Table of
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
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Preliminary Proxy
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Confidential, for Use of the
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Definitive Proxy
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Definitive Additional
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Soliciting Material Pursuant to §240.14a-12 |
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Express, Inc. |
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(Name of Registrant as
Specified In Its Charter) |
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(Name
of Person(s) Filing Proxy Statement, if other than the
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Table of
Contents
Notice of
2017
Annual
Meeting
of
Stockholders
Table of
Contents
Columbus, Ohio
April 28,
2017
LETTER TO OUR STOCKHOLDERS
FROM THE
BOARD OF DIRECTORS
Dear Fellow Stockholders,
Express, Inc.s Board of Directors remains
committed to the creation of long-term value for our stockholders through
effective corporate governance. We believe that effective Board oversight is
achieved through having the right combination of skills, attributes, and
experience reflected in the composition of the Board and effective Board
leadership and governance practices. I want to take this opportunity to
highlight a few governance items that are more fully discussed in the proxy
statement.
Board Composition: In 2016, we welcomed Karen Leever and Terry Davenport as new
directors to the Board. Ms. Leever, currently EVP and General Manager, Digital
Media, of Discovery Communications, has significant experience in technology
development and management, data analytics, and e-commerce. Mr. Davenport,
currently Global Brand Advisor at Starbucks, has significant experience in
consumer brand marketing and advertising. With the additions of Ms. Leever and
Mr. Davenport, we have strengthened the collective skills, experience, and
diversity of the Board necessary to effectively oversee the Company as the
retail sector continues to evolve.
Board Leadership &
Structure: Immediately following last years
annual meeting of stockholders, I assumed the role of independent Chairman of
the Board and Peter Swinburn assumed the role of Chair of the Compensation and
Governance Committee. We evaluate the effectiveness of our Board, including
leadership and structure, through an annual Board evaluation process that
provides us with valuable information so that we can continue to adapt our
governance practices to the needs of the Company and our
stockholders.
Stockholder Engagement: Each year, the Company contacts our largest stockholders
collectively representing at least a majority of our outstanding shares to
solicit feedback on our governance practices and executive compensation program.
We welcome your feedback and thank those stockholders who have taken time to
share their feedback with us.
Executive Compensation: In 2016, Mr. Kornbergs target total direct compensation was
increased to approximate the median level of our peer group at the time while
incorporating challenging performance targets to ensure pay for performance. Mr.
Kornbergs actual compensation in 2016 was significantly less than target and
significantly less than the prior year, reflecting the Companys decreased
performance in 2016. We continue to believe that the CEO compensation package is
appropriately designed with the CEO receiving actual pay that is reflective of
Company performance. When Mr. Kornberg assumed the role of CEO in 2015, we
designed his compensation package in part based on feedback received from
stockholders on our executive compensation program in prior years. That
compensation package received strong support in last years say-on-pay vote, and
our stockholder engagement program this past year did not yield any concerns or
requests for changes to our executive compensation program. Accordingly, the
overall design and target pay opportunity for Mr. Kornbergs compensation
package will remain the same for 2017.
Oversight: The Board recognizes that the retail environment is rapidly evolving
and that to generate long-term growth our strategy must allow us to quickly
adapt and meet the demands of our customers. The Board and the management team
regularly review the Companys strategy to ensure that it is designed to
accomplish long-term growth. In addition to strategy, the Board continues to be
focused on and committed to oversight of management and business performance,
risk management, compliance, and corporate responsibility.
We also want to express our gratitude to
Theo Killion who plans to leave the Board following the Companys 2017 annual
meeting of stockholders after more than five years of service.
We acknowledge the tremendous trust that
our stockholders place in us to exercise effective oversight of the Company and
assure you that we are engaged and committed to the best interests of our
stockholders. We thank you for your ongoing support of the
Company.
Mylle H. Mangum
Chairman of the Board
Table of
Contents
Notice
of
2017
Annual Meeting of Stockholders
Time and
Date |
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8:30 a.m., Eastern Daylight Time, on
Wednesday, June 7, 2017 |
Place |
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Express Corporate Headquarters, 1
Express Drive, Columbus, OH 43230 |
Items
of Business |
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1. |
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Election of Class I directors; |
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Advisory vote to approve executive compensation
(say-on-pay); |
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3. |
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Ratification of PricewaterhouseCoopers LLP as the Companys
independent registered public accounting firm for 2017; |
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4. |
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Approval of the Internal Revenue Code (Code) Section 162(m)
performance goals and various annual grant limitations under the Express,
Inc. 2010 Incentive Compensation Plan; and |
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5. |
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Such
other business as may properly come before the meeting. |
Record
Date |
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Holders of
record of the Companys common stock at the close of business on April 10,
2017 are entitled to notice of and to vote at the 2017 Annual Meeting of
Stockholders or any adjournment or postponement
thereof. |
This proxy statement is issued in
connection with the solicitation of proxies by the Board of Directors of
Express, Inc. for use at the 2017 Annual Meeting of Stockholders and at any
adjournment or postponement thereof. On or about April 28, 2017, we will begin
distributing print or electronic materials regarding the annual meeting to each
stockholder entitled to vote at the meeting. Shares represented by a properly
executed proxy will be voted in accordance with instructions provided by the
stockholder.
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How to Vote
YOUR VOTE IS VERY
IMPORTANT. Whether or not you plan to
attend the 2017 Annual Meeting of Stockholders, we urge you to vote your
shares now in order to ensure the presence of a quorum.
Stockholders of record may
vote: |
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By
Internet: go to www.proxyvote.com; |
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By
telephone: call toll free (800) 690-6903; or |
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By
mail: if you received paper copies in the mail of the proxy
materials and proxy card, mark, sign, date, and promptly mail the enclosed
proxy card in the postage-paid envelope. |
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Beneficial Stockholders. If you hold your
shares through a broker, bank, or other nominee, follow the voting
instructions you receive from your broker, bank, or other nominee, as
applicable, to vote your shares. |
By Order of the Board of
Directors,
Lacey Bundy
Senior Vice President, General Counsel and Corporate
Secretary
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting of Stockholders to be
held on June 7, 2017: this Notice of Annual Meeting and Proxy Statement and our
2016 Annual Report are available in the investor relations section of our
website at www.express.com/investor. Additionally, and in accordance with
the Securities and Exchange Commission (SEC) rules, you may access our proxy
materials at www.proxyvote.com, a site that does not have cookies that
identify visitors to the site.
Table of
Contents
Table of
Contents
Table of
Contents
Proxy Statement Summary
Information
The Board of Directors (the Board) of
Express, Inc. (the Company) is soliciting your proxy to vote at the Companys
2017 Annual Meeting of Stockholders (the Annual Meeting), or at any
adjournment or postponement of the Annual Meeting. To assist you in your review
of this proxy statement, we have provided a summary of certain information
relating to the items to be voted on at the Annual Meeting in this section. For
additional information about these topics, please review this proxy statement in
full and the Companys Annual Report on Form 10-K for 2016 which was filed with
the SEC on March 24, 2017 (the Annual Report).
We follow a 52/53 week fiscal year that
ends on the Saturday nearest to January 31 in each year. Fiscal years in this
proxy statement are identified according to the calendar year in which the
fiscal year commences. For example, references to 2016, fiscal 2016, 2016
fiscal year, or similar references refer to the fiscal year ended January 28,
2017 and references to 2015, fiscal 2015, 2015 fiscal year, or similar
references refer to the fiscal year ended January 30, 2016.
In this proxy statement, we refer to
adjusted diluted earnings per share (Adjusted EPS), a financial measure that
is not calculated in accordance with U.S. generally accepted accounting
principles (GAAP). Please refer to Appendix A to this proxy statement for more
information on Adjusted EPS, a non-GAAP measure, and a reconciliation of
Adjusted EPS information included in this proxy statement, to reported diluted
earnings per share (EPS), the most directly comparable GAAP
measure.
2016 Business
Performance
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Progress Against Select Strategic
Initiatives |
☒ |
Increase Store
Productivity. Same store sales
declined by 12% year over year. |
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Optimize Retail Store
Fleet. Since the beginning of 2015
we closed 47 of the 50 retail stores identified in our store
rationalization plan. |
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E-commerce
Growth. E-Commerce sales grew 5%
year over year to over $400 million. |
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☑ |
Open New Outlet
Stores. Added 23 outlet locations
in 2016. |
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☑ |
Significant Cost Savings
Initiatives. Announced $44-$54
million in cost savings opportunities expected to be realized through 2019
and realized $9 million in 2016. |
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☑ |
Transform and Leverage
Information Technology Systems. Successfully
implemented new retail management, order management, and enterprise
planning systems. |
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EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
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1 |
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Table of
Contents
Proxy Statement Summary
Information |
2016 Compensation
Highlights
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CEO Target Compensation
Established at Median and Tied to Challenging Performance
Targets. |
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●The overall design for Mr.
Kornbergs compensation package remained the same in 2016, while his
target total direct compensation increased to $7.3 million to approximate
the median level of our peer group based on market data at the time. This
decision was made based on the Companys strong financial performance in
2015 and in recognition of Mr. Kornbergs strong individual performance
during his first year as CEO in 2015.
●Over 90% of the increase in
target compensation was in the form of short-term and long-term incentives
that included challenging performance targets to ensure that the target
payout would only occur if the Company achieved the challenging financial
goals established by the Compensation and Governance
Committee.
●When Mr. Kornberg assumed
the role of CEO in 2015, his compensation package was designed in part
based on feedback received from stockholders on our executive compensation
program in prior years. We received over 95% support in last years
say-on-pay vote and our stockholder engagement program in 2016 did not
yield any concerns or requests for changes to the CEO compensation
package.
●Mr. Kornbergs compensation
package will remain the same for 2017 with respect to overall design and
target pay opportunity.
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CEO Actual Total Direct
Compensation Decreased Significantly in 2016 and was Significantly Below
Target, Reflecting Business Results. |
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●No amounts were paid to our
CEO or other senior executives under the Companys seasonal short-term
cash incentive program.
●No performance-based
restricted stock units are expected to be earned by our CEO or other
senior executives under our 2016 long-term equity incentive awards that
are subject to challenging Adjusted EPS performance targets based on a
three-year performance period from 2016 through
2018. |
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The chart on the right shows our CEOs
total direct compensation as reported in the Summary Compensation Table on page
47 in 2015 and 2016. Amounts reported in the Summary Compensation Table reflect
the grant date fair value of long-term equity incentive awards, at target in the
case of performance-based restricted stock units. Our CEO is not expected to
earn any of the $2.5 million performance-based restricted stock award granted to
him in 2016 that is subject to challenging Adjusted EPS performance targets
based on a three-year performance period from 2016 through 2018.
Summary Compensation Table
Total
Direct Compensation (TDC)(1)
(1) |
Total direct compensation is
comprised of base salary, short-term incentives, and long-term incentives,
and excludes non-qualified deferred compensation and all other
compensation reported in the Summary Compensation Table on page
47. |
(2) |
Long-term equity incentive awards
consist of performance-based restricted stock units, time-based restricted
stock units, and stock options. |
Table of
Contents
Proxy Statement Summary Information |
CEO Realizable TDC(1): Target
vs. Actual
The chart on the left illustrates our
CEOs actual realizable total direct compensation compared to target realizable
total direct compensation for the 2015 and 2016 fiscal years. Actual realizable
total direct compensation reflects the actual amount of pay our CEO can expect
to receive from equity awards, including a current estimate of value for awards
that have either not yet vested or have not yet been earned. For more
information on CEO realizable compensation refer to Executive
CompensationCompensation Discussion and AnalysisWhat We Pay and Why: Elements
of CompensationCEO Realizable Pay on page 40.
(1) |
Total direct compensation is
comprised of base salary, short-term incentives, and long-term incentives,
and excludes non-qualified deferred compensation and all other
compensation reported in the Summary Compensation Table on page
47. |
(2) |
Long-term equity incentive awards
consist of performance-based restricted stock units, time-based restricted
stock units, and stock options. |
For more information on 2016 CEO
compensation refer to Executive CompensationCompensation Discussion and
AnalysisWhat We Pay and Why: Elements of Compensation beginning on page 34 and
the Summary Compensation Table on page 47. For more information on our
short-term cash incentive program refer to Executive CompensationCompensation
Discussion and AnalysisWhat We Pay And Why: Elements of
CompensationPerformance-Based IncentivesShort-Term Incentives beginning on
page 36. For information on our long-term equity incentive program see
Executive CompensationCompensation Discussion and AnalysisWhat We Pay And
Why: Elements of CompensationPerformance-Based IncentivesLong-Term Incentives
beginning on page 37.
EXECUTIVE COMPENSATION
OBJECTIVES AND PRACTICES |
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Program Objective |
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What We
DO: |
Pay for Performance |
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☑ |
Performance-Based CEO Compensation
Package with 86% Variable Compensation |
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Short-Term and Long-Term Incentives
with Challenging Performance Targets that Incentivize Creation of
Stockholder Value |
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Performance-Based Equity Awards with 3-Year Performance
Periods |
Pay
Competitively |
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Robust Compensation Setting Process that Utilizes Market
Data to Ensure Competitiveness |
Pay Responsibly |
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3-Year Performance Periods for
Performance-Based Equity Awards and 4-year Vesting Requirements for
Time-Based Restricted Stock Units and Stock Options |
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Annual Stockholder Engagement Process
and the Incorporation of Stockholder Feedback into Executive Compensation
Decision Making |
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Stock Ownership
Guidelines |
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Mitigate Risk Through Incentive
Compensation Design |
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Utilize Independent Compensation
Consultant |
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Clawback Policy |
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What We DONT
DO: |
Pay Responsibly |
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☒ |
No Special Tax Gross-Ups |
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No Pension Plans or Other
Post-Employment Defined Benefit Plans |
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No Repricing of Underwater Stock
Options or Reloads of Stock Options |
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No Hedging or Pledging
Transactions |
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No Single Trigger Change-in-Control
Payments |
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No Special Perquisites |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
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3 |
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Table of
Contents
Proxy Statement Summary
Information |
Governance
Highlights
Governance
Changes: |
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Board
Leadership |
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Mylle Mangum assumed the
role of independent Chairman of the Board and Peter Swinburn assumed the
role of Chair of the Compensation and Governance Committee in June
2016. |
Board Composition |
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The Board strengthened its collective competencies and
experience with the appointments of Mr. Davenport and Ms. Leever to the
Board. |
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Other Governance Highlights: |
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Board
Independence |
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All of our directors are
independent, except for Mr. Kornberg, our President and CEO. |
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We currently have an
independent Chairman of the Board. |
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All of our committee
members are independent. |
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Our independent directors have an opportunity to meet in
executive session at each meeting and do so routinely. |
Director Elections |
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We adhere to a majority vote standard, with a director
resignation policy, for uncontested director elections. |
Board and
Committee Meetings |
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Each of our directors attended at least 75% of all Board
meetings and applicable Committee meetings. |
Board and
Committee Evaluations |
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The Board and each Committee conduct a comprehensive
self-evaluation each year to identify potential areas of
improvement. |
Corporate Strategy |
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● |
At least once per year, the Board and management engage
in an in-depth discussion and align on the Companys long-term corporate
strategy. The strategy is revisited regularly during Board and committee
meetings. |
Stockholder Engagement |
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● |
As part of our annual stockholder engagement cycle, we
reach out to our largest stockholders who collectively hold over a
majority of the shares of our outstanding common stock, which usually
includes approximately our top 20 largest stockholders. |
Succession Planning |
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● |
The Board reviews and discusses succession plans for
executives and key contributors at least
annually. |
Proposals to be Voted on and
Voting Recommendations
Proposal |
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Board Voting Recommendation |
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Page Reference (for more
detail) |
Election of Class I Directors (Proposal No. 1) |
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☑ |
FOR |
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9 |
Advisory vote to approve executive compensation
(say-on-pay) (Proposal No. 2) |
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☑ |
FOR |
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63 |
Ratification of PricewaterhouseCoopers LLP as the
Companys independent registered public accounting firm for 2017 (Proposal
No. 3) |
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☑ |
FOR |
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64 |
Approval of the Code Section 162(m) performance goals and
various annual grant limitations under the Express, Inc. 2010 Incentive
Compensation Plan (Proposal No. 4) |
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☑ |
FOR |
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65 |
Table of
Contents
Proxy Statement Summary Information |
Director Nominees
The following table provides summary
information about our Class I director nominees. The Class I directors will be
elected to serve a three-year term that will expire at the Companys 2020 annual
meeting of stockholders.
Nominee |
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Age |
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Director Since |
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Select Professional Experience |
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Independent |
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Board Committees |
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Select
Skills/Qualifications |
Michael Archbold |
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56 |
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January 2012 |
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Retired Retail Executive:
-Former CEO of GNC
Holdings, Inc.
-Former CEO of The Talbots
Inc.
-Former President & COO
of Vitamin Shoppe
-Former Chief
Financial Officer of multiple retailers |
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Yes |
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Audit Committee |
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Accounting, finance and capital structure; risk
management; retail merchandising and operations; business development and
strategic planning; investor relations; executive leadership of complex
organizations |
Peter Swinburn |
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64 |
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February 2012 |
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Retired Consumer Products
Executive:
-Former CEO of Molson Coors
Brewing Company
-Former CEO of Coors
(US)
-Former CEO of Coors Brewing
Worldwide
-Former COO of Molson
Coors Brewing Company (UK) |
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Yes |
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Compensation and Governance Committee |
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Business development and strategic planning; consumer
brand marketing and advertising; international operations; finance and
capital structure; corporate governance and board practices; executive
leadership of complex organizations; mergers and acquisitions; executive compensation
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Forward-Looking
Statements
This proxy statement contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include any statement
that does not directly relate to any historical or current fact and are based on
current expectations and assumptions, which may not prove to be accurate.
Forward-looking statements are not guarantees and are subject to risks,
uncertainties, changes in circumstances that are difficult to predict, and
significant contingencies, many of which are beyond the Companys control. Many
factors could cause actual results to differ materially and adversely from these
forward-looking statements, including those set forth in Item 1A of the
Companys Annual Report on Form 10-K. The Company undertakes no obligation to
publicly update or revise any forward-looking statements as a result of new
information, future events, or otherwise, except as required by
law.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
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5 |
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Table of Contents
Frequently Asked
Questions
about
Voting and the Annual Meeting
Who is entitled to vote at
the meeting?
Only stockholders of record at the close
of business on April 10, 2017, the record date for the Annual Meeting (the
Record Date), are entitled to receive notice of and to participate in the
Annual Meeting. If you were a stockholder of record on that date, you will be
entitled to vote all of the shares that you held on that date at the Annual
Meeting or at any adjournments or postponements of the meeting.
A list of stockholders of record entitled
to vote at the Annual Meeting will be available at the Annual Meeting and will
also be available for ten business days prior to the Annual Meeting between the
hours of 9:00 a.m. and 4:00 p.m., Eastern Daylight Time, at the Office of the
Corporate Secretary located at 1 Express Drive, Columbus, OH 43230. A
stockholder may examine the list for any germane purpose related to the Annual
Meeting.
What are the voting rights
of the holders of Express, Inc. common stock?
Holders of Express, Inc. common stock are
entitled to one vote for each share held of record as of the Record Date on all
matters submitted to a vote of the stockholders, including the election of
directors. Stockholders do not have cumulative voting rights.
How do I
vote?
Beneficial Stockholders. If you hold your shares through a broker, bank, or other
nominee, you are a beneficial stockholder. In order to vote your shares, please
refer to the materials forwarded to you by your broker, bank, or other nominee,
as applicable, for instructions on how to vote the shares you hold as a
beneficial stockholder.
Registered Stockholders. If you hold your shares in your own name, you are a
registered stockholder and may vote by proxy before the Annual Meeting via the
Internet at www.proxyvote.com, by calling (800) 690-6903, or if you received
paper copies of the proxy materials and proxy card in the mail, by signing and
returning the enclosed proxy card. Proxies submitted via the Internet, by
telephone, or by mail must be received by 11:59 p.m., Eastern Daylight Time, on
June 6, 2017. You may also vote at the Annual Meeting by delivering your
completed proxy card in person. If you vote by telephone or via the Internet you
do not need to return your proxy card.
Why did I receive a Notice
in the mail regarding the Internet Availability of Proxy Materials instead of a
full set of proxy materials?
Under rules adopted by the SEC, we are
making this proxy statement available to our stockholders primarily via the
Internet (Notice and Access). On or about April 28, 2017, we will mail the
Notice regarding the Internet Availability of Proxy Materials (the Notice of
Internet Availability) to stockholders at the close of business on the Record
Date, other than those stockholders who previously requested electronic or paper
delivery of communications from us. The Notice of Internet Availability contains
instructions on how to access an electronic copy of our proxy materials,
including this proxy statement and our Annual Report, and also contains
instructions on how to request a paper copy of the proxy materials.
Can I vote my shares by
filling out and returning the Notice of Internet Availability?
No. The Notice of Internet Availability
only identifies the items to be voted on at the Annual Meeting. You cannot vote
by marking the Notice of Internet Availability and returning it. The Notice of
Internet Availability provides instructions on how to cast your vote. For
additional information, please see the section above titled How do I
vote?
Table of Contents
Frequently Asked Questions about Voting and the Annual
Meeting |
What are broker non-votes
and why is it so important that I submit my voting instructions for shares I
hold as a beneficial stockholder?
If a broker or other financial institution
holds your shares in its name and you do not provide voting instructions to it,
New York Stock Exchange (NYSE) rules allow that firm to vote your shares only
on routine matters. Proposal No. 3, the ratification of PricewaterhouseCoopers
LLP as the Companys independent registered public accounting firm for 2017, is
the only routine matter for consideration at the Annual Meeting. For all matters
other than Proposal No. 3, you must submit voting instructions to the firm that
holds your shares if you want your vote to count on such matters. When a firm
votes a clients shares on some but not all of the proposals, the missing votes
are referred to as broker non-votes.
What constitutes a quorum
and how will votes be counted?
The presence at the Annual Meeting, in
person or by proxy, of the holders of a majority of the outstanding shares of
common stock entitled to vote will constitute a quorum for purposes of the
Annual Meeting. A quorum is required in order for the Company to conduct its
business at the Annual Meeting. As of the Record Date, 78,455,141 shares of
common stock were outstanding.
Proxies received but marked as abstentions and
broker non-votes will be included in the calculation of the number of shares
considered to be present at the Annual Meeting for purposes of establishing a
quorum.
What vote is required to
approve each proposal?
Proposal |
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Vote Required |
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Board Voting
Recommendation |
Election of Class I directors
(Proposal No. 1) |
|
Majority of the votes cast FOR the
director nominee |
|
FOR the nominee |
Advisory vote to approve executive
compensation (say-on-pay) (Proposal No. 2) |
|
The affirmative vote of a majority
of the shares present in person or represented by proxy and entitled to
vote at the Annual Meeting |
|
FOR the executive compensation of our named executive
officers |
Ratification of
PricewaterhouseCoopers LLP as the Companys independent registered public
accounting firm for 2017 (Proposal No. 3) |
|
The affirmative vote of a majority
of the shares present in person or represented by proxy and entitled to
vote at the Annual Meeting |
|
FOR the ratification of PricewaterhouseCoopers LLP as the Companys independent registered
public accounting firm for 2017 |
Approval of the Code Section 162(m)
performance goals and various annual grant limitations under the Express,
Inc. 2010 Incentive Compensation Plan (Proposal No. 4) |
|
The affirmative vote of a majority
of the shares present in person or represented by proxy and entitled to
vote at the Annual Meeting |
|
FOR the approval of the Code Section 162(m) performance goals and
various annual grant limitations under the Express, Inc. 2010 Incentive
Compensation Plan |
What are my choices for
casting my vote on each matter to be voted on?
Proposal |
|
Voting Options |
|
Effect of
Abstentions |
|
Broker Discretionary Voting Allowed? |
|
Effect of
Broker Non-Votes |
Election of Class I director
(Proposal No. 1) |
|
FOR, AGAINST or ABSTAIN
|
|
No effectnot counted as a vote
cast |
|
No |
|
No effect |
Advisory vote to approve executive
compensation (say-on-pay) (Proposal No. 2) |
|
FOR, AGAINST or ABSTAIN
|
|
Treated as a vote AGAINST the
proposal |
|
No |
|
No effect |
Ratification of
PricewaterhouseCoopers LLP as the Companys independent registered public
accounting firm for 2017 (Proposal No. 3) |
|
FOR, AGAINST or
ABSTAIN |
|
Treated as a vote AGAINST the
proposal |
|
Yes |
|
Not applicable |
Approval of the Code Section 162(m)
performance goals and various annual grant limitations under the Express,
Inc. 2010 Incentive Compensation Plan (Proposal No. 4) |
|
FOR, AGAINST or
ABSTAIN |
|
Treated as a vote AGAINST the
proposal |
|
No |
|
No
effect |
Unless you give other instructions when
you vote, the persons named as proxies, David Kornberg and Lacey Bundy, will
vote in accordance with the Boards recommendations. We do not expect any other
business to properly come before the Annual Meeting; however, if any other
business should properly come before the Annual Meeting, the proxy holders will
vote as recommended by the Board or, if no recommendation is given, in their own
discretion.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
7 |
|
|
|
Table of Contents
Frequently Asked Questions about Voting and the
Annual Meeting |
What happens if a director
nominee does not receive a majority of the votes cast for his or her
re-election?
Pursuant to the Companys Corporate
Governance Guidelines, the Board expects any director nominee who fails to
receive a greater number of votes cast for than votes cast against his or
her re-election to tender his or her resignation for consideration by the
Compensation and Governance Committee. The Compensation and Governance Committee
will act on an expedited basis to determine whether to accept the directors
resignation and will submit such recommendation for prompt consideration by the
Board. The Board expects the director whose resignation is under consideration
to abstain from participating in any decision regarding the resignation. The
Compensation and Governance Committee and the Board may consider any factors
they deem relevant in deciding whether to accept the directors
resignation.
May I change my vote or
revoke my proxy?
Beneficial Stockholders. Beneficial stockholders should contact their broker, bank,
or other nominee for instructions on how to change their vote or revoke their
proxy.
Registered Stockholders. Registered stockholders may change their vote or revoke a
properly executed proxy at any time before its exercise by:
● |
delivering written notice of
revocation to the Office of the Corporate Secretary, Express, Inc., 1
Express Drive, Columbus, OH 43230; |
● |
submitting another proxy that is
dated later than the original proxy (including a proxy submitted via
telephone or Internet); or |
● |
voting in person at the Annual
Meeting. |
Can I attend the Annual
Meeting?
Subject to space availability, all
stockholders as of the Record Date, or their duly appointed proxies, may attend
the Annual Meeting. Since seating is limited, admission to the Annual Meeting
will be on a first-come, first-served basis. Registration will begin at 8:00
a.m., Eastern Daylight Time. If you attend, please note that you may be asked to
present valid photo identification, such as a drivers license or passport, and
will need to check in at the registration desk prior to entering the Annual
Meeting. Please also note that if you are a beneficial stockholder (that is, you
hold your shares through a broker, bank, or other nominee), you will need to
show proof of your stock ownership as of the Record Date, such as a copy of a
brokerage statement, to present at the registration desk in order to gain
admission to the Annual Meeting. Cameras, cell phones, recording devices, and
other electronic devices will not be permitted at the Annual Meeting other than
those operated by the Company or its designees. All bags, briefcases, and
packages will be subject to search.
Table of Contents
Election of Class I
Directors
(Proposal No.
1)
The Board and its Compensation and
Governance Committee are committed to ensuring that the Board possesses the
right diversity of backgrounds, skills, experience, and perspectives to
constitute an effective Board. The Board currently consists of eight members and
is divided into three classes of directors, with two Class I directors, three
Class II directors, and three Class III directors. The current term of our Class
I directors expires at the Annual Meeting, while the terms for Class II and
Class III directors will expire at our 2018 and 2019 annual meetings of
stockholders, respectively. Mr. Killion, a Class III director, will resign from
the Board following the Annual Meeting. Effective upon Mr. Killions
resignation, the size of the Board will be reduced to seven members, with two
Class I directors, three Class II directors, and two Class III
directors.
Mr. Archbold and Mr. Swinburn currently
serve as Class I directors and are independent. Upon the recommendation of the
Compensation and Governance Committee, the Board has nominated Mr. Archbold and
Mr. Swinburn for re-election as Class I directors, to each serve three-year
terms expiring at the 2020 annual meeting of stockholders. Mr. Archbold and Mr.
Swinburn have each served as a director since 2012 and were each elected to
serve a three-year term at our 2014 annual meeting of stockholders.
Mr. Archbold and Mr. Swinburn have
consented to serve if elected. If re-elected, each of Mr. Archbold and Mr.
Swinburn will hold office until his respective successor has been duly elected
and qualified or until his earlier resignation or removal. If Mr. Archbold or
Mr. Swinburn becomes unavailable to serve as a director, the Board may either
designate a substitute nominee or reduce the number of directors. If the Board
designates a substitute nominee, the persons named as proxies will vote for the
substitute nominee designated by the Board.
Information with respect to our Class I
director nominees and our continuing Class II and Class III directors, including
their recent employment or principal occupation, a summary of select
qualifications, skills, and experience that led to the conclusion that they are
qualified to serve as directors, the names of other public companies for which
they currently serve as a director or have served as a director within the past
five years, their period of service on the Board, and their ages as of the
Record Date, are provided in this section. The Board believes that our
continuing directors, together with our director nominees, possess a
complementary and diverse set of qualifications, skills, and experience to allow
the Board to function at a high-level and fulfill its responsibilities to our
stockholders. Please refer to Corporate Governance Board Composition on page
15 for other information about our Board, including a description of the
qualifications, skills, and experience that the Board believes are important in
order to effectively oversee the Companys strategy to achieve sustainable,
long-term value creation.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
9 |
|
|
|
Table of Contents
Election of Class I Directors (Proposal No.
1) |
Nominees For Class I Directors
for Election at the 2017 Annual Meeting
MICHAEL ARCHBOLD |
|
|
Director
Since: January 2012 Age: 56
Audit Committee
Member
|
|
Select Qualifications, Skills,
and Experience:
●Accounting, finance, and capital structure
●Risk management
●Retail merchandising and operations
●Business development and strategic planning
●Investor relations
●Executive leadership of complex
organizations |
Business
Experience
Mr. Archbold served as Chief
Executive Officer of GNC Holdings Inc. from August 2014 until July 2016
and also served as a director on the Board of GNC Holdings Inc. Prior to
that he was the Chief Executive Officer of The Talbots Inc. from August
2012 until June 2013 and also served as a director on the Board of The
Talbots Inc. Prior to that, Mr. Archbold served as President and Chief
Operating Officer of Vitamin Shoppe, Inc. from April 2011 until June 2012
and prior to that as its Executive Vice President, Chief Operating
Officer, and Chief Financial Officer from April 2007. Mr. Archbold served
as Executive Vice President / Chief Financial and Administrative Officer
of Saks Fifth Avenue from 2005 to 2007. From 2002 to 2005 he served as
Chief Financial Officer for AutoZone, originally as Senior Vice President,
and later as Executive Vice President. Mr. Archbold is an inactive
Certified Public Accountant, and has 20 years of financial experience in
the retail industry. |
PETER SWINBURN |
|
|
Director
Since: February 2012
Age: 64 Chair of the Compensation
and Governance Committee
|
|
Select Qualifications, Skills,
and Experience:
●Business development and strategic planning
●Consumer brand marketing and advertising
●International operations
●Finance and capital structure
●Corporate governance and public company board practices
●Executive leadership of complex
organizations
●Mergers and acquisitions
●Executive compensation |
Business
Experience
Mr. Swinburn served as Chief
Executive Officer and President of Molson Coors Brewing Company from July
2008 until he retired in December 2014. He also served as a director of
Molson Coors Brewing Company and MillerCoors Brewing Company from July
2008 until his retirement. Prior to that he was Chief Executive Officer of
Coors (US) and from 2005 to October 2007, Mr. Swinburn served as President
and Chief Executive Officer of Molson Coors Brewing Company (UK) Limited.
Prior to that, he served as President and Chief Executive Officer of Coors
Brewing Worldwide and Chief Operating Officer of Molson Coors Brewing
Company (UK) Limited following the Molson Coors Brewing Companys
acquisition of Molson Coors Brewing Company (UK) Limited in 2002 until
2003. Mr. Swinburn currently serves as a director of Cabelas
Inc. |
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR EACH OF THE CLASS I NOMINEES TO BE ELECTED AS
DIRECTORS. |
Table of Contents
Election of Class I Directors (Proposal No.
1) |
Class II Directors With Terms
Continuing Until the 2018 Annual Meeting
MICHAEL F. DEVINE |
|
|
Director
Since: May 2010 Age: 58
Chair of the Audit
Committee
|
|
Select Qualifications, Skills,
and Experience:
●Accounting, finance, and capital structure
●Risk management
●Retail merchandising
●Corporate governance and public company board
practices
●Investor relations
●Executive leadership of complex
organizations |
Business
Experience
Mr. Devine was appointed Senior Vice
President and Chief Financial Officer of Coach in December 2001 and
Executive Vice President in August 2007, a role he held until he retired
in August 2011. Prior to joining Coach, Mr. Devine served as Chief
Financial Officer and Vice PresidentFinance of Mothers Work, Inc. (now
known as Destination Maternity Corporation) from February 2000 until
November 2001. From 1997 to 2000, Mr. Devine was Chief Financial Officer
of Strategic Distribution, Inc. Mr. Devine was Chief Financial Officer at
Industrial System Associates, Inc. from 1995 to 1997, and for the six
years prior to that he was the Director of Finance and Distribution for
McMaster-Carr Supply Co. Mr. Devine previously served as a director of
Nutrisystems, Inc. He currently serves as a director of Deckers, Inc. and
Five Below, Inc. He also serves as a director of The Talbots Inc. and Sur
La Table, both of which are privately held
companies. |
DAVID KORNBERG |
|
|
Director
Since: January 2015 Age: 49
President and
CEO
|
|
Select Qualifications, Skills,
and Experience:
●Retail merchandising and operations
●Apparel merchandising and design
●Business development and strategic planning
●E-commerce and omni-channel retailing
●Consumer brand marketing and advertising
●Experience with target customers
●Supply chain |
Business
Experience
Mr. Kornberg has served as our
President and CEO since January 30, 2015. He has also served as a member
of the Board since becoming CEO. Mr. Kornberg first joined Express in 1999
and has held various roles of increasing responsibility, including as
President since October 2012, Executive Vice President of Mens
Merchandising and Design from December 2007 to October 2012, and General
Merchandise Manager of the Express Mens business prior to that. From 2002
to 2003, Mr. Kornberg was Vice President of Business Development for
Disney Stores. Mr. Kornberg spent the first ten years of his career with
Marks & Spencer PLC in the United
Kingdom. |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
11 |
|
|
|
Table of Contents
Election of Class I Directors (Proposal No.
1) |
MYLLE MANGUM |
|
|
Director
Since: August 2010 Age:
68 Chairman of the Board;
Compensation and Governance Committee Member; Audit Committee
Member
|
|
Select Qualifications, Skills,
and Experience:
●Business development and strategic planning
●Corporate governance and public company board
practices
●Executive leadership of complex
organizations
●Leadership development and succession
planning
●International and franchise operations
●Accounting, finance, and capital structure
●Executive compensation |
Business
Experience
Ms. Mangum is the Chief Executive
Officer of IBT Enterprises, LLC (formerly International Banking
Technologies), a position she has held since October 2003, and is also
Chairman and CEO of IBT Holdings, a position she has held since July 2007.
Prior to that, Ms. Mangum served as Chief Executive Officer of True
Marketing Services, LLC since July 2002. She served as Chief Executive
Officer of MMS Incentives, Inc. from 1999 to 2002. From 1997 to 1999 she
served as President-Global Payment Systems and Senior Vice
President-Expense Management and Strategic Planning for Carlson Wagonlit
Travel, Inc. From 1992 to 1997 she served as Executive Vice
President-Strategic Management for Holiday Inn Worldwide. Ms. Mangum was
previously employed with BellSouth Corporation as Director-Corporate
Planning and Development from 1986 to 1992 and President of BellSouth
International from 1985 to 1986. Prior to that, she was with the General
Electric Company. Ms. Mangum previously served as a director of Emageon,
Inc., Scientific-Atlanta, Inc., Respironics, Inc., and Collective Brands,
Inc. Ms. Mangum currently serves as a director of PRGX Global, Inc.,
Barnes Group Inc., and Haverty Furniture Companies,
Inc. |
Table of Contents
Election of Class I Directors (Proposal No.
1) |
Class III Directors With Terms
Continuing Until the 2019 Annual Meeting
TERRY DAVENPORT |
|
|
Director
Since: November 2016 Age:
59 Compensation and Governance
Committee Member (Effective March 2017)
|
|
Select Qualifications, Skills,
and Experience:
●Consumer brand marketing and advertising
●E-commerce and omni-channel retailing
●Retail merchandising and operations
●Business development and strategic planning
●International operations
●Corporate responsibility
●Experience with target customers |
Business
Experience
Mr. Davenport is currently Global
Brand Advisor for Starbucks Coffee Company. Throughout his career, Mr.
Davenport has held various senior leadership roles in the areas of brand
building, marketing, advertising and retail design for leading consumer
brands. Mr. Davenport has spent the last ten years of his career at
Starbucks Coffee Company, where he has served as Global Brand Advisor
since February 2014. His prior roles at Starbucks include: SVP of Global
Creative Studios, SVP of Marketing and Category for Europe, Middle East,
and Africa (EMEA), and SVP of Marketing for the U.S. He originally joined
Starbucks as VP of Brand Strategy and Consumer Insights in October 2006.
Prior to joining Starbucks, Mr. Davenport held senior brand leadership
roles with YUM! Brands, PepsiCo. and Omnicom
Agencies. |
THEO KILLION |
|
|
Director
Since: April 2012 Age:
65 Compensation and Governance
Committee Member
|
|
Select Qualifications, Skills,
and Experience:
●Human resources and organizational design
●Leadership development and succession
planning
●Retail merchandising and operations
●Business development and strategic planning
●Executive leadership of complex
organizations
●Consumer brand marketing and advertising
●Executive compensation |
Business Experience
Mr. Killion served as Vice Chairman
of Herbert Mines Associates from May 2015 until March 2016. Prior to that,
Mr. Killion served as Chief Executive Officer of Zale Corporation from
September 2010 to July 2014. He also served as a director of Zale
Corporation from September 2010 until July 2014. Prior to that, Mr.
Killion served in a variety of other positions with Zale Corporation,
including President from August 2008 to September 2010, Interim Chief
Executive Officer from January 2010 to September 2010 and Executive Vice
President of Human Resources, Legal and Corporate Strategy from January
2008 to August 2008. From May 2006 to January 2008, Mr. Killion was
employed with the executive recruiting firm Berglass+Associates, focusing
on companies in the retail, consumer goods, and fashion industries. From
April 2004 through April 2006, Mr. Killion served as Executive Vice
President of Human Resources at Tommy Hilfiger. From 1996 to 2004, Mr.
Killion served in various management positions with Limited Brands (now
known as L Brands). Mr. Killion currently serves as a director of Libbey
Inc. |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
13 |
|
|
|
Table of Contents
Election of Class I Directors (Proposal No.
1) |
KAREN LEEVER |
|
|
Director
Since: August 2016 Age:
53 Compensation and Governance
Committee Member (Effective March 2017)
|
|
Select Qualifications, Skills,
and Experience:
●E-commerce and omni-channel retailing
●Technology development and management
experience
●Data analytics
●Business development and strategic planning
●Retail merchandising and operations
●Experience with target customers |
Business
Experience
Ms. Leever is Executive Vice
President and General Manager, Digital Media, of Discovery Communications,
a role she has held since October 2015. Throughout her career, Ms. Leever
has held a variety of leadership positions across digital media,
marketing, product development, direct sales, and operations in media and
retail. Prior to joining Discovery Communications, she spent ten years
with DIRECTV, and held several roles including, Senior Vice President,
Digital and Direct Sales from 2013 to 2015, Senior Vice President of
Digital Marketing and Media in 2012, and Senior Vice President of
directv.com and Customer Communications in 2011. Additionally, Ms. Leever
served as Vice President, Marketing at Kmart Corporation during 2005 and
as Divisional Vice President, eCommerce from 2004 until 2005. Earlier in
her career, she spent more than a decade in electronic television
retailing at HSN and QVC, overseeing website design, messaging, pricing,
and programming strategies. |
Table of
Contents
Corporate Governance
Board
Responsibilities
The Board is responsible for overseeing
the affairs of the Company in order to generate sustainable long-term value for
our stockholders and does so through oversight of the Companys (1) strategy and
performance, (2) management, including succession planning, (3) risk management
program, (4) compliance and corporate responsibility programs, and (5) other
corporate governance practices, including stockholder engagement.
Board Oversight |
|
Strategy and
Performance |
|
Management, including Succession
Planning |
|
Risk Management |
|
Compliance and Corporate
Responsibility |
|
Other Corporate Governance
Practices, including Stockholder
Engagement |
The Board believes that effective
oversight is best achieved through (1) having the right combination of people on
the Board, (2) an effective Board leadership and committee structure, and (3)
effective Board practices. The Board continually reassesses the composition of
the Board, the Boards leadership and structure, and its governance practices
and believes that the continuing directors, along with the director nominees,
together have a complementary and diverse set of skills, backgrounds, and
experiences to constitute an effective Board and that the Boards leadership and
committee structure as well as its governance practices are effective. See
Board Composition below and Election of Class I Directors (Proposal No. 1)
on page 9 for more information about the composition of the Board; see Board
Leadership and Structure on page 18 for more information about the Boards
leadership structure and its committees; and see Board Practices on page 22
for more information about the Boards governance practices.
Board
Composition |
|
+ |
|
Board Leadership &
Structure |
|
+ |
|
Board Practices |
|
= |
|
Effective Oversight |
Board Composition
The Board and its Compensation and
Governance Committee are committed to ensuring that the Board possesses the
right diversity of backgrounds, skills, experience, and perspectives to
constitute an effective Board. The Compensation and Governance Committee is
responsible for developing the criteria for, and reviewing periodically with the
Board, the skills and characteristics of nominees, as well as the composition of
the Board as a whole. These criteria include independence, diversity, age,
skills, tenure, and experience in the context of the needs of the Board. The
Compensation and Governance Committee also considers a number of other factors,
including the ability to represent all stockholders without a conflict of
interest; the ability to work in and promote a productive environment;
sufficient time and willingness to fulfill the substantial duties and
responsibilities of a director; a high level of character and integrity; broad
professional and leadership experience and skills necessary to effectively
respond to complex issues encountered by a publicly-traded company; and the
ability to apply sound and independent business judgment.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
15 |
|
|
|
Table of
Contents
BOARD COMPETENCIES AND
EXPERIENCE |
The Board believes that it has the right
mix of qualifications, skills, and experience that allow it to fulfill its
responsibilities, including overseeing managements execution of the Companys
corporate strategy which is designed to create long-term stockholder value. The
information below shows how the Boards collective qualifications, skills, and
experience relate to the Companys corporate strategy. For biographical
information regarding each of our directors and their individual qualifications,
skills, and experience see, Election of Class I Directors (Proposal No. 1)
beginning on page 9.
Long-Term Strategy for Value Creation |
Improving Profitability Through a
Balanced Approach to Growth
●Increase
Productivity of our Existing Stores
●Optimize our Retail
Store Footprint and Open New Outlet Stores
●Grow our E-commerce
Business
●Significant Cost
Savings Initiatives Across our Business |
|
Increasing Brand Awareness and
Elevating our Customer Experience |
|
Transforming and Leveraging
Information Technology Systems |
|
Investing in the Growth and
Development of our People |
|
|
|
|
|
|
|
Strategic Competencies and
Experience |
●Retail merchandising
& operations
●Apparel
merchandising & design
●E-commerce and
omni-channel retailing
●Business development
& strategic planning
●Supply
chain
●International and
franchise operations |
|
●Consumer brand
marketing/advertising
●Experience with
target customers |
|
●Technology
development and management experience
●Data
analytics |
|
●Human resources
& organizational design
●Leadership
development |
|
Corporate Governance
Competencies and Experience |
●Accounting, finance,
and capital structure
●Investor
relations
●Executive
compensation
●Mergers and
acquisitions
●Executive leadership
of complex organizations |
|
●Corporate
responsibility
●Corporate governance
and public company board practices
●Risk
management
●Succession
planning |
In 2016, the Board strengthened its
collective competencies and experience with the appointments of Mr. Davenport
and Ms. Leever to the Board. Mr. Davenport has significant experience in
consumer brand marketing and advertising and Ms. Leever has significant
experience in technology development and management, data analytics, and
e-commerce. See Election of Class I Directors (Proposal No. 1) beginning on
page 9 for additional information about Mr. Davenport and Ms. Leever, including
the qualifications that led to their appointment to the Board.
Table of
Contents
BOARD DEMOGRAPHICS AND
REFRESHMENT |
As previously noted, in addition to
ensuring that the Board collectively has a diverse set of competencies and
experience, the Compensation and Governance Committee and Board also consider
independence as well as diversity, age, and tenure. The charts below show
certain demographic information about our Board as of April 10, 2017.
Independence |
|
Diversity |
|
Tenure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All of our directors are independent
except for Mr. Kornberg, our President & CEO |
|
●One director, Mr.
Killion, is African-American
●Two directors, Mr.
Kornberg and Mr. Swinburn, are originally from the United Kingdom and have
significant international business experience |
|
Average Tenure: 4 years Average Age: 59 years old |
|
|
|
|
|
|
|
|
|
|
|
|
In order to assure the appropriate balance
between members with new and different perspectives and those with a deep
understanding of the Company built up over many years, the Compensation and
Governance Committee reviews a directors continuation on the Board each time
such directors term of office expires. This allows each director the
opportunity to conveniently confirm his or her desire to continue as a member of
the Board. In addition, the Companys Corporate Governance Guidelines provide
that a director will not be nominated for re-election if he or she is 72 years
of age or older at the time of nomination. The Board believes that together
these practices are effective at ensuring an appropriate balance between
experience and a fresh perspective on the Board.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
17 |
|
|
|
Table of
Contents
IDENTIFYING AND EVALUATING DIRECTOR
CANDIDATES |
The Compensation and Governance Committee
is responsible for identifying, recruiting, and recommending candidates for the
Board and is responsible for reviewing and evaluating any candidates recommended
by stockholders.
The following shows our new director
nomination process.
Conduct a Needs
Assessment |
The Committee determines the
director skills, experience, and attributes needed for the Board to
exercise effective oversight of the Company. The Committee assesses the
skills, experience, and attributes of existing directors against desired
director skills, experience, and attributes to identify any skills,
experience, and attributes that would strengthen the collective skills and
experience of the Board. |
|
Develop a New Director
Profile |
The Committee develops a profile
that sets forth the skills, experience, and attributes desired for the new
director, which satisfies the needs identified in the needs
assessment. |
|
Identify New Director
Candidates |
The Committee may identify new
director candidates through professional search firms, professional
networks of sitting directors, and nominations suggested by
stockholders. |
|
Selection of New
Director |
The Committee makes a recommendation
to the Board based on an initial round of interviews, reference checks,
and a final round of interviews with all directors. |
|
Due Diligence and
Onboarding |
Once due diligence is performed and
the nominee is appointed to the Board, the Company provides a robust
onboarding program which includes a full day of in-person meetings with
senior leadership at the Companys headquarters and participation in a
multi-day new director education program for first-time
directors. |
The Compensation and Governance Committee
followed the process described above in connection with the appointments of Mr.
Davenport and Ms. Leever to the Board in 2016 and such process included the
engagement of a third party search firm to identify and pre-qualify both Mr.
Davenport and Ms. Leever.
The Compensation and Governance Committee
considers all director candidates, including candidates proposed by stockholders
in accordance with our Bylaws, based on the same criteria. As noted above, the
Compensation and Governance Committee may engage third party search firms to
identify potential director nominees.
Board
Leadership & Structure
At our 2016 Annual Meeting of
Stockholders, Ms. Mangum assumed the role of independent Chairman. The
independent Chairmans roles and responsibilities include: (1) establishing the
Board agendas and schedules to confirm that appropriate topics are reviewed and
sufficient time is allocated to each; (2) providing input to the CEO with
respect to the information provided to the Board; (3) serving as a liaison
between the independent directors and the CEO; (4) presiding at the executive
sessions of independent directors; (5) facilitating communications and
coordination of activities among the committees as appropriate; and (6)
approving and coordinating the retention of advisors and consultants to the
Board.
Table of
Contents
Our Corporate Governance Guidelines
provide that the roles of Chairman and CEO may be separated or combined. The
Board exercises its discretion in combining or separating these positions as it
deems appropriate. The Board believes that the combination or separation of
these positions should be considered as part of the succession planning process.
In the event that the Chairman is not independent, the Board believes that it is
beneficial for the independent directors to appoint an independent Lead
Director. Currently, the Board believes that having an independent Chairman best
serves the Board in its oversight role.
The Board has two standing committees: an
Audit Committee and a Compensation and Governance Committee. The composition and
leadership of these committees are shown in the table below. In the future, the
Board may establish other committees, as it deems appropriate, to assist it with
its responsibilities. The committees report to the Board as they deem
appropriate, and as the Board may request. Each standing committee operates
under a charter that has been approved by the Board and each is comprised solely
of independent directors.
Board Member |
Audit
Committee |
|
Compensation
and Governance Committee |
Michael Archbold |
X |
|
|
Terry Davenport |
|
|
X(1) |
Michael F. Devine |
▲ |
|
|
Theo Killion |
|
|
X |
David Kornberg |
|
|
|
Karen Leever |
|
|
X(1) |
Mylle Mangum |
X |
|
X |
Peter Swinburn |
|
|
▲ |
▲ |
|
Chair of the committee |
(1) |
|
Effective March 2017, Mr. Davenport and Ms.
Leever were appointed to serve on the Compensation and Governance
Committee. |
AUDIT
COMMITTEE
Audit Committee
Responsibilities
The Audit Committee is responsible for,
among other matters:
●appointing,
compensating, retaining, evaluating, terminating, and overseeing our
independent registered public accounting firm;
●reviewing the
independent registered public accounting firms independence from
management;
●reviewing with our
independent registered public accounting firm the scope and results of
their audit;
●approving all audit
and permissible non-audit services to be performed by the Companys
independent registered public accounting firm;
●overseeing the
financial reporting process and discussing with management and the
Companys independent registered public accounting firm the interim and
annual financial statements, including related disclosures, that the
Company files with the SEC, as well as earnings releases and non-GAAP
measures;
●reviewing and
monitoring the Companys accounting principles, accounting policies,
financial and accounting controls, and compliance with legal and
regulatory requirements;
●establishing
procedures for the confidential anonymous submission of concerns regarding
questionable accounting, internal controls, or auditing
matters;
●reviewing and
approving known related person transactions;
●reviewing internal
audit activities and reports; and
●assisting the Board
in its oversight of the Companys risk management program, including
regularly reviewing the Companys risk portfolio, managements process for
identifying risks, and the steps management has taken to monitor and
control such risks. |
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Table of
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The Audit Committee also prepares the
Audit Committee Report that SEC rules require to be included in our annual proxy
statement. This report is on page 61 of this proxy statement.
Audit Committee
Meetings
The Audit Committee met eight times in
2016. The Audit Committee generally has eight regularly scheduled meetings per
year and has an opportunity at each meeting to speak with the lead audit partner
from the Companys independent registered public accounting firm as well as the
Companys director of internal audit without any other members of management
present. In addition, the Audit Committee Chair has regularly scheduled
teleconferences with each of the Companys Chief Financial Officer and the lead
audit partner from the Companys independent registered public accounting
firm.
Audit Committee
Practices
At the end of each quarter, the Audit
Committee reviews and discusses with management and the Companys independent
registered public accounting firm the Companys financial results, press
releases concerning the Companys financial performance and earnings estimates,
any significant control deficiencies identified and steps management has taken
or plans to take to remediate the deficiencies, significant estimates and
proposed adjustments to the financial statements, reports to the Companys
ethics hotline, internal audit activities and reports, and the results of the
independent registered public accounting firms review or audit of the Companys
financial statements, among other things.
Each year the Audit Committee evaluates
the performance of the Companys independent registered public accounting firm
and considers whether it is in the best interests of the Company and its
stockholders to engage the firm for another year. As part of its evaluation, the
Audit Committee considers the qualifications of the persons who will be staffed
on the Companys engagement, including the lead audit partner, quality of work,
firm reputation, independence, fees, retail experience, and understanding of the
Companys financial reporting processes, policies, and procedures. The Audit
Committee solicits feedback from management as part of its evaluation
process.
Audit Committee
Independence and Expertise
The Board has affirmatively determined
that (1) each of our Audit Committee members meets the definition of
independent director for purposes of serving on the Audit Committee under both
Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the Exchange
Act), and the NYSE listing rules, and (2) each qualifies as an audit committee
financial expert, as such term is defined in Item 407(d)(5) of Regulation
S-K.
Audit Committee
Charter
The Audit Committee Charter may be viewed
in the investor relations section of our website at www.express.com/investor. We
will also provide a copy of the charter in print without charge upon written
request delivered to the Office of the Corporate Secretary at 1 Express Drive,
Columbus, OH 43230.
Table of
Contents
COMPENSATION
AND GOVERNANCE COMMITTEE
Compensation and
Governance Committee Responsibilities
The Compensation and Governance Committee is
responsible for, among other matters:
●reviewing and
approving key employee compensation goals, policies, plans, and programs;
●reviewing and
approving corporate goals and objectives relevant to CEO compensation and
evaluating the CEOs performance in light of these goals and objectives;
●reviewing and
approving, in consultation with or with the approval of the independent
directors of the Board, compensation arrangements for the
CEO;
●overseeing the
overall performance evaluation process for the CEO;
●reviewing the
performance of and approving compensation arrangements for executive
officers other than the CEO;
●reviewing and
approving employment agreements and other similar arrangements between the
Company and its executive officers;
●reviewing and
recommending to the Board, in consultation with the Compensation and
Governance Committees independent compensation consultant, compensation
arrangements for the independent directors;
●overseeing
managements administration of Company benefit plans and policies,
including incentive compensation plans;
●reviewing the
Companys compensation program to ensure it is appropriate and does not
incentivize unnecessary and excessive risk taking;
●identifying
individuals qualified to become members of the Board, consistent with
criteria approved by the Board;
●reviewing
stockholder proposals and making recommendations to the Board regarding
proposals;
●overseeing the
self-evaluation process for the Board and its
committees;
●overseeing the
organization of the Board to discharge the Boards duties and
responsibilities properly and efficiently; and
●developing and
recommending to the Board a set of corporate governance guidelines and
principles applicable to the
Company. |
The Compensation and Governance Committee
also prepares the Compensation and Governance Committee Report that SEC rules
require to be included in our annual proxy statement. This report is on page 46
of this proxy statement.
Compensation and
Governance Committee Independence
The Board has affirmatively determined
that each of our Compensation and Governance Committee members meets the
definition of independent director for purposes of serving on the Compensation
and Governance Committee under both Rule 10C-1 of the Exchange Act and the NYSE
listing rules.
Compensation and
Governance Committee Meetings
The Compensation and Governance Committee
met six times in 2016. The Compensation and Governance Committee generally has
six regularly scheduled meetings per year and has an opportunity at each meeting
to speak with the Compensation and Governance Committees independent
compensation consultant.
Compensation and
Governance Committee Practices
See Executive CompensationCompensation
Discussion & AnalysisExecutive Compensation Practices on page 42 for
additional information about the Compensation and Governance Committees
practices.
Compensation Committee
Interlocks and Insider Participation
None of the members of the Compensation
and Governance Committee has been an officer or employee of the Company. No
interlocking relationships exist between the members of the Board or
Compensation and Governance Committee and the board of directors or compensation
committee of any other company.
Compensation and
Governance Committee Charter
The Compensation and Governance Committee
Charter may be viewed in the investor relations section of our website at
www.express.com/investor. We will also provide a copy of the charter in print
without charge upon written request delivered to the Office of the Corporate
Secretary at 1 Express Drive, Columbus, OH 43230.
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Board
Practices
The Board has deep experience in the area
of strategy and business development, with much of that experience gained in the
retail sector. At least once per year, the Board and management engage in an
in-depth discussion and align on the Companys corporate strategy which is
designed to create long-term stockholder value and serves as the foundation upon
which goals are established and decisions are made. Short and medium term
objectives are developed to support achievement of the long-term strategy and
the Board monitors managements progress against such objectives.
Full Board
The Board, with the assistance of
the Audit Committee and the Compensation and Governance Committee,
oversees our enterprise risk management (ERM) program. Our ERM program
is designed to enable effective identification and management of critical
enterprise risks and to facilitate the incorporation of risk
considerations into decision making.
The Board is kept informed of the
committees risk oversight and related activities primarily through
reports of the committee chairs to the full Board. The Board also receives
a comprehensive report from management on the ERM program at least
annually. In addition, the Audit Committee escalates issues relating to
risk oversight to the full Board as appropriate to ensure that the Board
is appropriately informed of developments that could affect our risk
profile or other aspects of our business. The Board also considers
specific risk topics in connection with strategic planning and other
matters. |
|
|
|
|
|
The Audit
Committee
The Audit Committee oversees
managements implementation of the ERM program, including regularly
reviewing our enterprise risk portfolio, managements process for
identifying risks, and steps management has taken to monitor and control
enterprise risks. |
|
The Compensation
and Governance Committee
The Compensation and Governance
Committee is responsible for risk oversight as it relates to our
compensation policies and practices and governance structure and
processes. |
|
|
|
|
|
Management
Management has day-to-day
responsibility for the Companys ERM program. As part of its
responsibilities, management continuously identifies and monitors the
Companys enterprise risks, develops and reviews risk response plans, and
takes steps to control risk where appropriate.
Managements responsibilities are
carried out by a cross-functional Risk Committee which includes our Chief
Operating Officer, General Counsel, Chief Financial Officer, SVP of Human
Resources, Chief Information Officer, and Director of Internal
Audit. |
Table of
Contents
MANAGEMENT OVERSIGHT AND SUCCESSION
PLANNING |
As part of its management oversight
responsibilities, the Board assesses whether the Company has the management
talent needed to successfully pursue the Companys strategy, monitors
managements execution of the Companys strategy, and provides advice to
management as a strategic partner. The Board believes that open communications
between the Board and management play a key role in effective oversight.
Accordingly, in addition to formal meetings, individual directors and members of
management engage in frequent dialogue in between meetings concerning the
business.
The Board is responsible for succession
planning for the CEO position and for monitoring and advising on managements
succession planning for other executive officers and key contributors. The Board
reviews and discusses succession plans for the CEO position and the Companys
other executive officers and key contributors at least once annually, usually as
part of the annual talent review of the executive leadership and key
contributors in the Company. As part of the annual talent review process, the
CEO shares his evaluation of the executive leadership in the business and makes
recommendations and evaluations of potential successors, along with a review of
any development plans recommended for such individuals. Directors become
familiar with potential successors for key management positions through various
means, including annual talent reviews, presentations to the Board, and
communications outside of meetings.
COMPLIANCE & CORPORATE
RESPONSIBILITY |
The Board is committed to ensuring that
the Board and the management team together cultivate a corporate culture that
emphasizes the importance of acting according to high ethical standards and in
compliance with legal requirements. The Board receives a compliance update each
quarter from the Companys General Counsel who has day-to-day oversight
responsibilities for the Companys compliance program. On an annual basis, the
Board reviews with management the Companys top compliance risks based on an
updated risk assessment, steps management is taking to reduce compliance risk,
and key compliance initiatives for the upcoming year.
The Companys reputation and commitment to
corporate responsibility, including respect for human rights, the environment,
our communities, and Associates, play an important role in our ability to create
long-term stockholder value. While matters of corporate responsibility are
integrated within various Board discussions, the Board also dedicates specific
time during each year to review and discuss the Companys corporate
responsibility program, including plans and progress against key initiatives.
Our stockholders views on corporate
governance and executive compensation are important to us and we value and
utilize the feedback and insights that we receive. Each year, as part of our
annual stockholder engagement cycle described below, we reach out to our largest
stockholders who collectively hold over a majority of the shares of our
outstanding common stock, which generally includes approximately our 20 largest
stockholders. Stockholders may request meetings with management or directors by
sending a written request to the Office of the Corporate Secretary at 1 Express
Drive, Columbus, OH 43230 or via email to ir@express.com.
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STOCKHOLDER ENGAGEMENT
CYCLE
|
|
Spring
●Publish Annual Report and Proxy Statement
●Engage with stockholders as appropriate concerning proposals
presented in the Proxy Statement. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Winter
●Perform comprehensive review of the Companys corporate governance
practices
●Evaluate proxy season trends, corporate governance best practices,
and regulatory developments |
|
Summer/Fall
●Review results from Annual Meeting / Discuss potential action
items
●Solicit feedback from Companys largest stockholders on the
Companys corporate governance and executive compensation
practices
●Companys Corporate Secretary summarizes stockholder feedback and
presents it to the Committee and Board |
|
|
|
Mr. Kornbergs compensation package was
designed in part based on feedback received from stockholders on our executive
compensation program in prior years. In 2016, our stockholders did not raise any
concerns regarding our 2016 executive compensation program and we received no
requests to change anything about Mr. Kornbergs pay package.
For more information regarding our 2016
stockholder engagement efforts, see Executive CompensationCompensation
Discussion and AnalysisExecutive Compensation PracticesStockholder Engagement
and Annual Advisory Vote on Executive Compensation on page 44.
COMMUNICATIONS WITH THE
BOARD |
Stockholders and other interested parties
may contact an individual director, including the independent Chairman, the
Board as a group, or a specified Board committee or group, including the
independent directors as a group, at the following address: Office of the
Corporate Secretary, Express, Inc., 1 Express Drive, Columbus, OH 43230 Attn:
Board of Directors. Any correspondence should clearly indicate whether the
correspondence is intended for an individual director, the Board as a group, or
a specified committee or group of directors.
All such reports or correspondence will be
forwarded to the appropriate director or group of directors as indicated on the
correspondence unless the correspondence is of a trivial nature, irrelevant to
the Boards responsibilities, or already addressed by the Board. A report will
be made to the Audit Committee of all communications to the Board, and all such
correspondence is made available to all directors.
The Board held a total of sixteen
meetings, in person and by telephone, during 2016. Each director attended at
least 75% of Board meetings held during the year, as well as at least 75% of
meetings of the committees on which he or she served during 2016. Directors are
expected to attend our annual meetings of stockholders. All of our directors
attended our 2016 annual meeting of stockholders, except Mr. Davenport and Ms.
Leever who each joined the Board after the meeting was held.
The independent directors are given an
opportunity to meet in executive session at each Board meeting and do so
routinely.
Table of Contents
CORPORATE GOVERNANCE
PRINCIPLES |
The Board has adopted policies and
procedures to ensure effective governance of Express. Our Corporate Governance
Guidelines may be viewed in the investor
relations section of our website at www.express.com/investor. We will also
provide the Corporate Governance Guidelines in print without charge upon written
request delivered to the Office of the Corporate Secretary at 1 Express Drive,
Columbus, OH 43230.
The Compensation and Governance Committee
reviews our Corporate Governance Guidelines from time to time as necessary, but
no less than annually, and may propose modifications to the principles and other
key governance practices from time to time for adoption by the Board.
DIRECTOR ELECTION
STANDARDS |
Our Bylaws and Corporate Governance
Guidelines provide for a majority voting standard in uncontested director
elections. Therefore, in uncontested director elections, a director nominee must
receive more votes cast for than against his or her election in order to be
elected to the Board. The Board expects a director to tender his or her
resignation if he or she fails to receive the required number of votes for
election or re-election.
The Company has a classified Board, with
each class of directors serving 3-year terms. Our certificate of incorporation
provides that, subject to any rights applicable to any then-outstanding
preferred stock, the Board shall consist of such number of directors as is
determined from time to time by resolution adopted by a majority of the total
number of authorized directors, whether or not there are any vacancies in
previously authorized directorships. Subject to any rights applicable to any
then-outstanding preferred stock, any vacancies resulting from an increase in
the size of the Board or otherwise must be filled by the directors then in
office unless otherwise required by law or by a resolution passed by the Board.
The term of office for each director will be until his or her successor is
elected at an annual meeting of stockholders or his or her death, resignation,
or removal, whichever is earliest to occur. Any additional directorships
resulting from an increase in the size of the Board will be distributed among
the three classes so that, as nearly as possible, each class will consist of
one-third of the total number of directors.
The Board conducts a comprehensive annual
self-evaluation to determine whether it and its committees are functioning
effectively and to identify potential areas of improvement. The evaluation
process includes written questionnaires and one-on-one interviews with each
director. The Chairman shares a summary of the results with the full Board and
action plans are created to address identified improvement
opportunities.
OUTSIDE BOARD
MEMBERSHIPS |
Our Corporate Governance Guidelines
provide that directors should not serve on more than four other public company
boards. Directors are expected to advise the Chairman in advance of accepting an
invitation to serve on another public company board or for-profit private
company board and before accepting an assignment to any other public companys
audit or compensation committee. No director may serve as a director, officer,
or employee of a competitor of ours.
Our Code of Conduct serves as the
foundation for our compliance program and sets forth the ethical standards,
legal requirements, and other policies we expect our directors, officers, and
associates to comply with at all times. Stockholders may access a copy of our
Code of Conduct in the investor relations section of our website at
www.express.com/investor. We will also provide the Code of Conduct in print
without charge upon written request delivered to the Office of the Corporate
Secretary at 1 Express Drive, Columbus, OH 43230.
We will promptly disclose any waivers of
our Code of Conduct involving our directors or executive officers. We intend to
satisfy any disclosure requirements regarding any amendment or waiver of our
Code of Conduct by posting the information on the Corporate Governance page of
our website which can be found at www.express.com/investor.
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Table of Contents
RELATED PERSON
TRANSACTIONS |
Under our current Related Person
Transaction policy, a Related Person Transaction is any transaction,
arrangement, or relationship between us or any of our subsidiaries and a Related
Person where the amount involved exceeds $120,000 and the Related Person has or
will have a direct or indirect material interest. A Related Person is any of
our executive officers, directors, director nominees, any stockholder
beneficially owning in excess of 5% of our stock or securities exchangeable for
our stock, any immediate family member of any of the foregoing persons, and any
firm, corporation, or other entity in which any of the foregoing persons is an
executive officer, a partner or principal, or in a similar position, or in which
such person has a 5% or greater beneficial ownership interest in such
entity.
All Related Person Transactions must be
approved or ratified by a majority of the disinterested directors on the Board
or a designated committee thereof consisting solely of disinterested directors
in accordance with our Related Person Transaction Policy. In approving any
Related Person Transaction, the Board or the committee must determine that the
transaction is on terms no less favorable in the aggregate than those generally
available to an unaffiliated third-party under similar circumstances.
Since January 31, 2016, there has not
been, and there is not currently proposed, any transaction or series of
transactions to which we were or will be a party in which the amount involved
exceeded or will exceed $120,000 and in which any Related Person had or will
have a direct or indirect interest.
Director
Compensation
Non-employee directors receive
compensation for Board service, which is designed to fairly compensate them for
their time and effort, be competitive with the market, and align their interests
with the long-term interests of our stockholders. Employee directors receive no
compensation for Board service. The Compensation and Governance Committee,
together with its independent compensation consultant, periodically review the
form and amount of director compensation and recommend changes to the Board, as
appropriate. As part of its review, the Compensation and Governance Committee
considers how the Companys director compensation program compares to the
programs at the peer companies we refer to in the executive compensation setting
process. See Executive CompensationCompensation Discussion and
AnalysisExecutive Compensation PracticesThe Role of Peer Companies and
Benchmarking beginning on page 43 for more information about our peer
companies. The Compensation and Governance Committee believes that director
compensation should be competitive with the market and geared towards attracting
and retaining highly-qualified independent professionals to oversee the Company
and represent the interests of the Companys stockholders.
NON-EMPLOYEE DIRECTOR
COMPENSATION |
The annual cash retainers for our
non-employee directors in 2016 are shown in the following table.
Annual
Retainer Type |
|
2016 Annual Retainer
Amount |
|
Non-Employee Director |
|
$75,000 |
|
Committee Service |
|
$10,000 |
|
Chairman |
|
$100,000 |
|
Audit Committee Chair |
|
$20,000 |
|
Compensation and Governance Committee Chair |
|
$20,000 |
(1) |
(1) |
|
Effective June 2016, the annual
retainer for the Compensation and Governance Committee Chair increased
from $15,000 to $20,000. |
Non-employee directors also receive equity
grants on an annual basis. In 2016, non-employee directors were granted
restricted stock units that had a fair value of approximately $125,000 on the
date of grant and that vest on May 15, 2017, subject to continued service. The
Companys non-employee Chairman was entitled to an additional grant of
restricted stock units that had a value of approximately $40,000 on the date of
grant and that vest on May 15, 2017, subject to continued service. All directors
receive reimbursement for reasonable out-of-pocket expenses incurred in
connection with their Board service.
Table of Contents
DIRECTOR STOCK OWNERSHIP
GUIDELINES |
The Board has director stock ownership
guidelines which call for non-employee directors to own an amount of our common
stock equal to five times their annual cash retainer. Directors have five years
to meet the guidelines. To avoid fluctuating ownership requirements, once a
director has achieved the applicable stock ownership guideline, he or she is
considered to have satisfied the guideline, provided that the shares used to
meet the underlying requirement are retained. As of the end of fiscal 2016, all
non-employee directors have met or are on track to meet the stock ownership
guidelines. For a discussion of the stock ownership guidelines applicable to Mr.
Kornberg, refer to Executive CompensationCompensation Discussion and
AnalysisExecutive Compensation PracticesStock Ownership Guidelines on page
45.
2016 DIRECTOR COMPENSATION
TABLE |
The following table sets forth information
regarding compensation earned for each of our non-employee directors in fiscal
2016.
Director(1) |
|
Fees Earned or Paid in
Cash
($) |
|
Stock Awards
($)(7)(8) |
|
Total
($) |
Michael Archbold |
|
85,000 |
|
124,997 |
|
209,997 |
Terry Davenport(2) |
|
29,348 |
|
71,912 |
|
101,260 |
Michael F. Devine |
|
105,000 |
|
124,997 |
|
229,997 |
Theo Killion |
|
85,000 |
|
124,997 |
|
209,997 |
Karen Leever(3) |
|
49,524 |
|
105,827 |
|
155,352 |
Mylle Mangum(4) |
|
183,626 |
|
164,998 |
|
348,624 |
Peter Swinburn(5) |
|
101,209 |
|
124,997 |
|
226,206 |
Michael Weiss(6) |
|
24,880 |
|
|
|
24,880 |
(1) |
|
Mr. Kornberg did not receive
compensation for service on the Board. |
(2) |
|
Mr. Davenport was appointed as a
Class III director to the Board in November 2016. |
(3) |
|
Ms. Leever, was appointed as a
Class III director to the Board in August 2016. |
(4) |
|
Ms. Mangum, formerly Chair of the
Compensation and Governance Committee, was appointed Chairman of the Board
in June 2016. |
(5) |
|
Mr. Swinburn was appointed Chair
of the Compensation and Governance Committee in June 2016. |
(6) |
|
Mr. Weiss retired as Chairman of
the Board in June 2016. |
(7) |
|
Reflects the aggregate grant date
fair value of restricted stock units. These values have been determined
based on the assumptions and methodologies set forth in Note 10 of the
Companys financial statements included in its Annual Report for the year
ended January 28, 2017. These amounts do not represent the actual amounts
paid to or received by the named director during 2016. No stock options
were granted to any of the Companys non-employee directors in
2016. |
(8) |
|
The aggregate restricted stock
units and stock options (whether or not exercisable in the case of
options) outstanding as of January 28, 2017 are as follows: Mr. Archbold
(8,406 restricted stock units); Mr. Davenport (5,181 restricted stock
units); Mr. Devine (8,406 restricted stock units and 10,000 stock
options); Mr. Killion (8,406 restricted stock units); Ms. Leever (7,074
restricted stock units); Ms. Mangum (11,096 restricted stock units and
2,500 stock options); Mr. Swinburn (8,406 restricted stock
units). |
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Table of Contents
Executive
Officers
The following table sets forth the names,
ages, and titles of our executive officers as of April 10, 2017:
Name |
|
Age |
|
Position |
David Kornberg |
|
49 |
|
President and Chief Executive Officer |
Matthew Moellering |
|
50 |
|
Executive Vice President and Chief Operating
Officer |
Colin Campbell |
|
58 |
|
Executive Vice PresidentSourcing and Production |
Jim
Hilt |
|
41 |
|
Executive Vice President, Chief Marketing Officer and
eCommerce |
Erica McIntyre |
|
48 |
|
Executive Vice PresidentMerchandising |
John J. (Jack) Rafferty |
|
65 |
|
Executive Vice PresidentPlanning and Allocation |
Douglas Tilson |
|
59 |
|
Executive Vice PresidentReal Estate |
Periclis (Perry) Pericleous |
|
44 |
|
Senior Vice President, Chief Financial Officer and
Treasurer |
Our executive officers are appointed by
the Board and serve until their successors have been duly elected and qualified
or their earlier resignation or removal. There are no family relationships among
any of our directors or executive officers.
Set forth below is a description of the
background of the persons named above, other than Mr. Kornberg, whose background
information is provided in Election of Class I Directors (Proposal No. 1) on
page 9.
Matthew
Moellering has served as our Executive Vice President and Chief Operating Officer
since September 2011. Prior to that, he served as our Executive Vice President,
Chief Administrative Officer, Chief Financial Officer, Treasurer and Secretary
from October 2009 to September 2011, Senior Vice President, Chief Financial
Officer, Treasurer and Secretary from July 2007 to October 2009 and our Vice
President of Finance from September 2006 to July 2007. Prior to that, he served
in various roles with Limited Brands (now known as L Brands) from February 2003
to September 2006, including Vice President of Financial Planning. Prior to
that, Mr. Moellering served in various roles with Procter and Gamble where he
was employed from July 1995 until February 2003. Prior to that he served as an
officer in the United States Army. Mr. Moellering serves on the board of
directors of L.L.Bean, Inc. which is a privately held company.
Colin
Campbell has served as our Executive Vice President of Sourcing and Production
since June 2005. Prior to that, from March 1997 to June 2005, Mr. Campbell held
a number of leadership positions for various divisions of Limited Brands (now
known as L Brands) including Cacique and Limited Stores and was an Executive
Vice President of Western Hemisphere Operations at Mast from 2003 to 2005. Prior
to that, from 1985 to 1997, Mr. Campbell was Vice President of Operations for
the dress division of Liz Claiborne. He has also worked in production leadership
positions with Bentwood Brothers LTD in England and Daks-Simpson LTD in
Scotland.
Jim Hilt has served as our
Executive Vice President, Chief Marketing Officer and eCommerce since March
2016. Mr. Hilt joined Express in February 2014 as Senior Vice President of
eCommerce. Prior to joining Express, he was the Vice President of eBooks and
Managing Director, International at Barnes & Noble from 2012 until February
2014. Prior to that, Mr. Hilt held several executive positions at Sears
Holdings, the parent company of Sears and Kmart, including Divisional Vice
President of Product Management, Divisional Vice President of Online Services,
and Divisional Vice President and Director of ManageMyHome. Prior to Sears, Mr.
Hilt was a Director of Global Marketing at SAP. Before joining SAP, Jim held
several senior positions at IBM.
Erica
McIntyre has served as our Executive Vice President of Merchandising since January
2016, with direct oversight of the womens and mens merchandising teams. From
May 2013 until her appointment to Executive Vice President, Ms. McIntyre served
as Senior Vice President and General Merchandise Manager, with responsibility
for the entire womens merchandising team. She joined Express in November 2010,
serving in the same capacity, with a focus on the womens casual business.
Before joining Express, Ms. McIntyre was at Gap, Inc., where she held a number
of leadership positions in merchandising at Old Navy. Prior to that, Ms.
McIntyre worked for Arthur Andersen in Corporate Finance, for Geos Corporation
in Tokyo, and also worked for the United States Senate.
John J. (Jack)
Rafferty has served as our Executive Vice President of Planning and Allocation
since 1999 after joining Express as Vice President of Planning and Allocation in
1998. Prior to joining Express, Mr. Rafferty held a number of planning and
allocation leadership roles with Limited Brands (now known as L Brands). These
roles included Vice President of Planning and Allocation for Lerner from 1990 to
1998, Vice President of Lane Bryant from 1988 until 1990 and Director of
Planning and Allocation for Sizes Unlimited from 1984 to 1986. Mr. Rafferty
started his career in various planning and allocation roles with Korvettes,
Casual Corner, and Brooks Fashion.
Table of Contents
Douglas
Tilson has served as our Executive Vice President of Real Estate since October
2009. Prior to that, he served as our Senior Vice President of Real Estate from
October 2007 to October 2009. Prior to that, he was with Steiner &
Associates as Senior Vice President of Leasing from April 2005 until October
2007. Prior to that, Mr. Tilson was Senior Vice President of Real Estate for
Tween Brands from July 1999 until April 2005 and served in a number of senior
real estate positions with Limited Brands (now known as L Brands) from January
1987 until July 1999. Prior to that, he was a labor attorney with the law firm
Porter, Wright, Morris & Arthur LLP from June 1984 until January
1987.
Periclis (Perry)
Pericleous has served as our Senior Vice President, Chief Financial Officer and
Treasurer since July 2015. Prior to this appointment, he held a number of other
leadership positions within our finance organization, including Vice President
of Finance from December 2010 to July 2015, Director of Financial Planning &
Analysis from April 2010 to December 2010, and Director of Store Finance from
November 2007 to April 2010. Mr. Pericleous joined Express in August 1999 and
served in a variety of roles of increasing responsibility across the finance
organization, including in store finance and financial reporting. He began his
career in 1996, serving in various accounting roles at Drug Emporium and then
Value City Department Stores. Mr. Pericleous is a Certified Public
Accountant.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
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29 |
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Table of Contents
Executive
Compensation
Compensation Discussion and
Analysis
OVERVIEW OF FISCAL 2016
BUSINESS RESULTS
After a strong year in 2015, our net sales
decreased to $2.2 billion in 2016. Sales were impacted by, among other things,
challenging mall traffic trends, a more promotional retail environment, and a
lack of fashion clarity in our product assortment, which offered too many
choices. The sales weakness, coupled with higher promotional activity, led to
margin contraction and a decline in earnings. Operating income in 2016 was
$103.6 million and Adjusted EPS was $0.81 per share, both representing declines
from the previous year. Going forward we will continue to focus on generating
long-term growth for our stockholders through the following strategic
objectives: (1) improving profitability through a balanced approach to growth,
(2) increasing brand awareness and elevating the customer experience, (3)
transforming and leveraging information technology systems, and (4) investing in
the growth and development of our people.
Net Sales |
|
Operating
Income |
|
Adjusted
EPS |
|
|
|
|
|
|
|
|
Progress Against Select Strategic
Initiatives |
☒ |
Increase Store
Productivity. Same store sales
declined by 12% year over year. |
|
☑ |
Optimize Retail Store
Fleet. Since the beginning of 2015
we closed 47 of the 50 retail stores identified in our store
rationalization plan. |
|
☑ |
E-commerce
Growth. E-Commerce sales grew 5%
year over year to over $400 million. |
|
☑ |
Open New Outlet
Stores. Added 23 outlet locations
in 2016. |
|
☑ |
Significant Cost Savings
Initiatives. Announced $44-$54
million in cost savings opportunities expected to be realized through 2019
and realized $9 million of these savings in 2016. |
|
☑ |
Transform and Leverage
Information Technology Systems. Successfully
implemented new retail management, order management, and enterprise
planning systems. |
|
|
|
|
Table of Contents
2016 COMPENSATION
HIGHLIGHTS
Our executive compensation program is
designed to strongly align executive compensation with the Companys financial
performance. In 2016:
|
|
|
CEO Target
Compensation Established at Median and Tied to Challenging Performance
Targets. |
● |
The
overall design for Mr. Kornbergs compensation package remained the same
in 2016, while his target total direct compensation increased to $7.3
million to approximate the median level of our peer group based on market
data at the time. This decision was made based on the Companys strong
financial performance in 2015 and in recognition of Mr. Kornbergs strong
individual performance during his first year as CEO in
2015. |
|
● |
Over
90% of the increase in target compensation was in the form of short-term
and long-term incentives that included challenging performance targets to
ensure that the target payout would only occur if the Company achieved the
challenging financial goals established by the Compensation and Governance
Committee (referred to as the Committee throughout this
section). |
|
● |
When
Mr. Kornberg assumed the role of CEO in 2015, his compensation package was
designed in part based on feedback received from stockholders on our
executive compensation program in prior years. We received over 95%
support in last years say-on-pay vote and our stockholder engagement
program in 2016 did not yield any concerns or requests for changes to the
CEO compensation package. |
|
● |
Mr.
Kornbergs compensation package will remain the same for 2017 with respect
to overall design and target pay opportunity. |
|
CEO Actual Total Direct
Compensation Decreased Significantly in 2016 and was Significantly Below
Target, Reflecting Business Results. |
|
●
|
No
amounts were paid to our CEO or other senior executives under the
Companys seasonal short-term cash incentive program.
|
|
● |
No
performance-based restricted stock units are expected to be earned by our
CEO or other senior executives under our 2016 long-term equity incentive
awards that are subject to challenging Adjusted EPS performance targets
based on a three-year performance period from 2016 through
2018. |
|
|
|
|
The chart on the right shows our CEOs
total direct compensation as reported in the Summary Compensation Table on page
47 in 2015 and 2016. Amounts reported in the Summary Compensation Table reflect
the grant date fair value of long-term equity incentive awards, at target in the
case of performance-based restricted stock units. Our CEO is not expected to
earn any of the $2.5 million performance-based restricted stock award granted to
him in 2016 that is subject to challenging adjusted EPS performance targets
based on a three-year performance period from 2016 through 2018.
Summary Compensation Table
Total
Direct Compensation (TDC)(1)
(1) |
Total direct compensation is
comprised of base salary, short-term incentives, and long-term incentives,
and excludes non-qualified deferred compensation and all other
compensation reported in the Summary Compensation Table on page
47. |
(2) |
Long-term equity incentive awards
consist of performance-based restricted stock units, time-based restricted
stock units, and stock options. |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
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31 |
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Table of Contents
CEO Realizable TDC(1): Target
vs. Actual
The chart on the left illustrates our
CEOs actual realizable total direct compensation compared to target realizable
total direct compensation for the 2015 and 2016 fiscal years. Actual realizable
total direct compensation reflects the actual amount of pay our CEO can expect
to receive from equity awards, including a current estimate of value for awards
that have either not yet vested or have not yet been earned. For more
information on CEO realizable compensation refer to What We Pay and Why:
Elements of CompensationCEO Realizable Pay on page 40.
(1) |
Total direct compensation is
comprised of base salary, short-term incentives, and long-term incentives,
and excludes non-qualified deferred compensation and all other
compensation reported in the Summary Compensation Table on page
47. |
(2) |
Long-term equity incentive awards
consist of performance-based restricted stock units, time-based restricted
stock units, and stock options. |
For more information on 2016 CEO
compensation refer to What We Pay And Why: Elements of Compensation beginning
on page 34 and the Summary Compensation Table on page 47. For more information
on our short-term cash incentive program refer to What We Pay And Why:
Elements of CompensationPerformance-Based IncentivesShort-Term Incentives
beginning on page 36. For information on our long-term equity incentive program
see What We Pay And Why: Elements of CompensationPerformance-Based
IncentivesLong-Term Incentives beginning on page 37.
2016 NAMED EXECUTIVE
OFFICERS
This Compensation Discussion and Analysis
(CD&A) focuses on the compensation of our named executive officers (our
NEOs) for 2016, who are listed below:
Name |
|
Position |
David Kornberg |
|
President and Chief
Executive Officer |
Matthew
Moellering |
|
Executive Vice President
and Chief Operating Officer |
John J. (Jack)
Rafferty |
|
Executive Vice
PresidentPlanning and Allocation |
Colin Campbell |
|
Executive Vice
PresidentSourcing and Production |
Periclis (Perry)
Pericleous |
|
Senior Vice President,
Chief Financial Officer and Treasurer |
Table of Contents
EXECUTIVE
COMPENSATION OBJECTIVES AND PRACTICES
Below we highlight the core objectives
that serve as the foundation for our compensation program, the practices we have
implemented to achieve those objectives, and practices we have not implemented
because we do not believe they would serve the Companys long-term
interests.
Program Objective |
|
What We DO: |
Pay
for Performance |
|
☑ |
Variable Compensation. A significant portion of
our executives compensation opportunity is variable and is tied to
achievement of challenging financial performance targets and changes in
the Companys stock price. In 2016, 86% of CEO target total direct
compensation was variable. |
|
☑ |
Short-Term and Long-Term Incentive
Compensation with Challenging Performance Targets. Our short-term cash
incentive awards and long-term performance-based stock awards are subject
to the achievement of challenging financial performance targets that
incentivize the creation of stockholder value. |
|
☑ |
Performance-Based Equity
Awards.
We grant a mix of long-term equity incentives, comprised of (i) stock
options, (ii) time-based restricted stock units, and (iii)
performance-based restricted stock units, with performance based on
adjusted diluted earnings per share over a three-year period.
Performance-based restricted stock units made up 50% of the long-term
equity incentives granted to our NEOs in 2016. |
Pay Competitively |
|
☑ |
Robust Compensation Setting
Process.
We utilize market data without strict benchmarking in order to make sure
executives are paid commensurate with their experience and performance.
Executive compensation packages are heavily weighted on performance but
also include base salary and other benefits that make them competitive
with our peers. |
Pay Responsibly |
|
☑ |
Long-Term Vesting
Requirements. Stock options and time-based restricted stock units
granted to our NEOs vest ratably over four years, and performance-based
stock units vest after 3 years, in order to align the interests of our
executives with our stockholders. |
|
☑ |
Annual Stockholder Engagement
Process.
As part of our annual stockholder engagement cycle, we reach out to our
largest stockholders who collectively hold over a majority of the shares
of our outstanding common stock, which generally includes our 20 largest
stockholders. The CEO compensation package was designed in part based on
feedback received from stockholders in prior years. In 2016, our
stockholders did not raise any concerns regarding our 2016 executive
compensation program and we received no requests to change anything about
the CEO pay package. We also offer our stockholders the opportunity to
vote annually on the Companys executive compensation program. Refer to
page 63 for more information about this years non-binding say-on-pay
proposal. |
|
☑ |
Stock Ownership Guidelines. Each of our executives
is subject to substantial stock ownership requirements. |
|
☑ |
Mitigate Undue Risk. The mix between
short-term incentives and long-term incentives is intended to discourage
executives and associates from maximizing short-term performance at the
expense of long-term performance. In 2016, our short-term cash-incentive
program had performance targets based on operating income and our
performance-based restricted stock units had performance targets based on
earnings per share, thereby discouraging participants from focusing on the
achievement of one performance measure at the expense of
another. |
|
☑ |
Capped Payouts. Payouts are capped under our cash
and equity incentive award programs. |
|
☑ |
Independent Compensation Consulting
Firm. The
Committee is advised by an independent compensation consultant that
provides no other services to the Company. |
|
☑ |
Clawback Policy. Our executives are subject to a
clawback policy. |
|
|
|
What We DONT
DO: |
Pay Responsibly
|
|
☒ |
No Special Tax Gross-Ups. We do not provide special
tax gross-ups to executives. |
|
☒ |
No Pension Plans or Other Post-Employment
Defined Benefit Plans. We do not provide any qualified or non-qualified
post-employment defined benefit plans. |
|
☒ |
No Special Executive Perquisites.
We do not provide
any executive with special perquisites. |
|
☒ |
No Repricing of Underwater Stock Options or
Reloads of Stock Options. The Companys 2010 Incentive Compensation Plan, as
amended (the 2010 Plan), prohibits the repricing of stock options
without the consent of stockholders and does not allow for reloads of
stock options to the extent stock options are used to pay the exercise
price or taxes with respect to stock option exercises. |
|
☒ |
No Hedging or Pledging
Transactions. We prohibit associates, including NEOs, and directors
from hedging or pledging any securities of the Company held by
them. |
|
☒ |
No Single Trigger Change-in-Control
Payments. Our NEOs are not currently entitled to any single-trigger
special vesting, severance, or other benefits in a
change-in-control. |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
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33 |
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Table of Contents
WHAT WE PAY AND WHY: ELEMENTS
OF COMPENSATION |
Our executive compensation program is
designed to strongly align executive compensation with the Companys financial
performance. The elements of our compensation program are as follows:
Compensation Element |
|
Form |
|
Performance/ Vesting Period |
|
Performance Metric |
|
Alignment to Compensation Objectives |
|
Base
Salary |
|
Cash |
|
---- |
|
---- |
|
Salary is set at competitive market levels
in order to compete for, obtain, and retain the talent necessary to
successfully operate the Company and execute our strategic
plans. |
|
|
|
|
|
|
|
|
|
Short-Term Incentives |
|
Cash |
|
Six-month
operating seasons |
|
Operating income(1) |
|
Incentive payment opportunities are based on
the attainment of pre-established objective financial goals and are
intended to motivate executives to work effectively to achieve financial
performance objectives aligned with our seasonal business cycle and reward
them when objectives are met. |
|
|
|
|
|
|
|
|
|
Long-Term Incentives |
|
50% performance-based restricted
stock units |
|
3-year performance and vesting
period |
|
3-year Adjusted EPS |
|
3-year performance periods incentivize the
creation of long-term stockholder value. |
|
|
|
|
|
|
|
|
|
35% time-based restricted stock
units |
|
4-year
vesting requirements |
|
---- |
|
4-year vesting
requirements align our executives interests with our stockholders and
incentivizes retention of our executive talent. |
|
|
|
|
|
|
15% stock options |
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
Defined contribution
retirement plans
Health & welfare
benefits Termination
benefits
|
|
---- |
|
---- |
|
We seek to offer retirement plan benefits,
health and welfare benefits, and termination benefits at levels that are
competitive with the market. |
(1) |
For 2017, the short-term cash
incentive program will also include an operational goal. See
Performance-Based IncentivesShort-Term Incentives2017 Short-Term Cash
Incentive Compensation on page 37 for more
information. |
The Committee strives to achieve an
appropriate mix between the various elements of our compensation program to meet
our compensation objectives; however, it does not apply any rigid allocation
formula in setting our executive compensation, and the Committee may make
adjustments to this approach for various positions on a case-by-case basis as
appropriate. A significant portion of executive compensation is intended to be
variable and tied to the Companys financial performance and stock price. The
following charts show that, for 2016, 86% of CEO compensation and 67% of other
NEO compensation at target was variable.
Table of Contents
CEO 2016 |
|
Other NEOs 2016
Average |
Target Total Direct
Compensation(1) |
|
Target Total Direct
Compensation(1) |
|
|
|
|
|
|
(1) |
Target total direct compensation
is comprised of base salary, short-term incentives, and long-term
incentives. Variable compensation is comprised of short-term incentives
and long-term incentives. |
BASE
SALARY
We provide a base salary to our executive
officers to compensate them for their services during the year and to provide
them with a stable source of income. NEO base salaries are determined by an
annual assessment of a number of factors, including the individuals current
base salary, job responsibilities, peer group and other publicly available
compensation data, and individual and Company performance.
The annual base salaries in effect for
each of our NEOs as of January 28, 2017 are shown in the following
table:
Name |
|
2015 Fiscal Year
End |
|
Changes to Base Salary During
2016 |
|
2016 Fiscal Year
End |
David Kornberg |
|
$900,000 |
|
In March 2016, Mr. Kornberg received a merit and market-based
salary increase from $900,000 to $1,000,000. |
|
$1,000,000 |
Matthew Moellering |
|
$769,000 |
|
In March 2016, Mr. Moellering received a merit and
market-based salary increase from $769,000 to $793,000. |
|
$793,000 |
John J. (Jack) Rafferty |
|
$569,000 |
|
In March 2016, Mr. Rafferty received a merit and market-based
salary increase from $569,000 to $582,000. |
|
$582,000 |
Colin Campbell |
|
$569,000 |
|
In March 2016, Mr. Campbell received a merit and market-based
salary increase from $569,000 to $582,000. |
|
$582,000 |
Periclis (Perry) Pericleous |
|
$420,000 |
|
In March 2016, Mr. Pericleous received a merit and
market-based salary increase from $420,000 to $445,000. |
|
$445,000 |
No base salaries are expected to increase
in 2017, except that in March 2017 the Committee approved a market-based
increase for Mr. Pericleous from $445,000 to $475,000.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
35 |
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|
|
Table of Contents
PERFORMANCE-BASED INCENTIVES
Short-Term Incentives
Our short-term performance-based cash
incentive compensation program provides our NEOs with incentive payment
opportunities for each six-month operating season. Using short-term incentives
tied to the traditional retail selling seasons of Spring (February through July)
and Fall (August through January) allows us to establish appropriately
challenging performance targets that align business performance expectations
with the seasonal nature of the way we manage our business and prevailing market
and economic conditions which can change quickly in the retail apparel sector.
For example, this structure allows for mid-year development of performance
targets and provides an incentive for our executives to focus on meeting goals
in the six-month Fall season in circumstances when business performance and
macro-economic conditions decline or improve relative to our operating
plans.
2016 Short-Term Cash Incentive
Compensation
The financial performance goals under the
short-term cash incentive program for 2016 were based on operating income,
subject to adjustments for certain extraordinary items. Operating income is used
because it is a performance measure over which executives can have significant
impact, and is also directly linked to the Companys seasonal operating plans
and long-range plan. There were no adjustments made for non-core operating items
in 2016 for purposes of determining whether the performance targets had been
achieved.
The Committee sets the performance goals
at the beginning of each six-month season based on an analysis of (i) historical
performance, (ii) internal financial plans, and (iii) general economic
conditions.
The performance goals are set at the same
targets for all leadership in the business. We believe it is important to have
all members of leadership working toward the same goals and that those goals are
clear, understandable, and within their control.
The target cash incentive
compensation opportunity for each eligible executive is set at a percentage of
base salary. 40% of each executives target bonus is allocated to the six-month
Spring season and 60% is allocated to the six-month Fall season which is
intended to align with the seasonality in our business where a higher portion of
our net sales and net income are typically realized in the six-month Fall season
due primarily to the impact of the holiday season.
For 2016, the amount of performance-based
cash incentive opportunity for participating executives ranged from zero to
double their incentive target, based upon the extent to which the performance
goals were achieved or exceeded. The threshold, target, and maximum short-term
performance-based cash incentive payout opportunities for our NEOs for 2016 are
set forth in the Grants of Plan-Based Awards table on page 49.
Mr. Kornbergs target cash incentive
compensation opportunity was increased from 120% to 130% in 2016. This was a
merit and market-based increase made in connection with other changes to Mr.
Kornbergs compensation package to increase target total direct compensation for
Mr. Kornberg to approximately the median of the Companys peer group based on
market data at the time. Mr. Pericleous target cash incentive compensation
opportunity was increased from 50% to 60% in 2016. This was a merit and
market-based increase made in connection with other changes to Mr. Pericleous
compensation package to increase his total direct compensation to closer to the
median of the Companys peer group.
The target cash incentive compensation
opportunity as a percentage of base salary in effect for each of our NEOs for
2016 is shown below:
Annual Short-Term Cash
Incentive Payout Opportunity at Target (as a % of Base
Salary) |
Name |
|
2015 |
|
Changes to Short-Term Cash Incentives During
2016 |
|
2016 |
David Kornberg |
|
120% |
|
In March 2016, Mr. Kornberg received a merit and
market-based increase from 120% to 130%. |
|
130% |
Matthew Moellering |
|
85% |
|
No change in 2016. |
|
85% |
John J. (Jack) Rafferty |
|
65% |
|
No change in 2016. |
|
65% |
Colin Campbell |
|
60% |
|
No change in 2016. |
|
60% |
Periclis (Perry) Pericleous |
|
50% |
|
In March 2016, Mr. Pericleous received a merit and
market-based increase from 50% to 60%. |
|
60% |
Final payout amounts for each six-month
season are approved by the Committee at its first regularly scheduled in-person
Committee meeting following the end of each six-month operating season and are
paid out to executives after such approval.
The following table illustrates that
for 2016, the Companys operating income for each six-month operating season was
below the threshold goal set by the Committee. Accordingly, no amounts were paid
to our NEOs under the Companys seasonal short-term cash incentive program in
2016.
Table of Contents
Performance
Period |
|
Performance Metric |
|
Threshold Goal |
|
Target Goal |
|
Maximum Goal |
|
Actual Performance |
|
Actual
Compensation Awarded |
Spring Season 2016 (40% weighting) |
|
Operating Income |
|
$70M |
|
$77M |
|
$85M |
|
$49.7M |
|
No Payout |
Fall Season 2016 (60% weighting) |
|
Operating Income |
|
$137M |
|
$144M-$147M |
|
$168M |
|
$53.9M |
|
No Payout |
2017 Short-Term Cash Incentive
Compensation
Based on a competitive review and peer
group practices, in 2017, our seasonal short-term performance-based cash
incentive compensation program will contain a financial goal for each season as
well as an operational goal. For each season, 75% of the target payout
opportunity will be based on an operating income goal and 25% will be based on
an operational goal. For Spring 2017, the operational goal is tied to cost
savings initiatives and will also be subject to a minimum performance hurdle
based on EBITDA. The operational goal is binary and will pay out at target only
if the cost savings initiative and the minimum performance hurdle is achieved.
The financial goal will continue to have a threshold, target, and maximum payout
which will allow participating executives to double the incentive payout
associated with achievement of the financial goal if the maximum operating
income goal is achieved. In previous years, the maximum payout under the
seasonal short-term cash incentive program was 200% of target. For 2017, the
maximum total payout under the seasonal short-term cash incentive program is
reduced to 175% because the operational goal metric does not pay out above
target.
Target cash incentive compensation
opportunity as a percentage of base salary is expected to remain the same for
each NEO in 2017, except that in March 2017 the Committee approved a
market-based increase for Mr. Pericleous from 60% to 65%.
Long-Term Incentives
For 2016, the Committee and Board
determined that our NEOs would receive a mix of long-term equity incentives
comprised of the following:
Fiscal 2016
Long-Term Equity Incentive Awards
Our long-term equity incentive awards are
generally intended to accomplish the following main objectives: (1) create a
direct correlation between the Companys financial performance and stock price
and compensation paid to our NEOs; (2) retention of our NEOs; (3) assist in
building equity ownership of our NEOs to increase alignment with long-term
stockholder interests; (4) attract and motivate key associates; (5) reward
participants for performance in relation to the creation of stockholder value;
and (6) deliver competitive levels of compensation consistent with our
compensation objectives. The total grant date fair value of awards for our NEOs
are determined on a position-by-position basis using market data for
corresponding positions in our peer group and other relevant market survey data,
the individuals job responsibilities, and individual performance.
Executives are generally granted
equity-based awards as part of our annual merit review process. During this
process, the Committee determines the appropriate overall value and mix of
equity-based grants for the NEOs. For more information on our executive
compensation practices, including the annual merit review process and the
objectives and factors considered by the Committee as part of the executive
compensation decision making process, see Executive Compensation
PracticesDetermining Compensation for the CEO and Determining Compensation for
the Other NEOs beginning on page 42.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
37 |
|
|
|
Table of Contents
2016 Stock
Options
In 2016, the Company granted our NEOs the
non-qualified stock options set forth in the Grants of Plan Based Awards table
on page 49. One-fourth of the stock options are scheduled to vest on each of
April 15, 2017, 2018, 2019, and 2020, subject to continued employment with the
Company.
The exercise price for stock options is
set at the most recent closing trading price prior to the grant date. Options
vest over multiple years and are exercisable for ten years after grant, which
furthers stockholder alignment by encouraging a focus on long-term growth and
stock performance.
2016 Time-Based
Restricted Stock Units
In 2016, the Company granted our NEOs the
time-based restricted stock units set forth in the Grants of Plan Based Awards
table on page 49. One-fourth of the restricted stock units are scheduled to vest
on each of April 15, 2017, 2018, 2019, and 2020, subject to continued employment
with the Company.
Performance-Based
Restricted Stock Units
Beginning in 2014, the Committee and Board
determined that performance-based restricted stock units granted to our NEOs
would be subject to performance goals over multiple years. Performance-based
restricted stock units granted in 2014 were subject to two-year performance
goals, and performance-based restricted stock units granted in 2015 and 2016
were subject to three-year performance goals.
Each multi-year Adjusted EPS performance
goal is assigned a threshold goal, target goal, and a maximum goal. The number
of performance-based restricted stock units that vest is determined using
straight line interpolation if Adjusted EPS over the performance period is an
amount between performance goals. No portion of performance-based restricted
stock units are payable in the event the Company fails to achieve the threshold
Adjusted EPS goal. The table below shows the payout and vesting status of these
awards.
Performance-based
restricted stock units granted to our NEOs |
Performance Period |
|
Performance Measure |
|
Payout |
|
Vesting Terms |
Fiscal 2016-Fiscal 2018 |
|
3-year Adjusted EPS |
|
No payout expected. |
|
Any performance-based restricted stock units that are earned
are scheduled to vest in April 2019. |
Fiscal 2015-Fiscal 2017 |
|
3-year Adjusted EPS |
|
Performance-based restricted stock units trending to pay out
between threshold and target levels. |
|
Any performance-based restricted stock units that are earned
are scheduled to vest in April 2018. |
Fiscal 2014-Fiscal 2015 |
|
2-year Adjusted EPS |
|
Performance-based restricted stock units were earned slightly
above threshold level at 76.7% of target. |
|
One-half vested in April 2016 and the remaining half will
vest in April 2017. |
For grant and vesting purposes, Adjusted
EPS means the Companys diluted earnings per share calculated in accordance
with GAAP, adjusted to exclude the impact of any non-core operating costs
consistent with past practice for debt extinguishment and one-time transaction
costs. Refer to Appendix A to this proxy statement for more information on
Adjusted EPS, a non-GAAP measure, and a reconciliation of Adjusted EPS for 2015
and 2016 to reported EPS, the most directly comparable GAAP measure. No
adjustments were made to EPS in 2014.
2016 Performance-Based
Restricted Stock Units
In 2016, the Company granted our NEOs the
performance-based restricted stock units set forth in the Grants of Plan Based
Awards table on page 49 that have performance goals based on Adjusted EPS
measured over a three-year performance period commencing on the first day of the
Companys 2016 fiscal year and ending on the last day of the Companys 2018
fiscal year. Any performance-based restricted stock units that are earned based
on the achievement of performance goals are scheduled to vest in April
2019.
To better align with market practices, in
2016, the Committee modified the threshold and maximum payout levels for the
Companys performance-based restricted stock units. The updated payout structure
became effective for grants of performance-based restricted stock units granted
in 2016. The following chart identifies the performance metric, performance
levels, the performance levels as a percentage of the target goal, and
corresponding payouts as a percentage of the target performance-based restricted
stock unit grant for the Companys performance-based restricted stock unit
awards granted in 2016.
Table of Contents
Performance
Metric: |
|
Performance
Level |
|
Company
Performance (as a % of target) |
|
% of
Performance Shares Earned |
2016-2018 Adjusted EPS |
|
Below Threshold |
|
Less than 80% |
|
0%
of target grant |
|
|
Threshold |
|
80% |
|
50% of target grant |
|
|
Target |
|
100% |
|
100% of target grant |
|
|
Maximum |
|
120% or higher |
|
200% of target grant |
The three-year cumulative Adjusted EPS
target goal was based on the Companys strong Adjusted EPS performance in 2015
of $1.45 and represents approximately double digit percent EPS growth in each
year of the 2016-2018 performance period.
The Company had Adjusted EPS of $0.81
in fiscal 2016, the first year of the three-year performance period, which was
approximately 45% below 2015. Even if the Company achieves the high point of its
EPS guidance for 2017 of $0.73, it would need a year-over-year increase in EPS
of greater than 300% in 2018 in order to just reach the threshold goal for this
award. Therefore, no performance-based restricted stock units are expected to be
earned under this award.
2015 Performance-Based
Restricted Stock Units
In 2015, our NEOs, excluding Mr.
Pericleous who was not CFO at the time, were granted performance-based
restricted stock units that were subject to performance goals based on the
Companys Adjusted EPS measured over the three-year period commencing on the
first day of the Companys 2015 fiscal year and ending on the last day of the
Companys 2017 fiscal year. Any performance-based restricted stock units that
are earned based on the achievement of performance goals are scheduled to vest
in April 2018.
The following chart identifies the
performance metric, performance levels, the performance levels as a percentage
of the target goal, and corresponding payouts as a percentage of the target
performance-based restricted stock unit grant for the Companys
performance-based restricted stock unit awards granted in 2015.
Performance
Metric: |
|
Performance
Level |
|
Company
Performance (as a % of target) |
|
% of
Performance Shares Earned |
2015-2017 Adjusted EPS |
|
Below Threshold |
|
Less than 75% |
|
0%
of target grant |
|
|
Threshold |
|
75% |
|
75% of target grant |
|
|
Target |
|
100% |
|
100% of target grant |
|
|
Maximum |
|
125% or higher |
|
125% of target grant |
The three-year cumulative Adjusted EPS
target goal was based on the Companys Adjusted EPS performance in 2014 of $0.81
per share, and represents approximately double digit percent EPS growth in each
year of the 2015-2017 performance period.
The Company had adjusted EPS of $1.45
per share in fiscal 2015, a 79% increase over 2014, and adjusted EPS of $0.81
per share in fiscal 2016, approximately a 45% decrease from 2015. The Company
will need an Adjusted EPS of $1.16 in 2017 in order to achieve the three-year
target set for this award. These awards are trending to pay out between
threshold and target levels.
2014 Performance-Based
Restricted Stock Units Goals and Results
In March 2014, our NEOs, excluding Mr.
Pericleous who was not CFO at the time, were granted performance-based
restricted stock units that were subject to performance goals based on the
Companys Adjusted EPS measured over the two-year period commencing on the first
day of the Companys 2014 fiscal year and ending on the last day of the
Companys 2015 fiscal year.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
39 |
|
|
|
Table of Contents
The following table shows the performance
metric, performance levels, the performance levels as a percentage of the target
goal, actual performance goals, and the actual percentage of performance-based
restricted stock units that were earned based upon achievement of the
performance goals.
Performance
Metric: |
|
Below Threshold |
|
Threshold Goal |
|
Target Goal |
|
Maximum Goal |
|
Actual Performance |
2014-2015 Adjusted EPS |
|
<$2.21 |
|
$2.21 |
|
$2.95 |
|
$3.69 |
|
$2.26 |
%
of Performance Shares Earned |
|
0% |
|
75% |
|
100% |
|
125% |
|
76.7% |
One-half of the performance-based
restricted stock units that were earned based on achievement of the performance
goals vested on April 15, 2016 and the remaining half vested on April 15,
2017.
2017 Long-Term Equity
Incentive Compensation
In March 2017, our NEOs were granted a mix
of long-term equity awards comprised of (i) 50% performance-based restricted
stock units; (ii) 35% time-based restricted stock units; and (iii) 15% stock
options.
One-fourth of the stock options and
one-fourth of the time-based restricted stock units are scheduled to vest on
each of April 15, 2018, 2019, 2020, and 2021, subject to continued employment
with the Company.
The design of the 2017 performance-based
restricted stock awards are the same as for 2016 with payout based on Adjusted
EPS for the three-year period commencing on the first day of the Companys 2017
fiscal year and ending on the last day of the Companys 2019 fiscal year,
compared to the performance goals established by the Committee. The
performance-based restricted stock units that are earned based on achievement of
the performance goals are scheduled to vest on April 15, 2020, subject to
continued employment with the Company.
CEO
REALIZABLE PAY
The following chart shows realizable total
direct compensation (TDC) at target and actual for Mr. Kornberg in 2015 and
2016. Mr. Kornberg was promoted to CEO in January 2015. For 2016, the chart
details the significant difference between realizable TDC at target versus
actual realizable TDC, which further illustrates the rigor of our challenging
performance targets which serve to strongly align CEO pay with the Companys
financial performance.
Realizable TDC is comprised of base
salary, short-term cash incentives, and long-term equity incentives (LTI).
Actual realizable TDC is intended to measure the actual amount of pay Mr.
Kornberg can expect to receive from his base salary and performance-based
compensation awards. Actual realizable TDC consists of base salary plus actual
cash bonus payouts and the actual amount of pay delivered from equity awards
including a current estimate of value for awards that have either not yet vested
or have not yet been earned. Realizable TDC is supplemental information and
should not be considered a substitute for information in the Summary
Compensation Table on page 47.
For 2016, actual realizable TDC varied
significantly from the total compensation reported in the Summary Compensation
Table because the Summary Compensation Table requires the inclusion of the grant
date fair value of the performance-based restricted stock units granted to Mr.
Kornberg in 2016 at target, even though Mr. Kornberg is not expected to earn any
of these performance-based restricted stock units based on the Companys
Adjusted EPS in 2016, the first year of the three-year performance
period.
Furthermore, the Summary Compensation
Table reports the grant date fair value of stock options as calculated in
accordance with GAAP, while actual realizable TDC reflects any amounts actually
received by the CEO through the exercise of stock options plus the estimated
fair value of outstanding and unexercised stock options as of fiscal year
end.
Table of Contents
Realizable
TDC at Target |
|
Actual
Realizable TDC |
Elements of TDC |
|
2015 CEO Compensation |
|
2016 CEO Compensation |
|
Elements of TDC |
|
2015 CEO Compensation |
|
2016 CEO Compensation |
Annual Cash |
|
|
|
|
|
|
|
Annual Cash |
|
|
|
|
|
|
Base Salary |
|
$ |
900,000 |
|
$ |
1,000,000 |
|
Base Salary |
|
$ |
900,000 |
|
$ |
1,000,000 |
Target Bonus |
|
$ |
1,080,000 |
|
$ |
1,300,000 |
|
Actual Bonus Paid(1) |
|
$ |
2,160,000 |
|
$ |
0 |
Sub-Total |
|
$ |
1,980,000 |
|
$ |
2,300,000 |
|
Sub-Total |
|
$ |
3,060,000 |
|
$ |
1,000,000 |
LTI Grant Values |
|
|
|
|
|
|
|
LTI Realized Values |
|
|
|
|
|
|
Options(1) |
|
$ |
593,917 |
|
$ |
749,949 |
|
Options |
|
$ |
0 |
|
$ |
0 |
Restricted Shares/Units(1) |
|
$ |
1,399,998 |
|
$ |
1,749,990 |
|
Restricted Shares/Units |
|
$ |
420,070 |
|
$ |
0 |
Performance Shares/Units(1) |
|
$ |
1,999,998 |
|
$ |
2,499,995 |
|
Performance Shares/Units |
|
$ |
0 |
|
$ |
0 |
Sub-Total |
|
$ |
3,993,914 |
|
$ |
4,999,934 |
|
Sub-Total |
|
$ |
420,070 |
|
$ |
0 |
|
|
|
|
|
|
|
|
LTI Unrealized Values |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options(2) |
|
$ |
205,415 |
|
$ |
185,415 |
|
|
|
|
|
|
|
|
Restricted Shares/Units(2) |
|
$ |
654,000 |
|
$ |
839,399 |
|
|
|
|
|
|
|
|
Performance Shares/Units(2) |
|
$ |
1,083,758 |
|
$ |
0 |
|
|
|
|
|
|
|
|
Sub-Total |
|
$ |
1,943,173 |
|
$ |
1,024,814 |
Total TDC |
|
$ |
5,973,914 |
|
$ |
7,299,934 |
|
Total TDC |
|
$ |
5,423,243 |
|
$ |
2,024,814 |
|
|
|
|
|
|
|
|
% of Target TDC |
|
|
91% |
|
|
28% |
(1) |
Reflects amounts disclosed in the
Summary Compensation Table on page 47 for the applicable fiscal
year. |
(2) |
Reflects awards disclosed in the
Outstanding Equity Awards at Fiscal Year-End table on page 50 and
displayed by grant year. Time-based restricted stock units and
performance-based restricted stock units are valued using the fiscal year
end stock price of $10.14 as of January 27, 2017. The value for the
performance-based restricted stock units is based on the compensation
expense that the Company has recorded in association with these awards
which as of the end of the 2016 fiscal year estimated an earnout
percentage of 87% of target for the 2015 awards and 0% of target for the
2016 awards. The values shown for options reflect the Black-Scholes value
with share price, volatility, expected term, and risk free rate
assumptions as of the Companys fiscal year end as follows: |
|
●Fiscal year end stock price
of $10.14 as of January 27, 2017.
●Volatility of 43.2%, which
represents the assumption used for fiscal year 2016
awards.
●Expected term of 5.1 years
and 6.0 years for the 2015 and 2016 awards, respectively. This value was
calculated by multiplying the ratio of the expected term at grant divided
by the original term to the remaining term at January 27,
2017.
●Risk free rate of 1.94% for
the 2015 and 2016 awards. These values reflect the yield as of January 27,
2017 of a U.S. Treasury with a term closest to the expected term of the
option. |
ADDITIONAL
EXECUTIVE BENEFITS
We provide our executive officers with
benefits that the Committee believes are reasonable and in the best interests of
the Company and its stockholders. Consistent with our compensation objectives,
we provide benefits for our executive officers, including retirement plans, life
insurance benefits, housing relocation benefits, and paid time off. The
Committee, in its discretion, may revise, amend, or add to an officers
executive benefits if it deems it advisable. We believe these benefits are
generally equivalent to benefits provided by comparable companies. We do not
provide any executive with special perquisites.
We have no current plans to materially
change the levels of benefits we provide.
Retirement Plan Benefits
We do not sponsor a defined benefit
retirement plan as we do not believe that such a plan best serves the needs of
our associates or the Company at this time. We sponsor a tax-qualified defined
contribution retirement plan and a non-qualified defined contribution retirement
plan. Participation in the qualified plan is available to associates who meet
certain age and service requirements. Participation in the non-qualified plan is
made available to associates who meet certain age, service, and job level
requirements. Our executive officers participate in these plans based on these
requirements.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
41 |
|
|
|
Table of Contents
Qualified Retirement
Plan
The qualified plan is available to all
eligible associates, including executive officers, and allows them to elect
contributions up to the maximum limits allowable under Section 401(k) of the
Code. We match 100% of associate deferrals, up to 4% of compensation not in
excess of the IRS Qualified Plan Maximum Compensation Limit. Associates
contributions and Company matching contributions vest immediately. Please refer
to footnote 6 to the Summary Compensation Table on page 47 for details of
Company contributions.
Non-Qualified Deferred
Compensation Plan
The non-qualified deferred compensation
plan is available to all director-level and above associates and is an unfunded
plan which provides benefits beyond the Code limits for qualified defined
contribution plans. The plan permits participating associates to elect
contributions up to a maximum of 3% of compensation in excess of the IRS
Qualified Plan Maximum Compensation Limit. We match 200% of associates
contributions. The plan also permits associates to defer additional compensation
of up to 75% of base salary and up to 75% of short-term cash incentive
compensation of which we do not match. Associates accounts are credited with
interest using a rate determined annually based on factors or indices, including
the borrowing rates available to the Company. The interest rate for the 2016
plan year was 5.2%. Associates contributions and the related interest vest
immediately. Company contributions and the related interest are subject to a
vesting schedule where associates begin vesting after two years of service and
are fully vested after six years of service. Associates generally may elect
in-service distributions for the unmatched deferred compensation component only.
The remaining vested portion of associates accounts in the plan will be
distributed upon termination of employment in either a lump sum or in equal
annual installments over a specified period of up to ten years as elected by the
participant. Please refer to footnote 6 to the Summary Compensation Table on
page 47 for details of Company contributions.
On March 21, 2017, the Company terminated
the non-qualified deferred compensation plan effective March 31, 2017. Associate
contributions and Company matches ceased in March 2017. Outstanding participant
balances are expected to be distributed after a 12-month waiting period per
Internal Revenue Service regulations regarding distributions from supplemental
non-qualified plans. Interest will continue to accrue on outstanding balances
until distribution.
Health
and Welfare Benefits
Executive Life
Insurance
We provide all executive officers with
executive life insurance that offers a benefit equal to two times their annual
base salary up to a maximum of $2 million.
Executive Disability
Insurance
We provide all executive officers with
disability coverage that provides a benefit of 100% base salary continuation for
up to 365 days and then 60% of the executives base salary plus the annual
average of the last three years of cash incentive compensation, up to a maximum
benefit of $25,000 per month.
Severance and Post-Employment Benefits
Please refer to Potential Payments Upon
Termination and Change-in-Control beginning on page 55 for information
regarding severance and post-employment benefits. Please refer to Employment
Related Agreements beginning on page 53 for additional information regarding
severance and post-employment benefits, including amendments made to the
severance provisions of our executive employment agreements in March
2017.
EXECUTIVE COMPENSATION
PRACTICES |
DETERMINING COMPENSATION FOR THE CEO
The Committee works directly with Frederic
W. Cook & Co. (F.W. Cook) to obtain independent market data, analysis, and
advice related to our CEOs total compensation package. The Committee, together
with F.W. Cook, present a recommended pay package for our CEO to the independent
directors of the Board for further review, discussion, and approval. Mr.
Kornberg does not participate in any deliberations with regard to his own
compensation. The Committee takes multiple factors into consideration when
determining the appropriate CEO compensation package, including the CEOs
existing compensation, the Companys performance, the CEOs individual
performance and qualifications, peer group CEO pay levels, competitor and
industry performance, our compensation objectives, and our business and
succession plans.
Table of Contents
DETERMINING COMPENSATION FOR THE OTHER NEOS
Each year, the Committee approves a
compensation package for each of our executive officers, other than the CEO,
that is consistent with our compensation objectives. As part of the review and
approval process, at the Committees request, our CEO and Senior Vice President
of Human Resources make recommendations for the upcoming year to the Committee
regarding compensation for executive officers other than for the CEO. The
recommendations are based on our compensation objectives, individual and Company
performance, compensation data compiled from independent third-party executive
compensation surveys, publicly available data from our peer group companies, and
feedback and insights from managements compensation consultant, the Hay Group,
all of which is summarized by management and shared with the
Committee.
The Committee considers individual
performance when determining (i) the annual merit-based pay increases for NEOs,
(ii) the amount of the short-term cash incentive compensation opportunity for
NEOs, and (iii) the amount of the long-term incentives awarded to
NEOs.
Individual performance is evaluated based
upon several individualized leadership factors, including: attaining specific
financial and operational objectives; building and developing individual skills
and a strong leadership team; execution of the Companys business strategy; and
individual performance relative to job requirements.
The Committee has an opportunity to
review, analyze, and discuss the information and recommendations with its
independent compensation consultant, F.W. Cook, and outside the presence of
management. The Committee gives considerable weight to the CEOs evaluation of
the other NEOs when approving other NEO compensation because of the CEOs direct
knowledge of each executive officers performance and contributions.
THE ROLE
OF PEER COMPANIES AND BENCHMARKING
How The Peer Group is
Determined. The Committee selects our
peer group companies based on such factors as business focus, competition for
executive talent, geographic proximity of corporate locations, size of business,
and publicly available compensation data. The size of the group has been
established so as to provide sufficient market data across the range of senior
positions at Express. The Committee annually evaluates whether companies should
be added or removed from our peer group companies. No changes were made to the
Companys peer group in 2016 except that in August 2016, for purposes of
determining executive compensation for 2017, Aeropostale was removed after it
filed for bankruptcy and Ann Inc. was removed after being acquired by Ascena
Retail Group.
Our peer group is comprised of the
following retail companies:
Abercrombie & Fitch |
Genesco |
Tailored Brands |
American Eagle Outfitters |
Guess? |
The Buckle |
Ascena Retail Group |
Kate Spade |
The Childrens Place Retail
Stores |
Chicos FAS |
New York and Company |
The Finish Line |
DSW |
Stage Stores |
Urban
Outfitters |
The following chart compares the Companys
revenue and market capitalization to the median revenue and market
capitalization for its peer group.
In Billions |
|
Express |
|
Peer Group
Median |
Annual Revenue* |
|
$2.2B |
|
$2.5B |
Market Capitalization* |
|
$768M |
|
$1.02B |
* |
|
Revenue based on
publicly available information for the trailing four quarters as of April
10, 2017. Market capitalization is as of January 27, 2017 (the last
trading day of the Companys 2016 fiscal year). |
How The Peer Group is
Used. The Committee reviews both
compensation and performance at peer companies to support its decision-making
process so it can set total compensation levels that it believes are consistent
with our compensation objectives to pay for performance and pay competitively.
The Committee does not strictly set compensation at a given level relative to
its peers (e.g., median). The pay positioning of individual executives varies
based on their competencies, skills, experience, business impact, and
performance, as well as internal alignment and pay relationships. Actual total
compensation earned may be more or less than target compensation based on
Company performance during the performance period.
EXPRESS Notice of
2017 Annual Meeting of Stockholders
|
|
43 |
|
|
|
Table of Contents
STOCKHOLDER ENGAGEMENT AND ANNUAL ADVISORY VOTE ON EXECUTIVE
COMPENSATION
In 2013, we afforded our stockholders the
opportunity to cast an advisory vote on how often we should hold an advisory
vote on executive compensation (say-on-pay). A majority of our stockholders then
voted to hold a say-on-pay vote every year. Accordingly, since 2013 we have
offered our stockholders the opportunity to vote annually on the Companys
executive compensation program.
At our 2016 annual meeting of
stockholders, stockholders demonstrated strong support for our 2015 executive
compensation program with over 95% of the votes cast in support of the
say-on-pay proposal. This level of support was significantly greater than the
approximately 60% support we received for our executive compensation program at
our 2015 annual meeting. The Board and its committees regularly discuss and
consider feedback from our stockholders and we attribute the increased support
of our executive compensation program, in part, to multiple discussions with
stockholders in previous years in which we gathered valuable feedback about our
executive compensation program. The Committee took such feedback into account in
developing Mr. Kornbergs compensation package for 2015, and kept the overall
design of Mr. Kornbergs compensation package the same for 2016.
Our stockholders views on corporate
governance and executive compensation are important to us, and we value and
utilize the feedback and insights that we receive. We reached out to our largest
stockholders again in 2016 to gather additional feedback regarding our executive
compensation program. Our stockholders did not raise any concerns regarding our
2016 executive compensation program and we received no requests to change
anything about Mr. Kornbergs pay package.
For additional information regarding our
stockholder engagement process, see Corporate GovernanceBoard
PracticesStockholder Engagement, on page 23.
THE ROLE
OF THE COMMITTEES COMPENSATION CONSULTANT
The Committee engages its independent
executive compensation consultant, F.W. Cook, to advise the Committee about our
executive compensation program and practices.
The Committee has determined that the work
of F.W. Cook did not raise any conflicts of interest in 2016. In making this
assessment, the Committee considered the independence factors enumerated in Rule
10C-1(b) under the Exchange Act, including the fact that F.W. Cook does not
provide any other services to the Company, the level of fees received from the
Company as a percentage of F.W. Cooks total revenue, policies and procedures
employed by F.W. Cook to prevent conflicts of interest, and whether the
individual F.W. Cook advisers to the Committee own any of the Companys stock or
have any business or personal relationships with members of the Committee or our
executive officers.
ANALYSIS
OF RISK IN OUR COMPENSATION PROGRAM
The Committee evaluates the risks of our
compensation program as part of its responsibilities. The compensation program
is intended to discourage excessive risk taking by executives and associates to
obtain short-term benefits that may be harmful to the Company and our
stockholders in the long term. We believe that the following elements of our
compensation program discourage excessive risk taking:
● |
Short-Term/Long-Term Incentive
Mix. The mix between short-term cash
incentives and long-term equity-based incentives discourages executives
and associates from maximizing short-term performance at the expense of
long-term performance. |
● |
Long-Term Incentive
Mix. We grant a mixture of long-term
equity incentives, which in 2016 were comprised of (i) stock options, (ii)
time-based restricted stock units, and (iii) performance-based restricted
stock units, because stock options and performance-based restricted stock
units alone may lead to increased risk taking and time-based restricted
stock awards alone may discourage associates from taking appropriate
risks. Our equity incentives have multi-year vesting requirements and
performance-based restricted stock units are subject to performance-based
vesting conditions measured over a three-year period. Our long-term
incentive awards are designed to incentivize the creation of long-term
stockholder value and to encourage
retention. |
● |
Short-Term and Long-Term
Incentive Program Design. In order to
discourage excessive risk taking, both short-term cash incentive
compensation awards and long-term performance-based restricted stock
awards generally allow for a graduated payout instead of a win or lose
payout structure. Each program has a minimum performance threshold below
which no payout is earned and a maximum above which no additional payout
is earned. In addition, a prorated payout may be earned based on the
achievement between threshold and target or achievement between target and
maximum. |
● |
Multiple Performance
Measures. In 2016, our short-term cash
incentive compensation program had a performance target based on operating
income and our performance-based restricted stock awards had performance
targets based on Adjusted EPS. In 2017, our short-term cash incentive
program has performance targets based on operating income as well as an
operational goal, and our performance-based restricted stock awards have
performance targets based on Adjusted EPS. The varied performance measures
are designed to discourage participants from focusing on the achievement
of one performance measure at the expense of
another. |
Table of Contents
● |
Stock Ownership Guidelines. We use meaningful stock
ownership guidelines to align our directors and executive officers
interests with our stockholders interests and focus our executives on
attaining long-term stockholder returns. |
● |
Clawback and Anti-Hedging and Anti-Pledging Policies.
Our clawback policy allows us to adjust and recover any short-term cash
incentive compensation paid in the event of a material restatement of the
Companys financial results, which discourages inappropriate risk-taking
behavior. Our anti-hedging and anti-pledging policies further align our
executives and associates interests with those of our
stockholders. |
COMPENSATION CLAWBACK POLICY
The Committee has approved a policy
concerning the recovery of incentive compensation. This policy applies to
performance-based awards paid to our NEOs as well as other key
executives.
Under the policy, in the event of a
material restatement of the Companys financial results, the Committee will
review the circumstances that caused the restatement and consider accountability
to determine whether a covered associate was negligent or engaged in misconduct.
If so, and if the amount of a cash incentive award paid or to be paid, or the
shares vested or to be vested of a performance-based long-term incentive award
would have been less had the financial statements been correct, the Committee
will recover compensation from the covered associate as it deems appropriate.
This policy is in addition to any requirements which might be imposed pursuant
to Section 304 under the Sarbanes-Oxley Act of 2002, and will be modified to the
extent required by the Dodd-Frank Act of 2010.
STOCK
OWNERSHIP GUIDELINES
We have stock ownership requirements for
our executives to further build commonality of interest between management and
stockholders and to encourage executives to think and act like owners. Our
current stock ownership guidelines are as follows:
Chief Executive Officer |
Lesser of 5x annual base salary or 200,000
shares |
Chief Operating Officer |
Lesser of 3x annual base salary or 75,000 shares |
Other Executive Officers |
Lesser of 2x annual base salary or 40,000 shares |
Senior Vice Presidents |
Lesser of 1x annual base salary or 16,000 shares |
Board Members |
5x annual retainer |
The executives and Board members have five
years to meet the guidelines. To avoid fluctuating ownership requirements,
except upon a promotion, once an individual has achieved the ownership
guidelines, they will be considered to have satisfied the requirements as long
as the shares used to meet the underlying requirements are retained. The
Committee annually reviews individual executive and director stock ownership
levels. During the Committees most recent review of ownership levels, it was
confirmed that all NEOs and directors currently meet or are on track to meet the
applicable ownership guideline.
POLICY
REGARDING TIMING OF STOCK-BASED AWARDS
The Committee recognizes the importance of
adhering to specific practices and procedures in the granting of equity awards
and has adopted a specific policy around this process.
The Committee generally grants equity
awards to executive officers annually during the first quarter in a given fiscal
year at the Boards first regularly scheduled in-person meeting for the year.
For directors, the Committee generally grants equity awards annually on the date
of the Companys annual meeting of stockholders. To the extent that equity
awards are granted at other times throughout the year, such grants are generally
made on the 15th calendar day of a month.
TRADING
CONTROLS
Executive officers, including our NEOs,
are required to receive pre-approval from the Companys General Counsel prior to
entering into any transactions in Company securities. Generally, trading is
permitted only during specified trading periods.
From time to time, certain of
our executive officers may adopt non-discretionary, written trading plans that
comply with Rule 10b5-1(c) under the Exchange Act (10b5-1 plans). 10b5-1 plans
permit our executive officers to monetize their equity-based compensation in an
automatic and non-discretionary manner over time and are generally adopted for
financial planning purposes.
Our Insider Trading Policy requires that our
General Counsel pre-approve any new 10b5-1 plan, or any modification or
termination of such a plan, and provides that executive officers may enter into
or modify a 10b5-1 plan only during an open trading window and while not in
possession of material non-public information. Moreover, any 10b5-1 plan must
include a waiting period between establishment or modification of the plan and
any transaction pursuant to the plan. In addition, our executive officers are
generally prohibited from entering into overlapping 10b5-1 plans, engaging in
transactions in Company stock outside of any 10b5-1 plan then in effect, and
amending or terminating plans absent unforeseen events such as a change in
personal financial circumstances.
EXPRESS Notice of
2017 Annual Meeting of Stockholders
|
|
45 |
|
|
|
Table of Contents
ACCOUNTING
AND TAX CONSIDERATIONS
In determining which elements of
compensation are to be paid, and how they are weighted, we also take into
account whether a particular form of compensation will be deductible under Code
Section 162(m) (162(m)). 162(m) generally limits the deductibility of
compensation paid to our NEOs to $1 million during any fiscal year unless such
compensation is performance-based under 162(m).
Rights or awards granted under the 2010
Plan, other than stock options, will not qualify as performance-based
compensation for purposes of 162(m) unless such rights or awards are earned
based on pre-established objective performance goals, the material terms of
which are disclosed to and approved by our stockholders. In 2012 our
stockholders approved the performance goals and various annual grant limitations
under the 2010 Plan. The 2010 Plan is being submitted to the stockholders of the
Company at the Annual Meeting for approval of the 162(m) performance goals and
various annual grant limitations. For more information about the proposal please
see Approval of the Code Section 162(m) Performance Goals and Various Annual
Grant Limitations under the Express, Inc. 2010 Incentive Compensation Plan
(Proposal No. 4) on page 65.
We consider the impact of 162(m) when
developing and implementing our executive compensation program. Cash incentive
awards and performance-based equity awards, including stock options, generally
are designed to meet the deductibility requirements. We believe that it is
important to preserve flexibility in administering compensation programs in a
manner designed to promote varying corporate goals. Accordingly, we have not
adopted a policy that all compensation must qualify as deductible under 162(m).
Amounts paid under any of our compensation programs, including salaries, cash
incentive awards, performance stock awards, and other equity awards, may not
qualify as performance-based compensation that is excluded from the limitation
on deductibility.
Many other Code provisions, SEC
regulations, and accounting rules affect the payment of executive compensation
and are generally taken into consideration as programs are developed. Our goal
is to create and maintain plans that are efficient, effective, and maintain
flexibility in order to accomplish executive compensation program
objectives.
Compensation and Governance
Committee Report
The Committee has reviewed and discussed
the Compensation Discussion and Analysis set forth above with management. Based
on this review and discussion, the Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this proxy statement and
incorporated into the Companys Annual Report on Form 10-K for the year ended
January 28, 2017.
Compensation and Governance
Committee
Peter Swinburn, Chair
Theo
Killion
Mylle Mangum
Table of Contents
Compensation
Tables
The purpose of the following tables is to
provide information regarding the compensation earned by our NEOs during the
fiscal years indicated.
The Summary Compensation Table and the
Grants of Plan-Based Awards should be viewed together for a more complete
representation of both the annual and long-term incentive compensation elements
of our executive compensation program.
SUMMARY
COMPENSATION TABLE
The following table shows the compensation
earned by our NEOs during the years ended January 28, 2017, January 30, 2016,
and January 31, 2015, referred to as 2016, 2015, and 2014,
respectively.
Name and Principal
Position |
|
Year |
|
Salary ($) |
|
Bonus ($)(1) |
|
Stock Awards ($)(2) |
|
Option Awards ($)(3) |
|
Non-Equity Incentive
Plan Compensation ($)(4) |
|
Non-Qualified Deferred Compensation Earnings ($)(5) |
|
All
Other Compensation ($)(6) |
|
Total ($) |
David
Kornberg President and CEO |
|
2016 |
|
984,615 |
|
|
|
4,249,985 |
|
749,949 |
|
|
|
24,851 |
|
133,912 |
|
6,143,312 |
|
2015 |
|
900,000 |
|
|
|
3,399,996 |
|
593,917 |
|
2,160,000 |
|
25,505 |
|
101,988 |
|
7,181,406 |
|
2014 |
|
700,000 |
|
|
|
989,006 |
|
221,925 |
|
|
|
29,651 |
|
135,078 |
|
2,075,660 |
Matthew
Moellering Executive
Vice President and Chief Operating Officer |
|
2016 |
|
789,308 |
|
|
|
1,104,988 |
|
194,985 |
|
|
|
20,845 |
|
91,483 |
|
2,201,609 |
|
2015 |
|
766,077 |
|
|
|
939,991 |
|
149,919 |
|
1,307,300 |
|
22,091 |
|
74,129 |
|
3,259,507 |
|
2014 |
|
750,000 |
|
|
|
885,008 |
|
198,591 |
|
|
|
25,908 |
|
96,479 |
|
1,955,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. (Jack)
Rafferty Executive
Vice PresidentPlanning and Allocation |
|
2016 |
|
580,000 |
|
|
|
594,985 |
|
104,997 |
|
|
|
72,906 |
|
58,384 |
|
1,411,272 |
|
2015 |
|
566,846 |
|
275,000 |
|
493,495 |
|
78,709 |
|
739,700 |
|
84,126 |
|
64,887 |
|
2,302,763 |
|
2014 |
|
555,000 |
|
|
|
460,218 |
|
103,270 |
|
|
|
103,869 |
|
81,583 |
|
1,303,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colin
Campbell Executive
Vice PresidentSourcing
& Production |
|
2016 |
|
580,000 |
|
|
|
594,985 |
|
104,997 |
|
|
|
51,600 |
|
56,333 |
|
1,387,915 |
|
2015 |
|
566,846 |
|
|
|
493,495 |
|
78,709 |
|
682,800 |
|
57,095 |
|
47,008 |
|
1,925,953 |
|
2014 |
|
555,000 |
|
|
|
460,218 |
|
103,270 |
|
|
|
69,504 |
|
117,282 |
|
1,305,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Periclis
(Perry) Pericleous Senior Vice
President, Chief Financial
Officer and Treasurer |
|
2016 |
|
441,154 |
|
|
|
467,511 |
|
82,493 |
|
|
|
1,399 |
|
38,063 |
|
1,030,620 |
|
2015 |
|
361,735 |
|
150,000 |
|
271,492 |
|
73,487 |
|
420,000 |
|
817 |
|
37,171 |
|
1,314,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For 2015, includes (i)
a special bonus paid to Mr. Rafferty for his contributions in connection
with the implementation of new systems, and (ii) a special retention bonus
awarded to Mr. Pericleous in 2013 that was paid out in 2015. |
(2) |
|
Reflects the aggregate
grant date fair value of awards granted in the applicable year. For 2016,
the amounts reflect the aggregate grant date fair value of time-based
restricted stock units and performance-based restricted stock units at
target. The number of performance-based restricted stock units that vest
will be determined based on Adjusted EPS for the three-year period
commencing on the first day of the Companys 2016 fiscal year and ending
on the last day of the Companys 2018 fiscal year, compared to the
performance goals established by the Committee. The maximum grant date
fair value related to the performance-based restricted stock units was as
follows: David Kornberg$4,999,991; Matthew Moellering$1,299,983; John J.
(Jack) Rafferty$699,998; Colin Campbell $699,998; Periclis Perry
Pericleous $550,021. These performance-based restricted stock awards are
not expected to be earned. See Compensation Discussion and
AnalysisWhat We Pay and Why: Elements of CompensationPerformance-Based
IncentivesLong- Term IncentivesPerformance-Based Restricted Stock Units
on page 38 for more detailed information regarding performance-based
restricted stock units granted to our NEOs in 2016. For 2015, the amounts
reflect the aggregate grant date fair value of time-based restricted stock
units and, except for Mr. Pericleous who was not CFO at the time,
performance-based restricted stock units at target. The number of
performance-based restricted stock units that vest will be determined
based on Adjusted EPS for the three-year period commencing on the first
day of the Companys 2015 fiscal year and ending on the last day of the
Companys 2017 fiscal year, compared to the performance goals established
by the Committee. The maximum grant date fair value related to the
performance-based restricted stock units was as follows: David
Kornberg$2,500,005; Matthew Moellering$737,500; John J. (Jack)
Rafferty$387,187; Colin Campbell$387,187. These performance-based awards
are trending to pay out between threshold and target levels. See
Compensation Discussion and AnalysisWhat We Pay and Why: Elements of
CompensationPerformance-Based IncentivesLong-Term
IncentivesPerformance-Based Restricted Stock Units on page 38 for more
detailed information regarding performance-based restricted stock units
granted to our NEOs in 2015. For 2014, the amounts reflect the aggregate
grant date fair value of time-based restricted stock units and
performance-based restricted stock units at target even though the
performance-based restricted stock units were earned at 76.7% of target.
The number of performance-based restricted stock units that were earned
were determined based on Adjusted EPS for the two-year period commencing
on the first day of the Companys 2014 fiscal year and ending on the last
day of the Companys 2015 fiscal year, compared to the performance goals
established by the Committee. See Compensation Discussion
and |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
47 |
|
|
|
Table of Contents
|
|
AnalysisWhat We Pay
and Why: Elements of CompensationPerformance-Based IncentivesLong-Term
IncentivesPerformance-Based Restricted Stock Units on page 38 for more
detailed information regarding performance-based restricted stock units
granted to our NEOs in 2014. These values have been determined based on
the assumptions and methodologies set forth in Note 10 of the Companys
financial statements included in its Annual Report for the year ended
January 28, 2017. |
(3) |
|
These values have been
determined based on the assumptions and methodologies set forth in Note 10
of the Companys financial statements included in its Annual Report for
the year ended January 28, 2017. |
(4) |
|
For 2016 and 2014,
because threshold performance goals were not met in either year, no
payouts were made under the short-term performance-based cash incentive
program in either year. For 2015, because maximum performance goals were
met, our NEOs earned payouts at the 200% level under the short-term
performance-based cash incentive program. See Compensation Discussion
and AnalysisWhat We Pay and Why: Elements of
CompensationPerformance-Based IncentivesShort-Term Incentives on page
36 for more information about our short-term incentive compensation
program. |
(5) |
|
We do not sponsor any
tax-qualified or non-qualified defined benefit retirement plans. For 2016,
the amounts shown represent the amount by which earnings of 5.2% on each
NEOs non-qualified deferred compensation account balance exceeded 120% of
the applicable federal long-term rate. |
(6) |
|
The following table
details All Other Compensation paid to each NEO during 2016: |
|
Name |
|
Executive Life and
Disability Insurance ($)(a) |
|
Severance ($) |
|
Qualified Retirement
Plan Company
Match ($)(b) |
|
Non-Qualified Supplemental Retirement
Plan Company
Match ($)(c) |
|
Total |
|
David Kornberg |
|
2,521 |
|
|
|
11,146 |
|
120,245 |
|
133,912 |
|
Matthew Moellering |
|
2,297 |
|
|
|
10,831 |
|
78,355 |
|
91,483 |
|
John J. (Jack) Rafferty |
|
2,059 |
|
|
|
10,886 |
|
45,439 |
|
58,384 |
|
Colin Campbell |
|
2,056 |
|
|
|
10,886 |
|
43,391 |
|
56,333 |
|
Periclis (Perry) Pericleous |
|
1,870 |
|
|
|
10,677 |
|
25,516 |
|
38,063 |
|
(a) |
|
Amounts represent the
annual premiums paid by the Company for executive life insurance and
executive disability insurance. |
|
(b) |
|
The Company matches
100% of 401(k) deferrals, limited to deferrals of up to 4% of compensation
not in excess of the IRS Qualified Plan Maximum Compensation Limit. See
Compensation Discussion and AnalysisWhat We Pay and Why: Elements of
CompensationAdditional Executive Benefits and PerquisitesRetirement Plan
BenefitsQualified Retirement Plan on page 42. |
|
(c) |
|
The Company matches
200% of associate deferrals (the maximum associate deferral for this plan
is 3% of compensation in excess of the IRS Qualified Plan Maximum
Compensation Limit). The non-qualified deferred compensation plan was
terminated effective March 31, 2017. See Compensation Discussion and
AnalysisWhat We Pay And Why: Elements of CompensationAdditional
Executive Benefits and PerquisitesRetirement Plan BenefitsNon-Qualified
Deferred Compensation Plan on page 42. |
Table of Contents
GRANTS OF
PLAN-BASED AWARDS
During 2016, each of our NEOs participated
in our short-term performance-based cash incentive program under which each NEO
was eligible for awards set forth under Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards below. Because threshold performance targets
were not met, no payouts were earned under this program as indicated in the
Non-Equity Incentive Plan Compensation column of the Summary Compensation
Table on page 47. In addition, our NEOs participated in our long-term equity
incentive program under which they were granted equity awards including
performance-based restricted stock units, time-based restricted stock units, and
stock options. Each NEO is eligible to earn performance-based restricted stock
units set forth under Estimated Future Payouts Under Equity Incentive Plan
Awards below based on achievement of performance goals. For a detailed
discussion of our long-term equity incentives, refer to Compensation
Discussion and AnalysisWhat We Pay And Why: Elements of
CompensationPerformance-Based IncentivesLong-Term Incentives beginning on
page 37.
|
|
|
|
|
Estimated Possible
Payouts Under Non-Equity Incentive Plan Awards |
|
Estimated Future
Payouts Under Equity Incentive Plan Awards |
|
All
Other Stock Awards: Number of Shares or
Stock Units (#) |
|
All Other Option Awards:
Number
of Securities Underlying Options (#) |
|
Exercise or Base Price
of Option Awards ($/Sh) |
|
Grant Date Fair Value of Stock and
Option Awards ($)(4) |
Name |
|
Grant Date |
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
|
Threshold (#) |
|
Target (#) |
|
Maximum (#) |
|
David Kornberg |
|
|
|
|
260,000 |
|
1,300,000 |
|
2,600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2016 |
(1) |
|
|
|
|
|
|
|
59,130 |
|
118,259 |
|
236,518 |
|
|
|
|
|
|
|
2,499,995 |
|
|
3/30/2016 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,947 |
|
21.14 |
|
749,949 |
|
|
3/30/2016 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
82,781 |
|
|
|
|
|
1,749,990 |
Matthew Moellering |
|
|
|
|
134,810 |
|
674,050 |
|
1,348,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2016 |
(1) |
|
|
|
|
|
|
|
15,374 |
|
30,747 |
|
61,494 |
|
|
|
|
|
|
|
649,992 |
|
|
3/30/2016 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,526 |
|
21.14 |
|
194,985 |
|
|
3/30/2016 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
21,523 |
|
|
|
|
|
454,996 |
John
J. (Jack) Rafferty |
|
|
|
|
75,660 |
|
378,300 |
|
756,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2016 |
(1) |
|
|
|
|
|
|
|
8,278 |
|
16,556 |
|
33,112 |
|
|
|
|
|
|
|
349,994 |
|
3/30/2016 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,053 |
|
21.14 |
|
104,997 |
|
|
3/30/2016 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
11,589 |
|
|
|
|
|
244,991 |
Colin Campbell |
|
|
|
|
69,840 |
|
349,200 |
|
698,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2016 |
(1) |
|
|
|
|
|
|
|
8,278 |
|
16,556 |
|
33,112 |
|
|
|
|
|
|
|
349,994 |
|
|
3/30/2016 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,053 |
|
21.14 |
|
104,997 |
|
|
3/30/2016 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
11,589 |
|
|
|
|
|
244,991 |
Periclis (Perry) Pericleous |
|
|
|
|
53,400 |
|
267,000 |
|
534,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/30/2016 |
(1) |
|
|
|
|
|
|
|
6,505 |
|
13,009 |
|
26,018 |
|
|
|
|
|
|
|
275,010 |
|
3/30/2016 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,684 |
|
21.14 |
|
82,493 |
|
|
3/30/2016 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
9,106 |
|
|
|
|
|
192,501 |
(1) |
Reflects restricted stock units with performance-based
and time-based vesting criteria granted under the 2010 Plan. The number of
performance-based restricted stock units that vest will be determined
based on Adjusted EPS for the three-year period commencing on the first
day of the Companys 2016 fiscal year and ending on the last day of the
Companys 2018 fiscal year, compared to the performance goals established
by the Committee. These performance-based awards are not expected to be
earned. See Compensation Discussion and AnalysisWhat We Pay and Why:
Elements of CompensationPerformance-Based IncentivesLong-Term
IncentivesPerformance-Based Restricted Stock Units on page 38 for more
information. |
(2) |
Reflects stock options granted under the 2010 Plan. These awards
vest in equal installments on each of April 15, 2017, 2018, 2019, and
2020. |
(3) |
Reflects restricted stock units with time-based vesting criteria
granted under the 2010 Plan. These awards vest in equal installments on
each of April 15, 2017, 2018, 2019, and 2020. |
(4) |
Reflects the aggregate grant date
fair value of performance-based restricted stock units at target,
time-based restricted stock units, and stock options, as applicable. These
values have been determined based on the assumptions and methodologies set
forth in Note 10 of the Companys financial statements included in its
Annual Report for the year ended January 28,
2017. |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
49 |
|
|
|
Table of
Contents
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The table below sets forth certain
information regarding the outstanding equity awards held by each of our NEOs as
of January 28, 2017.
|
|
Option Awards |
|
Stock
Awards |
Name |
|
Number
of Securities Underlying Exercisable Options (#) |
|
Number of Securities Underlying Unexercisable Options (#) |
|
|
Equity Incentive Plan Awards: Number
of Securities Underlying Unexercised Unearned Options (#) |
|
Option Exercise Price ($/Share) |
|
Option Expiration Date |
|
Number of
Shares or
Units of
Stock That
Have Not Vested (#) |
|
|
Market Value of Shares
or Units of Stock That Have
Not Vested ($)(14) |
|
Equity Incentive Plan
Awards: Number
of Unearned Shares, Units
or Other
Rights That
Have Not Vested (#) |
|
|
Equity Incentive Plans: Market or Payout
Value of Unearned Shares, Units
or Other
Rights That
Have Not
Vested ($)(14) |
David Kornberg |
|
|
|
78,947 |
(1) |
|
|
|
21.14 |
|
3/30/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,781 |
(2) |
|
839,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,130 |
(3) |
|
599,578 |
|
|
19,255 |
|
57,767 |
(4) |
|
|
|
16.28 |
|
3/30/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,497 |
(5) |
|
654,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,850 |
(6) |
|
1,245,699 |
|
|
13,025 |
|
13,025 |
(7) |
|
|
|
15.88 |
|
4/1/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,556 |
(8) |
|
107,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,788 |
(9) |
|
160,090 |
|
|
|
|
|
|
|
25,650 |
|
8,550 |
(10) |
|
|
|
17.49 |
|
4/2/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
27,100 |
|
|
|
|
|
|
11.29 |
|
10/15/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
17,260 |
|
|
|
|
|
|
25.25 |
|
3/22/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
18.51 |
|
2/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
17.00 |
|
5/12/2020 |
|
|
|
|
|
|
|
|
|
|
Matthew Moellering |
|
|
|
20,526 |
(1) |
|
|
|
21.14 |
|
3/30/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,523 |
(2) |
|
218,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,374 |
(3) |
|
155,892 |
|
|
4,813 |
|
14,442 |
(4) |
|
|
|
16.28 |
|
3/26/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,124 |
(5) |
|
163,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,241 |
(6) |
|
367,484 |
|
|
11,655 |
|
11,656 |
(7) |
|
|
|
15.88 |
|
4/1/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,446 |
(8) |
|
95,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,128 |
(9) |
|
143,258 |
|
|
|
|
|
|
|
28,500 |
|
9,500 |
(10) |
|
|
|
17.49 |
|
4/2/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
30,820 |
|
|
|
|
|
|
25.25 |
|
3/22/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
18.51 |
|
2/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
|
|
|
|
|
|
17.00 |
|
5/12/2020 |
|
|
|
|
|
|
|
|
|
|
John J. (Jack) Rafferty |
|
|
|
11,053 |
(1) |
|
|
|
21.14 |
|
3/30/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,589 |
(2) |
|
117,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,278 |
(3) |
|
83,939 |
|
|
2,527 |
|
7,582 |
(4) |
|
|
|
16.28 |
|
3/26/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,466 |
(5) |
|
85,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,026 |
(6) |
|
192,924 |
|
|
6,061 |
|
6,061 |
(7) |
|
|
|
15.88 |
|
4/1/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,912 |
(8) |
|
49,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,347 |
(9) |
|
74,499 |
|
|
|
|
|
|
|
14,820 |
|
4,940 |
(10) |
|
|
|
17.49 |
|
4/2/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
13,560 |
|
|
|
|
|
|
25.25 |
|
3/22/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
18.51 |
|
2/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
17.00 |
|
5/12/2020 |
|
|
|
|
|
|
|
|
|
|
Table of Contents
|
|
Option
Awards |
|
Stock
Awards |
Name |
|
Number
of Securities Underlying Exercisable Options (#) |
|
Number
of Securities Underlying Unexercisable Options (#) |
|
|
Equity Incentive Plan Awards: Number
of Securities Underlying Unexercised Unearned Options (#) |
|
Option Exercise Price ($/Share) |
|
Option Expiration Date |
|
Number of Shares or Units of
Stock That Have Not Vested (#) |
|
|
Market Value of Shares or Units
of Stock That Have Not Vested ($)(14) |
|
Equity Incentive Plan Awards: Number
of Unearned Shares, Units or Other Rights That Have Not
Vested (#) |
|
|
Equity Incentive Plans: Market or Payout
Value of Unearned Shares, Units or Other Rights That
Have Not Vested ($)(14) |
Colin Campbell |
|
|
|
11,053 |
(1) |
|
|
|
21.14 |
|
3/30/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,589 |
(2) |
|
117,512 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,278 |
(3) |
|
83,939 |
|
|
2,527 |
|
7,582 |
(4) |
|
|
|
16.28 |
|
3/26/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,466 |
(5) |
|
85,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,026 |
(6) |
|
192,924 |
|
|
6,061 |
|
6,061 |
(7) |
|
|
|
15.88 |
|
4/1/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,912 |
(8) |
|
49,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,347 |
(9) |
|
74,499 |
|
|
|
|
|
|
|
14,820 |
|
4,940 |
(10) |
|
|
|
17.49 |
|
4/2/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
13,560 |
|
|
|
|
|
|
25.25 |
|
3/22/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
18.51 |
|
2/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
|
|
|
17.00 |
|
5/12/2020 |
|
|
|
|
|
|
|
|
|
|
Periclis (Perry) Pericleous |
|
|
|
8,684 |
(1) |
|
|
|
21.14 |
|
3/30/2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,106 |
(2) |
|
92,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,505 |
(3) |
|
65,961 |
|
|
2,131 |
|
6,396 |
(11) |
|
|
|
18.84 |
|
7/15/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,828 |
(12) |
|
69,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,607 |
(5) |
|
46,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,936 |
(8) |
|
39,911 |
|
|
|
|
|
|
|
4,132 |
|
1,378 |
(10) |
|
|
|
17.49 |
|
4/2/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,348 |
(13) |
|
13,669 |
|
|
|
|
|
|
|
3,080 |
|
|
|
|
|
|
25.25 |
|
3/22/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
|
|
|
|
18.51 |
|
2/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
16.53 |
|
12/15/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
875 |
|
|
|
|
|
|
17.00 |
|
5/12/2020 |
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects stock options granted in 2016 under the 2010
Plan. These awards vest in equal installments on each of April 15, 2017,
2018, 2019, and 2020. |
(2) |
|
Reflects restricted stock units granted in 2016 under
the 2010 Plan. These awards vest in equal installments on each of April
15, 2017, 2018, 2019, and 2020. |
(3) |
|
Reflects the number of restricted stock units with
performance-based and time-based vesting criteria granted in 2016 under
the 2010 Plan that would be earned at the threshold performance level. The
number of performance-based restricted stock units that are actually
earned will be determined based on the Companys Adjusted EPS for the
three-year period commencing on the first day of the Companys 2016 fiscal
year and ending on the last day of the Companys 2018 fiscal year,
compared to the performance goals established by the Committee. The earned
portion of these awards vest on April 15, 2019. These performance-based
awards are not expected to be earned. See Compensation Discussion
and AnalysisWhat We Pay and Why: Elements of
CompensationPerformance-Based IncentivesLong-Term IncentivesPerformance-Based Restricted Stock Units on page 38 for further
information regarding these awards. |
(4) |
|
Reflects stock options granted in 2015 under the 2010
Plan. These awards vest in equal installments on each of April 15, 2017,
2018, and 2019. |
(5) |
|
Reflects restricted stock units granted in 2015 under
the 2010 Plan. These awards vest in equal installments on each of April
15, 2017, 2018, and 2019. |
(6) |
|
Reflects the number of restricted stock units with
performance-based and time-based vesting criteria granted in 2015 under
the 2010 Plan that would be earned at target. The number of
performance-based restricted stock units that are actually earned will be
determined based on the Companys Adjusted EPS for the three-year period
commencing on the first day of the Companys 2015 fiscal year and ending
on the last day of the Companys 2017 fiscal year, compared to the
performance goals established by the Committee. The earned portion of
these awards vest on April 15, 2018. These performance-based awards are
trending to pay out between threshold and target levels. See
Compensation Discussion and AnalysisWhat We Pay and Why: Elements of
CompensationPerformance-Based IncentivesLong-Term
IncentivesPerformance-Based Restricted Stock Units on page 38 for
further information regarding these awards. |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
51 |
|
|
|
Table of Contents
(7) |
|
Reflects stock options granted in 2014 under the 2010
Plan. These awards vest in equal installments on each of April 15, 2017
and 2018. |
(8) |
|
Reflects restricted stock units granted in 2014 under
the 2010 Plan. These awards vest in equal installments on each of April
15, 2017 and 2018. |
(9) |
|
Reflects restricted stock units with performance-based
and time-based vesting criteria granted in 2014 under the 2010 Plan. The
number of performance-based restricted stock units that were earned were
determined based on the Companys Adjusted EPS for the two-year period
commencing on the first day of the Companys 2014 fiscal year and ending
on the last day of the Companys 2015 fiscal year, compared to the
performance goals established by the Committee. These awards vested on
April 15, 2017. See Compensation Discussion and AnalysisWhat We Pay
and Why: Elements of CompensationPerformance-Based IncentivesLong-Term
IncentivesPerformance-Based Restricted Stock Units on page 38 for
further information regarding these awards. |
(10) |
|
Reflects stock options granted in 2013 under the 2010
Plan. These awards vested on April 2, 2017. |
(11) |
|
Reflects stock options granted in 2015 under the 2010
Plan. These awards vest in equal installments on each of July 15, 2017,
2018, and 2019. |
(12) |
|
Reflects restricted stock units granted in 2015 under
the 2010 Plan. These awards vest in equal installments on each of July 15,
2017, 2018, and 2019. |
(13) |
|
Reflects restricted stock units granted in 2013 under
the 2010 Plan. These awards vested on April 2, 2017. |
(14) |
|
Based on the January 27, 2017 closing stock price of
$10.14. |
OPTION EXERCISES AND STOCK
VESTED
The following table provides information
relating to stock options exercised and stock awards that vested during
2016.
|
|
Option
Awards |
|
Stock
Awards |
Name |
|
Number of Shares Acquired
on Exercise (#) |
|
Value Realized on Exercise ($) |
|
Number of Shares Acquired on Vesting (#) |
|
Value Realized on Vesting ($)(1) |
David Kornberg |
|
|
|
|
|
65,279 |
|
1,249,958 |
Matthew Moellering |
|
|
|
|
|
44,651 |
|
907,119 |
John J. (Jack) Rafferty |
|
|
|
|
|
22,582 |
|
458,290 |
Colin Campbell |
|
|
|
|
|
22,582 |
|
458,290 |
Periclis (Perry) Pericleous |
|
|
|
|
|
7,954 |
|
147,347 |
(1) |
|
Amounts reflect the market value of
our common stock on the day the stock award
vested. |
PENSION BENEFITS
We do not sponsor any qualified or
non-qualified defined benefit plans. The Board or Committee may elect to adopt
qualified or non-qualified defined benefit plans in the future if it determines
that doing so is in the Companys best interest.
DEFERRED
COMPENSATION
We provide a non-qualified deferred
compensation plan for our executive officers. The non-qualified deferred
compensation plan was terminated effective March 31, 2017. See Compensation
Discussion and AnalysisWhat We Pay and Why: Elements of CompensationAdditional
Executive Benefits and PerquisitesRetirement Plan BenefitsNon-Qualified
Deferred Compensation Plan on page 42. The following table provides the figures
related to our Non-Qualified Deferred Compensation Plan for 2016.
Name |
|
Executive Contributions ($) |
|
Company Contributions ($)(1) |
|
Aggregate Earnings ($)(2) |
|
Aggregate Withdrawals/ Distributions ($) |
|
Aggregate Balance at Year
End ($) |
David Kornberg |
|
60,122 |
|
120,245 |
|
84,572 |
|
|
|
1,724,101 |
Matthew Moellering |
|
39,178 |
|
78,355 |
|
70,940 |
|
|
|
1,439,245 |
John J. (Jack) Rafferty |
|
22,720 |
|
45,439 |
|
248,110 |
|
|
|
4,920,104 |
Colin Campbell |
|
124,115 |
|
43,391 |
|
175,601 |
|
|
|
3,506,813 |
Periclis (Perry) Pericleous |
|
12,758 |
|
25,516 |
|
4,762 |
|
|
|
111,680 |
(1) |
|
These amounts were included in
the All Other Compensation column of the Summary Compensation Table on
page 47. |
(2) |
|
The above-market portion of these
earnings was included in the Non-Qualified Deferred Compensation Earnings
column of the Summary Compensation Table. |
Table of Contents
Employment Related
Agreements
Prior to our IPO, as part of our executive
retention strategy, we entered into an employment agreement with Mr. Kornberg.
In connection with Mr. Kornbergs promotion from President to President and CEO,
we entered into a second amended and restated employment agreement with Mr.
Kornberg, effective January 30, 2015. The amended and restated employment
agreement may be terminated at any time by us or Mr. Kornberg.
The amended and restated employment
agreement provides for an annual base salary that is subject to annual review
for potential increase, as well as short-term, performance-based cash incentive
payment opportunities for each six-month operating season based on a percentage
of Mr. Kornbergs base salary. See, Compensation Discussion and AnalysisWhat
We Pay and Why: Elements of CompensationPerformance-Based IncentivesShort-Term
Incentives on page 36.
In addition, the amended and restated
employment agreement provides that Mr. Kornberg is eligible for equity-based
compensation awards that are commensurate with his performance and position. Mr.
Kornberg is also entitled to participate in all employee benefit plans that we
maintain and make available to our senior executives and is entitled to paid
time off in accordance with our policies as in effect from time to
time.
The amended and restated employment
agreement includes customary restrictions with respect to the use of our
confidential information and provides that all intellectual property developed
or conceived by Mr. Kornberg while he is employed by us that relates to our
business is Company property. During Mr. Kornbergs term of employment with us
and during the 12-month period immediately thereafter, Mr. Kornberg has agreed
not to (1) solicit any of our associates, (2) interfere with or harm any of our
business relationships, or (3) participate (whether as an officer, director,
employee, or otherwise) in any competitive business.
If Mr. Kornbergs
employment is terminated by the Company other than for cause, or by Mr. Kornberg
for good reason, and Mr. Kornberg signs a general release, then Mr. Kornberg
will be entitled to receive (1) his base salary and medical and dental benefits
for 18 months following separation from the Company; (2) any unpaid bonus for
any performance period ending prior to his separation from the Company, plus a
pro rata amount of any actual bonus amount he would have been entitled to for
the performance period in which a separation from the Company occurs had his
employment continued, plus an amount equal to 1.5 times the target bonus he
would have been entitled to had his employment continued for one year beyond his
separation from the Company; and (3) accelerated vesting of any cash or equity
awards that would have otherwise vested in the 18 months following separation
from the Company.
In the event that Mr. Kornbergs
employment with the Company is terminated by the Company other than for cause,
or by Mr. Kornberg for good reason, and the termination occurs in connection
with a change-in-control of the Company (as defined in the 2010 Plan), and Mr.
Kornberg signs a general release, then Mr. Kornberg will be entitled to (1) a
one-time payment equal to two times his annual base salary, plus any unpaid
bonus for any performance period terminating prior to separation from the
Company, plus a pro rata amount of any actual bonus amount he would have been
entitled to for the performance period in which a separation from the Company
occurs had his employment continued, plus an amount equal to two times the
target bonus he would have been entitled to had his employment continued for one
year beyond his separation from the Company; (2) medical and dental benefits for
18 months following separation from the Company; and (3) automatic vesting of
any unvested outstanding equity awards (at target with respect to
performance-based stock awards).
Good reason under the employment
agreement includes (1) an adverse change in responsibilities, pay, or reporting
relationship, (2) relocation more than 60 miles from Mr. Kornbergs principal
residence, (3) failure by the Company to abide by the agreement, or (4) failure
by any successor to assume the agreement. Cause under the employment agreement
generally includes (1) failure by the executive to perform his or her material
duties, (2) conviction of a felony, or (3) misconduct in bad faith which could
reasonably be expected to result in material harm to the Company.
OTHER EMPLOYMENT AGREEMENTS ENTERED INTO PRIOR TO
THE IPO |
Prior to our IPO, as part of our executive
retention strategy, we entered into employment agreements with Mr. Moellering,
Mr. Rafferty, and Mr. Campbell. The employment agreements may be terminated at
any time in the case of the applicable executives resignation, death or
disability, or termination by us or the executive.
Each such employment agreement provides
for an annual base salary that is subject to annual review for potential
increase, as well as short-term, performance-based cash incentive payment
opportunities for each six-month operating season based on a percentage of the
applicable executives base salary. See Compensation Discussion and
AnalysisWhat We Pay and Why: Elements of CompensationPerformance-Based
IncentivesShort-Term Incentives on page 36.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
53 |
|
|
|
Table of Contents
In addition, each such employment
agreement provides that the applicable executive is eligible for equity-based
compensation awards that are commensurate with the executives performance and
position. Each such executive is also entitled to participate in all employee
benefit plans that we maintain and make available to our senior executives and
is entitled to paid time off in accordance with our policies as in effect from
time to time.
The employment agreements include
customary restrictions with respect to the use of our confidential information
and provide that all intellectual property developed or conceived by the
executive while the executive is employed by us that relates to our business is
Company property. During the executives term of employment with us and during
the 12-month period immediately thereafter, each executive has agreed not to (1)
solicit any of our associates, (2) interfere with or harm any of our business
relationships, or (3) participate (whether as an officer, director, employee, or
otherwise) in any competitive business.
In April 2013, as part of the Committees
annual review of executive compensation arrangements, the Committee approved
changes to the severance arrangements for Mr. Moellering, Mr. Rafferty, and Mr.
Campbell in order to make them more competitive and to bring them in-line with
the severance arrangements offered by the Companys peer group.
Under the amended and restated employment
agreements, if the executives employment with the Company is terminated by the
Company other than for cause, or by the executive for good reason, and the
executive signs a general release, then the executive will be entitled to
receive his or her base salary and medical and dental benefits for 18 months
following separation from the Company. In addition, the executive will also be
entitled to receive the amount of cash incentive compensation that the executive
would have otherwise received during the 12-month period following separation
from the Company.
In the event that the executives
employment is terminated by the Company other than for cause, or by the
executive for good reason, and the termination occurs in connection with a
change-in-control of the Company (as defined in the 2010 Plan), and the
executive signs a general release, then the executive will be entitled to (1) a
one-time payment equal to (a) two times the executives annual base salary, plus
(b) 1.5 times the executives annual cash incentive compensation at target; (2)
medical and dental benefits for 18 months following separation from the Company;
and (3) automatic vesting of any unvested outstanding equity awards (at target
with respect to performance-based stock awards).
On March 13, 2017, the Committee approved
changes to the amended and restated employment agreements as part of the
Committees annual review of executive compensation arrangements solely for the
purpose of modifying the definition of Good Reason with respect to relocation
to better align with market practice and make consistent with Mr. Kornbergs
employment agreement. Prior to the amendment, a required relocation outside the
U.S. qualified as Good Reason. Under the new definition, a required relocation
outside of a 60-mile radius of the executives current residence qualifies as
Good Reason.
Good Reason as amended, under the employment agreements
generally includes (1) an adverse change in responsibilities, pay, or reporting
relationship, (2) relocation of more than 60 miles from the executives current
residence, (3) failure by the Company to abide by the agreement, or (4) failure
by any successor to assume the agreement. Cause under the employment
agreements generally includes (1) failure by the executive to perform his or her
material duties, (2) conviction of a felony, or (3) misconduct in bad faith
which could reasonably be expected to result in material harm to the
Company.
We entered into a severance agreement with
Mr. Pericleous in July 2015 in connection with his promotion to Senior Vice
President, Chief Financial Officer and Treasurer. The severance agreement
includes customary restrictions with respect to the use of our confidential
information and provides that all intellectual property developed or conceived
by Mr. Pericleous while he is employed by us which relates to our business is
Company property. Mr. Pericleous has also agreed not to (1) solicit any of our
associates, (2) interfere with or harm any of our business relationships, or (3)
participate (whether as an officer, director, employee, or otherwise) in any
competitive business during the term of his employment and during the 12-month
period immediately thereafter.
Under the severance agreement, if Mr.
Pericleous employment with the Company is terminated by the Company other than
for cause, or by Mr. Pericleous for good reason, and Mr. Pericleous signs a
general release, then he will be entitled to receive his base salary and medical
and dental benefits for 18 months following separation from the Company. In
addition, Mr. Pericleous will also be entitled to receive the amount of cash
incentive compensation that he would have otherwise received during the 12-month
period following separation from the Company.
In the event that Mr. Pericleous
employment is terminated by the Company other than for cause, or by Mr.
Pericleous for good reason, and the termination occurs in connection with a
change-in-control of the Company (as defined in the 2010 Plan), and Mr.
Pericleous signs a general release, then Mr. Pericleous will be entitled to (1)
a one-time payment equal to (a) two times Mr. Pericleous annual base salary,
plus (b) 1.5 times Mr. Pericleous annual cash incentive compensation at target;
(2) medical and dental benefits for 18 months following separation from the
Company; and (3) automatic vesting of any unvested outstanding equity awards (at
target with respect to performance-based stock awards).
Table of Contents
On March 13, 2017, the Committee approved
changes to the severance agreement as part of the Committees annual review of
executive compensation arrangements solely for the purpose of modifying the
definition of Good Reason with respect to relocation to better align with
market practice and make consistent with Mr. Kornbergs employment agreement.
Prior to the amendment, a required relocation outside the U.S. qualified as
Good Reason. Under the new definition, a required relocation outside of a
60-mile radius of Mr. Pericleous current residence qualifies as Good Reason.
Good Reason as amended, under the severance agreement generally includes (1)
an adverse change in responsibilities, pay, or reporting relationship, (2)
relocation of more than 60 miles from Mr. Pericleous current residence (3)
failure by the Company to abide by the agreement, or (4) failure by any
successor to assume the agreement. Cause under the severance agreement
generally includes (1) failure to perform material duties, (2) conviction of a
felony, or (3) misconduct in bad faith which could reasonably be expected to
result in material harm to the Company.
INDEMNIFICATION
AGREEMENTS |
We are party to indemnification agreements
with each of our NEOs and directors. The indemnification agreements provide our
NEOs and directors with contractual rights to indemnification, expense
advancement, and reimbursement, to the fullest extent permitted under the
General Corporation Law of the State of Delaware. Our Bylaws also provide that
we will indemnify our directors and officers to the fullest extent permitted by
the General Corporation Law of the State of Delaware.
Potential Payments Upon
Termination and Change-in-Control
The information below describes and
quantifies certain compensation that would have become payable under employment
and severance agreements with our NEOs if their employment with us had been
terminated as of January 28, 2017. Due to the number of factors that affect the
nature and amount of any benefits provided upon the events discussed below, any
actual amounts paid or distributed upon a termination or change-in-control may
be different. Factors that could affect these amounts include the timing during
the year of any such event. Further, the information below does not incorporate
changes to base salary, cash incentive compensation, bonus opportunities, and
equity awards granted after January 28, 2017.
Component |
|
Voluntary Resignation
or Retirement ($) |
|
Involuntary without
Cause or Voluntary with Good Reason with Signed
Release ($) |
|
|
Involuntary without Cause or Voluntary with Good
Reason following Change in Control
with Signed Release ($) |
|
|
Disability ($)(7) |
|
|
Death ($) |
|
Base Salary |
|
|
|
1,500,000 |
(1) |
|
|
|
|
1,000,000 |
|
|
|
|
Bonus |
|
|
|
1,950,000 |
(2) |
|
4,600,000 |
(5) |
|
|
|
|
|
|
Total Cash Severance (sub-total) |
|
|
|
3,450,000 |
|
|
4,600,000 |
|
|
1,
000,000 |
|
|
|
|
Value of Accelerated Equity |
|
|
|
2,368,521 |
(3) |
|
4,254,004 |
(6) |
|
4,205,372 |
(8) |
|
4,205,372 |
(8) |
Benefits and Perquisites |
|
|
|
25,831 |
(4) |
|
25,831 |
(4) |
|
5,904 |
|
|
|
|
Total Severance |
|
|
|
5,844,352 |
|
|
8,879,835 |
|
|
5,211,276 |
|
|
4,205,372 |
|
(1) |
Represents 18 months of salary
continuation. |
(2) |
This amount includes the Fall
2016 performance-based cash incentive award payout of $0 plus 1.5 times
the annual short term cash incentive compensation at target. |
(3) |
The value of accelerated equity
is based on the January 27, 2017 closing stock price of $10.14 per share.
Amount represents the value of equity awards that would have otherwise
vested in the 18 months following separation from the
Company. |
(4) |
Estimates for benefits and
perquisites include the continuation of medical and dental benefits for
the executive and his dependents for 18 months. |
(5) |
Represents the Fall 2016
performance-based cash incentive award payout of $0 plus a lump sum
payment equal to two times annual base salary and two times the annual
short-term cash incentive compensation target. |
(6) |
The value of accelerated equity
is based on the January 27, 2017 closing stock price of $10.14 per share.
Amount represents the value of all unvested equity as of January 28, 2017
(at target in the case of performance-based restricted stock
units). |
(7) |
If Mr. Kornberg became
permanently and totally disabled on January 28, 2017, he would receive one
year of salary continuation from us and six months of benefits
continuation. Additional eligible disability compensation would be
provided by a third-party insurance company and not paid by
us. |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
55 |
|
|
|
Table of Contents
(8) |
|
The value of accelerated equity
is based on the January 27, 2017 closing stock price of $10.14 per share.
For grants awarded prior to 2014, the number of shares subject to each
grant that will vest is the number of shares that would have vested had
employment continued through the first vesting date to occur after the
date of disability or death. For grants awarded in or after 2014, reflects
the vesting of all unvested equity awards (at target in the case of
performance-based restricted stock units). |
Component |
|
Voluntary Resignation
or Retirement ($) |
|
Involuntary without Cause or
Voluntary with Good Reason with Signed
Release ($) |
|
|
Involuntary without Cause or
Voluntary with Good Reason following Change in Control
with Signed Release ($) |
|
|
Disability ($)(6) |
|
|
Death ($) |
|
Base Salary |
|
|
|
1,189,500 |
(1) |
|
|
|
|
793,000 |
|
|
|
|
Bonus |
|
|
|
269,620 |
(2) |
|
2,597,075 |
(4) |
|
|
|
|
|
|
Total Cash Severance (sub-total) |
|
|
|
1,459,120 |
|
|
2,597,075 |
|
|
793,000 |
|
|
|
|
Value of Accelerated Equity |
|
|
|
|
|
|
1,343,560 |
(5) |
|
1,300,029 |
(7) |
|
1,300,029 |
(7) |
Benefits and Perquisites |
|
|
|
25,831 |
(3) |
|
25,831 |
(3) |
|
5,757 |
|
|
|
|
Total Severance |
|
|
|
1,484,951 |
|
|
3,996,466 |
|
|
2,098,786 |
|
|
1,300,029 |
|
(1) |
|
Represents 18 months of salary
continuation. |
(2) |
|
This amount includes the Fall 2016 performance-based
cash incentive award payout of $0 and the Spring 2016 performance-based
cash incentive award estimated at 100% of target. |
(3) |
|
Estimates for benefits and perquisites include the
continuation of medical and dental benefits for the executive and his
dependents for 18 months. |
(4) |
|
Represents a lump sum payment equal to two times annual
base salary and 1.5 times the annual short-term cash incentive
compensation target. |
(5) |
|
The value of accelerated equity is based on the January
27, 2017 closing stock price of $10.14 per share. Amount represents the
value of all unvested equity as of January 28, 2017 (at target in the case
of performance-based restricted stock units). |
(6) |
|
If Mr. Moellering became permanently and totally
disabled on January 28, 2017, he would receive one year of salary
continuation from us and six months of benefits continuation. Additional
eligible disability compensation would be provided by a third-party
insurance company and not paid by us. |
(7) |
|
The value of accelerated equity is based on the January
27, 2017 closing stock price of $10.14 per share. For grants awarded prior
to 2014, the number of shares subject to each grant that will vest is the
number of shares that would have vested had employment continued through
the first vesting date to occur after the date of disability or death. For
grants awarded in or after 2014, reflects the vesting of all unvested
equity awards (estimated at target in the case of performance-based
restricted stock units). |
JOHN
J. (JACK) RAFFERTY |
Component |
|
Voluntary Resignation
or Retirement ($) |
|
|
Involuntary without Cause or Voluntary with
Good Reason with Signed
Release ($) |
|
|
Involuntary without Cause or
Voluntary with Good Reason following
Change in Control with Signed Release ($) |
|
|
Disability ($)(7) |
|
|
Death ($) |
|
Base Salary |
|
|
|
|
873,000 |
(2) |
|
|
|
|
582,000 |
|
|
|
|
Bonus |
|
|
|
|
151,320 |
(3) |
|
1,731,450 |
(5) |
|
|
|
|
|
|
Total Cash Severance (sub-total) |
|
|
|
|
1,024,320 |
|
|
1,731,450 |
|
|
582,000 |
|
|
|
|
Value of Accelerated Equity |
|
297,179 |
(1) |
|
297,179 |
(1) |
|
711,098 |
(6) |
|
688,455 |
(8) |
|
688,455 |
(8) |
Benefits and Perquisites |
|
|
|
|
17,319 |
(4) |
|
17,319 |
(4) |
|
3,837 |
|
|
|
|
Total Severance |
|
297,179 |
|
|
1,338,818 |
|
|
2,459,867 |
|
|
1,274,292 |
|
|
688,455 |
|
(1) |
|
Mr. Rafferty is eligible for certain
retirement benefits. The value of accelerated equity is based on the
January 27, 2017 closing stock price of $10.14 per share. Amount
represents the value of all unvested stock options granted in 2014, 2015,
and 2016 and a pro rata portion of unvested restricted stock units granted
in 2014, 2015, and 2016 (based on actual performance for performance-based
restricted stock units granted in 2014, and estimated at target in the
case of performance-based restricted stock units granted in 2015 and
2016). |
(2) |
|
Represents 18 months of salary
continuation. |
Table of Contents
(3) |
|
This amount includes the Fall
2016 performance-based cash incentive award payout of $0 and the Spring
2016 performance-based cash incentive award estimated at 100% of
target. |
(4) |
|
Estimates for benefits and
perquisites include the continuation of medical and dental benefits for
the executive and his dependents for 18 months. |
(5) |
|
Represents a lump sum payment
equal to two times annual base salary and 1.5 times the annual short-term
cash incentive compensation target. |
(6) |
|
The value of accelerated equity
is based on the January 27, 2017 closing stock price of $10.14 per share.
Amount represents the value of all unvested equity as of January 28, 2017
(at target in the case of performance-based restricted stock
units). |
(7) |
|
If Mr. Rafferty became
permanently and totally disabled on January 28, 2017, he would receive one
year of salary continuation from us and six months of benefits
continuation. Additional eligible disability compensation would be
provided by a third-party insurance company and not paid by
us. |
(8) |
|
The value of accelerated equity
is based on the January 27, 2017 closing stock price of $10.14 per share.
For grants awarded prior to 2014, the number of shares subject to each
grant that will vest is the number of shares that would have vested had
employment continued through the first vesting date to occur after the
date of disability or death. For grants awarded in and after 2014,
reflects the vesting of all unvested equity awards (estimated at target in
the case of performance-based restricted stock
units). |
Component |
|
Voluntary Resignation
or Retirement ($) |
|
|
Involuntary without
Cause or Voluntary with Good Reason with Signed
Release ($) |
|
|
Involuntary without Cause or
Voluntary with Good Reason following
Change in Control with Signed Release ($) |
|
|
Disability ($)(7) |
|
|
Death ($) |
|
Base Salary |
|
|
|
|
873,000 |
(2) |
|
|
|
|
582,000 |
|
|
|
|
Bonus |
|
|
|
|
139,680 |
(3) |
|
1,687,800 |
(5) |
|
|
|
|
|
|
Total Cash Severance (sub-total) |
|
|
|
|
1,012,680 |
|
|
1,687,800 |
|
|
582,000 |
|
|
|
|
Value of Accelerated Equity |
|
297,179 |
(1) |
|
297,179 |
(1) |
|
711,098 |
(6) |
|
688,455 |
(8) |
|
688,455 |
(8) |
Benefits and Perquisites |
|
|
|
|
17,319 |
(4) |
|
17,319 |
(4) |
|
3,837 |
|
|
|
|
Total Severance |
|
297,179 |
|
|
1,327,178 |
|
|
2,416,217 |
|
|
1,274,292 |
|
|
688,455 |
|
(1) |
|
Mr. Campbell is eligible for
certain retirement benefits. The value of accelerated equity is based on
the January 27, 2017 closing stock price of $10.14 per share. Amount
represents the value of all unvested stock options granted in 2014, 2015,
and 2016 and a pro rata portion of unvested restricted stock units granted
in 2014, 2015, and 2016 (based on actual performance for performance-based
restricted stock units granted in 2014, and estimated at target in the
case of performance-based restricted stock units granted in 2015 and
2016). |
(2) |
|
Represents 18 months of salary
continuation. |
(3) |
|
This amount includes the Fall
2016 performance-based cash incentive award payout of $0, and the Spring
2016 performance-based cash incentive award estimated at 100% of
target. |
(4) |
|
Estimates for benefits and
perquisites include the continuation of medical and dental benefits for
the executive and his dependents for 18 months. |
(5) |
|
Represents a lump sum payment
equal to two times annual base salary and 1.5 times the annual short-term
cash incentive compensation target. |
(6) |
|
The value of accelerated equity
is based on the January 27, 2017 closing stock price of $10.14 per share.
Amount represents the value of all unvested equity as of January 28, 2017
(at target in the case of performance-based restricted stock
units). |
(7) |
|
If Mr. Campbell became
permanently and totally disabled on January 28, 2017, he would receive one
year of salary continuation from us and six months of benefits
continuation. Additional eligible disability compensation would be
provided by a third-party insurance company and not paid by
us. |
(8) |
|
The value of accelerated equity
is based on the January 27, 2017 closing stock price of $10.14 per share.
For grants awarded prior to 2014, the number of shares subject to each
grant that will vest is the number of shares that would have vested had
employment continued through the first vesting date to occur after the
date of disability or death. For grants awarded in and after 2014,
reflects the vesting of all unvested equity awards (estimated at target in
the case of performance-based restricted stock
units). |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
57 |
|
|
|
Table of Contents
PERICLIS (PERRY)
PERICLEOUS |
Component |
|
Voluntary Resignation
or Retirement ($) |
|
Involuntary without
Cause or Voluntary with Good Reason with Signed
Release ($) |
|
|
Involuntary without
Cause or Voluntary with Good Reason following Change in
Control with Signed Release ($) |
|
|
Disability ($)(6) |
|
|
Death ($) |
|
Base Salary |
|
|
|
667,500 |
(1) |
|
|
|
|
445,000 |
|
|
|
|
Bonus |
|
|
|
106,800 |
(2) |
|
1,290,500 |
(4) |
|
|
|
|
|
|
Total Cash Severance (sub-total) |
|
|
|
774,300 |
|
|
1,290,500 |
|
|
445,000 |
|
|
|
|
Value of Accelerated Equity |
|
|
|
|
|
|
393,777 |
(5) |
|
373,777 |
(7) |
|
373,777 |
(7) |
Benefits and Perquisites |
|
|
|
25,831 |
(3) |
|
25,831 |
(3) |
|
5,551 |
|
|
|
|
Total Severance |
|
|
|
800,131 |
|
|
1,710,108 |
|
|
824,328 |
|
|
373,777 |
|
(1) |
|
Represents 18 months of salary
continuation. |
(2) |
|
This amount includes the Fall
2016 performance-based cash incentive award payout of $0 and the Spring
2016 performance-based cash incentive award estimated at 100% of
target. |
(3) |
|
Estimates for benefits and
perquisites include the continuation of medical and dental benefits for
the executive and his dependents for 18 months. |
(4) |
|
Represents a lump sum payment
equal to two times annual base salary and 1.5 times the annual short-term
cash incentive compensation target. |
(5) |
|
The value of accelerated equity
is based on the January 27, 2017 closing stock price of $10.14 per share.
Amount represents the value of all unvested equity as of January 28, 2017
(at target in the case of performance-based restricted stock
units). |
(6) |
|
If Mr. Pericleous became
permanently and totally disabled on January 28, 2017, he would receive one
year of salary continuation from us and six months of benefits
continuation. Additional eligible disability compensation would be
provided by a third-party insurance company and not paid by
us. |
(7) |
|
The value of accelerated equity
is based on the January 27, 2017 closing stock price of $10.14 per share.
For grants awarded prior to 2014, the number of shares subject to each
grant that will vest is the number of shares that would have vested had
employment continued through the first vesting date to occur after the
date of disability or death. For grants awarded in and after 2014,
reflects the vesting of all unvested equity awards (estimated at target in
the case of performance-based restricted stock
units). |
Table of Contents
Stock Ownership
Information
The following table sets forth information
regarding beneficial ownership of our common stock, as of April 10, 2017, for
(1) each person who is known by us to own beneficially more than 5% of our
common stock, (2) each director, director nominee, and named executive officer,
and (3) all directors and executive officers as a group.
Beneficial ownership for purposes of the
following table is determined in accordance with the rules and regulations of
the SEC. These rules generally provide that a person is the beneficial owner of
securities if such person has or shares the power to vote or direct the voting
thereof, or to dispose or direct the disposition thereof, or has the right to
acquire such powers within 60 days. Common stock issuable upon the exercise of
options that are currently exercisable or exercisable within 60 days of April
10, 2017 and common stock issuable upon the vesting of restricted stock units
within 60 days are deemed to be outstanding and beneficially owned by the person
holding the options or restricted stock units, as applicable, for purposes of
computing the percentage ownership of that person and any group of which that
person is a member. These shares, however, are not deemed outstanding for the
purposes of computing the percentage ownership of any other person. Percentage
of beneficial ownership is based on 78,455,141 shares of common stock
outstanding for stockholders other than our executive officers and directors.
Percentage of beneficial ownership of our executive officers and directors is
based on 78,455,141 shares of common stock outstanding plus options currently
exercisable or exercisable within 60 days of April 10, 2017 and restricted stock
units scheduled to vest within 60 days of April 10, 2017 held by any executive
officer or director included in the group for which percentage ownership has
been calculated. Except as disclosed in the footnotes to the following table and
subject to applicable community property laws, we believe that each stockholder
identified in the following table possesses sole voting and investment power
over all shares of common stock shown as beneficially owned by the stockholder.
Unless otherwise indicated in the following table or footnotes below, the
address for each beneficial owner is c/o Express, Inc., 1 Express Drive,
Columbus, Ohio 43230.
Name and Address |
|
Shares
Beneficially Owned |
|
Percent of Stock
Outstanding |
5%
Stockholders: |
|
|
|
|
Blackrock,
Inc.(1) |
|
9,746,901 |
|
12.4% |
The Vanguard Group,
Inc.(2) |
|
6,804,017 |
|
8.7% |
Dimensional Fund Advisors
LP(3) |
|
6,101,160 |
|
7.8% |
Named
Executive Officers and Directors: |
|
|
|
|
David
Kornberg(4) |
|
488,496 |
|
* |
Matthew
Moellering(5) |
|
433,865 |
|
* |
John J. (Jack)
Rafferty(6) |
|
265,082 |
|
* |
Colin
Campbell(7) |
|
307,070 |
|
* |
Periclis
Pericleous(8) |
|
39,667 |
|
* |
Michael
Archbold(9) |
|
34,735 |
|
* |
Terry
Davenport(10) |
|
5,181 |
|
* |
Michael F.
Devine(11) |
|
38,934 |
|
* |
Theo
Killion(12) |
|
33,410 |
|
* |
Karen
Leever(13) |
|
7,074 |
|
* |
Mylle
Mangum(14) |
|
41,624 |
|
* |
Peter
Swinburn(15) |
|
34,735 |
|
* |
All Current
Directors and Executive Officers as a
Group (15 persons) |
|
2,079,382 |
|
2.6% |
(1) |
|
Based on a Schedule 13G/A filed
with the SEC by Blackrock, Inc. and its subsidiaries (collectively
Blackrock) on January 12, 2017. As of December 31, 2016, Blackrock is
the beneficial owner of 9,746,901 shares, as to which it has sole voting
power as to 9,534,553 shares and sole dispositive power as to all of such
shares. The address for Blackrock is 55 East 52nd Street, New York, NY
10022. |
(2) |
|
Based on a Schedule 13G/A filed
with the SEC by The Vanguard Group, Inc. on February 10, 2017. The
Vanguard Group, Inc. beneficially owns 6,804,017 shares of common stock as
to which it has sole voting power over 90,218 shares, shared voting power
over 10,284 shares, sole dispositive power over 6,707,924 shares, and
shared dispositive power over 96,093 shares. Vanguard Fiduciary Trust
Company (VFTC), a wholly-owned subsidiary of The Vanguard Group, Inc.,
beneficially owns 85,809 shares. Vanguard Investments Australia, Ltd.
(VIA), a wholly-owned subsidiary of The Vanguard Group, Inc.,
beneficially owns 14,693 shares. The address for The Vanguard Group, Inc.
is 100 Vanguard Blvd., Malvern, PA 19355. |
(3) |
|
Based on a Schedule 13G filed
with the SEC by Dimensional Fund Advisors LP or its subsidiaries (the
Dimensional Funds) on February 9, 2017. As of December 31, 2016, the
Dimensional Funds are beneficial owners of 6,101,160 shares, as to which
the Dimensional Funds have sole voting power over 5,839,607 shares and
sole dispositive power over 6,101,160 shares. The address for Dimensional
Funds is Building One, 6300 Bee Cave Road, Austin, TX
78746. |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
59 |
|
|
|
Table of Contents
Stock Ownership
Information |
(4) |
|
Includes (a) 231,344
shares of common stock issuable upon the exercise of stock options that
are currently exercisable or exercisable within 60 days of April 10, 2017
and (b) 63,260 shares of common stock issuable upon the vesting of
restricted stock units that will vest within 60 days of April 10,
2017. |
(5) |
|
Includes (a) 211,061
shares of common stock issuable upon the exercise of stock options that
are currently exercisable or exercisable within 60 days of April 10, 2017
and (b) 29,606 shares of common stock issuable upon the vesting of
restricted stock units that will vest within 60 days of April 10,
2017. |
(6) |
|
Includes (a) 125,228
shares of common stock issuable upon the exercise of stock options that
are currently exercisable or exercisable within 60 days of April 10, 2017
and (b) 15,522 shares of common stock issuable upon the vesting of
restricted stock units that will vest within 60 days of April 10,
2017. |
(7) |
|
Includes (a) 115,228
shares of common stock issuable upon the exercise of stock options that
are currently exercisable or exercisable within 60 days of April 10, 2017
and (b) 15,522 shares of common stock issuable upon the vesting of
restricted stock units that will vest within 60 days of April 10,
2017. |
(8) |
|
Includes a) 22,399
shares of common stock issuable upon the exercise of stock options that
are currently exercisable or exercisable within 60 days of April 10, 2017
and (b) 5,780 shares of common stock issuable upon the vesting of
restricted stock units that will vest within 60 days of April 10,
2017. |
(9) |
|
Includes 8,406 shares
of common stock issuable upon the vesting of restricted stock units that
will vest within 60 days of April 10, 2017. |
(10) |
|
Includes 5,181 shares
of common stock issuable upon the vesting of restricted stock units that
will vest within 60 days of April 10, 2017. |
(11) |
|
Includes (a) 10,000
shares of common stock issuable upon the exercise of stock options that
are currently exercisable and (b) 8,406 shares of common stock issuable
upon the vesting of restricted stock units that will vest within 60 days
of April 10, 2017. |
(12) |
|
Includes 8,406 shares
of common stock issuable upon the vesting of restricted stock units that
will vest within 60 days of April 10, 2017. |
(13) |
|
Includes 7,074 shares
of common stock issuable upon the vesting of restricted stock units that
will vest within 60 days of April 10, 2017. |
(14) |
|
Includes (a) 2,500
shares of common stock issuable upon the exercise of stock options that
are currently exercisable and (b) 11,096 shares of common stock issuable
upon the vesting of restricted stock units that will vest within 60 days
of April 10, 2017. |
(15) |
|
Includes 8,406 shares
of common stock issuable upon the vesting of restricted stock units that
will vest within 60 days of April 10, 2017. |
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires
our directors, executive officers, and beneficial owners of more than ten
percent of Express common stock to file with the SEC reports of their initial
ownership and changes in their ownership of Express stock and other equity
securities. We are required to disclose in this proxy statement any late filings
of such reports. Based solely on a review of copies of reports filed by the
reporting persons furnished to us, or written representations from reporting
persons, we believe that the reporting persons complied with all Section 16(a)
filing requirements on a timely basis during 2016.
Table of Contents
Audit
Committee
Audit Committee
Report
The Audit Committee operates under a
written charter adopted by the Board. The Audit Committee assists the Board in
its oversight of the integrity of the Companys financial statements, the
independent auditors qualifications and independence, and the performance of
the Companys internal audit function and independent auditors. The Audit
Committee relies on the expertise and knowledge of management, the internal
audit function, and the independent auditor in carrying out these oversight
responsibilities. Management is responsible for the preparation, presentation,
and integrity of the Companys consolidated financial statements, accounting and
financial reporting principles, internal control over financial reporting, and
disclosure controls and procedures designed to ensure compliance with accounting
standards, applicable laws, and regulations. Management is also responsible for
objectively reviewing and evaluating the adequacy, effectiveness, and quality of
the Companys system of internal control. The Companys independent auditor,
PricewaterhouseCoopers LLP, an independent registered public accounting firm, is
responsible for performing an independent audit of the consolidated financial
statements and expressing an opinion on the conformity of those financial
statements with accounting principles generally accepted in the United States.
PricewaterhouseCoopers LLP is also responsible for expressing an opinion on the
effectiveness of the Companys internal control over financial
reporting.
In this context, the Audit Committee
hereby reports as follows:
1. |
|
The Audit Committee has reviewed
and discussed the audited financial statements for fiscal 2016 with
management. |
2. |
|
The Audit Committee has discussed
with the independent auditor the matters required to be discussed by the
Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended, as adopted by the Public Company Accounting Oversight
Board in Rule 3200T. |
3. |
|
The Audit Committee has received
the written disclosures and the letter from the independent auditor
required by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent auditors communications with
the Audit Committee concerning independence, and has discussed with the
independent auditor the independent auditors
independence. |
4. |
|
Based on the review and
discussion referred to in paragraphs (1) through (3) above, the Audit
Committee recommended to the Board, and the Board has approved, that the
audited financial statements be included in the Annual Report on Form 10-K
for the year ended January 28, 2017 for filing with the
SEC. |
Each member of the Audit Committee meets
the independence and financial literacy requirements of the SEC and the NYSE.
The Board has determined that Mr. Archbold, Mr. Devine, and Ms. Mangum are audit
committee financial experts under SEC rules and have accounting or related
financial management expertise.
Audit Committee
Michael F. Devine, Chair
Michael
Archbold
Mylle Mangum
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
61 |
|
|
|
Table of Contents
Independent Registered Public
Accounting Firm Fees and Services
The following table sets forth the
aggregate fees billed to us by PricewaterhouseCoopers LLP, our independent
auditor, in 2016 and 2015:
|
|
Fees |
Services Rendered |
|
2016 |
|
2015 |
Audit Fees(1) |
|
$ |
1,400,675 |
|
$ |
1,103,261 |
Audit-Related Fees(2) |
|
$ |
9,500 |
|
$ |
19,000 |
Tax
Fees |
|
$ |
|
|
$ |
|
All
Other Fees(3) |
|
$ |
3,600 |
|
$ |
3,801 |
Total |
|
$ |
1,413,775 |
|
$ |
1,126,062 |
(1) |
|
Audit Fees for 2016 and 2015 represent fees for
professional services rendered by PricewaterhouseCoopers LLP in connection
with the audit of our annual consolidated financial
statements. |
(2) |
|
Audit-Related Fees for 2016 and 2015 represent fees for
consultation concerning the internal control of financial reporting
associated with new system implementations. |
(3) |
|
All other fees for 2016 and 2015 represent subscription
fees for software to assist management with its financial reporting
obligations. |
We have a policy that requires the Audit
Committee, or the Audit Committee Chair under a limited delegation of authority
from the Audit Committee, to pre-approve all audit and non-audit services to be
provided by our independent auditor and to consider whether the provision of
non-audit services is compatible with maintaining the independence of our
independent auditor in deciding whether to approve non-audit services. Any
pre-approvals made by the Audit Committee Chair under the limited delegation of
authority are reported to the full Audit Committee at the next regularly
scheduled meeting. All services performed by our independent auditor in 2016 and
2015 were pre-approved in accordance with the policy. As a general matter, it is
the Audit Committees preference that any non-audit services be provided by a
firm other than our independent auditor absent special circumstances.
Table of Contents
Advisory Vote to Approve
Executive Compensation
(Say-on-Pay) (Proposal No. 2)
We are seeking an advisory (non-binding)
vote from our stockholders to approve the compensation of our named executive
officers (our NEOs) for 2016 as disclosed in this proxy statement. At our 2016
annual meeting of stockholders, stockholders demonstrated strong support for our
2015 executive compensation program with over 95% of the votes cast in support
of the say-on-pay proposal. The Board and its Committees regularly discuss and
consider feedback from our stockholders and we attribute the increased support
of our executive compensation program, in part, to multiple discussions with
stockholders in previous years in which we gathered valuable feedback about our
executive compensation program. The Compensation and Governance Committee took
such feedback into account in developing Mr. Kornbergs compensation package for
2015, and kept the overall structure of Mr. Kornbergs compensation package the
same for 2016.
In 2016, we reached out to our largest
stockholders to gather additional feedback regarding our executive compensation
program. Our stockholders did not raise any concerns regarding our 2016
executive compensation program and we received no requests to change anything
about Mr. Kornbergs pay package.
In deciding how to vote on this proposal,
we urge our stockholders to read the Compensation Discussion and Analysis
beginning on page 30 of this proxy statement, which describes in more detail our
compensation objectives and elements of our executive compensation program, as
well as the Summary Compensation Table and other related compensation tables and
narrative appearing on pages 47 through 52, which provide additional information
on the compensation of our NEOs.
We are asking stockholders to approve, on
an advisory basis, the compensation of our NEOs for 2016 as disclosed in the
Compensation Discussion and Analysis, the Summary Compensation Table and related
compensation tables, and the notes and narrative discussion following the
compensation tables in this proxy statement. This vote is not intended to
address any specific item of compensation, but rather the overall compensation
program for our NEOs as described in this proxy statement.
Although this vote is non-binding, the
Board and the Compensation and Governance Committee value the opinions of our
stockholders and will consider the outcome of the vote when making future
decisions concerning executive compensation. Furthermore, stockholders are
welcome to bring any specific concerns regarding executive compensation to the
attention of the Board or the Compensation and Governance Committee at any time
throughout the year. Please refer to Corporate GovernanceBoard
PracticesCommunications with the Board on page 24 of this proxy statement for
information about communicating with the Board.
THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THIS
PROPOSAL. |
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
63 |
|
|
|
Table of Contents
Ratification of
PricewaterhouseCoopers LLP
as the Companys Independent Registered
Public Accounting Firm for 2017
(Proposal No. 3)
The Audit Committee has appointed
PricewaterhouseCoopers LLP, an independent registered public accounting firm, to
serve as our independent auditor for 2017. PricewaterhouseCoopers LLP served in
this capacity for us in 2015 and 2016. As a matter of good corporate governance,
the Audit Committee submits its selection of our independent auditor to our
stockholders for ratification. If the stockholders fail to ratify the selection,
the Audit Committee will review its future selection of an independent
registered public accounting firm in light of that result. Even if stockholders
ratify the selection, the Audit Committee in its discretion may select a
different independent registered public accounting firm at any time during
fiscal 2017 if it determines that such a change would be in the best interests
of the Company and our stockholders.
Additional information concerning the
Audit Committee and services rendered by and fees paid to PricewaterhouseCoopers
LLP is presented on pages 61 and 62. Representatives of PricewaterhouseCoopers
LLP are expected to be present at the Annual Meeting. They will have the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions.
THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF PRICEWATERHOUSECOOPERS
LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2017. |
Table of Contents
Approval of the Code
Section 162(m)
Performance
Goals and Various Annual Grant Limitations
Under the Express, Inc. 2010
Incentive Compensation Plan
(Proposal No. 4)
The Company maintains the Express, Inc.
2010 Incentive Compensation Plan (which is referred to herein as the 2010
Plan) for the benefit of eligible directors, officers, employees, and certain
other service providers of the Company and its subsidiaries. The IC Plan is
being submitted to the stockholders of the Company for approval
of:
● |
the Section 162(m) performance goals
under the IC Plan (as described in further detail below in the section
captioned Performance Goals);
|
● |
the Section 162(m) annual grant
limitations applicable to grants of awards under the IC Plan to individual
plan participants (as described in further detail below in the section
captioned Individual Participant Limitations);
and
|
● |
the addition of a $600,000 limit on
the amount of compensation that may be granted or paid to any non-employee
director in a calendar year, other than for additional compensation for
services as Chairman of the Board. |
Approval of the first two items will allow
certain incentive awards granted under the IC Plan to executive officers of the
Company to qualify as exempt performance-based compensation under Section 162(m)
of the Code, which otherwise generally disallows the corporate tax deduction for
certain compensation paid in excess of $1,000,000 annually to the principal
executive officer and to certain of the other most highly compensated executive
officers of publicly held companies. Section 162(m) of the Code generally
requires such performance goals to be approved by stockholders every five years.
As described in the section entitled Executive CompensationCompensation
Discussion & AnalysisExecutive Compensation PracticesAccounting and Tax
Considerations, on page 46 we consider the impact of Section 162(m) when
developing and implementing our executive compensation program. Cash incentive
awards and performance-based equity awards generally are designed to meet
deductibility requirements. However, we believe that it is important to preserve
flexibility in administering compensation programs in a manner designed to
promote varying corporate goals. As such, we have not adopted a policy that all
compensation must qualify as deductible under Section 162(m).
Effective April 14, 2017, the Board also
updated the list of performance metrics used for performance-based compensation
and made certain minor administrative changes to effect the amendment to the IC
Plan which did not require stockholder approval.
If the requisite stockholder approval of
the Section 162(m) performance goals and various annual grant limitations for
2010 Plan participants is not obtained, the Company will continue to grant
awards under the IC Plan in accordance with the current terms and conditions of
the IC Plan but the Company may not be able to deduct certain performance-based
compensation under Section 162(m).
Please note that we are not asking
stockholders to approve the IC Plan or an increase in shares under the IC
Plan.
The following is a summary of the material
terms of the IC Plan. Such description is qualified by reference to the full
text of the IC Plan, which is appended hereto as Appendix B.
Description of the Express,
Inc. 2010 Incentive Compensation Plan
The IC Plan provides for grants of stock
options, stock appreciation rights, restricted stock, performance awards, and
other stock-based and cash-based awards. Independent directors, officers, and
other employees of us and our affiliates, as well as others performing
consulting or advisory services for us or our affiliates, are eligible for
grants under the IC Plan. The purpose of the IC Plan is to provide incentives
that will attract, retain, and motivate high performing officers, directors,
employees, and consultants by providing them with appropriate incentives and
rewards either through a proprietary interest in our long-term success or
compensation based on their performance in fulfilling their personal
responsibilities.
EXPRESS Notice of 2017 Annual Meeting of
Stockholders |
|
65 |
|
|
|
Table of Contents
Approval of the Code Section 162(m) (Proposal No.
4) |
The IC Plan is administered by a committee
designated by our Board (referred to as the Committee throughout this
section), which is currently the Compensation and Governance Committee. Among
the Committees powers are to determine the form, amount, and other terms and
conditions of awards, clarify, construe, or resolve any ambiguity in any
provision of the IC Plan or any award agreement, amend the terms of outstanding
awards, and adopt such rules, forms, instruments, and guidelines for
administering the IC Plan as it deems necessary or proper. All actions,
interpretations, and determinations taken in good faith by the Committee or by
our Board are final and binding.
The Committee has full authority to
administer and interpret the IC Plan, to grant discretionary awards under the IC
Plan, to determine the persons to whom awards will be granted, to determine the
types of awards to be granted, to determine the terms and conditions of each
award, to determine the number of shares of common stock to be covered by each
award and to make all other determinations in connection with the IC Plan and
the awards thereunder as the Committee, in its sole discretion, deems necessary
or desirable.
As of April 10, 2017, the aggregate number
of shares of common stock which may be issued or used for reference purposes
under the IC Plan or with respect to which awards may be granted is 15,215,769
shares in the aggregate, which includes 10,054,895 shares previously issued or
to be issued in connection with outstanding awards and 5,160,874 shares
available for future issuance. The shares may be either authorized and unissued
shares of our common stock or shares of common stock held in or acquired for our
treasury. In general, if awards under the IC Plan are for any reason cancelled,
or expire or terminate unexercised, the shares covered by such awards will again
be available for the grant of awards under the IC Plan.
The following table sets forth information
regarding outstanding awards under the IC Plan as of April 10, 2017. These
figures represent an update to those provided in our Annual Report on Form 10-K
for the fiscal year ended January 28, 2017, filed on March 24, 2017, primarily
as a result of annual equity awards granted by the Committee on March 14,
2017.
Outstanding Stock
Options |
|
Weighted Average Exercise
Price |
|
Weighted Average Remaining Term |
|
RSUs and Restricted Stock
Awards Unvested |
2,697,581 |
|
$16.57 |
|
6.4 |
|
3,975,273 |
ELIGIBILITY FOR
PARTICIPATION |
Independent members of our Board, as well
as employees of, and consultants to, us or any of our subsidiaries and
affiliates, are eligible to receive awards under the IC Plan. The selection of
participants is within the sole discretion of the Committee.
Awards granted under the IC Plan are
evidenced by award agreements, which need not be identical, that provide
additional terms, conditions, restrictions, and/or limitations covering the
grant of the award, including, without limitation, additional terms providing
for the acceleration of exercisability or vesting of awards in the event of a
change in control or conditions regarding the participants employment, as
determined by the Committee in its sole discretion.
The Committee may grant non-qualified
stock options to purchase shares of our common stock to any eligible participant
and incentive stock options to purchase shares of our common stock only to
eligible employees. The Committee determines the number of shares of our common
stock subject to each option, the term of each option, which may not exceed ten
years, or five years in the case of an incentive stock option granted to a 10.0%
stockholder, the exercise price, the vesting schedule, if any, and the other
material terms of each option. No incentive stock option or non-qualified stock
option may have an exercise price less than the fair market value of a share of
our common stock at the time of grant or, in the case of an incentive stock
option granted to a 10.0% stockholder, 110.0% of such shares fair market value.
Options are exercisable at such time or times and subject to such terms and
conditions as determined by the Committee at grant and the exercisability of
such options may be accelerated by the Committee in its sole
discretion.
Table of Contents
Approval of the Code Section 162(m) (Proposal No.
4) |
STOCK APPRECIATION
RIGHTS |
The Committee may grant stock appreciation
rights (SARs) either with a stock option, which may be exercised only at such
times and to the extent the related option is exercisable (a Tandem SAR) or
independent of a stock option (a Non-Tandem SAR). A SAR is a right to receive
a payment in shares of our common stock or cash, as determined by the Committee,
equal in value to the excess of the fair market value of one share of our common
stock on the date of exercise over the exercise price per share established in
connection with the grant of the SAR. The term of each SAR may not exceed ten
years. The exercise price per share covered by a SAR is the exercise price per
share of the related option in the case of a Tandem SAR and is the fair market
value of our common stock on the date of grant in the case of a Non-Tandem SAR.
The Committee may also grant limited SARs, either as Tandem SARs or Non-Tandem
SARs, which may become exercisable only upon the occurrence of a change in
control, as defined in the IC Plan, or such other event as the Committee may, in
its sole discretion, designate at the time of grant or thereafter.
The Committee may award shares of
restricted stock. Except as otherwise provided by the Committee upon the award
of restricted stock, the recipient generally has the rights of a stockholder
with respect to the shares, including the right to receive dividends, the right
to vote the shares of restricted stock and, conditioned upon full vesting of
shares of restricted stock, the right to tender such shares, subject to the
conditions and restrictions generally applicable to restricted stock or
specifically set forth in the recipients restricted stock agreement. Except as
otherwise provided in the applicable award agreement, and with respect to an
award of restricted stock, a participant has no rights as a stockholder with
respect to shares of our common stock covered by any award until the participant
becomes the record holder of such shares. The Committee may determine at the
time of award that the payment of dividends, if any, is deferred until the
expiration of the applicable restriction period.
Recipients of restricted stock are
required to enter into a restricted stock agreement with us that states the
restrictions to which the shares are subject, which may include satisfaction of
pre-established performance goals and the criteria or date or dates on which
such restrictions will lapse.
If the grant of restricted stock or the
lapse of the relevant restrictions is based on the attainment of performance
goals, the Committee will establish for each recipient the applicable
performance goals, formulae or standards, and the applicable vesting percentages
with reference to the attainment of such goals or satisfaction of such formulae
or standards while the outcome of the performance goals is substantially
uncertain. Such performance goals may incorporate provisions for disregarding,
or adjusting for, changes in accounting methods, corporate transactions,
including, without limitation, dispositions and acquisitions, and other similar
events or circumstances. Section 162(m) of the Code requires that performance
awards be based upon objective performance measures. The performance goals for
performance-based restricted stock will be based on one or more of the objective
criteria set forth on Exhibit A to the IC Plan and are discussed in general
below.
The Committee may grant a performance
award to a participant payable upon the attainment of specific performance
goals. The Committee may grant performance awards that are intended to qualify
as performance-based compensation under Section 162(m) of the Code as well as
performance awards that are not intended to qualify as performance-based
compensation under Section 162(m) of the Code. Based on service, performance,
and/or such other factors or criteria, if any, as the Committee may determine,
the Committee may, at or after grant, accelerate the vesting of all or any part
of any performance award.
The Committee may, subject to limitations
under applicable law, make a grant of such other stock- based awards, including,
without limitation, performance units, dividend equivalent units, stock
equivalent units, restricted stock units, and deferred stock units under the IC
Plan that are payable in cash or denominated or payable in or valued by shares
of our common stock or factors that influence the value of such shares. The
Committee determines the terms and conditions of any such other awards, which
may include the achievement of certain minimum performance goals for purposes of
compliance with Section 162(m) of the Code and/or a minimum vesting period. The
performance goals for performance-based other stock-based awards will be based
on one or more of the objective criteria set forth on Exhibit A to the IC Plan
and discussed in general below.
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Approval of the Code Section 162(m) (Proposal No.
4) |
The Committee may grant a cash-based award
to a participant in such amount, on such terms and conditions, and for such
consideration, including no consideration or such minimum consideration as may
be required by applicable law, as the Committee may determine.
The Committee may grant awards of
restricted stock, performance awards, and other cash or stock- based awards that
are intended to qualify as performance-based compensation for purposes of
Section 162(m) of the Code or otherwise. These awards may be granted, vest and
be paid based on attainment of specified performance goals established by the
Committee. These performance goals are based on the attainment of a certain
target level of, or a specified increase or decrease in, one or more of the
following measures selected by the Committee (some of which may be used for
purposes of Section 162(m) of the Code): (1) earnings per share; (2) operating
income; (3) gross income; (4) net income (before or after taxes); (5) cash flow;
(6) gross profit; (7) gross profit return on investment; (8) gross margin return
on investment; (9) gross margin; (10) operating margin; (11) working capital;
(12) earnings before interest and taxes; (13) earnings before interest, tax,
depreciation and amortization; (14) return on equity; (15) return on assets;
(16) return on capital; (17) return on invested capital; (18) net revenues; (19)
gross revenues; (20) revenue growth; (21) annual recurring revenues; (22)
recurring revenues; (23) license revenues; (24) sales or market share; (25)
total stockholder return; (26) economic value added; (27) specified objectives
with regard to limiting the level of increase in all or a portion of our bank
debt or other long-term or short-term public or private debt or other similar
financial obligations, which may be calculated net of cash balances and/or other
offsets and adjustments as may be established by the Committee in its sole
discretion; (28) the fair market value of a share of our common stock; (29) the
growth in the value of an investment in the common stock assuming the
reinvestment of dividends; (30) reduction in operating expenses; (31) comparable
sales, comparable store sales, e-commerce sales; (32) inventory turnover or
shrinkage; (33) free cash flow; (34) cash flow from operations; or (35)
strategic or operational business criteria, consisting of one or more objectives
based on meeting geographic expansion or new concept development goals; new
store opening; product cost targets; customer satisfaction; human resources
goals, including employee engagement, staffing, training and development, and
succession planning; implementation or development of new or enhanced technology
systems and capabilities; and goals relating to acquisitions or divestitures of
subsidiaries, affiliates, or joint ventures.
To the extent permitted by law, the
Committee may also exclude the impact of an event or occurrence which it
determines should be appropriately excluded, including: (1) restructurings,
discontinued operations, extraordinary items or events, and other unusual or
non-recurring charges; (2) an event either not directly related to our
operations or not within the reasonable control of management; or (3) a change
in tax law or accounting standards required by generally accepted accounting
principles.
Performance goals may also be based on an
individual participants performance goals, as determined by the Committee, in
its sole discretion. In addition, all performance goals may be based upon the
attainment of specified levels of our performance, or the performance of a
subsidiary, division, or other operational unit, under one or more of the
measures described above relative to the performance of other corporations. The
Committee may designate additional business criteria on which the performance
goals may be based or adjust, modify, or amend those criteria.
INDIVIDUAL PARTICIPANT
LIMITATIONS |
The maximum number of shares of common
stock subject to any performance awards which may be granted under the IC Plan
during any fiscal year of the Company to any participant shall be 1.0 million
shares. The maximum value of a cash payment made under a performance award which
may be granted under the IC Plan with respect to any fiscal year of the Company
to any participant shall be $10.0 million. The aggregate value of all
compensation paid or granted to any individual for service as a non-employee
director during any calendar year will not exceed $600,000, other than with
respect to any special compensation paid to any non-employee director for his or
her service as Chairman of the Board.
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Approval of the Code Section 162(m) (Proposal No.
4) |
In connection with a change-in-control, as
defined in the IC Plan, the Committee may, in its sole discretion, accelerate
vesting of or lapse of restrictions on outstanding awards under the IC Plan. In
addition, such awards may be, in the discretion of the Committee, (1) assumed
and continued or substituted in accordance with applicable law or (2) purchased
by us or an affiliate for an amount equal to the excess of the price of a share
of our common stock paid in a change-in-control over the exercise price of the
award(s).
AMENDMENT AND
TERMINATION |
Notwithstanding any other provision of the
IC Plan, our Board may at any time amend any or all of the provisions of the IC
Plan, or suspend or terminate it entirely, retroactively, or otherwise;
provided, however, that, unless otherwise required by law or specifically
provided in the IC Plan, the rights of a participant with respect to awards
granted prior to such amendment, suspension, or termination may not be adversely
affected without the consent of such participant.
Awards granted under the IC Plan are
generally nontransferable (other than by will or the laws of descent and
distribution), except that the Committee may provide for the transferability of
nonqualified stock options at the time of grant or thereafter to certain family
members.
The 2010 Plan was adopted effective May
12, 2010.
Certain U.S.
Federal Income Tax Consequences
The rules concerning the federal income
tax consequences with respect to options granted and to be granted pursuant to
the IC Plan are quite technical. Moreover, the applicable statutory provisions
are subject to change, as are their interpretations and applications, which may
vary in individual circumstances. Therefore, the following is designed to
provide a general understanding of the U.S. federal income tax consequences with
respect to such grants. In addition, the following discussion does not set forth
any gift, estate, social security, or state or local tax consequences that may
be applicable and is limited to the U.S. federal income tax consequences to
individuals who are citizens or residents of the U.S., other than those
individuals who are taxed on a residence basis in a foreign country.
Incentive Stock
Options. In general, an employee will not
realize taxable income upon either the grant or the exercise of an incentive
stock option and the Company will not realize an income tax deduction at either
of such times. In general, however, for purposes of the alternative minimum tax,
the excess of the fair market value of the shares of common stock acquired upon
exercise of an incentive stock option (determined at the time of exercise) over
the exercise price of the incentive stock option will be considered income. If
the recipient was continuously employed from the date of grant until the date
three months prior to the date of exercise and such recipient does not sell the
shares of common stock received pursuant to the exercise of the incentive stock
option within either (i) two years after the date of the grant of the incentive
stock option, or (ii) one year after the date of exercise, a subsequent sale of
such shares of common stock will result in long-term capital gain or loss to the
recipient and will not result in a tax deduction to the Company.
If the recipient is not continuously
employed from the date of grant until the date three months prior to the date of
exercise or such recipient disposes of the shares of common stock acquired upon
exercise of the incentive stock option within either of the time periods
described in the immediately preceding paragraph, the recipient will generally
realize as ordinary income an amount equal to the lesser of (i) the fair market
value of such shares of common stock on the date of exercise over the exercise
price, and (ii) the amount realized upon disposition over the exercise price. In
such event, subject to the limitations under Sections 162(m) and 280G of the
Code (as described below), the Company generally will be entitled to an income
tax deduction equal to the amount recognized as ordinary income. Any gain in
excess of such amount realized by the recipient as ordinary income would be
taxed at the rates applicable to short-term or long-term capital gains
(depending on the holding period).
Non-Qualified Stock
Options. A recipient will not realize any
taxable income upon the grant of a non-qualified stock option and the Company
will not receive a deduction at the time of such grant unless such option has a
readily ascertainable fair market value (as determined under applicable tax law)
at the time of grant. Upon exercise of a non-qualified stock option, the
recipient generally will realize ordinary income in an amount equal to the
excess of the fair market value of the shares of common stock on the date
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Approval of the Code Section 162(m)
(Proposal No. 4) |
of exercise over the exercise price. Upon
a subsequent sale of such shares of common stock by the recipient, the recipient
will recognize short-term or long-term capital gain or loss depending upon his
or her holding period of such shares of common stock. Subject to the limitations
under Sections 162(m) and 280G of the Code (as described below), the Company
will generally be allowed a deduction equal to the amount recognized by the
recipient as ordinary income.
Certain Other Tax
Issues. In addition to the matters described
above, (i) any entitlement to a tax deduction on the part of the Company is
subject to applicable federal tax rules (including, without limitation, Section
162(m) of the Code regarding the $1.0 million limitation on deductible
compensation), (ii) the exercise of an incentive stock option may have
implications in the computation of alternative minimum taxable income, (iii)
certain awards under the IC Plan may be subject to the requirements of Section
409A of the Code (regarding non-qualified deferred compensation), and (iv) if
the exercisability or vesting of any option is accelerated because of a
change-in-control, such option (or a portion thereof), either alone or together
with certain other payments, may constitute parachute payments under Section
280G of the Code, which excess amounts may be subject to excise taxes. Officers
and directors of the Company subject to Section 16(b) of the Exchange Act may be
subject to special tax rules regarding the income tax consequences concerning
their options.
The IC Plan is not subject to any of the
requirements of the Employee Retirement Income Security Act of 1974, as amended.
The IC Plan is not, nor is it intended to be, qualified under Section 401(a) of
the Code.
Outstanding
Awards Under the IC Plan
As of April 10, 2017, the following
outstanding awards have been granted under the IC Plan to each of the executive
officers named below, all current executive officers as a group, all
non-employee directors as a group, and all other employees,
respectively:
Name |
|
Number
of Shares Underlying Options/SARs |
|
Weighted Average
Exercise Price of Options/ SARs |
|
Number of Shares
Underlying Restricted Stock Awards/Stock
Unit Awards |
David Kornberg |
|
506,422 |
|
$15.00 |
|
865,899 |
Matthew Moellering |
|
286,331 |
|
$17.20 |
|
245,512 |
John J. (Jack) Rafferty |
|
164,497 |
|
$17.06 |
|
128,353 |
Colin Campbell |
|
154,497 |
|
$17.07 |
|
128,353 |
Periclis (Perry) Pericleous |
|
53,677 |
|
$15.59 |
|
91,626 |
|
All
Executive Officers as a Group (8 people) |
|
1,459,629 |
|
$16.17 |
|
1,795,363 |
All
Non-Employee Directors as a Group (7 people) |
|
12,500 |
|
$17.11 |
|
56,975 |
All
Other Employees |
|
1,225,452 |
|
$17.04 |
|
2,122,934 |
Future Plan Awards. The terms and number of options or other awards to be granted
in the future under the IC Plan are to be determined in the discretion of the
Compensation and Governance Committee. Since no such determinations regarding
future awards or grants have yet been made, the benefits or amounts that will be
received by or allocated to the Companys executive officers or other eligible
employees or non-employee directors cannot be determined at this
time.
As of April 10, 2017, the closing price on
the New York Stock Exchange of the Companys common stock was $8.69 per
share.
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Approval of the Code Section 162(m) (Proposal No.
4) |
Equity
Compensation Plan Information
The following table sets forth, as of
January 28, 2017, certain information related to the Companys equity
compensation plans.
Plan Category |
Number of securities to be
issued upon exercise of outstanding options, warrants and
rights (a) |
|
Weighted-average exercise
price of outstanding options, warrants and
rights (b) |
|
|
Number of
securities remaining available for future issuance under
equity compensation plans (excluding securities reflected
in column (a)) (c) |
Equity compensation plans
approved by security holders |
4,415,970 |
|
$ |
18.18 |
(1) |
|
7,499,160 |
Equity compensation plans
not approved by security holders |
0 |
|
$ |
0 |
|
|
0 |
Total |
4,415,970 |
|
$ |
18.18 |
(1) |
|
7,499,160 |
(1) |
Does not include outstanding
rights to receive common stock upon the vesting of restricted stock
units. |
The following table sets forth, as of
April 10, 2017, certain information related to the Companys equity compensation
plans.
Plan Category |
Number of securities to be
issued upon exercise of outstanding options, warrants and
rights (a) |
|
Weighted-average exercise price
of outstanding options, warrants and rights (b) |
|
|
Number of
securities remaining available for future issuance under
equity compensation plans (excluding securities reflected
in column (a)) (c) |
Equity compensation plans approved by security
holders |
6,672,854 |
|
$ |
16.57 |
(1) |
|
5,160,874 |
Equity compensation plans not approved by security
holders |
0 |
|
$ |
0 |
|
|
0 |
Total |
6,672,854 |
|
$ |
16.57 |
(1) |
|
5,160,874 |
(1) |
Does not include outstanding
rights to receive common stock upon the vesting of restricted stock
units. |
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE CODE SECTION
162(M) PERFORMANCE GOALS AND VARIOUS ANNUAL GRANT LIMITATIONS UNDER THE
EXPRESS, INC. 2010 INCENTIVE COMPENSATION
PLAN. |
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Table of
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Other
Matters
The Board knows of no other matters to be
brought before the Annual Meeting. However, if other matters should come before
the meeting, each of the persons named as a proxy will vote as recommended by
the Board or, if no recommendation is given, in his or her discretion on such
matters.
Additional Information
Proxy
Solicitation Expenses
We will pay the expense of preparing,
assembling, printing, and mailing the proxy statement, proxy card, and other
related materials used in the solicitation of proxies. We have retained
Innisfree M&A Inc. (Innisfree) to act as a proxy solicitor in conjunction
with the Annual Meeting. We have agreed to pay Innisfree $12,500, plus
reasonable out-of-pocket expenses, for proxy solicitation services. We will
reimburse banks, brokerage firms, and others for their reasonable expenses in
forwarding proxy materials to beneficial owners and obtaining their
instructions. Officers and regular associates of Express may, but without
compensation other than their regular compensation, solicit proxies by further
mailing or personal conversations, or by telephone, facsimile, or other
electronic means.
Stockholder
Proposals for Inclusion in the 2018 Annual Meeting Proxy Statement
Stockholders interested in submitting a
proposal for inclusion in the proxy materials for the 2018 annual meeting of
stockholders may do so by following the procedures prescribed in Rule 14a-8 of
the Exchange Act. To be eligible for inclusion, stockholder proposals must be
submitted in writing to the Office of the Corporate Secretary, Express, Inc., 1
Express Drive, Columbus, OH 43230 and must be received no later than December
29, 2017 unless the date of our 2018 annual meeting is changed by more than 30
days from June 7, 2018, in which case the proposal must be received a reasonable
time before we begin to print and mail our proxy materials.
Other
Stockholder Proposals
Our Bylaws require that any stockholders
who intend to present an item of business, including nominees for election as
directors, at the 2018 annual meeting (other than a stockholder proposal
submitted for inclusion in our 2018 proxy statement) must provide notice of such
business to the Office of the Corporate Secretary, Express, Inc., 1 Express
Drive, Columbus, OH 43230 between Wednesday, February 7, 2018 and the close of
business on Friday, March 9, 2018. The notice must contain the information
required by our Bylaws, which are posted on our website.
Electronic
Delivery
Instead of receiving the Notice of
Internet Availability or paper copies of our Annual Report and proxy statement
in the mail, registered stockholders can elect to receive these communications
electronically. For additional information and to elect this option, please
access www.computershare.com/investor.
Many brokers and banks also offer
electronic delivery of proxy materials to their clients. If you are a beneficial
stockholder, you may contact your broker or bank to find out whether this
service is available to you. If your broker or bank uses Broadridge Investor
Communications Services, you can elect to receive future proxy materials
electronically at www.investordelivery.com.
Delivery of
Proxy Materials to Households
We have adopted a procedure called
householding, which has been approved by the SEC. Accordingly, we may only
deliver one copy of the Notice of Internet Availability, and if you requested
printed versions by mail, one copy of this proxy statement and one copy of our
Annual Report to multiple registered stockholders who share an address unless we
have received contrary instructions from one or more of the stockholders.
Stockholders who share an address to which printed copies of this proxy
statement and Annual Report have been delivered, will continue to receive
separate proxy cards. If you are a stockholder, share an address and last name
with one or more other stockholders, and would like to revoke your householding
consent or you are a stockholder eligible for householding and would like to
participate in householding, please contact Broadridge, either by calling toll
free at (866) 540-7095 or by writing to Broadridge, Householding Department, 51
Mercedes Way, Edgewood, New York 11717.
Table of
Contents
A number of brokerage firms have
instituted householding. If you hold your shares through a broker, bank, or
other nominee, please contact your broker, bank, or other nominee to request
information about householding.
Incorporation
by Reference
Neither the Compensation and Governance
Committee Report nor the Audit Committee Report shall be deemed soliciting
material or filed with the SEC and none of them shall be deemed incorporated by
reference into any prior or future filings made by us under the Securities Act
of 1933, as amended, or the Exchange Act, except to the extent that we
specifically incorporate such information by reference. In addition, this
document includes several website addresses. These website addresses are
intended to provide inactive, textual references only. The information on these
websites is not part of this document.
Availability
of SEC Filings, Code of Conduct, and Committee Charters
Copies of our reports on Forms 10-K,
10-Q, 8-K, and all amendments and exhibits to those reports filed with the SEC,
our Code of Conduct, the charters of the Audit and the Compensation and
Governance Committees, and any reports of beneficial ownership of our common
stock filed by executive officers, directors, and beneficial owners of more than
10% of our outstanding common stock are posted on and may be obtained through
the investor relations section of our website, at www.express.com/investor, or
may be requested in print, at no cost, by telephone at (888) 423-2421, by email
at IR@express.com, or by mail at Express, Inc., 1 Express Drive, Columbus, OH
43230, Attention: Investor Relations.
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Table of Contents
Appendix
A
Information
About Non-GAAP Financial Measures
Adjusted diluted earnings per share is a
supplemental measure of financial performance that is not required by, or
presented in accordance with GAAP. We believe that this non-GAAP measure
provides additional useful information to assist stockholders in understanding
our financial results and assessing our prospects for future performance.
Management believes adjusted diluted earnings per share is an important
indicator of our business performance because it excludes items that may not be
indicative of, or are unrelated to, our underlying operating results, and
provides a better baseline for analyzing trends in our business. In addition,
adjusted diluted earnings per share is used as a performance measure under our
executive compensation program for purposes of determining the number of equity
awards that are ultimately earned by executives. Because non-GAAP financial
measures are not standardized, it may not be possible to compare this financial
measure with other companies non-GAAP financial measures having the same or
similar names. Adjusted diluted earnings per share should not be considered in
isolation or as a substitute for reported diluted earnings per share. Adjusted
diluted earnings per share reflects an additional way of viewing our operations
that, when viewed with our GAAP results and the below reconciliations to the
corresponding GAAP financial measure, provides a more complete understanding of
our business. We strongly encourage investors and stockholders to review our
financial statements and publicly filed reports in their entirety and not to
rely on any single financial measure.
The following table presents adjusted net
income and adjusted diluted earnings per share for 2015 and 2016, which
eliminate certain non-core operating costs. No adjustments were made to diluted
earnings per share for 2014.
|
2016 |
|
2015 |
|
(in thousands) |
Adjusted Net Income |
$ |
64,343 |
|
$ |
122,429 |
Adjusted Diluted Earnings Per
Share |
$ |
0.81 |
|
$ |
1.45 |
The table below reconciles the non-GAAP
financial measures, adjusted net income and adjusted diluted earnings per share,
with the most directly comparable GAAP financial measures, net income and
diluted earnings per share.
|
2016 |
(in
thousands, except per share amounts) |
Net Income |
|
Diluted Earnings Per Share |
|
Weighted
Average Diluted Shares Outstanding |
Reported GAAP
Measure |
$ |
57,417 |
|
$ |
0.73 |
|
79,049 |
Interest
Expense(a) |
$ |
11,354 |
|
$ |
0.14 |
|
|
Income Tax
Benefit(b) |
$ |
(4,428) |
|
$ |
(0.06) |
|
|
Adjusted Non-GAAP
Measure |
$ |
64,343 |
|
$ |
0.81 |
|
|
(a) |
Represents non-core items related
to the amendment of the Times Square Flagship store lease discussed in
Note 5 of the Companys financial statements included in its Annual Report
for the year ended January 28, 2017. |
(b) |
Items were tax affected at our
statutory rate of approximately 39% for
2016. |
|
2015 |
(in thousands, except per share amounts) |
Net Income |
|
Diluted Earnings Per Share |
|
Weighted Average Diluted Shares
Outstanding |
Reported GAAP Measure |
$ |
116,513 |
|
$ |
1.38 |
|
84,591 |
Interest Expense(a) |
$ |
9,657 |
|
$ |
0.11 |
|
|
Income Tax Benefit(b) |
$ |
(3,741) |
|
$ |
(0.04) |
|
|
Adjusted Non-GAAP Measure |
$ |
122,429 |
|
$ |
1.45 |
|
|
(a) |
Includes the redemption premium
paid, the write-off of unamortized debt issuance costs, and the write-off
of the unamortized debt discount related to the redemption of all $200.9
million of our Senior Notes. |
(b) |
Items were tax affected at our
statutory rate of approximately 39% for
2015. |
Table of
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Appendix
B
SECOND AMENDED AND
RESTATED EXPRESS, INC. 2010
INCENTIVE COMPENSATION PLAN
ARTICLE I
PURPOSE
The purpose of this Express, Inc. 2010
Incentive Compensation Plan is to enhance the profitability and value of the
Company for the benefit of its
stockholders by enabling the Company to offer Eligible Individuals cash and
stock-based incentives in order to attract, retain and reward such individuals
and strengthen the mutuality of interests between such individuals and the
Companys stockholders.
ARTICLE
II
DEFINITIONS
For purposes of this Plan, the following
terms shall have the following meanings:
2.1 Acquisition
Event has the meaning set forth in
Section 4.2(d).
2.2 Affiliate means each of the following: (a) any Subsidiary; (b) any
Parent; (c) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is directly or indirectly
controlled 50% or more (whether by ownership of stock, assets or an equivalent
ownership interest or voting interest) by the Company or one of its Affiliates;
(d) any trade or business (including, without limitation, a partnership or
limited liability company) which directly or indirectly controls 50% or more
(whether by ownership of stock, assets or an equivalent ownership interest or
voting interest) of the Company; and (e) any other entity in which the Company
or any of its Affiliates has a material equity interest and which is designated
as an Affiliate by resolution of the Committee; provided that, unless
otherwise determined by the Committee, the Common Stock subject to any Award
constitutes service recipient stock for purposes of Section 409A of the Code
or otherwise does not subject the Award to Section 409A of the Code.
2.3 Award means any award under the Plan of any Stock Option, Stock
Appreciation Right, Restricted Stock, Performance Award or Other Stock-Based
Award or Other Cash-Based Award. All Awards shall be granted by, confirmed by,
and subject to the terms of, a written agreement executed by the Company and the
Participant.
2.4 Award
Agreement means the written or
electronic agreement setting forth the terms and conditions applicable to an
Award.
2.5 Board means the Board of Directors of the Company.
2.6 Cause means, unless otherwise determined by the Committee in the
applicable Award Agreement, with respect to a Participants Termination of
Employment or Termination of Consultancy, the following: (a) in the case where
there is no employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Company or an Affiliate and
the Participant at the time of the grant of the Award (or where there is such an
agreement but it does not define cause (or words of like import)), termination
due to a Participants, dishonesty, fraud, moral turpitude, willful misconduct
or refusal to perform his or her duties or responsibilities for any reason other
than illness or incapacity, as determined by the Committee in its sole
discretion; or (b) in the case where there is an employment agreement,
consulting agreement, change in control agreement or similar agreement in effect
between the Company or an Affiliate and the Participant at the time of the grant
of the Award that defines cause (or words of like import), cause as defined
under such agreement; provided, however, that with regard to any agreement under
which the definition of cause only applies on occurrence of a change in
control, such definition of cause shall not apply until a change in control
actually takes place and then only with regard to a termination thereafter. With
respect to a Participants Termination of Directorship, cause means an act or
failure to act that constitutes cause for removal of a director under applicable
Delaware law.
2.7 Change in
Control has the meaning set forth in
11.2.
2.8 Change in Control
Price has the meaning set forth in
Section 11.1.
2.9 Code means the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any successor
provision and any Treasury Regulation promulgated thereunder.
2.10 Committee
means any committee of the Board duly
authorized by the Board to administer the Plan. If no committee is duly
authorized by the Board to administer the Plan, the term Committee shall be
deemed to refer to the Board for all purposes under the Plan.
2.11 Common Stock
means the Common Stock, $0.01 par value per
share, of the Company.
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2.12 Company means Express, Inc., a Delaware corporation, and its
successors by operation of law.
2.13 Consultant
means any natural person who is an advisor or
consultant to the Company or its Affiliates.
2.14 Detrimental
Activity means, unless otherwise
determined by the Committee, in the applicable Award Agreement: (a) the
disclosure to anyone outside the Company or its Affiliates, or the use in any
manner other than in the furtherance of the Companys or its Affiliates
business, without written authorization from the Company, of any confidential
information, trade secrets or proprietary information, relating to the business
of the Company or its Affiliates that is acquired by a Participant prior to the
Participants Termination; (b) activity while employed or performing services
that results, or if known could result, in the Participants Termination that is
classified by the Company as a termination for Cause; (c) any attempt, directly
or indirectly, to solicit, induce or hire (or the identification for
solicitation, inducement or hiring of) any employee of the Company or its
Affiliates to be employed by, or to perform services for, the Participant or any
person or entity with which the Participant is associated (including, but not
limited to, due to the Participants employment by, consultancy for, equity
interest in, or creditor relationship with such person or entity) or any person
or entity from which the Participant receives direct or indirect compensation or
fees as a result of such solicitation, inducement or hire (or the identification
for solicitation, inducement or hire) without, in all cases, written
authorization from the Company; (d) any attempt, directly or indirectly, to
solicit in a competitive manner any customer or prospective customer of the
Company or its Affiliates at the time of a Participants Termination, without,
in all cases, written authorization from the Company; (e) the Participants
Disparagement, or inducement of others to do so, of the Company or its
Affiliates or their past and present officers, directors, employees or products;
or (f) breach of any agreement between the Participant and the Company or an
Affiliate (including, without limitation, any employment agreement or
noncompetition or nonsolicitation agreement). For purposes of sub-sections (a),
(c), and (d) above, the General Counsel, Chief Administrative Officer, Senior
Vice President of Human Resources or the Chief Executive Officer of the Company
shall have authority to provide the Participant, except for himself or herself,
with written authorization to engage in the activities contemplated thereby and
no other person shall have authority to provide the Participant with such
authorization.
2.15 Disability
means, unless otherwise determined by the
Committee in the applicable Award Agreement, with respect to a Participants
Termination, a permanent and total disability as defined in Section 22(e)(3) of
the Code. A Disability shall only be deemed to occur at the time of the
determination by the Committee of the Disability. Notwithstanding the foregoing,
for Awards that are subject to Section 409A of the Code, Disability shall mean
that a Participant is disabled under Section 409A(a)(2)(C)(i) or (ii) of the
Code.
2.16 Disparagement
means making comments or statements to the
press, the Companys or its Affiliates employees, consultants or any individual
or entity with whom the Company or its Affiliates has a business relationship
which could reasonably be expected to adversely affect in any manner: (a) the
conduct of the business of the Company or its Affiliates (including, without
limitation, any products or business plans or prospects); or (b) the business
reputation of the Company or its Affiliates, or any of their products, or their
past or present officers, directors or employees.
2.17 Effective Date
means the effective date of the Plan as
defined in Article XV.
2.18 Eligible Employee
means each employee of the Company or an
Affiliate.
2.19 Eligible Individual
means an Eligible Employee, Non-Employee
Director or Consultant who is designated by the Committee in its discretion as
eligible to receive Awards subject to the conditions set forth
herein.
2.20 Exchange Act
means the Securities Exchange Act of 1934, as
amended. Reference to a specific section of the Exchange Act or regulation
thereunder shall include such section or regulation, any valid regulation or
interpretation promulgated under such section, and any comparable provision of
any future legislation or regulation amending, supplementing or superseding such
section or regulation.
2.21 Fair Market Value
means, for purposes of the Plan, unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder, as of any date and except as provided below, the last sales
price reported for the Common Stock on the applicable date: (a) as reported on
the principal national securities exchange in the United States on which it is
then traded or (b) if the Common Stock is not traded, listed or otherwise
reported or quoted, the Committee shall determine in good faith the Fair Market
Value in whatever manner it considers appropriate taking into account the
requirements of Section 409A of the Code. For purposes of the grant of any
Award, the applicable date shall be the trading day immediately prior to the
date on which the Award is granted. For purposes of the exercise of any Award,
the applicable date shall be the date a notice of exercise is received by the
Committee or, if not a day on which the applicable market is open, the next day
that it is open.
2.22 Family Member
means family member as defined in Section
A.1.(5) of the general instructions of Form S-8.
2.23 Incentive Stock Option
means any Stock Option awarded to an Eligible
Employee of the Company, its Subsidiaries and its Parents (if any) under this
Plan intended to be and designated as an Incentive Stock Option within the
meaning of Section 422 of the Code.
2.24 Merger Event
has the meaning set forth in Section 4.2(d).
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2.25 Non-Employee Director
means a director or a member of the Board of
the Company or any Affiliate who is not an active employee of the Company or any
Affiliate.
2.26 Non-Qualified Stock
Option means any Stock Option awarded
under the Plan that is not an Incentive Stock Option.
2.27 Non-Tandem Stock Appreciation
Right shall mean the right to receive an
amount in cash and/or stock equal to the difference between (x) the Fair Market
Value of a share of Common Stock on the date such right is exercised, and (y)
the aggregate exercise price of such right, otherwise than on surrender of a
Stock Option.
2.28 Other Cash-Based
Award means an Award granted pursuant to
Section 10.3 of the Plan and payable in cash at such time or times and subject
to such terms and conditions as determined by the Committee in its sole
discretion.
2.29 Other Stock-Based Award
means an Award under Article X of the Plan
that is valued in whole or in part by reference to, or is payable in or
otherwise based on, Common Stock, including, without limitation, an Award valued
by reference to an Affiliate.
2.30 Parent means any parent corporation of the Company within the meaning
of Section 424(e) of the Code.
2.31 Participant
means an Eligible Individual to whom an Award
has been granted pursuant to the Plan.
2.32 Performance Award
means an Award granted to a Participant
pursuant to Article IX hereof contingent upon achieving certain Performance
Goals.
2.33 Performance Goals
means goals established by the Committee as
contingencies for Awards to vest and/or become exercisable or distributable
based on one or more of the performance goals set forth in Exhibit A
hereto.
2.34 Performance Period
means the designated period during which the
Performance Goals must be satisfied with respect to the Award to which the
Performance Goals relate.
2.35 Plan means this Second Amended & Restated Express, Inc.
Incentive Compensation Plan, as amended from time to time.
2.36 Reference Stock Option
has the meaning set forth in Section
7.1.
2.37 Restricted Stock
means an Award of shares of Common Stock
under the Plan that is subject to restrictions under Article VIII.
2.38 Restriction Period
has the meaning set forth in Section 8.3(a)
with respect to Restricted Stock.
2.39 Rule 16b-3
means Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provision.
2.40 Section 162(m) of the
Code means the exception for
performance-based compensation under Section 162(m) of the Code and any
applicable treasury regulations thereunder.
2.41 Section 409A of the Code
means the nonqualified deferred compensation
rules under Section 409A of the Code and any applicable treasury regulations and
other official guidance thereunder.
2.42 Securities Act
means the Securities Act of 1933, as amended
and all rules and regulations promulgated thereunder. Reference to a specific
section of the Securities Act or regulation thereunder shall include such
section or regulation, any valid regulation or interpretation promulgated under
such section, and any comparable provision of any future legislation or
regulation amending, supplementing or superseding such section or
regulation.
2.43 Stock Appreciation Right
shall mean the right pursuant to an Award
granted under Article VII.
2.44 Stock Option
or Option means any option to
purchase shares of Common Stock granted to Eligible Individuals granted pursuant
to Article VI.
2.45 Subsidiary
means any subsidiary corporation of the
Company within the meaning of Section 424(f) of the Code.
2.46 Tandem Stock Appreciation
Right shall mean the right to surrender
to the Company all (or a portion) of a Stock Option in exchange for an amount in
cash and/or stock equal to the difference between (i) the Fair Market Value on
the date such Stock Option (or such portion thereof) is surrendered, of the
Common Stock covered by such Stock Option (or such portion thereof), and (ii)
the aggregate exercise price of such Stock Option (or such portion
thereof).
2.47 Ten Percent Stockholder
means a person owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company, its Subsidiaries or its Parent.
2.48 Termination
means a Termination of Consultancy,
Termination of Directorship or Termination of Employment, as
applicable.
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2.49 Termination of Consultancy
means: (a) that the Consultant is no longer
acting as a consultant to the Company or an Affiliate; or (b) when an entity
which is retaining a Participant as a Consultant ceases to be an Affiliate
unless the Participant otherwise is, or thereupon becomes, a Consultant to the
Company or another Affiliate at the time the entity ceases to be an Affiliate.
In the event that a Consultant becomes an Eligible Employee or a Non-Employee
Director upon the termination of his or her consultancy, unless otherwise
determined by the Committee, in its sole discretion, no Termination of
Consultancy shall be deemed to occur until such time as such Consultant is no
longer a Consultant, an Eligible Employee or a Non-Employee Director.
Notwithstanding the foregoing, the Committee may otherwise define Termination of
Consultancy in the Award Agreement or, if no rights of a Participant are
reduced, may otherwise define Termination of Consultancy thereafter, provided
that any such change to the definition of the term Termination of Consultancy
does not subject the applicable Stock Option to Section 409A of the
Code.
2.50 Termination of Directorship
means that the Non-Employee Director has
ceased to be a director of the Company; except that if a Non-Employee Director
becomes an Eligible Employee or a Consultant upon the termination of his or her
directorship, his or her ceasing to be a director of the Company shall not be
treated as a Termination of Directorship unless and until the Participant has a
Termination of Employment or Termination of Consultancy, as the case may
be.
2.51 Termination of Employment
means: (a) a termination of employment (for
reasons other than a military or personal leave of absence granted by the
Company) of a Participant from the Company and its Affiliates; or (b) when an
entity which is employing a Participant ceases to be an Affiliate, unless the
Participant otherwise is, or thereupon becomes, employed by the Company or
another Affiliate at the time the entity ceases to be an Affiliate. In the event
that an Eligible Employee becomes a Consultant or a Non-Employee Director upon
the termination of his or her employment, unless otherwise determined by the
Committee, in its sole discretion, no Termination of Employment shall be deemed
to occur until such time as such Eligible Employee is no longer an Eligible
Employee, a Consultant or a Non-Employee Director. Notwithstanding the
foregoing, the Committee may otherwise define Termination of Employment in the
Award Agreement or, if no rights of a Participant are reduced, may otherwise
define Termination of Employment thereafter, provided that any such change to
the definition of the term Termination of Employment does not subject the
applicable Stock Option to Section 409A of the Code.
2.52 Transfer means: (a) when used as a noun, any direct or indirect
transfer, sale, assignment, pledge, hypothecation, encumbrance or other
disposition (including the issuance of equity in any entity), whether for value
or no value and whether voluntary or involuntary (including by operation of
law), and (b) when used as a verb, to directly or indirectly transfer, sell,
assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including
the issuance of equity in any entity) whether for value or for no value and
whether voluntarily or involuntarily (including by operation of law).
Transferred and Transferable shall have a correlative meaning.
ARTICLE
III
ADMINISTRATION
3.1 The Committee. The Plan shall be administered and interpreted by the
Committee. To the extent required by applicable law, rule or regulation, each
member of the Committee shall qualify as (a) a non-employee director under
Rule 16b-3, (b) an outside director under Code Section 162(m) and (c) an
independent director under the rules of any national securities exchange or
national securities association, as applicable. If it is later determined that
one or more members of the Committee do not so qualify, actions taken by the
Committee prior to such determination shall be valid despite such failure to
qualify. In the event that any member of the Committee does not qualify as a
non-employee director for purposes of Section 16 of the Exchange Act, then all
compensation that is intended to be exempt from Section 16 will also be approved
by the Board or a subcommittee made up of members of the Board who qualify as
non-employee directors. In the event that any member of the Committee does not
qualify as an outside director for purposes of Section 162(m) of the Code,
then all compensation that is intended to be exempt from Section 162(m) of the
Code will also be approved by a subcommittee made up of members of the Board who
qualify as outside directors.
3.2 Grants of Awards. The Committee shall have full authority to grant, pursuant
to the terms of this Plan, to Eligible Individuals: (i) Stock Options, (ii)
Stock Appreciation Rights, (iii) Restricted Stock, (iv) Performance Awards; (v)
Other Stock-Based Awards; and (vi) Other Cash-Based Awards. In particular, the
Committee shall have the authority:
(a) to select the Eligible Individuals to
whom Awards may from time to time be granted hereunder;
(b) to determine whether and to what
extent Awards, or any combination thereof, are to be granted hereunder to one or
more Eligible Individuals;
(c) to determine the number of shares of
Common Stock to be covered by each Award granted hereunder;
(d) to determine the terms and conditions,
not inconsistent with the terms of the Plan, of any Award granted hereunder
(including, but not limited to, the exercise or purchase price (if any), any
restriction or limitation, any vesting schedule or acceleration thereof, or any
forfeiture restrictions or waiver thereof, regarding any Award and the shares of
Common Stock relating thereto, based on such factors, if any, as the Committee
shall determine, in its sole discretion);
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(e) to determine whether, to what extent
and under what circumstances grants of Options and other Awards under the Plan
are to operate on a tandem basis and/or in conjunction with or apart from other
awards made by the Company outside of this Plan;
(f) to determine whether and under what
circumstances a Stock Option may be settled in cash, Common Stock and/or
Restricted Stock under Section 6.4(d);
(g) to determine whether a Stock Option is
an Incentive Stock Option or Non-Qualified Stock Option;
(h) to determine whether to require a
Participant, as a condition of the granting of any Award, to not sell or
otherwise dispose of shares acquired pursuant to the exercise of an Award for a
period of time as determined by the Committee, in its sole discretion, following
the date of the acquisition of such Award;
(i) to modify, extend or renew an Award,
subject to Article XII and Section 6.4(l), provided, however, that such action
does not subject the Award to Section 409A of the Code without the consent of
the Participant; and
(j) solely to the extent permitted by
applicable law, to determine whether, to what extent and under what
circumstances to provide loans (which may be on a recourse basis and shall bear
interest at the rate the Committee shall provide) to Participants in order to
exercise Options under the Plan.
3.3 Guidelines. Subject to Article XII hereof, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan and perform all acts, including the delegation of
its responsibilities (to the extent permitted by applicable law and applicable
stock exchange rules), as it shall, from time to time, deem advisable; to
construe and interpret the terms and provisions of the Plan and any Award issued
under the Plan (and any agreements relating thereto); and to otherwise supervise
the administration of the Plan. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any agreement relating
thereto in the manner and to the extent it shall deem necessary to effectuate
the purpose and intent of the Plan. The Committee may adopt special guidelines
and provisions for persons who are residing in or employed in, or subject to,
the taxes of, any domestic or foreign jurisdictions to comply with applicable
tax and securities laws of such domestic or foreign jurisdictions.
Notwithstanding the foregoing, no action of the Committee under this Section 3.3
shall impair the rights of any Participant without the Participants consent. To
the extent applicable, this Plan is intended to comply with the applicable
requirements of Rule 16b-3, and with respect to Awards intended to be
performance-based, the applicable provisions of Section 162(m) of the Code,
and the Plan shall be limited, construed and interpreted in a manner so as to
comply therewith.
3.4 Decisions Final. Any decision, interpretation or other action made or taken
in good faith by or at the direction of the Company, the Board or the Committee
(or any of its members) arising out of or in connection with the Plan shall be
within the absolute discretion of all and each of them, as the case may be, and
shall be final, binding and conclusive on the Company and all employees and
Participants and their respective heirs, executors, administrators, successors
and assigns.
3.5 Procedures. If the Committee is appointed, the Board shall designate one
of the members of the Committee as chairman and the Committee shall hold
meetings, subject to the By-Laws of the Company, at such times and places as it
shall deem advisable, including, without limitation, by telephone conference or
by written consent to the extent permitted by applicable law. A majority of the
Committee members shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. Any decision or determination
reduced to writing and signed by all of the Committee members in accordance with
the By-Laws of the Company, shall be fully effective as if it had been made by a
vote at a meeting duly called and held. The Committee shall keep minutes of its
meetings and shall make such rules and regulations for the conduct of its
business as it shall deem advisable.
3.6 Designation of
Consultants/Liability.
(a) The Committee may designate employees
of the Company and professional advisors to assist the Committee in the
administration of the Plan and (to the extent permitted by applicable law and
applicable exchange rules) may grant authority to officers to grant Awards
and/or execute agreements or other documents on behalf of the
Committee.
(b) The Committee may employ such legal
counsel, consultants and agents as it may deem desirable for the administration
of the Plan and may rely upon any opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.
Expenses incurred by the Committee or the Board in the engagement of any such
counsel, consultant or agent shall be paid by the Company. The Committee, its
members and any person designated pursuant to sub-section (a) above shall not be
liable for any action or determination made in good faith with respect to the
Plan. To the maximum extent permitted by applicable law, no officer of the
Company or member or former member of the Committee or of the Board shall be
liable for any action or determination made in good faith with respect to the
Plan or any Award granted under it.
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ARTICLE IV
SHARE
LIMITATION
4.1 Shares. (a) Subject to any increase or decrease pursuant to Section 4.2, the
aggregate number of shares of Common Stock that may be issued or used for
reference purposes or with respect to which Awards may be granted under the Plan
shall not exceed 15,215,769 in the aggregate, which includes 10,054,895 shares
previously issued under the Plan or to be issued in connection with outstanding
awards and 5,160,874 shares available for future issuance. The shares may be
either authorized and unissued Common Stock or Common Stock held in or acquired
for the treasury of the Company or both. The maximum number of shares of Common
Stock with respect to which Incentive Stock Options may be granted under the
Plan shall be 5,160,874 shares. With respect to Stock Appreciation Rights
settled in Common Stock, upon settlement, only the number of shares of Common
Stock delivered to a Participant (based on the difference between the Fair
Market Value of the shares of Common Stock subject to such Stock Appreciation
Right on the date such Stock Appreciation Right is exercised and the exercise
price of each Stock Appreciation Right on the date such Stock Appreciation Right
was awarded) shall count against the aggregate and individual share limitations
set forth under Sections 4.1(a) and 4.1(b). If any Option, Stock Appreciation
Right or Other Stock-Based Award granted under the Plan expires, terminates or
is canceled for any reason without having been exercised in full, the number of
shares of Common Stock underlying any such unexercised Award shall again be
available for the purpose of Awards under the Plan. If any shares of Restricted
Stock, Performance Awards or Other Stock-Based Awards denominated in shares of
Common Stock awarded under the Plan to a Participant are forfeited for any
reason (other than with respect to any Restricted Stock, Performance Awards or
Other Stock-Based Awards ultimately settled in cash), the number of forfeited
shares of Restricted Stock, Performance Awards or Other Stock-Based Awards
denominated in shares of Common Stock shall again be available for purposes of
Awards under the Plan. If a Tandem Stock Appreciation Right or a Limited Stock
Appreciation Right is granted in tandem with an Option, such grant shall only
apply once against the maximum number of shares of Common Stock which may be
issued under the Plan. Any Award under the Plan settled in cash shall not be
counted against the foregoing maximum share limitations.
(b) Individual Participant Limitations. To
the extent required by Section 162(m) of the Code for Awards under the Plan to
qualify as performance-based compensation, the following individual
Participant limitations apply:
(i) The maximum number of shares of Common
Stock subject to any Award of Stock Options, or Stock Appreciation Rights, or
shares of Restricted Stock, or Other Stock-Based Awards for which the grant of
such Award or the lapse of the relevant Restriction Period is subject to the
attainment of Performance Goals in accordance with Section 8.3(a)(ii) which may
be granted under the Plan during any fiscal year of the Company to any
Participant shall be one million (1,000,000) shares per type of Award (which
shall be subject to any further increase or decrease pursuant to Section 4.2),
provided that the maximum number of shares of Common Stock for all types of
Awards does not exceed one million (1,000,000) shares (which shall be subject to
any further increase or decrease pursuant to Section 4.2) during any fiscal year
of the Company. If a Tandem Stock Appreciation Right is granted or a Limited
Stock Appreciation Right is granted in tandem with a Stock Option, it shall
apply against the Participants individual share limitations for both Stock
Appreciation Rights and Stock Options.
(ii) There are no annual individual share
limitations applicable to Participants on Restricted Stock or Other Stock-Based Awards for which the grant, vesting or payment (as
applicable) of any such Award is not subject to the attainment of Performance
Goals.
(iii) The maximum number of shares of
Common Stock subject to any Performance Award which may be granted under the
Plan during any fiscal year of the Company to any Participant shall be one
million (1,000,000) shares (which shall be subject to any further increase or
decrease pursuant to Section 4.2) with respect to any fiscal year of the
Company.
(iv) The maximum value of a cash payment
made under a Performance Award which may be granted under the Plan with respect
to any fiscal year of the Company to any Participant shall be ten million
dollars ($10,000,000.00).
(v) Notwithstanding anything to the
contrary, the aggregate value of all compensation paid or granted to any
individual for service as a Non-Employee Director with respect to any calendar
year, including Awards granted under this Plan and cash fees paid by the Company
to such Non-Employee Director outside of the Plan, shall not exceed six hundred
thousand dollars ($600,000), calculating the value of any Awards granted during
such calendar year based on the grant date fair value of such Awards for
financial reporting purposes, excluding special compensation paid to any
Non-Employee Director when serving as Chairman of the Board.
(vi) The individual Participant
limitations set forth in this Section 4.1(b) (other than Section 4.1 (b)(iii))
shall be cumulative; that is, to the extent that shares of Common Stock for
which Awards are permitted to be granted to a Participant during a fiscal year
are not covered by an Award to such Participant in a fiscal year, the number of
shares of Common Stock available for Awards to such Participant shall
automatically increase in the subsequent fiscal years during the term of the
Plan until used.
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4.2 Changes.
(a) The existence of the Plan and the
Awards granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize (i) any
adjustment, recapitalization, reorganization or other change in the Companys
capital structure or its business, (ii) any merger or consolidation of the
Company or any Affiliate, (iii) any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock, (iv) the
dissolution or liquidation of the Company or any Affiliate, (v) any sale or
transfer of all or part of the assets or business of the Company or any
Affiliate or (vi) any other corporate act or proceeding.
(b) Subject to the provisions of Section
4.2(d), in the event of a dividend or other distribution (whether in the form of
cash, Common Stock, other securities, or other property) other than regular cash
dividends, recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, Change in Control or
exchange of Common Stock or other securities of the Company, or other corporate
transaction or event affects the Common Stock such that an adjustment is
necessary or appropriate in order to prevent dilution or enlargement of benefits
or potential benefits intended to be made available under the Plan (a Section
4.2 Event), the Committee shall equitably adjust (i) the number of shares of
Common Stock or other securities of the Company (or number and kind of other
securities or property) with respect to which Awards may be granted under the
Plan, (ii) the maximum share limitation applicable to each type of Award that
may be granted to any individual participant in any calendar year, (iii) the
number of shares of Common Stock or other securities of the Company (or number
and kind of other securities or property) subject to outstanding Awards, and
(iv) the exercise price with respect to any Stock Option or any Stock
Appreciation Right. Any such adjustment determined by the Committee shall be
final, binding and conclusive on the Company and all Participants and their
respective heirs, executors, administrators, successors and permitted assigns.
If the Company enters into or is involved in any merger, reorganization, Change
in Control or other business combination with any person or entity (a Merger
Event), the Committee may, prior to such Merger Event and effective upon such
Merger Event, take such action as it deems appropriate, including, but not
limited to, replacing Awards with substitute Awards in respect of the shares,
other securities or other property of the surviving corporation or any affiliate
of the surviving corporation on such terms and conditions, as to the number of
shares, pricing and otherwise, which shall substantially preserve the value,
rights and benefits of any affected Awards granted hereunder as of the date of
the consummation of the Merger Event. Upon receipt by any affected Participant
of any such substitute Award (or payment) as a result of any such Merger Event,
such Participants affected Awards for which such substitute Awards (or payment)
were received shall be thereupon cancelled without the need for obtaining the
consent of any such affected Participant. In addition, subject to Section
4.2(d), if there shall occur any change in the capital structure or the business
of the Company that is not a Section 4.2 Event or Merger Event (an Other
Extraordinary Event), then the Committee, in its sole discretion, may adjust
any Award and make such other adjustments to the Plan. Except as expressly
provided in this Section 4.2 or in the applicable Award Agreement, a Participant
shall have no rights by reason of any Section 4.2 Event, Merger Event, or any
Other Extraordinary Event.
(c) Fractional shares of Common Stock
resulting from any adjustment in Awards pursuant to Section 4.2(a) or 4.2(b)
shall be aggregated until, and eliminated at, the time of exercise by
rounding-down for fractions less than one-half and rounding-up for fractions
equal to or greater than one-half. No cash settlements shall be made with
respect to fractional shares eliminated by rounding. Notice of any adjustment
shall be given by the Committee to each Participant whose Award has been
adjusted and such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of the Plan.
(d) In the event of a Merger Event in
which the Company is not the surviving entity or in the event of any transaction
that results in the acquisition of substantially all of the Companys
outstanding Common Stock by a single person or entity or by a group of persons
and/or entities acting in concert, or in the event of the sale or transfer of
all or substantially all of the Companys assets (all of the foregoing being
referred to as an Acquisition Event), then the Committee may, in its sole
discretion, in addition to its rights under Article XI herein, terminate all
outstanding and unexercised Stock Options, Stock Appreciation Rights, or any
Other Stock-Based Awards that provide for a Participant elected exercise,
effective as of the date of the Acquisition Event, by delivering notice of
termination to each Participant at least 10 days prior to the date of
consummation of the Acquisition Event, in which case during the period from the
date on which such notice of termination is delivered to the consummation of the
Acquisition Event, each such Participant shall have the right to exercise in
full all of his or her vested Awards that are then outstanding, but any such
exercise shall be contingent on the consummation of the Acquisition Event, and,
provided that, if the Acquisition Event does not take place within a specified
period after giving such notice for any reason whatsoever, the notice and
exercise pursuant thereto shall be null and void.
If an Acquisition Event occurs but the
Committee does not terminate the outstanding Awards pursuant to this Section
4.2(d), then the provisions of Section 4.2(b) and Article XI shall
apply.
4.3 Minimum Purchase
Price. Notwithstanding any provision of the
Plan to the contrary, if authorized but previously unissued shares of Common
Stock are issued under the Plan, such shares shall not be issued for a
consideration that is less than as permitted under applicable law.
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ARTICLE V
ELIGIBILITY
5.1 General Eligibility. All current and prospective Eligible Individuals are
eligible to be granted Awards. Eligibility for the grant of Awards and actual
participation in the Plan shall be determined by the Committee in its sole
discretion.
5.2 Incentive Stock
Options. Notwithstanding the foregoing, only
Eligible Employees of the Company, its Subsidiaries and its Parent (if any) are
eligible to be granted Incentive Stock Options under the Plan. Eligibility for
the grant of an Incentive Stock Option and actual participation in the Plan
shall be determined by the Committee in its sole discretion.
5.3 General Requirement. The vesting and exercise of Awards granted to a prospective
Eligible Individual are conditioned upon such individual actually becoming an
Eligible Employee, Consultant or Non- Employee Director, respectively.
ARTICLE VI
STOCK
OPTIONS
6.1 Options. Stock Options may be granted alone or in addition to other Awards
granted under the Plan. Each Stock Option granted under the Plan shall be of one
of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock
Option.
6.2 Grants. The Committee shall have the authority to grant to any Eligible
Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options. The Committee shall have the authority to grant any
Consultant or Non-Employee Director one or more Non-Qualified Stock Options. To
the extent that any Stock Option does not qualify as an Incentive Stock Option
(whether because of its provisions or the time or manner of its exercise or
otherwise), such Stock Option or the portion thereof which does not so qualify
shall constitute a separate Non-Qualified Stock Option.
6.3 Incentive Stock
Options. Notwithstanding anything in the Plan
to the contrary, no term of the Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422.
6.4 Terms of Options. Options granted under the Plan shall be subject to the
following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable:
(a) Exercise Price. The exercise price per
share of Common Stock subject to a Stock Option shall be determined by the
Committee at the time of grant, provided that the per share exercise price of a
Stock Option shall not be less than 100% (or, in the case of an Incentive Stock
Option granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of
the Common Stock at the time of grant.
(b) Stock Option Term. The term of each
Stock Option shall be fixed by the Committee, provided that no Stock Option
shall be exercisable more than 10 years after the date the Option is granted;
and provided further that the term of an Incentive Stock Option granted to a Ten
Percent Stockholder shall not exceed five years.
(c) Exercisability. Unless otherwise
provided by the Committee in accordance with the provisions of this Section 6.4,
Stock Options granted under the Plan shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the Committee
at the time of grant. If the Committee provides, in its discretion, that any
Stock Option is exercisable subject to certain limitations (including, without
limitation, that such Stock Option is exercisable only in installments or within
certain time periods), the Committee may waive such limitations on the
exercisability at any time at or after the time of grant in whole or in part
(including, without limitation, waiver of the installment exercise provisions or
acceleration of the time at which such Stock Option may be exercised), based on
such factors, if any, as the Committee shall determine, in its sole discretion.
Unless otherwise determined by the Committee at the time of grant, the Option
agreement shall provide that (i) in the event that the Participant engages in
Detrimental Activity prior to any exercise of the Stock Option (whether vested
or unvested), all Stock Options held by the Participant shall thereupon
terminate and expire, (ii) as a condition of the exercise of a Stock Option, the
Participant shall be required to certify (or shall be deemed to have certified)
at the time of exercise in a manner acceptable to the Company that the
Participant is in compliance with the terms and conditions of the Plan and that
the Participant has not engaged in, and does not intend to engage in, any
Detrimental Activity, and (iii) in the event that the Participant engages in
Detrimental Activity during the one-year period commencing on the date that the
Stock Option is exercised or becomes vested, the Company shall be entitled to
recover from the Participant at any time within one year after such exercise or
vesting, and the Participant shall pay over to the Company, an amount equal to
any gain realized as a result of the exercise (whether at the time of exercise
or thereafter).
(d) Method of Exercise. Subject to
whatever installment exercise and waiting period provisions apply under Section
6.4(c), to the extent vested, Stock Options may be exercised in whole or in part
at any time during the Option term, by giving written notice of exercise to the
Company specifying the number of shares of Common Stock to be purchased. Such
notice shall be accompanied by payment in full of the purchase price as follows:
(i) in cash or by check, bank draft or money order payable to the order of the
Company; (ii) solely to the extent permitted by applicable law, if the Common
Stock is traded on a national securities exchange, and the Committee authorizes,
through a procedure whereby the Participant delivers irrevocable instructions to
a
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broker reasonably acceptable to the
Committee to deliver promptly to the Company an amount equal to the purchase
price; or (iii) on such other terms and conditions as may be acceptable to the
Committee (including, without limitation, the relinquishment of Stock Options or
by payment in full or in part in the form of Common Stock owned by the
Participant based on the Fair Market Value of the Common Stock on the payment
date as determined by the Committee). No shares of Common Stock shall be issued
until payment therefore, as provided herein, has been made or provided
for.
(e) Non-Transferability of Options. No
Stock Option shall be Transferable by the Participant otherwise than by will or
by the laws of descent and distribution, and all Stock Options shall be
exercisable, during the Participants lifetime, only by the Participant.
Notwithstanding the foregoing, the Committee may determine, in its sole
discretion, at the time of grant or thereafter that a Non-Qualified Stock Option
that is otherwise not Transferable pursuant to this Section is Transferable to a
Family Member in whole or in part and in such circumstances, and under such
conditions, as specified by the Committee. A Non-Qualified Stock Option that is
Transferred to a Family Member pursuant to the preceding sentence (i) may not be
subsequently Transferred otherwise than by will or by the laws of descent and
distribution and (ii) remains subject to the terms of this Plan and the
applicable Award Agreement. Any shares of Common Stock acquired upon the
exercise of a Non-Qualified Stock Option by a permissible transferee of a Non-
Qualified Stock Option or a permissible transferee pursuant to a Transfer after
the exercise of the Non- Qualified Stock Option shall be subject to the terms of
this Plan and the applicable Award Agreement.
(f) Termination by Death or Disability.
Unless otherwise determined by the Committee at the time of grant, or if no
rights of the Participant are reduced, thereafter, if a Participants
Termination is by reason of death or Disability, all Stock Options that are held
by such Participant that are vested and exercisable at the time of the
Participants Termination may be exercised by the Participant at any time within
a period of one year from the date of such Termination, but in no event beyond
the expiration of the stated term of such Stock Options; provided, however, that
if the Participant dies within such exercise period, all unexercised Stock
Options held by such Participant shall thereafter be exercisable, to the extent
to which they were exercisable at the time of death, for a period of one year
from the date of such death, but in no event beyond the expiration of the stated
term of such Stock Options.
(g) Involuntary Termination Without Cause.
Unless otherwise determined by the Committee at the time of grant, or if no
rights of the Participant are reduced, thereafter, if a Participants
Termination is by involuntary termination without Cause, all Stock Options that
are held by such Participant that are vested and exercisable at the time of the
Participants Termination may be exercised by the Participant at any time within
a period of 90 days from the date of such Termination, but in no event beyond
the expiration of the stated term of such Stock Options.
(h) Voluntary Termination. Unless
otherwise determined by the Committee at the time of grant, or if no rights of
the Participant are reduced, thereafter, if a Participants Termination is
voluntary (other than a voluntary termination described in Section 6.4(i)(y)
hereof), all Stock Options that are held by such Participant that are vested and
exercisable at the time of the Participants Termination may be exercised by the
Participant at any time within a period of 90 days from the date of such
Termination, but in no event beyond the expiration of the stated term of such
Stock Options.
(i) Termination for Cause. Unless
otherwise determined by the Committee at the time of grant, or if no rights of
the Participant are reduced, thereafter, if a Participants Termination (x) is
for Cause or (y) is a voluntary Termination (as provided in Section 6.4(h))
after the occurrence of an event that would be grounds for a Termination for
Cause, all Stock Options, whether vested or not vested, that are held by such
Participant shall thereupon terminate and expire as of the date of such
Termination.
(j) Unvested Stock Options. Unless
otherwise determined by the Committee at the time of grant, or if no rights of
the Participant are reduced, thereafter, Stock Options that are not vested as of
the date of a Participants Termination for any reason shall terminate and
expire as of the date of such Termination.
(k) Incentive Stock Option Limitations. To
the extent that the aggregate Fair Market Value (determined as of the time of
grant) of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by an Eligible Employee during any calendar year
under this Plan and/or any other stock option plan of the Company, any
Subsidiary or any Parent exceeds $100,000, such Options shall be treated as
Non-Qualified Stock Options. Should any provision of this Plan not be necessary
in order for the Stock Options to qualify as Incentive Stock Options, or should
any additional provisions be required, the Committee may amend this Plan
accordingly, without the necessity of obtaining the approval of the stockholders
of the Company.
(l) Form, Modification, Extension and
Renewal of Stock Options. Subject to the terms and conditions and within the
limitations of the Plan, Stock Options shall be evidenced by such form of
agreement or grant as is approved by the Committee. Notwithstanding anything
herein to the contrary, without the consent of stockholders, the Committee may
not (i) lower the strike price of a Stock Option after it is granted, or take
any other action with the effect of lowering the strike price of a Stock Option
after it is granted, or (ii) permit the cancellation of a Stock Option in
exchange for another Award.
(m) Deferred Delivery of Common Shares.
The Committee may in its discretion permit Participants to defer delivery of
Common Stock acquired pursuant to a Participants exercise of an Option in
accordance with the terms and conditions established by the Committee in the
applicable Award Agreement, which shall be intended to comply with the
requirements of Section 409A of the Code.
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(n) Early Exercise. The Committee may
provide that a Stock Option include a provision whereby the Participant may
elect at any time before the Participants Termination to exercise the Stock
Option as to any part or all of the shares of Common Stock subject to the Stock
Option prior to the full vesting of the Stock Option and such shares shall be
subject to the provisions of Article VIII and be treated as Restricted Stock.
Unvested shares of Common Stock so purchased may be subject to a repurchase
option in favor of the Company or to any other restriction the Committee
determines to be appropriate.
(o) Reserved.
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 Tandem Stock Appreciation Rights.
Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option (a Reference Stock Option)
granted under the Plan (Tandem Stock Appreciation Rights). In the case of a
Non-Qualified Stock Option, such rights may be granted either at or after the
time of the grant of such Reference Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of the grant of such
Reference Stock Option.
7.2 Terms and Conditions of Tandem
Stock Appreciation Rights. Tandem Stock
Appreciation Rights granted hereunder shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Committee, and the following:
(a) Exercise Price. The exercise price per
share of Common Stock subject to a Tandem Stock Appreciation Right shall be
determined by the Committee at the time of grant, provided that the per share
exercise price of a Tandem Stock Appreciation Right shall not be less than 100%
of the Fair Market Value of the Common Stock at the time of grant.
(b) Term. A Tandem Stock Appreciation
Right or applicable portion thereof granted with respect to a Reference Stock
Option shall terminate and no longer be exercisable upon the termination or
exercise of the Reference Stock Option, except that, unless otherwise determined
by the Committee, in its sole discretion, at the time of grant, a Tandem Stock
Appreciation Right granted with respect to less than the full number of shares
covered by the Reference Stock Option shall not be reduced until and then only
to the extent that the exercise or termination of the Reference Stock Option
causes the number of shares covered by the Tandem Stock Appreciation Right to
exceed the number of shares remaining available and unexercised under the
Reference Stock Option.
(c) Exercisability. Tandem Stock
Appreciation Rights shall be exercisable only at such time or times and to the
extent that the Reference Stock Options to which they relate shall be
exercisable in accordance with the provisions of Article VI, and shall be
subject to the provisions of Section 6.4(c).
(d) Method of Exercise. A Tandem Stock
Appreciation Right may be exercised by the Participant by surrendering the
applicable portion of the Reference Stock Option. Upon such exercise and
surrender, the Participant shall be entitled to receive an amount determined in
the manner prescribed in this Section 7.2. Stock Options which have been so
surrendered, in whole or in part, shall no longer be exercisable to the extent
that the related Tandem Stock Appreciation Rights have been
exercised.
(e) Payment. Upon the exercise of a Tandem
Stock Appreciation Right, a Participant shall be entitled to receive up to, but
no more than, an amount in cash and/or Common Stock (as chosen by the Committee
in its sole discretion) equal in value to the excess of the Fair Market Value of
one share of Common Stock over the Option exercise price per share specified in
the Reference Stock Option agreement multiplied by the number of shares of
Common Stock in respect of which the Tandem Stock Appreciation Right shall have
been exercised, with the Committee having the right to determine the form of
payment.
(f) Deemed Exercise of Reference Stock
Option. Upon the exercise of a Tandem Stock Appreciation Right, the Reference
Stock Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of the limitation set
forth in Article IV of the Plan on the number of shares of Common Stock to be
issued under the Plan.
(g) Non-Transferability. Tandem Stock
Appreciation Rights shall be Transferable only when and to the extent that the
underlying Stock Option would be Transferable under Section 6.4(e) of the
Plan.
7.3 Non-Tandem Stock Appreciation
Rights. Non-Tandem Stock Appreciation Rights
may also be granted without reference to any Stock Options granted under the
Plan.
7.4 Terms and Conditions of Non-Tandem
Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights granted hereunder shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Committee, and the following:
(a) Exercise Price. The exercise price per
share of Common Stock subject to a Non-Tandem Stock Appreciation Right shall be
determined by the Committee at the time of grant, provided that the per share
exercise price of a Non-Tandem Stock Appreciation Right shall not be less than
100% of the Fair Market Value of the Common Stock at the time of
grant.
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(b) Term. The term of each Non-Tandem
Stock Appreciation Right shall be fixed by the Committee, but shall not be
greater than 10 years after the date the right is granted.
(c) Exercisability. Unless otherwise
provided by the Committee in accordance with the provisions of this Section 7.4,
Non-Tandem Stock Appreciation Rights granted under the Plan shall be exercisable
at such time or times and subject to such terms and conditions as shall be
determined by the Committee at the time of grant. If the Committee provides, in
its discretion, that any such right is exercisable subject to certain
limitations (including, without limitation, that it is exercisable only in
installments or within certain time periods), the Committee may waive such
limitations on the exercisability at any time at or after grant in whole or in
part (including, without limitation, waiver of the installment exercise
provisions or acceleration of the time at which such right may be exercised),
based on such factors, if any, as the Committee shall determine, in its sole
discretion. Unless otherwise determined by the Committee at grant, the Award
Agreement shall provide that (i) in the event that the Participant engages in
Detrimental Activity prior to any exercise of the Non-Tandem Stock Appreciation
Right, all Non-Tandem Stock Appreciation Rights held by the Participant shall
thereupon terminate and expire, (ii) as a condition of the exercise of a
Non-Tandem Stock Appreciation Right, the Participant shall be required to
certify (or shall be deemed to have certified) at the time of exercise in a
manner acceptable to the Company that the Participant is in compliance with the
terms and conditions of the Plan and that the Participant has not engaged in,
and does not intend to engage in, any Detrimental Activity, and (iii) in the
event that the Participant engages in Detrimental Activity during the one-year
period commencing on the date the Non-Tandem Stock Appreciation Right is
exercised or becomes vested, the Company shall be entitled to recover from the
Participant at any time within one year after such exercise or vesting, and the
Participant shall pay over to the Company, an amount equal to any gain realized
as a result of the exercise (whether at the time of exercise or
thereafter).
(d) Method of Exercise. Subject to
whatever installment exercise and waiting period provisions apply under Section
7.4(c), Non-Tandem Stock Appreciation Rights may be exercised in whole or in
part at any time in accordance with the applicable Award Agreement, by giving
written notice of exercise to the Company specifying the number of Non-Tandem
Stock Appreciation Rights to be exercised.
(e) Payment. Upon the exercise of a
Non-Tandem Stock Appreciation Right a Participant shall be entitled to receive,
for each right exercised, up to, but no more than, an amount in cash and/or
Common Stock (as chosen by the Committee in its sole discretion) equal in value
to the excess of the Fair Market Value of one share of Common Stock on the date
that the right is exercised over the Fair Market Value of one share of Common
Stock on the date that the right was awarded to the Participant.
(f) Termination. Unless otherwise
determined by the Committee at grant or, if no rights of the Participant are
reduced, thereafter, subject to the provisions of the applicable Award Agreement
and the Plan, upon a Participants Termination for any reason, Non-Tandem Stock
Appreciation Rights will remain exercisable following a Participants
Termination on the same basis as Stock Options would be exercisable following a
Participants Termination in accordance with the provisions of Sections 6.4(f)
through 6.4(j).
(g) Non-Transferability. No Non-Tandem
Stock Appreciation Rights shall be Transferable by the Participant otherwise
than by will or by the laws of descent and distribution, and all such rights
shall be exercisable, during the Participants lifetime, only by the
Participant.
7.5 Limited Stock Appreciation
Rights. The Committee may, in its sole
discretion, grant Tandem and Non-Tandem Stock Appreciation Rights either as a
general Stock Appreciation Right or as a Limited Stock Appreciation Right.
Limited Stock Appreciation Rights may be exercised only upon the occurrence of a
Change in Control or such other event as the Committee may, in its sole
discretion, designate at the time of grant or thereafter. Upon the exercise of
Limited Stock Appreciation Rights, except as otherwise provided in an Award
Agreement, the Participant shall receive in cash and/or Common Stock, as
determined by the Committee, an amount equal to the amount (i) set forth in
Section 7.2(e) with respect to Tandem Stock Appreciation Rights, or (ii) set
forth in Section 7.4(e) with respect to Non-Tandem Stock Appreciation
Rights.
ARTICLE VIII
RESTRICTED
STOCK
8.1 Awards of Restricted
Stock. Shares of Restricted Stock may be
issued either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the Eligible Individuals, to whom, and the time or
times at which, grants of Restricted Stock shall be made, the number of shares
to be awarded, the price (if any) to be paid by the Participant (subject to
Section 8.2), the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards.
Unless otherwise determined by the
Committee at grant, each Award of Restricted Stock shall provide that in the
event that the Participant engages in Detrimental Activity prior to, or during
the one-year period after, any vesting of Restricted Stock, the Committee may
direct that all unvested Restricted Stock shall be immediately forfeited to the
Company and that the Participant shall pay over to the Company an amount equal
to the Fair Market Value at the time of vesting of any Restricted Stock which
had vested in the period referred to above.
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The Committee may condition the grant or
vesting of Restricted Stock upon the attainment of specified performance targets
(including, the Performance Goals) or such other factor as the Committee may
determine in its sole discretion, including to comply with the requirements of
Section 162(m) of the Code.
8.2 Awards and
Certificates. Eligible Individuals selected
to receive Restricted Stock shall not have any right with respect to such Award,
unless and until such Participant has delivered a fully executed copy of the
agreement evidencing the Award to the Company and has otherwise complied with
the applicable terms and conditions of such Award. Further, such Award shall be
subject to the following conditions:
(a) Purchase Price. The purchase price of
Restricted Stock shall be fixed by the Committee. Subject to Section 4.3, the
purchase price for shares of Restricted Stock may be zero to the extent
permitted by applicable law, and, to the extent not so permitted, such purchase
price may not be less than par value.
(b) Acceptance. Awards of Restricted Stock
must be accepted within a period of 60 days (or such shorter period as the
Committee may specify at grant) after the grant date, by executing a Restricted
Stock agreement and by paying whatever price (if any) the Committee has
designated thereunder.
(c) Legend. Each Participant receiving
Restricted Stock shall be issued a stock certificate in respect of such shares
of Restricted Stock, unless the Committee elects to use another system, such as
book entries by the transfer agent, as evidencing ownership of shares of
Restricted Stock. Such certificate shall be registered in the name of such
Participant, and shall, in addition to such legends required by applicable
securities laws, bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such Award, substantially in the following form:
The anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge of the shares of stock represented hereby are subject to
the terms and conditions (including forfeiture) of the Express, Inc. (the
Company) 2010 Incentive Compensation Plan (the Plan) and an Agreement
entered into between the registered owner and the Company dated [_______].
Copies of such Plan and Agreement are on file at the principal office of the
Company.
(d) Custody. If stock certificates are
issued in respect of shares of Restricted Stock, the Committee may require that
any stock certificates evidencing such shares be held in custody by the Company
until the restrictions thereon shall have lapsed, and that, as a condition of
any grant of Restricted Stock, the Participant shall have delivered a duly
signed stock power or other instruments of assignment (including a power of
attorney), each endorsed in blank with a guarantee of signature if deemed
necessary or appropriate by the Company, which would permit transfer to the
Company of all or a portion of the shares subject to the Restricted Stock Award
in the event that such Award is forfeited in whole or part.
8.3 Restrictions and
Conditions. The shares of Restricted Stock
awarded pursuant to the Plan shall be subject to the following restrictions and
conditions:
(a) Restriction Period. (i) The
Participant shall not be permitted to Transfer shares of Restricted Stock
awarded under the Plan during the period or periods set by the Committee (the
Restriction Period) commencing on the date of such Award, as set forth in the
Restricted Stock Award Agreement and such agreement shall set forth a vesting
schedule and any event that would accelerate vesting of the shares of Restricted
Stock. Within these limits, based on service, attainment of Performance Goals
pursuant to Section 8.3(a)(ii) and/or such other factors or criteria as the
Committee may determine in its sole discretion, the Committee may condition the
grant or provide for the lapse of such restrictions in installments in whole or
in part, or may accelerate the vesting of all or any part of any Restricted
Stock Award and/or waive the deferral limitations for all or any part of any
Restricted Stock Award.
(ii) If the grant of shares of Restricted
Stock or the lapse of restrictions is based on the attainment of Performance
Goals, the Committee shall establish the objective Performance Goals and the
applicable vesting percentage of the Restricted Stock applicable to each
Participant or class of Participants in writing prior to the beginning of the
applicable fiscal year or at such later date as otherwise determined by the
Committee and while the outcome of the Performance Goals are substantially
uncertain. Such Performance Goals may incorporate provisions for disregarding
(or adjusting for) changes in accounting methods, corporate transactions
(including, without limitation, dispositions and acquisitions) and other similar
type events or circumstances. With regard to a Restricted Stock Award that is
intended to comply with Section 162(m) of the Code, to the extent that any such
provision would create impermissible discretion under Section 162(m) of the Code
or otherwise violate Section 162(m) of the Code, such provision shall be of no
force or effect.
(b) Rights as a Stockholder. Except as
provided in Section 8.3(a) and this Section 8.3(b) and as otherwise determined
by the Committee, the Participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a holder of shares of Common Stock of the
Company including, without limitation, the right to vote such shares, subject to
and conditioned upon the full vesting of shares of Restricted Stock, the right
to tender such shares, and the right to receive all dividends and other
distributions paid with respect to the Restricted Stock, provided that such
dividends or other distributions will be subject to the
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same vesting requirements as the
underlying Restricted Stock and shall be paid at the time the Restricted Stock
becomes vested. If dividends or distributions are paid in shares of Common
Stock, such shares shall be deposited with the Company and shall be subject to
the same restrictions on transferability and forfeitability as the Restricted
Stock with respect to which they were paid. The Committee may, in its sole
discretion, determine at the time of grant that the payment of dividends shall
be deferred until, and conditioned upon, the expiration of the applicable
Restriction Period.
(c) Termination. Unless otherwise
determined by the Committee at grant or, if no rights of the Participant are
reduced, thereafter, subject to the applicable provisions of the Award Agreement
and the Plan, upon a Participants Termination for any reason during the
relevant Restriction Period, all Restricted Stock still subject to restriction
will be forfeited in accordance with the terms and conditions established by the
Committee at grant or thereafter.
(d) Lapse of Restrictions. If and when the
Restriction Period expires without a prior forfeiture of the Restricted Stock,
the certificates for such shares, if any, shall be delivered to the Participant.
All legends shall be removed from said certificates at the time of delivery to
the Participant, except as otherwise required by applicable law or other
limitations imposed by the Committee.
ARTICLE IX
PERFORMANCE
AWARDS
9.1 Performance Awards. The Committee may grant a Performance Award to a Participant
payable upon the attainment of specific Performance Goals. The Committee may
grant Performance Awards that are intended to qualify as performance-based
compensation under Section 162(m) of the Code, as well as Performance Awards
that are not intended to qualify as performance-based compensation under
Section 162(m) of the Code. If the Performance Award is payable in shares of
Restricted Stock, such shares shall be transferable to the Participant only upon
attainment of the relevant Performance Goal in accordance with Article VIII. If
the Performance Award is payable in cash, it may be paid upon the attainment of
the relevant Performance Goals either in cash or in shares of Restricted Stock
(based on the then current Fair Market Value of such shares), as determined by
the Committee, in its sole and absolute discretion. Each Performance Award shall
be evidenced by an Award Agreement in such form that is not inconsistent with
the Plan and that the Committee may from time to time approve.
Unless otherwise determined by the
Committee at grant, each Performance Award shall provide that in the event the
Participant engages in Detrimental Activity prior to, or during the one-year
period after, any vesting of the Performance Award, the Committee may direct (at
any time within one year thereafter) that all of the unvested portion of the
Performance Award shall be immediately forfeited to the Company and that the
Participant shall pay over to the Company an amount equal to any gain that the
Participant realized from any Performance Award that had vested in the period
referred to above.
With respect to Performance Awards that
are intended to qualify as performance-based compensation under Section 162(m) of the Code, the Committee shall condition the
right to payment of any Performance Award upon the attainment of objective
Performance Goals established pursuant to Section 9.2(c).
9.2 Terms and
Conditions. Performance Awards awarded
pursuant to this Article IX shall be subject to the following terms and
conditions:
(a) Earning of Performance Award. At the
expiration of the applicable Performance Period, the Committee shall determine
the extent to which the Performance Goals established pursuant to Section 9.2
(c) are achieved and the percentage of each Performance Award that has been
earned.
(b) Non-Transferability. Subject to the
applicable provisions of the Award Agreement and the Plan, Performance Awards
may not be Transferred during the Performance Period.
(c) Objective Performance Goals, Formulae
or Standards. With respect to Performance Awards that are intended to qualify as
performance-based compensation under Section 162(m) of the Code, the Committee
shall establish the objective Performance Goals for the earning of Performance
Awards based on a Performance Period applicable to each Participant or class of
Participants in writing prior to the beginning of the applicable Performance
Period or at such later date as permitted under Section 162(m) of the Code and
while the outcome of the Performance Goals are substantially uncertain. Such
Performance Goals may incorporate, if and only to the extent permitted under
Section 162(m) of the Code, provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar type events or
circumstances. To the extent that any such provision would create impermissible
discretion under Section 162(m) of the Code or otherwise violate Section 162(m)
of the Code, such provision shall be of no force or effect, with respect to
Performance Awards that are intended to qualify as performance-based
compensation under Section 162(m) of the Code.
(d) Dividends. Unless otherwise determined
by the Committee at the time of grant, amounts equal to dividends declared
during the Performance Period with respect to the number of shares of Common
Stock covered by a Performance Award will not be paid to the
Participant.
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(e) Payment. Following the
Committees determination in accordance with Section 9.2(a), the Company shall
settle Performance Awards, in such form (including, without limitation, in
shares of Common Stock or in cash) as determined by the Committee, in an amount
equal to such Participants earned Performance Awards. Notwithstanding the
foregoing, the Committee may, in its sole discretion, award an amount less than
the earned Performance Awards and/or subject the payment of all or part of any
Performance Award to additional vesting, forfeiture and deferral conditions as
it deems appropriate.
(f) Termination. Subject to the
applicable provisions of the Award Agreement and the Plan, upon a Participants
Termination for any reason during the Performance Period for a given Performance
Award, the Performance Award in question will vest or be forfeited in accordance
with the terms and conditions established by the Committee at grant.
ARTICLE X
OTHER STOCK-BASED AND CASH-BASED AWARDS
10.1 Other Stock-Based
Awards. The Committee is authorized to
grant to Eligible Individuals Other Stock-Based Awards that are payable in,
valued in whole or in part by reference to, or otherwise based on or related to
shares of Common Stock, including but not limited to, shares of Common Stock
awarded purely as a bonus and not subject to restrictions or conditions, shares
of Common Stock in payment of the amounts due under an incentive or performance
plan sponsored or maintained by the Company or an Affiliate, stock equivalent
units, restricted stock units, and Awards valued by reference to book value of
shares of Common Stock. Other Stock-Based Awards may be granted either alone or
in addition to or in tandem with other Awards granted under the Plan.
Subject to the provisions of the Plan, the
Committee shall have authority to determine the Eligible Individuals, to whom,
and the time or times at which, such Awards shall be made, the number of shares
of Common Stock to be awarded pursuant to such Awards, and all other conditions
of the Awards. The Committee may also provide for the grant of Common Stock
under such Awards upon the completion of a specified Performance
Period.
The Committee may condition the grant or
vesting of Other Stock-Based Awards upon the attainment of specified Performance
Goals as the Committee may determine, in its sole discretion; provided that to
the extent that such Other Stock-Based Awards are intended to comply with
Section 162(m) of the Code, the Committee shall establish the objective
Performance Goals for the grant or vesting of such Other Stock- Based Awards
based on a Performance Period applicable to each Participant or class of
Participants in writing prior to the beginning of the applicable Performance
Period or at such later date as permitted under Section 162(m) of the Code and
while the outcome of the Performance Goals are substantially uncertain. Such
Performance Goals may incorporate, if and only to the extent permitted under
Section 162(m) of the Code, provisions for disregarding (or adjusting for)
changes in accounting methods, corporate transactions (including, without
limitation, dispositions and acquisitions) and other similar type events or
circumstances. To the extent that any such provision would create impermissible
discretion under Section 162(m) of the Code or otherwise violate Section 162(m)
of the Code, such provision shall be of no force or effect, with respect to
Performance Awards that are intended to qualify as performance-based
compensation under Section 162(m) of the Code.
10.2 Terms and
Conditions. Other Stock-Based Awards made
pursuant to this Article X shall be subject to the following terms and
conditions:
(a) Non-Transferability. Subject to
the applicable provisions of the Award Agreement and the Plan, shares of Common
Stock subject to Awards made under this Article X may not be Transferred prior
to the date on which the shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period lapses.
(b) Dividends. Unless otherwise
determined by the Committee at the time of Award, subject to the provisions of
the Award Agreement and the Plan, the recipient of an Award under this Article X
shall not be entitled to receive, currently or on a deferred basis, dividends or
dividend equivalents with respect to the number of shares of Common Stock
covered by the Award, as determined at the time of the Award by the Committee,
in its sole discretion.
(c) Vesting. Any Award under this
Article X and any Common Stock covered by any such Award shall vest or be
forfeited to the extent so provided in the Award Agreement, as determined by the
Committee, in its sole discretion.
(d) Price. Common Stock issued on a
bonus basis under this Article X may be issued for no cash consideration. Common
Stock purchased pursuant to a purchase right awarded under this Article X shall
be priced, as determined by the Committee in its sole discretion.
10.3 Other Cash-Based
Awards. The Committee may from time to
time grant Other Cash-Based Awards to Eligible Individuals in such amounts, on
such terms and conditions, and for such consideration, including no
consideration or such minimum consideration as may be required by applicable
law, as it shall determine in its sole discretion. Other Cash-Based Awards may
be granted subject to the satisfaction of vesting conditions or may be awarded
purely as a bonus and not subject to restrictions or conditions, and if subject
to vesting conditions, the Committee may accelerate the vesting of such Awards
at any time in its sole discretion. The grant of an Other Cash-Based Award shall
not require a segregation of any of the Companys assets for satisfaction of the
Companys payment obligation thereunder.
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10.4 Detrimental
Activity. Unless otherwise determined by
the Committee at grant, the Award Agreement shall provide that (i) in the event
that the Participant engages in Detrimental Activity prior to any exercise,
distribution or settlement of any Other Stock-Based Award and/or Other
Cash-Based Award, such Other Stock-Based Awards and/or Other Cash-Based Awards
held by the Participant shall thereupon terminate and expire, (ii) as a
condition of the exercise, distribution or settlement of an Other Stock-Based
Award and/or Other Cash-Based Award, the Participant shall be required to
certify (or shall be deemed to have certified) at the time of exercise in a
manner acceptable to the Company that the Participant is in compliance with the
terms and conditions of the Plan and that the Participant has not engaged in,
and does not intend to engage in, any Detrimental Activity, and (iii) in the
event that the Participant engages in Detrimental Activity during the one-year
period commencing on the date of exercise, distribution, or settlement of an
Other Stock-Based Award and/or Other Cash-Based Award, the Company shall be
entitled to recover from the Participant at any time within one year after such
exercise, settlement, or distribution, and the Participant shall pay over to the
Company, an amount equal to any gain realized as a result of the exercise,
distribution or settlement (whether at the time of exercise, distribution or
settlement or thereafter).
ARTICLE XI
CHANGE IN CONTROL PROVISIONS
11.1 Benefits. In the event of a Change in Control of the Company (as
defined below), and except as otherwise provided by the Committee in an Award
Agreement, a Participants unvested Award shall not vest and a Participants
Award shall be treated in accordance with one of the following methods as
determined by the Committee:
(a) Awards, whether or not then vested,
shall be continued, assumed, have new rights substituted therefore or be treated
in accordance with Section 4.2(d) hereof, as determined by the Committee, and
restrictions to which shares of Restricted Stock or any other Award granted
prior to the Change in Control are subject shall not lapse upon a Change in
Control and the Restricted Stock or other Award shall, where appropriate in the
sole discretion of the Committee, receive the same distribution as other Common
Stock on such terms as determined by the Committee; provided that the Committee
may decide to award additional Restricted Stock or other Awards in lieu of any
cash distribution. Notwithstanding anything to the contrary herein, for purposes
of Incentive Stock Options, any assumed or substituted Stock Option shall comply
with the requirements of Treasury Regulation Section 1.424-1 (and any amendment
thereto).
(b) The Committee, in its sole discretion,
may provide for the purchase of any Awards by the Company or an Affiliate for an
amount of cash equal to the excess (if any) of the Change in Control Price (as
defined below) of the shares of Common Stock covered by such Awards, over the
aggregate exercise price of such Awards (if applicable). For purposes of this
Section 11.1, Change in Control Price shall mean the highest price per
share of Common Stock paid in any transaction related to a Change in Control of
the Company.
(c) Notwithstanding any other provision
herein to the contrary, the Committee may, in its sole discretion, provide for
accelerated vesting or lapse of restrictions, of an Award at any
time.
11.2 Change in
Control. Unless otherwise determined by
the Committee in the applicable Award Agreement or other written agreement
approved by the Committee, a Change in Control shall be deemed to occur if:
(a) any person, as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any
trustee or other fiduciary holding securities under any employee benefit plan of
the Company, or any company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of
Common Stock of the Company), becoming the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Companys
then outstanding securities;
(b) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board, and
any new director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in
paragraph (a), (c), or (d) of this Section 11.2 or a director whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such term is used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board) whose
election by the Board or nomination for election by the Companys stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the two-year period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority of the Board;
(c) a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
provided, however, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
(other than those covered by the exceptions in Section 11.2(a)) acquires more
than 50% of the combined voting power of the Companys then outstanding
securities shall not constitute a Change in Control of the Company;
or
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(d) a complete liquidation or dissolution
of the Company or the consummation of a sale or disposition by the Company of
all or substantially all of the Companys assets other than the sale or
disposition of all or substantially all of the assets of the Company to a person
or persons who beneficially own, directly or indirectly, 50% or more of the
combined voting power of the outstanding voting securities of the Company at the
time of the sale.
Notwithstanding the foregoing, with
respect to any Award that is characterized as non-qualified deferred
compensation within the meaning of Section 409A of the Code, an event shall not
be considered to be a Change in Control under the Plan for purposes of payment
of any such award unless such event is also a change in ownership, a change
in effective control or a change in the ownership of a substantial portion of
the assets of the Company within the meaning of Section 409A of the
Code.
ARTICLE XII
TERMINATION OR AMENDMENT OF PLAN
12.1 Termination or
Amendment. Notwithstanding any other
provision of the Plan, the Board may at any time, and from time to time, amend,
in whole or in part, any or all of the provisions of the Plan (including any
amendment deemed necessary to ensure that the Company may comply with any
regulatory requirement referred to in Article XIV or Section 409A of the Code),
or suspend or terminate it entirely, retroactively or otherwise; provided,
however, that, unless otherwise required by law or specifically provided herein,
the rights of a Participant with respect to Awards granted prior to such
amendment, suspension or termination, may not be impaired without the consent of
such Participant and, provided further, that without the approval of the holders
of the Companys Common Stock entitled to vote in accordance with applicable
law, no amendment may be made that would (i) increase the aggregate number of
shares of Common Stock that may be issued under the Plan (except by operation of
Section 4.2); (ii) increase the maximum individual Participant limitations for a
fiscal year under Section 4.1(b) (except by operation of Section 4.2); (iii)
change the classification of individuals eligible to receive Awards under the
Plan; (iv) decrease the minimum option price of any Stock Option or Stock
Appreciation Right; (v) extend the maximum option period under Section 6.4; (vi)
alter the Performance Goals for Restricted Stock, Performance Awards or Other
Stock-Based Awards as set forth in Exhibit A hereto; (vii) award any Stock
Option or Stock Appreciation Right in replacement of a canceled Stock Option or
Stock Appreciation Right with a higher exercise price than the replacement
award; or (viii) require stockholder approval in order for the Plan to continue
to comply with the applicable provisions of Section 162(m) of the Code or, to
the extent applicable to Incentive Stock Options, Section 422 of the Code. In no
event may the Plan be amended without the approval of the stockholders of the
Company in accordance with the applicable laws of the State of Delaware to
increase the aggregate number of shares of Common Stock that may be issued under
the Plan, decrease the minimum exercise price of any Award, or to make any other
amendment that would require stockholder approval under Financial Industry
Regulatory Authority (FINRA) rules and regulations or the rules of any exchange
or system on which the Companys securities are listed or traded at the request
of the Company. Notwithstanding anything herein to the contrary, the Board may
amend the Plan or any Award Agreement at any time without a Participants
consent to comply with applicable law including Section 409A of the
Code.
The Committee may amend the terms of any
Award theretofore granted, prospectively or retroactively, but, subject to
Article IV or as otherwise specifically provided herein, no such amendment or
other action by the Committee shall impair the rights of any holder without the
holders consent.
ARTICLE XIII
UNFUNDED STATUS OF PLAN
The Plan is intended to constitute an
unfunded plan for incentive and deferred compensation. With respect to any
payment as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any right that is greater than those of a general
unsecured creditor of the Company.
ARTICLE XIV
GENERAL
PROVISIONS
14.1 Legend. The Committee may require each person receiving shares of
Common Stock pursuant to a Stock Option or other Award under the Plan to
represent to and agree with the Company in writing that the Participant is
acquiring the shares without a view to distribution thereof. In addition to any
legend required by the Plan, the certificates for such shares may include any
legend that the Committee deems appropriate to reflect any restrictions on
Transfer. All certificates for shares of Common Stock delivered under the Plan
shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, any stock exchange upon which the
Common Stock is then listed or any national securities exchange system upon
whose system the Common Stock is then quoted, any applicable federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
14.2 Other Plans. Nothing contained in the Plan shall prevent the Board 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.
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14.3 No Right to
Employment/Directorship/Consultancy.
Neither the Plan nor the grant of any Option or other Award hereunder shall give
any Participant or other employee, Consultant or Non-Employee Director any right
with respect to continuance of employment, consultancy or directorship by the
Company or any Affiliate, nor shall there be a limitation in any way on the
right of the Company or any Affiliate by which an employee is employed or a
Consultant or Non-Employee Director is retained to terminate his or her
employment, consultancy or directorship at any time.
14.4 Withholding of
Taxes. The Company shall have the right
to deduct from any payment to be made pursuant to the Plan, or to otherwise
require, prior to the issuance or delivery of shares of Common Stock or the
payment of any cash hereunder, payment by the Participant of, any federal, state
or local taxes required by law to be withheld. Upon the vesting of Restricted
Stock (or other Award that is taxable upon vesting), or upon making an election
under Section 83(b) of the Code, a Participant shall pay all required
withholding to the Company. Any statutorily required withholding obligation with
regard to any Participant may be satisfied, subject to the consent of the
Committee, by reducing the number of shares of Common Stock otherwise
deliverable or by delivering shares of Common Stock already owned.
14.5 No Assignment of
Benefits. No Award or other benefit
payable under the Plan shall, except as otherwise specifically provided by law
or permitted by the Committee, be Transferable in any manner, and any attempt to
Transfer any such benefit shall be void, and any such benefit shall not in any
manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of any person who shall be entitled to such benefit, nor
shall it be subject to attachment or legal process for or against such
person.
14.6 Listing and Other
Conditions.
(a) Unless otherwise determined by the
Committee, as long as the Common Stock is listed on a national securities
exchange or system sponsored by a national securities association, the issuance
of shares of Common Stock pursuant to an Award shall be conditioned upon such
shares being listed on such exchange or system. The Company shall have no
obligation to issue such shares unless and until such shares are so listed, and
the right to exercise any Option or other Award with respect to such shares
shall be suspended until such listing has been effected.
(b) If at any time counsel to the Company
shall be of the opinion that any sale or delivery of shares of Common Stock
pursuant to an Option or other Award is or may in the circumstances be unlawful
or result in the imposition of excise taxes on the Company under the statutes,
rules or regulations of any applicable jurisdiction, the Company shall have no
obligation to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the Securities Act
or otherwise, with respect to shares of Common Stock or Awards, and the right to
exercise any Option or other Award shall be suspended until, in the opinion of
said counsel, such sale or delivery shall be lawful or will not result in the
imposition of excise taxes on the Company.
(c) Upon termination of any period of
suspension under this Section 14.6, any Award affected by such suspension which
shall not then have expired or terminated shall be reinstated as to all shares
available before such suspension and as to shares which would otherwise have
become available during the period of such suspension, but no such suspension
shall extend the term of any Award.
(d) A Participant shall be required to
supply the Company with certificates, representations and information that the
Company requests and otherwise cooperate with the Company in obtaining any
listing, registration, qualification, exemption, consent or approval the Company
deems necessary or appropriate.
14.7 Stockholders Agreement and
Other Requirements. Notwithstanding
anything herein to the contrary, as a condition to the receipt of shares of
Common Stock pursuant to an Award under the Plan, to the extent required by the
Committee, the Participant shall execute and deliver a stockholders agreement
or such other documentation that shall set forth certain restrictions on
transferability of the shares of Common Stock acquired upon exercise or
purchase, and such other terms as the Board or Committee shall from time to time
establish. Such stockholders agreement or other documentation shall apply to
the Common Stock acquired under the Plan and covered by such stockholders
agreement or other documentation. The Company may require, as a condition of
exercise, the Participant to become a party to any other existing stockholder
agreement (or other agreement).
14.8 Governing
Law. The Plan and actions taken in
connection herewith shall be governed and construed in accordance with the laws
of the State of Delaware (regardless of the law that might otherwise govern
under applicable Delaware principles of conflict of laws).
14.9 Jurisdiction; Waiver of Jury
Trial. Any suit, action or proceeding
with respect to the Plan or any Award Agreement, or any judgment entered by any
court of competent jurisdiction in respect of any thereof, shall be resolved
only in the courts of the State of Delaware or the United States District Court
for the District of Delaware and the appellate courts having jurisdiction of
appeals in such courts. In that context, and without limiting the generality of
the foregoing, the Company and each Participant shall irrevocably and
unconditionally (a) submit in any proceeding relating to the Plan or any Award
Agreement, or for the recognition and enforcement of any judgment in respect
thereof (a Proceeding), to the exclusive jurisdiction of the courts of the
State of Delaware, the court of the United States of America for the District of
Delaware, and appellate courts having jurisdiction of appeals from any of the
foregoing, and agree that all claims in respect of any such Proceeding shall be
heard and determined
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in such Delaware State court or, to the
extent permitted by law, in such federal court, (b) consent that any such
Proceeding may and shall be brought in such courts and waives any objection that
the Company and each Participant may now or thereafter have to the venue or
jurisdiction of any such Proceeding in any such court or that such Proceeding
was brought in an inconvenient court and agree not to plead or claim the same,
(c) waive all right to trial by jury in any Proceeding (whether based on
contract, tort or otherwise) arising out of or relating to the Plan or any Award
Agreement, (d) agree that service of process in any such Proceeding may be
effected by mailing a copy of such process by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such party, in the
case of a Participant, at the Participants address shown in the books and
records of the Company or, in the case of the Company, at the Companys
principal offices, attention General Counsel, and (e) agree that nothing in the
Plan shall affect the right to effect service of process in any other manner
permitted by the laws of the State of Delaware.
14.10
Construction. Wherever any words are
used in the Plan in the masculine gender they shall be construed as though they
were also used in the feminine gender in all cases where they would so apply,
and wherever words are used herein in the singular form they shall be construed
as though they were also used in the plural form in all cases where they would
so apply.
14.11 Other
Benefits. No Award granted or paid out
under the Plan shall be deemed compensation for purposes of computing benefits
under any retirement plan of the Company or its Affiliates nor affect any
benefit under any other benefit plan now or subsequently in effect under which
the availability or amount of benefits is related to the level of
compensation.
14.12 Costs. The Company shall bear all expenses associated with
administering this Plan, including expenses of issuing Common Stock pursuant to
Awards hereunder.
14.13 No Right to Same
Benefits. The provisions of Awards need
not be the same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.
14.14
Death/Disability. The Committee may in
its discretion require the transferee of a Participant to supply it with written
notice of the Participants death or Disability and to supply it with a copy of
the will (in the case of the Participants death) or such other evidence as the
Committee deems necessary to establish the validity of the transfer of an Award.
The Committee may also require that the agreement of the transferee to be bound
by all of the terms and conditions of the Plan.
14.15 Section 16(b) of the Exchange
Act. All elections and transactions under
the Plan by persons subject to Section 16 of the Exchange Act involving shares
of Common Stock are intended to comply with any applicable exemptive condition
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan and the transaction of business thereunder.
14.16 Section 409A of the
Code. The Plan is intended to comply with
the applicable requirements of Section 409A of the Code and shall be limited,
construed and interpreted in accordance with such intent. To the extent that any
Award is subject to Section 409A of the Code, it shall be paid in a manner that
will comply with Section 409A of the Code, including proposed, temporary or
final regulations or any other guidance issued by the Secretary of the Treasury
and the Internal Revenue Service with respect thereto. Notwithstanding anything
herein to the contrary, any provision in the Plan that is inconsistent with
Section 409A of the Code shall be deemed to be amended to comply with Section
409A of the Code and to the extent such provision cannot be amended to comply
therewith, such provision shall be null and void. The Company shall have no
liability to a Participant, or any other party, if an Award that is intended to
be exempt from, or compliant with, Section 409A of the Code is not so exempt or
compliant or for any action taken by the Committee or the Company and, in the
event that any amount or benefit under the Plan becomes subject to penalties
under Section 409A of the Code, responsibility for payment of such penalties
shall rest solely with the affected Participants and not with the Company.
Notwithstanding any contrary provision in the Plan or Award Agreement, any
payment(s) of nonqualified deferred compensation (within the meaning of
Section 409A of the Code) that are otherwise required to be made under the Plan
to a specified employee (as defined under Section 409A of the Code) as a
result of his or her separation from service (other than a payment that is not
subject to Section 409A of the Code) shall be delayed for the first six (6)
months following such separation from service (or, if earlier, the date of death
of the specified employee) and shall instead be paid (in a manner set forth in
the Award Agreement) on the payment date that immediately follows the end of
such six-month period or as soon as administratively practicable
thereafter.
14.17 Successor and
Assigns. The Plan shall be binding on all
successors and permitted assigns of a Participant, including, without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate.
14.18 Severability of
Provisions. If any provision of the Plan
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof, and the Plan shall be construed
and enforced as if such provisions had not been included.
14.19 Payments to Minors,
Etc. Any benefit payable to or for the
benefit of a minor, an incompetent person or other person incapable of receipt
thereof shall be deemed paid when paid to such persons guardian or to the party
providing or reasonably appearing to provide for the care of such person, and
such payment shall fully discharge the Committee, the Board, the Company, its
Affiliates and their employees, agents and representatives with respect
thereto.
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14.20 Agreement. As a condition to the grant of an Award, if requested by the
Company and the lead underwriter of any public offering of the Common Stock (the
Lead Underwriter), a Participant shall irrevocably agree not to sell,
contract to sell, grant any option to purchase, transfer the economic risk of
ownership in, make any short sale of, pledge or otherwise transfer or dispose
of, any interest in any Common Stock or any securities convertible into,
derivative of, or exchangeable or exercisable for, or any other rights to
purchase or acquire Common Stock (except Common Stock included in such public
offering or acquired on the public market after such offering) during such
period of time following the effective date of a registration statement of the
Company filed under the Securities Act that the Lead Underwriter shall specify
(the Lock-Up Period). The Participant shall further agree to sign such
documents as may be requested by the Lead Underwriter to effect the foregoing
and agree that the Company may impose stop-transfer instructions with respect to
Common Stock acquired pursuant to an Award until the end of such Lock-Up
Period.
14.21 Headings and
Captions. The headings and captions
herein are provided for reference and convenience only, shall not be considered
part of the Plan, and shall not be employed in the construction of the
Plan.
14.22 Section 162(m) of the
Code. Notwithstanding any other provision
of the Plan to the contrary, the provisions of the Plan requiring compliance
with Section 162(m) of the Code shall not apply to Awards granted under the Plan
that are not intended to qualify as performance-based compensation under
Section 162(m) of the Code. Any Award granted under the Plan that is intended to
be performance-based compensation under Section 162(m) of the Code, shall be
subject to the approval of the material terms of the Plan by a majority of the
stockholders of the Company in accordance with Section 162(m) of the Code and
the treasury regulations promulgated thereunder.
ARTICLE XV
EFFECTIVE DATE OF
PLAN
The Plan became effective at 12:01 AM
Eastern Time on May 12, 2010, the day that the Companys Registration Statement
on Form S-1 for its Initial Public Offering (File No. 333-164906) was declared
effective by the Securities and Exchange Commission.
ARTICLE XVI
TERM OF
PLAN
No Award shall be granted pursuant to the
Plan on or after the tenth anniversary of the earlier of the date that the Plan
is adopted or the date of stockholder approval, but Awards granted prior to such
tenth anniversary may extend beyond that date; provided that no Award (other
than a Stock Option or Stock Appreciation Right) that is intended to be
performance-based compensation under Section 162(m) of the Code shall be
granted on or after the fifth anniversary of the stockholder approval of the
Plan unless the Performance Goals are re-approved (or other designated
Performance Goals are approved) by the stockholders no later than the first
stockholder meeting that occurs in the fifth year following the year in which
stockholders approve the Performance Goals.
ARTICLE XVII
NAME OF
PLAN
This Plan shall be known as the Express,
Inc. 2010 Incentive Compensation Plan.
EXPRESS Notice of
2017 Annual Meeting of Stockholders
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Table of Contents
EXHIBIT A
PERFORMANCE
GOALS
To the extent permitted under Section
162(m) of the Code, performance goals established for purposes of Awards
intended to be performance-based compensation under Section 162(m) of the
Code, shall be based on the attainment of certain target levels of, or a
specified increase or decrease (as applicable) in one or more of the following
performance goals:
● |
earnings per
share; |
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operating
income; |
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gross
income; |
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net income (before or after
taxes); |
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cash
flow; |
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gross
profit; |
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gross profit return on
investment; |
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gross margin return on
investment; |
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gross
margin; |
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operating
margin; |
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working
capital; |
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earnings before interest and
taxes; |
● |
earnings before interest, tax,
depreciation and amortization; |
● |
return on equity;
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return on
assets; |
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return on
capital; |
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return on invested capital;
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net
revenues; |
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gross
revenues; |
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revenue
growth; |
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annual recurring
revenues; |
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recurring
revenues; |
● |
license
revenues; |
● |
sales or market
share; |
● |
total shareholder
return; |
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economic value
added; |
● |
specified objectives with regard to
limiting the level of increase in all or a portion of the Companys bank
debt or other long-term or short-term public or private debt or other
similar financial obligations of the Company, which may be calculated net
of cash balances and/or other offsets and adjustments as may be
established by the Committee in its sole discretion;
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● |
the fair market value of a share of
Common Stock; |
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the growth in the value of an
investment in the Common Stock assuming the reinvestment of
dividends; |
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reduction in operating
expenses; |
● |
comparable sales, comparable store
sales, e-commerce sales; |
● |
inventory turnover or shrinkage;
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● |
free cash flow; |
● |
cash flow from operations;
or |
Table of Contents
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strategic or operational business
criteria, consisting of one or more objectives based on meeting geographic
expansion or new concept development goals; new store opening; product
cost targets; customer satisfaction; human resources goals, including
employee engagement, staffing, training and development and succession
planning; implementation or development of new or enhanced technology
systems and capabilities; and goals relating to acquisitions or
divestitures of subsidiaries, affiliates, or joint
ventures. |
With respect to Awards that are intended
to qualify as performance-based compensation under Section 162(m) of the Code,
to the extent permitted under Section 162(m) of the Code, the Committee may, in
its sole discretion, also exclude, or adjust to reflect, the impact of an event
or occurrence that the Committee determines should be appropriately excluded or
adjusted, including:
(a) restructurings, discontinued
operations, extraordinary items or events, and other unusual or non-recurring
charges as described in Accounting Principles Board Opinion No. 30 and/or
managements discussion and analysis of financial condition and results of
operations appearing or incorporated by reference in the Companys Form 10-K for
the applicable year;
(b) an event either not directly related
to the operations of the Company or not within the reasonable control of the
Companys management; or
(c) a change in tax law or accounting
standards required by generally accepted accounting principles.
Performance goals may also be based upon
individual participant performance goals, as determined by the Committee, in its
sole discretion. In addition, Awards that are not intended to qualify as
performance-based compensation under Section 162(m) of the Code may be based
on the performance goals set forth herein or on such other performance goals as
determined by the Committee in its sole discretion.
In addition, such performance goals may be
based upon the attainment of specified levels of Company (or subsidiary,
division, other operational unit or administrative department of the Company)
performance under one or more of the measures described above relative to the
performance of other corporations. With respect to Awards that are intended to
qualify as performance-based compensation under Section 162(m) of the Code, to
the extent permitted under Section 162(m) of the Code, but only to the extent
permitted under Section 162(m) of the Code (including, without limitation,
compliance with any requirements for stockholder approval), the Committee may
also:
(a) designate additional business criteria
on which the performance goals may be based; or
(b) adjust, modify or amend the
aforementioned business criteria.
EXPRESS Notice of
2017 Annual Meeting of Stockholders
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Table of Contents
Driving
Directions to Annual Meeting
Directions to Express, Inc. corporate
headquarters located at 1 Express Drive, Columbus, Ohio 43230:
From the
North
Take I-71 South to 270 South. Take I-270
South for approximately 5.4 miles to the Morse Road exit (#32). Turn left at the
end of exit ramp onto Morse Road. Pass under the interstate. Make your first
right onto Express Drive through Gate 1 and follow signs.
From the
South
Take I-71 North to I-670 East to I-270
North. Take I-270 North for approximately 3 miles to the Morse Road exit (#32).
At the end of the exit ramp, turn right onto Morse Road and make your first
right onto Express Drive through Gate 1 and follow signs.
From the
East
Take I-70 West to I-270 North. Follow
I-270 North approximately 6 miles to the Morse Road exit (#32). At the end of
the exit ramp, turn right onto Morse Road and make your first right onto Express
Drive through Gate 1 and follow signs.
From the
West
Take I-70 East to I-71 North. Follow I-71
North for approximately .8 miles to I-670 East. Take I-670 East to I-270 North.
Take I-270 North for approximately 3 miles to the Morse Road exit (#32). At the
end of the exit ramp, turn right onto Morse Road and make your first right onto
Express Drive through Gate 1 and follow signs.
From Port Columbus
Airport
Take Airport Road out of Port Columbus to
I-670 East. Take I-670 East to I-270 North. Take I-270 North for approximately 3
miles to the Morse Road exit (#32). At the end of the exit ramp, turn right onto
Morse Road and make your first right onto Express Drive through Gate 1 and
follow signs.
Table of Contents
Table of
Contents
EXPRESS, INC. 1 EXPRESS
DRIVE COLUMBUS, OH 43230 |
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VOTE BY INTERNET -
www.proxyvote.com Use the Internet
to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the meeting
date. Have your proxy card in hand when you access the web site and follow
the instructions to obtain your records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF FUTURE
PROXY MATERIALS If you would like to
reduce the costs incurred by our company in mailing proxy materials, you
can consent to receiving all future proxy statements, proxy cards and
annual reports electronically via e-mail or the Internet. To sign up for
electronic delivery, please follow the instructions above to vote using
the Internet and, when prompted, indicate that you agree to receive or
access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Time the day
before the meeting date. Have your proxy card in hand when you call and
then follow the instructions.
VOTE BY MAIL Mark, sign and date your proxy card and return it in
the postage-paid envelope we have provided or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717. |
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TO VOTE, MARK
BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
KEEP THIS PORTION FOR YOUR
RECORDS |
DETACH AND RETURN THIS
PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
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The Board of Directors
recommends you vote FOR the following: |
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1. |
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Election of Class I Directors. |
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Nominees |
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For |
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Against |
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Abstain |
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1. |
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Michael Archbold |
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☐ |
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☐ |
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☐ |
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2. |
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Peter Swinburn |
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☐ |
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☐ |
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The Board of Directors
recommends you vote FOR the following proposals: |
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For |
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Against |
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Abstain |
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2. |
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Advisory vote to approve executive
compensation (say-on-pay). |
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☐ |
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3. |
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Ratification of PricewaterhouseCoopers LLP
as Express, Inc.'s independent registered public accounting firm for
2017. |
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☐ |
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4. |
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Approval of the Internal Revenue Code
Section 162(m) performance goals and various annual grant limitations
under the Express, Inc. 2010 Incentive Compensation Plan. |
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☐ |
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NOTE: Also includes
authorization of the named proxies to vote in their discretion upon such
other business as may properly come before the meeting or any adjournment
or postponement thereof. |
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Please sign exactly as your name(s)
appear(s) hereon. When signing as attorney, executor, administrator, or
other fiduciary, please give full title as such. Joint owners should each
sign personally. All holders must sign. If a corporation or partnership,
please sign in full corporate or partnership name, by authorized
officer. |
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Signature
[PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
Date |
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Table of
Contents
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Annual
Report is/are available at www.proxyvote.com |
EXPRESS,
INC. Annual Meeting of
Stockholders June 7, 2017 8:30 a.m., EDT This proxy is solicited by the Board of
Directors
The stockholder(s) hereby
appoint(s) David Kornberg and Lacey Bundy, or either of them, as proxies,
each with the power to appoint his or her substitute, and hereby
authorize(s) them to represent and to vote, as designated on the reverse
side of this ballot, all of the shares of common stock of Express, Inc.
that the stockholder(s) is/are entitled to vote at the Annual Meeting of
Stockholders to be held at 8:30 a.m., EDT, on June 7, 2017, at the
Express, Inc. corporate headquarters located at 1 Express Drive, Columbus,
Ohio, and any adjournment or postponement thereof.
This proxy, when properly
executed, will be voted in the manner directed herein. If no such
direction is made, this proxy will be voted in accordance with the
recommendations of the Board of Directors.
Continued and to
be signed on reverse
side |
This regulatory filing also includes additional resources:
expr_courtesy-pdf.pdf
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