DEF 14A of Sally Beauty Holdings, Inc.
Filed Dec 13, 2023 · FY20230001193125-23-294463
DIRECTOR NOMINEES
DIRECTOR NOMINEES Nine directors are standing for election at the 2024 Annual Meeting for one-year terms. The following table provides summary information about each of the director nominees as well as their committee memberships. The table also discloses the Board’s determination as to the independence of each nominee under the listing standards of the New York Stock Exchange (“NYSE”) and relevant rules of the Securities and Exchange Commission (“SEC”). Additional information about each nominee’s background and experience can be found beginning on page 10. To be elected, each nominee must receive more votes cast “for” such nominee’s election than votes cast “against” such nominee’s election.
DIRECTOR NOMINEES
| Name | Age | Director Since | Occupation | Experience / Qualification | Indep. | AC | CC | NG/ CR | EC | | Denise Paulonis | 51 | May 2018 | President & CEO, Sally Beauty Holdings, Inc. | Management, Finance, Audit, International Retail | | | | | • | | Rachel R. Bishop, Ph.D. | 50 | July 2022 | President, Hefty Tableware, Reynolds Consumer Products | Consumer Products, Retail, ESG, M&A | ✓ | | • | • | | | Jeffrey Boyer | 65 | July 2022 | COO, Fossil Group | Management, Audit, Retail | ✓ | • | • | | | | James Conroy | 54 | n/a | CEO, Boot Barn Holdings Inc. | Management, Finance, Retail | ✓ | | | | | | Diana S. Ferguson (Board Chair) | 60 | Jan. 2019 | Principal, Scarlett Investments LLC | Management, Finance | ✓ | | C | | • | | Dorlisa K. Flur | 58 | Jan. 2020 | Advisor, Former Chief Strategy & Transformation Officer, Southeastern Grocers | Management, Mass Market Retail Transformation | ✓ | • | | • | | | James M. Head | 58 | Jan. 2021 | EVP and CFO, MultiPlan Corporation | Finance, Strategy, M&A | ✓ | • | | | C | | Lawrence “Chip” P. Molloy | 62 | July 2022 | CFO, Sprouts Farmers Market | Management, Finance, Audit | ✓ | C | | | • | | Erin Nealy Cox | 53 | July 2021 (Also Aug. 2016 to Nov. 2017) | Partner, Kirkland & Ellis | Cyber Security, Governance, Legal | ✓ | | | C | • |
DIRECTOR NOMINEES
Committees: AC = Audit CC = Compensation & Talent NG/CR = Nominating, Governance and Corporate Responsibility EC = Executive C = Chair Each director nominee elected will serve until the 2025 annual meeting. The Board recommends a vote FOR each nominee.
BOARD NOMINEES SNAPSHOT
BOARD NOMINEES SNAPSHOT
BOARD NOMINEES SNAPSHOT
| Diversity | Independence | | Age Mix | Tenure |
BOARD NOMINEES SNAPSHOT
| FY23 PERFORMANCE |
BOARD NOMINEES SNAPSHOT
| (1) Please see “Executive Compensation — Compensation Discussion and Analysis — FY23 Executive Compensation Program — Annual Incentive” section for Comparable Sales and Adjusted Operating Income (“AOI”) definition. (2) Information in this Proxy Statement includes discussion of financial metrics that are not calculated in accordance with U.S. GAAP, including AOI, AOIM and Adjusted Diluted EPS. Please see Appendix 1 for a reconciliation of these measures to financial measures derived in accordance with U.S. GAAP. (3) 3-Year Average Return on Invested Capital (“ROIC”) is defined as net income plus after-tax interest expense divided by monthly invested capital over the three-year performance period. | | • Net Sales were $3.73 billion, a 2.3% decrease over the prior year. • Global E-Commerce Sales were $348 million and represented 9.3% of total net sales. • GAAP operating earnings of $325 million and GAAP operating margin of 8.7%, Adjusted Operating Earnings of $341 million and Adjusted Operating Margin of 9.1%. • Repurchased 1.5 million shares at an aggregate cost of $15 million. |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
| Our current Board of Directors consists of nine individuals, eight of whom qualify as independent of us under the rules of the NYSE. Eight of our nine directors are standing for re-election. Our Certificate of Incorporation and our By-Laws provide for the annual election of each of our directors for one-year terms. Following the recommendations of our Nominating, Governance and Corporate Responsibility Committee, our Board of Directors has nominated the following nine individuals for election to our Board of Directors: Ms. Paulonis, Ms. Bishop, Mr. Boyer, Mr. Conroy, Ms. Ferguson, Ms. Flur, Mr. Head, Mr. Molloy and Ms. Nealy Cox. Accordingly, this Proposal 1 seeks the election of these nine individuals to be directors, each with a one-year term that will expire at the annual meeting of stockholders in 2025. Unless otherwise indicated, all proxies that authorize the proxy holders to vote for the election of directors will be voted “FOR” the election of the nominees listed below. If a nominee becomes unavailable for election as a result of unforeseen circumstances, it is the intention of the proxy holders to vote for the election of such substitute nominee, if any, as the Board of Directors may propose. As of the date of this Proxy Statement, each of the nominees has consented to serve and the Board is not aware of any circumstances that would cause a nominee to be unable to serve as a director. Except for James Conroy who is standing for election to our Board for the first time, each director nominee is a current director with a term expiring at this annual meeting. Each director nominee has furnished to us the following information with respect to their principal occupation or employment and principal directorships: |
ELECTION OF DIRECTORS
| | Denise A. Paulonis | | | Director, President and Chief Executive Officer, age 51 Ms. Paulonis has served on our Board of Directors since May 2018 and is the Company’s President and Chief Executive Officer, a role she has held since October 2021. Prior to being appointed to her current role, Ms. Paulonis served as Chief Financial Officer of Sprouts Farmers Market, Inc. Prior to joining Sprouts in February 2020, Ms. Paulonis was the Executive Vice President and Chief Financial Officer of The Michaels Companies, a position she held from August 2016 to January 2020. Ms. Paulonis joined Michaels in September 2014 and served as its Senior Vice President, Finance and Treasurer from November 2015 to August 2016 and as its Vice President, Corporate Finance, Investor Relations and Treasury from September 2014 to November 2015. Prior to joining Michaels, Ms. Paulonis held various senior level positions with PepsiCo and McKinsey & Company, after starting her career at Procter & Gamble. She holds an M.B.A. from The Wharton School at the University of Pennsylvania and a Bachelors of Science in Finance and Economics from Miami University. Ms. Paulonis has served on the Conagra Brands Board of Directors since August 2022. We believe that Ms. Paulonis’ executive, management and finance experience well qualifies her to serve on our Board. |
ELECTION OF DIRECTORS
| Rachel R. Bishop, Ph.D. | | | Director, age 50 Ms. Bishop was elected to our Board of Directors in July 2022. Ms. Bishop brings more than 20 years of experience in consumer goods, manufacturing and retail. She currently serves as President, Hefty Tableware at Reynolds Consumer Products (NASDAQ: REYN), where she oversees a $1Bn portfolio of consumer products and leads Reynolds’ ESG programming. She was a member of the management team that led Reynolds through a successful IPO in January 2020. Prior to joining Reynolds in 2019, she held senior positions with Treehouse Foods, Inc., (NYSE: THS) from 2014 through 2018, including President, Snacks Division and SVP & Chief Strategy Officer. Her previous roles include GVP Retail Development and Global Merchandising at The Walgreen Co., now Walgreens Boots Alliance Inc., and started her business career with eight years at McKinsey & Company. Ms. Bishop holds a Ph.D. in Materials Science and Engineering from Northwestern University, and a Bachelor of Science in Materials Science and Engineering, and in Geophysics from Brown University. We believe that Ms. Bishop’s strong executive background in consumer products, retail, ESG, M&A and strategic planning well qualifies her to serve on our Board. | | | Jeffrey Boyer | | | Director, age 65 Mr. Boyer was elected to our Board of Directors in July 2022. Mr. Boyer is an experienced finance and operations executive and retail industry veteran. He currently serves as Chief Operating Officer of Fossil Group (NASDAQ: FOSL) after having held the roles of Chief Financial Officer and Treasurer from October 2017 to April 2020. Mr. Boyer also served as a director on Fossil Group’s Board from 2007 to 2017, including serving as Chair and a member of its Audit Committee. Prior to joining Fossil Group, Mr. Boyer held Chief Financial Officer roles at Pier 1 Imports, Tuesday Morning, and Michaels Stores, Inc., among others. He began his career at PricewaterhouseCoopers. Mr. Boyer holds a Bachelor of Science in Finance from the University of Illinois. We believe that Mr. Boyer’s extensive finance and operations experience, and his executive leadership in retail, well qualifies him to serve on our Board. | |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
| | James Conroy | | | Director Nominee, age 54 Mr. Conroy is President, Chief Executive Officer and a director of Boot Barn Holdings Inc. (NYSE: BOOT). Prior to joining Boot Barn, Mr. Conroy was with Claire’s Stores, Inc. from 2007 to 2012 where he served as Chief Operating Officer and Interim Co Chief Executive Officer in 2012, President from 2009 to 2012 and Executive Vice President from 2007 to 2009. Prior to joining Claire’s Stores, Inc., Mr. Conroy was employed by Blockbuster Entertainment Group from 1996 to 1998, Kurt Salmon Associates from 2003 to 2005 and Deloitte Consulting in various capacities. Mr. Conroy serves on the Foundation Board of Children’s Hospital of Orange County as well as the Foundation Board of Orange County School of the Arts. Mr. Conroy received a bachelor’s degree in business management and statistics and a master’s degree in business administration from Cornell University. | | | Diana S. Ferguson | | | Director, age 60 Ms. Ferguson was elected to our Board of Directors in January 2019. Ms. Ferguson has served as a principal of Scarlett Investments, LLC, a private investment firm, since 2013. She formerly served as Chief Financial Officer to Cleveland Avenue, LLC, a venture capital investment firm, from September 2015 to December 2020. She also served as Chief Financial Officer of the Chicago Board of Education from February 2010 to May 2011 and as Senior Vice President and Chief Financial Officer of The Folgers Coffee Company from April 2008 to November 2008 when Folgers was sold. Prior to joining Folgers, she was Executive Vice President and Chief Financial Officer of Merisant Worldwide, Inc. Ms. Ferguson also served as the Chief Financial Officer of Sara Lee Foodservice, a division of Sara Lee Corporation, and in a number of leadership positions at Sara Lee Corporation, including Senior Vice President of Strategy and Corporate Development, as well as Treasurer. She currently is a director of Mattel, Inc., where she serves on the Audit Committee and is also a director of Gartner, Inc. where she serves on the Audit Committee. We believe that Ms. Ferguson’s executive, management and finance experience well qualifies her to serve on our Board. |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
| Dorlisa K. Flur | | | Director, age 58 Ms. Flur has served on our Board of Directors since 2020. Ms. Flur is a corporate director and strategic advisor to companies in the retail industry. She currently serves as a director of Hibbett, Inc., where she is a member of its Compensation Committee and chairs its Nominating and Corporate Governance Committee. She also serves as a director of United States Cold Storage, a wholly-owned subsidiary of John Swire & Sons, Ltd., and chairs its Strategy Committee. She recently joined the Board of Trustees for BlueCross BlueShield of NC and serves on its Audit and Investments Committees. Ms. Flur has served as strategic advisor to Southeastern Grocers, Inc. since August 2018 and was previously its Chief Strategy and Transformation Officer from August 2016 to July 2018. Ms. Flur previously served as Executive Vice President, Omnichannel for Belk, Inc. from 2013 to 2016, where she integrated stores and eCommerce and also led supply chain. Prior to that she was Vice Chair, Strategy and Chief Administrative Officer at Family Dollar Stores, Inc. where she held a series of top operating roles including real estate, marketing and merchandising as the company scaled from 5000 to 7500 stores. Ms. Flur is a former partner of McKinsey & Company, Inc. and co-led its Charlotte, North Carolina office. She is recognized by the National Association of Corporate Directors as NACD Directorship Certified™ (including its Climate Governance credential) and as an NACD Board Leadership Fellow. We believe that Ms. Flur’s governance, executive and management experience, including extensive work driving transformations within mass market retail, well qualifies her to serve on our Board. | |
ELECTION OF DIRECTORS
| James M. Head | | | Director, age 58 Mr. Head was elected to our Board of Directors in January 2021. Mr. Head has served as the Executive Vice President and Chief Financial Officer of MultiPlan Corporation since November, 2021. Prior to being appointed to his current role he served as a Partner at BDT & Company, LLC from 2016 until June 2021 and, prior to that, worked at Morgan Stanley for 22 years where he held various executive leadership roles, including Co-Head of the Mergers, Acquisitions and Restructuring Group, Americas from 2013 to 2016; Co-Head of the Financial Institutions M&A Group, Americas from 2008 to 2013; and Managing Director from 2003 to 2016. We believe that Mr. Head’s financial, strategic, and transactional experience – including over 30 years as an investment banker involved in complex financial and strategic transactions – well qualifies him to serve on our Board. | |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
| | Lawrence “Chip” P. Molloy | | | Director, age 62 Mr. Molloy was elected to our Board of Directors in July 2022. Mr. Molloy brings finance, private equity and board experience to Sally Beauty. He currently serves as Chief Financial Officer of Sprouts Farmers Market (NASDAQ: SFM) having served as a director and Chair of the Audit and Compensation Committees of Sprouts’ board from 2012 to 2021 and Interim Chief Financial Officer of Sprouts from June 2019 to February 2020. Previously, Mr. Molloy served as a director and Chair of Torrid’s Audit Committee from 2018 to 2021 and Interim Chief Executive Officer of Torrid from January 2018 through August 2018. His previous roles include serving as Senior Advisor at Roark Capital Group, a private equity firm focused predominately on the restaurant and retail sectors, as well as holding Chief Financial Officer roles at Under Armour and Petsmart. Prior to his business career, Chip served as a U.S. Navy fighter pilot for 10 years, later retiring from the Naval Reserve with the rank of Commander. Mr. Molloy holds an MBA from the University of Virginia and a Bachelor of Science in Computer Science from the US Naval Academy. We believe that Mr. Molloy’s extensive executive and finance experience well qualifies him to serve on our Board. | | | Erin Nealy Cox | | | Director, age 53 Ms. Nealy Cox has served on our Board of Directors since July 2021 and is a partner in the Government, Regulatory and Internal Investigations Group at Kirkland & Ellis. Ms. Nealy Cox is a trial attorney, cybersecurity expert and former federal prosecutor who served as an independent director on our Board from August 2016 to November 2017. She resigned from the Board when she was nominated and confirmed as the U.S. Attorney for the Northern District of Texas. Ms. Nealy Cox served in this role until January 2021. Prior to her appointment as the U.S. Attorney, she served briefly in 2017 as a senior advisor at McKinsey & Co. in the consulting firm’s cybersecurity and risk practice. From 2008 to 2016 Ms. Nealy Cox was executive managing director at Stroz Friedberg, a cybersecurity and investigations consulting firm. She began her career serving as an Assistant U.S. Attorney for ten years in the Northern District of Texas. We believe that Ms. Nealy Cox’s executive management, cybersecurity and legal experience well qualifies her to serve on our Board. |
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED ABOVE. BOARD NOMINEE QUALIFICATIONS
ANNUAL ELECTION OF DIRECTORS
ANNUAL ELECTION OF DIRECTORS In 2014, the Board of Directors began the process of declassifying the Board to provide for the annual election of all directors for one-year terms. Our stockholders approved the declassification of the Board at our 2014 annual meeting of stockholders. At the annual meeting each year, all directors of the Board will be elected for one-year terms. At the 2024 annual meeting, our stockholders will elect nine individuals to serve on our Board.
FY23 Director Compensation Table (1)
FY23 Director Compensation Table (1)
FY23 Director Compensation Table (1)
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (4) | Total ($) | | Rachel R. Bishop, Ph.D. | 105,000 | 149,994 | 254,994 | | Jeffrey Boyer | 105,000 | 149,994 | 254,994 | | Marshall E. Eisenberg (2) | 40,278 | 149,994 | 190,272 | | Diana S. Ferguson | 231,667 | 149,994 | 381,661 | | Dorlisa K. Flur | 105,000 | 149,994 | 254,994 | | James M. Head | 105,000 | 149,994 | 254,994 | | Linda Heasley | 105,000 | 149,994 | 254,994 | | Robert R. McMaster (2) | 91,833 | 149,994 | 241,827 | | John A. Miller (2) | 33,833 | 149,994 | 183,827 | | Lawrence “Chip” P. Molloy | 125,333 | 149,994 | 275,327 | | Erin Nealy Cox | 118,556 | 149,994 | 268,550 | | Denise A. Paulonis (3) | — | — | — | | Edward W. Rabin (2) | 33,833 | 149,994 | 183,827 |
FY23 Director Compensation Table (1)
| (1) During FY23, we did not grant any stock options to, award any non-equity incentive plan compensation to, or maintain any pension or deferred compensation arrangements for members of our Board of Directors, and our directors did not receive any compensation that would constitute “All Other Compensation.” |
FY23 Director Compensation Table (1)
| (2) Mssrs. Eisenberg, McMaster, Miller and Rabin did not stand for re-election at the 2023 Annual Meeting. |
FY23 Director Compensation Table (1)
| (3) Ms. Paulonis did not receive compensation for her service as a director during FY23. |
FY23 Director Compensation Table (1)
| (4) Reflects the grant date fair value of restricted stock unit (RSU) awards, determined in accordance with Financial Accounting Standards Board ASC Topic 718 Stock Compensation (“ASC 718”). The grant date fair value of the RSUs is based on the fair market value of the underlying shares on the date of grant. On November 2, 2022, each director other than Ms. Paulonis, received 12,458 RSUs, which stock award had a grant date fair value equal to $149,994. As of September 30, 2023, the directors beneficially owned RSUs which were vested but not yet delivered in shares in the following amounts: (a) Ms. Bishop, 0; (b) Mr. Boyer, 0; (c) Mr. Eisenberg, 0; (d) Ms. Ferguson, 31,854; (e) Ms. Flur, 15,401; (f) Mr. Head, 14,292; (g) Ms. Heasley, 14,283; (h) Mr. McMaster, 0; (i) Mr. Miller, 0; (j) Mr. Molloy, 0; (k) Ms. Nealy Cox, 8,045; (l) Ms. Paulonis, 0; and (m) Mr. Rabin, 0. |
NARRATIVE DISCUSSION OF DIRECTOR COMPENSATION TABLE
NARRATIVE DISCUSSION OF DIRECTOR COMPENSATION TABLE The following is a narrative discussion of the material factors which we believe are necessary to understand the information disclosed in the Director Compensation Table. The Sally Beauty Holdings, Inc. Amended and Restated Independent Director Compensation Policy (the “Director Compensation Policy”) governs the compensation paid to our independent directors. Following FW Cook’s bi-annual review of our director compensation program in July 2022, the Director Compensation Policy was amended with changes to take effect in FY2023, beginning October 1, 2022. Under the revised Director Compensation Policy, fees for the Board and Committee meetings were eliminated and annual Board cash and equity retainer fees, and committee chair fees were increased.
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership of Common Stock (1) | Percent of Class (2) | | Marlo M. Cormier | 97,794(3) | * | | Mary Beth Edwards | 69,129(4) | * | | John H. Goss | 132,270(5) | * | | John M. Henrich | 155,129(6) | * | | Kim McIntosh | 11,272(7) | * | | Denise A. Paulonis | 250,388(8) | * | | Scott C. Sherman | 200,927(9) | * | | Mark G. Spinks | 337,612(10) | * | | Rachel R. Bishop | 12,458(11) | * | | Jeffrey Boyer | 12,458(12) | * | | James Conroy | —(13) | * | | Diana S. Ferguson | 49,724(14) | * | | Dorlisa K. Flur | 42,537(15) | * | | James M. Head | 26,801(16) | * | | Linda Heasley | 62,290(17) | * | | Lawrence “Chip” P. Molloy | 12,458(18) | * | | Erin Nealy Cox | 25,967(19) | * | | All directors and executive officers as a group (17 persons) | 1,499,214 | 1.36% |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (1) Except as otherwise noted, the directors and named executive officers, and all directors and executive officers as a group, have sole voting power and sole investment power over the shares listed. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (2) An asterisk indicates that the percentage of Common Stock projected to be beneficially owned by the named individual does not exceed one percent of our Common Stock. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (3) Includes 42,771 shares of Common Stock underlying vested stock options. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (4) Includes 41,775 shares of Common Stock underlying vested stock options and 100 shares held by trust. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (5) Includes 86,340 shares of Common Stock underlying vested stock options. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (6) Includes 115,780 shares of Common Stock underlying vested stock options. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (7) Includes 0 shares of Common Stock underlying vested stock options. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (8) Includes 83,562 shares of Common Stock underlying vested stock options. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (9) Includes 155,913 shares of Common Stock underlying vested stock options. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (10) Includes 275,907 shares of Common Stock underlying vested stock options and 2,283 shares held as a participant in the Sally Beauty Holdings, Inc. 401(k) and Profit Sharing Plan. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (11) Includes 6,229 vested and deferred restricted stock units. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (12) Includes 0 vested and deferred restricted stock units. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (13) Mr. Conroy beneficially owns no common stock of the Company. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (14) Includes 44,312 vested and deferred restricted stock units. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (15) Includes 15,401 vested and deferred restricted stock units. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (16) Includes 26,750 vested and deferred restricted stock units. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (17) Includes 26,741 vested and deferred restricted stock units. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (18) Includes 12,458 vested and deferred restricted stock units. |
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
| (19) Includes 20,503 vested and deferred restricted stock units. |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership of Common Stock | Percent of Class | | BlackRock, Inc. 55 East 52nd Street, New York, NY 10055 | 16,540,075 (1) | 15.49% | | FMR LLC 245 Summer Street, Boston, MA 02210 | 16,165,414 (2) | 15.14% | | The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | 13,732,079 (3) | 12.86% | | ArrowMark Colorado Holdings LLC 100 Fillmore Street, Denver, CO 80206 | 5,921,078 (4) | 5.55% |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| (1) Based solely on information provided on that certain Schedule 13F filed with the SEC on November 13, 2023. |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| (2) Based solely on information provided on that certain Schedule 13F filed with the SEC on November 13, 2023. |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| (3) Based solely on information provided on that certain Schedule 13F filed with the SEC on November 14, 2023. |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| (4) Based solely on information provided on that certain Schedule 13F filed with the SEC on November 14, 2023. |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
ADVISORY VOTE ON EXECUTIVE COMPENSATION
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| Pursuant to SEC rules, the Company is providing in this Proxy Statement a separate resolution, subject to an advisory (non-binding) vote, to approve the compensation of its named executive officers. This proposal is commonly referred to as a “Say on Pay” proposal. As required by these rules, the Board invites you to review carefully the Compensation Discussion and Analysis beginning on page 48 and the tabular and other disclosures on compensation under Executive Compensation beginning on page 48, and cast a vote “FOR” the Company’s executive compensation programs through the following resolution: “Resolved, that the stockholders approve the compensation of the Company’s named executive officers, including the Company’s compensation practices and principles and their implementation, as discussed and disclosed in the Compensation Discussion and Analysis, the compensation tables, and any narrative executive compensation disclosure contained in this Proxy Statement.” As discussed in the Compensation Discussion and Analysis beginning on page 48, the Board of Directors believes that the Company’s long-term success depends in large measure on the talents of our employees. The Company’s compensation system plays a significant role in our ability to attract, retain, and motivate the highest quality workforce. The Board believes that its current compensation program uses a balanced mix of base salary, and annual and long-term incentives to attract and retain highly qualified executives; the compensation program also maintains a strong relationship between executive compensation and performance, thereby aligning the interests of the Company’s executive officers with those of its stockholders. This vote is advisory and will not be binding on the Company. While the vote does not bind the Board to any particular action, the Board values the input of the stockholders, and will take into account the outcome of this vote in considering future compensation arrangements. The Company strongly encourages all stockholders to vote on this matter. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 2. |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
EXECUTIVE OFFICERS The executive officers of Sally Beauty Holdings, Inc., their ages (as of December 13, 2023), and their positions for at least the last five years are as follows:
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| | Denise A. Paulonis President and Chief Executive Officer Denise Paulonis, 51, has been our President and Chief Executive Officer since October 2021 and a member of our Board since May 2018. Prior to being appointed to her current role, Ms. Paulonis served as Executive Vice President and Chief Financial Officer of Sprouts Farmers Market, Inc. Prior to joining |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
Sprouts in February 2020, Ms. Paulonis was the Executive Vice President and Chief Financial Officer of The Michaels Companies, a position she held from August 2016 to January 2020. Ms. Paulonis joined Michaels in September 2014 and served as its Senior Vice President, Finance and Treasurer from November 2015 to August 2016 and as its Vice President, Corporate Finance, Investor Relations and Treasury from September 2014 to November 2015. Prior to joining Michaels, Ms. Paulonis held various senior level positions with PepsiCo and McKinsey & Company, after staring her career at Procter & Gamble. She holds an M.B.A from The Wharton School at the University of Pennsylvania and a Bachelors of Science in Finance and Economics from Miami University.
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| | Marlo M. Cormier Senior Vice President, Chief Financial Officer Marlo Cormier, 52, has been our Senior Vice President, Chief Financial Officer and Chief Accounting Officer since November 2020. Prior to being appointed to her current role Ms. Cormier was Senior Vice President – Finance and Chief Accounting Officer since April 2020. Prior to joining the Company, |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
Ms. Cormier was the Senior Vice President, Corporate Finance and Chief Accounting Officer at Fossil Group, Inc. from 2013 to 2020. At Fossil Group, Ms. Cormier’s responsibilities included general accounting and SEC reporting, financial planning and analysis, taxes and treasury. Prior to her role at Fossil Group, Ms. Cormier was at Callaway Golf from 2001 to 2013 where she served in various executive roles including Vice President and Chief Accounting Officer. Prior to that Ms. Cormier was a Manager in Deloitte’s Accounting and Audit Services group. Ms. Cormier holds an active CPA license and a Bachelor’s of Science from Oregon State University with a double major in Financial Management and Accounting and a minor in Computer Science.
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| | Mary Beth Edwards Senior Vice President, Chief Transformation and Business Services Officer Mary Beth Edwards, 60, has been our Senior Vice President, Chief Transformation and Business Services Officer since October 2023. Prior to being appointed to her current role, Ms. Edwards was our Chief Information Officer and Chief Transformation Officer since November 2020. Prior to that role, |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
Ms. Edwards had served as the Company’s Group Vice President, Chief Transformation Officer and Group Vice President of Global Sourcing. Prior to joining the Company in 2019, Ms. Edwards was Vice President Global Operations at Arrow Electronics from 2015 to 2019 and Vice President, Operations ECS, Arrow Electronics from 2009 to 2015. Ms. Edwards is a combat veteran and held the rank of MAJ Promotable in the U.S. Army. She holds a B.A. in Criminal Justice from Temple University.
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| | John H. Goss President, Sally Beauty Supply John Goss, 56, has been President of Sally Beauty Supply since November 2020. Prior to that he was our Group Vice President and Head of Stores and Operations for Sally Beauty Supply. His responsibilities included leading over 2,900 retail stores and supporting the operations team, and most recently he led |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
the deployment of Ship-From-Store (SFS) and Buy Online/Pickup in Store (BOPIS) across the Sally Beauty store network. Prior to joining the Company in 2016, Mr. Goss served consecutively as Vice President of Operations and then Vice President of Transformation Management Office for Signet Jewelers. Mr. Goss has held various leadership roles at Zales Jeweler, T-Mobile, Gap Inc., and L Brands throughout his career. Mr. Goss holds a Bachelor’s degree in Business Management from The University of Phoenix.
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| | John M. Henrich Senior Vice President, General Counsel and Secretary John Henrich, 49, has been our Senior Vice President, General Counsel and Secretary since June 2019. Mr. Henrich has held various senior level positions with the Company since January 2012, including Interim General Counsel and Secretary since January 2018; Vice President, Deputy General Counsel, |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
Head of Regulatory from October 2016 to January 2018; Vice President, Associate General Counsel from October 2015 to October 2016; and Senior Counsel from January 2012 to October 2015. Prior to joining the Company, Mr. Henrich was Senior Counsel at Accor Hospitality. Mr. Henrich received his J.D. from Fordham University School of Law and his B.A. in History from Columbia University in the City of New York.
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| | Kim McIntosh Group Vice President, Controller and Chief Accounting Officer Kim Mclntosh, 46, has been our Group Vice President, Controller, and Chief Accounting Officer since March 2021. Prior to joining the Company, Ms. McIntosh held various positions at Tailored Brands, Inc. including Chief Accounting Officer from 2020 to 2021, Vice President, Corporate Controller from 2013 to |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
2020, and Assistant Controller from 2012 to 2013. Prior to that, Ms. McIntosh held various roles at Chico’s FAS, Inc. Ms. McIntosh received her Masters of Business Administration and her Bachelors of Science in Accounting from Florida Gulf Coast University.
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| | Scott C. Sherman Senior Vice President and Chief Human Resources Officer Scott Sherman, 45, has been our Senior Vice President and Chief Human Resources Officer since October 2017. Mr. Sherman has held various senior level positions with the Company since October 2012, including Group Vice President, Human Resources from November 2016 to September 2017, Vice |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
President and Deputy General Counsel from October 2013 to November 2016 and Associate General Counsel, Employment and Litigation from October 2012 to October 2013. Prior to joining the Company, Mr. Sherman was a Shareholder/Attorney at Littler Mendelson, P.C. where he represented clients in all aspects of labor and employment law. Mr. Sherman received his J.D. from the University of Pittsburgh School of Law and his B.A. in Political Science from Pennsylvania State University.
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| | Mark G. Spinks President, Beauty Systems Group Mark G. Spinks, 62, has been the President of Beauty Systems Group LLC since July 2015. Mr. Spinks previously held a number of positions of increasing responsibility with us. Mr. Spinks was most recently the Chief Operating Officer of Beauty Systems Group LLC, a position he served in since September |
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
2014. Prior to that, Mr. Spinks was the Vice President of Operations/GM for the Company’s Armstrong McCall franchise business, a position he held for five and a half years, and prior to that was the Director of Business Development for the Company for almost four years. Mr. Spinks received a B.A. in Economics and Criminal Justice from Indiana University. EXECUTIVE COMPENSATION
PERSONS OWNING MORE THAN FIVE-PERCENT OF THE COMPANY’S COMMON STOCK
| 48 | Compensation Discussion and Analysis | | 49 | Executive Summary | | 53 | Compensation Philosophy and Objectives | | 54 | FY23 Executive Compensation Program | | 56 | Tying Compensation to Performance | | 57 | Base Salary | | 58 | Annual Incentive | | 61 | Long-Term Incentives | | 65 | Other Compensation | | 65 | Change-in-Control Severance Protection | | 66 | Additional Compensation Policies | | 68 | Compensation Decision-Making Process | | 68 | Role of Compensation and Talent Committee | | 68 | Role of Independent Compensation Consultant | | 68 | Role of Management | | 69 | Market Data/Benchmarking | | 69 | Total Compensation Review | | 70 | Consideration of Stockholder Vote on Executive Compensation | | 70 | Management of Compensation-Related Risk | | 71 | Compensation and Talent Committee Report | | 72 | Compensation Tables | | 72 | Summary Compensation Table | | 74 | Grants of Plan-Based Awards for FY23 | | 76 | Outstanding Equity Awards at 2023 Fiscal Year-End | | 80 | Option Exercises and Stock Vested in FY23 | | 80 | Potential Payments Upon Termination or Change in Control | | 83 | CEO Pay Ratio | | 84 | Pay Versus Performance |
EXECUTIVE SUMMARY
| FY23 Company Financial Performance | (1) Please see “Compensation Discussion and Analysis – FY23 Executive Compensation Program – Annual Incentive” section of this CD&A for Comparable Sales and Adjusted Operating Income (“AOI”) definition. (2) Information in this Proxy Statement includes discussion of financial metrics that are not calculated in accordance with U.S. GAAP, including AOI, AOIM and Adjusted Diluted EPS. Please see Appendix 1 for a reconciliation of these measures to financial measures derived in accordance with U.S. GAAP. (3) 3-Year Average Return on Invested Capital (“ROIC”) is defined as net income plus after-tax interest expense divided by monthly invested capital over the three-year performance period. (4) Please see “Compensation Discussion and Analysis – FY23 Executive Compensation Program – Long-Term Incentives” section of this CD&A for Total Shareholder Return (“TSR”) and Adjusted Operating Income Margin (“AOIM”) definition. |
EXECUTIVE SUMMARY
| FY23 Changes | Compensation Program Changes Going into FY23, as we looked at program design, we took into account a variety of factors, including the “reset” of certain short-term metrics and the number of crucial initiatives the team would be executing throughout the year, including those focused on store and supply chain optimization, improving our supply chain end-to-end, and activating key initiatives aimed at driving long-term future growth and enhanced profitability. We also strived to balance retention, incentivizing associates on these key initiatives and growing our value for shareholders. As a result, we delayed setting our performance goals until January 2023 (typically decided in November) and we set challenging yet achievable goals that were aligned with our annual plan but were lower than the prior year results. Because of this delay and the different approach to our goals, we lowered our maximum payouts from 200% to 150% and also reduced the payout opportunity until prior year performance was exceeded. See “Compensation Discussion and Analysis – FY23 Executive Compensation Program – Annual Incentive” section and “Compensation Discussion and Analysis – FY23 Executive Compensation Program – Long-Term Incentives” section for specific goals. No changes were made to metrics and weightings. The following changes were also made: ✓ On July 24, 2023, the Compensation and Talent Committee (“Committee”) approved an amended Compensation Recoupment Policy to comply with the new SEC / NYSE rules. See “Additional Compensation Policies” section of this CD&A for more details. ✓ On July 24, 2023, the Committee approved an amended Equity Ownership Policy. See “Additional Compensation Policies” section of this CD&A for more details. | | FY23 NEO Pay | ✓ The Committee increased base salaries for the NEOs between 3.5% to 6.3%, consistent with market data from our peer group. ✓ The NEOs were eligible for annual bonuses under the Annual Incentive Plan (“AIP”) and were granted long-term incentive (“LTI”) awards in the form of 50% performance stock units (“PSUs”) and 50% restricted stock units (“RSUs”). – The Committee increased Ms. Cormier, Mr. Goss and Mr. Spinks’ AIP target percentages from 70% to 75%, consistent with market data from our peer group. ✓ Our FY23 AOI performance was 95.4% performance achieved and Comparable Sales performance was 30.1% performance achieved. Accordingly, the payout for the financial component of the AIP was 51.3% of target. Our teams remained focused on fueling growth through our core strategic initiatives – enhancing customer centricity, driving innovation, increasing operating efficiency, and making progress on ESG. We continued to pilot a number of growth driving initiatives, including the launches of CosmoProf Direct, Studio by Sally and Happy Beauty Co. When combined with our focus on innovation and owned brands, we are confident that our strategies will continue to build upon our modern and dynamic retail / distribution platform, preparing us for a successful future. Importantly, we remain steadfast in our commitment to enhance value for our customers and shareholders over the long-term. As such, given the successful activation and enhancement of these long-term growth initiatives, the Committee determined a 150% payout for performance with respect to our strategic initiatives was appropriate (20% weighting, at target). Overall, after weighting the financial and strategic initiative components of the AIP, the AIP payouts were 81.3% of target. ✓ Following the completion of the performance period on September 30, 2023, the Committee determined that the FY21-23 relative total shareholder return PSUs (“FY21-23 rTSR PSUs”) granted in January 2021 were not earned because we did not achieve threshold performance. Per the terms of the award, the FY21-23 rTSR PSUs were cancelled without payout. ✓ Following the completion of the performance period on September 30, 2023, the Committee determined that the third one-year performance period of the FY21-23 adjusted operating income PSUs (“FY21-23 Y3AOI PSUs”) granted in January 2021 were earned at 77.2% of the target award. The earned FY21-23 Y3AOI PSUs were banked and will be paid out after completion of all performance periods on November 15, 2023, subject to the executive’s continued employment on such date. ✓ Following the completion of the performance period on September 30, 2023, the Committee determined that the second one-year performance period of the FY22-24 adjusted operating income margin PSUs (“FY22-24 Y2AOIM PSUs”) granted in November 2021 were earned at 82.9% of the target award. The earned FY22-24 Y2AOIM PSUs were banked and will be paid out after completion of all performance periods on November 15, 2024, subject to the executive’s continued employment on such date. ✓ Following the completion of the performance period on September 30, 2023, the Committee determined that the first one-year performance period of the FY23-25 adjusted operating income margin PSUs (“FY23-25 Y1AOIM PSUs”) granted in November 2022 were earned at 82.9% of the target award. The earned FY23-25 Y1AOIM PSUs were banked and will be paid out after completion of all performance periods on November 15, 2025, subject to the executive’s continued employment on such date. |
COMPENSATION PHILOSOPHY AND OBJECTIVES
| Pay for Performance | ✓ Link incentive compensation to performance through objectives that align with shareholder and other stakeholder interests and drive annual and long-term results. ✓ The higher the level in the organization, the greater the link to performance (more at-risk; making leaders more accountable). | | Alignment with Shareholders | ✓ Align executive and long-term shareholder interests by linking pay to achievement of performance objectives viewed as drivers of sustained value creation, delivering a significant portion of pay in equity compensation, and requiring executive officers to accumulate and hold a meaningful amount of Company stock. | | Drive Annual and Long-Term Results | ✓ Ensure performance objectives are understandable and drive delivery of financial results and successful execution of strategic initiatives. ✓ Ensure performance goals align to our annual and long-term strategies and financial operating plans. | | Pay Competitively | ✓ Ensure pay remains competitive with peer companies in order to attract, motivate and retain associates. ✓ Target the 50th percentile of market for all compensation components, adjusted by various factors such as individual performance, responsibilities, experience, internal equity, and expected future contributions. | | Mitigate Undue Risk | ✓ Use a mix of annual and long-term incentives and financial and strategic metrics. ✓ Use caps and gates for annual incentives and use vesting periods, caps, and restrictive covenants for long-term incentives. ✓ Maintain clawback policy and stock ownership guidelines. ✓ Review and approval of annual and long-term incentive performance goals, results and payouts by the Committee. |
FY23 EXECUTIVE COMPENSATION PROGRAM
| Component | Form of Compensation | Purpose | Performance Criteria | | Base Salary | Cash | Providing a competitive level of fixed compensation that attracts and retains skilled management, recognizing their respective roles, responsibilities, and experience. | Reviewed annually for increases. | | AIP | Cash | Communicating and driving achievement of financial and strategic annual objectives that are important to our sustained success and stock value. | Earned based on achievement of AOI, comparable sales, and strategic initiative goals, with potential adjustment based on individual performance. | | LTI 2019 Omnibus Incentive Plan | PSUs | Creating a strong financial incentive for meeting or exceeding long-term financial goals, rewarding performance, recognizing promotions, encouraging an equity stake in the Company, and aligning interests with those of our stockholders. | PSUs are eligible to vest based on achievement of goals related to rTSR over a three-year period and AOIM over three, one-year periods. In addition, realized value of PSUs at vesting is tied to Company stock price. | | | RSUs | Encouraging retention through multi-year vesting requirements. | RSUs vest ratably over a three-year period with continued employment providing a retention incentive. Realized value of RSUs at vesting is tied to Company stock price. |
FY23 EXECUTIVE COMPENSATION PROGRAM
| Component | | Form of Compensation | Purpose | | Other Compensation | Health and Welfare Benefits | Eligibility to receive available health and other welfare benefits paid for, in whole or in part, by the Company, including broad-based medical, dental, life and disability insurance. | Providing a competitive, broad-based employee benefits structure and promoting the good health of our executive officers. | | | Retirement Plan | Eligibility to participate in, and receive Company contributions to, our 401(k) plan (available to all employees). | Providing competitive retirement-planning benefits to attract and retain skilled management. | | | Executive Physical | Reimbursement for an annual physical exam. | Promoting the good health of our executive officers. | | | New Hire Benefits | Limited new hire benefits (including Company-paid COBRA and relocation expenses). | Attracting new talent by providing a smooth transition to our Company. | | Change-in-Control Severance Protection | | Eligibility to receive cash severance (1.99 times base salary and a 5-year average AIP award payout) and post-termination health and welfare benefits (24 months) in connection with involuntary termination within two years after a change in control. | Providing a competitive compensation package for attraction and retention purposes before and after a change in control, as well as ensuring continuity of management in the event of any actual or threatened change in control of our Company. |
TYING COMPENSATION TO PERFORMANCE
TYING COMPENSATION TO PERFORMANCE Our executive compensation program closely links realized compensation to the achievement of financial objectives and changes in the Company’s stock price, with 54% of Ms. Paulonis’ and 46% of our other NEOs’ FY23 target compensation being performance-based and contingent upon the achievement of financial or strategic performance objectives or changes in our stock price. We use five key performance metrics to measure results and determine annual incentive and PSU payouts: Use of these metrics supports the following objectives: Generate sustainable growth. The Committee believes these performance components – incorporated into the Company’s annual budget and long-term planning – represent the metrics that can be used by our stockholders to assess the Company’s value. Using these metrics, together with overlapping performance periods for our PSUs, enables the Committee to evaluate the NEOs’ performance in generating sustainable growth. Balance annual and long-term objectives. The Committee also believes these measures highlight the importance of leading the Company to achieve both annual and long-term financial and strategic goals. These measures also reduce the risk that actions would be taken to sacrifice long-term growth to meet annual targets or vice versa. Accountability for controllable operating performance and long-term growth. The standards for determining performance against objectives established for these metrics are derived from the Company’s financial statements, which follow generally accepted accounting principles. The terms of our AIP and PSUs provide the Committee the ability to adjust results to exclude certain items, either positive or negative, that it considers extraordinary when determining performance against pre-established financial goals. The Committee believes that retaining the ability to make adjustments encourages management’s willingness to take actions that may limit annual Company performance yet support long-term growth.
BASE SALARY
BASE SALARY The Committee determines the base salary of each NEO on an annual basis (unless market conditions or changes in responsibilities warrant a mid-year change) and targets the 50th percentile of our peer group. The Committee uses its judgment to vary executive officer pay based on factors, such as an executive officer’s experience, performance and responsibilities, as well as internal parity. In evaluating the NEOs’ performance, the Committee relies primarily on our Chief Executive Officer’s performance review of each executive officer (other than herself). The subjective factors considered by our Chief Executive Officer primarily consist of whether the executive officer met their developmental and operational goals and the financial performance within their area of responsibility. In September 2022, the Committee reviewed market data provided by FW Cook on our peer companies and the retail industry generally to determine whether changes to the base salaries for our executive officers were needed for FY23 to align our executive team with the market. The Committee increased base salary levels of the NEOs, with adjustments to reflect executive performance and to move executive salaries closer to the targeted competitive position. The Committee believes that the base salaries paid to our NEOs during FY23, as reflected in the table below, were appropriate to retain and motivate the officers and were competitive with those offered by our peer companies.
ANNUAL INCENTIVE
ANNUAL INCENTIVE Our AIP provides each NEO the opportunity to receive an annual cash incentive payout based on their base salary for the fiscal year, target award percentage and achievement of performance objectives:
ANNUAL INCENTIVE
| FY23 Base SalaryX | Target Award PercentageX | Performance Objectives Payout % | = | Award Payout | | Target Award | | | | |
TARGET AWARD
TARGET AWARD Our Chief Executive Officer made recommendations to the Committee for each NEO’s target award percentage (other than herself), based on job responsibilities and peer group data provided by FW Cook. After reviewing these recommendations, job responsibilities, peer group data, and ensuring an emphasis on performance-based / at-risk pay, the Committee approved the following FY23 target award percentages:
TARGET AWARD
| (2) Ms. Cormier, Mr. Goss and Mr. Spinks’ AIP target award percentages were increased 5% (from 70% to 75%), consistent with market data from our peer group. |
PERFORMANCE OBJECTIVES
| Payout Scale (1) | AOI (Millions) | Performance Achieved | Payout % | Weighted Payout % | | Maximum | ≥ $410.6 | ≥ 115% | 150% | 90% | | FY22 Actual | $391.3 | 109.6% | 110% | 66% | | Target | $357.0 | 100% | 100% | 60% | | Threshold | $303.5 | 85% | 25% | 15% | | Below Threshold | < $303.5 | < 85% | 0% | 0% |
PERFORMANCE OBJECTIVES
| (1) Payouts between performance levels is determined based on straight-line interpolation |
PERFORMANCE OBJECTIVES
| Payout Scale (1) | Comparable Sales | Performance Achieved | Payout % | Weighted Payout % | | Maximum | ≥ 6.3% | ≥ 140% | 150% | 30% | | Target | 4.5% | 100% | 100% | 20% | | Threshold | 1.4% | 30% | 25% | 5% | | Below Threshold | < 1.4% | < 30% | 0% | 0% |
PERFORMANCE OBJECTIVES
| (1) Payouts between performance levels is determined based on straight-line interpolation |
PERFORMANCE OBJECTIVES
| Performance Achieved | Payout % | Weighted Payout % | | Exceeds | 101-150% | 21-30% | | Target | 100% | 20% | | Not Fully Achieved | 0-99% | 0-19% |
PAYOUT
PAYOUT Actual results for FY23 were as follows:
PAYOUT
| | | Performance Achieved | Payout % | Weighted Payout % | | Adjusted Operating Income | $340.8M | 95.4% | 77.2% | 46.3% | | Comparable Sales | 1.4% | 30.1% | 25.1% | 5% | | Strategic Initiatives | — | Exceeds | 150% | 30% | | Performance Objectives Payout % | | | | 81.3% |
PAYOUT
The Committee determined that the Company delivered on our strategic initiatives, each of which is discussed further in the “Compensation Discussion and Analysis – Executive Summary – FY23 Company Strategies” section of this Proxy Statement. Accomplishments and achievements on these included enhancements to our Customer Centricity (launching CosmoProf Direct, our Licensed Colorist on Demand at Sally, Studio by Sally, and Happy Beauty Co.), growing high margin Own Brands (launched bondbar and continued growth of Strawberry Leopard) and amplifying innovation (launched Amika and Danger Jones, and expanded distribution with Color Wow), increasing operational efficiency and optimizing our capabilities, and making progress on sustainability. We are confident that our strategies will continue to build upon our modern and dynamic retail / distribution platform, preparing us for a successful future. Importantly, we remain steadfast in our commitment to enhance value for our customers and shareholders over the long-term. As such, the Committee determined a 150% payout for performance with respect to our strategic initiatives was appropriate for this component of the AIP (20% weighting, at target). The table below shows the target awards under the AIP for the NEOs for FY23 and the award payouts:
PAYOUT
| Name | Target Award | Performance Objectives Payout % | Award Payout | | Denise A. Paulonis | $1,694,877 | 81.3% | $1,377,935 | | Marlo M. Cormier | $464,024 | 81.3% | $377,251 | | John H. Goss | $412,262 | 81.3% | $335,169 | | Mark G. Spinks | $365,506 | 81.3% | $297,156 | | Mary Beth Edwards | $303,529 | 81.3% | $246,769 |
LONG-TERM INCENTIVES
LONG-TERM INCENTIVES The Committee’s policy is to approve equity awards and have them be effective on the same day. Other than special one-time grants, such as at the time of a new hire or promotion, the Committee intends to grant equity awards to its executive officers once a year, and such grants are generally made at the same time that the Committee approves base salary increases and the AIP target awards for the fiscal year. These actions generally occur within the first quarter of the fiscal year. Our Senior Vice President and Chief Human Resources Officer provides our Chief Executive Officer with a list of employees eligible for equity awards. Our Chief Executive Officer then makes a grant recommendation to the Committee for each of the proposed grantees, including the NEOs other than herself, based on consideration of the value of the grants that the employee received in prior years, the competitive market data provided to the Committee by FW Cook, and her views as to the employee’s expected future contribution to our business results. The Chair of the Committee recommends to the Committee the Chief Executive Officer’s proposed equity grant based on her review of competitive market data provided by FW Cook and the CEO’s performance. The Committee is ultimately responsible for approving the award grant value and the methodology for converting this value into number of shares. In making equity grants for eligible employees, the Committee considers the recommendations of the Chief Executive Officer and the competitive data provided by FW Cook regarding aggregate share usage and costs associated with equity grants.
FY23 EQUITY AWARDS
FY23 EQUITY AWARDS Consistent with its equity grant policy, the Committee granted RSUs and PSUs in November 2022 to each of our executive officers. For more information regarding the equity awards granted to our NEOs during FY23, please see the “Grants of Plan-Based Awards” table of this Proxy Statement. The intended grant values of the NEOs’ FY23 equity awards are reflected in the following table:
FY23 EQUITY AWARDS
| Name | FY23 Equity Award Grant Value | | Denise A. Paulonis | $4,750,000 | | Marlo M. Cormier | $950,000 | | John H. Goss | $750,000 | | Mark G. Spinks | $750,000 | | Mary Beth Edwards | $575,000 |
FY23 EQUITY AWARDS
| • | RSUs comprised 50% of the equity award value. RSUs vest ratably over a three-year period, subject to continued employment. |
FY23 EQUITY AWARDS
| • | PSUs comprised 50% of the equity award value. PSUs are eligible to vest based on the following FY23-25 PSU performance objectives (and continued employment): |
FY23 EQUITY AWARDS
| – | 50% rTSR measured over a three-year performance period. |
FY23 EQUITY AWARDS
| ◾ | TSR means the change in a company’s stock price plus dividends paid to shareholders (assumed to be reinvested) over the rTSR Performance Period, and is measured as follows: |
FY23 EQUITY AWARDS
| TSR = | Ending Stock Price – Beginning Stock Price + Reinvested Dividends | | | Beginning Stock Price |
FY23 EQUITY AWARDS
| – | Beginning and Ending Stock Price Determination: A 30-day trading average at the beginning and ending of the rTSR Performance Period. |
FY23 EQUITY AWARDS
| – | Dividend Reinvestment: Dividends will be determined using the Ex-Dividend date with the sum of all dividends paid throughout the performance period added to the difference between the Ending Stock Price and Beginning Stock Price. |
FY23 EQUITY AWARDS
| • | Sally Beauty Holdings, Inc.’s TSR is measured on a relative basis compared to the rTSR Comparator Companies. |
FY23 EQUITY AWARDS
| • | If Sally Beauty Holdings, Inc.’s absolute TSR (as measured for the FY23-25 PSU grants) is negative, then the payout will be capped at 100%. |
FY23 EQUITY AWARDS
| ◾ | rTSR Performance Period means fiscal years of the Company beginning on October 1, 2022 and ending on September 30, 2025. |
FY23 EQUITY AWARDS
| ◾ | rTSR Comparator Companies are the companies comprising the S&P Composite 1500 Specialty Stores Index. |
FY23 EQUITY AWARDS
| • | The S&P Composite 1500 Specialty Stores Index companies are locked in as of the grant date and remain the same throughout the rTSR Performance Period even if the Index composition changes. |
FY23 EQUITY AWARDS
| • | Award treatment if the following situations occur during the rTSR Performance Period: |
FY23 EQUITY AWARDS
| | Situation | Plan Treatment | | Adjustments | Stock splits and recapitalizations | Opening share price adjusted for recapitalizations | | | rTSR Comparator Company bankruptcy / delisting / liquidation | Company not removed from rTSR Comparator Companies; Company considered to be at the bottom of the rTSR Comparator Companies | | | rTSR Comparator Company acquired or taken private | Company removed from the rTSR Comparator Companies from the beginning of the performance period | | | rTSR Comparator Company announcement of being acquired but not yet closed | | | No Adjustments | Stock buybacks or issuance | No special adjustments made | | | Significant acquisition or divestiture | Acquisition or divestiture would impact the company’s TSR, so no adjustment needed | | | rTSR Comparator Company financial restatements which occur after the performance period ends | No adjustments made; Captured in the next annual grant cycle as reflected in stock price |
FY23 EQUITY AWARDS
| ◾ | rTSR Payout Scale – rTSR pays out between 0-200% of target based on Sally Beauty Holdings, Inc.’s percentile rank: |
FY23 EQUITY AWARDS
| Payout Scale (1)(2) | Percentile Rank Achieved | Payout % | | Maximum | ≥ 85th %ile | 200% | | Target | 55th %ile | 100% | | Threshold | 25th %ile | 25% | | Below Threshold | < 25th %ile | 0% |
FY23 EQUITY AWARDS
| (1) Payouts between performance levels will be determined on a straight-line interpolation. |
FY23 EQUITY AWARDS
| (2) If Sally Beauty Holdings, Inc.’s absolute TSR (as measured for the FY23-25 rTSR PSUs) is negative, then the payout will be capped at 100%. |
FY23 EQUITY AWARDS
| – | 50% AOIM measured over three, one-year performance periods. |
FY23 EQUITY AWARDS
| ◾ | AOIM is defined as Sally Beauty Holdings, Inc.’s adjusted operating income divided by total sales for the AOIM Performance Period. |
FY23 EQUITY AWARDS
| ◾ | AOIM Performance Period means: |
FY23 EQUITY AWARDS
Year 1: Fiscal year of the Company beginning on October 1, 2022 and ending on September 30, 2023 (“Y1AOIM”); Year 2: Fiscal year of the Company beginning on October 1, 2023 and ending on September 30, 2024 (“Y2AOIM”); and Year 3: Fiscal year of the Company beginning on October 1, 2024 and ending on September 30, 2025 (“Y3AOIM”).
FY23 EQUITY AWARDS
| ◾ | AOIM Payout Scale – AOIM for the FY23-25 PSUs pays out between 0-150% of target based on the Company’s performance. The payout scale for each tranche is determined at the beginning of each AOIM performance period. See “Determination of FY23-25 Y1AOIM PSUs” for the payout scale of the first, one-year performance period. |
FY23 EQUITY AWARDS
Any FY23-25 PSUs earned are banked and paid out after the completion of all performance periods on November 15, 2025, subject to the executive’s continued employment.
DETERMINATION OF FY21-23 RTSR PSUS
DETERMINATION OF FY21-23 RTSR PSUS Following the completion of the performance period on September 30, 2023, the Committee determined that the FY21-23 rTSR PSUs granted in January 2021 were not earned because we did not achieve threshold performance:
DETERMINATION OF FY21-23 RTSR PSUS
| Payout Scale (1)(2) | Percentile Rank Achieved | Payout % | | Maximum | ≥ 85th %ile | 200% | | Target | 55th %ile | 100% | | Threshold | 25th %ile | 25% | | Below Threshold | < 25th %ile | 0% | | Performance Achieved & Payout % | 23.1th %ile | 0% |
DETERMINATION OF FY21-23 RTSR PSUS
| (1) Payouts between performance levels were determined based on straight-line interpolation. |
DETERMINATION OF FY21-23 RTSR PSUS
| (2) If Sally Beauty Holdings, Inc.’s absolute TSR (as measured for the FY21-23 rTSR PSUs) is negative, then the payout will be capped at 100%. |
DETERMINATION OF FY21-23 RTSR PSUS
Per the terms of the award, the FY21-23 rTSR PSUs were cancelled without payout.
DETERMINATION OF FY21-23 Y3AOI PSUS
DETERMINATION OF FY21-23 Y3AOI PSUS Following the completion of the performance period on September 30, 2023, the Committee determined that the FY21-23 Y3AOI PSUs granted in January 2021 were earned at 77.2% of the target award:
DETERMINATION OF FY21-23 Y3AOI PSUS
| Payout Scale (1) | Y3AOI (Millions) | Performance Achieved | Payout % | | Maximum | ≥ $410.6 | ≥ 115% | 200% | | FY22 Actual | $391.3 | 109.6% | 110% | | Target | $357.0 | 100% | 100% | | Threshold | $303.5 | 85% | 25% | | Below Threshold | < $303.5 | < 85% | 0% | | Performance Achieved & Payout % | $340.8 | 95.4% | 77.2% |
DETERMINATION OF FY21-23 Y3AOI PSUS
| (1) Payouts between performance levels were determined based on straight-line interpolation. |
DETERMINATION OF FY21-23 Y3AOI PSUS
The earned FY21-23 Y3AOI PSUs were banked and will be paid out after completion of all performance periods on November 15, 2023, subject to the executive’s continued employment on such date. With the completion of the performance periods for the FY21-23 rTSR PSUs and the FY21-23 Y3AOI PSUs, all performance periods for the FY21-23 PSUs have now concluded:
DETERMINATION OF FY21-23 Y3AOI PSUS
| Grant | Metrics and Weighting | Performance Period(s) | FY21 | FY22 | FY23 | | FY21-23 | | | | | | | | 50% Relative Total Shareholder Return (“rTSR”) | 3-Year | rTSR 0% Payout | | | | | 50% Adjusted Operating Income (“AOI”) | 3, 1-Year | Y1AOI 132.7% Payout | Y2AOI 0% Payout | Y3AOI 77.2% Payout |
DETERMINATION OF FY21-23 Y3AOI PSUS
All earned and banked PSUs will be paid out on November 15, 2023, subject to the executive’s continued employment on such date.
DETERMINATION OF FY22-24 Y2AOIM PSUS
DETERMINATION OF FY22-24 Y2AOIM PSUS Following the completion of the performance period on September 30, 2023, the Committee determined that the FY22-24 Y2AOIM PSUs granted in November 2021 were earned at 82.9% of the target award:
DETERMINATION OF FY22-24 Y2AOIM PSUS
| Payout Scale (1) | Y2AOIM | Performance Achieved | Payout % | | Maximum | ≥ 10.7% | ≥ 115% | 200% | | FY22 Actual | 10.3% | 110.3% | 110% | | Target | 9.3% | 100% | 100% | | Threshold | 8.6% | 93% | 25% | | Below Threshold | < 8.6% | < 93% | 0% | | Performance Achieved & Payout % | 9.1% | 98.3% | 82.9% |
DETERMINATION OF FY22-24 Y2AOIM PSUS
| (1) Payouts between performance levels were determined based on straight-line interpolation. |
DETERMINATION OF FY22-24 Y2AOIM PSUS
The earned FY22-24 Y2AOIM PSUs were banked and will be paid out after completion of all performance periods on November 15, 2024, subject to the executive’s continued employment on such date.
DETERMINATION OF FY23-25 Y1AOIM PSUS
DETERMINATION OF FY23-25 Y1AOIM PSUS Following the completion of the performance period on September 30, 2023, the Committee determined that the FY23-25 Y1AOIM PSUs granted in November 2022 were earned at 82.9% of the target award:
DETERMINATION OF FY23-25 Y1AOIM PSUS
| Payout Scale (1) | Y1AOIM | Performance Achieved | Payout% | | Maximum | ≥ 10.7% | ≥ 115% | 150% | | FY22 Actual | 10.3% | 110.3% | 110% | | Target | 9.3% | 100% | 100% | | Threshold | 8.6% | 93% | 25% | | Below Threshold | < 8.6% | < 93% | 0% | | Performance Achieved & Payout % | 9.1% | 98.3% | 82.9% |
DETERMINATION OF FY23-25 Y1AOIM PSUS
| (1) Payouts between performance levels were determined based on straight-line interpolation. |
DETERMINATION OF FY23-25 Y1AOIM PSUS
The earned FY23-25 Y1AOIM PSUs were banked and will be paid out after completion of all performance periods on November 15, 2025, subject to the executive’s continued employment on such date.
CHANGE-IN-CONTROL SEVERANCE PROTECTION
CHANGE-IN-CONTROL SEVERANCE PROTECTION Many change-in-control transactions result in significant organizational changes, particularly at the senior executive level. To encourage our senior executive officers to remain employed with the Company during an important time when their prospects for continued employment can be uncertain, we are parties to change-in-control severance agreements with each of our NEOs, which provide payments and benefits in the event of the executive’s termination of employment by the Company without cause or by the executive for “good reason” within two years following a change in control. Because a termination by the executive for good reason is effectively a “constructive termination” by the Company without cause, we believe it is appropriate to provide severance benefits in these circumstances. The Committee has determined that our change-in-control agreements are generally consistent with those in place at similarly-situated public companies, are designed to keep our executive officers focused on their work responsibilities during the uncertainty that accompanies a potential change-in-control and are necessary to retain and recruit our executive officers. The Committee also deemed it important from a retention perspective to treat all of the NEOs similarly with respect to their change-in-control arrangements. Under the terms of our 2010 and 2019 Omnibus Incentive Plans, stock options, PSUs and RSUs have “double trigger” change-in-control vesting if the awards are assumed by the surviving company and equitably converted to awards for publicly traded stock in connection with such transaction. This means that the awards would vest upon the holder’s involuntary separation from service within two years following the change in control, or such other period specified by the Committee. If the awards are not assumed by the surviving company and equitably converted, they would vest upon the change in control. In either case, PSUs for which the performance period has not commenced will be forfeited.
ROLE OF INDEPENDENT COMPENSATION CONSULTANT
ROLE OF INDEPENDENT COMPENSATION CONSULTANT The Committee retained the services of an independent consultant, FW Cook, to assist in its annual review of our executive compensation program and biennial review of our non-employee director compensation program. As part of this engagement, FW Cook assisted the Committee in the design of our current programs and continues to advise the Committee on our programs. The Committee has directly engaged FW Cook to assist with these same services for FY23, based on FW Cook’s experience, expertise and familiarity with the Company. FW Cook does not provide any services to our management, and does not provide any service to us, other than with respect to its role as the Committee’s executive compensation consultant. The Committee determined that the work of FW Cook did not raise any conflicts of interest in FY23. In making this assessment, the Committee considered the independence factors enumerated in Rule 10C-1(b) under the Securities Exchange Act of 1934 and the NYSE listing standards, including the fact that FW Cook does not provide any other services to the Company, the level of fees received from the Company as a percentage of FW Cook’s total revenue, policies and procedures employed by FW Cook to prevent conflicts of interest, and whether the individual FW Cook advisers to the Committee own any stock of the Company or have any business or personal relationships with members of the Committee or our executive officers.
MARKET DATA/BENCHMARKING
MARKET DATA/BENCHMARKING FW Cook assisted the Committee in benchmarking our compensation arrangements and aggregate equity compensation practices against public companies similar in size and scope to our company. FW Cook obtained proxy data from the peer companies described below, as well as comparative compensation surveys of retail companies. The following 16 specialty retail companies comprised our peer group for FY23 and was used to set FY23 compensation for our NEOs, which we refer to as our “peer companies” or “peer group”:
MARKET DATA/BENCHMARKING
| Abercrombie & Fitch | Guess? | Signet Jewelers | | American Eagle Outfitters | Hibbett Sports | Ulta Beauty | | Caleres | Kontoor Brands | Urban Outfitters | | Carter’s | Party City | Williams-Sonoma | | Foot Locker | Petco Health & Wellness | Wolverine World Wide | | Genesco | | |
MARKET DATA/BENCHMARKING
The Committee selected the companies in the peer group, after reviewing data on retail companies (including financial metrics, line-of-business, stock performance and employee count for each respective company) and considering several criteria, including the comparability of specialty retailers and the volatility and maturity of potential peers. At the time of approval, in terms of size, our revenues were between the median and 75th percentile and our market capitalization was between the 25th percentile and median of these peer companies. The peer group differs from our peer group for FY22 as described below:
MARKET DATA/BENCHMARKING
| • | The Committee approved the addition of the following companies based on such companies being comparable to our financials, having similar business operations and strategy, and providing balance within the peer group: Genesco and Petco Health & Wellness. |
MARKET DATA/BENCHMARKING
| • | The Committee approved the removal of the following companies due to size or taken private: At Home Group and DICK’S Sporting Goods. |
TOTAL COMPENSATION REVIEW
| • | the types and amounts of long-term incentives granted in the last four fiscal years; |
TOTAL COMPENSATION REVIEW
| • | the proceeds realized from stock option exercises and PSU / RSU releases during the last four fiscal years; and |
MANAGEMENT OF COMPENSATION-RELATED RISK
| • | Diversification of incentive-related risk by employing complementary performance measures linked to growth, profitability and shareholder returns; |
MANAGEMENT OF COMPENSATION-RELATED RISK
| • | A balanced weighting of the various performance measures, to avoid excessive attention on achievement of one measure over another; |
MANAGEMENT OF COMPENSATION-RELATED RISK
| • | Standardized equity grant procedures; and |
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following table contains compensation information for our NEOs. The information included in this table reflects compensation earned by the NEOs for services rendered to us for the fiscal years ended September 30, 2023, September 30, 2022, and September 30, 2021.
SUMMARY COMPENSATION TABLE
| Name and Principal Position (1) | Fiscal Year | Salary ($) | Bonus ($)(2) | Stock Awards ($)(3)(4) | Option Awards ($)(5) | Non-Equity Incentive Plan Compensation ($)(6) | All Other Compensation ($)(7) | Total ($) | | Denise A. Paulonis | 2023 | 1,129,231 | — | 4,701,885 | — | 1,377,935 | 21,884 | 7,230,935 | | President and Chief Executive Officer | 2022 | 1,083,077 | 400,000 | 5,357,400 | 999,999 | 330,000 | 192,678 | 8,363,154 | | Marlo M. Cormier | 2023 | 618,269 | — | 964,884 | — | 377,251 | 17,539 | 1,977,943 | | Senior Vice President, Chief Financial Officer | 2022 | 586,538 | — | 768,259 | — | 82,216 | 22,245 | 1,459,258 | | | 2021 | 531,539 | — | 320,534 | 178,495 | 491,655 | 10,859 | 1,533,082 | | John H. Goss | 2023 | 549,115 | — | 760,339 | — | 335,169 | 17,870 | 1,662,493 | | President, Sally Beauty Supply | 2022 | 507,231 | — | 578,453 | — | 71,146 | 16,546 | 1,173,376 | | | 2021 | 441,289 | — | 262,529 | 146,197 | 402,029 | 18,424 | 1,270,468 | | Mark G. Spinks | 2023 | 487,058 | — | 769,440 | — | 297,156 | 22,450 | 1,576,104 | | President, Beauty Systems Group | 2022 | 470,692 | — | 589,050 | — | 65,929 | 21,128 | 1,146,799 | | | 2021 | 459,000 | — | 366,327 | 203,998 | 430,542 | 21,669 | 1,481,536 | | Mary Beth Edwards | 2023 | 466,692 | — | 585,505 | — | 246,769 | 20,620 | 1,319,586 | | Senior Vice President, Chief Transformation and Business Services Officer | 2022 | 450,962 | — | 479,940 | — | 58,653 | 16,660 | 1,006,215 |
SUMMARY COMPENSATION TABLE
| (1) Reflects principal positions held as of September 30, 2023. |
SUMMARY COMPENSATION TABLE
| (2) Reflects a cash sign-on bonus intended to compensate Ms. Paulonis for amounts forfeited upon termination from her prior employer (50% of which was subject to repayment if Ms. Paulonis resigned or if the Company terminated her employment for cause within her first year of employment with the Company). |
SUMMARY COMPENSATION TABLE
| (3) Reflects the grant date fair value of the stock awards (RSUs and PSUs), determined in accordance with ASC 718. The PSUs granted: |
SUMMARY COMPENSATION TABLE
| (a) In FY23 are comprised of PSUs with one, three-year performance period with goals related to rTSR (referred to herein as the FY23-25 rTSR PSUs) and PSUs with three, one-year performance periods with goals related to AOIM (referred to herein as the FY23-25 Y1AOIM PSUs, FY23-25 Y2AOIM PSUs and FY23-25 Y3AOIM PSUs), in each case with the number of shares earned paid out at the end of the three-year performance period on November 15, 2025. The AOIM goals for the FY23-25 Y2AOIM PSUs and FY23-25 Y3AOIM PSUs were not established on the date of grant and, as a result, for accounting purposes, are not considered granted until the respective performance goals are established. Accordingly, the grant date fair value of the FY23-25 rTSR PSUs and FY23-25 Y1AOIM PSUs are reported in the Stock Awards column for 2023, but the grant date fair value of the FY23-25 Y2AOIM PSUs and FY23-25 Y3AOIM PSUs will not be reported in the Stock Awards column until 2024 and 2025, respectively. |
SUMMARY COMPENSATION TABLE
| (b) In FY22 are comprised of PSUs with one, three-year performance period with goals related to rTSR (referred to herein as the FY22-24 rTSR PSUs) and PSUs with three, one-year performance periods with goals related to AOIM (referred to herein as the FY22-24 Y1AOIM PSUs, FY22-24 Y2AOIM PSUs and FY22-24 Y3AOIM PSUs), in each case with the number of shares earned paid out at the end of the three-year performance period on November 15, 2024. The AOIM goals for the FY22-24 Y2AOIM PSUs and FY22-24 Y3AOIM PSUs were not established on the date of grant and, as a result, for accounting purposes, are not considered granted until the respective performance goals are established. Accordingly, the grant date fair value of the FY22-24 rTSR PSUs and FY22-24 Y1AOIM PSUs were reported in the Stock Awards column for 2022, and the grant date fair value of the FY22-24 Y2AOIM PSUs are reported in the Stock Awards column for 2023. The grant date fair value of the FY22-24 Y3AOIM PSUs will not be reported in the Stock Awards column until 2024. |
SUMMARY COMPENSATION TABLE
| (c) In FY21 are comprised of PSUs with one, three-year performance period with goals related to rTSR (referred to herein as the FY21-23 rTSR PSUs) and PSUs with three, one-year performance periods with goals related to AOI (referred to herein as the FY21-23 Y1AOI PSUs, FY21-23 Y2AOI PSUs and FY21-23 Y3AOI PSUs), in each case with the number of shares earned paid out at the end of the three-year performance period on November 15, 2023. The AOI goals for the FY21-23 Y2AOI PSUs and FY21-23 Y3AOI PSUs were not established on the date of grant and, as a result, for accounting purposes, are not considered granted until the respective performance goals are established. Accordingly, the grant date fair value of the FY21-23 rTSR PSUs and FY21-23 Y1AOI PSUs were reported in the Stock Awards column for 2021, the grant date fair value of the FY21-23 Y2AOI PSUs were reported in the Stock Awards column for 2022, and the grant date fair value of the FY21-23 Y3AOI PSUs are reported in the Stock Awards column for 2023. |
SUMMARY COMPENSATION TABLE
| (4) The fair value of the FY23 RSUs is calculated using the closing price for shares of our Common Stock on the date of grant (11/02/22). The fair value of the FY23-25 Y1AOIM PSUs, FY22-24 Y2AOIM PSUs and FY21-23 Y3AOI PSUs is calculated using the closing price for shares of our Common Stock on the date the Committee approved the performance objectives of the awards (01/25/23). The fair value of the FY23-25 rTSR PSUs is based on the Monte Carlo valuation as of the grant date (11/02/22). The assumptions used in the Monte Carlo valuation of the FY23-25 rTSR PSUs are included in Note 5 to our audited financial statements for the fiscal year ended September 30, 2023, included in our Form 10-K filed with the SEC on November 16, 2023. For PSUs, the grant date fair value is calculated using the target number of PSUs awarded to each NEO, which was the assumed probable outcome as of the grant date. Assuming, instead, that the highest level of performance conditions would be achieved, the grant date fair values would have been as follows: |
SUMMARY COMPENSATION TABLE
| Name | FY23 PSUs ($)(a) | FY22 PSUs ($)(b) | FY21 PSUs ($)(c) | | Denise A. Paulonis | 4,408,517 | 3,564,846 | — | | Marlo M. Cormier | 930,745 | 736,536 | 294,581 | | John H. Goss | 731,964 | 556,920 | 241,284 | | Mark G. Spinks | 750,167 | 578,114 | 336,657 | | Mary Beth Edwards | 566,351 | 459,909 | — |
SUMMARY COMPENSATION TABLE
| (a) Includes the FY23-25 rTSR PSUs, FY23-25 Y1AOIM PSUs, FY22-24 Y2AOIM PSUs, and FY21-23 Y3AOI PSUs. |
SUMMARY COMPENSATION TABLE
| (b) Includes the FY22-24 rTSR PSUs, FY22-24 Y1AOIM PSUs and FY21-23 Y2AOI PSUs. |
SUMMARY COMPENSATION TABLE
| (c) Includes the FY21-23 rTSR PSUs and FY21-23 Y1AOI PSUs. |
SUMMARY COMPENSATION TABLE
| (5) Reflects the grant date fair value of the option awards, determined in accordance with ASC 718. The assumptions used in the calculation of the grant date fair values of the stock option awards are included in Note 5 to our audited financial statements for the fiscal years ended September 30, 2023, September 30, 2022, and September 30, 2021, included in our Form 10-K filed with the SEC on November 16, 2023, November 17, 2022, and November 22, 2021, respectively. |
SUMMARY COMPENSATION TABLE
| (6) The amounts reported reflect AIP awards earned for the respective fiscal year. For information regarding the AIP, please see “Compensation Discussion and Analysis – FY23 Executive Compensation Program – Annual Incentive” of this Proxy Statement. |
SUMMARY COMPENSATION TABLE
| (7) Amounts reported as “All Other Compensation” for FY23 include the following: |
SUMMARY COMPENSATION TABLE
| Name | Company Matching Contributions to 401(k) ($) | Life Insurance Premiums ($) | Total ($) | | Denise A. Paulonis | 19,262 | 2,622 | 21,884 | | Marlo M. Cormier | 13,537 | 4,002 | 17,539 | | John H. Goss | 12,968 | 4,902 | 17,870 | | Mark G. Spinks | 13,200 | 9,250 | 22,450 | | Mary Beth Edwards | 12,580 | 8,040 | 20,620 |
GRANTS OF PLAN-BASED AWARDS FOR FY23
GRANTS OF PLAN-BASED AWARDS FOR FY23 The following table contains information regarding plan-based awards provided during FY23 to the NEOs:
GRANTS OF PLAN-BASED AWARDS FOR FY23
| | | AIP | | | PSUs | | | RSUs | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) | | | Estimated Possible Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(4) | Grant Date Fair Value of Stock Awards ($)(5) | | Name | Grant Date(1) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Denise A. Paulonis | | | | | | | | | | | | | 423,719 | 1,694,877 | 2,542,316 | | | | | | | | 11/02/22 | | | | | | | 197,259 | 2,374,998 | | FY23-25 rTSR | 11/02/22 | | | | 24,658 | 98,629 | 197,258 | | 1,532,695 | | FY23-25 Y1AOIM | 01/25/23 | | | | 8,219 | 32,876 | 49,314 | | 490,510 | | FY22-24 Y2AOIM | 01/25/23 | | | | 5,089 | 20,354 | 40,708 | | 303,682 | | Marlo M. Cormier | | | | | | | | | | | | | 116,006 | 464,024 | 696,036 | | | | | | | | 11/02/22 | | | | | | | 39,451 | 474,990 | | FY23-25 rTSR | 11/02/22 | | | | 4,932 | 19,725 | 39,450 | | 306,527 | | FY23-25 Y1AOIM | 01/25/23 | | | | 1,644 | 6,575 | 9,863 | | 98,099 | | FY22-24 Y2AOIM | 01/25/23 | | | | 958 | 3,831 | 7,662 | | 57,159 | | FY21-23 Y3AOI | 01/25/23 | | | | 471 | 1,884 | 3,768 | | 28,109 | | John H. Goss | | | | | | | | | | | | | 103,066 | 412,262 | 618,393 | | | | | | | | 11/02/22 | | | | | | | 31,146 | 374,998 | | FY23-25 rTSR | 11/02/22 | | | | 3,894 | 15,573 | 31,146 | | 242,004 | | FY23-25 Y1AOIM | 01/25/23 | | | | 1,298 | 5,191 | 7,787 | | 77,450 | | FY22-24 Y2AOIM | 01/25/23 | | | | 719 | 2,873 | 5,746 | | 42,865 | | FY21-23 Y3AOI | 01/25/23 | | | | 386 | 1,543 | 3,086 | | 23,022 | | Mark G. Spinks | | | | | | | | | | | | | 91,377 | 365,506 | 548,259 | | | | | | | | 11/02/22 | | | | | | | 31,146 | 374,998 | | FY23-25 rTSR | 11/02/22 | | | | 3,894 | 15,573 | 31,146 | | 242,004 | | FY23-25 Y1AOIM | 01/25/23 | | | | 1,298 | 5,191 | 7,787 | | 77,450 | | FY22-24 Y2AOIM | 01/25/23 | | | | 719 | 2,873 | 5,746 | | 42,865 | | FY21-23 Y3AOI | 01/25/23 | | | | 539 | 2,153 | 4,306 | | 32,123 | | Mary Beth Edwards | | | | | | | | | | | | | 75,882 | 303,529 | 455,294 | | | | | | | | 11/02/22 | | | | | | | 23,878 | 287,491 | | FY23-25 rTSR | 11/02/22 | | | | 2,985 | 11,939 | 23,878 | | 185,532 | | FY23-25 Y1AOIM | 01/25/23 | | | | 995 | 3,979 | 5,969 | | 59,367 | | FY22-24 Y2AOIM | 01/25/23 | | | | 599 | 2,394 | 4,788 | | 35,718 | | FY21-23 Y3AOI | 01/25/23 | | | | 292 | 1,166 | 2,332 | | 17,397 |
GRANTS OF PLAN-BASED AWARDS FOR FY23
| (1) As described in footnotes 2 and 3 in the “Summary Compensation Table” of this Proxy Statement, the FY21-23 Y3AOI PSUs were granted during FY21 (grant date of 01/27/21), the FY22-24 Y2AOIM PSUs were granted during FY22 (grant date of |
GRANTS OF PLAN-BASED AWARDS FOR FY23
| 11/03/21) and the FY23-25 Y1AOIM PSUs were granted during FY23 (grant date of 11/02/22), but the Committee established the applicable performance objectives for such awards during FY23 (on 01/25/23). |
GRANTS OF PLAN-BASED AWARDS FOR FY23
| (2) Reflects potential cash award payouts under the AIP. Thresholds are based on financial measures only (no threshold for Strategic Initiatives). See “Compensation Discussion and Analysis – FY23 Executive Compensation Program – Annual Incentive” of this Proxy Statement for more details. FY23 AIP payouts are shown in the “Summary Compensation Table” of this Proxy Statement under “Non-Equity Incentive Plan Compensation”. |
GRANTS OF PLAN-BASED AWARDS FOR FY23
| (3) Reflects potential payouts of the PSUs described in footnote (1), in each case under the 2019 Omnibus Incentive Plan. See “Compensation Discussion and Analysis – FY23 Executive Compensation Program – Long-Term Incentives” and footnotes 2 and 3 in the “Summary Compensation Table” of this Proxy Statement for more details. |
GRANTS OF PLAN-BASED AWARDS FOR FY23
| (4) Reflects RSUs granted in FY23, in each case under the 2019 Omnibus Plan. The restrictions upon these awards lapse ratably over three years. See “Compensation Discussion and Analysis – FY23 Executive Compensation Program – Long-Term Incentives” of this Proxy Statement for more details. |
GRANTS OF PLAN-BASED AWARDS FOR FY23
| (5) Reflects a grant date fair value of $12.04 per RSU (granted on 11/02/22), $15.54 per rTSR PSU (granted on 11/02/22), $14.92 per Y1AOIM PSU (granted on 11/02/22 – performance objectives established on 01/25/23), $14.92 per Y2AOIM PSU (granted on 11/03/21 – performance objectives established on 01/25/23)) and $14.92 per Y3AOI PSU (granted on 01/27/21 – performance objectives established on 01/25/23). |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END The following table contains information about outstanding stock option and stock awards held by the NEOs on September 30, 2023:
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| | | Option Awards | | | | Stock Awards | | | | | | | | | | | RSUs | | PSUs | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) (1) | Option Exercise Price ($) | Option Expiration Date | Number of Units of Stock That Have Not Vested (#) (2) | Market Value of Units of Stock That Have Not Vested ($)(4) | Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Units That Have Not Vested ($)(4) | | Denise A. Paulonis | | | | | | | | | | | | 11/02/22 | | | | | 197,259 | 1,653,030 | | | | FY23-25 rTSR | 11/02/22 | | | | | | | 98,629 | 826,511 | | FY23-25 Y1AOIM | 11/02/22 | | | | | 27,255 | 228,397 | | | | | 11/03/21 | | | | | 81,418 | 682,283 | | | | FY22-24 rTSR | 11/03/21 | | | | | | | 61,063 | 511,708 | | FY22-24 Y2AOIM | 11/03/21 | | | | | 16,874 | 141,404 | | | | | 10/01/21 | 41,781 | 83,562 | 17.09 | 10/01/31 | 56,563 | 473,998 | | | | Marlo M. Cormier | | | | | | | | | | | | 11/02/22 | | | | | 39,451 | 330,599 | | | | FY23-25 rTSR | 11/02/22 | | | | | | | 19,725 | 165,296 | | FY23-25 Y1AOIM | 11/02/22 | | | | | 5,451 | 45,679 | | | | | 11/03/21 | | | | | 15,326 | 128,432 | | | | FY22-24 rTSR | 11/03/21 | | | | | | | 11,494 | 96,320 | | FY22-24 Y2AOIM | 11/03/21 | | | | | 3,176 | 26,615 | | | | FY21-23 Y1AOI | 01/27/21 | | | | | 2,498 | 20,933 | | | | FY21-23 Y3AOI | 01/27/21 | | | | | 1,455 | 12,193 | | | | | 11/23/20 | 7,831 | 3,916 | 11.78 | 11/23/30 | 1,634 | 13,693 | | | | | 11/04/20 | 20,682 | 10,342 | 9.09 | 11/04/30 | 4,236 | 35,498 | | | | John H. Goss | | | | | | | | | | | | 11/02/22 | | | | | 31,146 | 261,003 | | | | FY23-25 rTSR | 11/02/22 | | | | | | | 15,573 | 130,502 | | FY23-25 Y1AOIM | 11/02/22 | | | | | 4,304 | 36,068 | | | | | 11/03/21 | | | | | 11,494 | 96,320 | | | | FY22-24 rTSR | 11/03/21 | | | | | | | 8,620 | 72,236 | | FY22-24 Y2AOIM | 11/03/21 | | | | | 2,382 | 19,961 | | | | FY21-23 Y1AOI | 01/27/21 | | | | | 2,046 | 17,145 | | | | FY21-23 Y3AOI | 01/27/21 | | | | | 1,192 | 9,989 | | | | | 11/23/20 | 3,804 | 3,804 | 11.78 | 11/23/30 | 1,588 | 13,307 | | | | | 11/04/20 | 7,682 | 7,682 | 9.09 | 11/04/30 | 3,146 | 26,363 | | | | | 11/05/19 | 5,002 | — | 16.65 | 11/05/29 | | | | | | | 11/01/18 | 14,505 | — | 18.14 | 11/01/28 | | | | | | | 11/01/17 | 17,516 | — | 17.42 | 11/01/27 | | | | | | | 11/01/16 | 26,345 | — | 25.53 | 11/01/26 | | | | |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| | | Option Awards | | | | Stock Awards | | | | | | | | | | | RSUs | | PSUs | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) (1) | Option Exercise Price ($) | Option Expiration Date | Number of Units of Stock That Have Not Vested (#) (2) | Market Value of Units of Stock That Have Not Vested ($)(4) | Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Units That Have Not Vested ($)(4) | | Mark G. Spinks | | | | | | | | | | | | 11/02/22 | | | | | 31,146 | 261,003 | | | | FY23-25 rTSR | 11/02/22 | | | | | | | 15,573 | 130,502 | | FY23-25 Y1AOIM | 11/02/22 | | | | | 4,304 | 36,068 | | | | | 11/03/21 | | | | | 11,494 | 96,320 | | | | FY22-24 rTSR | 11/03/21 | | | | | | | 8,620 | 72,236 | | FY22-24 Y2AOIM | 11/03/21 | | | | | 2,382 | 19,961 | | | | FY21-23 Y1AOI | 01/27/21 | | | | | 2,855 | 23,925 | | | | FY21-23 Y3AOI | 01/27/21 | | | | | 1,663 | 13,936 | | | | | 11/04/20 | — | 17,728 | 9.09 | 11/04/30 | 7,261 | 60,847 | | | | | 11/05/19 | 36,013 | — | 16.65 | 11/05/29 | | | | | | | 11/01/18 | 34,812 | — | 18.14 | 11/01/28 | | | | | | | 11/01/17 | 42,040 | — | 17.42 | 11/01/27 | | | | | | | 11/01/16 | 57,959 | — | 25.53 | 11/01/26 | | | | | | | 10/28/15 | 53,151 | — | 23.45 | 10/28/25 | | | | | | | 10/29/14 | 34,204 | — | 29.20 | 10/29/24 | | | | | | | 10/30/13 | 17,700 | — | 26.30 | 10/30/23 | | | | | | Mary Beth Edwards | | | | | | | | | | | | 11/02/22 | | | | | 23,878 | 200,098 | | | | FY23-25 rTSR | 11/02/22 | | | | | | | 11,939 | 100,049 | | FY23-25 Y1AOIM | 11/02/22 | | | | | 3,299 | 27,646 | | | | | 11/03/21 | | | | | 9,578 | 80,264 | | | | FY22-24 rTSR | 11/03/21 | | | | | | | 7,183 | 60,194 | | FY22-24 Y2AOIM | 11/03/21 | | | | | 1,985 | 16,634 | | | | FY21-23 Y1AOI | 01/27/21 | | | | | 1,547 | 12,964 | | | | FY21-23 Y3AOI | 01/27/21 | | | | | 901 | 7,550 | | | | | 11/23/20 | 1,118 | 560 | 11.78 | 11/23/30 | 234 | 1,961 | | | | | 11/04/20 | 17,728 | 8,864 | 9.09 | 11/04/30 | 3,631 | 30,428 | | | | | 11/05/19 | 13,505 | — | 16.65 | 11/05/29 | | | | |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (1) The unvested stock options vest as follows: |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| | Grant Date | Vest Date | | | | | | Name | | 10/01/23 | 11/15/23 | 11/23/23 | 10/01/24 | Total | | Denise A. Paulonis | 10/01/21 | 41,781 | | | 41,781 | 83,562 | | Marlo M. Cormier | 11/23/20 | | | 3,916 | | 3,916 | | | 11/04/20 | | 10,342 | | | 10,342 | | John H. Goss | 11/23/20 | | | 3,804 | | 3,804 | | | 11/04/20 | | 7,682 | | | 7,682 | | Mark G. Spinks | 11/04/20 | | 17,728 | | | 17,728 | | Mary Beth Edwards | 11/23/20 | | | 560 | | 560 | | | 11/04/20 | | 8,864 | | | 8,864 |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (2) The unvested RSUs vest as follows: |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| | Grant Date | Vest Date | | | | | | | | Name | | 10/01/23 | 11/15/23 | 11/23/23 | 10/01/24 | 11/15/24 | 11/15/25 | Total | | Denise A. Paulonis | 11/02/22 | | 65,752 | | | 65,752 | 65,755 | 197,259 | | FY23-25 Y1AOIM (a) | 11/02/22 | | | | | | 27,255 | 27,255 | | RSUs | 11/03/21 | | 40,709 | | | 40,709 | | 81,418 | | FY22-24 Y2AOIM (b) | 11/03/21 | | | | | 16,874 | | 16,874 | | RSUs | 10/01/21 | 28,281 | | | 28,282 | | | 56,563 | | Marlo M. Cormier | 11/02/22 | | 13,150 | | | 13,150 | 13,151 | 39,451 | | FY23-25 Y1AOIM (a) | 11/02/22 | | | | | | 5,451 | 5,451 | | RSUs | 11/03/21 | | 7,663 | | | 7,663 | | 15,326 | | FY22-24 Y2AOIM (b) | 11/03/21 | | | | | 3,176 | | 3,176 | | FY21-23 Y1AOI (c) | 01/27/21 | | 2,498 | | | | | 2,498 | | FY21-23 Y3AOI (c) | 01/27/21 | | 1,455 | | | | | 1,455 | | RSUs | 11/23/20 | | | 1,634 | | | | 1,634 | | RSUs | 11/04/20 | | 4,236 | | | | | 4,236 | | John H. Goss | 11/02/22 | | 10,381 | | | 10,382 | 10,383 | 31,146 | | FY23-25 Y1AOIM (a) | 11/02/22 | | | | | | 4,304 | 4,304 | | RSUs | 11/03/21 | | 5,747 | | | 5,747 | | 11,494 | | FY22-24 Y2AOIM (b) | 11/03/21 | | | | | 2,382 | | 2,382 | | FY21-23 Y1AOI (c) | 01/27/21 | | 2,046 | | | | | 2,046 | | FY21-23 Y3AOI (c) | 01/27/21 | | 1,192 | | | | | 1,192 | | RSUs | 11/23/20 | | | 1,588 | | | | 1,588 | | RSUs | 11/04/20 | | 3,146 | | | | | 3,146 | | Mark G. Spinks | 11/02/22 | | 10,381 | | | 10,382 | 10,383 | 31,146 | | FY23-25 Y1AOIM (a) | 11/02/22 | | | | | | 4,304 | 4,304 | | RSUs | 11/03/21 | | 5,747 | | | 5,747 | | 11,494 | | FY22-24 Y2AOIM (b) | 11/03/21 | | | | | 2,382 | | 2,382 | | FY21-23 Y1AOI (c) | 01/27/21 | | 2,855 | | | | | 2,855 | | FY21-23 Y3AOI (c) | 01/27/21 | | 1,663 | | | | | 1,663 | | RSUs | 11/04/20 | | 7,261 | | | | | 7,261 | | Mary Beth Edwards | 11/02/22 | | 7,959 | | | 7,959 | 7,960 | 23,878 | | FY23-25 Y1AOIM (a) | 11/02/22 | | | | | | 3,299 | 3,299 | | RSUs | 11/03/21 | | 4,789 | | | 4,789 | | 9,578 | | FY22-24 Y2AOIM (b) | 11/03/21 | | | | | 1,985 | | 1,985 | | FY21-23 Y1AOI (c) | 01/27/21 | | 1,547 | | | | | 1,547 | | FY21-23 Y3AOI (c) | 01/27/21 | | 901 | | | | | 901 | | RSUs | 11/23/20 | | | 234 | | | | 234 | | RSUs | 11/04/20 | | 3,631 | | | | | 3,631 |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (a) The FY23-25 Y1AOIM PSUs are included in this table based on actual performance of 82.9% and will vest on November 15, 2025, subject to continued employment on such date. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (b) The FY22-24 Y2AOIM PSUs are included in this table based on actual performance of 82.9% and will vest on November 15, 2024, subject to continued employment on such date. The FY22-24 Y1AOIM PSUs are not included in this table because they were not earned and were cancelled without payout following the conclusion of the performance period on September 30, 2022. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (c) The FY21-23 Y1AOI PSUs and FY21-23 Y3AOI PSUs are included in this table based on actual performance of 132.7% and 77.2%, respectively, both of which will vest on November 15, 2023, subject to continued employment on such date. The FY21-23 rTSR PSUs are not included in this table because they were not earned and were cancelled without payout following the conclusion of the performance period on September 30, 2023. The FY21-23 Y2AOI PSUs are not included in this table because they were not earned and were cancelled without payout following the conclusion of the performance period on September 30, 2022. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (3) The potential payout dates for the unearned PSUs are as follows (shown at target except as otherwise noted). See “Compensation Discussion and Analysis – FY23 Executive Compensation Program – Long-Term Incentives” of this Proxy Statement for more details. The FY23-25 Y2AOIM PSUs, FY23-25 Y3AOIM PSUs, and FY22-24 Y3AOIM PSUs are not included in this table because the performance goals for such awards have not been established and, as a result, are not considered granted for accounting and disclosure purposes until the respective performance goals are established. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| | Grant Date | Performance Period | Potential Payout Date | | | | Name | | | 11/15/24 | 11/15/25 | Total | | Denise A. Paulonis | | | | | | | FY23-25 rTSR | 11/02/22 | FY23-25 | | 98,629 | 98,629 | | FY22-24 rTSR | 11/03/21 | FY22-24 | 61,063 | | 61,063 | | Marlo M. Cormier | | | | | | | FY23-25 rTSR | 11/02/22 | FY23-25 | | 19,725 | 19,725 | | FY22-24 rTSR | 11/03/21 | FY22-24 | 11,494 | | 11,494 | | John H. Goss | | | | | | | FY23-25 rTSR | 11/02/22 | FY23-25 | | 15,573 | 15,573 | | FY22-24 rTSR | 11/03/21 | FY22-24 | 8,620 | | 8,620 | | Mark G. Spinks | | | | | | | FY23-25 rTSR | 11/02/22 | FY23-25 | | 15,573 | 15,573 | | FY22-24 rTSR | 11/03/21 | FY22-24 | 8,620 | | 8,620 | | Mary Beth Edwards | | | | | | | FY23-25 rTSR | 11/02/22 | FY23-25 | | 11,939 | 11,939 | | FY22-24 rTSR | 11/03/21 | FY22-24 | 7,183 | | 7,183 |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (4) Value based on the closing price for shares of our Common Stock on September 29, 2023 of $8.38. |
OPTION EXERCISES AND STOCK VESTED IN FY23
OPTION EXERCISES AND STOCK VESTED IN FY23 The following table contains information about stock options exercised, stock vested and the value realized by the NEOs during FY23:
OPTION EXERCISES AND STOCK VESTED IN FY23
| | Option Awards | | Stock Awards (1) | | | Name | Number of Shares Acquired on Exercise (#) | Valued Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Denise A. Paulonis | | | 68,989 | 866,412 | | Marlo M. Cormier | | | 21,073 | 278,632 | | John H. Goss | | | 12,132 | 150,506 | | Mark G. Spinks | 35,456 | 286,997 | 16,972 | 212,659 | | Mary Beth Edwards | | | 10,139 | 126,820 |
OPTION EXERCISES AND STOCK VESTED IN FY23
| (1) Value realized on vesting for RSUs is equal to the closing price for shares of our Common Stock on the date of vesting multiplied by the number of shares acquired upon vesting. The “Number of Shares Acquired on Vesting” and the “Value Realized on Vesting” include shares that were withheld for taxes at the time of vesting. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The following table summarizes the estimated value of the payments and benefits that each of our NEOs would receive upon termination of employment under various circumstances or a change in control. The amounts shown assume that the triggering event (termination of employment or a change in control) occurred on September 30, 2023. The amounts presented in the following table do not reflect amounts the NEO earned or accrued prior to the triggering event, such as previously vested equity awards. For information about these previously earned and accrued amounts, see the “Summary Compensation Table”, “Outstanding Equity Awards at 2023 Fiscal Year-End” table and “Option Exercises and Stock Vested in FY23” table of this Proxy Statement.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Name and Potential Payment Type | Death or Disability ($) | Retirement ($)(1) | Change in Control ($)(2)(8) | Change in Control with Qualified Termination ($)(2)(3)(9) | Termination for Any Other Reason ($)(10) | | Denise A. Paulonis | | | | | | | FY23 Bonus (4) | 1,377,935 | — | — | 1,377,935 | — | | Severance (5) | — | — | — | 2,925,300 | — | | Equity Awards (6) | 2,115,582 | — | — | 4,517,331 | — | | Health and Welfare Benefits (7) | — | — | — | 16,089 | — | | Total | 3,493,517 | — | — | 8,836,655 | — | | Marlo M. Cormier | | | | | | | FY23 Bonus (4) | 377,251 | — | — | 377,251 | — | | Severance (5) | — | — | — | 1,727,101 | — | | Equity Awards (6) | 448,337 | — | — | 1,085,176 | — | | Health and Welfare Benefits (7) | — | — | — | 41,236 | — | | Total | 825,588 | — | — | 3,230,764 | — |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Name and Potential Payment Type | Death or Disability ($) | Retirement ($)(1) | Change in Control ($)(2)(8) | Change in Control with Qualified Termination ($)(2)(3)(9) | Termination for Any Other Reason ($)(10) | | John H. Goss | | | | | | | FY23 Bonus (4) | 335,169 | — | — | 335,169 | — | | Severance (5) | — | — | — | 1,457,367 | — | | Equity Awards (6) | 349,645 | — | — | 721,677 | — | | Health and Welfare Benefits (7) | — | — | — | 30,827 | — | | Total | 684,814 | — | — | 2,545,040 | — | | Mark G. Spinks | | | | | | | FY23 Bonus (4) | 297,156 | 297,156 | — | 297,156 | — | | Severance (5) | — | — | — | 1,393,249 | — | | Equity Awards (6) | 381,549 | 603,719 | — | 768,908 | — | | Health and Welfare Benefits (7) | — | — | — | 31,321 | — | | Total | 678,705 | 900,875 | — | 2,490,634 | — | | Mary Beth Edwards | | | | | | | FY23 Bonus (4) | 246,769 | — | — | 246,769 | — | | Severance (5) | — | — | — | 1,219,482 | — | | Equity Awards (6) | 277,491 | — | — | 567,101 | — | | Health and Welfare Benefits (7) | — | — | — | 31,211 | — | | Total | 524,260 | — | — | 2,064,563 | — |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (1) Only Mr. Spinks was eligible for retirement as of September 30, 2023. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (2) For purposes of the severance agreements, a “change in control” generally includes: (i) the acquisition by any person of 20% or more of the voting power of our outstanding Common Stock; (ii) a change in the majority of the incumbent Board of Directors; (iii) certain reorganizations, mergers or consolidations of us involving a change of ownership of 50% or more of our Common Stock or sales of substantially all of our assets; or (iv) stockholder approval of our complete liquidation or dissolution. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (3) For purposes of this table, a qualified termination means termination without cause or a resignation for good reason within 24 months following a change in control. “Good reason” generally includes: (i) a material diminution in authority, duties or responsibilities of the executive or the supervisor to whom the executive reports; (ii) a material reduction in the executive’s base salary; (iii) a material reduction in the budget over which the executive retains authority; (iv) a relocation of the executive’s principal location by more than 20 miles; or (v) any other material breach of the severance agreement. “Cause” generally includes: (i) the executive’s uncured demonstrably willful and deliberate material breach of duties and responsibilities, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company; and (ii) the executive’s commission of a felony involving moral turpitude. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (4) Reflects the current fiscal year AIP award payout, which was not yet paid as of September 30, 2023. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (5) Reflects a severance payment of 1.99 times the NEO’s base salary as of the end of FY23 plus 1.99 times the average of the NEO’s AIP award payouts for the previous five fiscal years (excluding FY23), payable in a lump sum. Because she commenced employment in FY20, an annualized bonus was used for FY20 for Ms. Cormier. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (6) Reflects the estimated value of unvested in-the-money stock options, PSUs and RSUs based on the closing price per share of our Common Stock on September 29, 2023 of $8.38. For purposes of this calculation, unvested stock options having a value less than $8.38 have a value of $0. For PSUs, calculations are based on the following: (i) in the case of death, disability, or retirement, 100% of the target number of units for the FY23-25 rTSR PSUs and FY22-24 rTSR PSUs, 0% of the target number of units for the FY21-23 rTSR PSUs, 132.7% of the target number of units for the FY21-23 Y1AOI PSUs, 0% of the target number of units for the FY21-23 Y2AOI PSUs, 77.2% of the target number of units for the FY21-23 Y3AOI PSUs, 0% of the target |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| number of units for the FY22-24 Y1AOIM PSUs, 82.9% of the target number of units for the FY22-24 Y2AOIM PSUs, and 82.9% of the target number of units for the FY23-25 Y1AOIM PSUs; and (ii) in the case of a change in control with qualified termination, 100% of the target number of units for the FY23-25 rTSR PSUs, FY22-24 rTSR PSUs and FY21-23 rTSR PSUs, 132.7% of the target number of units for the FY21-23 Y1AOI PSUs, 0% of the target number of units for the FY21-23 Y2AOI PSUs, 77.2% of the target number of units for the FY21-23 Y3AOI PSUs, 0% of the target number of units for the FY22-24 Y1AOIM PSUs, 82.9% of the target number of units for the FY22-24 Y2AOIM PSUs, and 82.9% of the target number of units for the FY23-25 Y1AOIM PSUs, per the terms of the award agreements. The impact of each scenario on outstanding stock options, PSUs and RSUs is described in the following table: |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Equity Award Type | Death or Disability | Retirement (a) | Change in Control with Qualified Termination | Termination for Any Other Reason | | Options | Accelerated Vesting (Next Tranche Only) | Continues to Vest up to 36 Months | Accelerated Vesting (All) | Forfeited | | PSUs | In Progress, Prorated (Based on Actual Performance); Not in Progress, Forfeited | In Progress, Prorated (Based on Actual Performance); Not in Progress, Forfeited | rTSR PSUs, Accelerated Vesting (All at Target); All Other PSUs (In Progress, Based on Actual Performance; Not in Progress, Forfeited) | Forfeited | | RSUs | Accelerated Vesting (Next Tranche Only) | Continues to Vest up to 36 Months | Accelerated Vesting (All) | Forfeited |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (a) Assuming the NEO agrees to restrictive covenants. If the NEO does not agree to restrictive covenants, then the NEO will forfeit his or her unvested equity awards. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (7) Reflects the cost of continued health and welfare benefits for 24 months, based on (i) our portion of the projected cost of the benefits (the NEO pays the employee cost for such coverage) and (ii) the level of coverage selected by the NEO. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (8) Assuming stock options, RSUs and PSUs awarded pursuant to the 2010 and 2019 Omnibus Incentive Plans are assumed by the acquirer. If, instead, the stock options, RSUs and PSUs were not assumed by the buyer, then such awards would be cancelled in in exchange for a cash payment (based upon the difference between the price per share offered in connection with the change in control and the exercise price, in the case of stock options). The estimated value of such awards is reflected in the “Change in Control with Qualified Termination” column of this table. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (9) Pursuant to the terms of the severance agreements, any payments to the executive under such agreements will be reduced so that the present value of such payments plus any other “parachute payments” as determined under Section 280G of the Internal Revenue Code will not, in the aggregate, exceed 2.99 times the executive’s average taxable income from us over the five-year period ending prior to the year in which a change in control occurs. However, no such reduction will apply to payments that do not constitute “excess parachute payments” under Section 280G of the Internal Revenue Code. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (10) If the executive terminates employment with the Company for any reason other than death or disability, retirement or a change in control with a qualified termination, then such executive will not be entitled to any payments or benefits in connection with such termination. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
CEO PAY RATIO The CEO pay ratio figures below are a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Exchange Act. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported below should not be used as a basis for comparison between companies. The Company identified the median employee for FY22, using a methodology in accordance with SEC rules, as explained in our proxy statement for our 2023 annual meeting, filed with the SEC on Schedule 14 A on December 14, 2022. We believe there has been no significant change to our employee population, employee compensation arrangements, or the circumstances of that median employee since the employee was first identified last year that would result in a significant change to our pay ratio. As of July 1, 2023, our global head count was 27,386 employees. Accordingly, as permitted under SEC rules, we are using the same median employee identified for purposes of last year’s CEO pay ratio. For FY23, the total annual compensation of our CEO was $7,230,935 and the median employee’s total annual compensation was $14,091. Accordingly, the ratio of CEO pay to median employee pay was 513:1. PAY VERSUS PERFORMANCE The following table shows the compensation actually paid (“CAP”) (as defined by the SEC in Item 402(v) of Regulation S-K) for our NEOs and our financial performance for the fiscal years shown.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | CEO (1) | | Other NEOs (1) | | | | | | | Fiscal Year | Summary Compensation Table Total (2) | Compensation Actually Paid (3) | Average Summary Compensation Table Total (2) | Average Compensation Actually Paid (3) | Total Shareholder Return (4) | Peer Group Total Shareholder Return (5) | Net Income (Millions) (6) | AOI (Millions) (7) | | 2023 | $7,230,935 | $2,854,742 | $1,634,032 | $857,188 | $96.43 | $94.71 | $184.6 | $340.8 | | 2022 | $8,363,154 | $6,267,042 | $1,286,427 | $575,679 | $144.99 | $82.42 | $183.6 | $391.3 | | 2021 | $6,723,259 | $5,734,028 | $1,407,832 | $1,781,613 | $193.90 | $124.60 | $239.9 | $461.1 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (1) NEOs included in these columns reflect the following individuals: |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Fiscal Year | CEO | Other NEOs | | 2023 | Denise A. Paulonis | Marlo M. Cormier, John H. Goss, Mark G. Spinks, Mary Beth Edwards | | 2022 | Denise A. Paulonis | Marlo M. Cormier, John H. Goss, Mark G. Spinks, Mary Beth Edwards, Pam K. Kohn | | 2021 | Christian A. Brickman | Marlo M. Cormier, John H. Goss, Mark G. Spinks, Pam K. Kohn, Aaron E. Alt |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (2) Amounts reflect Summary Compensation Table Total for our NEOs for each corresponding year. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (3) The following tables illustrate the adjustments to the Summary Compensation Table Total for our CEO as well as the average for our other NEOs, to determine “compensation actually paid”, as computed in accordance with Item 402(v). Amounts do not reflect actual compensation earned by or paid to our NEOs during the applicable year. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Reconciliation of Summary Compensation Table Total to Compensation Actually Paid for CEO | Fiscal Year 2021 | Fiscal Year 2022 | Fiscal Year 2023 | | | Summary Compensation Table Total | $6,723,259 | $8,363,154 | | 7,230,935 | | Minus: Grant Date Fair Value of Option and Stock Awards Granted in Fiscal Year | $4,245,711 | $6,357,399 | | 4,701,885 | | Plus: Fair Value at Fiscal Year-End of Outstanding and Unvested Option and Stock Awards Granted in Fiscal Year | $0 | $4,260,517 | | 2,022,820 | | Plus: Change in Fair Value of Outstanding and Unvested Option and Stock Awards Granted in Prior Fiscal Years | $0 | $0 | -$ | 1,694,291 | | Plus: Fair Value at Vesting of Option and Stock Awards Granted and Vested in Same Fiscal Year | $2,370,656 | $0 | | 0 | | Plus: Change in Fair Value as of Vesting Date of Option and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $1,289,566 | $770 | -$ | 2,837 | | Minus: Fair Value as of Prior Fiscal Year-End of Option and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $403,742 | $0 | | 0 | | Compensation Actually Paid | $5,734,028 | $6,267,042 | | 2,854,742 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Reconciliation of Average Summary Compensation Table Total to Average Compensation Actually Paid for Other NEOs | Fiscal Year 2021 | Fiscal Year 2022 | | Fiscal Year 2023 | | | Average Summary Compensation Table Total | $1,407,832 | | 1,286,427 | | 1,634,032 | | Minus: Grant Date Fair Value of Option and Stock Awards Granted in Fiscal Year | $581,704 | | 640,227 | | 770,042 | | Plus: Fair Value at Fiscal Year-End of Outstanding and Unvested Option and Stock Awards Granted in Fiscal Year | $839,512 | | 296,579 | | 331,238 | | Plus: Change in Fair Value of Outstanding and Unvested Option and Stock Awards Granted in Prior Fiscal Years | $166,112 | -$ | 172,842 | -$ | 335,892 | | Plus: Fair Value at Vesting of Option and Stock Awards Granted and Vested in Same Fiscal Year | $0 | | 0 | | 0 | | Plus: Change in Fair Value as of Vesting Date of Option and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $57,066 | | 83,141 | -$ | 2,147 | | Minus: Fair Value as of Prior Fiscal Year-End of Option and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $107,205 | | 277,399 | | 0 | | Average Compensation Actually Paid | $1,781,613 | | 575,679 | | 857,188 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
For purposes of the above adjustments, the fair value of equity awards on the applicable date were determined in accordance with FASB’s ASC Topic 718. For more information, please see the notes to our financial statements in our Annual Report on Form 10-K and the footnotes to the Summary Compensation Table of this proxy statement. The assumptions used in calculating the fair value of the Option and Stock Awards did not differ in any material respect from the assumptions used to calculate the grant date fair value of the awards as reported in the Summary Compensation Table, except that the fair value calculations of (i) the options granted on or between May 22, 2018 and October 1, 2021 used an estimated term between 3.09 years and 7.10-years in FY21, an expected term between 3.10 years and 5.00 years in FY22, and an expected term between 2.97 years and 6.00 years in FY23, as compared to an estimated term of 6.00 years used to calculate the grant date fair value of such awards, and (ii) (a) the FY19-21 AOIG/ROIC PSU assumed a payout below target, the FY20-22 AOIG/ROIC PSU assumed a payout below threshold, the FY21-23 AOI PSU assumed a payout above target in FY21, (b) the FY20-22 AOIG/ROIC and FY21-23 AOI and FY22-24 AOIM PSU awards had payouts below threshold in FY22, and (c) FY21-23 AOI, FY22-24 AOIM PSU, and FY23-25 AOIM PSU awards had payouts below target in FY23, in each case as compared to the grant date fair value calculations which assumed a payout at target.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (4) Total Shareholder Return (“TSR”) represents the cumulative return on a fixed investment of $100 in the common stock of Sally Beauty Holdings, Inc., for the period beginning on the last trading day of fiscal year 2020 through the end of the applicable fiscal year, assuming reinvestment of dividends. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (5) Peer Group Total Shareholder Return represents the cumulative return on a fixed investment of $100 in the Dow Jones U.S. Specialty Retailers Index for the period beginning on the last trading day of fiscal year 2020 through the end of the applicable fiscal year, assuming reinvestment of dividends. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (6) The dollar amounts reported represent the net income reflected in the Company’s audited financial statements for the applicable year. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (7) Adjusted Operating Income (“AOI”) is our Company Selected Measure. Please see “Compensation Discussion and Analysis – FY23 Executive Compensation Program – Annual Incentive” section of this CD&A for AOI definition. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
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