DEF 14A of lululemon athletica inc.
Filed Apr 25, 2024 · FY20230001397187-24-000013
Board of Directors
Board of Directors
Board of Directors
| Martha (Marti) Morfitt, Chair of the Board | | Director since: 2008 Age: 66 | | | Marti Morfitt has been a member of our board of directors since December 2008, and has been the chair of the board since March 2022. She has served as a principal of River Rock Partners, Inc., a business and cultural transformation consulting firm, since 2008. Ms. Morfitt served as the chief executive officer of Airborne, Inc. from October 2009 to March 2012. She served as the president and chief executive officer of CNS, Inc., a manufacturer and marketer of consumer healthcare products, from 2001 through March 2007. From 1998 to 2001, she was chief operating officer of CNS, Inc. Ms. Morfitt currently serves on the board of directors of Graco, Inc. and Olaplex Holdings, Inc. She served on the board of directors of Mercer International Inc., a forest products company, from 2017 to 2020, and Life Time Fitness, Inc. from 2008 to 2015. She received her HBA from the Richard Ivey School of Business at the University of Western Ontario, and an MBA from the Schulich School of Business at York University. | Skills & Experience Our board of directors selected Ms. Morfitt to serve as director because she has extensive public board experience and years of leading and managing branded consumer businesses, and their operations and strategic planning. |
Board of Directors
| David Mussafer, Lead Director | | Director since: 2014 Age: 60 | | | David Mussafer is the lead director and has been a member of our board of directors since September 2014. Mr. Mussafer also served as a director of lululemon from 2005 until 2010. Mr. Mussafer is chairman and managing partner of Advent International, L.P. which he joined in 1990. Prior to Advent, Mr. Mussafer worked at Chemical Bank and Adler & Shaykin in New York. Mr. Mussafer has led or co-led more than 30 buyout investments at Advent across a range of industries. Mr. Mussafer currently serves on the board of directors of Olaplex Holdings Inc. Mr. Mussafer previously served as a director of a number of public and private companies over the course of his career at Advent, including First Watch Restaurants, Inc. from 2019 to 2021. Mr. Mussafer holds a BSM, cum laude, from Tulane University and an MBA from the Wharton School of the University of Pennsylvania. | Skills & Experience Our board of directors believes Mr. Mussafer's extensive experience enables him to provide valuable insights to the board of directors regarding board processes, and operations as well as the relationship between the board of directors and shareholders. |
Board of Directors
| Michael Casey, Director | | Director since: 2007 Age: 78 | | | Michael Casey has been a member of our board of directors since October 2007. Mr. Casey also served as co-chair of the board of directors from September 2014 to April 2017, and as chair of the board of directors from May 2014 to September 2014. He retired from Starbucks Corporation in October 2007, where he had served as senior vice president and chief financial officer from August 1995 to September 1997, and executive vice president, chief financial officer and chief administrative officer from September 1997 to October 2007. Subsequent to retirement he served as a senior advisor to Starbucks Corporation from October 2007 to May 2008, and from November 2008 to January 2015. Prior to joining Starbucks, Mr. Casey was executive vice president and chief financial officer for Family Restaurants, Inc. and president and chief executive officer of El Torito Restaurants, Inc. He was also a member of the board of directors of the Nasdaq OMX Group, Inc. from January 2001 to May 2012. Mr. Casey graduated from Harvard College with a B.A. degree in Economics, cum laude, and Harvard Business School with an MBA degree. | Skills & Experience Our board of directors selected Mr. Casey to serve as director because he has extensive experience in corporate finance and accounting, managing retail-focused industry operations, strategic planning, and public company corporate governance. |
Board of Directors
| Shane Grant, Director | | Director since: 2023 Age: 49 | | | Shane Grant has been a member of our board of directors since November 2023. He currently serves as Group Deputy CEO, CEO Americas and EVP Dairy, Plant-Based and Global Sales at Danone. In his role, Mr. Grant is responsible for leading the Danone business across North America and Latin America, as well as Danone's largest global category in Dairy and Plant-Based and global Customer and Commercial Leadership. Mr. Grant joined Danone in May 2020 as EVP and CEO of Danone North America. Previously, Mr. Grant spent nearly 20 years with The Coca-Cola Company, where he held global and operating leadership roles in category, commercial, and general management. Before joining The Coca-Cola Company, he held customer, supply chain, and brand management positions at Unilever. Mr. Grant serves on the board of directors of the US Food Industry Association (FMI), the executive committee of the Consumer Brands Association, and is a member of the American Heart Association CEO roundtable. He is also a Member of World 50. Mr. Grant holds Business and Arts degrees from the University of Auckland. | Skills & Experience Our board of directors selected Mr. Grant to serve as a director because of his experience with consumer brands and in international markets. |
Board of Directors
| Kathryn Henry, Director | | Director since: 2016 Age: 58 | | | Kathryn Henry has been a member of our board of directors since January 2016. Ms. Henry is co-founder and advisor of LightBrite, where she also served as CEO from January 2022 to February 2023. From 2015 to 2022, she served as a strategic consultant for retail and technology companies, in addition to venture capital, investment and consulting firms seeking executive level guidance. Ms. Henry previously served as chief information officer, logistics & distribution at lululemon from 2010 to 2014 where she oversaw all global information and technology operations for the company. Prior to joining lululemon in 2010, Ms. Henry worked at Gap, Inc., where she served as vice president and chief information officer of international IT and Gap North America and was responsible for the systems support of key international growth initiatives. Previously, she was vice president of Dockers Business Divestiture and vice president of global IT strategy & development at Levi Strauss & Co. Ms. Henry was selected as a Global CIO Top 25 Breakaway Leader in 2013, and was a member of the National Retail Federation CIO council during her tenure with lululemon. | Skills & Experience Our board of directors believes Ms. Henry's strategic technology and retail experience as well as her experience with lululemon provides valuable insight to our board of directors. |
Board of Directors
| Teri List, Director | | Director since: 2024 Age: 61 | | | Teri List has been a member of our board of director since March 2024. Ms. List served as executive vice president and chief financial officer of Gap Inc, from January 2017 until her retirement in June 2020. Prior to joining the Gap, she served as chief financial officer at DICK’s Sporting Goods and Kraft Food Group, overseeing organizations across finance, accounting, real estate, legal, and information technology. Prior to those roles, Ms. List spent nearly 20 years with Procter & Gamble culminating in the role of SVP and Treasurer. She began her career in public accounting at Deloitte LLP. She currently serves on the board of directors of Danaher Corporation, Microsoft Corporation and Visa Inc. Ms. List has a bachelor’s degree in accounting and an honorary doctorate from Northern Michigan University and is a certified public accountant. | Skills & Experience Our board of directors selected Ms. List to serve as a director because of her extensive experience in corporate finance and accounting and her experience as a business leader and board member for global companies in the retail and consumer products industry. |
Board of Directors
| Alison Loehnis, Director | | Director since: 2022 Age: 53 | | | Alison Loehnis has been a member of our board of directors since January 2022. Since October 2022, Ms. Loehnis has been ad-interim CEO and president of Luxury and Fashion at Yoox Net-a-Porter where she is responsible for Net-a-Porter, Mr. Porter and the Outnet businesses, and where she was president of the luxury division from 2015 until 2021. She has held several leadership roles with expanding responsibility since she joined the company in 2007 and has been instrumental in the conception and launch of major initiatives including TheOutnet.com and MrPorter.com. Previously, Ms. Loehnis held positions with LVMH, Hachette Filipacchi and The Walt Disney Company, after starting her career with Saatchi & Saatchi. Ms. Loehnis received a degree in Art History from Brown University. | Skills & Experience Our board of directors selected Ms. Loehnis to serve as a director because it believes her experience as a leader in the retail industry, and international markets will provide valuable insight to the company. |
Board of Directors
| Isabel Mahe, Director | | Director since: 2022 Age: 50 | | | Isabel Mahe has been a member of our board of directors since November 2022. Ms. Mahe currently serves as Vice President and Managing Director of Greater China at Apple Inc. She joined Apple in 2008 as Vice President of Wireless Technologies and oversaw the development of cellular, Wi-Fi, Bluetooth, NFC, location and motion technologies for products across the business. Prior to Apple, she served as Vice President of Wireless Software Engineering at Palm and held key managerial positions at other technology-focused organizations. Ms. Mahe served on the board of directors of Starbucks from 2019 to 2023 and was named to Fortune’s 50 Most Powerful Women list in 2021 and 2022. She received a Bachelor of Applied Science and a Masters of Engineering from Simon Fraser University in British Columbia, Canada and an MBA from the University of California, Berkeley. | Skills & Experience Our board of directors selected Ms. Mahe to serve as a director because she has a strong track record of driving growth in fast growing and global markets, and industries through her knowledge of consumer and product trends. |
Board of Directors
| Jon McNeill, Director | | Director since: 2016 Age: 56 | | | Jon McNeill has been a member of our board of directors since April 2016. Since January 2020, Mr. McNeill has served as chief executive officer of DVx Ventures. He served as chief operating officer of Lyft, Inc. from March 2018 to July 2019. From September 2015 to February 2018, he served as president of Tesla Motors Inc., overseeing customer-facing operations. Prior to joining Tesla, he was the chief executive officer of Enservio, Inc., a software company, from 2006 until 2015, and founder of multiple technology and retail companies, including TruMotion, Sterling, First Notice Systems and Trek Bicycles Stores, Inc. He serves on the board of directors of General Motors. Mr. McNeill began his career at Bain & Company. He is a graduate of Northwestern University. | Skills & Experience Our board of directors selected Mr. McNeill because it believes his executive experience and innovative and entrepreneurial attributes provide valuable insight and are aligned with our unique culture. |
Board of Directors
| Emily White, Director | | Director since: 2011 Age: 45 | | | Emily White has been a member of our board of directors since November 2011. She has served as President of Anthos Capital, a Los Angeles-based investment firm since 2018. Prior to Anthos, Ms. White was chief operating officer at Snap, Inc. from January 2014 to March of 2015. Prior to joining Snap, Ms. White held several leadership roles at Facebook Inc. from 2010 to 2013 including as Director of Local Business Operations, Director of Mobile Business Operations and Head of Business Operations at Instagram. From 2001 to 2010, Ms. White worked at Google where she ran North American Online Sales and Operations, Asia Pacific & Latin America business and the Emerging Business channel. Ms. White is on the boards of directors of Olaplex Holdings Inc., Guayaki Sustainable Rainforest Products, Inc., and Gretel.ai. She was on the board of directors of Graco, Inc. from 2017 to 2022. Ms. White has also served on the boards of the National Center for Women in I.T., a non-profit coalition working to increase the participation of girls and women in computing and technology, and X-Prize, a non-profit focused on creating breakthroughs that pull the future forward. She received a BA in Art History from Vanderbilt University. | Skills & Experience Our board of directors selected Ms. White to serve as a director because of her extensive experience with social networking and technology companies. |
Board of Directors
ELECTION OF DIRECTORS We have a classified board of directors with a total of 11 directors, including four Class I directors, four Class II directors, and three Class III directors who will generally serve until the annual meetings of shareholders to be held in 2026, 2024 and 2025, respectively.
Director Nominees for Election at the 2024 Annual Meeting of Shareholders
Director Nominees for Election at the 2024 Annual Meeting of Shareholders New and re-nominated directors are evaluated by the corporate responsibility, sustainability and governance committee of our board of directors using information available about the candidate, criteria and procedures included in our "guidelines for evaluating director candidates." As the term for our Class II directors is expiring at the 2024 annual meeting, the committee has nominated the individuals noted below for re-election. If elected, the directors will serve for a three-year term until our 2027 annual meeting, and until their successors are duly elected and qualified, or until their earlier resignation or removal. Our board of directors appointed two new directors, Shane Grant on November 1, 2023 and Teri List on March 15, 2024. The board of directors believes our shareholders should have the opportunity to vote on both Mr. Grant and Ms. List as continuing Class I directors at this annual meeting. If approved, both Mr. Grant and Ms. List will serve until our 2026 annual meeting, and until their successor is duly elected and qualified or until their earlier resignation or removal. Our board of directors has no reason to believe that any of the nominees listed above will be unable to serve as a director. If, however, any nominee becomes unavailable, the proxies will have discretionary authority to vote for a substitute nominee. There are no family relationships among any of the directors or executive officers.
Director Nominees for Election at the 2024 Annual Meeting of Shareholders
| Name | Age(1) | Director Since | | Class II directors (whose terms would expire at the 2027 annual meeting) | | | | Calvin McDonald | 52 | 2018 | | Isabel Mahe | 50 | 2022 | | Martha Morfitt | 66 | 2008 | | Emily White | 45 | 2011 | | Class I directors (whose terms would expire at the 2026 annual meeting) | | | | Shane Grant | 49 | 2023 | | Teri List | 61 | 2024 |
Director Nominees for Election at the 2024 Annual Meeting of Shareholders
(1) Age as of April 25, 2024.
Our Board of Directors
Our Board of Directors The following table states the name, principal occupation, age, tenure, and committees of each of our current directors (including the nominees to be elected at this meeting), and the period during which each has served as a director of lululemon.
Our Board of Directors
| Name | Occupation | Age(1) | Director Since | Tenure (Years) | Independent | Audit Committee | Corporate Responsibility, Sustainability & Governance Committee | People, Culture & Compensation Committee | | Class I directors (whose terms expire at the 2026 annual meeting) | | | | | | | | | | Michael Casey | Retired Executive Vice President, Chief Financial Officer and Chief Administrative Officer of Starbucks Corporation | 78 | 2007 | 17 | l | Chair | | l | | David Mussafer Lead Director | Chairman and Managing Partner of Advent International, L.P. | 60 | 2014 | 10 | l | | Chair | | | Class I directors (who are nominees at the 2024 annual meeting to serve as continuing directors until the 2026 annual meeting) | | | | | | | | | | Shane Grant | Group Deputy CEO, CEO Americas and EVP Dairy, Plant Based and Global Sales of Danone | 49 | 2023 | 6 months | l | l | | | | Teri List | Retired Executive Vice President and Chief Financial Officer of Gap, Inc. | 61 | 2024 | 1 month | l | l | | | | Class II directors (whose terms expire and are nominees for re-election at the 2024 annual meeting) | | | | | | | | | | Isabel Mahe | Vice President and Managing Director of Greater China at Apple Inc. | 50 | 2022 | 1 | l | | l | l | | Calvin McDonald | Chief Executive Officer of lululemon athletica inc. | 52 | 2018 | 6 | | | | | | Martha Morfitt Chair | Principal of River Rock Partners Inc. | 66 | 2008 | 16 | l | l | | | | Emily White | President of Anthos Capital | 45 | 2011 | 13 | l | | l | Chair |
Our Board of Directors
| Name | Occupation | Age(1) | Director Since | Tenure (Years) | Independent | Audit Committee | Corporate Responsibility, Sustainability & Governance Committee | People, Culture & Compensation Committee | | Class III directors (whose terms expire at the 2025 annual meeting) | | | | | | | | | | Kathryn Henry | Co-Founder and Advisor of LightBrite | 58 | 2016 | 8 | l | l | | l | | Alison Loehnis | Ad-interim CEO and President of Luxury and Fashion of Yoox Net-a-Porter | 53 | 2022 | 2 | l | l | | | | Jon McNeill | Chief Executive Officer of DVx Ventures | 56 | 2016 | 8 | l | | l | |
Our Board of Directors
(1) Age is as of April 25, 2024.
Committees and Meeting Attendance
Committees and Meeting Attendance Our board of directors has three standing committees, including audit; people, culture and compensation; and corporate responsibility, sustainability and governance committees. Each of these committees operates under a written charter adopted by our board of directors. Copies of these charters are available on our website at www.lululemon.com. Our board of directors held five meetings of the full board of directors during 2023. Each of the standing committees held the number of meetings indicated in the table below. During 2023, each of our directors attended at least 75% of the total number of meetings of our board of directors and the committees of our board of directors on which such director served during that period. Directors are expected to attend all Board and applicable committee meetings, absent extraordinary circumstances and to review meeting materials in advance of such meetings. Directors are also encouraged to attend our annual meetings of shareholders. All of our directors who were directors at such time attended the 2023 annual meeting of shareholders. The table below shows the three standing committees of our board of directors, the members of each committee during 2023 and the number of meetings held by each committee.
Committees and Meeting Attendance
| Committee | Number of meetings in 2023 | Members(1) | | Audit | 7 | Michael Casey (chair) | | | | Shane Grant(2) | | | | Kathryn Henry | | | | Alison Loehnis | | | | Martha Morfitt | | Corporate Responsibility & Governance | 4 | David Mussafer (chair) | | | | Isabel Mahe | | | | Jon McNeill | | | | Emily White | | People, Culture & Compensation | 6 | Emily White (chair) | | | | Michael Casey | | | | Isabel Mahe | | | | Glenn Murphy(3) | | | | Kathryn Henry |
Committees and Meeting Attendance
(1) Teri List joined the board of directors effective March 15, 2024. (2) Shane Grant joined the board of directors effective November 1, 2023. (3) Glenn Murphy resigned from the board of directors effective August 25, 2023.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
Director Compensation Philosophy
Director Compensation Philosophy Our people, culture and compensation committee considers the specific duties and responsibilities for our non-employee director compensation program. We believe an offering of both cash and equity grants is best to attract and retain qualified candidates and aligns our directors' interest with our shareholders. In setting our director compensation, the people, culture, and compensation committee annually reviews our pay in an effort to ensure we remain competitive, and consults with its independent compensation advisor, WTW, for recommendations and market practice.
Director Compensation Design
Director Compensation Design For 2023, directors who served on the board of directors received cash retainers as appropriate to position and services performed. Furthermore, each non-employee director receives an annual grant of restricted stock awards under our 2023 equity incentive plan. These annual awards are generally granted after the annual meeting of shareholders each year if the director continues to be a member of our board of directors. For 2023, directors who served on the board of directors for the full fiscal year received an award of restricted stock having a fair value at the time of grant equal to approximately $150,000, subject to one year vesting. Non-employee directors who join our board of directors other than in connection with an annual meeting generally receive these awards on a pro-rata basis.
Fiscal 2023 Director Compensation
Fiscal 2023 Director Compensation The following table shows the amount of compensation we paid to each of our non-employee directors for fiscal 2023 for serving on our board of directors:
Fiscal 2023 Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Martha Morfitt | 268,333 | 148,757 | 417,090 | | David Mussafer | 171,667 | 148,757 | 320,424 | | Michael Casey | 149,167 | 148,757 | 297,924 | | Kourtney Gibson(2) | 60,641 | 52,706 | 113,347 | | Shane Grant(3) | 9,066 | 40,581 | 49,647 | | Kathryn Henry | 120,833 | 148,757 | 269,590 | | Alison Loehnis | 108,333 | 148,757 | 257,090 | | Isabel Mahe | 115,833 | 156,940 | 272,773 | | Jon McNeill | 105,833 | 148,757 | 254,590 | | Glenn Murphy(4) | 78,958 | 52,706 | 131,664 | | Emily White | 142,083 | 148,757 | 290,840 |
Fiscal 2023 Director Compensation
(1)The amounts in this column represent the expense we recognized in fiscal 2023 in accordance with FASB ASC Topic 718. See the notes to our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024 for a discussion of all assumptions made by us in determining the FASB ASC Topic 718 values of our equity awards. (2)Ms. Gibson did not stand for re-election at the 2023 annual general meeting. (3)Mr. Grant joined the board of directors effective November 1, 2023. (4)Mr. Murphy resigned from the board of directors effective August 25, 2023.
Director Compensation Changes
Director Compensation Changes Following a review of the non-employee director compensation program, the board of directors approved an increase to the base annual cash retainers, people, culture and compensation committee chair retainer, and equity grant amounts. The updates are intended to better position our director compensation and when benchmarking to our peer group.
Director Compensation Changes
| | Fiscal 2024 Total ($) | Fiscal 2023 Total ($) | | Base Annual Cash Retainer | | | | All Non-Employee Directors | 100,000 | 95,000 | | Additional Retainers | | | | Chair | 160,000 | 160,000 | | Lead Director | 50,000 | 50,000 | | Audit Committee Chair | 30,000 | 30,000 | | People, Culture and Compensation Committee Chair | 30,000 | 27,500 | | Corporate Responsibility, Sustainability and Governance Committee Chair | 20,000 | 20,000 | | Audit Committee Member | 15,000 | 15,000 | | People, Culture and Compensation Committee Member | 12,500 | 12,500 | | Corporate Responsibility, Sustainability and Governance Committee Member | 10,000 | 10,000 | | Sub-committees - additional compensation may be provided | | | | Equity Grant | | | | All Non-Employee Directors | 160,000 | 150,000 |
Compensation Design
Compensation Design Our 2023 executive compensation program consisted of the following elements intended to provide a competitive mix of short and long-term incentives to our executive officers. Base Salary Bonus Long-term Incentives ◦Restricted stock units (RSU); ◦Performance-based restricted stock units (PSU); and ◦Stock options. Retirement & Health Benefits ◦Defined contribution group savings programs; and ◦Medical, dental and vision plans. We align our executives' pay with performance, resulting in a substantial portion of executive pay being at-risk and tied to objective performance goals, including our annual bonus awards, and long-term incentives. The primary focus of our executive compensation is to drive long-term performance and value for our shareholders. The charts shown opposite illustrate our executive officers' 2023 total compensation. In developing our executive compensation programs, we follow these guidelines to support our compensation philosophy and governance practices:
Compensation Design
| What we do | | | | What we don't do | | | | a | Align executive compensation with shareholder interests through short and long-term incentives which are linked to our financial performance | a | Conduct an annual review of compensation programs and practices | x | Permit hedging or pledging of company stockx | Provide excessive benefits or perquisites | | a | Set challenging performance goals for our annual bonus and PSUs | a | Retain an independent compensation consultant | x | Reprice stock optionsx | Provide single-trigger severance or permit golden parachute tax gross-ups following a change in control | | a | Maintain meaningful and market-competitive stock ownership guidelines for the chief executive officer, executive officers, and non-employee directors | a | Include double-trigger change in control provisions in equity awards | x | Grant stock options at a discount to market price | | | a | Consider relevant market practices when establishing compensation | a | Include clawback provisions in our cash and equity incentive plans | x | Enter into employment agreements with multi-year terms | | | a | Assess and mitigate undue risk in compensation programs | | | | | |
Role of the Independent Compensation Consultant
Role of the Independent Compensation Consultant Our independent consultant The committee has engaged WTW as its independent consultant for executive officer and director compensation matters and other topics under the committee's purview. WTW reports directly to the committee, reviews certain materials, attends meetings as requested, provides market data and recommendations, advises on evolving trends and best practices in compensation and committee governance, evaluates policies and practices, conducts pay equity studies and reviews the compensation discussion and analysis disclosure in our proxy statement. During 2023, management also engaged WTW for consulting services regarding survey data, research products, and international compensation plans and policies. The WTW team members whom management engaged for these other services were not the same WTW team members whom the committee engaged. The following table shows the aggregate fees paid to WTW for both executive compensation matters and these other services during 2023:
Role of the Independent Compensation Consultant
| Type of Fee | 2023 Fees | Percentage of 2023 Fees | | Compensation-Related Fees | $296,283 | 60% | | All Other Fees | $199,251 | 40% | | Total | $495,534 | 100% |
Role of the Independent Compensation Consultant
Determination of independence The committee reviewed its relationship with WTW when assessing whether the engagement raised any conflict of interest. Factors the committee considered included the six required factors under SEC and Nasdaq rules regarding committee advisor independence, which include (1) other services provided by the advisor's firm, (2) fees as a percentage of firm revenue, (3) any policies and procedures maintained by the advisory firm to prevent or mitigate potential conflicts of interest, (4) any business or personal relationship of the compensation advisor with a member of the committee, (5) any company stock owned by the compensation advisor, and (6) any business or personal relationship of the compensation advisor or the firm employing the advisor with an executive officer of lululemon. The committee believes that WTW has been independent during its service for the committee. Role of People, Culture and Compensation Committee and Chief Executive Officer in Executive Compensation The committee reviews and recommends to the board of directors the compensation and other terms of employment of our chief executive officer and evaluates the chief executive officer’s performance considering relevant corporate performance goals and objectives. The chief executive officer provides a performance assessment and compensation recommendation for the other executive officers to the committee. The committee generally considers this feedback when it evaluates and approves each of the executive officer's (other than the chief executive officer's) compensation, including the executive's achievement of objectives, contributions to financial performance, and leadership accomplishments. The chief executive officer does not participate in or otherwise influence recommendations regarding the chief executive officer’s own compensation.
Peer Group
Peer Group The committee reviews what it believes is an appropriate peer group annually as it strives to ensure our executive compensation remains competitive against the most relevant external comparator companies. In selecting peers, the committee aims to identify comparably sized companies (based on revenue, operating income, and market capitalization), and which represent competitors for leadership talent. Following a review with the support of WTW, the committee approved the use of the peer group for 2023. While no singular company, or set of companies, has characteristics identical to lululemon, we believe our peer group for 2023 aligns with our high growth and strong consumer brand, and continues to be heavily weighted towards the retail industry.
Peer Group
| Peer Group: | | | | Adidas AG | Hanesbrands Inc. | Tapestry, Inc. | | Capri Holdings Limited | Levi Strauss & Co. | Ulta Beauty, Inc. | | Chipotle Mexican Grill | Nordstrom, Inc. | Under Armour, Inc. | | Columbia Sportswear Company | Puma SE | Urban Outfitters | | Deckers Outdoor | PVH Corp. | V.F. Corporation | | The Estee Lauder Companies Inc. | Ralph Lauren Corporation | Williams-Sonoma, Inc. |
Elements of Compensation
| Element | Purpose | How it Works | Link to Business Strategies | | Base Salary | Provides base level of earnings throughout the year. It considers multiple factors including responsibilities, experience, external market, and historical performance. | Payable in arrears subject to deductions required by law or authorized by the executive. | Competitive base salary levels support attracting and retaining executive talent. Base salaries are generally targeted near the market median of base salaries of similarly situated executives at peer group companies. | | Bonus | Rewards the achievement of annual financial and strategic goals. | Generally awarded in the form of annual cash performance bonus awards and payable based on the achievement of corporate performance goals established by the people, culture and compensation committee. | Performance metrics and incentive targets are set during the first part of the fiscal year and align with our financial goals. Performance metrics typically include operating income and net revenue. | | Long-term Incentive Awards | Rewards the achievement of our long-term performance goals and aligns the incentives of our executives with the interests of our shareholders. | Generally awarded in three equity vehicles: (1) Stock options; (2) PSUs; and (3) RSUs. | Stock options and RSUs provide incentives for long-term shareholder value creation and support long-term retention. PSUs are designed for our executives to deliver on long-term financial performance metrics we believe are drivers of shareholder value creation. All our equity programs are designed to encourage equity ownership for our executives to align their interest with shareholders. The ultimate value received by the executive officers is also linked to the performance of our share price. |
Bonus
Bonus Design The annual cash performance bonuses awarded to our executive officers are intended to compensate them for achieving financial and strategic goals. These bonuses reward for performance against annual performance metrics, distinct from our equity grants which are designed to reward the achievement of our long-term performance goals, and long-term value creation. The committee will set the components of our annual cash performance bonus usually during the first quarter of each fiscal year, including the following: •Target annual levels for each of our executive officers, expressed as a percentage of base salary; •Financial performance measures; •Relative weighting of each financial performance measure; •Threshold, target and maximum goals for each financial performance measure; and •Range of potential payouts for the annual cash bonus awards. Following the completion of each fiscal year, the committee reviews performance relative to the achievement of the company's performance goals to determine the amount of bonus payable to our executive officers. In making this determination, the committee may make adjustments in calculating whether the financial performance goals have been met to factor out extraordinary, unusual, or non-recurring items. The committee may use discretion in determining the amount of the bonus payable to an executive officer. Generally, executive officers must remain employed by us on the bonus payment date to be eligible for payment, unless the employment termination is a result of death or disability. Target Annual Bonus Levels The target annual cash bonus levels for each of our named executive officers for 2023 are shown in the table below:
Bonus
| Named Executive Officer | Role | 2023 Target Bonus (as a % of Base Salary) | | Calvin McDonald | Chief Executive Officer | 200% | | Meghan Frank | Chief Financial Officer | 90% | | Celeste Burgoyne | President, Americas and Global Guest Innovation | 100% | | Michelle Choe | Chief Product Officer | 100% | | André Maestrini | Executive Vice President, International | 90% |
Bonus
Financial Performance Measures & Relative Weighting The annual cash bonus awards were based on operating income and net revenue for 2023. Each metric was weighted evenly at 50% and the combined performance of the two metrics is the result. The committee continues to believe this structure focuses the executive team on our critical financial goals. Payout Range Actual payouts of the cash bonuses may vary from 0% of the target bonus level for performance below threshold, to 200% of the target bonus level for achieving or exceeding the maximum performance level determined by the committee at the beginning of the fiscal year. Fiscal 2023 Performance The committee determined that both 2023 financial goals had been exceeded, and the bonus payout was calculated as 200% of the target bonus level. The actual bonuses paid to the named executive officers for 2023 performance represented 200% of their target bonus levels, and are included in the Non-Equity Incentive Plan Compensation column of the summary compensation table. (1) The adjusted (non-GAAP) operating income was presented in our earnings release for fiscal 2023, and used in the determination of the achievement of the performance measure. The adjusted actual results exclude a pre-tax expense of $98.2M for the impairment and other charges recognized in relation to lululemon Studio as disclosed in Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs included in Item 8 of Part II of the Annual Report on Form 10-K filed with the SEC on March 21, 2024. Refer to the non-GAAP reconciliation table in Appendix A of this proxy statement for reconciliation between the above non-GAAP financial measure and the most directly comparable measure calculated in accordance with GAAP. The people, culture and compensation committee determined that it would use the adjusted (non-GAAP) operating income number in the determination of the achievement of the performance measure to provide a consistent basis for the calculation of the performance measures with respect to the 2023 bonuses.
Long-Term Incentive Awards
Long-Term Incentive Awards Design Equity awards are an important component of our executive compensation program that we believe helps drive the achievement of our long-term performance goals and aligns the incentives of our executives with the interests of our shareholders. We believe providing a significant portion of our total compensation opportunity in equity-based compensation enables us to competitively compensate executive talent. The committee evaluates the components of our equity-based awards annually, including the following: •Target annual grant for each of our executive officers as a significant part of their total compensation; •Financial performance metrics in alignment with company goals and shareholder interests; and •Program administration considerations that align with market trends within our peer group. Target Equity Annual Grant The target annual equity grants for each of our named executive officers for 2023 are shown in the table below.
Long-Term Incentive Awards
| Named Executive Officer | Role | Fiscal 2023 Target Annual Equity Grant ($) | | Calvin McDonald | Chief Executive Officer | 10,000,000 | | Meghan Frank | Chief Financial Officer | 2,000,000 | | Celeste Burgoyne | President, Americas and Global Guest Innovation | 4,000,000 | | Michelle Choe | Chief Product Officer | 3,750,000 | | André Maestrini | Executive Vice President, International | 2,500,000 |
Long-Term Incentive Awards
The committee awarded the following types of equity to each executive officer for 2023. The weighting of the type of equity is heavily weighted towards our PSUs to connect our executive officers' pay to achieving the company's long-term objectives. Equity Program Summary The grant date fair value of RSUs and PSUs is based on the closing price of our common stock on the grant date. The grant date fair value of each stock option granted is estimated on the grant date using the Black-Scholes model. The assumptions used in the Black-Scholes are disclosed in Note 15. Stock-Based Compensation and Benefit Plans of the Annual Report on Form 10-K filed with the SEC on March 21, 2024.
Long-Term Incentive Awards
| Equity Program | PSUs | Stock Options | RSUs | | How it Works | Each PSU represents a right to receive one share of our common stock on a specified settlement date if performance metrics have been met. | Each stock option represents a right to purchase one share of our common stock at the grant price, if the time vesting requirement has been met. Stock options are granted with an exercise price equal to the closing price of our common stock as reported on Nasdaq on the date of grant. Stock options expire on the seventh anniversary of their grant date. | Each RSU represents a right to receive one share of our common stock on a specified settlement date, if the time vesting requirement has been met. | | Vesting | PSUs generally vest on the third anniversary of the grant day (i.e., end of three-year performance period). | Stock options generally vest 1/4 on the annual anniversary of the grant day (i.e., fully vested on the fourth anniversary of the grant day). The expiry of stock options is generally seven years after the grant date. | RSUs generally vest 1/3 on the annual anniversary of the grant day (i.e., fully vested on the third anniversary of the grant day). | | Payout | The attainment of goals during the performance period may earn from 0% of target for performance below threshold to 200% of target for performance at or above maximum. | Stock options only have value to the extent that, on the date they are exercised, the company's share price is higher than the exercise price. | RSUs are earned subject to continued employment. |
Settlement of 2021 PSU Awards (2020-2023 Performance Period)
Settlement of 2021 PSU Awards (2020-2023 Performance Period) The people, culture and compensation committee established the following elements of the 2021 PSU awards: •Performance period was four fiscal years (Fiscal 2020 to Fiscal 2023). •Vesting was generally on the third anniversary of the grant date. •The minimum, target and maximum performance and payout levels were established during the first quarter of the beginning of fiscal 2021. •The performance metric selected was the four-year operating income compound annual growth rate, or CAGR, based on our operating income for fiscal 2019 of $889.1M. •The PSUs would pay out with a threshold CAGR of 5%, target CAGR of 10% and a maximum CAGR of 15%. The departure from our typical three year performance period was due to the impact of COVID-19 on our fiscal 2020 financials as we temporarily closed stores and restricted operations as necessary. The committee believed that by using fiscal 2019 operating income as a starting point, it would ensure that for executives to receive a payout, the company would need to return to our pre-COVID-19 growth trajectory. The committee has the discretion to make adjustments when calculating whether the performance goals have been met to factor out the effect (whether positive or negative) of any change in accounting standards or any extraordinary, unusual, or nonrecurring item occurring after the grant of an award. The purpose of this kind of adjustment would be to provide a consistent basis from period to period for the calculation of performance measures in order to prevent the dilution or enlargement of the participant's rights with respect to an award. The committee determined our adjusted annual operating income for 2023 was $2,230.9M, which represented a four-year CAGR of 25.9% CAGR and resulted in a payout of 200% of the target PSU awards granted. (1) The adjusted (non-GAAP) operating income was presented in our earnings release for fiscal 2023 and used in the determination of the achievement of the performance measure. The adjusted actual results exclude a pre-tax expense of $98.2M for the impairment and other charges recognized in relation to lululemon Studio as disclosed in Note 8. Impairment of Goodwill and Other Assets, Restructuring Costs included in Item 8 of Part II of the Annual Report on Form 10-K filed with the SEC on March 21, 2024. Refer to the non-GAAP reconciliation table in Appendix A of this proxy statement for reconciliation between the above non-GAAP financial measure and the most directly comparable measures calculated in accordance with GAAP. The committee will generally determine the achievement of the performance measure by using the earnings before other income and taxes as reported in the Consolidated Statements of Operations of the Company, or, if reported, then the adjusted operating income as reported in our earnings release or other EDGAR filings as applicable.
Future PSU Performance Periods
Future PSU Performance Periods Our executive officers are currently participating in the following ongoing PSU cycles:
Future PSU Performance Periods
| Cycle | Baseline(1) | Measure(2) | Performance Period | Payout Multiplier | | Fiscal 2022 - 2024 | 2021 - $1,374.7 M | Operating Income | 3 years | 0-200% multiplier | | Fiscal 2023 - 2025 | 2022 - $1,789.1 M | | | | | Fiscal 2024 - 2026 | 2023 - $2,230.9 M | | | |
Future PSU Performance Periods
(1) Baseline is the starting point to calculate the determination of the achievement of performance goals. It is generally based on the previous year's operating income result as reported in the Consolidated Statements of Operations of the Company, or, if reported, then the adjusted operating income as reported in our earnings release or other EDGAR filings as applicable. The baseline for all the outstanding PSUs use the respective fiscal year's adjusted operating income. Refer to the non-GAAP reconciliation table in Appendix A of this proxy statement for reconciliation between the above non-GAAP financial measure and the most directly comparable measures calculated in accordance with GAAP. (2) The committee will generally determine the achievement of the performance measure by using the earnings before other income and taxes as reported in the Consolidated Statements of Operations of the Company, or, if reported, then the adjusted operating income as reported in our earnings release or other EDGAR filings as applicable. The committee has the discretion to make adjustments when calculating whether the performance goals have been met to factor out the effect (whether positive or negative) of any change in accounting standards or any extraordinary, unusual, or nonrecurring item occurring after the grant of any award.
Employment Agreements and Severance Arrangements
Employment Agreements and Severance Arrangements We have employment agreements with our named executive officers which allow us to terminate their employment with us at any time, with or without cause. These agreements provide them with severance benefits under certain circumstances, including if we terminate their employment without cause. These agreements were made in order to attract and retain the services of these particular executives. The agreements were the result of negotiations between the parties, which we believe resulted in employment and severance terms and conditions that are commercially competitive and typical of the terms and conditions afforded to similarly situated executives in other companies of similar size and stage of business life cycle operating in the retail apparel industry. In each case, any severance payments are contingent on the occurrence of certain termination events and are subject to the executive's compliance with the surviving terms of the employment agreement and other terms, which may include a non-compete, non-solicitation and non-disparagement agreement, as well as the executive's release of any employment-related claims the executive may have against us. These severance arrangements are intended to provide each executive with a sense of security in making the commitment to dedicate the executive's professional career to our success. These severance rights do not differ based on whether or not we experience a change in control.
Employment Agreements and Severance Arrangements
| Benefits | Employee Eligibility | Executive Officer Eligibility | | Medical, Dental and Vision Plans | ü | ü | | Life and Disability Insurance | ü | ü | | Change in Control and Severance Plan | ü | ü | | 401(k) Plan (or other defined contribution group savings program) | ü | ü | | Employee Discount | ü | ü | | Supplemental Life | ü | ü | | Parental Leave Policy | ü | ü | | Fitness Benefits | ü | ü | | Tax Preparation | ü | ü | | Relocation Assistance | ü | ü | | Employee Stock Purchase Plan | ü | Not offered |
Compensation for Fiscal 2024
| Name | Title | Fiscal 2024 Base Salary ($) | Fiscal 2024 Target Annual Bonus | Fiscal 2024 Annual Equity ($) | | Calvin McDonald | Chief Executive Officer | 1,350,000 | 200% | 11,000,000 | | Meghan Frank | Chief Financial Officer | 805,000 | 90% | 2,750,000 | | Celeste Burgoyne | President, Americas and Global Guest Innovation | 880,000 | 100% | 4,000,000 | | Michelle Choe | Chief Product Officer | 855,000 | 100% | 3,750,000 | | André Maestrini | Executive Vice President, International | 805,000 | 90% | 2,750,000 |
Summary Compensation Table
Summary Compensation Table The following table shows information detailing the compensation of each person who served as our principal executive officer or our principal financial officer during fiscal 2023 and our three other most highly compensated executive officers during fiscal 2023. Collectively, we refer to these persons as our "named executive officers." The dollar amounts shown are in U.S. dollars. •The amounts originally in Canadian dollars were converted to U.S. dollars for this table using the average of the average exchange rates for each fiscal month during the applicable fiscal year. Applying this formula to fiscal 2023, fiscal 2022 and fiscal 2021, CDN$1.00 was equal to USD$0.741, USD$0.765 and USD$0.799 respectively. •The amounts originally in British pounds were converted to U.S. dollars for this table using the average of the average exchange rates for each fiscal month during the applicable fiscal year. Applying this formula to fiscal 2023, fiscal 2022 and fiscal 2021, GBP£1.00 was equal to USD$1.248, USD$1.226 and USD$1.375 respectively.
Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Calvin McDonald, Chief Executive Officer | 2023 | 1,292,308 | — | 5,000,011 | 4,999,937 | 5,169,231 | 33,290 | 16,494,777 | | | 2022 | 1,250,000 | — | 4,999,844 | 4,999,968 | 4,375,000 | 39,025 | 15,663,837 | | | 2021 | 1,250,000 | — | 4,000,112 | 4,000,028 | 4,000,000 | 15,315 | 13,265,455 | | Meghan Frank, Chief Financial Officer | 2023 | 738,462 | — | 1,400,132 | 600,018 | 1,329,231 | 23,879 | 4,091,722 | | | 2022 | 684,615 | — | 1,050,099 | 450,020 | 1,232,308 | 70,796 | 3,487,838 | | | 2021 | 567,308 | — | 699,912 | 299,988 | 850,962 | 11,782 | 2,429,952 | | Celeste Burgoyne, President, Americas and Global Guest Innovation | 2023 | 842,308 | — | 2,799,906 | 1,200,037 | 1,684,615 | 11,407 | 6,538,273 | | | 2022 | 784,615 | — | 2,449,980 | 1,050,046 | 1,569,231 | — | 5,853,872 | | | 2021 | 696,154 | — | 1,750,087 | 749,970 | 1,253,077 | 11,669 | 4,460,957 | | Michelle Choe, Chief Product Officer | 2023 | 821,154 | — | 2,624,800 | 1,125,035 | 1,642,308 | 80,307 | 6,293,604 | | | 2022 | 784,615 | — | 2,449,980 | 1,050,046 | 1,569,231 | 39,826 | 5,893,698 | | | 2021 | 696,154 | — | 1,750,087 | 749,970 | 1,253,077 | 248,400 | 4,697,688 | | André Maestrini, EVP, International(5) | 2023 | 762,763 | — | 1,749,986 | 750,023 | 1,372,974 | 54,951 | 4,690,697 | | | 2022 | 673,104 | — | 1,399,881 | 600,026 | 1,211,587 | 70,697 | 3,955,295 | | | 2021 | 687,500 | 126,042 | 1,049,868 | 449,982 | 1,237,500 | 66,568 | 3,617,460 |
Summary Compensation Table
(1)This column reflects the grant date fair value of PSUs and RSUs granted. See the "Grants of Plan-Based Awards Table" for information on PSUs and RSUs granted to our named executive officers in fiscal 2023. These amounts reflect the grant date fair value of the awards at target, and do not correspond to the actual value that will be realized by the executive officer. See the notes to our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024 for a discussion of all assumptions made by us in determining the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718 values of our equity awards. (2)This column reflects the grant date fair value of stock options granted. See the "Grants of Plan-Based Awards Table" for information on stock options granted to our named executive officers in fiscal 2023. These amounts reflect the grant date fair value of the awards, and do not correspond to the actual value that will be realized by the executive officer. See the notes to our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024 for a discussion of all assumptions made by us in determining the FASB ASC Topic 718 values of our equity awards. (3)In 2023 and 2022, non-equity incentive plan compensation is the annual performance-based cash bonus awards paid in accordance with the executive bonus plan and are reported for the fiscal year in which the relevant performance measures are satisfied rather than when awarded or paid. In 2021, non-equity incentive plan compensation includes the annual performance-based cash awards paid in accordance with our 2014 equity incentive plan and are reported for the fiscal year in which the relevant performance measures are satisfied rather than when awarded or paid. (4)The following table provides additional information with respect to "all other compensation":
Summary Compensation Table
| Name | Fiscal Year | Relocation Costs and Personal Tax Preparation Fees ($) | Tax Gross-Ups(a)(b) ($) | Company Match of 401(k) / RRSP ($) | Pension Allowance ($) | Other ($) | Total All Other Compensation ($) | | Calvin McDonald | 2023 | 15,480 | 17,810 | — | — | — | 33,290 | | | 2022 | 12,672 | 14,580 | 11,773 | — | — | 39,025 | | | 2021 | 5,727 | 3,083 | 6,505 | — | — | 15,315 | | Meghan Frank | 2023 | 11,307 | 12,572 | — | — | — | 23,879 | | | 2022 | 33,522 | 37,274 | — | — | — | 70,796 | | | 2021 | — | — | 11,782 | — | — | 11,782 | | Celeste Burgoyne | 2023 | — | — | 11,407 | — | — | 11,407 | | | 2022(c) | — | — | — | — | — | — | | | 2021 | — | — | 11,669 | — | — | 11,669 | | Michelle Choe | 2023 | 8,205 | 72,102 | — | — | — | 80,307 | | | 2022 | 12,443 | 27,383 | — | — | — | 39,826 | | | 2021 | 5,351 | 241,549 | | — | 1,500 | 248,400 | | André Maestrini(d) | 2023 | — | — | — | 41,187 | 13,764 | 54,951 | | | 2022 | 15,234 | 14,062 | — | 32,116 | 9,285 | 70,697 | | | 2021 | 11,659 | 6,278 | — | 34,375 | 14,256 | 66,568 |
Summary Compensation Table
(a) The amounts shown reflect tax gross-ups related to certain benefits to offset the additional taxes owed on the benefit received. (b) The amount shown for Ms. Choe also reflects tax equalization payments in connection with her Canadian and U.S. income taxes according to the terms of her employment agreement. (c) The aggregate of all personal benefits was less than $10,000. (d) Mr. Maestrini receives a pension allowance instead of participating in the pension scheme. (5)Mr. Maestrini commenced employment as our EVP, International in January 2021. He was granted a one-time retention award of $137,500, subject to remaining employed with lululemon for a period of 12 months. This award has been included in the table above, prorated for the amount earned in fiscal 2021.
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following table shows each plan-based award made to a named executive officer in fiscal 2023.
2023 Grants of Plan-Based Awards
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock (#) | All Other Option Awards: Number of Securities Underlying Options (#)(2) | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards ($)(3) | | Name | Type of Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#)(1) | Target (#)(1) | Maximum (#)(1) | | | | | | Calvin McDonald | Stock Option | 03/30/2023 | — | — | — | — | — | — | — | 38,465 | 358.09 | 4,999,937 | | | Performance-Based Restricted Stock Unit | 03/30/2023 | — | — | — | 6,982 | 13,963 | 27,926 | — | — | — | 5,000,011 | | | Performance-Based Cash Award(4) | 03/30/2023 | 1,292,308 | 2,584,615 | 5,169,231 | — | — | — | — | — | — | — | | Meghan Frank | Restricted Stock Unit(5) | 03/30/2023 | — | — | — | — | — | — | 1,117 | — | — | 399,987 | | | Stock Option | 03/30/2023 | — | — | — | — | — | — | — | 4,616 | 358.09 | 600,018 | | | Performance-Based Restricted Stock Unit | 03/30/2023 | — | — | — | 1,397 | 2,793 | 5,586 | — | — | — | 1,000,145 | | | Performance-Based Cash Award(4) | 03/30/2023 | 332,308 | 664,615 | 1,329,231 | — | — | — | — | — | — | — | | Celeste Burgoyne | Restricted Stock Unit(5) | 03/30/2023 | — | — | — | — | — | — | 2,234 | — | — | 799,973 | | | Stock Option | 03/30/2023 | — | — | — | — | — | — | — | 9,232 | 358.09 | 1,200,037 | | | Performance-Based Restricted Stock Unit | 03/30/2023 | — | — | — | 2,793 | 5,585 | 11,170 | — | — | — | 1,999,933 | | | Performance-Based Cash Award(4) | 03/30/2023 | 421,154 | 842,308 | 1,684,615 | — | — | — | — | — | — | — |
2023 Grants of Plan-Based Awards
| | | | 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 (#) | All Other Option Awards: Number of Securities Underlying Options (#)(2) | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards ($)(3) | | Name | Type of Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#)(1) | Target (#)(1) | Maximum (#)(1) | | | | | | Michelle Choe | Restricted Stock Unit(5) | 03/30/2023 | — | — | — | — | — | — | 2,094 | — | — | 749,840 | | | Stock Option | 03/30/2023 | — | — | — | — | — | — | — | 8,655 | 358.09 | 1,125,035 | | | Performance-Based Restricted Stock Unit | 03/30/2023 | — | — | — | 2,618 | 5,236 | 10,472 | — | — | — | 1,874,959 | | | Performance-Based Cash Award(4) | 03/30/2023 | 410,577 | 821,154 | 1,642,308 | — | — | — | — | — | — | — | | André Maestrini | Restricted Stock Unit(5) | 03/30/2023 | — | — | — | — | — | — | 1,396 | — | — | 499,894 | | | Stock Option | 03/30/2023 | — | — | — | — | — | — | — | 5,770 | 358.09 | 750,023 | | | Performance-Based Restricted Stock Unit | 03/30/2023 | — | — | — | 1,746 | 3,491 | 6,982 | — | — | — | 1,250,092 | | | Performance-Based Cash Award(4) | 03/30/2023 | 343,243 | 686,487 | 1,372,974 | — | — | — | — | — | — | — |
2023 Grants of Plan-Based Awards
(1)The PSUs vest based on achievement of performance goals over a three-year performance period. (2)The stock options vest in 25% installments on the four anniversary dates following the grant date, subject to continued employment. The stock options will expire seven years after the grant date. (3)This column reflects the grant date fair value in U.S. dollars of the award granted at target in accordance with FASB ASC Topic 718. See the notes to our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024 for a discussion of all assumptions made by us in determining the FASB ASC Topic 718 values of our equity awards. (4)Each of the performance-based cash bonus awards shown in the table was granted under our executive bonus plan. The material terms of the 2023 performance-based cash awards are described under "Executive Compensation - Compensation Discussion and Analysis" in the section entitled "Annual Cash Incentives." (5)The RSUs vest in installments of 33%, 33% and 34% on the three anniversary dates following the grant date, subject to continued employment.
Outstanding Equity Awards at 2023 Fiscal Year End
Outstanding Equity Awards at 2023 Fiscal Year End The following tables show information regarding the outstanding equity awards held by each of the named executive officers on January 28, 2024.
Outstanding Equity Awards at 2023 Fiscal Year End
| | Outstanding Stock Option Awards | | | | | | Name | Grant Date(1) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | | Calvin McDonald | 08/20/2018 | 35,355 | — | 136.67 | 08/20/2025 | | | 03/28/2019 | 55,957 | — | 167.54 | 03/28/2026 | | | 03/27/2020 | 39,323 | 13,108 | 188.84 | 03/27/2027 | | | 03/31/2021 | 21,521 | 21,521 | 306.71 | 03/31/2028 | | | 03/30/2022 | 9,900 | 29,698 | 376.92 | 03/30/2029 | | | 03/30/2023 | — | 38,465 | 358.09 | 03/30/2030 | | Meghan Frank | 03/28/2018 | 2,181 | — | 85.96 | 03/28/2025 | | | 03/28/2019 | 1,364 | — | 167.54 | 03/28/2026 | | | 03/28/2019 | 1,399 | — | 167.54 | 03/28/2026 | | | 03/27/2020 | 1,278 | 426 | 188.84 | 03/27/2027 | | | 12/11/2020 | 280 | 93 | 344.32 | 12/11/2027 | | | 03/31/2021 | 1,614 | 1,614 | 306.71 | 03/31/2028 | | | 03/30/2022 | 891 | 2,673 | 376.92 | 03/30/2029 | | | 03/30/2023 | — | 4,616 | 358.09 | 03/30/2030 | | Celeste Burgoyne | 03/28/2019 | 8,652 | — | 167.54 | 03/28/2026 | | | 03/27/2020 | 5,899 | 1,966 | 188.84 | 03/27/2027 | | | 03/31/2021 | 4,035 | 4,035 | 306.71 | 03/31/2028 | | | 03/30/2022 | 2,079 | 6,237 | 376.92 | 03/30/2029 | | | 03/30/2023 | — | 9,232 | 358.09 | 03/30/2030 |
Outstanding Equity Awards at 2023 Fiscal Year End
| | Outstanding Stock Option Awards | | | | | | Name | Grant Date(1) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | | Michelle Choe | 03/27/2020 | 5,899 | 1,966 | 188.84 | 03/27/2027 | | | 03/31/2021 | 4,035 | 4,035 | 306.71 | 03/31/2028 | | | 03/30/2022 | 2,079 | 6,237 | 376.92 | 03/30/2029 | | | 03/30/2023 | — | 8,655 | 358.09 | 03/30/2030 | | André Maestrini | 01/12/2021 | 240 | 80 | 356.93 | 01/12/2028 | | | 03/31/2021 | 2,421 | 2,421 | 306.71 | 03/31/2028 | | | 03/30/2022 | 1,188 | 3,564 | 376.92 | 03/30/2029 | | | 03/30/2023 | — | 5,770 | 358.09 | 03/30/2030 |
Outstanding Equity Awards at 2023 Fiscal Year End
(1)The stock options vest in 25% installments on the four anniversary dates following the grant date, subject to continued employment.
Outstanding Equity Awards at 2023 Fiscal Year End
| | Outstanding Stock Awards | | | | | | | | Time-Based Vesting Awards | | Performance-Based Vesting Awards | | | Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Market Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(3) | | Calvin McDonald | 3/31/2021(4) | — | — | 13,042 | 6,234,467 | | | 3/30/2022(5) | — | — | 13,265 | 6,341,068 | | | 3/30/2023(5) | — | — | 13,963 | 6,674,733 | | Meghan Frank | 3/31/2021(4) | 222 | 106,123 | 1,630 | 779,189 | | | 3/30/2022(5) | 533 | 254,790 | 1,990 | 951,280 | | | 3/30/2023(5) | 1,117 | 533,960 | 2,793 | 1,335,138 | | Celeste Burgoyne | 3/31/2021(4) | 554 | 264,829 | 4,076 | 1,948,450 | | | 3/30/2022(5) | 1,244 | 594,669 | 4,643 | 2,219,493 | | | 3/30/2023(5) | 2,234 | 1,067,919 | 5,585 | 2,669,798 | | Michelle Choe | 3/31/2021(4) | 554 | 264,829 | 4,076 | 1,948,450 | | | 3/30/2022(5) | 1,244 | 594,669 | 4,643 | 2,219,493 | | | 3/30/2023(5) | 2,094 | 1,000,995 | 5,236 | 2,502,965 | | André Maestrini | 3/31/2021(4) | 333 | 159,184 | 2,445 | 1,168,783 | | | 3/30/2022(5) | 711 | 339,879 | 2,653 | 1,268,214 | | | 3/30/2023(5) | 1,396 | 667,330 | 3,491 | 1,668,803 |
Outstanding Equity Awards at 2023 Fiscal Year End
(1)The RSUs vest in installments of 33%, 33% and 34% on the three anniversary dates following the grant date, subject to continued employment. (2)The market value of the RSUs is based on $478.03 per share, the closing sale price on January 26, 2024, the last trading day of our 2023 fiscal year. (3)The aggregate dollar value of the PSUs is shown at target payout value based on $478.03 per share, the fair market value on January 26, 2024, the last trading day of our 2023 fiscal year. (4)The PSUs vest based on a four-year performance period. (5)The PSUs vest based on a three-year performance period.
2023 Option Exercises and Stock Vested
2023 Option Exercises and Stock Vested The following table provides information regarding stock options exercised by our named executive officers during fiscal 2023 and the PSUs and RSUs that vested and the value realized upon vesting by our named executive officers during fiscal 2023. Stock option award value realized is calculated by subtracting the aggregate exercise price of the options exercised from the aggregate market value of the shares of common stock acquired on the date of exercise. Stock award value realized is calculated by multiplying the number of shares shown in the table by the closing price of our stock on the date the stock awards vested.
2023 Option Exercises and Stock Vested
| | | Option Awards | | Stock Awards | | | Name | Grant Date | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($) | | Calvin McDonald | 08/20/2018 | 12,500 | 4,479,127 | — | — | | | 08/20/2018 | 12,500 | 4,541,661 | — | — | | | 03/28/2019 | — | — | 29,532 | 9,368,141 | | Meghan Frank | 02/16/2017 | 94 | 40,799 | — | — | | | 03/31/2017 | 1,459 | 653,822 | — | — | | | 02/13/2020 | — | — | 394 | 124,930 | | | 03/27/2020 | — | — | 117 | 37,115 | | | 03/27/2020 | — | — | 1,601 | 507,869 | | | 06/12/2020 | — | — | 201 | 74,004 | | | 12/11/2020 | — | — | 349 | 110,710 | | | 12/11/2020 | — | — | 25 | 12,569 | | | 03/31/2021 | — | — | 215 | 78,301 | | | 03/30/2022 | — | — | 263 | 94,178 | | Celeste Burgoyne | 03/28/2018 | 8,949 | 2,470,286 | — | — | | | 03/28/2019 | 8,394 | 1,632,297 | — | — | | | 03/28/2019 | 10,000 | 3,264,869 | — | — | | | 03/27/2020 | — | — | 540 | 171,299 | | | 03/27/2020 | — | — | 7,384 | 2,342,352 | | | 03/31/2021 | — | — | 538 | 195,934 | | | 03/30/2022 | — | — | 613 | 219,509 |
2023 Option Exercises and Stock Vested
| | | Option Awards | | Stock Awards | | | Name | Grant Date | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($) | | Michelle Choe | 12/09/2016 | 180 | 59,706 | — | — | | | 03/31/2017 | 1,459 | 509,381 | — | — | | | 03/28/2018 | 2,796 | 880,852 | — | — | | | 09/20/2018 | 925 | 226,653 | — | — | | | 03/28/2019 | 9,326 | 2,177,248 | — | — | | | 03/28/2019 | 4,197 | 979,832 | — | — | | | 03/27/2020 | — | — | 540 | 171,299 | | | 03/27/2020 | — | — | 7,384 | 2,342,352 | | | 03/31/2021 | — | — | 538 | 195,934 | | | 03/30/2022 | — | — | 613 | 219,509 | | André Maestrini | 01/12/2021 | — | — | 2,604 | 826,041 | | | 01/12/2021 | — | — | 301 | 95,483 | | | 01/12/2021 | — | — | 22 | 10,559 | | | 03/31/2021 | — | — | 322 | 117,269 | | | 03/30/2022 | — | — | 350 | 125,332 |
2023 Option Exercises and Stock Vested
(1)The shares shown in this column represent the total number of shares acquired on the vesting of the stock awards. However, we generally issue shares after deducting the number of shares of our common stock that would be needed to pay applicable taxes.
Potential Payments upon Termination of Employment and Change in Control
Potential Payments upon Termination of Employment and Change in Control We have an employment agreement with each of our named executive officers, which provides that the named executive officer's employment may be terminated by the executive or by us at any time, with or without cause. •If the executive voluntarily resigns or we terminate the executive's employment for cause, the executive will receive only accrued base salary then in effect and benefits earned and payable as of the date of termination. •If we terminate the executive's employment without cause, and subject to the executive's compliance with the surviving terms of the executive's employment agreement and the release of all employment-related claims, each named executive officer will be entitled to the amounts shown in the table below. •These employment agreements do not provide for any payments or tax gross-up payments triggered by a change in control. Under the terms of our current 2023 equity incentive plan, the board of directors may take a number of actions with respect to outstanding equity awards in connection with a change in control, including the acceleration of the unvested portion of equity awards or the cancellation of outstanding awards in exchange for substitute awards. The following table shows the payments and the intrinsic value of accelerated equity awards that would be due to each of our named executive officers upon the termination of employment for various reasons, including termination in connection with a change in control. The amounts provided in the table below assume that each termination was effective as of January 28, 2024 (the last day of our fiscal year) and are merely illustrative of hypothetical events, based on the terms of arrangements that are in effect. The amounts to be payable upon an actual termination of employment can only be determined at the time of such event, based on the facts and circumstances then prevailing.
Potential Payments upon Termination of Employment and Change in Control
| Name | Termination Scenario | Severance ($)(1) | Intrinsic Value of Accelerated Equity Awards ($)(2)(3) | Total ($) | | Calvin McDonald | Cause | — | — | — | | | Death | — | 34,344,205 | 34,344,205 | | | Disability | — | 25,484,735 | 25,484,735 | | | Change in Control(4) | 1,950,000(6) | 34,344,205 | 36,294,205 | | | Involuntary (without cause)(5) | 1,950,000(6) | 12,468,935 | 14,418,935 | | | Voluntary | — | — | — | | | Retirement | — | — | — |
Potential Payments upon Termination of Employment and Change in Control
| Name | Termination Scenario | Severance ($)(1) | Intrinsic Value of Accelerated Equity Awards ($)(2)(3) | Total ($) | | Meghan Frank | Cause | — | — | — | | | Death | — | 5,196,529 | 5,196,529 | | | Disability | — | 4,739,667 | 4,739,667 | | | Change in Control(4) | 906,250(7) | 5,196,529 | 6,102,779 | | | Involuntary (without cause)(5) | 906,250(7) | 1,558,378 | 2,464,628 | | | Voluntary | — | — | — | | | Retirement | — | — | — | | Celeste Burgoyne | Cause | — | — | — | | | Death | — | 11,762,891 | 11,762,891 | | | Disability | — | 10,713,608 | 10,713,608 | | | Change in Control(4) | 1,062,500(7) | 11,762,891 | 12,825,391 | | | Involuntary (without cause)(5) | 1,062,500(7) | 3,896,901 | 4,959,401 | | | Voluntary | — | — | — | | | Retirement | — | — | — | | Michelle Choe | Cause | — | — | — | | | Death | — | 11,459,929 | 11,459,929 | | | Disability | — | 10,479,852 | 10,479,852 | | | Change in Control(4) | 1,031,250(7) | 11,459,929 | 12,491,179 | | | Involuntary (without cause)(5) | 1,031,250(7) | 3,896,901 | 4,928,151 | | | Voluntary | — | — | — | | | Retirement | — | — | — | | André Maestrini | Cause | — | — | — | | | Death | — | 6,749,056 | 6,749,056 | | | Disability | — | 6,440,976 | 6,440,976 | | | Change in Control(4) | 762,763(8) | 6,749,056 | 7,511,819 | | | Involuntary (without cause)(5) | 762,763(8) | 2,337,567 | 3,100,330 | | | Voluntary | — | — | — | | | Retirement | — | — | — |
Potential Payments upon Termination of Employment and Change in Control
(1)The dollar amounts shown are in U.S. dollars. (2)Amounts related to the death, disability, involuntary termination in connection with a change in control, and involuntary termination without cause are based on the intrinsic value of unvested equity awards that would have become vested upon the triggering event on January 28, 2024 based on the fair market value of the stock on such date. (3)The share-based compensation expense recorded for accounting purposes may differ from the intrinsic value as disclosed in this column. (4)Amounts shown assume the involuntary termination of the executive officer's employment without cause in addition to the election of the board of directors to accelerate the unvested portion of the outstanding stock options and restricted shares, and 100% vesting of restricted stock units and the target number of PSUs in connection with a change in control. (5)Also includes termination of the executive officer's employment by the executive officer for "constructive dismissal," which is not specifically defined in the executive's employment agreement. (6)Amounts payable in equal installments on the company's normal paydays over a 18-month period and will be forfeited if the executive fails to comply with certain restrictive covenants, including non-competition, non-solicitation and non-disparagement agreements. (7)Amounts payable in equal installments on the company's normal paydays over a 15-month period and will be forfeited if the executive fails to comply with certain restrictive covenants, including non-competition, non-solicitation and non-disparagement agreements. (8)Amounts payable in equal installments on the company's normal paydays over a 12-month period and will be forfeited if the executive fails to comply with certain restrictive covenants, including non-competition, non-solicitation and non-disparagement agreements.
CEO Pay Ratio
CEO Pay Ratio In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule that requires companies to disclose the ratio of chief executive officer compensation to that of the median employee. This section discloses the ratio of the annual total compensation of our chief executive officer to that of our median employee and how that ratio was derived.
Our Median Employee
| Name and Principal Position | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($) | Total | | Calvin McDonald, Chief Executive Officer | 1,292,308 | — | 5,000,011 | 4,999,937 | 5,169,231 | 33,290 | $16,494,777 | | Educator, Median Employee | 16,068 | — | — | — | 3,449 | — | $19,518 | | Pay Ratio | | | | | | | 845 |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE
Pay Versus Performance Table
Pay Versus Performance Table The following table shows information detailing (1) the total compensation of our principal executive officer ("PEO") as reported in the summary compensation table ("SCT"), (2) the average total compensation for the remaining named executive officers ("NEOs") collectively (other than the PEO) as reported in the summary compensation table, (3) the executive compensation actually paid to the PEO and (4) the average executive compensation actually paid to the non-PEO NEOs collectively, in each case for the covered fiscal year. The table also shows for each covered fiscal year our cumulative total shareholder return ("TSR") and our peer group's cumulative total shareholder return, our net income, and our operating income. The amounts originally in Canadian dollars were converted to U.S. dollars for this table using the average of the average exchange rates for each fiscal month during the applicable fiscal year. Applying this formula to fiscal 2023, fiscal 2022, fiscal 2021, and fiscal 2020, CDN$1.00 was equal to USD$0.741, USD$0.765, USD$0.799, and USD$0.748, respectively. •The amounts originally in British pounds were converted to U.S. dollars for this table using the average of the average exchange rates for each fiscal month during the applicable fiscal year. Applying this formula to fiscal 2023, fiscal 2022, and fiscal 2021, GBP£1.00 was equal to USD$1.248, USD$1.226, and USD$1.375, respectively.
Pay Versus Performance Table
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | | Fiscal Year | SCT Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(1)(3) | Average SCT Total for non-PEO NEOs ($)(2) | Average Compensation Actually Paid to Non-PEO NEOs ($)(2)(3) | | TSR ($) | Peer Group TSR ($)(4) | Net Income ($) | Operating Income ($)(5)(6) | | 2023 | 16,494,777 | 46,826,492 | 5,403,574 | 12,603,182 | | 199.69 | 52.91 | 1,550,190,000 | 2,230,886,000 | | 2022 | 15,663,837 | 18,293,236 | 4,798,051 | 5,432,002 | | 129.85 | 65.40 | 854,800,000 | 1,789,069,000 | | 2021 | 13,265,455 | 18,826,215 | 3,801,514 | 4,642,721 | | 131.96 | 92.79 | 975,322,000 | 1,374,749,000 | | 2020 | 10,590,106 | 39,322,881 | 2,017,947 | 4,622,741 | | 137.30 | 95.81 | 588,913,000 | 819,986,000 |
Pay Versus Performance Table
(1) The following table reconciles the PEO Summary Compensation Table total to compensation actually paid:
Pay Versus Performance Table
| Fiscal Year(a) | SCT Total ($) | Deductions from SCT Total($)(b) | Addition of Fair Value of Equity Awards Granted in the Year ($) | Addition (Deduction) for Change in Value of Prior Year Awards Unvested at end of Fiscal Year ($) | Addition (Deduction) for Change in Value of Prior Year Awards That Vested during Fiscal Year ($) | Compensation Actually Paid ($) | | 2023 | 16,494,777 | (9,999,948) | 21,668,543 | 17,428,693 | 1,234,427 | 46,826,492 |
Pay Versus Performance Table
(a) The PEO for 2023 was Calvin McDonald. (b) The deductions are the grant date fair value of equity-based awards (stock and option awards) granted each year. (2) The following table reconciles the Non-PEO NEOs Average Summary Compensation Table total to average compensation actually paid:
Pay Versus Performance Table
| Fiscal Year(a) | SCT Total ($) | Deductions from SCT Total ($)(b) | Addition of Fair Value of Equity Awards Granted in the Year ($) | Addition (Deduction) for Change in Value of Prior Year Awards Unvested at end of Fiscal Year ($) | Addition (Deduction) for Change in Value of Prior Year Awards That Vested during Fiscal Year ($) | Compensation Actually Paid ($) | | 2023 | 5,403,574 | (3,062,484) | 6,434,599 | 3,579,425 | 248,069 | 12,603,182 |
Pay Versus Performance Table
(a) The Non-PEO NEOs for 2023 included Meghan Frank, Celeste Burgoyne, Michelle Choe and André Maestrini. (b) The deductions are the grant date fair value of equity-based awards (stock and option awards) granted each year. (3) The fair values of the equity awards were calculated using valuation assumptions that materially differ from those disclosed at the time of grant, including: (1) the fair value of RSU awards was calculated using the closing price of our common stock as of the last day of the applicable year or on the date of vesting, as applicable; (2) the fair value of PSU awards was estimated using the closing stock price of our common stock as of the last day of the applicable year and adjusted for management’s estimate of performance; and (3) the fair value of options was estimated using the Black-Scholes option-pricing model (which reflects for each particular award and valuation date: adjustments for expected volatility, risk-free interest rate, dividend yield, expected term - calculated using the simplified method, and stock price). (4) Our peer group TSR is the S&P 500 Apparel, Accessories & Luxury Goods Index. (5) For purposes of evaluating the achievement of the performance measure in our incentive programs, operating income generally means earnings before other income and taxes as reported in our financial statements or, if reported, adjusted operating income as reported in our earnings release or other EDGAR filings as applicable. (6) Refer to the non-GAAP reconciliation table in Appendix A of this proxy statement for reconciliations between the above adjusted non-GAAP financial measures and the most directly comparable measures calculated in accordance with GAAP.
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table The graphs opposite show the relationship of compensation actually paid to our chief executive officer and other named executive officers in the fiscal years of 2020 - 2023 to the following: (1) total shareholder return of both our company and peer group, (2) net income, and (3) operating income. The graph for the "Compensation Actually Paid vs. lululemon and Peer Group TSR" assumes the investment of $100 on February 2, 2020 at the closing sale price of our common stock and the S&P 500 Apparel, Accessories & Luxury Goods Index. (1) For purposes of evaluating the achievement of the performance measure in our incentive programs, operating income means earnings before other income and taxes as reported in our financial statements or, if reported, adjusted operating income as reported in our earnings release or other EDGAR filings as applicable. (2) Refer to the non-GAAP reconciliation table in Appendix A of this proxy statement for reconciliations between the above adjusted non-GAAP financial measures and the most directly comparable measures calculated in accordance with GAAP.