DEF 14A of Citi Trends Inc
Filed May 8, 2024 · FY20230001558370-24-007183
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our board of directors currently consists of nine directors: Brian P. Carney, Jonathan Duskin, Christina Francis, Laurens M. Goff, Margaret L. Jenkins, David N. Makuen, Cara Robinson Sabin, Peter R. Sachse and Kenneth D. Seipel. In accordance with the Company’s bylaws and certificate of incorporation, our board determines the number of directors on our board, but such number cannot be less than five or more than nine. Our board of directors has nominated nine persons for election as directors to serve a one-year term expiring at the annual meeting of stockholders held in 2025 or until an earlier resignation or retirement or until their successors are elected and qualified to serve. Brian P. Carney, Laurens M. Goff and Christina Francis are retiring as directors on June 20, 2024, and are not nominated for election. It is intended that the persons named as proxies on the proxy card will vote to elect the nominees listed below unless otherwise directed or unless authority to vote is withheld. The following nominees have consented to be named in this proxy statement, stand for election and serve as directors if elected: Jonathan Duskin, Margaret L. Jenkins, David N. Makuen, Cara Robinson Sabin, Peter R. Sachse, Kenneth D. Seipel, David A. Heath, Chaoyang (Charles) Liu and Michael S. Kvitko. Messrs. Heath, Liu and Kvitko have been nominated by the board of directors pursuant to the terms of a Cooperation Agreement between the Company and Fund 1 Investments, LLC (the “Cooperation Agreement”). If any nominee named herein is unable to serve or for good cause will not serve as a director at the annual meeting, it is intended that shares represented by the proxy card will be voted for the election of the other nominees named below and may be voted for any substitute nominee designated by our board of directors consistent with the Cooperation Agreement or, in lieu thereof, our board of directors may reduce the number of directors in accordance with the Company’s Third Amended and Restated Bylaws.
Nominees for Election as Directors
Nominees for Election as Directors Jonathan Duskin. Mr. Duskin, age 56, has served as a director since 2017 and is Chairperson of the Finance Committee and a member of the Audit Committee, the Compensation Committee and the Corporate Social Responsibility Committee. Since March 2020, Mr. Duskin has served as the lead independent director of our board of directors. Since July 2009, Mr. Duskin has served as the Chief Executive Officer of Macellum Capital Management, LLC, which operates a New York-based pooled investment fund. From 2005 to 2008, Mr. Duskin served as a Managing Director and Partner at Prentice Capital Management, LP, an investment management firm, and from 2002 to 2005, Mr. Duskin served as a Managing Director at S.A.C. Capital Associates LLC, a New York-based hedge fund. From 1998 to 2002, Mr. Duskin served as a Managing Director at Lehman Brothers Inc., an investment bank, and served as Head of Product Management and Chairman of the Investment Policy Committee within the Research Department. Mr. Duskin previously served on the boards of directors of Christopher & Banks Corporation, The Wet Seal, Inc., Whitehall Jewelers, Inc. and Furniture.com Inc. Mr. Duskin’s considerable business, financial services and retail investment expertise, provision of financial services to a variety of public and private companies, prior service on the boards and committees of public companies and familiarity with the retail industry qualify Mr. Duskin to serve on our board of directors. Margaret L. Jenkins. Ms. Jenkins, age 72, has served as a director since 2017 and is Chairperson of the Corporate Social Responsibility Committee and a member of the Nominating and Corporate Governance Committee. Ms. Jenkins is a retired executive with extensive background in advertising and marketing, having served as the Chief Marketing Officer of Denny’s restaurants, and was the Chief Marketing Officer of El Pollo Loco restaurants. Ms. Jenkins also held several management positions with Taco Bell Corp. and PepsiCo International Foodservice. Her career in advertising included account management work on brands such as McDonald’s, Sunny Delight Beverages and the Atlantic Richfield Company. Ms. Jenkins was an independent director of PVH Corp., an international apparel manufacturer and retailer, from June 2006 through May 2014. She joined the board of directors of Kohl’s Corp., an omnichannel retailer, in May 2021 and is a member of its audit committee. Ms. Jenkins is the chair of the board of directors of Prisma Health-Upstate, one of the largest health care providers in the Southeast. Ms. Jenkins’ extensive marketing, advertising and management experience described above, as well as her performance as a director on boards of both public and not-for-profit companies, qualifies her to serve on our board of directors. David N. Makuen. Mr. Makuen, age 56, has served as a director since 2020. Since March 2020, Mr. Makuen has served as the Chief Executive Officer of the Company. Previously, Mr. Makuen spent over eight years in various positions at Five Below, Inc., a publicly-traded specialty value retailer (“Five Below”), including as Executive Vice President, Marketing and E-commerce since September 2019, as Executive Vice President, Marketing and Strategy from November 2017 to August 2019, and as Senior Vice President, Marketing from 2011 to 2017. Prior to his work with Five Below, Mr. Makuen was the owner and President of Fresh Life Foods, LLC, a food service business, from 2009 to 2011. Previously, Mr. Makuen served as Vice President, Marketing for Eddie Bauer, LLC, a clothing retailer, from 2005 to 2009. Mr. Makuen’s years of experience in the retail industry and his role as the Chief Executive Officer of the Company make him well qualified to serve on our board of directors. Cara Robinson Sabin. Ms. Robinson Sabin, age 54, has served as a director since 2021 and is a member of the Audit Committee and the Nominating and Corporate Governance Committee. Ms. Robinson Sabin has more than 20 years of general management, business strategy, marketing, digital and innovation experience. She’s the former CEO of Beauty and Wellbeing for Unilever, North America. She also served as the CEO of Sundial Brands makers of SheaMoisture. Prior to Unilever, she held various marketing management positions at L’Oreal, Estee Lauder, Johnson & Johnson, and Capital One Financial. Ms. Robinson Sabin serves on the Board of Visitors for Duke University’s Fuqua School of Business; Board of Trustees for the Alvin Ailey Dance Theater; and the Executive Committee and Board of the Ad Council. She is also a member of Delta Sigma Theta Sorority, Inc. Ms. Robinson Sabin’s substantial general management, business strategy, marketing, digital and innovation experience make her well qualified to serve on our board of directors. Peter R. Sachse. Mr. Sachse, age 66, has served as a director since 2019. Since March 2020, he has served as the Executive Chairman of our board of directors. He has served as Director at the Sachse Family Fund, an early-stage investor in digital startups since March 2017. Previously, Mr. Sachse spent 34 years in various positions at Macy’s, Inc., including as the Chief Growth Officer from February 2016 until January 2017, Chief of Innovation and Business Development from February 2015 to February 2016, Chief Stores Officer from February 2012 to February 2015 and Chief Marketing Officer from February 2009 to February 2012 (a title which he also held from June 2003 to May 2007). Mr. Sachse was also Chairman and Chief Executive Officer of the macys.com division of Macy’s, Inc. from April 2006 to February 2012. Since February 2024, Mr. Sachse has been the Chief Executive Officer of Tailored Brands Inc., an omnichannel specialty retailer of menswear, and previously served as the Co-Chief Executive Officer from March 2022 to January 2024, after previously serving as the Interim Co-Chief Executive Officer from March 2021 to February 2022, and as a director since February 2021. Mr. Sachse has served as a director of Mattress Firm since February 2019, and previously served as a director of XO Group Inc., a media and technology company that provides content, tools, products and services for couples who are planning weddings, creating a home, and starting a family, from February 2010 until December 2018 and from October 2006 through April 2007, and as an observer to the board from April 2007 to February 2010. Mr. Sachse also previously served as a director of Charitybuzz Inc., a for-profit internet company that raises funds for nonprofit organizations through online charity auctions with celebrities and brands, from 2012 until 2015. Prior to serving in these roles, Mr. Sachse was President and Chief Operating Officer of The Bon Marché, a department store chain launched in Seattle. Mr. Sachse’s substantial experience as an executive of companies with significant operations in the online industry, his financial expertise and his extensive experience in the retail industry make him well-qualified to serve on our board of directors.
Nominees for Election as Directors
Kenneth D. Seipel. Mr. Seipel, age 63, has served as a director since 2019 and is Chairperson of the Nominating and Corporate Governance Committee and a member of the Audit Committee and the Finance Committee. He has served as the lead independent director of West Marine Inc., the world’s largest retailer of boating supplies, since August 2021, after previously serving as the Chief Executive Officer from 2019 to 2021. From April 2017 until December 2018, Mr. Seipel served as a Principal of Retail Business Optimization LLC, a consulting firm helping retailers optimize their retail execution. From March 2013 to March 2017, Mr. Seipel served as Chief Executive Officer of Gabriel Brothers Inc., an off-priced retailer selling designer brands and fashions for up to 70% off department and specialty store prices. From March 2011 until February 2013, Mr. Seipel served as President and Chief Operating Officer of Wet Seal Inc. Prior to that, Mr. Seipel served as the President and Chief Merchandise/Marketing Officer of Pamida Discount Stores LLC, a regional discount chain of department stores with more than 175 locations in the United States, from 2009 until 2011. Mr. Seipel also served as Executive Vice President of Stores, Operations and Store Design for the Old Navy division of Gap, Inc., an American clothing brand and chain of more than 1,000 stores in the United States and Canada, from 2003 through 2008. Mr. Seipel also held various merchandising and operations management roles earlier in his career with Target Corporation, a public retailing company and the second largest discount retailer in the United States, Shopko Stores, Inc., a privately-held chain of retail stores, and J. C. Penney Company, Inc., a public corporation which operates a chain of mid-range department stores and catalog sales merchant offices throughout the United States. Mr. Seipel’s extensive knowledge and senior executive level experience in the retail industry, including the discount apparel market, make him well qualified to serve on our board of directors. David A. Heath. Mr. Heath, age 70, has served as Principal of Heath & Associates LLC, a consulting company for wholesale and retail companies primarily in Sports and Fitness apparel, footwear and accessories, since May 2009. Prior to that, he served as SVP of Sales for Under Armour, an American sportswear company that manufactures footwear and apparel, from 2015 to 2017. From 1990 to 2009, Mr. Heath held several executive roles at Nike, Inc., including Global Vice President of Sales and Customer Development. Prior to joining, Nike, he worked for Adidas USA. Mr. Heath was also involved in the start-up company, Apex One Inc., until its acquisition by Converse Inc. Mr. Heath has experience serving on boards of directors, including currently serving on the board of directors of Woodbolt Holdings LLC, a provider of health supplements and a subsidiary Nutrabolt LLC. Previously, he served on the boards of directors of Hillerich & Bradsby, owner of the Louisville Slugger Museum & Factory, Barrels & Billets, Bionic Gloves, and Timber Mills, and Broder Bros., Co., a retail apparel and fashion company. Mr. Heath has more than 40 years of experience in the Sports and Fitness Industry related to apparel, footwear, accessories and equipment, including roles in Sales, Marketing and General management, including P&L responsibility. Mr. Heath’s extensive wholesale and retail background together with his experience as a consultant, gives him keen insight into retailers’ needs from both supplier and operator viewpoints making him well qualified to serve on our board of directors. Chaoyang (Charles) Liu. Mr. Liu, age 49, brings more than 20 years of experience in end-to-end supply chain management and corporate operations across the retail and consumer products industry. Since October 2021, Mr. Liu has served as the Chief Operating Officer of Away where he is responsible for the end-to-end operation and supply chain functions, including global sourcing, manufacturing, product development, quality control, logistics, transportation, inventory management, allocation, customer service, along with digital, information technology and company ERP implementation. Prior to joining Away, Mr. Liu served as the Chief Operating Officer for Casper from Feb 2021 to Sep 2021 and from April 2018 to Feb 2021, he served as the Vice President of Supply Chain for Walmart eCommerce to deliver relationships and negotiations, inventory, logistics, and customer promise. Before Walmart, he had leadership positions with Shopko, Walgreens, and Ahold Delhaize. Charles received his Bachelor of Science Degree in Computer Science from Wuhan University in China, an MBA and Master of Science in Computer Science from the University of Tennessee. Mr. Liu’s substantial experience in supply chain management and corporate operations makes him well qualified to serve on our board of directors. Michael S. Kvitko. Mr. Kvitko, age 63, is an experienced retail leader with broad multi-channel expertise in off-price stores, dollar stores, big box discount stores, and department stores. He most recently spent 6 years as the CEO of Forman Mills, where he and his team modernized the operations of the company and totally transformed the customer shopping experience. Before joining Forman, he was President of Dollar Express, the 330 store carve-out of Family Dollar stores, created by an FTC order, when Dollar Tree acquired Family Dollar. He served previously as EVP and Chief Merchandising & Marketing Officer for both 99¢ Only Stores and Variety Wholesalers, and SVP of Merchandising at Family Dollar, Mervyn’s (a division of Target Corporation) and May Department Stores. He has experience with public, private and private equity-sponsored companies. Mike is well versed in brand management, including both private brand development and direct to-retail licensing, and has extensive global sourcing knowledge in both Softlines and Hardlines. Mr. Kvitko’s substantial experience as a leader of retail organizations makes him well qualified to serve on our board of directors. Our board of directors unanimously recommends that stockholders vote “FOR” each of the nominees listed above.
Nomination and Selection of Directors
Nomination and Selection of Directors The Nominating and Corporate Governance Committee identifies and evaluates potential director candidates in a variety of ways. Recommendations may come from current members of our board of directors, professional search firms, members of management, stockholders or other persons. In assessing the qualifications of potential nominees, the Nominating and Corporate Governance Committee may rely on personal interviews or discussions with the candidate and others familiar with the candidate’s professional background, on third-party background and reference checks and on such other due diligence information as reasonably available. The Nominating and Corporate Governance Committee must be satisfied that the candidate possesses the highest professional and personal ethics and values and has broad experience with business-policy-making before it would recommend a candidate as a nominee to our board of directors, and the nominee must meet the following minimum qualifications:
Nomination and Selection of Directors
| ● | demonstrates personal integrity and moral character; |
Nomination and Selection of Directors
| ● | shows a willingness to apply sound and independent business judgment for the long-term interests of stockholders of the Company; |
Nomination and Selection of Directors
| ● | possesses relevant business or professional experience, technical expertise or specialized skills; |
Nomination and Selection of Directors
| ● | exhibits personality traits and background that appear to fit with those of the other directors to produce a collegial and cooperative board responsive to the Company’s needs; and |
Nomination and Selection of Directors
| ● | maintains the ability to commit sufficient time to effectively carry out the substantial duties of a director. |
Nomination and Selection of Directors
Neither the board nor the Nominating and Corporate Governance Committee has a formal diversity policy regarding the consideration of diversity in identifying director candidates; however, the charter for the Nominating and Corporate Governance Committee provides that the committee will review candidates’ experience, integrity, competence, skills, diversity of experience, gender identity, race, ethnicity, sexual orientation and ages, and dedication in the context of the needs of the board. Accordingly, in connection with its evaluation of each candidate, the committee takes into account how all such factors pertaining to a candidate may complement or supplement those skills of other board members. As a result of this process, our board, represents a wide range of business-related experiences, including executive, financial, merchandising, retail operations, distribution, marketing and advertising. The Nominating and Corporate Governance Committee evaluates nominees submitted by stockholders in the same manner as nominees from other sources. Stockholders may recommend nominees for consideration at the annual meeting by submitting the names and supporting information to the Secretary of the Company at the following address: Stockholder Nominations, Citi Trends, Inc., 104 Coleman Boulevard, Savannah, Georgia 31408. Such submissions must be delivered or mailed to the Secretary and received not less than 90 calendar days and not more than 120 calendar days prior to the first anniversary of the previous year’s annual meeting. The submission should include a current resume and curriculum vitae of the candidate, a statement describing the candidate’s qualifications and contact information for personal and professional references. The submission must also include certain information about the stockholder who is submitting the nominee and must comply with all of the requirements set forth in the Company’s bylaws.
Objective of Our Compensation Program
| ● | Enable the Company to attract, retain and motivate a team of high-quality executives who will create long-term stockholder value; |
Compensation Consultant
Compensation Consultant The Compensation Committee has the authority to directly engage outside compensation consultants and other experts to assist in fulfilling its duties. As discussed in further detail in the following section, the Compensation Committee engaged Korn Ferry in 2021 to provide an analysis of the Company’s compensation practices and to provide the Compensation Committee with survey data and an update on current compensation trends. The Compensation Committee assessed the independence of the Compensation Consultant against specific criteria under applicable SEC and NASDAQ rules and concluded that no conflict of interest exists that would prevent Korn Ferry from independently advising the Compensation Committee. The Compensation Consultant does not have any relationship or arrangement with the Company other than their engagement as a consultant to the Compensation Committee.
Market Data
Market Data Periodically, the Compensation Committee reviews the compensation practices of a group of public companies selected from an industry peer group comprised primarily of specialty retailers that are similar in size to the Company. In 2023, the peer group used by the Compensation Committee consisted of the apparel retailers indicated below. The Compensation Committee believes that the companies comprising this peer group represented appropriate comparisons due to the similarity in business and financial characteristics. They were all either direct or tangential business competitors or geographically situated and similarly sized such that we considered them to be competitors for recruitment and retention purposes.
Market Data
| Boot Barn Holdings, Inc. | Hibbett, Inc. | | The Buckle Inc. | Shoe Carnival, Inc. | | The Cato Corporation | Tilly’s, Inc. | | Destination XL Group, Inc. | Zumiez, Inc. | | Five Below, Inc. | |
Market Data
The peer group referenced above was primarily used for purposes of reviewing and analyzing the competitiveness of the compensation paid to our CEO and CFO. In addition, as part of its analysis for setting 2023 compensation levels for other executive officers, the Compensation Committee reviewed compensation information provided by the Compensation Consultant from its proprietary 2021 survey of more than 140 retail companies, focusing on pay data from similarly-sized companies. The Compensation Consultant’s analysis focused on the following areas of compensation:
Market Data
| ● | base salary; |
Market Data
| ● | annual cash incentives; |
Market Data
| ● | total cash compensation (the sum of base salary and annual cash incentives); |
Market Data
| ● | long-term equity incentives (a variable incentive vesting over a multi-year period); and |
Market Data
| ● | total direct compensation (the sum of total cash compensation and long-term equity incentives). |
Market Data
We do not strive to set our executive officers’ targeted total direct compensation at a specific level relative to the median reflected in the Compensation Consultant’s peer group study or retail company survey. Instead, the data is used as a guide and is combined with the experience and judgment of the Compensation Committee’s members to determine the reasonableness of total direct compensation appropriate for each individual within the context of the Company’s performance. The 2023 analysis by the Compensation Consultant indicated that base salaries for our executive officers were generally near the median in relation to the peer group or retail survey, as applicable, whereas total cash compensation, long-term equity incentives and total direct compensation at target levels for the majority of our executive officers were generally above median (between the 50th and 75th percentiles) in relation to the peer group or retail survey, as applicable. We believe this reflects an appropriate balance between short-term cash incentives that are earned based on annual performance and long-term equity incentives that are intended to align the interests of our executives with those of our shareholders. The allocation of our executive officers’ total direct compensation among base salary, annual cash incentives and long-term equity incentives is based on the Compensation Committee’s judgment, taking into consideration market practices reflected in previous and current peer group and retail surveys, together with a goal of providing a fair balance of risk and reward through an allocation that includes a reasonable mix of both fixed and variable components.
Annual Cash Incentives
Annual Cash Incentives We measure our overall financial performance based on a number of financial metrics, of which the most important are (1) Sales and (2) earnings before interest, taxes, depreciation, and amortization excluding incentive compensation (“EBITDA”). We believe the Company’s performance under these metrics provides an effective way to evaluate the Company’s success and operational performance in any given year, directly impacting our compensation decisions with respect to our executive officers. We believe that linking our annual cash incentives to these financial metrics, while providing long-term equity incentives earned based on stock price appreciation and other financial metrics (as described below), provides an effective and balanced approach to executive compensation aligned with the interests of our stockholders. Our annual cash incentive program offers our executive officers the opportunity to earn cash awards based on the level of achievement of our budgeted goals for Sales and for EBITDA. Due to the importance of these financial metrics to the annual and long-term success of the Company, we strive to make the achievement of this goal each year a meaningful challenge to our executive officers. The budgeted Sales and EBITDA that represent our target goal for our annual cash incentive program take into account many key operating and financial factors, including:
Annual Cash Incentives
| ● | Store selling square footage; |
Annual Cash Incentives
| ● | Comparable store sales; |
Annual Cash Incentives
| ● | Average sales per store; |
Annual Cash Incentives
| ● | Gross margin; |
Annual Cash Incentives
| ● | Store and distribution operating expenses as a percentage of sales; and |
Annual Cash Incentives
| ● | Corporate expenses. |
Annual Cash Incentives
Our CEO recommends a target award (as a percentage of base salary) for each executive officer (other than himself) based on the executive’s position within the Company and consideration of data provided by the Compensation Consultant, and the Compensation Committee determines the appropriate target award for each executive. For fiscal 2023, each executive officer’s target award (as a percentage of base salary) was as follows:
Annual Cash Incentives
| Name | Target Award | | David N. Makuen | 100% | | Heather Plutino | 65% | | Lisa A. Powell | 65% | | Ivy D. Council (1) | 65% | | Vivek Bhargava(2) | 50% |
Annual Cash Incentives
| (1) Ms. Council retired from the Company effective September 29, 2023. |
Annual Cash Incentives
| (2) Mr. Bhargava joined the Company effective February 13, 2023. |
Annual Cash Incentives
The annual cash incentive program is directly linked to achievement of our budgeted Sales and EBITDA goals. Unusual and non-recurring items such as gains from sale-leasebacks, costs related to litigation, claim judgments or settlements and proxy contest expenses are excluded from both the budgeted and actual amounts used in the calculation of EBITDA. Since the calculation of cash incentives is based on performance versus budget, the exclusion of such items ensures that the inability to accurately budget such items does not positively or negatively influence cash incentives. Named executive officers can earn between 0% to 200% of their target annual cash incentive based on the actual achievement of Sales and EBITDA as a percentage of Target Sales and Target EBITDA. For fiscal 2023, 25% of the annual cash incentive is based on Sales. If actual Sales were equal to 98% of target (threshold performance), then 25% of the target award would be earned, if actual Sales were equal to 100% of target, then 100% of the target award would be earned, and if actual Sales were equal to or greater than 102% of target (maximum performance), then 200% of the target award would be earned. The remaining 75% of annual cash incentive is based on EBITDA. If 2023 EBITDA were equal to 80% of target (threshold performance), then 50% of the target award would be earned, if actual EBITDA were equal to 100% of target, then 100% of the target award would be earned, and if actual EBITDA were equal to or greater than 155% of target (maximum performance), then 200% of the target award would be earned. The graph below reflects the various potential payout levels at different levels of performance: The Compensation Committee believes it is imperative to structure our compensation program to provide a direct pay-for-performance linkage, such that our executives are rewarded (or held accountable, as the case may be) for annual performance relative to the Company’s goals, and not paying any cash bonuses in years when the Company does not meet certain minimum thresholds is consistent with this philosophy. Accordingly, if the Company performs well and meets or exceeds its goals for the year, the executives are rewarded, but if the Company does not meet its threshold performance target, then the executives do not earn annual incentives. For fiscal 2023, the annual bonus plan included a sales component and an EBITDA component, adjusted for unusual items as described above. The sales component of the annual bonus plan was weighted 25% while the adjusted EBITDA component of the annual bonus plan was weighted 75%. The sales Target was $817.0 million and the adjusted EBITDA Target was $42.6 million. For fiscal 2023, actual sales were $747.9 million and adjusted EBITDA was $5.5 million, both of which were below the bonus payout threshold. As a result, the named executive officers did not earn any annual cash incentives. Actual awards earned in each of the past three years by our named executive officers are shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table later in this proxy statement.
Long-Term Equity Incentives
Long-Term Equity Incentives Long-term equity incentive compensation awards are designed to encourage the creation of long-term value for our stockholders by increasing the retention of qualified key employees and aligning the interests of executive officers with our stockholders through the officers’ ownership of equity in the Company. The dollar value of equity awards granted to our executive officers is within the discretion of the Compensation Committee and is based on recommendations made by our CEO (with respect to executives other than himself), which take into account the executive’s past performance, the executive’s position within the Company and an evaluation of other elements of compensation provided to the executive officer. The Compensation Committee also considers studies performed by the Compensation Consultant to determine the appropriate size of the equity-based awards. We believe that grants of restricted stock and restricted stock units provide strong incentives for the creation of long-term stockholder value and provide significant retention value for the executives. In fiscal 2023, Mses. Plutino, Council and Powell and Messrs. Makuen, and Bhargava received long-term equity incentives with grant date values determined as a percentage of base pay, equal to 140% for Mr. Makuen, 65% for Mses. Plutino, Council and Powell, and 50% for Mr. Bhargava. The awards consisted of (1) time-based restricted shares that vest over three years based on continued future employment with the Company, and (2) performance-based restricted stock units that vest 100% if the Company’s Adjusted EBITDA excluding bonus and equity expense (Adjusted EBITDA ex. B&E) equals or exceeds $45.0 million in fiscal 2025. Recipients may receive up to 200% of the target units if Adjusted EBITDA ex. B&E equals or exceeds $54.0 million. The percent of target units to be awarded is based on a matrix, which provides for a maximum payout of 200% of target units. Target units of less than 100% may be awarded based on the matrix for Adjusted EBITDA ex. B&E values below $36.0 million but no target units will vest if Adjusted EBITDA ex. B&E is below $36.0 million. As previously discussed, the grant levels were determined as one of several components designed to achieve the desired total direct compensation; however, they were not set to be at any specific level within our peer group. The vesting periods were determined based on consideration of peer group practices and discussions with the Compensation Consultant. For more information regarding these long-term incentives granted to our named executive officers in fiscal 2022, please see “Grants of Plan-Based Awards in Fiscal 2023” and “Outstanding Equity Awards at 2023 Fiscal Year-End” and the related footnotes elsewhere in this proxy statement.
Other Benefits
Other Benefits Retirement. We maintain the Citi Trends, Inc. 401(k) Profit Sharing Plan, a tax-qualified, defined contribution employee benefit plan in which a substantial majority of our employees, including the named executive officers, are eligible to participate. We match 50% of employee contributions to the plan, up to a maximum of 4% of an employee’s total calendar year compensation (subject to IRS limits). Perquisites. During fiscal 2023, each executive officer received life/long-term disability insurance coverage. We did not provide any other special benefits or perquisites to our executive officers. We believe these perquisites are reasonable in light of peer group practices. We provide health and welfare benefits to our executive officers on the same basis as we provide to all of our salaried employees. Employment Agreements and Severance Agreements. We have entered into severance agreements with all of our named executive officers, which provide severance benefits in the event their employment is terminated by the Company without Cause (as defined in the severance agreement) or in connection with a Change in Control (as defined in the severance agreement) of the Company. Each severance agreement provides that if the Company terminates an executive’s employment without Cause or if the executive terminates his or her employment within twelve months of a Change in Control, provided that within such period the executive’s job duties have been materially diminished or compensation has been materially decreased, the Company will provide the executive with separation payments of twelve months’ base salary. The Company provides these involuntary termination severance benefits to protect individuals from events outside their control and to offer compensation packages similar to those commonly found in our market for competing executive talent. Furthermore, the Company provides these benefits to protect the Company against disruption in the event of a Change in Control. We believe that these severance agreements serve as an important retention element of the compensation package provided to these officers and acts to mitigate self-serving behavior during a potential Change in Control by providing a safety net to our executives in the event the employment relationship is severed. The potential severance benefits payable to our named executive officers are described in “Potential Payments upon Termination or Change in Control” elsewhere in this proxy statement.
Equity Grant Practices
Equity Grant Practices The Company has a practice of generally making equity awards on pre-established dates. Annual equity awards are presented to the Compensation Committee for approval at a regularly scheduled Compensation Committee meeting, usually held in March of each year. Equity awards are also given to employees throughout the year as they are hired or promoted into positions eligible for those awards. We make decisions on equity grants based solely on our compensation and retention objectives and our established measurements of the value of these awards.
Summary Compensation Table
Summary Compensation Table The following table sets forth the cash and other compensation that we paid to our named executive officers, or that was otherwise earned by our named executive officers, for their services in all capacities during fiscal years 2023, 2022 and 2021. Fiscal 2023 was comprised of 53 weeks, while 2022 and 2021 were each comprised of 52 weeks.
Summary Compensation Table
| | | | | | Non-Equity | | | | | | | | Stock | Incentive Plan | All Other | | | | | Salary | Bonus | Awards | Compensation | Compensation | Total | | Name and Principal Position | Year | ($) | ($) | ($) (1) | ($) (2) | ($) (3) | ($) | | David N. Makuen | 2023 | 725,000 | — | 1,015,008 | — | 11,571 | 1,751,579 | | Chief Executive Officer | 2022 | 712,692 | — | 1,015,002 | — | 2,322 | 1,730,016 | | | 2021 | 683,462 | — | 924,752 | 1,370,000 | 1,367 | 2,979,581 | | Heather Plutino | 2023 | 475,000 | — | 308,762 | — | 9,203 | 792,965 | | Executive Vice President and Chief Financial Officer | 2022 | 228,366 | 75,000 | 308,772 | — | 382 | 612,520 | | Lisa A. Powell | 2023 | 478,000 | — | 327,101 | — | 12,391 | 817,492 | | Executive Vice President and Chief | 2022 | 471,846 | — | 310,703 | — | 8,153 | 790,702 | | Merchandising Officer | 2021 | 456,769 | — | 297,722 | 595,400 | 7,231 | 1,357,122 | | Vivek Bhargava (4) | 2023 | 300,385 | 45,000 | 205,053 | — | 4,770 | 555,208 | | Senior Vice President of Supply Chain | | | | | | | | | Ivy D. Council (5) | 2023 | 289,569 | 50,000 | 220,950 | — | 11,274 | 571,793 | | Executive Vice President of Human | 2022 | 336,854 | — | 220,945 | — | 12,774 | 570,573 | | Resources and Chief Compliance Officer | 2021 | 329,231 | — | 214,528 | 429,000 | 10,517 | 983,276 | | Charles J. Hynes (6) | 2023 | 19,303 | — | — | — | 320,321(7) | 339,624 | | Former Senior Vice President of Supply Chain | 2022 | 294,523 | — | 148,170 | — | 7,755 | 450,448 |
Summary Compensation Table
| (1) Reflects the grant date fair value of stock awards granted to the named executive officers, computed in accordance with FASB ASC Topic 718. In fiscal 2023, each of the named executive officers received grants of time-based restricted stock and performance-based restricted stock units (RSUs) tied to achievement of Adjusted EBITDA ex. B&E goals. The grant date fair values of the time-based restricted stock awards and performance-based RSUs are based on the closing price of the Company's common stock on the date of grant (and the probable outcome of performance conditions, in the case of performance-based RSUs). The aggregate grant date fair value of the performance based RSUs granted to Messrs. Makuen and Bhargava and Mses. Plutino, Powell and Council in 2023 would be higher by $812,008, $88,762, $154,384, $155,349 and $110,470 respectively, assuming achievement of the performance conditions at the highest level (rather than the target level). |
Summary Compensation Table
| (2) Reflects amounts earned under our annual cash incentive program. |
Summary Compensation Table
| (3) All Other Compensation in 2023 includes amounts for each officer related to life and long-term disability insurance coverage, vehicle allowances and the Company’s 401(k) matching contributions, to the extent the officers participate in such programs. |
Summary Compensation Table
| (4) Mr. Bhargava joined the Company effective February 13, 2023. |
Summary Compensation Table
| (5) Ms. Council retired from the Company effective September 29, 2023. |
Summary Compensation Table
| (6) Mr. Hynes left the Company effective February 10, 2023. |
Summary Compensation Table
| (7) Amount includes severance payments in the amount of $319,000, representing 12 months of base salary and the full cost to maintain the same level of group health insurance maintained by Mr. Hynes as of his separation for 12 months. |
CEO Pay Ratio
CEO Pay Ratio As required by Item 402(u) of Regulation S-K under the Exchange Act, we are providing the following information regarding the ratio of the annual total compensation of our median employee to the annual total compensation of David N. Makuen, our Chief Executive Officer. The pay ratio figures below are considered to be a reasonable estimate, calculated in a manner that is consistent with the requirements of Item 402(u) of Regulation S-K. For the fiscal year ended February 3, 2024, annual total compensation of the employee who represents our median compensated employee (other than our CEO) was $24,960, and annual total compensation of our CEO was $1,751,579. Accordingly, for fiscal 2023, the ratio of CEO pay to median employee pay (other than the CEO) was 70:1.
Grants of Plan-Based Awards in Fiscal 2023
Grants of Plan-Based Awards in Fiscal 2023 The following table sets forth the individual grants of awards to each of our named executive officers during fiscal 2023:
Grants of Plan-Based Awards in Fiscal 2023
| | | | | | | | | | All Other | | | | | | | | | | | | Stock Awards: | Grant Date | | | | | Estimated Future Payouts Under | | | Estimated Future Payouts Under | | | Number of | Fair Value | | | | | Non-Equity Incentive Plan Awards (1) | | | Equity Incentive Plan Awards (2) | | | Shares of | of Stock and | | | Approval | Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | Stock or Units | Option Awards | | Name | Date | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) (3) | ($) (4) | | David N. Makuen | | | 362,500 | 725,000 | 1,450,000 | — | — | — | — | — | | | 6/8/23 | 6/9/23 | — | — | — | 25,249 | 50,498 | 100,996 | — | 812,008 | | | 5/5/23 | 5/5/23 | — | — | — | — | — | — | 12,500 | 203,000 | | Heather Plutino | | | 154,375 | 308,750 | 617,500 | — | — | — | — | — | | | 6/8/23 | 6/9/23 | — | — | — | 4,801 | 9,601 | 19,202 | — | 154,384 | | | 5/5/23 | 5/5/23 | — | — | — | — | — | — | 9,506 | 154,377 | | Lisa A. Powell | | | 155,350 | 310,700 | 621,400 | — | — | — | — | — | | | 6/8/23 | 6/9/23 | — | — | — | 4,831 | 9,661 | 19,322 | — | 155,349 | | | 5/5/23 | 5/5/23 | — | — | — | — | — | — | 9,566 | 155,352 | | | 6/12/23 | 6/12/23 | — | — | — | — | — | — | 1,000 | 16,400 | | Vivek Bhargava (5) | | | 88,750 | 177,500 | 355,000 | — | — | — | — | — | | | 6/8/23 | 6/9/23 | — | — | — | 2,760 | 5,520 | 11,040 | — | 88,762 | | | 5/5/23 | 5/5/23 | — | — | — | — | — | — | 5,465 | 88,752 | | | 2/13/23 | 3/30/23 | — | — | — | — | — | — | 1,500 | 27,540 | | Ivy D. Council (6) | | | 110,468 | 220,935 | 441,870 | — | — | — | — | — | | | 6/8/23 | 6/9/23 | — | — | — | 3,435 | 6,870 | 13,740 | — | 110,470 | | | 5/5/23 | 5/5/23 | — | — | — | — | — | — | 6,803 | 110,481 | | Charles J. Hynes (7) | — | — | — | — | — | — | — | — | — | — |
Grants of Plan-Based Awards in Fiscal 2023
| (1) Reflects threshold, target and maximum payout values pursuant to our annual cash incentive program for fiscal 2023 performance. For more information on our annual cash incentive program, see the description contained in the “Compensation Discussion and Analysis” elsewhere in this proxy statement. In each case, the actual amount earned pursuant to our annual cash incentive program by each named executive officer is reported under the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table. |
Grants of Plan-Based Awards in Fiscal 2023
| (2) Reflects threshold, target and maximum payout levels of performance-based restricted stock units that vest 100% if the Company's Adjusted EBITDA ex. B&E equals or exceeds $45.0 million in fiscal 2025. Recipients may receive up to 200% of the target units if Adjusted EBITDA ex. B&E equals or exceeds $54.0 million. The percent of target units to be awarded is based on a matrix, which provides for a maximum payout of 200% of target units. Target units of less than 100% may be awarded based on the matrix for Adjusted EBITDA ex. B&E values below $45.0 million but no target units will vest if Adjusted EBITDA ex. B&E is below $36.0 million. |
Grants of Plan-Based Awards in Fiscal 2023
| (3) Reflects awards of time-based restricted stock under the 2021 Incentive Plan, which vest in three equal installments on the first three anniversaries of the grant date. |
Grants of Plan-Based Awards in Fiscal 2023
| (4) Reflects the grant-date fair value of stock awards computed in accordance with FASB ASC Topic 718. The grant date fair value of time-based grants of restricted stock and performance-based restricted stock units tied to Adjusted EBIT ex. B&E is based on the closing price of the Company’s common stock on the date of grant and the probable outcome of performance conditions. |
Grants of Plan-Based Awards in Fiscal 2023
| (5) Mr. Bhargava joined the Company effective February 13, 2023. |
Grants of Plan-Based Awards in Fiscal 2023
| (6) Ms. Council retired from the Company effective September 29, 2023. |
Grants of Plan-Based Awards in Fiscal 2023
| (7) Mr. Hynes left the Company effective February 10, 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End
| | | Market Value of | Equity Incentive Plan Awards: | Equity Incentive Plan Awards: | | | Number of Shares | Shares or Units of | Number of Unearned Shares, | Market or Payout Value of | | | or Units of Stock | Stock That Have Not | Units or Other Rights That | Unearned Shares, Units or Other | | | That Have Not Vested | Vested | Have Not Vested | Rights That Have Not Vested | | | (#) | ($) (13) | (#) | ($) (13) | | David N. Makuen | 12,500(2) | 349,625 | 50,498(7) | 1,412,429 | | | 4,080(5) | 114,118 | 24,480(8) | 684,706 | | | 913(6) | 25,537 | 8,211(9) | 229,662 | | Heather Plutino | 9,506(2) | 265,883 | 9,601(7) | 268,540 | | | 4,258(4) | 119,096 | 6,388(8) | 178,672 | | Lisa A. Powell | 1,000(1) | 27,970 | 9,661(7) | 270,218 | | | 9,566(2) | 267,561 | 4,683(8) | 130,984 | | | 3,122(5) | 87,322 | 1,762(9) | 49,283 | | | 588(6) | 16,446 | — | — | | Vivek Bhargava (10) | 5,465(2) | 152,856 | 5,520(7) | 154,394 | | | 1,500(3) | 41,955 | | | | Ivy D. Council (11) | — | — | — | — | | Charles J. Hynes (12) | — | — | — | — |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (1) Restricted shares were awarded on June 12, 2023 under the 2021 Incentive Plan and vest in three equal annual installments beginning June 12, 2024. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (2) Restricted shares were awarded on May 5, 2023 under the 2021 Incentive Plan and vest in three equal annual installments beginning May 5, 2024. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (3) Restricted shares were awarded on March 30, 2023 under the 2021 Incentive Plan and vest in three equal annual installments beginning February 13, 2024. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (4) Restricted shares were awarded on June 27, 2022 under the 2021 Incentive Plan and vest in three equal annual installments beginning June 27, 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (5) Restricted shares were awarded on March 20, 2022 under the 2021 Incentive Plan and vest in three equal annual installments beginning March 20, 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (6) Restricted shares were awarded on March 20, 2021 under the 2021 Incentive Plan and vest in three equal annual installments beginning March 20, 2022. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (7) Reflects target number of performance based restricted stock units awarded during fiscal 2023 under the Citi Trends, Inc. 2021 Incentive Plan. These units are payable in shares of Common Stock with the number of shares based upon the achievement of various levels of Adjusted EBITDA ex. B&E for fiscal 2025. The number of units earned and vested will equal 100% of the target units upon the achievement of Adjusted EBITDA ex. B&E of $45.0 million. Recipients may receive up to 200% of the target units upon achievement of Adjusted EBITDA ex. B&E of $54.0 million based on a sliding scale which also provides for vesting of less than 100% of target units based on lower levels of Adjusted EBITDA ex. B&E. No units will be earned or vest for an Adjusted EBITDA ex. B&E level below $36.0 million. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (8) Reflects target number of performance based restricted stock units awarded during fiscal 2022 under the Citi Trends, Inc. 2021 Incentive Plan. These units are payable in shares of Common Stock with the number of shares based upon the achievement of various levels of Adjusted EBIT for fiscal 2024. The number of units earned and vested will equal 100% of the target units upon the achievement of Adjusted EBIT of $100.0 million. Recipients may receive up to 200% of the target units upon achievement of Adjusted EBIT of $136.0 million based on a sliding scale which also provides for vesting of less than 100% of target units based on lower levels of Adjusted EBIT. No units will be earned or vest for an Adjusted EBIT level below $91.0 million. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (9) Reflects target number of performance based restricted stock units awarded during fiscal 2021 under the Citi Trends, Inc. 2012 Incentive Plan. These units are payable in shares of Common Stock with the number of shares based upon the achievement of various levels of Adjusted EBIT for fiscal 2023. The number of units earned and vested equal 100% of the target units upon the achievement of Adjusted EBIT of $62.6 million. Recipients may receive up to 200% of the target units upon achievement of Adjusted EBIT of $85.1 million based on a sliding scale which also provides for vesting of less than 100% of target units based on lower levels of Adjusted EBIT. No units are earned or vest for an Adjusted EBIT level below $57.0 million. The performance-based restricted stock units awarded during fiscal 2021 did not vest, as the Company’s Adjusted EBIT in fiscal 2023 was below the minimum target level for vesting. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (10) Mr. Bhargava joined the Company effective February 13, 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (11) Ms. Council retired from the Company effective September 29, 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (12) Mr. Hynes left the Company effective February 10, 2023. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (13) Market value is based on the closing stock price of $27.97 on February 2, 2024, the last trading day of our 2023 fiscal year. |
Option Exercises and Stock Vested in Fiscal 2023
Option Exercises and Stock Vested in Fiscal 2023 The following table sets forth information concerning each vesting of restricted stock during the last completed fiscal year for each of the named executive officers.
Option Exercises and Stock Vested in Fiscal 2023
| | Number of | | | | Shares | | | | Acquired on | Value Realized | | | Vesting | on Vesting | | Name | (#) | ($)(1) | | David N. Makuen | 7,834 | 182,610 | | Heather Plutino | 2,129 | 39,323 | | Lisa A. Powell | 5,403 | 125,944 | | Vivek Bhargava (2) | — | — | | Ivy D. Council (3) | 7,035 | 160,552 | | Charles J. Hynes (4) | — | — |
Option Exercises and Stock Vested in Fiscal 2023
| (1) Reflects the fair market value of the shares on the vesting date. |
Option Exercises and Stock Vested in Fiscal 2023
| (2) Mr. Bhargava joined the Company effective February 13, 2023. |
Option Exercises and Stock Vested in Fiscal 2023
| (3) Ms. Council retired from the Company effective September 29, 2023. |
Option Exercises and Stock Vested in Fiscal 2023
| (4) Mr. Hynes left the Company effective February 10, 2023. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control As discussed in the “Other Benefits” section of the “Compensation Discussion and Analysis,” the Company has entered into severance agreements with each of the named executive officers. Each severance agreement provides that if the Company terminates an executive’s employment without Cause (as defined in the severance agreement) or if the executive terminates his or her employment within twelve months of a Change in Control (as defined in the severance agreement), provided that within such period the executive’s job duties have been materially diminished or compensation has been materially decreased (a “Qualifying Termination”), the Company will provide the executive with separation payments of twelve months base salary, and will pay the executive the full monthly cost, less applicable tax withholdings, to maintain the same level of group health insurance maintained by the executive as of his separation from service for twelve months. Mr. Makuen’s severance agreement also provides him with the severance benefits noted above if he terminates his employment in the event his job duties have been materially diminished or his compensation has been materially decreased (regardless of whether a Change in Control has occurred). “Cause” generally means (i) commission of an act of fraud or dishonesty; (ii) conviction of a felony or a crime involving embezzlement, conversion of property or moral turpitude; (iii) engaging in willful or reckless misconduct or gross negligence in connection with Company property or activities which adversely affects the Company; (iv) material breach of any obligations as an employee or stockholder as set forth in certain Company policies; or (v) failure or refusal to perform any material duty or responsibility or a breach of fiduciary obligations to the Company. Pursuant to the terms of our 2021 Incentive Plan and/or the applicable award agreements, all outstanding options and unvested time-based restricted stock will become 100% vested upon the occurrence of a change in control. The following table summarizes the approximate value of the payments and benefits that each of our named executive officers would receive if the Company had terminated such executive’s employment at the close of business on February 3, 2024 or if a change in control of the Company had occurred as of such date. The amounts shown in the table exclude distributions under our 401(k)-retirement plan that are generally available to all of our salaried employees. Pursuant to the applicable award agreements, all outstanding time-based restricted stock will become 100% vested upon the occurrence of a change in control. The following table summarizes the approximate value of the payments and benefits that each of our named executive officers would receive if the Company had terminated such executive’s employment at the close of business on February 3, 2024, or if a change in control of the Company had occurred as of such date. The amounts shown in the table exclude distributions under our 401(k) retirement plan that are generally available to all of our salaried employees. As noted above, Mr. Hynes left the Company effective February 10, 2023. Pursuant to his severance agreement, Mr. Hynes received severance payments in the amount of $319,000, representing 12 months of base salary and the full cost to maintain the same level of group health insurance maintained by Mr. Hynes as of his separation for 12 months. Ms. Council retired from the Company effective September 29, 2023, and did not receive any severance payments or benefits in connection with her retirement.
Potential Payments Upon Termination or Change in Control
| | David N. | Heather | Lisa A. | Vivek | | | Makuen | Plutino | Powell | Bhargava (1) | | Termination By Company Without Cause (Not in Connection with a Change in Control) | | | | | | Cash Severance (2) | $725,000(4) | $475,000 | $478,000 | $355,000 | | COBRA Payments | 21,881(4) | 14,020 | 15,771 | — | | Total | $746,881 | $489,020 | $493,771 | $355,000 | | Termination By Company Without Cause; Qualifying Termination by Executive (In Connection with a Change in Control) | | | | | | Cash Severance (2) | 725,000(4) | $475,000 | $478,000 | $355,000 | | COBRA Payments | 21,881(4) | 14,020 | 15,771 | — | | Value of Accelerated Unvested Restricted Stock (3) | 2,816,076 | $832,191 | $849,785 | 349,205 | | Total | 3,562,957 | $1,321,211 | $1,343,556 | $704,205 | | Change in Control of the Company (Regardless of Termination of Employment) | | | | | | Value of Accelerated Unvested Restricted Stock (3) | 2,816,076 | $832,191 | $849,785 | 349,205 | | Total | 2,816,076 | $832,191 | $849,785 | $349,205 |
Potential Payments Upon Termination or Change in Control
(1)Mr. Bhargava joined the Company effective February 13, 2023. (2)Reflects cash severance equal to 12 months of the executive’s fiscal 2023 annual salary. (3)Reflects the value of time-based and performance-based restricted stock awards using the closing stock price of the Company's common stock on February 2, 2024 ($27.97). (4)In addition to a termination by the Company without Cause, Mr. Makuen would be entitled to these benefits if he terminates his employment in the event his job duties have been materially diminished or his compensation has been materially decreased (regardless of whether a Change in Control has occurred).
Pay Versus Performance
Pay Versus Performance The following table shows the total compensation for our Named Executive Officers (NEOs) for the past three fiscal years as set forth in the Summary Compensation Table (SCT), the “compensation actually paid” (CAP) to our Principal Executive Officers (PEOs), and, on an average basis, our other NEOs (in each case, as determined under SEC rules), our Total Shareholder Return (TSR), the Dow Jones US Specialty Retailers Index, our net income, and our Company Selected Measure, Adjusted EBITDA ex. B&E.
Pay Versus Performance
| | | | | | | | Value ($) of Initial Fixed $100 | | | | | | SCT ($) for | CAP ($) to | SCT ($) for | CAP ($) to | Average | Average | Investment Based On: | | | Adjusted | | Fiscal | Mr. Makuen | Mr. Makuen | Mr. Sachse | Mr. Sachse | SCT ($) | CAP ($) | Citi Trends | Peer Group | Net Income | EBITDA ex. B&E | | Year | (PEO 1) | (PEO 1) | (PEO 2) | (PEO 2) | for NEOs | to NEOs | TSR | TSR | ($M) | ($M) | | (a) | (b)(1) | (c)(2) | (d)(1) | (e)(2) | (f)(3) | (g)(2) | (h)(4) | (i)(4) | (j) | (k)(5) | | 2023 | 1,751,579 | 1,191,613 | — | — | 615,206 | 513,982 | 116.11 | 159.02 | (12.0) | 5.6 | | 2022 | 1,730,016 | (331,897) | — | — | 483,470 | 122,735 | 135.73 | 135.59 | 58.9 | 35.6 | | 2021 | 2,979,581 | 2,882,746 | — | — | 1,140,197 | 1,200,526 | 210.06 | 142.18 | 62.2 | 123.7 | | 2020 | 2,995,723 | 3,438,376 | 682,576 | 1,719,020 | 693,908 | 949,579 | 254.38 | 140.92 | 24.0 | 66.6 |
Pay Versus Performance
| (1) The dollar amounts reported in columns (b) and (d) are the amounts of total compensation reported for Mr. Makuen (Chief Executive Officer and Principal Executive Officer since March 9th, 2020) and Mr. Sachse (Interim Chief Executive Officer until March 9th, 2020) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to our Summary Compensation Table on page 37. |
Pay Versus Performance
| (2) The dollar amounts reported in column (c), (e) and (g) represent the amount of “compensation actually paid,” as computed in accordance with SEC rules. “Compensation actually paid” does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. We do not have a defined benefit plan so no adjustment for pension benefits is included in the table below. Similarly, no adjustment is made for dividends as dividends are factored into the fair value of the award. The following table details these adjustments: |
Pay Versus Performance
| All table values in $ | | | | | | | | | | | | | | | Grant Date | Year End | Change in | Change in | Change in | Change in Value | | | | Fiscal | | | Value of | Value of | Value of | Value of | Value of | of Awards Granted | Total Equity | | | Year | Executives | SCT | New Awards | New Awards | Prior Awards | Vested Awards | Forfeited Awards | and Vested in '23 | Award Adjustments | CAP | | | | (a) | (b) | (i) | (ii) | (iii) | (iv) | (v) | (c)=(i)+(ii)+(iii)+(iv)+(v) | (d)=(a)-(b)+(c) | | 2023 | PEO 1 | 1,751,579 | 1,015,008 | 541,394 | (20,721) | (65,631) | — | — | 455,042 | 1,191,613 | | | Others | 615,206 | 212,373 | 170,067 | (6,613) | (26,523) | (28,034) | 2,253 | 111,149 | 513,982 |
Pay Versus Performance
(a)The dollar amounts reported in the Summary Compensation Table for the applicable year.
Pay Versus Performance
| (b) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. |
Pay Versus Performance
(c)The recalculated value of equity awards for each applicable year includes the addition (or subtraction, as applicable) of the following:
Pay Versus Performance
| (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; |
Pay Versus Performance
| (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; |
Pay Versus Performance
| (iii) | for awards that vest in applicable year, the change in the fair value as of the vesting date from the beginning of the applicable year. |
Pay Versus Performance
| (iv) for awards that failed to meet vesting conditions in the applicable year, the fair value from the end of prior fiscal year. |
Pay Versus Performance
| (v) for awards that were granted and vest in the applicable year, the fair value as of the vesting date. |
Pay Versus Performance
The valuation assumptions and processes used to recalculate fair values did not materially differ from those disclosed at the time of grant, except for PSU awards whose year-end and vesting date values are adjusted by the probability of achievement as of each such date.
Pay Versus Performance
| (d) “Compensation actually paid” does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. |
Pay Versus Performance
| (3) The dollar amounts reported in column (f) are the average amounts of total compensation reported for the other Named Executive Officers for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to our Summary Compensation Table on page 37. For each of 2020, 2021 and 2022 and 2023, the other NEOs were: |
Pay Versus Performance
| 2023 | 2022 | 2021 | 2020 | | Heather Plutino | Heather Plutino | Pamela J. Edwards | Pamela J. Edwards | | Lisa Powell | Pamela J. Edwards | Lisa A. Powell | Stuart C. Clifford | | Vivek Bhargava | Lisa A. Powell | Ivy D. Council | Jason Moschner | | Ivy Council | Ivy D. Council | James A. Dunn | Lisa A. Powell | | Charles Hynes | Charles J. Hynes | | Ivy D. Council | | | Jason Moschner | | Christina K. Short |
Pay Versus Performance
| (4) TSR is determined based on the value of an initial fixed investment of $100. The TSR peer group consists of the Dow Jones US Specialty Retailers Index. |
Pay Versus Performance
| (5) For 2023, our Company Selected Measure is Adjusted EBITDA ex. B&E, consistent with our Short- and Long-Term Incentive Programs. In prior years, we used Adjusted EBIT. For more details, refer to our Compensation Discussion and Analysis, beginning on page 29. |
Pay Versus Performance
| Company Selected Measure ($M) | 2023 | 2022 | 2021 | 2020 | | Adjusted EBITDA ex B&E | 5.6 | 35.6 | 123.7 | 66.6 | | Adjusted EBIT | -17.5 | 11.4 | 91.4 | 40.9 |
Relationship Between “Compensation Actually Paid” and Performance Measures
Relationship Between “Compensation Actually Paid” and Performance Measures We believe the table above shows the alignment between compensation actually paid to the NEOs and the Company’s performance, consistent with our compensation philosophy as described in our Compensation Discussion and Analysis, beginning on page 29. A large portion of NEO compensation is reliant on stock price and as such “compensation actually paid” each year was aligned with TSR performance. The tables below show the relationship between the CEO and non-CEO “compensation actually paid” and (i) the Company’s TSR and the Peer Group TSR; (ii) the Company’s net income; and (iii) the Company Selected Measure, Adjusted EBITDA ex. B&E. ‘
Director Compensation
Director Compensation Annual Retainers. During fiscal 2023, all non-employee directors except Mr. Sachse received an annual retainer fee of $71,400 (payable quarterly and prorated for any director that served for less than the full year). We also provided the following additional annual retainers: Lead Independent Director, $21,250; Chair of the Audit Committee, $10,200; Chair of the Compensation Committee, $6,800; Chair of the Nominating and Corporate Governance Committee, $6,800; Chair of the Corporate Social Responsibility Committee, $6,800; and Chair of the Finance Committee, $6,800 (prorated for the partial year). Mr. Sachse received an annual retainer of $127,500. Executive Chairman Bonus Opportunity. Mr. Sachse was also awarded a target bonus opportunity with a value equal to $127,500, with one-third payable in cash and two-thirds payable in shares of stock, which could be earned between 0% and 200% of the target amount based on the level of achievement of EBITDA (weighted 75%) and Sales (weighted 25%) for fiscal 2023. The Company did not achieve its target Sales and EBITDA or Sales goal and, as a result, Mr. Sachse did not earn compensation related to his target bonus opportunity. Equity Awards. During fiscal 2023, each non-employee director except Mr. Sachse received a restricted stock award with a grant date value equal to approximately $65,253, subject to vesting on the one-year anniversary of the grant date. Mr. Sachse received a restricted stock award with a grant date value equal to approximately $127,500, subject to vesting in three equal annual installments beginning May 5, 2024. We reimburse all of our non-employee directors for reasonable out-of-pocket expenses in connection with their attendance at the meetings of the board of directors and committees.
Director Compensation Table for Fiscal 2023
Director Compensation Table for Fiscal 2023 The following table sets forth the cash and other compensation paid by the Company to the members of the board of directors of the Company for all services as a member of the board of directors during fiscal 2023, except for Mr. Makuen, our current Chief Executive Officer, who was not compensated for his services as a director.
Director Compensation Table for Fiscal 2023
| | Fees Earned | Stock | | | | in Cash | Awards | Total | | Name | ($) | ($) (1) | ($) | | Peter Sachse | 127,500 | 127,500 | 255,000 | | Brian P. Carney | 81,600 | 65,253 | 146,853 | | Jonathan Duskin | 92,650 | 65,253 | 157,903 | | Kenneth D. Seipel | 78,200 | 65,253 | 143,453 | | Laurens M. Goff | 78,200 | 65,253 | 143,453 | | Margaret L. Jenkins | 78,200 | 65,253 | 143,453 | | Christina Francis | 71,400 | 65,253 | 136,653 | | Cara Sabin | 71,400 | 65,253 | 136,653 |
Director Compensation Table for Fiscal 2023
| (1) Reflects the grant-date fair value of 7,851 shares of restricted stock granted to Mr. Sachse, 4,058 shares of restricted stock granted to Messrs. Carney, Goff, Seipel and Duskin and Mses. Jenkins, Sabin and Francis computed in accordance with FASB ASC Topic 718 based on the closing price of the Company's common stock on the date of grant of May 5, 2023 for Mr. Sachse and June 9, 2023 for Messrs. Carney, Goff, Seipel and Duskin and Mses. Jenkins, Sabin and Francis. All shares granted to Messrs. Carney, Goff, Seipel and Duskin and Mses. Jenkins, Sabin and Francis vest on the first anniversary of the grant date. The shares granted to Mr. Sachse in 2023 vest in three equal installments beginning May 5, 2024. |
Director Compensation Table for Fiscal 2023
The following table summarizes the aggregate number of shares of restricted stock held by each of the non-employee directors as of February 3, 2024. Each of the grants were made pursuant to a restricted stock award agreement, the form of which is filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2021. There were no awards of stock options to directors in fiscal 2023, and as of February 3, 2024, no director held any stock options.
Director Compensation Table for Fiscal 2023
| | Number of Shares | | | of Stock That | | Name | Have Not Vested | | Peter Sachse | 15,478 | | Brian P. Carney | 4,058 | | Jonathan Duskin | 4,058 | | Kenneth D. Seipel | 4,058 | | Laurens M. Goff | 4,058 | | Margaret L. Jenkins | 4,058 | | Christina Francis | 4,058 | | Cara Sabin | 4,058 |
Key Data Relating to Outstanding Equity Awards and Shares Available
Key Data Relating to Outstanding Equity Awards and Shares Available The following table includes information regarding outstanding equity awards and shares available for future awards under the 2021 Incentive Plan as of April 22, 2024 (and without giving effect to approval of the amendment to the 2021 Incentive Plan under this Proposal):
Key Data Relating to Outstanding Equity Awards and Shares Available
| | 2021 Incentive Plan (1) | | Total shares underlying outstanding stock options and SARs | — | | Total shares underlying outstanding unvested time-based full value awards | 272,330 | | Total shares underlying outstanding unvested performance-based full value awards | 144,064(2) | | Total shares underlying all outstanding awards | 416,394 | | Total shares currently available for grant | 373,807(3) | | Common Stock outstanding as of April 22, 2024 | 8,536,716 | | Market price of Common Stock as of April 22, 2024 | $22.22 |
Key Data Relating to Outstanding Equity Awards and Shares Available
| (1) Includes information regarding all outstanding equity awards and shares available for future awards, which are all under the 2021 Incentive Plan. As April 22, 2024 (and as of the date of this Proxy Statement), no predecessor plans had awards outstanding or shares available for future awards. | | (2) Assumes performance-based awards will vest and pay out based on target performance levels being achieved. | | (3) Represents the total number of shares available for future awards under the 2021 Incentive Plan. |
Key Data Relating to Outstanding Equity Awards and Shares Available
As noted above, as of April 22, 2024, there were approximately 373,807 shares reserved and available for future awards under the 2021 Incentive Plan. The proposed amendment to the 2021 Incentive Plan authorizes an additional 450,000 shares for future grants (representing approximately 5.3% of the Company’s outstanding shares as of April 22, 2024). In setting and recommending to stockholders the number of additional shares to authorize under the 2021 Incentive Plan, the Compensation Committee and the Board considered, among other things, the historical number of equity awards granted under the 2021 Incentive Plan, projected future share usage and projected future forfeitures, potential dilution from the 2021 Incentive Plan, as well as the Company’s three-year average burn rate for the preceding three fiscal years. The Company’s burn rate averaged 2.3% of common shares outstanding over the last three years (fiscal years 2021-2023), as shown in the table below.
Key Data Relating to Outstanding Equity Awards and Shares Available
| | | | | 3-Year | | Fiscal Year | 2021 | 2022 | 2023 | Average | | Time-based RSUs granted | 147,017 | 141,111 | 272,479 | 186,869 | | Performance-based awards vested | - | 32,271 | - | 10,757 | | Total | 147,017 | 173,382 | 272,479 | 197,626 | | Weighted-average common shares outstanding | 8,911,810 | 8,216,448 | 8,221,450 | 8,449,903 | | Gross burn rate (1) | 1.6% | 2.1% | 3.3% | 2.3% |
Key Data Relating to Outstanding Equity Awards and Shares Available
| (1) Total number of restricted stock units and granted, and performance-based awards vested in each year divided by weighted average common shares outstanding. |