DEF 14A of Crocs, Inc.
Filed Apr 27, 2023 · FY20220001334036-23-000063
PROPOSAL 1 - ELECTION OF DIRECTORS
PROPOSAL 1 - ELECTION OF DIRECTORS
Board Composition
Board Composition Our Board currently consists of eight members divided into three classes, with each director elected to a three-year term. Under our amended and restated bylaws, each of our directors holds office until his or her successor has been elected and qualified or until such director’s earlier resignation or removal.
Board Composition
| Class III terms expire at the 2023 annual meeting: | | Thomas J. Smach | | Beth J. Kaplan | | Class I terms expire at the 2024 annual meeting: | | Ronald L. Frasch | | Andrew Rees | | Charisse Ford Hughes | | Class II terms expire at the 2025 annual meeting: | | Ian M. Bickley | | Tracy Gardner | | Douglas J. Treff |
Board Composition
At each annual meeting of stockholders, the successors to directors whose terms expire at such meeting will be elected, or such directors will be re-elected, and will serve from the time of election and qualification until the third annual meeting following their election or until their successors are duly elected and qualified. The current authorized number of directors is eight. The authorized number of directors may be changed by resolution of the Board. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. Vacancies on the Board can be filled by resolution of the Board. Upon the recommendation of the Governance and Nominating Committee, the Board has nominated Ms. Kaplan and Mr. Smach for re-election as Class III directors to serve for a three-year term expiring at the 2026 annual meeting of stockholders. A stockholder cannot vote for more than two nominees. Each of the director nominees has consented to serve for a three-year term. We do not contemplate that either of the nominees will be unable to stand for election, but should either nominee become unable to serve or will not serve for any reason, all proxies will be voted for the election of a substitute nominee as the Board may recommend. There are no arrangements or understandings between any director or executive officer and any other person pursuant to which he is or was to be selected as a director or officer of our Company. There are no family relationships among our executive officers and directors.
Director Nomination Process and Director Qualifications
Director Nomination Process and Director Qualifications The Governance and Nominating Committee’s process for identifying potential director candidates and the factors considered by the Governance and Nominating Committee in evaluating potential candidates are described below. In identifying potential director candidates, the Governance and Nominating Committee relies on recommendations from a number of sources, including current directors and officers. The Governance and Nominating Committee may also hire outside consultants, search firms, or other advisors to assist in identifying director candidates. We do not have a separate policy regarding director candidates recommended by stockholders, but the Governance and Nominating Committee will consider director candidates recommended by stockholders on the same basis as it considers other candidates. Any stockholder wishing to recommend a candidate for consideration by the Governance and Nominating Committee may do so by submitting a written recommendation to the Governance and Nominating Committee in accordance with the procedures set forth under “Stockholder Proposals and Nominations.” In evaluating a director candidate, our Governance and Nominating Committee considers, among other things, the candidate’s judgment, knowledge, personal and professional integrity, ethics and values, diversity, expertise, business and industry experience, and other expertise, which is likely to enhance the Board’s ability to govern our affairs and business. We do not have a separate policy regarding consideration of diversity in identifying director nominees, but the Governance and Nominating Committee strives to nominate directors with a variety of complementary skills and backgrounds so that, as a group, the Board will possess a broad perspective and the appropriate talent, skills, and expertise to oversee our business. For example, over the last three years, the Board added Ms. Beth J. Kaplan, Ms. Charisse Ford Hughes, and Ms. Tracy Gardner to the Board, and the Board believes they have provided valuable experience and insight, along with additional gender and racial diversity to the Board. The Governance and Nominating Committee also takes into account independence requirements imposed by law or regulations (including the Nasdaq listing standards). In the case of director candidates recommended by stockholders, the Governance and Nominating Committee may also consider the number of shares held by the recommending stockholder, the length of time that such shares have been held and the relationship, if any, between the recommending stockholder and the recommended director nominee.
Director Nomination Process and Director Qualifications
| THE BOARD RECOMMENDS A VOTE “FOR” EACH OF THE ABOVE-NAMED NOMINEES FOR DIRECTOR. |
Class III Director Nominees
Class III Director Nominees
Class III Director Nominees
| Thomas J. Smach (Class III) | Mr. Smach, age 62, has served as the Chairperson of the Board since June 2011, and as a member of the Board since April 2005. Since 2008, Mr. Smach has been a co-founding partner of Riverwood Capital Management, a private equity firm. From January 2005 to June 2008, Mr. Smach served as the Chief Financial Officer of Flextronics International (“Flextronics”), a Nasdaq-listed electronics manufacturing services (“EMS”) provider. From April 2000 to December 2004, Mr. Smach served as Senior Vice President-Finance of Flextronics. From 1997 to April 2000, he served as the Senior Vice President, Chief Financial Officer and Treasurer of The Dii Group, Inc., an EMS provider and publicly-traded company that merged with Flextronics in early 2000. In addition to currently serving on the board of various private companies around the world, Mr. Smach also served on the board of various public companies in both the United States and Germany. Mr. Smach is a certified public accountant (inactive). Mr. Smach has extensive accounting and financial management experience having served as the chief financial officer of global public companies and on the Boards of both public and private companies. In addition, Mr. Smach has significant experience with international manufacturing and business from his leadership positions at Riverwood Capital Management and Flextronics. This experience is useful in light of our international operations. Mr. Smach also has substantial experience in mergers and acquisitions as well as capital market transactions. Further, Mr. Smach is well versed in SEC compliance and risk oversight, which makes him particularly well suited to serve on our Audit Committee and as the Board’s Chairperson. | | | | | Beth J. Kaplan (Class III) | Ms. Kaplan, age 65, has served as a member of the Board since January 2020. She is a venture partner at Revolution Ventures and is the managing member of Axcel Partners, LLC, a venture capital firm investing in early stage and growth companies, since 2001. Ms. Kaplan served as President and Chief Operating Officer at Rent the Runway, Inc., a Nasdaq-listed e-commerce apparel company, from 2013 to 2015 and has served on its Board of Directors since February 2014 and also serves as chair of its Compensation Committee and on its Audit Committee. She has also served on the board of Brilliant Earth Group, Inc., a Nasdaq-listed digital-first jewelry company (“Brilliant Earth”) since October 2020 and serves as chair of its Compensation Committee and on its Nominating and Corporate Governance Committee. She has served on the Boards of several early stage growth companies, including Care/of (which is majority owned by Bayer, Inc.) since 2018 and Coopers Hawk since 2020, and she served on the Board of Framebridge (which is owned by Graham Holdings) from 2016 to 2020. Previously, Ms. Kaplan served as President and Chief Merchandising and Marketing Officer, and as a director, at General Nutrition Centers (“GNC”) from 2008 to 2011, where she played an integral role in GNC’s 2011 initial public offering. Prior to GNC, Ms. Kaplan served as Executive Vice President and General Manager at Bath & Body Works, LLC from 2002 to 2005, Executive Vice President of Marketing and Merchandising at Rite Aid Corporation from 1996 to 1999, and President and General Manager of the U.S. Cosmetics and Fragrance division at The Procter & Gamble Company. Ms. Kaplan served as a member of the Board of Directors of Meredith Corporation, a publicly traded media conglomerate, from January 2017 until December 2021 and was formerly the Chairperson of the Human Resource and Compensation Committee and a member of its Finance/Audit Committee. In addition, Ms. Kaplan joined the board of Howard Hughes Corporation, a publicly traded commercial, residential and mixed-use real estate company, in December 2017 and currently serves on its Audit and Risk Committees and is the chairperson of its Nominating and Governance Committee. Ms. Kaplan has decades of executive experience in consumer products, retail, and digital commerce and brings valuable perspective to the Board and management in terms of understanding consumer trends, brand management and operational expertise. Ms. Kaplan also has public board experience, and serves on multiple audit and risk committees. | | | |
Information About Continuing Directors
Information About Continuing Directors
Class I Directors
Class I Directors
Class I Directors
| Ronald L. Frasch (Class I) | Mr. Frasch, age 74, has served as a member of the Board since October 2006 and served as our Lead Director from November 2012 to January 2016. Mr. Frasch has been the founder of Ron Frasch Associates, an industry consulting firm, since 2014. Previously, he served as Operating Partner at Castanea Partners, a private equity firm, from February 2014 until June 2019. From June 2014 to June 2015, Mr. Frasch served as a director of EVINE Live, Inc., a Nasdaq-listed digital commerce company. Mr. Frasch also has served as a director of Burberry Ltd. since 2017. Mr. Frasch served as President and Chief Merchandising Officer of Saks Fifth Avenue, a division of Saks, Incorporated, a NYSE-listed luxury fashion retailer, from February 2007 until the merger of Saks, Incorporated with Hudson’s Bay Company in November 2013. From November 2004 until January 2007, he held the post of Vice Chairperson and Chief Merchant of Saks Fifth Avenue. From January 2004 to November 2004, he was employed by Saks in a non-executive capacity. From April 2000 to January 2004, Mr. Frasch served as Chairperson and Chief Executive Officer of Bergdorf Goodman (a subsidiary of Neiman Marcus Group, Inc.) and served as President of GFT North America (a subsidiary of Gruppo GFT, based in Turin, Italy, a global producer, marketer, and distributor of fine men’s and women’s clothing, sportswear, and furnishings) from 1996 to 2000. Mr. Frasch also served as President and Chief Executive Officer of Escada USA from 1994 to 1996. Mr. Frasch has extensive executive expertise in the fashion retail industry, which is valuable to the Board and management in understanding the consumer retail and fashion industry, including current buying trends by our wholesale customers. | | | | | Andrew Rees (Class I) | Andrew Rees, age 56, has served as a member of the Board since June 2017 and is currently the Chief Executive Officer and Principal Executive Officer of Crocs, Inc., overseeing the brands’ global strategy and operations. Mr. Rees joined Crocs as President in June 2014, and became Chief Executive Officer in June 2017. Mr. Rees has more than 25 years of experience in the footwear and retail industry. Prior to joining Crocs, Mr. Rees served as Managing Director of L.E.K. Consulting in Boston where he founded and led the firm’s Retail and Consumer Products Practice for 13 years. While at L.E.K., Mr. Rees served as a consultant for Crocs from 2013 to 2014, supporting the development and execution of the Company’s strategic growth plan. Previously, Mr. Rees served as Vice President of Strategic Planning and Vice President of Retail Operations for Reebok International. He also held a variety of positions at Laura Ashley from 1994 to 1996. Mr. Rees has extensive executive expertise in the footwear and retail industry and day-to-day knowledge of our operations as Chief Executive Officer. | | | | | Charisse Ford Hughes (Class I) | Charisse Ford Hughes, age 52, has served as a member of the Board since September 2020 and is currently the Senior Vice President and Chief Brand & Advanced Analytics Officer of Kellogg Company (“Kellogg”), a role she has held since March 2022. Prior to this role, Ms. Ford Hughes served as the Senior Vice President and Global Chief Marketing Officer of Kellogg from September 2020 to March 2022. Before joining Kellogg, Ms. Ford Hughes served as Chief Marketing Officer for the Americas region of Pandora Jewelry from January 2015 to September 2020. Ms. Ford Hughes has also held senior marketing and leadership positions at consumer brands including Estée Lauder Companies, Inc. (from August 2005 to July 2014), Avon Products, Inc. (from 2001 to 2005), and the Sara Lee Corporation (from 1997 to 2001). Ms. Ford Hughes currently serves on the board of Delivering Good, Inc. and as a board advisor to Prelude Growth Partners and Pixability, a video advertising platform company. She earned an undergraduate degree in Finance from Howard University and her MBA in Finance and Marketing from the J.L. Kellogg School of Management at Northwestern University. Ms. Ford Hughes has decades of executive experience in global brand strategy, marketing, consumer insights, retail, and digital commerce. Ms. Ford Hughes brings valuable perspective to the Board and management in terms of understanding consumer trends, brand management, data and digital marketing, and omni-channel retail. | | | |
Class II Directors
Class II Directors
Class II Directors
| Ian M. Bickley (Class II) | Mr. Bickley, age 59, has served as a member of the Board since April 2015. Mr. Bickley has served as the interim CEO of The Body Shop, owned by Natura & Co. Holding S.A., a NYSE-listed Brazilian global beauty and cosmetics company, since April 2023. Mr. Bickley served as an Executive Officer of Tapestry, Inc. (“Tapestry”), a NYSE-listed house of modern luxury lifestyle and accessory brands including Coach, Kate Spade, and Stuart Weitzman, until December 2018. Mr. Bickley held a number of executive roles at Tapestry (formerly Coach, Inc.) between 1993 and 2018. From July 2017 to December 2018, Mr. Bickley served as President, Global Business Development and Strategic Alliances for Tapestry. Prior to his last role with Tapestry, he served as President, International Group for Coach from August 2013 to July 2017, President, Coach International from February 2006 to August 2013, President and Chief Executive Officer of Coach Japan from August 2001 to February 2006, Vice President, Coach Japan from 1997 to 2001 and other successively senior positions since joining in 1993. He has served on the Board of Directors, Audit Committee, and Nominating and Corporate Governance Committee of Brilliant Earth since June 2021 and as a strategic advisor for Mycoworks Inc., a biotechnology company, since June 2021. Mr. Bickley served on the Board of Directors and Strategy Committee of Natura & Co. Holding S.A. from April 2019 to April 2023. Mr. Bickley brings more than 25 years of global multi-channel fashion and lifestyle brand building and distribution experience to the Board. At Tapestry, Mr. Bickley was an important leader and architect in the global expansion of the Coach brand in addition to the transformation of the company into a global multi-brand business and organization with three brands, more than 21,000 employees, and distribution in over 70 countries. His experience provides the Board with significant perspective and insight into the development of global brands, multi-channel retailing, and emerging market and channel opportunities. | | | | | Tracy Gardner (Class II) | Ms. Gardner, age 59, has served as a member of the Board since June 2021. She has served as Principal of Tracy Gardner Consultancy since 2010. Previously, Ms. Gardner served as Chief Executive Officer of dELiA*s Inc., an omni-channel retail company, primarily marketing to teenage girls, from 2013 to 2014. dELiA*s Inc. filed voluntary petitions for relief under Chapter 11 in December 2014. Prior to that time, she held a number of leadership roles at J. Crew Group, Inc. from 2004 to 2010, where she ultimately served as President. From 1999 to 2004, she held various positions with Gap Inc. (“Gap”). She also served as a director of Lands’ End from 2014 to 2015. Ms. Gardner has served on the Board of Directors of Gap since November 2015 and currently serves as the chairperson of its Compensation & Management Development Committee. Additionally, Ms. Gardner has served on the Board of Directors of Rowan, a privately-held ear piercing and jewelry omnichannel business, since December 2021. With over 30 years of experience, Ms. Gardner is a retail industry veteran who brings deep product and operational expertise and experience to the Board as an operator, merchant, creative director and leader in growing multi-channel brands. | | | | | Douglas J. Treff (Class II) | Mr. Treff, age 65, has served as a member of the Board since June 2016. He currently serves as the Senior Vice President and Chief Financial Officer of World Vision, Inc., an international relief and development organization. He served as Executive Vice President and Chief Administrative Officer of Payless Holdings, Inc. from September 2007 to July 2015 and also as its Chief Financial Officer from 2012 to 2015. Payless declared bankruptcy in 2017 subsequent to Mr. Treff’s departure. Mr. Treff served as Executive Vice President and Chief Administrative Officer of Sears Canada Inc. from 2006 to 2007, having been seconded to Sears Canada from Sears Holdings. Mr. Treff served as the Senior Vice President and Chief Financial Officer of Deluxe Corporation from 2000 to 2006. From 1990 to 2000, he held Chief Financial Officer and other leadership roles in finance at Wilsons The Leather Experts Inc., including serving as Vice President, Finance of Wilsons since 1993 and as Chief Financial Officer and Assistant Secretary since 1996. Mr. Treff brings significant knowledge and expertise in accounting, finance, information technology, and operations in the global retail industry. As a chief financial officer or chief administrative officer for more than 20 years, Mr. Treff has extensive experience in SEC reporting, risk management and the footwear industry, which makes him well suited to serve as the chairperson of our Audit Committee. This experience provides the Board with significant expertise and perspective relating to financial management, audit committee oversight, and global retail operations. | | | |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
2022 Retainer and Equity Awards
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | | Ian M. Bickley | — | 269,925 | 269,925 | | Charisse Ford Hughes | 62,500 | 239,915 | 302,415 | | Ronald L. Frasch | 130,000 | 139,963 | 269,963 | | Tracy Gardner | 127,500 | 139,963 | 267,463 | | Beth Kaplan | 130,000 | 139,963 | 269,963 | | Thomas J. Smach (Chairman) | 85,000 | 429,955 | 514,955 | | Douglas J. Treff | — | 274,918 | 274,918 |
Key Compensation Committee Actions in 2022
Key Compensation Committee Actions in 2022 The Committee took several actions which are consistent with our determination to pay for performance and align our incentive compensation metrics to key strategic initiatives. •Named Executive Officer Incentive Program Changes: In light of the HEYDUDE acquisition in 2022, the Committee approved changes to our annual cash incentive plan to better reflect and align our performance incentives with our multi-brand portfolio. Our executives and their teams aligned with the performance and results of Crocs, Inc. Enterprise, Crocs Brand, and HEYDUDE Brand as determined to be most appropriate based on their focus. We also added an ESG element to our incentive program, as discussed further below. In addition, the incentive curves for each of the annual cash incentive plan and long-term incentive program were adjusted to make the overachievement of incentive payouts more rigorous. Meridian, the Committee’s independent compensation consultant, assisted in the redesign and provided independent and market-based perspectives to support the process. •Emphasis on Pay-for-Performance: In 2022, the Committee continued to use multiple performance metrics and focus on objective, performance-based and “at-risk” pay arrangements. We believe these performance metrics help align the interests of our named executive officers with those of stockholders by making a significant portion of their compensation contingent upon results beneficial to stockholders, and thereby incenting our named executive officers to create long-term value for stockholders. The Committee believes the performance metrics continued to be appropriately aligned with stockholder value as demonstrated by the payouts for our named executive officers under our annual cash incentive plan and long-term incentive program in 2022 relative to the performance of our stock during 2022. The performance metrics used for our annual cash incentive plan were: ◦global adjusted EBIT, global adjusted free cash flow, Crocs, Inc. Enterprise strategic initiative performance and integration efforts for named executive officers on the Crocs, Inc. Enterprise scorecard, ◦Crocs Brand adjusted EBIT, global adjusted free cash flow and Crocs Brand strategic initiative performance for named executive officers on the Crocs Brand scorecard, and ◦HEYDUDE Brand adjusted EBIT, global adjusted free cash flow, and HEYDUDE Brand strategic initiative performance for named executive officers on the HEYDUDE Brand scorecard. The non-financial objectives were updated in 2022 to reflect the year’s strategic priorities. The performance metrics used for our PSU awards under our long-term incentive program were adjusted revenue, adjusted EBITDA operating margin, and ESG progress, which we believe drive long-term shareholder value creation. •No Widescale Base Salary Increases: None of our named executive officers received an increase in base salary in 2022, with the exception of Ms. Mehlman, whose salary increased 13% as a result of an annual evaluation of executive compensation relative to peer companies in the market and other relevant factors as discussed further below. •Rigorous Objective Financial Performance Goals: In 2022, the Committee approved changes to each of our annual cash incentive plan and long-term incentive program designs, which could distort the comparison between 2022 target goals and 2021 target goals as, among other things, our annual cash incentive plan is now comprised of enterprise- and brand-specific scorecards, depending on a particular named executive officer’s role within the Company, and certain of the financial performance metrics under our long-term incentive program have changed. In addition, because we acquired HEYDUDE in February 2022, there are no comparative amounts for the performance metrics for the HEYDUDE Brand scorecard for 2021 under the annual cash incentive plan.
Key Compensation Committee Actions in 2022
| Long-Term Incentive Program Scorecard | | | | Financial Performance Metric | 2022 Target Goal as a % of 2021 Actual Results | 2022 Target Goal as a % of 2021 Target Goal | | Adjusted revenue (1) | 168% | 210% | | Adjusted EBITDA operating margin (2) | 93% | 137% |
Role of Compensation Committee, Chief Executive Officer and Compensation Consultant
Role of Compensation Committee, Chief Executive Officer and Compensation Consultant The Committee has overall responsibility for evaluating and approving our executive officer compensation, benefits, severance, equity-based or other compensation plans, policies and programs. The Committee sets the Chief Executive Officer’s compensation, and those of our other executive officers. The Committee considers the recommendations of the Chief Executive Officer with respect to the compensation of the other named executive officers. During 2022, the Committee continued its engagement with Meridian as its independent executive compensation consultant. Meridian provided the Committee with advice and perspective regarding executive compensation market trends and best practices. In addition, as discussed further in “— Named Executive Officer Incentive Program Changes” below, Meridian assisted in the redesign of our annual short- and long-term incentive programs.
Compensation Best Practices
| û No excise tax gross-ups. We do not provide our management with “excise tax gross-ups” in the event of a change in control. | | û Ban on hedging and pledging. We do not allow our management or directors to engage in hedging transactions on our stock or to pledge our stock to secure loans or other obligations. A description of our anti-hedging and anti-pledging policy can be found in “Corporate Governance—Anti-Hedging and Anti-Pledging Policy”. | | û No repricing. Our equity plans do not allow repricing of stock option or stock appreciation rights (“SARs”) without stockholder approval. | | û No excessive executive benefit programs. We do not provide our management with pensions or any other enhanced benefit programs beyond those that are typically available to all other employees other than a voluntary deferred compensation plan for senior executives and a limited supplemental retirement plan. | | û No excessive perquisites. Our management receives minimal perquisites. | | û No “single trigger” vesting. Our CIC Plan provides for “double-trigger” vesting of awards that are assumed in the event of a change in control. | | û No payment of dividends on unvested stock awards. We do not pay dividends or dividend equivalents on unvested stock awards. |
Peer Group Companies
Peer Group Companies The Committee uses peer company and survey data to guide its review of the total compensation of our officers and executives to understand relevant market practices. The Committee focuses on ensuring that the performance-based elements of our executive compensation program are consistent with peer and industry trends, when appropriate for our business. The Committee does not benchmark compensation to a specific percentage of the compensation of peer companies. The Committee approved a peer group based on analysis and recommendations from Meridian, the Committee’s independent compensation consultant. The peer group is selected based on the key industry criteria noted below, and takes into consideration each company’s revenue, market capitalization and other key financial metrics to assess the relative complexity of operations (e.g., international sales and direct to consumer sales). The peer group referenced for 2022 pay decisions included 15 companies. Our relative positioning within the peer group is taken into consideration by the Committee when reviewing the peer group data. We believe these companies are broadly comparable to us as they are made up of footwear and apparel companies with sophisticated and often international operations and represent our labor market for talent for key leadership positions. The Committee believes this group provides appropriate information on market practices and compensation levels. The 2022 peer companies are listed below:
Peer Group Companies
| Abercrombie & Fitch Co. | Acushnet Holdings Corp. | Columbia Sportswear Company | | Deckers Outdoor Corporation | Designer Brands Inc. | Levi Strauss & Co. | | Lululemon Athletica Inc. | Ralph Lauren Corporation | Skechers U.S.A., Inc. | | Steven Madden, Ltd. | Stitch Fix, Inc. | Topgolf Callaway Brands Corp. | | Under Armour, Inc. | Wolverine World Wide, Inc. | YETI Holdings, Inc. |
Peer Group Companies
The 2022 benchmarking peer group was updated to better reflect the organizational complexity and scale when considering the impact of the HEYDUDE acquisition. As a result, for 2022, Movado Group, Inc., Oxford Industries, Inc., and Vera Bradley, Inc. were removed from the peer group, and Abercrombie & Fitch Co., Levi Strauss & Co., Ralph Lauren Corporation, Stitch Fix, Inc., and Under Armour, Inc. were added to the peer group due to their relevant size, complexity, and industry comparability.
Peer Group Companies
| Target Compensation |
Peer Group Companies
The Committee does not utilize an exact calculation in determining the break-down or weighting of named executive officer compensation among base salary, annual cash incentive awards, and long-term equity awards. Rather, the Committee considers all forms of compensation in light of the market competition for executive talent, the risk to an executive inherent in employment with our fast-paced, rapidly evolving company, and our financial goals. Accordingly, the Committee believes that a significant majority of each named executive officer’s total target compensation should be in the form of annual cash performance-based awards and equity awards that are earned upon achievement of performance goals and aligned with our stock price. For 2022, 11% of the total targeted compensation of our Chief Executive Officer was base salary and 89% was performance-based or at-risk consisting of our annual cash incentive and long-term equity incentive grants. In 2022, the Committee also continued to ensure that a significant proportion of the annual long-term incentive grants vest based on achievement of performance factors. Below are charts showing the fixed and performance-based and at-risk compensation for Mr. Rees and our other named executive officers, including Elaine Boltz who separated from her position with the Company effective October 14, 2022, based on the targeted 2022 compensation amounts:
Named Executive Officer Incentive Program Changes
Named Executive Officer Incentive Program Changes In light of the HEYDUDE acquisition and to better reflect the diversification of our product portfolio under two brands, in the beginning of 2022, the Committee undertook a thorough review of the named executive officer incentives to ensure 2022 and longer-term priorities are appropriately reflected. The Committee approved the named executive officer incentive plan designs summarized below for 2022. The primary objectives of the program changes were to: (i) align rewards with progress towards the Company’s longer-term goals and (ii) adjust the annual cash incentive plan framework to support our enterprise strategy, while aligning executives to brand accountabilities and responsibilities.
Annual Cash Incentive Plan
Annual Cash Incentive Plan Previously, our annual cash incentive plan utilized one compensation scorecard for all named executive officers. This was primarily due to the fact that prior to the acquisition of HEYDUDE we only had one brand. Accordingly, named executive officers were each evaluated against the same performance framework under a single compensation scorecard. Following completion of the HEYDUDE acquisition, the Committee believed that a redesign was necessary to support our overall enterprise strategy, while aligning executives to brand accountabilities and responsibilities, to support a “one team” approach. Accordingly, we now have three compensation scorecards depending on a named executive officer’s role within our Company: (i) Crocs, Inc. Enterprise, (ii) Crocs Brand and (iii) HEYDUDE Brand. For 2022, performance on each financial metric was measured against a predetermined scale of threshold, target, mid and maximum performance levels, and performance on each non-financial strategic objective was determined in the Committee’s discretion, in each case, for (i) the Crocs, Inc. Enterprise, with respect to Messrs. Rees and Michaels and Mss. Mehlman and Boltz, (ii) the Crocs Brand with respect to Ms. Poole and (iii) the HEYDUDE Brand with respect to Mr. Blackshaw. The Committee believes this aligns the incentives for named executive officers with performance metrics that are mostly closed related to their roles within the Company. Performance weightings are primarily driven by pay philosophy, culture, organizational structure as well as sharing of resources, capital and/or employees. Incentive compensation for brand executives is linked to both enterprise goals and brand goals, which the Committee believes can promote teaming across brands and regions. Furthermore, the Committee believes that the scorecards should support and align the Company’s evolving strategy as well as provide accountability clarity and alignment with respect to the Company’s multi-brand strategy. The Committee believes that the enterprise- and brand- specific metrics diversifies the performance goals among our short- and long-term incentive programs, drives performance across key metrics that we believe drive stockholder value and also supports our strategic priorities. For brand executives, this incentivizes them to focus on the success and performance of their brands, while keeping the overall success of the company in mind. For corporate executives, this incentivizes them to assist the brand executives in their success, while still emphasizing overall Company performance. Finally, the weighting of the non-financial strategic operating objectives under our annual cash incentive plan was decreased from 33% to 20% to place more emphasis on financial performance for 2022.
Long-Term Incentive Program
Long-Term Incentive Program The Committee continues to believe that annual equity awards under our long-term incentive program will continue to provide the greatest opportunity to drive enterprise value. In 2021, the Committee utilized two evenly weighted financial metrics (adjusted revenue and adjusted EBITDA operating margin). For 2022, the Committee believed the financial performance metrics continued to be appropriate for the 2022 targets to reinforce both growth and improved profitability. In addition, the Committee added a non-financial performance metric related to progress against various predetermined ESG-related strategic initiatives that reflect our current priorities, to emphasize our commitment to ESG. Accordingly, the financial performance metrics were weighted at 47.5% each and ESG progress was weighted at 5.0%.
2022 Compensation Program
(1) On September 28, 2022, we and Ms. Boltz agreed that she would separate from her position with the Company, effective October 14, 2022. Her base salary at the time was $650,000. Ms. Mehlman received a 13% salary increase in 2022 as a result of an annual evaluation of executive compensation relative to peer companies in the market. Annual Incentive Awards. The Committee believes that an annual cash incentive plan that offers significant awards to our named executive officers for meeting or exceeding Company performance goals provides our officers additional incentive to meet or exceed our strategic Company goals and ensures that we attract and retain talented named executive officers. In 2022, the Committee weighted 80% of the annual incentive program on financial metrics and 20% on strategic operating goals to provide focus and incentive to achieve key strategic non-financial objectives during the Company’s continued growth. As discussed above in “— Named Executive Officer Incentive Program Changes,” there was a change of the weighting of the metrics and objectives in 2022 to decrease the weighting of the strategic initiatives due to their relative importance to the business. The non-financial objectives were further refined in 2022 to reflect strategic priorities, including with respect to the onboarding of HEYDUDE. Each year, the Committee establishes a target annual incentive award for each named executive officer expressed as a percentage of the executive’s base salary, based on factors such as: the estimated contribution and responsibility of the named executive officer, market practices, internal equity and the recommendation of the Chief Executive Officer (for all named executive officers excluding himself). For 2022, the targets for our named executive officers were:
2022 Compensation Program
| Named Executive Officer | Annual Incentive Plan Target (as a percentage of Base Salary) | | Andrew Rees | 150% | | Michelle Poole | 100% | | Anne Mehlman | 90% | | Richard Blackshaw | 75% | | Adam Michaels | 90% | | Elaine Boltz | 90% |
2022 Compensation Program
The total annual incentive award actually paid to each named executive officer is determined based on the extent to which specified weighted objective performance goals are achieved with potential payouts ranging from 50% to 200% of the incentive plan target; there are no payouts for below-threshold performance. For purposes of the 2022 performance year, the Committee selected: (i) global adjusted EBIT, global adjusted free cash flow, Crocs, Inc. Enterprise strategic initiative performance and integration efforts for named executive officers on the Crocs, Inc. Enterprise scorecard, (ii) Crocs Brand adjusted EBIT, global adjusted free cash flow, and Crocs Brand strategic initiative performance for named executive officers on the Crocs Brand Scorecard, and (iii) HEYDUDE Brand adjusted EBIT, global adjusted free cash flow, and HEYDUDE Brand strategic initiative performance for named executive officers on the HEYDUDE Brand scorecard as performance measures in the annual incentive program. The Committee continued to include adjusted EBIT (though for 2022, on a brand-specific basis) and adjusted free cash flow to more closely align compensation with key performance metrics associated with profitability. Based on 2022 actual results, our named executive officers were eligible to be paid annual cash incentive awards at the applicable percentages of their respective target annual incentive award amounts set forth in the table below. The Committee has discretion to depart from the formula in approving the annual incentive awards by decreasing, but not increasing, incentive awards after results are known. The Committee did not exercise that discretion in 2022. For 2022, these goals and their applicable weightings and earned payouts were:
2022 Compensation Program
(1) The HEYDUDE Brand scorecard is applicable to Mr. Blackshaw. (2) HEYDUDE Brand adjusted EBIT is calculated by excluding interest expenses, tax expense, foreign currency changes, and non-recurring entries from generally accepted accounting principles (“GAAP”) net income attributable to common stockholders, such as a step-up of HEYDUDE inventory costs to fair value upon the close of the acquisition on February 17, 2022 and other costs. (3) Global adjusted free cash flow is calculated by modifying global adjusted EBIT by: subtracting capital expenditures; adding year-over-year changes in inventory, accounts receivable and accounts payable; and adding depreciation, amortization and stock-based compensation expenses. (4) The HEYDUDE Brand strategic initiative performance targets related to: (i) product architecture, (ii) building the HEYDUDE Brand, (iii) growing digital commerce, (iv) evolving the operating model, (v) managing the U.S. market, (vi) driving international efforts, and (vii) building talent to support growth. These strategic initiative performance targets were evaluated based on Committee discretion. Long-Term Equity Awards. The Committee grants long-term equity awards annually to the named executive officers in order to provide long-term performance-based compensation, to encourage the named executive officers to continue their employment throughout the vesting periods of the awards, and to align management and stockholder interests. The awards vest over a three-year period, which also assists with long-term incentives and retention. We believe that a significant portion of each named executive officer’s compensation should be in the form of equity awards. For 2022, the amount of long-term incentive awards granted to our named executive officers was based on a review of market practices by Meridian, the Committee’s independent compensation consultant, the recommendations of the Chief Executive Officer (for executive officers other than himself), personal performance, internal equity, and expected future contributions, among other factors. 2022 Long-Term Performance Incentive Program. In 2022, all of our named executive officers received grants of time-based RSUs and PSUs, 67% of which were PSUs earned based on satisfaction of performance goals and 33% of which were time-based RSUs that vest based on continued service. The material terms of these 2022 time-based RSU and PSU awards were as follows:
2022 Compensation Program
| Time-Based RSUs | Performance-Based RSUs | | | | | Performance Goals | Potential Awards | Further Time Vesting | | Vest in three annual installments beginning one year after the date of grant | Achievement of 2022 financial performance targets for adjusted revenue and adjusted EBITDA operating margin and the Committee’s determination of achievement of ESG progress | Executive may earn from 50% to 200% of the target number of PSUs based on the level of achievement of the performance goal - no PSUs are earned if performance falls below established threshold goals | Earned PSUs vest 33% upon satisfaction of performance goal and 33% in each of the next two years |
2022 Compensation Program
The Committee grants performance-based awards to support our pay-for-performance philosophy and better align the interests of our named executive officers with those of our stockholders. The Committee grants time-based RSUs because it generally believes that full-value awards such as time-based RSUs offer a stronger retention incentive than stock options while also providing alignment with stockholders. In addition, time-based RSUs and PSUs are less dilutive to our current stockholders as fewer time-based RSUs and PSUs are necessary to provide the same equity benefit compared to stock options. The Committee retained adjusted revenue and adjusted EBITDA operating margin as the financial performance metrics for the 2022 PSU grant because it continues to view these metrics as primary drivers of enhanced stockholder value and appropriate measures of performance given our continued, successful growth. In addition, the Committee added a non-financial performance metric related to progress against various predetermined ESG-related strategic initiatives that reflect our current priorities, to emphasize our commitment to ESG. Accordingly, the financial performance metrics were weighted at 47.5% each and ESG progress was weighted at 5.0%. The PSUs granted in 2022 were earned at 90.0% of target because 2022 adjusted revenue was approximately 83.5% of target, adjusted EBITDA operating margin was approximately 95.2% of target, and ESG process was determined by the Committee to be approximately 101% of target.
2022 Compensation Program
| 2022 PSU Targets | Actual Performance | Weighting | Weighted 2022 Actual Performance as a Percentage of Target | | Revenue (1): $3,859.1 million | $3,668.3 million | 47.5% | 39.7% | | Adjusted EBITDA operating margin (2): 29.4% | 28.9% | 47.5% | 45.2% | | ESG Progress (3) | All 4 Targets Achieved | 5% | 5.1% | | TOTAL: | | | 90.0% |
2023 Performance Metrics
2023 Performance Metrics For 2023, the Committee determined it was appropriate to introduce a 3-year PSU component into our long-term incentive program. As such, it will be comprised of two financial metrics: (1) Adjusted EBITDA operating margin and (2) Adjusted 3-year cumulative revenue, defined as three-year cumulative enterprise net revenues, adjusted on a constant currency basis as of the date of grant. The Committee has adopted an extended grant-to-vest schedule for the cumulative revenue portion of our long-term incentive program to ensure our most senior leaders have a heightened focus on our long-term performance goals and to further align with stockholder interests, while maintaining focus on Adjusted EBITDA operating margin and senior leader retention. The Committee will continue to use the same financial metrics for the short-term incentive scorecards; however, our non-financial metrics have been more narrowly defined and are brand specific. To that end, our ESG initiative will be an added component to each of the non-financial metrics in all three of our short-term incentive scorecards to increase focus on near-term goals.
Post-Employment Compensation
Post-Employment Compensation Change in Control Benefits. In 2013, we approved and adopted the Change in Control Plan, which was amended and restated in 2014, and further amended and restated in 2018 (“CIC Plan”), for eligible employees, including the named executive officers. The CIC Plan contains a “double-trigger” whereby if a “change in control” occurs and the participant’s employment is terminated by us without “cause” or the participant resigns for “good reason” within the two-year period following the “change in control,” the participants will be entitled to accelerated vesting of certain equity awards and a multiple of salary and bonus. The Committee believes that this approach will enhance stockholder value in the context of an acquisition, and align executives with the interests of our stockholders. The 2018 amendment and restatement of the CIC Plan made certain changes to further align the CIC Plan with market practices and good governance such as, among other things, removing the right to certain continued health coverage benefits and expressly requiring participants to agree to certain restrictive covenants, including non-competition and non-solicitation, in order to receive benefits under the CIC Plan following a “change in control.” For a more detailed discussion of the CIC Plan and definitions of “change in control,” “cause,” and “good reason” under the CIC Plan, see “Potential Payments on Termination or Change in Control” below. Offer Letters. In connection with the appointment to their respective positions, we negotiated and entered into offer letters with each of Messrs. Rees, Blackshaw, and Michaels, and Mss. Poole, Mehlman, and Boltz setting forth, among other things, the initial terms of their base salary, target bonus, and long-term equity targets along with the terms of certain sign-on equity awards. The offer letters also provide that if the executive is terminated by us without “cause” (as defined in the offer letter) or if the executive resigns for “good reason” (as defined in the offer letter), subject to execution of a general release of claims, the executive will be entitled to receive a lump sum payment equal to the executive’s then-current base salary plus an amount equal to the then-current target annual bonus. If the executive is terminated by us without “cause,” resigns for “good reason” or in the event of death or “disability” (as defined in the Company’s equity incentive plan), the executive will be entitled to certain vesting of equity awards. The offer letters also provide that the executives are eligible to participate in the CIC Plan. The offer letters contain non-competition and non-solicitation covenants which restrict the executives from taking part in certain competitive activities for a period of one year following their termination of employment with us. On September 28, 2022, we and Ms. Boltz agreed that she would separate from her position with the Company, effective October 14, 2022. For a more detailed discussion of the offer letters, definitions of “cause” and “good reason,” and Ms. Boltz’s separation letter, see “Potential Payments on Termination or Change in Control” below. The post-employment benefits provided in the offer letters were negotiated between the Committee and each executive in advance of the executive accepting employment as an executive with us. The Committee believed that such severance benefits were reasonable and necessary to induce each executive to accept employment with us.
Summary Compensation Table
Summary Compensation Table The following table sets forth information regarding compensation earned for services rendered during fiscal years 2022, 2021, and 2020 for each of our named executive officers (“NEOs”):
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (3) | Total ($) | | Andrew Rees | 2022 | 1,100,000 | — | 7,249,910 | 1,551,000 | 46,650 | 9,947,560 | | Chief Executive Officer | 2021 | 1,100,000 | — | 11,889,515 | 2,755,500 | 40,905 | 15,785,920 | | | 2020 | 984,231 | — | 6,999,974 | 2,044,740 | 50,925 | 10,079,870 | | Michelle Poole | 2022 | 700,000 | — | 874,907 | 560,000 | 15,222 | 2,150,129 | | Executive Vice President, Brand President for Crocs | 2021 | 700,000 | — | 4,069,707 | 1,169,000 | 25,496 | 5,964,203 | | | 2020 | 585,769 | — | 2,349,886 | 829,562 | 26,799 | 3,792,016 | | Anne Mehlman | 2022 | 632,693 | 100,000 | 649,902 | 535,258 | 13,022 | 1,930,875 | | Executive Vice President and Chief Financial Officer | 2021 | 575,000 | — | 3,227,098 | 720,188 | 25,268 | 4,547,554 | | | 2020 | 543,654 | — | 1,249,964 | 677,665 | 25,260 | 2,496,543 | | Richard Blackshaw (4) | 2022 | 650,000 | — | 552,382 | 599,625 | 12,991 | 1,814,998 | | Executive Vice President, Brand President for HEYDUDE | | | | | | | | | Adam Michaels | 2022 | 575,000 | — | 488,678 | 486,450 | 15,222 | 1,565,350 | | Executive Vice President, Chief Digital Officer | | | | | | | | | Elaine Boltz (5) | 2022 | 512,500 | — | 552,382 | — | 1,080,716 | 2,145,598 | | Former Executive Vice President and Chief Operations and Transformation Officer | 2021 | 638,462 | — | 3,744,676 | 799,673 | 17,254 | 5,200,065 | | | 2020 | 466,154 | — | 1,309,943 | 581,061 | 67,757 | 2,424,915 |
Summary Compensation Table
(1) The bonus column includes a one-time cash award of $100,000 for Ms. Mehlman relating to her significant leadership work on the HEYDUDE acquisition in 2022. (2) Amounts shown reflect the aggregate grant date fair value of grants made in each respective fiscal year computed in accordance with stock-based accounting rules (FASB ASC Topic 718-Stock Compensation), excluding the effect of estimated forfeitures. Assumptions used in the calculations of these amounts are included in Note 13 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. The grant date fair value of stock awards, which are comprised of time-based RSUs and PSUs, includes the grant date fair value for the PSUs calculated based on the target amount for the award period commencing in the year indicated. For 2022, the total aggregate grant date fair value of stock awards, including the time-based RSUs granted in March 2022 and the PSUs granted in and March 2022, assuming the highest level of payout for performance against assigned targets would be as follows: $12.1 million for Mr. Rees, $1.5 million for Ms. Poole, $1.1 million for Ms. Mehlman, $0.9 million for Mr. Blackshaw, $0.8 million for Mr. Michaels, and $0.9 million for Ms. Boltz. (3) All other compensation for 2022 represents the following: (i) Company matches to employee 401(k) contributions in the amounts of $12,200 for Messrs Rees, Blackshaw, and Michaels and Mss. Poole and Mehlman, and $10,600 for Ms. Boltz (ii) executive healthcare screenings paid by us in the amount of $2,200 for Mss. Poole and Mehlman (iii) group term life insurance premiums paid-in full by us in the amount of $822 for Messrs. Rees and Michaels and Mss. Poole and Mehlman, $791 for Mr. Blackshaw, and $696 for Ms. Boltz; and (iv) Company-provided apartment of $33,628 for Mr. Rees. (4) Mr. Blackshaw commenced service as our Executive Vice President, Brand President for HEYDUDE in March 2022. (5) On September 28, 2022, we and Ms. Boltz agreed that she would separate from her position with the Company, effective October 14, 2022. Ms. Boltz was entitled to the payments and benefits relating to her separation from the Company as set forth in her employment letter with the Company, as well as a special one-time discretionary lump sum payment of $419,420, less applicable taxes and withholdings, which is included within All other compensation in the table above. Refer to the details of her separation letter within the “Potential Payments on Termination or Change in Control” section below.
Grants of Plan-Based Awards Table
Grants of Plan-Based Awards Table The following table provides information for each of our NEOs regarding annual and long-term incentive award opportunities, including the range of potential payouts under our non-equity annual incentive plan and our PSUs granted during fiscal year 2022.
Grants of Plan-Based Awards Table
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) (2) | | Name | Type of Award | Grant Date | Threshold ($) | Target ($) (1) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Andrew Rees | Annual Incentive Award | | 825,000 | 1,650,000 | 3,300,000 | — | — | — | — | — | | | Time-Based RSUs | 3/3/22 | — | — | — | — | — | — | 31,059 | 2,392,475 | | | PSUs | 3/3/22 | — | — | — | 31,530 | 63,059 | 126,118 | — | 4,857,435 | | Michelle Poole | Annual Incentive Award | | 350,000 | 700,000 | 1,400,000 | — | — | — | — | — | | | Time-Based RSUs | 3/3/22 | — | — | — | — | — | — | 3,748 | 288,709 | | | PSUs | 3/3/22 | — | — | — | 3,805 | 7,610 | 15,220 | — | 586,198 | | Anne Mehlman | Annual Incentive Award | | 284,712 | 569,423 | 1,138,847 | — | — | — | — | — | | | Time-Based RSUs | 3/3/22 | — | — | — | — | — | — | 2,784 | 214,451 | | | PSUs | 3/3/22 | — | — | — | 2,827 | 5,653 | 11,306 | — | 435,451 | | Richard Blackshaw | Annual Incentive Award | | 243,750 | 487,500 | 975,000 | — | — | — | — | — | | | Time-Based RSUs | 3/3/22 | — | — | — | — | — | — | 2,366 | 182,253 | | | PSUs | 3/3/22 | — | — | — | 2,403 | 4,805 | 9,610 | — | 370,129 | | Adam Michaels | Annual Incentive Award | | 258,750 | 517,500 | 1,035,000 | — | — | — | — | — | | | Time-Based RSUs | 3/3/22 | — | — | — | — | — | — | 2,093 | 161,224 | | | PSUs | 3/3/22 | — | — | — | 2,126 | 4,251 | 8,502 | — | 327,454 | | Elaine Boltz | Annual Incentive Award | | — | — | — | — | — | — | — | — | | | Time-Based RSUs | 3/3/22 | — | — | — | — | — | — | 2,366 | 182,253 | | | PSUs | 3/3/22 | — | — | — | 2,403 | 4,805 | 9,610 | — | 370,129 |
Grants of Plan-Based Awards Table
(1) This represents the target annual incentive award. The incentives awarded were based on the actual amount of salary received in 2022, as disclosed in the “Summary Compensation Table” (above). (2) Amounts shown reflect the aggregate grant date fair value of grants made in each respective fiscal year computed in accordance with stock-based accounting rules (FASB ASC Topic 718-Stock Compensation), excluding the effect of estimated forfeitures. Assumptions used in the calculations of these amounts are included in Note 13 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. The grant date fair value of stock awards, which are comprised of time-based RSUs and PSUs, includes the grant date fair value for the PSUs calculated based on the target amount for the award period commencing in the year indicated. For 2022, the total aggregate grant date fair value of stock awards, including the time-based RSUs granted in March 2022 and the PSUs granted in March 2022, assuming the highest level of payout for performance against assigned targets would be as follows: $12.1 million for Mr. Rees, $1.5 million for Ms. Poole, $1.1 million for Ms. Mehlman, $0.9 million for Mr. Blackshaw, $0.8 million for Mr. Michaels, and $0.9 million for Ms. Boltz. Annual Incentive Awards. In 2022, annual incentive amounts were paid at 94% of target for NEOs on the Crocs, Inc. Enterprise scorecard, 80% of target for NEOs on the Crocs Brand scorecard, and 123% of target for NEOs on the HEYDUDE Brand scorecard, in each case, as reflected in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” set forth above. The amounts shown for non-equity incentive plan awards represent the target and maximum amounts of annual cash incentive compensation that, depending on performance results, might have been paid to each executive for 2022 performance contingent on achievement of specified levels of the applicable financial and non-financial metrics discussed above. The potential payments were contingent on achieving the target level of performance with ranges from zero to 200% of the executive’s annual incentive target. These awards are described in further detail under “Compensation Discussion and Analysis” above. Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units. The amounts shown for equity incentive plan awards represent the number of time-based RSUs and PSUs awarded to the NEOs in 2022 and the grant date fair values of the time-based RSUs and PSUs determined in accordance with FASB ASC 718. The amounts shown for time-based RSUs and PSUs granted to our NEOs represent awards of time-based RSUs and PSUs as part of a performance incentive plan. Time-based RSUs vest in three equal annual installments beginning one year after the date of grant based on continued employment. PSUs vest in three equal annual installments beginning one year after the grant date, pending certification of performance achievement by the Compensation Committee and subject to continued employment. The number of PSUs awarded may be earned between 50% and 200% of the target number of PSUs, contingent on the level of adjusted revenue and adjusted operating margin performance goals achieved. Offer Letters. We have entered into offer letters with Messrs. Rees, Blackshaw, and Michaels and Mss. Poole, Mehlman, and Boltz, which provide for certain initial compensation and other benefits. In October 2022, Ms. Boltz separated from the Company. Refer to the details of Ms. Boltz’s separation letter within the Potential Payments on Termination or Change in Control section below. Salary and Bonus in Proportion to Total Compensation. As noted in “Compensation Discussion and Analysis” above, we believe that a substantial portion of each NEO’s compensation should be in the form of performance-based annual incentive awards and equity awards. Base salary of the NEOs is set at levels that the Compensation Committee believes are competitive with our peer companies, with the expectation that shortfalls in base pay, if any, will be recouped through performance bonuses. The Compensation Committee believes that our current program substantially aligns the compensation of our NEOs with the compensation of executive officers of our peer companies, while also permitting the Compensation Committee to provide incentives to the NEOs to pursue performance that increases stockholder value. Please see “Compensation Discussion and Analysis” for a description of the objectives of our compensation program and overall compensation philosophy.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth information regarding outstanding options and unvested time-based RSUs and PSU awards held by our NEOs as of December 31, 2022. Market values for outstanding stock awards are presented as of the end of 2022 based on the closing price of our common stock on the Nasdaq Global Select Market on December 30, 2022 of $108.43 per share.
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) (1) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) | | Andrew Rees | 200,000 | — | 6.98 | 06/01/27 | 245,410(2) | 26,609,777(2) | 63,059 | 6,837,487 | | Michelle Poole | — | — | — | — | 64,665(3) | 7,011,663(3) | 7,610 | 825,152 | | Anne Mehlman | — | — | — | — | 45,539(4) | 4,937,808(4) | 5,653 | 612,955 | | Richard Blackshaw | — | — | — | — | 4,751(5) | 515,151(5) | 19,113 | 2,072,423 | | Adam Michaels | — | — | — | — | 33,349(6) | 3,616,042(6) | 4,251 | 460,936 | | Elaine Boltz | — | — | — | — | 22,608(7) | 2,451,385(7) | — | — |
Outstanding Equity Awards at Fiscal Year-End
(1) The aggregate number of PSUs was calculated based on the achievement of target performance. (2) Represents the unvested portion of five time-based RSU and PSU grants for: (i) 148,864 time-based RSUs and PSUs awarded on March 4, 2020, of which 33% vest in three equal annual installments on March 4, 2021, March 4, 2022, and March 4, 2023 based on continued employment, and of which up to 67% (up to 200%) could be earned based on achievement of performance metrics, of which 139,683 shares were “earned” pursuant to the Compensation Committee certification on February 19, 2021 and vest in three equal annual installments on March 4, 2021, March 4, 2022, and March 4, 2023 based on continued employment; (ii) 81,833 time-based RSUs awarded on August 3, 2020, that vest in three equal annual installments on August 3, 2021, August 3, 2022, and August 3, 2023 based on continued employment; (iii) 108,510 PSUs awarded January 11, 2021, of which 100% of the target number of shares would be earned if, between the date of grant and the fourth anniversary of the date of grant, the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 200% (the “2x Performance Condition) of the starting price of $64.51 per share (the “Starting Price”), 50% of the target number of shares would be earned if the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 175% (the “1.75x Performance Condition) of the Starting Price and 25% of the target number of shares would be earned if the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 150% (the “1.5x Performance Condition) of the Starting Price, and once a performance hurdle was met or exceeded, 33% of the “earned” portion of the PSUs would vest immediately, and the remaining 67% will be subject to continued employment, with 33% vesting one year later and the remaining 33% vesting two years later, but in no case later than the fourth anniversary of the award. If the 2x Performance Condition is met before the first anniversary of the date of grant, one-fourth of the earned units will vest immediately and become payable and one-fourth will vest and become payable on each of the first, second, and third anniversaries of the date the 2x Performance Condition is satisfied. On May 26, 2021, the 1.5x Performance Condition was met and 27,127 shares were earned. On July 22, 2021, the 1.75x Performance Condition was met and 27,127 shares were earned. On August 17, 2021, the 2x Performance Condition was met and 54,256 shares were earned; (iv) 70,866 time-based RSUs and PSUs awarded on March 3, 2021, of which 33% vest in three equal annual installments on March 3, 2022, March 3, 2023, and March 3, 2024 based on continued employment, and of which up to 67% (up to 200%) could be earned based on achievement of performance metrics, of which 94,536 shares were “earned” pursuant to the Compensation Committee certification on February 11, 2022 and will vest in three equal annual installments on March 3, 2022, March 3, 2023, and March 3, 2024 based on continued employment; and (v) 94,118 time-based RSUs and PSUs awarded on March 3, 2022, of which 33% vest in three equal annual installments on March 3, 2023, March 3, 2024, and March 3, 2025 based on continued employment, and of which up to 67% (up to 200%) could be earned based on achievement of performance metrics, of which 56,705 shares were “earned” pursuant to the Compensation Committee certification on February 17, 2023 and will vest in three equal annual installments on March 3, 2023, March 3, 2024, and March 3, 2025 based on continued employment. (3) Represents the unvested portion of six time-based RSU and PSU grants for (i) 31,632 time-based RSUs and PSUs awarded on March 4, 2020, of which 50% vest in three equal annual installments on March 4, 2021, March 4, 2022, and March 4, 2023 based on continued employment, and of which up to 50% (up to 200%) could be earned based on achievement of performance metrics, of which 22,257 shares were “earned” pursuant to the Compensation Committee certification on February 19, 2021 and vest in three equal annual installments on March 4, 2021, March 4, 2022, and March 4, 2023 based on continued employment; (ii) 13,638 time-based RSUs awarded on August 3, 2020, that vest in three equal annual installments on August 3, 2021, August 3, 2022, and August 3, 2023 based on continued employment; (iii) 25,627 time-based RSUs awarded on September 10, 2020, that vest in three equal annual installments on September 10, 2021, September 10, 2022, and September 10, 2023 based on continued employment (iv) 54,255 PSUs awarded January 11, 2021, of which 100% of the target number of shares would be earned if, between the date of grant and the fourth anniversary of the date of grant, the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 200% (the “2x Performance Condition) of the starting price of $64.51 per share (the “Starting Price”), 50% of the target number of shares would be earned if the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 175% (the “1.75x Performance Condition) of the Starting Price and 25% of the target number of shares would be earned if the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 150% (the “1.5x Performance Condition) of the Starting Price, and once a performance hurdle was met or exceeded, 33% of the “earned” portion of the RSUs would vest immediately, and the remaining 67% will be subject to continued employment, with 33% vesting one year later and the remaining 33% vesting two years later, but in no case later than the fourth anniversary of the award. If the 2x Performance Condition is met before the first anniversary of the date of grant, one-fourth of the earned units vest immediately and become payable and one-fourth will vest and become payable on each of the first, second, and third anniversaries of the date the 2x Performance Condition is satisfied. On May 26, 2021, the 1.5x Performance Condition was met and 13,564 shares were earned. On July 22, 2021, the 1.75x Performance Condition was met and 13,564 shares were earned. On August 17, 2021, the 2x Performance Condition was met and 27,127 shares were earned; (v) 11,273 time-based RSUs and PSUs awarded on March 3, 2021, of which 33% vest in three equal annual installments on March 3, 2022, March 3, 2023, and March 3, 2024 based on continued employment, and of which up to 67% (up to 200%) could be earned based on achievement of performance metrics, of which 15,038 shares were “earned” pursuant to the Compensation Committee certification on February 11, 2022 and vest in three equal annual installments on March 3, 2022, March 3, 2023, and March 3, 2024 based on continued employment; and (vi) 11,358 time-based RSUs and PSUs awarded on March 3, 2022, of which 33% vest in three equal annual installments on March 3, 2023, March 3, 2024, and March 3, 2025 based on continued employment, and of which up to 67% (up to 200%) could be earned based on achievement of performance metrics, of which 6,842 shares were “earned” pursuant to the Compensation Committee certification on February 17, 2023 and will vest in three equal annual installments on March 3, 2023, March 3, 2024, and March 3, 2025 based on continued employment.
Outstanding Equity Awards at Fiscal Year-End
(4) Represents the unvested portion of five time-based RSU and PSU grants for: (i) 27,912 time-based RSUs and PSUs awarded on March 4, 2020, of which 33% vest in three equal annual installments on March 4, 2021, March 4, 2022, and March 4, 2023 based on continued employment, and of which up to 67% (up to 200%) could be earned based on achievement of performance metrics, of which 26,187 shares were “earned” pursuant to the Compensation Committee certification on February 19, 2021 and will vest in three equal annual installments on March 4, 2021, March 4, 2022, and March 4, 2023 based on continued employment; (ii) 13,638 time-based RSUs awarded on August 3, 2020, that vest in three equal annual installments on August 3, 2021, August 3, 2022, and August 3, 2023 based on continued employment; (iii) 46,504 PSUs awarded January 11, 2021, of which 100% of the target number of shares would be earned if, between the date of grant and the fourth anniversary of the date of grant, the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 200% (the “2x Performance Condition) of the starting price of $64.51 per share (the “Starting Price”), 50% of the target number of shares would be earned if the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 175% (the “1.75x Performance Condition) of the Starting Price and 25% of the target number of shares would be earned if the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 150% (the “1.5x Performance Condition) of the Starting Price, and once a performance hurdle was met or exceeded, 33% of the “earned” portion of the PSUs would vest immediately, and the remaining 67% will be subject to continued employment, with 33% vesting one year later and the remaining 33% vesting two years later, but in no case later than the fourth anniversary of the award. If the 2x Performance Condition is met before the first anniversary of the date of grant, one-fourth of the earned units will vest immediately and become payable and one-fourth will vest and become payable on each of the first, second, and third anniversaries of the date the 2x Performance Condition is satisfied. On May 26, 2021, the 1.5x Performance Condition was met and 11,626 shares were earned. On July 22, 2021, the 1.75x Performance Condition was met and 11,626 shares were earned. On August 17, 2021, the 2x Performance Condition was met and 23,252 shares were earned; (iv) 6,297 time-based RSUs and PSUs awarded on March 3, 2021, of which 33% vest in three equal annual installments on March 3, 2022, March 3, 2023, and March 3, 2024 based on continued employment, and of which up to 67% (up to 200%) could be earned based on achievement of performance metrics, of which 8,400 shares were “earned” pursuant to the Compensation Committee certification on February 11, 2022 and vest in three equal annual installments on March 3, 2022, March 3, 2023, and March 3, 2024 based on continued employment; and (v) 8,437 time-based RSUs and PSUs awarded on March 3, 2022, of which 33% vest in three equal annual installments on March 3, 2023, March 3, 2024, and March 3, 2025 based on continued employment, and of which up to 67% (up to 200%) could be earned based on achievement of performance metrics, of which 5,080 shares were “earned” pursuant to the Compensation Committee certification on February 17, 2023 and vest in three equal annual installments on March 3, 2023, March 3, 2024, and March 3, 2025 based on continued employment. (5) Represents the unvested portion of two time-based RSU and PSU grants for: (i) 17,885 time-based RSUs and PSUs awarded on December 22, 2021, of which 20% vest in three equal annual installments on December 22, 2022, December 22, 2023, and December 22, 2024 based on continued employment, and of which up to 80% could be earned if, between the date of acquisition by the Company of HEYDUDE (the “Acquisition Date”) and the fourth anniversary of the Acquisition Date, the Company achieves $2.0 billion in annual revenue with a minimum of 25% EBITDA Margin for the HEYDUDE Brand, which is defined as adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) divided by revenue, (the “$2.0B Performance Condition”), 40% could be earned if, between Acquisition Date and the fourth anniversary of the Acquisition Date, the Company achieves $1.5 billion in Annual Revenue with a minimum of 25% EBITDA Margin (the “$1.5B Performance Condition”) and 20% could be earned if between the Acquisition Date and the fourth anniversary of the Acquisition Date, the Company achieves $1.0 billion in Annual Revenue with a minimum of 25% EBITDA Margin (the “$1.0B Performance Condition”), and once a performance hurdle is met or exceeded, 33% of the “earned” portion of the PSUs would vest immediately, and the remaining 67% will be subject to continued employment, with 33% vesting one year later and the remaining 33% vesting two years later, but in no case later than the fourth anniversary of the award. Had the $2.0B Performance Condition been met during the first 12 months after the Acquisition Date, one-fourth of the earned units would have vested immediately and become payable and one-fourth would have vested and become payable on each of the first, second, and third anniversaries of the date the $2.0B Performance Condition was satisfied; and (ii) 7,171 time-based RSUs and PSUs awarded on March 3, 2022, of which 33% vest in three equal annual installments on March 3, 2023, March 3, 2024, and March 3, 2025 based on continued employment, and of which up to 67% (up to 200%) could be earned based on achievement of performance metrics, of which 4,316 shares were “earned” pursuant to the Compensation Committee certification on February 17, 2023 and will vest in three equal annual installments on March 3, 2023, March 3, 2024, and March 3, 2025 based on continued employment.
Outstanding Equity Awards at Fiscal Year-End
(6) Represents the unvested portion of five time-based RSU and PSU grants for: (i) 13,024 time-based RSUs and PSUs awarded on March 4, 2020, of which 50% vest in three equal annual installments on March 4, 2021, March 4, 2022, and March 4, 2023 based on continued employment, and of which up to 50% (up to 200%) could be earned based on achievement of performance metrics, of which 9,162 shares were “earned” pursuant to the Compensation Committee certification on February 19, 2021 and vest in three equal annual installments on March 4, 2021, March 4, 2022, and March 4, 2023 based on continued employment; (ii) 5,455 time-based RSUs awarded on August 3, 2020, that will vest in three equal annual installments on August 3, 2021, August 3, 2022, and August 3, 2023 based on continued employment; (iii) 46,504 PSUs awarded January 11, 2021, of which 100% of the target number of shares would be earned if, between the date of grant and the fourth anniversary of the date of grant, the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 200% (the “2x Performance Condition) of the starting price of $64.51 per share (the “Starting Price”), 50% of the target number of shares would be earned if the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 175% (the “1.75x Performance Condition) of the Starting Price and 25% of the target number of shares would be earned if the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 150% (the “1.5x Performance Condition) of the Starting Price, and once a performance hurdle was met or exceeded, 33% of the “earned” portion of the PSUs would vest immediately, and the remaining 67% will be subject to continued employment, with 33% vesting one year later and the remaining 33% vesting two years later, but in no case later than the fourth anniversary of the award. If the 2x Performance Condition is met before the first anniversary of the date of grant, one-fourth of the earned units will vest immediately and become payable and one-fourth will vest and become payable on each of the first, second, and third anniversaries of the date the 2x Performance Condition is satisfied. On May 26, 2021, the 1.5x Performance Condition was met and 11,626 shares were earned. On July 22, 2021, the 1.75x Performance Condition was met and 11,626 shares were earned. On August 17, 2021, the 2x Performance Condition was met and 23,252 shares were earned; (iv) 4,830 time-based RSUs and PSUs awarded on March 3, 2021, of which 50% vest in three equal annual installments on March 3, 2022, March 3, 2023, and March 3, 2024 based on continued employment, and of which up to 50% (up to 200%) could be earned based on achievement of performance metrics, of which 4,830 shares were “earned” pursuant to the Compensation Committee certification on February 11, 2022 and vest in three equal annual installments on March 3, 2022, March 3, 2023, and March 3, 2024 based on continued employment; and (v) 6,344 time-based RSUs and PSUs awarded on March 3, 2022, of which 33% vest in three equal annual installments on March 3, 2023, March 3, 2024, and March 3, 2025 based on continued employment, and of which up to 67% (up to 200%) could be earned based on achievement of performance metrics, of which 3,816 shares were “earned” pursuant to the Compensation Committee certification on February 17, 2023 and will vest in three equal annual installments on March 3, 2023, March 3, 2024, and March 3, 2025 based on continued employment. (7) Represents the unvested portion of one PSU grant for: 54,255 PSUs awarded January 11, 2021, of which 100% of the target number of shares would be earned if, between the date of grant and the fourth anniversary of the date of grant, the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 200% (the “2x Performance Condition) of the starting price of $64.51 per share (the “Starting Price”), 50% of the target number of shares would be earned if the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 175% (the “1.75x Performance Condition) of the Starting Price and 25% of the target number of shares would be earned if the 30 trading day average of the daily volume weighted average per share trading price met or exceeded 150% (the “1.5x Performance Condition) of the Starting Price, and once a performance hurdle was met or exceeded, 33% of the “earned” portion of the PSUs would vest immediately, and the remaining 67% will be subject to continued employment, with 33% vesting one year later and the remaining 33% vesting two years later, but in no case later than the fourth anniversary of the award. If the 2x Performance Condition is met before the first anniversary of the date of grant, one-fourth of the earned units will vest immediately and become payable and one-fourth will vest and become payable on each of the first, second, and third anniversaries of the date the 2x Performance Condition is satisfied. On May 26, 2021, the 1.5x Performance Condition was met and 13,564 shares were earned. On July 22, 2021, the 1.75x Performance Condition was met and 13,564 shares were earned. On August 17, 2021, the 2x Performance Condition was met and 27,127 shares were earned. In October 2022, Ms. Boltz separated from the Company. Equity awards previously granted to Ms. Boltz under the Company’s 2020 Equity Incentive Plan and any other relevant plans will continue to vest or be cancelled in accordance with the terms of the applicable plan and award agreements.
Options Exercised and Stock Vested
Options Exercised and Stock Vested The following table sets forth information for each of our NEOs regarding stock awards vested during 2022:
Options Exercised and Stock Vested
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | | Andrew Rees | 247,581 | 19,336,847 | | Michelle Poole | 59,521 | 4,290,070 | | Anne Mehlman | 44,722 | 3,126,973 | | Richard Blackshaw | 1,192 | 122,120 | | Adam Michaels | 34,435 | 2,436,662 | | Elaine Boltz | 36,117 | 2,588,871 |
Options Exercised and Stock Vested
(1) For stock awards, the value realized is based on the closing price of our common stock on the vesting date. No stock options were exercised by our NEOs during 2022.
Potential Payments on Termination or Change in Control
Potential Payments on Termination or Change in Control
Non-Qualified Deferred Compensation Plan
Non-Qualified Deferred Compensation Plan The Crocs’ Executive Restoration Plan is our non-qualified deferred compensation plan (“NQDC Plan”) available to our most highly compensated employees, which includes our NEOs. The NQDC Plan is subject to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and established a Rabbi Trust with an independent trustee in order to fund benefits payable to the participants that timely enroll during an enrollment window that occurs prior to the start of a given calendar year. The plan allows for our NEOs to defer up to 100% of their eligible base salary and/or incentive compensation earned during the calendar year. Although certain highly compensated employees may elect to defer their compensation, Crocs does not match any employee contributions. The NQDC Plan’s investment options currently mirror those of our 401(k) savings plan. Participants can select a mix of investment options that best suit their goals, time horizon, and risk tolerance, and such allocations can be changed at any time. Changes generally become effective on the first trading day following such change. The investment options available through the NQDC Plan include conservative, moderately conservative, and aggressive funds. Any contributions made under the plan will pay out in a single, lump sum cash payment on a date that is six months following a payment event. Qualifying payment events include the following: separation from service, death, disability, change in control, or an unforeseeable emergency. The following table sets forth information of our NQDC plan for each of our NEOs in 2022:
Non-Qualified Deferred Compensation Plan
| Name | Executive Contributions in Last Fiscal Year ($) (1) | Company Contributions in Last Fiscal Year ($) (2) | Aggregate Earnings in Last Fiscal Year ($) (2) | Aggregate Withdrawals/Distributions ($) | Aggregate Balance as of December 31, 2022 ($) (3) | | Andrew Rees | — | — | (15,549) | — | 77,700 | | Michelle Poole | 186,912 | — | (214,131) | — | 787,970 | | Anne Mehlman | 101,702 | — | (51,619) | — | 285,570 | | Richard Blackshaw | — | — | — | — | — | | Adam Michaels | — | — | (20,352) | — | 50,264 | | Elaine Boltz | — | — | — | — | — |
Non-Qualified Deferred Compensation Plan
(1) The amounts deferred by our NEOs are included as part of the amounts reported in the “Salary” or “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table. (2) These amounts are not reported as compensation in the Summary Compensation Table because the NQDC Plan does not provide for above-market or preferential earnings. (3) Aggregate earnings are shown net of brokerage and/or other account fees.
Pay Versus Performance
Pay Versus Performance In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO named executive officers (“Non-PEO NEOs”) and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown. For further information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, please refer to the “Compensation Discussion and Analysis” section of this proxy statement.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year (a) | SCT Total Compensation for PEO ($) (b) | Compensation Actually Paid to PEO ($) (c) | Average SCT Total Compensation for Non-PEO NEOs ($) (d) | Average Compensation Actually Paid to Non-PEO NEOs ($) (e) | Total Shareholder Return ($) (f) | Peer Group Total Shareholder Return ($) (g) | Net Income ($ in millions) (h) | Global Adjusted EBIT ($ in millions) (i) | | 2022 | 9,947,560 | (4,437,094) | 1,920,110 | (1,740,310) | 258.84 | 119.13 | 540.2 | 1,021.3 | | 2021 | 15,785,920 | 57,406,163 | 4,809,719 | 12,822,996 | 306.09 | 161.56 | 725.7 | 2,301.7 | | 2020 | 10,079,870 | 20,796,543 | 2,725,275 | 4,370,754 | 149.58 | 136.78 | 312.9 | 1,396.5 |
Pay Versus Performance
Column (b): Reflects compensation amounts reported in the “Summary Compensation Table” (“SCT”) for our Chief Executive Officer, Andrew Rees, for 2022, 2021, and 2020. Refer to “Compensation Tables—Summary Compensation Table” (above). Column (c): Compensation actually paid (“CAP”) to our PEO in 2022, 2021, and 2020 reflects the respective amounts set forth in column (b) of the Pay versus Performance table above, adjusted as set forth in the table below, as determined in accordance with applicable SEC rules. The dollar amounts represented in column (b) of the table above do not reflect the actual amount of compensation earned or paid to our PEO during the applicable year. For information regarding pay decisions made by our Compensation Committee related to our PEO’s compensation for each fiscal year, refer to the Compensation Discussion and Analysis sections of the proxy statements reporting pay for the fiscal years covered in the table above. In accordance with the requirements of Item 402(v), the following amounts were deducted from and added to Mr. Rees’ SCT total compensation for each fiscal year to determine CAP:
Pay Versus Performance
| | 2022 | 2021 | 2020 | | SCT Total Compensation for PEO | $9,947,560 | $15,785,920 | $10,079,870 | | Less: Pension and Equity Values Reported in SCT for the Covered Year | (7,249,910) | (11,889,515) | (6,999,974) | | Add: Year-End Fair Value of Equity Compensation Granted in the Covered Fiscal Year that were Unvested at End of Covered Fiscal Year | 9,516,851 | 25,002,387 | 16,989,667 | | Adjust for: Change in Fair Value as of Vesting Date of any Awards Granted and Vested in the Same Year | — | 4,046,479 | — | | Adjust for: Change in Fair Value of Outstanding Awards Made in Prior Fiscal Years that were Unvested at End of Covered Fiscal Year | (4,242,006) | 17,500,324 | 5,592,676 | | Adjust for: Change in Fair Value of Awards Made in Prior Fiscal Years that Vested During Covered Fiscal Year | (12,407,989) | 6,960,568 | (4,865,696) | | Compensation Actually Paid to PEO | $(4,437,094) | $57,406,163 | $20,796,543 |
Pay Versus Performance
PSU grant date fair values are calculated using the stock price as of date of grant assuming target performance, except for the PSUs granted and vested in the same year, which are calculated using the volume-weighted intraday prices for the 30 trading days prior to and including the date of grant. Time-based RSU grant date fair values are calculated using the stock price as of the date of grant. Adjustments in the fair values of unvested and outstanding equity awards to our PEO were remeasured as of the end of each fiscal year, and as of each vesting date, during the years displayed in the table above. For outstanding stock options, we used the Black-Scholes option pricing model as of the date of vest. Column (d): Reflects the average of the total compensation paid to our Non-PEO NEOs, as shown in our “Summary Compensation Table.” The non-PEO NEOs included in each year are as follows: •For 2020 and 2021, Anne Mehlman, Michelle Poole, Daniel Hart, and Elaine Boltz. •For 2022, Anne Mehlman, Michelle Poole, Elaine Boltz, Richard Blackshaw, and Adam Michaels. Column (e): CAP to our non-PEO NEOs in 2022, 2021, and 2020 reflects the respective amounts set forth in column (d) of the Pay versus Performance table above, adjusted as set forth in the table below, as determined in accordance with applicable SEC rules. The dollar amounts represented in column (d) do not reflect the actual amount of compensation earned by or paid to our non-PEO NEOs during the applicable year. For information regarding pay decisions made by our Compensation Committee related to our non-PEO NEOs’ compensation for each fiscal year, refer to the Compensation Discussion and Analysis sections of the proxy statements reporting pay for the fiscal years covered in the table above. In accordance with the requirements of Item 402(v), the following adjustments were made to average total compensation for the non-PEO NEOs as a group for each year to determine the CAP:
Pay Versus Performance
| | 2022 | 2021 | 2020 | | SCT Total Compensation for Non-PEO NEOs | $1,920,110 | $4,809,719 | $2,725,275 | | Less: Pension and Equity Values Reported in SCT for the Covered Year | (623,650) | (3,331,484) | (1,477,440) | | Add: Year-End Fair Value of Equity Compensation Granted in the Covered Fiscal Year that were Unvested at End of Covered Fiscal Year | 673,633 | 5,857,186 | 3,334,360 | | Adjust for: Change in Fair Value as of Vesting Date of any Awards Granted and Vested in the Same Year | — | 1,734,082 | — | | Adjust for: Change in Fair Value of Outstanding Awards Made in Prior Fiscal Years that were Unvested at End of Covered Fiscal Year | (689,598) | 2,825,013 | 509,415 | | Adjust for: Change in Fair Value of Awards Made in Prior Fiscal Years that Vested During Covered Fiscal Year | (2,000,071) | 928,480 | (720,856) | | Adjust for: Awards Made in Prior Fiscal Years that were Forfeited During Covered Fiscal Year | (1,020,734) | — | — | | Compensation Actually Paid to Non-PEO NEOs | $(1,740,310) | $12,822,996 | $4,370,754 |
Pay Versus Performance
PSU grant date fair values are calculated using the stock price as of date of grant assuming actual performance, except for the PSUs granted and vested in the same year, which are calculated using the volume-weighted intraday prices for the 30 trading days prior to and including the date of grant. Time-based RSU grant date fair values are calculated using the stock price as of the date of grant. Adjustments in the fair values of unvested and outstanding equity awards to our non-PEO NEOs were remeasured as of the end of each fiscal year, and as of each vesting date, during the years displayed in the table above. Column (f): Represents the cumulative total shareholder return (“TSR”) of Crocs, Inc. for the years ended December 31, 2022, 2021, and 2020. Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period (if any, and assuming dividend reinvestment, if applicable), and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. All measurement periods noted begin on January 1, 2020 and end on December 31 of the respective year, so the 2020 value is a one-year TSR value, the 2021 value is a two-year TSR value, and the 2022 value is a three-year TSR value. Column (g): Represents the cumulative TSR of the Dow Jones U.S. Footwear Total Return Index (“Peer Group Cumulative TSR”), which is the published industry index used for purposes of Item 201(e) of Regulation S-K, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated, for the years ended December 31, 2022, 2021, and 2020. Column (h): Reflects net income in the Company’s consolidated statements of operations in the Company’s Annual Reports on Form 10-K for the years ended December 31, 2022, 2021, and 2020. Column (i): Company-selected performance measure is global adjusted EBIT, which is calculated by excluding interest expenses, tax expense, foreign currency changes and non-recurring entries from GAAP net income attributable to common stockholders, including distribution center costs such as expansion and duplicate rent costs primarily related to our distribution centers and new headquarters, respectively, the step-up of HEYDUDE inventory costs to fair value upon the close of the acquisition on February 17, 2022, the shutdown of our direct operations in Russia, HEYDUDE acquisition and integration costs, and other costs.
Relationship between Compensation Actually Paid and Performance
Relationship between Compensation Actually Paid and Performance The graphs below show the relationship between CAP to our PEO and non-PEO NEOs in 2022, 2021, and 2020 to (1) TSR of both Crocs, Inc. and the Dow Jones U.S. Footwear Total Return Index, (2) our net income, and (3) our global adjusted EBIT.
Pay Ratio
Pay Ratio We are providing the following information about the relationship of the annual total compensation of our median employee and the annual total compensation of our Chief Executive Officer, pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K. As a company with global operations, we utilize compensation programs that are regionally focused. Given the size and geographic composition of our retail workforce, we identified our median employee as of December 31, 2022, utilizing our internal records of salary and hourly rates (for non-exempt employees (other than our Chief Executive Officer)) and hours worked for the full fiscal year 2022. We have included all employees as of December 31, 2022, whether employed on a full-time, part-time, or seasonal basis. We also annualized the compensation for those employees who were hired in 2022, but were not employed for the entire fiscal year. For non-US employees, we converted such employees’ pay to a U.S. dollar equivalent using a spot exchange rate as of December 31, 2022. Using this methodology, we estimated our median employee to be a retail store team lead. Our median employee earned annual total compensation of $32,212 in 2022. The annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table above, was $9,947,560 in 2022. The ratio of the annual total compensation of our Chief Executive Officer to our estimated median employee for 2022 was approximately 309 to 1. We believe this ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. We believe the methodology, assumptions, and estimates described above to be reasonable given the nature of our workforce. As acknowledged by the SEC, there is a significant amount of flexibility and discretion in determining a company’s approach, which makes pay ratios across similar companies and more broadly, the footwear industry, difficult to compare.