Proxy Statement (definitive) (def 14a)

Date : 12/15/2017 @ 9:05AM
Source : Edgar (US Regulatory)
Stock : Sally Beauty Holdings (Name TO BE Changed From Sally Holdings, Inc.) (SBH)
Quote : 17.2  0.0 (0.00%) @ 4:02PM
Sally Beauty Holdings (Name TO BE Changed From Sally Holdings, Inc.) share price Chart

Proxy Statement (definitive) (def 14a)


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TABLE OF CONTENTS

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

SALLY BEAUTY HOLDINGS, 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):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
    (4)   Proposed maximum aggregate value of transaction:
        
 
    (5)   Total fee paid:
        
 

o

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

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LOGO

3001 Colorado Boulevard, Denton, Texas 76210

To our stockholders,

        You are cordially invited to attend the annual meeting of stockholders of Sally Beauty Holdings, Inc., which will take place at the Sally Support Center, 3001 Colorado Boulevard, Denton, Texas 76210 on Thursday, February 1, 2018, at 9:00 a.m., local time. Details of the business to be conducted at the annual meeting are given in the Official Notice of the Meeting, Proxy Statement, and form of proxy enclosed with this letter.

        Even if you intend to join us in person, we encourage you to vote in advance so that we will know that we have a quorum of stockholders for the meeting. When you vote in advance, please indicate your intention to personally attend the annual meeting. Please see the Question and Answer section on Page 4 of the enclosed Proxy Statement for instructions on how to obtain an admission ticket if you plan to personally attend the annual meeting.

        Whether or not you are able to personally attend the annual meeting, it is important that your shares be represented and voted. Your prompt vote over the Internet, by telephone via toll-free number, or by written proxy will save us the expense and extra work of additional proxy solicitation. Voting by any of these methods at your earliest convenience will ensure your representation at the annual meeting if you choose not to attend in person. If you decide to attend the annual meeting, you will be able to vote in person, even if you have personally submitted your proxy. Please review the instructions on the proxy card or the information forwarded by your bank, broker, or other holder of record concerning each of these voting options.

        On behalf of the Board of Directors, I would like to express our appreciation for your continued interest in the affairs of Sally Beauty Holdings, Inc.

    GRAPHIC
    Christian A. Brickman
Director, President and Chief Executive Officer

December 15, 2017

 

 

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Sally Beauty Holdings, Inc.
3001 Colorado Boulevard, Denton, Texas 76210



Official Notice of Annual Meeting of Stockholders



To our stockholders:

         The annual meeting of stockholders of Sally Beauty Holdings, Inc. (the "Corporation") will take place at the Sally Support Center, 3001 Colorado Boulevard, Denton, Texas 76210 on Thursday, February 1, 2018, at 9:00 a.m., local time, for the purpose of considering and acting upon the following:

    (1)
    The election of the ten directors named in the accompanying Proxy Statement for a one-year term;

    (2)
    To approve an advisory (non-binding) resolution regarding the compensation of the Corporation's named executive officers, including the Corporation's compensation practices and principles and their implementation, as disclosed in the accompanying Proxy Statement;

    (3)
    The ratification of the selection of KPMG LLP as our independent registered public accounting firm for our 2018 fiscal year; and

    (4)
    To transact such other business as may properly come before the annual meeting or any adjournment thereof.

         Only stockholders of record at the close of business on December 7, 2017 will be entitled to vote at the meeting.


Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders
to be held on February 1, 2018:

The Proxy Statement and the 2017 Annual Report to stockholders are available at:
www.edocumentview.com/sbh

    By Order of the Board of Directors,

 

 

GRAPHIC

 

 

Matthew O. Haltom
Corporate Secretary

December 15, 2017

 

 

 

IMPORTANT:

 

 

If you plan to attend the annual meeting you must have an admission ticket or other proof of share ownership as of the record date. Please see the Question and Answer section on Page 4 of this Proxy Statement for instructions on how to attend the annual meeting. Please note that the doors to the annual meeting will open at 8:00 a.m. and will close promptly at 9:00 a.m.

Whether or not you expect to personally attend the meeting, we urge you to vote your shares at your earliest convenience to ensure the presence of a quorum at the meeting. Promptly voting your shares via the Internet, by telephone via toll-free number, or by signing, dating, and returning the enclosed proxy card will save us the expense and extra work of additional solicitation. The Internet voting and telephone voting facilities for stockholders of record will be available until 1:00 a.m., local time, on February 1, 2018. If your shares are held in street name by a bank, broker or other similar holder of record, your bank, broker or other similar holder of record is not permitted to vote on your behalf on Proposal 1 (election of directors) or Proposal 2 (approval of an advisory resolution regarding the compensation of the Corporation's named executive officers, including the Corporation's compensation practices and principles and their implementation, as disclosed in this Proxy Statement), unless you provide specific instructions by completing and returning a voting instruction form or following the voting instructions provided to you by your bank, broker or other similar holder of record. Enclosed is an addressed, postage-paid envelope for those voting by mail in the United States. Because your proxy is revocable at your option, submitting your proxy now will not prevent you from voting your shares at the meeting if you desire to do so. Please refer to the voting instructions included on your proxy card or the voting instructions forwarded by your bank, broker, or other similar holder of record if you hold your shares in street name.
 

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2017 PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.

Annual Meeting of Stockholders

Time and Date

  9:00 a.m., February 1, 2018

Place

  Sally Support Center, 3001 Colorado Boulevard, Denton, Texas 76210

Record Date

  December 7, 2017

Voting

  Stockholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on.

Entry

  If you decide to attend the meeting in person, upon your arrival you will need to register as a visitor with the security desk on the first floor of the Sally Support Center and you must have an admission ticket or other proof of share ownership as of the record date along with a government-issued identification card in order to attend the meeting.

Meeting Agenda

    Election of ten directors

    Approval of an advisory (non-binding) resolution regarding the compensation of the Corporation's named executive officers, including the Corporation's compensation practices and principles and their implementation, as disclosed in this Proxy Statement

    Ratification of KPMG LLP as our independent registered public accounting firm for fiscal 2018

Voting Matters

Proposal
  Board Vote
Recommendation

  Page Reference (for
more detail)

Election of ten directors   FOR   7
Approval of an advisory (non-binding) resolution regarding the compensation of the Corporation's named executive officers, including the Corporation's compensation practices and principles and their implementation, as disclosed in this Proxy Statement   FOR   70
Ratification of KPMG LLP as our independent registered public accounting firm for fiscal 2018   FOR   71

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Proposal 1 — Election of Directors (see page 7)

The following table provides summary information about each director nominee. The nominees receiving a plurality of the votes cast at the meeting will be elected as directors.

Name
  Age
  Director
since

  Occupation
  Experience/
Qualification

  Independent
  AC
  CC
  EC
  NG
Christian A. Brickman   52   September 2012   President & Chief Executive Officer, Sally Beauty Holdings, Inc.   Management, International               X    
Katherine Button Bell   59   March 2013   Senior Vice President, Chief Marketing Officer & Member of the Office of the Chief Executive, Emerson Electric Company   Management, Marketing   X       X        
Marshall E. Eisenberg   72   November 2006   Founding Partner, Neal Gerber & Eisenberg LLP   Governance, Risk Management, Legal   X   X   X   X   C
David W. Gibbs   54   March 2016   President & Chief Financial Officer, Yum! Brands, Inc.   Management, Finance   X   X            
Linda Heasley   62   May 2017   Chief Executive Officer, The Honey Baked Ham Company, LLC   Management   X                
Joseph C. Magnacca   55   August 2017   President & Chief Executive Officer, Massage Envy Franchising   Management, Marketing   X                
Robert R. McMaster   69   November 2006   Retired Executive and Independent Auditor   Management, Finance, Audit   X   C       X   X
John A. Miller   64   November 2006   President & Chief Executive Officer, North American Corporation   Management, Finance   X   X       C    
Susan R. Mulder   47   November 2014   Chief Executive Officer, Nic & Zoe Co.   Management   X       X       X
Edward W. Rabin   71   November 2006   Retired Executive   Management   X       C       X

AC = Audit Committee
CC = Compensation Committee
EC = Executive Committee
NG = Nominating and Corporate Governance Committee
C = Chair of Committee

If elected, the director nominees will serve until the 2019 annual meeting. The Board recommends a vote FOR each director nominee.

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Proposal 2 — Approval of Non-Binding Resolution Regarding Executive Officer Compensation (see page 70)

We are asking stockholders to approve on an advisory (non-binding) basis the compensation of the Corporation's named executive officers, including the Corporation's compensation practices and principles and their implementation, as disclosed in this Proxy Statement. The Board believes that its current compensation program uses a balanced mix of base salary, and annual and long-term incentives to attract and retain highly qualified executives; the compensation program also maintains a strong relationship between executive compensation and performance, thereby aligning the interests of the Corporation's executive officers with those of its stockholders. As evidenced by the results of our "say-on-pay" vote at our 2017 Annual Meeting of Stockholders, with over 99% of the shares voted being voted in favor of the proposal, we believe that stockholders have indicated strong support for the structure and execution of our named executive officer compensation program. The Board recommends a vote FOR this proposal.

Highlights of our named executive officer compensation program, as described in the Compensation Discussion and Analysis section, include:

    emphasis on performance-based compensation, with base salary being the only fixed component of an executive officer's direct compensation;

    annual long-term equity grants in the form of stock options, which provide value only to the extent our stock price increases after the date of grant, thereby aligning stockholder and executive interests, and performance-based restricted stock units, which serve as a strong retention tool and align management with the long-term interests of our stockholders;

    double-trigger severance benefits and no tax gross-ups; and

    appropriate risk-management practices, including an annual review of our compensation-related risk profile, clawback and anti-hedging policies and stock ownership requirements.

This advisory (non-binding) resolution regarding the compensation of the Corporation's named executive officers, including the Corporation's compensation practices and principles and their implementation, as disclosed in this Proxy Statement, requires the affirmative vote of a majority of the votes cast at the meeting. The Board recommends a vote FOR this proposal.

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Proposal 3 — Ratification of Independent Auditors (see page 71)

Although stockholder ratification is not required by law, we are asking stockholders to ratify the selection of KPMG LLP as our independent registered public accounting firm for fiscal 2018. Set forth below is summary information with respect to KPMG LLP's fees for services provided in fiscal 2016 and fiscal 2017. The Board recommends a vote FOR this proposal.

 
  2017
  2016
 
Audit Fees   $ 2,382,532   $ 2,351,143  
Audit Related Fees          
Tax Fees   $ 563,457   $ 786,596  
All Other Fees   $ 1,780      
Total   $ 2,947,769   $ 3,137,739  

2019 Annual Meeting

    Stockholder proposals submitted pursuant to SEC Rule 14a-8 must be received by us by August 17, 2018.

    Notice of stockholder proposals outside of SEC Rule 14a-8 must be delivered to us no earlier than October 4, 2018 and no later than November 3, 2018.

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TABLE OF CONTENTS

Proxy Statement

  1

Solicitation and Ratification of Proxies

  1

Outstanding Stock and Voting Procedures

  2

Questions and Answers about the Meeting and Voting

  4

Proposal 1 — Election of Directors

  7

Information Regarding Corporate Governance, the Board, and Its Committees

  11

Compensation Committee Interlocks and Insider Participation

  19

Certain Relationships and Related Party Transactions

  20

Information on the Compensation of Directors

  21

Compensation Discussion and Analysis

  23

Compensation Committee Report

  44

Executive Compensation

  45

Summary Compensation Table

  45

Grants of Plan-Based Awards for Fiscal 2017

  47

Outstanding Equity Awards at 2017 Fiscal Year-End

  48

Fiscal 2017 Option Exercises and Stock Vested

  51

Potential Payments upon Termination or Change in Control

  53

Executive Officers of the Registrant

  60

Ownership of Securities

  63

Section 16(a) Beneficial Ownership Reporting Compliance

  67

Report of the Audit Committee

  68

Proposal 2 — Advisory Vote on Executive Compensation

  70

Proposal 3 — Ratification of Selection of Auditors

  71

Stockholder Proposals

  72

Reduce Printing and Mailing Costs

  72

Other Matters

  73

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Sally Beauty Holdings, Inc.
3001 Colorado Boulevard, Denton, Texas 76210



PROXY STATEMENT

Annual Meeting of Stockholders

February 1, 2018

        This Proxy Statement is being furnished by Sally Beauty Holdings, Inc. ("we," "us," or the "Corporation") in connection with a solicitation of proxies by our Board of Directors to be voted at our annual meeting of stockholders to be held on February 1, 2018. Whether or not you personally attend, it is important that your shares be represented and voted at the annual meeting. Most stockholders have a choice of voting over the Internet, by using a toll-free telephone number, or by completing a proxy card and mailing it in the postage-paid envelope provided. Check your proxy card or the information provided to you by your bank, broker, or other stockholder of record to determine which voting options are available to you. The Internet voting and telephone voting facilities for stockholders of record will be available until 1:00 a.m., local time, on February 1, 2018. This Proxy Statement and the accompanying proxy card were first mailed on or about December 15, 2017.


SOLICITATION AND RATIFICATION OF PROXIES

        If the enclosed form of proxy card is signed and returned, it will be voted as specified in the proxy, or, if no vote is specified, it will be voted "FOR" all nominees presented in Proposal 1, "FOR" the proposal set forth in Proposal 2, and "FOR" the proposal set forth in Proposal 3. If any matters that are not specifically set forth on the proxy card and in this Proxy Statement properly come to a vote at the meeting, the proxy holders will vote on such matters in accordance with their best judgments. At any time before the annual meeting, you may revoke your proxy by timely delivery of written notice to our Corporate Secretary, by timely delivery of a properly executed, later-dated proxy (including an Internet or telephone vote), or by voting via ballot at the annual meeting. Voting in advance of the annual meeting will not limit your right to vote at the annual meeting if you decide to attend in person. If you are a beneficial owner, but your shares are registered in the name of a bank, broker, or other stockholder of record, the voting instructions form mailed to you with this Proxy Statement may not be used to vote in person at the annual meeting. Instead, to be able to vote in person at the annual meeting you must obtain, from the stockholder of record, a proxy in your name and present it at the meeting. See "Questions and Answers about the Meeting and Voting" in this Proxy Statement for an explanation of the term "stockholder of record."

        The proxy accompanying this Proxy Statement is being solicited by our Board of Directors. We will bear the entire cost of this solicitation, including the preparation, assembly, printing, and mailing of this Proxy Statement, the proxy, and any additional information furnished to our stockholders. In addition to using the mail, proxies may be solicited by directors, executive officers, and other employees of the Corporation, in person or by telephone. No additional compensation will be paid to our directors, executive officers, or other employees for these services. We will also request banks, brokers, and other stockholders of record to forward proxy materials, at our expense, to the beneficial owners of our Common Stock. We have retained Alliance Advisors, LLC to assist us with the solicitation of proxies for an estimated fee of approximately $7,500, plus normal expenses not expected to exceed $13,500.

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OUTSTANDING STOCK AND VOTING PROCEDURES

Outstanding Stock

        The stockholders of record of our Common Stock at the close of business on December 7, 2017 will be entitled to vote in person or by proxy at the annual meeting. At that time, there were 127,019,313 shares of our Common Stock outstanding. Each stockholder will be entitled to one vote in person or by proxy for each share of Common Stock held.

        If you hold shares through an account with a bank, broker or other similar holder of record, the voting of the shares by the bank, broker or other similar holder of record when you do not provide voting instructions is governed by the rules of the New York Stock Exchange ("NYSE"). These rules allow banks, brokers and other similar holders of record to vote shares in their discretion on "routine" matters for which their customers do not provide voting instructions. On matters considered "non-routine," banks, brokers and other similar holders of record may not vote shares (referred to as "broker non-votes") without your instruction.

        Proposal 3 (the ratification of KPMG LLP as our independent registered public accounting firm for our 2018 fiscal year) is considered a routine matter. Accordingly, banks and brokers may vote shares on this proposal without your instructions.

        However, Proposal 1 (election of directors) and Proposal 2 (approval of an advisory resolution regarding the compensation of the Corporation's named executive officers, including the Corporation's compensation practices and principles and their implementation, as disclosed in this Proxy Statement) are considered non-routine, and banks, brokers and other similar holders of record therefore cannot vote shares on these proposals without your instructions. Please note that if your shares are held through a bank, broker or other similar holder of record and you want your vote to be counted on this proposal, you must instruct your bank or broker how to vote your shares.

Quorum

        A quorum for the transaction of business will be present if the holders of a majority of our Common Stock issued and outstanding and entitled to be cast thereat are present, in person or by proxy, at the annual meeting. Your shares are counted as present if you attend the annual meeting and vote in person or if you properly return a proxy over the Internet, by telephone or by mail. Abstentions and broker non-votes will be counted for purposes of establishing a quorum. If a quorum is not present at the annual meeting, the annual meeting may be adjourned from time to time until a quorum is present.

Voting Procedures

        Votes cast by proxy or in person at the meeting will be tabulated by the Inspector of Election from Computershare Trust Company, N.A. In addition, the following voting procedures will be in effect for each proposal described in this Proxy Statement:

        Proposal 1. Nominees for available director positions must be elected by a plurality of the votes cast in person or by proxy at the annual meeting. Withheld votes and broker non-votes will have no effect in determining whether the proposal has been approved.

        Proposal 2. The advisory (non-binding) resolution to approve the compensation of the Corporation's named executive officers, including the Corporation's compensation practices and principles and their implementation, as disclosed in this Proxy Statement, requires the affirmative vote of a majority of the votes cast in person or by proxy at the annual meeting. Abstentions and broker non-votes will have no effect in determining whether the proposal has been approved.

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        Proposal 3. Ratification of the appointment of KPMG LLP as our independent registered public accounting firm requires the affirmative vote of a majority of the votes cast in person or by proxy at the annual meeting. Abstentions will have no effect in determining whether this proposal has been approved. Since this proposal is considered a routine matter, there will be no broker non-votes with respect to this proposal.

        If any other matters properly come before the meeting that are not specifically set forth on the proxy card and in this Proxy Statement, such matters shall be decided by a majority of the votes cast at the annual meeting, unless otherwise provided in our Third Restated Certificate of Incorporation ("Certificate of Incorporation"), Amended and Restated By-Laws ("By-Laws"), the Delaware General Corporation Law or the rules and regulations of the New York Stock Exchange. None of the members of our Board have informed us in writing that they intend to oppose any action intended to be taken by us.

         NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS PROXY STATEMENT.

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QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

1.     What is a proxy?

    A proxy is your legal designation of another person, called a proxy holder, to vote the shares that you own. If you designate someone as your proxy holder in a written document, that document is called a proxy. We have designated Donald T. Grimes, our Senior Vice President, Chief Financial Officer and Chief Operations Officer, and Brently G. Baxter, our Vice President, Corporate Controller and Principal Accounting Officer, to act as proxy holders at the annual meeting as to all shares for which proxies are returned or voting instructions are provided by Internet or telephonic voting.

2.     What is a proxy statement?

    A proxy statement is a document that SEC regulations require us to give you when we ask you to sign a proxy card designating the proxy holders described above to vote on your behalf.

3.     What is the difference between a stockholder of record and a stockholder who holds stock in street name, also called a "beneficial owner?"

    If your shares are registered in your name at Computershare Trust Company, N.A., you are a stockholder of record.

    If your shares are registered at Computershare Trust Company, N.A. in the name of a broker, bank, trustee, nominee, or other similar holder of record, your shares are held in street name and you are the beneficial owner of the shares.

4.     How do you obtain an admission ticket to personally attend the annual meeting?

    Stockholders of Record.   Your admission ticket is attached to your proxy card. You will need to bring it with you to the meeting.

    Street Name Holders.   You will need to ask your broker or bank for an admission ticket in the form of a legal proxy and you will need to bring the legal proxy with you to the meeting. If you do not receive the legal proxy in time, bring your most recent brokerage statement with you to the meeting. We can use that to verify your ownership of Common Stock and admit you to the meeting; however, you will not be able to vote your shares at the meeting without a legal proxy. Please note that if you own shares in street name and you are issued a legal proxy, any previously executed proxy will be revoked and your vote will not be counted unless you appear at the meeting and vote in person.

    Please note that whether you are a stockholder of record or street name holder, you will also need to bring a government-issued photo identification card to gain admission to the annual meeting.

5.     What different methods can you use to vote?

    Stockholders of Record.     If your shares are registered in your own name, you may vote by proxy or in person at the annual meeting. To vote by proxy, you may select one of the following options:

    By Written Proxy  — You may vote by mailing the written proxy card.

    By Telephone or Internet Proxy  — You may also vote by telephone from the U.S. using the toll-free telephone number on the proxy card, or by the Internet, using the procedures and instructions described on the proxy card and other enclosures. The telephone and Internet voting procedures, including the use of control numbers, are designed to authenticate our stockholders' identities, to allow our stockholders to vote their shares, and to confirm that their instructions have been properly recorded.

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    Street Name Holders.     If your shares are held in the name of a bank, broker or other similar holder of record, you will receive instructions from such holder of record that you must follow for your shares to be voted. Please follow their instructions carefully. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the annual meeting, you must request a legal proxy or broker's proxy from such record holder that holds your shares and present that proxy and proof of identification at the annual meeting.

    See question 4 for a further description of how to obtain a legal proxy if your shares are held in street name.

6.     What is the record date and what does it mean?

    The record date for the annual meeting is December 7, 2017. The record date is established by our Board of Directors as required by Delaware law. Stockholders of record at the close of business on the record date are entitled to receive notice of the annual meeting and to vote their shares at the meeting.

7.     What are your voting choices for director nominees, and what vote is needed to elect directors?

    For the vote on the election of the director nominees to serve until the 2019 annual meeting, stockholders may:

    vote in favor of all nominees,

    vote to withhold votes from all nominees, or

    vote to withhold votes as to specific nominees, with the remainder of the nominees to be voted in favor.

    Directors will be elected by a plurality of the votes cast in person or by proxy at the annual meeting. The Board recommends a vote "FOR" each of the director nominees.

8.     What is a plurality of the votes?

    In order to be elected, a director nominee does not have to receive a majority of the affirmative votes cast for directors. Instead, the ten nominees elected are those who receive the most affirmative votes of all the votes cast on Proposal 1 in person or by proxy at the meeting.

9.     What are your voting choices on the proposal inviting stockholders to approve the advisory (non-binding) resolution endorsing the compensation of the Corporation's executive officers, including the Corporation's compensation practices and principles and their implementation, as discussed in this Proxy Statement?

    In the vote on the advisory (non-binding) resolution to approve the compensation of the Corporation's executive officers, including the Corporation's compensation practices and principles and their implementation, as discussed and disclosed in this Proxy Statement, stockholders may:

    vote in favor of the proposal,

    vote against the proposal, or

    abstain from voting on the proposal.

    The advisory resolution to approve the Corporation's executive compensation program will require the affirmative vote of a majority of the votes cast in person or by proxy at the annual meeting. This is an advisory vote, and as such is not binding on the Board. The Board recommends a vote "FOR" Proposal 2.

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10.   What are your voting choices on the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2018 fiscal year, and what vote is needed to ratify their appointment?

    In the vote on the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2018 fiscal year, stockholders may:

    vote in favor of the ratification,

    vote against the ratification, or

    abstain from voting on the ratification.

    The proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm will require the affirmative vote of a majority of the votes cast in person or by proxy at the annual meeting. The Board recommends a vote "FOR" Proposal 3.

11.   What if a stockholder does not specify a choice for a matter when returning a proxy?

    Stockholders should specify their choice for each proposal described on the enclosed proxy. However, proxies that are signed and returned will be voted "FOR" Proposals 1, 2, and 3, if no specific instructions are given on such proposals.

12.   How are abstentions and broker non-votes counted?

    Both abstentions and broker non-votes are counted as "present" for purposes of determining the existence of a quorum at the annual meeting. Abstentions (or, with respect to Proposal 1, withheld votes) will not be included in vote totals and will not affect the outcome of the vote on Proposals 1, 2, or 3. Broker non-votes will not be included in vote totals and will not affect the outcome of the vote on Proposals 1 and 2. Proposal 3 is considered a routine matter and accordingly there will be no broker non-votes with respect to this proposal.

13.   How will stockholders know the outcome of the proposals considered at the annual meeting?

    We will announce preliminary results at the annual meeting. We will report final results at http://investor.sallybeautyholdings.com and in a filing with the U.S. Securities and Exchange Commission on Form 8-K.

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PROPOSAL 1 — ELECTION OF DIRECTORS

        Our Board of Directors consists of ten individuals, nine of whom qualify as independent of us under the rules of the NYSE. Our Certificate of Incorporation and our By-Laws provide for the annual election of each of our directors for one-year terms.

        In light of the appointment of Ms. Heasley on May 4, 2017 and the appointment of Mr. Magnacca on August 30, 2017, the Board of Directors, acting pursuant to the By-Laws, changed the size of the Board of Directors to ten and then eleven members. Erin Nealy Cox resigned as a member of the Board of Directors on November 10, 2017, and the Board of Directors changed the size of the Board of Directors from eleven to ten members.

        Following the recommendations of our Nominating and Corporate Governance Committee, our Board of Directors has nominated Mr. Brickman, Ms. Button Bell, Mr. Eisenberg, Mr. Gibbs, Ms. Heasley, Mr. Magnacca, Mr. McMaster, Mr. Miller, Ms. Mulder and Mr. Rabin for reelection to our Board of Directors. Accordingly, this Proposal 1 seeks the reelection of these ten directors to a term that will expire at the annual meeting of stockholders in 2019.

        Unless otherwise indicated, all proxies that authorize the proxy holders to vote for the election of directors will be voted "FOR" the election of the nominees listed below. If a nominee becomes unavailable for election as a result of unforeseen circumstances, it is the intention of the proxy holders to vote for the election of such substitute nominee, if any, as the Board of Directors may propose. As of the date of this Proxy Statement, each of the nominees has consented to serve and the Board is not aware of any circumstances that would cause a nominee to be unable to serve as a director.

        Each of Mr. Brickman, Ms. Button Bell, Mr. Eisenberg, Mr. Gibbs, Ms. Heasley, Mr. Magnacca, Mr. McMaster, Mr. Miller, Ms. Mulder and Mr. Rabin are current directors with a term expiring at this annual meeting and each has furnished to us the following information with respect to their principal occupation or employment and principal directorships:

        Christian A. Brickman, Director, President and Chief Executive Officer, age 52.     Mr. Brickman has served on our Board of Directors since September 2012 and is the Corporation's President and Chief Executive Officer, a role he has held since February 2015. Prior to being appointed to his current role, Mr. Brickman served as President and Chief Operating Officer of the Corporation from June 2014 to February 2015. Prior to joining the Corporation, Mr. Brickman served as President of Kimberly-Clark International from May 2012 to February 2014, where he led the Corporation's international consumer business in all operations. From August 2010 to May 2012, Mr. Brickman served as President of Kimberly-Clark Professional. From 2008 to 2010, Mr. Brickman served as Chief Strategy Officer of Kimberly-Clark and played a key role in the development and implementation of Kimberly-Clark's strategic plans and processes to enhance enterprise growth initiatives. Prior to joining Kimberly-Clark, Mr. Brickman was a Principal in McKinsey & Company's Dallas, Texas office and a leader in the firm's consumer packaged goods and operations practices. Before joining McKinsey, Mr. Brickman was President and CEO of Whitlock Packaging, the largest non-carbonated beverage co-packing company in the United States, from 1998 to 2001. From 1994 to 1998, he was with Guinness/United Distillers, initially as Vice President of Strategic Planning for the Americas region and then as General Manager for Guinness Brewing Worldwide's Latin America region. Mr. Brickman was awarded an advanced bachelor's degree in economics in 1986 from Occidental College in Los Angeles where he graduated with honors, Phi Beta Kappa and cum laude. We believe that Mr. Brickman's executive and management experience, including his experience as President of two large international companies, well qualify him to serve on our Board.

        Katherine Button Bell, Director, age 59.     Ms. Button Bell has served on our Board of Directors since March 2013 and is Senior Vice President, Chief Marketing Officer and a member of the Office of the Chief Executive of Emerson Electric Company, a diversified global manufacturing and technology

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company. Ms. Button Bell joined Emerson in 1999 and provides strategic leadership for the company's global marketing, corporate branding, and digital customer experience initiatives. She also oversees corporate communications, market research, and professional development for the company's marketing teams worldwide. In this capacity, Ms. Button Bell played a key role in the launch of Emerson's corporate branding program, building Emerson's brand globally. Prior to joining Emerson, Ms. Button Bell was the President of Button Brand Development, Inc., an independent marketing consulting firm specializing in developing well-recognized companies' brand names. Ms. Button Bell has been a director of Johnson Outdoors Inc., a NASDAQ listed manufacturer of outdoor recreation equipment, since September 2014. She currently serves on the marketing/strategy committee of St. Louis Children's Hospital, and is a member of the board of trustees of the St. Louis Art Museum. We believe that Ms. Button Bell's executive and management experience well qualify her to serve on our Board.

        Marshall E. Eisenberg, Director, age 72.     Mr. Eisenberg has served on our Board of Directors since November 2006. Mr. Eisenberg is a founding partner of the Chicago law firm of Neal, Gerber & Eisenberg LLP and has been a member of the firm's Executive Committee for the past 30 years. Mr. Eisenberg is a director of Jel-Sert Company and was formerly a director of Ygomi, Inc. and Engineered Controls International, Inc. Mr. Eisenberg has served on the Board of Visitors of the University of the Illinois College of Law. Mr. Eisenberg received his J.D. degree with honors from the University of Illinois College of Law in 1971, where he served as a Notes and Comments Editor of the Law Review and was elected to the Order of the Coif. We believe that Mr. Eisenberg's extensive legal experience, including his extensive corporate governance experience, well qualifies him to serve on our Board.

        David W. Gibbs, Director, age 54.     Mr. Gibbs has served on our Board of Directors since March 2016. Mr. Gibbs is the President and Chief Financial Officer of Yum! Brands, Inc., a position he has held since 2016. In this capacity, Mr. Gibbs has global responsibility for finance, operations, supply chain and information technology for the company. Prior to his current position, Mr. Gibbs served as the Chief Executive Officer of Pizza Hut, a division of Yum! Brands and one of the world's largest global casual dining chains, a position he held from 2015 to 2016. At Pizza Hut, Mr. Gibbs was responsible for overseeing the Pizza Hut organization, including the development of a global growth strategy. Mr. Gibbs joined the restaurant division of PepsiCo in 1989, which later became part of Yum! Brands, and served in a variety of executive roles with Yum! Brands, including Chief Strategy Officer and Chief Financial Officer of Yum! Restaurants International. We believe that Mr. Gibbs' executive, management and finance experience well qualifies him to serve on our Board.

        Linda Heasley, age 62.     Ms. Heasley has served on our Board of Directors since May 2017 and has been the Chief Executive Officer of The Honey Baked Ham Company, LLC since February 2017. Ms. Heasley served as the Chief Executive Officer and President of Lane Bryant, Inc. from February 2013 until February 2017. Ms. Heasley served as the Chairman, President and Chief Executive Officer at Limited Stores LLC from August 2007 until February 2013. Prior to this, Ms. Heasley held senior leadership roles at CVS Health Corporation, Timberland LLC, Bath and Body Works and L Brands, Inc. She currently serves as a director at J. Jill, Inc. Ms. Heasley holds a B.A. degree from Harvard University and earned her MBA from the John Anderson School of Management, UCLA. We believe that Ms. Heasley's executive and management experience well qualify her to serve on our Board.

        Joseph C. Magnacca, age 55.     Mr. Magnacca has been a member of our Board of directors since August 2017. Mr. Magnacca has over 25 years of leadership experience in the retail industry and currently serves as President, Chief Executive Officer and Director of Massage Envy Franchising, LLC, a position he has held since January 2016. Before joining Massage Envy, Mr. Magnacca served as the Chief Executive Officer and Director of RadioShack Corp. from February 2013 to April 2015. From February 2011 to February 2013, Mr. Magnacca was Executive Vice President and President of Daily

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Living Products and Services of Walgreens Co., where he oversaw all of Walgreen's marketing and merchandising operations for more than 8,000 stores. Mr. Magnacca served as a Director of American Apparel, Inc. from 2014 to 2015. He graduated from Wilfrid Laurier University in Ontario. We believe that Mr. Magnacca's extensive marketing and merchandising experience, as well as his leadership and business skills, well qualify him to serve on our Board.

        Robert R. McMaster, Director, age 69.     Mr. McMaster has served on our Board of Directors since November 2006 and as our Chairman of the Board since February 2016. Mr. McMaster served as our Lead Independent Director from November 2012 until he was named Chairman of the Board. Mr. McMaster has been a director of Carpenter Technology Corporation, a NYSE listed manufacturer and distributor of specialty metals, since 2007, where he currently serves as a member of its audit and strategy committees. Mr. McMaster is also chairman of the audit committee of The Columbus Foundation, a charitable trust and nonprofit corporation. From May 2003 until June 2006, Mr. McMaster served as a director of American Eagle Outfitters, Inc. and as chairman of its audit committee and a member of its compensation committee. Mr. McMaster was a director and a member of the audit and compensation committees of Dominion Homes, Inc. from May 2006 to May 2008. From January 2003 until February 2005, Mr. McMaster served as Chief Executive Officer of ASP Westward, LLC and ASP Westward, L.P. and from June 1997 until December 2002, Mr. McMaster served as Chief Executive Officer of Westward Communications Holdings, LLC and Westward Communications, L.P. Mr. McMaster is a former partner of KPMG LLP and a former member of its management committee. He also served as the Senior Financial Advisor to the CEO of Worthington Industries, Inc. from October 2008 to May 2013. We believe that Mr. McMaster's long and varied business career, including his extensive accounting experience, well qualifies him to serve on our Board.

        John A. Miller, Director, age 64.     Mr. Miller has served on our Board of Directors since November 2006. Mr. Miller is the President and Chief Executive Officer of North American Corporation, a multi-divisional company specializing in industrial paper products, packaging, printing and other commercial consumables. Mr. Miller has served as the President of North American Corporation since 1987. Mr. Miller is also a director of Wirtz Corporation, where he is a member of its Audit and Compensation Committees and Breakthru Beverage, where he is a member of its Audit Committee. We believe that Mr. Miller's long business career, including service as CEO of a large distribution company and his previous service on the board of our previous owner, well qualifies him to serve on our Board.

        Susan R. Mulder, Director, age 47.     Ms. Mulder has served on our Board of Directors since November 2014 and is the Chief Executive Officer of Nic & Zoe Co., a privately-held woman's apparel company, a role she has held since April 2012. Under her leadership, the brand has not only grown its wholesale footprint but has also introduced an E-Commerce platform and NIC+ZOE branded retail locations. Ms. Mulder is also a director of Nic & Zoe Co. Prior to joining Nic & Zoe Co., Ms. Mulder was a Senior Partner with McKinsey & Company where she was a leader in the retail and consumer practice for over 10 years specializing in marketing and organization. Ms. Mulder is also a member of the Board of Overseers of Boston Children's Hospital. Ms. Mulder received her MBA from the Harvard Business School with distinction in 1996, and holds a Bachelor of Commerce degree with great distinction from McGill University in Montreal, Quebec. We believe that Ms. Mulder's executive and retail and consumer experience well qualify her to serve on our Board.

        Edward W. Rabin, Director, age 71.     Mr. Rabin has served on our Board of Directors since November 2006. Mr. Rabin was President of Hyatt Hotels Corporation until his retirement in 2006, having served in various senior management roles since joining the Corporation in 1969. Mr. Rabin was a director of PrivateBancorp, Inc., a NASDAQ listed bank holding company, from December 2003 until the bank was acquired in June 2017. Mr. Rabin served as lead director of WMS Industries Inc., a formerly NYSE listed company in the gaming industry, from July 2008 until that company was sold in October 2013 and as a member of its audit and compensation committees from December 2005 to

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October 2013. He also served as a director of SMG Corporation from 1992 through June 2007. Mr. Rabin is a consulting director of the Richard Gray Gallery, Chicago and New York, and was previously a board member of Oneida Holdings, Inc., a private corporation. Mr. Rabin attended the Wharton School of Advanced Business Management and holds an honorary Masters in Business Administration from Florida State University. We believe that Mr. Rabin's executive and management experience, including his experience as president of a large hotel company, well qualify him to serve on our Board.

         THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES LISTED ABOVE.

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INFORMATION REGARDING CORPORATE GOVERNANCE, THE BOARD, AND ITS COMMITTEES

Board Purpose and Structure

        The Board oversees, counsels, and directs management in the long-term interests of the Corporation and our stockholders. The Board's responsibilities include:

    providing strategic guidance to our management;

    overseeing the conduct of our business and the assessment of our business and other enterprise risks to evaluate whether the business is being properly managed;

    selecting, evaluating the performance of, and determining the compensation of the CEO and other executive officers;

    planning for succession with respect to the position of CEO and monitoring management's succession planning for other executive officers; and

    overseeing the processes for maintaining our integrity with regard to our financial statements and other public disclosures, and compliance with law and ethics.

Corporate Governance Philosophy

        We are committed to conducting our business in a way that reflects best practices and high standards of legal and ethical conduct. To that end, our Board of Directors has approved and oversees a comprehensive system of corporate governance policies and programs. These documents meet or exceed the requirements established by the NYSE listing standards and by the SEC and are reviewed periodically and updated as necessary under the guidance of our Nominating and Corporate Governance Committee to reflect changes in regulatory requirements and evolving oversight practices. These policies embody the principles, policies, processes and practices followed by our Board, executive officers and employees in governing us.

Code of Business Conduct and Ethics and Corporate Governance Guidelines

        Our Board of Directors has adopted our (a) Code of Business Conduct and Ethics and (b) Corporate Governance Guidelines that apply to our directors, officers and employees. Copies of these documents and the charters for our Board committees are available on our website at http://investor.sallybeautyholdings.com and are available in print to any person, without charge, upon written request to our Vice President of Investor Relations. We intend to disclose on our website any substantive amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics that applies to our principal executive officer, our principal financial officer, our principal accounting officer or persons performing similar functions. We have not incorporated by reference into this Proxy Statement the information included on or linked from our website, and you should not consider it to be part of this Proxy Statement.

Director Independence

        Our Board of Directors is currently comprised of nine non-management directors and Mr. Brickman, who is our President and Chief Executive Officer. Under the Corporate Governance Guidelines, our directors are deemed independent if the Board has made an affirmative determination that such director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us) and such director also satisfies the other independence requirements of the NYSE. Our Board of Directors has affirmatively determined that all of our directors, other than Mr. Brickman, satisfy the independence requirements of our Corporate Governance Guidelines, as well as the NYSE, relating to directors. As part of its annual evaluation of

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director independence, the Board examined (among other things) whether any transactions or relationships exist currently (or existed during the past three years), between each independent director and us, our subsidiaries, affiliates, equity investors, or independent auditors and the nature of those relationships under the relevant NYSE and SEC standards. The Board also examined whether there are (or have been within the past year) any transactions or relationships between each independent director and members of the senior management of the Corporation or its affiliates.

        All of our directors who serve as members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are independent as required by the NYSE corporate governance rules. In addition, all of our Audit Committee members also satisfy the separate SEC independence requirements applicable to audit committee members and all of our Compensation Committee members satisfy the additional NYSE independence requirements applicable to compensation committee members.

Nomination of Directors

        The Board of Directors is responsible for nominating directors for election by our stockholders and filling any vacancies on the Board of Directors that may occur. The Nominating and Corporate Governance Committee is responsible for identifying individuals it believes are qualified to become members of the Board of Directors. We anticipate that the Nominating and Corporate Governance Committee will consider recommendations for director nominees from a wide variety of sources, including other members of the Board of Directors, management, stockholders and, if deemed appropriate, from professional search firms. The Nominating and Corporate Governance Committee will take into account the applicable requirements for directors under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the listing standards of the NYSE. In addition, the Nominating and Corporate Governance Committee will take into consideration such other factors and criteria as it deems appropriate in evaluating a candidate, including such candidate's judgment, skill, integrity, and business and other experience and the perceived needs of the Board of Directors at that time. With regard to diversity, the Board of Directors and the Nominating and Corporate Governance Committee believe that sound governance of the Corporation requires a wide range of viewpoints. As a result, although the Board of Directors does not have a formal policy regarding board diversity, the Board of Directors and Nominating and Corporate Governance Committee believe that the Board of Directors should be comprised of a well-balanced group of individuals with diverse backgrounds, educations, experiences and skills that contribute to board diversity, and the Nominating and Corporate Governance Committee considers such factors when reviewing potential director nominees.

Stockholder Recommendations or Nominations for Director Candidates

        Our Corporate Governance Guidelines provide that our Nominating and Corporate Governance Committee will accept for consideration submissions from stockholders of recommendations for the nomination of directors. Acceptance of a recommendation for consideration does not imply that the Nominating and Corporate Governance Committee will nominate the recommended candidate. Director nominations by a stockholder or group of stockholders for consideration by our stockholders at our annual meeting of stockholders, or at a special meeting of our stockholders that includes on its agenda the election of one or more directors, may only be made pursuant to Section 1.06 or Section 1.07, as applicable, of our By-Laws or as otherwise provided by law. Nominations pursuant to our By-Laws are made by delivering to our Corporate Secretary, within the time frame described in our By-Laws, all of the materials and information that our By-Laws require for director nominations by stockholders. All notices of intent to make a nomination for election as a director shall be accompanied by the written consent of each nominee to serve as a director.

        Stockholders wishing to recommend or nominate a director must provide a written notice to our Corporate Secretary that includes, among other information required to be provided by our By-Laws,

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(a) the name, age, business address and residence address of the nominee(s), (b) the principal occupation or employment of the nominee(s), (c) such person's written consent to serve as a director if elected, (d) the class or series and number of shares of Common Stock which are owned beneficially or of record by the nominee(s), (e) a description of all arrangements or understandings between the stockholder and the nominee(s) pursuant to which nominations are to be made by the stockholder, and (f) such other information as the Corporation may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation or whether such nominee would be independent under applicable Securities and Exchange Commission rules and regulations and New York Stock Exchange rules and the Corporation's publicly disclosed Corporate Governance Guidelines. No person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in Section 1.06 or Section 1.07, as applicable, of our By-Laws; any nominee proposed by a stockholder not nominated in accordance with Section 1.06 or Section 1.07, as applicable, shall not be considered or acted upon for execution at such meeting. Stockholders' notice for any proposals requested to be included in the Corporation's Proxy Statement pursuant to Rule 14a-8 under the Exchange Act (including director nominations), must be made in accordance with that rule.

Director Qualifications

        In order to be recommended by the Nominating and Corporate Governance Committee, our Corporate Governance Guidelines require that each candidate for director must, at a minimum, have integrity, be committed to act in the best interest of all of our stockholders, and be able and willing to devote the required amount of time to our affairs, including attendance at Board of Director meetings. In addition, the candidate cannot jeopardize the independence of a majority of the Board of Directors. The candidate should preferably also have the following qualifications: business experience, demonstrated leadership skills, experience on other corporate boards and skill sets that add to the value of our business.

Annual Election of Directors

        In 2014, the Board of Directors implemented a process to declassify the Board and provide for the annual election of all directors for one-year terms. Our stockholders approved the declassification proposal at our 2014 annual meeting of stockholders. At the annual meeting each year, all directors of the Board will be elected for one-year terms.

        With the appointment of Ms. Heasley on May 4, 2017 and the appointment of Mr. Magnacca on August 30, 2017, the Board decided to change its size to ten and then eleven members beginning in August 2017. Ms. Nealy Cox resigned as a member of the Board of Directors on November 10, 2017, and the Board of Directors changed the size of the Board of Directors from eleven to ten members. At this annual meeting, our stockholders will elect ten individuals to serve on our Board.

Mandatory Retirement Age

        Pursuant to our Corporate Governance Guidelines, it is the policy of the Board that no non-management director should serve for more than 15 years in that capacity, although the Board may request that a director who would otherwise be due to retire continue his or her service if (a) the policy would result in multiple retirements in any 12-month period or (b) the Board deems such service to be in the best interest of our stockholders.

Directors Who Change Their Present Job Responsibility

        Pursuant to our Corporate Governance Guidelines, a director who experiences a significant change in job responsibilities or assignment will be required to submit a resignation to the Board. The

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remaining directors, upon the recommendation of the Nominating and Corporate Governance Committee, will then determine the appropriateness of continued Board membership.

Stockholder-Director Communications

        Stockholders and other interested parties may contact any member (or all members) of our Board (including the non-management directors as a group, the Chairman of the Board, any Board committee or any chair of any such committee) by addressing written correspondence to the attention of our Corporate Secretary at 3001 Colorado Boulevard, Denton, Texas 76210. Our Corporate Secretary's office will open all communications received for the sole purpose of determining whether the contents represent a message to our directors. Any contents that legitimately relate to our business and operations and that are not in the nature of advertising, promotions of a product or service, patently offensive material, charitable requests, repetitive materials, or designed to promote a political or similar agenda will be forwarded promptly to the addressee.

Self-Evaluation

        The Nominating and Corporate Governance Committee oversees a self-evaluation of the Board each year to determine whether the Board is functioning effectively. In addition, each committee of the Board conducts a self-evaluation each year and reports its findings to the Board.

Board Meetings and Attendance

        Pursuant to our Corporate Governance Guidelines, our directors are expected to:

    regularly attend meetings of the Board and the committees of which they are members (as well as each annual meeting of stockholders);

    spend the time needed to properly discharge their responsibilities;

    with respect to our non-management directors, meet at regularly scheduled executive sessions in which management does not participate, which sessions are chaired by the Chairman of the Board;

    with respect to our independent directors, meet at least once a year in an executive session without management, which session is chaired by the Chairman of the Board.

        In fiscal 2017, our Board of Directors met 12 times, our Audit Committee met 5 times, our Compensation Committee met 6 times, our Executive Committee met 10 times, and our Nominating and Corporate Governance Committee met 4 times. Our independent directors met in executive session 5 times. During fiscal 2017, each of our incumbent directors attended at least 75% percent of the total number of meetings of the Board (during his or her service on the Board) and each committee on which he or she served (during his or her service on such committee). In 2017, all members of the Board attended the Corporation's annual meeting of stockholders.

Board Leadership Structure

        In accordance with our By-Laws, the Board elects our Chief Executive Officer and our Chairman, and each of these positions may be held by the same person or may be held by two persons. Under our Corporate Governance Guidelines, the Board does not have a policy, one way or the other, on whether the role of the Chairman and Chief Executive Officer should be separate and, if it is to be separate, whether the Chairman should be selected from the non-management directors or be a management director. However, our Corporate Governance Guidelines require that, if the Chairman of the Board is not an independent director, the independent directors shall appoint from among themselves a Lead Independent Director. The Chairman of the Board is responsible for chairing Board meetings and

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meetings of stockholders, establishing the agendas for Board meetings along with the Lead Independent Director, if any, and providing information to the Board members in advance of meetings and between meetings. The Lead Independent Director, if any, is responsible for, among other things, coordinating the activities of the independent directors, coordinating with the Chairman to set the agenda for Board meetings, chairing executive sessions of the independent (and non-management) directors, reviewing and approving meeting schedules and information sent to the Board and liaising with the Chairman and the Chief Executive Officer and the other independent directors.

        Mr. Brickman serves as our Chief Executive Officer and Mr. McMaster serves as our Chairman of the Board. Our Board has determined that this leadership structure is appropriate at this time. In particular, our Board believes that this structure streamlines decision making and enhances accountability. Furthermore, our Board believes that the presence of an independent Chairman of the Board and a majority of independent directors provides effective oversight of management.

Board's Role in the Risk Management Process

        The Board's role in the risk management process is to understand and oversee the Corporation's strategic plans, the associated risks and the steps that senior management is taking to manage and mitigate those risks. To ensure proper oversight of the risk management process, the Audit Committee outlines our risk principles and management framework and sets high level strategy and risk tolerances. Our risk profile is managed by our Vice President of Internal Audit, an officer appointed by and reporting to the Chairman of the Audit Committee. The Vice President of Internal Audit meets at least quarterly in executive session with the Audit Committee, and conducts an annual Enterprise Risk Assessment for the Corporation. This assessment is then presented to the Audit Committee (for development of action items and responsible parties for oversight), the full Board (for information) and the Nominating and Corporate Governance Committee (to ensure appropriate Board oversight of the identified risks). This approach is designed to enable the Board and management to establish a mutual understanding of the Corporation's risk management practices and capabilities, to review the Corporation's risk exposure and to elevate certain key risks for discussion at the Board level. The Board also meets regularly in executive session without management to discuss a variety of topics, including risk management. Through this system of checks and balances, the Board is able to monitor our risk profile and risk management activities on an ongoing basis. Certain officers who report to the Chief Financial Officer also monitor various financial risks which add to the Corporation's overall risk management strategy.

Compensation Risk Assessment

        The Compensation Committee has reviewed with management the design and operation of our incentive compensation arrangements, including the performance objectives and target levels used in connection with incentive awards, for the purpose of assuring that these arrangements do not provide our executives or employees with incentive to engage in business activities or other behavior that would impose unnecessary or excessive risk to the value of the Corporation or the investments of our stockholders. The Compensation Committee considered compensation programs that apply to employees at all levels. This risk assessment process included an assessment of the impact of the Corporation's compensation programs on identified primary business risks (using our annual Enterprise Risk Assessment as a framework) and an analysis of whether and how our compensation programs support, or provide risks to, our corporate strategy. In addition, the Compensation Committee considered the presence of significant risk mitigation factors inherent in our compensation program, such as those described on page 28 under "Compensation Discussion and Analysis — Management of Compensation-Related Risk."

        Based on the foregoing, the Compensation Committee concluded in its April 2017 meeting that the Corporation's compensation plans, programs and policies do not create incentives that encourage

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employees to take risks that are reasonably likely to have a material adverse effect on the Corporation. We believe that our incentive compensation plans, policies and practices provide appropriate incentives for behaviors that are within the Corporation's ability to effectively identify and manage significant risks, are compatible with effective internal controls and our risk management practices and are supported by the oversight and administration of the Compensation Committee with regard to executive compensation programs.

Committees of the Board of Directors

        Pursuant to our By-Laws, our Board of Directors has established the following committees:

    Audit Committee;

    Compensation Committee;

    Nominating and Corporate Governance Committee; and

    Executive Committee.

        The function of each committee is described below.

        Each committee, pursuant to its charter adopted by the Board of Directors, consists of at least three members.

        Audit Committee.     The Audit Committee currently consists of Mr. McMaster (chair), Mr. Eisenberg, Mr. Miller, and Mr. Gibbs. The Board has determined that each member of the Audit Committee is financially literate, that each member of the Audit Committee meets the independence requirements of the NYSE and Rule 10A-3 of the Exchange Act and that each of Mr. Eisenberg, Mr. Gibbs, Mr. McMaster, and Mr. Miller qualifies as an "audit committee financial expert" under SEC rules.

        The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities for:

    the quality and integrity of our financial statements, including oversight responsibility for management's design and implementation, and the effectiveness of, internal controls;

    the independent auditor's qualifications and independence;

    the performance of our internal audit function and independent auditors;

    our compliance with legal and regulatory requirements;

    our information technology function;

    preparation of the report of the Audit Committee required for our annual proxy statements; and

    our financing strategy, financial policies and financial condition.

        Pre-Approval Policy.     The Audit Committee has established an Audit and Non-Audit Services Pre-Approval Policy to pre-approve all permissible audit and non-audit services provided by our independent auditors. We expect that on an annual basis, the Audit Committee will review and provide pre-approval for certain types of services that may be rendered by the independent auditors, together with a budget for the applicable fiscal year. The policy also requires the pre-approval of any fees that are in excess of the amount budgeted by the Audit Committee. The policy contains a provision delegating limited pre-approval authority to the chairman of the Audit Committee in instances when pre-approval is needed prior to a scheduled Audit Committee meeting. The chairman of the Audit Committee is required to report on such pre-approvals at the next scheduled Audit Committee meeting.

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        The Audit Committee is governed by the Audit Committee charter, which was amended and restated by the Board of Directors on July 30, 2015. A copy of this charter is available on the corporate governance section of our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations.

        Compensation Committee.     The Compensation Committee consists of Mr. Rabin (chair), Ms. Button Bell, Mr. Eisenberg, and Ms. Mulder. The Board has determined that each such member meets the independence requirements of the NYSE, as well as the "Non-Employee Director" requirements under Rule 16b-3 of the Exchange Act and the "outside director" requirements under Section 162(m) of the Internal Revenue Code. The purpose of the Compensation Committee is to, among other things:

    establish our general compensation philosophy and, in consultation with senior management, oversee and assess the development and implementation of compensation programs;

    review and approve corporate goals and objectives relevant to Chief Executive Officer compensation and evaluate the Chief Executive Officer's performance in light of those goals and objectives;

    determine and approve the Chief Executive Officer's compensation level based on this evaluation;

    review and approve the compensation of the other executive officers and our Board of Directors;

    review and recommend to the Board of Directors equity-based incentive compensation plans in which senior management will participate;

    consider the results of the most recent advisory vote on executive compensation in evaluating or making recommendations regarding executive compensation; and

    prepare the reports and analysis on executive compensation, which are required to be included in our annual proxy statements.

        The Compensation Committee's processes for fulfilling its responsibilities and duties with respect to executive compensation and the role of our executive officers and management in the compensation process are each described under "Compensation Discussion and Analysis — Processes for Determining Executive Compensation" beginning on page 28 of this Proxy Statement.

        The Compensation Committee is governed by the Compensation Committee charter, which was amended and restated by the Board of Directors on July 30, 2015. A copy of this charter is available on the corporate governance section of our website at http:// investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations.

        Pursuant to its charter, the Compensation Committee may retain such compensation consultants, outside counsel and other advisors as it may deem appropriate in its sole discretion and it has the sole authority to approve related fees and other retention terms. As described in greater detail in "Compensation Discussion and Analysis — Processes for Determining Executive Compensation" beginning on page 28 of this Proxy Statement, the Compensation Committee engages an independent executive compensation consultant, Frederic W. Cook & Co., Inc., or FW Cook, to assist it in its review of our management compensation levels and programs to ensure that our executive compensation program is commensurate with those of public companies similar in size and scope to us. During its engagement, FW Cook has participated in meetings of the Compensation Committee and advised it with respect to compensation trends and practices, plan design and the reasonableness of individual awards. FW Cook has not performed any services for our management.

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        Nominating and Corporate Governance Committee.     The Nominating and Corporate Governance Committee consists of Mr. Eisenberg (chair), Mr. McMaster, Ms. Mulder and Mr. Rabin. The Board has determined that each such member meets the independence requirements of the NYSE. The purpose of the Nominating and Corporate Governance Committee is to, among other things:

    identify individuals qualified and suitable to become members of our Board of Directors and to recommend to our Board of Directors the director nominees for each annual meeting of stockholders;

    consider any director candidates recommended by our stockholders pursuant to the procedures described in this proxy statement and in our By-Laws;

    recommend to our Board of Directors individual directors to serve on our various Board committees;

    develop and recommend to our Board of Directors a set of corporate governance principles applicable to us; and

    oversee the evaluation of the Board of Directors and management.

        The Nominating and Corporate Governance Committee is governed by the Nominating and Corporate Governance Committee charter, which was amended and restated by the Board of Directors on July 30, 2015. A copy of this charter is available on the corporate governance section of our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations.

        Executive Committee.     The Executive Committee consists of Mr. Miller (chair) and Messrs. Brickman, Eisenberg and McMaster. The purpose of the Executive Committee is to assist our Board of Directors with its responsibilities and, except as may be limited by law, our Certificate of Incorporation or our By-Laws, to exercise the powers and authority of our Board of Directors when it is not in session. The Executive Committee is governed by the Executive Committee charter, which was amended and restated by the Board of Directors on July 30, 2015. A copy of this charter is available on the corporate governance section of our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations.

Director Indemnification Agreements

        Our Board of Directors approved and authorized us to enter into an indemnification agreement with each member of the Board. The indemnification agreement is intended to provide directors with the maximum protection available under applicable law in connection with their services to us.

        Each indemnification agreement provides, among other things, that subject to the procedures set forth therein, we will, to the fullest extent permitted by applicable law, indemnify an indemnitee if, by reason of such indemnitee's corporate status as a director, such indemnitee incurs any losses, liabilities, judgments, fines, penalties or amounts paid in settlement in connection with any threatened, pending or completed proceeding, whether of a civil, criminal, administrative or investigative nature. In addition, each indemnification agreement provides for the advancement of expenses incurred by an indemnitee, subject to certain exceptions, in connection with any proceeding covered by the indemnification agreement. Each indemnification agreement also requires that we cover an indemnitee under liability insurance available to any of our directors, officers or employees. Our indemnification obligations under these agreements are primary for all claims against our directors.

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No Material Proceedings

        As of November 15, 2017 there are no material proceedings to which any of our directors, executive officers or affiliates, or any owner of record or beneficially of more than five percent of our Common Stock (or their associates) is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

        The Compensation Committee consists of Mr. Rabin (chair), Ms. Button Bell, Mr. Eisenberg, and Ms. Mulder. No member of our current Compensation Committee is or has been one of our officers or employees or has had any relationship requiring disclosure under SEC rules. In addition, during fiscal 2017, none of our executive officers served as:

    a member of the compensation committee (or other board committee performing similar functions or, in the absence of any such committee, the entire board of directors) of another corporation, one of whose executive officers served on the Compensation Committee;

    a director of another corporation, one of whose executive officers served on the Compensation Committee; or

    a member of the compensation committee (or other board committee performing similar functions or, in the absence of such committee, the entire board of directors) of another corporation, one of whose executive officers served as one of our directors.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Statement of Policy with respect to Related Party Transactions

        Our Board of Directors recognizes that interested transactions with related parties present a heightened risk of conflicts of interest or the perception thereof and therefore adopted a Statement of Policy with respect to Related Party Transactions, which was amended and restated in July 2016. Under this policy, an "interested transaction" is defined as any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including the incurrence or issuance of any indebtedness or the guarantee of indebtedness) in which (1) the aggregate amount involved will or may be reasonably expected to exceed $20,000 in any calendar year, (2) the Corporation or any of its subsidiaries is a participant, and (3) any related party has or will have a direct or indirect interest (other than solely as a result of being a director or a less than ten percent beneficial owner of another entity). Any charitable contribution, grant or endowment by the Corporation to a charitable organization, foundation or university at which a related party's only relationship is as an employee, an officer or a director also constitutes an interested transaction. A "related party" is defined as any person who is or was (since the beginning of the last fiscal year for which the Corporation has filed an Annual Report on Form 10-K and proxy statement, even if such person does not presently serve in that role) (1) any officer (including at the Vice President level or above), director or nominee for election as a director of the Corporation or any of its subsidiaries, (2) a greater than five percent beneficial owner of any class of the Corporation's Common Stock or other equity securities, or (3) an immediate family member of any of the foregoing individuals.

        Subject to several exceptions (as described below), all interested transactions must be approved or ratified by the Audit Committee of the Board of Directors, taking into account, among other factors it deems appropriate, whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, as well as the extent of the related party's interest in the transaction. An interested transaction may be approved or ratified if it is determined in good faith that, under all of the circumstances, the transaction is fair to the Corporation. The Audit Committee may impose such conditions as it deems appropriate on the Corporation or the related party in connection with the approval of the transaction.

        No director participates in any discussion or approval of an interested transaction for which he or she is a related party, except to the extent the director provides material information concerning the transaction to the Audit Committee. If an interested transaction remains ongoing, the Audit Committee must review and assess, on at least an annual basis, ongoing relationships with the related party to ensure that the interested transaction remains appropriate. In addition, if an interested transaction involving a member of the Board may constitute an actual or potential director conflict of interest, the General Counsel shall notify the Chair of the Nominating and Corporate Governance Committee of such interested transaction.

        Under the policy, the following categories of interested transactions have been deemed by the Audit Committee to be pre-approved, even if in excess of $20,000, unless otherwise specifically determined by the committee: (1) any employment by the Corporation of an officer of the Corporation or any of its subsidiaries if the related compensation is approved (or recommended to the Board of Directors for approval) by the Corporation's Compensation Committee, (2) any compensation paid to a director if the compensation is consistent with the Corporation's director compensation policies and is required to be reported in the Corporation's proxy statement under Item 402, (3) any transaction with another company at which a related party's only relationship is as an employee (other than an executive officer or director) or beneficial owner of less than ten percent of that company's equity, if the aggregate amount involved does not exceed the greater of $120,000, or two percent of that company's total annual revenues, and (4) any transaction where the related party's interest arises solely from the

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ownership of the Corporation's Common Stock and all holders of the Corporation's Common Stock received the same benefit on a pro-rata basis (e.g., dividends).

        All interested transactions with related parties were disclosed in the Corporation's Proxy Statement in accordance with the requirements of the Exchange Act. A copy of our Statement of Policy with respect to Related Party Transactions is available on the corporate governance section of our website at http://investor.sallybeautyholdings.com and is available in print to any person, without charge, upon written request to our Vice President of Investor Relations.


INFORMATION ON THE COMPENSATION OF DIRECTORS

Fiscal 2017 Director Compensation Table (1)

 
   
   
   
   
   
   
   
   
 
  Name
   
  Fees Earned or
Paid in Cash
($)

   
  Stock
Awards
($)(5)

   
  Total
($)

   

 

Christian A. Brickman(2)

                           

 

Katherine Button Bell

        81,000         124,995         205,995    

 

Erin Nealy Cox

        82,000         124,995         206,995    

 

Marshall E. Eisenberg

        128,000         124,995         252,995    

 

David W. Gibbs

        81,000         124,995         205,995    

 

Linda Heasley(3)

        29,473         51,358         80,831    

 

Joseph C. Magnacca(4)

        6,889         10,956         17,845    

 

Robert R. McMaster

        275,000         124,995         399,995    

 

John A. Miller

        92,000         124,995         216,995    

 

Susan R. Mulder

        91,000         124,995         215,995    

 

Edward W. Rabin

        110,000         124,995         234,995    
(1)
During our 2017 fiscal year, we did not grant any stock options to, award any non-equity incentive plan compensation to, or maintain any pension or deferred compensation arrangements for members of our Board of Directors, and our directors did not receive any compensation that would constitute "All Other Compensation."

(2)
Mr. Brickman did not receive any compensation for his service as a director during our 2017 fiscal year, nor will Mr. Brickman receive compensation for such services going forward.

(3)
Ms. Heasley was appointed to the Board on May 4, 2017.

(4)
Mr. Magnacca was appointed to the Board on August 30, 2017.

(5)
Reflects the grant date fair value of restricted stock unit (RSU) awards, determined in accordance with Financial Accounting Standards Board ASC Topic 718 Stock Compensation ("ASC 718"). The grant date fair value of the RSUs is based on the fair market value of the underlying shares on the date of grant. On November 1, 2016, each director other than Ms. Heasley and Mr. Magnacca received 4,896 RSUs, which stock award had a grant date fair value equal to $124,995. On the date of her appointment, Ms. Heasley received 2,586 RSUs which had a grant date fair value equal to $51,358. On the date of his appointment, Mr. Magnacca received 590 RSUs which had a grant date fair value equal to $10,956. As of September 30, 2017, the directors beneficially owned RSUs which were vested but not yet delivered in shares in the following amounts:

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    (a) Mr. Brickman, 8,059; (b) Ms. Button Bell, 18,284; (c) Ms. Nealy Cox, 5,436; (d) Mr. Eisenberg, 64,226; (e) Mr. Gibbs, 4,896; (f) Ms. Heasley, 2,379; (g) Mr. Magnacca, 498; (h) Mr. McMaster, 64,865; (i) Mr. Miller, 48,479; (j) Ms. Mulder, 7,693; and (k) Mr. Rabin, 54,771.

Narrative Discussion of Director Compensation Table

        The following is a narrative discussion of the material factors which we believe are necessary to understand the information disclosed in the Director Compensation Table. The Sally Beauty Holdings, Inc. Amended and Restated Independent Director Compensation Policy (the "Director Compensation Policy") governs the compensation paid to our independent directors. FW Cook reviews our director compensation program bi-annually, and FW Cook last completed such review in 2016 for application in fiscal year 2017.

Cash Compensation

        In fiscal 2017, pursuant to the Director Compensation Policy, each of our independent directors received an annual cash retainer of $55,000, payable in advance in four quarterly installments. For in-person Board or committee meetings during our 2017 fiscal year, each independent director in attendance received $2,000 per meeting. For telephonic Board or committee meetings for which minutes were kept, each independent director in attendance received $1,000 per meeting.

        Additional annual cash retainers were paid to each independent director who served as the Chairman of the Board (Mr. McMaster) or chairperson of the Audit Committee (Mr. McMaster), Compensation Committee (Mr. Rabin), or the Nominating and Corporate Governance Committee (Mr. Eisenberg). The following table sets forth the cash retainers for services rendered in fiscal 2017:

Non-Executive Chairman

  $ 150,000  

Audit Committee

  $ 25,000  

Compensation Committee

  $ 20,000  

Nominating & Corporate Governance Committee

  $ 18,000  

Equity-Based Compensation

        Pursuant to our Director Compensation Policy, each independent director was granted an annual equity-based retainer award with a value at the time of grant of approximately $125,000. For fiscal year 2017, these awards were granted in accordance with the 2010 Omnibus Plan in the form of RSUs that vested on September 30, 2017, the last day of the fiscal year, subject to the director's continued service on the Board on such date. On November 1, 2016, each independent director received an award of 4,896 RSUs, except Ms. Heasley who received a prorated award of 2,586 RSUs when she was appointed on May 4, 2017, and Mr. Magnacca who received a prorated award of 590 RSUs when he was appointed on August 30, 2017. As provided in the Director Compensation Policy, each independent director may elect to defer delivery of the shares of Common Stock that would otherwise be due on the vesting date until a later date specified by the independent director. Deferred shares are retained by us as deferred stock units that are distributed on the date specified by the independent director. If an independent director does not make such election, he or she will receive shares of Common Stock in settlement of the RSU on the vesting date. Vesting accelerates on a pro-rata basis in the event of the director's death or disability.

Stock Ownership and Retention Guidelines

        Pursuant to our minimum stock ownership guidelines, each independent director must own shares of Common Stock in an amount equal to five times the base annual cash retainer (excluding additional

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annual cash retainers for the Chairman of the Board and committee chairpersons, and all meeting fees). Independent directors are required to achieve the applicable level of ownership within five years of becoming subject to the requirements. Until such time as the required equity ownership is reached, the independent director must retain 100% of the shares of Common Stock received upon settlement of his or her RSUs. Shares underlying vested RSUs (including deferred shares) count towards the stock ownership total. Unexercised options (whether vested or unvested) and unvested RSUs do not count as stock owned under the guidelines. As of November 15, 2017, all of our independent directors were in compliance with our stock ownership guidelines.

Travel Expense Reimbursement

        Each of our independent directors is entitled to reimbursement for reasonable travel expenses properly incurred in connection with his or her functions and duties as a director. With respect to air travel, reimbursements are limited to the cost of first-class commercial airline tickets for the trip.


COMPENSATION DISCUSSION AND ANALYSIS

        In this section of our Proxy Statement, we explain how our executive compensation programs are designed and operate with respect to the following executive officers (whom we refer to as our "named executive officers"):

    Christian A. Brickman, our President and Chief Executive Officer;

    Donald T. Grimes, our Senior Vice President, Chief Financial Officer, and Chief Operations Officer (who was appointed effective December 12, 2016);

    Janna S. Minton, our former Interim Chief Financial Officer (effective September 30, 2016 until the appointment of Mr. Grimes on December 12, 2016) and Group Vice President, Chief Accounting Officer and Controller (who retired from the Company effective May 5, 2017);

    Matthew O. Haltom, our Senior Vice President, General Counsel and Corporate Secretary;

    Mark G. Spinks, our President of Beauty Systems Group LLC (BSG);

    Brently G. Baxter, our Vice President, Corporate Controller and Principal Accounting Officer (who was appointed effective May 1, 2017); and

    Sharon M. Leite, our former President of Sally Beauty Supply LLC (who separated from the Company effective May 1, 2017).

        For a complete understanding of our executive compensation program, this Compensation Discussion and Analysis should be read in conjunction with the Summary Compensation Table and other compensation disclosures included on pages 45-60 of this Proxy Statement.

Executive Overview

Our Business

        We are the largest distributor of professional beauty supplies in the U.S. based on store count. We operate primarily through two business units, Sally Beauty Supply and Beauty Systems Group, or BSG. Through Sally Beauty Supply and BSG (which primarily operates stores under the CosmoProf service mark), we operated a multi-channel platform of 4,963 stores and supplied 187 franchised stores primarily in North America, South America and selected European countries, as of September 30, 2017. Within BSG, we also have one of the largest networks of professional distributor sales consultants in North America, with approximately 829 professional distributor sales consultants who sell directly to salons and salon professionals. Sally Beauty Supply stores target retail consumers and salon professionals, while BSG exclusively targets salons and salon professionals.

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Fiscal 2017 Business Highlights

    For the full fiscal year, consolidated net sales were $3.94 billion, a decrease of 0.4%, and same store sales declined 0.7%. Natural disasters (three major hurricanes and two major earthquakes in Mexico) negatively impacted both full year sales growth and full year same store sales growth by approximately 20 basis points. Foreign currency translation had an unfavorable impact of approximately 80 basis points on full year consolidated sales growth.

    Full year gross margin increased 20 basis points to 49.9%, driven primarily by strategic pricing initiatives in both segments and favorable customer mix in the Sally Beauty segment.

    GAAP diluted earnings per share for the full fiscal year were $1.56, growth of 4.0% compared to the prior year. Natural disasters negatively impacted both reported and adjusted diluted earnings per share in the fiscal year by $0.03.

    GAAP operating earnings for the full fiscal year were $478 million, compared to $498 million for fiscal 2016.

    Full-year Adjusted EBITDA was $624 million, a decrease of 0.6% from fiscal 2016. Adjusted EBITDA is a non-GAAP financial measure that we define as GAAP net earnings before depreciation and amortization, interest expense, income taxes, share-based compensation, and certain non-recurring items. For a more detailed discussion of and reconciliation of our calculation of Adjusted EBITDA to net earnings, the most comparable GAAP financial measure, see Exhibit 99.1 to our Form 8-K filed with the SEC on November 15, 2017.

        Our GAAP diluted earnings per share were $1.56, representing a 4% increase over fiscal 2016.


Growth in EPS

GRAPHIC


*
For a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, see Exhibit 99.1 to our Form 8-K filed with the SEC on November 15, 2017.

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2017 Executive Compensation Events

    Executive compensation was primarily delivered through a combination of base salary, annual incentives and long-term incentives in the form of stock options and performance-based restricted stock units (PBRSUs). Our program closely links realized compensation to the achievement of financial objectives and increases in the Corporation's stock price. 80 percent of Mr. Brickman's fiscal 2017 target compensation was performance-based and contingent upon the achievement of financial performance objectives or, in the case of stock options, increases in our stock price.

    In fiscal year 2017, we failed to meet certain of the financial performance targets under the annual incentive plan. As a result, all of the named executive officers (other than Ms. Minton) earned below-target annual incentive payments for fiscal 2017. The Compensation Committee exercised its discretion to increase each eligible named executive officer's annual incentive plan payout by an amount such that each eligible name executive officer would receive an aggregate payout equal to a defined percentage of his target bonus (20%, in the case of Messrs. Grimes, Haltom, Spinks and Baxter, and 10%, in the case of Mr. Brickman). Due to her departure date, Ms. Minton was not eligible for an annual incentive payment for fiscal year 2017.

    Under our long-term incentive program, employees at the Vice President level and above received a significant portion (1/3 rd ) of their fiscal 2017 equity-based compensation in the form of PBRSUs and the remaining portion in the form of time-based stock options (2/3 rd ). PBRSUs vest based on achievement of 3-year sales growth and return on invested capital goals.

    On November 10, 2016, our Board appointed Mr. Donald T. Grimes as Senior Vice President, Chief Financial Officer and Chief Operations Officer, effective December 12, 2016. In connection with his commencement of employment with us, Mr. Grimes received certain sign-on benefits, including a cash sign-on bonus of $250,000, an award of non-qualified stock options with a grant date value of approximately $450,000 and an award of restricted stock with a grant date value of approximately $300,000. The Compensation Committee desired to offer Mr. Grimes a competitive compensation package designed to encourage him to accept employment with us, which competitive compensation package included one-time awards intended to address equity compensation granted by his then-current employer that he would forfeit in connection with his termination of employment.

    On May 1, 2017, Ms. Sharon M. Leite resigned from her position as President of Sally Beauty Supply LLC. In order to obtain Ms. Leite's agreement to certain restrictive covenants following her resignation, including confidentiality, non-disparagement and non-solicitation provisions, as well as a release of potential claims, we entered into a separation agreement with Ms. Leite. Pursuant to that agreement, Ms. Leite received payments that represent her base salary and reimbursement for the cost of health insurance continuation for twelve months.

    On April 17, 2017, the Board appointed Mr. Brently G. Baxter as Vice President, Corporate Controller and Principal Accounting Officer of the Company, effective May 1, 2017. Mr. Baxter did not receive any sign-on awards in connection with his commencement of employment.

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2017 Compensation Governance Highlights

        We endeavor to maintain good governance standards including with respect to the oversight of our executive compensation policies and practices. The following policies and practices were in effect during fiscal 2017:

ü
The Compensation Committee is composed solely of independent directors who have established channels to communicate with stockholders regarding their executive compensation views.

ü
The Compensation Committee's independent compensation consultant, FW Cook, is retained directly by the Compensation Committee and performs no other consulting or other services for Sally Beauty Holdings, Inc.

ü
The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review of our compensation-related risk profile to assure that compensation-related risks are not reasonably likely to have a material adverse effect on the Corporation.

ü
The Compensation Committee reviews tally sheets in connection with making compensation decisions.

ü
We have a compensation recoupment policy for the executives that requires current and former executives to return incentive compensation that is subsequently determined not to have been earned.

ü
We have a long-term incentive program that provides employees at the Vice President level and above with a significant portion (1/3 rd ) of their equity-based compensation in the form of PBRSUs, which are subject to a three-year cliff-vesting provision and are payable if we meet sales growth and return on invested capital goals over the three-year period.

ü
Minimum vesting requirements under our 2010 Omnibus Plan require that, subject to certain limited exceptions, full-value awards granted to employees either (i) be subject to a minimum vesting period of three years, or one year if the vesting is based on performance criteria, or (ii) be granted solely in exchange for foregone compensation.

ü
We have stock ownership and retention guidelines for our executive officers, including the named executive officers, and our independent directors.

ü
We prohibit all employees and directors from engaging in any margin trading, pledging or hedging transactions with respect to the Corporation's stock.
X
The exercise price of options granted under our 2010 Omnibus Plan is never less than the closing price of our Common Stock on the date of grant.

X
We do not provide "single trigger" change-in-control severance benefits.

X
With the exception of our PBRSUs, we do not provide "single trigger" change-in-control acceleration for our equity awards. Our equity plans provide for "double trigger" change-in-control vesting for awards assumed by the surviving company (other than PBRSUs, which will vest at target).

X
We do not provide 280G excise tax "gross-ups."

X
The change in control definition contained in our 2010 Omnibus Plan and severance agreements is not a "liberal" definition that would be activated on mere stockholder approval of a transaction.

X
We do not provide excessive perquisites. Our named executive officers participate in the same benefit programs at the same cost as other salaried employees, and receive only minimal perquisites, consisting of reimbursement for an annual physical and, in limited situations, reimbursement for relocation expenses to assist and ease the transition to a new location and health insurance premiums (upon hire and only prior to eligibility for coverage under the Corporation's group health plans).

X
We do not provide tax "gross-ups" for perquisites or other benefits provided to our executive officers, other than in the case of reimbursement of certain new-hire relocation and health insurance expenses.

X
Our plans prohibit the repricing of stock options without stockholder approval.

X
We do not maintain compensation programs that we believe create risk reasonably likely to have a material adverse effect on the Corporation.

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Philosophy/Objectives of Executive Compensation

        Our Compensation Committee has developed the following set of objectives to guide the design of our executive officer compensation plans and practices, including those for our named executive officers. The Compensation Committee considers these objectives when making decisions regarding the forms, mix and amounts of compensation paid to our executive officers:



 

Attract, motivate and retain highly qualified individuals. To assure that our compensation arrangements remain competitive with the compensation paid by other employers who compete with us for talent, the Compensation Committee considers peer group information as one input in its decision-making process. In fiscal 2017, we targeted our compensation program to provide total direct compensation opportunities for our named executive officers at approximately the 25 th  percentile to median of our peer group. The Compensation Committee uses its judgment to vary executive officer pay within the targeted range and from the targeted range based on various factors, such as an executive officer's performance, responsibilities, experience and expected future contributions.

 

LOGO


 

Align the interests of our executive officers more closely with those of our stockholders. The compensation program for our executives is weighted toward performance-based compensation, with base salary generally being the only component of an executive officer's direct compensation that is fixed each year. Other components, including annual bonus and long-term incentive compensation, are subject to the achievement of financial and strategic business objectives and/or increases in stock price. The Compensation Committee believes this performance-driven compensation will promote our long-term success and lead to increased stockholder returns.


 

Manage risk by balancing the time horizon of incentive compensation. Our compensation program is balanced between short- and long-term performance objectives, but always with a view to achieving long-term value for our stockholders. This structure, together with our compensation recoupment policy, encourages and rewards sustained superior performance.

        We believe our compensation program provides a balanced and stable foundation for achieving our intended objectives. Our compensation philosophy emphasizes team effort, which we believe fosters rapid adjustment and adaptation to fast-changing market conditions and helps to not only achieve our short-term and long-term goals, but also aligns the interests of our management team with those of the Corporation and our stockholders.

Internal Equity

        Internal equity is one factor of many that the Compensation Committee considers in establishing compensation for our executives. While there is no formal policy, the Compensation Committee reviews compensation levels to ensure that appropriate parity exists within the senior management team. The differences in compensation levels among our named executive officers reflect the significant variations in their relative responsibilities. The responsibilities of the Chief Executive Officer for management and oversight of a global enterprise are significantly higher than those of our other named executive

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officers. As a result, the pay level for our Chief Executive Officer is commensurately higher than the pay for other officer positions.

Management of Compensation-Related Risk

        We have designed our compensation programs to avoid excessive risk-taking. The following are some of the features of our program designed to help us appropriately manage business risk:

  Diversification of incentive-related risk by employing a variety of performance measures;


 

A balanced weighting of the various performance measures, to avoid excessive attention on achievement of one measure over another;











 

An assortment of vehicles for delivering
compensation, including cash and equity
based incentives with different time horizons,
to focus our executives on specific
objectives that help us achieve our business
plan and create an alignment with long-term stockholder interests;

A compensation recoupment policy, as described on page [40];

Standardized equity grant procedures; and

 

LOGO


 

Stock ownership and retention guidelines applicable to all executive officers.

Processes for Determining Executive Compensation

        The Compensation Committee reviews each element of our executive compensation program, and the methods for determining the types and amounts of compensation, to assure that they help us meet our compensation philosophy and objectives. The Compensation Committee receives input from its independent compensation consultant as well as from members of management, as discussed below.

Role of Independent Compensation Consultant

        The Compensation Committee retained the services of an independent consultant, FW Cook, to assist in its annual review of our management compensation levels and programs and bi-annual review of our non-employee director compensation levels and programs. As part of this engagement, FW Cook assisted the Compensation Committee in the design of our current compensation program for executives, and continues to advise the Compensation Committee on the program. The Compensation Committee has directly engaged FW Cook to assist with these same services for fiscal 2017, based on FW Cook's experience, expertise and familiarity with our company. FW Cook does not provide any services to our management, and does not provide any service to us, other than with respect to its role as the Compensation Committee's executive compensation consultant.

Conflicts of Interest Assessment

        The Compensation Committee determined that the work of FW Cook did not raise any conflicts of interest in fiscal 2017. In making this assessment, the Compensation Committee considered the independence factors enumerated in Rule 10C-1(b) under the Securities Exchange Act of 1934 and the NYSE listing standards, including the fact that FW Cook does not provide any other services to the Corporation, the level of fees received from the Corporation as a percentage of FW Cook's total revenue, policies and procedures employed by FW Cook to prevent conflicts of interest, and whether

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the individual FW Cook advisers to the Compensation Committee own any stock of the Corporation or have any business or personal relationships with members of the Compensation Committee or our executive officers.

Market Data/Benchmarking

        FW Cook assisted the Compensation Committee in benchmarking our compensation arrangements and aggregate equity compensation practices against public companies similar in size and scope to our company. FW Cook obtained proxy data from the peer companies described below, as well as comparative compensation surveys of general industrial companies.

        The following 16 specialty retail companies comprised our peer group for fiscal 2017, which we refer to as our "peer companies" or "peer group:"

 
Abercrombie & Fitch Co.   Fossil Group, Inc.   The Michaels Companies, Inc.
Advance Auto Parts Inc.   GNC Holdings Inc.   Tractor Supply Company
Caleres, Inc.   O'Reilly Automotive Inc.   ULTA Salon, Cosmetics & Fragrance, Inc.
Columbia Sportswear Company   Pier 1 Imports, Inc.   Urban Outfitters Inc.
Dick's Sporting Goods Inc.   Tailored Brands, Inc.   Williams-Sonoma Inc.
Foot Locker, Inc.        
 

The Compensation Committee selected the companies in the peer group, after reviewing data on retail companies (including financial metrics, line-of-business, stock performance and employee count for each respective company) and considering several criteria, including the comparability of specialty retailers and the volatility and maturity of potential peers. In terms of size, our revenues and our market capitalization approximated the median of these peer companies. The peer group is unchanged from the peer group for fiscal 2016.

Role of Management

        The Compensation Committee also considers the views and insights of our management, including our executive officers, in making compensation decisions. In particular, our Chief Executive Officer recommends to the Compensation Committee the base pay levels and individual compensation targets for each executive officer (other than himself) based on each executive's experience, as well as our Chief Executive Officer's view as to the strategic importance of that executive's role, knowledge and performance. Our Chief Executive Officer's unique insight into our business and day-to-day interaction with our senior executives provides a valuable resource to the Compensation Committee with respect to our executive compensation programs. In addition, the Compensation Committee relied on recommendations made by our Chief Executive Officer and our Chief Financial Officer in selecting the performance metrics and targets for fiscal 2017 annual incentive compensation awards.

        Our Chief Executive Officer as well as other members of management generally attend Compensation Committee meetings to provide input on executive contributions, but no member of management participates in discussions with the Compensation Committee concerning his or her own compensation. The Compensation Committee also works closely with our internal legal, human resources, and finance personnel in establishing and monitoring our compensation programs. Our Chief Financial Officer provides the Compensation Committee with input on our financial performance and operational issues, and our General Counsel provides input to the Compensation Committee regarding compliance with the laws, regulations and best practices applicable to executive compensation.

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Experience of our Compensation Committee

        The Chair of our Compensation Committee has significant experience in the management of professionals and has served both as chair and as a member of the compensation committees of other publicly-traded companies, and all of our Compensation Committee members have significant experience with regard to the oversight of executive compensation practices of large publicly-traded companies. The Board believes that this experience provides the members of our Compensation Committee with a solid frame of reference within which to evaluate our executive compensation programs and practices.

Total Compensation Review

        As part of its process for determining the amount and mix of total compensation to be paid to our executive officers in fiscal 2017, the Compensation Committee reviewed tally sheets prepared by management containing information for each executive officer regarding, among other things:

    compensation for the last four fiscal years;

    length of service with us;

    the types and amounts of long-term incentive awards granted in the previous four fiscal years;

    the types and amounts of our equity securities, both vested and unvested, owned as of the end of the most recently completed fiscal year;

    the proceeds realized from option exercises during the last four fiscal years;

    perquisites and other compensation paid in the previous fiscal year; and

    the severance and other payments that he or she would receive upon the occurrence of certain events, taking into account the proposed compensation to be paid to such executive officer for the new fiscal year.

        The Compensation Committee believes that this comprehensive annual review is important to an understanding of the total compensation paid and, in certain circumstances, payable to, our executive officers. The Compensation Committee uses these reports to test whether the various forms, targets, mix, and amounts of compensation paid and payable to our executive officers remain consistent with our compensation objectives. Based on its review for fiscal 2017, the Compensation Committee believes that the overall compensation of our executive officers was in line with the philosophy and objectives set forth above.

        The Compensation Committee strives to make decisions on each element of executive compensation within the context of an officer's entire compensation package, meaning that a decision on one pay element (such as base salary) impacts decisions made on other pay elements (such as annual and long-term incentives). Based upon input received from FW Cook, the Compensation Committee believes that this program balances both the mix of cash and equity compensation, the mix of currently-paid and longer-term compensation, and the security of severance and change-in-control benefits in a way that furthers the compensation objectives discussed above.

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Compensation Components for Fiscal 2017

        The following are the principal elements of the fiscal 2017 compensation program for our executive officers, including our named executive officers, each of which are described in greater detail following the chart:

 
 
  Element
   
  Form of
Compensation

   
  Purpose
   
  Performance Criteria
   
  Actions Taken in
Fiscal 2017

   

  

  Base Salary       Cash       Providing a competitive level of fixed compensation that attracts and retains skilled management, recognizing their respective roles, responsibilities, and experience.       Reviewed annually for increases.       Increases as follows:


Mr. Brickman, 2.2%


Ms. Minton, 8.7%


Mr. Haltom, 8.7%


Mr. Spinks, 10.7%


Ms. Leite, 2.3%


Initial base salary set at $675,000 and $250,000 for Mr. Grimes and Mr. Baxter, respectively.
   

  

  Annual Incentive Bonus       Cash       Communicating and driving achievement of strategic short-term objectives that are important to our sustained success and stock value.       Funded based on sales, adjusted EBITDA and working capital goals, with potential adjustment based on individual performance, as discussed on pages 33-37. The AIP financial performance targets for fiscal 2017 are set forth in the table on page 35.       Each of the eligible named executive officers earned between 10% and 20% of target based on achievement of performance goals and taking into account adjustments to bonus payments based on individual performance.    

  

  Long-Term Incentive Awards       Stock Options


Performance Based Restricted Stock Units (PBRSUs)
      Creating a strong financial incentive for meeting or exceeding long-term financial goals, rewarding past performance, recognizing promotions, encouraging an equity stake in the Corporation, and aligning their interests with those of our stockholders. Also encouraging officer retention through multi-year vesting requirements.       Value for stock options requires increases in common stock price over the life of the option (maximum ten-year period).


PBRSUs vest following conclusion of a three-year performance period based on achievement of goals related to sales growth and return on invested capital (ROIC) over such 3-year period. In addition, value of PBRSUs at vesting is tied to company stock price.
      Each of the named executive officers received stock options and PBRSUs (2/3 rd  - 1/3 rd  value mix). Stock options vest over a three-year period, and PBRSUs vest based on achievement of objective, pre-established performance goals related to sales growth and ROIC, at the end of a three-year period.    

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        The Corporation also provides the following elements of compensation:

 
 
  Element
   
  Form of Compensation
   
  Purpose
   
     Health and Welfare Plans       Eligibility to receive available health and other welfare benefits paid for, in whole or in part, by the Corporation, including broad-based medical, dental, life and disability insurance.       Providing a competitive, broad-based employee benefits structure and promoting the good health of our executives.    
     Retirement Plan       Eligibility to participate in, and receive Corporation contributions to, our 401(k) plan (available to all employees).       Providing competitive retirement-planning benefits to attract and retain skilled management.    
     Perquisites       Reimbursement for annual physical.       Promoting the good health of our executives.    
     Change-in-Control Severance Protection       Eligibility to receive cash severance (1.99 times base salary) and post-termination health benefits (24 months) in connection with involuntary termination within two years after a change of control.       Providing a competitive compensation package for retention purposes before and after a change in control, as well as ensuring continuity of management in the event of any actual or threatened change in control of our Corporation.    
     Sign-On Benefits       Sign-on benefits:

• Sign-on cash bonus or equity for foregone compensation.

• Reimbursement of relocation expenses in limited situations.

• Reimbursement of health insurance premiums only upon hire and prior to eligibility for coverage in Corporation's group health plans in limited situations.

      Provide a competitive sign-on package that attracts and retains skilled management.


Encourage acceptance of employment with us by addressing equity compensation granted by former employer that the executive would forfeit in connection with his or her termination of employment.
   

Base Salary

GRAPHIC

        The Compensation Committee determines the base salary for each of our named executive officers on an annual basis (unless market conditions or changes in responsibilities merit mid-year changes) and targets base salaries at or near the 25 th  percentile to median of the companies in our peer group. The Compensation Committee uses its judgment to vary executive officer pay within the targeted range and from the targeted range based on various factors, such as an executive officer's performance and responsibilities.

        In evaluating each executive officer's performance in his or her position with us, the Compensation Committee relies primarily on our Chief Executive Officer's performance review of each executive officer other than himself. The subjective factors considered by our Chief Executive Officer primarily consist of whether the executive officer met the developmental and operational goals set for him or her and the financial performance within the executive officer's area of responsibility.

        In September 2016, the Compensation Committee reviewed market data provided by FW Cook on our peer companies and general industry to determine whether any significant changes to the base

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salaries for our executive officers were needed for fiscal 2017 to align our executive team with the market. The Compensation Committee increased the base salary levels of the named executive officers (from 2.2% to 10.7%, as reflected in the table above, with adjustments to reflect executive performance and to move executive salaries closer to the targeted competitive position, in the case of Messrs. Spinks and Haltom, and to reflect her additional responsibilities as interim CFO, in the case of Ms. Minton) as follows: Mr. Brickman, $978,500 to $1,000,000; Ms. Minton $286,500 to $311,500; Mr. Haltom, $414,000 to $450,000; Mr. Spinks, $375,000 to $415,013; and Ms. Leite, $525,000 to $536,970. In connection with their commencement of employment with us, the Compensation Committee approved an annual base salary for Mr. Grimes of $675,000 and an annual base salary for Mr. Baxter of $250,000. In determining the base salaries for Messrs. Grimes and Baxter, the Compensation Committee considered the market data of our peer companies and general industry market data, as well as the pay level of their predecessors. With respect to Mr. Grimes, the Compensation Committee also took into consideration the base salary that he received from his prior employer.

        The Compensation Committee believes that the base salaries paid to our named executive officers during fiscal 2017 were appropriate to facilitate our ability to retain and motivate such officers and were competitive with those offered by our peer companies. For the base salaries paid to our named executive officers during fiscal 2017, please see the "Summary Compensation Table" on page 45 of this Proxy Statement.

Annual Cash Incentive Bonus

        AIP.     For fiscal 2017, annual cash incentive bonuses for our named executive officers were made pursuant to the Sally Beauty Holdings,  Inc. Annual Incentive Plan, which we refer to as the AIP, which operates as a sub-plan of the 2010 Omnibus Plan. The AIP is designed to function as a "plan within a plan" in order to preserve deductibility under Section 162(m) of the Internal Revenue Code, while giving the Compensation Committee the flexibility to tailor awards to reflect financial, operational and individual achievements based on subjective as well as objective criteria. The "outer layer" component of the AIP is entirely objective. No bonuses will be payable under the AIP unless we achieve positive operating income for the year, as reflected in our audited consolidated financial statements. If we achieve this threshold financial goal for the year, our Chief Executive Officer's maximum award is 1% of such operating income and each other named executive officer's maximum award is 0.5% of such operating income, which we refer to as the "Section 162(m) maximum awards." As the "inner layer" component of the AIP, at the beginning of each year the Compensation Committee establishes other financial, operational and/or individual performance goals for each executive officer that will be used to determine actual bonus amounts that are below the officer's Section 162(m) maximum award. The Compensation Committee in effect uses "negative discretion" to reduce the Section 162(m) maximum awards, as it deems appropriate, based on our financial performance relative to these pre-determined goals and based on the Compensation Committee's more subjective evaluation of financial, operational and individual performance.

        Award Opportunities.     Consistent with the above approach, the Compensation Committee established certain performance criteria for each named executive officer which, if satisfied, would enable him to earn a target-level (below maximum) award under the AIP for fiscal 2017 (we refer to these "inner layer" performance criteria as the AIP criteria). These AIP criteria are factors used by the Compensation Committee in exercising its discretion to appropriately size the AIP bonuses, if any, to an amount that is below the Section 162(m) maximum award amount, as described above.

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GRAPHIC

        Our Chief Executive Officer made recommendations to the Compensation Committee as to the percentage of each named executive officer's base salary (other than himself) to be used as his target-level award under the AIP, based on job responsibilities and peer group data provided by FW Cook. The Compensation Committee made the determination as to the percentage of the Chief Executive Officer's base salary to be used for his target-level award under the AIP, based on his job responsibilities and the peer group data provided by FW Cook. Mr. Brickman's bonus target was 100% of his base salary. The bonus targets for each of our other named executive officers for fiscal 2017 other than Ms. Minton and Mr. Baxter were 60% of their respective base salaries (which bonus targets were unchanged from fiscal 2016), and Ms. Minton's and Mr. Baxter's bonus targets were, respectively, 50% and 40% of their base salaries. Due to her departure date, Ms. Minton was not eligible for an annual incentive payment for fiscal year 2017.

        The AIP is designed so that if we achieve the AIP financial performance targets (as discussed below), the executive is eligible to earn 100% of his or her target bonus award. Financial performance at below-target levels would result in awards as low as 0% of the target award, subject to the discretion of the Compensation Committee to make adjustments as described below. If we exceed the AIP financial performance targets, each named executive officer is eligible to earn an AIP bonus in an amount up to 200% of his or her target award, not to exceed the designated individual award limit. We refer to these higher amounts as the "AIP maximum awards," as distinguished from the Section 162(m) maximum awards.

        AIP Financial Performance Criteria.     In establishing the performance objectives for fiscal 2017, the Compensation Committee determined that the primary emphasis should be on financial performance objectives. Accordingly, in order for an executive to receive 100% of his or her AIP target bonus, the target level of financial performance must be achieved, subject to a potential adjustment based on individual performance, as described below.

        For fiscal 2017, the AIP financial criteria consisted of the following three performance metrics, which were measured with reference to our annual operating plan. For shared services officers (Messrs. Brickman, Grimes, Haltom and Baxter and Ms. Minton (who was not eligible for an AIP payout in 2017 due to her retirement)), these metrics were expressed on the consolidated level as made up by individual reporting units. For heads of a business unit (Mr. Spinks and Ms. Leite), these metrics were expressed as that segment's portion of our annual operating plan. The percentage weighting of the various financial metrics represents the Compensation Committee's determination regarding the relative importance of each metric to our overall financial performance.

    Sales (30%).   Sales, excluding unbudgeted acquisitions, measures our growth. It is a valuable measure in determining incentive compensation, as it provides consistency and comparability in our financial reporting and therefore links the compensation of our executive officers with our growth objectives.

    Adjusted EBITDA (50%).   Adjusted EBITDA, excluding unbudgeted acquisitions, provides a meaningful measure of our ability to meet our future debt service, capital expenditures and working capital requirements. For incentive award purposes, we calculate adjusted EBITDA in the same manner as we publicly report this non-GAAP financial measure to the public in our quarterly earnings releases. Calculations exclude unrealized gains/losses due to re-valuation of foreign exchange hedging transactions.

    Working Capital (20%).   Working capital (expressed as a percentage of sales) provides a meaningful measure of the capital employed in our business. We use this measure as a means to

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      reward employees for decreasing the level of capital needed to effectively run the business so that any additional cash could be used for other value-creating purposes, such as the repayment of debt, acquisitions, or opening additional stores. We define this working capital target as the 12-month average value of inventory and accounts receivable, minus accounts payable, expressed as a percentage of sales for the corresponding fiscal year period.

        In setting the financial performance targets for the AIP, the Compensation Committee reviewed our financial projections for fiscal 2017 with Mr. Brickman. For fiscal 2017, the AIP financial performance targets were as follows:

 
 
  Sales
  Adjusted EBITDA
  Working Capital
 
Messrs. Brickman,
    Grimes, Haltom, Baxter and
    Ms. Minton
  $4.106 Billion (Consolidated)
(Weighted 30%)
  $663.2 Million (Consolidated)
(Weighted 50%)
  17.74% (Consolidated)
(Weighted 20%)
 
Mr. Spinks   $1.641 Billion (BSG North America)
(Weighted 30%)
  $301.8 Million (BSG North America)
(Weighted 50%)
  18.55% (BSG North America)
(Weighted 20%)
 
Ms. Leite   $1.912 Billion (Sally USA and Canada)
(Weighted 30%)
  $448.3 Million (Sally USA and Canada)
(Weighted 50%)
  14.80% (Sally USA and Canada)
(Weighted 20%)
 

        As noted above, if we achieve target-level financial performance, the executives are eligible to earn 100% of their target AIP bonus awards. Financial performance at below-target levels would result in awards as low as approximately 0% of the target award, except that, as discussed below, the Compensation Committee has discretion to reduce or increase the dollar value of an individual officer's AIP award based upon a subjective assessment of the individual's performance. The named executive officers were eligible to earn bonuses in excess of the target awards (up to the AIP maximum awards stated above) to the extent that performance against the financial goals exceeded target performance. AIP maximum awards could be earned if:

    we, or the applicable business unit, had achieved 100.1% or greater of the target amount of sales for fiscal 2017,

    we, or the applicable business unit, had achieved 100.1% or greater of the target amount of adjusted EBITDA for fiscal 2017, and

    we, or the applicable business unit, achieved a ratio of working capital to sales at least one basis point below target.

        When performance for a given financial metric exceeds target, the payout between target and maximum award opportunity for that metric is determined by straight-line interpolation. For example, based on the following sales chart, sales performance of 102.38% of target would translate into a payout percentage of 159.50%. If the sales component is weighted at 30% of the bonus opportunity, the weighted payout for that metric would equate to 47.85% of the total target bonus opportunity for that participant. Based on the following adjusted EBITDA chart (SBH Consolidated), adjusted EBITDA performance of 104.58% of target would translate into a payout percentage of 157.25%. If

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the adjusted EBITDA component is weighted at 50% of the bonus opportunity, the weighted payout for that metric would equate to 78.63% of the total target bonus opportunity for that participant.

 
Sales Target
SBH Consolidated, Sally USA and Canada, and BSG North America

 
Objective
  Payout Percentage
 

104% & Above

  200%
 

103%

  175%
 

102%

  150%
 

101%

  125%
 

100%

  100%
 

99%

  75%
 

98%

  50%
 

97%

  25%
 

96% & Below

  0%
 

 

 
EBITDA Target
SBH Consolidated

  EBITDA Target
Sally USA and Canada and BSG North America

 
Objective
  Payout Percentage
  Objective
  Payout Percentage
 

108% & Above

  200%   108% & Above   200%
 

106%

  175%   106%   175%
 

104%

  150%   104%   150%
 

102%

  125%   102%   125%
 

100%

  100%   100%   100%
 

98.5%

  75%   98.5%   75%
 

97%

  50%   97%   50%
 

95.5%

  25%   95.5%   25%
 

94.7% & Below

  0%   94% & Below   0%
 

        Individual Performance.     In order to provide flexibility to recognize overall achievements in key focus areas and operational performance, which can change throughout the year based on unanticipated contingencies, the Compensation Committee does not list specific individual performance objectives for individual officers under the AIP. Instead, the Compensation Committee has the ability to use its qualitative judgment to reduce or increase the dollar value of an individual officer's AIP award (by up to 50 percentage points below or above the percentage of the target award resulting from application of the financial performance formulas) based upon a subjective assessment of the individual's performance, but the adjusted payout cannot exceed the Section 162(m) maximum award for such individual.

        Determination of Fiscal 2017 Awards.     In its September and November 2017 meetings, the Compensation Committee reviewed the 2017 fiscal year business results and determined whether and to what extent the AIP criteria were met. During this review, the Compensation Committee met with Mr. Brickman to discuss his performance reviews of the other named executive officers and with the Chairman of the Board to discuss the Board's review of Mr. Brickman (without Mr. Brickman being present). After taking into consideration such performance reviews, the Compensation Committee's desire to recognize each executive officer's work and progress against our strategic initiatives (including without limitation cost reduction initiatives and our previously announced restructuring plan) and its desire to retain and motivate our executive team to continue such strong efforts, the Compensation Committee exercised its discretion to increase each named executive officer's AIP payout by an amount

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such that each eligible name executive officer would receive an aggregate payout equal to a defined percentage of his or her target bonus (20%, in the case of Messrs. Grimes, Haltom, Spinks and Baxter, and 10%, in the case of Mr. Brickman). As with the other named executive officers, the Compensation Committee desired to recognize Mr. Brickman's efforts and leadership during fiscal year 2017; however, in order to appropriately balance that recognition with Mr. Brickman's greater level of responsibility for the performance of the Company overall, the Compensation Committee applied a lower adjustment factor to Mr. Brickman's AIP payout as compared to the other named executive officers.

        The amounts by which the financial performance targets under the AIP were achieved for each metric, the individual performance adjustment and the resulting payout factors, are illustrated in the following table.

    Sales     Adjusted EBITDA     Working Capital     Individual
Performance
Adjustment
    Aggregate
Payout
 
 
  Weighted
Achievement
%

  Weighted
Payout
%

  Weighted
Achievement
%

  Weighted
Payout
%

  Weighted
Achievement
%

  Weighted
Payout
%

   
  As % of
Target
Bonus

  As % of
Base
Salary

 

Mr. Brickman

    96.08 %   0.00 %   94.19 %   0.00 %   95.84 %   0.00 %   10.00 %   10.00 %   10 %

Mr. Grimes(1)

    96.08 %   0.00 %   94.19 %   0.00 %   95.84 %   0.00 %   20.00 %   20.00 %   12 %

Ms. Minton(2)

    96.08 %   0.00 %   94.19 %   0.00 %   95.84 %   0.00 %   0.00 %   0.00 %   0 %

Mr. Haltom

    96.08 %   0.00 %   94.19 %   0.00 %   95.84 %   0.00 %   20.00 %   20.00 %   12 %

Mr. Spinks

    97.15 %   8.25 %   94.97 %   7.50 %   94.11 %   0.00 %   4.25 %   20.00 %   12 %

Mr. Baxter(1)

    96.08 %   0.00 %   94.19 %   0.00 %   95.84 %   0.00 %   20.00 %   20.00 %   8 %

Ms. Leite(1)

    96.08 %   0.00 %   93.18 %   0.00 %   98.08 %   0.00 %   0.00 %   0.00 %   0 %
(1)
Table above reflects a prorated base salary to determine Mr. Grimes', Mr. Baxter's and Ms. Leite's % of base salary.

(2)
Ms. Minton was not eligible for a 2017 AIP payout due to her retirement in May 2017.

        The table below shows the payout opportunities and actual payouts under the AIP for the named executive officers for fiscal 2017:

 
  AIP Target as
a % of Salary

  AIP Target
Award ($)

  FY17 Actual AIP
Award ($)

  AIP Actual Award
as a % of Salary

 

Mr. Brickman

    100 %   998,292     99,829     10 %

Mr. Grimes(1)

    60 %   325,110     65,022     12 %

Ms. Minton(1)

    50 %   154,757     0     0 %

Mr. Haltom

    60 %   268,284     53,657     12 %

Mr. Spinks

    60 %   247,100     49,420     12 %

Mr. Baxter(1)

    40 %   41,918     8,384     8 %

Ms. Leite(1)

    60 %   186,560     0     0 %
(1)
Table above reflects a prorated base salary to determine Mr. Grimes', Mr. Baxter's and Ms. Leite's % of salary.

    Equity-Based Long-Term Incentive Compensation

        In November 2016, the Compensation Committee approved the long-term incentive program for fiscal 2017, pursuant to which employees at the Vice President level and above received a significant portion (1/3 rd ) of their fiscal 2017 equity-based compensation in the form of PBRSUs and the remaining portion in the form of time-based stock options (2/3 rd ).

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    The PBRSUs are eligible to vest following the conclusion of a three-year performance period based on the level of achievement of goals related to sales growth (weighted at 40%) and return on invested capital (ROIC) (weighted at 60%), over such three-year period. Each of these performance metrics is an indicator of our growth and profitability, thereby aligning the interests of senior management with the long-term interests of our shareholders. The Compensation Committee established threshold, target and maximum performance levels for both sales growth and ROIC, where achievement at the threshold, target and maximum performance level results in 50%, 100% and 200%, respectively, of the PBRSUs becoming vested.

    Stock options create a strong financial incentive for meeting or exceeding our long-term financial goals and increasing stockholder return because the benefits of such awards are dependent on the appreciation of the price of our Common Stock. In addition, the options vest ratably over a three-year period, requiring our executives to remain employed for a significant period in order to realize any value for their options.

        Grant Practices for Equity-Based Awards.     The Compensation Committee's policy is to grant equity awards on the same day it approves the grant. Options have an exercise price equal to the closing price of our Common Stock on the date of grant. Other than special one-time grants, such as at the time of a new hire or promotion, the Compensation Committee intends to grant equity awards to its executive officers once a year, and such grants will generally be made at the same time that the Compensation Committee approves the annual bonus award targets under the annual bonus plan for the fiscal year. These actions will generally occur within the first month of the fiscal year. Equity grants are currently made under the 2010 Omnibus Plan.

        Our Vice President of Compensation and Benefits recommends to our Chief Executive Officer the number of options or other equity awards to be granted to certain key employees based on consideration of each individual's rate of base salary and the dollar value of the proposed award as a percentage of base salary and market value. Our Chief Executive Officer then makes a grant recommendation for each of the proposed grantees, including the named executive officers other than himself, to the Compensation Committee based on consideration of the value of the grants that the individual received in prior years, the competitive market data provided by FW Cook and his views as to the individual's expected future contribution to our business results. The Chairman of the Compensation Committee of the Board of Directors recommends to the Compensation Committee the Chief Executive Officer's proposed equity grant based on his review of competitive market data provided by FW Cook. The Compensation Committee is ultimately responsible for determining the number of options or shares to be awarded and for approving each grant. In making this determination, the Compensation Committee considers the recommendations of the Chief Executive Officer, the long-term incentive opportunity market data provided by FW Cook, and the competitive data provided by FW Cook regarding aggregate share usage and costs associated with equity grants.

GRAPHIC

        The Compensation Committee sets an aggregate long-term incentive budget to determine the total amount of equity awards that may be awarded in any fiscal year. The Compensation Committee determines the budget after discussions with FW Cook and management and a review of peer group practices, evaluation of prior year performance and the projected impact to our net income. Based upon input received from FW Cook, the long-term incentive award opportunities provided to our executive officers are conservative relative to market practice.

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        Fiscal 2017 Equity Awards.     Consistent with its equity grant policy, in November 2016, the Compensation Committee granted stock options and PBRSUs to each of Messrs. Brickman, Haltom and Spinks, and Ms. Minton and Ms. Leite, with stock options comprising 2/3 rd  of the grant value and PBRSUs comprising 1/3 rd  of the grant value (with the exception of Ms. Leite's grant, who, per her offer letter, received a mix of 50% stock options and 50% PBRSUs (applicable to her November 2016 grant only)). In addition to these regular grants, the Compensation Committee approved the following:

    a one-time restricted stock award to Ms. Minton for her role as Interim Chief Financial Officer, which award vested on September 30, 2017.

    an award of non-qualified stock options with a grant date value of approximately $450,000 and an award of restricted stock with a grant date value of approximately $300,000 in connection with Mr. Grimes commencement of employment. The stock option award vests ratably over four years and the restricted stock award vests ratably over three years, in each case subject to Mr. Grimes's continued employment with the Company.

        Mr. Baxter did not receive an equity award in connection with his commencement of employment with us in May 2017. He will participate in the long-term incentive program for fiscal 2018.

GRAPHIC

        For more information regarding the equity-based awards granted to our named executive officers during fiscal 2017, please see the "Grants of Plan-Based Awards For Fiscal 2017" table on page 47 of this Proxy Statement.

         Benefits and Perquisites.     Our named executive officers are eligible to participate in the benefit plans generally available to all of our U.S. employees, which include health, dental, life insurance, and disability plans. In addition, our named executive officers (along with our other U.S. employees) are eligible to participate in our 401(k) plan, which represents the only retirement plan that we provide to our named executive officers. Under the 401(k) plan, our employees may contribute, on a pre-tax basis, up to 50% of eligible compensation, subject to Internal Revenue Code limitations. We match each employee's contribution, including our named executive officers, at a rate of 100% on the first 4% of the employee's eligible compensation. Employees are immediately vested in the matching contributions made by us.

        Consistent with our philosophy of emphasizing performance-based pay, our executive compensation program provides limited benefits and perquisites. All perquisites for executive officers must be approved by the Compensation Committee.

        The Compensation Committee believes that offering the above-described benefits and perquisites to our named executive officers is consistent with the terms and benefits offered by other similarly-situated public companies, and enhances our ability to retain our named executive officers. Given the fact that these items represent a relatively insignificant portion of our named executive officers' total compensation, the availability of such items does not materially influence the decisions made by the Compensation Committee with respect to the other elements of the total compensation payable to our named executive officers.

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Post-Termination Benefits

        Change-in-Control Agreements.     Many change-in-control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage our senior executive officers to remain employed with the Corporation during an important time when their prospects for continued employment can be uncertain, during fiscal year 2017, we were parties to change-in-control agreements with each of our named executive officers (other than Ms. Minton and Mr. Baxter), which provide payments and benefits in the event of the executive's termination of employment by the Corporation without cause or by the executive for "good reason" within two years following a change in control. Because a termination by the executive for good reason is effectively a "constructive termination" by the Corporation without cause, we believe it is appropriate to provide severance benefits in these circumstances. The Compensation Committee has determined that our change-in-control agreements were generally consistent with those in place at similarly-situated public companies, were designed to keep our executives focused on their work responsibilities during the uncertainty that accompanies a potential change-in-control, and (consistent with the recommendation of our Chief Executive Officer) were necessary to retain and recruit our senior executives. The Compensation Committee also deemed it important from a retention perspective to treat all of the named executive officers similarly with respect to their change-in-control arrangements.

        Treatment of Equity Awards upon Change in Control.     Under the terms of our Sally Beauty Holdings, Inc. 2007 Omnibus Incentive Plan (the "2007 Omnibus Plan") and our 2010 Omnibus Plan, stock option and restricted stock awards have "double trigger" change-in-control vesting if the awards are assumed by the surviving company and equitably converted to awards for publicly traded stock in connection with such transaction. This means that the awards would vest upon the holder's involuntary separation from service within two years following the change in control, or such other period specified by the Compensation Committee. If the awards are not assumed by the surviving company and equitably converted, they would vest upon the change in control. In addition, upon a change in control, PBRSUs will be cancelled in exchange for an amount equal to the change in control price multiplied by the target number of PBRSUs granted. This vesting approach aids in our ability to retain key executives during the critical time leading up to and following a change in control.

        Separation Agreement with Ms. Leite.     As discussed earlier, Ms. Leite received certain separation benefits in connection with her resignation from her position as President of Sally Beauty Supply LLC in order to obtain her agreement to certain restrictive covenants following her resignation, including confidentiality, non-disparagement and non-solicitation provisions, as well as a release of potential claims. In determining the appropriate severance amounts for Ms. Leite, the Compensation Committee considered the severance payable to comparable executives and also considered the fact that Ms. Leite would forfeit a substantial number of previously-granted equity awards in connection with her resignation.

Compensation Recoupment Policy

        The Corporation has adopted a compensation recoupment policy that complies with and goes beyond the parameters described in the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"). Consistent with the Dodd-Frank Act, in the event that we are required to prepare an accounting restatement due to material noncompliance with financial reporting requirements under the U.S. securities laws, we will seek to recover from any current or former executive officer incentive-based compensation (including equity compensation) received during the three-year period preceding the date on which the accounting restatement was required to be made. The amount to be recovered is the excess of the amount paid calculated by reference to the erroneous data, over the amount that would have been paid to the executive officer calculated using the corrected accounting statement data. This compensation recovery would be applied regardless of whether the executive officer engaged in misconduct or otherwise caused or contributed to the requirement for the restatement.

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        In addition to the above-described recoupment specified by the Dodd-Frank Act, our policy also requires the Corporation, to the extent permitted by governing law, to seek reimbursement of non-equity incentive compensation paid to any current or former employee after January 1, 2011, where: A) (i) the payment was predicated upon the achievement of specified financial results; (ii) such financial results were subsequently the subject of a restatement or other material adjustment, (iii) in the Compensation Committee's view the person engaged in misconduct that caused or contributed to the need for the restatement or material adjustment, and (iv) a lower payment would have been made to the person based upon the correct financial results; or B) such employee commits an act of embezzlement, fraud or theft with respect to the property of the Corporation. In each such instance, the Corporation will seek to recover the person's entire non-equity incentive compensation payment (not just the excess amount earned based on erroneous data) paid during the 12-month period preceding the Compensation Committee's determination that the person engaged in misconduct.

Stock Ownership and Retention Guidelines

        Consistent with our commitment to aligning the interests of our executives with stockholders, the Nominating and Corporate Governance Committee of our Board of Directors has adopted stock ownership guidelines which apply to our officers at the Vice President level and above. Pursuant to these guidelines, officers are encouraged to own shares of our Common Stock generally equal in value to a multiple of their annual base salary (as in effect on December 1 st  of each year) depending on such executive's level in the Corporation.

        The amended guidelines provide that shares owned outright by the officer or indirectly (e.g., owned or held in trust by an immediate family member), vested but unexercised stock options, shares the receipt of which has been deferred, as well as shares held in company sponsored benefit or retirement plans, count towards the grantee's stock ownership totals, with each option counting as one share of stock owned.

        Unvested stock options, restricted shares (stock for which restrictions have not lapsed), restricted stock units which have not been settled, as well as unearned PBRSUs, do not count as stock owned under the guidelines. The officer stock ownership guidelines, as applicable to the named executive officers, are as follows:

    Chief Executive Officer   Five times annual base salary    
    Presidents and Senior Vice Presidents   Three times annual base salary    
    Group Vice Presidents and Vice Presidents   One times annual base salary    

        Until such time as the officer reaches his or her equity ownership guideline, the officer will be required to retain that percentage of the shares of Common Stock received upon vesting of restricted stock, settlement of restricted stock units and exercise of stock options (net of any shares utilized to pay for the exercise price of the option and/or tax withholding for the option, restricted stock or restricted stock units, as applicable) as set forth below:

Retention Requirement
   
 

Chief Executive Officer

    100 %

Presidents and Senior Vice Presidents

    50 %

Group Vice Presidents and Vice Presidents

    50 %

        Because officers must retain a percentage of shares resulting from any exercise of stock options, settlement of restricted stock units or the vesting of restricted stock until they achieve the specified guidelines, there is no minimum time period required to achieve the equity ownership guidelines set forth above. As of September 30, 2017, all of our executive officers were in compliance with our equity ownership guidelines.

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        The Compensation Committee may in the future consider an executive's achievement of the guideline stock ownership targets in its award of further equity grants.

        Beginning in fiscal year 2013, we instituted stock ownership and retention guidelines for our independent directors, as further described on page 22 of this Proxy Statement.

Use of Pre-Approved Trading Plans

        We permit our executive officers and Directors to enter into pre-approved trading plans established according to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, with an independent broker-dealer to enable them to either a) purchase securities; or b) to recognize the value of their compensation and diversify their holdings of our securities during periods in which they might otherwise not be able to buy or sell our stock because important information about us had not been publicly released. These plans include specific instructions for the broker to exercise options or purchase or sell stock on behalf of the plan participant if our stock price reaches a specified level or certain events occur. The plan participant no longer controls the decision to purchase, exercise or sell the securities in the plan. Generally, when our executive officers trade under these plans they are publicly disclosed in Section 16 filings with the SEC. One of our named executive officers (Mr. Haltom) and one of our Directors (Mr. Miller) had Rule 10b5-1 sale plans in place during fiscal 2017.

Policy Against Margin Trading, Pledging or Hedging Company Stock

        Certain forms of margin trading, pledging, hedging or monetization transactions, such as zero-cost collars and forward sale contracts, allow a director, officer or other employee to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the person to continue to own the covered securities but without the full risks and rewards of ownership. When that occurs, he or she may no longer have the same objectives as the Corporation's other stockholders. Therefore, pursuant to our published insider trading policy, our directors, officers and other employees are prohibited from engaging in any such transactions.

Deductibility of Compensation

        Section 162(m) of the Internal Revenue Code limits the deductibility for federal income tax purposes of compensation paid to our named executive officers (other than our Chief Financial Officer). Under Section 162(m), compensation paid to each of these officers in excess of $1,000,000 per year is deductible by us only if it is "performance-based." The Compensation Committee believes that tax deductibility of compensation is an important consideration in establishing our executives' compensation. For example, the 2010 Omnibus Plan is designed to allow the Compensation Committee to grant awards that may qualify for the performance-based compensation exemption from Section 162(m), such as stock options and PBRSUs, and the AIP, as a sub plan of the 2010 Omnibus Plan, also allows annual cash incentive awards that may qualify as performance-based compensation. A number of requirements must be met for particular compensation to so qualify, however, so there can be no assurance that any compensation awarded will be fully deductible under all circumstances. Also, with the goal of providing a compensation program that enhances stockholder value, the Compensation Committee reserves flexibility to approve compensation arrangements that are not fully tax deductible by us.

Consideration of Most Recent Advisory Stockholder Vote on Executive Compensation

        At the annual meeting of stockholders on January 26, 2017, our stockholders expressed a preference that advisory votes on executive compensation occur every year. In accordance with the

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results of this vote, the Board determined to implement an advisory vote on executive compensation every year until the next required vote on the frequency of stockholder votes on the compensation of executives. Therefore, the last advisory vote was held in 2017 and the next advisory vote on executive compensation will occur at this annual meeting. Please refer to "Proposal 2 — Advisory Vote on Executive Compensation" on page 70 for information regarding the advisory (non-binding) resolution regarding the compensation of the Corporation's named executive officers, including the Corporation's compensation practices and principles and their implementation, as disclosed in this Proxy Statement.

        At the annual meeting of stockholders on January 26, 2017, in the second advisory vote on executive compensation, over 99% of the shares voted were voted in support of the compensation of the Corporation's named executive officers. The Compensation Committee appreciates and values the views of our stockholders. As part of its compensation review, the Compensation Committee considered both the results of the 2017 advisory vote on executive compensation and feedback from our stockholders, and concluded that the compensation paid to our executive officers and the Corporation's overall executive pay practices have strong stockholder support and have been effective in implementing the Corporation's stated compensation philosophy and objectives. The Compensation Committee recognizes that executive pay practices and notions of sound governance principles continue to evolve. Consequently, the Compensation Committee intends to continue paying close attention to the advice and counsel of its compensation advisors and invites our stockholders to communicate any concerns or opinions on executive pay directly to the Compensation Committee or the Board. Please refer to "Stockholder — Director Communications" on page 14 for information about communicating with the Board.

Material Changes to Fiscal Year 2018 Compensation Program

        In connection with its annual review of our compensation program, the Compensation Committee approved changes to the AIP criteria for fiscal year 2018. Specifically, the majority of the annual incentive bonus for shared services officers will be determined with respect to achievement of goals related to consolidated performance metrics (consolidated sales (20%) and consolidated adjusted operating income (60%)), and the remaining portion will be determined with respect to achievement of strategic initiatives (20%). Similarly, the majority of the annual incentive bonus for heads of a business unit will be determined with respect to achievement of goals related to segment performance metrics (sales (12%) and adjusted operating income (48%)), and the remaining portion will be determined with respect to consolidated adjusted operating income (20%) and strategic initiatives (20%).

        The Compensation Committee also approved certain changes to the structure of our long-term incentive program for fiscal 2018. In order to both continue the focus on long-term shareholder value creation and add retention value, the Compensation Committee determined that the target value of fiscal year 2018 long-term incentives would be delivered in the form of stock options (34%), PBRSUs (33%) and restricted shares (33%). As in prior years, stock options vest ratably over three years, subject to the executive's continued service with us, as will the restricted shares. PBRSUs will continue to vest based on achievement of performance over a 3-year performance period; however, performance will be measured against operating income CAGR (60%) and ROIC (40%), as opposed to the current design which measures performance against sales CAGR (40%) and ROIC (60%).

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COMPENSATION COMMITTEE REPORT

        The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K included in this Proxy Statement. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

    Submitted by the Compensation Committee

 

 

Edward W. Rabin (Chair)
Katherine Button Bell
Marshall E. Eisenberg
Susan R. Mulder

         The foregoing report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

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EXECUTIVE COMPENSATION

Summary Compensation Table

        The following table contains compensation information for our named executive officers. The information included in this table reflects compensation earned by the named executive officers for services rendered to us for the years ended September 30, 2017, September 30, 2016 and September 30, 2015.


SUMMARY COMPENSATION TABLE

Name and Principal Position(1)
  Year   Salary
($)
  Bonus
($)
  Stock
Awards
($)(2)
  Option
Awards
($)(3)
  Non-Equity
Incentive
Plan
Compensation
($)(4)
  All Other
Compensation
($)(5)
  Total
($)
 

Christian A. Brickman

    2017     998,346         1,016,656     2,033,330     99,829     14,549     4,162,710  

President and Chief

    2016     1,013,942         950,006     1,899,990     515,265     18,396     4,397,599  

Executive Officer

    2015     844,038         712,480     1,425,147     430,553     6,638     3,418,856  

Donald T. Grimes

   
2017
   
545,192
   
250,000

(6)
 
299,976
   
449,993
   
65,022
   
8,679
   
1,618,862
 

Senior Vice President,

                                                 

Chief Financial Officer and

                                                 

Chief Operations Officer

                                                 

Janna S. Minton

   
2017
   
183,779
   
   
108,324
   
166,666
   
   
8,789
   
467,558
 

Former Interim Chief Financial

                                                 

Officer and Group Vice

                                                 

President, Chief Accounting

                                                 

Officer and Controller(8)

                                                 

Matthew O. Haltom

   
2017
   
447,231
   
   
224,996
   
449,996
   
53,657
   
17,003
   
1,192,883
 

Senior Vice President,

    2016     428,846         200,005     399,990     130,776     14,287     1,173,904  

General Counsel and

    2015     396,539         325,171     300,003     127,210     14,170     1,163,093  

Corporate Secretary

                                                 

Mark G. Spinks

   
2017
   
411,935
   
   
183,331
   
366,666
   
49,420
   
13,520
   
1,024,872
 

President, Beauty

    2016     389,423         166,659     333,331     258,435     14,373     1,162,221  

Systems Group

    2015     304,615         249,770     300,003     181,709     16,248     1,052,345  

Brently G. Baxter

   
2017
   
105,769
   
   
   
   
8,384
   
154,043
   
268,196
 

Vice President, Corporate

                                                 

Controller and Principal

                                                 

Accounting Officer(9)

                                                 

Sharon M. Leite

   
2017
   
310,935
   
   
399,979
   
399,999
   
   
377,414
   
1,488,327
 

Former President, Sally

    2016     353,365     100,000 (7)   312,493     312,486     104,564     4,130     1,187,038  

Beauty Supply(10)

                                                 

(1)
Reflects principal positions held as of September 30, 2017.

(2)
Reflects the grant date fair value of the stock awards, determined in accordance with ASC 718. The grant date fair value of restricted stock awards granted in 2015, as applicable, was based on the fair market value of the underlying shares on the date of grant. The grant date fair value of the PBRSUs granted in 2016 and 2017 was computed by multiplying (i) the target number of PBRSUs awarded to each named executive officer, which was the assumed probable outcome as of the grant date, by (ii) the fair market value of the underlying shares on the date of grant. Assuming, instead, that the highest level of performance conditions would be achieved, the grant date fair values of the 2017 PBRSUs would have been as follows: Mr. Brickman, $2,033,311; Ms. Minton, $166,660; Mr. Haltom, $449,992; Mr. Spinks, $366,662; and Ms. Leite, $799,957; and the grant date fair value of the 2016 PBRSUs granted in 2015 would have been as follows: Mr. Brickman, $1,900,013; Mr. Haltom, $400,010; and Mr. Spinks, $333,318.

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(3)
Reflects the grant date fair value of the option awards, determined in accordance with ASC 718. The assumptions used in the calculation of the grant date fair values of the option awards are included in Note 7 to our audited financial statements for the fiscal years ended September 30, 2017, September 30, 2016, and September 30, 2015, included in our Form 10-K filed with the SEC on November 15, 2017, November 15, 2016, and November 12, 2015, respectively.

(4)
The amounts reported reflect annual incentive awards earned for our 2017 fiscal year under the AIP. For information regarding the AIP, which is a sub-plan of the 2010 Omnibus Plan, please see " Compensation Discussion and Analysis — Compensation Components for Fiscal 2017 — Annual Cash Incentive Bonus."

(5)
Amounts reported as "All Other Compensation" for our 2017 fiscal year include the following:
 
  Company
Matching
Contributions
to 401(k) and
Profit Sharing
Plan
($)
  Life
Insurance
Premiums
($)
  Relocation
Expenses
($)
  Tax
Gross-Up
($)
  Other
($)
  Total
($)
 

Christian A. Brickman

    12,935     1,014             600 (a)   14,549  

Donald T. Grimes

        976         1,943 (d)   5,760 (b)   8,679  

Janna S. Minton

    8,417     372                 8,789  

Matthew O. Haltom

    15,989     1,014                 17,003  

Mark G. Spinks

    12,510     1,010                 13,520  

Brently G. Baxter

        182     119,773 (c)   34,088 (d)       154,043  

Sharon M. Leite

        557         29,640 (d)   347,217 (e)   377,414  

(a)
Reflects payment to Mr. Brickman of $600 for reimbursement for an executive physical.

(b)
Reflects payments to Mr. Grimes of $600 for reimbursement for an executive physical and $5,160 to cover COBRA coverage during the first two months of his employment with the Company.

(c)
Reflects reimbursement of relocation expenses incurred by Mr. Baxter, including but not limited to moving of household goods, shipment of automobiles, travel expense reimbursement (for home-finding trips and final journey to the destination), home sale assistance (including payment of certain closing costs), payment of certain closing costs in connection with a new home purchase, and temporary housing.

(d)
Represents gross-up payments related to (i) reimbursement of health insurance premiums, in the case of Mr. Grimes, (ii) reimbursement of relocation expenses, in the case of Mr. Baxter, and (iii) reimbursement of health insurance continuation (twelve months), outplacement services, and an additional cash payment, in the case of Ms. Leite.

(e)
Reflects payments to Ms. Leite in connection with her separation of $33,732 to cover the cost of COBRA coverage for twelve months and $313,485 for twelve months' severance. For additional information regarding Ms. Leite's severance arrangement, please see the "Potential Payments Upon Termination or Change in Control" table on page 53 of this Proxy Statement.

    Perquisites and other personal benefits provided to each of the other named executive officers had an aggregate incremental cost of less than $10,000 and accordingly have been omitted from the table in accordance with SEC rules. For information regarding perquisites, please see " Compensation Discussion and Analysis — Compensation Components for Fiscal 2017  —  Benefits and Perquisites ."

(6)
Reflects Mr. Grimes' sign-on bonus.

(7)
Reflects Ms. Leite's sign-on bonus.

(8)
Ms. Minton was not a named executive officer in fiscal year 2016 or 2015 and retired on May 4, 2017.

(9)
Mr. Baxter commenced employment with us effective May 4, 2017.

(10)
Ms. Leite separated from the Company effective May 1, 2017. She was not a named executive officer in fiscal year 2015.

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GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2017

 
   
   
   
   
   
   
   
  All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(3)
  All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(4)
   
   
 
 
   
  Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1)
  Estimated Future Payouts
Under Equity Incentive Plan
Awards(2)
  Exercise
or Base
Price of
Option
Awards
($ / Sh)
(5)
  Grant Date
Fair Value
of Stock
and Option
Awards
($)(6)
 
Name
  Grant
Date
  Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
 

Christian A. Brickman

          37,037     998,292     4,785,964                                            

    11/01/2016                       19,911     39,822     79,644                       1,016,656  

    11/01/2016                                               321,409     25.53     2,033,330  

Donald T. Grimes

          12,062     325,110     2,392,982                                            

    12/12/2016                                         11,057                 299,976  

    12/12/2016                                               61,819     27.13     449,993  

Janna S. Minton

          5,741     154,757     2,392,982                                            

    11/01/2016                       1,632     3,264     6,528                       83,330  

    11/01/2016                                         979                 24,994  

    11/01/2016                                               26,345     25.53     166,666  

Matthew O. Haltom

          9,953     268,284     2,392,982                                            

    11/01/2016                       4,407     8,813     17,626                       224,996  

    11/01/2016                                               71,131     25.53     449,996  

Mark G. Spinks

          7,376     247,100     2,392,982                                            

    11/01/2016                       3,591     7,181     14,362                       183,331  

    11/01/2016                                               57,959     25.53     366,666  

Brently G. Baxter(7)

          1,555     41,918     2,392,982                              

Sharon M. Leite

          5,569     186,560     2,392,982                                            

    11/01/2016                       7,834     15,667     31,334                       399,979  

    11/01/2016                                               63,228     25.53     399,999  

(1)
Reflects threshold, target and maximum bonus opportunities under the financial component of our AIP. As discussed in greater detail in the Compensation Discussion and Analysis, the Compensation Committee exercised its discretion to increase the dollar value of each officer's AIP payout by an amount such that each eligible name executive officer would receive an aggregate payout equal to 20% of his target award, in the case of Messrs. Grimes, Haltom, Spinks and Baxter, or 10%, in the case of Mr. Brickman. In no event may the adjusted payout exceed the officer's Section 162(m) maximum award. Mr. Brickman's target AIP bonus was 100% of his base salary. The target AIP bonus for each of Messrs. Haltom and Spinks was 60% of his base salary. Mr. Grimes' target AIP bonus was 60% of his base salary, with such amount pro-rated from Mr. Grimes' start date through the end of the 2017 fiscal year. Ms. Leite's target AIP bonus was 60% of her base salary, with the amount of such bonus pro-rated from the beginning of the 2017 fiscal year through Ms. Leite's last day of employment with the Company. Ms. Minton's target AIP bonus was 50% of her base salary, but she was not eligible for an AIP payout due to her retirement. Mr. Baxter's target AIP bonus was 40% of his base salary, with the amount of such bonus pro-rated from Mr. Baxter's start date through the end of the 2017 fiscal year. Please see "Compensation Discussion and Analysis — Compensation Components for Fiscal 2017 — AIP Criteria Based on Financial Performance" for additional information on these targets.

(2)
On November 1, 2016, our Compensation Committee granted PBRSUs to each of our executive officers (other than Messrs. Grimes and Baxter) under the 2010 Omnibus Plan. PBRSUs are eligible to vest following the conclusion of a three-year performance period based on the level of achievement of goals related to sales growth and ROIC. Please see " Compensation Discussion and Analysis — Compensation Components for Fiscal 2017 — Equity-Based Long-Term Incentive Compensation" for additional information on the PBRSUs.

(3)
On November 1, 2016, our Compensation Committee granted a one-time restricted stock award to Ms. Minton for her role as Interim Chief Financial Officer. The restrictions upon this award lapsed on September 30, 2017. On December 12, 2016, our Compensation Committee granted an inducement equity award of restricted stock to Mr. Grimes pursuant to the 2010 Omnibus Plan. The restrictions upon this award lapse ratably over a three-year period beginning December 12, 2017.

(4)
On November 1, 2016, our Compensation Committee granted options to each of our executive officers (other than Messrs. Grimes and Baxter) to purchase shares of our Common Stock under the 2010 Omnibus Plan. These options vest ratably over a three-year period beginning on September 30, 2017. On December 12, 2016, our Compensation Committee granted an inducement equity award of stock options to Mr. Grimes pursuant to the 2010 Omnibus Plan. These options vest ratably over a four-year period beginning on December 12, 2017.

(5)
The exercise price of the options is equal to the closing price of our Common Stock on the NYSE on the grant date.

(6)
Reflects the grant date fair value of the stock ($25.53 for the November 1, 2016 awards and $27.13 for Mr. Grimes' December 12, 2016 award) and option awards ($6.3263 for the November 1, 2016 awards and $7.2792 for Mr. Grimes' December 12, 2016 award) determined in accordance with ASC 178. The assumptions used in the calculation of the grant date fair value of the option awards are included in Note 7 to our audited financial statements for the fiscal year ended September 30, 2017 included in our Form 10-K filed with the SEC on November 15, 2017. The grant date fair value of the stock awards is based on the fair market value of the underlying shares on the date of grant.

(7)
Mr. Baxter did not receive any equity awards in fiscal 2017.

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OUTSTANDING EQUITY AWARDS AT 2017 FISCAL YEAR-END

 
  Option Awards   Stock Awards  
 
   
   
   
   
   
   
   
  Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)(20)
 
 
   
   
   
   
   
   
  Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
 
 
  Number of
Securities
Underlying
Unexercised
Options
(#)
   
   
   
   
   
 
 
  Number of
Securities
Underlying
Unexercised
Options (#)
   
   
   
  Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(19)
 
 
   
   
  Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
 
 
  Option
Exercise
Price
  Option
Expiration
Date
 
Name
  Exercisable   Unexercisable  

Christian A. Brickman

    98,214     32,738 (6)   25.36     06/02/2024     20,701 (7)   405,326              

    121,863     40,621 (8)   29.20     10/29/2024     6,100 (9)   119,438              

    201,974     100,987 (11)   23.45     10/28/2025                 40,512 (12)   793,225  

    107,137     214,272 (15)   25.53     11/01/2026                 39,822 (16)   779,715  

Donald T. Grimes

   
   
61,819

(17)
 
27.13
   
12/12/2026
   
11,057

(18)
 
216,496
             

Janna S. Minton

   
33,750

(1)
 
   
11.39
   
05/05/2020
                         

    27,564 (2)       19.21     05/05/2020                          

    11,940 (3)       23.49     05/05/2020     196 (4)   3,838              

    22,700 (5)       26.30     05/05/2020                          

    12,540     4,180 (8)   29.20     05/05/2020     627 (9)   12,277              

    17,716     8,858 (11)   23.45     05/05/2020                 1,892 (12)   37,045  

    8,782     17,563 (15)   25.53     05/05/2020                 647 (16)   12,668  

Matthew O. Haltom

   
43,087

(3)
 
   
23.49
   
10/29/2022
   
1,431

(4)
 
28,019
             

    46,200 (5)       26.30     10/30/2023                          

    25,653     8,551 (8)   29.20     10/29/2024     2,784 (9)   54,511              

    42,520     21,260 (11)   23.45     10/28/2025                 8,529 (12)   166,998  

    23,711     47,420 (15)   25.53     11/01/2026                 8,813 (16)   172,559  

Mark G. Spinks

   
25,000

(1)
 
   
11.39
   
10/19/2020
                         

    15,324 (2)       19.21     10/26/2021                          

    14,328 (3)       23.49     10/29/2022     120 (4)   2,350              

    17,700 (5)       26.30     10/30/2023                          

    25,653     8,551 (8)   29.20     10/29/2024     1,283 (9)   25,121              

                    1,118 (10)   21,890              

    35,434     17,717 (11)   23.45     10/28/2025                 7,107 (12)   139,155  

    19,320     38,639 (15)   25.53     11/01/2026                 7,181 (16)   140,604  

Brently G. Baxter(19)

   
   
   
   
                         

Sharon M. Leite

   
   

(13)
 
   
   

(14)
                 

        (15)                       (16)      
(1)
On October 19, 2010, our Compensation Committee granted options to purchase shares of our Common Stock pursuant to the 2010 Omnibus Plan in the following amounts: Ms. Minton, 45,000 and Mr. Spinks, 25,000. These options vested in four annual installments beginning on October 18, 2011, and therefore were fully vested as of October 18, 2014.

(2)
On October 26, 2011, our Compensation Committee granted options to purchase shares of our Common Stock pursuant to the 2010 Omnibus Plan in the following amounts: Ms. Minton, 27,564 and Mr. Spinks, 15,324. These options vested in four annual installments beginning on October 25, 2012, and therefore were fully vested as of October 25, 2015.

(3)
On October 29, 2012, our Compensation Committee granted options to purchase shares of our Common Stock pursuant to the 2010 Omnibus Plan in the following amounts: Ms. Minton, 23,880; Mr. Haltom, 48,676; and Mr. Spinks, 14,328. These options vest in four annual installments beginning on October 28, 2013, and therefore were fully vested as of October 28, 2016.

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(4)
On October 29, 2012, our Compensation Committee granted shares of time-based restricted stock pursuant to the 2010 Omnibus Plan in the following amounts: Ms. Minton, 980; Mr. Haltom, 7,155; and Mr. Spinks, 600. The restrictions upon these awards lapse in five annual installments beginning on October 28, 2013. Per the 2010 Omnibus Plan, in connection with her retirement, Ms. Minton's shares of restricted stock will remain outstanding subject to her compliance with certain restrictive covenants and will vest in accordance with the original vesting schedule.

(5)
On October 30, 2013, our Compensation Committee granted options to purchase shares of our Common Stock pursuant to the 2010 Omnibus Plan in the following amounts: Ms. Minton, 22,700; Mr. Haltom, 46,200; and Mr. Spinks, 17,700. These options vest in four annual installments beginning on September 30, 2014, and therefore were fully vested as of September 30, 2017.

(6)
On June 2, 2014, our Compensation Committee granted options to purchase shares of our Common Stock pursuant to the 2010 Omnibus Plan to Mr. Brickman in the amount of 130,952 in connection with the executive management transition plan. These options vest in four annual installments beginning on June 1, 2015.

(7)
On June 2, 2014, our Compensation Committee granted shares of time-based restricted stock pursuant to the 2010 Omnibus Plan to Mr. Brickman in the amount of 82,804 in connection with the executive management transition plan. The restrictions upon these awards lapse in four annual installments beginning on June 1, 2015.

(8)
On October 29, 2014 our Compensation Committee granted options to purchase shares of our Common Stock pursuant to the 2010 Omnibus Plan in the following amounts: Mr. Brickman, 162,484; Ms. Minton, 16,720; and Mr. Haltom and Mr. Spinks, 34,204. These options vest in four annual installments beginning on September 30, 2015. Per the 2010 Omnibus Plan, in connection with her retirement, Ms. Minton's outstanding unvested options will remain outstanding subject to her compliance with certain restrictive covenants and will vest in accordance with the original vesting schedule.

(9)
On October 29, 2014 our Compensation Committee granted shares of time-based restricted stock pursuant to the 2010 Omnibus Plan in the following amounts: Mr. Brickman, 24,400; Ms. Minton, 2,508; Mr. Haltom, 11,136; and Mr. Spinks, 5,132. The restrictions upon these awards lapse in four annual installments beginning on September 30, 2015. Per the 2010 Omnibus Plan, in connection with her retirement, Ms. Minton's shares of restricted stock will remain outstanding subject to her compliance with certain restrictive covenants and will vest in accordance with the original vesting schedule.

(10)
On July 31, 2015, our Compensation Committee granted shares of time-based restricted stock pursuant to the 2010 Omnibus Plan to Mr. Spinks in the amount of 3,354 in connection with his promotion to President of Beauty Systems Group, LLC. The restrictions upon these awards lapse in three annual installments beginning on July 31, 2016.

(11)
On October 28, 2015 our Compensation Committee granted options to purchase shares of our Common Stock pursuant to the 2010 Omnibus Plan in the following amounts: Mr. Brickman, 302,961; Ms. Minton, 26,574; Mr. Haltom, 63,780; and Mr. Spinks, 53,151. These options vest in three annual installments beginning on September 30, 2016. Per the 2010 Omnibus Plan, in connection with her retirement, Ms. Minton's outstanding unvested options will remain outstanding subject to her compliance with certain restrictive covenants and will vest in accordance with the original vesting schedule.

(12)
On October 28, 2015, our Compensation Committee granted PBRSUs to each of the named executive officers, other than Ms. Leite. The number of PBRSUs shown reflects estimated payout at the target level. The PBRSUs do not vest until the end of the three-year performance period, and the payout level will depend on the actual level of achievement of sales growth and ROIC goals. Per the 2010 Omnibus Plan, in connection with her retirement, Ms. Minton's PBRSUs were prorated from 3,554 to 1,892, and such prorated PBRSUs will remain outstanding subject to her compliance with certain restrictive covenants and will be eligible to vest based on the actual level of achievement of the performance objectives.

(13)
On February 1, 2016, our Compensation Committee granted options to purchase shares of our Common Stock pursuant to the 2010 Omnibus Plan to Ms. Leite in the amount of 42,711 in connection with her employment as President of Sally Beauty Supply, LLC. These options vest in three annual installments beginning on February 1, 2017. Ms. Leite forfeited the unvested portion of these options in connection with her separation.

(14)
On February 1, 2016, our Compensation Committee granted shares of time-based restricted stock pursuant to the 2010 Omnibus Plan to Ms. Leite in the amount of 11,409 in connection with her employment as President of Sally Beauty Supply, LLC. The restrictions upon these awards lapse in three annual installments beginning on February 1, 2017. Ms. Leite forfeited the unvested portion of her restricted stock in connection with her separation.

(15)
On November 1, 2016, our Compensation Committee granted options to purchase shares of our Common Stock pursuant to the 2010 Omnibus Plan in the following amounts: Mr. Brickman, 321,409; Ms. Minton, 26,345; Mr. Haltom, 71,131; Mr. Spinks, 57,959; and Ms. Leite, 63,228. Ms. Leite forfeited her options in connection with her separation. Per the 2010 Omnibus Plan, in connection with her retirement, Ms. Minton's outstanding unvested options will remain outstanding subject to her compliance with certain restrictive covenants and will vest in accordance with the original vesting schedule

(16)
On November 1, 2016, our Compensation Committee granted PBRSUs to each of the named executive officers, other than Messrs. Grimes and Baxter. The number of PBRSUs shown reflects estimated payout at target level. The PBRSUs do not

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    vest until the end of the three-year performance period, and the payout level will depend on the actual level of achievement of sales growth and ROIC goals. Per the terms of the 2010 Omnibus Plan, in connection with her retirement, Ms. Minton's PBRSUs were prorated from 3,264 to 647, and such prorated PBRSUs will remain outstanding subject to her compliance with certain restrictive covenants and will be eligible to vest based on the actual level of achievement of the performance objectives. Ms. Leite forfeited her PBRSUs in connection with her separation.

(17)
On December 12, 2016, our Compensation Committee granted options to purchase shares of our Common Stock pursuant to the 2010 Omnibus Plan to Mr. Grimes in the amount of 61,819 in connection with his employment as Senior Vice President, Chief Financial Officer and Chief Operations Officer. These options vest in four annual installments beginning on December 12, 2017.

(18)
On December 12, 2016, our Compensation Committee granted shares of time-based restricted stock pursuant to the 2010 Omnibus Plan to Mr. Grimes in the amount of 11,057 in connection with his employment as Senior Vice President, Chief Financial Officer and Chief Operations Officer. The restrictions upon these awards lapse in three annual installments beginning on December 12, 2017.

(19)
Mr. Baxter did not hold any equity awards as of the last day of fiscal 2017.

(20)
Calculated by reference to the closing price for shares of our Common Stock on the NYSE on September 29, 2017, which was $19.58.

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FISCAL 2017 OPTION EXERCISES AND STOCK VESTED

 
  Option Awards   Stock Awards  
Name
  Number of Shares
Acquired on Exercise
(#)
  Value Realized
on Exercise
($)
  Number of Shares
Acquired on Vesting
(#)
  Value Realized
on Vesting
($)
 

Christian A. Brickman

            26,801     497,438 (1)

Donald T. Grimes