UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT
OF 1934
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Section 240.14a-12 |
ANN 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):
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Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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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): |
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Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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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. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
7 TIMES SQUARE
NEW YORK, NEW YORK 10036
To Our Stockholders:
We are pleased to invite you to attend the Annual Meeting of Stockholders of ANN INC. to be held on Wednesday, May 20, 2015 at 8:00 A.M., local time, at our offices at 7 Times Square, 5th Floor, New York, New York 10036.
The following pages include a formal notice of the meeting and the proxy statement. These materials describe various matters on the
agenda for the meeting and provide details regarding admission to the meeting. Please read these materials so that you will know what we plan to do at the meeting. It is important that your shares be represented at the Annual Meeting, regardless of
whether or not you plan to attend the meeting in person. You may vote your shares through any of the voting options available to you as described in this proxy statement.
We hope you will exercise your rights as a stockholder and fully participate in ANN INC.’s future. On behalf of management and our Board of Directors, we thank you for your continued support of ANN
INC.
Sincerely,
Kay Krill
President and Chief Executive Officer
New York, New York
April 2, 2015
7 TIMES SQUARE
NEW YORK, NEW YORK 10036
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 2015
To the Stockholders of ANN INC.:
The 2015 Annual Meeting of Stockholders of ANN INC. (the “Company”) will be held at 8:00 A.M., local time, on
Wednesday, May 20, 2015, at the Company’s offices at 7 Times Square, 5th Floor, New York, New York 10036, for the following purposes:
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To elect to the Board of Directors of the Company the five directors named in the attached proxy statement; |
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To approve, by non-binding, advisory vote, the Company’s executive compensation (commonly referred to as “Say on Pay”); |
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To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the 2015 fiscal year; and
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To conduct such other business as may properly come before the meeting. |
Stockholders who hold our common stock at the close of business on March 25, 2015 are entitled to notice of and to vote at the Annual Meeting. If you wish to attend the Annual Meeting, you must
obtain an admission ticket in advance. You can request a ticket by following the instructions set forth on page 2 of the proxy statement.
By Order of the Board of Directors,
Katherine H. Ramundo
Secretary
New York, New York
April 2, 2015
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDERS’ MEETING TO BE HELD ON MAY 20, 2015
This proxy statement and our 2014 Annual Report to stockholders are available at www.proxyvote.com.
Your vote is important. Proposals 1 and 2 in this proxy statement are deemed non-routine matters, and accordingly, if you hold your shares through a bank, brokerage firm or other financial institution
and do not provide that firm with voting instructions, the firm is not allowed to vote those shares on your behalf. For this reason, it is critical that you cast your vote if you want it to count.
Whether or not you attend the meeting in person, please follow the instructions you received to vote your shares to
ensure that your shares are represented at the meeting. If you wish to attend the Annual Meeting, please see the instructions on page 2 of this proxy statement.
You may minimize the impact on the environment by eliminating paper proxy mailings. With your consent, we will provide all future proxy voting materials and annual reports to you electronically.
Instructions for consenting to electronic delivery can be found on your proxy card. Your consent to receive stockholder materials electronically will remain in effect until cancelled by you.
TABLE OF CONTENTS
7 TIMES SQUARE
NEW YORK, NEW YORK 10036
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 2015
We are furnishing this proxy statement and the accompanying proxy to the stockholders of ANN INC., a
Delaware corporation (the “Company”), in connection with solicitation of proxies by the Board of Directors of the Company (the “Board”) for use at the Annual Meeting of Stockholders of the Company and at any and all adjournments
or postponements of that meeting. The Annual Meeting will be held at 8:00 A.M., local time, on Wednesday, May 20, 2015, at our offices located at 7 Times Square, 5th Floor, New York, New York 10036.
This proxy statement and the proxies solicited by this proxy statement will be made available to stockholders on or about April 2, 2015.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
What is the purpose of the meeting?
At the Annual Meeting, stockholders
will act upon the matters outlined in the accompanying notice of meeting. In addition, the Company’s management will report on the Company’s performance during 2014 and respond to questions from stockholders.
What is a proxy?
A
proxy is a document, also referred to as a proxy card, on which you authorize someone else to vote for you at the upcoming Annual Meeting in the way that you want to vote. You may also choose to abstain from voting. The Board is soliciting your vote
as indicated in this proxy statement and on your proxy card.
Who is entitled to vote?
You can vote if you were a holder of our common stock at the close of business on March 25, 2015 (the “Record Date”). At
the close of business on the Record Date, there were 45,937,502 shares of common stock outstanding. Each common share has one vote.
How do
I vote?
If you are a stockholder of record on the Record Date and hold your shares in your own name, you have three ways
to vote and submit your proxy before the Annual Meeting:
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By Internet—We encourage you to vote and submit your proxy over the internet at www.proxyvote.com. Even though you may have received paper
copies of the proxy materials, you may vote online by going to www.proxyvote.com and entering your control number, which is a 16-digit number located in a box on your proxy card that is included with your proxy materials.
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By Telephone—You may vote and submit your proxy by calling (800) 690-6903 and providing your control number, which is a 16-digit number
located in a box on your proxy card that is included with your proxy materials. |
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By Mail—If you received your proxy materials by mail, you may vote by completing, signing and returning the enclosed proxy card.
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In each case, the voting deadline for stockholders of record is 11:59 P.M. Eastern Daylight
Time (EDT) on May 19, 2015. If you own shares through the Company’s Associate Discount Stock Purchase Plan or 401(k) Savings Plan, please refer to page 3 of this proxy statement for the deadline to vote those shares.
If you hold your shares through an account with a bank, brokerage firm or other financial institution, your ability to vote over the
internet or by telephone depends on the voting procedures of that firm. Please follow the directions provided to you by that firm.
All shares that are represented by properly executed proxies and received in time for voting at the Annual Meeting (and that have not been revoked) will be voted as instructed on the proxy. If your shares
are held by you as a record holder and no specific choices are indicated, the shares represented by your properly completed and executed proxy will be voted FOR the election of the five director nominees (Proposal 1) and in favor of Proposals 2 and
3. If your shares are held through a bank, brokerage firm or other financial institution, your broker may not vote on Proposals 1 and 2, the non-routine matters, without your instructions, as explained on page 3 of this proxy statement. Should any
matter not described above be properly presented at the meeting, the persons named in the proxy will vote in accordance with their judgment as permitted.
If you choose to vote your ANN INC. shares at the Annual Meeting and these shares are held for you through a bank, brokerage firm or other financial institution, you must obtain a legal proxy from that
firm and bring it with you to hand in with your ballot in order to be able to vote your shares at the meeting.
If you sign
and submit the enclosed proxy card or vote through the internet or by telephone before the Annual Meeting, you may still attend the meeting (provided you follow the pre-registration instructions below).
Where will the Annual Meeting be held?
The meeting will be held at the Company’s offices located at 7 Times Square, 5th Floor, New York, New York 10036 at 8:00 A.M., local time, on Wednesday, May 20, 2015.
You may obtain directions to attend the meeting by sending an e-mail to the Corporate Secretary at corporate_secretary@anninc.com or
calling (212) 536-4229. In addition, if, due to a disability, you need an accommodation to attend or participate, please contact the Corporate Secretary by Monday, May 18, 2015.
How do I attend the Annual Meeting? What do I need to bring?
To attend the
Annual Meeting, you must be a stockholder at the close of business on the record date March 25, 2015 and request an admission ticket in advance by visiting www.proxyvote.com and following the instructions provided. You will need
the 16-digit control number printed on your voter instruction form or proxy card. Tickets will be issued to registered and beneficial owners at the close of business on the record date and to one guest accompanying each registered and beneficial
owner.
Requests for admission tickets will be processed in the order in which they are received and must be requested no
later than Monday, May 18, 2015. Please note that seating is limited, and requests for admission tickets will be accepted on a first-come, first-served basis. On the day of the meeting, stockholders will be required to present valid,
government-issued picture identification with their admission ticket. The admission desk will open at 7:00 A.M. EDT on May 20, 2015, and the meeting will begin at 8:00 A.M. EDT. Stockholders who arrive after the meeting has started will not be
admitted.
Cameras and recording devices (except those used by the Company) will not be permitted in the meeting room during
the meeting. For security and safety reasons, all bags will be subject to search.
For questions about admission to the Annual
Meeting, please contact us at (212) 536-4229.
If you do not provide photo identification or comply with the other
procedures outlined above, you will not be admitted to the Annual Meeting.
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Who votes for me if I own my shares through the Company’s Associate Discount Stock Purchase Plan or
the 401(k) Savings Plan and what is the deadline for voting these shares?
The plan custodian or trustee, as the case may
be, votes in accordance with your instructions. If you own shares through the Associate Discount Stock Purchase Plan and the custodian does not receive your properly completed and executed proxy with your voting instructions by 11:59 P.M. EDT on
May 18, 2015, the custodian will not vote your shares.
If you own shares through the 401(k) Savings Plan and the trustee
does not receive your properly completed and executed proxy with your voting instructions by 11:59 P.M. EDT on May 17, 2015, the trustee will vote your shares in the same proportion as it voted shares for which it received instructions.
On what matters may I vote?
At the Annual Meeting, you will be able to vote on the:
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election of five directors to the Board; |
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Company’s executive compensation (“Say on Pay”); |
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ratification of the appointment of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting
firm for the 2015 fiscal year; and |
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transaction of any other business as may properly come before the meeting or any adjournments, continuations or postponements of the meeting.
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We do not expect any other matters requiring a vote of the stockholders to be presented at the Annual
Meeting, but if another matter is properly submitted, the individuals named in the proxy intend to vote on those matters in accordance with their best judgment.
How does the Board recommend I vote?
The Board recommends a vote:
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FOR each of the five nominees for the Board of Directors; |
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FOR approval of the Company’s executive compensation (“Say on Pay”); and |
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FOR ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm for the 2015 fiscal year.
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How many shares must be present to conduct a meeting?
A quorum is necessary to hold a valid meeting of stockholders. The presence, either in person or by proxy, of the holders of a majority of
the shares of common stock outstanding on the Record Date is necessary to constitute a quorum at the Annual Meeting. All abstentions and broker non-votes will be included as shares that are present and entitled to vote for purposes of determining
the presence of a quorum at the meeting.
What is a “broker non-vote”?
If your shares are held in the name of a bank, brokerage firm or other financial institution, your shares may be voted even if you do not
provide your broker with voting instructions. These firms have the authority under New York Stock Exchange rules to vote shares for which their customers do not provide voting instructions on
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certain “routine” matters. However, when a proposal is not a “routine” matter under the New York Stock Exchange rules and your broker has not received your voting instructions
with respect to that proposal, the firm cannot vote the shares on that proposal. This is called a “broker non-vote.”
Proposal 3, the ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm for
the 2015 fiscal year, is a routine matter for which the bank, brokerage firm or other financial institution who holds your shares can vote your shares even if it has not received instructions from you. The two other proposals in this proxy statement
are non-routine matters and accordingly, your broker cannot vote your shares on those proposals without your instructions.
How are broker
non-votes counted?
Shares represented by broker non-votes will be counted in determining whether there is a quorum. Shares
represented by broker non-votes will not be counted as shares present and voting on a specific proposal, thus having no effect on the outcome of that proposal.
What happens if I abstain?
A share voted “abstain” with respect
to any proposal is considered as present and entitled to vote with respect to that proposal, but is not considered a vote cast with respect to that proposal. For Proposal 1, abstentions will have no effect on the outcome of the proposal. For
Proposals 2 and 3, however, abstentions will be counted as votes against those proposals.
How many votes are required to pass a proposal?
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For Proposal 1, in order for a director nominee to be elected, the number of votes cast “for” the nominee must exceed the number of votes
cast “against” the nominee; |
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For Proposal 2, the affirmative vote of the holders of a majority of the shares of the Company’s common stock represented in person or by proxy
and entitled to vote at the Annual Meeting will be deemed to be stockholders’ non-binding approval with respect to our executive compensation; and |
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For Proposal 3, the affirmative vote of the holders of a majority of the shares of the Company’s common stock represented in person or by proxy
and entitled to vote at the Annual Meeting is required for stockholders’ ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm for 2015. |
Can I change my vote after I have voted?
Yes. You can change your vote at any time before your proxy is voted at the Annual Meeting. A later vote by any means will cancel an earlier vote. The last vote we receive before the Annual Meeting will
be the vote counted. You may change your vote in any of the following ways:
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You may revoke your proxy by sending written notice before the Annual Meeting to the Company’s Corporate Secretary at ANN INC., 7 Times Square,
New York, NY 10036; |
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You may send the Company’s Corporate Secretary (to the address indicated above) a signed proxy, dated later than the original proxy, before the
Annual Meeting; |
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If you voted through the internet or by telephone, you may vote again over the internet or by telephone by 11:59 P.M. EDT on May 19, 2015,
and if you are voting shares held through the Company’s Associate Discount Stock Purchase Plan, by 11:59 P.M. EDT on May 18, 2015, and through the Company’s 401(k) Savings Plan, by 11:59 P.M. EDT on May 17, 2015;
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You may attend the Annual Meeting in person and vote. However, attending the Annual Meeting, in and of itself, will not change an earlier vote; or
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If your shares are held in an account at a bank, brokerage firm or other financial institution, you may contact your bank, broker or financial
institution, as the case may be, to change your vote or obtain a legal proxy to vote your shares if you wish to cast your votes in person at the Annual Meeting. |
Who pays for soliciting the proxies?
The Company pays the cost of
soliciting the proxies. We have retained Morrow & Co., LLC (“Morrow”), a professional soliciting organization located at 470 West Ave., Stamford, CT 06902, to assist us in soliciting the proxies from brokerage firms, custodians
and other fiduciaries. The Company expects the fees paid to Morrow for soliciting the proxies to be approximately $9,500. In addition, the Company’s directors, officers and employees may, without additional compensation, also solicit proxies by
mail, telephone, internet, personal contact, facsimile or through similar methods.
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CORPORATE GOVERNANCE
Board Committees
The
Board of Directors has established the following committees to assist the Board in discharging its responsibilities: Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. The committees on which the independent
directors serve as of the date of this proxy statement are set forth below:
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Audit
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Compensation Committee |
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Nominating and Corporate
Governance Committee |
| Katie J. Bayne |
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| James J. Burke, Jr. |
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| Dale W. Hilpert |
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| Ronald W. Hovsepian |
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| Linda A. Huett |
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| Michael C. Plansky |
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| Stacey Rauch |
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| Daniel W. Yih |
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Independence
Under our Corporate Governance Guidelines, at least a majority of our Board members must be independent, and it is the Board’s goal
to have two-thirds of the directors qualify as independent. With eight independent, non-employee directors out of nine current Board members, we have satisfied our independence requirements. All members of Board committees must meet our Director
Independence Requirements and such other requirements for committee service as required by the rules of the New York Stock Exchange and applicable law.
The Board has adopted Director Independence Requirements which are designed to supplement and be applied together with the listing standards of the NYSE. The Director Independence Requirements are
incorporated into our Corporate Governance Guidelines, which is available on the Company’s website at http://investor.anninc.com. As required by the New York Stock Exchange rules, the Board evaluates annually the independence of our
directors by determining whether a director or any member of his or her immediate family has, either directly or indirectly, any material relationship with the Company.
Under the Director Independence Requirements, a director will not be considered “independent” if:
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The director is or has been within the last ten years an employee of the Company. |
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An immediate family member of the director is or has been within the last ten years an executive officer of the Company. |
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The director has received more than $120,000 in direct compensation from the Company during any twelve-month period within the last three years. This
excludes director and committee fees or other forms of deferred compensation for prior service. |
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An immediate family member of the director has received more than $120,000 in direct compensation from the Company during any twelve-month period
within the last three years. |
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The director or an immediate family member of the director is a current partner of the Company’s external auditor. |
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The director is a current employee of the Company’s external auditor. |
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An immediate family member of the director is a current employee of the Company’s external auditor and personally works on the Company’s
audit. |
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Within the last three years, the director or immediate family member of the director was a partner or employee of the Company’s external auditor
and personally worked on the Company’s audit during that time. |
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The director or immediate family member of the director is, or has been within the last three years, employed as an executive officer of another
company at which any of the Company’s present executive officers at the same time serves or served on the other company’s compensation committee. |
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The director is a current employee, or an immediate family member of the director is a current executive officer, of a company that has made payments
to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1,000,000 or 2% of the other company’s consolidated gross revenues.
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In making its independence determinations, the Board considers and broadly evaluates all information
provided by each director in response to a detailed questionnaire concerning his or her independence and any direct or indirect business, family, employment, transaction or other relationship or affiliation of that director with the Company.
As part of its analysis to determine director independence during fiscal year 2014, the Board considered whether
Mr. Hovsepian’s daughter’s employment by the Company would have any impact on his independence. Following consideration of all relevant facts and circumstances, including the fact that she is not an executive officer, the terms of her
employment are consistent with the Company’s human resources policies, and the total value of her annual compensation is significantly below the U.S. Securities and Exchange Commission (the “SEC”) threshold of $120,000 requiring
disclosure, the Board determined that her employment did not impair Mr. Hovsepian’s independence. The Board also considered payments made by the Company to the Corporate Executive Board (“CEB”), where Ms. Rauch serves as a
director. Given Ms. Rauch’s position as a non-employee director, the Board determined that the benefit to Ms. Rauch was remote and the transaction did not impair her independence. In addition, the Board considered
Mr. Yih’s position as Chief Operating Officer of Starwood Capital Group (“Starwood”), which manages funds that invest in retail properties across the United States, including some malls where the Company’s stores are
located. The Board of Directors has determined that Mr. Yih’s position at Starwood did not impair his independence as a director of the Company.
The independent directors are:
Ms. Krill is a non-independent director.
As stated above,
Mr. Hovsepian is the Chairman of the Board and Ms. Krill is the Company’s Chief Executive Officer. The Company feels this structure is appropriate at this time because it is beneficial to have an independent chairman whose
responsibility is leading the Board and focusing on the Board’s oversight responsibilities, while allowing our Chief Executive Officer to focus on managing and growing our business.
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Board and Committee Oversight of Risk
The Board exercises risk oversight through its interactions with management and through extensive discussions among the Board members. The
Board meets regularly with management to discuss and consider potential risks that the Company may be facing. The Audit Committee of the Board evaluates the Company’s financial risks with input from management and Deloitte, and reports any such
risk matters to the entire Board for discussion and decision-making. The full Board considers operational risks of the Company. In addition, as discussed in the Compensation Discussion and Analysis section (the “CD&A”) of this proxy
statement, the Compensation Committee considers risks associated with the Company’s compensation programs and works closely with its compensation consultant to ensure that the Company’s compensation programs and practices incentivize our
executives and other associates to act in the best interests of the Company’s stockholders. Mr. Hovsepian, a member of all Committees, is able to share with each Committee any risks the other Committee is evaluating.
Board Committee Functions
The functions of the standing committees are as follows:
Audit Committee
The purpose of the Audit Committee, which has been
established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is to assist the Board of Directors in fulfilling its obligations regarding the accounting, auditing,
financial reporting, internal control over financial reporting and legal compliance functions of the Company and its subsidiaries. The Audit Committee’s principal functions include assisting the Board of Directors in its oversight of the:
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integrity of the Company’s financial statements; |
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major financial risk exposures and the steps the Company is taking to monitor and control those risks; |
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Company’s compliance with legal and regulatory requirements; |
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qualifications, independence and performance of the Company’s independent registered public accounting firm; and |
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performance of the Company’s internal audit function. |
The Audit Committee also prepares the Audit Committee Report for inclusion in the proxy statement. See “Audit Committee Report.”
In the judgment of the Board of Directors, each member of the Audit Committee is financially literate. In addition, the Board of
Directors has determined that Messrs. Plansky and Yih each qualifies as an “audit committee financial expert” within the meaning of the applicable rules of the SEC and they have accounting or related financial management expertise.
The Board has also determined that all members of the Audit Committee are “independent,” as required by SEC rules and the listing standards of the New York Stock Exchange.
The Audit Committee meets from time to time in separate executive sessions with each of the representatives of Deloitte, the
Company’s independent registered public accounting firm, the Chief Financial Officer, the General Counsel and the Vice President of Internal Audit.
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Compensation Committee
The purpose of the Compensation Committee is to discharge the responsibilities of the Board of Directors relating to compensation for the
Company’s Chief Executive Officer, senior management and such other key management employees as the Compensation Committee may determine, to ensure that management’s interests are aligned with the interests of stockholders of the Company.
The Compensation Committee is also responsible for determining compensation for non-employee directors. The Committee’s principal functions include:
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establishing the Company’s compensation philosophy and practices; |
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reviewing and approving compensation of the Chief Executive Officer and other key executives to ensure that it is tied to performance;
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setting compensation of non-employee directors; |
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reviewing the Company’s compensation programs to determine whether they incent executives to take unnecessary and excessive risks;
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reviewing and approving appropriate performance metrics under the Company’s incentive compensation plans and determining amounts to be paid to key
executives based on performance levels achieved; |
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making recommendations to the Board of Directors with respect to proposed employee benefit plans, incentive compensation plans and equity-based plans;
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reviewing and participating with management in the preparation of the CD&A and preparing the Compensation Committee Report for inclusion in the
proxy statement in accordance with the rules and regulations of the SEC. |
During fiscal year 2014, the
Compensation Committee retained Frederic W. Cook & Co., Inc., a nationally recognized compensation consultant, to advise it on executive compensation. The Compensation Committee considered whether there were any conflicts of interest with
Frederic W. Cook & Co., Inc. and determined that its work did not raise any conflict of interest. See the CD&A for further information regarding processes and procedures for the determination of executive compensation and the
“Director Compensation” section of this proxy statement for further information regarding non-employee director compensation.
The Board has also determined that all members of the Compensation Committee are “independent,” as required by SEC rules and the listing standards of the New York Stock Exchange.
Nominating and Corporate Governance Committee
The purpose of the Nominating and Corporate Governance Committee is to provide assistance to the Board of Directors in corporate governance matters and in determining the proper size and composition of
the Board. The Nominating and Corporate Governance Committee’s principal functions include:
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identifying individuals qualified to become members of the Board of Directors; |
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recommending to the Board of Directors nominees for directors for each annual meeting of stockholders and nominees for election to fill any vacancies
on the Board of Directors; |
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developing and recommending to the Board of Directors corporate governance principles applicable to the Company; and |
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leading the annual review of the Board’s performance. |
The Nominating and Corporate Governance Committee will consider (in consultation with the Chairman of the Board) and recruit candidates to fill positions on the Board, including vacancies resulting from
the removal, resignation or retirement of any director, an increase in the size of the Board of Directors or otherwise. In considering potential nominees to the Board, the Nominating and Corporate Governance Committee evaluates
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each potential candidate against its then-current criteria for selecting new directors. Those criteria include, at a minimum, any requirements of applicable law or listing standards, as well as
consideration of a candidate’s strength of character, judgment, business experience, specific areas of expertise, factors relating to the composition of the Board (including its size and structure) and principles of diversity. In addition, the
Nominating and Corporate Governance Committee will consider each potential candidate in light of the core competencies that the Committee believes should be represented on the Board of Directors and will also consider the mix of directors and their
individual skills, experiences and diverse perspectives to ensure that the composition of the Board is appropriate to carry out its duties.
Diversity of the Company’s Board members is one of the principal factors that the Nominating and Corporate Governance Committee takes into account when considering potential Board nominees. Since the
Company is in the women’s apparel business, the Nominating and Corporate Governance Committee, as well as the entire Board, considers that a woman’s perspective is important to the business and should be reflected in the Board composition.
Currently, four out of our nine Board members are women.
The Company’s Nominating and Corporate Governance Committee
also retains from time to time, at the Company’s expense, search firms to identify candidates, including for the purpose of performing background reviews of potential candidates. The Committee provides guidance to search firms it retains about
the particular qualifications the Board is then seeking.
Stockholders may recommend candidates for nomination to the Board of
Directors for consideration by the Nominating and Corporate Governance Committee by submitting in writing to the following address the information required by our Bylaws for director nominees: Corporate Secretary, ANN INC., 7 Times Square, New York,
NY 10036. All the director candidates, including those recommended by stockholders, are evaluated on the same basis. The Nominating and Corporate Governance Committee will review any candidate recommended by a stockholder of the Company in light of
the Committee’s criteria for selection of new directors.
Committee Charters
The charters for the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are
available free of charge on the Company’s website at http://investor.anninc.com.
Executive Sessions of Non-Employee Directors
The Company’s independent directors meet separately in executive session without the Chief Executive Officer or other
representatives of management. These meetings occur at each regularly scheduled in-person Board meeting in accordance with the Company’s Corporate Governance Guidelines. Mr. Hovsepian, the Non-Executive Chairman of the Board, presides at
the executive sessions.
Director Attendance
The Company’s Board of Directors held 17 meetings in fiscal year 2014. The Audit Committee held four meetings, the Compensation Committee held six meetings, and the Nominating and Corporate
Governance Committee held five meetings in fiscal year 2014. Each current director attended at least 95% of the total number of meetings of the Board and the Committees on which he or she served.
It is the Company’s policy that all current directors attend the Company’s Annual Meeting of Stockholders. All then-current
directors attended the 2014 Annual Meeting of Stockholders, and it is anticipated that the eight directors identified in the “Board of Directors” discussion below will attend the 2015 Annual Meeting of Stockholders.
10
Corporate Governance Guidelines
The Board adopted the Corporate Governance Guidelines to assist it in the exercise of its responsibilities. The Company’s Corporate
Governance Guidelines are available free of charge on the Company’s website at http://investor.anninc.com.
Related Person
Transactions Policy and Procedures
It is the written policy of the Board of Directors that the Audit Committee consider
any related person transaction which is required to be disclosed under the rules of the SEC, and based on its review, recommend to the Board whether the transaction should be approved. Members of the Board who have no financial interest in the
transaction then determine whether that transaction should be approved or not. For purposes of this policy, the terms “transaction” and “related person” have the meanings contained in Item 404 of Regulation S-K. In
determining whether the transaction should be approved or ratified by the Board, the Audit Committee and the Board consider:
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• |
|
the nature of the related person’s interest in the transaction; |
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• |
|
the material terms of the transaction; |
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• |
|
the significance of the transaction to the related person; |
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• |
|
the significance of the transaction to the Company; |
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• |
|
whether the transaction would impair the judgment of a Board member or an executive officer to act in the best interest of the Company; and
|
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• |
|
any other matters the Audit Committee or Board deems appropriate. |
Any Audit Committee or Board member who is a related person with respect to a transaction under review may not participate in the
deliberations or vote respecting approval or ratification, provided, however, that such director may be counted in determining the presence of a quorum at the Audit Committee or Board meeting at which the transaction is being considered.
Related Person Transactions
During fiscal year 2014, the Company was not a participant in any related person transaction requiring disclosure under Item 404 of Regulation S-K.
Code of Conduct
The
Company has a Code of Conduct that applies to all its associates, including its Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Controller, as well as members of the Company’s Board of Directors. The Code of
Conduct is available on the Company’s website at http://investor.anninc.com. Any updates or amendments to the Code of Conduct, as well as any waiver from the Code of Conduct granted to an executive officer (including the Company’s
Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Controller), will also be posted on the website.
11
Communications with the Board of Directors
Stockholders and other interested parties may write to the Non-Executive Chairman of the Board or the non-employee directors as a group at
the following address:
Ronald W. Hovsepian, Non-Executive Chairman
ANN INC.
7
Times Square
New York, NY 10036
Or
Non-Employee Directors
ANN INC.
7
Times Square
New York, NY 10036
You may also report issues regarding accounting, internal accounting controls or auditing matters to the Company’s Board of Directors by writing to the above address, by going online at
www.anninc.ethicspoint.com or by calling the ANN INC. Compliance & Ethics Hotline at (800) 688-2273. A call to this telephone line is anonymous and free, and this line is available 24 hours per day. Information about how to
contact the Board and the Compliance & Ethics Hotline is also available on the Company’s website at http://investor.anninc.com.
Information on the Company’s website is not incorporated by reference into this proxy statement.
12
BOARD OF DIRECTORS
The Board of Directors of the Company is presently composed of nine members. In accordance with our Corporate Governance Guidelines, Dale
W. Hilpert, having reached the mandatory retirement age of 72, will not stand for re-election at our Annual Meeting.
The
below biographies illustrate the value each individual brings as a director. In addition, each of our directors has a prominent professional reputation, leadership skills and extensive business expertise and possesses other key attributes necessary
to be an effective director, including integrity, analytical skills and a willingness and ability to devote adequate time to Board duties.
Katie J. Bayne, age 48. Ms. Bayne has been a director of the Company since November 2014. Ms. Bayne serves as Senior Vice President, Global Sparkling Brands at The Coca-Cola Company. In
this role, she is responsible for global marketing, portfolio strategy and innovation for the flagship brand, Coca-Cola, and the company’s other sparkling brands around the world. She also oversees worldwide licensing, retail and attractions
for The Coca-Cola Company. Ms. Bayne joined Coca-Cola in 1989 in brand management and has since held roles of increasing responsibility, focused on consumer strategy, retail marketing and consumer marketing in the U.S. and Australia. From 2010
to 2013, she was President and General Manager, Sparkling Beverages, Coca-Cola North America. Prior to her current position, Ms. Bayne served as President, North America Brands for The Coca-Cola Company.
With 26 years of experience as a marketing executive at Coca-Cola, Ms. Bayne brings extensive strategic marketing and brand
management experience to ANN INC. Throughout her career, Ms. Bayne acquired expertise in consumer strategy, retail marketing and consumer marketing. In addition, through her leadership roles at Coca-Cola, Ms. Bayne acquired extensive
managerial and operational knowledge of the retail industry, both domestically and internationally.
James J. Burke, Jr.,
age 63. Mr. Burke has been a director of the Company since 1989. He is the founder and has been the Managing Member of J Burke Capital Partners LLC, a private investment firm, since 2007. Mr. Burke is also a director of Lincoln
Educational Services Corporation. Prior to J Burke Capital Partners, from 2004 to 2011, he was the co-founder, partner and director of Stonington Partners, a private investment firm. Previously, Mr. Burke served as co-founder and investment
professional with Merrill Lynch Capital Partners, Inc., for which he was President and Chief Executive Officer from 1987 until 1994, when he left to start Stonington Partners.
Mr. Burke brings to ANN INC. extensive financial and business knowledge through his engagement in private equity investing since 1981. Throughout his career, he has been responsible for sourcing and
analyzing investment opportunities, where he has developed expertise and significant knowledge regarding the managerial, operational and financial aspects of a business.
Ronald W. Hovsepian, age 54. Mr. Hovsepian has been Non-Executive Chairman of the Company’s Board since 2005 and a director of the Company since 1998. Since December 2011,
Mr. Hovsepian has been the Chief Executive Officer, President and director of IntraLinks Holdings, Inc., a global provider of Software-as-a-Service solutions. From 2006 to April 2011, he was the Chief Executive Officer, President and director
of Novell, Inc., a technology company. From 2005 to 2006, he was President and Chief Operating Officer of Novell, and prior he served as Executive Vice President and President, Worldwide Field Operations and as President, North America of Novell.
Before that, Mr. Hovsepian held management and executive positions at IBM Corporation over a 16-year period, including worldwide general manager of IBM’s Distribution industries, and manager of global hardware and software development,
sales, marketing and services related to that industry. Since February 2012, Mr. Hovsepian has been a director of ANSYS, Inc., a technology company that develops and markets engineering simulation software and technologies.
13
As the current Chief Executive Officer of IntraLinks, former Chief Executive Officer of
Novell and former executive of IBM Corporation, Mr. Hovsepian brings to ANN INC. significant knowledge and experience in management and operations. In addition, he brings to the ANN INC. Board his skills and expertise in information technology.
Linda A. Huett, age 70. Ms. Huett has been a director of the Company since 2005. From 2000 to 2006, she was Chief
Executive Officer of Weight Watchers International, Inc., a global branded consumer company and provider of weight-loss services. In addition, Ms. Huett was a director of Weight Watchers from 1999 to 2006 and a director of RC2 Corporation, a
producer of children’s and collectible products, from 2007 until April 2011.
Through her experience as Chief Executive
Officer and a director of Weight Watchers, Ms. Huett brings to ANN INC. significant experience in global sales and consumer marketing, especially to women. Ms. Huett also contributes to ANN INC. her experience in managing and operating a
large public company.
Kay Krill, age 60. Ms. Krill has served as Chief Executive Officer of the Company since
2005 and President of the Company and a member of the Board of Directors since 2004. Previously, from 2001 to 2004, Ms. Krill served as President of the LOFT Division. Prior to that, from 1998 to 2001, Ms. Krill was Executive Vice
President, Merchandise and Design of the LOFT Division. From 1996 to 1998, Ms. Krill served as Senior Vice President, General Merchandise Manager of the LOFT Division and, from 1994 to 1996, she was Vice President of Merchandising for Ann
Taylor. Prior to joining the Company, Ms. Krill held various management positions at several retailers including The Talbots, Inc. and Hartmarx Corporation.
Ms. Krill brings to ANN INC. extensive knowledge of the Company and the apparel industry. Ms. Krill created and spearheaded the growth of the LOFT Division from a start-up to over a $1 billion
business. With 21 years of exemplary service as a leader of the Company, she understands every component of the Company’s business. Ms. Krill has a depth of experience in the apparel industry, a talent for shaping and building brands and a
proven track record of delivering sustainable long-term growth.
Michael C. Plansky, age 65. Mr. Plansky has been
a director of the Company since July 2011. From 2005 to 2009, he was the National Partner in Charge, Risk Management—Audit and served as Americas Region Risk Management Partner at KPMG LLP. From 2005 until 2010, he also served as KPMG’s
Ombudsman and as a member of the firm’s Legal and Compliance Committee and Management Review Panel.
Through his 35-year
tenure at KPMG, Mr. Plansky brings to ANN INC. broad accounting expertise, including significant knowledge in audit and risk management, and extensive experience in the consumer products and retail industries. He qualifies as an “audit
committee financial expert” under the applicable SEC rules, and, in particular, brings to the Board significant expertise in analyzing financial statements.
Stacey Rauch, age 57. Ms. Rauch has been a director of the Company since January 2011. Ms. Rauch is a Director Emeritus of McKinsey & Company, Inc. from which she retired in
September 2010. Ms. Rauch was a leader in McKinsey’s Retail and Consumer Goods Practices, served as the head of the North American Retail and Apparel Practice, and acted as the Global Retail Practice Convener. Ms. Rauch was the first
woman at McKinsey appointed as an industry practice leader. She is currently a director of Land Securities Group PLC, a LSE-traded real estate investment trust in the United Kingdom, Fiesta Restaurant Group, Inc., a Nasdaq-traded owner and operator
of quick-casual restaurants, and Corporate Executive Board, a NYSE-traded, leading member-based advisory company. Ms. Rauch also served as a director of Tops Holding Corporation, the parent company of the supermarket chain Tops Markets, LLC
until December 2013.
Ms. Rauch brings to ANN INC. extensive marketing, merchandising, business strategy and
international experience in the retail industry. During her 24-year tenure at McKinsey, she developed substantial expertise working with specialty retailers, wholesale apparel manufacturers and department stores, and also acquired extensive
experience in other areas of the retail sector, including grocery retail, consumer packaged goods and big-box hard goods retail.
14
Daniel W. Yih, age 56. Mr. Yih has been a director of the Company since 2007. He
has been Chief Operating Officer of Starwood Capital Group, a private investment firm, since 2007 and previously was Chief Operating Officer and a Portfolio Principal of GTCR Golder Rauner, LLC, a private equity firm, from 2000 to 2007. Mr. Yih
was also a member of the Board of Directors of Starwood Hotels & Resorts Worldwide, Inc. from 1995 to 2007.
Mr. Yih’s experience as Chief Operating Officer of Starwood Capital Group and as an executive at other companies as well as
other investment companies, gives him extensive business and financial expertise. Like Mr. Plansky, Mr. Yih qualifies as an “audit committee financial expert” under the applicable SEC rules and, accordingly, also brings to the
Board significant knowledge regarding financial statements.
15
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is currently divided into three classes. We are in the process of declassifying our Board, and beginning at the 2016 Annual Meeting of Stockholders each director will be elected for
a one-year term.
The Board of Directors has nominated for re-election James J. Burke, Jr., Ronald W. Hovsepian, Linda A.
Huett, Kay Krill, and Stacey Rauch (the “Nominees”) to hold office for a one-year term expiring at the next Annual Meeting, or until their respective successors are elected and qualified. Messrs. Burke and Hovsepian and
Mses. Huett, Krill and Rauch have consented to serve as directors if elected at the Annual Meeting. If for any reason, any of these Nominees become unable or unwilling to serve at the time of the Annual Meeting, the persons named as proxies in
the proxy will have the authority to vote for substitute nominees. The Company does not anticipate that any of the Nominees will be unable or unwilling to serve.
The Board of Directors has determined Messrs. Burke and Hovsepian and Mses. Huett and Rauch are “independent” under the New York Stock Exchange listed company rules and
applicable law.
The Board of Directors recommends that stockholders vote
“FOR” the Company’s Nominees.
16
PROPOSAL 2
TO APPROVE, BY NON-BINDING, ADVISORY VOTE, THE COMPANY’S
EXECUTIVE COMPENSATION
As required by the executive compensation disclosure rules of the SEC, we are offering our stockholders the opportunity to cast a non-binding, advisory stockholder vote on the compensation of our Named
Executive Officers, as disclosed in the Compensation Discussion and Analysis (“CD&A”), compensation tables and narrative discussion in this proxy statement.
The Company maintains a dialogue with many of its stockholders on a number of topics including corporate governance and executive compensation, and in connection with last year’s Say on Pay vote, the
Company held discussions with stockholders to solicit their views on the Company’s executive compensation. Although this vote is advisory, our Compensation Committee gives serious consideration to stockholders’ views and voting results
when making future compensation decisions.
As described in the CD&A, our compensation program is designed to drive the
achievement of consistent revenue growth with strong bottom-line performance and to attract and retain highly talented executives. Our compensation program has a number of features we believe are designed to promote these objectives. Therefore, in
deciding how to vote on this proposal, the Board encourages you to consider the following features, among others, which are more fully discussed in the CD&A:
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• |
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The Company’s executive compensation program seeks to align pay with performance by having performance-based compensation represent a significant
portion of total compensation; |
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• |
|
86% of the target compensation for our Chief Executive Officer is “at-risk,” and 76% of the compensation for our other Named Executive
Officers is “at-risk,” with both upside and downside potential tied to the Company’s performance; |
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• |
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We set aggressive goals for financial performance and tie those goals to our short-term and long-term cash incentive compensation and performance-based
equity programs; |
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We have adopted a clawback policy that applies in the event of a material financial restatement; and |
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We maintain stock ownership guidelines for our senior executives (including the Named Executive Officers) and directors. |
Our compensation programs are designed so a substantial majority of the compensation payable to the Named Executive Officers is
performance-based, long-term and “at-risk.” Our compensation programs seek to reward our executives for high performance and to align compensation with the long-term interests of our stockholders. Accordingly, the Board of Directors
submits the following resolution for a stockholder vote at the 2015 Annual Meeting:
RESOLVED, that the
compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K of the Exchange Act, including the CD&A, compensation tables and narrative discussion in this proxy statement, is hereby
APPROVED.
The Board of Directors recommends that stockholders vote “FOR” adoption of the resolution approving the
Company’s executive compensation as detailed in the CD&A, compensation tables and narrative discussion in this proxy statement.
17
PROPOSAL 3
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointed the firm of Deloitte & Touche LLP (“Deloitte”), an independent registered public accounting firm, to make an examination of
the accounts of the Company for fiscal year 2015. In determining whether to reappoint Deloitte, the Audit Committee considered a number of qualitative factors at both the engagement team and firm level, including, among other things, their
capabilities, technical expertise, quality of services and knowledge of the Company’s operations and industry.
Independent Auditor
Fees and Services
The following table presents fees billed for professional services rendered by Deloitte for fiscal years
2014 and 2013.
|
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|
|
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|
|
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|
2014 |
|
|
2013 |
|
| Audit Fees |
|
$ |
1,457,005 |
|
|
$ |
1,300,207 |
|
| Audit-Related Fees (1) |
|
|
76,000 |
|
|
|
157,407 |
|
| Tax Fees |
|
|
— |
|
|
|
— |
|
| All Other Fees (2) |
|
|
15,843 |
|
|
|
18,400 |
|
|
|
|
|
|
|
|
|
|
| Deloitte Total Fees |
|
$ |
1,548,848 |
|
|
$ |
1,476,014 |
|
|
|
|
|
|
|
|
|
|
| (1) |
Audit-Related Fees include fees billed in 2014 and 2013 for audits and other services related to the Company’s employee benefit plans. In fiscal year 2013, fees
were billed for services performed in connection with the Company’s response to an SEC comment letter and for a technical accounting update. |
| (2) |
In fiscal year 2014, All Other Fees included advisory services related to conflict minerals law compliance. In fiscal year 2013, All Other Fees included a
subscription-based membership fee for human resource materials and support and advisory services related to one of the Company’s foreign sourcing offices. |
Auditor Independence
The Audit Committee has considered whether the
provision of the above-noted services is compatible with maintaining the independence of the independent registered public accounting firm and has determined, based on advice from Deloitte, that the provision of those services has not adversely
affected Deloitte’s independence.
Policy on Audit Committee Pre-Approval of Audit and Permitted Non-Audit Services
The Audit Committee has established policies and procedures regarding pre-approval of audit, audit-related, tax, and permitted non-audit
services that the independent registered public accounting firm may perform for the Company. Under these policies, predictable and recurring services are generally approved by the Audit Committee on an annual basis. The Audit Committee must
pre-approve on an individual basis any requests for audit, audit-related, tax, and permitted non-audit services not covered by the services that are pre-approved annually, subject to certain de minimis exceptions permitted under the Exchange
Act for services other than audit, review or attest services. In fiscal year 2014, the Audit Committee delegated pre-approval authority to the Chair of the Audit Committee, provided that the aggregate estimated fees for all current and future
periods for which the services are to be rendered are not expected to exceed a designated amount. Any such pre-approval must be reported at the next scheduled meeting of the Audit Committee. The Audit Committee may prohibit services that in its view
may compromise, or appear to compromise, the independence and objectivity of the independent registered public accounting firm. The Audit Committee also periodically reviews a schedule of fees paid and payable to the independent registered public
accounting firm by type of service being or expected to be provided.
18
In fiscal year 2014, all fees for audit, audit-related, tax, and permitted non-audit
services performed by Deloitte were pre-approved by the Audit Committee.
While not required by law, the Board of Directors is
asking the stockholders to ratify the selection of Deloitte as a matter of good corporate practice. If the appointment of Deloitte is not ratified, the Audit Committee of the Board of Directors will reconsider the appointment.
Representatives of Deloitte are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
The Board of Directors recommends that
stockholders vote “FOR” the ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm for the 2015 fiscal year.
19
AUDIT COMMITTEE REPORT
The purpose of the Audit Committee is to assist the Board of Directors in fulfilling its obligations regarding the accounting, auditing,
financial reporting, internal control over financial reporting, financial risk management and legal compliance functions of the Company and its subsidiaries, as described more fully in the Audit Committee charter, a copy of which is available on the
Company’s website at http://investor.anninc.com. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm,
Deloitte & Touche LLP (“Deloitte”). In carrying out its oversight responsibilities, the Audit Committee is not responsible for planning or conducting audits or for determining that the Company’s financial statements are
complete and accurate or prepared in accordance with generally accepted accounting principles. The Company’s management is responsible for preparing the Company’s financial statements, establishing and maintaining effective internal
control over financial reporting and assessing the effectiveness of its internal control over financial reporting. Deloitte is responsible for auditing the Company’s financial statements and its internal control over financial reporting in
accordance with the standards of the Public Company Accounting Oversight Board of the United States (“PCAOB”), and rendering opinions on whether the financial statements are in conformity with accounting principles generally accepted in
the United States and the effectiveness of the Company’s internal control over financial reporting.
The Audit Committee
has reviewed and discussed with management, internal audit and Deloitte, the overall scope, plan and results of the audit, the audited financial statements as of and for the fiscal year ended January 31, 2015 and Deloitte’s opinions on the
Company’s financial statements and its internal control over financial reporting as of January 31, 2015. In addition, the discussions included a review of the selection and application of the Company’s accounting principles, the
reasonableness of significant judgments, the clarity of the disclosures in the Company’s financial statements and any matters that are required to be discussed with the Audit Committee by Auditing Standard No. 16, as adopted by the PCAOB.
The Audit Committee has also received the written disclosures and letter from Deloitte concerning independence, as required by the PCAOB, and has discussed the independence of Deloitte with that firm.
Based upon the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited
financial statements of the Company as of and for the fiscal year ended January 31, 2015 be included in the Company’s Annual Report on Form 10-K for that fiscal year for filing with the Securities and Exchange Commission. This report is
provided by the following independent directors, who comprise the Audit Committee:
Michael C. Plansky (Chairperson)
James J. Burke, Jr.
Ronald W. Hovsepian
Daniel W. Yih
The Audit
Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the
Company specifically incorporates the Audit Committee Report by reference therein.
20
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis section
(“CD&A”) of this proxy statement. Based on that review and discussion, the Compensation Committee has recommended to the Board of Directors that the CD&A be included in this proxy statement. This report is provided by the following
independent directors, who comprise the Compensation Committee:
Dale W. Hilpert (Chairperson)
Linda A. Huett
Ronald W. Hovsepian
Compensation Committee Interlocks and Insider Participation
As of the Record Date, there were no Compensation Committee interlocks.
21
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (the “CD&A”) explains the compensation paid to the executive officers listed in
the Summary Compensation Table of this Proxy Statement (the “Named Executive Officers”), namely Kay Krill (Chief Executive Officer and President), Michael J. Nicholson (Executive Vice President, Chief Operating Officer, Chief Financial
Officer and Treasurer), Gary Muto (President, ANN INC. Brands), Katherine H. Ramundo (Executive Vice President, General Counsel and Secretary) and Brian Lynch (Former Brand President, Ann Taylor division). Mr. Lynch’s employment with the
Company terminated on March 15, 2014.
EXECUTIVE SUMMARY
Our Business—Focus on Strategic Initiatives
Fiscal 2014 was characterized by a challenging external environment for apparel retailers, including ANN INC., and we were disappointed that we could not deliver a sixth consecutive year of earnings per
share growth. However, despite the highly promotional and competitive environment, as well as the severe dampening effect of the West Coast port contract situation in the back half of the year, we ultimately delivered net revenues that were slightly
higher than fiscal 2013, on a comparable sales decline of 1.9 percent. We also aggressively managed those aspects of the business within our control, and as a result, were able to manage our expenses to deliver our lowest selling, general &
administrative expense rate in more than five years. In addition, the Company continued to maintain its strong balance sheet. Even with the Company’s continuing investments in technology, international expansion into Canada and Mexico, the
opening of additional stores in the United States and the repurchase of $50 million of our stock under our securities repurchase program, the Company had approximately $208 million in cash at the end of fiscal year 2014. Highlights from 2014
include:
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Enhancement of our Omni-Channel Offering. We enhanced our omni-channel capabilities through the launch of a new mobile experience, the
pilot launch of our “endless aisle” concept in select Ann Taylor and LOFT stores as well as other ongoing improvements to our web platform, website aesthetics and capabilities. |
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Supply Chain End-to-End Assessment. We launched a new corporate initiative in late 2014 that will focus on enhancing the effectiveness
and efficiency of our sourcing capabilities, including a comprehensive, end-to-end assessment of our supply chain, designed to identify opportunities to enhance our profitability with a focus on speed, flexibility, improved product sell-through and
reduced cost of goods sold. |
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Lou & Grey. We continued to develop our new concept, Lou & Grey. We opened five new Lou & Grey stores and one
Lou & Grey shop-in-shop within an existing LOFT store in fiscal 2014. We are encouraged by the initial results and plan to further test and expand this concept in 2015. |
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International Expansion. We continued to expand our international presence with the opening of three franchised LOFT stores in Mexico in
2014. We also opened three stores in Canada in 2014, for a total of 13 stores in Canada at the end of our fiscal year. |
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Real Estate. We continued to optimize our real estate portfolio and manage our store fleet to optimize performance in an omni-channel
environment. In particular, we selectively opened additional domestic LOFT stores in small and mid-size markets, as well as new stores in the factory outlet channel at both brands. At Ann Taylor, our primary focus remained on optimizing productivity
of the fleet. Management also closed 45 underperforming stores during fiscal year 2014. |
22
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Strategic Realignment and SG&A Optimization. In 2014, the Company strategically realigned its organization to support the continued
rapid shift of our clients’ shopping and purchasing behavior. In particular, we created an integrated stores/e-commerce organizational structure to better support our omni-channel retail strategy, the acceleration of our strategic growth agenda
and our overall financial performance. In 2015, we are taking a further look at how we operate to identify additional opportunities to increase our efficiency and lower costs. |
The Company continues to take strategic actions designed to position the Company for long-term profitable growth.
Strong Link Between Pay and Performance
Fiscal 2014 was a year of significant change for our executive team. As part of our strategic realignment, we promoted Mr. Muto to President, ANN INC. Brands from his prior position as Brand
President, LOFT division, and Mr. Nicholson and Ms. Ramundo assumed additional responsibilities. Under the leadership of Ms. Krill, our executive team quickly assumed these new responsibilities, and this strategic realignment is
expected to result in annualized, on-going pre-tax operating cost savings of approximately $25 million, of which approximately $20 million was realized in fiscal 2014.
Payments under our incentive compensation plans in 2014 were strongly correlated with our operating results, as illustrated in the charts below. The negative impact of those results on our Named Executive
Officers’ total compensation in fiscal 2014 was offset, in part, by actions taken in connection with the strategic realignment. In fiscal 2014, our executives’ pay was influenced by the following:
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• |
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Aligning the Majority of Compensation received by our Executives with the Performance of the Company. More than three-quarters of our
Named Executive Officers’ target annual compensation was “at-risk,” as discussed on page 27 of this proxy statement. |
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• |
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Setting Aggressive Performance Targets under our Incentive Plans. Fiscal 2014 was a challenging environment for apparel retailers, and
the Compensation Committee set aggressive targets in light of this climate to motivate our executives and drive strong business results. Our financial results did not meet our demanding targets for the performance periods ended in 2014, and
therefore, payouts were below target. |
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Measuring Performance over Multiple Year Periods. Payouts under our long-term restricted cash plan were influenced by the Company’s
net income performance for the four-year period ended in 2014. |
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Adjusting Compensation to Reflect the New Roles and Increased Responsibilities of the Executives. Our executive team assumed additional
responsibilities in connection with the strategic realignment; accordingly, certain elements of their compensation were adjusted to reflect their increased responsibilities. In addition, to recognize the additional responsibilities required of them
and to incent their continued service, our current Named Executive Officers (other than our Chief Executive Officer) each received a one-time grant of time-vesting restricted shares which will vest in three equal annual installments on the third,
fourth and fifth anniversaries of the grant date, subject in each case to the executive’s continued employment. |
23
In 2014, overall compensation decreased approximately 8% from 2013 for
our Chief Executive Officer. The following charts compare the Company’s earnings per share and corporate operating profit as measured for our Named Executive Officers under our performance-based compensation plans to the aggressive targets set
for the last three years.*
| * |
Corporate operating profit and earnings per share as measured for our Named Executive Officers under our performance-based compensation plans are
described on pages 31 and 33 of this proxy statement. |
Forty-five percent of
our Chief Executive Officer’s compensation is equity-based, and our executive team’s successful management of the business helped drive the dramatic increase in the Company’s stock price over the past five years. Our stock price
increased 2.4% over a one-year period, 35.5% over a three-year period and 163.5% over a five-year period, outperforming the Standard & Poor’s 500 Stock Index (“S&P 500”) over the five year period. The following chart
compares the Company’s stock performance for the five-year period ended January 31, 2015, showing the last trading day of the Company’s 2014 fiscal year, with the indexed price performance of the S&P 500 and the indexed price
performance during the same period of the “ANN Peer Group,” as defined and listed on page 29.1
24
| 1 |
The indexed price for the ANN Peer Group on a given day is based on the average of our peers’ closing stock prices on that day. For purposes of
this chart, Express, Inc. was excluded from the ANN Peer Group since it became a publicly-traded company in May of 2010. |
Key Features of our Executive Compensation—Best Pay Practices
Highlighted below are compensation practices we maintained in 2014 to drive Company performance and align the interests of the
Company’s executives with its stockholders:
| |
• |
|
Pay for Performance. We have a strong pay for performance philosophy. In particular, nearly three-quarters of our Named Executive
Officers’ target compensation is “at-risk,” meaning it is variable compensation that has upside potential and downside risk depending upon the Company’s performance. |
| |
• |
|
Focus on Long-Term Performance. Our performance-based compensation plans utilize a mix of performance periods ranging from one to four
years to ensure our executives focus on both the short-term success and the long-term growth and profitability of the Company. |
| |
• |
|
Limited Base Salary Increases. In general, the Committee prefers to make compensation increases for the Named Executive Officers through
performance-based incentives (as opposed to base salaries). Our Chief Executive Officer has not received a base salary increase for the past six consecutive years. |
| |
• |
|
Mitigation of Risk. Our compensation programs have provisions to mitigate excessive risk, including different performance metrics
associated with incentive awards and varied time frames associated with the earning of awards. Our Compensation Committee regularly reviews our compensation programs and has determined they do not incentivize the Company’s Named Executive
Officers to take unnecessary and excessive risks. |
| |
• |
|
Regular Review of Share Utilization. We regularly evaluate share utilization levels by reviewing the dilutive impact of stock
compensation. We have decreased dilution and burn rate significantly over the |
25
| |
last five years, which was accomplished, in part, by eliminating options from the portfolio of our annual equity grants for the Named Executive Officers (other than the CEO).
|
| |
• |
|
Clawback Policy. The Named Executive Officers and other key executives are subject to a clawback policy that applies in the event of
material financial restatements. |
| |
• |
|
Stock Ownership Guidelines. Senior executives and directors are required to own Company stock. These stock ownership guidelines are shown
below and must be achieved in five years from the date of adoption of the guidelines in January 2012, or the date of hire, using only shares that are directly owned. |
|
|
|
|
|
|
|
| Level |
|
Ownership Guideline as a Multiple of Salary
(or Cash
Retainer for Directors) |
| CEO |
|
5x |
|
|
| President, ANN INC. Brands |
|
3x |
|
|
| Executive Vice Presidents |
|
1x |
|
|
| Directors |
|
3x |
|
|
| |
• |
|
Elimination of Excise Tax Gross Ups Upon Change in Control. The Company eliminated excise tax gross ups for executives joining the
Company after the end of fiscal year 2010. |
| |
• |
|
No Excessive Executive Perquisites. We offer minimal perquisites to our Named Executive Officers. |
| |
• |
|
Hedging and Pledging of Company Stock is Prohibited. Our anti-hedging policy prohibits the Named Executive Officers from hedging against
a decrease in the value of the Company’s stock. In addition, the Company prohibits the Named Executive Officers from pledging the Company’s stock as collateral for a loan. |
| |
• |
|
No Backdating or Repricing of Stock Options. The Company makes annual equity awards at the same predetermined times each year. Equity
awards, including stock options, are never backdated or issued with below market exercise prices. Repricing of stock options without stockholder approval is prohibited. |
COMPENSATION PROGRAM FRAMEWORK
Compensation Philosophy
The Compensation Committee believes the
Company’s compensation programs should be structured to drive the achievement of consistent revenue growth with strong bottom-line performance. Based on that philosophy, in 2014 and 2015, the Committee designed its compensation programs so a
substantial majority of the compensation payable to the Named Executive Officers continues to be performance-based, long-term and “at-risk,” with performance targets closely linked to earnings growth.
In structuring our compensation programs, we balance our need to attract and retain highly talented executives with our desire to reward
executives primarily for achieving performance targets. To accomplish this, we designed a competitive compensation program with a fixed component of total compensation and a larger incentive-based component designed to motivate and reward executives
for contributions to the advancement of our key business objectives.
We design our compensation programs so that if targeted
objectives are achieved, total compensation to the executive falls between the 50th and 75th percentile of our comparator group, based on the latest, publicly-available compensation information for that group. “Total compensation” includes
the sum of base salary, short-term cash incentive compensation, long-term cash incentive compensation and equity incentive compensation. Recognizing the importance of implementing pay for performance practices, we also structure our compensation
26
programs so that if the Company’s performance exceeds target levels, total compensation to the executive may approach the 75th percentile. If the Company, however, fails to achieve its
targeted objectives, total compensation may fall below the median. The Compensation Committee retains the discretion to set target compensation above the median when it believes that it is important to attract or retain key executive officers.
Fiscal Year 2014 Compensation Design
In 2014, the Committee continued to design its compensation programs so a significant portion of the compensation paid to our executives was performance-based, “at-risk” and earned over an
extended period to drive long-term profitable growth. The Committee establishes stretch goals for its compensation programs; and the rigorous nature of these goals was demonstrated in 2014.
The following are the key compensation decisions made by the Committee that shaped our compensation programs for fiscal year 2014:
| |
• |
|
“At-risk” compensation comprises almost three-quarters of target annual compensation. When the Committee established 2014
compensation for the Named Executive Officers in March of 2014, the Committee did so with the intention that a substantial portion of that compensation should be “at-risk” and long-term. The Committee defines “at-risk”
compensation as variable pay that has both upside potential and downside risk depending on the Company’s
performance.* The following charts illustrate the
proportion of each major element of target compensation for our CEO and other Named Executive Officers’ in fiscal year 2014 (excluding one-time grants of time-vesting restricted stock in connection with certain officers’ assumption of
additional responsibilities). |
| * |
This “at-risk” compensation includes potential bonus payments under the Company’s cash incentive plans (our STIP and RCP as defined
below) and the targeted economic value of equity awards (time-vesting restricted stock awards, performance-vesting restricted stock awards and stock options). More than half of this “at-risk” compensation is long-term and earned over
multiple years. |
| |
• |
|
More than half of the annual restricted stock awards were performance-based. In 2014, a majority of the restricted stock granted to our
Named Executive Officers pursuant to annual awards was performance-based. This restricted stock would only be earned if the Company were to achieve the respective performance goals for fiscal years 2014, 2015 and/or 2016.
|
| |
• |
|
EPS as performance goal for performance-based restricted stock awards. The Committee maintained EPS as the sole performance goal
applicable to the performance-vesting restricted stock awarded in 2014, in order to focus executives’ efforts on this key shareholder metric. |
27
Processes for Determining Compensation for our Named Executive Officers
Compensation Committee—Working with our Compensation Consultant and Management
During fiscal year 2014, the Compensation Committee conducted its annual review of its compensation practices and programs to ensure they
were designed to drive the attainment of the Company’s key business objectives. As part of this process, the Compensation Committee retained Frederic W. Cook & Co., Inc. (“Cook”) to provide the Committee with information
regarding industry compensation practices and developments and comparative data necessary to evaluate executive compensation.
Cook provides its views and makes recommendations to the Compensation Committee regarding compensation of the Company’s executives,
including the Chief Executive Officer. Certain of our human resources executives meet regularly with Cook to ensure that Cook has the compensation information it needs to advise the Compensation Committee. Cook is permitted to provide compensation
advice to the Company only with the Committee’s prior authorization and specification. During fiscal year 2014, Cook only provided compensation advice to the Compensation Committee.
Management regularly meets with the Compensation Committee to assist the Committee in making compensation decisions regarding our Named
Executive Officers and also to discuss with the Compensation Committee its recommendations for other executives. We believe that since our management has extensive knowledge regarding our business, they are in a position to provide valuable input.
Specifically, our Chief Operating/Chief Financial Officer provides input relevant to setting performance goals and certifies to the Compensation Committee the level of achievement of our performance targets under our Management Performance
Compensation Plan (“Performance Compensation Plan”) and 2003 Equity Incentive Plan, as amended (the “2003 Plan”). In addition, our Chief Executive Officer makes recommendations to the Committee regarding the compensation of her
direct reports.
Compensation Committee—Assessment of Risk
Each year, the Compensation Committee reviews the Company’s compensation programs and works closely with Cook, who has extensive
knowledge of the Company’s compensation philosophy and programs, to assess risk in the Company’s compensation programs. As part of its consideration, the Committee considers any potential risks that could arise from the Company’s
compensation policies and practices and the extent to which any of those risks would be reasonably likely to have a material adverse effect on the Company. Together with Cook, the Committee considers all facets of the compensation programs, their
underlying assumptions and the objectives those programs were designed to achieve. Some of the factors the Committee considered to minimize potential risks are the balance between cash and stock awards, the various time frames associated with
earning of awards (seasonal, annual and multi-year) and the different performance metrics associated with the incentive awards for each of the Company’s businesses and corporate associates. After that review, the Committee has determined that
the Company’s compensation programs for 2014 and 2015 do not incentivize its associates, including senior executives, to take unnecessary and excessive risks that could jeopardize the future of the Company and would be adverse to the best
interests of its shareholders.
Benchmarking—Our Comparator Group
In determining the appropriate level of compensation for our executive officers, including our Named Executive Officers, we compare the
compensation of our executives to that of similarly-positioned executives in a comparator group of companies. We benchmark against this group to remain competitive in our compensation practices, thereby permitting us to attract and retain key
executives. While the Compensation Committee finds benchmarking to be very useful in its compensation determinations, it considers benchmarking just one element among the various factors it takes into account when making compensation decisions.
28
The Compensation Committee periodically reviews the comparator group to determine whether it
continues to consist of companies against which it is appropriate to benchmark our compensation practices based on a number of factors including size, structure and business comparability. In evaluating companies for inclusion in our peer group, we
consider companies with similar business models in the retail industry sector with revenues comparable to the Company. We do not include all companies within the retailing index. We exclude companies with materially different business
characteristics (for example, discount companies, home improvement companies and automotive retailers). We refine the peer list further by focusing on companies with which we compete for talent, and by looking at companies that list the Company as a
peer company—a peer of peers approach. The comparator group reflects one change from fiscal year 2013, specifically, the removal of Jones Group, Inc. due its ownership change and the fact that it is no longer a publicly-traded company. The 2014
peer group consisted of the following companies (the “ANN Peer Group”):
ANN Peer Group
|
|
|
|
|
|
|
| Abercrombie & Fitch Co. |
|
Brown Shoe Company, Inc. |
|
Coach, Inc. |
|
Kate Spade & Company |
|
|
|
|
| Aeropostale Inc. |
|
Carter’s, Inc. |
|
DSW Inc. |
|
New York & Company, Inc. |
|
|
|
|
| American Eagle Outfitters, Inc. |
|
Chico’s FAS, Inc. |
|
Express, Inc. |
|
PVH Corp. |
|
|
|
|
| Ascena Retail Group, Inc. |
|
The Children’s Place Retail Stores, Inc. |
|
Guess?, Inc. |
|
Urban Outfitters, Inc. |
Tally Sheets
As part of the Compensation Committee’s annual evaluation of compensation of our Named Executive Officers, the Committee reviews tally sheets setting out each component of each executive’s
compensation, the aggregate amount of his or her total compensation, including any pension or other retirement benefits, and projected and historical compensation earned. Tally sheets permit the Committee to determine annually whether the elements
of compensation and individual decisions made by the Committee during the year with respect to an executive, when considered in the aggregate, amount to a compensation package that is consistent with our compensation philosophy and our overall
business objectives. Tally sheets assist the Committee in analyzing target pay, realized pay, retention value and termination value. Tally sheets are one but not the only factor the Committee takes into account when making executive compensation
decisions.
Results of 2014 Say on Pay Vote and Shareholder Outreach
At our 2014 Annual Meeting of Stockholders, the Company’s stockholders approved the compensation of our Named Executive Officers by a
substantial majority, with almost 95% of the votes cast in favor of this proposal.
In structuring 2015 compensation for the
Named Executive Officers, the Compensation Committee reflected on the views expressed by the Company’s shareholders in its discussions with management during the 2014 proxy season, as well as the results of its Say on Pay vote in 2014. The
Committee is committed to considering adjustments to its practices that are consistent with the Company’s compensation philosophy in order to respond appropriately to evolving pay practices and market conditions.
The Committee designed 2015 compensation for the Named Executive Officers to drive the achievement of the business goals the Company has
established: profitable top-line sales growth across the Company’s brands and sales channels and increasing shareholder value. The Committee also took into account the performance of the executives in 2014 and the Committee’s philosophy
that a substantial portion of executive compensation should be performance-based, long-term and “at-risk.”
29
In response to the 2014 Say on Pay vote, feedback from our shareholders and the Compensation
Committee’s ongoing evaluation of our programs, the Committee’s key decisions for 2015 included:
| |
• |
|
Performance-based and “at-risk” compensation should continue to comprise a substantial portion of total compensation. A
substantial majority of the total compensation awarded to our Named Executive Officers for fiscal year 2015 will continue to be performance-based and “at-risk,” as described on page 27 in this CD&A. |
| |
• |
|
Performance-vesting restricted stock awards tied to EPS performance. In order to ensure the Company continues to focus on driving
profitable growth, the Committee established EPS as the goal in 2015 for performance-vesting restricted stock awards to be earned by the Company’s executives. |
THE ELEMENTS OF COMPENSATION
Overview of Elements of Compensation
We use both equity and cash
incentive-based compensation, and offer both short-term and long-term awards. We designed our short-term incentive compensation to reward executives for the Company’s achievement of short-term goals and our long-term incentive compensation to
incentivize them to drive consistent long-term performance. Our short-term incentive compensation is paid in cash and our long-term incentive compensation is comprised of both cash and equity components.
The Compensation Committee made equity awards to our Named Executive Officers by considering each Named Executive Officer’s
performance, the values granted in prior years and the price of ANN INC. stock. In addition, the Compensation Committee annually reviews the allocation between the short- and long-term and cash and equity elements of compensation and determines the
allocation based on the Company’s business goals and competitive market practices.
The principal components of
compensation for our Named Executive Officers in fiscal year 2014 included: (1) base salary, (2) payments under our short-term cash incentive plan and (3) long-term incentive compensation (including payments under our long-term
restricted cash incentive program and grants of performance-based restricted stock, time-vesting restricted stock and time-vesting stock options).
1. Base Salary
The annual base salary of our Named Executive
Officers represents the only fixed component of their compensation. The Compensation Committee reviews the Named Executive Officers’ base salaries annually and when the Officers’ duties change in any material way. In determining the
appropriate level of base salary, the Committee considers the Named Executive Officer’s performance, his or her position, level of responsibility at the Company and market data. The Committee also takes into account the fact that increases in a
Named Executive Officer’s base salary also raise the amount of potential cash earnings under our short- and long-term cash incentive awards, because compensation under these awards is calculated based on a percentage of the individual’s
base salary.
In general, the Committee prefers to provide for any compensation increases for the Named Executive Officers
through incentives (as opposed to base salary). For Ms. Krill, this is the sixth consecutive year in which she did not receive an increase in her base salary because the Committee remains focused on delivering compensation through incentives.
In connection with the Company’s strategic realignment, Messrs. Muto and Nicholson received increases in their base salaries to reflect their increased responsibilities and enhanced leadership positions. Ms. Ramundo’s base salary has
remained unchanged since her appointment in January 2013.
30
2. Short-Term Cash Incentive Plan
We provide our Named Executive Officers with performance-based, short-term cash incentive compensation (referred to as “STIP”)
in the form of Spring and Fall season bonuses under the Company’s Performance Compensation Plan. We believe that the performance periods utilized under the STIP align the compensation of the Company’s associates with our business, which is
based on two separate seasons.
In 2014, the STIP bonus was based on a pre-tax corporate operating profit target, and the
Compensation Committee set stretch targets under STIP to drive increases in the Company’s revenues and earnings. The following chart highlights the operating profit targets for the STIP in fiscal year 2014:
|
|
|
|
|
|
|
|
|
| |
|
Corp. Op. Profit Targets |
|
| |
|
Spring* |
|
|
Fall ** |
|
| |
|
($ in millions) |
|
| Maximum (200%) |
|
$ |
110.0 |
|
|
$ |
105.0 |
|
| Target (100%) |
|
$ |
85.0 |
|
|
$ |
70.0 |
|
| Threshold (30%) |
|
$ |
64.0 |
|
|
$ |
59.5 |
|
| Below Threshold (0%) |
|
$ |
— |
|
|
$ |
— |
|
| * |
Corporate operating profit results for Spring were adjusted in determining actual achievement to remove the impact of the Company’s $17.3 million pre-tax
restructuring charge associated with the Company’s strategic realignment. |
| ** |
Corporate operating profit results for Fall were adjusted in determining actual achievement by $13.4 million to remove the impact of certain unusual or infrequently
occurring events consisting of: (i) a charge related to the closure of Ann Taylor’s Madison Avenue store; (ii) third-party consulting and advisory fees and (iii) a portion of the incremental air freight costs incurred in response
to labor uncertainty at the West Coast ports. |
In setting target goals under the STIP, we considered historic
levels of performance, but also took into account the continuing uncertain business environment in 2014. Furthermore, in establishing the intended degree of difficulty of the payout formula, we took into account circumstances specific to the
Company, including business cycle issues, recruitment and retention needs, and historical pay levels. In each case, we established targets that would require successful implementation of corporate operating objectives (excluding the impact of
certain unusual or infrequently occurring events) in order for meaningful payouts to occur.
A retention feature is embedded
in the STIP whereby if in the Spring season the Company exceeds its performance targets, the payments earned in excess of target (up to the maximum) are mandatorily banked by the Company and paid out to the executives after the end of the Fall
season.
The Company achieved results above the minimum corporate operating profit threshold for Spring and Fall 2014.
The following chart highlights the seasonal individual target payout for each of the current NEOs under the STIP in fiscal
year 2014:
|
|
|
|
|
| |
|
Seasonal Individual Target Payout
(as a percentage of base salary) |
|
| Kay Krill |
|
|
67.5 |
% |
| Michael J. Nicholson |
|
|
40.0 |
% |
| Gary Muto |
|
|
50.0 |
% |
| Katherine H. Ramundo |
|
|
35.0 |
% |
For a discussion of Mr. Lynch’s severance pursuant to his Non-Compete Agreement, please refer
to page 54 of the proxy statement. Amounts earned for fiscal year 2014 by our Named Executive Officers are set forth in the Summary Compensation Table on page 37.
31
3. Long-Term Incentive Compensation
The components of long-term incentive compensation granted to our Named Executive Officers in fiscal year 2014 included:
(a) long-term restricted cash, (b) performance-based restricted stock, (c) time-vesting restricted stock and, for our Chief Executive Officer, time-vesting stock options.
A. Long-Term Restricted Cash Program
The Company maintains a performance-based, long-term cash incentive program, the Long-Term Restricted Cash Program (“RCP”) under the Performance Compensation Plan. The RCP is structured to
incentivize our executives to drive consistent, long-term growth as amounts earned under the RCP are banked and mandatorily deferred for three years during which time these amounts may fluctuate based on the Company’s net income performance, as
discussed further below.
For fiscal year 2014, there were two performance metrics applicable to the RCP: corporate operating
profit and corporate net income. Corporate operating profit targets for the RCP were set at the same levels as those under STIP for the 2014 Spring and Fall seasons. During the three-year mandatory deferral period, these banked amounts are adjusted
upwards or downwards by the average percentage increase or decrease of the Company’s corporate net income performance (this adjustment is referred to as the “Corporate Net Income Adjustment”). The Corporate Net Income Adjustment is
adjusted for certain unusual or infrequently occurring events to avoid distorting operating fundamentals and penalizing or benefitting management for the financial impact of such unusual or infrequent events.
Another key feature of the RCP is the retention aspect of the award, as the executive must be employed by the Company at the end of the
mandatory deferral period in order to receive any payout under the RCP, unless the terms of his or her severance arrangement provide otherwise, as further described below. Accordingly, the amounts earned by our Named Executive Officers under the RCP
in fiscal year 2014, including any subsequent adjustment (up or down), will not be paid out to these executives until 2018.
The Company achieved results above the minimum corporate operating profit threshold for Spring and Fall 2014.
The following chart highlights the seasonal individual target payout for each of the current NEOs under the RCP in fiscal year 2014:
|
|
|
|
|
| |
|
Seasonal Individual Target Payout
(as a percentage of base salary) |
|
| Kay Krill |
|
|
83.3 |
% |
| Michael J. Nicholson |
|
|
67.5 |
% |
| Gary Muto |
|
|
72.5 |
% |
| Katherine H. Ramundo |
|
|
57.5 |
% |
For a discussion of Mr. Lynch’s severance pursuant to his Non-Compete Agreement, please refer
to page 54 of the proxy statement. Amounts earned for fiscal year 2014 by our Named Executive Officers are set forth in the Summary Compensation Table on page 37.
B. Performance-Based Restricted Stock
During fiscal year 2014, we
granted performance-based restricted stock to each of our Named Executive Officers, constituting more than half of the restricted stock granted to our Named Executive Officers pursuant to annual awards. This restricted stock would only be earned if
the Company were to achieve the respective performance goals for fiscal years 2014, 2015 and/or 2016, excluding the impact of certain unusual or infrequently occurring events.
32
The performance goal applicable to these equity grants for fiscal year 2014 was EPS. The
following chart illustrates the EPS targets applicable to the performance-based restricted stock in fiscal year 2014:
|
|
|
|
|
|
|
|
|
| |
|
EPS Targets |
|
| |
|
Spring* |
|
|
Fall ** |
|
| Maximum (200%) |
|
$ |
1.25 |
|
|
$ |
1.04 |
|
| Target (100%) |
|
$ |
1.09 |
|
|
$ |
0.90 |
|
| Threshold (50%) |
|
$ |
0.93 |
|
|
$ |
0.77 |
|
| Below Threshold (0%) |
|
$ |
— |
|
|
$ |
— |
|
| * |
EPS results for Spring were adjusted in determining actual achievement to remove (i) the $0.01 EPS benefit associated with the Company’s 2014 share repurchase
activity and (ii) the $0.22 EPS impact of the Company’s $17.3 million pre-tax restructuring charge associated with its strategic realignment. |
| ** |
EPS results for Fall were adjusted in determining actual achievement to remove the $0.18 EPS impact of certain unusual or infrequently occurring events consisting of:
(i) a charge related to the closure of Ann Taylor’s Madison Avenue store; (ii) third-party consulting and advisory fees and (iii) a portion of the incremental air freight costs incurred in response to labor uncertainty at the West Coast ports.
|
The Named Executive Officers earned 78% of their target shares for the Spring season and 73% of their target
shares for the Fall season of fiscal year 2014.
C. Time-Vesting Restricted Stock and Time-Vesting Stock Options
Time-vesting restricted stock is designed to provide our key executives with value directly tied to our share price
and encourage their retention. During fiscal year 2014, we made an annual grant of time-vesting restricted stock to each of our Named Executive Officers.
In addition to their annual equity grants, Messrs. Muto and Nicholson and Ms. Ramundo were awarded one-time grants of time-vesting restricted stock in recognition of their assumption of
additional responsibilities in connection with our strategic realignment in March 2014. Each received a one-time grant of time-vesting restricted shares which will vest in three equal annual installments on the third, fourth and fifth anniversaries
of the grant date, subject in each case to their continued employment.
Time-vesting stock options compensate our executives
through the appreciation in the Company’s stock price and also encourage their retention. Only Ms. Krill was awarded an annual equity grant of stock options.
Minimum Other Compensation
We offer minimal perquisites to our
Named Executive Officers. For fiscal year 2010 and onward, Ms. Krill waived the benefit under her employment agreement to be reimbursed for taxes in connection with her car service.
We have an employment agreement with Ms. Krill and individual Confidentiality, Non-Solicitation of Associates and Non-Competition
Agreements with each of our other Named Executive Officers, which are more fully described on pages 34 and 50–51 of this proxy statement. We have a special severance plan, which is described on pages 34 and 51 of this proxy statement, in
which our Named Executive Officers, other than Ms. Krill, participate.
While the Company does not offer any supplemental
pension plans to its Named Executive Officers, it maintains an additional savings plan that permits associates at the Vice President level and above to voluntarily defer compensation earned by them in excess of the deferral limits applicable to the
Company’s broad-based,
33
tax-qualified 401(k) plan and to receive matching contributions that they are prohibited from receiving under the 401(k) plan because of certain tax limitations. The Company matches contributions
under both plans. This additional savings plan is further described under the “Nonqualified Deferred Compensation” section on page 44 of this proxy statement.
CHANGE IN CONTROL AND OTHER TERMINATION EVENTS
Under the terms of the Company’s equity plans, special severance plan and non-solicitation and non-competition agreements, certain
of our Named Executive Officers are entitled to compensation and benefits upon the occurrence of specific events, including a change in control or termination of the executive’s employment without Cause (as those terms are defined in the
applicable document). The terms of these arrangements, as well as an estimate of the payments that would be made to the executive if any of those events were to have occurred at the end of the Company’s fiscal year 2014, are described in detail
in the section entitled “Payments and Entitlements Upon Change in Control and Other Termination Events” beginning on page 47 of this proxy statement.
Severance
The Company has an employment agreement with
Ms. Krill, which was entered into in connection with her becoming Chief Executive Officer in 2005. The employment agreement with Ms. Krill provides for payments to be made to her upon certain termination events, including a Change in
Control of the Company (as defined under her employment agreement).
The Company has Confidentiality, Non-Solicitation of
Associates and Non-Competition Agreements (“Non-Compete Agreements”) with each of Messrs. Muto and Nicholson and Ms. Ramundo. Under the Non-Compete Agreements, the executives agree to comply with certain non-competition,
non-solicitation and confidentiality obligations. These agreements are described in the “Payments and Entitlements Upon Change in Control and Other Termination Events” section of this proxy statement beginning on page 47.
Mr. Lynch left the Company on March 15, 2014. He is entitled to severance pursuant to his Non-Compete Agreement, the terms of
which are summarized on page 54 of this proxy statement.
The Named Executive Officers, other than Ms. Krill, are
also eligible to receive benefits under the ANN INC. Special Severance Plan (the “Special Severance Plan”). Under this plan, a participant is eligible to receive benefits if within two years after a Change in Control of the Company (as
defined in the Special Severance Plan) there is a Qualifying Termination of his or her employment. A “Qualifying Termination” is either a termination of the executive’s employment by the Company without Cause or a termination by the
executive of his or her employment for Good Reason (as defined in that plan). While the Named Executive Officers are entitled to gross-up payments to compensate them for excise taxes applicable to Change in Control payments, the Company eliminated
that entitlement for executives joining the Company after the end of fiscal year 2010. A description of Ms. Krill’s employment agreement and the Special Severance Plan is also provided in the “Payments and Entitlements Upon Change in
Control and Other Termination Events” section of this proxy statement on pages 47 – 50.
A key difference
between Ms. Krill’s arrangement under her employment agreement and that of the other current Named Executive Officers under the Special Severance Plan is the requirement under the Special Severance Plan that a Change in Control occur prior
to the occurrence of a Qualifying Termination before severance is paid to the executive under the plan. Under Ms. Krill’s arrangement, one year after a Change in Control and without the occurrence of an additional event, Ms. Krill has
the right to terminate her employment (with or without any reason) and receive severance. We believe that the provision permitting Ms. Krill to receive severance benefits upon her voluntary resignation following a Change in Control is important
in order to ensure that her economic interests would not be inconsistent with those of our shareholders in the period preceding a Change in Control and to ensure that she has a strong incentive not to voluntarily resign during the one-year period
after a Change in Control.
34
Equity
In the case of equity granted in fiscal year 2014 to our Named Executive Officers, other than Ms. Krill, treatment of those awards upon a change in control of the Company or other termination events
is subject to the terms of the 2003 Plan. Under the 2003 Plan, if the Named Executive Officer’s employment is terminated by reason of death, Disability or Retirement (as such terms are defined under the 2003 Plan), vested stock options remain
exercisable for a period of three years following the termination event (or sooner if the options expire before that date). All unvested stock options are forfeited. If the Named Executive Officer is terminated for Cause (as defined under the Plan)
or the executive voluntarily leaves his or her employment, all vested and unvested stock options granted to the executive terminate on the day following termination. If the Named Executive Officer’s employment is terminated for any reason other
than those provided above, only the stock options that are exercisable on the date of that termination may be exercised for a period of up to three months following the termination event (or sooner if the options expire before that date). For
restricted stock, if the Named Executive Officer’s employment is terminated for any reason, all restricted stock granted to the executive that has not vested by the date of termination are forfeited by the executive. Upon a Change in Control of
the Company, all stock options and restricted stock granted to the Named Executive Officer automatically vest.
Under
Ms. Krill’s employment agreement, if Ms. Krill’s employment is terminated by the Company without Cause, by her for Good Reason, due to Disability (each as defined in her employment agreement) or if her employment agreement
expires as a result of the Company not renewing her employment agreement at the end of the term, all time-vesting stock options and restricted stock granted to Ms. Krill on or after October 1, 2005 will fully vest, and Ms. Krill will
be entitled to exercise those stock options for a period of up to three years following any of those events, provided that those options have not expired before the end of that period. However, while Ms. Krill’s previous employment
agreement with the Company provided that performance-based equity awards would fully vest upon similar termination events (except in the case of Disability), the Compensation Committee decided that it would be in the Company’s and
shareholders’ best interests to limit accelerated vesting of future awards under her current employment agreement. As a result, under her current agreement, only that portion of the performance-based restricted stock that is eligible to vest in
March following the end of the fiscal year of termination will vest (and then only on a pro rata basis), other than in the case of a Change in Control. All equity awards granted to Ms. Krill under her employment agreement will vest upon a
Change in Control and will become exercisable in accordance with the equity plans and award agreements under which those awards were granted.
Different meanings are assigned to the various terms giving rise to benefits and entitlements under Ms. Krill’s employment agreement, the 2003 Plan and the Special Severance Plan. One difference
among the documents is the definition of “Change in Control.” For example, under Ms. Krill’s employment agreement, “Change in Control” is defined as set forth in the 2003 Plan, except that if Ms. Krill’s
termination occurs prior to a Change in Control but during the pendency of a Potential Change in Control, the date of termination will be deemed as having occurred after a Change in Control. A Potential Change in Control (as defined in the
“Payments and Entitlements Upon Change in Control and Other Termination Events” section of this proxy statement) may be triggered by an entity’s acquisition of 15% of the Company’s common stock. Under the Special Severance Plan,
the trigger for a Change in Control would occur by the beneficial ownership of 30% of the Company’s common stock. Under the 2003 Plan, a merger in which the Company represents 80% or less of the common stock of the surviving entity would
trigger a change in control, while under the Special Severance Plan, the Company would need to represent less than 50%. These differences, among others, occur as a result of historical circumstances and individual negotiations with our Chief
Executive Officer.
35
OTHER COMPENSATION PRACTICES AND INFORMATION
Equity Grant Policy
We generally make our annual equity grants to our Named Executive Officers at the regularly scheduled Compensation Committee meeting held in March of each year after the final results of the prior
year’s performance are determined. We also make grants during other times of the year when required for new hires, promotions and other business reasons.
Tax and Accounting Considerations
In making its compensation
decisions, the Compensation Committee considers the accounting and income tax impact on the Company of its decisions, including the potential non-deductibility of certain compensation. In doing so, the Committee strives to strike an appropriate
balance between designing appropriate and competitive compensation packages for its executives while also maximizing the deductibility of compensation and ensuring that any accounting consequences to the Company are appropriately reflected in its
financial statements. Section 162(m) of the Internal Revenue Code generally disallows deductions to publicly-traded companies for compensation in excess of $1.0 million in a taxable year paid to its chief executive officer and to the three
other most highly compensated named executive officers (excluding the chief financial officer), with certain exceptions for qualified “performance-based compensation.” Annual base salaries and time-vesting restricted stock granted during
fiscal year 2014 did not qualify as performance-based compensation under Section 162(m). For those types of compensation that could qualify as performance-based compensation, the Company attempted to meet the qualification requirements.
36
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the total compensation of the Company’s Chief Executive Officer and President, Chief Financial Officer, Chief Operating Officer and Treasurer and three other most highly
compensated executive officers (each such executive officer, a “Named Executive Officer”) for 2014, 2013 and 2012.
|
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| Name and Principal Position |
|
Year |
|
|
Salary
($) |
|
|
Bonus
($) |
|
|
Stock
Awards
($) (a) |
|
|
Option
Awards
($) (a) |
|
|
Non-Equity
Incentive Plan
Compensation
($) (b) |
|
|
Change in
Pension Value
and Non-
qualified
Deferred
Compensation
Earnings
($)
(c) |
|
|
All Other
Compensation
($) (d) |
|
|
Total
($) |
|
| Kay Krill |
|
|
2014 |
|
|
$ |
1,200,000 |
|
|
|
— |
|
|
$ |
3,154,196 |
|
|
$ |
1,069,769 |
|
|
$ |
2,339,574 |
|
|
$ |
63,527 |
|
|
$ |
305,961 |
|
|
|
8,133,027 |
|
| Chief Executive Officer, President
and Director |
|
|
2013 |
|
|
|
1,200,000 |
|
|
|
— |
|
|
|
2,696,498 |
|
|
|
1,165,589 |
|
|
|
3,336,200 |
|
|
|
(13,502 |
) |
|
|
441,339 |
|
|
|
8,826,124 |
|
| |
|
2012 |
|
|
|
1,200,000 |
|
|
|
— |
|
|
|
3,263,677 |
|
|
|
1,236,000 |
|
|
|
6,706,170 |
|
|
|
11,965 |
|
|
|
285,091 |
|
|
|
12,702,903 |
|
|
|
|
|
|
|
|
|
|
|
| Michael J. Nicholson |
|
|
2014 |
|
|
|
743,750 |
|
|
|
— |
|
|
|
1,769,464 |
|
|
|
— |
|
|
|
1,044,632 |
|
|
|
— |
|
|
|
93,191 |
|
|
|
3,651,037 |
|
| Executive Vice President, Chief Operating Officer, CFO and
Treasurer (e) |
|
|
2013 |
|
|
|
700,000 |
|
|
|
— |
|
|
|
566,987 |
|
|
|
— |
|
|
|
1,274,700 |
|
|
|
— |
|
|
|
119,548 |
|
|
|
2,661,235 |
|
| |
|
2012 |
|
|
|
616,667 |
|
|
|
— |
|
|
|
1,468,526 |
|
|
|
278,100 |
|
|
|
1,860,384 |
|
|
|
— |
|
|
|
72,887 |
|
|
|
4,296,564 |
|
|
|
|
|
|
|
|
|
|
|
| Gary Muto |
|
|
2014 |
|
|
|
987,500 |
|
|
|
— |
|
|
|
3,050,648 |
|
|
|
— |
|
|
|
1,584,794 |
|
|
|
— |
|
|
|
179,049 |
|
|
|
5,801,990 |
|
| President, ANN INC. Brands (f) |
|
|
2013 |
|
|
|
900,000 |
|
|
|
— |
|
|
|
864,005 |
|
|
|
— |
|
|
|
1,861,650 |
|
|
|
— |
|
|
|
53,435 |
|
|
|
3,679,090 |
|
| |
|
2012 |
|
|
|
900,000 |
|
|
|
— |
|
|
|
1,092,830 |
|
|
|
432,600 |
|
|
|
3,755,948 |
|
|
|
— |
|
|
|
27,310 |
|
|
|
6,208,688 |
|
|
|
|
|
|
|
|
|
|
|
| Katherine H. Ramundo |
|
|
2014 |
|
|
|
500,000 |
|
|
|
— |
|
|
|
1,362,899 |
|
|
|
— |
|
|
|
601,250 |
|
|
|
— |
|
|
|
29,430 |
|
|
|
2,493,579 |
|
| Executive Vice President, General Counsel and Secretary (g) |
|
|
2013 |
|
|
|
500,000 |
|
|
|
— |
|
|
|
840,108 |
|
|
|
263,152 |
|
|
|
721,875 |
|
|
|
— |
|
|
|
— |
|
|
|
2,325,135 |
|
| |
|
2012 |
|
|
|
24,679 |
|
|
|
300,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
324,679 |
|
|
|
|
|
|
|
|
|
|
|
| Brian Lynch |
|
|
2014 |
|
|
|
100,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
750,806 |
|
|
|
— |
|
|
|
4,333 |
|
|
|
855,139 |
|
| Brand President, Ann Taylor division (h) |
|
|
2013 |
|
|
|
800,000 |
|
|
|
— |
|
|
|
1,002,192 |
|
|
|
— |
|
|
|
1,550,816 |
|
|
|
(3,690 |
) |
|
|
11,475 |
|
|
|
3,360,793 |
|
| |
|
2012 |
|
|
|
800,769 |
|
|
|
— |
|
|
|
1,578,516 |
|
|
|
741,600 |
|
|
|
3,225,534 |
|
|
|
3,685 |
|
|
|
11,542 |
|
|
|
6,361,646 |
|
| (a) |
The amounts in these columns reflect the grant date fair value of awards pursuant to the Company’s equity incentive plans in accordance with Accounting Standards
Codification 718-10, Compensation—Stock Compensation (“ASC 718-10”). Assumptions used in the calculation of these amounts for fiscal years ended January 31, 2015, February 1, 2014 and February 2, 2013 are included
in footnote 9 to the Company’s audited financial statements for the fiscal year ended January 31, 2015 in the Company’s Annual Report on Form 10-K. The grant date fair value of performance-based restricted stock awards for the Named
Executive Officers is reflected in the table above at target. The grant date fair value associated with all performance-based stock awards granted in 2014 and valued at maximum performance is as follows: for Ms. Krill, $3,509,398, for
Mr. Nicholson, $852,496, for Mr. Muto, $1,201,184, and for Ms. Ramundo, $339,526. As explained in the Compensation Discussion & Analysis (“CD&A”) section of this proxy statement, a portion of these awards
was forfeited by the Named Executive Officers because the Company did not fully achieve the targets associated with those performance-based restricted shares. The target value of the forfeited performance-based equity awards, calculated in
accordance with ASC 718-10, is as follows: for Ms. Krill, $431,815, for Mr. Nicholson, $69,233, for Mr. Muto, $147,794, and for Ms. Ramundo, $41,739. |
| (b) |
Reflects amounts earned by the Named Executive Officers under the Company’s Short-Term Cash Incentive bonus (“STIP”) and the Long-Term Restricted
Cash Program (“RCP”). For fiscal year 2014, the amount for Ms. Krill includes $1,053,000 for STIP, $1,300,000 for the RCP bonus banked in 2014, and ($13,426) for the Corporate Net Income Adjustment relating to the RCP bonus banked in
2011. For Mr. Nicholson, the amount reflects $390,000 for STIP, $658,125 for the RCP bonus banked in 2014, and ($3,493) for the Corporate Net Income Adjustment relating to the RCP bonus banked in 2011. For Mr. Muto, the amount reflects
$650,000 for STIP, $942,500 for the RCP bonus banked in 2014, and ($7,706) for the Corporate Net Income Adjustment relating to the RCP bonus banked in 2011. For Ms. Ramundo, the amount reflects $227,500 for STIP and $373,750 for the RCP bonus
banked in 2014. For Mr. Lynch, the amount reflects $246,400 for STIP and $510,400 for the RCP bonus banked in 2014, and ($5,994) for the Corporate Net Income Adjustment relating to the RCP bonus banked in 2011. RCP amounts banked in 2014 do not
include any adjustment up or down related to the Corporate Net Income Adjustment, since that adjustment amount will not be determined until 2018, the conclusion of the mandatory three-year deferral period for that bonus. See the CD&A for a
description of the STIP and RCP. |
| (c) |
The amounts set forth in this column for 2014 represent only changes in pension value. |
| (d) |
For Ms. Krill, this represents $15,047 for car service, $10,524 for estate planning, $15,080 in life insurance premiums paid by the Company on her
behalf, and $11,700 and $252,495 in contributions made by the Company under its 401(k) savings and non-qualified deferred compensation plans, |
37
(footnotes continued on next page)
| |
respectively, on her behalf. The value for Ms. Krill’s car service was calculated based on the portion of the cost to the Company of operating the Company car attributed to the
incremental mileage associated with Ms. Krill’s commute. For all periods presented, Ms. Krill waived the benefit under her employment agreement to be reimbursed for taxes in connection with her car service. The remaining amounts for
Ms. Krill represent compensation in the form of group personal liability insurance. For Mr. Nicholson, the amount represents $11,700 and $81,491 in contributions made by the Company on his behalf to the Company’s 401(k) savings and
non-qualified deferred compensation plans, respectively. For Mr. Lynch, the amount represents $4,333 in contributions made by the Company on his behalf to the Company’s 401(k) savings plan. For Mr. Muto, the amount represents $11,700
and $167,349 in contributions made by the Company on his behalf to the Company’s 401(k) savings and non-qualified deferred compensation plans, respectively. For Ms. Ramundo, the amount represents $11,700 and $17,730 in contributions made
by the Company on her behalf to the Company’s 401(k) savings and non-qualified deferred compensation plans, respectively. |
| (e) |
Mr. Nicholson was appointed Chief Operating Officer in December 2012, in addition to his responsibilities as Executive Vice President, Chief Financial Officer and
Treasurer. |
| (f) |
Mr. Muto was appointed President, ANN INC. Brands effective March 16, 2014. Prior, he served as Brand President, LOFT Division. |
| (g) |
Ms. Ramundo’s employment with the Company began on January 14, 2013. |
| (h) |
Mr. Lynch’s employment with the Company terminated on March 15, 2014. |
38
(footnotes continued from previous page)
GRANTS OF PLAN-BASED AWARDS
The following table shows information in accordance with ASC 718-10, Compensation—Stock Compensation (“ASC 718-10”) on
cash incentives, stock options and restricted stock for fiscal year 2014 for each of the Company’s Named Executive Officers. See the CD&A for a description of the formula and criteria for determining amounts payable to our Named Executive
Officers under the Performance Compensation Plan.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Estimated Future
Payouts Under Non-Equity
Incentive Plan Awards |
|
|
Estimated
Future
Payouts
Under Equity
Incentive
Plan Awards |
|
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or Units
(#) (c) |
|
|
All
other
Option
Awards:
Numbers
of
Securities
Underlying
Options
(#) (c) |
|
|
Exer-
cise
or
Base
Price
of
Option
Awards
($/Sh)
(d) |
|
|
Stock
Price at
Close
of
Market
on
Date
of
Grant
($/Sh)
(d) |
|
|
Grant
Date Fair
Value
of
Stock and
Option
Awards
($)
(e) |
|
| |
|
Plan Name |
|
Grant
Date |
|
|
Thres-
hold
($) |
|
|
Target
($) |
|
|
Maxi-
mum ($) |
|
|
Thres-
hold
(#) (b) |
|
|
Target
(#) (b) |
|
|
Maxi-
mum
(#) (b) |
|
|
|
|
|
|
| Kay Krill |
|
2003 Equity |
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
37,300 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,399,496 |
|
|
|
Incentive Plan |
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
63,700 |
|
|
|
37.52 |
|
|
|
37.27 |
|
|
|
1,069,769 |
|
|
|
|
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,199 |
|
|
|
22,398 |
|
|
|
44,796 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
840,373 |
|
|
|
|
|
|
9/15/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,200 |
|
|
|
22,399 |
|
|
|
44,798 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
914,327 |
|
|
|
Performance
Compensation
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• STIP |
|
|
|
|
|
|
486,000 |
|
|
|
1,620,000 |
|
|
|
3,240,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
• RCP (a) |
|
|
|
|
|
|
600,000 |
|
|
|
2,000,000 |
|
|
|
4,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Michael J. Nicholson |
|
2003 Equity |
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,100 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
341,432 |
|
|
|
Incentive Plan |
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26,700 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,001,784 |
|
|
|
|
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,721 |
|
|
|
5,441 |
|
|
|
10,882 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
204,146 |
|
|
|
|
|
|
9/15/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,721 |
|
|
|
5,441 |
|
|
|
10,882 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
222,102 |
|
|
|
Performance
Compensation
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• STIP |
|
|
|
|
|
|
180,000 |
|
|
|
600,000 |
|
|
|
1,200,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
• RCP (a) |
|
|
|
|
|
|
303,750 |
|
|
|
1,012,500 |
|
|
|
2,025,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gary Muto |
|
2003 Equity |
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
450,240 |
|
|
|
Incentive Plan |
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
53,300 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,999,816 |
|
|
|
|
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,834 |
|
|
|
7,667 |
|
|
|
15,334 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
287,666 |
|
|
|
|
|
|
9/15/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,833 |
|
|
|
7,666 |
|
|
|
15,332 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
312,926 |
|
|
|
Performance
Compensation
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• STIP |
|
|
|
|
|
|
300,000 |
|
|
|
1,000,000 |
|
|
|
2,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
• RCP (a) |
|
|
|
|
|
|
435,000 |
|
|
|
1,450,000 |
|
|
|
2,900,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Katherine H. Ramundo |
|
2003 Equity |
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,100 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
191,352 |
|
|
|
Incentive Plan |
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26,700 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,001,784 |
|
|
|
|
|
|
3/18/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,084 |
|
|
|
2,167 |
|
|
|
4,334 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
81,306 |
|
|
|
|
|
|
9/15/14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,084 |
|
|
|
2,167 |
|
|
|
4,334 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
88,457 |
|
|
|
Performance
Compensation
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• STIP |
|
|
|
|
|
|
105,000 |
|
|
|
350,000 |
|
|
|
700,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
• RCP (a) |
|
|
|
|
|
|
172,500 |
|
|
|
575,000 |
|
|
|
1,150,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Brian Lynch |
|
2003 Equity |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Incentive Plan |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Performance
Compensation
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• STIP |
|
|
|
|
|
|
105,000 |
|
|
|
350,000 |
|
|
|
700,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
• RCP (a) |
|
|
|
|
|
|
172,500 |
|
|
|
575,000 |
|
|
|
1,150,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
(footnotes on following page)
39
(footnotes to table on previous page)
| (a) |
These amounts reflect the amounts banked in 2014 and do not include any adjustment up or down related to the Corporate Net Income Adjustment, which will be determined
in 2018, at the conclusion of the mandatory three-year deferral period. See the CD&A for a description of the Corporate Net Income Adjustment under the Long-Term Restricted Cash Program. |
| (b) |
Represents performance-based restricted stock awards whose performance goals were established seasonally. For the awards whose performance goals relate to the Spring
and Fall 2014 seasons, based on below-target achievement, only 78% and 73%, respectively, of the target shares were earned and the remainder were forfeited. The shares earned vested on March 18, 2015. |
| (c) |
These awards vest in equal installments on each of the first three anniversaries of the grant date. |
| (d) |
Under the Company’s equity incentive plans, the exercise price for stock options is the fair market value on the grant date, determined as the closing price per
share of the Company’s common stock on the New York Stock Exchange for the trading day immediately preceding the grant date. |
| (e) |
Amounts set forth in the stock and option award columns represent the aggregate grant date fair value computed in accordance with ASC 718-10 based on the assumptions
set forth in footnote 9 to our audited financial statements for the fiscal year ended January 31, 2015 in our Annual Report on Form 10-K. |
For an explanation of the performance goals applicable to the awards under the 2003 Equity Incentive Plan and the Performance Compensation Plan, see pages 31 – 34 in the CD&A. For a
description of employment agreements between the Company and its Named Executive Officers, see pages 34-35 of the CD&A and the “Payments and Entitlements Upon Change in Control and Other Termination Events” section of this proxy
statement beginning on page 47.
40
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table shows the number of shares of the Company’s common stock covered by exercisable and unexercisable options and
unvested time-vesting and performance-vesting restricted stock held by the Company’s Named Executive Officers on January 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Option Awards |
|
Stock Awards |
|
| Name |
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable |
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable |
|
|
Equity
Incentive
Plan Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options (#) |
|
|
Option
Exercise
Price
($) |
|
|
Option
Expiration Date |
|
Number of
Shares of
Stock
That Have
Not Vested
(#) |
|
|
Market
Value of
Shares of
Stock
That
Have Not
Vested
($) (j) |
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares
or
Other
Rights
That Have
Not
Vested (#) |
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value
of
Unearned
Shares
or Other
Rights
That
Have
Not
Vested
($) (j) |
|
| Kay Krill |
|
|
200,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
28.49 |
|
|
November 17, 2015 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
|
100,000 |
|
|
|
— |
|
|
|
— |
|
|
|
35.49 |
|
|
March 8, 2016 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
180,000 |
|
|
|
— |
|
|
|
— |
|
|
|
35.28 |
|
|
March 15, 2017 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
41,251 |
|
|
|
— |
|
|
|
— |
|
|
|
14.08 |
|
|
September 1, 2019 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
43,334 |
|
|
|
— |
|
|
|
— |
|
|
|
19.58 |
|
|
March 16, 2020 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
100,000 |
|
|
|
— |
|
|
|
— |
|
|
|
27.74 |
|
|
March 15, 2021 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
66,666 |
|
|
|
33,334 |
(a) |
|
|
— |
|
|
|
27.85 |
|
|
March 13, 2022 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
27,133 |
|
|
|
54,267 |
(b) |
|
|
— |
|
|
|
30.73 |
|
|
March 12, 2023 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
63,700 |
(c) |
|
|
— |
|
|
|
37.52 |
|
|
March 18, 2024 |
|
|
16,667 |
(a) |
|
|
551,678 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
23,867 |
(b) |
|
|
789,998 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
37,300 |
(c) |
|
|
1,234,630 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
13,841 |
(a) |
|
|
458,137 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
9,914 |
(d) |
|
|
328,153 |
|
|
|
13,134 |
(e) |
|
|
434,735 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
10,065 |
(f) |
|
|
333,152 |
|
|
|
26,668 |
(g) |
|
|
882,711 |
|
|
|
|
|
|
|
|
|
|
|
| Michael J. Nicholson |
|
|
27,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
32.36 |
|
|
September 17, 2017 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
|
30,000 |
|
|
|
— |
|
|
|
— |
|
|
|
23.92 |
|
|
March 12, 2018 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
15,000 |
|
|
|
— |
|
|
|
— |
|
|
|
23.22 |
|
|
July 10, 2018 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
50,000 |
|
|
|
— |
|
|
|
— |
|
|
|
2.82 |
|
|
March 10, 2019 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
25,000 |
|
|
|
— |
|
|
|
— |
|
|
|
7.32 |
|
|
June 1, 2019 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
25,000 |
|
|
|
— |
|
|
|
— |
|
|
|
14.08 |
|
|
September 1, 2019 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
20,000 |
|
|
|
— |
|
|
|
— |
|
|
|
19.58 |
|
|
March 16, 2020 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
15,000 |
|
|
|
— |
|
|
|
— |
|
|
|
27.74 |
|
|
March 15, 2021 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
14,999 |
|
|
|
7,501 |
(a) |
|
|
— |
|
|
|
27.85 |
|
|
March 13, 2022 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
3,751 |
(a) |
|
|
124,158 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
25,000 |
(h) |
|
|
827,500 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
5,334 |
(b) |
|
|
176,555 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
9,100 |
(c) |
|
|
301,210 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
26,700 |
(i) |
|
|
883,770 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
2,831 |
(a) |
|
|
93,706 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
2,591 |
(d) |
|
|
85,762 |
|
|
|
3,434 |
(e) |
|
|
113,665 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
2,793 |
(f) |
|
|
92,448 |
|
|
|
7,400 |
(g) |
|
|
244,940 |
|
(footnotes on following pages)
41
(table continued from previous page)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Option Awards |
|
Stock Awards |
|
| Name |
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable |
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable |
|
|
Equity
Incentive
Plan Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options (#) |
|
|
Option
Exercise
Price
($) |
|
|
Option
Expiration Date |
|
Number of
Shares of
Stock
That Have
Not Vested
(#) |
|
|
Market
Value
of
Shares
of
Stock
That
Have
Not
Vested
($)
(j) |
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares
or
Other
Rights
That Have
Not
Vested (#) |
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value
of
Unearned
Shares
or Other
Rights
That
Have
Not
Vested
($) (j) |
|
| Gary Muto |
|
|
43,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
19.58 |
|
|
March 16, 2020 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
|
32,000 |
|
|
|
— |
|
|
|
— |
|
|
|
27.74 |
|
|
March 15, 2021 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
23,333 |
|
|
|
11,667 |
(a) |
|
|
— |
|
|
|
27.85 |
|
|
March 13, 2022 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
5,834 |
(a) |
|
|
193,105 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
7,401 |
(b) |
|
|
244,973 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
12,000 |
(c) |
|
|
397,200 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
53,300 |
(i) |
|
|
1,764,230 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
4,404 |
(a) |
|
|
145,772 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
3,473 |
(d) |
|
|
114,956 |
|
|
|
4,600 |
(e) |
|
|
152,260 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
3,699 |
(f) |
|
|
122,437 |
|
|
|
9,800 |
(g) |
|
|
324,380 |
|
|
|
|
|
|
|
|
|
|
|
| Katherine H. Ramundo |
|
|
6,666 |
|
|
|
13,334 |
(b) |
|
|
— |
|
|
$ |
30.73 |
|
|
March 12, 2023 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
13,334 |
(b) |
|
|
441,355 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
3,334 |
(b) |
|
|
110,355 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
5,100 |
(c) |
|
|
168,810 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
26,700 |
(i) |
|
|
883,770 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
1,637 |
(d) |
|
|
54,185 |
|
|
|
2,166 |
(e) |
|
|
71,695 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
1,636 |
(f) |
|
|
54,152 |
|
|
|
4,334 |
(g) |
|
|
143,455 |
|
|
|
|
|
|
|
|
|
|
|
| Brian Lynch |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
|
— |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| (a) |
This award vests on March 13, 2015. |
| (b) |
This award vests in two equal installments on each of March 12, 2015 and 2016. |
| (c) |
This award vests in three installments on each of March 18, 2015, 2016 and 2017. |
| (d) |
This award vests on March 12, 2015. |
| (e) |
This award vests on March 12, 2016 if the Company meets the performance target associated with these shares. |
| (f) |
This award vests on March 18, 2015. |
| (g) |
This award vests in two equal installments on each of March 18, 2016 and 2017 if the Company meets the performance target associated with these shares.
|
| (h) |
This award vests on December 3, 2015. |
| (i) |
This award vests in three installments on each of March 18, 2017, 2018 and 2019. |
| (j) |
The amounts in this column represent the number of unvested shares outstanding for the Named Executive Officer at the Company’s 2014 fiscal year-end stock price of
$33.10. |
42
OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2014
The table below shows the number of shares of the Company’s common stock acquired by each Named Executive Officer
during fiscal year 2014 upon the exercise of stock options, if applicable, and vesting of restricted stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Option Awards |
|
|
Stock Awards |
|
| Name |
|
Number of Shares
Acquired on Exercise
(#) |
|
|
Value Realized
on Exercise
($) |
|
|
Number of Shares
Acquired on Vesting
(#) |
|
|
Value Realized
on Vesting
($) |
|
| Kay Krill |
|
|
— |
|
|
|
— |
|
|
|
90,272 |
|
|
|
3,264,124 |
|
| Michael J. Nicholson |
|
|
— |
|
|
|
— |
|
|
|
17,973 |
|
|
|
646,978 |
|
| Gary Muto |
|
|
— |
|
|
|
— |
|
|
|
29,609 |
|
|
|
1,070,018 |
|
| Katherine H. Ramundo |
|
|
— |
|
|
|
— |
|
|
|
10,357 |
|
|
|
373,784 |
|
| Brian Lynch |
|
|
72,667 |
|
|
|
365,036 |
|
|
|
37,671 |
|
|
|
1,351,382 |
|
PENSION BENEFITS
The table below shows the present value of accumulated benefits payable to each of the Named Executive Officers and the number of years
of service credited to each Named Executive Officer under the AnnTaylor Inc. Pension Plan (“Pension Plan”), determined using interest rate and mortality assumptions consistent with those used in the Company’s financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
PLAN NAME |
|
|
Number of
Years of
Credited
Service at end
of Fiscal Year
2014 |
|
|
Present Value of
Accumulated
Benefits at end
of Fiscal
Year
2014
($) |
|
|
Payments
during
Fiscal Year
2014
($) |
|
| Kay Krill |
|
|
AnnTaylor Inc. Pension Plan |
|
|
|
12.25 |
|
|
|
384,680 |
|
|
|
— |
|
| Michael J. Nicholson |
|
|
AnnTaylor Inc. Pension Plan |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Gary Muto |
|
|
AnnTaylor Inc. Pension Plan |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Katherine H. Ramundo |
|
|
AnnTaylor Inc. Pension Plan |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Brian Lynch |
|
|
AnnTaylor Inc. Pension Plan |
|
|
|
— |
|
|
|
— |
|
|
|
126,971 |
|
The Pension Plan is a tax-qualified retirement plan that was generally available to all eligible
employees upon completion of a 12-month period during which the employee completed 1,000 hours of service. Effective October 1, 2007, the Pension Plan was amended to eliminate future benefit accruals for all employees and to freeze
participation. Prior to October 1, 2007, the following provisions applied:
Benefits under the Pension Plan are
determined as follows:
| |
(a) |
For participants with ten years or less of service with the Company: |
| |
(i) |
1.25% of Compensation (as defined below) for the calendar year up to the Social Security Wage Base (which for 2007 was $97,500), plus |
| |
(ii) |
1.60% of Compensation for the calendar year in excess of the Social Security Wage Base. |
| |
(b) |
For participants with more than ten years of service, the sum of (i) and (ii) below: |
| |
(i) |
For the first ten years of service with the Company: |
| |
1) |
1.25% of Compensation for the calendar year up to the Social Security Wage Base, plus |
| |
2) |
1.60% of Compensation for the calendar year in excess of the Social Security Wage Base, plus |
43
| |
(ii) |
For years of service in excess of ten years: |
| |
1) |
1.60% of Compensation for the calendar year up to the Social Security Wage Base, plus |
| |
2) |
1.95% of Compensation for the calendar year in excess of the Social Security Wage Base. |
Participants do not accrue benefits under the Pension Plan for any years of service in excess of 35 years of service with the Company or for service after September 30, 2007.
Credited service under the Pension Plan is different from the participant’s actual years of service with the Company. Credited
service for benefit accruals under the Pension Plan began the first of the month following the completion of one year of service with the Company. Credited service was frozen as of September 30, 2007.
“Compensation” is defined as W-2 earnings reported for a calendar year, excluding any severance pay, equity grants, moving
allowance, car allowance, certain imputed income, or other similar payments, but including pre-tax contributions to a cafeteria plan, a transportation fringe benefit plan or a 401(k) plan. The maximum amount taken into account was $225,000, the
Internal Revenue Code limit for 2007.
Benefits under the Pension Plan are payable as a lifetime annuity or under a variety of
other payment forms, including a lump sum distribution. Benefits are payable, at the election of the vested participant:
| |
• |
|
at the normal retirement age of 65; |
| |
• |
|
upon early retirement after age 55; or |
| |
• |
|
upon termination of employment. |
For a participant under the Pension Plan to receive any benefits, he or she must have been employed for at least five years by the Company. Full benefits are payable at the normal retirement age of 65. If
the participant retires between the ages of 55 and 65, the amount of benefits is reduced to reflect the additional years of pension payments. If the participant retires at age 55, he or she will be entitled to 60% of the accrued benefits. If the
participant elects to commence payments upon termination of his or her employment with the Company prior to age 55, the benefit will be payable in a lump sum (or as an annuity, at the election of the participant) and will be reduced to the actuarial
equivalent of the benefit payable at age 65.
The present value of accumulated benefits at January 31, 2015 provided in
the table above is determined based on the accrued plan benefit at that date and assumes the following:
| |
• |
|
the Named Executive Officer will retire from the Company at age 65, the plan’s normal retirement age; |
| |
• |
|
the Named Executive Officer will receive his or her payments in the form of a lump sum; and |
| |
• |
|
the present value of the lump-sum payment is calculated using a discount rate of 3.50% for pre-retirement years (with retirement assumed at age 65)
while the discount rate for post-retirement years is 4.85%. This is consistent with the assumptions used for financial reporting purposes. |
For calculation of the changes in pension value set forth in the Summary Compensation Table above, the present value of accumulated benefits at February 1, 2014 (the end of the Company’s 2013
fiscal year) is determined using the same assumptions and methodologies described above, except that the discount rate of 4.65% is applied to pre-retirement years and the assumed lump-sum interest rate is 5.75% as prescribed by IRC
Section 417(e)(3).
NONQUALIFIED DEFERRED COMPENSATION
Under the Company’s Non-Qualified Deferred Compensation Plan (“Deferred Compensation Plan”), in 2014, certain executives,
including the Named Executive Officers, were able to defer up to 50% of their salary as well as up to 95% of awards earned under the Performance Compensation Plan during the calendar year.
Under the Deferred Compensation Plan, beginning on the first of the month immediately following the first anniversary of the
executive’s date of hire, the Company matches all or a portion of the amount of the base and
44
bonus compensation deferred by the executive during the Plan year minus the Internal Revenue Code Section 401(a)(17) qualified plan compensation limit as indexed on an annual basis
(“Eligible Compensation”). If an executive elects to defer up to 3% of his or her Eligible Compensation, the Company matches 100% of the deferral. If an executive elects to defer more than 3% of his or her Eligible Compensation, the
Company matches additional amounts deferred over 3% and up to 6% of Eligible Compensation at a rate of 50% (collectively, the “Company Match”). The amounts deferred by the executive and credited under the executive’s deferred
compensation account are at all times fully vested. The Company Match vests upon the second anniversary of the executive’s date of hire, or earlier upon a Change in Control. A Change in Control will be deemed to have occurred if it would
constitute a Change in Control as defined under Section 409A of the Internal Revenue Code of 1986, as amended, (“Section 409A”) and under the Company’s Special Severance Plan, which is described under the “Payments and
Entitlements Upon Change in Control and Other Termination Events” section of this proxy statement.
Amounts held under
the Deferred Compensation Plan may be invested by the executive through participation in certain mutual funds or other permitted investments made available under the Deferred Compensation Plan.
The Deferred Compensation Plan provides for payments in compliance with Section 409A. Accordingly, either on a predetermined date
selected by participants in accordance with the terms of the Deferred Compensation Plan, or six months after the date of an executive’s separation from service, an executive is entitled to receive, in a single lump-sum cash payment, the vested
amounts credited in his or her deferred compensation account. If the payment event is separation from service and such separation from service takes place after the executive’s normal or early retirement date, the executive may receive payments
in installments in the form he or she elected prior to participation in the Plan.
If prior to distribution of all amounts
under the Deferred Compensation Plan, the executive’s employment is terminated due to death or disability, the Company will pay to the executive or his or her estate, on the date of separation from service and in a single lump sum, the vested
amount credited under his or her deferred compensation account. If the executive incurs a severe financial hardship caused by an accident, illness or similar extraordinary and unforeseeable emergency beyond the control of the executive, the
executive may elect immediate payment of all or a portion of the vested amount credited to the executive’s deferred compensation account, subject to Company authorization and compliance with Section 409A.
In addition, in the event of the occurrence of a Change in Control of the Company, the executive is entitled to receive in a single lump
sum payment, the amounts then credited to his or her deferred compensation account as soon as practicable thereafter.
45
NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 2014
The table below provides, for each Named Executive Officer, information relating to his or her deferred compensation activity and
balances, if any.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Executive
contributions in
Fiscal Year 2014
($) |
|
|
Company
contributions in
Fiscal Year 2014
($) (a) |
|
|
Aggregate
earnings in Fiscal
Year 2014
($) |
|
|
Aggregate
withdrawals/
distributions
in Fiscal Year
2014
($) |
|
|
Aggregate
balance at end
of Fiscal Year
2014
($) (b) |
|
| Kay Krill |
|
$ |
336,660 |
|
|
$ |
252,495 |
|
|
$ |
145,005 |
|
|
$ |
— |
|
|
$ |
3,172,394 |
|
| Michael J. Nicholson |
|
|
526,467 |
|
|
|
81,491 |
|
|
|
(241,072 |
) |
|
|
— |
|
|
|
3,725,977 |
|
| Gary Muto |
|
|
223,131 |
|
|
|
167,349 |
|
|
|
69,981 |
|
|
|
— |
|
|
|
769,476 |
|
| Katherine H. Ramundo |
|
|
23,640 |
|
|
|
17,730 |
|
|
|
349 |
|
|
|
— |
|
|
|
41,719 |
|
| Brian Lynch |
|
|
— |
|
|
|
— |
|
|
|
8,162 |
|
|
|
126,971 |
|
|
|
— |
|
| (a) |
Any contributions reported in this column are reflected as compensation for the respective Named Executive Officer in the “All Other Compensation” column of
the Summary Compensation Table of this proxy statement. |
| (b) |
$767,296 of the aggregate balance for Ms. Krill, $241,077 of the aggregate balance for Mr. Nicholson, $30,296 of the aggregate balance for Mr. Lynch,
$101,670 of the aggregate balance for Mr. Muto was reported as compensation in the Summary Compensation Table in previous years. |
46
PAYMENTS AND ENTITLEMENTS UPON CHANGE IN CONTROL AND
OTHER TERMINATION EVENTS
The following is a description of the specific circumstances relating to termination of employment and Change in Control of the Company that will trigger payments to each Named Executive Officer and a
calculation of the estimated payments to those officers as a result of the occurrence of those events had they occurred on January 31, 2015, the end of the Company’s 2014 fiscal year. “Change in Control” is generally defined as
(i) the acquisition of a substantial percentage of the Company’s common stock (at least 20% under Ms. Krill’s employment agreement and under the Company’s 2003 Equity Incentive Plan, and at least 30% under the Company’s
Deferred Compensation Plan, the Performance Compensation Plan and the Special Severance Plan), (ii) a change in the majority of the Board of Directors or (iii) certain reorganizations, mergers or consolidations involving the Company.
Kay Krill
The Company has an employment agreement with Ms. Krill, which was entered into in connection with her becoming Chief Executive
Officer on October 1, 2005. While the initial term of the agreement ended on October 1, 2008, the term of the agreement automatically renews for additional one-year periods unless either party gives a timely non-renewal notice.
Ms. Krill’s employment agreement provides for payments to be made to Ms. Krill upon certain termination events, including a Change in Control of the Company.
Cash Compensation
Under Ms. Krill’s employment agreement,
if any of the following termination events (the “Termination Events”) occurs:
| |
• |
|
the Company terminates Ms. Krill’s employment without “Cause” (generally defined as conviction for the commission of a felony;
dishonesty; refusal to follow directions of the Board; gross nonfeasance; breach of confidentiality or restrictive covenant provisions; or certain other instances of willful misconduct); |
| |
• |
|
Ms. Krill terminates her employment for “Good Reason” (as defined below); |
| |
• |
|
Ms. Krill terminates her employment due to “Disability” (which entails her inability to perform her duties as a result of physical or
mental incapacity for a period of six consecutive months); or |
| |
• |
|
the agreement expires as a result of the Company not renewing her employment agreement, |
Ms. Krill is entitled to receive, in addition to medical and welfare benefits, cash severance (payable monthly) for a specified severance period (as
described below) based on:
| |
• |
|
her annual base salary, plus |
| |
• |
|
the average of her total bonuses (including her bonuses under the Performance Compensation Plan, including the RCP) earned over the prior three fiscal
years, |
except that in the case of Disability, only her salary and the average of her annual bonuses under the Performance
Compensation Plan will be used and any disability payments she would have received under the Company’s disability plans would be deducted.
In the case of a termination due to Disability, the severance period is 18 months. In the other circumstances, the severance period is the longer of 18 months or the remainder of the term of her
employment agreement, and she would also be entitled to outplacement services. In the event of Ms. Krill’s Disability, after the 18-month severance period and until Ms. Krill reaches the age of 65, Ms. Krill would be entitled to
receive payments under the Company’s applicable short-term and long-term disability plans, which long-term disability payments may not be less than 60% of her annual base salary in effect on the date of termination.
47
During the term of Ms. Krill’s employment agreement and for a period of 18 months
following Ms. Krill’s termination of employment with the Company (other than in the case of termination in connection with her death, termination by the Company for Cause or termination by Ms. Krill for other than Good Reason), the
Company is required to maintain a supplemental life insurance policy on behalf of Ms. Krill. This policy provides for a death benefit to her beneficiary of no less than $7 million, the proceeds of which would be paid upon her death.
If following a Change in Control, Ms. Krill’s employment is terminated without Cause or she terminates her employment for Good
Reason, then instead of the cash severance described above, Ms. Krill is entitled to receive a lump sum cash severance payment equal to three times the sum of:
| |
• |
|
her annual base salary, plus |
| |
• |
|
the average of her total bonuses earned over the prior three fiscal years. |
If the Change in Control, however, does not constitute a change in control within the meaning of Section 409A of the Internal
Revenue Code or if such termination occurs prior to the occurrence of a Change in Control but during the pendency of a Potential Change in Control, upon termination, Ms. Krill would be entitled to receive on a monthly basis for a period of 18
months, an amount equal to one-sixth of her annual base salary then in effect plus one-sixth of the average of her total bonuses earned over the prior three fiscal years. A Potential Change in Control will generally be deemed to have occurred if the
Company or any person takes action which, if consummated, would constitute a Change in Control, any person acquires 15% or more of the Company’s common stock, or the Board adopts a resolution declaring that a Potential Change in Control has
occurred.
In addition, Ms. Krill has “Good Reason” to terminate her employment with the Company:
| |
• |
|
upon a failure by the Company to comply with any material provision of her employment agreement which has not been cured within ten business days after
Ms. Krill provides the Company notice of noncompliance; |
| |
• |
|
upon action by the Company resulting in a diminution of Ms. Krill’s title or authority; |
| |
• |
|
upon the Company’s relocation of Ms. Krill’s principal place of employment outside of the New York City metropolitan area;
|
| |
• |
|
one year after a Change in Control; or |
| |
• |
|
upon the failure of the Company to obtain from a successor the assumption and agreement to perform the Company’s obligations under the employment
agreement. |
In the event of a Change in Control, regardless of whether her employment is terminated,
Ms. Krill is also entitled to receive an accelerated pro rata cash payment of her STIP and RCP bonuses for the current performance period, pursuant to the terms of the Performance Compensation Plan. The amount of that payment would be equal to
the target amount of the STIP and RCP bonus, assuming that all performance goals applicable to the awards were achieved at a level of 100%, multiplied by a fraction, the numerator of which is the number of full and partial months in the current
performance period that have elapsed as of the date of the Change in Control, and the denominator of which is the total number of months in the performance period.
Equity Compensation
Upon a Termination Event, all time-vesting
stock options and time-vesting restricted stock granted to Ms. Krill on or after October 1, 2005 will fully vest, and Ms. Krill is entitled to exercise these stock options for a period of up to three years following the Termination
Event, provided that these options have not expired before the end of that period. While Ms. Krill’s previous employment agreement with the Company had provided that performance-based equity awards would fully vest upon similar termination
events (except in the case of
48
Disability), the Compensation Committee imposed a limitation on the acceleration of vesting of performance-based restricted stock awards made on or after October 1, 2005. As a result, upon a
Termination Event not involving a Change in Control, only that portion of these awards which is eligible to vest in March following the end of the fiscal year of termination will vest (and then only on a pro rata basis).
In the case of a Change in Control, regardless of whether her employment is terminated, all equity awards granted to Ms. Krill will
vest and will become exercisable in accordance with the equity plans and award agreements under which those awards were granted. Ms. Krill will also be entitled to a gross-up to compensate her for excise taxes applicable to Change in Control
payments.
Restrictive Covenants
Ms. Krill is subject to non-solicitation and non-competition covenants during her employment, during the period in which she receives severance payments and, in the case where the Company terminates
her employment for Cause or Ms. Krill terminates her employment without Good Reason, for the following 12 months.
See
the “Non-Qualified Deferred Compensation” section of this proxy statement for deferred compensation benefits payable to Ms. Krill and the other Named Executive Officers upon termination or Change in Control, if applicable.
The following table summarizes the amounts that would be payable to Ms. Krill upon the occurrence of the following termination
events and/or Change in Control if such events and/or Change in Control were to have occurred on January 31, 2015 (the end of the Company’s 2014 fiscal year):
2014 Potential Payments to Kay Krill upon the Occurrence of Certain Events
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Component of Compensation |
|
Executive’s
Voluntary
Termination |
|
|
Termination
by the
Company
For Cause |
|
|
Termination
by the
Executive
For Good
Reason |
|
|
Termination
by the
Company
Without
Cause |
|
|
Termination
due to the
Executive’s
Disability |
|
|
Termination
upon the
Executive’s
Death |
|
|
Change in
Control of
Company
without the
Executive’s
Termination |
|
|
Change in
Control of
Company
with the
Executive’s
Termination |
|
| Cash Severance (base salary + bonus) (a) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
7,990,972 |
|
|
$ |
7,990,972 |
|
|
$ |
3,755,250 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
15,981,944 |
|
| Restricted Stock and Units—Accelerated (b) |
|
|
— |
|
|
|
— |
|
|
|
3,895,903 |
|
|
|
3,895,903 |
|
|
|
3,895,903 |
|
|
|
3,895,903 |
|
|
|
5,213,283 |
|
|
|
5,213,283 |
|
| Stock Options—Accelerated (b) |
|
|
— |
|
|
|
— |
|
|
|
303,609 |
|
|
|
303,609 |
|
|
|
303,609 |
|
|
|
303,609 |
|
|
|
303,609 |
|
|
|
303,609 |
|
| Health & Welfare |
|
|
— |
|
|
|
— |
|
|
|
60,276 |
|
|
|
60,276 |
|
|
|
60,276 |
|
|
|
— |
|
|
|
— |
|
|
|
60,276 |
|
| Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,840,000 |
(c) |
|
|
9,500,000 |
(d) |
|
|
— |
|
|
|
30,000 |
(e) |
| Excise Tax Gross-Up |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Total |
|
|
— |
|
|
|
— |
|
|
|
12,250,760 |
|
|
|
12,250,760 |
|
|
|
14,855,038 |
|
|
|
13,699,512 |
|
|
|
5,516,892 |
|
|
|
21,589,112 |
|
| (a) |
Amounts do not include the Corporate Net Income Adjustments relating to the RCP bonuses banked in 2012 to 2014, as those adjustments, upwards or downwards, as the case
may be, will not be determined until the conclusion of the respective mandatory three-year deferral periods. See the CD&A for a description of the Corporate Net Income Adjustment. In addition, amounts do not include payment of pro rata bonuses
for any incomplete performance period at the time of the applicable trigger event. |
| (b) |
For the table above, as well as for all the tables that follow in this section, the restricted stock value represents the number of shares outstanding for the executive
multiplied by the Company’s 2014 fiscal year end stock price of $33.10. For stock options, the value represents the number of the option shares outstanding for the executive multiplied by the difference between the Company’s 2014 fiscal
year end stock price and the stock option’s exercise price. |
| (c) |
Represents payments under the Company’s short-term and long-term disability plans that Ms. Krill would be entitled to receive after the initial 18-month
severance period. Approximately $5.7 million of this amount is paid by the Company, and the remaining amount is paid by the Company’s insurance provider. |
49
| (d) |
Represents the death benefit payable to Ms. Krill’s beneficiary under basic and supplemental life insurance policies. |
| (e) |
Represents the approximate value of outplacement services for one year. |
Other Named Executive Officers
Confidentiality, Non-Solicitation of
Associates and Non-Competition Agreements
The Company has Confidentiality, Non-Solicitation of Associates and
Non-Competition Agreements (“Non-Compete Agreements”) with each of our current Named Executive Officers other than Ms. Krill, who is subject to the terms of her employment agreement as described above. In exchange for the
benefits described below, the executives agree to comply with certain non-competition, non-solicitation and confidentiality obligations. The following benefits are provided under the Non-Compete Agreements:
| |
• |
|
Mr. Muto. Under the Non-Compete Agreement for Mr. Muto, if he is terminated without Cause or he was to terminate his employment
for Good Reason, he is entitled to receive severance in the amount of 18 months’ base salary payable over 12 months and continued health and welfare benefits for 12 months (“Base Severance Compensation”), as well as the bonuses
payable under STIP based upon actual performance for the season in which he was terminated. Mr. Muto is also entitled to receive any banked amounts under the RCP (“Banked RCP Payments”), in addition to any amounts earned in the season
in which he is terminated, those amounts to be adjusted over the mandatory three-year deferral period based on the Corporate Net Income Adjustment (as explained earlier in this CD&A). Amounts earned under the RCP, as adjusted, are payable in
accordance with the payment schedule of the RCP for all other associates. |
If Mr. Muto were to resign
other than for Good Reason, he would only be entitled to receive Base Severance Compensation.
Under Mr. Muto’s
Non-Compete Agreement, “Good Reason” is generally defined as:
| |
• |
|
action by the Company resulting in a diminution of the executive’s title or responsibilities, including a change in the executive’s reporting
relationship so that he or she no longer reports to the CEO; |
| |
• |
|
the Company’s relocation of the executive’s principal place of employment outside of the New York City metropolitan area; or
|
| |
• |
|
the Company’s breach of any contractual agreements with the executive, provided the Company does not cure that breach within fourteen calendar
days of notice from the executive. |
| |
• |
|
Mr. Nicholson. Under the Non-Compete Agreement for Mr. Nicholson, if he is terminated without Cause, he is entitled to receive
Base Severance Compensation, as well as a bonus payable under STIP based on targeted performance for the season in which he was terminated. He is also entitled to receive Banked RCP Payments, in addition to any amounts earned in the season in which
he is terminated, those amounts to be adjusted over the mandatory three-year deferral period based on the Corporate Net Income Adjustment. Amounts earned under the RCP, as adjusted, are payable in accordance with the payment schedule of the RCP for
all other associates. |
If Mr. Nicholson were to resign, the Company could elect whether to enforce the
non-competition provision for the full period and accordingly pay Base Severance Compensation to him for the time period, if any, it chooses to enforce that provision.
| |
• |
|
Ms. Ramundo. Under the Non-Compete Agreement for Ms. Ramundo, if she is terminated without Cause, she is entitled to receive
Base Severance Compensation. She is also entitled to receive a pro-rated bonus payable under STIP based upon actual performance for the season in which she is terminated, as well as pro-rated Banked RCP Payments. For Ms. Ramundo, the Banked RCP
Payments are pro-rated based upon years of service and the payments are not adjusted based on Corporate Net Income. Amounts earned under the RCP are payable in accordance with the terms of the agreement. |
50
If Ms. Ramundo were to resign, the Company could elect whether to enforce the
non-competition provision for the full period and accordingly pay Base Severance Compensation to her for the time period, if any, it chooses to enforce that provision.
Under the Non-Compete Agreements, “Cause” is defined as:
| |
• |
|
conviction for the commission of any act or acts constituting a felony; |
| |
• |
|
action toward the Company involving dishonesty; |
| |
• |
|
refusal to abide by or follow reasonable written directions of the CEO, which does not cease within ten business days after such written notice;
|
| |
• |
|
gross nonfeasance which does not cease within ten business days after written notice; or |
| |
• |
|
failure to comply with the confidentiality, non-competition and non-solicitation provisions of the Non-Compete Agreement or other willful conduct which
is intended to have and does have a material adverse impact on the Company. |
Special Severance Plan
In addition, our Named Executive Officers, other than Ms. Krill, are entitled to the benefits under the ANN INC.
Special Severance Plan (the “Special Severance Plan”). Under the Special Severance Plan, the executive is entitled to receive cash severance upon the occurrence of a “Qualifying Termination” following a Change in Control of the
Company. A “Qualifying Termination” includes a termination of the executive’s employment by the Company without “Cause” or a termination by the executive of his or her employment for “Good Reason” at any time
within two years following a Change in Control. “Cause” is defined as:
| |
• |
|
the willful and continued failure by the executive to substantially perform his or her duties with the Company (other than by reason of physical or
mental incapacity); or |
| |
• |
|
the conviction of the executive for the commission of a felony involving moral turpitude. |
The executive has “Good Reason” to terminate his or her employment if any of the following occurs after a Change in Control:
| |
• |
|
his or her duties or authority are diminished materially; |
| |
• |
|
the location of his or her place of employment has changed by more than fifty miles; or |
| |
• |
|
there has been a reduction in the executive’s salary or bonus opportunity. |
In the event of a Change in Control with a Qualifying Termination, the executive is entitled to receive a lump sum equal to 2.5 times his
or her “Annual Compensation.” “Annual Compensation” is the executive’s current base salary plus the average of the annual bonuses earned by the executive over the prior three full fiscal years or, if higher, in the three
years including the year in which the Qualifying Termination occurs. In addition, for a period of 30 months following the date of a Qualifying Termination, the executive is entitled to receive all Company-paid benefits under any group health plan
and life insurance plan of the Company. Upon a Change in Control of the Company, in accordance with the terms of the Company’s 2003 Equity Incentive Plan, all stock options and restricted stock granted to the Named Executive Officer
automatically vest.
Under the Special Severance Plan, in exchange for the severance benefits described above, the participant
is required to sign a release in favor of the Company relating to all claims or liabilities of any kind with the Company. In addition, while the executive is entitled to a gross-up payment to compensate him or her for excise taxes applicable to
Change in Control payments, the Company eliminated that entitlement for participants joining the Company after fiscal year 2010.
Performance Compensation Plan
In the event of a Change in Control,
whether or not the executive’s employment is terminated, each of our Named Executive Officers is entitled to receive an accelerated pro rata cash payment of his or her STIP and RCP bonuses for the current performance period, pursuant to the
terms of the Performance Compensation Plan. The amount of that payment
51
would be equal to the target amount of the STIP and RCP bonus, assuming that all performance goals applicable to the awards were achieved at a level of 100%, multiplied by a fraction, the
numerator of which is the number of full and partial months in the current performance period that have elapsed as of the date of the Change in Control, and the denominator of which is the total number of months in the performance period.
Disability Plans and Life Insurance
Under the Company’s disability plans, each of our Named Executive Officers (other than Ms. Krill, whose arrangement is covered by her employment agreement) is entitled to receive, for the first
2.5 years following the date of disability, 100% of his or her base salary in effect on the date of disability and thereafter, depending on the nature of the disability, up to 60% of his or her base salary, not to exceed $12,500 per month, until he
or she reaches the age of 65. The Company maintains on behalf of each executive a basic life insurance policy, the proceeds of which are payable upon the death of the executive. Of the Named Executive Officers, Messrs. Nicholson and Muto each
has a supplemental life insurance policy, the premiums of which are not funded by the Company. Under Ms. Krill’s employment agreement, the Company is required to maintain a supplemental life insurance policy on her behalf, as explained on
page 48.
Assuming the occurrence of the following termination events and/or Change in Control of the Company on
January 31, 2015 (the end of the Company’s 2014 fiscal year), each current Named Executive Officer will be entitled to receive payments set out in the respective tables below.
2014 Potential Payments to Mr. Nicholson upon the Occurrence of Certain Events
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Component of Compensation |
|
Executive’s
Voluntary
Termination |
|
|
Termination
by the
Company
For Cause |
|
|
Termination
by the
Executive
For Good
Reason |
|
|
Termination
by the
Company
Without
Cause |
|
|
Termination
due to the
Executive’s
Disability |
|
|
Termination
upon the
Executive’s
Death |
|
|
Change in
Control of
Company
without the
Executive’s
Termination |
|
|
Change in
Control of
Company
with
Qualifying
Termination |
|
| Cash Severance (base salary + bonus, if applicable) |
|
$ |
1,125,000 |
(a) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,474,770 |
(b)(c) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,358,096 |
(c) |
| Restricted Stock and Units—Accelerated |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,992,207 |
|
|
|
2,992,207 |
|
| Stock Options—Accelerated |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
39,375 |
|
|
|
39,375 |
|
| Health & Welfare |
|
|
11,683 |
(a) |
|
|
— |
|
|
|
— |
|
|
|
11,683 |
(b) |
|
|
11,683 |
|
|
|
— |
|
|
|
— |
|
|
|
30,258 |
|
| Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,725,000 |
(d) |
|
|
2,500,000 |
(e) |
|
|
— |
|
|
|
— |
|
| Excise Tax Gross-Up |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,517,010 |
|
| Total |
|
|
1,136,683 |
(a) |
|
|
— |
|
|
|
— |
|
|
|
3,486,453 |
(b) |
|
|
4,736,683 |
|
|
|
2,500,000 |
|
|
|
3,031,582 |
|
|
|
10,936,946 |
|
| (a) |
Payable only if the Company elects to enforce for the full 12-month period the non-competition provisions of the Non-Compete Agreement. |
| (b) |
Payable pursuant to the executive’s Non-Compete Agreement under which the executive is bound by non-competition provisions. |
| (c) |
Cash severance amounts do not include the Corporate Net Income Adjustments relating to the RCP bonuses banked in 2012 to 2014, as those adjustments, upwards or
downwards, as the case may be, will not be determined until the conclusion of the respective mandatory three-year deferral periods. In addition, amounts do not include payment of pro rata bonuses for any incomplete performance period at the time of
the applicable trigger event. |
| (d) |
Represents payments under the Company’s short-term and long-term disability plans. Approximately $3.2 million of this amount is paid by the insurance provider, and
the remaining amount is paid by the Company. |
| (e) |
Represents payments under basic and supplemental life insurance policies. |
52
2014 Potential Payments to Mr. Muto upon the Occurrence of Certain Events
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Component of Compensation |
|
Executive’s
Voluntary
Termination |
|
|
Termination
by the
Company
For Cause |
|
|
Termination
by the
Executive
For Good
Reason |
|
|
Termination
by the
Company
Without
Cause |
|
|
Termination
due to the
Executive’s
Disability |
|
|
Termination
upon the
Executive’s
Death |
|
|
Change in
Control of
Company
without the
Executive’s
Termination |
|
|
Change in
Control of
Company
with
Qualifying
Termination |
|
| Cash Severance (base salary + bonus, if applicable) |
|
$ |
1,500,000 |
(a) |
|
$ |
— |
|
|
$ |
4,945,419 |
(a)(b) |
|
$ |
4,945,419 |
(a)(b) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
8,501,993 |
(b) |
| Restricted Stock and Units—Accelerated |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,527,699 |
|
|
|
3,527,699 |
|
| Stock Options—Accelerated |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
61,247 |
|
|
|
61,247 |
|
| Health & Welfare |
|
|
11,683 |
(a) |
|
|
— |
|
|
|
11,683 |
(a) |
|
|
11,683 |
(a) |
|
|
11,683 |
|
|
|
— |
|
|
|
— |
|
|
|
30,258 |
|
| Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,125,000 |
(c) |
|
|
2,000,000 |
(d) |
|
|
— |
|
|
|
— |
|
| Excise Tax Gross-Up |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Total |
|
$ |
1,511,683 |
(a) |
|
|
— |
|
|
|
4,957,102 |
(a) |
|
|
4,957,102 |
(a) |
|
|
4,136,683 |
|
|
|
2,000,000 |
|
|
|
3,588,945 |
|
|
|
12,121,196 |
|
| (a) |
Payable pursuant to the executive’s Non-Compete Agreement under which the executive is bound by non-competition provisions. |
| (b) |
Cash severance amounts do not include the Corporate Net Income Adjustments relating to the RCP bonuses banked in 2012 to 2014, as those adjustments, upwards or
downwards, as the case may be, will not be determined until the conclusion of the respective mandatory three-year deferral periods. In addition, amounts do not include payment of pro rata bonuses for any incomplete performance period at the time of
the applicable trigger event. |
| (c) |
Represents payments under the Company’s short-term and long-term disability plans. Approximately $1.9 million of this amount is paid by the insurance provider, and
the remaining amount is paid by the Company. |
| (d) |
Represents payments under the basic and supplemental life insurance policies. |
2014 Potential Payments to Ms. Ramundo upon the Occurrence of Certain Events
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Component of Compensation |
|
Executive’s
Voluntary
Termination |
|
|
Termination
by the
Company
For Cause |
|
|
Termination
by the
Executive
For Good
Reason |
|
|
Termination
by the
Company
Without
Cause |
|
|
Termination
due to the
Executive’s
Disability |
|
|
Termination
upon the
Executive’s
Death |
|
|
Change in
Control of
Company
without the
Executive’s
Termination |
|
|
Change in
Control of
Company
with
Qualifying
Termination |
|
| Cash Severance (base salary + bonus, if applicable) |
|
$ |
750,000 |
(a) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
823,500 |
(b)(c) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,903,906 |
|
| Restricted Stock and Units—Accelerated |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,947,008 |
|
|
|
1,947,008 |
|
| Stock Options—Accelerated |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
31,597 |
|
|
|
31,597 |
|
| Health & Welfare |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
788 |
|
| Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,100,000 |
(d) |
|
|
750,000 |
(e) |
|
|
— |
|
|
|
— |
|
| Excise Tax Gross-Up |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
| Total |
|
|
750,000 |
(a) |
|
|
— |
|
|
|
— |
|
|
|
823,500 |
(b) |
|
|
4,100,000 |
|
|
|
750,000 |
|
|
|
1,978,605 |
|
|
|
4,883,299 |
|
| (a) |
Payable only if the Company elects to enforce for the full 12-month period the non-competition provisions of the Non-Compete Agreement. |
| (b) |
Payable pursuant to the executive’s Non-Compete Agreement under which the executive is bound by non-competition provisions. |
| (c) |
Cash severance amounts do not include the Corporate Net Income Adjustments relating to the RCP bonus banked in 2013 or 2014, as those adjustments, upwards or downwards,
as the case may be, will not be determined until the conclusion of the respective mandatory three-year deferral periods. In addition, amounts do not include payment of pro rata bonuses for any incomplete performance period at the time of the
applicable trigger event. |
| (d) |
Represents payments under the Company’s short-term and long-term disability plans. Approximately $3.3 million of this amount is paid by the insurance provider, and
the remaining amount is paid by the Company. |
| (e) |
Represents payments under the basic life insurance policy. |
53
Brian Lynch
Mr. Lynch’s employment with the Company terminated on March 15, 2014. In connection with his separation and consistent with the terms of his Non-Compete Agreement, Mr. Lynch is bound
by the confidentiality, non-solicitation and non-compete provisions of that agreement. In consideration for his compliance with those provisions, Mr. Lynch is entitled to receive $1,956,800 in severance, which consists of 18 months of his base
salary payable over a twelve month period and his STIP and RCP bonuses earned for the Spring season of fiscal year 2014. In addition, Mr. Lynch is entitled to receive health benefits for twelve months. This severance amount does not include the
RCP bonuses banked by Mr. Lynch in years prior to fiscal year 2014. Mr. Lynch is entitled to receive his RCP bonuses earned in 2014 and in prior years when those bonuses are paid out to all other participating associates.
For Mr. Lynch, who was formerly Brand President of the Ann Taylor division, 30% of his STIP bonus for the Spring Season of 2014 was
based on achievement of corporate operating profit and 70% on achievement of Ann Taylor’s contribution margin targets. For Spring 2014, both corporate operating profit and the Ann Taylor divisional contribution margin were earned above the
minimum threshold but below target. The seasonal individual target payout for Mr. Lynch’s STIP bonus was 35% of his base salary. Mr. Lynch’s seasonal individual target payout under the RCP was 72.5% of his base salary.
54
DIRECTOR COMPENSATION
The Compensation Committee reviews non-employee director compensation annually. In its review, the Committee considered compensation paid
to directors at similarly situated companies and the time commitments required of the directors. The compensation structure for 2014 is set out below.
Directors who are employees of the Company do not receive any compensation for serving on the Board.
Cash Compensation
During fiscal year 2014, directors, other than
Ms. Krill, received the following cash fees:
| |
• |
|
an annual fee of $55,000; and |
| |
• |
|
for each Audit Committee member, an annual fee of $15,000, and for each Compensation Committee and Nominating and Corporate Governance Committee
member, an annual fee of $10,000. |
The Committee Chairs also received the following fees:
| |
• |
|
the Audit Committee Chair received an annual fee of $30,000; |
| |
• |
|
the Compensation Committee Chair received an annual fee of $20,000; and |
| |
• |
|
the Nominating and Corporate Governance Committee Chair received an annual fee of $20,000. |
In addition to the applicable fees above, the Non-Executive Chairman of the Board also received an additional annual cash fee of $60,000.
Equity Compensation
In connection with the Company’s 2014 Annual Meeting of Stockholders, non-employee directors received an annual grant of restricted shares of the Company’s common stock valued at $115,000. The
Non-Executive Chairman received an additional annual grant of restricted shares of the Company’s common stock valued at $65,000, also in connection with the 2014 Annual Meeting of Stockholders. The restricted shares of common stock awarded to
the non-employee directors vest on the date of the next annual meeting of stockholders. Generally, a director will forfeit his or her unvested restricted shares if he or she ceases to be a director prior to that date.
A non-employee Director who joins the Board after the Annual Meeting of Stockholders would receive a pro-rated amount of the annual grant
of restricted stock, based on the portion of the year the director served according to the following schedule: (1) if the director is appointed to the Board within 90 days after the Annual Meeting, the director would receive a grant of
restricted stock valued at $115,000 on the grant date, (2) if the director is appointed to the Board between 91 days and 270 days after the Annual Meeting, the director would receive a grant of restricted stock valued at $57,500 on the grant
date, and (3) if the director is appointed to the Board 271 or more days after the Annual Meeting, the director would not receive any grant of restricted stock prior to the date of the Annual Meeting. The grant date is determined in accordance
with the Company’s equity grant policy.
55
The following table lists the compensation paid to the Company’s non-employee directors
during fiscal year 2014.
DIRECTOR COMPENSATION FOR FISCAL YEAR 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Fees
Earned or
Paid in
Cash ($) |
|
|
Stock
Awards
($) (a) (b) |
|
|
Total ($) |
|
| Katie J. Bayne (c) |
|
$ |
11,332 |
|
|
$ |
57,494 |
|
|
$ |
68,826 |
|
| James J. Burke, Jr. |
|
|
80,000 |
|
|
|
114,988 |
|
|
$ |
194,988 |
|
| Dale W. Hilpert |
|
|
85,000 |
|
|
|
114,988 |
|
|
$ |
199,988 |
|
| Ronald W. Hovsepian |
|
|
170,000 |
|
|
|
180,006 |
|
|
$ |
350,006 |
|
| Linda A. Huett |
|
|
75,000 |
|
|
|
114,988 |
|
|
$ |
189,988 |
|
| Michael C. Plansky |
|
|
100,000 |
|
|
|
114,988 |
|
|
$ |
214,988 |
|
| Stacey Rauch |
|
|
65,000 |
|
|
|
114,988 |
|
|
$ |
179,988 |
|
| Daniel W. Yih |
|
|
70,000 |
|
|
|
114,988 |
|
|
$ |
184,988 |
|
| (a) |
The amounts in this column reflect the grant date fair value of awards pursuant to the Company’s equity incentive plans in accordance with ASC 718-10. Assumptions
used in the calculation of these amounts for fiscal years ended January 31, 2015 are included in footnote 8 to the Company’s audited financial statements for the fiscal year ended January 31, 2015 in the Company’s Annual Report
on Form 10-K. |
| (b) |
As of January 31, 2015, each of our current directors held 3,026 shares of unvested restricted stock, except for Ms. Bayne, who held 1,513 shares and
Mr. Hovsepian, who held 4,737 shares. |
| (c) |
Ms. Bayne’s service as a director of the Company began on November 18, 2014. |
56
BENEFICIAL OWNERSHIP OF COMMON STOCK
Principal Stockholders
The following table sets forth certain information as of March 1, 2015 concerning the beneficial ownership of the Company’s
common stock by: (i) each stockholder who is known by the Company to own beneficially in excess of 5% of the outstanding common stock, (ii) each current director, (iii) the Named Executive Officers, and (iv) all current directors
and executive officers as a group. Except as otherwise indicated, each stockholder listed below has sole voting and investment power with respect to his or her shares of common stock. Beneficial ownership is calculated in accordance with the SEC
rules and includes shares that may be acquired pursuant to stock options that are or will become exercisable within 60 days.
|
|
|
|
|
|
|
|
|
| Name of Beneficial Owner |
|
No. of
Shares of
Common Stock |
|
|
Percent
of Class |
|
| Golden Gate Capital (a) |
|
|
4,375,000 |
|
|
|
9.57 |
% |
| Blackrock, Inc. (b) |
|
|
3,825,304 |
|
|
|
8.37 |
% |
| The Vanguard Group, Inc. (c) |
|
|
2,684,958 |
|
|
|
5.87 |
% |
| T. Rowe Price Associates, Inc. (d) |
|
|
2,459,695 |
|
|
|
5.38 |
% |
| Ronald W. Hovsepian (e) |
|
|
40,492 |
|
|
|
* |
|
| Kay Krill (e) |
|
|
1,164,013 |
|
|
|
2.55 |
% |
| Brian Lynch (e) |
|
|
— |
|
|
|
* |
|
| Gary Muto (e) |
|
|
377,207 |
|
|
|
* |
|
| Michael J. Nicholson (e) |
|
|
580,493 |
|
|
|
1.27 |
% |
| Katherine H. Ramundo (e) |
|
|
78,103 |
|
|
|
* |
|
| Katie J. Bayne (e) |
|
|
1,513 |
|
|
|
* |
|
| James J. Burke, Jr. (e) |
|
|
53,404 |
|
|
|
* |
|
| Dale W. Hilpert (e) |
|
|
41,374 |
|
|
|
* |
|
| Linda A. Huett (e) |
|
|
44,825 |
|
|
|
* |
|
| Michael C. Plansky (e) |
|
|
17,723 |
|
|
|
* |
|
| Stacey Rauch (e) |
|
|
19,560 |
|
|
|
* |
|
| Daniel W. Yih (e) |
|
|
26,770 |
|
|
|
* |
|
| All Executive Officers and Directors as a Group (13 persons) (e) |
|
|
2,445,477 |
|
|
|
5.35 |
% |
| (a) |
In an amended Schedule 13D jointly filed on October 14, 2014, amending an initial Schedule 13D jointly filed on March 20, 2014, the following entities reported
beneficial ownership of 4,375,000 shares in the aggregate: GGC Public Equities Opportunities, L.P. (“GGCPE”), GGC Public Equities Opportunities Blocker Corporation, Ltd. (“Blocker”), Golden Gate Capital Opportunity Fund, L.P.
(“GGCOF”), Golden Gate Capital Opportunity Fund-A, L.P. (“GGCOF-A”), GGCOF Co-Invest, L.P. (“Co-Invest”), GGCOF Co-Invest Management, L.P. (“Co-Invest GP”), GGC Opportunity Fund Management, L.P. (“Fund
GP”), GGC Opportunity Fund Management GP, Ltd. (“Ultimate GP”) and GGCOF Management, LLC (“Ultimate Parent”) (collectively, “Golden Gate Capital”). Each of GGCPE, Blocker, the Funds, Co-Invest GP, Fund GP and
Ultimate GP has shared voting and shared dispositive power with each other with respect to the shares owned by GGCPE. Ultimate Parent has sole voting power and sole dispositive power with respect to all of the shares owned by GGCPE. Golden Gate
Capital’s address is One Embarcadero Center, 39th Floor, San Francisco, CA 94111. |
| (b) |
In an amended Schedule 13G filed with the SEC on January 23, 2015, BlackRock, Inc. (“Blackrock”) reported beneficial ownership of 3,825,304 shares.
Blackrock has sole voting power over 3,714,416 shares and sole dispositive power over 3,825,304 shares. Blackrock’s address is 55 East 52nd Street, New York, NY 10022. |
| (c) |
In an amended Schedule 13G filed with the SEC on February 11, 2015, The Vanguard Group, Inc. (“Vanguard”) reported beneficial ownership of 2,684,958
shares. Vanguard has sole voting power over 61,893 shares and sole dispositive power over 2,626,565 shares. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355. |
57
| (d) |
In an amended Schedule 13G filed with the SEC on February 13, 2015, T. Rowe Price Associates, Inc. (“Price Associates”) reported beneficial ownership of
2,459,695 shares. Price Associates has sole voting power over 257,150 shares and sole dispositive power over 2,459,695 shares. Price Associates’ address is 100 E. Pratt Street, Baltimore, MD 21202. |
| (e) |
The shares listed include shares subject to stock options that are currently or will become exercisable within 60 days of March 1, 2015 as follows:
Mr. Hovsepian, 0 shares; Ms. Krill, 840,084 shares; Mr. Lynch, 0 shares; Mr. Muto, 110,000 shares; Mr. Nicholson, 229,500 shares; Ms. Ramundo, 13,333 shares; Ms. Bayne, 0 shares; Mr. Burke, 0 shares;
Mr. Hilpert, 0 shares; Ms. Huett, 0 shares; Mr. Plansky, 0 shares; Ms. Rauch, 0 shares; and Mr. Yih, 0 shares. The shares listed also include restricted shares which have not yet vested as of March 1, 2015 and which are
subject to forfeiture as follows: Mr. Hovsepian, 4,737 shares; Ms. Krill, 151,456 shares; Mr. Lynch, 0 shares; Mr. Muto, 104,511 shares; Mr. Nicholson, 88,934 shares; Ms. Ramundo, 58,241 shares; Ms. Bayne,
1,513 shares; Mr. Burke, 3,026 shares; Mr. Hilpert, 3,026 shares; Ms. Huett, 3,026 shares; Mr. Plansky, 3,026 shares; Ms. Rauch, 3,026 shares; and Mr. Yih, 3,026 shares. |
58
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s directors and certain officers and holders of more than 10% of the Company’s common stock to file with the SEC reports of their
ownership and changes in their ownership of common stock. Based solely on a review of copies of Section 16(a) reports furnished to the Company, or written representations from certain reporting persons, the Company believes that during fiscal
year 2014 all transactions were reported on a timely basis.
EXECUTIVE OFFICERS
The following table lists certain information regarding the current executive officers of the Company:
|
|
|
| Name |
|
Position and Offices |
| Kay Krill |
|
Chief Executive Officer, President and a Director |
| Michael J. Nicholson |
|
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Treasurer |
| Gary Muto |
|
President, ANN INC. Brands |
| Katherine H. Ramundo |
|
Executive Vice President, General Counsel and Secretary |
Information regarding Ms. Krill is set forth above under “Board of Directors.”
Michael J. Nicholson, age 48. Mr. Nicholson has been Executive Vice President, Chief Operating Officer, Chief Financial
Officer and Treasurer of the Company since December 2012. Previously, from 2007 to 2012, he served as Executive Vice President, Chief Financial Officer and Treasurer of the Company. Prior to that, from 2006 to 2007, he was Executive Vice President,
Chief Operating and Financial Officer of Victoria’s Secret Beauty Company, a subsidiary of Limited Brands, Inc. From 2005 to 2006, he served as Senior Vice President and Chief Financial Officer of Victoria’s Secret Beauty Company and from
2001 to 2005 as its Vice President and Chief Financial Officer.
Gary Muto, age 55. Mr. Muto was appointed
President, ANN INC. Brands in March 2014. Previously, from 2008 to 2014, he served as Brand President of the LOFT Division. Prior to that, from 2007 to 2008, he was President of Gap Adult and GapBody, a division of Gap, Inc., and from 2005 to 2007,
he was President of Forth & Towne, also a division of Gap, Inc. From 2002 to 2005, Mr. Muto was President of Gap, N.A., and from 2001 to 2002, he was President of the Banana Republic division of Gap, Inc.
Katherine H. Ramundo, age 47. Ms. Ramundo has been Executive Vice President, General Counsel and Secretary since January
2013. Prior to joining the Company, Ms. Ramundo was Vice President, Deputy General Counsel and Assistant Secretary at Colgate-Palmolive Company.
STOCKHOLDER PROPOSALS FOR THE 2016 ANNUAL MEETING
From time to time, stockholders of the Company submit proposals that they believe should be voted on by the stockholders. The SEC has adopted regulations that govern the inclusion of those proposals in a
company’s proxy materials. Under Rule 14a-8 of the Exchange Act, the Company must receive any stockholder proposals intended to be presented at the 2016 Annual Meeting of Stockholders no later than December 4, 2015, in order for those
proposals to be considered for inclusion in the Company’s proxy statement and form of proxy relating to that meeting.
The Company’s Bylaws provide that for a stockholder to nominate a director for election to the Company’s Board of Directors or
to propose any other matter for consideration at the Company’s annual meeting (other than matters to be included in the Company’s proxy statement, which must be submitted in accordance with Rule 14a-8 as indicated above), that stockholder
must give timely prior written notice to the Secretary of the Company of
59
that stockholder’s intention to bring that business before the meeting, and the notice must contain certain information as set forth in our Bylaws. To be timely for the 2016 Annual Meeting
of Stockholders, it must be received by the Company not less than 90 days nor more than 120 days prior to May 20, 2016, which will be the anniversary date of the prior year’s meeting (or if the date for the 2016 Annual Meeting is not
within 25 days before or after the anniversary date of the prior year’s meeting, then not later than the tenth day following the first to occur of the day on which the notice of the date of the meeting is mailed or public disclosure thereof is
made).
STOCKHOLDERS SHARING THE SAME ADDRESS
We have adopted a procedure called “householding,” which has been approved by the SEC. Under this
procedure, we are delivering only one copy of this proxy statement and our 2014 Annual Report to multiple stockholders who share the same address and have the same last name, unless we have received contrary instructions from an affected
stockholder. We will deliver upon written or oral request a separate copy of the proxy statement and Annual Report to any stockholder at a shared address to which a single copy of these materials was delivered. To receive a separate copy of these
materials, you may contact our Investor Relations Department either by mail at 7 Times Square, 15th Floor, New York, NY 10036, by telephone at (212) 541-3445, or by e-mail at investor_relations@anninc.com.
If you are a stockholder of record and would like to revoke your householding consent and receive in the future a separate copy of our proxy statement and Annual Report, please contact Broadridge
Financial Solutions, Inc., either by telephone at (800) 542-1061 or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Any stockholders of record sharing the same address and currently receiving
multiple copies of the Annual Report and the proxy statement who wish to receive only one copy of these materials per household in the future, may contact ANN INC. c/o Computershare, 211 Quality Circle, Suite 210, College Station, TX 77845 or by
telephone at (800) 522-6645 to participate in the householding program. If you hold your shares through a bank, brokerage firm or other financial institution, please contact that firm to request information about householding.
ADDITIONAL INFORMATION
Copies of the Company’s 2014 Annual Report to Stockholders, which includes audited financial statements, are being provided to stockholders of the Company with this proxy statement.
NEW YORK, NEW YORK
April 2, 2015
60
|
|
|
|
|
|
IN SUPPORT OF OUR COMPANY’S GREEN INITIATIVE, THIS PROXY STATEMENT WAS PRINTED ON FSC® CERTIFIED PAPER. |
|
|
|
| ANN INC.
7 TIMES SQUARE, 5TH FLOOR
NEW YORK, NY 10036 |
|
VOTE BY INTERNET - www.proxyvote.com
Use the internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting
date or by 11:59 p.m. Eastern Time on the cut-off date indicated in the Company’s proxy statement. Have your proxy card in hand when you access the website and follow the instructions so that you may vote electronically.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our Company in mailing proxy materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via e-mail or the internet. To sign up for electronic delivery, please follow the instructions above to vote using the internet and, when prompted, indicate that you agree to receive or
access proxy materials electronically in future years. VOTE BY
PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before
the meeting date or by 11:59 p.m. Eastern Time on the cut-off date indicated in the Company’s proxy statement. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717. ANNUAL MEETING ADMISSION
In order to attend the meeting, you must obtain an admission ticket by going to the “shareholder meeting registration” link at
www.proxyvote.com. |
|
|
|
|
|
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
|
M70343-P48600 |
|
KEEP THIS PORTION FOR YOUR RECORDS |
|
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— — — — — — — — — — — — — — — — — — — —
— — — — — |
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DETACH AND RETURN THIS PORTION ONLY |
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ANN INC. |
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The Board of Directors recommends a vote
“FOR” Proposals 1, 2 and 3. |
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To elect the following five directors to the Board of
Directors of the Company: |
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Nominees:
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1a. James J.
Burke, Jr. |
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1b. Ronald W.
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1c. Linda A.
Huett |
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1d. Kay
Krill |
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1e. Stacey
Rauch |
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To approve, by non-binding, advisory vote, the
Company’s executive compensation. |
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To ratify the appointment of Deloitte & Touche LLP as
the Company’s independent registered public accounting firm for the 2015 fiscal year. |
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You may also vote on such other business as may properly
come before the meeting or any adjournment thereof. |
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For address changes and/or comments, please check this box
and write them on the back where indicated. |
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Please sign exactly as your name(s) appear(s) hereon. When
signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by
authorized officer. |
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Signature [PLEASE SIGN WITHIN BOX] |
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Signature (Joint Owners) |
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The 2015 Annual Meeting of the Stockholders of ANN INC. (the “Company”) will be held at 8:00 A.M.,
Eastern Daylight Time (EDT), on Wednesday, May 20, 2015, at the Company’s offices at 7 Times Square, 5th floor, New York, New York 10036, for the purposes listed on the reverse side.
Admission Ticket
If you would like to
attend the Annual Meeting, you must obtain an admission ticket in advance as described in more detail in the Proxy Statement.
Important Notice
Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and the Annual Report to Stockholders are
available at www.proxyvote.com.
— — — — — — — — — — — — — — —
— — — — — — — — — — — — — — — — — — — — — — — — — — — —
M70344-P48600
ANN INC.
7 Times Square, 5th Floor
New York, NY 10036
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 2015
The stockholder(s) hereby appoint(s) Kay Krill, Michael J. Nicholson and Katherine H. Ramundo, or any of them, as proxies,
each with the power to appoint his or her substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of ANN INC. that the stockholder(s) is/are entitled to
vote at the Annual Meeting of Stockholders to be held at 8:00 A.M., Eastern Daylight Time (EDT) on May 20, 2015, at the Company’s offices, and at any adjournment or postponement thereof.
To the extent the undersigned holds shares of common stock of the Company through participation in the Company’s
Associate Discount Stock Purchase Plan and/or the 401(k) Savings Plan, the undersigned is hereby providing instructions to the respective plan administrator on how to vote the shares which the undersigned is entitled to vote in connection with the
Annual Meeting of Stockholders. If a signed proxy card is not returned and received by 11:59 P.M. Eastern Daylight Time (EDT) on May 18, 2015, in the case of shares held through the Associate Discount Stock Purchase Plan, the custodian will not vote
those shares. If a signed proxy card is not returned and received by 11:59 P.M. EDT on May 17, 2015, in the case of Company shares held through the 401(k) Savings Plan, the trustee will vote those shares in the same proportion as it voted shares for
which it received instructions.
If no choice is specified, the proxy will be voted “FOR” the persons
nominated as directors by the Board of Directors, and “FOR” proposals 2 and 3. The proxies listed above will vote in their discretion with respect to any other matters that may properly come before the Annual Meeting and all adjournments
and postponements thereof.
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side