of Directors has adopted an Insider Trading Compliance Policy, which applies to all of our directors, officers and employees. The policy prohibits our directors, officers and employees and any entities they control from engaging in all hedging or monetization transactions, such as zero-cost collars and forward sale contracts, involving our equity securities.
Attendance by Members of the Board of Directors at Meetings
There were fivesix meetings of the Board of Directors during the fiscal year ended March 28, 2020.April 3, 2021. During the fiscal year ended March 28, 2020,April 3, 2021, each Director attended at least 75% of the aggregate of (i) all meetings of the Board of Directors and (ii) all meetings of the committees on which the Director served during the period in which he or she served as a Director.
Our Corporate Governance Guidelines provide that all directors are expected to make best efforts to attend the Annual Meeting. NineEight out of tennine directors who were members of our Board at the time of the 20192020 Annual Meeting of Shareholders attended the meeting.
The non-management members of the Board meet in regularly scheduled executive sessions. Robert E. Jordan, as the current lead director, presides over the regularly scheduled executive sessions at which he is present.
present, and will continue to preside over such meetings as Chairperson of the Board following the conclusion of the Annual Meeting.
2123
|
|
Environmental, Social and Governance Approach
Governance of Corporate Responsibility
Our Board of Directors’ primary duty of overseeing our corporate strategy and enterprise risk management program includes the Board’s oversight of how environmental, social and governance (“ESG”) issues may impact the long-term interests of our stakeholders. Our Board and its committees play a critical role in oversight of our corporate culture and holds management accountable for its maintenance of high ethical standards, governance practices and compliance programs to protect our business, employees and reputation.
Corporate responsibility promotes the long-term interests of our stakeholders and strengthens Board and management accountability. We believe good governance at all levels is necessary to drive corporate responsibility, and that our corporate governance is more effective when we consider environmental and social issues as a part of our corporate strategy, key risks, and operations. The Container Store’s seven Foundation Principles articulate our culture and commitment to best serve our employees, customers, vendors, communities, and stockholders. Our Foundation Principles are simple business philosophies that guide each decision we make. You can learn about our Foundation Principles on our blog, www.whatwestandfor.com.
We believe that environmentally and socially responsible operating practices go hand in hand with generating value for our shareholders. You can learn more about our commitment to sustainability at investor.containerstore.com/corporate-social-responsibility.
Environmental Stewardship
At The Container Store, we are focused on ESG factors that are connected to our strategic business initiatives. We are increasingly engaging in sustainable practices that we believe drive value, efficiency, and quality of environment for our stakeholders. In keeping with our belief, we endeavor to contribute to a sustainable society by reducing environmental impacts of our products at each stage of development and selling the highest quality products that will last over time.
Our Elfa-manufactured products, which contributed approximately 29%28% of our fiscal 20192020 retail sales, are largely made from recycled materials. Elfa further enhanced its robust sustainability program in fiscal 2019, increasing its efforts to support the United Nation’s Sustainable Development Goals and adhering to the ten principles outlined in the UN Global Compact, to which it has been a signatory since 2018.
Employee and Stakeholder Engagement
We desire to progress towards a fair, healthy and safe workplace, while creating work environment policies that promote diversity, equality and inclusion. We are committed to building our business on a foundation of ethics. We believe that when we create a workplace where our employees are engaged, committed and empowered for the long-term, we are better positioned to create value for our company, as well as for our stakeholders.
Attracting and retaining talent at all levels is vital to continuing our success. We promote work-life balance of our employees, we invest in our employees through high-quality benefits and various health and wellness initiatives, and we have created a healthy work environment in the locations we operate.
2224
|
|
Our Board has established three standing committees—Audit, Culture and Compensation and Nominating and Corporate Governance—each of which operates under a written charter that has been approved by our Board.
The current members of each of the Board committees are set forth in the following chart.
| | | | | | |
|
| |
| |
| Nominating and Corporate |
Name | | Audit | | Culture and Compensation | | Governance |
Timothy J. Flynn* |
| |
| Chair |
|
|
J. Kristofer Galashan* |
| |
| |
| X |
Robert E. Jordan* |
| Chair |
| X |
| |
Satish Malhotra | | | | | | |
Melissa Reiff |
| |
| |
| |
|
|
| ||||
Rajendra (“Raj”) Sisodia* |
| X |
| |
| Chair |
Jonathan D. Sokoloff* |
| |
| |
| |
Caryl Stern* |
| X |
| X |
| |
Wendi Sturgis* | | | | | | X |
* | Independent director |
AUDIT COMMITTEE
Our Audit Committee’s responsibilities include, but are not limited to:
● | appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm; |
● | discussing with our independent registered public accounting firm their independence from management; |
● | reviewing with our independent registered public accounting firm the scope and results of their audit; |
● | approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; |
● | overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC; |
● | reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls and compliance with legal and regulatory requirements; and |
● | establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters. |
The current members of the Audit Committee are Robert E. Jordan, Caryl Stern and Rajendra (“Raj”) Sisodia, with Mr. Jordan serving as Chair. Our Board of Directors has appointed Anthony Laday and Wendi Sturgis to serve on the Audit Committee upon the conclusion of the Annual Meeting, with Mr. Laday assuming the role of Chair of the committee. Our Board of Directors has affirmatively determined that each of Mr. Jordan, Mr. Laday, Ms. Stern, Ms. Sturgis and Mr. Sisodia meets the definition of “independent director” for purposes of serving on an audit committee under Rule 10A-3 and the NYSE rules. In addition, our Board of Directors has determined that Mr. Jordan and Mr. Laday each qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S K.
23
The Audit Committee met nine times during the fiscal year ended March 28, 2020.April 3, 2021.
25
CULTURE AND COMPENSATION COMMITTEE
The Culture and Compensation Committee is responsible for, among other matters:
● | reviewing and making recommendations to the Board regarding the compensation of our directors; |
● | reviewing and approving corporate goals and objectives with respect to the compensation of our Chief Executive Officer, evaluating our Chief Executive Officer’s performance in light of these goals and objectives and, based upon these evaluations, setting the Chief Executive Officer’s compensation (either alone or, if directed by the Board, in conjunction with a majority of the independent directors of the Board); |
● | overseeing an evaluation of the performance of our other executive officers and, after considering such evaluation, reviewing and setting or marking recommendations to the Board regarding the compensation of our other executive officers; |
● | administering our incentive and equity-based plans and arrangements and making grants thereunder; |
● | appointing and overseeing any compensation consultants; and |
● | preserving and enhancing our strong culture. |
The Culture and Compensation Committee consults with the Chief Executive Officer with respect to the compensation of executive officers other than the Chief Executive Officer. Under its charter, the Culture and Compensation Committee is permitted to delegate its authority to a subcommittee of the committee and has formed a Section 16 subcommittee. The members of our Culture and Compensation Committee are Robert E. Jordan, Caryl Stern, Walter Robb and Timothy J. Flynn, with Mr. Flynn serving as Chair. Our Board of Directors has appointed Ms. Otto to serve on the Culture and Compensation Committee and Ms. Stern to serve as Chair of the committee upon the conclusion of the Annual Meeting. Mr. Flynn, Mr. Jordan, Ms. Otto, and Ms. Stern and Mr. Flynn each qualifyqualifies as independent under the NYSE’s heightened independence standards for members of a compensation committee. Mr. Robb does not qualify as independent under NYSE rules.
The Culture and Compensation Committee met four times during the fiscal year ended March 28, 2020.April 3, 2021.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee is responsible for, among other matters:
● | identifying individuals qualified to become members of our Board of Directors, consistent with criteria approved by our Board of Directors; and |
● | developing and recommending to our Board of Directors a set of corporate governance guidelines and principles. |
Our Nominating and Corporate Governance Committee consists of J. Kristofer Galashan, Walter Robb, Rajendra (“Raj”) Sisodia and Wendi Sturgis, with Mr. Sisodia serving as Chair. Our Board of Directors has appointed Anthony Laday to serve on the Nominating and Corporate Governance Committee and Mr. Galashan to serve as Chair of the committee upon the conclusion of the Annual Meeting. Mr. Galashan, Mr. Laday, Mr. Sisodia and Ms. Sturgis are each independent under NYSE rules. Mr. Robb does not qualify as independent under NYSE rules.
The Nominating and Corporate Governance Committee met foursix times during the fiscal year ended March 28, 2020.April 3, 2021.
2426
|
|
Executive and Director Compensation
DIRECTOR COMPENSATION
Unless specifically set forth in this section captioned "Director Compensation," the tabular and other disclosure herein regarding director compensation (including, without limitation, the number of shares and exercise price for stock options related to periods prior to the initial public offering of our Common Stock (our "IPO")) give effect to the approximate 5.9:1 stock split that occurred in connection with our IPO.
Fiscal 20192020 Director Compensation Table
| | | | | | | | | | | | | | | | | |
|
| Fees Earned or |
| |
| | |
| Fees Earned or |
|
|
|
|
| |||
| | Paid in Cash | | Stock Awards | | Total | | Paid in Cash | | Stock Awards | | Total | | ||||
Name | | ($)1 | | ($)2,3 | ($) | | ($)1 | | ($)2,3 | | ($) | | |||||
Jonathan D. Sokoloff | | $ | 80,000 |
| 100,000 | | $ | 180,000 | | | $ 60,000 | | $100,000 | | $ | 160,000 | |
Timothy J. Flynn | | $ | 95,000 |
| 100,000 | | $ | 195,000 | | | $ 75,000 | | $100,000 | | $ | 175,000 | |
J. Kristofer Galashan | | $ | 80,000 |
| 100,000 | | $ | 180,000 | | | $ 60,000 | | $100,000 | | $ | 160,000 | |
Walter Robb | | $ | 80,000 |
| 100,000 | | $ | 180,000 | |||||||||
Walter Robb4 | | | $ 40,000 | | $100,000 | | $ | 140,000 | | ||||||||
Rajendra ("Raj") Sisodia | | $ | 95,000 |
| 100,000 | | $ | 195,000 | | | $ 75,000 | | $100,000 | | $ | 175,000 | |
Robert E. Jordan | | $ | 120,000 |
| 100,000 | | $ | 220,000 | | | $100,000 | | $100,000 | | $ | 200,000 | |
Caryl Stern | | $ | 80,000 |
| 100,000 | | $ | 180,000 | | | $ 60,000 | | $100,000 | | $ | 160,000 | |
Wendi Sturgis 4 | | $ | 47,253 | | 100,000 | | $ | 147,253 | |||||||||
Wendi Sturgis | | | $ 60,000 | | $100,000 | | $ | 160,000 | |
1 | Consists of amounts described below under "Narrative Disclosure to Director Compensation Table". |
2 | Represents the aggregate grant date fair value for restricted stock awards granted in fiscal |
3 | The following table sets forth the aggregate numbers of shares of restricted stock and stock options held by each of our non-employee directors on |
| | | | | |
|
| Aggregate Number |
|
|
|
| | of Shares of Restricted | | Aggregate Number | |
| | Stock | | of Stock Options | |
Name | | As of 04/03/21(#) | | As of 04/03/21(#) | |
Jonathan D. Sokoloff | | 42,834 | | 109,150 | |
Timothy J. Flynn | | 42,834 | | 109,150 | |
J. Kristofer Galashan | | 42,834 | | 109,149 | |
Walter Robb | | — | | — | |
Rajendra ("Raj") Sisodia | | 42,834 | | 122,752 | |
Robert E. Jordan | | 42,834 | | 122,752 | |
Caryl Stern | | 42,834 | | 94,691 | |
Wendi Sturgis | | 39,781 | | — | |
4 |
|
| | | | |
|
| Aggregate Number |
| |
| | of Shares of Restricted | | Aggregate Number |
| | Stock | | of Stock Options |
Name | | As of 03/28/20(#) | | As of 03/28/20(#) |
Jonathan D. Sokoloff | | 27,705 | | 109,150 |
Timothy J. Flynn | | 27,705 | | 109,150 |
J. Kristofer Galashan | | 27,705 | | 109,149 |
Walter Robb | | 27,705 | | 122,752 |
Rajendra ("Raj") Sisodia | | 27,705 | | 122,752 |
Robert E. Jordan | | 27,705 | | 122,752 |
Caryl Stern | | 27,705 | | 94,691 |
Wendi Sturgis | | 21,599 | | — |
2527
Narrative Disclosure to Director Compensation Table
Non-Employee Director Compensation Policy
In connection with our IPO, our Board of Directors adopted a compensation policy that is applicable to all of our non-employee directors. We revised the policy on October 27, 2014, March 28, 2017, March 28, 2018, on April 8, 2019 and again on April 8, 2019.6, 2021. Pursuant to the policy, each non-employee director receives an annual cash retainer of $80,000, payable quarterly. The chairperson of eachthe Audit Committee of the Board of Directors receives an additional annual cash retainer of $25,000 per year, the chairperson of the Culture and Compensation Committee of the Board of Directors receives an additional annual cash retainer of $20,000 per year, and the chairperson of the Nominating and Corporate Governance Committee of the Board of Directors receives an additional annual cash retainer of $15,000 per year. In addition, each director serving as a member of any Committee, except for the director serving as Chairperson of such Committee, receives an additional annual retainer of $5,000 per year. The Chairperson of the Board of Directors receives an additional annual cash retainer of $75,000. The Lead Director of the Board of Directors receives an additional annual cash retainer of $25,000 per year. In the case of the directors affiliated with LGP, such retainers are paid directly to LGP and not to the director individually. There are no fees paid for board or committee meeting attendance. All directors receive reimbursement for reasonable out-of-pocket expenses incurred in connection with meetings of our Board of Directors.
With respect to the fiscal year ended March 28, 2020, the directors received all fees due under the policy. On March 26, 2020, in light of the outbreak of COVID-19 and the associated impact on the Company’s business operations, each of the directors agreed to waivewaived the receipt of his or her annual and additional annual cash retainers for the quarter ending June 27, 2020, which were payable on April 1, 2020.
Pursuant to our non-employee director compensation policy each non-employee director receives an annual grant of an equity award of stock options, restricted shares or restricted stock units, as determined by our Board of Directors (pursuant to the policy in effect prior to 2018, such equity award was solely in the form of stock options), under the Amended and Restated 2013 Incentive Award Plan (described below) with. For grants made in the fiscal year ended April 3, 2021, awards had a grant date fair value of approximately $100,000.$100,000, and under the policy as amended on April 6, 2021, such grant date fair value of future awards shall be $130,000. Each non-employee director initially elected or appointed to our Board of Directors on a date other than the date of an annual meeting of shareholders will be granted a prorated portion of the annual award for the applicable year. If an equity award is in the form of stock options, the per-share exercise price of each stock option granted to a non-employee director will equal the fair market value of a share of our Common Stock on the date of grant. Each such equity award granted under the non-employee director compensation policy generally vests ratably in equal annual installments over three years,one year, subject to the non-employee director’s continued service through the vesting date, subject to acceleration immediately prior to the occurrence of a change in control.
On February 25, 2015, we adopted a non-employee director stock ownership policy, pursuant to whichand we amended and restated the policy on April 8, 2021. Under the policy, each non-employee director is required over time to hold a number of shares of Common Stock with a value, measured based on the fair market value of a share of our Common Stock on the date of measurement, equal to onethree times the annual cash compensation received for his or her first full year of service on our Board of Directors. For these purposes, shares include only vested shares of stock or stock options, and with respect to stock options, a number of shares with a value equal to the exercise price of the stock option is subtracted from the shares subject to the option. Compliance with the guidelines is required within five years of a director joining our Board of Directors or, if later, by February 25, 2020,April 8, 2026, the fifth anniversary of the date of adoption of the policy. Following the first date on which a non-employee director holds the minimum number of shares that meets the relevant equity threshold, such non-employee director will be deemed to continue to comply with the policy so long as such non-employee director continues to hold at least as many such shares, notwithstanding any decrease in the fair market value per share of our Common Stock or any increase in cash compensation following such date. As of March 28, 2020,April 3, 2021, all of our directors were in compliance with our non-employee director stock ownership policy.
William A. ("Kip") Tindell, III Employment Agreement
Until he retired as an executive officer and as our Chairman on August 28, 2019, Mr. Tindell served as both an executive officer and a director of the Company pursuant to an employment agreement entered into between the Company and him on May 6, 2016, effective as of July 1, 2016. Mr. Tindell did not receive any compensation in respect of his service as a director in fiscal 2019.
2628
The term of Mr. Tindell’s employment agreement expired on August 28, 2019, which was the date of the annual meeting of the Company’s shareholders in 2019. Mr. Tindell did not stand for re-election at the 2019 annual meeting and is no longer serving on our Board.
Mr. Tindell’s employment agreement provided that, during the term, Mr. Tindell would be Chairman of the Board, a director on the board of directors of Elfa and an employee of the Company. It provided for an annual base salary of $675,000 during fiscal 2016 and $350,000 thereafter during the term and for an annual cash performance-based bonus for fiscal 2016 with a target of 20% of his annual base salary and a maximum of 40% of his annual base salary. Mr. Tindell was not entitled to an annual cash bonus in fiscal 2017, 2018 or 2019. Pursuant to Mr. Tindell’s employment agreement, during the term, he was entitled to receive the same type and amount of equity-based compensation awards provided generally to the Company’s non-employee directors from time to time.
Mr. Tindell’s employment agreement provides for certain payments and benefits upon termination by us without cause, by Mr. Tindell for good reason or due to Mr. Tindell’s death or disability. No such payments or benefits were triggered in connection with Mr. Tindell’s retirement on August 28, 2019.
Mr. Tindell agreed that, during his employment with us and during the two-year period following the termination date, he will not directly or indirectly work for or engage or invest in any of our competitors or solicit, directly or through any third party, any of our employees or consultants.
EXECUTIVE COMPENSATION
The discussion below provides compensation information for our "named executive officers," consisting of our principal executive officer and our two other most highly compensated executive officers. Our named executive officers for fiscal 20192020 were:
● | Satish Malhotra, who has served as our President and Chief Executive Officer since February 1, 2021. |
● | Melissa Reiff, who |
● | Jeffrey Miller, who has served as our Chief Financial Officer since August 31, 2020. |
● | John Gehre, who has served as our Chief Merchandising Officer since October 20, 2020. |
● | Jodi Taylor, who |
Unless specifically set forth in this section captioned "Executive Compensation", the tabular and other disclosure herein regarding executive compensation (including, without limitation, the number of shares and exercise price for stock options related to periods prior to our IPO) give effect to the approximate 5.9:1 stock split that occurred in connection with our IPO.
27
Summary Compensation Table
The following table shows the compensation earned by our named executive officers during fiscal 20192020 and, for Mses. Reiff and Taylor, during 2018.
fiscal 2019.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| |
| |
| | | |
| Non equity |
| |
| |
|
|
|
|
|
|
| Non equity |
|
|
|
|
|
|
|
Name and | | | | | | | | | | incentive plan | | All other | | | | | | | | | | incentive plan | | All other | | | | | |
principal | | | | Salary | | Bonus | | Stock awards | | compensation | | compensation | | Total | | | | Salary | | Bonus | | Stock awards | | compensation | | compensation | | Total | |
position | | Fiscal year | | ($)1 | | ($)2 | | ($)3 | | ($)4 | | ($)5 | | ($) | | Fiscal year | | ($)1 | | ($)2 | | ($)3 | | ($)4 | | ($)5 | | ($) | |
Satish Malhotra | | 2020 | | 151,442 | | 1,000,000 | | 777,051 | | — | | 242,706 | | 2,171,199 | | ||||||||||||||
President and Chief Executive Officer | | | | | | | | | | | | | | | | ||||||||||||||
| | | | | | | | | | | | | | | | ||||||||||||||
Melissa Reiff |
| 2019 |
| 875,000 |
| 193,000 | | 1,312,494 |
| 19,000 |
| 4,313 |
| 2,403,807 | | 2020 | | 631,010 | | — | | 1,312,499 | | 1,750,000 | | 1,961,431 | | 5,654,940 | |
President and Chief Executive Officer |
| 2018 |
| 812,692 |
| | | 1,000,000 |
| 672,000 |
| 3,421 |
| 2,488,113 | |||||||||||||||
Former President and Chief Executive Officer | | 2019 | | 875,000 | | 193,000 | | 1,312,494 | | 19,000 | | 4,313 | | 2,403,807 | | ||||||||||||||
| | | | | | | | | | | | | | | | ||||||||||||||
Jeffrey Miller | | 2020 | | 309,006 | | — | | 149,997 | | 259,000 | | — | | 718,003 | | ||||||||||||||
Chief Financial Officer | | | | | | | | | | | | | | | | ||||||||||||||
| | | | | | | | | | | | | | | | ||||||||||||||
John Gehre | | 2020 | | 317,250 | | — | | 149,997 | | 150,523 | | — | | 617,770 | | ||||||||||||||
Chief Merchandising Officer | | | | | | | | | | | | | | | | ||||||||||||||
| | | | | | | | | | | | | | | | ||||||||||||||
Jodi Taylor |
| 2019 |
| 600,000 |
| 90,000 | | 419,993 |
| 7,000 |
| 4,313 |
| 1,121,306 | | 2020 | | 468,692 | | — | | 419,997 | | 900,000 | | 1,072,158 | | 2,860,847 | |
Chief Financial Officer, Chief Administrative Officer and Secretary |
| 2018 |
| 537,692 |
| | | 367,500 |
| 304,000 |
| 2,748 |
| 1,211,940 | |||||||||||||||
Melissa Collins |
| | | | | | | | | | | | | | |||||||||||||||
Chief Marketing Officer |
| 2019 | | 338,462 | | | | 124,993 | | 90,771 | | 3,288 | | 557,514 | |||||||||||||||
Former Chief Financial Officer, Chief Administrative Officer and Secretary | | 2019 | | 600,000 | | 90,000 | | 419,993 | | 7,000 | | 4,313 | | 1,121,306 | |
1 | As described further under "Executive Compensation—Narrative Disclosure to Summary Compensation Table—Base Salary" below, effective March 30, 2020, the named executive officers’ base salaries were |
29
2 | The amount |
| column for Mr. Malhotra reflects a signing bonus paid in connection with his commencement of employment with us, as described further under "Executive Compensation—Narrative Disclosure to Summary Compensation Table—Chief Executive Officer Signing Bonus”. The amounts in this column for Mses. Reiff and Taylor reflect discretionary bonuses awarded to Mses. Reiff and Taylor, as described further under "Executive Compensation—Narrative Disclosure to Summary Compensation Table—Annual Cash Incentives" below. As described in more detail in that section, on March 26, 2020, the Company and Mses. Reiff and Taylor agreed to defer receipt of these discretionary bonuses |
3 | For |
4 | The amounts in this column reflect the annual cash awards earned by Mses. Reiff, Taylor and |
5 | The amounts in this column for Mr. Malhotra reflect relocation benefits paid to Mr. Malhotra related to his relocation to the |
2830
|
|
Narrative Disclosure to Summary Compensation Table
Elements of Compensation
In fiscal 2019,2020, we compensated our named executive officers through a combination of base salary, cash incentive opportunities, and other benefits as described below. Our named executive officers also were granted time-based and performance-based restricted shares and continued to hold stock options, time-based restricted shares, and performance-based restricted shares granted in previous years.
Base Salary
The base salaries for Mses. Reiff and Taylorour named executive officers were determined pursuant to negotiation, as set forth in employment agreements, described below. The base salary of Ms. Collins was set by the Culture and Compensation Committee, based on recommendations by Ms. Reiff.
Our named executive officers, except for Mses. Reiff and Taylor, received raises in connection with the negotiation of their new employment agreements in fiscal 2018.2020.
In light of the outbreak of COVID-19 and the associated impact on our business operations, the Board approved the reduction of the base salaries of each of the named executive officers, effective March 30, 2020. Ms. Reiff’s base salary was reduced by 45%, from $875,000 to $481,250. Ms. Taylor’s base salary was reduced by 33% from $600,000 to $402,000. Ms. Collins’Mr. Miller’s base salary was reduced by 33% from $375,000 to $251,250. Mr. Gehre’s salary was reduced by 33% from $350,000 to $234,500. The Company has entered into amended employment agreements with Mses. ReiffOn August 26, 2020, the Culture and Taylor, under whichCompensation Committee reinstated the base salaries for each officer has agreed to the above reduction, which will continue to apply until determined otherwise by the Board.our of named executive officers effective October 4, 2020.
Annual Cash Incentives
In fiscal 2019, Ms. Reiff and Ms. Taylor were eligible to receive annual performance-based cash bonuses based on percentages of base salary under the Amended and Restated 2013 Incentive Award Plan. The bonuses were determined using a performance grid based on our total consolidated annual sales, consolidated adjusted annual EBITDA and comparable store sales.
For fiscal 2019, the minimum bonus level under the Amended and Restated 2013 Incentive Award Plan for Ms. Reiff and Ms. Taylor was set at 0% of annual base salary, and the maximum level was set at 200% of annual base salary for Ms. Reiff and 150% for Ms. Taylor. The target level was established at 130% of annual base salary for Ms. Reiff and 85% of annual base salary for Ms. Taylor. With respect to such target levels for fiscal 2019, 55% was based upon consolidated adjusted annual EBITDA, 10% on total consolidated annual sales and 35% on comparable store sales. The Board approved a scale to determine the amount of the bonuses to be paid based on achievement of the performance targets, including, the achievement of a comparable store sales target of 3.5%.
Based on performance prior to the onset of the COVID-19 pandemic, the Company determined that it would have achieved comparable store sales of approximately 3.6% for the fiscal year ended March 28, 2020 and, as a result, that Mses. Reiff and Taylor would have earned annual bonuses of approximately $424,000 and $194,000, respectively. However, due to the outbreak of the COVID-19 pandemic and the associated impact on the Company’s business operations, including certain store closures that occurred during March 2020, the Company achieved comparable store sales of approximately 2.9% for the fiscal year ended March 28, 2020 and, as a result, that Mses. Reiff and Taylor would actually earn 2019 bonuses of $19,000 and $7,000, respectively. The amounts of these earned bonuses are shown in the Summary Compensation Table above in the "Non equity incentive plan compensation" column.
29
In light of the unforeseeable and extraordinary nature of the COVID-19 pandemic, the Board determined to grant an additional discretionary bonus to each of Mses. Reiff and Taylor in an amount equal to the difference between (1) 50% of the bonus that each executive was projected to have earned but for the onset of the COVID-19 pandemic and (2) the bonus actually earned by each executive applying the original performance
31
targets. These discretionary bonus amounts were $193,000 for Ms. Reiff and $90,000 for Ms. Taylor and are shown in the Summary Compensation Table above in the "Bonus" column.
Notwithstanding the determination of the bonus amounts, on March 26, 2020, the Culture and Compensation Committee and the Board determined to defer the payment of such bonuses, along with (1) any annual cash bonus for the fiscal year ended March 28, 2020 and (2) any then-unpaid quarterly cash bonus for such fiscal year or for any future fiscal quarter in the fiscal year ending April 3, 2021, that each named executive officer would otherwise be deemed eligible to receive based on the achievement of previously-established performance targets. Mses. Reiff and Taylor have amended their employment contracts to temporarily defer the payment of any annual cash bonus for the fiscal year ended March 28, 2020 until such later date as either the Culture and Compensation Committee or the Board determines. On August 26, 2020, the Culture and Compensation Committee determined that all deferred bonuses would be paid in October 2020.
In fiscal 2020, Ms. Reiff and Ms. Taylor were eligible to receive annual performance-based cash bonuses and in connection with Mr. Miller’s appointment as Chief Financial Officer, the Culture and Compensation Committee determined that Mr. Miller would also be eligible to receive an annual performance-based cash bonus in fiscal 2020, in each case, based on percentages of base salary under the Amended and Restated 2013 Incentive Award Plan. The bonuses were determined using a performance grid based on our total annual sales, consolidated adjusted annual EBITDA and the Company’s response to the COVID-19 pandemic.
For fiscal 2020, the minimum bonus level under the Amended and Restated 2013 Incentive Award Plan for Ms. Reiff, Ms. Taylor and Mr. Miller was set at 0% of annual base salary, and the maximum level was set at 200% of annual base salary for Ms. Reiff, 150% for Ms. Taylor and 75% for Miller. The target level was established at 130% of annual base salary for Ms. Reiff, 85% of annual base salary for Ms. Taylor and 40% of annual base salary for Mr. Miller. With respect to such target levels for fiscal 2020, 50% was based upon consolidated adjusted annual EBITDA, 25% on total annual sales and 25% on the Company’s response to the COVID-19 pandemic. The amounts of these earned bonuses are shown in the Summary Compensation Table above in the "Non equity incentive plan compensation" column.
Chief Executive Officer Signing Bonus.
Pursuant to his employee agreement, Mr. Malhotra was paid a lump sum cash signing bonus of $1,000,000. If, prior to February 1, 2023, Mr. Malhotra’s employment is terminated by us for Cause or by him other than for Good Reason (as each such term is defined in his employment agreement), Mr. Malhotra is required repay to the Company the net-after tax amount of the signing bonus within thirty days following such termination of employment.
Quarterly Cash Incentives
Ms. Collins participatesDuring the 2020 fiscal year, Mr. Gehre participated in our Executive & Company Leadership Team Quarterly Bonus Plan, which provides quarterly, cash incentive-based bonuses to employees who are part of our Executive Leadership Team and Company Leadership Team. To be eligible for a bonus, the employee must be employed for the full fiscal quarter with respect to which the bonus is paid and on the date of the bonus payment. Bonuses are paid during the regularly scheduled payroll cycle after each fiscal quarter’s earnings are publicly released. The amount of each bonus is calculated as a percentage of our adjusted EBITDA for the fiscal quarter. The percentage is communicated to each participant individually. The plan is a discretionary plan and can be modified or terminated by the Company at any time. Ms. CollinsMr. Gehre was paid $10,644, $22,425,$4,463, $44,083, $42,445 and $22,008$59,532 for each of the first, second, third and thirdfourth fiscal quartersquarter of the fiscal year ended March 28, 2020,April 3, 2021, respectively. For the fourth fiscal quarter, Ms. Collins was awarded a bonus
32
Long Term Equity Incentives
Prior to our IPO, we maintained an equity incentive plan, the 2012 Stock Option Plan of TCS Holdings, Inc. (the "2012 Stock Option Plan"), pursuant to which, on June 20, 2012, we granted stock options to Ms. Taylor and Ms. Reiff. Like the stock options granted under the 2012 Stock Option Plan to our other employees, such stock options were originally scheduled to vest in equal installments over five years from the date of grant, but the vesting of all the stock options granted under the 2012 Stock Option Plan was fully accelerated as of the consummation of our IPO. As of our IPO, no further stock options have been or will be granted under the 2012 Stock Option Plan.
Upon our IPO, we adopted, and our shareholders approved, our 2013 Incentive Award Plan, which permits the granting of stock-based compensation awards and cash-based performance bonus awards. In 2017, our Board of Directors adopted, and our shareholders approved, our Amended and Restated 2013 Incentive Award Plan. The Amended and Restated 2013 Incentive Award Plan provides for the grant of, among other awards, stock options, stock appreciation rights, or SARs (as defined below), restricted stock awards, restricted stock unit awards, deferred stock awards, deferred stock unit awards, dividend equivalent awards, stock payment awards, performance awards and other stock-based awards.
In connection with our IPO, we granted stock options to certain of our employees, including the stock options granted to the named executive officers shown in the Fiscal 20182020 Outstanding Equity Awards at Fiscal Year-End table below. All such stock options were immediately vested and exercisable as of the consummation of our IPO. We have not granted any other stock options to our named executive officers.
30
On July 1, 2016, in connection with the negotiation of new employment agreements for the named executive officers, we granted, under our Amended and Restated 2013 Incentive Award Plan, 46,125 time-based restricted shares to Ms. Reiff and 11,526 time-based restricted shares to Ms. Taylor, each vesting in equal annual installments on April 1, 2017, April 1, 2018 and April 1, 2019, subject only to continued employment. In addition, we granted 179,889 performance-based restricted shares to Ms. Reiff and 44,954 performance-based restricted shares to Ms. Taylor. Such numbers of performance-based restricted shares represent the maximum number of shares, of which 75% could have performance-vested based on the Company’s performance with respect to certain consolidated adjusted annual EBITDA goals in fiscal 2016 and 25% could have performance-vested based on the Company’s performance with respect to certain total consolidated annual sales goals in fiscal 2016. Such figures represent 130% of the target amounts for such awards. Based on fiscal 2016 performance, Ms. Reiff performance-vested in 62,269 such restricted shares and Ms. Taylor performance-vested in 15,561 such restricted shares. Of such shares that have performance-vested, one-third time-vested on April 1, 2018, one-third time-vested on April 1, 2019 and the remainder will time-vest on April 1, 2020, subject to continued employment.
On June 1, 2018, we granted, under our Amended and Restated 2013 Incentive Award Plan, 32,552 time-based restricted shares to Ms. Reiff and 11,963 time-based restricted shares to Ms. Taylor, each vesting in equal annual installments on June 1, 2019, June 1, 2020 and June 1, 2021, subject only to continued employment. In addition, we granted 126,952 performance-based restricted shares to Ms. Reiff and 46,654 performance-based restricted shares to Ms. Taylor. Such numbers of performance-based restricted shares represent the maximum number of shares, of which 60% could have performance-vested based on the Company’s performance with respect to certain consolidated adjusted annual EBITDA goals, 26.7% could have performance-vested based on total consolidated annual sales and 13.3% could have performance-vested based on achievement of strategic initiatives. Such figures represent 130% of the target amounts for such awards. Based on fiscal 2018 performance, Ms. Reiff performance-vested in 59,473 such restricted shares, and Ms. Taylor performance-vested in 21,856 such restricted shares. Such shares that have performance-vested will time-vest in equal annual installments on June 1, 2019, June 1, 2020 and June 1, 2021, subject to continued employment.
On June 1, 2019, we granted, under our Amended and Restated 2013 Incentive Award Plan, 46,675 time-based restricted shares to Ms. Reiff and 14,936 time-based restricted shares to Ms. Taylor, and 4,445 time-based restricted shares to Ms. Collins, each vesting in
33
equal annual installments on June 1, 2020, June 1, 2021 and June 1, 2022, subject only to continued employment. In addition, we granted 182,031 performance-based restricted shares to Ms. Reiff and 58,249 performance-based restricted shares to Ms. Taylor and 17,335 performance-based restricted shares to Ms. Collins.Taylor. Such numbers of performance-based restricted shares represent the maximum number of shares, of which 53.3% could have performance-vested based on the Company’s performance with respect to certain consolidated adjusted annual EBITDA goals, 26.7% could have performance-vested based on comparable store sales and 20% could have performance-vested based on achievement of strategic initiatives. Such figures represent 130% of the target amounts for such awards.
Based on our performance prior to the onset of the COVID-19 pandemic and absent the impact of the pandemic, we determined that the Company would have achieved comparable store sales of approximately 3.6% for the fiscal year ended March 28, 2020 and, as a result, the percentage of performance-based restricted shares earned as of June 1, 2020 would have been 49.2% (the projected vested percentage). Due to the outbreak of the COVID-19 pandemic and the associated impact on the Company’s business operations, including certain store closures that occurred during March 2020, the Company determined it would achieve comparable store sales of approximately 2.9% for the fiscal year ended March 28, 2020. As a result, the percentage of performance-based restricted shares earned as of June 1, 2020 will be approximately 35.7% (the actual vested percentage).
In light of the unforeseeable and extraordinary nature of the COVID-19 pandemic, the Board determined that the number of performance-based restricted shares that vest on June 1, 2020 based on performance in fiscal 2019 should be increased by a number equal to the product of (i) the number of shares subject to the grant and (ii) the excess of (a) the projected vested percentage over (b) the actual vested percentage. Applying this
31
adjustment, the number of performance-based restricted shares that performance-vested for the fiscal year ended March 28, 2020 is 68,891 for Ms. Reiff and 22,045 for Ms. Taylor and 6,560 for Ms. Collins.Taylor. Such shares that have performance-vested will time-vest in equal annual installments on June 1, 2020, June 1, 2021 and June 1, 2022, subject to continued employment.
On June 1, 2020, we granted, under our Amended and Restated 2013 Incentive Award Plan, 129,951 time-based restricted shares to Ms. Reiff, 41,584 time-based restricted shares to Ms. Taylor and 14,851 time-based restricted shares to each of Messrs. Miller and Gehre, each vesting in equal annual installments on June 1, 2021, June 1, 2022 and June 1, 2023, subject only to continued employment. In addition, we granted 394,182 performance-based restricted shares to Ms. Reiff, 126,137 performance-based restricted shares to Ms. Taylor and 45,048 performance-based restricted shares to each of Messrs. Miller and Gehre. Such numbers of performance-based restricted shares represent the maximum number of shares, of which 42.86% could have performance-vested based on the Company’s performance with respect to certain consolidated adjusted annual EBITDA goals, 28.57% could have performance-vested based on total annual sales and 28.57% could have performance-vested based on achievement of goals that relate to the Company’s response to the COVID-19 pandemic. Such figures represent 130% of the target amounts for such awards.
On December 21, 2020, we granted Mr. Malhotra 50,100 time-based restricted shares which will vest as to one-third of the restricted shares on each of the first through third anniversaries of February 1, 2021, subject to Mr. Malhotra’s continued employment through each applicable vesting date.
On January 23, 2021, the Culture and Compensation Committee approved that all outstanding stock options held by Mses. Reiff and Taylor upon their respective cessations from service to the Company, on March 1, 2021 for Ms. Taylor and on the date of the 2021 annual meeting of shareholders, for Ms. Reiff, would expire on the tenth anniversary of the date of grant of each stock option.
All equity awards held by the named executive officers as of March 28, 2020 are shown in the Fiscal 20192020 Outstanding Equity Awards at Fiscal Year-End Table below.
Section 162(m) of the Code imposes a $1 million limit on the amount that a public company may deduct for compensation paid to covered employees who are employed as of the end of the year. Prior to the U.S. Tax Cuts and Jobs Act of 2017 (the "Tax Reform Act"), compensation that qualified as "performance-based" under Section 162(m) of the Code was exempt from this $1 million deduction limitation. As part of the Tax
34
Reform Act, the ability to rely on the "performance-based" exemption was, with certain limited exceptions, eliminated. Although we maintain compensation plans that originally were intended to permit the payment of compensation deductible under Section 162(m) of the Code, we may no longer be able to take a deduction for any compensation in excess of $1 million that is paid to a covered employee, subject to the Tax Reform Act’s limited transition relief rules.
Jodi Taylor
2020
468,692
—
419,997
900,000
1,072,158
2,860,847
Nonqualified DeferredFormer Chief Financial Officer, Chief Administrative Officer and Secretary
2019
600,000
90,000
419,993
7,000
4,313
1,121,306
1 | As described further under "Executive Compensation—Narrative Disclosure to Summary Compensation
|
29
2 | The amount in the column for Mr. Malhotra reflects a signing bonus paid in connection with his commencement of employment with us, as described further under "Executive Compensation—Narrative Disclosure to Summary Compensation Table—Chief Executive Officer Signing Bonus”. The amounts in this column for Mses. Reiff and Taylor reflect discretionary bonuses awarded to Mses. Reiff and Taylor, as described further under "Executive Compensation—Narrative Disclosure to Summary Compensation Table—Annual Cash Incentives" below. As described in more detail in that section, on March 26, 2020, the Company and Mses. Reiff and Taylor agreed to defer receipt of these discretionary bonuses and were paid in October 2020. |
3 | For fiscal 2020, the amount in the column reflects the aggregate grant date fair value of (i) time-based restricted stock awards granted in fiscal 2020, which equaled $777,051 for Mr. Malhotra, $393,752 for Ms. Reiff, $44,998 for Messrs. Miller and Gehre and $125,999 for Ms. Taylor, and (ii) performance-based restricted stock awards, which, based upon 100% achievement of performance targets that represented the probable outcome of the performance targets, equaled $918,748 for Ms. Reiff, $104,999 for Messrs. Miller and Gehre and $293,998 for Ms. Taylor. At maximum achievement of the performance targets, the values of the performance-based restricted stock awards would have been $1,194,371 for Ms. Reiff, $136,495 for Messrs. Miller and Gehre and $382,195 for Ms. Taylor. Mr. Malhotra was not granted any performance-based restricted stock awards during fiscal 2020. See Note 7. Stock-based compensation of the Consolidated Financial Statements in our Annual Report on Form 10-K for Fiscal 2020 for the assumptions used in valuing such restricted stock awards. See "Executive Compensation—Narrative Disclosure to Summary Compensation Table—Long Term Equity Incentives" below for a description of these awards. |
4 | The amounts in this column reflect the annual cash awards earned by Mses. Reiff, Taylor and Mr. Miller under our annual bonus programs for fiscal 2020 performance and, for Mses. Reiff and Taylor, for fiscal 2019 performance, as described further under "Executive Compensation—Narrative Disclosure to Summary Compensation Table—Annual Cash Incentives" below. For Mr. Gehre, the amounts in this column also reflect cash awards earned under our quarterly bonus program for the fiscal year ended April 3, 2021, as described further under "Executive Compensation—Narrative Disclosure to Summary Compensation Table—Quarterly Cash Incentives" below. As described in more detail in “Executive Compensation—Narrative Disclosure to Summary Compensation Table” below, on March 26, 2020, the Culture and Compensation Committee and the Board determined to defer the payment to the named executive officers
|
5 | The amounts in this column for Mr. Malhotra reflect relocation benefits
|
30
Narrative Disclosure to Summary Compensation Table
Elements of Compensation
In fiscal 2020, we compensated our named executive officers through a combination of base salary, cash incentive opportunities, and other benefits as described below. Our named executive officers also were granted time-based and performance-based restricted shares and continued to hold stock options, time-based restricted shares, and performance-based restricted shares granted in previous years.
Base Salary
The base salaries for our named executive officers were determined pursuant to negotiation, as set forth in employment agreements, described below. Our named executive officers, except for Mses. Reiff and Taylor, received raises in connection with the negotiation of their new employment agreements in fiscal 2020.
In light of the outbreak of COVID-19 and the associated impact on our business operations, the Board approved the reduction of the base salaries of each of the named executive officers, effective March 30, 2020. Ms. Reiff’s base salary was reduced by 45%, from $875,000 to $481,250. Ms. Taylor’s base salary was reduced by 33% from $600,000 to $402,000. Mr. Miller’s base salary was reduced by 33% from $375,000 to $251,250. Mr. Gehre’s salary was reduced by 33% from $350,000 to $234,500. On August 26, 2020, the Culture and Compensation Committee reinstated the base salaries for each our of named executive officers effective October 4, 2020.
Annual Cash Incentives
In fiscal 2019, Ms. Reiff and Ms. Taylor were eligible to receive annual performance-based cash bonuses based on percentages of base salary under the Amended and Restated 2013 Incentive Award Plan. The bonuses were determined using a performance grid based on our total consolidated annual sales, consolidated adjusted annual EBITDA and comparable store sales.
For fiscal 2019, the minimum bonus level under the Amended and Restated 2013 Incentive Award Plan for Ms. Reiff and Ms. Taylor was set at 0% of annual base salary, and the maximum level was set at 200% of annual base salary for Ms. Reiff and 150% for Ms. Taylor. The target level was established at 130% of annual base salary for Ms. Reiff and 85% of annual base salary for Ms. Taylor. With respect to such target levels for fiscal 2019, 55% was based upon consolidated adjusted annual EBITDA, 10% on total consolidated annual sales and 35% on comparable store sales. The Board approved a scale to determine the amount of the bonuses to be paid based on achievement of the performance targets, including, the achievement of a comparable store sales target of 3.5%.
Based on performance prior to the onset of the COVID-19 pandemic, the Company determined that it would have achieved comparable store sales of approximately 3.6% for the fiscal year ended March 28, 2020 and, as a result, that Mses. Reiff and Taylor would have earned annual bonuses of approximately $424,000 and $194,000, respectively. However, due to the outbreak of the COVID-19 pandemic and the associated impact on the Company’s business operations, including certain store closures that occurred during March 2020, the Company achieved comparable store sales of approximately 2.9% for the fiscal year ended March 28, 2020 and, as a result, Mses. Reiff and Taylor would actually earn 2019 bonuses of $19,000 and $7,000, respectively. The amounts of these earned bonuses are shown in the Summary Compensation Table above in the "Non equity incentive plan compensation" column.
In light of the unforeseeable and extraordinary nature of the COVID-19 pandemic, the Board determined to grant an additional discretionary bonus to each of Mses. Reiff and Taylor in an amount equal to the difference between (1) 50% of the bonus that each executive was projected to have earned but for the onset of the COVID-19 pandemic and (2) the bonus actually earned by each executive applying the original performance
31
targets. These discretionary bonus amounts were $193,000 for Ms. Reiff and $90,000 for Ms. Taylor and are shown in the Summary Compensation Table above in the "Bonus" column.
Notwithstanding the determination of the bonus amounts, on March 26, 2020, the Culture and Compensation Committee and the Board determined to defer the payment of such bonuses, along with (1) any annual cash bonus for the fiscal year ended March 28, 2020 and (2) any then-unpaid quarterly cash bonus for such fiscal year or for any future fiscal quarter in the fiscal year ending April 3, 2021, that each named executive officer would otherwise be deemed eligible to receive based on the achievement of previously-established performance targets. Mses. Reiff and Taylor amended their employment contracts to temporarily defer the payment of any annual cash bonus for the fiscal year ended March 28, 2020 until such later date as either the Culture and Compensation Committee or the Board determines. On August 26, 2020, the Culture and Compensation Committee determined that all deferred bonuses would be paid in October 2020.
In fiscal 2020, Ms. Reiff and Ms. Taylor were eligible to receive annual performance-based cash bonuses and in connection with Mr. Miller’s appointment as Chief Financial Officer, the Culture and Compensation Committee determined that Mr. Miller would also be eligible to receive an annual performance-based cash bonus in fiscal 2020, in each case, based on percentages of base salary under the Amended and Restated 2013 Incentive Award Plan. The bonuses were determined using a performance grid based on our total annual sales, consolidated adjusted annual EBITDA and the Company’s response to the COVID-19 pandemic.
For fiscal 2020, the minimum bonus level under the Amended and Restated 2013 Incentive Award Plan for Ms. Reiff, Ms. Taylor and Mr. Miller was set at 0% of annual base salary, and the maximum level was set at 200% of annual base salary for Ms. Reiff, 150% for Ms. Taylor and 75% for Miller. The target level was established at 130% of annual base salary for Ms. Reiff, 85% of annual base salary for Ms. Taylor and 40% of annual base salary for Mr. Miller. With respect to such target levels for fiscal 2020, 50% was based upon consolidated adjusted annual EBITDA, 25% on total annual sales and 25% on the Company’s response to the COVID-19 pandemic. The amounts of these earned bonuses are shown in the Summary Compensation Table above in the "Non equity incentive plan compensation" column.
Chief Executive Officer Signing Bonus.
Pursuant to his employee agreement, Mr. Malhotra was paid a lump sum cash signing bonus of $1,000,000. If, prior to February 1, 2023, Mr. Malhotra’s employment is terminated by us for Cause or by him other than for Good Reason (as each such term is defined in his employment agreement), Mr. Malhotra is required repay to the Company the net-after tax amount of the signing bonus within thirty days following such termination of employment.
Quarterly Cash Incentives
During the 2020 fiscal year, Mr. Gehre participated in our Executive & Company Leadership Team Quarterly Bonus Plan, which provides quarterly, cash incentive-based bonuses to employees who are part of our Executive Leadership Team and Company Leadership Team. To be eligible for a bonus, the employee must be employed for the full fiscal quarter with respect to which the bonus is paid and on the date of the bonus payment. Bonuses are paid during the regularly scheduled payroll cycle after each fiscal quarter’s earnings are publicly released. The amount of each bonus is calculated as a percentage of our adjusted EBITDA for the fiscal quarter. The percentage is communicated to each participant individually. The plan is a discretionary plan and can be modified or terminated by the Company at any time. Mr. Gehre was paid $4,463, $44,083, $42,445 and $59,532 for each of the first, second, third and fourth fiscal quarter of the fiscal year ended April 3, 2021, respectively.
32
Long Term Equity Incentives
Prior to our IPO, we maintained an equity incentive plan, the 2012 Stock Option Plan of TCS Holdings, Inc. (the "2012 Stock Option Plan"), pursuant to which, on June 20, 2012, we granted stock options to Ms. Taylor and Ms. Reiff. Like the stock options granted under the 2012 Stock Option Plan to our other employees, such stock options were originally scheduled to vest in equal installments over five years from the date of grant, but the vesting of all the stock options granted under the 2012 Stock Option Plan was fully accelerated as of the consummation of our IPO. As of our IPO, no further stock options have been or will be granted under the 2012 Stock Option Plan.
Upon our IPO, we adopted, and our shareholders approved, our 2013 Incentive Award Plan, which permits the granting of stock-based compensation awards and cash-based performance bonus awards. In 2017, our Board of Directors adopted, and our shareholders approved, our Amended and Restated 2013 Incentive Award Plan. The Amended and Restated 2013 Incentive Award Plan provides for the grant of, among other awards, stock options, stock appreciation rights, or SARs (as defined below), restricted stock awards, restricted stock unit awards, deferred stock awards, deferred stock unit awards, dividend equivalent awards, stock payment awards, performance awards and other stock-based awards.
In connection with our IPO, we granted stock options to certain of our employees, including the stock options granted to the named executive officers shown in the Fiscal 2020 Outstanding Equity Awards at Fiscal Year-End table below. All such stock options were immediately vested and exercisable as of the consummation of our IPO. We have not granted any other stock options to our named executive officers.
On July 1, 2016, in connection with the negotiation of new employment agreements for the named executive officers, we granted, under our Amended and Restated 2013 Incentive Award Plan, 46,125 time-based restricted shares to Ms. Reiff and 11,526 time-based restricted shares to Ms. Taylor, each vesting in equal annual installments on April 1, 2017, April 1, 2018 and April 1, 2019, subject only to continued employment. In addition, we granted 179,889 performance-based restricted shares to Ms. Reiff and 44,954 performance-based restricted shares to Ms. Taylor. Such numbers of performance-based restricted shares represent the maximum number of shares, of which 75% could have performance-vested based on the Company’s performance with respect to certain consolidated adjusted annual EBITDA goals in fiscal 2016 and 25% could have performance-vested based on the Company’s performance with respect to certain total consolidated annual sales goals in fiscal 2016. Such figures represent 130% of the target amounts for such awards. Based on fiscal 2016 performance, Ms. Reiff performance-vested in 62,269 such restricted shares and Ms. Taylor performance-vested in 15,561 such restricted shares. Of such shares that have performance-vested, one-third time-vested on April 1, 2018, one-third time-vested on April 1, 2019 and the remainder will time-vest on April 1, 2020, subject to continued employment.
On June 1, 2018, we granted, under our Amended and Restated 2013 Incentive Award Plan, 32,552 time-based restricted shares to Ms. Reiff and 11,963 time-based restricted shares to Ms. Taylor, each vesting in equal annual installments on June 1, 2019, June 1, 2020 and June 1, 2021, subject only to continued employment. In addition, we granted 126,952 performance-based restricted shares to Ms. Reiff and 46,654 performance-based restricted shares to Ms. Taylor. Such numbers of performance-based restricted shares represent the maximum number of shares, of which 60% could have performance-vested based on the Company’s performance with respect to certain consolidated adjusted annual EBITDA goals, 26.7% could have performance-vested based on total consolidated annual sales and 13.3% could have performance-vested based on achievement of strategic initiatives. Such figures represent 130% of the target amounts for such awards. Based on fiscal 2018 performance, Ms. Reiff performance-vested in 59,473 such restricted shares, and Ms. Taylor performance-vested in 21,856 such restricted shares. Such shares that have performance-vested will time-vest in equal annual installments on June 1, 2019, June 1, 2020 and June 1, 2021, subject to continued employment.
On June 1, 2019, we granted, under our Amended and Restated 2013 Incentive Award Plan, 46,675 time-based restricted shares to Ms. Reiff and 14,936 time-based restricted shares to Ms. Taylor, each vesting in
33
equal annual installments on June 1, 2020, June 1, 2021 and June 1, 2022, subject only to continued employment. In addition, we granted 182,031 performance-based restricted shares to Ms. Reiff and 58,249 performance-based restricted shares to Ms. Taylor. Such numbers of performance-based restricted shares represent the maximum number of shares, of which 53.3% could have performance-vested based on the Company’s performance with respect to certain consolidated adjusted annual EBITDA goals, 26.7% could have performance-vested based on comparable store sales and 20% could have performance-vested based on achievement of strategic initiatives. Such figures represent 130% of the target amounts for such awards.
Based on our performance prior to the onset of the COVID-19 pandemic and absent the impact of the pandemic, we determined that the Company would have achieved comparable store sales of approximately 3.6% for the fiscal year ended March 28, 2020 and, as a result, the percentage of performance-based restricted shares earned as of June 1, 2020 would have been 49.2% (the projected vested percentage). Due to the outbreak of the COVID-19 pandemic and the associated impact on the Company’s business operations, including certain store closures that occurred during March 2020, the Company determined it would achieve comparable store sales of approximately 2.9% for the fiscal year ended March 28, 2020. As a result, the percentage of performance-based restricted shares earned as of June 1, 2020 will be approximately 35.7% (the actual vested percentage). In light of the unforeseeable and extraordinary nature of the COVID-19 pandemic, the Board determined that the number of performance-based restricted shares that vest on June 1, 2020 based on performance in fiscal 2019 should be increased by a number equal to the product of (i) the number of shares subject to the grant and (ii) the excess of (a) the projected vested percentage over (b) the actual vested percentage. Applying this adjustment, the number of performance-based restricted shares that performance-vested for the fiscal year ended March 28, 2020 is 68,891 for Ms. Reiff and 22,045 for Ms. Taylor. Such shares that have performance-vested will time-vest in equal annual installments on June 1, 2020, June 1, 2021 and June 1, 2022, subject to continued employment.
On June 1, 2020, we granted, under our Amended and Restated 2013 Incentive Award Plan, 129,951 time-based restricted shares to Ms. Reiff, 41,584 time-based restricted shares to Ms. Taylor and 14,851 time-based restricted shares to each of Messrs. Miller and Gehre, each vesting in equal annual installments on June 1, 2021, June 1, 2022 and June 1, 2023, subject only to continued employment. In addition, we granted 394,182 performance-based restricted shares to Ms. Reiff, 126,137 performance-based restricted shares to Ms. Taylor and 45,048 performance-based restricted shares to each of Messrs. Miller and Gehre. Such numbers of performance-based restricted shares represent the maximum number of shares, of which 42.86% could have performance-vested based on the Company’s performance with respect to certain consolidated adjusted annual EBITDA goals, 28.57% could have performance-vested based on total annual sales and 28.57% could have performance-vested based on achievement of goals that relate to the Company’s response to the COVID-19 pandemic. Such figures represent 130% of the target amounts for such awards.
On December 21, 2020, we granted Mr. Malhotra 50,100 time-based restricted shares which will vest as to one-third of the restricted shares on each of the first through third anniversaries of February 1, 2021, subject to Mr. Malhotra’s continued employment through each applicable vesting date.
On January 23, 2021, the Culture and Compensation Committee approved that all outstanding stock options held by Mses. Reiff and Taylor upon their respective cessations from service to the Company, on March 1, 2021 for Ms. Taylor and on the date of the 2021 annual meeting of shareholders, for Ms. Reiff, would expire on the tenth anniversary of the date of grant of each stock option.
All equity awards held by the named executive officers as of March 28, 2020 are shown in the Fiscal 2020 Outstanding Equity Awards at Fiscal Year-End Table below.
Section 162(m) of the Code imposes a $1 million limit on the amount that a public company may deduct for compensation paid to covered employees who are employed as of the end of the year. Prior to the U.S. Tax Cuts and Jobs Act of 2017 (the "Tax Reform Act"), compensation that qualified as "performance-based" under Section 162(m) of the Code was exempt from this $1 million deduction limitation. As part of the Tax
34
Reform Act, the ability to rely on the "performance-based" exemption was, with certain limited exceptions, eliminated. Although we maintain compensation plans that originally were intended to permit the payment of compensation deductible under Section 162(m) of the Code, we may no longer be able to take a deduction for any compensation in excess of $1 million that is paid to a covered employee, subject to the Tax Reform Act’s limited transition relief rules.
Jodi Taylor
Ms. Taylor’s employment agreement is substantially similar to Ms. Reiff’s employment agreement except that (a) her position is
2020
468,692
—
419,997
900,000
1,072,158
2,860,847
Former Chief Financial Officer, Chief Administrative Officer and Secretary
2019
600,000
90,000
419,993
7,000
4,313
1,121,306
1 | As described further under "Executive Compensation—Narrative Disclosure to Summary Compensation Table—Base Salary" below, effective March 30, 2020, the named executive officers’ base salaries were reduced and
|
29
be named, but she will continue to serve as Chief Administrative Officer and Secretary, (b) her annual base salary is $600,000 (which was increased from $525,000
2 | The amount in the |
3 | For fiscal 2020, the amount in the column reflects the aggregate grant date fair value of (i) time-based restricted stock awards granted in fiscal 2020, which equaled $777,051 for Mr. Malhotra, $393,752 for Ms. Reiff, $44,998 for Messrs. Miller and Gehre and $125,999 for Ms. Taylor, and (ii) performance-based restricted stock awards, which, based upon 100% achievement of performance targets that represented the probable outcome of the performance targets, equaled $918,748 for Ms. Reiff, $104,999 for Messrs. Miller and Gehre and $293,998 for Ms. Taylor. At maximum achievement of the performance targets, the values of the performance-based restricted stock awards would have been $1,194,371 for Ms. Reiff, $136,495 for Messrs. Miller and Gehre and $382,195 for Ms. Taylor. Mr. Malhotra was not granted any performance-based restricted stock awards during fiscal 2020. See Note 7. Stock-based compensation of the Consolidated Financial Statements in our Annual Report on Form 10-K for Fiscal 2020 for the assumptions used in valuing such restricted stock awards. See "Executive Compensation—Narrative Disclosure to Summary Compensation Table—Long Term Equity Incentives" below for a description of these awards. |
4 | The amounts in this column reflect the annual cash awards earned by Mses. Reiff, Taylor and Mr. Miller under our annual bonus
|