DEF 14A of Shoe Station Group Inc
Filed May 14, 2024 · FY20230000950170-24-059480
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
Nominee and Director Information
Nominee and Director Information Our Board is divided into three classes, and generally, each director holds office for a three-year term expiring at the annual meeting of shareholders held in the year that is three years after the director’s election and thereafter until his or her successor is elected and qualified. At the annual meeting, our shareholders will be asked to elect two directors. Charles B. Tomm and Mark J. Worden have been nominated by the Board, upon the recommendation of the Nominating Committee, for election as directors for a term to expire at the 2027 annual meeting of shareholders and until their successors are elected and have qualified. Mr. Tomm has served as a director since 2017 and is our Lead Independent Director, Chairman of our Audit Committee and a member of our Compensation Committee. Mr. Tomm is also our audit committee financial expert. Mr. Worden has served as a director since 2021 and is our President and CEO. To be elected, a director nominee must receive the affirmative vote of a majority of the votes cast, which means that the number of shares voted “for” the director’s election must exceed the number of shares voted “against” the director’s election. This majority vote standard is in effect because this is an uncontested election (i.e., the number of nominees for director does not exceed the number of directors to be elected as of the record date of the annual meeting). For any contested election, the director would be elected by a plurality of the votes cast by the shares entitled to vote on the election of directors. If a director nominee who is serving as a director is not elected at the annual meeting, under Indiana law the director would continue to serve on the Board as a “holdover director.” However, under our by-laws, any incumbent director who fails to be elected must immediately tender his or her resignation to the Board, subject to acceptance by the Board. The Nominating Committee would then make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board, taking into account the recommendation of the Nominating Committee, would determine the appropriate responsive action with respect to the tendered resignation. The director who tenders his or her resignation may not participate in the Board’s decision. If a nominee who was not already serving as a director is not elected at the annual meeting, under Indiana law that nominee would not become a director and would not serve on the Board as a “holdover director.” The nominees for election as directors at the annual meeting are currently serving on the Board. The Nominating Committee is responsible for recommending to the Board the director nominees that collectively have the complementary experience, qualifications, skills and attributes to guide us and function effectively as a Board. Each nominee for election as a director is selected based on his or her experience, judgment, integrity, ability to make independent inquiries, an understanding of our business environment and a willingness to devote adequate time to Board duties. The Nominating Committee's general view is to re-nominate an incumbent director who continues to satisfy the criteria for membership on the Board, continues to make important contributions to the Board and consents to continue his or her service on the Board. However, as the Board and Nominating Committee continue to assess the long-term succession planning of the Board and the diversity of its collective skill set, incumbent directors may not be re-nominated in future years and the size of the Board is subject to change. Over the last four years, three total board members have transitioned from our Board, creating space for new directors who have enhanced our diversity and collective skill set. Our Board succession planning continues. Consistent with our objective to enhance the diversity of our Board, the Board has prioritized the identification of diverse director candidates and is actively evaluating diverse candidates. Our Board will appoint an ethnically diverse director to the Board as soon as reasonably practicable but no later than by our 2025 annual meeting of shareholders. Set forth below are the current nominees for director as well as our other continuing directors and information regarding each person's service as a director, business experience, director positions held currently or at any time in the last five years, and the experiences, qualifications, attributes or skills that caused the Nominating Committee and the Board to recommend the director nominees and to determine that the continuing directors should serve as members of our Board. Unless otherwise indicated, the principal occupation of each director has been the same for the last five years. There is no family relationship between any of our directors or executive officers.
Nominee and Director Information
| NOMINEES FOR DIRECTOR |
Nominee and Director Information
| Charles B. Tomm | | Mr. Tomm has served as the Managing Partner and Chief Executive Officer of Pablo River Partners, an investor in the retail automotive industry, since January 2017. He is also a director of Margo Caribe Inc., a company involved in garden products. Previously, he was President and Chief Executive Officer of Brumos Automotive (Mercedes-Benz, Porsche and Lexus dealerships) from January 2009 until its sale in April 2016. He started in the retail automotive business with Coggin Automotive Group in April 1994 as Vice President, Chief Financial Officer and General Counsel and was named company President in 1997. After a 1998 merger with Asbury Automotive Group Inc. (“Asbury”) and a subsequent merger with Courtesy Automotive in 2003, Mr. Tomm became President and Chief Executive Officer of the Asbury subsidiary Coggin/Courtesy Auto Group, with 27 dealerships and $1.7 billion in revenue. He served as a director of Asbury from 2000 to 2002 and 2005 to 2007. Prior to entering the retail automotive industry, he was Executive Vice President & COO of PIE Nationwide Inc. (trucking), an investment banker, Deputy General Counsel of Schlumberger Ltd. (oilfield services), Vice President & General Counsel of Arkansas Best Corporation, now ArcBest Corporation (trucking), an adjunct professor of law at the University of Arkansas and in the private practice of law with Winthrop, Stimson, Putnam & Roberts (now Pillsbury Winthrop Shaw Pittman LLP) in New York City. He served from 1968 to 1972 as a diver and officer on the U.S. Navy's only troop carrying submarine and earned the Navy Achievement, Vietnam Service, Vietnam Campaign and National Defense Medals. He is an emeritus trustee of Washington & Lee University and of Mayo Clinic. Formerly, he was a trustee of The Bolles School (“Bolles”), a trustee and board chair of Jacksonville University, a trustee of HabiJax (Habitat for Humanity in Jacksonville), a commissioner and board chair of the Jacksonville Housing Authority, a chair of the Jacksonville Sports Council, and a lacrosse coach at Bolles. He also served as a director of Florida Bank Group, Inc. from September 2007 until its merger with IBERIABANK Corporation in 2015. | | Mr. Tomm’s areas of relevant experience include strategic planning, corporate governance and leadership, corporate finance, capital markets, financial reporting, risk management and mergers and acquisitions. | | Term: Director nominee for a three-year term to expire at the annual meeting of shareholders in 2027 | | Director since: 2017 | | Age: 78 |
Nominee and Director Information
| Mark J. Worden | | Mr. Worden has served as our President and Chief Executive Officer since October 2021 and prior to that appointment served as our President and Chief Customer Officer since September 2019. From September 2018 to September 2019, Mr. Worden served as our Executive Vice President – Chief Strategy and Marketing Officer. Prior to joining us, Mr. Worden led the Northern European region for S. C. Johnson & Son, Inc. (“SC Johnson”), a manufacturer of household cleaning supplies and products, and was responsible for revenue and share growth objectives across six countries from May 2014 to July 2018. Prior to that, Mr. Worden served as Assistant to the Chairman and Chief Executive Officer of SC Johnson from May 2012 to May 2014 and as a Senior Marketing Director from 2009 to 2012. Mr. Worden also served as a Senior Brand Manager at Kimberly-Clark Corporation and held multiple marketing roles across its flagship brands during his tenure there from 2003 through 2009. | | Mr. Worden’s areas of relevant experience include strategic planning, corporate governance and leadership, marketing and customer engagement, and mergers and acquisitions. | | Term: Director nominee for a three-year term to expire at the annual meeting of shareholders in 2027 | | Director since: 2021 | | Age: 50 |
Nominee and Director Information
The Board recommends a vote FOR each of the director nominees listed above.
Nominee and Director Information
| DIRECTORS CONTINUING IN OFFICE |
Nominee and Director Information
| James A. Aschleman | | Mr. Aschleman retired from the law firm Baker & Daniels LLP (now Faegre Drinker Biddle & Reath LLP) in December 2011. As a partner in the firm since 1976, Mr. Aschleman advised public and private companies on a wide range of issues, including corporate governance, executive compensation, mergers and acquisitions and compliance with SEC rules and regulations. Additionally, Mr. Aschleman previously served on our Board from 2001 until 2006 and has extensive knowledge of our operations. | | Mr. Aschleman’s areas of relevant experience include strategic planning, capital markets and corporate finance, corporate governance and legal and regulatory analysis. | | Term: Director with term expiring at the annual meeting of shareholders in 2025 | | Director since: 2012 | | Age: 79 |
Nominee and Director Information
| Andrea R. Guthrie | | Ms. Guthrie has served as the Chief Strategy Officer at Kiln Holdings, Inc., a provider of flexible office and lifestyle spaces in the western United States, since October 2021. From 2015 to July 2023, she also led Gyde Travel, LLC, an online travel technology business, which she co-founded in 2015. From August 2009 to January 2014, Ms. Guthrie served as Senior Vice President, Strategic New Businesses at Claire’s Stores, Inc., one of the world’s leading specialty retailers of fashionable jewelry and accessories for young women, teens, tweens, and kids. Prior to that, Ms. Guthrie was a Principal at The Boston Consulting Group, where she led client projects and addressed strategic and operational issues, with a particular emphasis on the retail and consumer industries, from January 2002 to August 2009. She held merchandising roles with A|X Armani Exchange and Saks Fifth Avenue from 1993 to 1999. | | Ms. Guthrie’s areas of relevant experience include strategic planning, e-commerce, consumer insights and market research, loyalty/CRM, competitive analysis, financial modeling and analytics, market analysis and mergers and acquisitions. | | Term: Director with term expiring at the annual meeting of shareholders in 2025 | | Director since: 2015 | | Age: 52 |
Nominee and Director Information
| Clifton E. Sifford | | Mr. Sifford has served as our Vice Chairman of the Board since October 2021. He served as our Vice Chairman of the Board and Chief Executive Officer from September 2019 to September 2021. Mr. Sifford also served as our President and Chief Executive Officer from October 2012 to September 2019. Mr. Sifford served as our Chief Merchandising Officer from October 2012 to March 2016. From June 2001 to October 2012, Mr. Sifford served as our Executive Vice President – General Merchandise Manager and from April 1997 to June 2001, Mr. Sifford served as our Senior Vice President – General Merchandise Manager. | | Mr. Sifford, as our Vice Chairman and a former long-standing member of our senior management team, brings to the Board an in-depth knowledge of our Company and the retail industry. Mr. Sifford’s areas of relevant experience include detailed knowledge and experience in executive leadership and retail merchandising, encompassing merchandise procurement, building brand awareness, proprietary brand development and consumer behavior. | | Term: Director with term expiring at the annual meeting of shareholders in 2025 | | Director since: 2012 | | Age: 70 |
Nominee and Director Information
| Diane E. Randolph | | Ms. Randolph was appointed to our Board effective September 16, 2021. From 2014 to 2020, Ms. Randolph served as the Chief Information Officer of U.S. beauty retailer, Ulta Beauty, Inc. (“Ulta”). Prior to Ulta, Ms. Randolph served as the Chief Information Officer of Reitmans (Canada) Limited, a Canadian specialty apparel retailer, from 2008 to 2014. In August 2023, Ms. Randolph was appointed to the Board of Directors of Dollar Tree, Inc., a Fortune 200 retailer, and serves on its Audit Committee and Finance Committee. In February 2022, Ms. Randolph was appointed to the Board of Directors of Flexe, Inc., a venture-backed company that delivers technology-powered, omnichannel logistics programs. Ms. Randolph served on the Board of Directors of Core-Mark Holding Company, Inc., a leader in fresh food distribution to convenience stores, from January 2020 until Core-Mark was acquired and also served on its Nominating and Corporate Governance Committee. Ms. Randolph has also served on the Executive Committee of the National Retail Foundation CIO Council and on the Advisory Council of Chicago CIOs. | | Mr. Randolph’s areas of relevant experience include retail sector information technology, cybersecurity, risk management, supply chain, and human resources. | | Term: Director with term expiring at the annual meeting of shareholders in 2026 | | Director since: 2021 | | Age: 69 |
Nominee and Director Information
| J. Wayne Weaver | | Mr. Weaver has served as Chairman of our Board since March 1988. From 1993 until January 2012 when the franchise was sold, Mr. Weaver served as Chairman and Chief Executive Officer of the Jacksonville Jaguars, LTD, a professional football franchise. From 1978 until February 1993, Mr. Weaver's principal occupation was as President and Chief Executive Officer of Nine West Group, Inc., a designer, developer and marketer of women's footwear. Mr. Weaver previously served two terms as a director of Stein Mart, Inc., a publicly traded chain of off-price retail stores, from June 2014 until March 2016 and from November 2000 until April 2008. | | Mr. Weaver's areas of relevant experience include strategic planning, marketing/branding, economic indicators and issues, and industry trends. | | Term: Director with term expiring at the annual meeting of shareholders in 2026 | | Director since: 1988 | | Age: 89 |
INFORMATION REGARDING THE BOARD OF
INFORMATION REGARDING THE BOARD OF
Compensation Discussion and Analysis
| What We Do | What We Do Not Do | | • Long-term equity-based awards granted to our Executives are weighted toward performance-based stock units (“PSUs”). | • Our Executives’ employment contracts do not provide for excise tax gross-ups upon a change in control and do not guarantee salary increases, bonuses or awards of equity-based compensation. | | • Both our annual cash incentive plan and our PSUs include performance thresholds and payout caps. | • Our directors and Executives are prohibited from hedging and pledging our stock. | | • Our PSUs and service-based restricted stock units (“RSUs”) only vest following a change in control if employment is terminated without cause or for good reason (“double trigger”). | • Our Executives receive limited perquisites. | | • Our directors and executive officers are subject to stock ownership requirements. | • There is no guaranteed return or above-market return on compensation that has been deferred. | | • Our clawback policy for each Executives’ incentive compensation applies to both accounting restatements due to material noncompliance with financial reporting requirements, as well as fraud and intentional misconduct. | • We do not provide any pension benefits. | | • The Committee has the discretion to lower performance-based awards when it determines that such adjustments would be in the best interests of the Company and our shareholders. | • We have not granted stock options since 2008. | | • Compensation decisions for the CEO and other Executives are subject to the review and approval of the Compensation Committee, comprised of independent directors and advised by its selected independent advisors. | |
Compensation Discussion and Analysis
Amendment and Restatement of the 2017 Equity Incentive Plan At our 2023 annual meeting on June 20, 2023, our shareholders approved an amendment and restatement of the Shoe Carnival, Inc. 2017 Equity Incentive Plan (as amended and restated, the “2017 Equity Plan”). Pursuant to the amendment and restatement, the number of shares of our common stock reserved for issuance under the 2017 Equity Plan was increased by an additional 1,800,000 shares, the term of the 2017 Equity Plan was extended to June 20, 2033, and certain other design changes were made to the plan. The 2017 Equity Plan includes a number of provisions that we believe promote and reflect compensation practices that closely align our equity compensation arrangements with the interests of our shareholders, including the following key features: • Dividends, distributions and dividend equivalents payable only on vested awards. The 2017 Equity Plan provides that any dividends, distributions or dividend equivalents payable with respect to the shares of our common stock that are subject to an award will be subject to the same restrictions and risk of forfeiture as the award and will only be paid if the vesting provisions of an award are met. • No evergreen provision. There is no “evergreen” or automatic replenishment provision pursuant to which the shares authorized for issuance under the 2017 Equity Plan are automatically replenished. • No automatic grants. The 2017 Equity Plan does not provide for automatic grants to any participant. • Limited definition of “change in control.” No change in control would be triggered by shareholder approval of a business combination transaction, the announcement or commencement of a tender offer or any Board assessment that a change in control is imminent. • No liberal share recycling provisions. We may not add back to the 2017 Equity Plan’s share reserve shares that are delivered or withheld to satisfy a tax withholding obligation in connection with any form of award currently granted to our Executives. Our Executives for Fiscal 2023 Our Executives and their positions at the end of Fiscal 2023 were:
Compensation Discussion and Analysis
| Fiscal 2023 Peer Companies | | | Boot Barn Holdings, Inc. | Genesco Inc. | | The Buckle, Inc. | Hibbett, Inc. | | Caleres, Inc. | Oxford Industries, Inc. | | Carter's Inc. | Steven Madden, Ltd. | | The Cato Corporation | Tilly's, Inc. | | Citi Trends, Inc. | Wolverine World Wide, Inc. | | Crocs, Inc. | Zumiez Inc. | | Designer Brands Inc. (formerly DSW Inc.) | | | Median Revenue : $1.6 billion | Median Market Capitalization: $861 million |
Compensation Discussion and Analysis
The increase in Mr. Worden’s base salary for Fiscal 2023 was to better align his base salary and total target compensation with peer group data provided by Pearl Meyer. (2) For the period from January 29, 2023 to September 24, 2023, Mr. Edwards’ base salary was $260,000, which represented a 4.0% increase from his base salary in Fiscal 2022. Mr. Edwards’ base salary was further increased by the Compensation Committee in September 2023 to $366,000 to reflect the increased responsibilities assumed upon becoming our Senior Vice President – Chief Financial Officer. (3) The increase in Mr. Chilton’s base salary was to reflect the increased responsibilities assumed during Fiscal 2023 upon his promotion to Chief Operating Officer in February 2023. Annual Cash Incentives under the EICP The EICP is a performance-based cash incentive program, which is designed to reward members of our management team, including our Executives, for meeting financial goals. Performance targets may be based on one or more specified business criteria and performance periods may be for one or more full fiscal years or for a spring or fall season. On March 14, 2023, the Committee established the performance criteria and targets for a cash bonus that all officers, including the Executives, could earn under the EICP based on our operating income for Fiscal 2023, calculated in accordance with U.S. generally accepted accounting principles (“Operating Income”). At that time, the Committee also established the threshold, target and maximum performance levels, with payout for performance between threshold and target and between target and maximum Operating Income to be interpolated. The Operating Income business criteria was first selected by the Committee in 2017, and after considering our current business strategy, the Committee determined that using Operating Income remained appropriate for evaluating our performance for Fiscal 2023. When setting the threshold, target and maximum performance levels, the Committee utilized financial projections prepared by management. These projections incorporated various assumptions related to targeted comparable store sales, gross profit, new store openings, store closings and selling, general and administrative expense levels. These projections also incorporated known risk factors inherent with the economic retail climate and reflected both the challenges and opportunities facing the Company. Such uncertainties specifically considered in March 2023 when the performance criteria and performance targets were set included the lingering and unknown effects of supply chain disruptions, inflation and higher interest rates. Given these projections and uncertainties, the Committee determined that the target Operating Income for Fiscal 2023 should be set at approximately 102% of our Fiscal 2022 Operating Income. Upon the attainment of target Operating Income for Fiscal 2023, or $149.45 million, each Executive would earn the target bonus. Consistent with recommendations from Pearl Meyer, the Committee approved EICP threshold, target and maximum incentive opportunities to provide additional focus on driving annual Operating Income results, as follows: The payout percentage at target performance was unchanged at 125% for Mr. Worden and 75% for Messrs. Scibetta and Chilton. Mr. Edwards’ payout percentage increased from 35% to 40% at target performance. • The payout at threshold performance was 25% of the target payout and was unchanged from Fiscal 2022. • The payout at maximum performance was unchanged at 175% of the target payout for Messrs. Worden, Scibetta and Chilton and 150% for Mr. Edwards. • Operating Income at the threshold performance level increased to approximately 98% of the target performance level so that amounts would only be earned if Fiscal 2023 Operating Income equaled or exceeded actual Fiscal 2022 Operating Income. The threshold performance level in Fiscal 2022 was 90% of the target performance level. • Operating Income at the maximum performance level was unchanged at 125% of the target performance level. The following table sets forth the percentage of salary each Executive could earn based upon the attainment of the various levels of Operating Income in Fiscal 2023. Because our actual Fiscal 2023 Operating Income did not exceed the $146.444 million threshold, our Executives did not receive any payout under the EICP for Fiscal 2023.
Compensation Discussion and Analysis
| | EICP Opportunity as % of Salary | | | Operating Income Goals ($ in millions) | | | | EICP Payout | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | Actual | % of Salary | $000s | | Mark J. Worden | 31.25% | 125.0% | 218.75% | $146.444 | $149.450 | $186.813 | $93.505 | 0.00% | $- | | Patrick C. Edwards | 10.00% | 40.0% | 60.00% | (Prior Year | | (125% of | (Below | 0.00% | $- | | Carl N. Scibetta | 18.75% | 75.0% | 131.25% | Actual) | | Target) | Threshold) | 0.00% | $- | | Marc A. Chilton | 18.75% | 75.0% | 131.25% | | | | | 0.00% | $- |
Compensation Discussion and Analysis
Additional Bonuses No discretionary bonuses were awarded by the Committee to Executives during Fiscal 2023. Long-Term Equity-Based Incentives under the 2017 Equity Plan Equity compensation is an important element in the overall compensation of our Executives and other key employees. These awards vest over time and/or upon the attainment of performance measures, help to retain Executives and encourage them to manage through difficult periods and to improve our long-term performance. Since June 2017, long-term equity-based incentive awards have been granted to our Executives pursuant to the 2017 Equity Plan, at the discretion of the Committee. On March 14, 2023, the Committee granted a combination of PSUs and service-based RSUs as equity-based incentive compensation to members of our management, including our Executives. Consistent with recommendations from Pearl Meyer and to improve Executive attraction and retention goals, for Fiscal 2023 the Committee continued with the mix of long-term equity awards, vesting periods and payout opportunities utilized in Fiscal 2022. The Committee determined that approximately 60% of the total grant date fair value of the Fiscal 2023 equity awards granted to the Executives, at the target level of performance, would be PSUs and approximately 40% would be service-based RSUs. The Committee determined that equity grant mix created an appropriate, market-competitive balance between aligning executive rewards with long-term shareholder value creation and incenting Executive retention in a very competitive and highly volatile market. The target number of PSUs and the service-based RSUs granted to our Executives for Fiscal 2023 were as follows:
Compensation Discussion and Analysis
| Name | Target Number of PSUs | Number of Service- Based RSUs | | Mark J. Worden | 51,263 | 34,175 | | Patrick C. Edwards | 4,056 | 2,704 | | Carl N. Scibetta | 14,153 | 9,435 | | Marc A. Chilton | 12,259 | 8,172 |
Compensation Discussion and Analysis
| | 2023 PSU Payout Schedule | | | | | | | Below | | | | FY 2023 | | | Threshold | Threshold | Target | Maximum | Actual | | FY 2023 EPS | < $3.96 | $3.96 | $4.19 | $5.24 | $2.68 | | % of Target | < 95% | 95% | 100% | 125% | 64.0% | | Payout (% of Target Number of PSUs) | 0% | 25% | 100% | 175% | 0.0% |
Compensation Discussion and Analysis
RSUs Consistent with vesting periods utilized in Fiscal 2022 and to further strengthen the retention value of the awards, the service-based RSUs granted on March 14, 2023 to Executives vest over three years, with one-third vesting on March 31, 2025 and two-thirds vesting on March 31, 2026, provided that the Executive maintains continuous service with us through such dates. Treatment of Dividend Equivalents For any cash dividends that we pay on the shares of our common stock while the PSUs and RSUs are outstanding and unvested, as of each dividend payment date, a dollar amount of dividend equivalents is credited to the respective Executive’s account. If the PSUs are earned, and when the PSUs and RSUs vest, the amount of the accrued dividend equivalents is paid in cash to the Executives. Aggregate Size of the Long-Term Equity Incentive Awards In approving equity awards granted to all participants for Fiscal 2023, which includes the Executives and other members of management, the Committee considered the dilutive effect of the proposed grant and determined that the total number of shares issued be approximately 1.2% of the then outstanding shares (at the target level of performance for the PSUs). Recommendation of the allocation of shares among members of management was made based on the individual’s potential for making significant contributions in the future and the relative importance of the individual’s position to others in our organization. Other Benefits We provide the Executives with health and welfare programs, a 401(k) retirement plan and employee benefit plans, programs and arrangements generally available to all employees. We also provide the Executives, along with our other officers, other executive benefit programs and perquisites in order to provide a competitive executive compensation program and to foster executive retention, including an executive life insurance program, an executive long-term disability program, additional medical benefits and a nonqualified deferred compensation plan. In addition, we provide for an automobile allowance for certain Executives and our Chief Executive Officer is eligible for limited personal utilization of the Company-provided aircraft, and for Fiscal 2022 and Fiscal 2023, the Committee also approved the reimbursement of certain expenses incurred by Mr. Worden and Mr. Scibetta in connection with each Executive’s relocation to our Southern Office located in Fort Mill, South Carolina. These other executive benefit programs and perquisites were not changed from Fiscal 2022. Details of our perquisites are contained in footnote 5 to the Summary Compensation Table. Compensation Decisions Impacting Clifton E. Sifford, the Executive Vice Chairman of our Board and a Named Executive Officer On September 30, 2021, we entered into a letter agreement with Mr. Sifford (the “Letter Agreement”), setting forth the terms of his at-will employment as Executive Vice Chairman of the Board. For his service as Executive Vice Chairman, Mr. Sifford’s annual compensation is $300,000, of which $150,000 is paid in cash and $150,000 is paid in the form of an equity award granted under the 2017 Equity Plan on the date of the annual shareholders’ meeting. Mr. Sifford is also due a monthly stipend of $2,957. Mr. Sifford was awarded 6,850 shares of restricted stock under the 2017 Equity Plan on June 20, 2023. The restrictions on this restricted stock award lapsed on January 2, 2024. Cash dividends were also paid to Mr. Sifford in Fiscal 2023 upon the vesting of this restricted stock award and upon the vesting of other PSUs and RSUs that were granted to him in Fiscal 2021 while he was our Chief Executive Officer. Compensation Decisions Impacting Former Named Executive Officers: Mr. Jackson and Mr. Gast As previously disclosed, Mr. Jackson retired from the Company in May 2023 after 35 years of service. Mr. Jackson served as our Senior Executive Vice President, Chief Financial and Administrative Officer and Treasurer until April 24, 2023 and remained with the Company as our Chief Administrative Officer until May 9, 2023. On April 24, 2023, Mr. Gast was appointed our Executive Vice President, Chief Financial Officer to succeed Mr. Jackson. In September 2023, the Company and Mr. Gast mutually agreed that Mr. Gast would leave the Company to pursue other opportunities, effective as of September 25, 2023, and Patrick C. Edwards was appointed as Senior Vice President - Chief Financial Officer, Treasurer and Secretary to succeed Mr. Gast. As a result of Mr. Jackson’s planned departure from the Company, at its meeting on March 14, 2023, the Committee approved no base salary increase for Mr. Jackson for Fiscal 2023, determined he would not participate in the EICP for Fiscal 2023, and granted no equity awards to him in Fiscal 2023 under the 2017 Equity Plan. On March 14, 2023, the Committee approved an employment agreement for Mr. Gast authorizing the following compensation: an annual base salary of $550,000; a target annual cash incentive bonus of 75% of his base salary, prorated based on his start date, under our EICP; and a prorated annual grant of RSUs and PSUs and a one-time sign-on grant of RSUs, all pursuant to our 2017 Equity Plan. More information about Mr. Gast’s EICP participation and 2017 Equity Plan grants can be found in the Grants of Plan-Based Awards table on page 35. While Mr. Gast was employed, he received other benefits including an automobile allowance and participation in all employee benefit plans, practices and programs generally provided to our other Executives. In addition, the Company provided reimbursement for Mr. Gast’s relocation expenses of up to $100,000, plus an amount equal to any additional out-of-pocket federal, state and local income taxes incurred in connection with such reimbursement. In connection with his departure from the Company, we entered into a mutual separation agreement with Mr. Gast, pursuant to which he received a one-time lump sum cash payment and monthly cash payments equal to his monthly COBRA premium. These COBRA payments were to be made for the shorter of 18 months or the date Mr. Gast became eligible for group health insurance coverage benefits with a new employer, which occurred on January 31, 2024. Mr. Gast also forfeited all unvested RSUs and PSUs that were granted to him under the 2017 Equity Plan. Additional information regarding the lump sum cash payment and other benefits paid to Mr. Gast can be found in footnote 5 to the Summary Compensation Table on page 34. Decisions Regarding our Executive Compensation Programs for Fiscal 2024 Given the comprehensive peer group information and advice regarding the design and structure of our Executive compensation program provided by Pearl Meyer in both Fiscal 2023 and Fiscal 2022, the Committee decided not to engage Pearl Meyer to provide peer group data or to otherwise advise the Committee with respect to setting Fiscal 2024 Executive compensation. The advice and recommendations provided by Pearl Meyer in Fiscal 2023 and Fiscal 2022 served as the foundation of the Committee’s approach to Executive compensation for Fiscal 2024, including keeping the peer group the same as that used in Fiscal 2023. No material changes were made to the methods of setting Executive compensation. On March 13, 2024, the Committee approved our Executive compensation for Fiscal 2024. Material decisions regarding our compensation programs effective for Fiscal 2024 include the following: • For the EICP: o The payout percentage at target performance increased from 40% to 50% for Mr. Edwards and the payout at maximum performance for Mr. Edwards increased from 150% of the target payout to 175% of the target payout to reflect his increased responsibilities as Chief Financial Officer. o The threshold, target and maximum incentive opportunities for the other Executives were unchanged from Fiscal 2023. o
Compensation Discussion and Analysis
The maximum performance goal was changed to 115% of the target goal compared to 125% of the target goal in Fiscal 2023 and the threshold performance goal was changed to 95% of the target goal compared to approximately 98% of the target goal in Fiscal 2023. For the PSUs, the threshold, target and maximum incentive opportunities were unchanged from Fiscal 2023. However, the maximum performance goal was changed to 115% of the target goal compared to 125% of the target goal in Fiscal 2023 and the threshold performance goal was changed to approximately 96% of the target goal compared to approximately 95% of the target goal in Fiscal 2023. The allocation of long-term equity awards between PSUs and RSUs was unchanged at 60% (at target performance) and 40%, respectively. The equity award vesting period for the PSUs was unchanged, with any earned PSUs vesting in full after three years (on March 31, 2027), subject to continued service. • The equity award vesting for the RSUs was changed, as one-half of the RSUs granted will vest after two years (on March 31, 2026) and one-half of the RSUs granted will vest after three years (on March 31, 2027), subject to continued service. • The equity awards issued to all employees, including the Executives, totaled 1.2% of our then outstanding shares at the target level of performance for the PSUs. • Fiscal 2024 Net Income per Diluted Share is the performance measure for the PSUs and Fiscal 2024 Operating Income is the performance measure for the EICP. Both measures are unchanged from the prior year. • Base salary increases from the salary in effect at the end of Fiscal 2023 for the Executives were as follows: 3% for Mr. Worden; 9% for Mr. Edwards; 3% for Mr. Scibetta; and 3% for Mr. Chilton. Mr. Sifford’s base salary was unchanged. Mr. Edwards’ salary increase reflects his increased responsibilities as Chief Financial Officer Compensation Recovery Policy On June 19, 2023, the Board, based on the recommendation of the Committee, adopted an amended and restated policy providing for the recoupment of certain incentive compensation awarded to our current and former “officers,” as defined in Section 16a-1(f) of the Exchange Act, which includes our Executives. The policy was amended and restated to align with Nasdaq’s final listing standards with respect to compensation recovery policies that were finalized during 2023. The policy applies to an accounting restatement due to the material noncompliance of the Company with any financial reporting requirements under the securities laws. Other than in the case of certain limited exceptions, promptly following such an accounting restatement, the Committee is to determine the excess of the amount of incentive-based compensation received by a covered executive officer during a three-fiscal-year lookback period over the amount of incentive-based compensation that otherwise would have been received based on the restated financial results, computed without regard to any taxes paid. The Company is to provide notice of this amount to each covered executive officer, who must promptly repay or return that excess compensation. The policy also applies to fraud or intentional misconduct committed by a covered executive officer that results in a violation of law and that causes significant financial or reputational harm to the Company. To the extent deemed appropriate by the Committee, the Company will seek recovery or repayment of a covered executive officer’s incentive compensation that is awarded, vested or paid, is scheduled to be vested or paid or is currently in a performance measurement period, calculated net of taxes paid or payable by the executive officer. The time period for such recoupment includes the fiscal year in which the fraud or illegal misconduct occurred, the three fiscal years preceding such fiscal year and any fiscal years subsequent to such fiscal year. In addition to our internal policy, the Sarbanes-Oxley Act of 2002 subjects our Chief Executive Officer and our Chief Financial Officer to forfeiture of incentive compensation and profits from the sale of stock in the event of an accounting restatement associated with non-compliance, because of misconduct, with any financial reporting requirement under the securities laws. Termination and Change in Control Arrangements We have entered into an employment and noncompetition agreement with Mr. Worden, Mr. Edwards, Mr. Scibetta and Mr. Chilton, and such agreements specify various payments to be made to each Executive in the event that employment is terminated, including upon a qualifying termination following a change in control. We believe the severance benefits payable under these agreements are competitive with general industry practices and that these agreements serve to ensure the continued dedication of the Executive team and minimize the likelihood of the transfer of trade secrets to our direct competitors. We have not utilized an “excise tax gross-up” provision related to a change in control in our employment agreements for some time and have no intention of reintroducing one. The employment agreements with our Executives state that, in the event of an “excess parachute payment,” the aggregate payments and benefits otherwise constituting a parachute payment may be reduced in order to eliminate the impact of the excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), if such reduction would result in a higher net payment to the Executive. Further information on our termination and change in control arrangements is contained under the section “Termination and Change in Control Arrangements” beginning on page 39 of this proxy statement. Stock Ownership Guidelines Under our stock ownership guidelines, our Chairman of the Board, our Vice Chairman and our Chief Executive Officer are each required to own shares valued at three times their annual base salary, with all other executive officers required to own shares valued at two times their annual base salary. Unvested and vested shares of restricted stock, RSUs or PSUs awarded as a new hire inducement are not counted toward the ownership requirements except for the Chief Executive Officer, who can elect to have such inducement award count toward the requirements. Unless otherwise determined by the Committee, until an executive officer has reached the ownership requirement, he or she must retain 50% of the net-after tax shares received upon the exercise, vesting or settlement of any form of equity-based compensation award. The value of stock holdings is determined based on the average daily closing price of our common stock during the 30-day period ending on the date of valuation determination. The Committee is responsible for monitoring the application of the stock ownership guidelines and evaluating whether each executive officer has met his or her ownership goal annually. The Committee reviewed the current ownership valuation for each of our executive officers at its March 2023 meeting, using a valuation date of February 3, 2024, our Fiscal 2023 year end. Of our executive officers, Messrs. Weaver, Sifford, and Scibetta met the ownership requirements as of that valuation date. Policy on Hedging and Pledging of Common Stock
Compensation-Related Risk Assessment
Compensation-Related Risk Assessment In March 2024, our Compensation Committee reviewed our compensation policies and practices for all employees, including our Executives, and the risks that could arise from our compensation policies and practices. As part of the Compensation Committee’s review, it noted the following factors that reduce the likelihood of excessive risk-taking: Our overall compensation levels are competitive with the market. • There is a balanced mix of cash and equity and annual and longer-term incentive compensation. • While the performance criteria used under our EICP has been Operating Income achieved in a particular fiscal year, the overall compensation of our Executives is not overly weighted toward this metric. • Our EICP has payouts at multiple levels of performance. The maximum bonus percentage payable under the EICP for Fiscal 2023 was also capped at a percentage of the Executive’s annualized base salary to protect against disproportionately large short-term incentives. • The Compensation Committee has the discretion to lower performance-based awards when it determines that such adjustments would be appropriate based on our interests and the interests of our shareholders. • We do not grant stock options. • The performance-based equity awards granted to our Executives vest based on our attainment of certain EPS targets, aligning the interests of our Executives with those of our shareholders. Our PSUs granted in Fiscal 2023 were, and Fiscal 2024 are, measured at multiple levels of performance. • Under our incentive compensation recovery policy, we will recoup excess incentive compensation received by our Executives in the event of an accounting restatement due to material noncompliance with any financial reporting requirements and may recoup incentive compensation awarded or paid to the Executive if he has committed fraud or intentional misconduct resulting in a violation of law that has caused significant financial or reputational harm to the Company. • Stock ownership guidelines applicable to all non-employee directors and all executive officers further align interests with those of our shareholders. • Pursuant to our Corporate Governance Guidelines, our directors and executive officers are prohibited from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan. In addition, our directors and executive officers are prohibited from (a) purchasing any financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Company securities that such individual holds, directly or indirectly, whether or not such Company securities were acquired as part of such individual’s compensation; and (b) conducting short sales of Company securities. Some of our non-executive employees are eligible to receive bonuses and equity awards. With respect to the non-executive officer employees who receive bonus awards or performance-based equity awards, the performance criteria and targets are not unreasonable or clearly unattainable without excessive risk-taking. Based on these factors, the Compensation Committee believes that our compensation policies and practices encourage behaviors that are aligned with the Company’s long-term interests, and that any short-term incentives do not make up a significant portion of compensation and do not encourage our employees to take risks for short-term gain. As a result, the Compensation Committee determined that any risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
Summary Compensation Table
Summary Compensation Table The following table sets forth a summary of the compensation paid by us for services rendered in all capacities to us by each of our Executives for Fiscal 2023 and, as applicable, Fiscal 2022 and Fiscal 2021.
Summary Compensation Table
| | Fiscal | | | | Non-Equity | All Other | | | | Year | | Bonus | Stock Awards | Incentive Plan | Compensation | | | Name and Principal Position | (1) | Salary (2) | | (3) | Compensation (4) | (5) | Total | | Mark J. Worden | 2023 | $1,000,000 | $– | $2,124,843 | $- | $326,052 | $3,450,895 | | President and Chief Executive | 2022 | $850,000 | $– | $1,950,900 | $1,065,639 | $141,005 | $4,007,544 | | Officer | 2021 | $645,333 | $– | $639,683 | $844,400 | $52,351 | $2,181,767 | | Patrick C. Edwards (6) | 2023 | $294,462 | $– | $168,121 | $- | $31,569 | $494,152 | | Senior Vice President | 2022 | $250,000 | $– | $179,310 | $87,672 | $31,661 | $548,643 | | Chief Financial Officer, Treasurer | 2021 | $216,923 | $– | $93,817 | $115,500 | $24,928 | $451,168 | | and Secretary | | | | | | | | | Carl N. Scibetta | 2023 | $635,000 | $– | $586,634 | $- | $153,845 | $1,375,479 | | Senior Executive Vice President | 2022 | $615,000 | $– | $606,360 | $462,613 | $60,544 | $1,744,517 | | Chief Merchandising Officer | 2021 | $575,000 | $– | $499,922 | $517,500 | $58,129 | $1,650,551 | | Marc A. Chilton (6) | 2023 | $550,000 | $– | $508,119 | $- | $74,073 | $1,132,192 | | Executive Vice President | 2022 | $480,000 | $– | $473,250 | $361,064 | $69,326 | $1,383,640 | | Chief Operating Officer | 2021 | $416,635 | $– | $389,977 | $387,000 | $60,648 | $1,254,260 | | Clifton E. Sifford | 2023 | $185,484 | $– | $150,015 | $- | $25,899 | $361,398 | | Executive Vice Chairman of | 2022 | $185,484 | $– | $150,002 | $- | $8,871 | $344,357 | | the Board | 2021 | $579,167 | $– | $426,436 | $737,501 | $107,587 | $1,850,691 | | W. Kerry Jackson (6) | 2023 | $189,538 | $– | $– | $– | $55,710 | 245,248 | | Former Senior Executive Vice President | 2022 | $640,000 | $– | $631,020 | $481,419 | $79,732 | $1,832,171 | | Chief Financial and Administrative | 2021 | $601,000 | $– | $499,922 | $540,900 | $69,395 | $1,711,217 | | Officer and Treasurer | | | | | | | | | Erik D. Gast (6) | 2023 | $234,808 | $– | $995,913 | $– | $757,574 | $1,988,295 | | Former Executive Vice President | | | | | | | | | Chief Financial Officer and Treasurer | | | | | | | |
Summary Compensation Table
| (1) Our fiscal year is a 52/53 week year ending on the Saturday closest to January 31. Fiscal 2023 was a 53-week year. Fiscal 2022 and Fiscal 2021 were each 52-week years. | | (2) For Mr. Edwards, his salary in Fiscal 2023 reflects a base salary of $260,000 for the period from January 29, 2023 to September 24, 2023 and a base salary of $366,000 for the period from September 25, 2023 to February 3, 2024. For Mr. Sifford, his salaries in Fiscal 2023 and Fiscal 2022 reflect the $150,000 portion of his annual compensation paid in cash plus the additional $2,957 monthly cash stipend paid to him. Mr. Sifford's salary in Fiscal 2021 reflects an annual base salary of $737,500 for the period from January 31, 2021 to September 30, 2021 while he served as our Chief Executive Officer, a base salary of $25,000 each month from October 1, 2021 to December 31, 2021 and an annual cash base salary of $150,000 beginning January 1, 2022. For Mr. Worden, his salary in Fiscal 2021 reflects a base salary of $618,000 for the period from January 31, 2021 to September 30, 2021 and a base salary of $700,000 for the period from October 1, 2021 to January 29, 2022. For Mr. Chilton and Mr. Edwards, their base salaries in effect at the end of Fiscal 2021 were $430,000 and $220,000, respectively. Their salaries during Fiscal 2021 disclosed in the chart are reflective of in-year promotions and salary adjustments |
Summary Compensation Table
| (3) Amounts reflect the aggregate grant date fair value of performance-based and service-based equity awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”). The grant date fair value of each performance-based award was computed based on the level of performance that was deemed probable on the grant date, which was the target level of performance for the PSUs in all years presented. The table below sets forth the grant date fair value of the service-based RSUs granted in Fiscal 2023 and the PSUs granted in Fiscal 2023 at target performance and maximum performance. |
Summary Compensation Table
| | | PSUs | | | Name | Service-Based RSUs | Target | Maximum | | Mark J. Worden | $849,932 | $1,274,911 | $2,231,088 | | Patrick C. Edwards | $67,248 | $100,873 | $176,527 | | Carl N. Scibetta | $234,649 | $351,985 | $615,980 | | Marc A. Chilton | $203,238 | $304,881 | $533,536 | | Clifton E. Sifford | $150,015 | $- | $- | | Erik D. Gast | $765,255 | $230,658 | $403,663 |
Summary Compensation Table
| Disclosure of the relevant assumptions related to the valuation of awards is provided in the Notes to Consolidated Financial Statements as contained in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024. |
Summary Compensation Table
| (4) GAAP Operating Income achieved for Fiscal 2023 was $93.5 million, which was below threshold performance. As a result, no bonus was paid to any Executive under the EICP. GAAP Operating Income achieved for Fiscal 2022 was $146.4 million, which was 100.1% of the target level of performance. As a result, the bonus paid to each Executive who participated in the EICP was 125.4% of base salary for Mr. Worden, 75.2% of base salary for Messrs. Jackson, Scibetta, and Chilton, and 35.1% of base salary for Mr. Edwards. GAAP Operating Income achieved for Fiscal 2021 was $207.7 million, which exceeded the established maximum level of performance. As a result, the maximum bonus was paid to each Executive who participated in the EICP. Mr. Worden’s bonus was based on a pro-rated base salary and payout percentages during Fiscal 2021 due to the change in his position during Fiscal 2021. | | (5) We provide Executives with health and welfare programs, a 401(k) retirement plan, and employee benefit plans, programs and arrangements generally available to all employees. We also provide Executives with other executive benefit programs and perquisites. Perquisites and personal benefits received by certain Executives in Fiscal 2023 included: • An automobile allowance of $1,100 per month for Messrs. Worden, Scibetta, and Chilton. Messrs. Jackson and Gast also received an automobile allowance of $1,100 per month while they were employed by the Company. • Limited personal utilization of the Company-provided aircraft by our CEO, the value of which is based on the incremental cost of utilization. For Mr. Worden, the incremental cost for utilizing Company-provided aircraft totaled $121,722. • For Mr. Worden, the cost to reimburse him for relocation costs incurred by him was $153,169, which included a tax gross-up of $67,548. For Mr. Scibetta, the cost to reimburse him for relocation costs incurred by him was $86,842, which included a tax gross-up of $39,817. For Mr. Gast, the cost to reimburse him for relocation costs incurred by him was $146,772, which included a tax gross-up of $67,294. • For Mr. Gast, per his mutual separation agreement dated September 21, 2023, he was paid a one-time lump sum cash payment of $566,000 and monthly COBRA payments totaling $11,759. The amounts in this column for Fiscal 2023 also include (a) matching contributions made by us under our 401(k) and deferred compensation plans; (b) reimbursements under our Executive medical plan; (c) premiums on the Executive’s life and long-term disability insurance; and (d) cash dividend equivalents subject to forfeiture that were paid to the Executive upon the vesting of PSUs and RSUs. These amounts are detailed in the following table: |
Summary Compensation Table
| | | | | | Long-term | | | | | Deferred | | Life | Disability | Cash Dividend | | | 401(k) | Compensation | Medical Plan | Insurance | Insurance | Equivalents on | | | Match | Plan Match | Reimbursements | Premiums | Premiums | PSUs and RSUs | | Mark J. Worden | $6,831 | $- | $6,573 | $427 | $900 | $23,230 | | Patrick C. Edwards | $6,764 | $15,285 | $4,010 | $292 | $578 | $4,640 | | Carl N. Scibetta | $6,628 | $25,913 | $2,263 | $427 | $900 | $17,672 | | Marc A. Chilton | $6,692 | $22,474 | $18,719 | $426 | $900 | $11,662 | | Clifton E. Sifford | $- | $- | $- | $- | $- | $25,899 | | W. Kerry Jackson | $5,674 | $27,014 | $504 | $151 | $300 | $17,667 | | Erik D. Gast | $2,858 | $- | $24,356 | $104 | $225 | $- |
Summary Compensation Table
| (6) Mr. Edwards was appointed an executive officer on March 18, 2021 and was promoted to Chief Financial Officer effective September 25, 2023. Mr. Chilton was appointed an executive officer on April 4, 2021 and was promoted to Chief Operating Officer effective February 1, 2023. Mr. Jackson served as an executive officer and our Chief Financial and Administrative Officer until April 24, 2023 and continued as our Chief Administrative Officer until his retirement on May 9, 2023. Mr. Gast served as an executive officer and as our Chief Financial Officer from April 2023 to September 2023. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information with respect to the non-equity and equity grants of plan-based awards made during Fiscal 2023 to each Executive.
Grants of Plan-Based Awards
| | | | | | | | | All Other Stock | Grant Date | | | | Estimated Possible Payouts Under | | | Estimated Future Payouts Under | | | Awards: Number | Fair Value | | | | Non-Equity Incentive Plan Awards ($)(1) | | | Equity Incentive Plan Awards (2) | | | of Shares of | of Stock | | | Grant | | | | | | | Stock or | and Option | | Name | Date | Threshold | Target | Maximum | Threshold | Target | Maximum | Units | Awards (6) | | Mark J. Worden | 03/14/23 | | | | 12,816 | 51,263 | 89,710 | | $1,274,911 | | | 03/14/23 | | | | | | | 34,175 (3) | $849,932 | | | | $312,500 | $1,250,000 | $2,187,500 | | | | | | | Patrick C. Edwards | 03/14/23 | | | | 1,014 | 4,056 | 7,098 | | $100,873 | | | 03/14/23 | | | | | | | 2,704 (3) | $67,248 | | | | $36,600 | $146,400 | $219,600 | | | | | | | Carl N. Scibetta | 03/14/23 | | | | 3,538 | 14,153 | 24,768 | | $351,985 | | | 03/14/23 | | | | | | | 9,435 (3) | $234,649 | | | | $119,063 | $476,250 | $833,438 | | | | | | | Marc A. Chilton | 03/14/23 | | | | 3,065 | 12,259 | 21,453 | | $304,881 | | | 03/14/23 | | | | | | | 8,172 (3) | $203,238 | | | | $103,125 | $412,500 | $721,875 | | | | | | | Clifton E. Sifford | 06/20/23 | | | | | | | 6,850 (4) | $150,015 | | Erik D. Gast | 04/24/23 | | | | 2,358 | 9,430 | 16,503 | | $230,658 | | | 04/24/23 | | | | | | | 6,286 (3) | $153,755 | | | 04/24/23 | | | | | | | 25,000 (5) | $611,500 | | | | $81,310 | $325,241 | $569,171 | | | | | |
Grants of Plan-Based Awards
| (1) Represents the amount each Executive could have earned based upon the attainment of various target levels of GAAP Operating Income for Fiscal 2023 under the EICP. The material terms of the Executives' bonus awards under the EICP are described in the section “Compensation Discussion and Analysis ― Compensation Program Components, Why Each Component is Chosen, How Each Component Relates to Our Compensation Philosophy and Objectives and Fiscal 2023 Outcomes ― Annual Cash Incentives under the EICP.” For Fiscal 2023, our GAAP Operating Income was below threshold performance. As a result, no bonuses were earned by any Executive in Fiscal 2023 under the EICP. | | (2) Represents PSUs granted to the Executives on March 14, 2023, or in the case of Mr. Gast on April 24, 2023, under the 2017 Equity Plan. The material terms of these PSU grants are described in the section “Compensation Discussion and Analysis ― Compensation Program Components, Why Each Component is Chosen, How Each Component Relates to Our Compensation Philosophy and Objectives and Fiscal 2023 Outcomes ― Long-Term Equity-Based Incentives under the 2017 Equity Plan.” Mr. Gast forfeited these PSUs upon his mutual separation from the Company on September 25, 2023. For Fiscal 2023, our Diluted Net Income per Share resulted in below threshold performance. As a result, no PSUs were earned by any Executive in Fiscal 2023. | | (3) Represents service-based RSUs granted to the Executives on March 14, 2023, or in the case of Mr. Gast on April 24, 2023, under the 2017 Equity Plan. The material terms of these RSU grants are described in the section “Compensation Discussion and Analysis ― Compensation Program Components, Why Each Component is Chosen, How Each Component Relates to Our Compensation Philosophy and Objectives and Fiscal 2023 Outcomes ― Long-Term Equity-Based Incentives under the 2017 Equity Plan.” Mr. Gast forfeited these RSUs upon his mutual separation from the Company on September 25, 2023. One-third of these RSUs vest on March 31, 2025 and two-thirds vest on March 31, 2026. | | (4) Represents the number of shares of restricted stock granted to Mr. Sifford as a portion of his annual compensation under the 2017 Equity Plan. The restrictions on this restricted stock award lapsed on January 2, 2024. | | (5) The 25,000 RSUs granted to Mr. Gast on April 24, 2023 reflect a one-time sign-on grant. These RSUs were forfeited upon his mutual separation from the Company on September 25, 2023. | | (6) The grant date fair value assigned to these awards was calculated in accordance with ASC 718, using the closing market price of our common stock on the grant date, which was $24.87 on March 14, 2023, $24.46 on April 24, 2023 and $21.90 on June 20, 2023. |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table sets forth information with respect to the outstanding equity awards for each Executive as of the fiscal year ended February 3, 2024, except for the PSUs granted on March 14, 2023 under the 2017 Equity Plan as these PSUs were not earned based on Fiscal 2023 performance.
Outstanding Equity Awards at Fiscal Year End
| | | Stock Awards | | | | | | Market Value of | | | | Number of Shares or | Shares or Units of | | | Grant | Units of Stock That | Stock That Have | | Name | Date | Have Not Vested | Not Vested (1) | | Mark J. Worden | | | | | | 03/17/21 (2) | 1,878 | $49,354 | | | 03/09/22 (3) | 40,847 | $1,073,459 | | | 03/09/22 (4) | 26,012 | $683,595 | | | 03/14/23 (5) | 34,175 | $898,119 | | Patrick C. Edwards | | | | | | 03/09/22 (3) | 3,754 | $98,655 | | | 03/09/22 (4) | 2,391 | $62,835 | | | 03/14/23 (5) | 2,704 | $71,061 | | Carl N. Scibetta | | | | | | 03/17/21 (2) | 1,468 | $38,579 | | | 03/09/22 (3) | 12,704 | $333,861 | | | 03/09/22 (4) | 8,077 | $212,264 | | | 03/14/23 (5) | 9,435 | $247,952 | | Marc A. Chilton | | | | | | 03/09/22 (3) | 9,915 | $260,566 | | | 03/09/22 (4) | 6,304 | $165,669 | | | 03/14/23 (5) | 8,172 | $214,760 | | Clifton E. Sifford | | | | | | 03/17/21 (2) | 1,252 | $32,903 |
Outstanding Equity Awards at Fiscal Year End
| (1) The value of the shares that have not vested was computed utilizing $26.28, the closing price of our common stock on Friday, February 2, 2024, the last trading day of Fiscal 2023. | | (2) Represents service-based RSUs granted on March 17, 2021 under the 2017 Equity Plan. These service-based RSUs vested on March 31, 2024. | | (3) Represents PSUs granted under the 2017 Equity Plan on March 9, 2022, which were earned based on our actual Diluted Net Income per Share for Fiscal 2022. These PSUs will vest on March 31, 2025, provided the Executive maintains continuous service with us through such date. | | (4) Represents service-based RSUs granted on March 9, 2022 under the 2017 Equity Plan. One-third of these awards vested on March 31, 2024 and the remaining two-thirds will vest on March 31, 2025, provided the Executive maintains continuous service with us through such date. | | (5) Represents service-based RSUs granted on March 14, 2023 under the 2017 Equity Plan. One-third of these awards will vest on March 31, 2025 and the remaining two-thirds will vest on March 31, 2026, provided the Executive maintains continuous service with us through such dates. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table sets forth for each Executive information with respect to the value realized upon the vesting of stock and stock units during Fiscal 2023.
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | | Number of | | Number of | | | | Shares | | Shares | | | | Acquired on | Value Realized | Acquired on | Value Realized on | | Name | Exercise | on Exercise | Vesting | Exercise (1) | | Mark J. Worden | - | $- | 31,116 | $798,125 | | Patrick C. Edwards | - | $- | 6,214 | $159,389 | | Carl N. Scibetta | - | $- | 23,728 | $608,623 | | Marc A. Chilton | - | $- | 16,409 | $420,891 | | Clifton E. Sifford | - | $- | 38,488 | $1,012,905 | | W. Kerry Jackson | - | $- | 23,722 | $608,469 |
Option Exercises and Stock Vested
| (1) Amount was calculated by multiplying the number of shares that vested by the closing price of our common stock on the vesting date or, if not a trading day, the last trading day preceding the vesting date. |
Equity Compensation Plan Information
Equity Compensation Plan Information The Compensation Committee administers and grants equity incentive awards under the 2017 Equity Plan, which was amended and restated with shareholder approval on June 20, 2023. The 2017 Equity Plan provides for the grant of incentive awards in the form of stock units, restricted stock, stock appreciation rights (“SARs”), stock options, and other equity-based awards to our employees, consultants, advisors and non-employee directors. A maximum of 3,470,398 shares of our common stock are available for issuance under the 2017 Equity Plan, inclusive of the 1,800,000 increase in shares approved by our shareholders on June 20, 2023. Any shares of our common stock subject to an award under the 2017 Equity Plan that expires, is canceled or forfeited, or is settled for cash will, to the extent of such cancellation, forfeiture, expiration or cash settlement, automatically become available for future awards under the 2017 Equity Plan. However, any shares tendered or withheld to pay the exercise price of an option award or to satisfy a tax withholding obligation in connection with any award, any shares repurchased by us using option exercise proceeds and any shares subject to a SAR award that are not issued in connection with the stock settlement of the SAR award on its exercise may not be used again for future awards under the 2017 Equity Plan. Each share of common stock that again becomes available for awards will correspondingly increase the share reserve by the same number of shares by which the share reserve was decreased upon the grant of the applicable award. The 2017 Equity Plan also provides that participants receiving awards under the plan must adhere to certain confidentiality and non-solicitation terms set forth in the plan. If a participant violates any of the confidentiality, non-solicitation terms or other restrictive covenant obligations set forth in the 2017 Equity Plan or otherwise, any unvested equity awards will automatically be forfeited and canceled, and we have the sole discretion to claw back any value received by the participant from any restricted stock, stock units or other equity-based awards that vested or any options or SARs that were exercised within one year of the time of the violation. The following table sets forth information regarding outstanding grants and shares available for grant under our existing equity compensation plans, including our 2017 Equity Plan and our Employee Stock Purchase Plan. All information is as of February 3, 2024.
Equity Compensation Plan Information
| | | | Number of Securities | | | Number of Securities | | Remaining Available | | | To be Issued Upon | Weighted Average | for Future Issuance | | | Exercise of Outstanding | Exercise Price of | (Excluding Securities | | | Options, Warrants and | Outstanding Options, | Reflected in the | | Plan Category | Rights | Warrants and Rights | First Column | | Equity compensation plans approved by security holders (1) | 425,129(2) | $-(3) | 2,275,729(4) | | Equity compensation plans not approved by security holders (5) | - | - | - | | Total | 425,129(2) | $-(3) | 2,275,729(4) |
Equity Compensation Plan Information
| (1) Includes the 2017 Equity Plan and the Employee Stock Purchase Plan. | | (2) Represents shares that may be issued pursuant to outstanding RSUs and PSUs granted under the 2017 Equity Plan. The amount does not include the 279,926 PSUs (at maximum performance) that were not earned because the performance condition was not satisfied based on our Fiscal 2023 annual results. | | (3) The RSUs and PSUs, once vested, convert into shares of our common stock on a one-for-one basis for no additional consideration. | | (4) These shares include 2,175,298 shares available for future issuance under the 2017 Equity Plan. The number of shares available for future issuance under the 2017 Equity Plan includes the 279,926 shares underlying the PSUs that were not earned, as described in footnote 2 above. These shares also include 100,431 shares available for future issuance under the Employee Stock Purchase Plan. | | (5) We do not maintain any equity compensation plans that have not been approved by our shareholders. |
Nonqualified Deferred Compensation and Retirement Plans
Nonqualified Deferred Compensation and Retirement Plans The Pension Benefits Table has been excluded, as we do not have a defined benefit plan. On February 24, 1994, our Board approved the Shoe Carnival Retirement Savings Plan. The primary savings mechanism is a 401(k) plan. Further information regarding the Shoe Carnival Retirement Savings Plan can be found in Note 12 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024. Nonqualified Deferred Compensation In Fiscal 2000, we established a nonqualified deferred compensation plan for highly compensated employees who, due to Internal Revenue Service limitations, cannot defer an adequate level of replacement income for their retirement planning. Features of the plan include: • On a calendar year basis, participants elect to defer, on a pre-tax basis, a specific portion of their base salary and/or bonus earned up to a maximum of $150,000 per calendar year. • Deferrals on a participant’s bonus are credited to the plan year in which the bonus was earned, which, in most cases, is the plan year preceding the year in which the bonus was paid. As a result, the amounts included in the “Executive Contributions in Last Fiscal Year” column in the Nonqualified Deferred Compensation table may exceed the maximum deferral amount per calendar year described in the preceding bullet point. • The compensation deferred under this plan is credited with earnings or losses on a daily basis and measured by the rate of return on investments elected by plan participants similar to those available under our 401(k) plan. These services are provided by a third-party provider. • While not required to, we can match a portion of the participant’s contributions, which are then subject to immediate, one-year or two-year vesting requirements depending on the length of service of the participant. • Benefits are paid to participants upon death, disability, retirement, financial hardship or termination of employment based on each participant’s pre-selected payout schedule. Designated future in-service distributions may be taken two years after the year of deferral and must be requested a minimum of two years in advance. The amount of the distribution is restricted to the maximum of the actual deferral amount and vested employer match if elected for the specific year, adjusted by any investment gain or loss. The following table sets forth, for each Executive that has chosen to participate in our nonqualified deferred compensation plan, information on the nonqualified deferred compensation plan with respect to deferrals, our match, earnings and distributions made during Fiscal 2023, along with the ending account balance at February 3, 2024. Mr. Worden has chosen not to participate in this plan. Mr. Sifford is not eligible to participate in this plan, and Mr. Gast did not participate in the plan.
Nonqualified Deferred Compensation and Retirement Plans
| | Executive | Registrant | | Aggregate | | | | Contributions in | Contributions in Last | Aggregate Earnings in | Withdrawals and | Aggregate Balance at | | | Last Fiscal Year (1) | Fiscal Year (2) | Last Fiscal Year (3) | Distributions | Last Fiscal Year End | | Patrick C. Edwards | $30,571 | $15,285 | $17,943 | $- | $148,370 | | Carl N. Scibetta | $51,825 | $25,913 | $104,341 | $- | $1,150,412 | | Marc A. Chilton | $84,278 | $22,474 | $130,585 | $- | $1,144,033 | | W. Kerry Jackson | $54,029 | $27,014 | $32,723 | $(1,559,981) | $- |
Nonqualified Deferred Compensation and Retirement Plans
| (1) These amounts deferred are included in the Summary Compensation Table in the Salary column for Fiscal 2023. | | (2) These amounts are included in the All Other Compensation column in the Summary Compensation Table for Fiscal 2023. | | (3) The amounts shown in this column are not reported as compensation in the Summary Compensation Table, as they do not represent above-market or preferential earnings on deferred compensation. |
Termination and Change in Control Arrangements
Termination and Change in Control Arrangements Former Executive Officers During Fiscal 2023, two executive officers, Mr. Jackson and Mr. Gast, left the Company. Payments made to Mr. Gast upon his departure can be found in footnote 5 to the Summary Compensation Table on page 34 and no payments were made to Mr. Jackson upon his retirement. Messrs. Worden, Edwards, Scibetta and Chilton We have entered into employment and noncompetition agreements with Messrs. Worden, Edwards, Scibetta and Chilton. Mr. Worden’s amended and restated agreement is dated October 1, 2021; Mr. Edwards’ agreement is dated July 7, 2022; Mr. Scibetta’s agreement is dated December 4, 2012; and Mr. Chilton’s agreement is dated April 4, 2021. The agreement with each Executive, as amended, is similar in form and content; however, payments can vary by Executive and the nature of the termination. None of the agreements with our Executives obligate the Company to pay the Executives an excise tax gross-up payment upon a change in control. The term of Mr. Worden’s agreement is through September 30, 2024; the term of Mr. Edwards’ agreement is through June 30, 2024; the term of the agreement for Mr. Scibetta is through January 31, 2025; and the term of Mr. Chilton’s agreement is through April 3, 2025 (such terms, including any extension, are referred to as the “Terms”). The agreements are subject to early termination as provided in the agreements. The agreements shall be renewed automatically for successive terms of one year each unless either party provides written notice of non-renewal to the other party not more than 90 days and not less than 30 days before the end of the then current Term for Mr. Scibetta, and at least 30 days before the end of the then current Term for Mr. Worden, Mr. Edwards and Mr. Chilton. No such notification has been given by any party. The agreements provide for an annual base salary and entitle the Executive to participate in the EICP, and in any successor plan adopted by us from time to time. Such Executives are also entitled to participate in all employee benefit plans. Under each of the agreements, employment will terminate upon death, and may be terminated by us upon the disability of such Executive, or by us for cause or without cause. Each such Executive may terminate employment voluntarily or with good reason. Under the agreements with Messrs. Worden, Edwards, and Chilton, “cause” is defined as any one or more of the following actions by the respective Executive: failure to perform his duties (other than any such failure resulting from incapacity due to physical or mental illness); embezzlement, misappropriation or fraud, whether or not related to his employment with us; conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony or other crime involving moral turpitude; • engaging in dishonesty, illegal conduct or gross misconduct which is in each case injurious to us or our affiliates; • failure or refusal to comply with any lawful and reasonable instructions of our Chief Executive Officer, President, or other executive officer to whom he reports, in the case of Mr. Edwards and Mr. Chilton and, or in the case of Mr. Worden, of our Board; • material breach of any of his obligations under the agreement; • material breach of our policies; • use of alcohol or drugs which interferes with the performance of his duties for us or which compromises our integrity or reputation; • engaging in any conduct tending to bring us into public disgrace or disrepute; or • for Mr. Edwards only, failure to work on a full-time basis in fulfilling his employment duties, except for periods in which he is absent for scheduled vacations, or for sickness, injury or other authorized leaves of absence. Under the agreement with Mr. Scibetta, “cause” is defined as any one or more of the following actions by him: • conviction for a felony or other crime involving moral turpitude; • engaging in illegal conduct or gross misconduct which is injurious to us; • engaging in any fraudulent or dishonest conduct in Mr. Scibetta's dealings with, or on behalf of, us; • failure or refusal to follow the lawful and reasonable instructions of our Chief Executive Officer, President, or other executive officer to whom Mr. Scibetta reports, if such failure or refusal continues for a period of 10 days after we deliver him a written notice stating the instructions which he has failed or refused to follow; • material breach of any of his obligations under the agreement; • material breach of our policies; • use of alcohol or drugs which interferes with the performance of his duties for us or which compromises our integrity or reputation; or • engaging in any conduct tending to bring us into public disgrace or disrepute. In addition, “good reason” under the agreements with Messrs. Edwards, Scibetta and Chilton is defined as the occurrence, without the Executive’s written consent, of a material reduction by us in the Executive’s base salary. “Good reason” also includes a material breach by the Company of the agreement for Mr. Edwards. “Good reason” under the agreement with Mr. Worden is defined as the occurrence, without Mr. Worden’s consent, of any one or more of the following: (a) a material reduction by us in his base salary; (b) our assignment to him of a position or duties that constitute a material, adverse diminution of his title, authority or duties (other than temporarily while he is unable to perform his duties because of a physical or mental injury or illness); (c) our relocation of his principal place of employment to a location that is more than thirty (30) miles from the Company office at which he was principally based immediately prior to such relocation; (d) the failure of any successor or assign to assume the obligations as set forth in the agreement; or (e) a material breach of the agreement by us. Notwithstanding any other provision of the agreements, upon termination of employment for any reason, the Executive shall be entitled to receive all base salary earned but unpaid and all other payments and benefits accrued before the termination date. The benefits granted to each Executive under the agreements and the 2017 Equity Plan are subject to certain employment and post-employment conditions. This includes, but is not limited to, the agreement by each Executive not to engage in (including being employed by, working for, consulting with or rendering services to) any competing business in a prohibited capacity for a period of one year, or 18 months in the case of Mr. Worden, following termination of the Executive’s employment under the agreements and to adhere to certain confidentiality terms and a one-year non-solicitation provision under the 2017 Equity Plan. The following tables set forth the estimated payments Messrs. Worden, Edwards, Scibetta and Chilton would receive from us under each of the specific triggering events and assumes that the triggering event took place on February 3, 2024, the last day of our most recently completed fiscal year.
Termination and Change in Control Arrangements
| Mark J. Worden | | | | | | | | | | Qualifying | | | | | | Termination | | | | Without Cause or | For Cause or by | Following a | | | Death or | by Employee for | Employee Without | Change in | | Description of Payout and/or Accelerated Vesting | Disability | Good Reason | Good Reason | Control | | Cash severance (1) | $- | $3,375,000 | $- | $4,500,000 | | Out-placement services (3) | - | 10,000 | - | 10,000 | | Medical and dental benefits (4) | - | 52,900 | - | 52,900 | | Equity awards, accelerated vesting (5) (6) (7) | 2,298,354 | 2,704,527 | - | 2,704,527 | | Total | $2,298,354 | $6,142,427 | $- | $7,267,427 |
Termination and Change in Control Arrangements
| Patrick C. Edwards | | | | | | | | | | Qualifying | | | | | | Termination | | | | Without Cause or | For Cause or by | Following a | | | Death or | by Employee for | Employee Without | Change in | | Description of Payout and/or Accelerated Vesting | Disability | Good Reason | Good Reason | Control | | Cash severance (1) | $- | $366,000 | $- | $549,000 | | Medical and dental benefits (4) | - | 35,300 | - | 52,900 | | Equity awards, accelerated vesting (5) (6) (7) | 195,223 | 133,897 | - | 232,552 | | Total | $195,223 | $535,197 | $- | $834,452 |
Termination and Change in Control Arrangements
| Carl N. Scibetta | | | | | | | | | | Qualifying | | | | | | Termination | | | | Without Cause or | For Cause or by | Following a | | | Death or | by Employee for | Employee Without | Change in | | Description of Payout and/or Accelerated Vesting | Disability | Good Reason | Good Reason | Control | | Bonus for year of separation (2) | $- | $349,250 | $- | $- | | Cash severance (1) | - | 952,500 | - | 1,968,500 | | Out-placement services (3) | - | - | - | 2,500 | | Medical and dental benefits (4) | - | 52,900 | - | 52,900 | | Equity awards, accelerated vesting (5) (6) (7) | 706,330 | 498,794 | - | 832,656 | | Total | $706,330 | $1,853,444 | $- | $2,856,556 |
Termination and Change in Control Arrangements
| Marc A. Chilton | | | | | | | | | | Qualifying | | | | | | Termination | | | | Without Cause or | For Cause or by | Following a | | | Death or | by Employee for | Employee Without | Change in | | Description of Payout and/or Accelerated Vesting | Disability | Good Reason | Good Reason | Control | | Bonus for year of separation (2) | $- | $302,500 | $- | $- | | Cash severance (1) | - | 825,000 | - | 1,705,000 | | Out-placement services (3) | - | - | - | 2,500 | | Medical and dental benefits (4) | - | 52,900 | - | 52,900 | | Equity awards, accelerated vesting (5) (6) (7) | 542,403 | 380,429 | - | 640,995 | | Total | $542,403 | $1,560,829 | $- | $2,401,395 |
Termination and Change in Control Arrangements
| (1) For Mr. Worden, the cash severance for termination without cause or by Mr. Worden for good reason would be paid in a lump sum within 30 days after a release agreement with the Company becomes effective in an amount equal to 150% of the sum of (i) his base salary at the highest rate in effect at any time during the 12 months immediately preceding his employment termination date, plus (ii) his targeted incentive bonus for the bonus year in which his employment termination date occurs. Following a change in control and upon a qualifying termination of Mr. Worden, the cash severance would be paid in a lump sum within 30 days after a release agreement with the Company becomes effective in an amount equal to 200% of the sum of (i) his base salary at the highest rate in effect at any time during the 12 months immediately preceding his employment termination date, plus (ii) his targeted incentive bonus for the bonus year in which his employment termination date occurs. In this table, the annual base salary is equivalent to the Executive's base salary as of February 3, 2024. For Mr. Edwards, the cash severance for termination without cause or by Mr. Edwards for good reason would be paid in a lump sum within 30 days after a release agreement with the Company becomes effective in an amount equal to 100% of his base salary at the highest rate in effect at any time during the six months immediately preceding his employment termination date. If within two years following a change in control, Mr. Edwards is terminated without cause or he terminates for good reason (a “qualifying termination”), a lump sum cash severance would be paid within 30 days after a release agreement with the Company becomes effective in an amount equal to 150% of Mr. Edwards’ base salary at the highest rate in effect at any time during the six months immediately preceding his employment termination date. For Messrs. Scibetta and Chilton, the cash severance for termination without cause or by the Executive for good reason would be paid in a lump sum within 30 days of termination in an amount equal to 150% of each Executive’s current base salary for the fiscal year in which the termination occurs. If within two years following a change in control, Mr. Scibetta or Mr. Chilton is terminated without cause or he terminates for good reason (a “qualifying termination”), a lump sum cash severance would be paid within 30 days of termination in an amount equal to 310% of Mr. Scibetta’s or Mr. Chilton’s current base salary for the fiscal year in which the qualifying termination occurs. | | (2) The bonus for year of separation would be paid in a lump sum within 30 days of termination in an amount equal to 55% of Messrs. Scibetta’s and Chilton’s current base salary for the fiscal year in which the termination occurs, multiplied by a fraction, the numerator of which is the number of days elapsed in such fiscal year through the termination date and the denominator of which is 365. In this table, the annual base salary is equivalent to the Executive's base salary as of February 3, 2024. | | (3) We will provide out-placement services at a cost not to exceed $2,500 in the event of a qualifying termination following a change in control for Messrs. Scibetta and Chilton. For Mr. Worden, we will provide out-placement services at a cost not to exceed $10,000 in the event of a qualifying termination following a change in control or in the event he is terminated by us without cause or by him for good reason. | | (4) Upon a termination without cause, by the Executive for good reason or a qualifying termination following a change in control, Mr. Worden would be paid an amount equal to 18 times the monthly COBRA premium rate within 30 days after a release agreement with the Company becomes effective. In the case of Mr. Edwards, within 30 days after a release agreement with the Company becomes effective, he would be paid an amount equal to 12 times the monthly COBRA premium rate upon a termination without cause or by him for good reason and an amount equal to 18 times the monthly COBRA premium rate upon a qualifying termination following a change in control. In the cases of Messrs. Scibetta and Chilton, each would be paid in a lump sum within 30 days of termination an amount equal to 18 times the monthly COBRA premium rate. Based on current healthcare benefits in place, the monthly COBRA premium rate for each of these Executives is calculated using the COBRA rate for a family. | | (5) The 2017 Equity Plan, under which our RSUs and PSUs outstanding on February 3, 2024 were issued, and certain applicable award agreements include a provision that upon death or disability, each Executive would be entitled to a ratable portion of the Executive’s PSUs based on our actual performance, measured as of the later of the date the Compensation Committee determines the level of achievement of the performance goals for such PSUs and the date of death or disability, as well as full, immediate vesting of all RSUs. In this example, the value was calculated by taking the sum of (i) the number of unvested PSUs determined to have been earned based on performance held by each Executive on February 3, 2024, multiplied by a fraction, the numerator of which is the number of full months elapsed between the effective date of the grant and February 3, 2024 and the denominator of which is the number of months in the vesting period; plus (ii) the number of unvested service-based RSUs held by each Executive on February 3, 2024, and then multiplying the result by $26.28, the closing price of our common stock on February 2, 2024, the last trading day of Fiscal 2023. | | (6) The award agreements for the service-based RSUs granted to each Executive provide for immediate vesting upon a termination of the Executive without cause or by the Executive for good reason. Any outstanding unvested PSUs are forfeited upon a termination of the Executive without cause or by the Executive for good reason, except for Mr. Worden. For Mr. Worden, any unvested PSUs that have been earned based on our actual performance and thus are subject solely to service-based vesting restrictions would immediately vest upon his termination without cause or by him for good reason. In this example, the value was calculated by multiplying $26.28, the closing price of our common stock on February 2, 2024, the last trading day of Fiscal 2023, by the number of service-based RSUs granted to the Executive and, in the case of Mr. Worden, the PSUs earned by him that were subject solely to service-based vesting restrictions and that were unvested and held by such Executive on February 3, 2024. | | (7) The award agreements for PSUs and service-based RSUs outstanding as of February 3, 2024 provide that if the PSUs and service-based RSUs are not continued, assumed or replaced in connection with a change in control, or upon a qualifying termination of the Executive following a change in control, such PSUs and service-based RSUs will fully vest. In this example, the value was calculated by multiplying $26.28, the closing price of our common stock on February 2, 2024, the last trading day of Fiscal 2023, by the sum of the number of unvested RSUs and the number of unvested PSUs held by each Executive on February 3, 2024. |
Termination and Change in Control Arrangements
Mr. Sifford On September 30, 2021, we entered into a letter agreement with Mr. Sifford (the "Letter Agreement") governing his employment as our Executive Vice Chairman. The Letter Agreement does not provide for any payments upon Mr. Sifford’s termination or upon a change in control, but does contain non-competition, non-solicitation and non-disparagement provisions to which Mr. Sifford is subject during the term of the Letter Agreement and for 12 months after the termination of his employment with the Company for any reason, as well as customary confidentiality provisions. As of February 3, 2024, Mr. Sifford held 1,252 service-based RSUs granted to him on March 17, 2021 under the 2017 Equity Plan when he was serving as our Chief Executive Officer. These service-based RSUs vested on March 31, 2024. However, these RSUs would have vested upon a termination of his employment due to his death or disability, by the Company without cause or by Mr. Sifford for good reason under the terms of the award agreement governing these RSUs.
Pay Versus Performance Compensation Table
Pay Versus Performance Compensation Table For Fiscal 2023, Fiscal 2022, Fiscal 2021, and Fiscal 2020, the following table sets forth a comparison of amounts disclosed in the Summary Compensation Table (“SCT”) for our Executives to the total compensation actually paid (“CAP”) to our Executives, calculated in accordance with the SEC’s guidelines, and a comparison of the Company’s total shareholder return (“TSR”) to a peer group TSR and certain other financial performance metrics.
Pay Versus Performance Compensation Table
| | SCT total in | CAP in year | SCT total in | CAP in year | Average SCT | Average CAP | Value of initial | | Net | Diluted | | | year holding | holding PEO | year holding | holding PEO | total for non- | to non-PEO | fixed $100 | | Income | Net | | Year | PEO Office | Office | PEO Office | Office | PEO named | named | investment | | (In | Income | | | (Worden) | (Worden) | (Sifford) | (Sifford) | executive | executive | based on: | | Millions) | per | | | (1) | (1) | (1) | (1) | officers | officers | Our | Peer | | Share | | | | | | | (2) | (2) | TSR | group | | (4) | | | | | | | | | | TSR (3) | | | | (a) | (b) | (c) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | $3,450,895 | $2,076,755 | N/A | N/A | $932,794 | $505,613 | $154 | $167 | $73.3 | $2.68 | | 2022 | $4,007,544 | $3,633,987 | N/A | N/A | $1,377,243 | $1,200,218 | $158 | $123 | $110.1 | $3.96 | | 2021 | $2,181,767 | $3,084,893 | $1,850,691 | $2,549,441 | $1,224,336 | $1,563,415 | $187 | $145 | $154.9 | $5.42 | | 2020 | N/A | N/A | $1,558,095 | $1,701,732 | $1,034,246 | $1,258,067 | $132 | $138 | $16.0 | $0.56 |
Pay Versus Performance Compensation Table
The charts that follow set forth the calculation of CAP for our PEO and non-PEO Executives for Fiscal 2023. In the years presented, we did not issue any stock options and no Executives received any pension benefits. (1) On March 18, 2021, the Board unanimously elected Mr. Worden as our next President and Chief Executive Officer and our principal executive officer (“PEO”), effective September 30, 2021. Mr. Worden succeeded Mr. Sifford, who stepped down as our Chief Executive Officer effective September 30, 2021 and continues to serve in the role of Vice Chairman of the Board. In Fiscal 2021, the year of transition, the table above reflects the total compensation set forth in the SCT and the CAP for the full fiscal year for both Executives. The following chart reconciles the total compensation set forth in the SCT to the CAP in Fiscal 2023 for Mr. Worden.
Pay Versus Performance Compensation Table
| | Mr. Worden | | | 2023 | | SCT - Total | $3,450,895 | | Less: Grant Date Fair Value of Current Year Awards | (2,124,843) | | Add: Fair Value of Unvested Current Year Awards | 898,119 | | Add: Fair Value of Unvested Prior Year Awards | 1,806,408 | | Less: Prior Year Fair Value of Unvested Prior Year Awards | (1,894,392) | | Add: Value at Vest of Prior Year Awards Vesting in Current Year | 798,125 | | Less: Prior Year Fair Value of Awards Vesting in Current Year | (857,557) | | CAP | $2,076,755 |
Pay Versus Performance Compensation Table
| (2) The following chart reconciles the total compensation set forth in the SCT to the CAP for Fiscal 2023 for each Executive other than Mr. Worden. We have separately identified the persons holding the position of Chief Financial Officer (Mr. Edwards), Chief Merchandising Officer (Mr. Scibetta), and Chief Operating Officer (Mr. Chilton) as of our Fiscal 2023 year end. Executives in “Other” include Messrs. Sifford, Jackson and Gast. |
Pay Versus Performance Compensation Table
| Fiscal 2023 | Edwards | Scibetta | Chilton | Other | Average | | SCT - Total | $494,152 | $1,375,479 | $1,132,192 | $2,594,941 | $932,794 | | Less: Grant Date Fair Value of Current Year Awards | (168,121) | (586,634) | (508,119) | (1,145,928) | (401,467) | | Add: Fair Value of Unvested Current Year Awards | 71,061 | 247,952 | 214,760 | - | 88,962 | | Add: Fair Value of Unvested Prior Year Awards | 161,491 | 584,704 | 426,235 | 32,903 | 200,889 | | Less: Prior Year Fair Value of Unvested Prior Year Awards | (169,356) | (613,182) | (446,996) | (34,505) | (210,673) | | Less: Prior Year Fair Value of Forfeited Prior Year Awards | - | - | - | (636,471) | (106,079) | | Add: Value at Vest of Current Year Awards Vesting in Current Year | - | - | - | 201,390 | 33,565 | | Add: Value at Vest of Prior Year Awards Vesting in Current Year | 159,389 | 608,623 | 420,891 | 1,419,984 | 434,815 | | Less: Prior Year Fair Value of Awards Vesting in Current Year | (171,258) | (653,944) | (452,232) | (1,525,721) | (467,193) | | CAP | $377,358 | $962,998 | $786,731 | $906,593 | $505,613 |
Pay Versus Performance Compensation Table
(3) The selected peer group is the Nasdaq US Benchmark Retail TR I- Ticker: NQUSB4040T. This benchmark index has historically been the peer group used in our TSR performance graph included in our annual report to shareholders, including the annual report to shareholders for the fiscal year ended February 3, 2024. Diluted Net Income per Share, which was the performance measure utilized for our PSUs granted in Fiscal 2023, was selected as our most important financial measure. PSUs comprise the largest portion of Mr. Worden’s Fiscal 2023 target compensation (Base salary 23%, EICP 29%, PSUs 29%, and RSUs 19%) and averaged approximately 20% of the total target compensation for Messrs. Edwards, Scibetta, and Chilton in Fiscal 2023. Comparison of CAP to Company TSR PEO CAP is Mr. Sifford’s CAP in Fiscal 2020 and Mr. Worden’s CAP in Fiscal 2021, Fiscal 2022 and Fiscal 2023. Over the four years presented in the Pay Versus Performance Compensation Table, an initial $100 investment at the beginning of this period would be worth $154 at the end of the period, a 54% return. Over this same period, the CAP to our PEO increased 22% and the average CAP to our non-PEO Executives decreased 60%. In Fiscal 2023, no annual cash incentives were earned by our Executives and none of the PSUs granted to our Executives for Fiscal 2023 were earned. Other factors impacting CAP over this four-year period are the approach taken on compensation in Fiscal 2020, as impacted by the COVID-19 pandemic, the mix of Executives in each year and stock price volatility. • The total compensation reported in the SCT for Mr. Sifford, our former PEO, was $1.6 million in Fiscal 2020 compared to $2.4 million in Fiscal 2019 and $2.6 million in Fiscal 2018. Mr. Sifford’s total compensation disclosed in the SCT in Fiscal 2020 was lower than this historical trend due to the impact the COVID-19 pandemic had on our business and the approach taken by the Compensation Committee on compensation in that year, especially regarding short-term cash incentives and long-term equity-based incentives. Had Mr. Sifford’s total compensation disclosed in the SCT in Fiscal 2020 been more consistent with these previous two years, the CAP to our PEO would have been lower in Fiscal 2023 compared to Fiscal 2020. • With respect to the changing mix of Executives impacting CAP, our non-PEO Executives included Mr. Worden and Mr. Timothy Baker, our former Executive Vice President and Chief Retail Operations Officer, in Fiscal 2020 and includes Mr. Chilton and Mr. Edwards in Fiscal 2023. The CAP to Mr. Worden and Mr. Baker in Fiscal 2020 totaled $2.9 million; the CAP to Mr. Chilton and Mr. Edwards in Fiscal 2023 totaled $1.2 million. Also, upon Mr. Jackson’s retirement from the Company in Fiscal 2023, his equity awards were forfeited, which lowered the CAP in Fiscal 2023. During Fiscal 2020, our stock price increased 31% ($17.93 to $23.50); during Fiscal 2021, our stock price increased 41% ($23.50 to $33.04); during Fiscal 2022 our stock price decreased 17% ($33.04 to $27.56); and during Fiscal 2023 our stock price decreased 5% ($27.56 to $26.28). Based on the level of equity-based awards held by our Executives, this volatility had a significant impact on CAP in these years. In Fiscal 2023 compared to Fiscal 2022, the total CAP to all Executives identified in the SCT decreased 39%, as impacted by a 43% decrease in the CAP to Mr. Worden and a 37% decrease in the total CAP to the other Executives. Our TSR decreased $4, or 7%, in Fiscal 2023 (a $54 total return by the end of Fiscal 2023 compared to a $58 total return at the end of Fiscal 2022). In Fiscal 2022 compared to Fiscal 2021, the total CAP to all Executives identified in the SCT decreased 37%, as impacted by an 18% increase in the CAP to Mr. Worden, a 26% decrease in the total CAP to the other Executives, and the removal of Mr. Sifford and Mr. Baker from the SCT in Fiscal 2022. Our TSR decreased $29, or 33%, in Fiscal 2022 (a $58 total return by the end of Fiscal 2022 compared to an $87 return at the end of Fiscal 2021). The increase in Mr. Worden’s CAP in Fiscal 2022 was primarily due to his in-year promotion to PEO in Fiscal 2021 and the peer group compensation analysis performed by the Compensation Committee’s compensation consultant, Pearl Meyer, in connection with setting Fiscal 2022 Executive compensation. In Fiscal 2021 compared to Fiscal 2020, the total CAP to all Executives increased 100% (75% for Mr. Worden, 50% for Mr. Sifford and 139% for the other Executives) compared to Fiscal 2020. Our TSR in Fiscal 2021 increased $55, or 172% (an $87 return at the end of Fiscal 2021 compared to a $32 return at the end of Fiscal 2020). In Fiscal 2021, Mr. Baker’s employment with us ended. Pursuant to agreements that were in effect and/or executed at the time of his planned departure, he was paid $925,699, which increased the CAP to non-PEO Executives in that year. Comparison of CAP to Net Income and Diluted Net Income Per Share ("EPS") Compared to Fiscal 2020, our Net Income and EPS in Fiscal Years 2021, 2022, and 2023 have increased substantially given that Fiscal 2020 was significantly impacted by the COVID-19 pandemic and the temporary closure of our physical stores in that year. In Fiscal 2023 compared to Fiscal 2022, Net Income and EPS decreased 33% and 32%, respectively, and the total CAP to all Executives decreased 39%. While our Net Income and EPS were down year over year, our long-term term strategies have resulted in significant growth. Over these four years and, thus, since Fiscal 2019, our EPS increased 84%, Gross Profit margin expanded 570 basis points, and Net Sales grew 13%. In Fiscal 2022 compared to Fiscal 2021, Net Income and EPS decreased 29% and 27%, respectively, and the total CAP to all Executives decreased 37%. Due, in part, to the amount of government stimulus injected into the economy, our financial results set all-time records in Fiscal 2021 and Fiscal 2022 was only surpassed by the record results in Fiscal 2021. Net Income and Diluted Net Income per Share had substantial increases of over 850% in Fiscal 2021 compared to Fiscal 2020, while the total CAP to all Executives increased 100% over the same period. Comparison of Company TSR to Peer Group TSR (Nasdaq U.S. Benchmark Retail TR I- Ticker: NQUSB4040T) Over this four-year period, the value of an initial $100 fixed investment in our stock would be worth $154 at the end of the period, compared to a $167 value for an investment in the peer group, which includes retailers much larger than we are. Our TSR includes a 7% decrease in Fiscal 2023 compared to Fiscal 2022 ($54 of return at the end of Fiscal 2023 compared to $58 at the end of Fiscal 2022) and a peer group TSR increase of 191% (a $67 return at the end of Fiscal 2023 compared to a $23 return at the end of Fiscal 2022). After a three-year period of above peer group performance, our TSR was lower than the peer group at the end of Fiscal 2023. In Fiscal 2022 compared to Fiscal 2021, our TSR decreased 33% ($58 of return at the end of Fiscal 2022 compared to $87 at the end of Fiscal 2021) and our peer group TSR decreased 49% (a $23 return at the end of Fiscal 2022 compared to a $45 return at the end of Fiscal 2021). In Fiscal 2021 compared to Fiscal 2020, our TSR increased approximately 8 times the increase in TSR of our peer group. We believe our response to the pandemic where we re-opened stores quickly, maintained vendor relationships, and increased the use of customer relationship management tools allowed for us to grow market share compared to the broader index. Our TSR lagged the peer group in Fiscal 2020. We believe this was due to the impact of COVID-19 on our business compared to our peer group, which contains essential retail businesses that were not forced to close physical stores during the pandemic and other retailers with a more established on-line presence.
Pay Versus Performance Compensation Table
Tabular Presentation of Our Most Important Performance Measures The four items listed below represent the most important performance metrics we used to determine CAP for Fiscal 2023, as further described in our Compensation Discussion and Analysis within the sections titled “Compensation Program Components, Why Each Component is Chosen, How Each Component Relates to Our Compensation Philosophy and Objectives and Fiscal 2023 Outcomes ― Annual Cash Incentives under the EICP” and “―Long-Term Equity-Based Incentives under the 2017 Equity Plan.”
Pay Versus Performance Compensation Table
| Most Important Performance Measures | | ● Diluted Net Income per Share | | ● Operating Income | | ● Net Sales | | ● Comparable store sales |
Pay Versus Performance Compensation Table
Diluted Net Income per Share is the single performance measure for PSUs issued in each of the last three fiscal years. Operating Income is the single performance measure for our EICP in each of the last three fiscal years. Net Sales and comparable store sales are two of our most important financial performance measures that drive both Diluted Net Income per Share and Operating Income.
CEO Pay Ratio
CEO Pay Ratio We are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mark J. Worden, our Chief Executive Officer (our “CEO”). For Fiscal 2023, our last completed fiscal year: • the median of the annual total compensation of all employees of our Company (other than our CEO) was $18,919; and • the annual total compensation of our CEO, as reported in the Summary Compensation Table, was $3,450,895. Based on this information, for Fiscal 2023, we reasonably estimate that the ratio of our CEO’s annual total compensation to the annual total compensation of our median employee was 182:1. Our pay ratio estimate has been calculated in a manner consistent with Item 402(u) of Regulation S-K. We identified our median employee based on the total taxable compensation during calendar year 2023 of 5,400 members of our workforce, including full-time, part-time, temporary and seasonal employees, other than our CEO, who were employed on December 23, 2023. The date selected aligns with the period for which total taxable compensation used to identify our median employee was calculated. For purposes of determining the total taxable compensation for each employee, we included the amount of base salary or wages the employee received during the calendar year, the amount of any cash incentives paid to the employee in that year (which includes annual cash incentives that are generally paid in March for performance during the prior fiscal year) and the value of any equity grants that vested during the year based on the value of the shares on the date of vesting. We did not include any adjustments for the value of benefits provided, but we did annualize the pay for any full-time or part-time employees who were employed by us for only part of the year. Once we identified our median employee, we then determined that employee’s total compensation, including any perquisites and other benefits, in the same manner that we determine the total compensation of our Executives for purposes of the Summary Compensation Table. The total compensation of our median employee, a part-time store lead, was determined to be $18,919. This total compensation amount for our median employee was then compared to the total compensation of our CEO. Our method for identifying the median employee was unchanged from Fiscal 2022. The pay ratio was calculated in accordance with SEC rules based upon our reasonable judgment and assumptions. The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio, and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to our pay ratio as disclosed above. Supplemental Pay Ratio Because of the nature of our business in the retail industry, many part-time, temporary and seasonal employees are hired for very short amounts of time during our peak sales periods. The SEC rules do not allow for companies to annualize the compensation paid to temporary or seasonal employees or to make a full-time equivalent adjustment for part-time employees. As of December 23, 2023, approximately 56% of the members of our workforce were part-time, temporary or seasonal employees. As a result, we believe that measuring the compensation paid to our median full-time employee more accurately reflects our pay practices relative to the compensation of our CEO. Excluding all part-time, temporary and seasonal employees, we had 2,385 full-time employees as of December 23, 2023. Using the same methodology described above, we identified our median full-time employee for Fiscal 2023. The total annual compensation of our median full-time employee was $36,883 for Fiscal 2023. Based on this information, for Fiscal 2023, we reasonably estimate that the ratio of our CEO’s annual total compensation to the annual total compensation of our median full-time employee was 94:1.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
Non-Employee Directors
| | | | All Other | | | | Fees Earned or | Stock Awards | Compensation | | | Name (1) | Paid in Cash | (2) | (3) | Total | | James A. Aschleman | $102,500 | $80,001 | $804 | $183,305 | | Andrea R. Guthrie | $100,000 | $80,001 | $804 | $180,805 | | Diane E. Randolph | $82,500 | $80,001 | $804 | $163,305 | | Charles B. Tomm | $117,500 | $80,001 | $804 | $198,305 |
Non-Employee Directors
| (1) Information on our non-employee directors can be found in “Proposal No. 1 Election of Directors ― Nominee and Director Information” as well as in the section “Information Regarding the Board of Directors and Committees.” | | (2) Amounts reflect the aggregate grant date fair value of restricted stock awards computed in accordance with ASC 718. Disclosure of the relevant assumptions related to the valuation of awards is provided in Note 13 to the Notes to Consolidated Financial Statements as contained in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024. | | (3) The amounts in this column represent cash dividends paid to our non-employee directors on the shares of unvested restricted stock that they held on the record date for each such dividend. |
Non-Employee Directors
Each non-employee director then in office was awarded 3,653 shares of restricted stock under the 2017 Equity Plan on June 20, 2023, with a grant date fair value of $80,001 based on the closing market price of our common stock on that day and those shares vested on January 2, 2024. As of February 3, 2024, no shares of restricted stock were held by any of our non-employee directors. Stock Ownership Guidelines for Non-Employee Directors We believe the stock ownership guidelines further serve to align the interests of our non-employee directors with those of our shareholders. Under our stock ownership guidelines, which were adopted by our Board effective in June 2013 and amended by our Board in March 2017 and March 2021, our non-employee directors are required to own shares valued at five times their annual Board cash retainer. For the purposes of these guidelines, shares directly owned without any restrictions and shares owned directly by members of a non-employee director’s immediate family who share the same household or any trust for the benefit of a non-employee director’s immediate family members count toward ownership requirements. Unless otherwise determined by the Compensation Committee, until a non-employee director has reached his or her ownership requirement, he or she must retain 50% of the net-after tax shares received upon the exercise, vesting or settlement of any form of equity-based compensation award. The value of stock holdings is determined based on the average daily closing price of our common stock during the 30-day period ending on the date of the valuation determination. The Compensation Committee is responsible for monitoring the application of the stock ownership guidelines and evaluating whether each non-employee director has met his or her ownership goal annually. The Compensation Committee reviewed the current ownership valuation for each of our non-employee directors at its March 2024 meeting, using a valuation date of February 3, 2024, our Fiscal 2023 year end. Of our current non-employee directors, Ms. Guthrie and Messrs. Aschleman and Tomm met the ownership requirements, as amended, as of that valuation date.