DEF 14A of Barnes & Noble Education, Inc.
Filed Aug 25, 2023 · FY20230001140361-23-041294
PROPOSAL ONE: ELECTION OF DIRECTORS
PROPOSAL ONE: ELECTION OF DIRECTORS
Introduction
Introduction Nine of the current directors are standing for re-election. Emily C. Chiu and Daniel A. DeMatteo are not standing for reelection and their current terms on the Board will expire at the Annual Meeting. Their decision not to stand for reelection is not the result of any disagreement with the Company on any matter relating to its operations, policies or practices. The Company strives to maintain a Board with broad and diverse experience and judgment. Diversity is considered in a broad sense, including, among other attributes, leadership, experience, skills, perspectives, gender, ethnicity and geography. The grid below summarizes the key qualifications, skills and attributes each of our directors possesses that were most relevant to the decision to nominate him or her to serve on the Board. The lack of a checkmark does not mean the director does not possess that qualification or skill; rather a checkmark indicates a specific area of focus or expertise on which the Board relies most heavily. In addition, more than 35% of our Directors are women or racial or ethnic minorities. Our director nominees exhibit high integrity, innovative thinking, a proven record of success, and knowledge of corporate governance. The director nominees bring a balance of important skills to our boardroom.
Introduction
| Skills and Attributes | Dell’Aera | Eberle Walker | Golden | Huseby | Panagos | Ryan | Wallace | Wallander | Warren | | Academia / Education | | ✔ | | ✔ | | ✔ | | | | | Accounting, Internal Control Risk Management | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | | Business Head / Executive | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Business Operations | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | | ✔ | | CEO and Executive | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | | Commercial Business | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | | Corporate Governance | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Customer Engagement / Marketing | ✔ | | | ✔ | | ✔ | | | ✔ | | Data Analytics | | | | | | | | | ✔ | | Defense Industry or Military | | | | | | ✔ | | | | | Digital / e-Commerce | ✔ | ✔ | ✔ | ✔ | | ✔ | | | ✔ | | Digital Experience | | ✔ | ✔ | ✔ | | ✔ | ✔ | | ✔ | | Financial Expertise and Literacy | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Financing and Investments | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | | Government / Public Policy | | | | | | ✔ | | | | | International Business | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ | | | | Knowledge of Company Business | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | | | Legal Expertise | | | ✔ | | | | ✔ | ✔ | | | Operational and Strategy Planning | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Other Relevant Industry | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | | Public Company | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | | Retail Experience | | | | ✔ | ✔ | | | | | | Science, Technology, and Innovation | ✔ | | ✔ | ✔ | | ✔ | | | | | Sustainability and Corporate Responsibility | | | ✔ | ✔ | | ✔ | | | ✔ |
Information Concerning the Directors and the Board of Directors’ Nominees
Information Concerning the Directors and the Board of Directors’ Nominees Background information with respect to the Board of Directors’ nominees for election as directors appears below. See “Security Ownership of Certain Beneficial Owners and Management” for information regarding such persons’ holdings of equity securities of the Company.
Information Concerning the Directors and the Board of Directors’ Nominees
| Name | Age | Director Since | Position | | Nominees for Election at the Annual Meeting | | | | | Mario R. Dell’Aera, Jr.* | 64 | 2022 | Director | | Kathryn Eberle Walker* | 46 | 2022 | Director | | David G. Golden* | 65 | 2015 | Director | | Michael P. Huseby | 68 | 2015 | Director | | Steven G. Panagos* | 61 | 2023 | Director | | John R. Ryan* | 78 | 2015 | Chairman of the Board | | Rory D. Wallace* | 37 | 2022 | Director | | Raphael T. Wallander* | 50 | 2023 | Director | | Denise Warren* | 59 | 2022 | Director |
Information Concerning the Directors and the Board of Directors’ Nominees
| * Independent for purposes of the NYSE listing standards. |
Information Concerning the Directors and the Board of Directors’ Nominees
Nominees for Election as Director The following individuals are nominees for director at the Annual Meeting. The Board of Directors unanimously recommends a vote FOR each of the below nominees for director using the enclosed proxy card. Mario R. Dell’Aera, Jr. was appointed as a director in July 2022 and thereafter was elected as a director in September 2022 by the stockholders at the 2022 Annual Meeting. Mr. Dell’Aera previously served as the Senior Audit Partner and Chief Operating Officer of U.S. Audit Operations at KPMG LLP from 2019 until his retirement in 2021, managing 16 business units encompassing over 9,000 partners and professionals and a $3.0 billion operating plan. From 2012 to 2019, he served as Senior Audit Partner for KPMG’s Financial Services audit practice, comprising banking, capital markets, insurance, asset management and real estate companies. Mr. Dell’Aera also served as the Metro New York Area Audit Managing Partner for KPMG’s Technology, Media and Telecommunications audit practice from 2012 to 2019. Qualifications, Experience, Attributes and Skills. Having served as a global lead partner for several Fortune 500 companies, Mr. Dell’Aera has a proven track record of leadership, innovation and guiding public companies undergoing strategic transformations and financing transactions. Further, as a result of Mr. Dell’Aera’s professional experience and 40-year career with KPMG LLP, Mr. Dell’Aera provides the Board of Directors with substantial financial expertise, accounting insights, experience in risk management, technology innovation, executive managerial experience, business operations and matters unique to publicly-traded companies. Kathryn (“Kate”) Eberle Walker was appointed as a director in July 2022 and thereafter was elected as a director in September 2022 by the stockholders at the 2022 Annual Meeting. Since 2019, Ms. Walker has been the Chief Executive Officer and Board Chair of Presence Learning Inc., a provider of special education teletherapy solutions. From 2015 to 2017, she served as Chief Executive Officer of The Princeton Review and Tutor.com, and its Chief Financial Officer and Chief Strategy Officer from 2014 to 2015. Ms. Eberle Walker has managed strategy and investments for Kaplan, Inc. Ms. Walker began her career in investment banking at Goldman Sachs. She currently serves as a Director of Babbel, Testing Mom and Prospect Schools, and as a Trustee of the International School of Brooklyn. Ms. Walker previously served on the Board of Directors of Rosetta Stone from 2019 until the company’s acquisition by Cambium Learning Group Inc. in 2020. Qualifications, Experience, Attributes and Skills. Ms. Walker has over 20 years of experience leading education organizations and brings extensive board service on companies in the education industry. Ms. Walker’s experience also allows her to bring to the Board of Directors skills in diversity, equity and inclusion, management strategy, transactions, finance, leadership, change management and education technology. David G. Golden was elected as a director in August 2015. Mr. Golden served as a director of Barnes & Noble, Inc. (“Barnes & Noble”) from October 2010 until the Company’s separation from Barnes & Noble in August 2015 (the “Spin Off”). Mr. Golden has been a Managing Partner at Revolution Ventures, an early-stage venture affiliate of Revolution LLC, since January 2013. From March 2006 until December 2011, Mr. Golden was a Partner, Executive Vice President and Strategic Advisor at Revolution LLC, a private investment company. Mr. Golden also served as Executive Chairman of Code Advisors, a private merchant bank focused on the intersections of technology and media from its founding in 2010 through 2012. Previously, Mr. Golden served in various senior positions over an 18-year period, including as Vice Chairman and Global Director of the Technology, Media and Telecom investment banking group, at JPMorgan Chase & Co. (“JPMorgan”), a financial services firm, and a predecessor company, Hambrecht & Quist, Inc. (“Hambrecht & Quist”). Prior to that, Mr. Golden worked as a corporate attorney at Davis Polk & Wardwell LLP. Mr. Golden has previously served as a member of the Board of Directors of Blackbaud and Everyday Health, where he also served on their respective Audit Committees. Mr. Golden also is a member of the Advisory Board for Partners for Growth LLC, a venture lending firm, and he is a director of several private companies. Qualifications, Experience, Attributes and Skills. Mr. Golden has over 20 years of technology and finance experience as an investment banker specializing in the technology sector at JPMorgan, Hambrecht & Quist, and more recently as a managing partner and executive of Revolution Ventures and Executive Chairman of Code Advisors LLC. Mr. Golden’s technology experience also includes his service as a director and Advisory Board of Directors member of several technology companies including Blackbaud, a global provider of software services specifically designed for nonprofit organizations. Mr. Golden’s finance experience at Hambrecht & Quist and JPMorgan included significant work with mergers, capital markets and principal investing, and he has participated as lead merger advisor, equity underwriter or investor on over 150 transactions. Given this experience, Mr. Golden brings to the Board of Directors substantial knowledge of the technology sector and meaningful insight into the financial, strategic and capital-related issues technology companies face. Michael P. Huseby has served as Chief Executive Officer since September 2017, acting Chief Financial Officer (“Acting Chief Financial Officer”) since April 28, 2023 and as a member of the Board of Directors since August 2015. Mr. Huseby served as Executive Chairman of the Board of Directors of the Company from August 2015 to June 2022. Prior to joining the Company, he was a member of the board of directors of Barnes & Noble, Inc. from January 2014 and served as the Chief Executive Officer of Barnes & Noble until August 2, 2015. Mr. Huseby was appointed Chief Executive Officer of NOOK Media LLC and President of Barnes & Noble in July 2013, and Chief Financial Officer of Barnes & Noble in March 2012. From 2004 to 2011, Mr. Huseby served as Executive Vice President and Chief Financial Officer of Cablevision Systems Corporation, a leading telecommunications and media company, which was acquired by the Altice Group in June 2016. He served on the Cablevision Systems Corporation board of directors in 2000 and 2001. Prior to joining Cablevision in 2004, Mr. Huseby served as Executive Vice President and Chief Financial Officer of Charter Communications, Inc., a large cable operator in the United States. Mr. Huseby served on the board of directors of Charter Communications from May 2013 through May 2016. From 1999 to 2002, Mr. Huseby served as Executive Vice President, Finance and Administration, of AT&T Broadband, a provider of cable television services. In addition, Mr. Huseby spent over 20 years at Arthur Andersen, LLP and Andersen Worldwide, S.C., where he held the position of Global Equity Partner serving a myriad of clients, including a number of large publicly-traded companies. Mr. Huseby also served on the board of directors of CommerceHub, Inc., a cloud-based e-commerce fulfillment and marketing software platform company previously listed on Nasdaq, from July 2016 until May 2018 with his tenure ending upon the consummation of the sale of CommerceHub to financial sponsors. While on the board of CommerceHub, Mr. Huseby served as chair of the Audit Committee and as a member of the Compensation Committee.
Information Concerning the Directors and the Board of Directors’ Nominees
Qualifications, Experience, Attributes and Skills. Mr. Huseby has more than 30 years of financial and executive experience, having served as a senior executive at Barnes & Noble, Cablevision Systems Corporation and AT&T Broadband. Mr. Huseby’s experience also includes his service as a director and audit committee member of Charter Communications and CommerceHub, Inc., and as a member of Cablevision Systems Corporation’s board of directors. During his 23-year career as a partner of Arthur Andersen, LLP, and Andersen Worldwide S.C., Mr. Huseby provided various services to public companies and their boards of directors. This experience allows Mr. Huseby to bring to the Board of Directors substantial knowledge and a wide range and depth of insights in technology, retail, financial, business and matters unique to publicly-traded companies. Steven G. Panagos was appointed as a director in August 2023 pursuant to the Eighth Amendment (the “ABL Amendment”) to the Credit Agreement, dated as of August 3, 2015 (as amended prior to the ABL Amendment, the “ABL Credit Agreement”), among the Company, as the lead borrower, the other borrowers party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent for the lenders. Mr. Panagos has served as an independent director of various companies since June 2018 providing advice, guidance and governance regarding corporate transformation and turnaround management. Mr. Panagos has served as a director on numerous public and private boards of directors. Mr. Panagos currently serves as an independent director on the board of directors of several companies, including iMedia Brands, Inc., Vital Pharmaceuticals, Inc., and American Consolidated Natural Resources, Inc. In the past five years, Mr. Panagos has also served on the boards of Spirit Master Trust A, Tops Markets, Inc., PhyMed Healthcare Group, Top Golf, Inc. and Pier 1 Imports, Inc. From April 2009 to June 2019, he served as Managing Director and Vice Chairman of the Recapitalization & Restructuring Group at the investment bank Moelis & Company, where he led restructurings and reorganizations for companies and their creditors across a broad spectrum of industries. From March 1988 to March 2008, Mr. Panagos was the National Practice Leader of Kroll Zolfo Cooper’s Corporate Advisory & Restructuring Practice, where he provided restructuring advice to numerous companies and creditors. Qualifications, Experience, Attributes and Skills. Mr. Panagos was selected to serve as a director based on his extensive experience with restructurings and corporate transformation and his other qualifications and skills. John R. Ryan was elected to the Board of Directors in July 2015 and as of June 23, 2022 serves as Chairman of the Board. Prior to his appointment to Chairman of the Board, Mr. Ryan served as the Lead Independent Director. Vice Admiral Ryan served as director of Barnes & Noble from July 2014 until the Spin-Off. Vice Admiral Ryan joined the Center for Creative Leadership’s Board of Governors in 2002 and served as its President and Chief Executive Officer from 2007 until 2022. From 2005 to 2007, he served as Chancellor of the State University of New York. Previously, Vice Admiral Ryan served as President of the State University of New York Maritime College from 2002 to 2005, Interim President of the State University of New York at Albany from 2004 to 2005 and Superintendent of the United States Naval Academy, Annapolis, Maryland from 1998 to 2002. Vice Admiral Ryan served in the United States Navy from 1967 until his retirement in 2002, including as Commander of the Fleet Air Mediterranean from 1995 to 1998, Commander of the Patrol Wings for the United States Pacific Fleet from 1993 to 1995 and Director of Logistics for the US Pacific Command from 1991 to 1993. Vice Admiral Ryan also served as the lead director of CIT Group, Inc. from 2008 until their merger with First Citizens Bank in 2022. He then served as a director of First Citizens Bank from January 2022 to April 2023, which included the significant acquisition of Silicon Valley Bank. Vice Admiral Ryan also currently serves as a Commissioner of the Council on Higher Education as a Strategic Asset. Qualifications, Experience, Attributes and Skills. Vice Admiral Ryan has a total of more than 35 years in military service, more than 10 years as a leader at major universities, and over two decades of executive and Board of Directors-level experience, including his service as lead director of CIT Group. Vice Admiral Ryan has substantial experience serving on public company Board of Directors undergoing multiple strategic transactions, such as mergers and separations, including serving as a director of Cablevision during its 2010 spinoff of Madison Square Garden, L.P., its 2011 spinoff of AMC Networks, Inc., and its 2013 sales of Clearview Cinemas and Optimum West to Bow Tie Cinemas and Charter Communications, respectively. Vice Admiral Ryan has also gained experience through the acquisition of Cablevision Systems Corporation by the Altice Group in June 2016 and was one of two independent directors on the Special Committee of the Board of Directors involved in the acquisition of MBS Textbook Exchange, LLC. He also participated in First Citizens Bank’s acquisition of Silicon Valley Bank in March 2023. This experience allows Vice Admiral Ryan to bring to the Board of Directors leadership and expertise in managing large complex organizations, and in particular the environment in which the Company operates. Rory Wallace was appointed as a director in July 2022, pursuant to a Cooperation Agreement between the Company and Outerbridge Capital Management, LLC and certain of its affiliates, dated June 25, 2022, and thereafter was elected as a director in September 2022 by the stockholders at the 2022 Annual Meeting. Mr. Wallace serves as the Founder and Managing Member of Outerbridge Capital Management, LLC, an investment advisor to private investment funds, for which Mr. Wallace has served as the Chief Investment Officer since December 2014. In his role at Outerbridge, Mr. Wallace conducts significant due diligence on public companies in the technology, media, retail, and education sectors, engaging constructively with both management teams and boards where appropriate. From January 2013 to December 2014, Mr. Wallace was the Founder and Chief Investment Officer of DHC Asset Management, LLC, an investment adviser that focused its investments in technology, media, and retail. Earlier in his career, Mr. Wallace served in various positions at Straus Asset Management LLC, an investment management firm, including as an analyst and then as a Portfolio Manager. Qualifications, Experience, Attributes and Skills. Mr. Wallace contributes extensive knowledge of finance and small-cap companies, particularly in the technology, media, retail, and education sectors, a detailed knowledge of the Company and its industry as its largest shareholder, a deep history advising public companies on managing the capital markets including from an investor relations perspective, as well as extensive experience with financial forecasting and accounting, strategic transformations, and turnarounds.
Information Concerning the Directors and the Board of Directors’ Nominees
Raphael T. Wallander was appointed as a director in August 2023 pursuant to the ABL Amendment. Mr. Wallander currently serves on the board of directors of F45 Training Holdings Inc. Since April 2018, Mr. Wallander has served as the Chairman and Chief Executive Officer of Maxwell Bay Advisors, LLC, a platform created for independent director services, restructuring and consulting. Through Maxwell Bay Advisors, Mr. Wallander has served on the boards of over ten private companies and provided consulting services. Since 2007, Mr. Wallander has held various roles with Wayzata Investment Partners, LLC, including Corporate Counsel, Principal, and General Counsel. Wayzata is an SEC-registered investment adviser focused on distressed debt, special situations, and underperforming assets. Prior to joining Wayzata, Mr. Wallander worked as an attorney in private practice, with a focus on bankruptcy, restructuring and litigation. Qualifications, Experience, Attributes and Skills. Mr. Wallander was selected to serve as a director based on his extensive experience with restructurings and corporate transformation and his other qualifications and skills. Denise Warren was appointed as a director in July 2022 and thereafter was elected as a director in September 2022 by the stockholders at the 2022 Annual Meeting. Since 2016, she has also served as the Founder and Chief Executive Officer of Netlyst, LLC, a consulting and advisory firm that focuses on digital business growth and scaling consumer and enterprise recurring revenue streams. Prior to founding Netlyst, Ms. Warren served as the President of Digital and Chief Executive Officer of East Coast Publishing for Tribune Publishing from 2015 to 2016. For more than 25 years, she served in numerous capacities at The New York Times Company including as Executive Vice President of Digital Products and Services; General Manager, nytimes.com; Chief Advertising Officer; Senior Vice President of Strategic Planning; and Director of Marketing. Ms. Warren currently serves as an independent Director and member of the audit committee of Taylor Morrison Home Corporation (NYSE: TMHC), and as an independent director on the board of directors of Naviga, a Vista Equity partners backed software technology company. She previously served as a Director and Chair of the Nominating and Governance Committee of Monotype Imaging Holdings Inc., a publicly traded provider of design assets, technology and expertise, and as a Director and member of the audit committee of Electronic Arts Inc. (NASDAQ: EA), a publicly traded digital interactive entertainment company. Qualifications, Experience, Attributes and Skills. Ms. Warren’s long experience in operating profitable recurring revenue businesses and driving transformative change in digital operations, consumer marketing, sales and product development at the strategic, operational and financial levels of digital marketing, business operations and corporate governance make her well qualified to serve on the Board of Directors. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH NOMINEE FOR DIRECTOR NAMED ABOVE USING THE ENCLOSED PROXY CARD.
Meetings and Committees of the Board of Directors
| • | setting and reviewing Director compensation; |
What we do
| ✔ | Tie a majority of executive pay to performance-based cash and equity incentives; |
What we do
| ✔ | Align annual incentive payouts to individual and company-based performance goals; |
What we do
| ✔ | Vest equity awards over time to promote retention and require a one-year minimum vesting period for equity awards; |
What we do
| ✔ | Accelerate equity only upon termination of employment following a change in control (double trigger); |
What we don’t do
| ✘ | Pay current dividends or dividend equivalents on unearned performance shares and unvested restricted stock units; |
What we don’t do
| Stockholders Were Concerned About | | How We Addressed Their Concerns | | | • | Alignment between Company performance, compensation and run rate | • | In Fiscal 2023 granted to the NEOs 50% of the long-term equity incentives in the form of time-based restricted stock units (“RSUs”); 25% in the form of fair market value stock options, and 25% in the form of stock options with an exercise price above the fair market value of the shares of common stock on the date of grant (“premium priced stock options”) and reduced the grant date fair value of such awards, to mitigate run rate and dilution (as described further below) | | • | No stock ownership guidelines for executive officers | • | Adopted stock ownership guidelines for executive officers (in addition to the existing guidelines for directors); only fully vested and owned shares count toward ownership requirement | | • | Clawback provisions only applied to equity awards | • | Adopted a compensation recoupment policy (“clawback policy”) that applies to all incentive compensation (cash and equity) | | • | Discretionary bonuses for executive officers | • | No portion of the Annual Incentive Plan is discretionary |
What we don’t do
| • | In June 2022, the Company and Mr. Huseby agreed to amend the terms of Mr. Huseby’s employment agreement effective September 1, 2022. The amended employment agreement extends the term of the agreement to September 20, 2023, reduces Mr. Huseby’s annual target bonus from 125% to 100% of his base salary and reduces severance payments payable upon termination. See the more detailed description under in the “Employment Arrangements-General Provisions.” Mr. Huseby’s employment agreement will renew automatically for another renewal term, in accordance with its terms. |
What we don’t do
| • | The annual equity awards granted to executive officers and directors in June 2022 for Fiscal 2023 were made based on the same number of underlying shares of Common Stock as awards made in Fiscal 2023, reducing the grant date fair value of such awards, to mitigate run rate and dilution. No decisions with respect to Fiscal 2024 equity awards have been made as of the date of this Proxy Statement. |
Operational highlights for Fiscal 2023
Pay and Performance Alignment in Fiscal 2023 Annual incentives for NEOs for Fiscal 2023 were awarded based on Company EBITDA (earnings before interest, taxes, depreciation and amortization adjusted for certain items) performance relative to a pre-defined target level. As described below in more detail, our Fiscal 2023 Company EBITDA performance was 0% of target, which yielded a payout factor of 0% of the target award. Fiscal 2023 equity grants for the executive officers were delivered in a combination of RSUs, which accounted for 50% of the target award amount for the NEOs, and stock options, which accounted for 50% of the target award for the NEOs. The stock option awards were split between options with an exercise price of $2.36, which equal to fair market value on the date of grant, and stock options with an exercise price of $4.86, which represents a premium of approximately 106% on the fair market value of the Company’s common stock on the date of grant. The Compensation Committee believes the mix of awards provides a strong link between the Company’s financial performance and executive compensation, aligns executives with the Company’s stockholders and provides an important retention tool. The Committee determined that performance shares that have been historically used would not be effective given the continued challenge to forecast goals for multi-year periods. The RSUs will vest in equal one-third increments on the first, second and third anniversary of the grant date. The stock options will vest in equal one-quarter increments on the first, second, third and fourth anniversary of the grant date.
Compensation Market References
Compensation Market References In establishing compensation for Fiscal 2023, the Compensation Committee worked with Mercer, its compensation consultant, to develop a peer group for the Company and review executive compensation against that peer group. In support of its compensation philosophy, the Compensation Committee reviews the following: (a) base salary; (b) target short-term incentive; (c) target total cash compensation; (d) actual total cash compensation; (e) target or grant date fair value of long-term incentive; and (f) target total direct compensation. Executives are matched to market positions based on titles, responsibilities and contributions to the Company. The Compensation Committee reviewed compensation among the peer group companies to determine the competitiveness of pay levels and pay mix for executives. Although no other public companies are directly comparable to the Company and its businesses, the Compensation Committee considers the Company’s competitors for executive talent to be companies engaged in retail and education services. Our peer group, which is reviewed annually, includes companies that are similar in size to the Company based on revenues and market capitalization and also companies with overlapping business model characteristics (e.g., education / technology focus, combination of products and services, strong relationships with business partners, go-to-market strategy, and geographic footprint) as follows:
Compensation Market References
| 2U, Inc. | Grand Canyon Education, Inc. | | Adtalem Global Education Inc. | John Wiley & Sons, Inc. | | American Eagle Outfitters, Inc. | Lands’ End, Inc. | | Bright Horizons Family Solutions Inc. | Scholastic Corporation | | Chegg, Inc. | Stride, Inc. | | Express, Inc. | Urban Outfitters, Inc. | | Graham Holdings Company | |
Compensation Market References
In Fiscal 2023, Graham Holdings Company and Grand Canyon Education, Inc. were added as peer companies. The Committee reviews the peer group annually and will continue to consider the Company’s current size and strategic direction in its review.
Compensation Market References
| | Total Revenue(1) (LTM, $M) | Market Cap (as of 4/29/23, $M) | | Peer Group Median | $1,704 | $2,127 | | Barnes & Noble Education, Inc. | $1,543 | $82 |
Compensation Market References
| (1) Data as reported by S&P Capital IQ. |
Compensation Market References
However, peer group compensation is just one factor that is considered in determining compensation levels for our executive officers. We also consider: (a) the Company’s business performance; (b) each executive officer’s job responsibilities, experience and prior performance; (c) relative compensation among our executive officers; (d) industry-wide business conditions; and (e) the recommendations of our Chief Executive Officer (in the case of Messrs. Donohue, Miller, Shar, Henderson and Nenke).
Overview of Compensation Program Design
Performance-Based Annual Incentive Compensation Each of Messrs. Huseby, Donohue, Miller, Shar, Henderson and Nenke were granted performance-based annual incentive compensation opportunities. The target award under the Annual Incentive Plan is expressed as a percentage of base salary as set forth in the table below. For Messrs. Huseby, Donohue, Miller, Shar, Henderson and Nenke, the individual Annual Incentive Plan payouts were based 100% on Company performance as measured by Company EBITDA. Participants had the opportunity to earn up to 150% of the of the target amount based on the achievement of Company EBITDA.
Overview of Compensation Program Design
| Company EBITDA Performance Range (Min.-Max, in Millions) | Payout Percentage (% of Target Payout) | | Below $35.25 | 0% | | Between $35.25 - $47.00 | 75-100%* | | $47.00 | 100% | | Between $47.00 - $70.50 | 100-150%* | | $70.50 and above | 150% |
Overview of Compensation Program Design
| * Payout percentage is interpolated for results within range. |
Overview of Compensation Program Design
| | Target ($) (in millions) | Actual ($) (in millions) | % Target Achieved | % Target Payout | | Company EBITDA* | $47.0 | $(8.2) | 0% | 0% |
Overview of Compensation Program Design
Fiscal 2023 Performance-Based Annual Incentive Compensation Payment Amounts. Set forth below is a table showing target, maximum and actual Fiscal 2023 performance-based annual incentive compensation for our NEOs.
Overview of Compensation Program Design
| Named Executive Officer | Company EBITDA Weighting | Target Annual Incentive ($) | Maximum Annual Incentive ($) | Actual Company EBITDA Payout | Actual Total Payout | Total Payout as a % of Target | | Michael P. Huseby | 100% | $1,100,000 | $1,650,000 | $— | $— | 0% | | Thomas D. Donohue | 100% | $510,000 | $765,000 | $— | $— | 0% | | Michael C. Miller | 100% | $510,000 | $765,000 | $— | $— | 0% | | David W. B. Nenke | 100% | $467,500 | $702,000 | $— | $— | 0% | | Jonathan Shar | 100% | $467,500 | $702,000 | $— | $— | 0% | | David Henderson | 100% | $467,500 | $702,000 | $— | $— | 0% |
Overview of Compensation Program Design
The performance-based annual incentive awards earned by our NEOs under the annual incentive plan for Fiscal 2023 are set forth in the “Summary Compensation Table” on page 35. The threshold, target and maximum incentive award opportunities for each of our NEOs for Fiscal 2023 are set forth in the “2023 Grants of Plan-Based Awards Table” on page 36. In addition to the annual incentive awards, the Compensation Committee also approved the retention bonuses for Messrs. Miller and Shar as described above on page 35. Long-Term Equity Incentives Long-term equity incentives are a critical component of the Company’s compensation program. They are designed to promote the Company’s long-term financial interests and growth, to attract, motivate, and retain key employees, and to align the interests of management with those of the Company’s stockholders. The Company grants long-term equity incentive awards under the Company’s Amended and Restated Equity Incentive Plan (the “Equity Incentive Plan”), which is administered by the Compensation Committee. The Compensation Committee reviews, discusses and approves the types and number of awards made to senior management, including the NEOs, and approves the terms, conditions and limitations applicable to each award. The Committee delegates authority to the CEO, within pre-established limitations, to make awards to newly-hired employees or current employees who are not executive officers. Equity awards are generally granted in connection with the June Compensation Committee meeting. In Fiscal 2023, the Compensation Committee established a target long-term incentive amount for each of the NEOs denominated in dollars. The Compensation Committee determined to make awards with a mix of RSUs, fair market value exercise price options and premium exercise options, which accounted for 50%, 25% and 25% of the target award amount (based on fair value of the awards), respectively. Performance Share Units. The Compensation Committee has, in the past, used performance share units in the design of the compensation program. However, given the ongoing impact of the COVID-19 pandemic, the Compensation Committee has not granted performance share units in Fiscal 2021, Fiscal 2022 or Fiscal 2023. Performance share units are earned and settled for shares of common stock if and only to the extent that certain pre-established performance goals are met for a two-year performance period. The performance shares granted in June 2019, which covered the Fiscal 2020 and 2021 performance period, were earned at a 46% of target. The performance shares were subject to a one-year holding period and vested in June 2022. Stock Options. Because of the decision to not award performance shares due to the lack of visibility and ability to establish performance goals, in order to incentivize executives and align their interests with that of stockholders, the Compensation Committee determined to award 50% of the target equity amount (based on the fair value of the grants) in the form of stock options, including stock options that have a premium exercise price that was approximately 106% higher than the trading price of the Common Stock on the date of grant.
Overview of Compensation Program Design
| Named Executive Officer | Fair Market Value Options(1) | Premium Options(2) | RSUs | Aggregate Award Target ($) | | Michael P. Huseby | 130,580 | 141,200 | 152,778 | $751,526 | | Thomas D. Donohue | 47,484 | 51,346 | 55,556 | $273,284 | | Michael C. Miller | 47,484 | 51,346 | 55,556 | $273,284 | | David W.B. Nenke | 39,570 | 42,788 | 46,297 | $227,737 | | Jonathan Shar | 39,570 | 42,788 | 46,297 | $227,737 | | David Henderson | 17,807 | 19,255 | 20,834 | $102,484 |
Overview of Compensation Program Design
Other Components of Compensation 401(k) Plan. Each of our NEOs is entitled to participate in our tax-qualified defined contribution 401(k) plan on the same basis as all other eligible employees. The 401(k) plan provides our employees, including our NEOs, with a way to accumulate tax-deferred savings for retirement. The Company matches the contributions of participants, subject to certain criteria. Under the terms of the 401(k) plan, as prescribed by the Internal Revenue Code of 1986, as amended (the “Code”), the contribution of any participating employee is limited to the lesser of 75% of annual salary before taxes or a maximum dollar amount ($22,500 for 2023), subject to a $7,500 increase for participants who are age 50 or older. As a result of the COVID-19 pandemic, in April 2020, upon the recommendation of management, the Compensation Committee suspended the Company’s 401(k) plan match for the remainder of Fiscal 2021. On July 25, 2021, the Compensation Committee approved the reinstatement of the Company’s 401(k) plan match, effective July 1, 2021. In August 2023, upon management’s recommendation, the Compensation Committee approved the conversion of the Company’s 401(k) plan match to a year end match to be awarded at the Compensation Committee’s discretion based upon the Company’s fiscal year 2024 results. The amount of the Company’s matching contributions for each of our NEOs is set forth in footnotes to the “Summary Compensation Table” on page 35. We do not provide supplemental executive retirement benefits. Limited Perquisites and Other Compensation. The Company’s NEOs are entitled to only the limited perquisites set forth in their employment agreements or letters and disclosed in the footnotes to the “Summary Compensation Table” on page 35. Severance and Change of Control Payments and Benefits. The Company has an employment agreement with Mr. Huseby and each of Messrs. Donohue, Miller, Shar, Henderson and Nenke have employment letter agreements that contain severance and change in control benefits. The agreements provide for certain severance payments and benefits upon termination of employment by the Company without cause or by the NEO for good reason (including upon termination within two years following a change of control). The triggering events that would result in the severance payments and benefits and the amount of those payments and benefits are intended to provide our NEOs with financial protection upon loss of employment and to support our executive retention goals and enable our NEOs to focus on the interests of the Company in the event of a potential change of control. Equity awards are subject to a “double-trigger” and vesting will only be accelerated if there is a termination of employment without “cause” or for “good reason” following a change of control. The Company does not pay any tax gross-ups in connection with the severance payments. The Compensation Committee believes that the terms of the employment agreements, including triggering events and amounts payable, are competitive with severance protection being offered by other companies with whom we compete for highly qualified executives. The compensation that could be received by (or were paid to) each of our NEOs upon termination or change of control is set forth in the “Potential Payments Upon Termination or Change of Control Table” on page 41 and the amounts paid in connection with the termination of employment of our NEOs are on page 57. The material terms of these agreements, as in effect for Fiscal 2023, are described in the “Narrative to the Summary Compensation Table” and the “Grants of Plan-Based Awards Table-Employment Arrangements with the Named Executive Officers.”
Governance Policies
| • | a balance among short- and long-term incentives; cash and equity-based compensation; and fixed and variable pay; |
Governance Policies
| • | multiple performance metrics; |
Governance Policies
| • | limited change-in-control benefits. |
Roles of the Compensation Committee, Management, and our Compensation Consultant in Determining the Compensation of our Named Executive Officers
Roles of the Compensation Committee, Management, and our Compensation Consultant in Determining the Compensation of our Named Executive Officers Roles of the Compensation Committee and Management The Compensation Committee is responsible for establishing, implementing and overseeing our compensation program, and reviews and approves our compensation philosophy and objectives. The Compensation Committee also annually reviews and approves annual base salary levels, annual incentive opportunity levels, long-term incentive opportunity levels, employment and severance agreements and any special or supplemental benefits for each of the NEOs and any other executive officers, Section 16 officers and employees of the Company earning a base salary of $400,000 or more. The compensation of our Chief Executive Officer is determined by the Compensation Committee in executive session. The Chief Executive Officer reviews the performance of each of our other executive officers and makes compensation recommendations to the Compensation Committee. The Compensation Committee considers all key elements of compensation separately and also reviews the full compensation package of each executive officer. Role of the Compensation Consultant The Compensation Committee has retained Mercer, a wholly-owned subsidiary of Marsh & McLennan Companies, Inc., to assist with the committee’s responsibilities related to the Company’s executive compensation program and the director compensation program. Mercer’s engagement by the Compensation Committee includes reviewing and recommending the structure of our compensation program and advising on all significant aspects of executive compensation, including base salaries, annual incentives and long-term equity incentives for executives. At the request of the Compensation Committee, Mercer collects relevant market data to allow the Compensation Committee to compare components of our compensation program to those of our peers, provides information on executive compensation trends and implications and makes other recommendations to the Committee regarding our executive compensation program. Our management, Chief Executive Officer (on certain occasions), Chief Human Resources Officer, Chief Legal Officer and the chair of the Compensation Committee, meet with representatives of Mercer before Compensation Committee meetings. In making its final decisions regarding the form and amount of compensation to be paid to the executives, the Compensation Committee considers the information gathered by and recommendations of Mercer. Mercer’s fees for executive and director compensation consulting to the Compensation Committee in Fiscal 2023 were approximately $188,804. The Company also paid Marsh & McLennan Companies, Inc., the parent company of Mercer, for insurance brokerage services totaling approximately $403,304 in Fiscal 2023 versus $435,840 in Fiscal 2022 (and $50,000 to Mercer Investments for 401(k) plan consulting). The Compensation Committee has assessed the independence of Mercer taking into account the following factors identified by the SEC and NYSE as bearing upon independence: (i) Mercer’s provision of other services to the Company; (ii) the fees Mercer received for such services as a percentage of the revenues of Marsh & McLennan, Mercer’s parent; (iii) the policies and procedures of Mercer that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the Mercer consultants with a member of the Compensation Committee; (v) any of our stock owned by the Mercer consultants; and (vi) any business or personal relationship of the Mercer consultants or Mercer with any of our executive officers. The Compensation Committee concluded that no conflict of interest exists with respect to its engagement of Mercer.
Pay Ratio 2023
Pay Ratio 2023 The Company is required to provide the ratio of the annual total compensation of the Company’s CEO to the annual total compensation of its median employees under Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The pay ratio information provided below is a reasonable estimate calculated in a manner consistent with Item 402(u) of SEC Regulation S-K. For Fiscal 2023, the annual total compensation of our median employee, excluding our CEO, was $8,640 and the annual total compensation of our CEO was $2,387,034. Accordingly, the ratio of the CEO’s annual total compensation to the annual total compensation of our median employee was 276:1. To determine our median employee, the Company used the employee population of 7,927 on the final day of the payroll year, April 29, 2023. Temporary, seasonal, and part-time employees make up 73% of the Company’s total population and on average work less than 15 hours per week. As permitted under SEC rules, we excluded employees in India as de minimis. We used cash compensation (base salary, overtime and cash bonuses paid during Fiscal 2023) to determine the median employee in our population. When we include only our full time “permanent” staff as of April 29, 2023, our median employee’s annualized total compensation was $47,663 for Fiscal 2023. Under this calculation, the CEO pay ratio is 50:1. We believe this is a more representative indication of how our CEO pay compares to that of our workforce. (Note this population totals 2,137). The SEC rules do not specify a single methodology for identifying the median employee or calculating the CEO pay ratio. Since other companies use different assumptions, adjustments, or estimates in their own calculation, disclosure and methodology is inconsistent across companies. Therefore, our CEO pay ratio is not comparable to another company’s CEO pay ratio. We believe our information and pay ratio calculation is a reasonable good faith estimate, based on our methodology and SEC rules as required for disclosure.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary(1) | Bonus(2) | Stock Awards(3) | Option Awards(4) | Non-Equity Incentive Plan Compensation | All Other Compensation(5) | Total | | Michael P. Huseby Chief Executive Officer and Acting Chief Financial Officer | 2023 | $1,100,000 | $— | $360,556 | $390,970 | $— | $39,257 | $1,890,783 | | | 2022 | $1,100,000 | $— | $1,650,002 | $1,877,394 | $— | $38,710 | $4,666,106 | | | 2021 | $1,031,250 | $— | $1,260,976 | $1,625,673 | $290,000 | $26,271 | $4,234,170 | | Thomas D. Donohue Former Executive Vice President, Chief Financial Officer | 2023 | $600,000 | $150,000 | $131,112 | $142,172 | $— | $13,793 | $1,037,077 | | | 2022 | $600,000 | $— | $600,005 | $682,695 | $— | $8,892 | $1,891,592 | | | 2021 | $557,693 | $— | $343,903 | $443,365 | $175,000 | $1,855 | $1,521,816 | | Michael C. Miller Chief Legal Officer and Executive Vice President, Corporate Development & Affairs, and Secretary | 2023 | $600,000 | $150,000 | $131,112 | $142,172 | $— | $11,485 | $1,034,769 | | | 2022 | $600,000 | $— | $600,005 | $682,695 | $— | $7,970 | $1,890,670 | | | 2021 | $557,693 | $— | $343,903 | $443,365 | $175,000 | $1,470 | $1,521,431 | | David W. B. Nenke Executive Vice President, Consumer Digital and President, Digital Student Solutions | 2023 | $550,000 | $100,000 | $109,261 | $118,477 | $— | $655,688 | $1,533,426 | | | 2022 | $550,000 | $— | $500,008 | $568,910 | $116,875 | $8,720 | $1,744,513 | | | 2021 | $74,038 | $— | $303,541 | $— | $— | $200 | $377,779 | | Jonathan Shar Executive Vice President, BNED Retail | 2023 | $550,000 | $150,000 | $109,261 | $118,477 | $— | $12,593 | $940,331 | | | 2022 | $550,000 | $— | $500,008 | $568,910 | $— | $8,277 | $1,627,195 | | | 2021 | $526,923 | $— | $447,073 | $310,355 | $160,000 | $1,778 | $1,446,129 | | David Henderson(6) Executive Vice President, Strategic Services, and President, MBS Textbook Exchange, LLC | 2023 | $550,000 | $— | $49,168 | $53,315 | $— | $30,314 | $682,797 | | | 2022 | $550,000 | $— | $225,007 | $256,016 | $— | $29,068 | $1,060,091 | | | 2021 | $526,923 | $— | $223,536 | $155,178 | $160,000 | $29,151 | $1,094,788 |
Summary Compensation Table
| (1) This column represents base salary earned during each fiscal year. |
Summary Compensation Table
| (2) This column represents the retention award paid during Fiscal 2023. |
Summary Compensation Table
| (3) This column represents, with respect to Fiscal 2022 and 2020, RSUs, and with respect to Fiscal 2021, cash-settled phantom shares. The grant date fair value of stock awards granted computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718, Compensation-Stock Compensation (“ASC 718”). The stock awards value is determined to be the fair market value of the underlying Company shares on the grant date, which is determined based on the closing price of the Company’s Common Stock on the grant date. These amounts reflect an estimate of the grant date fair value and may not be equivalent to the actual value recognized by the NEO. |
Summary Compensation Table
| (4) This column represents the dollar value of options granted at the average fair value price. |
Summary Compensation Table
| (5) This column represents the value of all other compensation, as detailed in the table below. |
Summary Compensation Table
| (6) Mr. Henderson was not an NEO in Fiscal 2022. |
2023 Grants of Plan-Based Awards Table
2023 Grants of Plan-Based Awards Table The following table provides additional information about non-equity incentive awards and equity incentive awards granted to our NEOs by the Company during Fiscal 2023.
2023 Grants of Plan-Based Awards Table
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards | | Name | Award(1) | Grant Date | Meeting Date(2) | Threshold ($) | Target ($) | Maximum ($) | | | | | | Michael P. Huseby | AIP | | | $825,000 | $1,100,000 | $1,650,000 | | | | | | | RSU | 6/16/22 | | | | | 152,778 | | | $360,556 | | | Options | 6/16/22 | | | | | | 130,580 | $2.36 | $210,234 | | | Options | 6/16/22 | | | | | | 141,200 | $4.86 | $180,736 | | Thomas D. Donohue | AIP | | | $382,500 | $510,000 | $765,000 | | | | | | | RSU | 6/16/22 | | | | | 55,556 | | | $131,112 | | | Options | 6/16/22 | | | | | | 47,484 | $2.36 | $76,449 | | | Options | 6/16/22 | | | | | | 51,346 | $4.86 | $65,723 | | Michael C. Miller | AIP | | | $382,500 | $510,000 | $765,000 | | | | | | | RSU | 6/16/22 | | | | | 55,556 | | | $131,112 | | | Options | 6/16/22 | | | | | | 47,484 | $2.36 | $76,449 | | | Options | 6/16/22 | | | | | | 51,346 | $4.86 | $65,723 | | David W. B. Nenke | AIP | | | $350,625 | $467,500 | $701,250 | | | | | | | RSU | 6/16/22 | | | | | 46,297 | | | $109,261 | | | Options | 6/16/22 | | | | | | 39,570 | $2.36 | $63,708 | | | Options | 6/16/22 | | | | | | 42,788 | $4.86 | $54,769 |
2023 Grants of Plan-Based Awards Table
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards | | Name | Award(1) | Grant Date | Meeting Date(2) | Threshold ($) | Target ($) | Maximum ($) | | | | | | Jonathon Shar | AIP | | | $350,625 | $467,500 | $701,250 | | | | | | | RSU | 6/16/22 | | | | | 46,297 | | | $109,261 | | | Options | 6/16/22 | | | | | | 39,570 | $2.36 | $63,708 | | | Options | 6/16/22 | | | | | | 42,788 | $4.86 | $54,769 | | David Henderson | AIP | | | $350,625 | $467,500 | $701,250 | | | | | | | RSU | 6/16/22 | | | | | 20,834 | | | $49,168 | | | Options | 6/16/22 | | | | | | 17,807 | $2.36 | $28,669 | | | Options | 6/16/22 | | | | | | 19,255 | $4.86 | $24,646 |
2023 Grants of Plan-Based Awards Table
| (1) Forms of awards granted to executive officers during Fiscal 2023 include RSU bonus payments under the Company’s Annual Incentive Plan (“AIP”) and Stock Options (“Options”). |
2023 Grants of Plan-Based Awards Table
| (2) The Compensation Committee met on June 16, 2022 and approved awards with a grant date of June 16, 2022. |
2023 Grants of Plan-Based Awards Table
| (3) These columns represent the threshold payout level, target payout level and maximum payout level for the performance-based incentive compensation awards under the Company’s AIP. For additional information regarding the performance-based annual incentive compensation program, see the discussion in the “Compensation Discussion and Analysis-Overview of Compensation Program Design-Performance-Based Annual Incentive Compensation” section of this Proxy Statement. |
Narrative to the Summary Compensation Table and the Grants of Plan-Based Awards Table
Narrative to the Summary Compensation Table and the Grants of Plan-Based Awards Table Employment Arrangements with the Named Executive Officers The Company has entered into an employment agreement or employment letter with each of the NEOs and compensation of each of these NEOs is based on their respective employment agreement or employment letter, as the case may be, as well as their job responsibilities. The Company entered into an employment agreement with Mr. Huseby on June 26, 2015 in connection with the Spin-Off, which was amended and restated on July 19, 2017, and has been further amended from time to time. The most recent amendment to Mr. Huseby’s employment agreement, which is effective as of September 1, 2022, was entered into on June 23, 2022 as described herein. The employment agreement provides severance payments and benefits upon termination of employment by the Company without “cause” or by the NEO for “good reason” (including upon termination within two years following a change of control). The employment agreement renews automatically for additional one year terms unless either party gives notice of non-renewal at least three months prior to automatic renewal. The Amended Agreement (i) extends the term of the agreement to September 20, 2023 (subject to automatic renewal); (ii) reduces Mr. Huseby’s annual target bonus from 125% to 100%, (iii) provides for severance in the event that the Company elects not to renew the term of the agreement and Mr. Huseby thereafter resigns employment effective upon the expiration of the then-current term, (iv) provides for acceleration of time-based equity awards in certain events of termination, and (v) reduces the lump-sum severance payment in the event of a change in control. The Company has also entered into employment letters outlining employment terms with each of Messrs. Donohue, Miller, Shar and Henderson on June 19, 2019 and with Mr. Nenke on February 19, 2021. The employment letters provide the officers with severance payments and benefits upon termination of employment by the Company without “cause” or by the NEO for “good reason” (including upon termination within two years following a change of control). Employment Arrangements - General Provisions Unless otherwise noted, the following descriptions describe the terms of the employment arrangements in effect for Fiscal 2023. Pursuant to their employment agreement or letters, the annual base salaries of Messrs. Huseby, Donohue, Miller, Nenke, Shar and Henderson can be no less than $1,100,000, $500,000, $500,000, $550,000, $400,000 and $500,000, respectively, during the terms of their employment. Each of Messrs. Huseby, Donohue, Miller, Nenke, Shar and Henderson are eligible for a minimum target annual incentive compensation award of not less than 125%, 85%, 85%, 85%, 75% and 85%, respectively, of his base salary, as determined by the Compensation Committee. The employment agreements or employment letters also provide that the NEO is eligible for grants of equity-based awards under the Barnes & Noble Education, Inc. Equity Incentive Plan. With respect to Messrs. Donohue, Miller, Nenke and Shar the amounts of such grants are determined by the Compensation Committee, and with respect to Mr. Huseby, the amount of such equity award shall have an aggregate target value of 300% of his base salary. Each of our NEOs is entitled to all other benefits afforded to executive officers and employees of the Company. Under their respective employment agreements or employment letters with the Company, our NEOs are subject to certain restrictive covenants regarding competition, solicitation, confidentiality and disparagement. Mr. Huseby’s agreement contains non-competition and non-solicitation covenants that apply during the employment term and for the two-year period following the termination of employment. Messrs. Donohue, Nenke, Miller and Henderson are restricted by a non-competition and non-solicitation covenant during their term of employment and for a one-year period thereafter. The confidentiality and non-disparagement covenants apply during the term of each respective employment letters of each NEO and at all times thereafter. Employment Arrangements-Severance and Change of Control Benefits Mr. Huseby’s employment agreement provides that he may be terminated by the Company upon death or disability or for “cause”, and by Mr. Huseby without “good reason”. If Mr. Huseby’s employment is terminated by the Company upon death, disability or for “cause,” or by the NEO without “good reason,” Mr. Huseby is entitled to payment of base salary through the date of death, disability or termination of employment. If the employment of Messrs. Huseby, Donohue, Miller, Nenke, Shar or Henderson is terminated by the Company without “cause” or by the NEO for “good reason,” the NEO is entitled, provided he signs a release of claims against the Company, to a lump-sum severance payment equal to one times (a) annual base salary; (b) the target annual incentive compensation for the fiscal year in which termination takes place (except for Mr. Nenke); and (c) the cost of benefits. Further, if the employment of any NEO is terminated by the Company without “cause” or by the NEO for “good reason” within two years (or the remainder of his term of employment under his employment agreement, whichever is longer) following a “change of control” of the Company, the NEO is entitled, regardless of whether he signs a release of claims against the Company, to a lump-sum severance payment equal to two times (a) annual base salary; (b) the target annual incentive compensation for the fiscal year in which termination takes place; and (c) the cost of benefits. However, if such severance payments trigger the “golden parachute” excise tax under Sections 280G and 4999 of the Code, the severance benefits for an NEO would be reduced if such reduction would result in a greater after-tax benefit to him. Except as otherwise provided by the applicable award agreement, if the successor company assumes or substitutes for an outstanding equity award, such award will continue in accordance with its applicable terms and will not be accelerated. Under the restricted stock unit award agreements, if the holder were terminated other than for “cause” at any time following a change of control, then the unvested restricted stock units underlying the award would immediately vest. Under the award agreements executed under the Barnes & Noble Education, Inc. Equity Incentive Plan, “change of control” generally has the same meaning as provided under the Barnes & Noble Education, Inc. Equity Incentive Plan and means any of the following: (a) a change in the ownership of the Company; (b) a change in the effective control of the Company; or (c) a change in the ownership of a substantial portion of the Company’s assets, in each case, within the meaning of Section 409A of the Code and the regulations promulgated thereunder. “Cause” is defined by reference to the individual’s employment agreement or letter, and if there is no agreement or letter, the applicable award agreement, and generally means (a) a material failure by the holder to perform his or her duties (other than as a result of incapacity due to physical or mental illness) during his or her employment with the Company after written notice of such breach or failure and the holder failed to cure such breach or failure to the Company’s reasonable satisfaction within five days after receiving such written notice; or (b) any act of fraud, misappropriation, misuse, embezzlement or any other material act of dishonesty in respect of the Company or its funds, properties, assets or other employees. The estimated payments to be made by the Company to our NEOs in the event of a change of control are set forth in the “Potential Payments Upon Termination or Change of Control Table” on page 41. Employment Arrangements - Defined Terms
Narrative to the Summary Compensation Table and the Grants of Plan-Based Awards Table
“Cause,” for purposes of the employment agreement and employment letters, generally means any of the following: (a) the NEO engaging in intentional misconduct or gross negligence that, in either case, is injurious to the Company; (b) the NEO’s indictment, entry of a plea of nolo contendere or conviction by a court of competent jurisdiction with respect to any crime or violation of law involving fraud or dishonesty (with the exception of misconduct based in good faith on the advice of professional consultants, such as attorneys and accountants) or any felony (or equivalent crime in a non-U.S. jurisdiction); (c) any gross negligence, intentional acts or intentional omissions by the NEO in connection with the performance of the NEO’s duties and responsibilities; (d) fraud, dishonesty, embezzlement or misappropriation in connection with the performance of the NEO’s duties and responsibilities; (e) the NEO engaging in any act of misconduct or moral turpitude reasonably likely to adversely affect the Company or its business; (f) the NEO’s abuse of or dependency on alcohol or drugs (illicit or otherwise) that adversely affects the NEO’s job performance; (g) the NEO’s willful failure or refusal to properly perform the duties, responsibilities or obligations of the NEO’s service for reasons other than disability or authorized leave, or to properly perform or follow any lawful direction by the Company; or (h) the NEO’s breach of the agreement or of any other contractual duty to, written policy of, or written agreement with, the Company. “Change of Control,” for purposes of the employment agreement and employment letters, generally means any of the following: (a) the Company’s directors immediately prior to a merger, consolidation, liquidation or sale of assets cease within two years thereafter to constitute a majority of the Company’s Board of Directors; (b) the Company’s directors immediately prior to a tender or exchange offer for the Company’s voting securities cease within two years thereafter to constitute a majority of the Company’s Board of Directors. The consummation of a corporate transaction constituting a Reorganization or a Sale, if such transaction requires the approval of the Company’s stockholders, subject to certain exceptions outlined in the agreement and letters; or (c) the acquisition by any person or group (other than the executive or his or her affiliates) of 40% or more of the Company’s voting securities. “Good Reason,” for purposes of the employment agreement and employment letters, generally means any of the following without the NEO’s written consent: (a) a material diminution of authority, duties or responsibilities; (b) a material diminution in the authority, duties or responsibilities of the supervisor to whom the NEO reports; (c) a reduction in current annual base salary or target annual bonus; (d) the relocation of the Company’s principal executive offices more than 50 miles from both New York City, New York and Basking Ridge, New Jersey; (e) a failure by the Company to make material payments under the agreement; (f) a reduction in title; or (g) a material reduction in the value of employee benefits following a Change of Control. Notwithstanding the foregoing, an NEO will only have grounds to resign for Good Reason if the NEO notifies the Company in writing with 60 days of the Good Reason occurrence, the Company does not cure such grounds within 30 days following receipt of notice, and the NEO actually resigns employment 30 days following the end of such cure period.
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table summarizes the equity awards the Company made to our NEOs that were outstanding as of the end of Fiscal 2023. In accordance with the applicable SEC disclosure guidance, this table and the accompanying footnotes do not account for any awards that may have been exercised or have vested pursuant to their terms in the ordinary course since the end of Fiscal 2023.
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table provides additional information about the value realized by our NEOs upon the vesting of stock or stock unit awards and the exercise of options during Fiscal 2023.
Option Exercises and Stock Vested
| | | Stock Awards | | Options | | | Name | Fiscal Year | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(1) ($) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise(2) ($) | | Michael P. Huseby | 2023 | 523,050 | $1,265,651 | 0 | $— | | Thomas D. Donohue | 2023 | 120,918 | $288,076 | 0 | $— | | Michael C. Miller | 2023 | 120,918 | $288,076 | 0 | $— | | David W. B. Nenke | 2023 | 15,432 | $35,494 | 0 | $— | | Jonathan Shar | 2023 | 121,061 | $283,972 | 0 | $— | | David Henderson | 2023 | 88,002 | $212,796 | 0 | $— |
Option Exercises and Stock Vested
| (1) The amounts in this column are calculated by multiplying the number of RSUs and phantom shares vested by the closing price of our Common Stock on the date of vesting. |
Option Exercises and Stock Vested
| (2) Reflects the product of the number of shares of stock subject to the exercised option multiplied by the difference between the market price of our Common Stock at the time of exercise on the exercise date and the exercise price of the option. |
Potential Payments Upon Termination or Change of Control Table(1)
Potential Payments Upon Termination or Change of Control Table(1)
Potential Payments Upon Termination or Change of Control Table(1)
| Event | Michael P. Huseby | Michael C. Miller | Jonathan Shar | David Henderson | | Involuntary Termination or Voluntary Termination with Good Reason | | | | | | Cash severance payment(2) | $4,535,778 | $1,150,117 | $1,058,725 | $1,059,441 | | Accelerated equity-based awards(3) | — | — | — | — | | Total | $4,535,778 | $1,150,117 | $1,058,725 | $1,059,441 | | Death | | | | | | Cash severance payment(2) | $0 | $0 | $0 | $0 | | Accelerated equity-based awards(3) | 2,374,696 | 751,213 | 638,155 | 301,823 | | Health benefits(4) | 4,957 | 7,301 | 7,301 | 7,301 | | Total | $2,379,653 | $758,514 | $645,456 | $309,124 | | Disability | | | | | | Cash severance payment(2) | $0 | $0 | $0 | $0 | | Accelerated equity-based awards(3) | 2,374,696 | 751,213 | 638,155 | 301,823 | | Health benefits(5) | 13,053 | 13,053 | 13,053 | 13,053 | | Total | $2,387,749 | $764,266 | $651,208 | $314,876 | | Change of Control with Involuntary Termination (without Cause) or Termination with Good Reason | | | | | | Cash severance payment(2) | $6,803,667 | $2,300,234 | $2,117,450 | $2,118,882 | | Accelerated equity-based awards(3) | 22,374,696 | 751,213 | 638,155 | 301,823 | | Total | $9,178,363 | $3,051,447 | $2,755,605 | $2,420,705 |
Potential Payments Upon Termination or Change of Control Table(1)
| (1) The values in this table reflect estimated payments associated with various termination scenarios, assume a stock price of $1.56 (closing price of our Common Stock on April 28, 2023, the last trading day of Fiscal 2023) and include all outstanding grants through the assumed termination date of April 29, 2023. Actual value will vary based on changes in the Company’s Common Stock price. |
Potential Payments Upon Termination or Change of Control Table(1)
| (2) Cash severance is equal to the sum of (i) the NEO’s annual base salary, (ii) the target annual incentive compensation for the fiscal year in which termination takes place except for Mr. Nenke and (iii) the aggregate annual cost of benefits, times the named executive officer’s severance multiple as follows: one time for non-change of control and two times for change of control. |
Potential Payments Upon Termination or Change of Control Table(1)
| (3) This row represents the value of restricted stock unit awards, phantom shares and options at expected vested amounts that would automatically vest upon a termination due to death or disability and the value restricted stock unit awards upon a termination following a change of control. Except as provided below, in the event of a change of control, unless otherwise provided by the applicable award agreement, if the successor company assumes or substitutes for an outstanding equity award such award will continue in accordance with |
Potential Payments Upon Termination or Change of Control Table(1)
its applicable terms and not be accelerated. Absent a change of control, in the event of involuntary termination, termination for “cause” or resignation for any reason, each restricted stock unit award will be forfeited. In the event of an involuntary termination other than for “cause” within 24 months following a change of control, each restricted stock unit award will immediately vest.
Potential Payments Upon Termination or Change of Control Table(1)
| (4) Following the termination of employment due to death, the Company provides the NEO’s spouse three months of premiums for medical and dental insurance in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). |
Potential Payments Upon Termination or Change of Control Table(1)
| (5) Following the termination of employment due to disability, the Company provides the NEO a seven-month subsidy for premiums for medical and dental insurance in accordance with COBRA. |
Potential Payments Upon Termination or Change of Control Table(1)
For the table above, the amount of potential payments to our NEOs (other than Messrs. Donohue and Nenke, who terminated prior to the end of Fiscal 2023, whose terminations are discussed in more detail below) in the event of a termination of their employment in connection with a change of control was calculated assuming that a change of control occurred on the last day of Fiscal 2023 (April 29, 2023), each NEO’s employment terminated on that date due to involuntary termination without “cause” or for “good reason” and the successor company did not assume the NEO’s equity awards. For a summary of the provisions of the employment agreements with our NEOs that were effective as of April 29, 2023 and the outstanding equity awards that were held by our NEOs as of April 29, 2023, and therefore affect the amounts set forth in the table above in the event of involuntary termination without “cause” or for “good reason” or a “change of control,” see the discussions in the “Narrative to the Summary Compensation Table and Grants of Plan-Based Awards Table-Employment Arrangements-General Provisions” and “Narrative to the Summary Compensation Table and Grants of Plan-Based Awards Table-Employment Arrangements-Severance and Change of Control Benefits” sections of this Proxy Statement.
Pay versus Performance
Pay versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company.
Pay versus Performance
| Fiscal Year | Summary Compensation Table Total for CEO ($)(1) | Compensation Actually Paid to CEO ($)(2) | Average Summary Compensation Table Total for Non-CEO Named Executive Officers (“NEOs”) ($)(3) | Average Compensation Actually Paid to Non-CEO NEOs ($)(2)(3) | Value of Initial Fixed $100 Investment Based on: | | Net Income ($ thousands) | Adjusted EBITDA ($ thousands) | | | | | | | Total Shareholder Return ($)(4) | Peer Group Total Shareholder Return ($)(4)(5) | | | | 2023 | 1,890,783 | (134,970) | 1,045,680 | 478,123 | 194.16 | 106.29 | (101,862) | (7,492) | | 2022 | 4,666,106 | (2,214,192) | 1,788,493 | (50,246) | 361.93 | 120.41 | (68,857) | (4,792) | | 2021 | 4,234,170 | 15,069,827 | 1,615,082 | 3,375,257 | 225.17 | 97.55 | (139,810) | (65,625) |
Pay versus Performance
| (1) Mr. Huseby was the CEO each of Fiscal 2023, 2022 and 2021. |
Pay versus Performance
| (2) SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine Compensation Actually Paid as reported in the Pay versus Performance Table. Compensation Actually Paid does not necessarily represent cash and/or equity value transferred to the applicable named executive officer without restriction, but rather is a value calculated under applicable SEC rules. In general, Compensation Actually Paid is calculated as Summary Compensation Table total compensation adjusted to include the fair market value of equity awards as of the end of the applicable fiscal year or, if earlier, the vesting date (rather than the grant date). Named executive officers do not participate in a defined benefit plan so no adjustment for pension benefits is included in the table below. Similarly, no adjustment is made for dividends as dividends are factored into the fair value of the award. |
Pay versus Performance
| (3) The non-CEO named executive officers include the following individuals in each year: |
Pay versus Performance
2023: Messrs. Donohue, Miller, Nenke, Shar and Henderson 2022: Messrs. Donohue, Miller, Nenke and Shar 2021: Messrs. Donohue, Miller, Henderson, Shar and Malhotra
Pay versus Performance
| (4) Total Stockholder Return is determined based on the value of an initial fixed investment of $100 at May 2, 2020. |
Pay versus Performance
| (5) This amount represents the Total Stockholder Return for the peer group referenced above. |
Pay versus Performance
The following table outlines the adjustments made to the compensation earned by our CEO and non-CEO NEOs, as presented in the Summary Compensation Table, to derive the Compensation Actually Paid to our CEO and non-CEO NEOs.
Pay versus Performance
| Item and Value Added (Deducted) | 2023 | 2022 | 2021 | | For CEO: | | | | | Summary Compensation Table Total | 1,890,783 | 4,666,106 | 4,234,170 | | - Summary Compensation Table “Option Awards” column value | (390,970) | (1,877,394) | (1,625,673) | | - Summary Compensation Table “Stock Awards” column value | (360,556) | (1,650,002) | (1,260,976) | | + year-end fair value of outstanding and unvested equity awards granted in the fiscal year | 468,285 | 829,586 | 11,978,706 | | +/- change in fair value of outstanding and unvested equity awards granted in prior years | (1,247,961) | (5,703,253) | 1,588,914 | | + vest date fair value of equity awards granted in the covered year | 0 | 0 | 0 | | +/- change in fair value of prior-year equity awards vested in the fiscal year | (494,551) | 1,520,765 | 154,686 | | Compensation Actually Paid | (134,970) | (2,214,192) | 15,069,827 | | For Non-CEO NEOs (Average): | | | | | Summary Compensation Table Total | 1,045,680 | 1,788,493 | 1,615,082 | | - Summary Compensation Table “Option Awards” column value | (114,923) | (625,803) | (359,126) | | - Summary Compensation Table “Stock Awards” column value | (105,983) | (550,007) | (340,464) | | + year-end fair value of outstanding and unvested equity awards granted in the fiscal year | 96,692 | 276,531 | 2,253,273 |
Pay versus Performance
| Item and Value Added (Deducted) | 2023 | 2022 | 2021 | | +/- change in fair value of outstanding and unvested equity awards granted in prior years | (173,534) | (1,181,555) | 227,697 | | + vest date fair value of equity awards granted in the covered year | 0 | 0 | 0 | | +/- change in fair value of prior year equity awards vested in the fiscal year | (76,849) | 242,095 | 22,768 | | - fair value of awards granted during prior years forfeited in the fiscal year, determined as of prior year end | (192,960) | 0 | (43,973) | | Compensation Actually Paid | 478,123 | (50,246) | 3,375,257 |
Pay versus Performance
2023 Most Important Measures to Determine Compensation Actually Paid As required by Item 402(v) of Regulation S-K, we have identified the following performance measures as being the most important in linking actual compensation paid to our executives to our performance.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
Director Compensation Table
Director Compensation Table
Director Compensation Table
| Name | Paid in Cash | Number of Restricted Stock Units (Number of Shares)(1) | Value | Total Compensation | | Emily C. Chiu | $110,000 | 11,804 | $27,149 | $137,149 | | Mario R. Dell’Aera, Jr.(4) | $91,305 | 11,804 | $27,149 | $118,454 | | Daniel A. DeMatteo | $108,750 | 11,804 | $27,149 | $135,899 | | Kathryn Eberle Walker(4) | $87,033 | 11,804 | $27,149 | $114,182 | | David G. Golden | $120,000 | 11,804 | $27,149 | $147,149 | | Zachary D. Levenick(2) | $27,500 | — | $— | $27,500 | | Lowell W. Robinson(2) | $31,250 | — | $— | $31,250 | | John R. Ryan | $234,835 | 11,804 | $27,149 | $261,984 | | Jerry Sue Thornton(3) | $41,827 | — | $— | $41,827 | | Rory Wallace(4) | $87,033 | 11,804 | $27,149 | $114,182 | | Denise Warren(4) | $87,033 | 11,804 | $27,149 | $114,182 |
Director Compensation Table
| (1) Each of the Directors hold the following unvested restricted units or shares as of the end of Fiscal 2023: Chiu – 131,191 RSU; Dell’Aera – 11,804 RSU; DeMatteo – 164,066 RSU; Eberle Walker – 11,804 RSU; Golden – 11,804 RSU; Ryan – 164,066 RSU; Wallace – 11,804 RSU; Warren – 11,804 RSU. |
Director Compensation Table
| (2) Resigned from the Board of Directors effective July 15, 2022. |
Director Compensation Table
| (3) Resigned from the Board of Directors effective September 21, 2022. |
Director Compensation Table
| (4) Appointed to the Board of Directors effective July 15, 2022. |