We cordially invite you to attend our 2017 Annual Meeting on Tuesday, June 6, 2017, at 8:00 a.m. (local time), to be held at the Courtyard Marriott,
342 Speen Street, Natick, Massachusetts 01760.
The proxy statement accompanying this letter describes the business we will consider at the meeting. Your
vote is important regardless of the number of shares you own. Please read the proxy statement and vote your shares. Instructions for Internet and telephone voting are attached to your proxy card. If you prefer, you can vote by mail by
completing and signing your proxy card and returning it in the enclosed
pre-paid
return envelope.
Other Information
Please note below other topics included in this proxy statement that may be of interest. This list does not cover all information included in this proxy statement that
you should consider. You should review the entire proxy statement carefully before voting your shares.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING TO BE HELD ON JUNE 6, 2017: THIS PROXY STATEMENT AND ANNUAL
REPORT AND
FORM 10-K
FOR FISCAL 2017 ARE AVAILABLE AT
HTTP://WWW.ENVISIONREPORTS.COM/TJX
2
CORPORATE GOVERNANCE
Integrity has been a core tenet of TJX since our inception. We seek to perform with the highest standards of ethical conduct and in compliance with all laws and
regulations that relate to our businesses. We have Corporate Governance Principles, an Associate Global Code of Conduct, a Code of Ethics for TJX Executives,
written charters for each of our Board committees, and a Director Code of
Business Conduct and Ethics.
The current versions of these documents and other items relating to our governance can be found on our corporate website, www.tjx.com, as described below in
Online Availability of Information
.
B
oard’s Role and Responsibilities
Our Board of Directors is responsible for overseeing the business and affairs of the company. The Board has the responsibility to monitor regularly the effectiveness of
management’s implementation of strategy, policies, and decisions. The Board and management believe that responsibly considering the interests of our customers, Associates, suppliers, service providers, communities where we operate, and others
will enhance the interests of our shareholders. During the year, our Board reviews with management our corporate strategy, including our goals to drive profitable sales and increase market share, and our capital allocation. The Board oversees
management succession planning, including the transition that was effective at the beginning of this fiscal year from Carol Meyrowitz to Ernie Herrman as CEO. The Board also has oversight responsibility for our enterprise risk management, discussed
below in
Board’s Role in Risk Oversight,
and considers Board composition and refreshment, discussed below in
Board Service at TJX
.
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Board’s Role in Risk Oversight
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It is
management’s responsibility to manage risk and bring to the Board’s attention risks that are material to TJX. The Board has oversight responsibility for the systems established to report and monitor the most significant risks
applicable to TJX. The Board administers its risk oversight role directly and through its committee structure and the committees’ regular communications with the full Board. In general terms:
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The Board
reviews strategic, financial and execution risks and exposures associated with the annual plan and multi-year plans; any major litigation and other
matters that may present material risk to our operations, plans, prospects, or reputation; significant acquisitions and divestitures; and senior management succession planning and receives regular reports from our Chief Risk and Compliance
Officer.
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The Audit Committee
reviews risks associated with financial and accounting matters, including financial reporting, accounting, disclosure, internal controls over
financial reporting, ethics and compliance programs, compliance with orders, and data security and receives regular reports from our Chief Risk and Compliance Officer.
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The Executive Compensation Committee (ECC)
reviews risks related to executive compensation and the design of compensation programs, plans, and
arrangements.
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●
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The Corporate Governance Committee
reviews risks related to Board and CEO evaluations and management succession.
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The Finance Committee
reviews risks related to
financing plans, investment policies, capital structure and liquidity; foreign currency exchange and commodity hedging policies; and investment performance, asset allocation strategies and funding of our pension and retirement benefit plans.
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Board Independence
Independence Determination
. As provided in our
Corporate Governance Principles, at least
two-thirds
of the members of our Board should be independent directors. A board member is considered independent if the Corporate Governance Committee has recommended
to the Board that the director is free of any relationship that, in the Corporate Governance Committee’s opinion, would interfere with the exercise of independent judgment as a director and the Board has affirmatively determined that the
director has no material relationship with TJX. To assist it in making its independence determination, the Board has adopted categorical independence standards in our Corporate Governance Principles that are based on the independence standards
required by the New York
3
Stock Exchange (NYSE) for its listed companies. As part of the Board’s annual review of director independence, the Board considers the Corporate Governance Committee’s independence
assessment and recommendation and reviews any transactions and relationships between each director or any member of his or her immediate family and TJX, in accordance with our Corporate Governance Principles (see
Transactions
with Related Persons
, p. 11). To the extent there were any such relationships or transactions, the Board considers whether they are inconsistent with a determination that the director was independent.
As a result of this review, our Board unanimously determined that 9 directors of our current
11-member
Board (82%) are
independent: Zein Abdalla, José B. Alvarez, Alan M. Bennett, David T. Ching, Michael F. Hines, Amy B. Lane, Jackwyn L. Nemerov, John F. O’Brien, and Willow B. Shire. Similarly, the Board unanimously determined that William H. Swanson,
who served on the Board until June 2016, was independent. None of these directors had any relationship with TJX that implicated our categorical standards of independence. Carol Meyrowitz, as Executive Chairman, and Ernie Herrman, as Chief Executive
Officer and President, are executive officers of TJX and are therefore not independent.
Board Leadership
Structure
. Our Board annually elects a director to serve as Chairman of the Board of Directors. Carol Meyrowitz was elected Chairman of the Board during fiscal 2016 and Executive
Chairman at the beginning of fiscal 2017 when Ernie Herrman was elected Chief Executive Officer. Consistent with our Corporate Governance Principles, because our current Chairman is not independent, our independent directors have elected an
independent Lead Director, John F. O’Brien.
The Board believes that the separate roles of Chairman, Chief Executive Officer and Lead Director are in the
best interests of TJX and its shareholders. Ms. Meyrowitz, as Executive Chairman, has wide-ranging,
in-depth
knowledge of our business arising from her many years of service to TJX, and as a result has
provided, and we believe will continue to provide, effective leadership to the Board and support for management as an active and integral member of the executive team. Mr. O’Brien, as Lead Director, provides independence in TJX’s
Board leadership, as provided in the Corporate Governance Principles, through his review and approval of Board meeting agendas, his participation in management business review meetings and his leadership of the independent directors.
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Independent Lead Director
The role of Lead Director, includes, among other duties:
●
meeting at least quarterly with our Chief
Executive Officer and Executive Chairman, and
with other senior officers as necessary;
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attending regular management business
review meetings;
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scheduling meetings of the independent
directors;
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presiding at meetings of the Board at which
the Executive Chairman is not present, including meetings of the independent directors;
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serving as a liaison between the
independent directors and the Executive Chairman and management and approving Board meeting schedules and agendas;
●
attending the meetings of each Board
committee; and
●
undertaking other responsibilities
designated by the independent directors.
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4
Board Service at TJX
Director Qualifications and Nominations
. The Corporate
Governance Committee recommends to the Board individuals to be director nominees who, in the opinion of the Corporate Governance Committee, have high personal and professional ethics, integrity, and values; have demonstrated ability and judgment and
will be committed to collectively serving the long-term best interests of our shareholders. As described below in
Board Expertise and Diversity
, the Corporate Governance Committee considers a range of factors
when considering individual candidates, including professional experience, personal integrity and potential contributions to the Board as a whole. The Corporate Governance Committee considers each director nominee’s experience, qualifications,
attributes and skills in light of our business, including those that are identified in the biographical information contained below under
Nominees and Their Qualifications
.
The Corporate Governance Committee’s process for identifying and evaluating candidates, including candidates recommended by shareholders, includes actively seeking
to identify qualified individuals by various means that may include reviewing lists of possible candidates, such as chief executive officers of public companies or leaders of finance or other industries; considering recommendations from a range of
sources, such as the Board of Directors, management or other Associates, shareholders and industry contacts; and engaging a third-party search firm to expand our search and assist in compiling information about possible candidates. Ms. Nemerov
was nominated to be a director by our Corporate Governance Committee after being initially recommended by an executive officer and then was elected by the full Board in November 2016.
The Corporate Governance Committee has a policy for shareholder recommendations of candidates for director nominees, which is available on our website. Any shareholder
may submit, in writing, one candidate for consideration for each shareholder meeting at which directors are to be elected. Shareholders wishing to recommend a candidate must submit the recommendation by a date not later than the 120th calendar day
before the first anniversary of the date that we released our proxy statement to shareholders in connection with the previous year’s Annual Meeting. Recommendations should be sent to the Secretary of TJX, The TJX Companies, Inc., 770
Cochituate Road, Framingham, Massachusetts 01701. As described in the policy, a recommendation must provide specified information about, certifications from and consents and agreements of, the candidate. The Corporate Governance Committee
evaluates candidates for the position of director recommended by shareholders in the same manner as candidates from other sources. The Corporate Governance Committee will determine whether to interview any candidates and may seek additional
information about candidates from third-party sources.
Board Expertise and
Diversity
.
As a global company with approximately 235,000 Associates at our fiscal year end, we consider diversity among our Associates, customers and vendors to be part of who we are
and core to our culture. At the Board level and throughout our organization, we strive to promote the benefits of leveraging differences, inclusion and promoting a talented and diverse workforce. We seek to have a Board that represents diversity as
to experience, gender and ethnicity/race and that reflects a range of talents, ages, skills, viewpoints, professional experiences, educational backgrounds, and expertise to provide sound and prudent guidance on our operations, strategy and
interests. In evaluating the suitability of individual Board nominees, the Corporate Governance Committee does not have a formal policy with respect to diversity, but takes into account many factors, including general understanding of disciplines
relevant to the success of a large, global and complex publicly traded company in today’s business environment; understanding of our business and industry; professional background and leadership experience; experience on the boards of other
large publicly traded companies; personal accomplishments; ethics, integrity and values; independence; and geographic, gender, age, ethnic and racial diversity. The Corporate Governance Committee evaluates each individual in the context of the Board
as a whole, with the objective of recommending a group that the Committee believes can best continue the success of our business and represent shareholder interests through the exercise of sound judgment using its collective diversity of experience.
We value the many kinds of diversity reflected in our Board and nominees.
Board Self-Assessment
. The Board believes it is important that the Board be composed of highly engaged directors and that the Board’s composition be aligned with the changing needs of the company in current and future
business environments. We have a comprehensive review process for regularly evaluating the performance and composition of our Board. Our Corporate Governance Committee oversees the annual performance evaluation of the Board as a whole, our Chairman,
our independent Lead Director, each of our committees and their respective chairs, and each of our individual directors. Currently, our process, which we review annually, includes opportunities for individual assessments as well as collective
discussion. In addition, each of our independent committees conducts an annual self-assessment.
5
Majority Voting
. Our
by-laws
provide for the election of directors in an uncontested election by a majority of the shares properly cast at the meeting. Our Corporate
Governance Principles require any incumbent nominee for director to provide an irrevocable contingent resignation to the Secretary of TJX at least 14 days in advance of the distribution date for proxy solicitation materials for the shareholder
meeting at which such director is expected to be nominated to stand for election. This resignation would be effective only if (a) the director fails to receive the requisite majority vote in an uncontested election and (b) the Board
accepts the resignation. Our Corporate Governance Principles provide procedures for the consideration of this kind of resignation by the Board. Within 90 days of the date of the annual meeting of shareholders, the Board, with the
recommendation of the Corporate Governance Committee, will act upon such resignation. In making its decision, the Board will consider the best interests of TJX and its shareholders and will take what it deems to be appropriate action, which may
include accepting or rejecting the resignation or taking further measures to address those concerns that were the basis for the underlying shareholder vote.
Board Service Policies
.
Under our Corporate Governance Principles, directors who are CEOs of public companies should not serve on more than
two boards of public companies besides their own and no director should serve on more than five boards of public companies, including the TJX Board. Under our Audit Committee Charter, members of the Audit Committee should not serve on more than two
audit committees of other companies. When a director’s principal occupation or business association changes during his or her tenure as a director, our Corporate Governance Principles provide that the director is required to tender his or her
resignation from the Board, and the Corporate Governance Committee will recommend to the Board any action to be taken with respect to the resignation.
Board Attendance
.
During fiscal 2017, our Board met six
times. The independent directors also met separately at regularly
scheduled executive sessions. It is our policy, included in our Corporate Governance Principles, that all directors standing for reelection are expected to attend the annual meeting of shareholders. All directors who stood for reelection
at the 2016 Annual Meeting were in attendance.
B
oard Committees and Meetings
The Board of Directors has five standing committees: Audit, Corporate Governance, Executive, Executive Compensation, and Finance, described in more detail
below. All members of the Audit, Corporate Governance, Executive Compensation, and Finance Committees are independent directors. Each of our directors attended at least 75% of all meetings of the Board and committees of which he or she was then
a member. While each committee has designated responsibilities, each committee may act on behalf of the entire Board to the extent designated by the respective charter or otherwise by the Board. The committees typically invite other Board
members to join their meetings and report on their activities to the entire Board. The table below provides information about membership and meetings of these committees during fiscal 2017:
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Name
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Audit
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Corporate
Governance
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Executive
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Executive
Compensation
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Finance
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Zein Abdalla
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+
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+
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José B. Alvarez
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+
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+
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Alan M. Bennett
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*
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+
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David T. Ching
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+
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+
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Ernie Herrman
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Michael F. Hines
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*
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+
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Amy B. Lane
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+
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+
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*
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Carol Meyrowitz
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*
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Jackwyn L. Nemerov(1)
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+
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John F. O’Brien
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+
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Willow B. Shire
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*
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+
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William H. Swanson(2)
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+
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Number of meetings
during fiscal 2017
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10
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4
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—
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6
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5
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* Committee Chairman
(1) Ms. Nemerov joined the Executive Compensation Committee in November 2016.
(2) Mr. Swanson served on the Executive Compensation Committee until June 2016.
6
Audit Committee:
Mr. Hines, Chairman; Mr. Alvarez; Mr. Ching; Ms. Lane
The Audit Committee is
directly responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit the company’s financial statements and oversight of the financial reporting process. Each
member of the Audit Committee is a
non-employee
director and meets the independence standards adopted by the Board in compliance with NYSE listing standards. The Audit Committee operates under the terms of a
written charter which is reviewed by members of the committee annually. The Audit Committee’s responsibilities include, among other things:
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reviewing and discussing with management, internal auditors and the independent registered public accounting firm our quarterly and annual financial statements, including the accounting principles and procedures applied
in their preparation and any changes in accounting policies;
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monitoring our system of internal financial controls and accounting practices;
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●
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overseeing the internal and external audit process, including the scope and implementation of the annual audit;
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overseeing our compliance and ethics programs;
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selecting, retaining, negotiating and approving the compensation of, overseeing, and if necessary, replacing the independent registered public accounting firm;
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establishing and maintaining procedures for receipt, retention and treatment of complaints, including the confidential and anonymous submission of complaints by employees, regarding accounting, internal accounting
controls or auditing matters;
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pre-approving
all work by the independent registered public accounting firm; and
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reviewing other matters as the Board deems appropriate.
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As part of these responsibilities, in addition to assuring the
regular rotation of the lead partner of the independent auditor, as required by law, the Audit Committee, including its Chairman, has been involved in the selection of, and reviews and evaluates the performance of, the independent auditor, including
the lead audit partner, and further considers whether there should be regular rotation of the audit function among firms.
Executive Compensation Committee:
Mr. Bennett, Chairman; Mr. Alvarez; Ms. Nemerov; Ms. Shire
The Executive Compensation Committee, or the ECC, is responsible for overseeing executive compensation and benefits. Each member of the ECC is a
non-employee
director and meets the independence standards adopted by the Board and those required by NYSE listing standards. The ECC operates under the terms of a written charter which is reviewed by the members of
the committee annually. Pursuant to its charter, the ECC may delegate its authority to a subcommittee or to such other person that the ECC determines is appropriate and is permitted by applicable law, regulations and listing standards. The
ECC’s responsibilities include, among other things:
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reviewing and approving the structure and philosophy of compensation of the Chief Executive Officer, other executive officers, and senior Associates;
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●
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approving the compensation and benefits, including awards of stock options, bonuses and other awards and incentives, of our executive officers and other Associates in those categories as are from time to time identified
by the ECC;
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●
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determining the compensation of the Chief Executive Officer, including awards of stock options, bonuses and other awards and incentives, based on the evaluation by the Corporate Governance Committee of the performance
of the Chief Executive Officer and such other factors as the ECC deems relevant;
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●
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determining the performance goals and performance criteria under our incentive plans;
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●
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approving the terms of employment of our executive officers, including employment and other agreements with such officers;
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7
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reviewing and undertaking other matters that the Board or the ECC deems appropriate, such as the review of our succession plan for the Chief Executive Officer and other executive officers; and
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●
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overseeing the administration of our incentive plans and other compensatory plans and funding arrangements.
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The ECC also
reviews our compensation policies and practices for our Associates to determine whether they give rise to risks which are reasonably likely to have a material adverse effect on the company.
See
Compensation Program Risk Assessment
, below.
Corporate
Governance Committee:
Ms. Shire, Chairman; Mr. Abdalla; Mr. Ching
The
Corporate Governance Committee is responsible for recommending nominees to serve as members of our Board and for overseeing our corporate governance practices. Each member of the Corporate Governance Committee is a
non-employee
director and meets the independence standards adopted by the Board in compliance with NYSE listing standards. The Corporate Governance Committee operates under the terms of a written charter which
is reviewed by the members of the committee annually. The Corporate Governance Committee’s responsibilities include, among other things:
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recommending director nominees to the Board;
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developing, recommending to the Board and reviewing corporate governance principles;
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●
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in concert with the Board, reviewing our policies with respect to significant issues of corporate social and public responsibility, including political contributions and activities, environmental and sustainability
activities and charitable giving;
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●
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reviewing practices and policies with respect to directors, including retirement policies, the size of the Board and the meeting frequency of the Board;
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reviewing the functions, duties and composition of the committees of the Board and compensation for Board and committee members;
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●
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recommending processes for the annual evaluations of the performance of the Board, each individual director, the Chairman, the independent Lead Director and each committee and its chair;
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●
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establishing performance objectives for the Chief Executive Officer and annually evaluating the performance of the Chief Executive Officer against such objectives; and
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●
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overseeing the maintenance and presentation to the Board of management’s plans for succession to senior management positions.
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Executive
Committee:
Ms. Meyrowitz, Chairman; Ms. Lane; Mr. O’Brien
The
Executive Committee meets at such times as it determines to be appropriate and has the authority to act for the Board on specified matters during the intervals between meetings of the Board.
8
Finance Committee:
Ms. Lane, Chairman; Mr. Abdalla; Mr. Bennett; Mr. Hines
The Finance Committee is
responsible for reviewing and making recommendations to the Board relating to our financial activities and condition. The Finance Committee operates under the terms of a written charter which is reviewed by the members of the committee annually. The
Finance Committee’s responsibilities include, among other things:
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●
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reviewing and making recommendations to the Board with respect to our financing plans and strategies; financial condition; capital structure; tax strategies, liabilities and payments; dividends; stock repurchase
programs; and insurance programs;
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●
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approving our cash investment policies, foreign exchange risk management policies, commodity hedging policies, capital investment criteria, and agreements for borrowing by us and our subsidiaries from banks and other
financial institutions; and
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●
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reviewing investment policies as well as the performance and actuarial status of our pension and other retirement benefit plans.
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Compensation Program Risk
Assessment
. As part of our regular enterprise risk assessment process overseen by the Board and described above, we review the risks associated with our compensation plans and arrangements.
In fiscal 2017, the ECC reviewed TJX’s Associate compensation policies and practices and determined that they do not give rise to risks that are reasonably likely to have a material adverse effect on TJX. The ECC’s assessment considered
what risks could be created or encouraged by our executive and broad-based compensation plans and arrangements worldwide, how those potential risks are monitored, mitigated and managed and whether those potential risks are reasonably likely to have
a material adverse effect on TJX.
The assessment was led by our Chief Risk and Compliance Officer, whose responsibilities include leadership of our
enterprise risk management process, and included consultation with and input from, among others, executive officers, senior human resources and financial executives, the ECC’s independent compensation consultant, and internal and external legal
counsel. The assessment considered, among other things, factors intended to mitigate risk at TJX, including:
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●
Board and committee oversight,
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the ECC’s use of an independent compensation
consultant,
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market checks,
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compensation mix,
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●
emphasis on objective
performance-based pay,
●
caps on payouts,
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Associate communications and training, and
●
company policies, internal controls and
risk
management initiatives.
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The assessment also considered the balance of potential risks and rewards related to our compensation programs and the role of those
programs in implementing our corporate strategy.
Codes of Conduct and Ethics and Other Policies
Global Code of Conduct for Associates
. We have a Global
Code of Conduct for our Associates that requires our Associates to conduct our business with integrity. Our Global Code of Conduct addresses professional conduct, including employment policies, ethical business dealings, conflicts of interest,
confidentiality, intellectual property rights, and the protection of confidential information, as well as adherence to laws and regulations applicable to the conduct of our business. We have a Code of Conduct helpline to allow Associates to voice
their concerns. We also have procedures for Associates to report complaints regarding accounting and auditing matters, which are available on our website, www.tjx.com.
9
Code of Ethics for TJX Executives and Director Code of Business Conduct
and Ethics
. We have a Code of Ethics for TJX Executives governing our Executive Chairman, Chief Executive Officer and President, Chief Financial Officer and other senior operating,
financial and legal executives. The Code of Ethics for TJX Executives is designed to ensure integrity in our financial reports and public disclosures. We also have a Director Code of Business Conduct and Ethics that is designed to promote
honest and ethical conduct; compliance with applicable laws, rules and regulations; and the avoidance of conflicts of interest for our Board members. We intend to disclose any future amendments to, or waivers from, the Code of Ethics for TJX
Executives and the Director Code of Business Conduct and Ethics, as required, within four business days of the waiver or amendment through a posting on our website or by filing a Current Report on Form
8-K
with the Securities and Exchange Commission, or SEC.
Stock Ownership Guidelines for Directors
. Our Corporate Governance Principles provide that a
non-employee
director is expected to attain stock ownership with a fair market value equal to at least five
times the annual retainer paid to the director within five years of initial election to the Board
.
New board members are also expected to acquire at least $10,000 of our common stock outright upon joining the Board. As described further
on p. 36 in the
Compensation Discussion and Analysis
section, our executives are also subject to stock ownership guidelines. As of April 10, 2017, all of our directors and executive officers were in
compliance with our ownership guidelines.
C
orporate Responsibility and Sustainability
For 40 years, TJX has been focused on delivering value through our mix of brand name and high quality fashions. Similarly, we are committed to our corporate
responsibility mission of bringing value to the many important stakeholders we serve – our Associates, customers, neighbors, and shareholders. With our long-held principles of integrity, ethics and fairness central to our efforts, we recognize
that it is important that we operate as a responsible corporate citizen. We remain focused on continuously improving our programs and making a positive, sustainable impact on the world in which we live and conduct our business.
We categorize our global corporate responsibility efforts under four pillars:
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Our Workplace,
which reflects our commitment to our Associates worldwide, including fostering a diverse and inclusive work environment and creating opportunities through training and development.
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●
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Our Communities,
which focuses on support through charitable giving, volunteering, establishing partnerships, and leveraging our vast store network to raise funds for organizations important to our
community-giving mission to help vulnerable families and children access the resources and opportunities they need to build a better future.
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●
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Environmental Sustainability,
which demonstrates our progress in reducing our impacts on the environment, including greenhouse gas emissions resulting from our business operations. We remain focused on managing
our carbon footprint and driving towards the achievement of our emissions reduction target through initiatives like energy efficiency and supporting renewable energy.
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●
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Responsible Business,
which reflects our approach to managing our business and to running our business responsibly, ensuring strong corporate governance and compliance, and treating people with dignity and
respect through our global social compliance program.
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To learn more about our efforts, please visit our Responsibility website at
www.tjx.com/responsibility
.
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Online Availability of Information
Our Corporate Governance Principles, Global Code of Conduct, Code of Ethics for TJX Executives, Director Code of Business Conduct and Ethics, and
charters for our Audit, Corporate Governance, Executive, Executive Compensation and Finance Committees are available on our website, www.tjx.com, in the Responsibility: Responsible Business: Governance section. Information appearing on
www.tjx.com is not a part of, and is not incorporated by reference in, this proxy statement.
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10
C
ommunicating with Our Board
We are interested in hearing from our shareholders. Security holders and other interested parties may communicate directly with our Board, the
non-management
directors or the independent directors as a group, the Lead Director or any other specified individual director or directors. Address your correspondence to the individual or group you would like to
reach and send it to us, c/o Office of the Secretary/ Legal Department:
The TJX Companies, Inc.
770 Cochituate Road,
Framingham, Massachusetts 01701
The Secretary will forward these communications to the relevant group or individual at or prior to the next Board meeting. Shareholders and others can
communicate complaints regarding accounting, internal accounting controls or auditing matters by writing to the Audit Committee, c/o Corporate Internal Audit Director, The TJX Companies, Inc., 770 Cochituate Road, Framingham, Massachusetts 01701.
Transactions with Related Persons
Under its
charter, the Corporate Governance Committee is responsible for reviewing and approving or ratifying any transaction in which, in addition to TJX, any of our directors, director nominees, executive officers (or their immediate family members) or any
greater than 5% shareholders (or their immediate family members) is a participant and has a direct or indirect material interest, as provided under SEC rules. In the course of reviewing potential related person transactions, the Corporate Governance
Committee considers the nature of the related person’s interest in the transaction; the presence of standard prices, rates or charges or terms otherwise consistent with arms-length dealings with unrelated third parties; the materiality of the
transaction to each party; the reasons for TJX entering into the transaction with the related person; the potential effect of the transaction on the status of a director as an independent, outside or disinterested director or committee member; and
any other factors the Corporate Governance Committee may deem relevant. Our General Counsel’s office is primarily responsible for the implementation of processes and procedures for screening potential transactions and providing information to
the Corporate Governance Committee. During fiscal 2017, Barbara House,
sister-in-law
of Mr. Sherr, was employed by TJX. She received compensation from us for fiscal
2017 and the beginning of fiscal 2018 totaling approximately $282,314, consistent with other Associates at her level and responsibility. She also participated in company benefit plans generally available to similarly situated Associates. As
described below in
Beneficial Ownership
, The Vanguard Group reported that it was the beneficial owner of more than 5% of TJX’s outstanding common stock. TJX expects to pay The Vanguard Group, Inc. and its
affiliates approximately $1,747,319 for services primarily provided during fiscal 2017 and the first quarter of fiscal 2018 in connection with TJX’s retirement savings plans (including recordkeeping, trustee and related services). Our Corporate
Governance Committee discussed and approved or ratified these transactions, consistent with our review process described above.
Audit
Committee Report
The Audit Committee operates in accordance with a written charter adopted by the Board and reviewed annually by the Committee. We are
responsible for overseeing the quality and integrity of TJX’s accounting, auditing and financial reporting practices. The Audit Committee is composed solely of members who are independent, as defined by the NYSE and TJX’s Corporate
Governance Principles. Further, the Board has determined that two of our members (Mr. Hines and Ms. Lane) are audit committee financial experts as defined by the rules of the SEC.
We met 10 times during fiscal 2017, including 4 meetings held with TJX’s Chief Financial Officer, Corporate Controller, Corporate Internal Audit and
PricewaterhouseCoopers LLP, or PwC, TJX’s independent registered public accounting firm, prior to the public release of TJX’s quarterly and annual earnings announcements in order to discuss the financial information contained in the
announcements. Management has the responsibility for the preparation of TJX’s financial statements, and PwC has the responsibility for the audit of those statements.
11
We took numerous actions to discharge our oversight responsibility with respect to the audit process. We reviewed and
discussed the audited financial statements of TJX as of and for fiscal 2017 with management and PwC. We received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board
(PCAOB) regarding the independent accountant’s communications with the audit committee concerning independence and the potential effects of any disclosed relationships on PwC’s independence and discussed with PwC its independence. We
discussed with management, the internal auditors, and PwC TJX’s internal control over financial reporting and management’s assessment of the effectiveness of internal control over financial reporting and the internal audit function’s
organization, responsibilities, budget, and staffing. We reviewed with both PwC and our internal auditors their audit plans, audit scope and identification of audit risks.
We reviewed and discussed with PwC communications required by the Standards of the PCAOB (United States), as described in PCAOB Auditing Standard 1301,
“Communication with Audit Committees,” and, with and without management present, discussed and reviewed the results of PwC’s examination of TJX’s financial statements. We also discussed the results of the internal audit
examinations with and without management present.
Based on these reviews and discussions with management and PwC, we recommended to the Board that TJX’s
audited financial statements be included in its Annual Report on Form
10-K
for fiscal 2017 for filing with the SEC. We also have selected PwC as the independent registered public accounting firm for fiscal
2018, subject to ratification by TJX’s shareholders.
|
|
|
|
|
|
|
|
|
|
|
Audit Committee
|
|
|
|
|
|
|
|
|
|
Michael F. Hines,
Chairman
|
|
|
|
|
|
José B. Alvarez
|
|
|
|
|
|
David T. Ching
|
|
|
|
|
|
Amy B. Lane
|
Auditor Fees
The
aggregate fees that TJX was billed for professional services rendered by PwC for fiscal 2017 and fiscal 2016 were:
|
|
|
|
|
|
|
|
|
|
|
In thousands
|
|
2017
|
|
|
2016
|
|
|
Audit
|
|
$
|
8,262
|
|
|
$
|
7,810
|
|
|
Audit Related
|
|
|
790
|
|
|
|
781
|
|
|
Tax
|
|
|
840
|
|
|
|
1,155
|
|
|
All Other
|
|
|
55
|
|
|
|
206
|
|
|
Total
|
|
$
|
9,947
|
|
|
$
|
9,952
|
|
|
|
●
|
|
Audit fees were for professional services rendered for the audits of TJX’s consolidated financial statements including financial statement schedules and statutory and subsidiary audits, review of documents filed
with the SEC, review of and opinions on the effectiveness of internal control over financial reporting, and, in fiscal 2017, providing a comfort letter in connection with TJX’s issuance of notes.
|
|
|
●
|
|
Audit related fees were for consultations concerning financial accounting and reporting standards and employee benefit plan and medical claims audits and, in fiscal 2016, due diligence assistance.
|
|
|
●
|
|
Tax fees were for services related to tax compliance, planning and advice, including assistance with tax audits and appeals, tax services for employee benefit plans, transfer pricing and requests for rulings and
technical advice from tax authorities.
|
|
|
●
|
|
All other fees were for services related to our environmental sustainability program and, in fiscal 2016, for services related to foreign exchange, our conflict minerals program and for training for our internal audit
department.
|
12
The Audit Committee is responsible for the audit fee negotiations associated with the company’s retention of PwC. The
Audit Committee of the Board
pre-approves
all audit services and all permitted
non-audit
services by PwC, including engagement fees and terms. The Audit Committee has
delegated the authority to take such action between meetings to the Audit Committee chairman, who reports the decisions made to the full Audit Committee at its next scheduled meeting.
Our policies prohibit TJX from engaging PwC to provide any services relating to bookkeeping or other services related to accounting records or financial statements,
financial information system design and implementation, appraisal or valuation services, fairness opinions or
contribution-in-kind
reports, actuarial services, internal
audit outsourcing, any management function, legal services or expert services not related to audit, broker-dealer, investment adviser, or investment banking services, or human resource consulting. In addition, the Audit Committee evaluates whether
TJX’s use of PwC for permitted
non-audit
services is compatible with maintaining PwC’s independence. The Audit Committee concluded that PwC’s provision of
non-audit
services, which were approved in advance, was compatible with their independence.
13
PROPOSAL 1
ELECTION OF DIRECTORS
N
ominees
and Their Qualifications
We seek nominees who have established strong professional reputations and experience in the retail and consumer industries and with
experience in substantive areas that are important to our business, such as international operations and growth; marketing and brand management; sales, buying and distribution; accounting, finance and capital structure; strategic planning and
leadership of complex organizations; succession planning, human resources and talent development practices; risk oversight; and strategy, growth and innovation. Please see
Board Service at TJX
for additional
information.
The individuals listed below have been nominated and are standing for election at this year’s Annual Meeting. If elected, they will hold office
until our 2018 Annual Meeting of Shareholders and until their successors are duly elected and qualified.
Our nominees have held senior executive positions in large,
complex organizations or in businesses related to substantive areas important to our business, and in these positions have gained experience in core management skills and substantive areas relevant to our business. Our nominees also have
experience working with or serving on boards of directors and board committees of public companies, and each of our nominees has an understanding of corporate governance practices and trends. Each of our nominees also has prior service on our
Board, which has provided them with exposure to both our business and the industry in which we compete. Other than Jackwyn L. Nemerov, who was elected by the Board in November 2016, all of our nominees were elected to the Board by our
shareholders.
We believe that all our nominees possess the professional and personal qualifications necessary for board service. In addition to the attributes noted
above, we have highlighted qualifications for each director in the individual biographies below.
Your Board of Directors unanimously recommends
that you vote FOR the election of each of the nominees.
14
Zein Abdalla, 58
Director since 2012
Mr. Abdalla was the President of PepsiCo, Inc., a leading global food, snack and beverage company, from September 2012 through his retirement in December 2014, prior
to which he served as CEO of PepsiCo Europe, a division of PepsiCo, starting in November 2009 and as President, PepsiCo Europe Region starting in January 2006. Mr. Abdalla previously held a variety of senior positions at PepsiCo since he joined
that company in 1995, including as General Manager of PepsiCo’s European Beverage Business, General Manager of Tropicana Europe and Franchise Vice President for Pakistan and the Gulf region.
Mr. Abdalla is also a director of Cognizant Technology Solutions Corporation.
Mr. Abdalla’s executive experience with a large global company has given him expertise in corporate management, including in emerging markets, operations, brand
management, distribution, and global strategy.
José B. Alvarez, 54
Director since 2007
Mr. Alvarez has been a member of the faculty of the Harvard
Business School since 2009. From August 2008 through December 2008, Mr. Alvarez was the Global Executive Vice President for Business Development for Ahold, a global supermarket retail company. From 2001 to August 2008, he held various executive
positions with Stop & Shop/Giant-Landover, Ahold’s U.S. subsidiary, including President and Chief Executive Officer of Stop & Shop/Giant-Landover from 2006 to 2008 and Executive Vice President, Supply Chain and Logistics from
2004 to 2006. Previously, he served in executive positions at Shaw’s Supermarkets, Inc. and began his career at the Jewel Food Stores subsidiary of American Stores Company in 1990.
Mr. Alvarez is also a director of United Rentals, Inc. and served on the board of Church & Dwight Co., Inc. from 2011 until 2013.
Mr. Alvarez’s long career in retail has given him broad experience in large retail chain management, including store management, supply chain, logistics,
distribution, and strategy.
Alan M. Bennett, 66
Director since 2007
Mr. Bennett served as the President and Chief Executive
Officer of H&R Block, Inc., a tax services provider, from July 2010 until his retirement in May 2011 and was previously Interim Chief Executive Officer from November 2007 through August 2008. He was Senior Vice President and Chief Financial
Officer and a Member of the Office of the Chairman of Aetna Inc., a diversified healthcare benefits company, from 2001 to 2007, and previously held other senior financial management positions at Aetna after joining in 1995. Mr. Bennett held
various senior management roles in finance and sales/marketing at Pirelli Armstrong Tire Corporation, formerly Armstrong Rubber Company, from 1981 to 1995 and began his career with Ernst & Ernst (now Ernst & Young LLP).
Mr. Bennett is also a director of Halliburton Company and Fluor Corporation.
Mr. Bennett’s senior leadership roles in two significant financial businesses provide him with executive experience in managing very large businesses and
change management as well as financial expertise including financial management, taxes, accounting, controls, finance, and financial reporting.
15
David T. Ching, 64
Director since 2007
Mr. Ching was Senior Vice President and Chief Information Officer for Safeway Inc., a food and drug retailer, from 1994 to January 2013 and has consulted through DTC
Associates LLC, focusing on management consulting and technology services, since 2013. Previously, Mr. Ching was the General Manager for British American Consulting Group, a software and consulting firm focusing on the distribution and retail
industry. He also worked for Lucky Stores Inc., a subsidiary of American Stores Company from 1979 to 1993, including serving as the Senior Vice President of Information Systems.
Mr. Ching’s strong technological experience and related management positions in the retail industry provide him expertise including in information systems,
information security and controls, technology implementation and operation, reporting, and distribution in the retail industry.
Ernie Herrman, 56
Director since 2015
Mr. Herrman has been Chief Executive Officer of TJX since
January 2016, a director since October 2015, and President since January 2011. He served as Senior Executive Vice President, Group President from August 2008 to January 2011, with responsibilities for The Marmaxx Group (Marmaxx), HomeGoods and TJX
Canada; President of Marmaxx from 2005 to 2008 and Senior Executive Vice President, Chief Operating Officer of Marmaxx from 2004 to 2005. From 1989 to 2004, he held various merchandising positions with TJX.
As Chief Executive Officer and President of TJX, and through the many other positions Mr. Herrman has held with the company, Mr. Herrman has a deep
understanding of TJX and broad experience in all aspects of
off-price
retail, including merchandising, management, leadership development, strategy, international operations, marketing, real estate, buying,
and distribution.
Michael F. Hines, 61
Director since 2007
Mr. Hines served as Executive Vice President and Chief
Financial Officer of Dick’s Sporting Goods, Inc., a sporting goods retailer, from 1995 to March 2007. From 1990 to 1995, he held management positions with Staples, Inc., an office products retailer, most recently as Vice President, Finance.
Mr. Hines spent 12 years in public accounting, the last eight years with the accounting firm Deloitte & Touche LLP.
Mr. Hines is also a director
of GNC Holdings, Inc., where he serves as
Non-Executive
Chairman, and Dunkin’ Brands Group, Inc.
Mr. Hines’
experience as a financial executive and certified public accountant provides him with expertise in the retail industry including accounting, controls, financial reporting, tax, finance, risk management, and financial management.
16
Amy B. Lane, 64
Director since 2005
Ms. Lane was a Managing Director and Group Leader of the Global Retailing Investment Banking Group at Merrill Lynch & Co., Inc., from 1997 until her
retirement in 2002. Ms. Lane previously served as a Managing Director at Salomon Brothers, Inc., where she founded and led the retail industry investment banking unit.
Ms. Lane is also a director of GNC Holdings, Inc., NextEra Energy, Inc. and a member of the board of trustees of Urban Edge Properties.
Ms. Lane’s experience as the leader of two investment banking practices covering the global retailing industry has given her substantial experience with
financial services, capital markets, finance and accounting, capital structure, acquisitions and divestitures in that industry as well as management, leadership and strategy.
Carol Meyrowitz, 63
Director since 2006
Ms. Meyrowitz has been Executive Chairman of the Board since
January 2016. She served as Chairman of the Board from June 2015 to January 2016, as Chief Executive Officer of TJX from January 2007 to January 2016 and a director since September 2006. In previous roles, Ms. Meyrowitz served as President of
TJX from October 2005 to January 2011, Senior Executive Vice President of TJX from 2004 until January 2005, Executive Vice President of TJX from 2001 to 2004 and President of Marmaxx from 2001 to January 2005. From January 2005 until October 2005,
she was employed in an advisory role for TJX and consulted for Berkshire Partners LLC, a private equity firm. From 1983 to 2001, Ms. Meyrowitz held various senior management and merchandising positions with Marmaxx and with Chadwick’s of
Boston and Hit or Miss, former divisions of TJX.
Ms. Meyrowitz is also a director of Staples, Inc. and was a director of Amscan Holdings, Inc. from 2005 to
2012.
As Executive Chairman of the Board of TJX, and through the many other positions Ms. Meyrowitz has held with TJX, Ms. Meyrowitz has a deep
understanding of TJX and broad experience in all aspects of
off-price
retail, including innovation, strategy, buying, distribution, merchandising, marketing, real estate, finance and accounting, and
international operations.
Jackwyn L. Nemerov, 65
Director since November 2016
Ms. Nemerov was the President and Chief Operating Officer of
Ralph Lauren Corporation, a global leader in premium lifestyle products, from November 2013 until November 2015. She served as Executive Vice President of Ralph Lauren Corporation from September 2004 until October 2013 and was a member of Ralph
Lauren Corporation’s board of directors from 2007 until September 2015. Prior to her tenure there, she held multiple positions in the retail industry, including President and Chief Operating Officer of the Jones Apparel Group from 1998 to 2002.
Ms. Nemerov’s extensive retail, brand management and operations experience, as well as her related management positions in the apparel and retail
industry, provide her with valuable expertise in supply chain management, manufacturing, merchandising, and licensing in the retail industry.
17
John F. O’Brien, 74
Director since 1996
Mr. O’Brien is the retired Chief Executive Officer and President of Allmerica Financial Corporation (now The Hanover Insurance Group, Inc.), an insurance and
diversified financial services company, holding those positions from 1995 to 2002. Mr. O’Brien previously held executive positions at Fidelity Investments, an asset management firm, including Group Managing Director of FMR Corporation,
Chairman of Institutional Services Company and Chairman of Brokerage Services, Inc. Mr. O’Brien serves as our Lead Director.
Mr. O’Brien is also
Non-Executive
Chairman and a director of Cabot Corporation, a director of LKQ Corporation and a director of a family of 95 registered mutual funds managed by BlackRock, Inc., an investment management advisory
firm.
Mr. O’Brien has substantial executive experience with two financial services businesses, giving him expertise including general management and
oversight with respect to strategy, financial planning, insurance, operations, finance and capital structure.
Willow B. Shire, 69
Director since 1995
Ms. Shire was an executive consultant with Orchard
Consulting Group from 1994 to January 2015, specializing in leadership development and strategic problem solving. Previously, she was Chairperson for the Computer Systems Public Policy Project within the National Academy of Science. She
also held various positions at Digital Equipment Corporation, a computer hardware manufacturer, for 18 years, including Vice President and Officer, Health Industries Business Unit.
Through her consulting experience and prior business experience, Ms. Shire brings expertise in leadership development, talent assessment, change management, human
resources and development practices, cultural assessment, and strategic problem solving.
18
BENEFICIAL OWNERSHIP
The following table shows, as of April 10, 2017, the number of shares of our common stock beneficially owned by each director/ director nominee and executive
officer named in the Summary Compensation Table and all directors and executive officers as a group:
|
|
|
|
|
|
|
Name
|
|
Number of Shares
|
|
|
Zein Abdalla
|
|
|
18,669
|
|
|
José B. Alvarez
|
|
|
41,228
|
|
|
Alan M. Bennett
|
|
|
46,999
|
|
|
David T. Ching
|
|
|
42,235
|
|
|
Scott Goldenberg
|
|
|
81,600
|
|
|
Ernie Herrman
|
|
|
401,313
|
|
|
Michael F. Hines
|
|
|
55,294
|
|
|
Amy B. Lane
|
|
|
53,871
|
|
|
Michael MacMillan
|
|
|
46,574
|
|
|
Carol Meyrowitz
|
|
|
362,438
|
|
|
Jackwyn L. Nemerov
|
|
|
1,260
|
|
|
John F. O’Brien
|
|
|
115,923
|
|
|
Richard Sherr
|
|
|
87,584
|
|
|
Willow B. Shire
|
|
|
75,888
|
|
|
All Directors and Executive Officers as a Group (15 Persons)
|
|
|
1,506,880
|
|
The total number of shares beneficially owned by each individual and by the group above constitutes, in each case, less than 1% of the
outstanding shares of TJX. The amounts above reflect sole voting and investment power.
The shares listed in the table above include:
|
|
●
|
|
Vested deferred shares (including estimated deferred shares for accumulated dividends) held by the following directors: Mr. Abdalla 7,321; Mr. Alvarez 39,462; Mr. Bennett 41,933; Mr. Ching 26,597;
Mr. Hines 44,228; Ms. Lane 36,339; Ms. Nemerov 530; Mr. O’Brien 54,727; Ms. Shire 57,680; and all directors and executive officers as a group 308,817.
|
|
|
●
|
|
1,066 deferred shares (including estimated deferred shares for accumulated dividends) that are scheduled to vest within 60 days of April 10, 2017 held by each of Mr. Abdalla, Mr. Alvarez,
Mr. Bennett, Mr. Ching, Mr. Hines, Ms. Lane, Mr. O’Brien, and Ms. Shire; 530 scheduled for Ms. Nemerov; and 9,058 held by all directors and executive officers as a group.
|
|
|
●
|
|
Shares of common stock that the following persons had the right to acquire on April 10, 2017 or within 60 days thereafter through the exercise of options: Mr. Goldenberg 21,029; Mr. Herrman 141,313;
Mr. MacMillan 6,574; Ms. Meyrowitz 122,860; Mr. Sherr 7,584; and all directors and executive officers as a group 335,493.
|
|
|
●
|
|
Performance-based restricted shares that were subject to forfeiture restrictions as of April 10, 2017: Mr. Goldenberg 60,000; Mr. Herrman 260,000; Ms. Meyrowitz 70,185; Mr. Sherr 80,000;
and all directors and executive officers as a group 500,185.
|
|
|
●
|
|
40,000 performance-based deferred shares scheduled to vest within 60 days of April 10, 2017 held by Mr. MacMillan.
|
Shares listed do not include unvested performance-based deferred stock awards or restricted stock unit awards not scheduled to vest within 60 days of April 10,
2017.
19
The following table shows, as of April 10, 2017, each person known by us to be the beneficial owner of more than 5% of
our outstanding common stock:
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Number of Shares
|
|
Percentage of
Class
Outstanding
|
|
The Vanguard Group(1)
100 Vanguard Boulevard
Malvern, PA 19355
|
|
44,771,769
|
|
6.9%
|
|
BlackRock, Inc.(2)
40 East 52nd Street
New York, NY 10022
|
|
41,611,827
|
|
6.4%
|
|
FMR LLC(3)
245 Summer Street
Boston, MA 02210
|
|
40,569,876
|
|
6.2%
|
|
|
|
|
(1)
|
Amounts based on ownership of The Vanguard Group at December 31, 2016 as indicated in its Schedule 13G/A filed with the SEC on February 10, 2017, which reflected sole voting power with respect to
1,025,680 of the shares, shared voting power with respect to 142,666 of the shares, sole dispositive power with respect to 43,616,519 of the shares and shared dispositive power over 1,155,250 of the shares.
|
|
|
(2)
|
Amounts based on ownership of BlackRock, Inc. and certain subsidiaries at December 31, 2016 as indicated in its Schedule 13G/A filed with the SEC on January 27, 2017, which reflected sole voting power with
respect to 33,766,446 of the shares and sole dispositive power with respect to 41,611,827 shares.
|
|
|
(3)
|
Amounts based on ownership of FMR LLC at December 31, 2016 as indicated in its Schedule 13G/A filed by FMR LLC and Abigail P. Johnson with the SEC on February 14, 2017, which reflected that FMR LLC had
sole voting power with respect to 3,933,000 of the shares and FMR LLC and Ms. Johnson had sole dispositive power with respect to 40,569,876 of the shares.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act), requires our directors and executive officers to file reports of holdings and
transactions in our common stock with the SEC and the NYSE. To facilitate compliance, we have undertaken the responsibility to prepare and file these reports on behalf of our officers and directors. Based on our records and other
information, all reports for fiscal 2017 were timely filed.
20
SHAREHOLDER PROPOSAL FOR INCLUSION OF DIVERSITY
AS A CEO PERFORMANCE MEASURE
We received the following
proposal from NorthStar Asset Management, Inc. Funded Pension Plan, P.O. Box 301840, Boston, Massachusetts 02130, a beneficial owner of 566 shares of our common stock.
In accordance with SEC rules, we are reprinting the proposal and supporting statement in this proxy statement as they were submitted to us. The shareholder proposal is
required to be voted upon at the Annual Meeting only if properly presented at the Annual Meeting. As explained below, our Board unanimously recommends that you vote AGAINST the shareholder proposal.
Shareholder Proposal
Executive Compensation &
Diversity in Senior Level Management
Whereas:
In an increasingly complex global marketplace, the ability to draw on a wide range of viewpoints,
backgrounds, skills, and experience is critical to a company’s success;
McKinsey & Company research shows that gender diverse companies are 15% more
likely to outperform while ethnically diverse companies were 35% more likely to outperform
non-diverse
firms;
McKinsey also
showed that women are less likely to receive the first critical promotion to manager – so far fewer end up on the path to leadership – and they are less likely to be hired into more senior positions. In 2015, 90% of new CEOs were promoted
or hired from
CEO-pipeline
roles, and 100% of them were men;
In December 2016, a group of 27 major companies joined the
newly-launched Paradigm for Parity coalition, an organization committed to achieving gender parity across all levels of corporate leadership. Corporations that have joined are committed to having 50% women in top management roles by 2030;
Shareholders believe that it is crucial for the Company’s senior management to reflect the diversity of its employees and customers. According to Forbes, TJX’s
customer profile is a 25 to 44 year old female customer with middle to upper-middle income, while labor force statistics indicate that 49.8% of retail employees are female and 33.1% are minorities;
Unfortunately in the past 5 years, TJX’s senior management team has remained 0% minority and at most 16% female. Of the six executive officers listed on TJX’s
website, the one female (former CEO Carol Meyrowitz) left her full-time position with the company in 2016, leaving the executive offices filled entirely with white men. Given the primarily female customer base, this shift in the executive team is
particularly alarming;
An article published on the
Harvard Law School Forum on Corporate Governance and Financial Regulation
indicated that management-level
diversity “signals that women’s and minorities’ perspectives are important to the organization, and that the organization is committed to inclusion not only in principle but also in practice. Further, corporations with a commitment to
diversity have access to a wider pool of talent and a broader mix of leadership skills than corporations that lack such a commitment”;
Shareholders are
concerned that TJX’s dearth of senior management diversity may be adversely affecting shareholder value and believe that adding diversity in senior level management as a clear metric in our CEO’s compensation package creates an incentive
to strive for excellence in this area just as our financial metrics incent performance.
Resolved:
Shareholders request that the Board’s Compensation
Committee, when setting CEO compensation, include metrics regarding diversity among senior executives as one of the performance measures for the CEO under the Company’s annual and/or long-term incentive plans. For the purposes of this proposal,
“diversity” is defined as gender, racial, and ethnic diversity.
61
Statement of the Board of Directors in Opposition to Proposal 7
The Board of Directors unanimously recommends a vote AGAINST this Shareholder Proposal.
The Board of Directors opposes this proposal because it believes our independent Board committee, the Executive Compensation Committee, or ECC, is in the best position
to evaluate changes to our executive compensation practices.
At TJX, we are committed to our culture, which is honest, integrity-driven and focused on Associate
development. We work to cultivate an inclusive environment, and we value the benefits of leveraging differences. We publish an annual corporate responsibility report, which speaks, among other things, to our approach regarding diversity and
inclusion, and which is available on our website, www.tjx.com, in the Responsibility section.
We believe that diversity throughout our organization, including
within our executive team and our Board of Directors, is an important component of our success. Our company was led by Ms. Meyrowitz as Chief Executive Officer from January 2007 until January 2016, and she continues to be an active and
integral member of our six person executive team in her current role as Executive Chairman. Our company has been recognized for our efforts to promote diversity and inclusion, as we discuss in our corporate responsibility report, including by the
Human Rights Campaign, the Black EOE Journal, Hispanic Network Magazine and Professional Woman’s Magazine, and we have broad
non-discrimination
policies.
We believe that it is most appropriate for the ECC to continue to determine the CEO’s performance measures that are part of our compensation program. Each year, the
ECC carefully considers the design and overall level and mix of compensation for our CEO, including the performance metrics and other details of our incentive compensation programs. The ECC considers various quantitative and qualitative factors in
establishing performance goals under our incentive plans, as further described in the
Compensation Discussion and Analysis
included in this proxy statement. We continue to believe the ECC, which is advised
by an independent compensation consultant, is in the best position to weigh these factors and evaluate changes to our compensation program that will best promote our objectives and align the interests of our Associates and shareholders. We believe
that the decisions the ECC has made in recent years, including those more fully described in the
Compensation Discussion and Analysis
included in this proxy statement, have promoted the best interests of our
shareholders through an incentive compensation program that, by using a profit-based metric as the key performance indicator, is objective, transparent and aligned with our core business goals and an overall compensation program that emphasizes pay
for performance. For several years, our shareholders have expressed strong support for our executive compensation practices in the annual
say-on-pay
vote, and we believe
our program continues to be effective.
Your Board of Directors unanimously recommends a vote AGAINST Proposal 7.
62
PROPOSAL 8
SHAREHOLDER PROPOSAL FOR A REVIEW AND SUMMARY REPORT ON
EXECUTIVE COMPENSATION POLICIES
We received the following
proposal from the Priests of the Sacred Heart, U.S. Province, 7373 S. Highway 100, P.O. Box 289, Hales Corners, Wisconsin 53130, a beneficial owner of 5,575 shares of our common stock, and from Zevin Asset Management, LLC, 11 Beacon
Street, Suite 1125, Boston, Massachusetts 02108, on behalf of Carol A. Reisen, a beneficial owner of 1,690 shares of our common stock.
In accordance with SEC rules,
we are reprinting the proposal and supporting statement in this proxy statement as they were submitted to us. The shareholder proposal is required to be voted upon at the Annual Meeting only if properly presented at the Annual Meeting. As explained
below, our Board unanimously recommends that you vote AGAINST the shareholder proposal.
Shareholder Proposal
TOP EXECUTIVES’ PAY
WHEREAS: Recent events have increased
concerns about the extraordinarily high levels of executive compensation at many U.S. corporations. Concerns about the structure of executive compensation packages have also intensified, with some suggesting compensation systems incentivize
excessive risk-taking.
In a
Forbes
article on Wall Street pay, the director of the Program on Corporate Governance at Harvard Law School noted that
“compensation policies will prove to be quite costly—excessively costly—to shareholders.” Another study by Glass Lewis & Co. declared that compensation packages for the most highly paid U.S. executives “have been so
over-the
top that they have skewed the standards for what’s reasonable.” That study also found CEO pay may be high even when performance is mediocre or dismal.
A September 2015
Harvard Business Review
piece noted that a recent global study found that
CEO-to-worker
pay ratio in most countries is “at least 50 to one,” but “in the United States it’s 354 to one.”
MSCI’s
2016 ESG Trends To Watch
noted a shift in investor focus from sector- and country- level impacts of income inequality to links between intra-company
pay structures and economic growth. They cite OECD’s estimates that growing inequality has cumulatively shaved seven percentage points from growth of GDP in the U.S. between 1990 and 2010. Contrary to popular belief that higher wages will hurt
the bottom line, MSCI found that companies with low pay gaps had higher operating profit margins than companies with high gaps in pay between their CEOs and average workers.
Some companies have begun disclosing
CEO-to-worker
pay ratios in anticipation of the Pay
Ratio Disclosure Rule approved by the Securities and Exchange Commission in August 2015. Beginning in 2018, that rule will require issuers to report the ratio between median employee compensation and the CEO’s total compensation.
RESOLVED: Shareholders request the Board’s Compensation Committee initiate a review of our company’s executive compensation policies and make available, upon
request, a summary report of that review by October 1, 2017 (omitting confidential information and processed at a reasonable cost). We request that the report include: 1) A comparison of the total compensation package of senior executives and
our employees’ median wage (including benefits) in the United States in July 2007, July 2012 and July, 2017; 2) an analysis of changes in the relative size of the gap and an analysis and rationale justifying this trend; 3) an evaluation of
whether our senior executive compensation packages (including, but not limited to, options, benefits, perks, loans and retirement agreements) should be modified to be kept within boundaries, such as that articulated in the previously proposed
Excessive Pay Shareholder Approval Act; and 4) an explanation of whether sizable layoffs or the level of pay of our lowest paid workers should result in an adjustment of senior executive pay to more reasonable and justifiable levels and how the
Company will monitor this comparison annually in the future.
63
Statement of the Board of Directors in Opposition to Proposal 8
The Board of Directors unanimously recommends a vote AGAINST this Shareholder Proposal.
The Board of Directors opposes this proposal because it believes the requested review and report would not provide useful additional information to shareholders and
would require an unnecessary expenditure of corporate resources that is not in the best interests of our shareholders.
We believe this proxy statement provides more
meaningful information for shareholders about the compensation paid to our executives than the analysis and report requested by this proposal. The proxy statement includes a detailed discussion of our compensation objectives and methods,
including the process by which compensation decisions are made in the context of our business, which is large, operationally complex and global, with stores in nine countries across three continents and a worldwide buying team sourcing from a
universe of over 18,000 vendors.
The ECC, which has responsibility for overseeing our executive compensation program and for approving the compensation of our
executive officers, has used the same principles of compensation design for many years: establish a program of competitive total compensation, heavily weighted toward objective, performance-based incentives that focus on team-based execution and
reward achievement of our core business goals. The detailed annual disclosures in our proxy statement allow shareholders to assess the reasonableness of TJX’s executive compensation.
Moreover, we have provided our shareholders the right to approve, on an advisory basis, the compensation paid to our named executive officers at each annual meeting of
shareholders. This
say-on-pay
vote provides our shareholders with the opportunity to provide feedback on our executive compensation practices as disclosed every year.
For several years, our shareholders have expressed strong support for our executive compensation practices in our
say-on-pay
vote, and we believe our program continues
to be effective. As in prior years, the ECC will take into account the outcome of this year’s
say-on-pay
vote, among other factors, when considering executive
compensation arrangements in the future.
More broadly, we remain focused on attracting and retaining the best talent at all levels and in all functions. We
work hard to create an environment of teaching and mentoring and to provide opportunities for growth. We are proud that approximately 35% of our global managerial team, which we define as Assistant Store Manager and above, has been at the company
for more than ten years. During fiscal 2016 and fiscal 2017, we implemented our previously announced wage initiative that benefits current and future U.S. store Associates. This wage initiative remains an important piece of our strategy to continue
attracting and retaining the best talent to deliver a great shopping experience for our customers, remain competitive on wages in our U.S. markets and remain focused on our mission of delivering great value to our customers through the combination
of brand, fashion, price and quality. We want our customers to love shopping our stores, and we know our
in-store
experience is driven by our store Associates.
We believe that the compensation information disclosed in the annual proxy statement and the annual
say-on-pay
vote on our executive compensation practices provide both the information necessary for shareholders to assess whether our executive compensation practices
are appropriate and an appropriate means for shareholders to express approval or disapproval of those practices. As a result, we believe the additional review and report requested by the proposal is unnecessary and an inefficient use of our
resources.
Your Board of Directors unanimously recommends a vote AGAINST Proposal 8.
64
PROPOSAL 9
SHAREHOLDER PROPOSAL FOR A REPORT ON
COMPENSATION DISPARITIES BASED ON RACE, GENDER, OR ETHNICITY
We received the following proposal from Zevin Asset Management, LLC, 11 Beacon Street, Suite 1125, Boston, Massachusetts 02108, on behalf of David Fenton, a beneficial
owner of 1,660 shares of our common stock.
In accordance with SEC rules, we are reprinting the proposal and supporting statement in this proxy statement as they
were submitted to us. The shareholder proposal is required to be voted upon at the Annual Meeting only if properly presented at the Annual Meeting. As explained below, our Board unanimously recommends that you vote AGAINST the shareholder proposal.
Shareholder Proposal
Report on Compensation
Disparities Based on Race, Gender, or Ethnicity
Whereas
: The median income for women working full time in the U.S. is reported to be 79 percent of
that of their male counterparts. According to the Economic Policy Institute, average hourly wages for black men are 78 percent of those of similarly situated white men. Wages for black women are 66 percent of those of comparable white men
and 88 percent of those received by white women.
Women hold just over one half of retail industry positions, but women are underrepresented in higher paying
retail management positions and overrepresented in low paying front line jobs. According to Demos, “retail employers pay Black and Latino full-time retail salespersons just 75 percent of the wages of their white peers.”
These stubborn pay gaps have attracted attention from national media and policy makers.
Regulatory risk exists as the Paycheck Fairness Act, pending in Congress, aims to improve company-level transparency and strengthen penalties for equal pay violations.
California and Massachusetts have passed some of the strongest equal pay legislation to date.
Federal contractors are now required to report pay data by gender,
race, and ethnicity, and the Equal Employment Opportunity Commission (EEOC) has proposed rules requiring wage gap reporting.
In 2014, Gap Inc. released data showing
wage parity between male and female workers. Adobe, Amazon, Apple, eBay, Expedia, Intel, and Microsoft have committed to report on gender pay gaps. Intel and Microsoft published pay gap data covering gender and race/ethnicity.
According to McKinsey, companies in the top quartiles for gender and racial/ethnic diversity were more likely to have financial returns above the industry median. In a
Catalyst study, racial diversity and gender diversity were positively associated with more customers, increased sales revenue, and greater relative profits.
TJX
reports that people of color account for 55 percent of the Company’s U.S. workforce but only 32 percent of its managers. TJX has taken steps to promote diversity; however, there is no reporting on gender, race, or ethnic pay gaps.
Investors seek clarity on how TJX manages risks and opportunities related to pay equity.
Resolved
: Shareholders request that TJX prepare a report (at a reasonable cost, in a reasonable timeframe, and omitting proprietary and confidential information)
on the Company’s policies and goals to identify and reduce inequities in compensation due to gender, race, or ethnicity within its workforce. Gender-, race-, or ethnicity- based inequities are defined as the difference, expressed as a
percentage, between the earnings of each demographic group.
Supporting Statement
: A report adequate for investors to assess strategy and performance would
include: (1) an aggregated, anonymized chart of
EEO-1
data identifying employees according to gender and race in the major
65
EEOC-defined job categories, listed numbers or percentages in each category; (2) the percentage pay gap between groups (using a similar chart or square matrix); (3) discussion of policies
addressing any gaps and quantitative reduction targets; and (4) the methodology used to identify pay inequities, omitting proprietary information.
Statement of the Board of Directors in Opposition to Proposal 9
The Board of Directors unanimously recommends a vote AGAINST this Shareholder Proposal.
The Board of Directors opposes this proposal because we have a compensation structure intended to pay our Associates competitively and fairly based on their skills,
qualifications, and abilities, and because this proposal would not enhance our existing commitment to fostering a diverse and inclusive culture.
We have broad
non-discrimination
policies, and we strive for diversity at all levels of our organization, including management, and continue to work on initiatives that further embed inclusion as one of our core values, as it
impacts not only our ability to recruit and retain our Associates, but also is a key element of our team-based culture. As a large, complex and global business, we believe it is important to our success in the long-term that our workforce be
inclusive and reflect the diversity of our customers.
In 2016, we were proud to report in our annual corporate responsibility report that, in the United States,
approximately 55% of our total workforce and approximately 32% of our managerial team, which we define as Assistant Store Manager and above, are people of color, and that globally, women comprise approximately 66% of our managerial team. We were
also listed as a Top Diversity Employer by Black EOE Journal, Hispanic Network Magazine and Professional Woman’s Magazine in 2014 and 2015 for our work in incorporating diversity into our business practices. As discussed in further detail in
our annual corporate responsibility report, which is available on our website, www.tjx.com, in the Responsibility Section, we provide and promote inclusion-related learning and training initiatives on diversity; sponsor several Associate Resource
Groups organized for networking and career development, including Women Adding Value Everyday (WAVE) and The Multicultural Coalition; and partner with organizations, including the National Council of La Raza and the National Urban League, to
supplement our internal training and recruitment initiatives, among other efforts.
We believe it is imperative that we focus on attracting and retaining the best
talent at all levels and in all functions, and we strive to provide compensation that is both competitive in the market and equitable across our diverse workforce. Part of our overall compensation philosophy is to create a balanced program to
attract and retain top talent, motivate Associates to achieve our business objectives, reward short- and long-term performance and maintain pay practices that help align the interests of our Associates and shareholders. We set objective pay targets
by position and conduct general periodic compensation reviews to ensure that our compensation structure is working as intended. Furthermore, our incentive plans emphasize objective, performance-based pay and team-based execution of our business
goals across the company.
We remain committed to our ongoing efforts to promote diversity and maintain fair pay practices. This proposal calls for the creation of a
report that would be costly and time-consuming, and given our approach to our compensation program, which has been designed to pay our Associates competitively and fairly, and our multipronged diversity efforts, we believe the requested report would
neither offer shareholders meaningful additional information nor further our diversity and pay equity goals.
Your Board of Directors unanimously
recommends a vote AGAINST Proposal 9.
66
PROPOSAL 10
SHAREHOLDER PROPOSAL FOR A REPORT ON
NET-ZERO
GREENHOUSE GAS EMISSIONS
We received the following proposal from Jantz Management LLC, P.O. Box 301090, Boston,
Massachusetts 02130, on behalf of Christine Jantz, a beneficial owner of at least $2,000 of our common stock.
In accordance with SEC rules, we are reprinting the
proposal and supporting statement in this proxy statement as they were submitted to us. The shareholder proposal is required to be voted upon at the Annual Meeting only if properly presented at the Annual Meeting. As explained below, our Board
unanimously recommends that you vote AGAINST the shareholder proposal.
Shareholder Proposal
Net-Zero
Greenhouse Gas Emissions
Whereas
:
It is widely reported that greenhouse gases (GHGs) from human
activities are the most significant driver of observed climate change since the
mid-20
th
century;
In 2015, 196 parties at the U.N. Climate Change Conference agreed to limit climate change to an average global warming of 2 degrees Celsius above
pre-industrial
temperatures, with a goal of limiting it to 1.5 degrees Celsius. Alarmingly, recent data suggest that “if current emissions trends continue (RCP8.5) we could cross the 1.5°C threshold in 10
to 15 years, somewhere between the years 2025-2030.” Experts have concluded that the temperature increase goals mean that to fend off catastrophic climate change the entire world will need to achieve net zero GHG emissions;
Shareholders laud TJX Companies for committing “to reduc[ing] our global GHG emissions per dollar of revenue by 30% by 2020, against a 2010 baseline.” However,
these goals do not include a plan to reach net zero GHG emissions status;
We believe that achieving the goal of
Net-Zero
Greenhouse Gas Emissions is important for companies generally, and TJX specifically, to achieve sustainable long-term shareholder value.
Resolved
: The
shareholders request the Board of Directors of TJX, Inc. (the “Company”) to prepare a report to shareholders by December 31, 2017 that evaluates the potential for the Company to achieve by a fixed date
“net-zero”
emissions of greenhouse gases from parts of the business owned and operated by the Company. The report should be done at reasonable expense and may exclude confidential information.
Supporting Statement
: While the scope of coverage would be in the management’s discretion, the proponent suggests that the relevant operations could include
executive and administrative offices, data centers, product development offices, fulfillment centers and customer service offices, as well as transportation of goods and employees.
“Net-zero
greenhouse
gas emissions status” can be defined as reduction of GHG emissions attributed to company operations to a target annual level, and offsetting the remaining GHG emissions by negative emissions strategies that result in a documented reduction
equal to or greater than the company’s remaining GHG emissions during the same year. “Negative emissions solutions” are rigorously measured and tracked activities to displace polluting forms of energy production. Examples include
tree-planting and technological solutions that draw carbon from the air. Such negative emissions solutions can be developed by a company or purchased as offsets. We recommend that the report consider the potential fixed dates of 2030, 2040 or 2050
for achieving net zero GHG.
ATTENTION FUND FIDUCIARIES
: Mutual funds and institutions hold about 91% of TJX common stock. Leading investors include, among
others, Vanguard, FMR, Bank of New York Mellon, State Street, BlackRock, JP Morgan Chase, and Primecap. Your YES vote will promote TJX’s reputation and sales, and encourage TJX to establish a long-term sustainable business model.
67
Statement of the Board of Directors in Opposition to Proposal 10
The Board of Directors unanimously recommends a vote AGAINST this Shareholder Proposal.
The Board of Directors opposes this proposal because it believes that the requested report is not necessary or in the best interests of our shareholders, as TJX has
already established a greenhouse gas reduction target and is continuing to focus its global environmental sustainability program on meaningful initiatives that help reduce the company’s environmental impacts. Some of the key initiatives that
demonstrate the company’s ongoing commitment to environmental sustainability include:
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Global greenhouse gas emissions reduction target
: In 2014, we established TJX’s second greenhouse gas reduction target, which is to reduce the company’s global greenhouse gas emissions per dollar of
revenue by 30% by 2020, against a 2010 baseline. As reported in the company’s 2016 annual corporate responsibility report, which is available on our website, www.tjx.com, in the Responsibility section, TJX is on track with that goal.
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Energy efficiency measures
: We have implemented a number of initiatives designed to increase energy efficiency and to reduce energy consumption, including: retrofitting lighting, implementing and monitoring
energy management / building automation systems, conducting preventative maintenance on HVAC systems, and providing our stores with energy awareness training materials. In 2015, our energy efficiency initiatives allowed us to reduce our greenhouse
gas emissions footprint by more than 10,700 metric tons of CO
2
e.
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Supporting renewable energy
: In some regions in the United States, we have entered into agreements with renewable energy providers. Our Connecticut distribution center, as well as select stores in New Jersey and
California, have solar panels on their roofs, and we are working to ensure that the roofs of newly constructed distribution centers are designed to accommodate solar panels. In Canada in 2015, we purchased
Green-e
certified renewable energy credits equal to 100% of our electricity usage of our Canadian home office building as part of our LEED certification application. In Europe, our processing centers in
Germany and Poland incorporate solar and geothermal technologies.
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External reporting
: We have participated annually in the CDP Climate Change Information Request for the past six consecutive years using the standardized CDP questionnaire, and in 2016, we received an
“A-”
score from the CDP in recognition of our performance and disclosure of climate-related risks and opportunities.
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Third-party certifications and recognitions
: We were
re-accredited
with the Carbon Trust Standard certification in 2015 for our efforts throughout our European operations.
In 2016, we were listed once again on the FTSE4Good Index for the 16
th
consecutive year.
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We
understand that our growth may result in increases in our environmental footprint, including our absolute greenhouse gas emissions, which is why we are focused on pursuing meaningful initiatives that help reduce our environmental impacts and
actively demonstrate our ongoing commitment to environmental sustainability, while simultaneously supporting our mission to deliver value. Accordingly, we do not believe that the report requested by the proposal is necessary, nor do we believe that
it would further our goals of pursuing initiatives that are smart for our business and good for the environment.
Your Board of Directors
unanimously recommends a vote AGAINST Proposal 10.
68
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information as of January 28, 2017 with respect to our equity compensation plans:
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Plan Category
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Number of securities to be
issued upon exercise of
outstanding
options,
warrants and rights(a)
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Weighted-average
exercise price of
outstanding
options, warrants
and rights(b)
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Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column(a))(c)
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Equity compensation plans approved by security holders*
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28,416,594
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$ 48.69
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31,496,537
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Equity compensation plans not approved by security holders
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—
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—
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—
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Total
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28,416,594
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48.69
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31,496,537
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* We use one equity
compensation plan, the Stock Incentive Plan (or SIP), which was most recently approved by shareholders in 2013. Securities reported in column (a) include outstanding options and restricted stock unit awards as well as outstanding deferred stock
awards where the underlying shares have not been issued. The weighted-average exercise price in column (b) takes into account option awards but not the 1,063,793 shares subject to other awards.
For additional information concerning our equity compensation plan see Note I to our consolidated financial statements included in our Annual Report on Form
10-K
for fiscal 2017.
69
V
OTING REQUIREMENTS AND PRACTICES
Election of directors:
A nominee receiving a majority of the votes properly cast at the meeting for the nominee’s election (meaning he or she receives more
votes cast “for” than cast “against”) will be elected director. As described above in
Majority Voting
in the
Board Service at TJX
section
,
we require any
incumbent director standing for election to provide an irrevocable contingent resignation to be considered by the Board if the director receives a greater number of votes “against” his or her election than votes “for” such
election. You may vote “for” or “against” each of the nominees for director in Proposal 1 or “abstain” from voting for one or more nominees for director.
Other proposals:
All other proposals require the approval of a majority of the votes properly cast at the meeting (meaning the proposal is approved if there are
more votes properly cast “for” than cast “against”). You may vote “for” or “against” one or more of the other proposals, other than Proposal 6, advisory approval of the frequency of our
say-on-pay
votes, where you can vote for the vote to be held every one year, every two years or every three years. You may also abstain from voting on any of the proposals.
Quorum:
A majority of the shares outstanding and entitled to vote at the meeting is required for a quorum for the meeting.
Voting your shares:
Shareholders of record at the close of business on April 10, 2017 are entitled to vote at the meeting. Each of the 644,552,972
shares of common stock outstanding on the record date is entitled to one vote. There are multiple ways to vote your shares.
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If you are a shareholder of record, meaning you hold shares on the books of the company, you may vote by signing and returning the enclosed proxy card by mail or by using the procedures and instructions described on the
proxy card to vote over the Internet or by telephone using the toll-free telephone number provided. You may also vote in person at the meeting.
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If you are a “street name” holder (sometimes referred to as a “beneficial” holder), meaning you own through a third party such as a bank, broker, or nominee, please refer to the voting instruction
card or other enclosures provided by that third party with this proxy statement to see how and when to provide voting directions for your shares. (Internet or telephone voting may be permitted.)
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If you hold shares in the TJX stock fund available through one of our retirement plans, the TJX General Savings/Profit Sharing Plan, our U.S. 401(k) plan, or the TJX General Savings/Profit Sharing Plan (P.R.), our
Puerto Rico savings plan (collectively, “plan shares”), you may vote your plan shares by mail, over the Internet or by telephone by following the directions provided with this proxy statement. In order to allow sufficient time for the plan
shares to be voted by the plan trustee in accordance with your directions, your voting directions for your plan shares must be received no later than 11:59 p.m., Eastern Daylight Time, on Thursday, June 1, 2017. If you do not timely submit
voting directions, your plan shares will not be voted.
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If you vote your shares by mail, telephone or Internet, your shares will be voted in accordance
with your directions.
If you are a record holder and vote your proxy for the 2017 annual meeting by mail, telephone or Internet, but do not indicate specific choices
for some or all proposals as part of that process, your shares will be voted as follows:
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for the election of the director nominees (Proposal 1),
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for the ratification of the appointment of PricewaterhouseCoopers as TJX’s independent registered public accounting firm for fiscal 2018 (Proposal 2),
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for the reapproval of material terms of performance goals under the stock and cash incentive plans (Proposal 3 and Proposal 4),
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for the advisory approval of TJX’s executive compensation (the
say-on-pay
vote) (Proposal 5),
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every one year on the frequency of TJX’s
say-on-pay
votes (Proposal 6), and
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●
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against each of the shareholder proposals (Proposal 7 through Proposal 10).
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70
The persons named as proxies will also be able to vote your shares at postponed or adjourned meetings. If any nominee should
become unavailable, your shares will be voted for another nominee selected by the Board or for only the remaining nominees.
However, note that brokers (and nominees)
are not permitted to vote your shares on any matter other than the ratification of the appointment of the independent registered public accounting firm (Proposal 2) without instruction from you. If your shares are held in the name of a broker
or nominee and you do not instruct the broker or nominee on how to vote your shares with respect to the election of the director nominees (Proposal 1), any of Proposal 3 through 10, or if you abstain from voting on any matter, your shares will not
be counted as having been voted on that matter. Your shares will therefore have no effect on the outcome of the vote, but will be counted as in attendance at the meeting for purposes of a quorum.
Changing or revoking your proxy:
If you are a shareholder of record, you may change or revoke your proxy at any time before it is voted at the Annual Meeting by
voting later by Internet or telephone, returning a later-dated proxy card by mail, or delivering a written revocation to the Secretary of TJX at our corporate offices at:
Corporate Secretary
c/o Legal Department
The TJX Companies, Inc.
770 Cochituate Road,
Framingham, Massachusetts 01701.
If you are a street name holder, you
should refer to the voting instruction card or contact your broker, bank or other holder of record for instructions on how to change or revoke your vote.
If you hold
plan shares, please refer to the provided voting instruction card or contact the plan trustee for directions on how to change or revoke your vote. Please note that any new instructions on how to vote your shares must be received no later than 11:59
p.m. Eastern Daylight Time, on Thursday, June 1, 2017.
BRINGING PROPOSALS AND DIRECTOR NOMINATIONS
A shareholder who intends to present a proposal at the 2018 Annual Meeting of Shareholders and who wishes the proposal to be included in our proxy materials for that
meeting pursuant to Rule
14a-8
under the Exchange Act must submit the proposal in writing to us so that we receive it no later than December 28, 2017.
A shareholder who intends to present a proposal at the 2018 Annual Meeting of Shareholders but does not wish the proposal to be included in our proxy materials for that
meeting must provide written notice of the proposal to us no earlier than February 6, 2018 and no later than March 8, 2018. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any
proposal that does not comply with these and other applicable requirements. Our
by-laws,
which are available on our website, www.tjx.com, describe the requirements for submitting proposals at the Annual
Meeting.
A shareholder who wishes to nominate a director at the 2018 Annual Meeting must notify us in writing no earlier than February 6, 2018 and no later
than March 8, 2018. The notice must be given in the manner and must include the information and representations required by our
by-laws.
OTHER MATTERS
At the time of
mailing of this proxy, we do not know of any other matter that may come before the Annual Meeting and do not intend to present any other matter. However, if any other matters properly come before the meeting or any adjournment, the persons
named as proxies will have discretionary authority to vote the shares represented by the proxies in accordance with their own judgment, including the authority to vote to adjourn the meeting.
We will bear the cost of solicitation of proxies. We have retained Morrow Sodali LLC to assist in soliciting proxies by mail, telephone and personal interview for a
fee of $11,500, plus expenses. Our officers and other Associates may also assist in soliciting proxies in those manners.
71
APPENDIX A
NOTES AND RECONCILIATIONS
Definitions
We define
comparable (same) store sales
to be sales of those stores that have been in operation for all or a portion of two consecutive fiscal years, or in other
words, stores that are starting their third fiscal year of operation. The sales of our
e-commerce
businesses, meaning Sierra Trading Post (including stores), tjmaxx.com and tkmaxx.com, are not included in same
store sales. We determine which stores are included in the same store sales calculation at the beginning of a fiscal year and the classification remains constant throughout that year, unless a store is closed. We calculate same store sales results
by comparing the current and prior year weekly periods that are most closely aligned. Relocated stores and stores that have increased in size are generally classified in the same way as the original store, and we believe that the impact of these
stores on the consolidated same store percentage is immaterial. Same store sales of our foreign segments are calculated by translating the current year’s same store sales of our foreign segments at the same exchange rates used in the prior
year. This removes the effect of changes in currency exchange rates, which we believe is a more accurate measure of segment operating performance.
We define
customer traffic
to be the number of transactions in stores included in the same store sales calculation.
We define
total segment profit
to be the sum
of the segment profit or loss of our reporting segments and segment profit/loss to be
pre-tax
income or loss before general corporate expense, loss on early extinguishment of debt, the pension settlement
charge and interest expense, net.
The way we define these financial measures may not be comparable to similarly titled measures used by other entities.
Notes on charts
In the
Annual Sales Growth chart
on p. 21, peer group
averages are based on sales growth for the comparable period to TJX’s fiscal year end, using the last four quarters reported if the peer company’s fiscal calendar is not comparable (Bed Bath and Beyond, Nike and Starbucks). Excludes Yum
and Staples from the fiscal 2017 peer group average because they experienced a corporate event that made year-over-year growth not comparable. TJX’s fiscal 2013 revenue is reported on a
53-weeks
basis.
Adjusted growth on a
52-week
basis was 9.8% for fiscal 2013 and 7.6% for fiscal 2014, with an estimated positive impact of 1.74% and negative impact of 1.68% from the 53
rd
week, respectively.
In the
Annual Store Growth chart
on p. 21, peer group averages are based on the number
of stores for the comparable period to TJX’s fiscal year end, using the latest quarter reported if the fiscal calendar is not comparable to TJX’s (Bed Bath and Beyond and Starbucks). Amazon, eBay, Kimberly Clark and Yum Brands were
excluded from the fiscal 2017 peer group average as they do not have significant store operations. Staples was excluded because it experienced a corporate event that made year-over-year growth not comparable and Nike and Best Buy were excluded
because comparable recent store numbers were not available. TJX’s fiscal 2016 store growth includes 35 Trade Secret stores; excluding those stores, fiscal 2016 annual store growth was 5.4%.
For the
EPS and Adjusted EPS chart
on p. 22, see below for reconciliations of TJX adjusted EPS to GAAP EPS.
In the
CEO Pay for Performance Chart
on p. 22, total compensation for each fiscal year consists of the following elements: base salary, annual cash incentives
(MIP), and long term incentives, consisting of equity (performance-based stock awards granted during the fiscal year for Mr. Herrman or allocated to the year of the related service and performance for Ms. Meyrowitz; stock options granted
during the fiscal year and valued at grant date; and cash (LRPIP with performance periods ending in that fiscal year). Compensation information reflected in this chart differs from, and is not a substitute for, the information presented in the
Summary
Compensation Table
on p. 38 of this proxy statement.
Reconciliations
Earnings Per Share
Adjusted earnings per share (EPS) of TJX excludes from
diluted EPS from continuing operations computed in accordance with U.S. generally accepted accounting principles (GAAP) the following positive and negative effects of items that affect comparability between periods. Several of the peer group
members also report adjusted EPS, which were used in calculating the five-year adjusted EPS growth rate for our fiscal 2017 peer group. Peers might not calculate adjusted EPS in the same way we do. Adjusted EPS for our peers includes GAAP EPS for
years in which no adjusted EPS was reported.
For TJX EPS:
Fiscal 2012 adjusted
EPS of $1.99 excludes the negative impact of $0.06 per share from the A.J. Wright consolidation from GAAP EPS of $1.93.
Fiscal 2013 adjusted EPS of $2.47 excludes an
estimated $0.08 per share benefit from the 53
rd
week from GAAP EPS of $2.55.
Fiscal 2014 adjusted EPS of $2.83
excludes an $0.11 per share tax benefit from GAAP EPS of $2.94.
Fiscal 2015 adjusted EPS of $3.16 excludes the impact of a second quarter debt extinguishment charge
of $0.01 per share on GAAP EPS of $3.15.
Fiscal 2017 adjusted EPS of $3.53 excludes the negative impact of $0.07 from a third quarter debt extinguishment charge and
a pension settlement charge from GAAP EPS of $3.46.
A-1
APPENDIX B
THE TJX COMPANIES, INC.
STOCK INCENTIVE
PLAN
(2013 Restatement)
First
Amendment
Second Amendment
B
THE TJX COMPANIES, INC.
STOCK INCENTIVE PLAN
(2013 Restatement)
TABLE OF CONTENTS
THE TJX COMPANIES, INC.
STOCK INCENTIVE PLAN
(2013 Restatement)
SECTION 1.
NAME; EFFECTIVE DATE; GENERAL PURPOSE
The name of the plan is The TJX Companies, Inc. Stock Incentive Plan (the “Plan”). The Plan is an amendment and restatement of The TJX
Companies, Inc. Stock Incentive Plan. Except as otherwise expressly provided herein, the provisions of the Plan as herein amended and restated shall apply to all Awards outstanding as of, or granted after, February 2, 2013 (referred to herein
as the “Effective Date”). All Awards outstanding as of the Effective Date, including Awards granted on the Effective Date, are referred to herein as “Outstanding Awards”; and all Awards granted after the Effective Date are
referred to herein as “New Awards.”
The purpose of the Plan is to secure for The TJX Companies, Inc. (the “Company”) and its
stockholders the benefit of the incentives inherent in stock ownership and the receipt of incentive awards by selected key employees and directors of the Company and its Subsidiaries who contribute to and will be responsible for its continued long
term growth. The Plan is intended to motivate such individuals to enhance the long-term value of the Company by providing an opportunity for capital appreciation and to recognize services that contribute materially to the success of the Company.
Capitalized terms used in the Plan shall have the meaning set forth in Section 14.
SECTION 2.
PLAN ADMINISTRATION
(a) The Plan shall be administered by the Executive Compensation Committee of the Board or such other committee of the Board as the Board may from time to
time determine (the “Committee”). The Committee shall consist of not fewer than two Independent Directors, and if at any time the body that would otherwise constitute the Committee shall include any member who is not an Independent
Director, a subcommittee of such body consisting solely of two or more Independent Directors shall constitute the Committee. If at any time no Committee (or subcommittee of Independent Directors described in the preceding sentence) shall be in
office, the functions of the Committee shall be exercised by the independent Directors.
(b) The Committee shall have the power and authority to do
any or all of the following in its sole discretion: grant Awards consistent with the terms of the Plan, including the power and authority to select from among those eligible the persons to whom Awards may from time to time be granted; determine the
time or times of grant of any Awards; to determine the number of shares to be covered by any Award; determine the terms and conditions of any Award; adopt such rules, guidelines and practices for administration of the Plan and for its own acts and
proceedings as it shall deem advisable; interpret the terms and provisions of the Plan and any Award; prescribe such forms and agreements as it deems advisable in connection with any Award; make all determinations it deems advisable for the
administration of the Plan; decide all disputes arising in connection with the Plan; and otherwise supervise the administration of the Plan.
(c) The
Committee may delegate its power and authority under the Plan to such officers or other employees of the Company or a Subsidiary, or other persons, as it determines; provided, that only the Committee shall have the power and authority to take such
actions under the Plan as are required by applicable law or stock exchange requirements to be taken by Independent Directors. To the extent consistent with the foregoing, the Committee may, as part of any such delegation, provide that all or part of
any such delegated powers and authorities may be further delegated to any officer, employee or person to whom the Committee could have made the delegation in the first instance. For purposes of the Plan, other than in this Section 2(c), and as
used in any Award, the term “Committee” shall be deemed to include any such delegate (or subdelegate) acting within the scope of any such delegation (or subdelegation), to the extent of such delegation.
(d) All decisions and interpretations of the Committee shall be binding on all persons, including the Company, its Subsidiaries and Participants.
B-1
SECTION 3.
SHARES ISSUABLE UNDER THE PLAN; MERGERS;
SUBSTITUTION.
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(i)
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The number of shares of Stock (“Share Limit”) available to be issued under the Plan, determined as of the Effective Date, is 89,224,956 (including, for the avoidance of doubt, shares that as of the Effective
Date were subject to Outstanding Awards); provided, that of this number, 26,000,000 shall be part of the Share Limit only upon approval by the stockholders of the Company. For purposes of the Share Limit, (A) each share subject to a Stock
Option or SAR shall count as one (1) share and each share subject to any other Award shall count as one and thirteen one-hundredths (1.13) shares; (B) shares issued under the Plan shall include only the number of shares actually
issued under an Award and shall not include shares subject to an Award to the extent the Award is forfeited, expires, or is satisfied without the issuance of Stock; provided, however, that unissued shares resulting from the net settlement in Stock
of a Stock Option or SAR, and shares retained by or delivered to the Company to satisfy any purchase or exercise price or the payment of withholding taxes in connection with a Stock Option or SAR, shall be treated as issued; and further provided,
for the avoidance of doubt, that the purchase of shares by the Company on the open market with the proceeds of the exercise of a Stock Option will not increase the Share Limit; and (C) to the extent an Outstanding Award other than a Stock
Option or SAR is forfeited, the Share Limit shall be appropriately increased consistent with clause (A) above.
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(ii)
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The following limits also apply to Awards, subject in each case to the Share Limit: (A) the maximum number of shares of Stock that in the aggregate are available to be issued pursuant to the exercise of ISOs shall
not exceed the Share Limit; (B) the number of shares of Stock subject to each of Stock Options, SARs and Performance Awards awarded to any Participant during any consecutive three-year period shall be limited to 16,000,000 shares each;
(C) the maximum number of shares subject to New Awards that are Full Value Awards with a vesting schedule of less than three years from the date of grant and not described in any of clauses (i) through (iv) of the second paragraph of
Section 7(c) shall not exceed 2,500,000.
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(iii)
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Shares issued under the Plan may be authorized but unissued shares or shares reacquired by the Company.
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(iv)
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The Company shall appropriately reserve shares in connection with the grant of Awards to reflect the limitations set forth above.
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The per-individual limits described above shall be construed to include earnings or notional earnings on Awards to the extent consistent with Section 162(m) of the
Code.
(b)
Stock Dividends, Mergers, etc
. In the event of a stock dividend, stock split, reverse stock split or similar change in
capitalization, or extraordinary dividend or distribution or restructuring transaction affecting the Stock, the Committee shall make appropriate adjustments in the number and kind of shares of stock or securities on which Awards may thereafter be
granted, including the limits described in Section 3(a) and Section 7(c), and shall make such adjustments in the number and kind of shares remaining subject to outstanding Awards, and the option or purchase price in respect of such shares
as it may deem appropriate with a view toward preserving the value of outstanding awards. In the event of any merger, consolidation, dissolution or liquidation of the Company, the Committee in its sole discretion may, as to any outstanding Awards,
make such substitution or adjustment in the aggregate number of shares reserved for issuance under the Plan and in the number and purchase price (if any) of shares subject to such Awards as it may determine, or accelerate, amend or terminate such
Awards upon such terms and conditions as it shall provide (which, in the case of the termination of the vested portion of any Award, shall require payment or other consideration which the Committee deems equitable in the circumstances), subject,
however, to the provisions of Section 12.
(c)
Substitute Awards
. The Company may grant Awards under the Plan in conversion,
replacement or adjustment of outstanding options or other equity-based compensation awards held by employees of another corporation or other entity who become employees or Eligible Directors of the Company or a Subsidiary as described in the first
sentence of Section 4 as the result of a merger or consolidation of the employing corporation
B-2
or other entity (or an affiliate of such corporation or entity) with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of stock of the employing corporation or an
affiliate. The Committee may direct that the converted, replacement or adjusted awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances to reflect the transaction. The shares that may be delivered
under such substitute Awards shall be in addition to the limitations on the number of shares available for issuance under Awards and other limits described in Section 3(a).
SECTION 4.
ELIGIBILITY.
Participants in the Plan will be (i) such full or part time officers and other key employees of the Company and its Subsidiaries who are selected
from time to time by the Committee in its sole discretion, and (ii) Eligible Directors. Persons who are not employees of the Company or a subsidiary (within the meaning of Section 424 of the Code) shall not be eligible to receive grants of
ISOs.
SECTION 5.
DURATION OF AWARDS; TERM OF P LAN
.
(a)
Duration of Awards
. Subject to Sections 13(a) and 13(e) below, no Stock Option or SAR may remain exercisable beyond 10 years from the
grant date, and no other Award shall have a vesting or restriction period that extends beyond 10 years from the grant date, except that deferrals elected by Participants of the receipt of Stock or other benefits under the Plan may extend beyond such
date.
(b)
Latest Grant Date
. No Award shall be granted after June 11, 2023 and no more than 26,000,000 ISOs shall be granted
after June 2, 2019, but outstanding Awards and ISOs, respectively, may extend beyond such dates.
SECTION 6.
STOCK OPTIONS; SARs
.
Any Stock Option or SAR granted under the Plan shall be in such form as the Committee may from time to time approve. Stock Options granted under the Plan
may be either ISOs or NSOs. Any Stock Option that is not expressly designated as an ISO at time of grant shall be deemed to have been expressly designated at time of grant as an NSO. Anything in the Plan to the contrary notwithstanding, no term of
this Plan relating to ISOs shall be interpreted, amended or altered.
Stock Options granted under the Plan shall be subject to the provisions of
Sections 6(a) through Section 6(f) below. SARs shall be subject to the provisions of Section 6(g) below; and Stock Options and SARs shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable.
(a)
Option Price
. The option price per share of Stock purchasable under a Stock Option shall be
determined by the Committee at the time of grant but shall be not less than 100% of Fair Market Value on the date of grant.
(b)
Exercisability
.
Stock Options shall be exercisable at such time or times, whether or not in installments, as shall be determined by the Committee at or after the grant date. The Committee may at any time accelerate the exercisability
of all or any portion of any Stock Option. Unless the Committee expressly provides otherwise, the following rules will apply to any portion of a Stock Option that is outstanding immediately prior to the termination of employment of the person to
whom the Stock Option was granted (the “Outstanding Stock Option”):
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(i)
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Termination by Reason of Death or Disability: Partial Acceleration of Exercisability
. If the employment of such person terminates by reason of death or Disability, the Outstanding Stock Option shall be
exercisable as to the number of shares for which it could have been exercised immediately prior to such termination or, if greater, (A) the total number of shares subject to the Stock Option multiplied by a fraction, the numerator of which
shall be the number of days between the grant of the Stock Option and such termination and the denominator of which shall be the number of days between the grant of the Stock Option and the date upon which the Stock Option, by its terms, would have
become fully exercisable, minus (B) the number of shares, if any, previously purchased under the Stock Option; provided, however, that no shares may be purchased under the Outstanding Stock Option in the event that such termination occurs
within three months after the grant of the Stock Option.
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B-3
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(ii)
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Termination by Reason of Death: Extension of Exercise Period
. If the employment of such person terminates by reason of death, the Outstanding Stock Option may thereafter be exercised, to the extent exercisable
immediately prior to death (determined after taking into account any applicable acceleration), for a period of five years (or such other period as may be specified under the terms of the Stock Option) from the date of death or until the expiration
of the stated term of the option, if earlier.
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(iii)
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Termination by Reason of Disability: Extension of Exercise Period
. If the employment of such person terminates by reason of Disability, the Outstanding Stock Option may thereafter be exercised, to the extent it
was exercisable immediately prior to such termination (determined after taking into account any applicable acceleration), for a period of five years (or such other period as may be specified under the terms of the Stock Option) from the date of such
termination of employment or until the expiration of the stated term of the option, if earlier. The death during the final year of such exercise period of the person to whom such Stock Option was granted shall, to the extent the Stock Option remains
outstanding, extend such period for one year following death or until the expiration of the stated term of the option, if earlier.
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(iv)
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Termination by Reason of Normal Retirement: Extension of Exercise Period
. If the employment of such person terminates by reason of Normal Retirement, the Outstanding Stock Option may thereafter be exercised, to
the extent that it was exercisable immediately prior to such termination, for a period of five years (or such other period as may be specified under the terms of the Stock Option) from the date of such termination or until the expiration of the
stated term of the option, if earlier. The death during the final year of such exercise period of the person to whom such Stock Option was granted shall, to the extent the Stock Option remains outstanding, extend such period for one year following
death, subject to termination on the expiration of the stated term of the option, if earlier.
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(v)
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Termination by Reason of Special Service Retirement: Continued Vesting and Extension of Exercise Period
. If the employment of such person terminates by reason of a Special Service Retirement, the Outstanding
Stock Option may thereafter be exercised, to the extent exercisable from time to time as hereinafter determined, for a period of five years (or such other period as may be specified under the terms of the Stock Option) from the date of such
termination or until the expiration of the stated term of the option, if earlier. The death during the final year of such exercise period of the person to whom such Stock Option was granted shall, to the extent the Stock Option remains outstanding,
extend such period for one year following death or until the expiration of the stated term of the option, if earlier. To the extent the Outstanding Stock Option is not yet fully exercisable at the date of the Special Service Retirement of the person
to whom the Stock Option was granted, it shall continue to become exercisable over the period of three years following the Special Service Retirement date (subject to the stated term of the option, or on such accelerated or other basis as the
Committee shall at any time determine), on the same basis as if such person had not retired.
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(vi)
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Other Termination
. If the employment of such person terminates for any reason other than death, Disability, Normal Retirement, Special Service Retirement or for Cause, the Outstanding Stock Option may thereafter
be exercised, to the extent it was exercisable on the date of termination of employment, for a period of three months (or such other period as may be specified under the terms of the Stock Option) from the date of termination of employment or until
the expiration of the stated term of the option, if earlier. Notwithstanding any other provision of this Section 6(b)(i) through (v), if the employment of such person terminates or is terminated for Cause, all outstanding Stock Options
previously granted to such person (whether or not exercisable) shall immediately terminate.
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Unless the Committee expressly provides otherwise, each
Stock Option shall terminate and cease to be outstanding as follows: (A) in the event of any termination of employment other than a Special Service Retirement, any portion of the Outstanding Stock Option that is not exercisable immediately
prior to such termination of employment (determined after taking into account any applicable acceleration) shall terminate and cease to be outstanding upon such termination; (B) in the case of a Special Service Retirement, any portion of the
Outstanding Stock Option that has not become exercisable by the last day of the applicable post-retirement vesting period under clause (v) above shall terminate and cease to be outstanding at the end of such period; and (C) to the extent
not earlier exercised, forfeited or terminated, and after giving effect to any settlement pursuant to Section 6(f), any outstanding portion of the Stock Option (whether or not exercisable) shall terminate and cease to be outstanding upon
expiration of any applicable post-termination of employment exercise period or upon the expiration of the stated term of the option, if earlier.
B-4
Stock Options that are exercisable may be exercised by the person to whom the Stock Option was granted or,
in the event of his or her death, by his or her legal representative or legatee, and (if applicable) may be settled in accordance with Section 6(f).
(c)
Method of Exercise
. The person holding a Stock Option may exercise the Stock Option in whole or in part by means of such exercise
procedures as the Committee may from time to time establish, each of which shall require, as the Committee determines, delivery to the Committee of the full purchase price plus (as provided in Section 13(d)) any taxes required to be withheld in
connection with the exercise, or delivery of an unconditional and irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay such purchase price and taxes, for the portion of Stock Option so exercised. If so
permitted by the Committee in its discretion and subject to such limitations and restrictions as the Committee may impose, payment in full or in part of the exercise price or payment of withholding taxes (as provided in Section 13(d)) may also
be made in the form of shares of Stock not then subject to restrictions under any Company plan. The person holding a Stock Option shall have the rights of a shareholder (including, but not limited to, rights to receive dividends) only as to shares
acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.
(d)
Non-transferability
of Options
. No ISO (and, except as determined by the Committee, no NSO) shall be transferable by the person to whom such Stock Option was granted otherwise than by will or by
the laws of descent and distribution, and all ISOs (and, except as determined by the Committee, all NSOs) shall be exercisable during the lifetime of the person to whom such Stock Options were granted only by such person. Transfers, if any,
permitted by the Committee in the case of NSOs shall be limited to gratuitous transfers (transfers not for value). Where an NSO is permitted by the Committee to be transferred, references in the Plan to the “person to whom the Stock Option was
granted” and similar terms shall be construed, as the Committee in its discretion deems appropriate, to include any permitted transferee to whom the Stock Option is transferred.
(e)
Form of Settlement
. Subject to Section 13(a) and Section 13(e) below, shares of Stock issued upon exercise of a Stock Option
shall be free of all restrictions under the Plan, except as provided in the following sentence. The Committee may provide at time of grant that the shares to be issued upon the exercise of a Stock Option shall be in the form of Restricted Stock, or
may reserve the right to so provide after time of grant.
(f)
Discretionary Payments; Automatic Settlement
. The Committee may, in its
discretion, upon the written request of the person exercising a Stock Option (which request shall not be binding on the Committee, except as hereinafter provided), cancel such Stock Option, whereupon the Company shall pay to the person exercising
such Stock Option an amount equal to the excess, if any, of the Fair Market Value of the Stock to have been purchased pursuant to such exercise of such Stock Option (determined on the date the Stock Option is canceled) over the aggregate
consideration to have been paid by such person upon such exercise. Such payment shall be by check, bank draft or in Stock (or in another form of payment acceptable both to the Committee and the person exercising the option) having a Fair Market
Value (determined on the date the payment is to be made) equal to the amount of such payments or any combination thereof, as determined by the Committee. Except as otherwise provided by the Committee and subject to such limitations as the Committee
may prescribe, if a Stock Option granted on or after January 31, 2009 remains unexercised on the date it would otherwise have expired and if on such date the Fair Market Value of the shares subject to the Stock Option exceeds the aggregate
consideration that would have been required to have been paid to purchase such shares had the Stock Option been exercised, the person then holding the Stock Option shall be deemed to have requested, and the Committee shall be deemed to have
approved, a cancellation of such Stock Option in accordance with the first sentence of this Section 6(f) and the amount payable pursuant to the first sentence of this Section 6(f) shall be paid in the form of shares of Stock in accordance
with the first sentence of this Section 6(f). The Committee may provide that the automatic settlement provision set forth in the foregoing sentence applies to a Stock Option granted prior to January 31, 2009.
(g)
SARs
. An SAR is an award entitling the recipient to receive an amount in cash or shares of Stock (or in any other form of payment
acceptable to the Committee) or a combination thereof having a value determined by reference to (and not to exceed) the excess of the Fair Market Value of a share of Stock on the date of exercise over the Fair Market Value of a share of Stock on the
date of grant (or over the option exercise price, if the SAR was granted in tandem with a Stock Option). The Committee shall determine all terms of SARs granted under the Plan. SARs may be granted in tandem with, or independently of, any Stock
Option granted under the Plan. Any SAR granted in tandem with ISOs shall comply with the ISO rules relating to tandem SARs. The Committee may at any time accelerate the exercisability of all or any portion of any SAR.
B-5
SECTION 7.
OTHER STOCK-BASED AWARDS.
(a)
Nature of Stock Awards
. Awards under this Section 7 include Awards other than Stock Options or SARs that entitle the recipient to
acquire for a purchase price (which may be zero) shares of Stock subject to restrictions under the Plan (including a right on the part of the Company during a specified period to repurchase such shares at their original purchase price, or to require
forfeiture if the purchase price was zero, upon the Participant’s termination of employment) determined by the Committee (“Restricted Stock”); Awards that entitle the recipient, with or without payment, to the future delivery of
shares of Stock, subject to such conditions and restrictions as may be determined by the Committee (“Stock Units”); and other Awards (excluding Stock Options or SARs) under which Stock may be acquired or which are otherwise based on the
value of Stock.
(b)
Rights as a Shareholder
. A Participant shall have all the rights of a shareholder, including voting and dividend
rights, (i) only as to shares of Stock received by the Participant under an Other Stock-based Award, and (ii) in any case, subject to such nontransferability restrictions, Company repurchase or forfeiture rights, and other conditions as
are made applicable to the Award.
(c)
Restrictions
. The Committee may determine the conditions under which an Other Stock-based Award,
or Stock acquired under an Other Stock-based Award, shall be forfeited, and may at any time accelerate, waive or, subject to Section 10, amend any or all of such limitations or conditions. Each Other Stock-based Award shall specify the terms on
which such Award or the shares under such Award shall vest (become free of restrictions under the Plan), which may include, without limitation, terms that provide for vesting on a specified date or dates, vesting based on the satisfaction of
specified performance conditions, and accelerated vesting in the event of termination of employment under specified circumstances. The Committee shall take such steps as it determines to be appropriate to reflect any restrictions applicable to an
Other Stock-based Award or the shares thereunder and to facilitate the recovery by the Company of any such Award or shares that are forfeited.
Notwithstanding the foregoing but subject to Section 3(a)(ii)(C) and subject to the following provisions of this paragraph, no grants of Full Value
Awards shall specify a vesting date that is less than three years from the date of grant other than (i) grants made in connection with a Participant’s commencement of employment with the Company or any Subsidiary; (ii) Performance
Awards, the vesting of which is set by reference to a performance period of at least one year; (iii) Awards that specify full vesting in no less than three years and partial vesting at a rate no faster than one-third of the Award each year; and
(iv) Awards to Eligible Directors under Section 7(e). Acceleration of vesting of a Full Value Award (whether pursuant to the original terms of an Award or otherwise) in the event of death, disability, retirement or a Change of Control
shall not be taken into account in determining whether the Full Value Award complies with the foregoing vesting limitations.
Except as otherwise
determined by the Committee, if the employment by the Company and its Subsidiaries of a person to whom an Other Stock-based Award has been granted terminates for any reason, (i) any shares of Restricted Stock that are not then vested (taking
into account any accelerated vesting applicable to such shares under the terms of the Award or otherwise) shall be resold to the Company at their purchase price or forfeited to the Company if the purchase price was zero and (ii) any Other
Stock-based Award that is not then vested (taking into account any accelerated vesting applicable to such Award under the terms of the Award or otherwise) shall immediately terminate. The Committee at any time may accelerate the vesting date or
dates for an Other Stock-based Award or for Restricted Stock, if any, granted thereunder and may otherwise waive or, subject to Section 10, amend any conditions of the Award. Neither the Committee nor the Company shall be liable for any adverse
tax or other consequences to a Participant from any such acceleration, waiver, or amendment.
(d)
Dividends; Dividend Equivalents
.
Except as otherwise determined by the Committee, a Participant’s rights under an Other Stock-based Award to dividends (or dividend equivalent payments, in the case of an Other Stock-based Award, if any, other than Restricted Stock, that is
subject to vesting conditions and as to which the Committee has made provision for such payments) shall be treated as unvested so long as such Award remains unvested (the “restricted period”), and any such dividends or dividend equivalent
payments that would otherwise have been paid during the restricted period shall instead be accumulated and paid within thirty (30) days following the date on which such Award is determined by the Company to have vested.
B-6
(e)
Annual Deferred Stock Awards, Additional Deferred Stock Awards and Dividend Awards for Eligible
Directors
.
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(i)
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Accounts
. The Company shall establish and maintain an Account in the name of each Eligible Director to which the Annual Deferred Stock Awards, Additional Deferred Stock Awards and Dividend Awards shall be
credited.
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(ii)
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Annual Awards
. On the date of each Annual Meeting, each Eligible Director who is elected a Director at such Annual Meeting shall automatically and without further action by the Board or Committee be granted an
Annual Deferred Stock Award as provided in subsection (iv) and an Additional Deferred Stock Award as provided in subsection (v). On each date other than the date of an Annual Meeting on which an Eligible Director is first elected a Director by
the Board, the Eligible Director then so elected shall automatically and without further action by the Board or Committee be granted a prorated Annual Deferred Stock Award as provided in subsection (iv) and a prorated Additional Deferred Stock
Award as provided in subsection (v). The grant of each Annual Deferred Stock Award and Additional Deferred Stock Award shall entitle each recipient, automatically and without further action by the Board or the Committee, to Dividend Awards as
provided in subsection (vi).
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(iii)
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Nature of Awards
. Each Annual Deferred Stock Award, Additional Deferred Stock Award and Dividend Award shall be an Other Stock-based Award subject to the terms of this Plan and shall constitute an unfunded and
unsecured promise of the Company to deliver in the future to such Eligible Director, without payment, the number of shares of Stock in the amounts and at the times hereinafter provided. The shares of Stock notionally credited to the Accounts of
Eligible Directors shall be notional shares only and shall not entitle the Eligible Director to any voting rights, dividend or distribution or other rights except as expressly set forth herein. Nothing herein shall obligate the Company to issue or
set aside shares of Stock, in trust or otherwise, to meet its contractual obligations hereunder.
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(iv)
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Annual Deferred Stock Award
. In respect of each Annual Deferred Stock Award granted on the date of an Annual Meeting, the Company shall credit to each Eligible Director’s Account, effective as of the date of
such Annual Meeting, the number of notional shares of Stock, including any fractional share, equal to $125,000 or such lesser dollar amount as may be determined by the Board divided by the Fair Market Value of a share of Stock on the date of such
Annual Meeting. In respect of each Annual Deferred Stock Award granted on a date other than the date of an Annual Meeting, the Company shall credit to the Account of the Eligible Director first elected on such date the number of notional shares of
Stock, including any fractional share, equal to (i) $125,000 or such lesser dollar amount as may be determined by the Board divided by the Fair Market Value of a share of Stock on the date of such first election multiplied by (ii) the
quotient (not greater than one) obtained by dividing (A) the number of days starting with the date of such first election and ending on the day first preceding the anticipated date of the next Annual Meeting, by (B) 365.
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(v)
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Additional Deferred Stock Award
. In addition to the Annual Deferred Stock Award, the Company shall credit to the Account of each Eligible Director, effective as of the date that any Annual Deferred Stock Award is
credited to such Account, an Additional Deferred Stock Award covering the same number of shares as are covered by such Annual Deferred Stock Award determined in the same manner prescribed in subsection (iv) above.
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(vi)
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Dividend Awards
. The Company shall credit (each such credit, a “Dividend Award”) the Account of each Eligible Director on the date of each Annual Meeting and on the date on which an Eligible Director
ceases to be a Director if not the date of an Annual Meeting with a number of notional shares of Stock, including any fractional share, equal to (i) plus (ii), divided by (iii), where:
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(i)
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is the product obtained by multiplying the number of shares then allocated to such Eligible Director’s Account (disregarding, for purposes of this clause (i), any shares credited to such Account since the date
of the immediately preceding Annual Meeting) by the aggregate per-share amount of regular cash dividends for which the record date occurred since the date of the immediately preceding Annual Meeting;
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(ii)
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is the product obtained by multiplying the number of shares first credited to such Eligible Director’s Account since
the date of the immediately preceding Annual Meeting but prior to the
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B-7
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date of such Dividend Award by the aggregate per-share amount of regular cash dividends for which the record date occurred since the date that such shares were credited to such Account; and
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(iii)
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is the Fair Market Value of one share of Stock on the date of such Dividend Award.
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(vii)
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Vesting
. Each Annual Deferred Stock Award, and any Dividend Awards in respect of Annual Deferred Stock Awards and/or Additional Deferred Stock Awards, shall vest immediately upon grant and be non-forfeitable.
Each Additional Deferred Stock Award shall vest and become non-forfeitable on the date immediately preceding the date of the Annual Meeting next succeeding the date of grant of such Award,
provided
, that the recipient is still a Director on
such date. In the event that an Eligible Director terminates his or her service as a Director for any reason prior to such vesting date, the Eligible Director shall forfeit any then unvested Additional Deferred Stock Award.
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(viii)
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Delivery
. The Company shall deliver to an Eligible Director (or a former Eligible Director) the number of shares of Stock, rounded up to the next full share, represented by notional shares of Stock credited to
the Account of such Eligible Director in respect of Annual Deferred Stock Awards (including any Dividend Awards made in respect of such Annual Deferred Stock Awards) at the earlier of the following: (x) immediately prior to a Change of Control
or (y) within sixty (60) days following the Eligible Director’s death or earlier separation from service (as determined under the regulations under Section 409A of the Code). With respect to any Additional Deferred Stock Award,
absent an election to defer delivery of the shares of Stock subject to such Award pursuant to subsection (ix) below, the Company shall deliver to an Eligible Director the number of shares of Stock, rounded up to the next full share, represented
by notional shares of Stock credited to the Account of such Eligible Director in respect of such Additional Deferred Stock Award (including any Dividend Awards made in respect of such Additional Deferred Stock Award) at the earlier of the following:
(x) immediately prior to a Change of Control or (y) within sixty (60) days following the date of vesting pursuant to subsection (vii) above. In the event of a termination by reason of death, such shares of Stock shall be
delivered to such beneficiary or beneficiaries designated by the Eligible Director in writing in such form, and delivered prior to his or her death to such person at the Company, as specified by the Company or, in the absence of such a designation,
to the legal representative of Eligible Director’s estate.
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(ix)
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Deferral of Delivery of Additional Deferred Stock Awards
. By filing a written notice to the Company in such form, and delivered to such person at the Company, as specified by the Company, an Eligible Director may
irrevocably elect to defer receipt of the delivery of shares of Stock representing all or a portion of the notional shares of Stock subject to any Additional Deferred Stock Award (including any Dividend Awards made in respect of such notional
shares) until the earlier of the following: (x) immediately prior to a Change of Control or (y) as soon as practicable and in all events within sixty (60) days following the Eligible Director’s death or earlier separation from
service (as determined under the regulations under Section 409A of the Code). Any election made pursuant to this subsection (ix) must be submitted with respect to any Additional Deferred Stock Award (A) in the case of the Additional
Deferred Stock Award granted on the date an Eligible Director is first elected as a Director, no later than 30 days after the date of such Eligible Director’s election to the Board or (B) in the case of any other Additional Deferred Stock
Award, no later than December 31 of the calendar year preceding the calendar year in which such Award is granted, or (C) at such other time as is necessary to satisfy the requirements of Section 409A of the Code, as determined by the
Committee.
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SECTION 8.
PERFORMANCE AWARDS.
(a)
Nature of Performance Awards
. A Performance Award is an award entitling the recipient to acquire cash or shares of Stock, or a
combination of cash and Stock, upon the attainment of specified performance goals. If the grant, vesting, or exercisability of a Stock Option, SAR, or Other Stock-Based Award is conditioned upon attainment of a specified performance goal or goals,
it shall be treated as a Performance Award for purposes of this Section and shall be subject to the provisions of this Section in addition to the provisions of the Plan applicable to such form of Award.
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(b)
Qualifying and Nonqualifying Performance Award
s
. Performance Awards
may include Awards intended to qualify for the performance-based compensation exception under Section 162(m)(4)(C) of the Code (“Qualifying Awards”) and Awards not intended so to qualify (“Nonqualifying Awards”).
(c)
Terms of Performance Awards
. The Committee in its sole discretion shall determine the performance goals applicable under each such
Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the Award. Performance Awards may be granted independently or in connection with the granting of other Awards. In the case of a
Qualifying Award (other than a Stock Option or an SAR), the following special rules shall apply: (i) the Committee shall preestablish the performance goals and other material terms of the Award not later than the latest date permitted under
Section 162(m) of the Code; (ii) the performance goal or goals fixed by the Committee in connection with the Award shall be based exclusively on one or more Approved Performance Criteria; (iii) no payment (including, for this purpose,
vesting or exercisability where vesting or exercisability, rather than the grant of the Award, is linked to satisfaction of performance goals) shall be made unless the preestablished performance goals have been satisfied and the Committee has
certified (pursuant to Section 162(m) of the Code) that they have been satisfied; (iv) no payment shall be made in lieu or in substitution for the Award if the preestablished performance goals are not satisfied (but this clause shall not
limit the ability of the Committee or the Company to provide other remuneration to the affected Participant, whether or not under the Plan, so long as the payment of such remuneration would not cause the Award to fail to be treated as having been
contingent on the preestablished performance goals) and (v) in all other respects the Award shall be construed and administered consistent with the intent that any compensation under the Award be treated as performance-based compensation under
Section 162(m)(4)(C) of the Code.
(d)
Rights as a Shareholder
. A Participant shall have all the rights of a shareholder,
including voting and dividend rights, (i) only as to shares of Stock received by the Participant under a Performance Award, and (ii) in any case, subject to such nontransferability restrictions, Company repurchase or forfeiture rights, and
other conditions as are made applicable to the Award. Notwithstanding the foregoing and for the avoidance of doubt, in the case of any Performance Award that is also an Other Stock-based Award, the limitations of Section 7(d) (providing that
rights to dividends and dividend equivalents shall remain unvested until the underlying Stock or rights to Stock are vested) shall apply to any right to dividends or dividend equivalent payments hereunder and, for the further avoidance of doubt, a
Participant’s rights to dividends and dividend equivalents under a Qualifying Award shall be subject to the special rules of Section 8(c) above to the same extent as such Qualifying Award.
(e)
Termination
.
Except as may otherwise be provided by the Committee (consistent with Section 162(m) of the Code, in the case of a
Qualifying Award), a Participant’s rights in all Performance Awards shall automatically terminate upon the Participant’s termination of employment by the Company and its Subsidiaries for any reason (including death).
(f)
Acceleration, Waiver, etc
. The Committee may in its sole discretion (but subject to Section 162(m) of the Code, in the case of a
Qualifying Award) accelerate, waive or, subject to Section 10, amend any or all of the goals, restrictions or conditions imposed under any Performance Award. Neither the Committee nor the Company shall be liable for any adverse tax or other
consequences to a Participant from any such acceleration, waiver, or amendment.
SECTION 9.
TERMINATION OF EMPLOYMENT; TRANSFER; LEAVE OF ABSENCE
.
For purposes of the Plan, the following events shall not be deemed a termination of
employment:
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(a)
|
a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another;
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(b)
|
an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, but in each case only if the employee’s right to reemployment is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing.
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For purposes of
the Plan, the employees of a Subsidiary of the Company shall be deemed to have terminated their employment on the date on which such Subsidiary ceases to be a Subsidiary of the Company unless in connection with such event the employee continues to
be employed by the Company or another Subsidiary. Subject to the
B-9
foregoing, except as otherwise provided by the Committee, an individual’s employment with the Company and its Subsidiaries shall be considered to have terminated on the last day of his or
her actual employment, whether such day is determined by agreement between the Company or a Subsidiary and the individual or unilaterally, and whether such termination is with or without notice, and no period of advance notice, if any, that is or
ought to have been given under applicable law in respect of such termination of employment shall be taken into account in determining the individual’s entitlements, if any, under the Plan or any Award.
Notwithstanding the foregoing, in the case of any Award that is subject to the requirements of Section 409A of the Code, “termination of
employment” shall mean a separation from service (as determined under the regulations under Section 409A of the Code).
For the avoidance
of doubt, nothing in this Section 9 shall be construed as limiting the Committee’s authority to specify Award terms that provide for forfeiture or other consequences in connection with an event other than termination of employment.
SECTION 10.
AMENDMENTS AND TERMINATION
.
The Board or the Committee may at any time amend or discontinue the Plan and the Committee may at any time amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no such action shall materially adversely affect rights under any outstanding Award without the holder’s consent. However, no such amendment shall be effective unless
approved by stockholders if it would (i) reduce the exercise price of any option previously granted hereunder or otherwise constitute a repricing requiring stockholder approval under applicable New York Stock Exchange rules or the rules of any
successor exchange, or (ii) provide for a Participant to receive any payment or other consideration upon the termination or cancellation of any Stock Option or SAR pursuant to the provisions of this Section 10 if the exercise price of such
Stock Option or SAR is equal to or greater than the Fair Market Value of a share of Stock on the date of such termination or cancellation, or (iii) otherwise require stockholder consent under applicable law (including the Code), regulation,
guidance or any listing standard for any stock exchange on which the Company’s Stock is traded, as determined by the Committee.
Notwithstanding
any provision of this Plan, the Board or the Committee may at any time adopt such modifications, procedures, subplans and forms of Award as it determines to be necessary or desirable to comply with the laws or regulatory requirements of foreign
countries or to facilitate Plan administration with respect to Participants performing services in such countries, consistent with the objectives of the Plan.
SECTION 11.
STATUS OF PLAN
.
With respect to the portion of any Award which has not been exercised and any payments in cash, stock or other consideration not received by a
Participant, a Participant shall have no rights greater than those of a general creditor of the Company unless the Committee shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Stock or make payments with respect to awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the
provision of the foregoing sentence.
SECTION 12.
CHANGE OF CONTROL PROVISIONS
.
As used herein, a Change of Control and related definitions shall have the meanings set forth in Exhibit A to this Plan.
Upon the occurrence of a Change of Control:
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(i)
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Each Stock Option shall automatically become fully exercisable unless the Committee shall otherwise expressly provide at the time of grant.
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(ii)
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Restrictions and conditions on Other Stock-based Awards (including without limitation Restricted Stock) and Performance Awards shall automatically be deemed waived unless the Committee shall otherwise expressly provide
at the time of grant.
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B-10
The Committee may at any time prior to or after a Change of Control accelerate the exercisability of any Stock Options and
may waive restrictions, limitations and conditions on Other Stock-based Awards (including without limitation Restricted Stock) and Performance Awards to the extent it shall in its sole discretion determine.
SECTION 13.
GENERAL PROVISIONS
.
(a)
No Distribution; Compliance with Legal Requirements, etc
. The Committee may require each person acquiring shares pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. No shares of Stock shall be issued pursuant to an Award until all applicable securities law and other legal and stock
exchange requirements have been satisfied as determined by the Committee. The Committee may require the placing of such stop-orders and restrictive legends on certificates for Stock and Awards as it deems appropriate.
(b)
References to Employment
. Wherever reference is made herein to “employee,” “employment” (or correlative terms),
except in Section 4, the term shall include, if so determined by the Committee, both common law employees and others.
(c)
Other
Compensation Arrangements; No Employment Rights
. Nothing contained in this Plan shall prevent the Board of Directors from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required;
and such arrangements may be either generally applicable or applicable only in specific cases. Neither the adoption of the Plan nor the grant of any Award hereunder shall (i) confer upon any employee any right to continued employment or service
with the Company or a Subsidiary or to receive other Awards under the Plan, or (ii) interfere in any way with the right of the Company or a Subsidiary to terminate, or alter the terms of, the employment of any of its employees at any time.
(d)
Tax Withholding, etc
. Each Participant shall, no later than the date as of which the value of an Award or of any Stock or other amounts
received thereunder first becomes includable in the gross income of the Participant for U.S. Federal or other income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any national, state, or
local taxes of any kind required by law to be withheld with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes, or other legally or contractually required
withholdings, from any payment of any kind otherwise due to the Participant. The Company may withhold or otherwise administer the Plan to comply with tax obligations under any applicable foreign laws.
The Committee may provide, in respect of any transfer of Stock under an Award, that if and to the extent withholding of any national, state or local tax
is required in respect of such transfer or vesting, the Participant may elect, at such time and in such manner as the Committee shall prescribe, to (i) surrender to the Company Stock not then subject to restrictions under any Company plan or
(ii) have the Company hold back from the transfer or vesting Stock having a value calculated to satisfy such withholding obligation. In no event shall Stock be surrendered under clause (i) or held back by the Company under clause
(ii) in excess of the minimum amount required to be withheld for national, state and local taxes.
Except as otherwise expressly provided by the
Committee in any case, all Awards under the Plan that are not exempt from the requirements of Section 409A of the Code shall be construed to comply with the requirements of Section 409A of the Code and any discretionary authority of the
Committee or the Company with respect to an Award that is intended to be exempt from or in compliance with the requirements of Section 409A of the Code shall be exercised in a manner that is consistent with such intent. Notwithstanding the
foregoing, neither the Company nor any Subsidiary, nor any officer, director or employee of the Company or any Subsidiary, nor the Board or the Committee or any member of either, shall be liable to the Participant or any beneficiary of a Participant
by reason of any additional tax (whether or not under Section 409A of the Code), including any interest or penalty, or any other adverse tax or other consequence (A) resulting from any exercise of discretion or other action or failure to
act by any of the Company, any Subsidiary, any such officer, director or employee, or the Board or the Committee, including without limitation, any acceleration of vesting under Section 6(b), settlement of a Stock Option under Section 6(f)
or acceleration, waiver or amendment of an Award under Section 7(c) or 8(f), or (B) by reason of the failure of an Award to qualify for an exemption from, or to comply with the requirements of, Section 409A of the Code, or for any
cost or expense incurred in connection with any action by any taxing authority related to any of the foregoing.
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(e)
Deferral of Awards
. Participants may elect to defer receipt of Awards or vesting of Awards
in such cases and to such extent, if any, as the Committee may determine at or after the grant date.
(f)
Transfer and Other
Restrictions
. In addition to the restrictions on transfer that apply to Stock Options under Section 6(d), no Award may be sold, assigned, transferred (except for transfers by will or by the laws of descent and distribution), pledged, or
otherwise encumbered or disposed of except as specifically provided herein or as otherwise permitted by the Committee. In addition, all Awards shall be subject to applicable prohibitions under Company policy regarding the use of Awards for pledging
(including, for the avoidance of doubt, as collateral for a loan or in a margin account) or in any hedging or derivative transactions.
(g)
Acceptance of Terms and Conditions
. The Committee may condition the grant, vesting, exercisability or other full enjoyment of any Award under the Plan on the Participant’s acceptance of all the terms and conditions thereto on the
timeframe specified by, and in such form as is acceptable to, the Committee.
(h)
Governing Law
. Except as otherwise provided herein or
by the express terms of an Award, the provisions of the Plan and of Awards and the rights and obligations of the Company, Subsidiaries and Participants hereunder and thereunder shall be governed by and construed in accordance with the domestic
substantive laws of the Commonwealth of Massachusetts without giving effect to any choice or conflict of laws provision or any rule that would result in the application of the domestic substantive laws of any other jurisdiction. Any legal action
related to the Plan or an Award shall be brought only in a federal or state court located in the Commonwealth of Massachusetts.
SECTION 14.
DEFINITIONS
.
The following terms shall be defined as set forth below:
(a) “Account” means a bookkeeping account established and maintained under Section 7(e) in the name of each Eligible
Director to which Annual Deferred Stock Awards, Additional Deferred Stock Awards, and Dividend Awards are credited hereunder.
(b)
“Act” means the Securities Exchange Act of 1934.
(c) “Additional Deferred Stock Award” means an Award granted to
an Eligible Director pursuant to Section 7(e)(v).
(d) “Annual Deferred Stock Award” means an Award granted to an
Eligible Director pursuant to Section 7(e)(iv).
(e) “Annual Meeting” shall mean the annual meeting of stockholders of
the Company.
(f) “Approved Performance Criteria” means one or more objectively determinable measures of performance
relating to any one or any combination of the following business criteria (measured on an absolute basis or relative to one or more comparators, including one or more companies or indices, and determined on a consolidated, divisional, line of
business, project, geographical or area of executive’s responsibilities basis, or any combination thereof): (i) sales, revenues, or comparable store sales; (ii) assets, inventory levels, inventory turns, working capital, cash flow or
expenses; (iii) earnings, profit, income, losses or margins, before or after deduction for all or any portion of interest, taxes, depreciation, amortization, rent, or such other items as the Committee may determine in a manner consistent with
Section 162(m) of the Code, whether or not on a continuing operations and aggregate or per share basis, basic or diluted, before or after dividends; (iv) return on investment, capital, equity, assets, sales or revenues, or economic value
added models or equivalent metrics; (v) market share, store openings or closings, customer service or satisfaction levels, or employee recruiting, retention or diversity; (vi) stock price, dividends, or total stockholder return, or credit
ratings; or (vii) strategic plan implementations. The Committee may provide for automatic adjustments (in measures of achievement, amounts payable, or other award terms) to reflect objectively determinable events (for example, acquisitions,
divestitures, extraordinary items, other unusual or non-recurring items and/or changes in accounting principles) that may affect the business criteria, any such adjustment to be established and administered in a manner consistent with the
requirements for exempt performance-based compensation under Section 162(m) of the Code; provided, that nothing herein shall be construed as limiting the Committee’s authority to reduce or eliminate a Performance Award (including, without
limitation, by restricting vesting under any such Award) that would otherwise be deemed to have been earned.
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(g) “Award” or “Awards” except where referring to a particular category
of grant under the Plan shall include Stock Options, SARs, Other Stock-based Awards and Performance Awards.
(h) “Board”
means the Board of Directors of the Company.
(i) “Cause” means (i) as to any Participant who at the relevant time is
party to an employment, severance, or similar agreement with the Company or a Subsidiary that contains a definition of “cause” (including any similar term used in connection with a for-cause involuntary termination), the definition set
forth in such agreement, and (ii) in every other case, a felony conviction of a Participant or the failure of a Participant to contest prosecution for a felony, or a Participant’s willful misconduct or dishonesty, any of which is directly
harmful to the business or reputation of the Company or any Subsidiary. A termination for Cause shall also be deemed to have occurred in circumstances that in the sole determination of the Committee would have constituted grounds for the
Participant’s employment to be terminated for Cause.
(j) “Code” means the Internal Revenue Code of 1986, as amended,
and any successor Code, and related rules, regulations and interpretations.
(k) “Committee” means the Committee referred to
in Section 2.
(l) “Company” means The TJX Companies, Inc.
(m) “Director” means a member of the Board.
(n) “Disability” means disability as determined in accordance with standards and procedures similar to those used under the
Company’s long term disability program. The Committee shall have the authority to deem an inactive employee as having been terminated by reason of Disability.
(o) “Dividend Award” means an Award granted to an Eligible Director pursuant to Section 7(e)(vi).
(p) “Effective Date” is defined in Section 1.
(q) “Eligible Director” means a Director who is not employed (other than as a Director) by the Company or by any Subsidiary.
(r) “Fair Market Value” on any given date means the last sale price regular way at which Stock is traded on such date as
reflected in the New York Stock Exchange Composite Index (or any successor index determined by the Committee) or, where applicable, the value of a share of Stock as determined by the Committee in accordance with the applicable provisions of the
Code.
(s) “Full Value Award” means an Award other than a Stock Option or an SAR.
(t) “Independent Director” means a Director who is a Non-Employee Director, an Outside Director, and an “independent
director” within the meaning of Section 303A.02 of the New York Stock Exchange Listed Company Manual (or any successor rule) or under such other applicable standard as the New York Stock Exchange (or any successor exchange) may establish
pursuant to its rule-making authority.
(u) “ISO” means a Stock Option intended to be and designated as an “incentive
stock option” as defined in the Code.
(v) “Non-Employee Director” shall have the meaning set forth in Rule 16b-3(b)(3)
promulgated under the Act, or any successor definition under the Act.
(w) “NSO” means any Stock Option that is not an ISO.
(x) “Normal Retirement” means retirement from active employment with the Company and its Subsidiaries at or after age 65
with at least five years of service for the Company and its Subsidiaries. For purposes of determining whether a retirement is a Normal Retirement, years of service shall be determined by the Committee; provided, that, except as otherwise provided by
the Committee, periods of service for an entity prior to the date the entity becomes a Subsidiary will not be treated as service.
(y)
“Other Stock-based Award” means an Award of one of the types described in Section 7.
(z) “Outside Director”
means a member of the Board who is treated as an “outside director” for purposes of Section 162(m) of the Code.
(aa)
“Participant” means a participant in the Plan.
(bb) “Performance Award” means an Award described in
Section 8.
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(cc) “Plan” is defined in Section 1.
(dd) “Restricted Stock” is defined in Section 7(a).
(ee) “SAR” means an Award described in Section 6(l).
(ff) “Stock Unit” is defined in Section 7(a).
(gg) “Share Limit” is defined in Section 3(a).
(hh) “Special Service Retirement” means retirement from active employment with the Company and its Subsidiaries (i) at or
after age 60 with at least twenty years of service for the Company and its Subsidiaries, or (ii) at or after age 65 with at least ten years of service for the Company and its Subsidiaries. For purposes of determining whether a retirement is a
Special Service Retirement, years of service shall be determined by the Committee; provided, that, except as otherwise provided by the Committee, periods of service for an entity prior to the date the entity becomes a Subsidiary will not be treated
as service.
(ii) “Stock” means the Common Stock, $1.00 par value, of the Company, subject to adjustments pursuant to
Section 3.
(jj) “Stock Option” means any option to purchase shares of Stock granted pursuant to Section 6.
(kk) “Subsidiary” means any corporation or other entity (other than the Company) in an unbroken chain beginning with the Company
if each of the entities (other than the last entity in the unbroken chain) owns stock or other interests possessing 50% or more of the total combined voting power of all classes of stock or other interest in one of the other corporations or other
entities in the chain.
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EXHIBIT A
DEFINITION OF “CHANGE OF CONTROL
”
“Change of Control” shall mean the occurrence of any one of the following events:
(a) there occurs a change of control of the Company of a nature that would be required to be reported in response to Item 5.01 of the
Current Report on Form 8-K (as amended in 2004) pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) or in any other filing under the Exchange Act;
provided
,
however
, that if the
Participant or a Participant Related Party is the Person or a member of a group constituting the Person acquiring control, a transaction shall not be deemed to be a Change of Control as to a Participant unless the Committee shall otherwise determine
prior to such occurrence; or
(b) any Person other than the Company, any wholly-owned subsidiary of the Company, or any employee
benefit plan of the Company or such a subsidiary becomes the owner of 20% or more of the Company’s Common Stock and thereafter individuals who were not directors of the Company prior to the date such Person became a 20% owner are elected as
directors pursuant to an arrangement or understanding with, or upon the request of or nomination by, such Person and constitute a majority of the Company’s Board of Directors;
provided
,
however
, that unless the Committee shall
otherwise determine prior to the acquisition of such 20% ownership, such acquisition of ownership shall not constitute a Change of Control as to a Participant if the Participant or a Participant Related Party is the Person or a member of a group
constituting the Person acquiring such ownership; or
(c) there occurs any solicitation or series of solicitations of proxies by or on
behalf of any Person other than the Company’s Board of Directors and thereafter individuals who were not directors of the Company prior to the commencement of such solicitation or series of solicitations are elected as directors pursuant to an
arrangement or understanding with, or upon the request of or nomination by, such Person and constitute a majority of the Company’s Board of Directors; or
(d) the Company executes an agreement of acquisition, merger or consolidation which contemplates that (i) after the effective date
provided for in such agreement, all or substantially all of the business and/or assets of the Company shall be owned, leased or otherwise controlled by another Person and (ii) individuals who are directors of the Company when such agreement is
executed shall not constitute a majority of the board of directors of the survivor or successor entity immediately after the effective date provided for in such agreement;
provided
,
however
, that unless otherwise determined by the
Committee, no transaction shall constitute a Change of Control as to a Participant if, immediately after such transaction, the Participant or any Participant Related Party shall own equity securities of any surviving corporation (“Surviving
Entity”) having a fair value as a percentage of the fair value of the equity securities of such Surviving Entity greater than 125% of the fair value of the equity securities of the Company owned by the Participant and any Participant Related
Party immediately prior to such transaction, expressed as a percentage of the fair value of all equity securities of the Company immediately prior to such transaction (for purposes of this paragraph ownership of equity securities shall be determined
in the same manner as ownership of Common Stock); and
provided
,
further
, that, for purposes of this paragraph (d), if such agreement requires as a condition precedent approval by the Company’s shareholders of the agreement or
transaction, a Change of Control shall not be deemed to have taken place unless and until the acquisition, merger, or consolidation contemplated by such agreement is consummated (but immediately prior to the consummation of such acquisition, merger,
or consolidation, a Change of Control shall be deemed to have occurred on the date of execution of such agreement).
In addition, for purposes of
this Exhibit A the following terms have the meanings set forth below:
“Common Stock” shall mean the then outstanding Common Stock of the
Company plus, for purposes of determining the stock ownership of any Person, the number of unissued shares of Common Stock which such Person has the right to acquire (whether such right is exercisable immediately or only after the passage of time)
upon the exercise of conversion rights, exchange rights, warrants or options or otherwise. Notwithstanding the foregoing, the term Common Stock shall not include shares of Preferred Stock or convertible debt or options or
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warrants to acquire shares of Common Stock (including any shares of Common Stock issued or issuable upon the conversion or exercise thereof) to the extent that the Board of Directors of the
Company shall expressly so determine in any future transaction or transactions.
A Person shall be deemed to be the “owner” of any Common
Stock:
(i) of which such Person would be the “beneficial owner,” as such term is defined in Rule 13d-3 promulgated by the
Securities and Exchange Commission (the “Commission”) under the Exchange Act, as in effect on March 1, 1989; or
(ii)
of which such Person would be the “beneficial owner” for purposes of Section 16 of the Exchange Act and the rules of the Commission promulgated thereunder, as in effect on March 1, 1989; or
(iii) which such Person or any of its affiliates or associates (as such terms are defined in Rule 12b-2 promulgated by the Commission
under the Exchange Act, as in effect on March 1, 1989) has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options or otherwise.
“Person” shall have the meaning used in Section 13(d) of the
Exchange Act, as in effect on March 1, 1989.
A “Participant Related Party” shall mean, with respect to a Participant, any affiliate
or associate of the Participant other than the Company or a Subsidiary of the Company. The terms “affiliate” and “associate” shall have the meanings ascribed thereto in Rule 12b-2 under the Exchange Act (the term
“registrant” in the definition of “associate” meaning, in this case, the Company).
Notwithstanding the foregoing, in any case
where the occurrence of a Change of Control could affect the vesting of or payment under an Award subject to the requirements of Section 409A of the Code, the term “Change of Control” shall mean an occurrence that both
(i) satisfies the requirements set forth above in this Exhibit A, and (ii) is a “change in control event” as that term is defined in the regulations under Section 409A of the Code.
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THE TJX COMPANIES, INC.
STOCK INCENTIVE PLAN
(2013 Restatement)
First Amendment
Pursuant to Section 10 of
The TJX Companies, Inc. Stock Incentive Plan (2013 Restatement) (the “Plan”), The TJX Companies, Inc. (the “Company”) by authorization of the Executive Compensation Committee of the Company’s Board of Directors hereby amends
the Plan effective as of June 7, 2016 by replacing Section 7(e) of the Plan in its entirety with the following text:
“(e)
Annual Deferred Stock Awards, Additional Deferred Stock Awards and Dividend Awards for Eligible Directors
.
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(i)
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Accounts
. The Company shall establish and maintain an Account in the name of each Eligible Director to which the Annual Deferred Stock Awards, Additional Deferred Stock Awards and Dividend Awards shall be
credited.
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(ii)
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Annual Awards
. On the date of each Annual Meeting, each Eligible Director who is elected a Director at such Annual Meeting shall automatically and without further action by the Board or Committee be granted an
Annual Deferred Stock Award as provided in subsection (iv) and an Additional Deferred Stock Award as provided in subsection (v). On each date other than the date of an Annual Meeting on which an Eligible Director is first elected a Director by
the Board, the Eligible Director then so elected shall automatically and without further action by the Board or Committee be granted a prorated Annual Deferred Stock Award as provided in subsection (iv) and a prorated Additional Deferred Stock
Award as provided in subsection (v). The grant of each Annual Deferred Stock Award and Additional Deferred Stock Award shall entitle each recipient, automatically and without further action by the Board or the Committee, to Dividend Awards as
provided in subsection (vi).
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(iii)
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Nature of Awards
. Each Annual Deferred Stock Award, Additional Deferred Stock Award and Dividend Award shall be an Other Stock-based Award subject to the terms of this Plan and shall constitute an unfunded and
unsecured promise of the Company to deliver in the future to such Eligible Director, without payment, the number of shares of Stock in the amounts and at the times hereinafter provided. The shares of Stock notionally credited to the Accounts of
Eligible Directors shall be notional shares only and shall not entitle the Eligible Director to any voting rights, dividend or distribution or other rights except as expressly set forth herein. Nothing herein shall obligate the Company to issue or
set aside shares of Stock, in trust or otherwise, to meet its contractual obligations hereunder.
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(iv)
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Annual Deferred Stock Award
. In respect of each Annual Deferred Stock Award granted on the date of an Annual Meeting, the Company shall credit to each Eligible Director’s Account, effective as of the date of
such Annual Meeting, the number of notional shares of Stock, including any fractional share, equal to $125,000 or such lesser dollar amount as may be determined by the Board divided by the Fair Market Value of a share of Stock on the date of such
Annual Meeting. In respect of each Annual Deferred Stock Award granted on a date other than the date of an Annual Meeting, the Company shall credit to the Account of the Eligible Director first elected on such date the number of notional shares of
Stock, including any fractional share, equal to (i) $125,000 or such lesser dollar amount as may be determined by the Board divided by the Fair Market Value of a share of Stock on the date of such first election multiplied by (ii) the
quotient (not greater than one) obtained by dividing (A) the number of days starting with the date of such first election and ending on the day first preceding the anticipated date of the next Annual Meeting, by (B) 365.
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(v)
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Additional Deferred Stock Award
. In addition to the Annual Deferred Stock Award, the Company shall credit to the Account of each Eligible Director, effective as of the date that any Annual Deferred Stock Award is
credited to such Account, an Additional Deferred Stock Award covering the same number of shares as are covered by such Annual Deferred Stock Award determined in the same manner prescribed in subsection (iv) above.
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(vi)
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Dividend Awards
. The Company shall credit (each such credit, a “Dividend Award”) the Account of each
Eligible Director on the date of each Annual Meeting and on the date on which an Eligible
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Director ceases to be a Director if not the date of an Annual Meeting with a number of notional shares of Stock, including any fractional share, equal to (i) plus (ii), divided by (iii),
where:
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(i)
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is the product obtained by multiplying the number of shares then allocated to such Eligible Director’s Account (disregarding, for purposes of this clause (i), any shares credited to such Account since the date
of the immediately preceding Annual Meeting) by the aggregate per-share amount of regular cash dividends for which the record date occurred since the date of the immediately preceding Annual Meeting;
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(ii)
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is the product obtained by multiplying the number of shares first credited to such Eligible Director’s Account since the date of the immediately preceding Annual Meeting but prior to the date of such Dividend Award
by the aggregate per-share amount of regular cash dividends for which the record date occurred since the date that such shares were credited to such Account; and
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(iii)
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is the Fair Market Value of one share of Stock on the date of such Dividend Award.
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(vii)
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Vesting
. Each Annual Deferred Stock Award, and any Dividend Awards in respect of Annual Deferred Stock Awards and/or vested Additional Deferred Stock Awards, shall vest immediately upon grant and be
non-forfeitable. Unless earlier vested pursuant to Section 12, each Additional Deferred Stock Award shall vest and become non-forfeitable on the date immediately preceding the date of the Annual Meeting next succeeding the date of grant of such
Award,
provided
, that the recipient is still a Director on such date. Upon termination of an Eligible Director’s service as a Director for any reason, the Eligible Director shall forfeit any then unvested Additional Deferred Stock Award
(determined after taking into account any acceleration of vesting pursuant to Section 12).
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(viii)
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Delivery
. The Company shall deliver to an Eligible Director (or a former Eligible Director) the number of shares of Stock, rounded up to the next full share, represented by notional shares of Stock credited to
the Account of such Eligible Director in respect of Annual Deferred Stock Awards (including any Dividend Awards made in respect of such Annual Deferred Stock Awards) at the earlier of the following: (x) immediately prior to a Change of Control
or (y) not later than sixty (60) days following the Eligible Director’s death or earlier separation from service (as determined under the regulations under Section 409A of the Code). With respect to any Additional Deferred Stock
Award, absent an election to defer delivery of the shares of Stock subject to such Award pursuant to subsection (ix) below, the Company shall deliver to an Eligible Director the number of shares of Stock, rounded up to the next full share,
represented by notional shares of Stock credited to the Account of such Eligible Director in respect of such Additional Deferred Stock Award (including any Dividend Awards made in respect of such Additional Deferred Stock Award) within sixty
(60) days following the date of vesting pursuant to subsection (vii) above or, if earlier and if so provided in accordance with the terms of the applicable Award pursuant to Section 12, immediately prior to a Change of Control. In the
event of a termination by reason of death, such shares of Stock shall be delivered to such beneficiary or beneficiaries designated by the Eligible Director in writing in such form, and delivered prior to his or her death to such person at the
Company, as specified by the Company or, in the absence of such a designation, to the legal representative of Eligible Director’s estate.
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(ix)
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Deferral of Delivery of Additional Deferred Stock Awards
. By filing a written notice to the Company in such form, and delivered to such person at the Company, as specified by the Company, an Eligible Director may
irrevocably elect to defer receipt of the delivery of shares of Stock representing all or a portion of the notional shares of Stock subject to any Additional Deferred Stock Award (including any Dividend Awards made in respect of such notional
shares) such that those shares are delivered as soon as practicable and in all events within sixty (60) days following the Eligible Director’s death or earlier separation from service (as determined under the regulations under
Section 409A of the Code); except that if so provided in accordance with the terms of the applicable Award, such shares shall instead be delivered immediately prior to any earlier occurrence of a Change of Control . Any election made pursuant
to this subsection (ix) must be submitted with respect to any Additional Deferred Stock Award (A) in the case of the Additional Deferred Stock Award granted on the date an Eligible Director is first elected as a Director, no later than 30
days after the date of such Eligible Director’s election to the Board or (B) in the case of any other Additional Deferred Stock Award, no later than December 31 of the calendar year preceding the calendar year in which such Award is
granted, or (C) at such other time as is necessary to satisfy the requirements of Section 409A of the Code, as determined by the Committee.”
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THE TJX COMPANIES, INC.
STOCK INCENTIVE PLAN
(2013 Restatement)
Second Amendment
Pursuant to Section 10
of The TJX Companies, Inc. Stock Incentive Plan (2013 Restatement) (the “Plan”), The TJX Companies, Inc. (the “Company”) by authorization of the Executive Compensation Committee of the Company’s Board of Directors hereby
amends the Plan effective as of January 29, 2017 by replacing Section 13(d) of the Plan in its entirety with the following text:
“(d)
Tax Withholding, etc
. Each Participant shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the Participant for U.S.
Federal or other income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any national, state, or local taxes of any kind required by law to be withheld with respect to such income. The
Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes, or other legally or contractually required withholdings, from any payment of any kind otherwise due to the Participant. The Company may
withhold or otherwise administer the Plan to comply with tax obligations under any applicable foreign laws.
The Committee may
provide, in respect of any transfer of Stock under an Award, that if and to the extent withholding of any national, state or local tax is required in respect of such transfer or vesting, the Participant may elect, at such time and in such manner as
the Committee shall prescribe, to (i) surrender to the Company Stock not then subject to restrictions under any Company plan or (ii) have the Company hold back from the transfer or vesting Stock having a value calculated to satisfy such
withholding obligation. In no event shall Stock be surrendered under clause (i) or held back by the Company under clause (ii) in excess of the maximum withholding amount consistent with the Award’s being subject to equity accounting
treatment under applicable accounting principles (including FASB ASC Topic 718 or any successor provision).
Except as otherwise
expressly provided by the Committee in any case, all Awards under the Plan that are not exempt from the requirements of Section 409A of the Code shall be construed to comply with the requirements of Section 409A of the Code and any discretionary
authority of the Committee or the Company with respect to an Award that is intended to be exempt from or in compliance with the requirements of Section 409A of the Code shall be exercised in a manner that is consistent with such intent.
Notwithstanding the foregoing, neither the Company nor any Subsidiary, nor any officer, director or employee of the Company or any Subsidiary, nor the Board or the Committee or any member of either, shall be liable to the Participant or any
beneficiary of a Participant by reason of any additional tax (whether or not under Section 409A of the Code), including any interest or penalty, or any other adverse tax or other consequence (A) resulting from any exercise of discretion or
other action or failure to act by any of the Company, any Subsidiary, any such officer, director or employee, or the Board or the Committee, including without limitation, any acceleration of vesting under Section 6(b), settlement of a Stock Option
under Section 6(f) or acceleration, waiver or amendment of an Award under Section 7(c) or 8(f), or (B) by reason of the failure of an Award to qualify for an exemption from, or to comply with the requirements of, Section 409A of the Code, or
for any cost or expense incurred in connection with any action by any taxing authority related to any of the foregoing.”
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APPENDIX C
THE TJX COMPANIES, INC.
MANAGEMENT
INCENTIVE PLAN
AND
LONG RANGE
PERFORMANCE INCENTIVE PLAN
(2013 Restatement)
C
The TJX Companies, Inc. Management Incentive Plan
and
The TJX Companies, Inc. Long Range
Performance Incentive Plan
(2013 Restatement)
This document sets forth the governing terms of two incentive plans maintained by The TJX Companies, Inc. (“TJX”): The TJX Companies, Inc.
Management Incentive Plan (“MIP”) and The TJX Companies, Inc. Long Range Performance Incentive Plan (“LRPIP”) (together, the “Plans”). The Plans have been established to advance the interests of TJX by providing for the
grant of Awards to eligible employees of TJX and its subsidiaries (the “Employer”). The Plans are intended to permit Awards that qualify for exemption from the tax deductibility limits imposed by Section 162(m) of the Internal Revenue
Code (including the regulations thereunder, “Section 162(m)”) (such exemption, the “Section 162(m) Exemption”), to the extent applicable. This document is an amendment and restatement of each of the Plans, and references to
“Plan” or “Plans” herein shall be deemed to apply to each of MIP and LRPIP, to the extent applicable.
I. Administration.
The Plans are administered by the Executive Compensation Committee of TJX’s Board of Directors (the “Committee”). The Committee has the authority, in its sole discretion, to administer all aspects of the Plans, to construe and
interpret provisions of the Plans, to determine all questions arising in connection with the Plans, and to adopt such rules for Plan administration as it may deem necessary or desirable, and references herein to a determination or other action by
the Committee are to be construed as a reference to the Committee’s discretionary discharge of such authority. Plan-related determinations by the Committee are conclusive and binding on all parties. Subject to the Section 162(m) Exemption
requirements in the case of Section 162(m) Awards, the Committee may delegate to other persons such duties, powers and responsibilities as it deems appropriate, and references to “Committee” herein are to be construed to include any
such person to the extent of such delegation.
II. Eligibility; Participants.
Executive officers and other key employees of the Employer are
eligible to be considered for participation in the Plans. The Committee will select, from among those eligible, the persons who will from time to time participate in each Plan (each, a “Participant”).
III. Awards.
The term “Award” as used in the Plans means a MIP or LRPIP award opportunity granted to a Participant with respect to a
specified performance period (each, a “Performance Period”). Except as otherwise determined by the Committee in the case of any Award, (i) the Performance Period for a MIP Award will consist of a single fiscal year of TJX (a
“Fiscal Year”), and (ii) the Performance Period for an LRPIP Award will consist of a cycle of two or more consecutive Fiscal Years (a “Cycle”) (which Cycle, unless otherwise provided by the Committee, shall be three
consecutive Fiscal Years).
IV. Grant of Awards.
The Committee will establish the following with respect to each Award: (a) the
applicable Performance Goal or Goals; (b) the amount or amounts that will be payable (subject to adjustment in accordance with Section V and VI) if the Performance Goal or Goals are achieved; and (c) such other terms and conditions as the
Committee deems appropriate.
For Section 162(m) Awards, the Committee will take these actions in a manner that is consistent with the “preestablishment” and other Section 162(m) Exemption requirements. A Participant who is
granted an Award will be entitled to a payment, if any, under the Award only if all conditions to payment have been satisfied in accordance with the Plan and the terms of the Award. A Participant who accepts (or, under such rules as the Committee
may prescribe, is deemed to have accepted) an Award is deemed thereby to have agreed to the terms of the Award and the Plan.
V. Performance
Goals.
As used in the Plan, “Performance Goal” means a specified criterion, other than the mere continuation of employment or the mere passage of time, the satisfaction of which is a condition for the vesting, payment or full enjoyment
of an Award. A Performance Goal need not be based upon an increase or positive result. For Section 162(m) Awards, a Performance Goal will be one or more objectively determinable measures of performance relating to any one or any combination of
the following business criteria (measured on an absolute basis or relative to one or more comparators, including one or more companies or indices, and determined on a consolidated, divisional, line of business, project, geographical or area of
executive’s responsibilities basis, or any combination thereof): (i) sales, revenues, or comparable store sales; (ii) assets,
C-1
inventory levels, inventory turns, working capital, cash flow or expenses; (iii) earnings, profit, income, losses or margins, before or after deduction for all or any portion of interest,
taxes, depreciation, amortization, rent, or such other items as the Committee may determine at the time the Performance Goals are pre-established (within the meaning of Section 162(m)), whether or not on a continuing operations and aggregate or
per share basis, basic or diluted, before or after dividends; (iv) return on investment, capital, equity, assets, sales or revenues, or economic value added models or equivalent metrics; (v) market share, store openings or closings,
customer service or satisfaction levels, or employee recruiting, retention or diversity; (vi) stock price, dividends, or total shareholder return, or credit ratings; or (vii) strategic plan implementations. In connection with the
establishment of Section 162(m) Award terms under Section IV, the Committee may provide for automatic adjustments (in measures of achievement, amounts payable, or other award terms) to reflect objectively determinable events (for example,
acquisitions, divestitures, extraordinary items, other unusual or non-recurring items and/or changes in accounting principles) that may affect the business criteria, any such adjustment to be established and administered in a manner consistent with
the Section 162(m) Exemption requirements.
VI. Certification of Performance Results; Determination of Amounts Payable.
(a)
In General.
As soon as practicable after the close of a Performance Period, the Committee will determine whether and to what extent, if
at all, the Performance Goal or Goals applicable to each Award granted for the Performance Period have been satisfied and, in the case of Section 162(m) Awards, will take such steps as it deems necessary or appropriate to satisfy the
certification requirement for Section 162(m) Exemption prior to any payment under the Award. The Committee may at any time (i) reduce (including to zero) the actual payment, if any, to be made under an Award, or (ii) in the case of an
Award other than a Section 162(m) Award, increase the actual amount payable under the Award.
(b)
Special Rules.
Notwithstanding
subsection (a), but subject to Section 162(m) Exemption requirements for Section 162(m) Awards, the Committee may take such actions with respect to some or all Awards as it determines to be necessary or advisable to establish the
Employer’s obligation under such Awards prior to the end of a Fiscal Year for tax deductibility purposes.
(c)
No Requirement of Similar
Treatment
. For the avoidance of doubt, the Committee need not treat similar Awards or similarly situated Participants the same for purposes of this Section VI.
VII. Payment under Awards.
Unless deferred, where available, under an applicable deferred compensation plan or arrangement of the Employer, each
Plan payment will be made in cash as soon as practicable after the close of the relevant Performance Period and not later than two and one-half
(2
1
⁄
2
) months after the later of the end of the calendar year or end of the Fiscal Year in which such Performance Period ends (or otherwise in accordance
with such alternative payment schedule, in the event of death, disability or other special circumstances, as may be established by the Committee under the Plans consistent with the requirements of, or requirements for exemption from,
Section 409A of the Internal Revenue Code (including the regulations thereunder, “Section 409A”)). For any amount deferred with respect to a Section 162(m) Award, no adjustment for interest or other earnings shall be made except
as permitted under the Section 162(m) Exemption.
VIII. Payment Limits.
The maximum amount payable to any Participant under MIP for any
Fiscal Year, and the maximum amount payable to any Participant under LRPIP in the aggregate with respect to all Cycles commencing in a single Fiscal Year, is $5,000,000, increased by 5% per year starting with the Fiscal Year ending
February 1, 2014. For the avoidance of doubt, the preceding sentence is to be applied without regard to any deferrals of Award payments or earnings thereon (determined, in the case of a Section 162(m) Award, in a manner consistent with the
Section 162(m) Exemption).
IX. Withholding.
All payments under the Plans are subject to reduction for applicable tax and other legally
or contractually required withholdings.
X. Amendment and Termination.
The Committee may amend the Plans or either of them at any time
and from time to time and may terminate the Plans or either of them at any time.
Notwithstanding any provision of the Plans, the Committee may at
any time adopt such modifications, procedures, subplans and Award terms as it determines to be necessary or desirable to comply with the laws or
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regulatory requirements of foreign countries or to facilitate Plan administration with respect to Participants performing services in such countries, consistent with the objectives of the
applicable Plan or Plans.
XI. Miscellaneous.
(a)
Section 162(m) Awards
. For purposes of the Plans, “Section 162(m) Award” means an Award that as of the relevant time or times
(as determined by the Committee) is treated by the Committee as an Award intended to qualify for the Section 162(m) Exemption. For the avoidance of doubt, the Committee may treat any Award as a Section 162(m) Award until such time, if any,
as it determines otherwise (for example, but without limitation, in connection with a determination that the holder of the Award is not likely to be, as of the relevant time, a covered employee within the meaning of Section 162(m)). In the case
of any Section 162(m) Award, the Plan and such Award will be construed and administered in a manner consistent with qualifying the Award for the Section 162(m) Exemption, notwithstanding anything to the contrary in the Plan. In the event
the Committee reasonably anticipates that Section 162(m) limits on deductibility will apply to any Award, the Committee may delay payment with respect to the Award to the extent permitted by Section 409A.
(b)
Section 409A of the Internal Revenue Code
. Award payments are intended to qualify for exemption from the requirements of, or otherwise
comply with, Section 409A, but the Employer will not be liable for any adverse tax or other consequences to a Participant in connection with any failure or alleged failure to comply with Section 409A or an exemption therefrom.
(c)
No Guarantees; No Employment Rights; No Funding.
No person will have any claim or right to be granted an Award, nor will the selection for
participation in a Plan for any Performance Period be construed as giving a Participant the right to participate with respect to any other Award under either Plan or as affecting the rights and powers of the Employer to terminate, or alter the terms
of, the Participant’s employment. The loss of an Award will not constitute an element of damages in any claim that may be brought against the Employer. Awards represent an unfunded and conditional obligation of the Employer, and nothing herein
or under any Award is to be construed as requiring the Employer to establish a trust or otherwise to set aside assets to help it satisfy any such obligation. The Employer will not be liable for any adverse tax or other consequences to a Participant
that may arise in connection with the grant, payment, forfeiture or recovery of an Award.
(d)
Treatment of Award Upon Termination of
Employment
. Subject to such exceptions as the Committee may determine (any such exceptions to be consistent with Section 162(m) Exemption requirements in the case of
Section 162(m) Awards), and subject to the terms of any
applicable employment or severance agreement or plan, a Participant will forfeit all rights under an Award (i) if he or she does not remain employed by the Employer through the end of the applicable Performance Period, or (ii) if he or she
is terminated for cause (as determined by the Committee) at any time prior to payment. The Committee shall have the authority to treat any termination as a termination for cause if determines that such termination occurred in circumstances that
would have constituted grounds for a termination for cause.
(e)
Payments Upon Death; Other Transfers
. Amounts payable under the Plans upon or
following the death of a Participant, if any, will be paid to the Participant’s beneficiary or estate in accordance with such rules as may be established from time to time by the Committee. Except as provided in the preceding sentence or as
required by law, no purported transfer or assignment of a Participant’s rights or interests under the Plans will be permitted or recognized.
(f)
Change of Control
. The Committee will determine the effects, if any, that a corporate merger, consolidation, sale of stock or assets or
similar transaction affecting TJX may have on outstanding Awards, subject to the terms of any applicable employment or change of control agreement or plan and consistent with Section 162(m) Exemption requirements in the case of
Section 162(m) Awards.
(g)
Applicable Law
. The Plans will be governed by and construed in accordance with the laws of the Commonwealth
of Massachusetts without regard to its conflict-of-laws provisions.
(h)
Effective Date
. This 2013 Restatement of MIP and LRPIP is effective
as of April 1, 2013 (“the Effective Date”), including for all outstanding Awards granted on or before the Effective Date. The material terms of performance goals (within the meaning of Section 162(m)) set forth in this 2013
Restatement were approved by TJX shareholders on June 13, 2012.
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DIRECTIONS TO THE TJX ANNUAL MEETING
Courtyard Marriott
342 Speen Street
Natick, Massachusetts 01760
(508)
655-6100
From Exit 13 on the Massachusetts Turnpike
Bear left on the exit ramp across an overpass and onto Route 30 East / Cochituate Road toward Natick. At the first set of traffic lights, turn right onto Speen Street.
The Courtyard Marriott is on the right.
From Logan International Airport (From the East)
Leaving the Airport, follow the signs for the Massachusetts Turnpike West
(I-90W).
Follow the Massachusetts Turnpike West for
approximately 20 miles to exit 13 (Framingham/Natick). Follow the directions above for
From Exit 13 on the Massachusetts Turnpike
.
From the
West
Take the Massachusetts Turnpike East
(I-90E)
to exit 13 (Framingham/Natick). Follow the directions above for
From Exit 13 on the Massachusetts Turnpike
.
From the North
Take
I-95
South to exit 25 (Massachusetts Turnpike
I-90).
Take the Massachusetts Turnpike
West
(I-90W)
for approximately 6.5 miles to exit 13 (Framingham/Natick). Follow the directions above for
From Exit 13 on the Massachusetts Turnpike.
From the South
Take
I-95
North to exit
25 (Massachusetts Turnpike). Take the Massachusetts Turnpike West
(I-90W)
for approximately 6.5 miles to exit 13 (Framingham/Natick). Follow the directions above for
From Exit 13 on the Massachusetts
Turnpike
.
Parking
The Courtyard Marriott offers free
on-site
parking.
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IMPORTANT ANNUAL MEETING INFORMATION
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Mark your votes with an
X
as shown in this example. Please do not write outside the designated areas.
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Electronic Voting Instructions
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Available 24 hours a day, 7 days a week!
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Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
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VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
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Proxies for record holders submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Daylight Time, on June 6, 2017. See
reverse for more information.
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Vote by Internet
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• Go to
www.envisionreports.com/TJX
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• Or scan the QR code with your smartphone
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• Follow the steps outlined on the secure website
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Vote by telephone
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• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch
tone telephone
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• Follow the instructions provided by the recorded message
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IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE OF THIS CARD, AND DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
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The Board recommends a vote
FOR
each of the nominees:
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1. Election of Directors:
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For
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Against
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Abstain
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For
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Against
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Abstain
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For
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Against
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Abstain
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01 - Zein Abdalla
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02 - José B. Alvarez
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03 - Alan M. Bennett
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04 - David T. Ching
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05 - Ernie Herrman
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06 - Michael F. Hines
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07 - Amy B. Lane
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08 - Carol Meyrowitz
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09 - Jackwyn L. Nemerov
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10 - John F. O’Brien
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11 - Willow B. Shire
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The Board recommends a vote
FOR
Proposals 2, 3, 4, and 5 and for every
ONE YEAR
on Proposal 6:
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For
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Against
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Abstain
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For
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Against
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Abstain
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2. Ratification of appointment of PricewaterhouseCoopers as TJX’s independent
registered public accounting firm for fiscal 2018
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3. Reapproval of material terms of performance goals under the stock incentive plan
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For
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Against
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Abstain
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For
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Against
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Abstain
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4. Reapproval of material terms of performance goals under the cash incentive
plans
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5. Advisory approval of TJX’s executive compensation (the
say-on-pay
vote)
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6. Advisory approval of the frequency of TJX’s say-
on-pay
votes
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One Year
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Two Years
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Three Years
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Abstain
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The Board recommends a vote
AGAINST
Proposals 7, 8, 9, and 10:
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For
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For
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Abstain
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7.
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Shareholder proposal for inclusion of diversity as a CEO performance measure
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8.
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Shareholder proposal for a review and summary report on executive compensation policies
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9.
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Shareholder proposal for a report on compensation disparities based on race, gender, or ethnicity
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10.
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Shareholder proposal for a report on
net-zero
greenhouse gas emissions
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The TJX Companies, Inc.
2017 Annual Meeting of Shareholders
Tuesday,
June 6, 2017, 8:00 a.m. Eastern Daylight Time
Courtyard Marriott
342 Speen Street
Natick, Massachusetts 01760
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Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. You can view the Annual Report and Proxy Statement on the Internet at: www.envisionreports.com/TJX
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Your vote is important. Please vote by Internet, by telephone, or by mail.
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q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, PLEASE VOTE, DATE AND SIGN BELOW, FOLD ALONG THE PERFORATION, AND DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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Proxy — THE TJX COMPANIES, INC.
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2017 Annual Meeting of Shareholders
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Proxy Solicited by Board of Directors for Annual Meeting - June 6,
2017
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Ernie Herrman, Scott Goldenberg, and Mary B. Reynolds, or any of them,
each with the full power of substitution, are hereby authorized as Proxies to represent and vote the shares of the undersigned with respect to all of the matters indicated on the reverse side of this card and any other matters which may properly
come before the Annual Meeting, with all the powers which the undersigned would possess if personally present, at the 2017 Annual Meeting of Shareholders of The TJX Companies, Inc. to be held at the Courtyard Marriott, 342 Speen Street, Natick,
Massachusetts 01760 on Tuesday, June 6, 2017 at 8:00 a.m. (Eastern Daylight Time), and at any postponement or adjournment thereof.
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Shares represented by this proxy will be voted by the Proxies
subject to the directions indicated by the shareholder on the reverse side of this card. If no directions are indicated, the Proxies will have authority to vote FOR each nominee; FOR Proposals 2, 3, 4, and 5; for every ONE YEAR on Proposal 6; and
AGAINST Proposals 7, 8, 9, and 10. In their discretion, the Proxies are hereby authorized to vote upon such other business as may properly come before the meeting and any postponement or adjournment thereof.
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However, if you are voting shares held in the TJX stock fund
available through The TJX Companies, Inc. General Savings/Profit Sharing Plan, our U.S. 401(k) plan, or The TJX Companies, Inc. General Savings/Profit Sharing Plan (P.R.), our Puerto Rico savings plan (collectively, “plan shares”), your
plan shares will be voted by the plan trustee in accordance with your instructions. Your voting instructions must be received by
11:59 p.m. Eastern Daylight Time, Thursday, June
1, 2017
to allow time for tabulation and
voting.
Please note that if your instructions are not received by this
time, your plan shares will not be voted.
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(Items to be voted appear on reverse side.)
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C
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Authorized Signatures — This section must be completed for your vote to be
counted. — Date and Sign Below
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Please sign exactly as your name(s) appear(s) on the books of the Company. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer,
trustee, guardian, or custodian, please give full title to indicate the capacity in which you are signing.
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Date (mm/dd/yyyy) — Please print date below.
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Signature 1 — Please keep signature within the box.
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Signature 2 — Please keep signature within the box.
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Change of Address
— Please print new address below.
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Comments
— Please print your comments below.
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∎
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IF VOTING BY MAIL, PLEASE COMPLETE BOTH SIDES OF THIS CARD.
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