DEF 14A of American Eagle Outfitters Inc
Filed May 17, 2024 · FY20230001193125-24-141741
PROPOSAL ONE: ELECTION OF DIRECTORS
PROPOSAL ONE: ELECTION OF DIRECTORS General The Board is divided into three classes. Each class of directors is elected for a three-year term. On the recommendation of the Nominating Committee, the Board fixed the size of the board at seven directors. On the recommendation of the Nominating Committee, the Board has nominated three candidates, each of whom is currently a director of the Company, to be elected as Class II directors at the 2024 Annual Meeting. If re-elected, the Class II directors will serve for three-year terms ending at the 2027 Annual Meeting of Stockholders, or when their successors are duly elected and qualified. The terms of the remaining Class III and Class I directors are scheduled to expire at the Annual Meetings of Stockholders to be held in 2025 and 2026, respectively. Biographical information regarding each nominee and each incumbent director is set forth below as of May 1, 2024. In addition, information about each director’s specific experience, attributes and skills that has led the Board to believe that each of the directors is highly qualified to serve as a member of the Board is set forth below. Each of our directors has contributed to the mix of skills, core competencies and qualifications of the Board. Our directors are highly educated and have diverse backgrounds and talents and extensive track records of success in what we believe are highly relevant positions with a variety of well-respected companies in a wide range of industries. The Board believes that through their varying backgrounds, our directors bring a wealth of experiences, new ideas and solutions to our Board. Each of the nominees has consented to be named as a nominee. If any nominee should become unavailable to serve, the Board may decrease the number of directors pursuant to our Amended and Restated Bylaws (the “Bylaws”) or may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the Board. The Board has no reason to believe that any nominee will be unavailable or, if elected, unable to serve.
PROPOSAL ONE: ELECTION OF DIRECTORS
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The Board of Directors recommends that the stockholders vote “FOR”
The Board of Directors recommends that the stockholders vote “FOR” the following Class II director nominees:
The Board of Directors recommends that the stockholders vote “FOR”
| Janice E. Page | | | Age: 75 Director since: June 2004 Independent Committees: • Audit • Compensation • Nominating (Chair) Current Public Company Directorships: • None | BACKGROUND Ms. Page spent 27 years in apparel retailing, holding numerous merchandising, marketing and operating positions with Sears Roebuck & Company (“Sears”), including Group Vice President from 1992 to 1997. While at Sears, Ms. Page launched the direct-to-consumer business and oversaw sporting goods, men’s, women’s and children’s apparel, footwear and accessories, and beauty and fragrances, among other responsibilities. She holds a B.A. from Pennsylvania State University. | | | SKILLS AND QUALIFICATIONS | | | Ms. Page has extensive knowledge of the apparel retail industry and brings to the Board in-depth experience across diverse consumer product categories, as well as retail operations. Her service and tenure on public company boards allows her to provide the Board with a variety of perspectives on corporate governance issues. | | | SELECT PROFESSIONAL AND COMMUNITY CONTRIBUTIONS Ms. Page serves on the advisory boards for the Daveler Entrepreneurship Scholarship of the University of South Florida and Champions for Learning Center for Innovation. | | | PREVIOUS DIRECTORSHIPS Ms. Page previously served as a director of R.G. Barry Corporation from 2000 to 2014, Hampshire Group, Limited from 2009 to 2011 and Kellwood Company from 2000 to 2008. Ms. Page also served as Trustee of Glimcher Realty Trust, a real estate investment trust that owns, manages, acquires and develops malls and community shopping centers from 2001 to 2004. |
The Board of Directors recommends that the stockholders vote “FOR”
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The Board of Directors recommends that the stockholders vote “FOR”
| David M. Sable | | | Age: 70 Director since: June 2013 Independent Committees: • Audit • Compensation • Nominating Current Public Company Directorships: • Ethan Allen Interiors Inc. (NYSE: ETD) | BACKGROUND Mr. Sable has served as Vice Chair at Stagwell Global since October 2023. He is also Co-Founder and Partner of DoAble, a Marketing Consultancy focused on branding, positioning and big ideas. As Senior Advisor to WPP plc (“WPP”), a multinational communications, advertising, public relations, technology, and commerce holding company, he mentored and consulted across the company. Previously he was Chairman of VMLY&R, a global marketing agency, from 2011 to 2019. He propelled Y&R to a top-five global creative firm at Cannes, developed new resources and practices, expanded the global footprint of subsidiary company VML, and ultimately helped unify Y&R and VML into VMLY&R, one of the most successful agencies in the industry today. Prior to his time at Y&R, Mr. Sable served at Wunderman, Inc., a leading customer relationship manager and digital unit of WPP, as Vice Chairman and Chief Operating Officer from August 2000 to February 2011. Mr. Sable was a Founding Partner and served as Executive Vice President and Chief Marketing Officer of Genesis Direct, Inc., a pioneer digital omni-channel retailer, from June 1996 to September 2000. Mr. Sable attended New York University and Hunter College in New York. | | | SKILLS AND QUALIFICATIONS | | | With more than 30 years of experience in digital leadership and marketing communications, Mr. Sable brings to the Board his strategic insight and ability to connect talent across marketing disciplines and geographies. The Board also benefits from his extensive involvement with community programs. | | | SELECT PROFESSIONAL AND COMMUNITY CONTRIBUTIONS In 2013, Fast Company named Mr. Sable one of the 10 Most Generous Marketing Geniuses. He currently serves on the Board of Directors of the International Special Olympics, as well as on the Executive Board of UNCF and he was Executive Producer on MTV’s highly acclaimed REBEL MUSIC series. |
The Board of Directors recommends that the stockholders vote “FOR”
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The Board of Directors recommends that the stockholders vote “FOR”
| Noel J. Spiegel | | | Age: 76 Director since: June 2011 Independent (Lead Independent Director) Committees: • Audit (Chair) • Compensation • Nominating Current Public Company Directorships: • Radian Group Inc. (NYSE: RDN) | BACKGROUND Mr. Spiegel was a partner at Deloitte & Touche, LLP (“Deloitte”), where he practiced from September 1969 until his retirement in May 2010. In his over 40-year career at Deloitte, he served in numerous management positions, including as Deputy Managing Partner, member of the Executive Committee, Managing Partner of Deloitte’s Transaction Assurance practice, Global Offerings and IFRS practice and Technology, Media and Telecommunications practice (Northeast Region), and as Partner-in-Charge of Audit Operations in Deloitte’s New York office. Mr. Spiegel holds a B.S. from Long Island University and he attended the Advanced Management Program at Harvard Business School. | | | SKILLS AND QUALIFICATIONS Mr. Spiegel provides expertise in public company accounting, disclosure and financial system management to the Board and, more specifically, to the Audit Committee. | | | SELECT PROFESSIONAL AND COMMUNITY CONTRIBUTIONS From 2006 to 2017, Mr. Spiegel was a Trustee, Chair of the Executive Committee and President of the Jewish Communal Fund of New York, a 501(c)(3) donor-advised fund. | | | PREVIOUS DIRECTORSHIPS Mr. Spiegel previously served as a director at Vringo, Inc. from 2013 to 2016 and vTv Therapeutics Inc. (Nasdaq: VTVT) from 2015 to 2022. | | Awards and Recognitions: • National Association of Corporate Directors (“NACD”) Top 100 (2020) | |
The Board of Directors recommends that the stockholders vote “FOR”
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The following Class III Directors have terms that
The following Class III Directors have terms that expire as of the 2025 Annual Meeting:
The following Class III Directors have terms that
| Deborah A. Henretta | | | Age: 62 Director since: February 2019 Independent Committees: • Audit • Compensation • Nominating Current Public Company Directorships: • Corning, Inc.(NYSE: GLW) • Meritage Homes Corporation (NYSE: MTH) • NiSource, Inc. (NYSE: NI) | BACKGROUND Ms. Henretta has over 30 years of business leadership experience across both developed and developing markets, as well as expertise in brand building, marketing, philanthropic program development, and government relations. She joined Procter & Gamble (“P&G”) in 1985. In 2005, she was appointed President acting as Senior Executive Officer of P&G’s business in Association of Southeast Asian Nations, Australia and India. She was appointed group president of P&G Asia in 2007, group president of P&G Global Beauty Sector in June 2013, and group president of P&G E-Business in February 2015. She retired from P&G in June 2015. Ms. Henretta is a partner at Council Advisors (formerly G100 Companies) where she assisted in establishing a Board Excellence program that provides director education on board oversight and governance responsibilities, including in the areas of digital transformation and cybersecurity, as well as a partnership program for New Director Training. She holds an M.A. in advertising from Syracuse University and a B.A. in communications and a Hobart degree in humane letters from St. Bonaventure. | | | SKILLS AND QUALIFICATIONS | | | Ms. Henretta has significant experience in business leadership and global and international operations. She is skilled in brand building, marketing, and emerging market management. Ms. Henretta has risk management experience as an executive at P&G tasked with specific risk management duties. She also brings significant knowledge of digital transformation and cybersecurity to the Board. In April 2023, Ms. Henretta completed the Competent Boards Global ESG Certificate and Designation (GCB.D). | | | SELECT PROFESSIONAL AND COMMUNITY CONTRIBUTIONS | | | Ms. Henretta was a member of Singapore’s Economic Development Board (“EDB”) from 2007 to 2013. She contributed to the growth strategies for Singapore, and was selected to serve on the EDB’s Economic Strategies Committee between 2009 and 2011. In 2008, she received a U.S. State Department appointment to the Asia-Pacific Economic Cooperation’s Business Advisory Council. In 2011, she was appointed chair of this 21-economy council, becoming the first woman to hold the position. In that role, she advised top government officials, including former President Barack Obama and former Secretary of State Hillary Clinton. Ms. Henretta serves on the Board of Trustees of both St. Bonaventure University and Xavier University. | | | PREVIOUS DIRECTORSHIPS Ms. Henretta previously served as a director of Staples, Inc. (Nasdaq: SPLS) from 2016 to 2017. |
The following Class III Directors have terms that
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The following Class III Directors have terms that
| Cary D. McMillan | | | Age: 66 Director since: June 2007 Independent Committees: • Audit • Compensation (Chair) • Nominating Current Public Company Directorships: • Hyatt Corporation (NYSE: H) Awards and Recognitions: • NACD Top 100 (2023) | BACKGROUND Prior to his retirement in 2020, Mr. McMillan served as Chief Executive Officer of True Partners Consulting, LLC, a professional services firm providing tax and other financial services, since December 2005. From October 2001 to April 2004, he was the Chief Executive Officer of Sara Lee Branded Apparel. Mr. McMillan served as Executive Vice President of Sara Lee Corporation (“Sara Lee”), a branded consumer packaged goods company, from January 2000 to April 2004. From November 1999 to December 2001, he served as Chief Financial and Administrative Officer of Sara Lee. Prior thereto, Mr. McMillan served as an audit partner with Arthur Andersen LLP. Mr. McMillan holds a B.S. from the University of Illinois and is a CPA. | | | SKILLS AND QUALIFICATIONS | | | Mr. McMillan brings to the Board demonstrated leadership abilities as a Chief Executive Officer and has a deep understanding of business, both domestically and internationally. His experience as a former audit partner and CPA also provides him with extensive knowledge of financial and accounting issues. Furthermore, Mr. McMillan’s current and prior service on other public boards provides the Board with diversified knowledge of best corporate governance and compensation practices. | | | SELECT PROFESSIONAL AND COMMUNITY CONTRIBUTIONS | | | Mr. McMillan serves on the AEO Foundation Board and brings a wealth of philanthropic experience to the position. He serves on a number of nonprofit boards in Chicago including as Treasurer of both the Millenium Park Foundation and WTTW, the local PBS station. He is also a Trustee of the Art Institute of Chicago. | | | PREVIOUS DIRECTORSHIPS | | | Mr. McMillan previously served as a director of McDonald’s Corporation (NYSE: MCD) from 2003 to 2015, Hewitt Associates, Inc. from 2002 to 2010, and Sara Lee from 2000 to 2004. |
The following Class III Directors have terms that
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The following Class I Directors have terms that
The following Class I Directors have terms that expire as of the 2026 Annual Meeting:
The following Class I Directors have terms that
| Jay L. Schottenstein | | | Age: 69 Director since: March 1992 Executive Committees: • None Current Public Company Directorships: • Designer Brands Inc. (NYSE: DBI) Awards and Recognitions: • World Retail Congress Retail Hall of Fame Inductee (2024) • T. Kenyon Holly Award for Outstanding Humanitarian Achievement (Two Ten Footwear Foundation) (2016) • Humanitarian of the Year: American Red Cross of Greater Columbus (2010) | BACKGROUND Mr. Schottenstein has served as our Chief Executive Officer since December 2015. Prior thereto, he served as our Interim Chief Executive Officer from January 2014 to December 2015. He has served as Chairman of the Board since March 1992. He previously served the Company as Chief Executive Officer from March 1992 until December 2002 and as a Vice President and Director of the Company’s predecessors since 1980. He has also served as Chairman of the Board and Chief Executive Officer of Schottenstein Stores Corporation (“SSC”) since March 1992 and as President of SSC since 2001. Prior thereto, Mr. Schottenstein served as Vice Chairman of SSC from 1986 to 1992. He has been a Director of SSC since 1982. Mr. Schottenstein also has served since March 2005 as Executive Chairman of the Board of Directors of Designer Brands Inc. (f/k/a DSW Inc.) (NYSE: DBI) and formerly served as that company’s Chief Executive Officer from March 2005 to April 2009. He has served as an officer and director of various other entities owned or controlled by members of his family since 1976. He is a graduate of Indiana University. | | | SKILLS AND QUALIFICATIONS | | | Mr. Schottenstein has deep knowledge and extensive experience with respect to the Company’s operations and the retail industry in general. His expertise in merchandising, operations, retail, real estate, brand building, and team management has guided the Company from a single-brand company to a multi-brand $5+ billion global specialty retailer. | | | SELECT PROFESSIONAL AND COMMUNITY CONTRIBUTIONS Mr. Schottenstein dedicates significant time to civic and cultural organizations. In 1985, he and his wife founded the Jay and Jeanie Schottenstein Foundation, the couple’s personal philanthropic organization. Together, they have donated millions of dollars to causes that improve the world, from arts and culture to mental health and cardiovascular research. The Schottensteins support many local organizations, including the Columbus Museum of Art, the United Way of Central Ohio, and The Ohio State University. In 2008, the Schottensteins endowed the biennial Jay and Jeanie Schottenstein Prize in Cardiovascular Sciences at The Ohio State University, an esteemed award given to outstanding medical and research professionals in the field. In 2010, Mr. and Mrs. Schottenstein were named Humanitarians of the Year by the American Red Cross of Central Ohio. In 2021, the Schottensteins pledged $10.15 million to The Ohio State University toward improving students’ access to behavioral healthcare and reducing stigma surrounding mental illness. Mr. Schottenstein is a member of the board of directors at the Columbus Partnership and the Columbus Development Corporation. PREVIOUS DIRECTORSHIPS Mr. Schottenstein previously served as a member of the Board of Directors for Albertsons Companies Inc. (NYSE: ACI) from 2006 to 2022. |
The following Class I Directors have terms that
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The following Class I Directors have terms that
| Sujatha Chandrasekaran | | | Age: 56 Director since: March 2018 Independent Committees: • Audit • Compensation • Nominating Current Public Company Directorships: • Cardinal Health (NYSE: CAH) • Brenntag SE (ETR: BNR) • ATOS (PAR: ATO) Awards and Recognitions: • Directors & Boards: Director to Watch (2023 and 2019) • Modern Healthcare: Top 25 Women Leaders in Healthcare (2022) • Forbes: Innovative Technology leader (2021) • NACD Governance Fellow (2018) • IDG: CIO Hall of Fame (2017) | BACKGROUND Ms. Chandrasekaran has been an advisor and independent consultant in the technology and consulting sectors since July 2022. Previously, she served as Senior Executive Vice President and Chief Digital and Information Officer for CommonSpirit Health, a non-profit health system, from 2019 to 2022. Prior to that, she was Global Chief Information Officer for Kimberly Clark Corporation, a multinational personal care corporation focused on consumer products, from 2016 to 2019 and Senior Vice President, Global Chief Technology and Data Officer for Walmart Inc. from 2011 to 2016. Before joining Walmart, Ms. Chandrasekaran held senior technology, digital, and ecommerce roles at The Timberland Company and leadership roles at Nestlé S.A. Ms. Chandrasekaran holds a bachelor of engineering degree from University of Madras, India; a master of business systems from Monash University, Melbourne Australia; and an Executive Development Education Certificate from London Business School. She is certified as NACD.DC. | | | SKILLS AND QUALIFICATIONS | | | Ms. Chandrasekaran brings vast information, artificial intelligence (“AI”) and digital technology expertise and a wealth of leadership experience in the global retail, eCommerce, consumer and supply chain industries to the Board. Ms. Chandrasekaran is an industry thought leader in digital business transformation, digital business models, innovation and talent transformation. She possesses deep technical expertise in cybersecurity, data, Al and multiple technologies. Ms. Chandrasekaran also brings significant risk management and data protection experience as an executive level Enterprise Risk Committee member at Kimberly-Clark Corporation, CommonSpirit Health and the Timberland Company and the Enterprise Privacy Council at Walmart Inc. | | | SELECT PROFESSIONAL AND COMMUNITY CONTRIBUTIONS | | | Ms. Chandrasekaran serves as a director of Pando.AI a privately held AI & digital supply chain platform company, and Agendia, Inc., a privately held commercial-stage company focused on precision oncology for breast cancer. Ms. Chandrasekaran is the founder and chair of the board at T200 Foundation, a non-profit focused on developing women in technology. | | | PREVIOUS DIRECTORSHIPS | | | Ms. Chandrasekaran previously served as a director of Barry Callebaut AG (SIX: BARN), publicly listed on the Swiss stock exchange, from 2018 to 2020 and Blume Global Technologies, a company focused on digital supply chain platform software-as-a-service, data and AI platform from 2019 to 2023. |
The following Class I Directors have terms that
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CORPORATE GOVERNANCE
CORPORATE GOVERNANCE The following section discusses the Company’s corporate governance, including the role of the Board and its Committees. Additional information regarding corporate governance, including our Corporate Governance Guidelines, the charters of our Audit, Compensation, and Nominating Committees and our Code of Ethics, which applies to all of our directors, officers (including the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) and employees, may be found on our Investors website at investors.ae.com. Any amendments or waivers to our Code of Ethics will also be available on our website. The Code of Ethics includes our privacy and data security policies, as well as our policy on anti-corruption and bribery. We also have a comprehensive Code of Conduct that governs the behavior of our production, sourcing and supply chain business partners, and we routinely audit the factories with which we do business in order to ensure compliance with our expected standards of operations, human rights and quality in our products. A copy of the corporate governance materials is available in print to any stockholder upon request. The Evolving Role of the Board AEO benefits greatly from the vast industry-relevant experience, deep institutional knowledge, and thoughtful engagement of our Board. During Fiscal 2023, the Board continued to adapt and respond to the remarkable speed, volume and proliferation of issues that have created challenges, opportunities and responsibilities for the Company. As the business environment has grown more complex with macroeconomic uncertainty, geopolitical tensions, regulatory unpredictability, political polarization, culture wars, cyber threats, and the growth of generative artificial intelligence, our Board tapped into their experience and expertise to ensure that the Company is continuing to conduct its business to enable its continued success and increase in value over the long-term notwithstanding this unprecedented complexity. Far from a one-size-fits-all approach, our Board has used its knowledge, agility and focus to ensure that best-in-class policies, practices, and processes are in place, acknowledging the dynamic nature of our business and the material risks facing our industry and the Company. Our Board’s Principles of Effectiveness As the expectations and responsibilities of the Board continued to evolve during Fiscal 2023, our directors adhered to critical fundamental principles to maintain effective operation:
CORPORATE GOVERNANCE
| • | Constant attention on AEO’s priorities. While the number of issues that require Board attention has expanded, the Company and the directors have carefully crafted meeting agendas to ensure sufficient time and focus was given to those issues that would or could materially impact the business in the near-, medium-, and long-term. Further, the Board was able to align priorities while distributing responsibilities to each independent director serving on each of the three committees. |
CORPORATE GOVERNANCE
| • | Effective collaboration with Management. The Board’s relationship with management has been central to its effectiveness. A relationship of mutual trust and candor ensures that information is timely received and the Board’s feedback can be reflected in day-to-day operations. The Board has leveraged management’s expertise to stay informed on emerging issues and identification of issues to share feedback and receive input frequently. |
CORPORATE GOVERNANCE
| • | Cohesiveness of the Directors. Our directors have skills of leadership, diplomacy, judgment and overall business acumen that are vital to ensuring an effective, engaged oversight role. The ability to amicably raise and discuss different perspectives, and a willingness to build consensus and collaborate with each other have been vital to the well-functioning operation of the Board. |
CORPORATE GOVERNANCE
| • | Balancing the Near- and Long-Terms. The Board has helped Management balance the need to deliver near-term results with developing longer-term stockholder value. The Board has empowered management to consider the longer-term direction of the business and has helped management see around corners, balance competing interests, anticipate risks and threats and explore new opportunities to achieve its new long-term corporate strategy. |
CORPORATE GOVERNANCE
| • | Participate in the Innovation. As much as AEO is an innovator in retail, the Board has ensured that it has developed policies, practices and processes that are tailored to the needs of the business. While the Board remains informed about peers and the market as appropriate, our directors have remained open to creative approaches to unprecedented challenges in a way that is appropriate for AEO and all of its stakeholders. |
CORPORATE GOVERNANCE
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Our Board’s Primary Responsibilities
Our Board’s Primary Responsibilities Board Oversight of AEO’s Strategy and Capital Deployment The Board receives frequent updates on the Company’s performance and is actively engaged in reviewing and assessing the Company’s strategy, both long- and short-term, including major business and organizational initiatives, capital allocation priorities and potential business development opportunities. During Fiscal 2023, the Board was instrumental in the oversight of management’s profit improvement work which was initiated during the year. The Board reviews performance against strategy on a regular basis through robust discussions at Board meetings and through regular updates from management. In addition, at least one Board meeting per year is focused on review of strategy and strategic alignment, including identification of any risks that could impact results. At this meeting, the Board provides input on and oversight of the short-term strategic goals and direction of the Company. The Board also reviews and approves capital deployment, including dividends and share repurchase plans. Board Oversight of Risk Management The Board as a whole has the responsibility for risk oversight and management, with a focus on the most significant risks facing the Company, including strategic, competitive, economic, operational, financial, legal, regulatory, cybersecurity, ESG, compliance, and reputational risks. In addition, Board Committees oversee and review risk areas that are particularly relevant to their respective areas of responsibility and oversight and regularly report to the full Board on such areas. The risk oversight responsibility of the Board and its Committees is supported by our management reporting processes, which are designed to provide visibility to the Board to those Company personnel responsible for risk assessment, including our management-led Enterprise Risk Management Committee, and information about management’s identification, assessment, and mitigation strategies for critical risks. The Company’s Enterprise Risk Management Committee is chaired by the Chief Financial Officer and is composed of all members of our executive leadership team, as well as other key financial-control representatives. The Board receives regular Enterprise Risk Management risk report from the Chief Financial Officer during routine Board meetings. In addition, our Company employs a Chief Compliance Officer who provides regular updates to the Audit Committee on compliance-related matters. In overseeing risk management, the Board and management also leverage the expertise of external advisors, as needed.
Our Board’s Primary Responsibilities
| Risk Oversight by the Board | | | | Full Board | | | | • Assesses major risks facing the Company and reviews options for risk mitigation with the assistance of management and the Board Committees • Monitors risks that have been delegated to a particular Committee through regular reports provided by the respective Board Committee | | | | Audit Committee | Compensation Committee | Nominating Committee | | • Assesses major financial risk exposures and steps taken by management to address the same • Responsible for the review and assessment of information technology and cybersecurity risk exposures and the steps taken to monitor and control those exposures (see details below) • Reviews risks identified during the internal and external auditors’ risk assessment procedures | • Oversees risk management related to employee compensation plans and arrangements • Assesses whether the Company’s compensation plans and practices may incentivize excessive risk-taking and discusses at least annually the relationship between risk management policies and compensation | • Manages risks associated with corporate governance policies and practices • Reviews any risks and exposures relating to director and executive succession planning • Oversees risk management related to the Company’s governance and corporate social responsibility matters |
Our Board’s Primary Responsibilities
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Our Board’s Primary Responsibilities
Cybersecurity & Data Governance Oversight The Board recognizes the importance of maintaining the trust and confidence of our various stakeholders. The Board as a whole has responsibility for the Company’s oversight and management of cybersecurity risks. At the management level, to more effectively prevent, detect and respond to information security threats, the Company has a dedicated Chief Information Security Officer whose team is responsible for leading our company-wide cybersecurity strategies, policies, standards, architectures, operations and processes. The Audit Committee receives regular reports from the Chief Information Security Officer on pertinent cyber risk exposures, the status of projects designed to fortify our Information Security Program, metrics on the effectiveness of this program, and the emerging threats in this area. Furthermore, on at least a quarterly basis or more often as needed, the Chief Information Security Officer provides pertinent cybersecurity risk exposures and updates along with various other business units as part of the enterprise risk management report to the Audit Committee. On an annual basis, management invites third-party cyber experts to present to the Audit Committee on best practices in cybersecurity oversight. The Board also receives quarterly reports from management on risks and action plans related to data governance, artificial intelligence opportunities and privacy compliance. Board Oversight of Sustainability and Our ESG Program We engage with a diverse group of stakeholders, including our vendors and partners, our associates, our customers, our communities, and our investors to ensure we are thoughtfully considering their perspectives to determine priorities within our Build A Better World strategy. Our Board plays an active and vital role in overseeing our ESG initiatives and ensuring that any ESG risks and opportunities are integrated into the Company’s long-term strategy. Given the breadth of matters that fall within the ESG umbrella for a retail company of our size and scale, oversight of those issues is allocated among each of the Committees as outlined below.
Our Board’s Primary Responsibilities
| Nominating Committee | Audit Committee | Compensation Committee | | Environmental Impact | Privacy and Data Security | Human Capital Management Disclosures | | Culture/IDEA | Anti-Corruption and Bribery | Executive Compensation | | Human Rights | Business Ethics and Integrity | Employee Well-Being | | Philanthropy/Charitable Giving | Responsible Innovation | | | Board Structure and Governance Issues | ESG Measurement, Controls and Reporting | | | Public Policy | | |
Our Board’s Primary Responsibilities
At the management level, given the breadth of issues that touch ESG, all ESG matters are ultimately coordinated by a committee of our Chief Financial Officer, Chief Human Resources Officer, Chief Supply Chain Officer, Chief Accounting Officer, and General Counsel & Chief Compliance Officer. Depending on the topic, we have subject matter experts who present proposals and ideas to the committee, which provides a robust and holistic review of the various matters presented, including how each proposal aligns with AEO’s strategy and returns value to our stakeholders. Director Selection and Nominations The Nominating Committee periodically reviews the appropriate size of the Board, whether any vacancies are expected due to retirement or otherwise, and the need for particular expertise on the Board. In evaluating and determining whether to recommend a candidate to the Board, the Nominating Committee reviews the appropriate skills and characteristics required of Board members in the context of the background of existing members and in light of the perceived needs for the future growth of our business. This includes a review of issues of diversity in background and experience in different substantive areas such as retail operations, marketing, technology, distribution, mergers and acquisitions, and finance. The Board seeks the best director candidates based on the skills and characteristics required without regard to race, color, national origin, religion, disability, marital status, age, sexual orientation, gender, gender identity and expression, or any other basis protected by federal, state, or local law. The Nominating Committee has formalized its diversity focus by mandating that any search that the Nominating Committee engages for a new director must include women and minority candidates in the pool from which the Nominating Committee selects director candidates. The Nominating Committee will continue to review the efficacy of this policy on a going-forward basis. Board diversity is valued and provides many benefits, including creativity, variety in approaches to problem solving, and the ability to work effectively in our various markets. We also value a Board that reflects the diverse makeup of our associate and customer base. Pursuant to its charter, the Nominating Committee has the authority to retain consultants and search firms to assist with the process of identifying and evaluating director candidates and to approve the fees and other retention terms for any such consultant or search firm.
Our Board’s Primary Responsibilities
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Our Board’s Primary Responsibilities
Director Skills and Qualifications The Nominating Committee believes that the current members of the Board collectively have the level and balance of skills, experience, diversity, and character to execute the Board’s responsibilities. The table below is a summary of the range of skills and experiences that each director brings to the Board, each of which we find to be relevant to our business. Because it is a summary, the table does not include all of the skills, experiences, and qualifications that each director offers, and the fact that a particular experience, skill, or qualification is not listed does not mean that a director does not possess it. All of our directors exhibit high integrity, an appreciation for diversity of background and thought, innovative thinking, a proven record of success, and deep knowledge of corporate governance requirements and best practices.
Our Board’s Primary Responsibilities
| ATTRIBUTES, EXPERIENCE AND SKILLS | | | | | | | | | SKILLS CENTRAL TO AEO’S STRATEGY | | | | | | | | | Retail Industry | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Marketing and Consumer Insight | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Technology and Digital | ✓ | ✓ | ✓ | | | ✓ | ✓ | | Real Estate | ✓ | | | | ✓ | | | | International | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | CORE COMPETENCIES | | | | | | | | | Leadership | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Risk Management | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Audit Committee Financial Expertise | | | ✓ | ✓ | ✓ | | ✓ | | Cybersecurity | | ✓ | | | | | | | Crisis Management | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
Our Board’s Primary Responsibilities
Director Tenure The Nominating Committee and the Board believe it is important for the Board to be “refreshed” by adding new directors from time to time, balanced against the importance of having directors who have deep, historical experience and institutional knowledge of the Company, its strategies and market opportunities and challenges. Accordingly, the Company does not have a mandatory retirement age or term limits for its directors. In the last six years, the Board appointed three new independent directors, all of whom brought diverse backgrounds and experience to the Company. Of our current directors, two joined the Board in the last six years. The Nominating Committee and the Board also believe that our longer-serving directors bring critical skills and a historical perspective to the Board that are highly relevant in a cyclical business such as retail. In addition, the Nominating Committee and the Board believe that longer-serving directors have a deep knowledge and understanding of our business, balanced against the fresh information and perspectives brought by our newer directors.
Our Board’s Primary Responsibilities
| BALANCED TENURES OF INDEPENDENT DIRECTORS | | | 5 – 9 years: | Two Directors | | 10 – 15 years: | Two Directors | | 16 – 19 years: | Two Directors |
Our Board’s Primary Responsibilities
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Our Board’s Primary Responsibilities
Director Time Commitments and Protections Against Overboarding The Board appreciates that serving on a public board of directors is a significant responsibility and time commitment. Board members are expected to spend the time needed and meet as often as necessary to discharge their responsibilities properly. In considering each Board member’s ability to properly discharge their duties, the Nominating Committee will annually review each Board member’s various time commitments, including without limitation their primary occupation, service on public company boards and committee memberships, as well as service with private companies and non-profit organizations. The Board has approved a policy in our Corporate Governance Guidelines to review and limit the number of public company boards on which our directors may serve. Directors who are full-time employees of other companies generally may not serve on more than two public company boards (including our Board) at one time, and directors who are retired from full-time employment generally may not serve on more than four public company boards (including our Board) at one time unless otherwise determined by the Nominating Committee. Our CEO may not serve on more than one other public company board unless otherwise determined by the Nominating Committee. Director Recommendations and Nominations Candidates may come to the attention of the Nominating Committee from a variety of sources, including current Board members, stockholders and management. All candidates are reviewed in the same manner, regardless of the source of the recommendation. From time to time, the Nominating Committee retains the services of a search firm to assist in identifying and evaluating qualified director candidates. The Nominating Committee will consider, in normal course, the recommendations of stockholders regarding potential director candidates and, in doing so, will consider the needs of the Board and the qualifications of each candidate. Stockholders may recommend potential director candidates for consideration by the Nominating Committee by submitting the recommendation in writing to the Chair of the Nominating Committee, in care of the Company, at the Company’s principal executive offices at 77 Hot Metal Street, Pittsburgh, PA 15203. Additionally, stockholders may nominate candidates to the Board pursuant to the procedural, informational, and consent requirements set forth in our Bylaws. See “Submission of Nominations and Proposals for the 2025 Annual Meeting” for information regarding the submission of director nominations. Director Independence Our Board is 86% independent and such independent oversight bolsters our success. Our Board has determined that each of the following non-employee directors qualifies as “independent” in accordance with the listing requirements of the New York Stock Exchange (“NYSE”) and applicable SEC rules:
Our Board’s Primary Responsibilities
| Sujatha Chandrasekaran | | Deborah A. Henretta | | Cary D. McMillan | | Janice E. Page | | David M. Sable | | Noel J. Spiegel |
Our Board’s Primary Responsibilities
In particular, the Board affirmatively determined that none of these directors had relationships that would cause them not to be independent under the specific criteria of Section 303A.02 of the NYSE Listed Company Manual. The Board also determined that each member of the Audit Committee meets the heightened independence standards required for audit committee members under the NYSE listing standards and applicable SEC rules and considered the additional factors under the NYSE listing standards relating to members of the Compensation Committee before determining that each member of the Compensation Committee is independent.
Our Board’s Primary Responsibilities
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Our Board’s Primary Responsibilities
In making these determinations, the Board evaluated all factors and circumstances that it considered relevant, including the following:
Our Board’s Primary Responsibilities
| • | Whether the director is currently, or at any time during the last three years was, an employee of the Company or any of its subsidiaries; |
Our Board’s Primary Responsibilities
| • | Whether any immediate family member of the director is currently, or at any time during the past three years was, an executive officer of the Company or any of its subsidiaries; |
Our Board’s Primary Responsibilities
| • | Whether the director is an employee or any immediate family member of the director is an executive officer of a company that has made payments to, or received payments from, the Company or any of its subsidiaries for property or services in an amount that is in excess of the greater of $1 million, or 2% of such other company’s consolidated fiscal gross revenues in the current year or any of the past three fiscal years; |
Our Board’s Primary Responsibilities
| • | Whether the director is an executive officer of a charitable organization that received contributions from the Company or any of its subsidiaries in the past three years in an amount that exceeds the greater of $1 million, or 2% of the charitable organization’s consolidated gross revenues; |
Our Board’s Primary Responsibilities
| • | Whether the director or any of the director’s immediate family members is, or has been in the past three years, employed as an executive officer by a company that has or had, during the same period, an executive officer of the Company on its compensation committee; |
Our Board’s Primary Responsibilities
| • | Whether the director or any of the director’s immediate family members is, or has been in the past three years, a partner or employee of the Company’s independent registered public accounting firm; and |
Our Board’s Primary Responsibilities
| • | Whether the director or any of the director’s immediate family members accepted any payment from the Company or any of its subsidiaries in excess of $120,000 during the current fiscal year or any of the past three fiscal years, other than compensation for Board or Committees service and pension or other forms of deferred compensation for prior service. |
Our Board’s Primary Responsibilities
Mr. Schottenstein is not independent because he is an executive officer of the Company. See “Related Party Transactions” for information regarding our policy on related party transactions and transactions with affiliates of Mr. Schottenstein, who is our sole employee director. Board Leadership Structure We believe the Company’s current leadership structure with a combined Executive Chairman and Chief Executive Officer (held by Mr. Schottenstein), balanced by a strong Lead Independent Director (appointed annually by the independent directors), and Committees composed entirely of independent directors deliver the best results for our business. Having Mr. Schottenstein in this combined position provides unified leadership and direction to the Company and valuable insight to the Board. His duties include presiding over meetings of the Board, setting meeting agendas and schedules of the Board in collaboration with the Lead Independent Director, determining whether there are major risks upon which the Board should focus at meetings, and providing strategic and business awareness and guidance to the Board. Our Board believes that the current Board composition, along with an emphasis on Board independence, provides effective independent oversight of management. Mr. Spiegel served as our Lead Independent Director for Fiscal 2023. Our Corporate Governance Guidelines establish robust and well-defined duties for our Lead Independent Director. Our Board’s support of the current leadership structure is premised on these duties being transparently disclosed, comprehensive in nature, and actively exercised. The Lead Independent Director is responsible for:
Our Board’s Primary Responsibilities
| • | Presiding over the meetings of independent directors; |
Our Board’s Primary Responsibilities
| • | Serving as a liaison between the Executive Chair and independent directors; |
Our Board’s Primary Responsibilities
| • | Having input on information sent to the Board; |
Our Board’s Primary Responsibilities
| • | Collaborating with the Executive Chair and providing material input on meeting agendas for the Board; and |
Our Board’s Primary Responsibilities
| • | Approving meeting schedules to ensure that there is sufficient time for discussion of all agenda items. |
Our Board’s Primary Responsibilities
The Lead Independent Director also has the authority to call meetings of the independent directors, and, if requested by major stockholders, is available, when appropriate, for consultation and direct communication with our stockholders. We believe that this leadership structure provides our Board with the greatest depth of leadership and experience, while also providing independent oversight of the Company. Mr. Spiegel also meets regularly with members of management across the Company between Board and Committee meetings.
Our Board’s Primary Responsibilities
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Our Board’s Primary Responsibilities
Board Practices Meetings of Independent Directors The Board’s policy is to have the independent directors meet separately in executive sessions in connection with each regularly scheduled Board meeting (at least four times annually). During each meeting of the independent directors, the Lead Independent Director, Mr. Spiegel, presides and leads the discussion. The independent directors of the Board also meet more frequently in between regularly scheduled quarterly meetings, if needed. Self-Assessments We annually evaluate the performance of the Board and its Committees. The Board believes it is important to assess both its overall performance and the performance of its Committees, and to solicit and act upon feedback received, where appropriate. As part of the Board’s self-assessment process, directors consider various topics related to Board composition, structure, effectiveness, and responsibilities, as well as the overall mix of director skills, experience, and backgrounds. The Board is undergoing a review of its self-assessment process during 2024 and, as a result, the Nominating Committee expects to implement various enhancements to its process. Director Education/Orientation Our Board believes that director education is vital to the ability of directors to fulfill their roles and supports Board members in their continuous learning. The Board encourages directors to participate annually in external continuing director education programs, and we reimburse directors for their expenses associated with this participation. For example, Ms. Henretta recently received the Competent Board ESG Certification Program Certificate, Ms. Chandrasekaran received the NACD cybersecurity oversight CERT certification and Mr. Sable participated in the Harvard Business School: Marking Corporate Boards More Effective program. Our directors also attend professional development forums and industry-leading conferences convened by the NACD, external accounting firms, and retail/brand organizations focused on topics that are relevant to their duties as a director. Continuing director education is also provided during Board meetings and other Board discussions as part of the formal meetings and as stand-alone information sessions outside of meetings. Throughout Fiscal 2023, our Board participated in roundtable discussions with our external advisors and learning opportunities with management on various topics including:
Our Board’s Primary Responsibilities
| • Governance matters • Executive compensation • Stockholder engagement | • Industry- and Company-specific regulatory developments • Cybersecurity, including new SEC cybersecurity disclosure requirements | • Artificial intelligence • Crisis management • Workplace culture |
Our Board’s Primary Responsibilities
All new directors also participate in our director orientation program during their first six months on our Board. The Board believes that it is important for each newly elected director to have an understanding of our Company, the specialty retail industry, and his or her duties as a director. We provide this initial information through a combination of reference materials, formal meetings with business leaders and tours of our facilities/store locations. The orientation program is designed to familiarize new directors with the Company’s businesses, strategies and challenges. We believe that this onboarding approach over the first six months of Board service, coupled with participation in regular Board and Committee meetings, provides new directors with a strong foundation in our Company’s businesses, connects directors with members of management with whom they will interact and oversee, and accelerates their effectiveness to engage fully in Board deliberations. Management Succession Planning Succession planning and talent development are important at all levels within the Company. The Board regularly reviews short- and long-term succession plans for the CEO and other executive officers. The Nominating Committee is responsible for recommending to the Board any candidates for succession under the succession plan for the CEO and any changes to such candidates. In assessing possible CEO candidates, the Nominating Committee identifies the skills, experience and attributes it believes are required for an effective CEO in light of the Company’s business strategies, opportunities and challenges. More broadly, the Board engages with the Company’s leadership team on matters of talent and culture, including around the development of the Company’s talent pipeline and advancing diversity and inclusion efforts across AEO. The Board meets annually for a two-day succession planning and talent development session with the CEO and executive officers.
Our Board’s Primary Responsibilities
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Our Board’s Primary Responsibilities
Board Committees The Board has a standing Audit Committee, a standing Compensation Committee and a standing Nominating Committee. These Committees are governed by written charters, which were approved by the Board and are available on our Investors website at investors.ae.com. The following sets forth Committee memberships as of the date of this Proxy Statement.
Our Board’s Primary Responsibilities
| Director | Audit Committee | Compensation Committee | Nominating Committee | | Jay L. Schottenstein, Executive Chairman of the Board and Chief Executive Officer | — | — | — | | Sujatha Chandrasekaran | | | | | Deborah A. Henretta | | | | | Cary D. McMillan | | | | | Janice E. Page | | | | | David M. Sable | | | | | Noel J. Spiegel, Lead Independent Director | | | |
Our Board’s Primary Responsibilities
| | = Member | | = Committee Chair | | = Audit Committee Financial Expert |
Our Board’s Primary Responsibilities
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Our Board’s Primary Responsibilities
| Board Committee Responsibilities | | | | | | Responsibilities | Committee Members | Meetings in Fiscal 2023 | | AUDIT COMMITTEE | The primary function of the Audit Committee is to assist the Board with oversight of: • the integrity of the financial statements; • the qualifications, performance and independence of the Company’s independent registered public accounting firm; • the performance of the internal audit function; • our compliance with regulatory and legal requirements, including the financial reporting and disclosure process; • the performance of the Company’s ethics and compliance function; and • the assessment of key financial and certain other risks to the Company. The Audit Committee also reviews, approves, and monitors the terms of any new related party transactions, as required, in accordance with the policy developed and approved by the Audit Committee. The Board has determined that each member of the Audit Committee meets all applicable independence and financial literacy requirements under the NYSE listing standards and applicable SEC rules. | Sujatha Chandrasekaran Deborah A. Henretta * Cary D. McMillan * Janice E. Page * David M. Sable Noel J. Spiegel (Chair)* * Audit Committee financial experts | 15 | | COMPENSATION COMMITTEE | The primary function of the Compensation Committee is to aid the Board in meeting its responsibilities with regard to oversight and determination of executive compensation. Among other matters, the Compensation Committee: • reviews, recommends, and approves salaries and other compensation of executive officers; • administers our stock award and incentive plans (including reviewing, recommending, and approving stock award grants to executive officers); and • reviews and makes recommendations to the Board regarding director compensation. The Compensation Committee has the authority to retain a compensation consultant after taking into consideration all factors relevant to the adviser’s independence from management, including those specified in Section 303A.05(c) of the NYSE Listed Company Manual. The Compensation Committee also has the authority to delegate its authority to subcommittees, including subcommittees consisting solely of one or more persons, other Board members, and/or officers. Additionally, the Compensation Committee may delegate to the CEO the authority to review and grant equity awards to employees who are not executive officers. All members of the Compensation Committee are independent under applicable NYSE listing standards and qualify as “non-employee” directors within the meaning of Rule 16b-3 under the Exchange Act. | Sujatha Chandrasekaran Deborah A. Henretta Cary D. McMillan (Chair) Janice E. Page David M. Sable Noel J. Spiegel | 12 |
Our Board’s Primary Responsibilities
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Our Board’s Primary Responsibilities
| Board Committee Responsibilities | | | | | | Responsibilities | Committee Members | Meetings in Fiscal 2023 | | NOMINATING COMMITTEE | The function of the Nominating Committee is to aid the Board in meeting its responsibilities with regard to: • the organization and operation of the Board; • selection of nominees for election to the Board; • evaluation of Board procedures and performance; • executive succession planning and leadership development; and • social responsibility, environmental sustainability, and other corporate governance matters. The Nominating Committee developed and reviews annually our Corporate Governance Guidelines, which were adopted by the Board and are available under the “Corporate Governance” section of our website at investors.ae.com. All members of the Nominating Committee are independent under applicable NYSE listing standards. | Sujatha Chandrasekaran Deborah A. Henretta Cary D. McMillan Janice E. Page (Chair) David M. Sable Noel J. Spiegel | 7 |
Our Board’s Primary Responsibilities
Communications with the Board The Board provides a process for stockholders and all interested parties to send communications to the Board, the Lead Independent Director, the independent directors as a group, or individual directors as described on our Investors website at investors.ae.com. Stockholders wishing to communicate with the Board may send an email to boardofdirectors@ae.com or write to American Eagle Outfitters, Inc. at our principal executive offices located at 77 Hot Metal Street, Pittsburgh, PA 15203, c/o the Corporate Secretary. Communications intended for a specific director or directors (such as the Lead Independent Director or independent directors) should be addressed to his, her or their attention c/o the Corporate Secretary at this address. Communications received from stockholders are provided directly to the applicable Board member or members following receipt of the communications (other than spam, junk mail, mass mailings, solicitations, resumes, job inquiries, or other matters unrelated to the Company). Director Meetings and Attendance As discussed above, the expectations and responsibilities of the Board continued to evolve during Fiscal 2023, including their instrumental involvement in the Company’s strategy, both long- and short-term. and oversight of management’s profit improvement work which was initiated during the year. During Fiscal 2023, the Board held six meetings and the committees of the Board held a total of 34 meetings. Overall attendance at such meetings was approximately 99%. Each director attended 94% or more of the aggregate of all meetings of the Board and the committees on which he or she served during Fiscal 2023. It is our expectation, but not a requirement, that all current directors attend the Annual Meeting of Stockholders. All then-serving members of the Board virtually attended our 2023 Annual Meeting.
Our Board’s Primary Responsibilities
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Our Board’s Primary Responsibilities
Stockholder Engagement We value regular dialogue with all our stakeholders. The Company has an extensive, year-round stockholder engagement program led by management and overseen by the Board. Through this program, management addresses questions and concerns, provides perspective on the Company’s strategy and business performance, provides details of the Company’s policies and practices and seeks stockholder feedback.
Our Board’s Primary Responsibilities
| WHO WE ENGAGE | HOW WE ENGAGE | WHO IS INVOLVED | TOPICS OF ENGAGEMENT | | We engage with a wide range of constituents, including: • Institutional stockholders • Research analysts • Proxy advisory firms • ESG rating firms • Regulators | We pursue multiple avenues for engagement, including: • Quarterly investor calls and investor-led confeences and presentations • Company-hosted investor meetings, both in-person and virtual • Annual Meeting of Stockholders • Quarterly and annual reporting and disclosures | • Executive leadership team • Investor Relations team • Independent directors | Our interactions cover a broad range of topics including: • Business performance and execution • Long-term strategic initiatives to drive growth and stockholder returns • Executive compensation; sustainability; diversity, equity and inclusion • Company culture |
Our Board’s Primary Responsibilities
In Fiscal 2023, the Company continued to have extensive engagement with our stockholders and met with approximately 41% of our top 100 stockholders, who collectively owned approximately 46% of the total shares outstanding as of February 4, 2024. In addition to regular engagement with our stockholders, we also participated in a number of conferences which are included in the list of our engagement highlights below:
Our Board’s Primary Responsibilities
| MARCH | APRIL | MAY | JUNE | | • Fourth Quarter and Full Year Fiscal 2022 Earnings • Publication of Fiscal 2022 Form 10-K • Bank of America Consumer and Retail Conference • Citi Global Consumer Conference • JP Morgan Retail Round Up Conference • Shoptalk Conference | • Proxy Advisory Firm outreach • Publication of 2023 Proxy Statement • World Retail Congress | • First Quarter 2023 Earnings | • Annual Meeting of Stockholders | | SEPTEMBER | NOVEMBER | DECEMBER | JANUARY | | • Second Quarter 2023 Earnings • Publication of Second “Building a Better World” Report • Wells Fargo Consumer Conference • Company-hosted Investor Meetings • Independent Director conversations with Top Five Stockholder | • Third Quarter 2023 Earnings | • Independent Director conversations with Investor Communications Consultant | • ICR Investor Conference |
Our Board’s Primary Responsibilities
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ESG at AEO (“Building a Better World”)
| Fiscal 2023 Director Compensation(1) | | | | | | | Fees Earned or Paid in Cash(2) | Stock Awards(3) | All Other(4) | Total | | Sujatha Chandrasekaran | $162,500 | $200,000 | $5,000 | $367,500 | | Deborah A. Henretta | $167,500 | $200,000 | $— | $367,500 | | Cary D. McMillan | $197,500 | $200,000 | $5,000 | $402,500 | | Janice E. Page | $191,750 | $200,000 | $— | $391,750 | | David M. Sable | $167,500 | $200,000 | $— | $367,500 | | Noel J. Spiegel | $277,500 | $200,000 | $5,000 | $482,500 |
COMPENSATION DISCUSSION AND ANALYSIS
Profit margins expanded significantly in Fiscal 2023, reflecting the Company’s comprehensive review of the business to strengthen profitability. Positive revenue growth and management’s focus on inventory management, cost controls, lower product costs and efficiency gains were major drivers of margin expansion. GAAP operating margin was 4.2%. Excluding impairment and restructuring charges, the adjusted operating margin(1) of 7.1% expanded 170 basis points driven by improvement across brands. The Company generated strong cash flow and ended the year in a healthy financial position. Cash and investments more than doubled from last year, reaching $454 million at year end. Reflecting improved financial performance and a healthy balance sheet, in December 2023 the Company announced a 25% increase in its quarterly cash dividend. In January 2024, the Company repurchased one million shares and in February 2024 authorized 30 million shares for future repurchases. This underscores management’s confidence in the strength of the business and commitment to returning cash to stockholders. Our leaders were at the forefront of efforts to improve profitability and streamline strategic priorities. The strength of their business and leadership capabilities were key to the delivery of our results. Strong EBIT(1) results supported a 200% bonus payment for Fiscal 2023. Relative TSR (“RTSR”)(2) achievement over the three-year performance period ended February 3, 2024 was at the 42nd percentile and resulted in the performance-based restricted stock units (“PSUs”) granted in Fiscal 2021 being earned at 85% of target. Additional detail regarding Fiscal 2023 Business Highlights can be found on pages 9-11 in the Proxy Summary. Our Look Forward Powering Profitable Growth Strategy Building on momentum and strong results achieved in Fiscal 2023, in March 2024 the Company unveiled its new Powering Profitable Growth strategy plan. The plan is structured to deliver mid-to-high teens of annual operating income growth on 3-5% annual revenue growth through Fiscal 2026, and an approximate 10% operating margin. Fueled by a shift in strategy, culture and focus to generate stronger profitability on continued growth, the multi-year plan is centered around three key pillars:
COMPENSATION DISCUSSION AND ANALYSIS
| (2) For the 2021 PSUs, RTSR performance was measured against performance of the S&P 1500 Specialty Retail Index. |
COMPENSATION DISCUSSION AND ANALYSIS
| Performance | • We align executive compensation with the achievement of quantitative goals that we expect to drive increases in stockholder value. • Our program focuses on “at-risk” compensation, with a program design that creates a meaningful retention aspect as well as an incentive to achieve challenging performance objectives. • NEOs receive a substantial long-term incentive component, which aligns their interests with those of our stockholders and serves to retain executive talent through a multi-year vesting schedule. • Our long-term incentive design varies actual compensation above or below the targeted compensation opportunity based on the degree to which performance goals and changes in stockholder value are attained over time. | | Competitiveness | • Executive compensation is structured to be competitive relative to a group of retail peers, taking into account company size relative to peers and recognizing our highly competitive industry as well as our emphasis on performance-based compensation. • Target total compensation for individual NEOs varies based on a variety of factors, including the executive’s skill set and experience, historic performance, expected future contributions, and the importance of each position to our success. | | Affordability | • Our compensation program is designed to limit fixed compensation expense and tie realized compensation costs to the degree to which budgeted financial objectives are attained. • We structure our incentive plans to maximize efficiency by striving to align performance-based payments with expense. | | Transparency | • We focus on simple, straightforward compensation programs that our associates and stockholders can easily understand. |
COMPENSATION DISCUSSION AND ANALYSIS
| American Eagle Outfitters’ Executive Compensation Checklist | | ✓ A Compensation Committee composed entirely of independent directors oversees the Company’s executive compensation policies and decisions. | | ✓ The Compensation Committee utilizes an independent compensation consulting firm, FW Cook, which does not provide any other services to the Company. | | ✓ We maintain robust executive stock ownership guidelines (six times base salary for our CEO, and three times base salary for our other NEOs). | | ✓ We pay for performance. The majority of our NEOs’ total compensation opportunities are “at-risk.” | | ✓ Our long-term incentive plan does not allow for the payment of dividends or dividend equivalents on unearned PSU awards or unvested RSU awards. | | ✓ We do not maintain (i) employment contracts of defined length with our NEOs, or (ii) multi-year guarantees for base salary increases, bonuses, or long-term incentives. | | ✓ We maintain a Clawback Policy that enables the Board to recoup incentive-based compensation paid or awarded to a current or former executive officer if such compensation was based on financial results that subsequently were restated. | | ✓ We maintain a stringent anti-hedging and anti-pledging policy, applicable to all employees and non-employee directors. | | ✓ We do not provide tax gross-ups on change-in-control benefits. | | ✓ We have double-trigger cash severance and long-term incentive vesting in the event of a change in control. | | ✓ We discourage excessive risk-taking by having our Compensation Committee closely monitor the risks associated with our executive compensation program and individual executive compensation decisions to determine that they do not encourage excessive risk-taking. |
OUR EXECUTIVE COMPENSATION PROGRAM
Role of Our Compensation Committee: The Board has delegated authority to the Compensation Committee to develop and approve the overall compensation program for our NEOs, including the authority to establish and award annual base salaries, annual incentive bonuses, and long-term incentive awards pursuant to our stockholder-approved incentive plan. Furthermore, the Compensation Committee reviews and approves changes to our compensation peer group, as appropriate. In making its decisions, the Compensation Committee takes into consideration a variety of factors, including suggestions made by the CEO (except with respect to decisions regarding his own performance or pay determinations), compensation consultants, and the Company’s external advisory firms. The Compensation Committee acts in accordance with its charter, which can be found on our Investors website at investors.ae.com under “Committee Composition”. Role of Executive Officers in Compensation Decisions: Our CEO annually reviews the performance of each NEO and makes recommendations to the Compensation Committee with respect to each element of executive compensation for the NEOs, excluding himself. The CEO considers Company, brand, and individual performance and market positioning in his recommendations to the Compensation Committee with regard to total compensation for all NEOs. The Compensation Committee makes the final determination of individual compensation levels and awards, taking into consideration the CEO’s recommendations. CEO compensation is determined with input from the compensation consultant, FW Cook, informed by market benchmarking, and ultimately approved by the Compensation Committee. Role of Compensation Consultants: The Compensation Committee has the authority under its charter to retain outside consultants or advisors for assistance. In accordance with this authority, during Fiscal 2023 the Compensation Committee continued to retain the services of FW Cook as its outside independent compensation consultant to advise on matters related to CEO and other executive compensation. The services provided by FW Cook are subject to a written agreement with the Compensation Committee. The Compensation Committee has sole authority to terminate the relationship. The Compensation Committee reviewed its relationship with FW Cook and determined that there are no conflicts of interest pursuant to applicable SEC and NYSE requirements. FW Cook does not provide any other services to the Company. The Compensation Committee may engage other consultants as needed in order to provide analyses, recommendations, or other market data. Under the direction of the Compensation Committee, FW Cook interacts with members of the senior management team to provide insights into market practices and ensure that management is aware of emerging best practices and market trends. In Fiscal 2023, representatives from FW Cook contributed to this CD&A and assisted with various matters related to executive compensation. Fiscal 2022 Say-on-Pay Historically, we have received strong support on our Say-on-Pay proposals, which we have taken as an endorsement of our executive compensation programs. We are proud that our Fiscal 2022 stockholder support for Say-on-Pay at the 2023 Annual Meeting of Stockholders was approximately 94%. This level of support reinforced that our executive compensation program, stockholder engagement and Committee responsiveness were positively received by stockholders.
OUR EXECUTIVE COMPENSATION PROGRAM
Response to 2023 Advisory Vote on Executive Compensation and Stockholder Engagement: At our 2023 Annual Meeting of Stockholders, approximately 94% of shares present and entitled to vote supported, on an advisory basis, the compensation of our NEOs in Fiscal 2022. This vote was consistent with our historically high levels of stockholder support for Say-on-Pay and reinforced the support for our compensation program design. Compensation Benchmarking In determining NEO compensation, the Compensation Committee reviews and takes into account the compensation practices of comparable companies. The Compensation Committee considers three key factors in choosing the companies that compose our peer group:
OUR EXECUTIVE COMPENSATION PROGRAM
Other selection criteria include omni-channel retailing and a review of those companies listed as our peers by proxy advisory firms. We evaluate our peer group on an annual basis and propose changes when appropriate. For Fiscal 2023, our peer group consisted of 17 companies. We fall in the second quartile of the peer group for revenue and the median for market capitalization. Peer group data also is supplemented as needed with additional data from various retail and general industry market surveys, as adjusted to reflect our revenue scope. For Fiscal 2024, the peer group has been updated to remove Chico’s FAS, Inc., which will result in 16 companies.
OUR EXECUTIVE COMPENSATION PROGRAM
| • | balanced to provide a mix of cash and long-term incentive awards; and |
OUR EXECUTIVE COMPENSATION PROGRAM
| • | focused on both annual and long-term performance to ensure that executives are held accountable and rewarded for achievement of annual and longer-term financial and strategic objectives that lead to sustained shareholder value measured on both absolute and relative bases. |
OUR EXECUTIVE COMPENSATION PROGRAM
| Element of Compensation | Form and Objective | Fiscal 2023 Information | Alignment to Strategic Plan | | Base Salary | • Delivered in cash. • Provides a baseline compensation level that delivers a predictable level income to each NEO and reflects his or her job responsibilities, experience, skill set, and contribution to the Company. | • Base salary increases of approximately 7% to 12.5% were delivered to the NEOs (other than Mr. Schottenstein and Mr. Rempell) for 2023 to recognize their significant contributions, expertise, and the competitive talent market in our industry. | • Base salaries enable us to attract and retain qualified, high-caliber executive officers to lead and implement our strategy. | | Annual Incentive Bonus | • Delivered in cash. • Provides bonus opportunities for NEOs if pre-established performance goals are attained, focusing our NEOs on key annual objectives. | • For Fiscal 2023, the incentive bonus was based 100% upon the Company achieving annual EBIT goals at predetermined threshold, target and stretch performance levels. • Actual performance exceeded stretch level goals and a 200% payout was earned. | • Annually, the Compensation Committee establishes performance metrics and goals that align with our strategic plan. • The Fiscal 2023 annual incentive bonus structure funded 100% based on quantitative financial goals. | | Annual Long-Term Incentive Awards | • Delivered in PSUs, RSUs, and stock options. • Aligns our NEOs’ financial interests closely with those of our stockholders. • Links compensation to the achievement of multi-year financial or RTSR goals. | • PSUs represented 50% of the annual target grant values for Fiscal 2023 equity awards. These PSUs vest between threshold and stretch level only to the extent that the pre-established, three-year performance goals are met. If performance falls below the threshold, the award is forfeited in full. For Fiscal 2023, the PSUs are measured on RTSR. The three year cycle that was completed at the end of Fiscal 2023 vested at 85% of target. • In Fiscal 2023, stock options represented 30% of the annual equity grant target value. These stock options vest ratably over three years from the grant date based on continued service and provide compensation only to the extent that our share price appreciates. • RSUs represented 20% of the annual equity grant target value for Fiscal 2023 equity awards. These RSUs vest ratably over three years from the grant date based on continued service. | • Aligns NEO compensation with our longer-term performance objectives and changes in stockholder value over time. |
OUR EXECUTIVE COMPENSATION PROGRAM
Fiscal 2023 Annual Incentive Bonus Our NEOs are eligible for annual incentive bonuses, the achievement of which is based upon the Company meeting pre-established performance goals. For Fiscal 2023, 100% of the annual incentive bonuses awarded to our NEOs pursuant to the AIP were based upon the achievement of annual EBIT goals.
EBIT Goal
EBIT Goal Bonus Opportunity EBIT was chosen as the sole performance measure as it reflects both sales performance and expense management initiatives, is controllable by the NEOs, and directly links the Company’s long-term growth with stockholder value. EBIT represents operating income, as reported in our consolidated financial statements, before interest expense and income taxes and excludes any asset impairment and restructuring charges, as determined by the Compensation Committee. The Compensation Committee believes that the selection of EBIT as a performance measure directly links the Company’s long-term growth with stockholder value. The Compensation Committee established EBIT performance goals, with threshold, target, and stretch level goals linked to payouts of 25%, 100%, and 200% of target bonus amounts, respectively. The goals were designed to be challenging in context of the need to generate both sales and margin improvement from trends at the time the goals were set, as well as expense reduction.
Setting Target Bonus Opportunities
Setting Target Bonus Opportunities Early in the year, the Compensation Committee establishes each NEO’s annual incentive bonus opportunity as a percentage of the NEO’s base salary. Each NEO’s target annual incentive bonus opportunity reflects his or her role and responsibilities as well as market competitiveness and internal equity considerations. Target bonus award opportunities typically constitute over 20% of each NEO’s target compensation for the year. During Fiscal 2023, the target bonus award opportunities for the NEOs were set as follows:
Setting Target Bonus Opportunities
| Executive Officer | Fiscal 2022 Target (as a Percentage of Base Salary) | Fiscal 2023 Target (as a Percentage of Base Salary) | | Jay Schottenstein, CEO | 175% | 175% | | Michael Mathias, CFO | 90% | 100% | | Jennifer Foyle, President | 140% | 150% | | Marisa Baldwin, CHRO | 70% | 80% | | Michael Rempell, Former COO | 100% | 100% |
Fiscal 2023 EBIT Performance
| Executive Officer | Fiscal 2023 Target Annual Incentive Awards | Fiscal 2023 Actual(2) Annual Incentive Award Payouts | | Jay Schottenstein, CEO | $3,062,500 | $6,360,577 | | Michael Mathias, CFO | $900,000 | $1,815,384 | | Jennifer Foyle, President | $2,250,000 | $4,592,308 | | Marisa Baldwin, CHRO | $500,000 | $1,014,769 | | Michael Rempell, Former COO(1) | $1,050,000 | $2,180,769 |
Fiscal 2023 EBIT Performance
| (1) Mr. Rempell remained employed as a non-executive officer through April 30, 2024 and continued his service to the Company through the payout date for the Fiscal 2023 annual incentive bonus. |
Fiscal 2023 EBIT Performance
| (2) Amount represents a 200% payout based on wages paid during the 53-week fiscal year. |
Overview and Mix of Awards
Overview and Mix of Awards We utilize a combination of time- and performance-based long-term incentive awards, which are granted on an annual basis, to focus management on long-term corporate performance and sustainable earnings growth. The Fiscal 2023 equity blend of our long-term incentive awards was:
Overview and Mix of Awards
| • | PSUs represented 50% (at target) of total long-term equity awards; |
Overview and Mix of Awards
| • | Stock options represented 30% of total long-term equity awards; and |
Overview and Mix of Awards
| • | RSUs represented 20% of total long-term equity awards. |
Fiscal 2023 Long-Term Incentive Award Grants
Fiscal 2023 Long-Term Incentive Award Grants The Compensation Committee established the following Fiscal 2023 target regular cycle long-term incentive opportunities for each NEO based on his or her overall responsibilities, contributions to the business, market position and internal pay equity. With respect to Mr. Schottenstein, the Compensation Committee determined his long-term incentive award grant value within the context of his expertise, sizeable contributions to the success of the business, and overall compensation position relative to peers. The following table summarizes Fiscal 2023 long-term incentive award grants; actual amounts earned for the PSUs, if any, will depend on the Company’s RTSR performance results spanning Fiscal 2023 through Fiscal 2025.
Fiscal 2023 Long-Term Incentive Award Grants
| Executive Officer | Fiscal 2023 Target Long-Term Incentive: PSU Awards | Fiscal 2023 Long-Term Incentive: RSU Awards | Fiscal 2023 Long-Term Incentive: Stock Option Awards | Fiscal 2023 Target Total Long-Term Incentive Award | | Jay Schottenstein, CEO | $4,150,000 | $1,660,000 | $2,490,000 | $8,300,000 | | Michael Mathias, CFO | $800,000 | $320,000 | $480,000 | $1,600,000 | | Jennifer Foyle, President | $2,100,000 | $840,000 | $1,260,000 | $4,200,000 | | Marisa Baldwin, CHRO | $375,000 | $150,000 | $225,000 | $750,000 | | Michael Rempell, Former COO | $1,625,000 | $650,000 | $975,000 | $3,000,000 |
Fiscal 2023 Long-Term Incentive Award Grants
PSUs The grant of PSUs supports the Compensation Committee’s desire to create a stronger and more visible link between executive pay and Company performance and further aligns our executives’ interests with those of our stockholders. PSUs represent 50% of the value of the NEOs’ annual long-term incentive award. We determine the number of target PSUs based on the overall dollar grant value of the award divided by the estimated fair value of our common stock utilizing a Monte Carlo simulation on the date of the grant. Dividend equivalents on the PSUs are reinvested in additional units and paid out only to the extent that the associated PSUs vest. Annual PSU grants cliff vest, if at all, at the end of a three-year performance period upon achievement of pre-established goals. For Fiscal 2023, the Compensation Committee selected RTSR, measured against the Company’s Peer Group over a three-year performance period as the performance metric for PSUs. Recent PSU awards were measured against the S&P 1500 Specialty Retail Index. The change to the Peer Group for the 2023 award was intended to focus the award measurement on a more narrow group of retail peers with whom the Company competes for customers and talent. The selection of a relative performance metric ensures that the recipients will be measured against industry performance and encourages a balanced compensation program as the annual incentive bonus and long-term incentive awards are based on multiple metrics, without any overlap. Vesting of the PSUs ranges from 0% of the target amount for below threshold performance, 50% of the target amount at threshold performance, 100% of the target amount at target performance, and 150% of the target amount if we achieve stretch goals. Threshold performance is attained at the 25th percentile of the Peer Group, target is attained at the 50th percentile and stretch is attained at the 75th percentile or higher. If threshold performance is met or exceeded, performance and award payouts will be
Fiscal 2023 Long-Term Incentive Award Grants
| 56 | | | |
Fiscal 2023 Long-Term Incentive Award Grants
determined through interpolation. If the Company’s absolute TSR is negative over the three-year period, vesting is capped at target (100%), regardless of performance relative to the Peer Group. Stock Options The grant of stock options supports the Compensation Committee’s philosophy that stock price appreciation should be a significant determinant of the economic return received by our executives from equity compensation. Stock options represent 30% of the value of each NEO’s annual long-term incentive award. We determine the number of stock options for each grant based on the overall dollar grant value of the award divided by the estimated fair value of our common stock, utilizing the Black Scholes option pricing model on the grant date. Annual stock option grants have an exercise price per share equal to the fair market value of a share of stock on the grant date and vest ratably over three years from the grant date, assuming continued employment, and provide compensation to NEOs only to the extent that our share price appreciates from grant date to exercise date. RSUs RSUs are subject to time-based vesting and provide a retention incentive for our NEOs and an incentive to increase stockholder value. RSUs represent only 20% of the value of NEOs’ annual long-term incentive award. We determine the number of RSUs in each grant based on the overall dollar grant value of the award divided by the closing price per share of our common stock on the grant date. Dividend equivalents on RSUs are reinvested in additional RSUs and paid only to the extent that the associated RSUs vest. RSUs vest with a three-year ratable vesting schedule, subject to continued employment. Fiscal 2021 PSU Payouts In Fiscal 2021, the Compensation Committee granted Messrs. Schottenstein, Mathias, Rempell and Mss. Foyle and Baldwin PSUs that cliff-vested at the end of a three-year performance period ending February 3, 2024. An 85% payout of PSUs that were granted in Fiscal 2021 and vested at the end of Fiscal 2023 was earned. Payout of the Fiscal 2021 PSUs was subject to the achievement of RTSR, measured against the S&P 1500 Specialty Retail Index. AEO’s RTSR was at the 42th percentile, resulting in an 85% vesting. Based upon the performance discussed above, Messrs. Schottenstein, Mathias, Rempell and Mss. Foyle and Baldwin received the following payouts with respect to their Fiscal 2021 PSU awards, which represented 85% of target vesting:
Fiscal 2023 Long-Term Incentive Award Grants
| NEO | Target Fiscal 2021 PSU Award (# of Shares) | Fiscal 2021 PSU Payout (# of Shares)(1) | | Jay Schottenstein, CEO | 87,829 | 74,655 | | Michael Mathias, CFO | 16,107 | 13,691 | | Jennifer Foyle, President | 50,188 | 42,660 | | Marisa Baldwin, CHRO | 3,783 | 3,216 | | Michael Rempell, Former COO | 35,555 | 30,221 |
Fiscal 2023 Long-Term Incentive Award Grants
| (1) PSU Payout (# of Shares) includes accrued dividends. Pursuant to the terms of the award agreements, participants are eligible to receive dividend equivalents with respect to dividends paid prior to the settlement of the award. The earned shares reported in this table do not include additional shares acquired through the deemed reinvestment of dividend equivalents prior to settlement of the award. The earned shares, including shares acquired through the deemed reinvestment of dividends through February 3, 2024, are reported in the 2023 Option Exercises and Stock Vested Table. PSU award recipients receive fractional shares upon settlement; however, for purposes of this table, share numbers have been rounded to the nearest whole share. |
Fiscal 2023 Long-Term Incentive Award Grants
| 2024 Proxy Statement | | | 57 |
COMPANY COMPENSATION POLICIES AND PRACTICES
COMPANY COMPENSATION POLICIES AND PRACTICES Other Practices and Policies Clawback Policy In connection with the SEC’s and NYSE’s new rules requiring adoption of a clawback policy applicable to incentive-based compensation for executive officers of listed companies, the Company has adopted an Incentive Based Compensation Recovery Policy (the “Clawback Policy”). Current executive officers of the Company have agreed in writing to the terms and conditions of the Clawback Policy. Under the Clawback Policy, if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the federal securities laws, the Company will recoup any erroneously awarded incentive-based compensation from the Company’s current and former executive officers. Additionally, the 2023 Stock Plan includes additional award forfeiture provisions that provide for the cancellation or forfeiture of an award (in full or in part) in the event that the award recipient engages in misconduct related to the restatement of financial statements. Prohibition Against Hedging Transactions and Pledging Employees (including our executive officers) and members of the Board are prohibited from engaging in transactions in financial instruments designed to hedge or offset any decrease in the market value of our stock. Our policy prohibits transactions in such instruments as prepaid variable forward contracts, equity swaps, collars or exchange funds, as well as any other hedging instrument. Employees and members of the Board are also prohibited from holding our stock in a margin account as collateral for a margin loan or otherwise pledging our stock as collateral. Benefits and Perquisites Executives generally are eligible for the same health and welfare plans as other full-time Company employees, including medical, dental, life and disability insurance, and retirement plans. We provide limited perquisites for our NEOs, as set forth in the Summary Compensation Table, which we believe are reasonable and justified by market practice, personal safety and convenience that enhances productivity. For Fiscal 2023, perquisites primarily consist of a security benefit to Mr. Schottenstein and an executive physical program to proactively manage health risks for our executive officers that was utilized by Messrs. Schottenstein and Rempell and Mses. Foyle and Baldwin during Fiscal 2023. Compensation Risk Assessment Annually, the Compensation Committee, together with management, conducts an analysis to determine whether any risks arising from compensation policies and practices are reasonably likely to have a material adverse effect on the Company in light of our overall business, strategy, and objectives. Management, in concert with the Compensation Committee, reviews and evaluates both cash and equity incentive plans across executive and non-executive employee populations, as well as other compensation-related policies to which our employees are subject. This assessment evaluates both (i) material enterprise risks related to our business that may be exacerbated by compensation policies and practices and (ii) the potential risks arising from attributes in our compensation practices, performance criteria, pay mix, and verification of performance results. Based on this assessment, the Compensation Committee has determined that the risks arising from the Company’s compensation plans and policies are not reasonably likely to have a material adverse effect on the Company. Management Stock Ownership Requirements Management has stock ownership requirements to establish a commonality of interest between the teams and stockholders. Eligible members of management are required to own the equivalent value of a multiple of their salary. For Mr. Schottenstein, the multiple is six times and for the other NEOs three times. The requirement can be met through various forms of equity, including personal holdings and equity incentive awards such as restricted stock units. Unearned performance awards and unexercised stock options do not count toward ownership requirement attainment. Executives not meeting their requirement must retain 50% of their after-tax shares acquired through stock sales until the requirement is reached. As of the Record Date of this Proxy Statement, the CEO and the other NEOs are in compliance with their requirements, with the exception of Ms. Baldwin, who was hired in September 2021. Ms. Baldwin is on track to meet the requirement within a reasonable timeline and is subject to trading restrictions until the requirement has been met. Additional information regarding stock ownership requirements can be found on page 76.
COMPANY COMPENSATION POLICIES AND PRACTICES
Change in Control and Other Agreements Our NEOs are entitled to receive consideration upon the termination of the executive’s employment with us under specified circumstances, including termination related to a change in control (“CIC”). These arrangements provide essential protections to the NEO to assist us in attracting and retaining qualified executives in a competitive environment. At the same time, we obtain certain agreements that preserve our valuable assets by imposing non-competition and non-solicitation restrictions, confidentiality obligations, and cooperation covenants on our NEOs. Change in Control Provisions The Company has entered into CIC agreements (each, a “CIC Agreement”) with all of our NEOs, with the exception of Mr. Schottenstein, our CEO. The CIC Agreements are designed to motivate executives to continue to work for the best interests of the Company and our stockholders in a potential CIC situation. The CIC Agreements contain “double-trigger” provisions for severance and other benefits. In the event of a CIC, and within 18 months of such event, if a NEO’s employment is terminated by the Company other than for Cause, Disability, or as a result of the NEO’s death, or if the executive terminates his or her employment for Good Reason (each capitalized term as defined in the applicable CIC Agreement), the NEO is entitled to receive:
COMPANY COMPENSATION POLICIES AND PRACTICES
| • | a lump-sum severance payment equal to one and one-half times the NEO’s base salary, annualized for any partial year amount, and annual incentive cash bonus amount, at target; |
COMPANY COMPENSATION POLICIES AND PRACTICES
| • | a prorated amount of the NEO’s then-current annual incentive cash bonus, at target; and |
COMPENSATION TABLES AND RELATED INFORMATION
| Summary Compensation Table | | | | | | | | | | Name and Principal Position | Fiscal Year(1) | Base Salary(2) | Bonus | Stock Awards(3) | Option Awards(4) | Non-Equity Incentive Plan Compensation(5) | All Other Compensation(6) | Total | | Jay L. Schottenstein Chief Executive Officer | 2023 | $1,817,308 | — | $5,810,002 | $2,490,002 | $6,360,577 | $315,330 | $16,793,219 | | | 2022 | $1,750,000 | — | $5,459,994 | $2,340,002 | $— | $226,544 | $9,776,540 | | | 2021 | $1,750,000 | — | $4,899,981 | $2,100,003 | $5,889,423 | $236,040 | $14,875,447 | | Michael A. Mathias Chief Financial Officer | 2023 | $907,692 | — | $1,120,004 | $479,997 | $1,815,384 | $13,962 | $4,337,039 | | | 2022 | $779,808 | — | $1,049,985 | $450,001 | $— | $10,154 | $2,289,948 | | | 2021 | $725,000 | — | $898,627 | $385,123 | $898,750 | $10,356 | $2,917,856 | | Jennifer M. Foyle President, Executive Creative Officer AE and Aerie | 2023 | $1,530,769 | — | $2,939,989 | $1,259,999 | $4,592,308 | $51,087 | $10,374,152 | | | 2022 | $1,373,077 | — | $2,799,997 | $1,200,002 | $— | $10,445 | $5,383,521 | | | 2021 | $1,300,000 | — | $2,799,994 | $1,199,998 | $3,413,846 | $10,803 | $8,724,641 | | Marisa A. Baldwin Chief Human Resources Officer | 2023 | $634,231 | — | $525,006 | $225,001 | $1,014,769 | $49,750 | $2,448,756 | | | 2022 | $557,885 | — | $455,010 | $195,002 | $— | $1,955 | $1,209,852 | | Michael R. Rempell Former Chief Operations Officer | 2023 | $1,090,385 | — | $2,275,002 | $975,001 | $2,180,769 | $49,889 | $6,571,046 | | | 2022 | $1,023,077 | — | $2,100,008 | $900,002 | $— | $10,226 | $4,033,313 | | | 2021 | $950,000 | — | $1,983,629 | $850,121 | $1,654,269 | $10,269 | $5,448,288 |
COMPENSATION TABLES AND RELATED INFORMATION
| Grants of Plan-Based Awards – Fiscal 2023 | | | | | | | | | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payout Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Jay L. Schottenstein(1) | — | $765,625 | $3,062,500 | $6,125,000 | — | — | — | — | — | — | — | | (2) | 3/30/2023 | — | — | — | 140,774 | 281,547 | 422,321 | — | — | — | $4,150,003 | | (3) | 3/30/2023 | — | — | — | — | — | — | 126,044 | — | — | $1,659,999 | | (4) | 3/30/2023 | — | — | — | — | — | — | — | 468,927 | $13.17 | $2,490,002 | | Michael A. Mathias(1) | — | $225,000 | $900,000 | $1,800,000 | — | — | — | — | — | — | — | | (2) | 3/30/2023 | — | — | — | 27,137 | 54,274 | 81,411 | — | — | — | $799,999 | | (3) | 3/30/2023 | — | — | — | — | — | — | 24,298 | — | — | $320,005 | | (4) | 3/30/2023 | — | — | — | — | — | — | — | 90,395 | $13.17 | $479,997 | | Jennifer M. Foyle(1) | — | $562,500 | $2,250,000 | $4,500,000 | — | — | — | — | — | — | — | | (2) | 3/30/2023 | — | — | — | 71,235 | 142,469 | 213,704 | — | — | — | $2,099,993 | | (3) | 3/30/2023 | — | — | — | — | — | — | 63,781 | — | — | $839,996 | | (4) | 3/30/2023 | — | — | — | — | — | — | — | 237,288 | $13.17 | $1,259,999 | | Marisa A. Baldwin(1) | — | $125,000 | $500,000 | $1,000,000 | — | — | — | — | — | — | — | | (2) | 3/30/2023 | — | — | — | 12,721 | 25,441 | 38,162 | — | — | — | $375,000 | | (3) | 3/30/2023 | — | — | — | — | — | — | 11,390 | — | — | $150,006 | | (4) | 3/30/2023 | — | — | — | — | — | — | — | 42,373 | $13.17 | $225,001 | | Michael R. Rempell(1) | — | $262,500 | $1,050,000 | $2,100,000 | — | — | — | — | — | — | — | | (2) | 3/30/2023 | — | — | — | 55,122 | 110,244 | 165,366 | — | — | — | $1,624,997 | | (3) | 3/30/2023 | — | — | — | — | — | — | 49,355 | — | — | $650,005 | | (4) | 3/30/2023 | — | — | — | — | — | — | — | 183,616 | $13.17 | $975,001 |
COMPENSATION TABLES AND RELATED INFORMATION
| Outstanding Equity Awards at Fiscal 2023 Year – End | | | | | | | | | | | | Option Awards | | | | | Stock Awards (1) | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexer- cisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Jay L. Schottenstein(2) | 227,937 | — | — | $14.59 | 3/8/24 | — | — | — | — | | (3) | 235,526 | — | — | $19.60 | 3/14/25 | — | — | — | — | | (4) | 266,719 | — | — | $21.41 | 3/26/26 | — | — | — | — | | (5) | 347,142 | — | — | $8.62 | 3/26/27 | — | — | — | — | | (6) | 258,000 | — | — | $12.33 | 6/4/27 | — | — | — | — | | (7) | — | — | — | — | — | — | — | 94,322 | $1,959,065 | | (8) | — | — | — | — | — | 15,384 | $319,518 | — | — | | (9) | 115,348 | 57,675 | — | $32.58 | 4/9/28 | — | — | — | — | | (13) | — | — | — | — | — | — | — | 206,489 | $4,288,777 | | (14) | — | — | — | — | — | 62,890 | $1,306,227 | — | — | | (15) | 132,282 | 264,566 | — | $17.24 | 3/30/29 | — | — | — | — | | (16) | — | — | — | — | — | — | — | 289,257 | $6,007,867 | | (17) | — | — | — | — | — | 129,496 | $2,689,624 | — | — | | (18) | — | 468,927 | — | $13.17 | 3/30/30 | — | — | — | — | | Michael A. Mathias(6) | 40,471 | — | — | $12.33 | 6/4/27 | — | — | — | — | | (7) | — | — | — | — | — | — | — | 17,298 | $359,274 | | (8) | — | — | — | — | — | 2,822 | $58,609 | — | — | | (9) | 21,154 | 10,577 | — | $32.58 | 4/9/28 | — | — | — | — | | (13) | — | — | — | — | — | — | — | 39,709 | $824,756 | | (14) | — | — | — | — | — | 12,094 | $251,202 | — | — | | (15) | 25,439 | 50,878 | — | $17.24 | 3/30/29 | — | — | — | — | | (16) | — | — | — | — | — | — | — | 55,760 | $1,158,140 | | (17) | — | — | — | — | — | 24,963 | $518,489 | — | — | | (18) | — | 90,395 | — | $13.17 | 3/30/30 | — | — | — | — | | Jennifer M. Foyle(3) | 73,032 | — | — | $19.60 | 3/14/25 | — | — | — | — | | (4) | 127,607 | — | — | $21.41 | 3/26/26 | — | — | — | — | | (5) | 106,084 | — | — | $8.62 | 3/26/27 | — | — | — | — | | (6) | 123,435 | — | — | $12.33 | 6/4/27 | — | — | — | — | | (7) | — | — | — | — | — | — | — | 53,898 | $1,119,465 | | (8) | — | — | — | — | — | 8,791 | $182,591 | — | — | | (9) | 65,913 | 32,957 | — | $32.58 | 4/9/28 | — | — | — | — | | (13) | — | — | — | — | — | — | — | 105,891 | $2,199,365 | | (14) | — | — | — | — | — | 32,252 | $669,866 | — | — | | (15) | 67,837 | 135,675 | — | $17.24 | 3/30/29 | — | — | — | — | | (16) | — | — | — | — | — | — | — | 146,370 | $3,040,113 | | (17) | — | — | — | — | — | 65,528 | $1,361,008 | — | — | | (18) | — | 237,288 | — | $13.17 | 3/30/30 | — | — | — | — | | Marisa A. Baldwin(10) | — | — | — | — | — | — | — | 4,042 | $83,945 | | (11) | — | — | — | — | — | 659 | $13,691 | — | — | | (12) | 4,970 | 2,485 | — | $27.01 | 9/13/28 | — | — | — | — | | (13) | — | — | — | — | — | — | — | 17,208 | $357,401 | | (14) | — | — | — | — | — | 5,243 | $108,892 | — | — | | (15) | 11,023 | 22,048 | — | $17.24 | 3/30/29 | — | — | — | — | | (16) | — | — | — | — | — | — | — | 26,138 | $542,880 | | (17) | — | — | — | — | — | 11,702 | $243,049 | — | — | | (18) | — | 42,373 | — | $13.17 | 3/30/30 | — | — | — | — | | Michael R. Rempell(4) | 88,697 | — | — | $21.41 | 3/26/26 | — | — | — | — | | (7) | — | — | — | — | — | — | — | 38,183 | $793,070 | | (8) | — | — | — | — | — | 6,229 | $129,380 | — | — | | (9) | 46,695 | 23,348 | — | $32.58 | 4/9/28 | — | — | — | — | | (13) | — | — | — | — | — | — | — | 79,419 | $1,649,534 | | (14) | — | — | — | — | — | 24,189 | $502,405 | — | — | | (15) | — | 101,756 | — | $17.24 | 3/30/29 | — | — | — | — | | (16) | — | — | — | — | — | — | — | 113,263 | $2,352,471 | | (17) | — | — | — | — | — | 50,707 | $1,053,175 | — | — | | (18) | — | 183,616 | — | $13.17 | 3/30/30 | — | — | — | — |
COMPENSATION TABLES AND RELATED INFORMATION
| Option Exercises and Stock Vested – Fiscal 2023 | | | | | | | Option Awards (1) | | Stock Awards (2) | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Jay L. Schottenstein | — | — | 336,433 | $4,925,206 | | Michael A. Mathias | — | — | 58,346 | $845,165 | | Jennifer M. Foyle | 50,760 | $1,013,840 | 186,555 | $2,764,457 | | Marisa A. Baldwin | — | — | 3,201 | $43,285 | | Michael R. Rempell | 125,354 | $2,529,588 | 131,896 | $1,931,033 |
COMPENSATION TABLES AND RELATED INFORMATION
| Nonqualified Deferred Compensation |
COMPENSATION TABLES AND RELATED INFORMATION
| Pay Versus Performance Table | | | | | | | | | | Fiscal Year | Summary Compensation Table Total for PEO (1) ($) | Compensation Actually Paid to PEO (1)(2)(3) ($) | Average Summary Compensation Table Total for Non-PEO NEOs (1) ($) | Average Compensation Actually Paid to Non-PEO NEOs (1)(2)(3) ($) | Value of Initial Fixed $100 Investment based on (4) | | Net Income (Loss) ($ Millions) (5) | Earnings Before Interest and Taxes ($ Millions) (6) | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) | | | | 2023 | $16,793,219 | $24,307,437 | $5,932,748 | $8,206,623 | $156.8 | $143.4 | $170 | $386 | | 2022 | $9,776,540 | $1,499,742 | $3,080,683 | $726,957 | $115.0 | $118.4 | $125 | $280 | | 2021 | $14,875,447 | $15,274,358 | $5,334,752 | $5,623,793 | $160.4 | $122.3 | $420 | $617 | | 2020 | $14,784,288 | $29,296,913 | $4,920,732 | $9,134,036 | $158.7 | $115.5 | ($209) | $12 |