VOTING SECURITIES AND PRINCIPAL HOLDERS EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The following is a discussion and analysis of our compensation programs as they apply to our executive officers named in the Summary Compensation Table below.
Compensation Philosophy and Objectives
The Compensation Committee has developed and implemented compensation policies, plans and programs to provide competitive compensation opportunities with a significant component of actual payments being dependent principally on the Company’s performance results and on enhancements to shareholder value. The Committee considers the total compensation package (earned or potentially available, including benefits) in establishing each element of compensation.
The policies, plans and programs are designed to meet the following objectives:
·Attract and retain highly qualified executives
·Be competitive with other major U.S. retail peer companies
·Reward corporate and individual performance
·Align the interests of executives and shareholders
·Promote the balance of annual and long-term results
Role of the Compensation Committee
The Compensation Committee provides overall guidance for our executive compensation policies and determines the amounts and elements of compensation for our named executive officers, which are our Co-Chairmen, Chief Executive Officer, President and Chief Financial Officer, as well as for such other key executives as the Committee determines. No executive may be present during voting or deliberations with respect to matters relating to such executive’s compensation. The Compensation Committee charter, which describes the Committee’s function, responsibilities and duties, is available on our website at www.bedbathandbeyond.com under the Investor Relations section.
The Compensation Committee currently consists of three members of our Board of Directors, Mr. Adler and Mses. Morrison and Stoller, all of whom are “independent” as defined by the NASDAQ listing standards and the applicable tax and securities rules and regulations. The Compensation Committee meets on a regular basis for various reasons as outlined in its charter.
Methodology
In making its determinations with respect to executive compensation, the Compensation Committee has periodically engaged the services of compensation consultants. The Compensation Committee has the authority to retain, terminate and set the terms of the Company’s relationship with any consultants and any other outside advisors who assist the Committee in carrying out its responsibilities. In connection with making its determinations regarding compensation for our named executive officers and certain
25
other key executives for fiscal 2008, the Compensation Committee conducted a search for an independent compensation consultant and retained James F. Reda & Associates LLC (“JFR”) to conduct a compensation review for the named executive officers and certain other executives. JFR had not previously worked with the Company in any capacity. Under the direction of the Committee, the compensation review included a peer group competitive market review and total compensation recommendations by JFR.
The methodology used by JFR included reviewing available data based on the Company’s industry, revenue size and financial performance, as well as data from companies from various industries with a chairman among its named executive officers who is also a founder in light of the fact that the Company’s Co-Chairmen are its Co-Founders. The principal peer group developed by JFR (“Peer Group 1”), upon which it based its recommendations, consisted of 18 companies that are the Company’s direct competitors, retailing companies of similar size or retailing companies with founders/chairmen positions. Peer Group 1 consisted of the following companies:
·Barnes & Noble, Inc.
·The Bon-Ton Stores, Inc.
·Dillard’s, Inc.
·Family Dollar Stores, Inc.
·Jones Apparel Group, Inc.
·Kohl’s Corporation
·Macy’s, Inc.
·Nordstrom, Inc.
·J.C. Penney Company, Inc.
·Pier 1 Imports, Inc.
·Retail Ventures, Inc.
·Ross Stores, Inc.
·Saks Incorporated
·Starbucks Corporation
·Stein Mart, Inc.
·Target Corporation
·The TJX Companies, Inc.
·Williams-Sonoma, Inc.
JFR also based its recommendations for fiscal 2008 on a peer group of 14 companies from various industries with a chairman among its named executives who is also a founder. The latter peer group (“Peer Group 2”) consisted of the following companies:
·Affiliated Computer Services, Inc.
·Apollo Group, Inc.
·Barnes & Noble, Inc.
·CBS Corporation
·Clear Channel Communications, Inc.
·D.R. Horton, Inc.
·Dell Inc.
·Dollar Tree, Inc.
·Harman International Industries, Incorporated
·Hovnanian Enterprises, Inc.
·Jones Apparel Group, Inc.
·Pilgrim’s Pride Corporation
·Pulte Homes, Inc.
·Starbucks Corporation
The peer group analyses prepared by JFR used public company proxy statements, third party industry compensation surveys and other publicly available information.
JFR advised that the aggregate compensation for Messrs. Eisenberg and Feinstein, as Co-Chairmen, and Mr. Temares, as Chief Executive Officer, for the Company’s 2007 fiscal year was in the 73rd percentile of Peer Group 1. JFR also advised that the aggregate recommended compensation for these top three named executives for fiscal 2008 was at the 73rd percentile of Peer Group 1 and the 61st percentile in a calculation which compared total senior executive compensation of the Peer Group 1 companies against their latest fiscal year net income as a percentage of sales.
JFR further advised that the aggregate compensation for Mr. Temares for the Company’s 2007 fiscal year was in the 65th percentile of Peer Group 1, and that the aggregate compensation for Messrs. Eisenberg and Feinstein (i.e., the combined compensation for both of such executives) for fiscal 2007 was in the 88th percentile of Peer Group 2.
26
In addition to advising the Compensation Committee as to how the fiscal 2007 compensation of the Company’s named executive officers compared to the compensation of executives in the peer groups in various different categories, JFR provided advice and recommendations with respect to compensation levels for fiscal 2008. Taking into account such advice, the Committee determined that the aggregate compensation for the Company’s top three named executive officers for fiscal 2008 should not exceed the aggregate compensation for those executives for fiscal 2007. The Committee further determined that the respective compensation of the Co-Chairmen and Mr. Temares, as the Chief Executive Officer, for fiscal 2008 should reflect the Company’s succession planning. As a result of this determination, and in light of analyses prepared by JFR, the Compensation Committee increased for fiscal 2008 the total compensation of the Chief Executive Officer and decreased the total compensation of the Co-Chairmen by approximately equal amounts.
Also for fiscal 2008, the Compensation Committee requested advice from JFR regarding the methodology for determining equity compensation for the named executive officers and other key officers. Based upon advice from JFR, the Compensation Committee deemed it advisable to modify its approach to granting stock option awards by determining the compensation allocated to these awards in dollars as compared to its approach in prior years of determining these awards based on the number of shares covered by the options. Accordingly, the Compensation Committee made aggregate and individual compensation determinations, including each element of compensation, in dollars. The Compensation Committee also requested advice from JFR regarding the methodology for computing the number of option share grants based on dollar-denominated awards of stock option grants as described under “Senior Executive Compensation.”
In making its determinations for the current fiscal year (fiscal 2009), the Committee continued the engagement of JFR to conduct a compensation review for the named executive officers and certain other executives. Under the direction of the Committee, the compensation review included a peer group competitive market review and total compensation recommendations by JFR. In reaching its compensation determinations for fiscal 2009, the Committee took into account both the Company’s very strong performance during fiscal 2008 as compared to the companies in its Peer Group 1 and the fact that, although the Company performed strongly compared to its peers, the Company’s net income and stock price declined considerably during fiscal 2008 compared to fiscal 2007. In a comparison with companies in Peer Group 1, the Company ranked in the 85th percentile in total shareholder return for fiscal 2008 and in the 99th percentile in terms of net income as a percentage of sales. In addition, during fiscal 2008, the Company saw its principal direct competitor file for bankruptcy protection and liquidate as it was unable to withstand the difficult operating environment in the sector in which the Company was able to continue to effectively compete. The Committee also recognized that, although the Company had performed well on a relative basis, the Company’s total shareholder return for fiscal 2008 was negative 24.8% and its net earnings for fiscal 2008 declined approximately 24.5% compared to 2007, due in significant part to the economic crisis affecting the housing sector and retail generally. Taking into account the foregoing factors and advice from JFR, the Committee determined that the aggregate compensation for all of the Company’s named executive officers for fiscal 2009 should remain the same as the aggregate compensation for those executives for fiscal 2008.
In connection with its fiscal 2009 compensation review, the Committee determined that it would use only Peer Group 1 as a reference peer group; the Committee concluded that Peer Group 2 did not provide sufficient meaningful incremental data to warrant continued use of two separate peer groups for comparison purposes.
The Compensation Committee solicits input from the Co-Chairmen when considering decisions concerning the compensation of the Chief Executive Officer, and solicits input from the Co-Chairmen and
27
the Chief Executive Officer when considering decisions concerning the compensation of the other named executive officers and any other executive whose compensation the Committee determines. In connection with its determinations in the spring of 2008 and 2009, the Committee consulted with the Co-Chairmen, who are the Co-Founders of the Company and who have been continuously involved in the affairs of the Company since its organization in 1971, with respect to the recommendations of JFR regarding the compensation package of the Chief Executive Officer. The Committee also received and reviewed the recommendations of the Co-Chairmen and Chief Executive Officer regarding the proposed salary and equity compensation awards for the other named executive officers and certain other executives for fiscal 2008 and 2009. In addition, JFR met with the Co-Chairmen to discuss compensation recommendations.
The compensation approved by the Compensation Committee for each of Messrs. Eisenberg, Feinstein and Temares for fiscal 2008 and 2009 was in the amounts and comprised of the elements recommended by JFR. The compensation approved by the Compensation Committee for the other named executive officers for fiscal 2008 and 2009 was determined by the Compensation Committee, taking into account the recommendations of the Co-Chairmen and Chief Executive Officer and certain data the Compensation Committee requested from JFR.
Elements of Compensation
The Company seeks to provide total compensation packages to our employees, including our named executive officers, that implement our compensation philosophy. The components of our compensation programs are base salary, equity compensation (consisting of stock options and restricted stock awards), retirement and other benefits (consisting of health plans, a limited 401(k) plan match and a deferred compensation plan) and perquisites. The Company believes that its executive cash compensation is low compared to the other companies in our peer group. In fact, according to the analysis prepared by JFR, the aggregate total cash compensation of Messrs. Eisenberg, Feinstein and Temares in fiscal 2008 was in the 13th percentile of Peer Group 1 cash compensation for the top three executives. The Company places greater emphasis in the compensation packages for named executive officers on equity incentive compensation in order to align compensation more closely with performance results and the creation of shareholder value. The Company does not have a cash bonus program for executive officers.
Base Salary
The Company pays base salaries to provide our named executive officers with current, regular compensation that is appropriate for their position, experience and responsibilities. As noted above, the Company believes that cash compensation levels for our named executive officers are lower than our peers as the Company places greater emphasis on equity compensation.
Equity Compensation
The Company’s overall approach to equity compensation is to make equity awards comprised of a combination of stock options and restricted stock to all executive officers, including the named executive officers, and a small number of other executives. Commencing in fiscal 2007, these grants are made on May 10 of each year (or the following trading day should such date fall on a weekend or holiday). The vesting provisions relating to equity compensation have been and continue to be determined with the principal purpose of retaining the Company’s executives and key employees. The Company believes its equity compensation policies have been highly successful in the long term retention of its executives and key employees, including its named executive officers.
Consistent with the Company’s historic practice, the stock options vest over time, subject, in general, to the named executive officers remaining in the Company’s employ on specified vesting dates. Vesting of
28
the restricted stock awarded to these named executive officers is dependent on (i) the Company’s achievement of a performance-based test for the fiscal year in which the grant is made, and (ii) assuming achievement of the performance-based test, time vesting, subject, in general, to the executive remaining in the Company’s employ on the specified vesting dates.
The performance-based test requires that the Company’s net income in the fiscal year exceed the Company’s net income in the prior fiscal year or that the Company’s net income as a percentage of sales place it in the top half of the companies in the S&P 500 Retailing Index with respect to such measurement. Net income is adjusted for such purpose to reflect (i) mergers, acquisitions, consolidations or dispositions, (ii) changes in accounting methods, and (iii) extraordinary items, as defined in APB 30, or stock repurchase or dividend activity. The Company believes that this performance-based test meets the standard for performance-based compensation under the Code so that the restricted stock awards will be deductible compensation for certain executives if their annual compensation exceeds $1 million.
For fiscal 2007 and for fiscal 2008, the performance-based test was satisfied in that the Company’s net income as a percentage of sales for the prior fiscal year placed it in the top half of the S&P 500 Retailing Index for fiscal 2007 and top quartile for fiscal 2008. The S&P 500 Retailing Index included the following companies in fiscal 2007: Abercrombie & Fitch, Amazon.com, AutoNation, AutoZone, Best Buy, Big Lots, Circuit City, Dillard’s, Expedia, Family Dollar, Gamestop, Gap, Genuine Parts, Home Depot, IAC InterActive, J.C. Penney, Kohl’s, Limited Brands, Lowe’s, Macy’s, Nordstrom, Office Depot, Office Max, Radio Shack, Sears, Sherwin-Williams, Staples, Target, Tiffany & Co. and TJX Companies. In fiscal 2008, the S&P 500 Retailing Index did not include: Circuit City, Dillard’s, IAC InterActive and Office Max.
In making its determinations for fiscal 2009 and in light of macroeconomic factors that have resulted in substantial volatility and uncertainty in the retail sector, the Committee decided to follow the same performance-based tests used in fiscal 2008. However, the Committee determined that, as it continues to monitor retail sector performance in the coming months, it would undertake a comprehensive review of all of the Company’s compensation programs for named executive officers and other key executives, including performance-based compensation, in connection with its fiscal 2010 compensation review.
All executives (other than those discussed above) and associates awarded incentive compensation receive grants consisting solely of restricted stock. Vesting of restricted stock awarded to these employees is based solely on time-vesting with no performance-based test.
All awards of restricted stock and stock options are made under the Company’s 2004 Incentive Compensation Plan, approved by the Company’s shareholders, which is the only equity incentive plan under which the Company can currently make awards of equity compensation.
Senior Executive Compensation
In addition to considering the Company’s compensation policies generally, the Compensation Committee reviews executive compensation and concentrates on the compensation packages for the Company’s named executive officers, namely, the Co-Chairmen (Warren Eisenberg and Leonard Feinstein, who are the Company’s Co-Founders) and the Chief Executive Officer (Steven H. Temares), believing that these three named executive officers are the most important and influential in determining the continued success of the Company. The Company has enjoyed considerable success in the 17 years it has been a public company, with, until the challenging economic environment in fiscal 2008, revenue and earnings per share growth in each year since its initial public offering in 1992.
Cash compensation of the three senior executives has been held to comparatively modest levels when
29
compared with companies of comparable size and earnings. The base salaries of the Co-Chairmen for fiscal 2009 are $1,100,000, the same as they were for the prior three years. The base salary of the Chief Executive Officer for fiscal 2009 is $1,500,000, the same as it was for fiscal 2008. His base salary was increased in annual increments of $100,000 for fiscal 2006 and 2007 and in fiscal 2008 was increased by $150,000. No cash bonuses were paid.
In each of fiscal years 2006 and 2007, the Compensation Committee awarded stock options (in addition to restricted stock) to the named executive officers since stock options reward the named executive officers only if shareholder values are increased. In each such year, the stock option awards were 200,000 shares to the Chief Executive Officer and 100,000 shares to each of the Co-Chairmen. In making the awards in these number of shares, the Committee considered the fair value of these options determined in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation” or SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123R”). In addition, in each such year, the Compensation Committee awarded shares of restricted stock having a market value on the date of grant of $2,400,000 to each of the Chief Executive Officer and the Co-Chairmen.
As described above, the Compensation Committee determined that for fiscal 2008 there should be no increase in aggregate compensation for the top three named executive officers, with a reallocation of compensation among such officers such that the total compensation of the Chief Executive Officer was increased in an amount approximately equal to a reduction in total compensation of the Co-Chairmen. Consequently, the aggregate equity awards to Mr. Temares for fiscal 2008 were increased from fiscal 2007 by $1,600,000 to $7,000,000 (valued by the Committee as described below). The increase to Mr. Temares was comprised entirely of stock options. Of the total of $7,000,000 of equity awards to Mr. Temares for fiscal 2008, $2,400,000 consisted of restricted stock (based on the market value of the Company’s common stock on the date of grant) and $4,600,000 consisted of stock options (based on the fair value determined on the date of grant in accordance with SFAS No. 123R [“Stock Option Fair Value”]).
The equity awards to Messrs. Eisenberg and Feinstein for fiscal 2008 were decreased from fiscal 2007 by an aggregate of $1,800,000 to $3,000,000 for each such executive, of which $2,000,000 consisted of restricted stock and $1,000,000 consisted of stock options (valued on the same basis as Mr. Temares’ awards).
Unlike prior years in which stock option awards were made by the Committee based on the number of shares covered by the options, and based upon advice from JFR, the stock option awards for fiscal 2008 were made in dollars (with the number of shares covered by the options determined by dividing the dollar amount of the grant by the Stock Option Fair Value). The Committee believes that making stock option awards in dollar amounts rather than share amounts is an increasingly prevalent practice and is advisable because making stock option awards in dollar amounts allows the Compensation Committee to align stock option awards with the value of the option grants. Making stock option awards in dollars also enables the Compensation Committee to more readily evaluate appropriate aggregate compensation amounts and percentage increases or decreases for executives, in comparison to making stock option awards in share amounts (the value of which varies depending on the trading price of the Company’s stock and other factors).
While not increasing the aggregate dollar amount of equity compensation for the named executive officers in fiscal 2009, the Company allocated 50% of equity compensation awards to Mr. Temares in restricted stock in 2009 compared to approximately 34% in restricted stock in 2008. The Committee made this reallocation to provide for equal allocation between restricted stock awards based on specifically-identified performance criteria and stock option awards that are tied to stock price
30
performance.
In the view of the Compensation Committee, the base salary, stock option grants, and restricted stock awards constituted compensation packages for the Chief Executive Officer and for the Co-Chairmen appropriate for a company with the revenues and earnings of the Company. The stock options granted to the Chief Executive Officer vest in five equal annual installments, while the stock options awarded to the Co-Chairmen vest in three equal annual installments, in each case commencing on the first anniversary of the grant date and based on continued service to the Company. The restricted stock awards to each such executive are conditioned on the performance-based test described above with time vesting in five equal annual installments, in each case commencing on the first anniversary of the grant date and based on continued service to the Company.
Base salaries and the dollar value of equity awards for fiscal 2009 will remain unchanged from fiscal 2008. The base salaries of Mr. Stark in fiscal 2007 and 2008 were $950,000 and $1,055,000, respectively. The base salaries of Mr. Castagna in fiscal 2007 and 2008 were $755,000 and $840,000, respectively.
In fiscal 2007, Mr. Stark and Mr. Castagna both received option awards in the amount of 25,000 shares, vesting in five equal annual installments commencing on the third anniversary of the grant date, based on continued service to the Company. In fiscal 2008 (when option grants were made in dollars as described above), Mr. Stark and Mr. Castagna both received option awards based on a dollar value of $590,000 (which translated to 41,029 option shares), with the same vesting schedule as the fiscal 2007 option awards. Mr. Stark was awarded shares of restricted stock in each of fiscal 2007 and 2008 having a market value on the date of grant of $1,000,000. Mr. Castagna was awarded shares of restricted stock in each of fiscal 2007 and 2008 having a market value on the date of grant of $750,000. The restricted stock awards to both Mr. Stark and Mr. Castagna for both fiscal 2007 and 2008 were conditioned on the performance-based test described above with time vesting in five equal annual installments commencing on the third anniversary of the grant date.
For further discussion related to equity grants to the named executive officers, see “Potential Payments Upon Termination or Change in Control” below.
Other Benefits
The Company provides the named executive officers with the same benefits offered to all other employees. The cost of these benefits constitutes a small percentage of each named executive officer’s total compensation. Key benefits include paid vacation, premiums paid for long-term disability insurance, a matching contribution to the named executive officer’s 401(k) plan account, and the payment of a portion of the named executive officer’s premiums for healthcare and basic life insurance.
In addition, effective January 1, 2006, the Company adopted a nonqualified deferred compensation plan for the benefit of certain highly compensated employees, including the named executive officers. The plan provides that a certain percentage of an employee’s contributions may be matched by the Company, subject to certain limitations. This matching contribution will vest over a specified period of time. See “Deferred Compensation” below.
Mr. Temares, as Chief Executive Officer, has a supplemental retirement benefit agreement with the Company under which if he remains employed by the Company through June 12, 2012 (or the earlier occurrence of a change of control of the Company), he is entitled to receive a supplemental retirement benefit upon his separation from service from the Company, for ten years, in an amount equal to fifty percent of his annual salary at the date of termination of employment.
31
The Company also provides the named executive officers with certain perquisites including tax preparation services and car service, in the case of Messrs. Eisenberg and Feinstein, and a car allowance, in the case of all named executive officers. The Compensation Committee believes all such perquisites are reasonable and consistent with its overall objective of attracting and retaining our named executive officers.
The Company reviews these other benefits and perquisites on an annual basis and makes adjustments as warranted based on competitive practices and the Company’s performance.
See the “All Other Compensation” column in the Summary Compensation Table for further information regarding these benefits and perquisites, and “Potential Payments Upon Termination or Change in Control” below for information regarding termination and change in control payments and benefits.
Impact of Accounting and Tax Considerations
The Compensation Committee considers the accounting cost associated with equity compensation and the impact of Section 162(m) of the Code, which generally prohibits any publicly-held corporation from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to the named executive officers, subject to certain exceptions for performance-based compensation. Stock options and performance-based compensation granted to our named executive officers are intended to satisfy the performance-based exception and be deductible. Base salary amounts in excess of $1 million are not deductible by the Company.
Policy on the Recovery of Incentive Compensation
In April 2009, the Board adopted a policy as part of the Company’s corporate governance guidelines on the recovery of incentive compensation, commonly referred to as a “clawback policy,” applicable to the Company’s named executive officers (as defined under Item 402(a)(3) of Regulation S-K).
Advisory Vote on Executive Compensation
The Company anticipates that non-binding advisory votes on compensation practices, commonly referred to as “say-on-pay,” may in the future be mandated by law, in which case the Company will comply with such requirements.
In any event, if no such advisory vote is required by law at the time of the Company’s 2011 Annual Meeting, the Board has approved in principle that, effective with the Company’s 2011 Annual Meeting, the Company will implement a non-binding, advisory vote by the Company’s shareholders on the Compensation Committee’s compensation philosophy, policies and procedures for the Company’s named executive officers.
Conclusion
After careful review and analysis, the Company believes that each element of compensation and the total compensation provided to each of its named executive officers is reasonable and appropriate. The value of the compensation payable to the named executive officers is significantly tied to the Company’s performance and the return to its shareholders. The Company believes that its compensation programs will allow it to attract and retain a top performing management team.
32
Report of the Compensation Committee of the Board of Directors
The Compensation Committee of the Company’s Board of Directors has submitted the following report for inclusion in this Proxy Statement:
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. Based on the Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2009 for filing with the SEC.
The foregoing report is provided by the following directors, who constitute the Compensation Committee:
| COMPENSATION COMMITTEE
|
| Dean S. Adler
|
| Victoria A. Morrison
|
| Fran Stoller
|
33
Summary Compensation Table for Fiscal 2008, Fiscal 2007 and Fiscal 2006
The following table sets forth information concerning the compensation of the Company’s principal executive officer, principal financial officer and the three mostly highly compensated executive officers of the Company other than its principal executive officer and principal financial officer for fiscal 2008, fiscal 2007 and fiscal 2006 (“named executive officers”).
Name and
Principal
Position | | Fiscal
Year | | Salary(1)
($) | | Stock
Awards(2)
($) | | Option
Awards(2)
($) | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) | | All Other
Compensa-
tion(3)
($) | | Total
($) | |
| | | | | | | | | | | | | | | |
Warren Eisenberg (4) (5) | | 2008 | | 1,100,000 | | 2,320,646 | | 1,275,557 | | 0 | | 78,645 | | 4,774,848 | |
Co-Chairman | | 2007 | | 1,100,000 | | 2,037,483 | | 1,271,238 | | 0 | | 60,346 | | 4,469,067 | |
| | 2006 | | 1,100,000 | | 1,449,004 | | 2,972,556 | | 0 | | 110,071 | | 5,631,631 | |
| | | | | | | | | | | | | | | |
Leonard Feinstein (6) (7) | | 2008 | | 1,100,000 | | 2,320,646 | | 1,275,557 | | 0 | | 140,309 | | 4,836,512 | |
Co-Chairman | | 2007 | | 1,100,000 | | 2,037,483 | | 1,271,238 | | 0 | | 66,887 | | 4,475,608 | |
| | 2006 | | 1,100,000 | | 1,449,004 | | 2,972,556 | | 0 | | 109,939 | | 5,631,499 | |
| | | | | | | | | | | | | | | |
Steven H. Temares (8) (9) (10) | | 2008 | | 1,468,269 | | 2,467,010 | | 3,620,127 | | 99,932 | | 21,104 | | 7,676,442 | |
Chief Executive Officer | | 2007 | | 1,328,846 | | 2,037,483 | | 3,929,565 | | 37,983 | | 23,621 | | 7,357,498 | |
| | 2006 | | 1,230,769 | | 1,449,004 | | 3,721,746 | | 0 | | 22,526 | | 6,424,045 | |
| | | | | | | | | | | | | | | |
Arthur Stark (11) (12) | | 2008 | | 1,032,788 | | 641,680 | | 1,063,604 | | 0 | | 10,387 | | 2,748,459 | |
President and Chief Merchandising Officer | | 2007 | | 928,846 | | 425,722 | | 1,153,294 | | 0 | | 9,911 | | 2,517,773 | |
| | 2006 | | 821,154 | | 230,981 | | 1,384,678 | | 0 | | 9,523 | | 2,446,336 | |
| | | | | | | | | | | | | | | |
Eugene A. Castagna (13) (14) | | 2008 | | 822,319 | | 510,766 | | 1,086,845 | | 0 | | 13,468 | | 2,433,398 | |
Chief Financial Officer and Treasurer | | 2007 | | 738,076 | | 348,800 | | 1,225,389 | | 0 | | 16,874 | | 2,329,139 | |
| | 2006 | | 660,577 | | 202,192 | | 1,242,913 | | 0 | | 18,229 | | 2,123,911 | |
(1)Except as otherwise described in this Summary Compensation Table, salaries to named executive officers were paid in cash in the fiscal year ended February 28, 2009 (the Company’s “2008 fiscal year”), March 1, 2008 (the Company’s “2007 fiscal year”) and March 3, 2007 (the Company’s “2006 fiscal year”) and increases in salary, if any, were effective in May of the fiscal year.
(2)Pursuant to SEC rules, stock awards and option awards are valued in the amounts recognized for financial statement reporting purposes, in accordance with SFAS No. 123R, for fiscal year 2008, 2007 and 2006 and thus include amounts from awards granted in and prior to that specific fiscal year, without regard to the estimated forfeiture related to service-based vesting conditions. All assumptions made in the valuations are contained in footnote 14 to the Company’s financial statements and described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of
34
Operations” in the Company’s Form 10-K for the Company’s 2008 fiscal year. The amounts shown in the table reflect the Company’s accounting expense and do not necessarily reflect the actual value, if any, that may be realized by the named executive officers.
(3)The amounts of Company matching contribution payments relating to deferred compensation reflected in this column which relate to fiscal 2006 include amounts in respect of calendar years 2006 and 2007 as fiscal year 2006 commenced on February 26, 2006 and ended on March 3, 2007. Thus, certain matching contributions noted below exceed the single calendar year limitation.
(4)Mr. Eisenberg deferred $222,115, $268,171 and $264,423 of his salary for fiscal 2008, 2007 and 2006, respectively, pursuant to the terms of the Company’s Nonqualified Deferred Compensation Plan. Such amount for fiscal 2008 is also reported in the Deferred Compensation Table below.
(5)All Other Compensation for Mr. Eisenberg includes incremental costs to the Company for tax preparation services of $21,688, $22,988 and $22,525, car service of $26,300, $4,537 and $55,548 and car allowance of $23,757, $26,071 and $25,398, and an employer nonqualified deferred compensation plan matching contribution of $6,900, $6,750 and $6,600, for fiscal 2008, 2007 and 2006, respectively.
(6)Mr. Feinstein deferred $222,115, $270,920 and $264,423 of his salary for fiscal 2008, 2007 and 2006, respectively, pursuant to the terms of the Company’s Nonqualified Deferred Compensation Plan. Such amount for fiscal 2008 is also reported in the Deferred Compensation Table below.
(7)All Other Compensation for Mr. Feinstein includes incremental costs to the Company for tax preparation services of $21,687, $22,987 and $22,525, car service of $82,731, $4,537 and $51,087 and car allowance of $28,991, $32,613 and $29,727, and an employer nonqualified deferred compensation plan matching contribution of $6,900, $6,750 and $6,600, for fiscal 2008, 2007 and 2006, respectively.
(8)Mr. Temares deferred $20,923, $15,769 and $10,769 of his salary for fiscal 2008, 2007 and 2006, respectively, pursuant to the terms of the Company’s Nonqualified Deferred Compensation Plan. Such amount for fiscal 2008 is also reported in the Deferred Compensation Table below. Additionally, Mr. Temares contributed $11,700, $8,580 and $9,635 of his salary for fiscal 2008, 2007 and 2006, respectively, to the Bed Bath & Beyond Inc. 401(k) Savings Plan (the “Company 401(k)”).
(9)The actuarial present value of the benefits payable under the supplemental executive retirement benefit agreement with Mr. Temares increased from fiscal 2007 to fiscal 2008, increased from fiscal 2006 to fiscal 2007 and decreased from fiscal 2005 to fiscal 2006. With reference to fiscal 2008, see “Potential Payments Upon Termination or Change in Control — Messrs. Temares, Castagna and Stark” below.
(10)All Other Compensation for Mr. Temares includes incremental costs to the Company for car allowance of $14,209, $16,871 and $15,026 and employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $6,895, $6,750 and $7,500, for fiscal 2008, 2007 and 2006, respectively.
(11)Mr. Stark deferred $219,159, $232,212 and $205,289 of his salary for fiscal 2008, 2007 and 2006, respectively, pursuant to the terms of the Company’s Nonqualified Deferred Compensation Plan. Such amount for fiscal 2008 is also reported in the Deferred Compensation Table below. Additionally, Mr. Stark contributed $5,000 of his salary in each of the fiscal years to the Company 401(k).
(12) All Other Compensation for Mr. Stark includes incremental costs to the Company for car allowance of $3,487, $3,162 and $2,923 and employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $6,900, $6,749 and $6,600, for fiscal 2008, 2007 and 2006, respectively.
(13) Mr. Castagna deferred $67,054, $52,827 and $40,673 of his salary for fiscal 2008, 2007 and 2006, respectively, pursuant to the terms of the Company’s Nonqualified Deferred Compensation Plan. Such amount for fiscal 2008 is also reported in the Deferred Compensation Table below. Additionally, Mr. Castagna contributed $6,500, $4,781 and $8,866 of his salary for fiscal 2008, 2007 and 2006, respectively, to the Company 401(k).
(14)All Other Compensation for Mr. Castagna includes incremental costs to the Company for car allowance of $6,570, $10,522 and $11,114 and employer 401(k) plan and nonqualified deferred compensation plan matching contributions of $6,898, $6,352 and $7,115, for fiscal 2008, 2007 and 2006, respectively.
35
Employment Agreements with Messrs. Eisenberg and Feinstein
Messrs. Eisenberg and Feinstein have employment agreements with the Company for executive employment terms which expire on June 30, 2010, or as further extended by mutual agreement. These agreements provide for salaries at the rate of $800,000 per year which may be increased from time to time by the Company. The current annual salary for each of Messrs. Eisenberg and Feinstein is $1,100,000. Under these agreements, each of Messrs. Eisenberg and Feinstein may at any time elect senior status (i.e., to be continued to be employed to provide non-line executive consultative services) at an annual salary of the greater of $400,000 (increased for cost of living adjustments) or 50% of his average salary over the three year period prior to such election for a period (the “Senior Status Period”) of up to ten years from the date of such election. During the Senior Status Period, the executive must provide services at a level of at least 25% of the average level of services the executive performed for the prior 36 month period. During the Senior Status Period, the Company is required to provide to the executive an office at a location specified by the executive, a secretary, car service and car allowance, all on a basis comparable to that which is currently provided to the executive. The agreements contain non-competition, non-solicitation and confidentiality provisions. These provisions generally apply through the term of employment, including the Senior Status Period and any other time when salary payments are required to be made under the agreements. The agreements provide, in addition, for some of Messrs. Eisenberg’s and Feinstein’s employee benefits to continue during their active employment, their Senior Status Period and during the period of supplemental pension payments. For a complete description of payments due to Messrs. Eisenberg and Feinstein upon termination of their employment with the Company, see “Potential Payments Upon Termination or Change in Control” below.
Agreements with Messrs. Temares, Stark and Castagna
Messrs. Temares, Stark and Castagna have employment agreements with the Company which provide for severance pay and other benefits upon a termination of their employment. For a complete description of payments due to Messrs. Temares, Stark and Castagna upon termination of their employment with the Company, see “Potential Payments Upon Termination or Change in Control” below. These agreements also provide for non-competition and non-solicitation of the Company’s employees during the term of employment and for one year thereafter (two years in the case of Mr. Castagna), and confidentiality during the term of employment and surviving the end of the term of employment.
Potential Payments Upon Termination or Change in Control
The named executive officers’ employment agreements and certain of the plans in which the executives participate require the Company to pay compensation to the executives if their employment terminates. The estimated amount of compensation payable to the named executive officers in each termination situation is listed in the table below. The table is presented using an assumed termination date and an assumed change in control date of February 28, 2009, the last day of the Company’s 2008 fiscal year and a price per share of common stock of $21.30 (the “Per Share Closing Price”), the closing per share price as of February 27, 2009, the last business day of the Company’s 2008 fiscal year. Descriptions of the agreements under which such payments would be made follow:
Messrs. Eisenberg and Feinstein
Pursuant to their employment agreements, following the Senior Status Period, Messrs. Eisenberg and Feinstein are each entitled to supplemental pension payments of $200,000 per year (as adjusted for a cost of living increase) until the death of the survivor of him and his current spouse. The agreements provide, in addition, for some of Messrs. Eisenberg’s and Feinstein’s employee benefits to continue during their Senior Status Period and during the period of supplemental pension payments or following a termination
36
upon a change in control.
Under the agreements, if Messrs. Eisenberg and Feinstein are terminated without “cause” (as defined below) or if the executive is removed from or not reelected to any officer or director position prior to his Senior Status Period (or any officer position during his Senior Status Period), there is a material diminution in the executive’s salary, benefits or perquisites or, prior to his Senior Status Period, there is a material diminution in the executive’s duties or the Company’s principal office or the executive’s own office location as assigned to him by the Company is relocated and the executive elects to terminate his employment, the executive shall be paid through the end of the term of employment and the Senior Status Period. Following a change in control of the Company (as defined in the agreements), each of the executives may, at his option, upon 90 days’ written notice, terminate employment and shall be paid an amount equal to three times salary then in effect, if the written notice is given before the Senior Status Period, or, if during the Senior Status Period, one half of Senior Status Salary for the number of years (including fractions), if any, remaining in the Senior Status Period, payable over such applicable period in accordance with normal payroll practices. In the event any amounts paid or provided to the executive in connection with a change in control are determined to constitute “excess parachute payments” under Code Section 280G which would be subject to the excise tax imposed by Code Section 4999, the executive shall be entitled to receive an additional “gross-up payment” in an amount such that after payment by the executive of all taxes the executive retains an amount of such “gross-up payment” equal to the excise tax imposed. In the event of termination of employment, the executives are under no obligation to seek other employment and there is no reduction in the amount payable to the executive on account of any compensation earned from any subsequent employment. In the event of termination due to death of either of the executives, the executive’s estate or beneficiary shall be entitled to his salary for a period of one year following his death and payment of expenses incurred by executive and not yet reimbursed at the time of death. In the event of termination due to the inability to substantially perform his duties and responsibilities for a period of 180 consecutive days, the executive shall be entitled to his salary for a period of one year following the date of termination (less any amounts received under the Company’s benefit plans as a result of such disability). Either of the executives may be terminated for “cause” upon written notice of the Company’s intention to terminate his employment for cause, such notice to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for cause is based. The executives shall have ten days after such notice is given to cure such conduct, to the extent a cure is possible. “Cause” means (i) the executive is convicted of a felony involving moral turpitude or (ii) the executive is guilty of willful gross neglect or willful gross misconduct in carrying out his duties under the agreement, resulting, in either case, in material economic harm to the Company, unless the executive believed in good faith that such act or non-act was in the best interests of the Company. In addition, pursuant to their respective restricted stock agreements, all shares of restricted stock will vest upon termination of employment for any reason other than for “cause.”
In substitution for a split dollar insurance benefit previously provided to such executives,in fiscal 2003, the Company entered into deferred compensation agreements with Messrs. Eisenberg and Feinstein under which the Company is obligated to pay Messrs. Eisenberg and Feinstein $2,125,000 and $2,080,000, respectively, in each case payable only on the last day of the first full fiscal year of the Company in which the total compensation of Mr. Eisenberg or Feinstein, as applicable, will not result in the loss of a deduction for such payment pursuant to applicable federal income tax law.
Messrs. Temares, Stark and Castagna
The agreements with Messrs. Temares and Stark provide for severance pay equal to three years’ salary, and the agreement with Mr. Castagna provides for severance pay equal to one year’s salary, if the Company terminates their employment other than for “cause” (including by reason of death or disability) and one year’s severance pay if the executive voluntarily leaves the employ of the Company. Severance
37
pay will be paid in accordance with normal payroll, however any amount due prior to the six months after termination of employment will be paid in a lump sum on the date following the six month anniversary of termination of employment. Any severance payable to these executives will be reduced by any monetary compensation earned by them as a result of their employment by another employer or otherwise. Cause is defined in the agreements as when the executive has: (i) acted in bad faith or with dishonesty; (ii) willfully failed to follow reasonable and lawful directions of the Company’s Chief Executive Officer or the Board of Directors, as applicable, commensurate with his titles and duties; (iii) performed his duties with gross negligence; or (iv) been convicted of a felony. Upon a termination of employment by the Company for any reason other than for “cause,” all unvested options will vest and become exercisable. In addition, pursuant to their respective restricted stock agreements, all shares of restricted stock will vest upon any such termination of employment. These agreements also provide for non-competition during the term of employment and for one year thereafter (two years in the case of Mr. Castagna), and confidentiality during the term of employment and surviving the end of the term of employment.
Mr. Temares is party to a supplemental executive retirement benefit agreement with the Company under which, if he remains employed by the Company through June 12, 2012 (the twentieth anniversary of his employment with the Company) or the earlier occurrence of a change of control of the Company (as defined in the agreement), he is entitled to receive a supplemental retirement benefit on his retirement or other separation from service from the Company. The retirement benefit will be an annual amount equal to 50% of Mr. Temares’ annual base salary on the date of termination of employment for a period of 10 years, payable, in general, except as described below, in accordance with the Company’s normal payroll practices. In the event Mr. Temares is terminated without cause, his employment is terminated due to death or disability, or his retirement occurs within 12 months after the occurrence of change of control of the Company, he will receive the present value of such supplemental retirement benefit in a lump sum. Except in the case of Mr. Temares’ death, such lump sum payment will be made six months after the date of termination of employment and, in the case of a retirement benefit payable over a ten-year period, any amount due prior to six months after the termination of employment will be paid in a lump sum on the date six months from the date of such termination of employment.
Table and related footnotes follow on the next two pages.
38
| | Cash Severance | | Senior Status
Salary
Continuation (2) | | Option
Acceleration (3) | | Restricted Stock
Acceleration (3) | | Benefit
Continuation (4) | | Non-Qualified
Deferred
Compensation
Balance (5) | | Supplemental
Pension (6) | | Split-Dollar Life
Insurance
Substitute Payment
(7) | | Total | |
| | | | | | | | | | | | | | | | | | | |
Warren Eisenberg (8) | | | | | | | | | | | | | | | | | | | |
Termination Without Cause/ | | | | | | | | | | | | | | | | | | | |
Constructive Termination (1) | | $ | 1,469,722 | | $ | 5,500,000 | | $ | — | | $ | 3,632,246 | | $ | 926,463 | | $ | 527,374 | | $ | 1,315,284 | | $ | 2,125,000 | | $ | 15,496,089 | |
Change in Control (no termination) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | — | |
Change in Control + Termination (1) | | $ | 1,469,722 | | $ | 5,500,000 | | $ | — | | $ | 3,632,246 | | $ | 926,463 | | $ | 527,374 | | $ | 1,315,284 | | $ | 2,125,000 | | $ | 15,496,089 | |
Change in Control + Voluntary | | | | | | | | | | | | | | | | | | | |
Termination (9) | | $ | 3,300,000 | | $ | — | | $ | — | | $ | — | | $ | 926,463 | | $ | 527,374 | | $ | 1,315,284 | | $ | 2,125,000 | | $ | 8,194,121 | |
| | | | | | | | | | | | | | | | | | | |
Leonard Feinstein (8) | | | | | | | | | | | | | | | | | | | |
Termination Without Cause/ | | | | | | | | | | | | | | | | | | | |
Constructive Termination (1) | | $ | 1,469,722 | | $ | 5,500,000 | | $ | — | | $ | 3,632,246 | | $ | 1,895,664 | | $ | 528,933 | | $ | 2,375,286 | | $ | 2,080,000 | | $ | 17,481,851 | |
Change in Control (no termination) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | — | |
Change in Control + Termination (1) | | $ | 1,469,722 | | $ | 5,500,000 | | $ | — | | $ | 3,632,246 | | $ | 1,895,664 | | $ | 528,933 | | $ | 2,375,286 | | $ | 2,080,000 | | $ | 17,481,851 | |
Change in Control + Voluntary | | | | | | | | | | | | | | | | | | | |
Termination (9) | | $ | 3,300,000 | | $ | — | | $ | — | | $ | — | | $ | 1,895,664 | | $ | 528,933 | | $ | 2,375,286 | | $ | 2,080,000 | | $ | 10,179,883 | |
| | | | | | | | | | | | | | | | | | | |
Steven H. Temares | | | | | | | | | | | | | | | | | | | |
Termination Without Cause (9) | | $ | 4,500,000 | | $ | — | | $ | — | | $ | 3,891,446 | | $ | — | | $ | 46,397 | | $ | 6,322,402 | | $ | — | | $ | 14,760,245 | |
Voluntary Termination (10) | | $ | 1,500,000 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 46,397 | | $ | — | | $ | — | | $ | 1,546,397 | |
Change in Control (no termination) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | — | |
Change in Control + Termination (9) | | $ | 4,500,000 | | $ | — | | $ | — | | $ | 3,891,446 | | $ | — | | $ | 46,397 | | $ | 6,322,402 | | $ | — | | $ | 14,760,245 | |
| | | | | | | | | | | | | | | | | | | |
Arthur Stark | | | | | | | | | | | | | | | | | | | |
Termination Without Cause (9) | | $ | 3,165,000 | | $ | — | | $ | — | | $ | 1,853,441 | | $ | — | | $ | 723,720 | | $ | — | | $ | — | | $ | 5,742,161 | |
Voluntary Termination (10) | | $ | 1,055,000 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 723,720 | | $ | — | | $ | — | | $ | 1,778,720 | |
Change in Control (no termination) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | — | | — | |
Change in Control + Termination (9) | | $ | 3,165,000 | | $ | — | | $ | — | | $ | 1,853,441 | | $ | — | | $ | 723,720 | | $ | — | | $ | — | | $ | 5,742,161 | |
| | | | | | | | | | | | | | | | | | | |
Eugene A. Castagna | | | | | | | | | | | | | | | | | | | |
Termination Without Cause (10) | | $ | 840,000 | | $ | — | | $ | — | | $ | 1,478,966 | | $ | — | | $ | 124,524 | | $ | — | | $ | — | | $ | 2,443,490 | |
Voluntary Termination (10) | | $ | 840,000 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 124,524 | | $ | — | | $ | — | | $ | 964,524 | |
Change in Control (no termination) | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | — | |
Change in Control + Termination (10) | | $ | 840,000 | | $ | — | | $ | — | | $ | 1,478,966 | | $ | — | | $ | 124,524 | | $ | — | | $ | — | | $ | 2,443,490 | |
39
(1)Cash severance represents current salary continuation through June 30, 2010.
(2)Represents 50% of current salary payable for 10 years during the Senior Status Period.
(3)Represents the value of unvested outstanding stock options and restricted stock that would accelerate and vest on a termination occurring on February 28, 2009. In the case of stock options, the value is calculated by multiplying the number of shares underlying each accelerated unvested stock option by the difference between the Per Share Closing Price and the per share exercise price. In the case of restricted stock, the value is calculated by multiplying the number of shares of restricted stock that accelerate and vest by the Per Share Closing Price.
(4)Represents the estimated present value of continued health and welfare benefits and other perquisites for the life of the executive and his spouse.
(5)Reflects executives’ vested account balances as of February 28, 2009.
(6)For Messrs. Eisenberg and Feinstein, represents the estimated present value of lifetime supplemental pension payments, commencing at the conclusion of the Senior Status Period. For Mr. Temares, present value will be paid out 6 months following 1) termination without cause or 2) any termination (including voluntary termination) following a change in control.
(7)This amount will be paid on the last day of the following fiscal year.
(8)Based on their employment agreements, Messrs. Eisenberg and Feinstein are eligible to receive tax gross up payments in the event that excise taxes are triggered as a result of certain types of compensation payments, as defined under Code Section 280G, that may become payable in connection with a change in control. However, no tax gross up payments are disclosed above since neither of these executives would have been subject to excise taxes as a result of payments subject to Code Section 280G that would have been made in connection with a change in control occurring on February 28, 2009.
(9)Cash severance represents three times current salary payable over a period of three years.
(10)Cash severance represents one times current salary payable over a period of one year.
40
STOCK OPTIONS AND RESTRICTED STOCK
Grants of Stock Options and Restricted Stock Awards for Fiscal 2008
The following table sets forth information with respect to stock options granted and restricted stock awarded during the Company’s 2008 fiscal year to each of our named executive officers under the Company’s 2004 Incentive Compensation Plan (the “2004 Plan”). The Company did not grant any non-equity incentive plan awards in the 2008 fiscal year.
Name | | Grant
Date | | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units(1)
(#) | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | Exercise
or Base
Price of
Option
Awards
($/Sh) | | Closing
Market
Price on
Date of
Grant
($/Sh) | | Grant Date
Fair Value
of Stock and
Option
Awards(2)
($) | |
Warren Eisenberg | | 5/12/08 | | 60,846 | | 81,367 | | $ | 32.87 | | $ | 33.51 | | $ | 3,000,008 | |
Leonard Feinstein | | 5/12/08 | | 60,846 | | 81,367 | | $ | 32.87 | | $ | 33.51 | | $ | 3,000,008 | |
Steven H. Temares | | 5/12/08 | | 73,015 | | 374,288 | | $ | 32.87 | | $ | 33.51 | | $ | 7,000,003 | |
Arthur Stark | | 5/12/08 | | 30,423 | | 41,029 | | $ | 32.87 | | $ | 33.51 | | $ | 1,590,001 | |
Eugene A. Castagna | | 5/12/08 | | 22,817 | | 41,029 | | $ | 32.87 | | $ | 33.51 | | $ | 1,339,992 | |
(1)Number of shares of restricted stock when converted from dollars to shares, which number is rounded up to the nearest whole share.
(2)Pursuant to the SEC rules, stock option awards are valued in accordance with SFAS No. 123R. See footnote 2 to the Summary Compensation Table in this Proxy Statement.
Vesting of restricted stock awards depends on (i) the Company’s achievement of a performance-based test for the fiscal year of the grant, and (ii) assuming the performance-based test is met, time vesting, subject in general to the executive remaining in the Company’s employ on specific vesting dates. The performance-based test for fiscal 2008 was met. The performance test is designed to meet the standard for performance-based compensation under the Code, so that restricted stock awards will be deductible compensation for certain executives if their annual compensation exceeds $1,000,000. The stock awards granted in fiscal 2008 to Messrs. Eisenberg, Feinstein and Temares time vest in five equal installments starting on the first anniversary of the grant date. The stock awards granted in fiscal 2008 to Messrs. Stark and Castagna time vest in five equal installments starting on the third anniversary of the grant date.
The options granted in fiscal 2008 to Messrs. Eisenberg and Feinstein vest in three equal installments starting on the first anniversary of the grant date. The options granted in fiscal 2008 to Mr. Temares vest in five equal installments starting on the first anniversary of the grant date. The options granted in fiscal 2008 to Messrs. Stark and Castagna vest in five equal installments starting on the third anniversary of the grant date. At the time of grant or thereafter, option awards and underlying shares of common stock, are
41
not transferable other than by will or the laws of descent and distribution, except as the Compensation Committee may permit.
42
Outstanding Stock Option and Restricted Stock Awards at Fiscal Year-End for 2008
The following table sets forth information for each of the named executive officers with respect to the value of all unexercised options and unvested restricted stock awards as of February 28, 2009, the end of fiscal 2008.
Option Awards (1) | | Stock Awards | |
| | Number of
Securities
Underlying
Unexercised
Options
(#) | | Number of
Securities
Underlying
Unexercised
Options
(#) | | Option
Exercise
Price | | Option
Expiration | | Number of
Shares or
Units of
Stock That
Have Not
Vested | | Market Value
of Shares or
Units of Stock
That Have Not
Vested (2) | |
Name | | Exercisable | | Unexercisable | | ($) | | Date | | (#) | | ($) | |
Warren Eisenberg | | 100,000 | | 0 | | $ | 23.7815 | | 3/30/11 | | 170,528 | | 3,632,246 | |
| | 200,000 | | 0 | | $ | 31.6150 | | 3/6/12 | | | | | |
| | 100,000 | | 0 | | $ | 32.5200 | | 3/6/12 | | | | | |
| | 133,333 | | 0 | | $ | 38.2200 | | 4/25/13 | | | | | |
| | 266,667 | | 0 | | $ | 38.7650 | | 4/25/13 | | | | | |
| | 300,000 | | 0 | | $ | 41.3450 | | 3/3/14 | | | | | |
| | 100,000 | | 0 | | $ | 37.5100 | | 4/20/13 | | | | | |
| | 66,667 | | 33,333 | | $ | 38.5150 | | 4/17/14 | | | | | |
| | 33,334 | | 66,666 | | $ | 41.1150 | | 5/10/15 | | | | | |
| | 0 | | 81,367 | | $ | 32.8700 | | 5/12/16 | | | | | |
| | | | | | | | | | | | | |
Leonard Feinstein | | 100,000 | | 0 | | $ | 23.7815 | | 3/30/11 | | 170,528 | | 3,632,246 | |
| | 200,000 | | 0 | | $ | 31.6150 | | 3/6/12 | | | | | |
| | 100,000 | | 0 | | $ | 32.5200 | | 3/6/12 | | | | | |
| | 133,333 | | 0 | | $ | 38.2200 | | 4/25/13 | | | | | |
| | 266,667 | | 0 | | $ | 38.7650 | | 4/25/13 | | | | | |
| | 300,000 | | 0 | | $ | 41.3450 | | 3/3/14 | | | | | |
| | 100,000 | | 0 | | $ | 37.5100 | | 4/20/13 | | | | | |
| | 66,667 | | 33,333 | | $ | 38.5150 | | 4/17/14 | | | | | |
| | 33,334 | | 66,666 | | $ | 41.1150 | | 5/10/15 | | | | | |
| | 0 | | 81,367 | | $ | 32.8700 | | 5/12/16 | | | | | |
| | | | | | | | | | | | | |
Steven H. Temares | | 400,000 | | 0 | | $ | 14.7658 | | 8/13/09 | | 182,697 | | 3,891,446 | |
| | 480,000 | | 0 | | $ | 11.4688 | | 3/13/10 | | | | | |
| | 120,000 | | 0 | | $ | 15.8125 | | 3/13/10 | | | | | |
| | 180,000 | | 0 | | $ | 23.7815 | | 3/30/11 | | | | | |
| | 120,000 | | 0 | | $ | 24.5940 | | 3/30/11 | | | | | |
| | 120,000 | | 0 | | $ | 31.6150 | | 3/6/12 | | | | | |
| | 180,000 | | 0 | | $ | 32.5200 | | 3/6/12 | | | | | |
| | 80,000 | | 0 | | $ | 38.2200 | | 4/25/13 | | | | | |
| | 320,000 | | 0 | | $ | 38.7650 | | 4/25/13 | | | | | |
| | 240,000 | | 60,000 | | $ | 41.3450 | | 3/3/14 | | | | | |
| | 120,000 | | 80,000 | | $ | 37.5100 | | 4/20/13 | | | | | |
| | 80,000 | | 120,000 | | $ | 38.5150 | | 4/17/14 | | | | | |
| | 40,000 | | 160,000 | | $ | 41.1150 | | 5/10/15 | | | | | |
| | 0 | | 374,288 | | $ | 32.8700 | | 5/12/16 | | | | | |
43
Arthur Stark | | 60,000 | | 0 | | $ | 11.4688 | | 3/13/10 | | 87,016 | | 1,853,441 | |
| | 15,000 | | 0 | | $ | 23.7815 | | 3/30/11 | | | | | |
| | 15,000 | | 0 | | $ | 31.6150 | | 12/31/09 | | | | | |
| | 60,000 | | 40,000 | | $ | 38.7650 | | 4/25/13 | | | | | |
| | 40,000 | | 60,000 | | $ | 41.3450 | | 3/3/14 | | | | | |
| | 5,000 | | 20,000 | | $ | 37.5100 | | 4/20/13 | | | | | |
| | 0 | | 25,000 | | $ | 38.7950 | | 4/17/14 | | | | | |
| | 0 | | 25,000 | | $ | 41.1150 | | 5/10/15 | | | | | |
| | 0 | | 41,029 | | $ | 32.8700 | | 5/12/16 | | | | | |
| | | | | | | | | | | | | |
Eugene A. Castagna | | 30,000 | | 0 | | $ | 23.7815 | | 12/31/09 | | 69,435 | | 1,478,966 | |
| | 60,000 | | 15,000 | | $ | 31.6150 | | 12/31/10 | | | | | |
| | 60,000 | | 40,000 | | $ | 38.7650 | | 4/25/13 | | | | | |
| | 40,000 | | 60,000 | | $ | 41.3450 | | 3/3/14 | | | | | |
| | 5,000 | | 20,000 | | $ | 37.5100 | | 4/20/13 | | | | | |
| | 0 | | 25,000 | | $ | 38.7950 | | 4/17/14 | | | | | |
| | 0 | | 25,000 | | $ | 41.1150 | | 5/10/15 | | | | | |
| | 0 | | 41,029 | | $ | 32.8700 | | 5/12/16 | | | | | |
(1)During the Company’s fiscal year 2006, an independent committee of the Company’s Board of Directors identified various deficiencies in the process of granting and documenting stock options and restricted shares, with the result, among other things, that for purposes of Section 409A of the Code (“Section 409A”), certain stock options were deemed to have been granted with an exercise price less than the value of underlying common stock on the date of grant. Under Section 409A, this would have subjected certain stock options held by a significant number of the Company’s employees (including Messrs. Eisenberg, Feinstein, Temares, Stark and Castagna) to adverse tax consequences unless brought into compliance with Section 409A. In order to effect such compliance, the exercise price of certain options held by Messrs. Eisenberg, Feinstein and Temares was increased, and the exercise of certain options held by Messrs. Stark and Castagna was limited to a specified calendar year (in all cases without any payment or other consideration to the affected executive). As a consequence, individual option grants to Messrs. Eisenberg, Feinstein and Temares may appear in this table as multiple entries where the exercise price was increased for only a portion of such grant, and, in the cases of Messrs. Stark and Castagna, some grants appear with a December 31 expiration date where that year was selected as the latest year in which any portion of such grant may be exercised.
(2)Market value is based on the closing price of the Company’s common stock of $21.30 per share on February 27, 2009, the last trading day in fiscal year 2008.
44
Options Exercises and Restricted Stock Vested for 2008
The following table includes certain information with respect to the exercise of options and vesting of restricted stock by named executive officers during fiscal 2008.
| | Option Awards | | Stock Awards | |
| | Number of Shares
Acquired on
Exercise | | Value Realized on
Exercise | | Number of
Shares Acquired
on Vesting | | Value Realized
on Vesting | |
Name | | (#) | | ($) | | (#) | | ($) | |
Warren Eisenberg(1) | | 0 | | 0 | | 36,934 | | 1,174,832 | |
Leonard Feinstein(1) | | 0 | | 0 | | 36,934 | | 1,174,832 | |
Steven H. Temares(1) (4) | | 160,000 | | 3,504,396 | | 36,934 | | 1,174,832 | |
Arthur Stark (2) | | 0 | | 0 | | 3,199 | | 102,550 | |
Eugene A. Castagna(3) (5) | | 24,000 | | 229,922 | | 3,199 | | 102,550 | |
(1)Messrs. Eisenberg, Feinstein and Temares each acquired 12,797 shares with a market price of $32.06 on April 21, 2008, 12,463 shares with a market price of $30.57 on April 17, 2008, and 11,674 shares with a market price of $32.87 on May 12, 2008 upon the lapse of restrictions on previously granted shares of restricted stock.
(2)Mr. Stark acquired 3,199 shares with a market price of $32.06 on April 21, 2008, upon the lapse of restrictions on previously granted shares of restricted stock.
(3)Mr. Castagna acquired 3,199 shares with a market price of $32.06 on April 21, 2008, upon the lapse of restrictions on previously granted shares of restricted stock.
(4)Mr. Temares exercised 160,000 stock options on May 6, 2008, with an exercise price of $11.8282 and a market price of $33.73. These options were expiring on May 27, 2008.
(5)Mr. Castagna exercised 24,000 stock options on November 13, 2008, with an exercise price of $11.4688 and a market price of $21.05. These options were expiring on December 31, 2008 and, pursuant to the Company’s insider trading policy, could not be exercised between November 21, 2008 and their expiration date.
45
DEFERRED COMPENSATION
Effective January 1, 2006, the Company adopted a nonqualified deferred compensation plan for the benefit of employees defined by the Internal Revenue Service as highly compensated. A certain percentage of an employee’s contributions may be matched by the Company, subject to certain plan limitations, as more fully described below. The following table provides compensation information for the Company’s nonqualified deferred compensation plan for each of the named executive officers for fiscal year 2008.
Nonqualified Deferred Compensation for Fiscal Year 2008
Name | | Executive
Contributions for
Fiscal Year 2008(1)
($) | | Company
Contributions for
Fiscal Year 2008(2)
($) | | Aggregate
Earnings (Losses)
in Fiscal Year
2008
($) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate Balance
at Fiscal Year End
2008
($) | |
Warren Eisenberg | | 222,115 | | 6,900 | | (278,143 | ) | 0 | | 527,374 | |
Leonard Feinstein | | 222,115 | | 6,900 | | (279,080 | ) | 0 | | 528,933 | |
Steven H. Temares | | 20,923 | | 1,053 | | (9,265 | ) | 0 | | 46,397 | |
Arthur Stark | | 219,159 | | 4,406 | | (7,677 | ) | 0 | | 723,720 | |
Eugene A. Castagna | | 67,054 | | 3,650 | | (49,474 | ) | 0 | | 124,524 | |
(1)All amounts reported in this column were also reported in this Proxy Statement in the “Salary” column of the Summary Compensation Table for the applicable named executive officer.
(2)All amounts reported in this column were also reported in this Proxy Statement in the “All Other Compensation” column of the Summary Compensation Table for the applicable named executive officer.
Under the Company’s nonqualified deferred compensation plan, a participant’s regular earnings may be deferred at the election of the participant, excluding bonus or incentive compensation, welfare benefits, fringe benefits, noncash remuneration, amounts realized from the sale of stock acquired under a stock option or grant, and moving expenses.
When a participant elects to make a deferral under the plan, the Company credits the account of the participant with a matching contribution equal to fifty percent of the deferral, offset dollar for dollar by any matching contribution that the Company makes to the participant under the Company’s 401(k) plan. The payment of this matching contribution is made upon the conclusion of the fiscal year. The maximum matching contribution to be made by the Company to a participant between the Company’s nonqualified deferred compensation plan and the Company’s 401(k) plan cannot exceed the lesser of $6,900 and three percent of a participant’s eligible compensation.
A participant is fully vested in amounts deferred under the nonqualified deferred compensation plan. A participant has a vested right in matching contributions made by the Company under the nonqualified deferred compensation plan, depending on the participant’s years of service with the Company: twenty percent at one to two years of service, forty percent at two to three years of service, sixty percent at three to four years of service, eighty percent at four to five years of service and one hundred percent at five or more years of service. As each of the named executive officers has more than five years of service to the Company, they are each fully vested in the matching contributions made by the Company under the plan.
Amounts in a participant’s account in the nonqualified deferred compensation plan are payable either in a lump sum or substantially equal annual installments over a period of five or ten years, as elected by the
46
participant. Such distributions may be delayed to a period of six months following a participant’s termination of employment to comply with applicable law.
47
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table below sets forth certain information regarding the beneficial ownership of shares of our common stockCommon Stock as of May 5, 2009March 15, 2023 by (i) each person or group of affiliated persons known by us to beneficially own more than five percent5% of our common stock;Common Stock; (ii) our named executive officers; (iii) each of our directors and nominees for director; and (iv) all of our directors and executive officers as a group.
Ownership data with respect to our institutional shareholders is based upon information publicly available as described in the footnotes below.
The following table gives effect to the shares of
common stockCommon Stock issuable within 60 days of
May 5, 2009March 15, 2023 upon the exercise of all
optionsawards and other rights beneficially owned by the indicated
stockholdersshareholders on that date. Beneficial ownership is determined in accordance with Rule 13d-3 promulgated under Section 13 of the Exchange Act, and includes voting and investment power with respect to shares. Percentage of beneficial ownership is based on
260,855,916335,404,588 shares of
our common stockCommon Stock outstanding at
May 5, 2009.March 15, 2023. Except as otherwise noted below, each person or entity named in the following table has sole voting and investment power with respect to all shares of
our common stockCommon Stock that he, she or it beneficially owns.
Unless otherwise indicated, the address of each beneficial owner listed below is c/o Bed Bath & Beyond Inc., 650 Liberty Avenue, Union, New Jersey 07083.
| | | | Number of Shares of Common Stock | |
| | | | Beneficially Owned and Percent of Class as | |
Name | | Position | | of May 5, 2009 | |
T. Rowe Price Associates, Inc. | | | | 37,370,084 | (1) | 14.3 | % |
FMR LLC | | | | 24,828,416 | (2) | 9.5 | % |
Davis Selected Advisers, L.P. | | | | 21,710,854 | (3) | 8.3 | % |
PRIMECAP Management Company | | | | 15,579,653 | (4) | 6.0 | % |
Warren Eisenberg | | Co-Chairman and Director | | 6,220,644 | (5) | 2.4 | % |
Leonard Feinstein | | Co-Chairman and Director | | 4,720,885 | (6) | 1.8 | % |
Steven H. Temares | | Chief Executive Officer and Director | | 2,595,833 | (7) | 1.0 | % |
Arthur Stark | | President and Chief Merchandising Officer | | 341,153 | (8) | * | |
Eugene A. Castagna | | Chief Financial Officer and Treasurer | | 299,175 | (9) | * | |
Dean S. Adler | | Director | | 9,857 | | * | |
Stanley F. Barshay | | Director | | 7,675 | | * | |
Klaus Eppler | | Director | | 9,042 | | * | |
Patrick R. Gaston | | Director | | 4,775 | | * | |
Jordan Heller | | Director | | 6,526 | | * | |
Robert S. Kaplan | | Director | | 14,016 | | * | |
Victoria A. Morrison | | Director | | 4,309 | | * | |
Fran Stoller | | Director | | 3,305 | | * | |
All Directors and Executive Officers as a Group (14 persons) | | | | 14,842,019 | | 5.7 | % |
BlackRock, Inc. | | | | | | 12,332,491(1) | | | 3.7% |
The Vanguard Group | | | | | | 8,572,118(2) | | | 2.6% |
Sue E. Gove | | | President & Chief Executive Officer and Director | | | 115,179(3) | | | * |
Laura Crossen | | | Senior Vice President of Finance & Chief Accounting Officer | | | 18,371(4) | | | * |
Harriet Edelman | | | Director | | | 73,789 | | | * |
Jeffrey A. Kirwan | | | Director | | | 85,496 | | | * |
Shelly Lombard | | | Director | | | 40,000 | | | * |
Joshua E. Schechter | | | Director | | | 77,128 | | | * |
Minesh Shah | | | Director | | | 42,041 | | | * |
Andrea M. Weiss | | | Director | | | 69,137 | | | * |
Ann Yerger | | | Director | | | 79,465 | | | * |
Carol Flaton | | | Director | | | — | | | * |
All Directors and Executive Officers as a Group | | | | | | 652,194 | | | * |
*Less than 1% of the outstanding common stock of the Company.
(1) Information regarding T. Rowe Price Associates, Inc. was obtained from a Schedule 13G filed with the SEC on February 11, 2009 by T. Rowe Price Associates, Inc. The Schedule 13G states that T. Rowe Price Associates, Inc. is deemed to have beneficial ownership of 37,370,084 shares of common stock, acquired in the ordinary course of business. The Schedule 13G also
48
*
| Less than 1% of our outstanding Common Stock. |
(1)
| Information regarding BlackRock, Inc. was obtained from a Schedule 13G filed with the SEC on January 26, 2023 by BlackRock, Inc. The Schedule 13G states that BlackRock, Inc. has sole voting power of 12,230,331 shares of Common Stock and sole dispositive power of 12,332,491 shares of Common Stock. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
(2)
| Information regarding The Vanguard Group was obtained from a Schedule 13G filed with the SEC on February 9, 2023 by The Vanguard Group. The Schedule 13G states that The Vanguard Group has 0 sole voting power of shares of Common Stock, shared voting power of 110,283 shares of Common Stock, sole dispositive power of 8,405,735 shares of Common Stock and shared dispositive power of 166,383 shares of Common Stock. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
(3)
| The shares reported as being owned by Ms. Gove are owned by her individually. |
(4)
| The shares reported as being owned by Ms. Crossen are owned by her individually. |
