DEF 14A of Steven Madden, Ltd.
Filed Apr 7, 2025 · FY20240001641172-25-002947
TABLE OF CONTENTS
| Compensation Committee Report | 43 | | Pay Versus Performance | 43 | | PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2025 | 48 | | Required Vote | 48 | | Recommendation of the Board of Directors | 48 | | Independent Registered Public Accounting Firm’s Fees and Services | 48 | | Audit Committee’s Pre-Approval Policies and Procedures | 49 | | AUDIT COMMITTEE REPORT | 49 | | PROPOSAL THREE: NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION | 50 | | Required Vote | 50 | | Recommendation of the Board of Directors | 50 | | ANNEX A – RECONCILIATION OF ADJUSTED RESULTS (NON-GAAP) | A-1 |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our By-Laws provide that the number of directors constituting our whole Board of Directors may be fixed from time to time by action of the directors. The Board of Directors has fixed the number of directors comprising the Board of Directors at eleven members. Directors are elected to serve until the next annual meeting of stockholders, and the term of each of the current directors will expire at the Annual Meeting.
Stockholder Nominations for Board Membership
Stockholder Nominations for Board Membership The Nominating/Corporate Governance Committee of the Board of Directors recommends to the Board director candidates for nomination and election at each annual meeting of stockholders or for appointment to fill vacancies on the Board. The Nominating/Corporate Governance Committee will review and evaluate the qualifications of proposed director candidates recommended to it from various sources, including candidates proposed by our stockholders in accordance with the procedures established for that purpose. To enable the Nominating/Corporate Governance Committee to consider a stockholder recommendation in connection with the 2026 Annual Meeting, we must receive the recommendation on or before December 8, 2025. Directors and Nominees for Election to the Board of Directors Upon recommendation of the Nominating/Corporate Governance Committee of the Board of Directors, the Board of Directors has nominated and is recommending to the stockholders the election of each of the eleven nominees named below to serve as a director of the Company until the next annual meeting of our stockholders and until his, her, or their successor is duly elected and qualified or until his, her, or their earlier death, resignation or removal from office. All of the nominees were elected directors at last year’s Annual Meeting of Stockholders. All nominees have agreed to be named in this Proxy Statement and to serve on the Board of Directors if elected. The names and biographical summaries of the eleven persons who have been recommended by the Nominating/Corporate Governance Committee of the Board of Directors and nominated by the Board of Directors to stand for election at the Annual Meeting are provided below for your information. Our Board of Directors is responsible for overseeing our business in a manner consistent with the Board’s fiduciary duty to our stockholders. This significant responsibility requires that our directors consist of individuals who are well-qualified for service on our Board and its committees and demonstrate a commitment to the success of the Company and to serve in the best interests of our stockholders. The following matrix identifies the relevant skills, experience and qualifications of our eleven director nominees. The skills and experience identified below are reviewed by the Nominating/Corporate Governance Committee, in addition to other qualifications, and nominees are selected with a view to establishing a Board of Directors that consists of individuals who have extensive business leadership experience, are independent, bring diverse perspectives to the Board, and possess high ethical standards, sound business judgment and acumen, and a willingness to devote the time necessary for the Board to effectively fulfill its responsibilities. We believe that all of the director nominees possess these qualifications and provide the Board with a full complement of knowledge, business skills and expertise for the effective management of the Company.
Stockholder Nominations for Board Membership
| | Rosenfeld | Davis | Ferrara | Klipper | Kumar | Lynch | Migliorini | Reed | Sachdev | Smith | Varela | | Knowledge, Skills and Experience | | | | | | | | | | | | | Public Company Board | ● | | ● | | | ● | | | ● | | | | Finance/Accounting | ● | | ● | ● | | ● | ● | | ● | | | | Executive Leadership | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | | Risk Oversight/ Management | ● | | ● | ● | | ● | | | ● | | | | Retail Industry | ● | ● | ● | ● | | ● | ● | ● | | ● | ● | | Independence | | ● | ● | ● | ● | ● | ● | ● | ● | ● | |
Stockholder Nominations for Board Membership
Below is a summary of general qualifications, skills and attributes for each director nominee as of April 7, 2025 that led to the Board’s conclusion that the nominee is qualified to serve as a director.
Stockholder Nominations for Board Membership
| Name | Principal Occupation | Age | Year Became a Director | | Edward R. Rosenfeld | Chairman of the Board and Chief Executive Officer, Steven Madden, Ltd. | 49 | 2008 | | Peter A. Davis | Retired executive in the footwear and apparel industry and Founder and Managing Director of Pete Davis Basketball,LLC, a grassroots community youth basketball organization | 71 | 2022 | | Al Ferrara | Retired National Director of the Retail and Consumer Products Division of BDO USA, LLP, a major international accounting firm | 74 | 2019 | | Mitchell S. Klipper | Retired Chief Executive Officer of Barnes & Noble, Inc.’s Retail Group, one of the largest retail booksellers in the United States | 67 | 2018 | | Maria Teresa Kumar | President and CEO of Voto Latino, which she co-founded in 2004 and built into America’s largest Latinx voter registration and advocacy organization | 51 | 2021 | | Rose Peabody Lynch | Retired owner of Marketing Strategies, LLC, a New York based consulting firm of which she was founder and President, which focused on strategic marketing and operating issues for small to medium-sized companies | 75 | 2014 | | Peter Migliorini | Sales Manager, Greschlers, Inc., a building supplies company | 76 | 1996 | | Arian Simone Reed | Co-Founder and Chief Executive Officer of Fearless Fund, a venture capital fund that she co-founded in 2018 | 44 | 2022 | | Ravi Sachdev | Partner, Clayton Dubilier & Rice, LLC, a global alternative investment firm | 48 | 2008 | | Robert Smith | Founder and Chief Executive Officer of Phluid Project, part retail concept and part experimental platform, with a website that offers products and programs worldwide | 59 | 2014 | | Amelia Newton Varela | President, Steven Madden, Ltd. | 53 | 2016 |
Additional Information About the Directors
Additional Information About the Directors Other Public Company Directorships Three of our directors also currently serve or recently served as directors of other public companies:
Additional Information About the Directors
| ● | Mr. Rosenfeld served as a director and chairman of the Audit & Risk Management Committee of PVH Corp. (NYSE: PVH), one of the world’s largest apparel companies, from March 24, 2013 until December 11, 2023. |
Additional Information About the Directors
| ● | Ms. Lynch is a director and member of the Compensation Committee, Pension Committee, and Nominating Committee of General American Investors Company, Inc. (NYSE: GAM), a closed-end fund that manages a global portfolio of investments consisting mainly of U.S. and foreign securities. |
Additional Information About the Directors
| ● | Mr. Sachdev serves as a director of Agilon Health, Inc. (NYSE: AGL), a technology-enabled services platform for the physicians’ market. |
Additional Information About the Directors
Specific Qualifications, Attributes, Skills and Experience of Directors Edward R. Rosenfeld has served as our Chairman of the Board and Chief Executive Officer since August 2008 and has been a director of the Company since February 2008. Mr. Rosenfeld, who joined our executive management team in May 2005, has more than two decades of experience focused on the retail, apparel and footwear industries and possesses particular knowledge and experience in the industry that strengthens the Board’s collective qualifications, skills and experience. He has strong leadership skills and an in-depth understanding of the Company and its goals from his positions as the Chairman of the Board and Chief Executive Officer. His background in finance and his analytical skills gained through his years as a Vice President with Peter J. Solomon Company, an investment banking firm, where he specialized in mergers and acquisitions in the retail, apparel and footwear industries, provide the Board with insight and guidance with respect to, among other things, strategic business development matters. Mr. Rosenfeld served as a director and chairman of the Audit & Risk Management Committee of PVH Corp. (NYSE: PVH), one of the world’s largest apparel companies, from March 2013 until December 2023. Peter A. Davis has served as a director of the Company and as a member of the Compensation Committee since January 2022. Mr. Davis has over 40 years of experience in the footwear and apparel industry, having held executive leadership positions in sales and marketing with companies including Skechers, Fila, Reebok, Joy & Mario and Dynasty Footwear. He also founded The Infamous Black Sheep Brand, an urban action sports lifestyle brand. A former player in the NBA, Mr. Davis founded Pete Davis Basketball, LLC, a grassroots community youth basketball organization, in 2019 and today serves as its Managing Director. Prior to founding Pete Davis Basketball, LLC, Mr. Davis was the Senior Vice President of Footwear for Joy & Mario Footwear from 2013 to 2018. Mr. Davis’ years of experience in our industry provide relevant knowledge, expertise and leadership to the Board. Al Ferrara has served as a director of the Company and as a member of the Audit Committee since July 2019. In May 2020, Mr. Ferrara became the Chairman of the Audit Committee and a member of the Nominating/Corporate Governance Committee. He is a retired certified public accountant having retired from his position as a partner with BDO USA, LLP, a major international accounting firm, in August 2016 after 25 years with the firm, most recently serving as National Director of the Retail & Consumer Products Division. Mr. Ferrara also served as a director on the firm’s Board of Directors from 2003 through 2010 and was also a director and BDO representative on the Board of Directors of BDO Capital Advisors, LLC from 2000 to 2015. Mr. Ferrara served as a member of the Board of Directors of Barnes & Noble, Inc., the nation’s largest retail bookseller, from 2016 until its sale in August 2019 and also served on its Audit Committee and Compensation Committee. In September 2020, Mr. Ferrara was appointed to the Board of Directors of VIVAKOR, Inc. (NASDAQ: VIVK), a socially responsible operator, acquirer and developer of clean energy technologies and environmental solutions, where he served as the Chairman of its Audit Committee. Mr. Ferrara resigned from VIVAKOR’s Board of Directors in November 2022. Mr. Ferrara’s decades of relevant experience as a certified public accountant, the director of the retail practice at a major international accounting firm, and as a member of the audit committee of a public company enhance the financial oversight capabilities of our Board and its Audit Committee. Mitchell S. Klipper has served as a director of the Company since April 2018, as a member of the Audit Committee since June 2018 and as a member of the Corporate Social Responsibility Committee since August 2019. Mr. Klipper served as the Chief Executive Officer of Barnes & Noble, Inc.’s Retail Group, one of the nation’s largest retail booksellers, from March 2010 to May 2015. Mr. Klipper began his career at Barnes & Noble as Chief Financial Officer of B&N College in June 1986. He subsequently held several executive positions at Barnes & Noble, Inc., including Executive Vice President, President of Barnes & Noble Development and Chief Operating Officer. Prior to joining Barnes & Noble, Inc., Mr. Klipper was an Audit Manager with KMG Main Hurdman, a certified public accounting firm and predecessor to KPMG. He also served on the advisory board of Modell’s Sporting Goods, a sporting goods retailer, from 2006 through 2018. Mr. Klipper’s decades of relevant experience in retail management, general business and accounting enhance the leadership and oversight capabilities of our Board. Maria Teresa Kumar has served as a director of the Company and as a member of the Corporate Social Responsibility Committee since January 2021. Ms. Kumar is the President and CEO of Voto Latino, America’s largest Latinx voter registration and advocacy organization, which she co-founded in 2004. She is also a regular on-air contributor for MSNBC. Ms. Kumar serves on the Boards of Emily’s List and the World Economic Forum’s Global Shapers and is a World Economic Forum Young Global Leader and a Council on Foreign Relations Life Member. Ms. Kumar graduated from U.C. Davis with a B.A. in International Affairs and earned a Masters’ degree in Public Policy from Harvard’s Kennedy School. Ms. Kumar’s extensive experience in management, leadership, social advocacy and working with non-profits enhance Board leadership and management oversight with a unique perspective on corporate social responsibility.
Additional Information About the Directors
Rose Peabody Lynch has served as a director of the Company since April 2014, as a member of the Compensation Committee since June 2014, and as a member of the Audit Committee since July 2024. Ms. Lynch formerly served on the Corporate Social Responsibility Committee from August 2019 to July 2024, when she became a member of the Audit Committee. Until recently, Ms. Lynch operated her own New York based consulting business, Market Strategies, LLC, which focused on strategic marketing and operating issues for small to medium-sized companies. She possesses over 30 years of business experience, including tenures as President and in other senior executive officer positions of major companies in the beauty and fashion industries, and has extensive executive level financial and operating experience. Her experience serving as a director and as a senior executive for a range of companies, including Victoria’s Secret; Trowbridge Gallery, a supplier of fine art to the interior design trade; and Danskin, Inc., a leading manufacturer of women’s dance and active wear, enhances the Board’s leadership and oversight capabilities. Ms. Lynch has served on several boards, including The Harmony Group-LeRoi Princeton (a manufacturer of children’s apparel), Salant Corporation (Perry Ellis Menswear) and Frederick’s of Hollywood (a retailer of women’s apparel and lingerie). Currently, Ms. Lynch serves on the board of General American Investors Company, Inc. (NYSE: GAM). In her role on the GAM Board, she serves on the Compensation Committee, along with the Pension and Nominating Committees. She was a member of the Audit Committee and Nominating and Governance Committees during her tenure at Salant and chaired the Compensation Committee during her tenure on the board of Frederick’s of Hollywood. In addition, Ms. Lynch has held leadership positions with a variety of not-for-profit organizations. She currently serves on the Board of Directors of the Princeton University Varsity Club. She also served two terms on the Board of Trustees of Concord Academy in Concord, Massachusetts and rotated off the Board in July 2021. Ms. Lynch is a member of the Women and Foreign Policy Advisory Council at the Council on Foreign Relations. Ms. Lynch graduated from Princeton with a B.A. in Art History and earned a Master of Business Administration from Harvard Business School. Peter Migliorini has served as a director of the Company since October 1996 and has served on the Nominating/Corporate Governance Committee, as its Chair, since July 2004 and the Compensation Committee, as its Chair, since July 2004. Mr. Migliorini formerly served on the Audit Committee, from October 1996 until June 2018. Mr. Migliorini is the Presiding Director over all executive sessions of the independent directors. Mr. Migliorini possesses extensive executive level financial, sales and operations experience. Mr. Migliorini currently serves as sales manager for Greschlers, Inc., a building supplies company. Prior to joining Greschlers, Mr. Migliorini served as Director of Operations for Mackroyce Group, a construction company, from 1987 to 1994. Earlier, Mr. Migliorini held various positions of increasing responsibility from Assistant Buyer to Chief Planner/Coordinator for several shoe companies, including Meldisco Shoes, Perry Shoes and Fasco Shoes. His numerous years of business experience at various levels and in various industries provide the Board with a measure of practical orientation regarding our operations and growth endeavors. Mr. Migliorini’s early experience in the shoe industry also provides relevant knowledge and expertise in our specific industry. Arian Simone Reed has served as a director of the Company and as a member of the Nominating/Corporate Governance Committee since January 2022, and as a member of Corporate Social Responsibility since July 2024. Ms. Reed is the Founding Partner and Chief Executive Officer of the Fearless Fund, a venture capital fund that invests in women of color led businesses, which she co-founded in 2018. Prior to Fearless Fund, Ms. Reed was the owner of AR PR Marketing, a publicity and marketing strategy firm from 2004 to 2017. Ms. Reed serves as a member on the Board of Directors for the Birmingham Civil Rights Institute. In 2021, she was the recipient of the 15th Annual General Motors African Ancestry Network Black History Month Celebration Entrepreneurial Spirit Award and the Detroit Branch NAACP Great Expectations Award. Ms. Reed’s marketing expertise, leadership, social advocacy, and working with entrepreneurs will enhance Board leadership, strategic business development, and provide a unique perspective on corporate social responsibility. Ravi Sachdev has served as a director of the Company as a member of the Nominating/Corporate Governance Committee since August 2019 and as a member of the Audit Committee from September 2008 until March 2025. As a Partner of the private equity firm Clayton Dubilier & Rice, LLC since June 2015, Mr. Sachdev focuses on the healthcare sector. Earlier, Mr. Sachdev worked at several investment banks. He was a Managing Director and Co- Head of Healthcare Services at J.P. Morgan from November 2010 until June 2015 and prior to that held the positions of Managing Director at Deutsche Bank Securities, Inc. from January 2009 until November 2010 and Director at Deutsche Bank from January 2007 until January 2009. Prior to joining Deutsche Bank in 2006 as a Vice President, Mr. Sachdev served as a Vice President at Peter J. Solomon Company, an investment banking boutique, specializing in mergers and acquisitions in the healthcare sector, from 1998 to 2006. Mr. Sachdev possesses knowledge of finance and the financial analytics used to measure business performance. His 20 years of professional experience in investment banking and private equity brings to the Board a thorough understanding of the financial issues affecting public companies and greater insights in business valuation together with a practical orientation with respect to acquisitions and integrations. Mr. Sachdev also serves on the Board of Directors of Agilon Health, Inc. (NYSE: AGL), a technology-enabled services platform for the physicians’ market and served on the Board of Directors and the Strategy Committee and Compensation Committee of Covetrus, Inc. (NASDAQ: CVET), a global animal-health technology and services company, from February 2019 until October 2022.
Additional Information About the Directors
Robert Smith has served as a director of the Company since April 2014 and has served on the Compensation Committee since June 2014 and on the Corporate Social Responsibility Committee, as its Chair, since August 2019. Mr. Smith formerly served on the Nominating/Corporate Governance Committee from June 2014 to July 2019, when he became a member of the Corporate Social Responsibility Committee. Mr. Smith is the Chief Executive Officer of Phluid Project and GET Phluid, which he founded in 2018. Prior to Phluid Project, Mr. Smith was the Chief Merchandising Officer for Haddad Brands from 2013 to 2017, a global children’s apparel and accessories licensing partner for iconic brands such as Levi’s, Hurley, Nike, Jordan and Converse. Before his former position with Haddad Brands, Mr. Smith served as Executive Vice President, Merchandising from 2010 to 2012 for Limited Brands, at Victoria’s Secret Direct, one of the largest direct-to-consumer women’s apparel retailer in the United States. Prior thereto, Mr. Smith held various senior merchandising positions at Macy’s Inc. between 1998 and 2010, beginning with Vice President, Merchandise Manager, Macy’s West and culminating with Executive Vice President, Merchandising for Juniors, Kids, Intimate Apparel, Dresses, Suits, Coats and Swimwear. Earlier, Mr. Smith was a Merchandiser for XOXO Apparel Company and held various positions with Burdine’s Department Stores. Mr. Smith possesses over 30 years of business experience in the fashion industry and has extensive executive level expertise in merchandising. His experience in this area further enhances the Board’s depth of understanding of the industry. Amelia Newton Varela has served as President of the Company since September 2015 and has been a director since 2016. Prior to this tenure, Ms. Varela was Executive Vice President of Wholesale of the Company since April 2008 and Executive Vice President of Wholesale Footwear of the Company from November 2004 to April 2008. Previously, she was Vice President of Sales for Steve Madden Women’s Wholesale Division from January 2000. Ms. Varela began her career with the Company in 1998 in the role of Account Executive for Steve Madden Women’s Wholesale Division. She graduated from The Fashion Institute of Technology in 1995. Ms. Varela’s over 25 years of experience at the Company provides relevant industry knowledge and expertise, and leadership to the Board. Required Vote Proxies will be voted for the election of the eleven nominees as directors of the Company unless otherwise specified in the proxy. A plurality of the votes cast by the holders of shares of Common Stock present in person or represented by proxy and entitled to vote at the Annual Meeting will be necessary to elect the nominees as directors. This means that the director nominees who receive the greatest number of affirmative votes cast are elected as directors, subject to our Director Election (Majority Voting) Policy, which is described below. If, for any reason, any nominee is unable or unwilling to serve, the proxies will be voted for a substitute nominee, who will be designated by the Board of Directors at the Annual Meeting. Stockholders may abstain from voting by marking the appropriate boxes on the accompanying proxy. Abstentions will be counted separately and used for purposes of calculating whether a quorum is present at the Annual Meeting, but will have no effect on the outcome of the vote.
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR The Compensation Committee is responsible for establishing and overseeing all matters pertaining to compensation paid to directors for service on the Board and its committees. The following table sets forth information concerning the 2024 Fiscal Year compensation of our non- employee directors who served in the 2024 Fiscal Year. Following the table is a discussion of material factors related to the information disclosed in the table. Mr. Rosenfeld and Ms. Varela do not receive any compensation for their service on the Board.
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | | Peter A. Davis(2) | 85,000 | 120,018 | — | 205,018 | | Al Ferrara(3) | 120,000 | 120,018 | — | 240,018 | | Mitchell S. Klipper(4) | 95,000 | 120,018 | — | 215,018 | | Maria Teresa Kumar(5) | 85,000 | 120,018 | — | 205,018 | | Rose Peabody Lynch(6) | 95,000 | 120,018 | — | 215,018 | | Peter Migliorini(7) | 100,000 | 120,018 | — | 220,018 | | Arian Simone Reed(8) | 85,000 | 120,018 | — | 205,018 | | Ravi Sachdev(9) | 95,000 | 120,018 | — | 215,018 | | Robert Smith(10) | 95,000 | 120,018 | — | 215,018 |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| (1) Reflects the grant date fair value of stock awards calculated in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. Assumptions used in the calculation of these amounts are included in Note 8 to our audited financial statements for the fiscal year ended December 31, 2024 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 3, 2025. |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| (2) At December 31, 2024, the aggregate number of shares of restricted Common Stock held by Mr. Davis was 2,906, all of which were issued in the 2024 Fiscal Year, and Mr. Davis had no options outstanding. |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| (3) At December 31, 2024, the aggregate number of shares of restricted Common Stock held by Mr. Ferrara was 2,906, all of which were issued in the 2024 Fiscal Year, and Mr. Ferrara had no options outstanding. |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| (4) At December 31, 2024, the aggregate number of shares of restricted Common Stock held by Mr. Klipper was 2,906, all of which were issued in the 2024 Fiscal Year, and Mr. Klipper had no options outstanding. |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| (5) At December 31, 2024, the aggregate number of shares of restricted Common Stock held by Ms. Kumar was 2,906, all of which were issued in the 2024 Fiscal Year, and Ms. Kumar had no options outstanding. |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| (6) At December 31, 2024, the aggregate number of shares of restricted Common Stock held by Ms. Lynch was 2,906, all of which were issued in the 2024 Fiscal Year, and Ms. Lynch had no options outstanding. |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| (7) At December 31, 2024, the aggregate number of shares of restricted Common Stock held by Mr. Migliorini was 2,906, all of which were issued in the 2024 Fiscal Year, and Mr. Migliorini had no options outstanding. |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| (8) At December 31, 2024, the aggregate number of shares of restricted Common Stock held by Ms. Reed was 2,906, all of which were issued in the 2024 Fiscal Year, and Ms. Reed had no options outstanding. |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| (9) At December 31, 2024, the aggregate number of shares of restricted Common Stock held by Mr. Sachdev was 2,906, all of which were issued in the 2024 Fiscal Year, and Mr. Sachdev had no options outstanding. |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
| (10) At December 31, 2024, the aggregate number of shares of restricted Common Stock held by Mr. Smith was 2,906, all of which were issued in the 2024 Fiscal Year, and Mr. Smith had no options outstanding. |
COMPENSATION OF DIRECTORS IN THE 2024 FISCAL YEAR
Directors who are also our employees are not paid any fees or other remuneration for service on the Board of Directors or any of its committees. In the 2024 Fiscal Year, each non-employee director received for service on the Board a grant of 2,906 shares of restricted Common Stock, vesting on May 20, 2025, the first anniversary of the grant date, and was entitled to receive $75,000 for such service. In the 2024 Fiscal Year, members of the Audit Committee, Nominating/Corporate Governance Committee, Compensation Committee and Corporate Social Responsibility Committee were each entitled to receive an additional $10,000 for serving on such committees. Additionally, the Chairman of the Audit Committee was entitled to receive $35,000 for serving in this role and the Chairman of the Compensation Committee was entitled to receive an additional $15,000. We reimburse our directors for any out-of-pocket expenses incurred by them in connection with services provided in such capacity, in accordance with our business expense reimbursement guidelines. STOCK OWNERSHIP
EXECUTIVE COMPENSATION
| ● | base salary; | | ● | annual performance-based cash bonuses; | | ● | long-term equity incentives (consisting of restricted stock, and, in certain cases, performance shares); and | | ● | benefits and perquisites. |
EXECUTIVE COMPENSATION
| | Bonus as % of | | EBIT | Salary | | Maximum (130% of Plan) | 80% | | Target (100% of Plan) | 50% | | Threshold (90% of Plan) | 30% |
EXECUTIVE COMPENSATION
| Diluted EPS | Bonus as % of Salary | | Maximum (130% of Plan) | 90% | | Target (100% of Plan) | 60% | | Threshold (90% of Plan) | 40% |
EXECUTIVE COMPENSATION
| Named Executive Officer | 2024 Annual Performance-Based Cash Bonus | | Edward R. Rosenfeld | $880,000 | | Amelia Newton Varela | $407,496 | | Zine Mazouzi | $420,045 | | Lisa Keith | $106,250 | | Karla Frieders | $- |
EXECUTIVE COMPENSATION
Adjusted EBIT and adjusted diluted EPS represent financial measures that are adjusted from the corresponding GAAP financial measures. We include a reconciliation of these adjusted financial measures to the corresponding GAAP financial measures in Annex A to this Proxy Statement. In Fiscal Year 2024, we established a bonus pool equal to 6.6% of our net income out of which any bonuses earned by our Named Executive Officers and other key executives would be paid. The bonus pool, based on net income of $169.4 million for Fiscal Year 2024, was approximately $11.2 million. Long-term Equity Incentives. Management and the Compensation Committee believe that equity-based awards are an important factor in aligning the long-term financial interest of the executive officers and stockholders. The Compensation Committee continually evaluates the use of equity-based awards and intends to continue to use such awards in the future as part of designing and administering our compensation program. In Fiscal Year 2024, the Compensation Committee continued its practice in recent years of granting equity incentives in the form of restricted stock, which the Compensation Committee believes provides both substantial incentive and retention characteristics. The Committee also awarded Mr. Rosenfeld a grant of performance shares under the terms of his employment agreement. The Committee designed these awards to provide emphasis on preserving stockholder value generated in recent years while providing significant incentives for continuing growth in stockholder value. We determined the amounts of the equity-based awards that we granted to our Named Executive Officers in the Fiscal Year 2024 based on the Committee’s evaluation of our performance during Fiscal Year 2023, Gallagher’s recommendations based on comparisons with our peer group companies, including target incentive compensation (which we discuss below under “Pay Levels and Benchmarking”), the individual performance of the Named Executive Officers and the terms of their individual employment agreements. On March 15, 2024, we made a grant of 81,672 shares of restricted Common Stock to Mr. Rosenfeld, a grant of 6,005 shares of restricted Common Stock to Mr. Mazouzi, a grant of 6,005 shares of restricted Common Stock to Ms. Varela and a grant of 2,402 shares of restricted Common Stock to Ms. Frieders. Mr. Mazouzi also received a grant of 23,641 shares of restricted stock on January 2, 2024 pursuant to the terms of his employment agreement. Ms. Keith also received grants of 5,833 and 8,044 shares of restricted Common Stock on February 1, 2024 and August 1, 2024, respectively. Each of those grants vests 20% per year over five years commencing on the first anniversary of the grant date. In addition, under the terms of his employment agreement, Mr. Rosenfeld received a grant of 86,476 performance shares with a grant date fair value of approximately $3,600,000 that is eligible to be earned over the three-year performance period from 2024-2026 based on the Company’s average annual return on capital over such performance period compared to the average annual return on capital of a predetermined peer group. The peer group initially selected by the Committee for Mr. Rosenfeld’s performance shares was as follows:
EXECUTIVE COMPENSATION
Because only four peer companies disclose compensation for a Chief Merchandising Officer, the Committee added seven additional companies with respect to the consideration of Ms. Frieders’ compensation: Big Lots Inc., Burlington Stores Inc., Carter’s Inc., Citi Trends Inc., Dollar General Inc., Express (former peer company) and Vince Holding Corp. After consideration of data on external competitive levels of compensation and internal needs, the Compensation Committee makes decisions regarding the Named Executive Officers’ target total compensation opportunities based on the need to attract, motivate and retain an experienced and effective management team. Relative to the competitive market data, the Compensation Committee generally intends that the base salary and target incentive compensation, including both cash bonuses and equity-based compensation, for each Named Executive Officer will be at the median of the competitive market. As noted above, despite our overall pay positioning objectives, pay opportunities for specific individuals vary based on factors such as scope of duties, tenure, institutional knowledge and difficulty in recruiting a new executive. Actual total compensation in a given year will vary above or below the target compensation levels based primarily on the attainment of operating goals and the creation of stockholder value. Compensation Committee Discretion The Compensation Committee has complete discretion whether to make cash performance bonuses or equity- based incentive awards, with the exception of any such payouts that are to be made pursuant to contractual commitments. We describe factors to consider in making such awards under “Annual Performance-Based Cash Bonuses” and “Long-term Equity Incentives” above. Pay Ratio As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the following disclosure provides the relationship of the total annual compensation of our median-paid employee to the total annual compensation of our Chief Executive Officer, Mr. Rosenfeld. The table below sets forth the total annual compensation for Mr. Rosenfeld and our median-paid employee, who is a store assistant manager, and the ratio between the two.
EXECUTIVE COMPENSATION
We determined our median-paid employee as of December 31, 2024, which date was within the last three months of the 2024 Fiscal Year, as permitted by the pay ratio rule under the Dodd-Frank Act. In determining our median employee, we applied the “de minimis” exemption under the rule, which allows the exemption of 5% or less of our total global workforce in jurisdictions outside of the U.S. Our total global workforce as of December 31, 2024 was 4,400 employees. As such, we excluded all of our employees in each of Portugal, 25 employees; Taiwan, 45 employees; the Netherlands, 66 employees; Ecuador, 26 employees; Colombia, 24 employees; Panama, 5 employees; Serbia, 14 employees and Croatia, 5 employees; which in total amounted to 210 employees, which was less than 5% of our total global workforce. We did not exclude from consideration any employees who joined the Company during the 2024 Fiscal Year as the result of a business acquisition or combination. Employees on leave of absence were excluded and wages and salaries were annualized for those employees who were not employed for the entire 2024 Fiscal Year. To identify our median employee, we used payroll data consisting of salary, hourly wage, overtime wage, bonus, commissions, vesting of equity awards and any similar payroll items for all of our employees included in the calculation. For purposes of determining the ratio, we determined our median-paid employee’s annual total compensation for the 2024 Fiscal Year using the same method required for calculating our Chief Executive Officer’s (and other Named Executive Officers’) total annual compensation for purposes of the Summary Compensation Table for the Fiscal Year 2024. We believe that the ratio stated above is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. It is based on the methodologies, assumptions and estimates described above and is not necessarily comparable to the ratios reported by other companies. Risk Assessment Bonus payments to executives are either based on the discretion of the Compensation Committee or are tied to growth in various indicators of financial performance, such as EBIT or diluted earnings per share. We have established long-term incentives in the form of time-vested restricted stock that generally vests over four or five years and, in certain cases, performance-based equity awards. We believe these forms of compensation have proved effective in rewarding performance while not encouraging inappropriate risk-taking. The Compensation Committee undertook to review and evaluate our executive and company-wide compensation program and plans to assess whether any aspect of the program and these plans would encourage inappropriate risk-taking by our executives and non-executive employees that could have a material adverse effect on the Company and to confirm that we have adequate risk management controls in place to ensure that executive and company-wide compensation is reasonable and achieves its intended incentive without creating unacceptable risk. Based on such review and evaluation, the Compensation Committee believes there is no material risk to the Company that is related to our compensation program for executives and non-executive employees. This review and evaluation of the risks associated with our compensation program and plans consisted of:
EXECUTIVE COMPENSATION
| ● | we use a pay mix that is well-balanced between short-term financial performance and long-term stock performance, consisting of secure compensation in the form of base salary, short-term incentives in the form of potential for cash bonuses, and long-term incentives in the form of time-vested restricted stock that generally vest over four or five years and, in certain cases, performance-based equity awards; | | ● | in most instances, management or the Compensation Committee retains the discretion to decrease all forms of incentive compensation based on significant individual or Company performance shortfalls; | | ● | we periodically benchmark our compensation program and plans and target executive and non-executive compensation within the normal limits of the competitive market; and | | ● | the Compensation Committee provides oversight of our compensation program and plans and compensation philosophy, makes recommendations to the Board with respect to improvements to our compensation program and plans, and is responsible for reviewing and approving executive compensation and administering and awarding incentive, deferred and equity compensation to our senior executives. |
EXECUTIVE COMPENSATION
In light of the assessment described above, the Compensation Committee concluded that the risks associated with our compensation program and plans (executive and company-wide) are not reasonably likely to have a material adverse effect on the Company. Implications of Tax and Accounting Matters As a general matter, the Compensation Committee considers the various tax and accounting implications of compensation vehicles that we employ. Although the Compensation Committee reviews and considers both the accounting and tax effects of various components of compensation, those effects are not a significant factor in the Compensation Committee’s allocation of compensation among the different components. Compensation paid to certain covered employees, generally including our Named Executive Officers, generally is not deductible to the extent that the compensation exceeds $1 million in any one year for any such covered employee under Code Section 162(m). The Compensation Committee believes that our interests and those of our stockholders are best served by providing competitive levels of compensation, even if not fully deductible, so some of the compensation that we have provided to our Named Executive Officers in the past, and that we provide to our executive officers in the future, may not be deductible under Code Section 162(m). As more fully described below under the heading “Termination, Change-in-Control and Non- Competition/Non-Solicitation,” with the exception of Ms. Frieders, all of our Named Executive Officers are entitled to receive certain compensation in the event of a termination of employment in connection with a change-in-control event for the Company, which payments may trigger the application of the “golden parachute” provisions of Sections 280G and 4999 of the Code. Section 280G of the Code disallows a tax deduction with respect to excess parachute payments to certain executives of companies that undergo a change-in-control. In addition, Section 4999 of the Code imposes a 20% excise tax on the individual receiving the excess parachute payment. Excess parachute payments are golden parachute payments that exceed an amount determined under Section 280G based on the executive’s prior compensation. In approving the compensation arrangements of our Named Executive Officers, our Compensation Committee considers all elements of the cost to the Company of providing such compensation, including the potential impact of Sections 280G and 4999, which, under certain circumstances, may limit the deductibility of executive compensation. However, our Compensation Committee may determine, in its judgment, to authorize compensation arrangements that could give rise to loss of deductibility under Section 280G and the imposition of excise taxes under Section 4999 when it believes that such arrangements are appropriate to attract and retain executive talent. Clawback Policy We have adopted a Recovery Policy (the “Clawback Policy”) that is designed to comply with NASDAQ Listing Rule 5608 relating to such policies (with such listing rule itself having been adopted as required by SEC rules adopted pursuant to the Dodd-Frank Act). The Clawback Policy applies to our executive officers, including the Named Executive Officers, and provides for the repayment of certain incentive compensation received over a covered period if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws. The covered period under the Clawback Policy is the three full fiscal years prior to the date the Company is required to prepare an accounting restatement. Compensation subject to recovery is the amount of incentive-based compensation received that exceeds the amount of incentive- based compensation that otherwise would have been received had it been determined based on the restated amounts. Policies and Practices for Granting Certain Equity Award We generally grant annual equity-based awards during the first half of our fiscal year, although such timing may change from year to year. Our Compensation Committee also may consider and approve interim or mid-year grants, or grants made on another basis, from time to time based on business needs, changing compensation practices or other factors, in the discretion of our Compensation Committee. Our Compensation Committee does not take into account material nonpublic information in determining the timing and terms of equity-based awards, and we have not timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. Conclusion The Compensation Committee considers the level and mix of compensation that it finally decides upon as to each executive within the context of both the objective data from our competitive assessment of compensation and performance, as well as the subjective factors as outlined above. The Compensation Committee believes that each of the compensation packages for the Named Executive Officers is within the competitive range of practices when compared to the objective comparative data even where subjective factors may have influenced the compensation decisions.
Option Exercises and Stock Vested in the 2024 Fiscal Year
Option Exercises and Stock Vested in the 2024 Fiscal Year The following table sets forth information concerning stock options exercised and restricted stock vested during the 2024 Fiscal Year for each of the Named Executive Officers. The value realized from exercised options is deemed to be the market value of the Common Stock on the date of exercise, less the exercise price of the option, multiplied by the number of shares of Common Stock underlying the option. The value realized from the vesting of restricted stock is deemed to be the market value of the Common Stock on the date of vesting multiplied by the number of shares vesting.
Option Exercises and Stock Vested in the 2024 Fiscal Year
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Edward R. Rosenfeld | — | — | 127,463 | 5,491,617 | | Zine Mazouzi | — | — | 13,708 | 573,692 | | Amelia Newton Varela | — | — | 23,514 | 986,062 | | Lisa Keith | — | — | 3,002 | 128,627 | | Karla Frieders | — | — | 18,447 | 773,698 |
Option Exercises and Stock Vested in the 2024 Fiscal Year
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information as of December 31, 2024 with respect to compensation plans (including individual compensation arrangements) under which shares of Common Stock are authorized for issuance, aggregated as follows:
Option Exercises and Stock Vested in the 2024 Fiscal Year
| ● | All compensation plans previously approved by security holders; and | | ● | All compensation plans not previously approved by security holders. |
Option Exercises and Stock Vested in the 2024 Fiscal Year
| Equity compensation plan information | Number of securities to be issued upon exercise of outstanding options, warrants and rights (#) | Weighted average exercise price of outstanding options, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in Column (a)) (#) | | Equity compensation plans approved by security holders | 1,268,000 | 36.82 | 10,411,378 | | Equity compensation plans not approved by security holders | — | — | — | | Total | 1,268,000 | 36.82 | 10,411,378 |
Compensation Committee Report
| Year | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards(i) | Equity Award Adjustments(ii) | Compensation Actually Paid To PEO | | 2024 | $9,078,571 | $(7,000,001) | $7,608,260 | $9,686,830 | | 2023 | $5,033,103 | $(2,999,991) | $7,326,543 | $9,359,656 | | 2022 | $7,609,075 | $(5,499,990) | $(173,356) | $1,935,729 | | 2021 | $7,566,831 | $(5,499,985) | $9,432,090 | $11,498,936 | | 2020 | $2,872,859 | $(2,360,456) | $49,995 | $562,398 |