UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
For the fiscal year ended
OR
Commission File Number
(Exact name of Registrant as specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbols(s) |
Name of each exchange on which registered |
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Securities registered pursuant to Section 12(g) of the Act:
None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
☒ |
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Non-accelerated filer |
☐ |
Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of July 29, 2022, the aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $
The registrant had
Documents Incorporated by Reference:
Auditor Name: |
Auditor Location: |
Auditor Firm ID: |
EXPLANATORY NOTE
Except for the amendments described above, this Form 10−K/A does not modify or update the disclosure in our Annual Report on Form 10−K for the fiscal year ended January 28, 2023 filed with the Securities and Exchange Commission on March 16, 2023.
TABLE OF CONTENTS
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PAGE |
PART III |
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ITEM 10. |
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3 |
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ITEM 11. |
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7 |
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ITEM 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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33 |
ITEM 13. |
Certain Relationships and Related Transactions, and Director Independence |
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35 |
ITEM 14. |
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35 |
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PART IV |
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ITEM 15. |
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37 |
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38 |
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2
PART III.
Item 10. Directors, Executive Officers and Corporate Governance
Set forth below is certain information regarding our current directors, including information furnished by them as to their principal occupations and business experience for the past five years, certain directorships held by each director within the past five years, their respective ages as of May 12, 2023, current committee membership, and the year in which each became a director of our Company:
Name |
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Age |
|
Director |
|
Audit |
|
Compensation |
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Nominating and |
|
Cybersecurity |
Lionel F. Conacher, Chairman of the Board and Director |
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60 |
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2018 |
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C |
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X |
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Harvey S. Kanter, President and Chief Executive Officer and Director |
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61 |
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2019 |
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Carmen R. Bauza, Director |
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61 |
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2021 |
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X |
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X |
Jack Boyle, Director |
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55 |
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2017 |
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X |
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C |
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Willem Mesdag, Director |
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69 |
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2014 |
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X |
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C |
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Ivy Ross, Director |
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67 |
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2013 |
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X |
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C |
Elaine K. Rubin, Director |
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60 |
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2021 |
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X |
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X |
C= current member and committee chairperson
X= current member of the committee
Lionel F. Conacher has been a director since June 2018 and became Chairman of the Board on August 12, 2020. Since September 2021, Mr. Conacher has served as a member of the board of directors for Better Choice Company Inc., a publicly-traded company. He also served as a member of the audit committee from November 2021 until September 2022. From September 2022 until May 2023, he served as its interim chief executive officer. Mr. Conacher was a managing partner of Next Ventures, GP from August 2018 until February 2021. From January 2011 to June 2018, Mr. Conacher was a senior advisor for Altamont Capital Partners LLC (“ACP”), a private equity firm. Prior to joining ACP, from April 2008 until July 2010, Mr. Conacher was the president and chief operating officer of Thomas Weisel Partners, an investment bank. Additionally, Mr. Conacher served as the chairman of Wunderlich Securities, an investee company of ACP, from December 2013 until July 2017. Mr. Conacher previously served as a member of the board of directors for AmpHP Inc., a venture-backed human performance company. He formerly served as a member of the board of directors of Mervin Manufacturing, a leading designer and manufacturer of snow boards and other board sports equipment, and PowerDot, Inc., a consumer electronics company that markets a muscle recovery and performance tool. Mr. Conacher brings extensive financial and operational experience to the Board.
Harvey S. Kanter is the President, Chief Executive Officer and a director of the Company. Mr. Kanter joined the Company in February 2019 in a transition role as Advisor to the Acting CEO and assumed the role of President and Chief Executive Officer and a director of the Company in April 2019. Mr. Kanter currently serves as a non-executive co-chair, Seattle University Center for Leadership Formation, Albers School of Business and Economics. Mr. Kanter served as a director and a member of the compensation committee of Potbelly Corporation, a publicly-traded company, from August 2015 until May 2019. Mr. Kanter has over 30 years of business experience, with an extensive background in the retail industry having served from March 2012 until June 2017 as the president and chief executive officer of Blue Nile, Inc., a leading online retailer of high-quality diamonds and fine jewelry and formerly a publicly-traded company. From March 2012 until February 2020, Mr. Kanter also served as a member of the board of directors of Blue Nile, Inc. and, from January 2014 until February 2020 as its chairman. From January 2009 to March 2012, Mr. Kanter was the chief executive officer and president of Moosejaw Mountaineering and Backcountry Travel, Inc., a leading multi-channel retailer of premium outdoor apparel and gear. From April 2003 to June 2008, Mr. Kanter served in various executive positions at Michaels Stores, Inc. He was a former brand ambassador for the Fred Hutch Cancer Research Institute, and previously served as an advisory member to the Seattle University Executive MBA Program. Mr. Kanter brings an extensive knowledge of integrated-commerce retailing, with strong strategic and operational expertise.
Carmen R. Bauza was appointed a director of the Company in December 2021. In March 2023, Ms. Bauza joined the board of directors of OneWater Marine Inc., a publicly-traded company, and serves as a member of its audit and compensation committees. Since May 2022, Ms. Bauza has also served on the board of directors of Zumiez, Inc., a publicly-traded company, and serves as a member of its audit and governance and nominating committees. Ms. Bauza serves as a member of the board of managers of Claire’s Holdings LLC. which she joined in October 2018. Most recently, Ms. Bauza was the chief merchandising officer at Fanatics, Inc. from January 2019 until April 2021. Prior to that, she was the chief merchandising officer at HSN from November 2016 until December 2017 and the senior vice president, general merchandise manager consumables, health and wellness at Walmart from June
3
2007 to October 2016. She previously held roles at Bath & Body Works, Five Below and The Walt Disney Company. Ms. Bauza currently serves as a member of the board of trustees at Seton Hill University and as a member of the advisory board of RoundTable Healthcare Partners Council. Ms. Bauza brings extensive retail and merchandising experience to the Board.
Jack Boyle has been a director since August 2017. Since February 2019, Mr. Boyle has been the global co-president of direct to consumer/omni-channel for Fanatics, Inc., a market leader for officially licensed sports merchandise. Mr. Boyle originally joined Fanatics as president of merchandising in June 2012, and from December 2017 to February 2019, served as co-president of North America direct to consumer/omni-channel. From February 2005 to June 2012, Mr. Boyle was the executive vice president, general merchandising manager of women’s apparel, intimate, cosmetics and accessories for Kohl’s Corporation. From October 2003 to February 2005, he served as senior vice president, divisional merchandise manager of women’s apparel for Kohl’s Corporation, vice president of junior sportswear from July 2000 to October 2003 and vice president of planning/allocation for women's apparel from December 1999 to July 2000. From June 1990 to December 1999, Mr. Boyle held various merchandise positions, including divisional merchandise manager of women’s at May Company. Mr. Boyle brings to the Board extensive experience in merchandising, brand management and omni-channel leadership.
Willem Mesdag has been a director since January 2014. Since January 2005, Mr. Mesdag has been the managing partner of Red Mountain Capital Partners LLC, an investment management firm. Since January 2021, Mr. Mesdag has been a consultant for HPS Investment Partners, a global investment firm. Prior to founding Red Mountain in 2005, Mr. Mesdag was a partner and managing director of Goldman Sachs & Co., which he joined in 1981. Prior to Goldman Sachs, he was a securities lawyer at Ballard, Spahr, Andrews & Ingersoll, which he joined in 1978. He also serves on the board of Heidrick & Struggles International, Inc., a publicly-traded company. He previously served on the boards of 3i Group plc, Cost Plus, Inc., Encore Capital Group, Inc., Nature’s Sunshine Products, Inc. and Yuma Energy, Inc., all of which are or were publicly-traded companies. Having had an extensive career in international investment banking and finance and having served on domestic and international public-company boards, Mr. Mesdag brings to the Board significant knowledge and experience related to business and financial issues, corporate governance and brings an investor's perspective to the Board.
Ivy Ross has been a director since January 2013. In May 2014, Ms. Ross joined Google as head of glass and is currently a vice president of hardware design at Google. From July 2011 until April 2014, Ms. Ross was the chief marketing officer of Art.com from where she oversaw the company's marketing, branding, merchandising and user-experience functions. Prior to Art.com, from June 2008 to June 2011, Ms. Ross was EVP of marketing for the Gap brand, and also acted as the creative catalyst for all brands within Gap, Inc. Ms. Ross also has held senior creative and product design positions at Disney Stores North America, Mattel, Calvin Klein, Coach, Liz Claiborne, Swatch Watch and Avon. She also has served on Proctor and Gamble’s design board since its inception. With her industry insight and marketing expertise, Ms. Ross provides a valuable perspective to the Board as we continue to build our DXL brand.
Elaine K. Rubin has been a director since April 2021. Since January 2010, Ms. Rubin has been the founder and president of Digital Prophets Network, LLC, a consulting, advisory and placement firm with a network of digital commerce experts that supports the growth of retail and direct-to-consumer businesses. Since October 2013, she has also served as an advisor to Hint, Inc., which produces fruit-infused water. Prior to that, Ms. Rubin previously held leadership positions at 1800flowers.com, iVillage.com and amazon.com. She previously served on the boards of Smart & Final Stores, Inc. and Blue Nile, Inc., both of which were formerly publicly-traded companies. Ms. Rubin co-founded shop.org in February 1996 and served as its elected chair of the board of directors from February 1996 to October 2007 and served on the board of the National Retail Federation (NRF) from 2001 until 2010. Ms. Rubin brings extensive knowledge and experience of digital commerce business and will provide a valuable insight to the Board as we continue to grow our direct business.
All directors hold office until the next Annual Meeting of Stockholders and until their respective successors have been duly elected and qualified or until their earlier death, resignation or removal.
Current Non-Director Executive Officers
Peter H. Stratton, Jr., 51, has been our Executive Vice President, Chief Financial Officer and Treasurer since November 2017. Prior to that, Mr. Stratton served as our Senior Vice President, Chief Financial Officer and Treasurer from June 2014 to November 2017. From August 2009 to June 2014, Mr. Stratton was our Senior Vice President of Finance, Corporate Controller and Chief Accounting Officer. Mr. Stratton joined the Company in June 2009 as Vice President of Finance. Prior to joining the Company, Mr. Stratton served as the senior director of corporate accounting at BearingPoint, Inc. from May 2007 to June 2009. Prior to May 2007, Mr. Stratton held various finance and accounting leadership positions at Legal Sea Foods, Inc., Shaw’s Supermarkets, Inc. and Cintas Corporation.
Francis C. Chane, 60, has been our Senior Vice President of Supply Chain and Customer Fulfillment since June 2011. Mr. Chane joined the Company in June 2008 as our Vice President of Distribution & Logistics. Prior to joining our Company, Mr. Chane was the
4
vice president operations & facilities for Redcats USA, a division of the French multi-national company PPR, from 1999 to June 2008. Prior to that, Mr. Chane held various leadership positions with WearGuard Corporation, a division of Aramark Corporation.
John F. Cooney, 40, has been our Senior Vice President, Corporate Controller and Chief Accounting Officer since March 2022. Prior to that, Mr. Cooney was the Vice President of Finance and Managing Director, Corporate Controller and Chief Accounting Officer from May 2018 until March 2022 and was our Vice President of Finance, Corporate Controller and Chief Accounting Officer from May 2015 until May 2018 and our Vice President of Finance and Corporate Controller from June 2014 until May 2015. From November 2010 until June 2014, Mr. Cooney was our Director of Financial Accounting and Reporting. Prior to joining the Company, Mr. Cooney was an audit manager with PricewaterhouseCoopers LLP, which he joined in August 2004.
Anthony J. Gaeta, 53, has been our Chief Stores and Real Estate Officer since April 2023. Prior that that, Mr. Gaeta was the Chief Stores Officer from March 2022 until April 2023. From November 2017 until March 2022, Mr. Gaeta was the Senior Vice President of Store Sales and Operations. Prior to that, Mr. Gaeta was the Vice President of Store Operations and Training from November 2013 until November 2017 and a Zone Vice President from April 2010 until November 2013. Prior to joining the Company, Mr. Gaeta was a regional manager for Men’s Wearhouse from September 2007 until April 2010 and, prior to that, a regional vice president for After Hours Formalwear from March 2006 until September 2007.
Stacey A. Jones, 52, has been our Chief Human Resources Officer since February 2021. From May 2018 until February 2021, she served as Vice President, Managing Director of Human Resources. Prior to that, from April 2013 to April 2018, Ms. Jones was Vice President, Human Resources Operations. Ms. Jones joined the Company in October 2001 and has held a variety of positions in both Retail Operations and Human Resources. Prior to joining the Company, she held leadership positions with Converse, Inc., Jet Apparel and T.A.C. Group, Inc.
Robert S. Molloy, 63, has been our General Counsel since February 2008 and Secretary of the Company since May 2014. From May 2018 until February 2021, Mr. Molloy also served as Chief Administrative Officer. Prior to joining the Company, Mr. Molloy served as the vice president, assistant general counsel at Staples, Inc. from May 1999 to February 2008. Prior to May 1999, Mr. Molloy was a trial attorney.
James Reath, 51, joined the Company in September 2022 as our Chief Marketing Officer. Mr. Reath has over 20 years of marketing leadership experience with a particular focus on omni-retail, digital marketing, brand building and consumer insights. Prior to joining the Company, he was the senior vice president of marketing at Bed Bath & Beyond Inc. from January 2021 until July 2022. Prior to that, Mr. Reath served as the senior vice president, marketing at Macy’s, Inc. from April 2017 to December 2020. From November 2013 through April 2017, he was at BBDO New York where he served as executive vice president, head of retail from January 2016. Mr. Reath was with McKinney from June 2010 until November 2013, where he served as vice president and group account director until January 2012 when he was promoted to executive vice president – director of retail and shopper marketing and became a partner of the firm and member of the board of directors. He was also the chief marketing officer at Young & Rubicam from April 2008 until June 2010. He serves on the New Jersey Regional Council of the American Red Cross.
Allison Surette, 42, has been our Chief Merchandising Officer since March 2022. Prior to that, Ms. Surette was the Senior Vice President, General Merchandise Manager from May 2018 to March 2022 and Vice President, Merchandise Manager of Private Label, Active, Young Men’s and Outerwear from September 2016 to May 2018. Ms. Surette joined the Company in May 2006 as an Associate Planner and in June 2008, she transitioned into Merchandising as an Associate Buyer for Branded Collections. From October 2010 to January 2014, she served as a Buyer of Traditional Branded Collections and Buyer of Private Label Sportshirts and Outerwear. From January 2014 to September 2016, she was the Senior Buyer of Private Label Sportshirts and Outerwear. Prior to joining the Company, Ms. Surette was a planner for TJX from June 2003 until May 2006.
There are no family relationships between any of our directors and executive officers.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities (collectively, the “Reporting Persons”), to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the “SEC”). The Reporting Persons are required to furnish us with copies of all Section 16(a) reports they file. Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us by our officers and directors during fiscal 2022, we believe that the Reporting Persons complied with all applicable Section 16(a) reporting requirements and that all required reports were filed in a timely manner. However, on October 5, 2022, we reported the late filing for each of Messrs. Chane, Cooney, Gaeta, Kanter, Molloy and Stratton and Mses. Surette and Jones of stock options granted by the Board on March 9, 2021, subject to shareholder approval at the Company's Annual Meeting of Stockholders on August 5, 2021.
5
Code of Ethics
We have adopted a Code of Ethics for Directors, Officers and Financial Professionals (the “Code of Ethics”). The full text of the Code of Ethics can be found under “Corporate Governance –Charters & Policies” on the Investor Relations page of our corporate web site, which is at https://investor.dxl.com. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, a provision of our Code of Ethics by posting such information on our website. We also have a Code of Ethics for all of our associates. Annually, our directors and associates, including our officers, certify that they have read and are in compliance with our Code of Ethics.
Audit Committee
We have a separately-designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act. The Audit Committee is currently comprised of Messrs. Conacher and Mesdag and Ms. Ross. Each of the members of the Audit Committee is independent, as independence for Audit Committee members is defined under the rules of Nasdaq. Messrs. Conacher and Mesdag each qualify as an audit committee financial expert under the rules of the Securities Exchange Commission (the “SEC”).
Director Nominations
No material changes have been made to the procedures by which security holders may recommend nominees to our Board from those that were described in our Definitive Proxy Statement for our 2022 Annual Meeting of Stockholders that was filed with the SEC on June 30, 2022.
6
Item 11. Executive Compensation
Compensation Discussion and Analysis
Executive Summary
This Compensation Discussion and Analysis provides a summary of our executive compensation philosophy and programs, and discusses the compensation paid to our Chief Executive Officer (“CEO”), our Chief Financial Officer (“CFO”) and certain of our other executive officers who served in fiscal 2022 (collectively, our “Named Executive Officers”).
Our Named Executive Officers for fiscal 2022 were:
Fiscal 2022 Financial and Executive Compensation Highlights
Fiscal 2022 marked our second record-breaking year of sales, resulting in eight consecutive quarters of positive comparable sales growth and the second year of double-digit adjusted EBITDA margins. Total comparable sales growth was 10.9%, as compared to fiscal 2021. We reported net income of $89.1 million, or $1.33 per diluted share, as compared to net income of $56.7 million, or $0.83 per diluted share, in fiscal 2021. Net income for fiscal 2022 included the release of substantially all of the valuation allowance on deferred tax assets expected to be realized in future periods, which resulted in a non-recurring tax benefit of $31.6 million, or $0.47 per diluted share. Adjusted EBITDA, a non-GAAP measure, was $73.8 million, as compared to $76.9 million for fiscal 2021. The slight decrease in adjusted EBITDA for fiscal 2022 as compared to fiscal 2021 was due to deliberate investments in our business, specifically in marketing, as well as attracting and retaining talent, to drive the transformation of digital and our brand repositioning to support sales growth.
Our fiscal 2022 results exceeded our plan. When setting our plan for 2022, there was continuing uncertainty with respect to inflation, labor shortages, COVID-19 impacts, supply chain issues and geopolitical instability from the Russian invasion of Ukraine. However, through much of fiscal 2022 our sales outperformed both our plan and fiscal 2021 results, with increases in both our stores as well as our direct business. We believe that our brand repositioning resonated with our customer and enabled us to grow sales while maintaining strong margins, but believe we also benefited from some level of pent-up consumer demand and the fiscal stimulus policy in fiscal 2021. The compensation earned by our Named Executive Officers in fiscal 2022 was directly tied to our fiscal 2022 financial results.
The following table shows total compensation earned and total realized pay for each of the Named Executive Officers (NEOs) in fiscal 2022 as compared to fiscal 2021:
|
|
Total Compensation(1) |
|
|
Total Realized Pay (2) |
|
||||||||||||||||||
Named Executive Officer |
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Fiscal 2022 |
|
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Fiscal 2021 |
|
|
% Change |
|
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Fiscal 2022 |
|
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Fiscal 2021 |
|
|
% Change |
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||||||
Harvey S. Kanter |
|
$ |
4,221,881 |
|
|
$ |
3,616,278 |
|
|
|
16.7 |
% |
|
$ |
6,881,634 |
|
|
$ |
8,410,773 |
|
|
|
(18.2 |
)% |
Peter H. Stratton, Jr. |
|
$ |
1,153,866 |
|
|
$ |
1,068,604 |
|
|
|
8.0 |
% |
|
$ |
1,287,281 |
|
|
$ |
1,040,363 |
|
|
|
23.7 |
% |
Anthony J. Gaeta |
|
$ |
831,020 |
|
|
$ |
725,294 |
|
|
|
14.6 |
% |
|
$ |
899,072 |
|
|
$ |
663,061 |
|
|
|
35.6 |
% |
Robert S. Molloy |
|
$ |
1,014,167 |
|
|
$ |
980,419 |
|
|
|
3.4 |
% |
|
$ |
1,088,916 |
|
|
$ |
947,702 |
|
|
|
14.9 |
% |
Allison Surette |
|
$ |
818,948 |
|
|
$ |
- |
|
|
- |
|
|
$ |
850,290 |
|
|
$ |
- |
|
|
- |
|
7
Executive Compensation Philosophy and Objectives
Our Compensation Committee is responsible for establishing, implementing and monitoring adherence to the Board’s compensation philosophy, which is to ensure that executive compensation is fair, reasonable, competitive and consistent with the interests of the Company’s stockholders.
The Compensation Committee believes that an effective executive compensation program will:
When reviewing compensation, the Compensation Committee emphasizes Direct Compensation, which consists of total cash compensation (base salary and annual performance-based cash incentive awards) plus long-term incentive awards, which, prior to the COVID-19 pandemic, were primarily equity awards. Every year, we assess the effectiveness of our compensation plans with the goal of strengthening our overall compensation program as appropriate, including by setting performance metrics to ensure that compensation is aligned with performance that drives stockholder value. We also compare our performance metrics to those used by our peers and take into consideration the recommendations of proxy advisory services.
Key Features of Our Executive Compensation Program
We believe that the Company’s executive compensation program includes key features that align the compensation for our executive officers with the interests of our stockholders.
What We Do |
What We Don’t Do |
Focus on performance-based pay |
No re-pricing of underwater options |
Balance short-term and long-term incentives |
No hedging of Company stock |
Use multiple targets for performance awards |
No tax gross-up on severance payments |
Provide executives with very limited perquisites |
No active supplemental executive retirement plan |
Require “double-trigger” change-in-control provisions |
|
Maintain a “clawback” policy covering incentive cash and equity programs |
|
Seek to mitigate undue risk in compensation plans |
|
Utilize an independent compensation consultant |
|
|
|
Use of Compensation Consultants
The Compensation Committee has the authority to retain compensation consultants and other outside advisors to assist in carrying out its duties, including the review of compensation of our Named Executive Officers. The Compensation Committee may accept, reject or modify any recommendations by compensation consultants or other outside advisors.
The Compensation Committee periodically consults with the Segal Group ("Segal"), formerly Sibson Consulting, an independent firm that specializes in benefits and compensation, with respect to the structure and competitiveness of the Company’s executive
8
compensation program compared to its proxy peer group. The Compensation Committee has assessed Segal’s independence, and has concluded that no conflict of interest exists with respect to the services that it performs.
In February 2022, the Compensation Committee engaged Segal to review Mr. Kanter's base salary and total direct compensation in connection with the amendment of Mr. Kanter’s employment agreement with the Company, as further described below under “Employment Agreement - Harvey S. Kanter, Chief Executive Officer and Director.” Based on market insights from Segal, including information derived from published surveys on CEO compensation in retail companies with annual revenues of up to $500 million and trends in CEO compensation, the Compensation Committee approved an increase in Mr. Kanter's annual base salary from $735,000 to $850,000.
Fiscal 2022 Target Compensation
CEO Compensation. The Compensation Committee is responsible for determining the target compensation of our CEO. With respect to setting 2022 target compensation, working with Segal, the Compensation Committee compared each element of the CEO’s Direct Compensation to published survey data and data from the Company’s peer group. The Compensation Committee’s objective was that total target compensation should approximate the median target compensation of the Company’s compensation peer group.
Other Named Executive Officers. Our CEO is primarily responsible for recommending the compensation paid to our other Named Executive Officers, subject to the review and approval of the Compensation Committee. Our other Named Executive Officers are provided with a competitive base salary and an opportunity to earn performance awards each year, which are driven by our overall financial targets. Compensation to our other Named Executive Officers was most recently reviewed by Segal in May 2019, at which time Segal reported that such compensation was within the median (or 50% percentile) of the Company’s then proxy peer group. See “Compensation Components and Fiscal 2022 Compensation Decisions.”
Our Peers
When determining peer companies for use in reviewing and establishing compensation for our Named Executive Officers, we focus primarily on public companies within the specialty retail apparel business with similar revenue and/or market capitalization. The companies in the fiscal 2022 peer group were:
• |
Boot Barn Holding, Inc. |
• |
J.Jill, Inc. |
• |
Tilly’s Inc. |
|
|
|
|
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|
• |
Build-A-Bear Workshop, Inc. |
• |
Kaspien Holding, Inc. |
• |
Vera Bradley |
|
|
|
|
|
|
• |
Cato Group |
• |
Kirkland’s, Inc. |
• |
Vince Holding Corp. |
|
|
|
|
|
|
• |
Citi Trends |
• |
Movado Group |
• |
Zumiez, Inc. |
|
|
|
|
|
|
• |
Delta Apparel, Inc. |
• |
Sportsman’s Warehouse |
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|
|
|
|
|
|
|
• |
Duluth Holding, Inc. |
• |
Tile Shop Holdings |
|
|
|
|
|
|
|
|
The Compensation Committee engaged Korn Ferry to review its peer group for fiscal 2023. As a result of that review and based on the recommendations of Korn Ferry, for fiscal 2023 the Company has removed Boot Barn Holding, Inc., Sportsman's Warehouse and Kaspien Holding, Inc. due to their annual revenues being outside of the preferred revenue parameters, and will add Shoe Carnival and Big 5 Sporting Goods to its 2023 peer group.
In order to develop an appropriate peer group, we consider companies with a range of revenues, assets and market capitalizations that may differ from those included by independent analysts such as Institutional Shareholder Services (ISS). With respect to our fiscal 2022 peers, we fell just below the median of the revenues and assets of our peer group. Our market capitalization was considered in developing our peer group, but due to the fact that our stock is so thinly traded, more weight was given to the revenue and assets. We do so because we believe that companies doing business in specialty retail markets with omni-channel distribution models provide a better benchmark for total shareholder return. An independent analyst may include a company that falls within the same Standard & Poor’s GICS code with similar revenue and market capitalization but with a different business model, business risks, geographic locations, customer base and industry traffic trends and which, consequently, may have nothing in common with our Company. For example, a company that owns automotive dealerships is within the same GICS code as our Company, but clearly has a distinctively different business model and is not affected by the same trends that affect specialty retail apparel.
9
Say-on-Pay
At our 2017 Annual Meeting, stockholders voted on a non-binding advisory proposal as to the frequency with which we should conduct an advisory vote on executive compensation (a "say-on-pay proposal"). At that meeting, and in accordance with the recommendation of our Board, 95.6% of votes cast voted for the “one-year” frequency for advisory votes on executive compensation. We intend to hold such vote every year, until the next “say-on-pay” frequency vote, which will be at our 2023 Annual Meeting.
At our 2022 Annual Meeting, stockholders had an opportunity to cast a non-binding advisory vote on executive compensation as disclosed in the 2022 Proxy Statement. Of the votes cast on the say-on-pay proposal, 99.5% voted in favor of the proposal. The Compensation Committee considered the results of the 2022 advisory vote and believes that it affirms support of our stockholders for our approach to executive compensation, namely to align short- and long-term incentives with the Company’s financial performance. We will continue to consider the outcome of subsequent say-on-pay votes when making future compensation decisions for our executive officers.
Risk Assessment/Clawback
We believe that our compensation programs do not provide incentives for unnecessary risk taking by our employees. Our employment agreements with each of our Named Executive Officers include a “clawback” provision that permits us to demand full repayment of certain amounts paid to the executive in the event we learn, after the executive’s termination, that the executive could have been terminated for “justifiable cause.” In addition, in August 2018, our Compensation Committee approved the Executive Incentive Pay Clawback Policy (“Clawback Policy”) that would allow the Company to recover all Excess Incentive-Based Compensation, as defined in the Clawback Policy, from each executive who willfully committed an act of fraud, dishonesty, or recklessness that contributed to any error or noncompliance that resulted in a financial restatement. Incentive-Based Compensation includes all cash and equity awards. In addition, pursuant to Section 10D of the Exchange Act, The Nasdaq Stock Market is required to adopt listing rules requiring the repayment of incentive-based compensation (as defined in Section 10D of the Exchange Act). Therefore, such incentive-based compensation to our Named Executive Officers will be subject to the provisions of any compensation recovery policy adopted by the Company as required by Section 10D of the Exchange Act and any other Company policy that may be adopted regarding compensation recovery, including to comply with any applicable law and government regulation.
Our emphasis on performance-based annual and long-term incentive awards is also designed to align executives with preserving and enhancing shareholder value. Based on these considerations, among others, we do not believe that our compensation policies and practices create risks that are likely to have a material adverse effect on our Company.
Compensation Components and Fiscal 2022 Compensation Decisions
We believe that our executive compensation policies and practices appropriately align the interests of our executives with those of our stockholders and emphasize the shared responsibility of our executive officers for the Company’s financial performance. Accordingly, the compensation of our Named Executive Officers is heavily weighted toward “at-risk” performance-based compensation.
The primary components of compensation for our Named Executive Officers include base salary (“fixed compensation”), annual performance-based cash incentives and long-term incentives (“at-risk compensation”). The annual weight of each component leads to the following allocation of potential compensation that each executive can earn.
The components of executive compensation are as follows:
Base salary represents the fixed component of an executive’s annual compensation. In order to attract and retain top executive talent, we believe that it is important that our base salary be competitive, generally at or near the median of our industry peers.
10
Base salaries are reviewed annually and adjustments are influenced by the Company’s performance in the previous fiscal year and the executive’s contribution to that performance. The executive’s performance is measured by various factors, including, but not limited to, achievement of specific individual and department goals. Additionally, adjustments may consider an individual’s promotion that may have occurred during the fiscal year, and any modifications in the individual's level of responsibility.
The Compensation Committee expects the CEO’s base salary to be at or near the peer group median, and to approximate 25%-33% of his target Direct Compensation. Our CEO determines the base salary of our other Named Executive Officers, subject to the review and approval of the Compensation Committee, and targets the median of the peer group and published industry compensation surveys.
In March 2022, Mr. Gaeta was promoted to Chief Stores Officer and his base salary was increased from $295,000 to $325,000. In March 2022, Ms. Surette was promoted to Chief Merchandise Officer, and her base salary was increased from $285,000 to $314,000. Mr. Kanter's salary for fiscal 2022 was increased from $735,000 to $850,000 effective April 1, 2022, in accordance with the terms of his amended and restated employment agreement, discussed below.
Subsequent to fiscal 2022, Ms. Surette's base salary was adjusted to $350,000, effective January 29, 2023 and was adjusted to $375,000, effective April 16, 2023. Effective April 16, 2023, Mr. Gaeta was named Chief Stores and Real Estate Officer, and his salary was increased from $325,000 to $400,000.
The Compensation Committee believes that a substantial portion of each Named Executive Officer’s compensation should tie directly to our Company’s financial performance. On April 2, 2022, the Compensation Committee approved our Fifth Amended and Restated Annual Incentive Plan (“AIP”) that provides for an annual performance-based cash incentive for all executives as well as certain non-executive employees, which was effective beginning with our 2022 AIP awards. The AIP was amended, among other things, to change the definition of employees eligible to participate in the AIP, which resulted in increased participation in the AIP.
2022 AIP Awards
On April 9, 2022, the Compensation Committee established the performance metrics for the 2022 AIP. For fiscal 2022, Mr. Kanter’s target participation in the AIP was at 100% of his earned salary and Mr. Molloy participated at 50% of his earned salary. Effective March 6, 2022, Mr. Stratton's participation rate increased from 55% to 60% and Mr. Gaeta's and Ms. Surette's participation rates increased from 40% to 50% and therefore resulted in a blended participation rate for each of them.
The performance metrics and potential payout levels were derived from the Company’s annual operating plan for fiscal 2022. The Compensation Committee believed that sales growth and profitability (adjusted EBITDA) continued to be the two most significant financial metrics for the 2022 AIP. In addition to the two financial metrics, specific departmental metrics were set for Store Operations, Marketing & Digital, and Merchandise/Planning and Allocation, as well as personal goals. For Messrs. Kanter, Stratton and Molloy, the financial metrics represented 80% of their AIP, and for Mr. Gaeta and Ms. Surette, these financial metrics represented 40%, and their respective departmental metrics represented 40% of their AIP. The remaining 20% for each of the Named Executive Officers was attributable to the achievement of pre-defined personal goals. See footnote 3 to the below table for a discussion of these personal goals.
The 2022 AIP metrics were intended to be achievable, with an approximate 50% probability of achievement; however, given the uncertainty surrounding the duration of the pandemic, the rollout of vaccines and its impact on our financial results, there was an inherent risk that these metrics might not be attainable. The decrease in our adjusted EBITDA target for fiscal 2022 as compared to actual adjusted EBITDA for fiscal 2021 was due to planned investments in our business, specifically in marketing and, as we reported, our cost structure in fiscal 2021 was not sustainable to support the current level of sales and future sales growth.
The 2022 AIP performance metrics and actual results against these metrics were as follows:
11
|
|
Metric |
|
Award % for Metric other than Mr. Gaeta and Ms. Surette |
Award % Weight of Metric for Mr. Gaeta |
Award % Weight of Metric for Ms. Surette |
|
Minimum/Maximum Potential Payout |
|
2022 Target |
2022 Actual |
Payout % earned |
Corporate Target 1 |
|
Sales |
|
40.0% |
20.0% |
20.0% |
|
100% payout at target, with 50% payout at 96.2% of target and 150% payout at 101.9% of target, with the exception of Mr. Kanter who was eligible for maximum payout of 200% at 101.9% of target.
|
|
$520.0 million |
$545.8 million |
150.0% (200.0% for Mr. Kanter) |
Corporate Target 2 |
|
Adjusted EBITDA(1) |
|
40.0% |
20.0% |
20.0% |
|
100% payout at target, with 50% payout at 94.3% of target and 150% payout at 103.9% of target, with the exception of Mr. Kanter who was eligible for a maximum payout of 200% at 103.9% of target.
|
|
$53.0 million |
$73.8 million |
150.0% (200.0% for Mr. Kanter) |
Department goals, if applicable |
|
Store Operations |
|
-- |
15.0% |
-- |
|
Store conversion |
|
(2) |
(2) |
150.0% |
|
|
|
15.0% |
|
|
Payroll as a % of sales |
|
(2) |
(2) |
150.0% |
||
|
|
|
10.0% |
|
|
Net promoter score (NPS) |
|
74 |
76 |
150.0%
|
||
|
|
Merchandise |
|
|
10.0% |
|
Sales by category |
|
(2) |
(2) |
150.0% |
|
|
|
Planning & Allocations |
-- |
-- |
10.0% |
|
Gross margin by category |
|
(2) |
(2) |
139.6% |
|
|
|
|
|
10.0% |
|
Inventory turnover |
|
(2) |
(2) |
150.0% |
||
|
|
|
|
10.0% |
|
Store conversion |
|
(2) |
(2) |
150.0%
|
||
Personal Target 3 |
|
Discretionary – Personal Goals |
|
20.0% |
20.0% |
20.0% |
|
Discretionary, at target, based upon individual performance, as evaluated by the CEO (except with respect to the CEO whose individual performance was evaluated by the Compensation Committee). Participants were eligible to receive a discretionary award up to 30%, with the exception of Mr. Kanter who was eligible to receive a discretionary award up to 40%. (3) |
|
Varies by NEO |
Varies by NEO |
25.0%-30.0% (40.0% for Mr. Kanter) |
12
As a result of achieving the performance targets for fiscal 2022 pursuant to the 2022 AIP, as shown above, in March 2023 the Compensation Committee approved, upon the completion of the audited financial statements, cash bonus payouts to our NEOs as follows:
Named Executive Officer |
|
Payout at |
|
|
Total |
|
|
Total Cash Payout |
|
|||
Harvey S. Kanter |
|
$ |
830,539 |
|
|
|
200 |
% |
|
$ |
1,661,077 |
|
Peter H. Stratton, Jr. |
|
$ |
241,609 |
|
|
|
150 |
% |
|
$ |
362,413 |
|
Anthony J. Gaeta |
|
$ |
158,221 |
|
|
|
145 |
% |
|
$ |
229,421 |
|
Robert S. Molloy |
|
$ |
192,471 |
|
|
|
145 |
% |
|
$ |
279,083 |
|
Allison Surette |
|
$ |
152,866 |
|
|
|
149 |
% |
|
$ |
227,702 |
|
2023 AIP
On April 27, 2023, the Compensation Committee established the financial, operating and performance metrics for the 2023 AIP. Traditionally, the metrics for the AIP have been focused on the financial and operating performance of the Company in relation to our board-approved budget. However, given the significant uncertainty surrounding the U.S. economy, and the retail industry in particular, in 2023, in order to keep employees engaged and motivated to achieve strategic objectives should the macroeconomic situation deteriorate in 2023, the Compensation Committee added a second tier to the 2023 AIP program that would be a relative measure, comparing the Company's financial performance in fiscal 2023 against the financial performance of its 2023 compensation peer group.
Under this two-tier structure, the payout, if any, will be determined based on the higher achievement of either TIER I (based on the Company’s approved financial plan) or TIER II (based on the relative financial performance of the Company to its 2023 compensation peers). The maximum payout under TIER I remains 150% (200% for Mr. Kanter); however, the maximum payout under TIER II is capped at 100%.
TIER I is structured in the same manner as our 2022 AIP, and consists of two Corporate financial metrics with departmental targets for Store Operations, Marketing & Digital, and Merchandise/Planning and Allocation. Under TIER I, the Company’s financial performance metrics represent 80% for Messrs. Kanter, Stratton and Molloy and 40% for Mr. Gaeta and Ms. Surette. Mr. Gaeta’s performance metrics include specific store operation targets, and Ms. Surette's performance metrics include specific merchandising, planning and allocation targets, and represent 40% of their respective TIER I targets. Discretionary personal goals represent the remaining 20% for each of the Named Executive Officers.
TIER II consists of two Corporate financial metrics (Comparable Sales and Adjusted EBITDA Margin), each weighted 40% for each participant, with the remaining 20% representing discretionary personal goals. Our Comparable Sales and Adjusted EBITDA Margin results for fiscal 2023 will be compared to our 2023 compensation peer group on a quartile ranking. For each metric, if the Company ranks in (i) the top quartile, the payout would be 100%; (ii) the second quartile, the payout would be 75%; and (iii) the third quartile, the payout would be 50%. No payout is earned if the Company finishes in the fourth quartile.
The 2023 AIP performance metrics approved by the Compensation Committee are as follows:
13
|
|
Metric |
|
Award % |
|
Award % Attributable to Metric for Mr. Gaeta |
Award % Attributable to Metric for Ms. Surette |
Minimum/Maximum Potential Payout |
|
TIER I - Company's Financial Performance |
|
|
|
|
|||||
Corporate Target 1 |
|
Sales |
|
40.0% |
|
20.0% |
20.0% |
100% payout at target, with 50% payout at 95.3% of target and 150% payout at 100.5% of target, with the exception of Mr. Kanter who is eligible for a maximum payout of 200% at 100.5% of target.
|
|
Corporate Target 2 |
|
Adjusted EBITDA |
|
40.0% |
|
20.0% |
20.0% |
100% payout at target, with 50% payout at 91.6% of target and 150% payout at 102.3% of target, with the exception of Mr. Kanter who is eligible for a maximum payout of 200% at 102.3% of target.
|
|
Personal Target |
|
Discretionary- Personal Goals |
|
20.0% |
|
20.0% |
20.0% |
Discretionary, at target, based upon individual performance, as evaluated by the CEO (except with respect to the CEO whose individual performance will be evaluated by the Compensation Committee). Participants are eligible to receive a discretionary award up to 30%, with the exception of Mr. Kanter who is eligible to receive a discretionary award up to 40%. |
|
Departmental Goals, if applicable |
|
Store Operations |
|
- |
|
40.0% |
- |
Includes payroll as a percentage of sales target, net promoter score target and store conversion target. |
|
|
|
Merchandise, Planning and Allocation |
|
- |
|
- |
40.0% |
Includes targets for sales by category, gross margin rates by category, inventory turnover and store conversion target. |
|
|
|
|
|
|
|
|
|
Departmental goals payouts range from 50% to 150% dependent upon achievement of the various targets. |
|
TIER II - Measured Against the Company's 2023 Peers |
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
Corporate - Target 1 |
|
Comparable Sales
|
|
40.0% |
|
40.0% |
40.0% |
Top Quartile 100%; 2nd Quartile 75%; 3rd Quartile 50%; 4th Quartile no payout. |
|
Corporate - Target 2 |
|
Adjusted EBITDA Margin
|
|
40.0% |
|
40.0% |
40.0% |
Top Quartile 100%; 2nd Quartile 75%; 3rd Quartile 50%; 4th Quartile no payout. |
|
Personal Targets |
|
Discretionary- Personal Goals |
|
20.0% |
|
20.0% |
20.0% |
Same as discussed above, except that elements of departmental goals will be factored in with respect to participants who have departmental goals under Tier I, including Mr. Gaeta and Ms. Surette. |
|
|
|
|
|
|
|
|
|
|
|
The above targets for each metric in TIER I were derived from the Company’s annual operating plan and budget for the 2023 fiscal year, and are intended to be achievable, with an approximate 50% probability of achievement. The likelihood of achieving the 2023 targets reflects the challenges inherent in achieving the goals and objectives of an ambitious operating plan, given the continuing uncertainty with respect to the economy, rising costs, and consumer spending. The Compensation Committee's adoption of the TIER II plan is to ensure that all participants in the recently expanded AIP will be motivated, despite any economic headwinds faced by the Company and, in all likelihood, its 2023 compensation peer group, in fiscal 2023.
For fiscal 2023, Mr. Kanter will continue to participate at 100% of his salary, Mr. Stratton will continue to participate at 60% of his salary, and Messrs. Molloy and Gaeta and Ms. Surette will continue to participate at 50% of their respective salaries.
14
The Company’s long-term incentive plan is designed to ensure that the interests of our executives are aligned with those of our stockholders to create sustainable shareholder value and to promote executive retention.
On March 30, 2022, the Compensation Committee approved the Fourth Amended and Restated Long-Term Incentive Plan (the "LTIP"), which was effective beginning with the 2022-2024 LTIP. The LTIP was amended to, among other things, add a definition for "Structured Retirement" and the related vesting of both time-based and performance-based awards under such Structured Retirement. The addition of Structured Retirement provides an opportunity for greater vesting upon retirement where the participant assists the Company in ensuring the succession of the participant’s position within the Company prior to the participant’s retirement. In order to be eligible to participate in a Structured Retirement, the participant must terminate employment after meeting the age and service requirements set forth in the LTIP, the Compensation Committee must confirm through proper corporate action that the participant has met all of the succession planning objectives set by the Compensation Committee for the participant, the participant must continue to work until the date required by the Compensation Committee (which may not be more than 60 days after the Compensation Committee confirms that the objectives have been met), and the participant must execute a release of claims in favor of the Company. The final determination as to whether the requirements of a Structured Retirement have been met is in the sole discretion of the Compensation Committee.
2020-2022 LTIP
The performance period for the Company’s 2020-2022 LTIP ended on January 28, 2023. The performance target, which was established by the Compensation Committee on June 11, 2020, and the actual performance achieved was as follows:
2020-2022 LTIP Performance Period
Metric |
|
Weight of each target |
|
Potential Payout |
|
Target |
|
Actual |
|
Payout % |
|
|
3-yr. relative total shareholder return as compared to 2020 disclosed proxy peers |
|
100.0% |
|
100% payout at target (2nd quartile), with 50% payout (3rd quartile) and 150% payout (1st quartile). No payout in the 4th quartile. |
|
2nd quartile |
|
1st quartile |
|
|
150.0 |
% |
Based on the above achievement, subsequent to the end of fiscal 2022, on March 6, 2023, the Compensation Committee approved, subject to the Audit Committee's approval of the Company's audited financial results, a total performance award of $2.8 million to be granted on March 23, 2023, in a combination of 50% cash and 50% RSUs. All awards are subject to further vesting through August 31, 2023. Approximately $1.6 million of the $2.8 million of the 2020-2022 LTIP award was earned by the Named Executive Officers.
The following is a summary of the awards granted to our Named Executive Officers on March 23, 2023 as a result of achieving the performance metrics under the 2020-2022 LTIP:
Name |
|
RSUs |
|
|
Cash |
|
|
Total Award |
|
|||
Harvey S. Kanter |
|
$ |
468,563 |
|
|
$ |
468,563 |
|
|
$ |
937,126 |
|
Peter H. Stratton, Jr. |
|
$ |
103,688 |
|
|
$ |
103,688 |
|
|
$ |
207,376 |
|
Anthony J. Gaeta |
|
$ |
77,438 |
|
|
$ |
77,438 |
|
|
$ |
154,876 |
|
Robert S. Molloy |
|
$ |
98,438 |
|
|
$ |
98,438 |
|
|
$ |
196,876 |
|
Allison Surette |
|
$ |
74,813 |
|
|
$ |
74,813 |
|
|
$ |
149,626 |
|
2021-2023 LTIP and 2022-2024 LTIP
The following is a summary of the 2021-2023 LTIP and 2022-2024 LTIP in effect, but not completed, during fiscal 2022:
15
Summary of LTIPs |
|
2021-2023 |
|
2022-2024 |
||
Effective date |
|
March 8, 2021 |
|
April 9, 2022 |
||
Performance period |
|
3yrs |
|
3yrs |
||
End of Performance Period |
|
February 3, 2024 |
|
February 1, 2025 |
||
Target cash value |
|
Annual Salary * Participation Rate |
|
Annual Salary * Participation Rate |
||
|
|
Time-Based |
Performance-Based |
|
Time-Based |
Performance-Based |
Allocation of Target Cash Value |
|
50% |
50% |
|
50% |
50% |
Award type |
|
at effective date: |
RSUs, Cash or a combination thereof, when earned |
|
at effective date: |
RSUs, Cash or a combination thereof, when earned |
Vesting period |
|
25% April 1, 2022 |
any award earned subject to additional vesting through August 31, 2024 |
|
25% April 9, 2023 |
any award earned subject to additional vesting through August 31, 2025 |
|
|
|
|
|
|
|
Performance Targets (1): |
|
Target: |
Min/Max Payout: |
|
Target: |
Min/Max Payout: |
|
|
3-yr. relative total shareholder return as compared to 2021 disclosed proxy peers (2) |
100% payout at target (2nd quartile), with 50% payout (3rd quartile) and 150% payout (1st quartile). No payout in the 4th quartile. |
|
3-yr. relative total shareholder return as compared to 2022 disclosed proxy peers (3) |
100% payout at target (2nd quartile), with 50% payout (3rd quartile) and 150% payout (1st quartile). No payout in the 4th quartile. |
At the time of establishing the performance targets, the Compensation Committee believed that the above metrics reflected the Company’s primary objective of returning to profitability in fiscal 2021 and, in both instances, driving shareholder return.
The following table illustrates the components of the LTIPs with the respective vesting dates, illustrating that the time-based portion of the LTIP acts as a retention tool:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
% of |
|
Vesting of Awards by Fiscal Year: |
|
|||||||||||||
Approval date |
|
Performance Period |
|
total award |
|
2022 |
|
2023 |
|
2024 |
|
2025 |
|
2026 |
|
|||||
3/8/2021 |
|
2021-2023 LTIP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Time-Based Awards, vest April 1 (1), subject to forfeiture |
|
50% |
|
25% |
|
25% |
|
25% |
|
25% |
|
|
— |
|
||||
|
|
Performance-Based Awards- vest August 31, if achieved |
|
50% |
|
|
— |
|
|
— |
|
100% |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
4/9/2022 |
|
2022-2024 LTIP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Time-Based Awards, vest April 1 (1), subject to forfeiture |
|
50% |
|
|
— |
|
25% |
|
25% |
|
25% |
|
25% |
|
||||
|
|
Performance-Based Awards- vest August 31, if achieved |
|
50% |
|
|
— |
|
|
— |
|
|
— |
|
100% |
|
|
— |
|
2023-2025 LTIP
Effective May 1, 2023, the Compensation Committee established and approved the metric for the 2023-2025 LTIP. Consistent with the past three years, the Compensation Committee established a 3-year relative total shareholder return ("TSR") as the only metric under the 2023-2025 LTIP. The Compensation Committee believes that the selection of a relative total TSR against the Company’s 2023 compensation peers aligns the interests of the LTIP participants with the interests of the Company’s stockholders. The Compensation Committee granted the time-based awards for the 2023-2025 LTIP in a combination of 50% restricted stock units and 50% cash.
No discretionary cash or equity awards were granted to our Named Executive Officers in fiscal 2022.
16
We offer our senior executives, including our Named Executive Officers, supplemental disability insurance and long-term care and pay a portion of the premiums, which we do not do for our other employees.
Our Named Executive Officers also receive benefits under certain group health, long-term disability and life insurance plans that are generally available to all of our eligible employees.
After six months of service with us, all of our employees, including our Named Executive Officers, are eligible to participate in our 401(k) Plan, and after one year of employment are eligible for a Company match. For the 2021 plan year, the Company suspended its QACA ("Qualified Automatic Contribution Arrangement") safe harbor and, while not required, the Company made a discretionary employer match for 2021. The Company resumed its QACA safe harbor status for fiscal 2022.
We have employment agreements with our CEO and all of our other Named Executive Officers. Upon termination of employment, each executive is entitled to receive severance payments under his or her employment agreement(s) and under the Company’s incentive programs in the event of a termination without justifiable cause. These employment agreements and incentive programs, as they relate to terminations, are discussed in detail below in the section “Employment Agreements” following the “Summary Compensation Table.” Our employment agreements do not contain any tax gross-ups pursuant to Section 280(g) of the Internal Revenue Code.
17
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on this review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Form 10-K/A.
The Compensation Committee
|
Willem Mesdag, Chair |
Jack Boyle |
Lionel F. Conacher |
|
|
|
|
18
Summary Compensation Table. The following Summary Compensation Table sets forth certain information regarding compensation paid or accrued by us with respect to our Named Executive Officers for fiscal 2022.
SUMMARY COMPENSATION TABLE
Name and Principal Position |
|
Year |
|
Salary ($) |
|
|
Bonus ($) |
|
|
Stock |
|
|
Option |
|
|
Non-Equity |
|
|
All Other |
|
|
Total ($) |
|
|||||||
Harvey S. Kanter |
|
2022 |
|
$ |
830,539 |
|
|
|
— |
|
|
$ |
829,813 |
|
|
|
— |
|
|
$ |
2,402,969 |
|
|
$ |
158,560 |
|
|
$ |
4,221,881 |
|
President and Chief Executive |
|
2021 |
|
$ |
735,000 |
|
|
$ |
73,500 |
|
|
$ |
443,260 |
|
|
$ |
207,035 |
|
|
$ |
2,069,448 |
|
|
$ |
88,035 |
|
|
$ |
3,616,278 |
|
Officer |
|
2020 |
|
$ |
686,942 |
|
|
|
— |
|
|
|
— |
|
|
$ |
436,880 |
|
|
$ |
902,425 |
|
|
$ |
84,682 |
|
|
$ |
2,110,929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Peter H. Stratton, Jr. |
|
2022 |
|
$ |
405,846 |
|
|
|
— |
|
|
$ |
195,263 |
|
|
|
— |
|
|
$ |
526,585 |
|
|
$ |
26,172 |
|
|
$ |
1,153,866 |
|
Executive Vice President, Chief |
|
2021 |
|
$ |
395,000 |
|
|
$ |
39,500 |
|
|
$ |
98,088 |
|
|
$ |
51,844 |
|
|
$ |
458,525 |
|
|
$ |
25,647 |
|
|
$ |
1,068,604 |
|
Financial Officer and Treasurer |
|
2020 |
|
$ |
369,173 |
|
|
|
— |
|
|
|
— |
|
|
$ |
61,358 |
|
|
$ |
200,022 |
|
|
$ |
25,472 |
|
|
$ |
656,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Anthony J. Gaeta |
|
2022 |
|
$ |
322,115 |
|
|
|
— |
|
|
$ |
134,310 |
|
|
|
— |
|
|
$ |
352,030 |
|
|
$ |
22,565 |
|
|
$ |
831,020 |
|
Chief Stores and Real Estate Officer |
|
2021 |
|
$ |
295,000 |
|
|
$ |
29,500 |
|
|
$ |
73,256 |
|
|
$ |
38,281 |
|
|
$ |
267,217 |
|
|
$ |
22,040 |
|
|
$ |
725,294 |
|
|
|
2020 |
|
$ |
275,711 |
|
|
|
— |
|
|
|
— |
|
|
$ |
45,824 |
|
|
$ |
112,162 |
|
|
$ |
21,864 |
|
|
$ |
455,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Robert S. Molloy |
|
2022 |
|
$ |
384,942 |
|
|
|
— |
|
|
$ |
165,988 |
|
|
|
— |
|
|
$ |
434,942 |
|
|
$ |
28,295 |
|
|
$ |
1,014,167 |
|
General Counsel and Secretary |
|
2021 |
|
$ |
375,000 |
|
|
$ |
37,500 |
|
|
$ |
93,122 |
|
|
$ |
49,218 |
|
|
$ |
397,809 |
|
|
$ |
27,770 |
|
|
$ |
980,419 |
|
|
|
2020 |
|
$ |
350,481 |
|
|
|
— |
|
|
|
— |
|
|
$ |
58,251 |
|
|
$ |
156,598 |
|
|
$ |
27,595 |
|
|
$ |
592,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Allison Surette |
|
2022 |
|
$ |
311,558 |
|
|
|
— |
|
|
$ |
129,763 |
|
|
|
— |
|
|
$ |
346,156 |
|
|
$ |
31,471 |
|
|
$ |
818,948 |
|
The fair value associated with the performance-based component of the equity awards under the 2022-2024 LTIP was determined based on the probable outcome of the performance conditions as of the service-inception date. Because the achievement of the performance targets under the 2022-2024 LTIP was not deemed probable as of the service-inception date, no value was attributed to the performance-based portion of these awards. The following reflects the fair values of the performance-based equity portion of the 2022-2024 LTIP assuming the highest level of performance conditions will be achieved for each of the Named Executive Officers:
Harvey S. Kanter |
$ |
541,875 |
|
Peter H. Stratton, Jr. |
$ |
137,363 |
|
Anthony J. Gaeta |
$ |
85,313 |
|
Robert S. Molloy |
$ |
101,325 |
|
Allison Surette |
$ |
82,425 |
|
The following table provides a breakdown of the amounts in fiscal 2022 in the "Stock Awards" column of the Summary Compensation Table above:
Name |
|
2020-2022 LTIP |
|
|
2022-2024 LTIP |
|
|
Total Stock |
|
|||
Harvey S. Kanter |
|
$ |
468,563 |
|
|
$ |
361,250 |
|
|
$ |
829,813 |
|
Peter H. Stratton, Jr. |
|
$ |
103,688 |
|
|
$ |
91,575 |
|
|
$ |
195,263 |
|
Anthony J. Gaeta |
|
$ |
77,438 |
|
|
$ |
56,872 |
|
|
$ |
134,310 |
|
Robert S. Molloy |
|
$ |
98,438 |
|
|
$ |
67,550 |
|
|
$ |
165,988 |
|
Allison Surette |
|
$ |
74,813 |
|
|
$ |
54,950 |
|
|
$ |
129,763 |
|
19
The following table provides a breakdown of the amounts for fiscal 2022 in the “2022 Non-Equity (Cash) Incentive Plan Compensation” column of the Summary Compensation Table above:
Name |
|
Annual Incentive |
|
|
2020-2022 LTIP |
|
|
2019-2021 LTIP |
|
|
2020-2022 LTIP |
|
|
2021-2023 LTIP |
|
|
Total Non- |
|
||||||
Harvey S. Kanter |
|
$ |
1,661,077 |
|
|
$ |
468,563 |
|
|
$ |
78,094 |
|
|
$ |
78,094 |
|
|
$ |
117,141 |
|
|
$ |
2,402,969 |
|
Peter H. Stratton, Jr. |
|
$ |
362,413 |
|
|
$ |
103,688 |
|
|
$ |
17,281 |
|
|
$ |
17,281 |
|
|
$ |
25,922 |
|
|
$ |
526,585 |
|
Anthony J. Gaeta |
|
$ |
229,421 |
|
|
$ |
77,438 |
|
|
$ |
12,906 |
|
|
$ |
12,906 |
|
|
$ |
19,359 |
|
|
$ |
352,030 |
|
Robert S. Molloy |
|
$ |
279,083 |
|
|
$ |
98,438 |
|
|
$ |
16,406 |
|
|
$ |
16,406 |
|
|
$ |
24,609 |
|
|
$ |
434,942 |
|
Allison Surette |
|
$ |
227,702 |
|
|
$ |
74,813 |
|
|
$ |
12,469 |
|
|
$ |
12,469 |
|
|
$ |
18,703 |
|
|
$ |
346,156 |
|
The following table provides a breakdown of the amounts for fiscal 2022 in the “All Other Compensation” of the Summary Compensation Table above:
Name |
|
Auto |
|
|
401(k) |
|
|
Long-Term |
|
|
Supplemental |
|
|
Travel Allowance |
|
|
Total |
|
||||||
Harvey S. Kanter |
|
$ |
10,000 |
|
|
$ |
10,675 |
|
|
$ |
12,876 |
|
|
$ |
5,009 |
|
|
$ |
120,000 |
|
|
$ |
158,560 |
|
Peter H. Stratton, Jr. |
|
$ |
8,400 |
|
|
$ |
10,675 |
|
|
$ |
4,034 |
|
|
$ |
3,063 |
|
|
$ |
— |
|
|
$ |
26,172 |
|
Anthony J. Gaeta |
|
$ |
8,400 |
|
|
$ |
10,675 |
|
|
$ |
— |
|
|
$ |
3,490 |
|
|
$ |
— |
|
|
$ |
22,565 |
|
Robert S. Molloy |
|
$ |
8,400 |
|
|
$ |
10,675 |
|
|
$ |
4,821 |
|
|
$ |
4,399 |
|
|
$ |
— |
|
|
$ |
28,295 |
|
Allison Surette |
|
$ |
8,400 |
|
|
$ |
10,675 |
|
|
$ |
10,465 |
|
|
$ |
1,931 |
|
|
$ |
— |
|
|
$ |
31,471 |
|
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Company is providing the following information about the relationship between the annual total compensation of the Company’s employees and the annual total compensation of the Company’s CEO. Our CEO-to-employee pay ratio has been calculated in accordance with Item 402(u) of Regulation S-K under the Exchange Act.
Under Instruction 2 to Item 402(u), the median-paid employee may be identified once every three years if there is no impact to the pay ratio disclosure. We last identified our median employee on December 31, 2020. There has been no change in our employee population or employee compensation arrangements since that time that we believe would significantly impact the pay ratio disclosure for 2022 and require the calculation of a new median employee. However, the employee we identified as our median employee at that time terminated employment with us during fiscal 2022 and as a result, as permitted by SEC rules for fiscal 2022, we have replaced this employee with another full-time employee who earns substantially the same annual compensation.
The total annual compensation for our CEO, Mr. Kanter, for fiscal 2022, as shown in the “Summary Compensation Table”, was $4,221,881. The total annual compensation for our new median employee, who is a full-time employee, was $40,361, calculated
20
using the same methodology as used in the “Summary Compensation Table”. Based on this information, for fiscal 2022 the ratio of the annual total compensation of Mr. Kanter, our CEO, to the median of the annual total compensation of all employees was 105 to 1.
The methodology used to identify the median employee in 2020 was to evaluate all employees, other than our CEO, employed by the Company as of December 31, 2020, including those employees who were furloughed for any period of time, and performed the following:
PAY VERSUS PERFORMANCE
Pay Versus Performance Table
In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Act, below is disclosure regarding executive compensation for Harvey Kanter, our principal executive officer (“PEO”), our non-PEO NEOs, and our Company financial performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown. The amounts shown for “Compensation Actually Paid” have been calculated in accordance with Item 402(v) of Regulation and do not reflect compensation actually earned, realized, or received by our NEO's. These amounts reflect total compensation per the Summary Compensation Table with certain adjustments as described in the following table and footnotes.
For more information concerning our philosophy of how we align compensation for our NEOs to certain performance metrics, refer to the “Compensation Discussion and Analysis” above.
|
|
|
|
|
|
|
|
|
Value of Initial Fixed $100 Investment Based on: |
|
|
|
|
|
||||||||||
Year |
Summary Compensation Table |
|
Compensation Actually Paid |
|
Average Summary Compensation Table Total for Non-PEO NEOs ($)(2) |
|
Average Compensation Actually Paid to Non-PEO NEOs ($)(3) |
|
Total Shareholder Return |
|
Peer Group Total Shareholder Return |
|
Net Income |
|
Adjusted EBITDA |
|
||||||||
(a) |
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
||||||||
2022 |
$ |
4,221,881 |
|
$ |
7,093,048 |
|
$ |
954,500 |
|
$ |
1,482,529 |
|
$ |
663.06 |
|
$ |
124.59 |
|
$ |
89,123 |
|
$ |
73,808 |
|
2021 |
$ |
3,616,278 |
|
$ |
13,729,433 |
|
$ |
909,752 |
|
$ |
1,878,242 |
|
$ |
390.09 |
|
$ |
114.78 |
|
$ |
56,713 |
|
$ |
76,862 |
|
2020 |
$ |
2,110,929 |
|
$ |
2,270,835 |
|
$ |
579,831 |
|
$ |
563,984 |
|
$ |
72.07 |
|
$ |
106.22 |
|
$ |
(64,538 |
) |
$ |
(24,197 |
) |
21
Fiscal Year: |
2020 |
|
2021 |
|
2022 |
|
|||
Summary Compensation Table ("SCT") Total for PEO (column b) |
$ |
2,110,929 |
|
$ |
3,616,278 |
|
$ |
4,221,881 |
|
Deduct - SCT "Stock Award" value |
|
— |
|
|
(443,260 |
) |
|
(829,813 |
) |
Deduct - SCT "Option Award" value |
|
(436,880 |
) |
|
(207,035 |
) |
|
— |
|
Add or Deduct - year-over-year change in fair value of equity awards granted in prior year that vested in current year |
|
(81,267 |
) |
|
4,203,022 |
|
|
227,798 |
|
Add or Deduct - year-over-year change in fair value of equity awards granted in prior year that are outstanding and unvested as of the current year-end |
|
(59,872 |
) |
|
4,412,134 |
|
|
2,474,982 |
|
Add - year-end fair value of equity awards granted in the current year that are outstanding and unvested as of the current year-end |
|
737,926 |
|
|
2,148,295 |
|
|
998,200 |
|
Add or Deduct - vesting date fair value of equity awards granted and vested in current year |
|
— |
|
|
— |
|
|
— |
|
Deduct - fair value as of prior year end of equity awards granted in prior years that failed to vest in the current year |
|
— |
|
|
— |
|
|
— |
|
Compensation Actually Paid to PEO (column c) |
$ |
2,270,835 |
|
$ |
13,729,433 |
|
$ |
7,093,048 |
|
Fiscal Year: |
2020 |
|
2021 |
|
2022 |
|
|||
Average Summary Compensation Table Total for Non-PEO NEO's (column d) |
$ |
579,831 |
|
$ |
909,752 |
|
$ |
954,500 |
|
Deduct - SCT "Stock Award" value |
|
— |
|
|
(79,352 |
) |
|
(156,331 |
) |
Deduct - SCT "Option Award" value |
|
(53,009 |
) |
|
(44,496 |
) |
|
— |
|
Add or Deduct - year-over-year change in fair value of equity awards granted in prior year that vested in current year |
|
(44,540 |
) |
|
122,413 |
|
|
31,521 |
|
Add or Deduct - year-over-year change in fair value of equity awards granted in prior year that are outstanding and unvested as of the current year-end |
|
(14,636 |
) |
|
524,801 |
|
|
464,934 |
|
Add - year-end fair value of equity awards granted in the current year that are outstanding and unvested as of the current year-end |
|
96,338 |
|
|
445,124 |
|
|
187,905 |
|
Add or Deduct - vesting date fair value of equity awards granted and vested in current year |
|
— |
|
|
— |
|
|
— |
|
Deduct - fair value as of prior year end of equity awards granted in prior years that failed to vest in the current year |
|
— |
|
|
— |
|
|
— |
|
Average Compensation Actually Paid to Non-PEO NEO's (column e) |
$ |
563,984 |
|
$ |
1,878,242 |
|
$ |
1,482,529 |
|
Pay Versus Performance Relationships Descriptions
The following charts depict the relationships between PEO and non-PEO NEO Compensation Actually Paid ("CAP") and the financial metrics included in the table above. The key factor that drove the change in CAP for our PEO and non-PEO NEOs as compared to these financial metrics was the increase in our stock price over the periods reflected, as our LTIP awards are based solely on Company
22
relative TSR. In addition, in fiscal 2021, the CAP for our PEO reflects the value of performance stock units that vested when our stock price reached certain thresholds in fiscal 2021.
Description of Relationship Between PEO and Non-PEO Compensation Actually Paid and Company's TSR
The following chart sets forth the relationship between CAP to our PEO, the average of CAP to our Non-PEO NEOs, and the Company’s cumulative TSR over the three most recently completed fiscal years.
Description of Relationship Between the Company TSR and Peer Group Cumulative TSR
The following chart shows the cumulative TSR of the Company, assuming an initial fixed $100 investment and computed in accordance with the requirements of Item 402(v) of Regulation S-K, versus the Dow Jones U.S. Apparel Retailers, assuming an initial fixed $100 investment on February 1, 2020 (end of fiscal 2019) and computed in accordance with the requirements of Item 402(v) of Regulation S-K.
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income (Loss)
23
The following chart sets forth the relationship between CAP to our PEO, the average of CAP to our Non-PEO NEOs and net income (loss) during the three most recently completed fiscal years. Net income for fiscal 2022 included a non-recurring tax benefit related to the release of our tax valuation allowance of $31.6 million. The net loss for fiscal 2020 included a $14.8 million asset impairment charge.
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company-Selected Measure
The following chart sets forth the relationship between CAP to our PEO, the average of CAP to our Non-PEO NEOs, and Adjusted EBITDA, a non-GAAP measure (our Company-Selected Measure) during the three most recently completed fiscal years.
Tabular List of Most Important Performance Measures
As discussed above in more detail under "Compensation Discussion and Analysis - Compensation Components and Fiscal 2022 Compensation Decisions," the Compensation Committee uses several financial and operational performance measures in making its compensation decisions. The following list represents the most important financial performance measures used by the Company to link Compensation Actually Paid to our PEO and other NEOs to Company performance for fiscal 2022.
• Adjusted EBITDA (a non-GAAP measure) |
• TSR |
• Sales Growth |
24
Employment Agreements
Harvey S. Kanter, President, Chief Executive Officer and Director
On February 19, 2019, we entered into an employment agreement with Mr. Kanter (the “Employment Agreement”). Pursuant to the terms of the Employment Agreement, Mr. Kanter was appointed President, Chief Executive Officer and a director of the Company effective April 1, 2019. From February 19, 2019 to March 31, 2019, Mr. Kanter served as an Advisor to the Acting CEO. The initial term of the Employment Agreement was three years, and could be automatically renewed, upon the same terms and conditions, for successive periods of one year, unless either party terminated the agreement in accordance with its terms.
In February 2022, the Compensation Committee engaged Segal to review Mr. Kanter’s direct compensation. Effective April 1, 2022, the Company and Mr. Kanter entered into an amended employment agreement (the "Amended Employment Agreement"). The initial term of the Amended Employment Agreement is for three years, unless terminated earlier in accordance with its terms (the "Initial Term"). At the expiration of the Initial Term, the Amended Employment Agreement will automatically renew, upon the same terms and conditions, for successive periods of one year, unless either party provides advance written notice in accordance with the agreement.
Pursuant to his Amended Employment Agreement, Mr. Kanter receives an annual base salary of $850,000 as President and Chief Executive Officer with an annual automobile allowance of $10,000. Mr. Kanter receives a quarterly travel allowance in the amount of $30,000, which is intended to be used for travel between Mr. Kanter's home and the Company’s corporate offices.
Under Mr. Kanter's initial Employment Agreement, Mr. Kanter was granted 720,000 PSUs. Of the 720,000 PSUs, 480,000 vested in fiscal 2021, and 240,000 PSUs expired unvested on April 1, 2023. Under the terms of the Amended Employment Agreement, the Company agreed to grant Mr. Kanter a new performance share award after April 1, 2023 (but not later than December 31, 2023), if the remaining 240,000 PSUs did not vest. The amount and terms of such award will be determined by the Board in its sole discretion.
Mr. Kanter is eligible to participate in our annual incentive plan at a target rate of 100% of his earned salary, up to a maximum payout of up to 200% of target. Mr. Kanter is also eligible to participate in our long-term incentive plans at a target bonus equal to 170% of his base salary in effect on the effective date of participation. Pursuant to the terms of the LTIP, 50% of any award will be time-based compensation and 50% will be performance-based compensation. Maximum payout of performance-based compensation is 150% of target.
Pursuant to the Amended Employment Agreement, if Mr. Kanter terminates his employment for Good Reason (as defined in the Amended Employment Agreement) or the Company terminates his employment without Justifiable Cause (as defined in the Amended Employment Agreement):
If Mr. Kanter’s employment is terminated by him for Good Reason or by the Company without Justifiable Cause during the one-year period following a Change in Control (as defined in the 2016 Plan), then Mr. Kanter will be eligible to receive, subject to certain requirements described in the Employment Agreement, a payment equal to (i) two times his then current base salary plus (ii) the then value of two times his target bonus under the AIP, generally payable in a lump sum within 60 days of the termination of his employment following a Change in Control.
In addition, if a termination of Mr. Kanter’s employment prior to the expiration of the Initial Term meets the requirements of a Structured Retirement (as defined in the LTIP, as described above) such termination will be deemed to be a termination by the Company without Justifiable Cause. Additionally, for purposes of the AIP, a termination of his employment that meets the requirements of a Structured Retirement and that occurs at any time during the employment term (including after the Initial Term) will be deemed to be a termination by the Company without Justifiable Cause under the AIP.
25
Employment Agreements with Other Named Executive Officers
We have employment agreements with each of Named Executive Officers other than our CEO (the “NEO Employment Agreements”). The term of each NEO Employment Agreement begins on the respective effective date and continues until terminated by either party. Our Named Executive Officers are eligible to participate in our AIP. Each Named Executive Officer is entitled to vacation and to participate in and receive any other benefits customarily provided by us to our senior executives.
Each of the NEO Employment Agreements provide that, if the executive officer’s employment is terminated by us at any time for any reason other than “justifiable cause” (as defined in the NEO Employment Agreements), disability or death, we are required to pay the executive the executive's then current base salary for five months after the effective date of such termination. This severance benefit is conditioned upon the executive’s execution of a general release. These payments are not made if the executive is terminated with “justifiable cause,” the executive resigns, or the executive dies or becomes disabled. The Named Executive Officers would also be entitled to additional payments or acceleration of awards under the AIP and LTIP programs, in accordance with the terms of those plans.
If the Named Executive Officer’s employment is terminated at any time within one year following a Change of Control (as defined in the NEO Employment Agreements) other than for "justifiable cause," or if the executive resigns for “good reason” (as defined in the NEO Employment Agreements), then we will be obligated to pay the executive an amount equal to twelve months of the executive’s highest base salary in effect at any time during the six-month period ending on the date of the Change of Control. This payment also is conditioned upon the executive’s execution of a general release. Payments made under this provision are to be reduced if and to the extent necessary to avoid any payments or benefits to the executive being treated as “excess parachute payments” within the meaning of Internal Revenue Code Section 280G(b)(i).
The NEO Employment Agreements contain confidentiality provisions pursuant to which each executive agrees not to disclose confidential information regarding our Company. The NEO Employment Agreements also contain covenants pursuant to which each executive agrees, during the term of his employment and for a one-year period following the termination of his employment, not to have any connection with any business which is a specialty retailer that primarily distributes, sells or markets so-called “big and tall” apparel of any kind for men or which utilizes the “big and tall” retail or wholesale marketing concept as part of its business.
Estimated Potential Payments to Named Executive Officers
The following table shows the payments that would be made to our Named Executive Officers assuming a “termination without cause” or a “resignation for good reason” (each a “Qualifying Termination”) or a Qualifying Termination following a Change in Control, as described in the employment agreements, as of January 28, 2023 (the last day of fiscal year 2022).
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive Plan |
|
|
|
|
|||||||||
Name |
|
Continued |
|
|
Annual |
|
|
Sign-on and Discretionary Awards (3) |
|
|
Time- |
|
|
Performance- |
|
|
Total |
|
||||||
Harvey S. Kanter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Qualifying Termination |
|
$ |
3,683,333 |
|
|
$ |
1,661,077 |
|
|
$ |
1,398,179 |
|
|
$ |
5,242,927 |
|
|
$ |
1,590,929 |
|
|
$ |
13,576,445 |
|
Qualifying Termination due to change in control |
|
$ |
3,400,000 |
|
|
$ |
1,661,077 |
|
|
$ |
1,398,179 |
|
|
$ |
5,242,927 |
|
|
$ |
1,590,929 |
|
|
$ |
13,293,111 |
|
Peter H. Stratton, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Qualifying Termination |
|
$ |
203,500 |
|
|
$ |
362,413 |
|
|
$ |
70,793 |
|
|
$ |
1,169,713 |
|
|
$ |
353,158 |
|
|
$ |
2,159,577 |
|
Qualifying Termination due to change in control |
|
$ |
407,000 |
|
|
$ |
362,413 |
|
|
$ |
70,793 |
|
|
$ |
1,169,713 |
|
|
$ |
353,158 |
|
|
$ |
2,363,077 |
|
Anthony J. Gaeta |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Qualifying Termination |
|
$ |
162,500 |
|
|
$ |
229,421 |
|
|
$ |
51,075 |
|
|
$ |
853,532 |
|
|
$ |
261,049 |
|
|
$ |
1,557,577 |
|
Qualifying Termination due to change in control |
|
$ |
325,000 |
|
|
$ |
229,421 |
|
|
$ |
51,075 |
|
|
$ |
853,532 |
|
|
$ |
261,049 |
|
|
$ |
1,720,077 |
|
Robert S. Molloy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Qualifying Termination |
|
$ |
193,000 |
|
|
$ |
279,083 |
|
|
$ |
67,213 |
|
|
$ |
1,070,005 |
|
|
$ |
328,687 |
|
|
$ |
1,937,988 |
|
Qualifying Termination due to change in control |
|
$ |
386,000 |
|
|
$ |
279,083 |
|
|
$ |
67,213 |
|
|
$ |
1,070,005 |
|
|
$ |
328,687 |
|
|
$ |
2,130,988 |
|
Allison Surette |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Qualifying Termination |
|
$ |
157,000 |
|
|
$ |
227,702 |
|
|
$ |
51,075 |
|
|
$ |
834,856 |
|
|
$ |
252,201 |
|
|
$ |
1,522,835 |
|
Qualifying Termination due to change in control |
|
$ |
314,000 |
|
|
$ |
227,702 |
|
|
$ |
51,075 |
|
|
$ |
834,856 |
|
|
$ |
252,201 |
|
|
$ |
1,679,835 |
|
26
Clawback Policy
Our employment agreements with our executives, including our CEO and our other Named Executive Officers, contain a “clawback” provision that provides for remedies in the event we learn, after the executive’s termination by us, other than for “justifiable cause,” that his or her termination could have been terminated for “justifiable cause.” Pursuant to the employment agreements, an executive shall be required to pay to the Company all amounts paid to the executive other than such portion of an executive’s base salary and reimbursement of expenses accrued through the date of the termination; all vested and unvested awards, as defined therein, held by the executive shall immediately expire; and the executive shall be required to pay to the Company an amount equal to any gains resulting from the exercise or payment of any awards.
In addition, in August 2018, our Compensation Committee approved a clawback policy that requires our Named Executive Officers to reimburse the Company for bonuses and other incentive compensation and stock sale profits if the Company is required to restate its financial statements, as a result of misconduct, due to material noncompliance with the financial reporting requirements of the securities laws. Finally, pursuant to Section 10D of the Exchange Act, The Nasdaq Stock Market is required to adopt listing rules requiring the repayment of incentive-based compensation (as defined in Section 10D of the Exchange Act). Therefore, such incentive-based compensation to our Named Executive Officers will be subject to the provisions of any compensation recovery policy adopted by the Company as required Section 10D of the Exchange Act and any other Company policy that may be adopted regarding compensation recovery, including to comply with any applicable law and government regulation.
Grants of Plan-Based Awards. The following table sets forth certain information with respect to plan-based awards granted to the Named Executive Officers in fiscal 2022.
2022 GRANTS OF PLAN-BASED AWARDS
|
|
|
Service |
|
Estimated Future Payouts |
|
|
Estimated Future Payouts |
|
|
All Other |
|
|
All Other |
|
|
Exercise |
|
|
Grant |
|
||||||||||||||||||||||||||
|
|
Grant |
Inception |
|
Threshold |
|
|
|
Target |
|
|
|
Maximum |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
or Units |
|
|
Options |
|
|
Awards |
|
|
Awards |
|
||||||||||||
|
|
Date |
Date |
|
($) |
|
|
|
($) |
|
|
|
($) |
|
|
($) (1) |
|
|
($) (1) |
|
|
($) (1) |
|
|
(#) |
|
|
(#) |
|
|
($ / Sh) |
|
|
($) |
|
||||||||||||
Harvey S. Kanter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
2022 AIP (2) |
|
4/9/2022 |
|
$ |
166,108 |
|
|
|
$ |
830,539 |
|
|
|
$ |
1,661,078 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
|
2022-2024 LTIP, Time-Based (3) |
4/9/2022 |
1/30/2022 |
|
$ |
- |
|
|
|
$ |
361,250 |
|
|
|
$ |
- |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
71,962 |
|
|
|
— |
|
|
|
— |
|
|
$ |
361,250 |
|
||
|
2022-2024 LTIP, Performance-Based (3) |
4/9/2022 |
1/30/2022 |
|
$ |
90,313 |
|
|
|
$ |
361,250 |
|
|
|
$ |
541,875 |
|
|
$ |
90,313 |
|
|
$ |
361,250 |
|
|
$ |
541,875 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Peter H. Stratton, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
2022 AIP (2) |
|
4/9/2022 |
|
$ |
48,322 |
|
|
|
$ |
241,609 |
|
|
|
$ |
362,413 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
|
2022-2024 LTIP, Time-Based (3) |
4/9/2022 |
1/30/2022 |
|
|
— |
|
|
|
$ |
91,575 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18,242 |
|
|
|
— |
|
|
|
— |
|
|
$ |
91,575 |
|
||
|
2022-2024 LTIP, Performance-Based (3) |
4/9/2022 |
1/30/2022 |
|
$ |
22,894 |
|
|
|
$ |
91,575 |
|
|
|
$ |
137,363 |
|
|
$ |
22,894 |
|
|
$ |
91,575 |
|
|
$ |
137,363 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Anthony J. Gaeta |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
2022 AIP (2) |
|
4/9/2022 |
|
$ |
31,644 |
|
|
|
$ |
158,221 |
|
|
|
$ |
237,332 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
|
2022-2024 LTIP, Time-Based (3) |
4/9/2022 |
1/30/2022 |
|
|
— |
|
|
|
$ |
56,875 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,329 |
|
|
|
— |
|
|
|
— |
|
|
$ |
56,872 |
|
||
|
2022-2024 LTIP, Performance-Based (3) |
4/9/2022 |
1/30/2022 |
|
$ |
14,219 |
|
|
|
$ |
56,875 |
|
|
|
$ |
85,313 |
|
|
$ |
14,219 |
|
|
$ |
56,875 |
|
|
$ |
85,313 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Robert S. Molloy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
2022 AIP (2) |
|
4/9/2022 |
|
$ |
38,494 |
|
|
|
$ |
192,471 |
|
|
|
$ |
288,707 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
|
2022-2024 LTIP, Time-Based (3) |
4/9/2022 |
1/30/2022 |
|
|
— |
|
|
— |
|
$ |
67,550 |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13,456 |
|
|
|
— |
|
|
|
— |
|
|
$ |
67,550 |
|
|
2022-2024 LTIP, Performance-Based (3) |
4/9/2022 |
1/30/2022 |
|
$ |
16,888 |
|
|
— |
|
$ |
67,550 |
|
|
— |
|
$ |
101,325 |
|
|
$ |
16,888 |
|
|
$ |
67,550 |
|
|
$ |
101,325 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Allison Surette |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
2022 AIP (2) |
|
4/9/2022 |
|
$ |
30,573 |
|
|
|
$ |
152,866 |
|
|
|
$ |
229,298 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
|
2022-2024 LTIP, Time-Based (3) |
4/9/2022 |
1/30/2022 |
|
|
— |
|
|
|
$ |
54,950 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,946 |
|
|
|
— |
|
|
|
— |
|
|
$ |
54,950 |
|
||
|
2022-2024 LTIP, Performance-Based (3) |
4/9/2022 |
1/30/2022 |
|
$ |
13,738 |
|
|
|
$ |
54,950 |
|
|
|
$ |
82,425 |
|
|
$ |
13,738 |
|
|
$ |
54,950 |
|
|
$ |
82,425 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
27
28
Outstanding Equity Awards at Fiscal Year-End. The following table sets forth certain information with respect to outstanding equity awards held by the Named Executive Officers at the end of fiscal 2022.
2022 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
|
Option Awards |
|
Stock Awards |
|
|||||||||||||||||||||||||||||||||
|
|
Number of |
|
|
Number of |
|
|
Equity |
|
|
Option |
|
|
Option |
|
Number of |
|
|
|
Market |
|
|
Equity |
|
|
|
Equity |
|
||||||||||
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
(#) |
|
|
($) |
|
|
Date |
|
(#) |
|
|
|
($)(1) |
|
|
(#) |
|
|
|
($)(1) |
|
||||||||||
Harvey S. Kanter |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
240,000 |
|
|
(2 |
) |
|
1,766,400 |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
60,000 |
|
|
(3 |
) |
$ |
441,600 |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
45,669 |
|
|
(4 |
) |
$ |
336,120 |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
71,962 |
|
|
(5 |
) |
$ |
529,640 |
|
|
|
|
|
|
|
|
||||
|
|
|
— |
|
|
|
150,000 |
|
|
|
— |
|
(6) |
$ |
0.64 |
|
|
6/10/2030 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
442,040 |
|
(7) |
$ |
0.53 |
|
|
6/11/2030 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
251,970 |
|
(8) |
$ |
0.69 |
|
|
3/8/2031 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
70,843 |
|
|
|
— |
|
(9) |
$ |
0.75 |
|
|
3/9/2031 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Peter H. Stratton, Jr. |
|
|
77,818 |
|
|
|
— |
|
|
|
97,818 |
|
(7) |
$ |
0.53 |
|
|
6/11/2030 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
18,586 |
|
|
|
— |
|
|
|
55,758 |
|
(8) |
$ |
0.69 |
|
|
3/8/2031 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
12,038 |
|
|
|
24,078 |
|
|
|
— |
|
(9) |
$ |
0.75 |
|
|
3/9/2031 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
10,106 |
|
(4) |
|
$ |
74,380 |
|
|
|
— |
|
|
|
|
— |
|
|||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
18,242 |
|
(5) |
|
$ |
134,261 |
|
|
|
— |
|
|
|
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Anthony J. Gaeta |
|
|
73,054 |
|
|
|
— |
|
|
|
73,054 |
|
(7) |
$ |
0.53 |
|
|
6/11/2030 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
13,881 |
|
|
|
— |
|
|
|
41,641 |
|
(8) |
$ |
0.69 |
|
|
3/8/2031 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
8,686 |
|
|
|
17,372 |
|
|
|
— |
|
(9) |
$ |
0.75 |
|
|
3/9/2031 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
7,547 |
|
|
(4 |
) |
$ |
55,546 |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
11,329 |
|
|
(5 |
) |
$ |
83,381 |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Robert S. Molloy |
|
|
92,866 |
|
|
|
— |
|
|
|
92,865 |
|
(7) |
$ |
0.53 |
|
|
6/11/2030 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
17,645 |
|
|
|
— |
|
|
|
52,934 |
|
(8) |
$ |
0.69 |
|
|
3/8/2031 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
11,429 |
|
|
|
22,858 |
|
|
|
— |
|
(9) |
$ |
0.75 |
|
|
3/9/2031 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
9,594 |
|
(4) |
|
$ |
70,612 |
|
|
|
— |
|
|
|
|
— |
|
|||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
13,456 |
|
(5) |
|
$ |
99,036 |
|
|
|
— |
|
|
|
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allison Surette |
|
|
4,261 |
|
|
|
— |
|
|
|
— |
|
(10) |
$ |
4.49 |
|
|
9/11/2026 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
70,578 |
|
|
|
— |
|
|
|
70,577 |
|
(7) |
$ |
0.53 |
|
|
6/11/2030 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
13,410 |
|
|
|
— |
|
|
|
40,230 |
|
(8) |
$ |
0.69 |
|
|
3/8/2031 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
8,686 |
|
|
|
17,372 |
|
|
|
— |
|
(9) |
$ |
0.75 |
|
|
3/9/2031 |
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
7,291 |
|
|
(4 |
) |
$ |
53,662 |
|
|
|
— |
|
|
|
|
— |
|
||
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
10,946 |
|
|
(5 |
) |
$ |
80,563 |
|
|
|
— |
|
|
|
|
— |
|
29
Option Exercises and Stock Vested Table. The following table sets forth information for the Named Executive Officers with respect to the exercise of option awards and the vesting of stock awards during fiscal 2022.
2022 OPTION EXERCISES AND STOCK VESTED
|
|
Option Awards |
|
|
Stock Awards |
|
||||||||||
Name |
|
Number of shares |
|
|
Value Realized |
|
|
Number of shares |
|
|
Value Realized |
|
||||
Harvey S. Kanter |
|
|
490,432 |
|
|
$ |
2,448,759 |
|
|
|
194,676 |
|
|
$ |
1,040,807 |
|
Peter H. Stratton, Jr. |
|
|
20,000 |
|
|
$ |
105,400 |
|
|
|
41,637 |
|
|
$ |
223,278 |
|
Anthony J. Gaeta |
|
|
18,719 |
|
|
$ |
37,064 |
|
|
|
30,798 |
|
|
$ |
165,298 |
|
Robert S. Molloy |
|
|
18,317 |
|
|
$ |
28,758 |
|
|
|
39,530 |
|
|
$ |
211,979 |
|
Allison Surette |
|
|
— |
|
|
$ |
— |
|
|
|
30,043 |
|
|
$ |
161,105 |
|
Pension Benefits
None of our Named Executive Officers was a participant in any pension plan and, therefore, none has accumulated benefits.
Non-Qualified Deferred Compensation
We do not offer to our executive officers or employees any defined contribution or similar plan that provides for the deferral of compensation on a basis that is not tax-qualified. We offer a 401(k) savings plan to all of our employees eligible to participate, as further described below.
30
401(k) Plan
The Company has one defined contribution plan, the Destination XL Group, Inc. 401(k) Savings Plan (the “401(k) Plan”). Employees who are 21 years of age or older are eligible to make deferrals after 6 months of employment and are eligible to receive a match from the Company after one year of employment and 1,000 hours. Our Named Executive Officers are eligible to participate in the 401(k) Plan, and the amount of any Company match to our Named Executive Officers is set forth above in the “All Other Compensation” table.
The Company suspended its QACA safe harbor during the 2021 plan year and, while not required, the Company made a discretionary employer match for 2021. The Company resumed its QACA status for fiscal 2022.
Director Compensation
The Compensation Committee is responsible for reviewing and making recommendations to our Board with respect to the compensation paid to our non-employee directors.
The Company's Non-Employee Director Compensation Plan, as amended to date, sets forth the compensation to be paid to our non-employee directors, including in the form of equity. The plan has a minimum equity ownership requirement that requires each director to receive at least 60% of their annual retainers in shares of common stock until the value of their equity ownership is equal to at least three times the annual retainer. Any shares issued to satisfy the minimum equity ownership requirement are issued under the Company’s 2016 Incentive Compensation Plan, as amended (the “2016 Plan”). The plan also permits the Company’s non-employee directors to acquire shares of the Company’s common stock at fair market value by voluntarily electing to receive shares of common stock in lieu of cash fees for service as a director. The plan is a stand-alone plan and is not a sub-plan under our 2016 Plan. Accordingly, shares issued under the plan for voluntary elections to receive shares of common stock in lieu of cash fees do not reduce the shares available for issuance under the 2016 Plan. The maximum number of shares that can be issued in any quarter pursuant to the plan is limited to 250,000 shares in the aggregate, with the shortfall paid in cash.
We believe that our Non-Employee Director Compensation Plan will support our ongoing efforts to attract and retain exceptional directors to provide strategic guidance to our Company. We believe that the total compensation that our non-employee directors receive is in line with our current peer group. Our non-employee directors were compensated under the plan as follows in fiscal 2022:
Director Compensation Table
The following table sets forth the compensation paid to our directors during fiscal 2022. Mr. Kanter is not included in the following table as he is a Named Executive Officer and, accordingly, received no compensation for his services as a director. Compensation earned by Mr. Kanter is included above in the “Summary Compensation Table.”
2022 DIRECTOR COMPENSATION TABLE
Name |
|
Fees Earned or |
|
|
Stock |
|
|
Option |
|
|
All Other |
|
|
Total |
|
|||||
Lionel F. Conacher, Chairman |
|
$ |
195,000 |
|
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
195,000 |
|
Carmen R. Bauza |
|
|
54,000 |
|
|
|
80,990 |
|
|
|
— |
|
|
|
— |
|
|
|
134,990 |
|
Jack Boyle |
|
|
72,500 |
|
|
|
72,490 |
|
|
|
— |
|
|
|
— |
|
|
|
144,990 |
|
Willem Mesdag |
|
|
— |
|
|
|
144,987 |
|
|
|
— |
|
|
|
— |
|
|
|
144,987 |
|
Ivy Ross |
|
|
77,500 |
|
|
|
67,495 |
|
|
|
— |
|
|
|
— |
|
|
|
144,995 |
|
Elaine K. Rubin |
|
|
— |
|
|
|
134,982 |
|
|
|
— |
|
|
|
— |
|
|
|
134,982 |
|
31
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee who served on the Compensation Committee during fiscal 2022 was at any time during fiscal 2022 or at any other time an officer or employee of our Company. During fiscal 2022, none of our executive officers served as a member of the board of directors or compensation committee of any other entity that had one or more executive officers serving as a member of our Board or Compensation Committee.
32
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information with respect to persons known to us to be the beneficial owners of more than five percent of the issued and outstanding shares of our common stock as of May 12, 2023. We were informed that, except as indicated, each person has sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by such person, subject to community property laws where applicable.
Name and Address of Beneficial Owner |
|
Number of Shares Beneficially Owned |
|
|
Percent of Class (1) |
|
||
AWM Investment Company, Inc. |
|
|
9,399,297 |
|
(2) |
|
14.9 |
% |
Wolf Hill Capital Management, LP |
|
|
4,831,340 |
|
(3) |
|
7.7 |
% |
BlackRock, Inc. |
|
|
3,681,487 |
|
(4) |
|
5.9 |
% |
Seymour Holtzman |
|
|
3,667,591 |
|
(5) |
|
5.8 |
% |
The Vanguard Group |
|
|
3,157,073 |
|
(6) |
|
5.0 |
% |
33
Security Ownership of Management
The following table sets forth certain information as of May 12, 2023, with respect to our directors, our Named Executive Officers (as defined above under “Executive Compensation”) and our directors and executive officers as a group. Except as indicated, each person has sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by such person, subject to community property laws where applicable.
Name and Title |
|
Number of Shares Beneficially Owned |
|
|
Percent of Class (1) |
|
||
Lionel F. Conacher |
|
|
338,404 |
|
(2) |
* |
|
|
Chairman of the Board |
|
|
|
|
|
|
||
Harvey S. Kanter |
|
|
815,430 |
|
(3) |
|
1.3 |
% |
President and Chief Executive Officer and Director |
|
|
|
|
|
|
||
Peter H. Stratton, Jr. |
|
|
401,224 |
|
(4) |
* |
|
|
Executive Vice President, Chief Financial Officer and Treasurer |
|
|
|
|
|
|
||
Anthony J. Gaeta |
|
|
285,002 |
|
(5) |
* |
|
|
Chief Stores and Real Estate Officer |
|
|
|
|
|
|
||
Robert S. Molloy |
|
|
418,852 |
|
(6) |
* |
|
|
General Counsel and Secretary |
|
|
|
|
|
|
||
Allison Surette |
|
|
224,578 |
|
(7) |
* |
|
|
Chief Merchandise Officer |
|
|
|
|
|
|
||
Jack Boyle, Director |
|
|
457,745 |
|
(2) |
* |
|
|
Carmen R. Bauza, Director |
|
|
24,108 |
|
|
* |
|
|
Willem Mesdag, Director |
|
|
3,028,460 |
|
(8) |
|
4.8 |
% |
Ivy Ross, Director |
|
|
187,179 |
|
|
* |
|
|
Elaine K. Rubin, Director |
|
|
74,783 |
|
|
* |
|
|
Directors and executive officers as a group (15 persons) |
|
|
6,890,796 |
|
(9) |
|
10.6 |
% |
* Less than 1%
34
EQUITY COMPENSATION PLAN INFORMATION
The following is a summary of information with respect to our equity compensation plans as of January 28, 2023:
Plan category |
|
Number of securities to be |
|
|
Weighted-average |
|
|
Number of securities |
|
|||
Equity compensation plans approved by security holders (1) |
|
|
4,752,010 |
|
|
$ |
0.83 |
|
(2) |
|
3,873,006 |
|
Equity compensation plans not approved by security holders (3) |
|
|
— |
|
|
|
— |
|
|
|
694,066 |
|
Total |
|
|
4,752,010 |
|
|
$ |
0.83 |
|
|
|
4,567,072 |
|
Item 13. Certain Relationships and Related Transactions, and Director Independence
Review, Approval or Ratification of Transactions with Related Persons
Pursuant to its charter, the Audit Committee reviews all related-party transactions on an ongoing basis and, to the extent required by the Sarbanes−Oxley Act of 2002, the SEC or Nasdaq, all such transactions must be approved by the Audit Committee except as otherwise delegated by the Audit Committee to another independent body of the Board.
There have been no related party transactions since January 30, 2022, in which the Company was a participant and in which any director or executive officer of the Company, any known 5% or greater stockholder of the Company or any immediate family member of any of the foregoing persons, had a direct or indirect material interest as defined in Item 404(a) of Regulation S-K. As permitted by SEC rules, discussion of employment relationships or transactions involving the Company’s executive officers and directors, and compensation solely resulting from such employment relationships or transactions, or service as a director of the Company, as the case may be, has been omitted to the extent disclosed in the Executive Compensation or the Director Compensation section of this Amendment, as applicable.
Director Independence
Our Board is currently comprised of seven members, all of whom are independent, under the rules for Nasdaq, other than Mr. Kanter, the Company’s CEO.
Item 14. Principal Accountant Fees and Services
The Audit Committee engaged KPMG LLP to serve as our independent registered public accounting firm during the fiscal year ended January 28, 2023. KPMG LLP has served as the Company’s independent registered public accounting firm since June 6, 2013.
Principal Accounting Fees and Services
The following table sets forth the fees accrued or paid to the Company’s independent registered accounting firm for the fiscal years ended January 28, 2023 ("fiscal 2022") and January 29, 2022 (“fiscal 2021”):
|
|
Fiscal 2022 |
|
|
Fiscal 2021 |
|
||
Audit Fees (1) |
|
$ |
995,000 |
|
|
$ |
1,060,500 |
|
Audit-Related Fees |
|
|
— |
|
|
|
— |
|
Tax Fees (2) |
|
|
160,000 |
|
|
|
125,000 |
|
All Other Fees (3) |
|
|
1,780 |
|
|
|
1,780 |
|
Total Fees |
|
$ |
1,156,780 |
|
|
$ |
1,187,280 |
|
35
Pre-Approval of Services by Independent Auditors
The Audit Committee has adopted a policy governing the provision of audit and non-audit services by our independent registered public accounting firm. Pursuant to this policy, the Audit Committee will consider annually and approve the provision of audit services (including audit, review and attest services) by our independent registered public accounting firm and consider and pre-approve the provision of certain defined permitted non-audit services within a specified dollar limit. It will also consider on a case-by-case basis and approve specific engagements that do not fit within the definition of pre-approved services or established fee limits, if appropriate. The policy provides that any proposed engagement that does not fit within the definition of a pre-approved service or is not within the fee limits must be presented to the Audit Committee for consideration at its next regular meeting or to the Chair of the Audit Committee in time sensitive cases. The Audit Committee will regularly review summary reports detailing all services (and related fees and expenses) being provided to us by the independent registered public accounting firm.
All of the services provided in fiscal 2022 and fiscal 2021 under Audit Fees, Tax Fees and All Other Fees were pre-approved by the Audit Committee.
36
PART IV.
Item 15. Exhibits and Financial Statement Schedules
15(a)(3) Exhibits
Index to Exhibits
31.1 |
|
|
|
|
|
|
|
31.2 |
|
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File – The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. |
|
37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
DESTINATION XL GROUP, INC.
|
May 30, 2023 |
By: |
/s/ HARVEY S. KANTER |
|
|
Harvey S. Kanter |
|
|
President and Chief Executive Officer |
|
|
|
|
|
/s/ PETER H. STRATTON, JR. |
|
|
Peter H. Stratton, Jr. |
|
|
Executive Vice President, Chief Financial Officer and Treasurer |
38
Exhibit 31.1
PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
I, Harvey S. Kanter, certify that:
1. I have reviewed this Annual Report on Form 10-K/A of Destination XL Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
Date: |
May 30, 2023 |
By: |
/s/ Harvey S. Kanter |
|
|
|
Harvey S. Kanter |
|
|
|
President and Chief Executive Officer |
Exhibit 31.2
PRINCIPAL FINANCIAL OFFICER CERTIFICATION
I, Peter H. Stratton, Jr., certify that:
1. I have reviewed this Annual Report on Form 10-K/A of Destination XL Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Date: |
May 30, 2023 |
By: |
/s/ Peter H. Stratton, Jr. |
|
|
|
Peter H. Stratton, Jr. |
|
|
|
Executive Vice President, Chief Financial Officer and Treasurer |