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. )
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as Permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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Bed Bath & Beyond Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Date Filed:
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The following information supplements the proxy statement (the Proxy Statement) of
Bed Bath & Beyond Inc. (the Company, we or us) provided to shareholders of the Company in connection with the solicitation of proxies by the Board of Directors of the Company (the Board) for
the 2017 Annual Meeting of Shareholders (the Annual Meeting). The Annual Meeting is scheduled to be held on Thursday, June 29, 2017, at 9:00 a.m. Eastern Time at The Madison Hotel, One Convent Road, Morristown, New Jersey 07960.
This supplement to the Proxy Statement (this Supplement) is being filed with the Securities and Exchange Commission (the SEC) on June 22, 2017. Capitalized terms used in this Supplement and not otherwise defined have the
meaning given to them in the Proxy Statement
Supplemental Disclosure in Response to Recommendations by Proxy Advisory Firm Institutional Shareholder
Services (ISS)
At the Annual Meeting, you are being asked to vote, among other things, on (i) the election of ten
nominees as directors of the Company (Proposal 1) and (ii) the approval, by
non-binding
vote, of the 2016 compensation paid to the Companys Named Executive Officers (Proposal 3). The Board
recommends that you vote FOR each nominee in Proposal 1 and FOR Proposal 3.
We are writing to further explain the
Boards recommendations, in light of the unfavorable recommendations recently published by ISS, specifically relating to the nominations of the Board members who serve on our Compensation Committee in Proposal 1, and on the 2016 compensation
program in Proposal 3.
The Company strongly disagrees with ISSs recommendations, for a number of reasons, and asks our shareholders
to consider the following points:
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Our Compensation Committee has accelerated its
on-going
efforts to better align the Companys compensation practices with the Companys performance
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the past several years, the Compensation Committee and Board have made substantial improvements to the Companys compensation practices, focusing, among other things, on significant reductions in CEO total target compensation and important
improvements to the overall structure of incentive compensation. These actions have been in response to shareholder concerns regarding magnitude of CEO pay and support of more long-term performance-based awards.
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For 2017, based on the extensive discussions described below with shareholders and other factors, the Compensation Committee and Board have
accelerated this process. They have continued to make significant reductions in CEO total target compensation and to increase the emphasis on long-term performance by adjusting the weighting of the three-year performance goal for Performance Stock
Units (PSUs) (from 50% to 75%). In addition, they have also broadened and deepened these improvements, including steps which resulted in significant reductions in the salary and equity compensation of the Companys
Co-Chairmen
and the compensation of all
non-employee
directors, and no increases in the compensation of almost all executives other than the CEO and
Co-Chairmen
(whose compensation has been significantly reduced).
Specifically, the Company responded to
shareholder concerns with the following key adjustments to 2017 executive compensation:
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Reduced the value of CEO target compensation by approximately $2.35 million, or by approximately 14%. This reflects a reduction of approximately $1 million in 2017 equity compensation awards, as well as a
discount applied to the CEOs grant of 2017 PSUs by virtue of the newly required
two-year
post-vesting holding period described below.
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In total, since fiscal 2015, the value of annual CEO target compensation has been reduced by approximately $5 million, or by an aggregate
of approximately 26%.
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Reduced the combined salary and equity compensation of the Companys
Co-Chairmen
by approximately 50%, or approximately $3.1 million, as a result of the election by the
Co-Chairmen
under their employment agreements to commence senior status, and reductions in equity compensation by the Compensation Committee in consultation with the
Co-Chairmen.
The
Co-Chairmen
intend to remain actively involved with the business of the Company.
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Reduced the compensation of each
non-employee
director by $19,000.
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Adopted a
two-year
post-vesting holding period for the CEO of shares acquired on vesting of 2017 PSUs, net of withholding taxes, resulting in a reduction in the value of CEO
equity compensation of approximately $1.35 million.
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No increase in target compensation for all executive officers and other senior officers reporting to the CEO, other than an increase in equity awards for the Chief Financial Officer who was promoted to her current
position just three years ago.
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No increase in total compensation for other executives, including all vice presidents, with minor exceptions.
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Improved the PSU performance-based equity program by, among other things, adjusting the weighting of three-year and
one-year
performance goals from 50/50 to 75/25, respectively,
continuing the trend of increasing the weighting of the three-year goal.
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In this context, it is also worth noting that a
different proxy advisory firm, Glass Lewis & Co. (Glass Lewis), has recommended a vote FOR the 2016 compensation paid to the Companys Named Executive Officers (Proposal 3), recognizing the substantial
improvements to the Companys executive compensation program, including the reduction in target CEO compensation, the maintenance of his base salary at the same level for a fourth consecutive year, the reduction in compensation of the
Companys Co-Chairmen, the adoption of post-vesting holding periods for the CEOs PSUs, the adjustments to PSUs to more heavily weight three-year performance, and adding an EBIT margin metric and TSR limiter to PSU awards. The Compensation
Committee believes that its compensation policies, including the changes to 2017 executive compensation, align the long-term interests of the Companys shareholders and its executive officers.
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Compensation Committee members have been and will continue to be responsive to shareholder concerns on executive compensation, and have joined in the approval by the Board of a $19,000 reduction in the
compensation of each outside director
. Over the past 12 months, the members of the Compensation Committee have increased their previous high level of communications with shareholders regarding executive compensation and worked to implement
the feedback received during these engagement meetings, which included overall positive responses to the incremental changes made to the fiscal 2016 compensation program and a desire to further improve
pay-for-performance
alignment. Members of the Committee met or spoke with shareholders representing approximately 56% of the Companys shares and attempted to engage with shareholders representing
approximately 75% of such shares. They continue to clearly qualify as independent directors, including as independent outside directors under ISS standards. During 2016, the Compensation Committee held ten meetings, in addition to ten
meetings of the Board. Members of the Compensation Committee also engaged in numerous discussions regarding executive compensation among Committee and Board members, with independent compensation consultants and independent counsel, and others, and
as part of the numerous meetings and telephone conferences held during shareholder outreach.
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The Compensation Committee is
committed to continuing its shareholder outreach and will continue to incorporate the ideas from such outreach in making future improvements to the Companys executive compensation program.
Our Compensation Committee members joined in the approval by the Board of Directors for fiscal 2017 of a $19,000 reduction in the compensation
of each
non-employee
director. They have devoted the past year to addressing shareholder concerns in the Companys executive compensation program, in addition to their other Board duties, and have
accelerated their
on-going
efforts to improve the Companys compensation practices. ISS has demonstrated no reason why Messrs. Adler or Barshay or Ms. Morrison should not continue to serve on the
Board.
In further support of the Companys position, it notes that Glass Lewis also recommended a vote FOR all ten
nominees in Proposal 1, again recognizing the substantial improvements that the Compensation Committee and the Board have made to the Companys compensation program. Glass Lewis specifically acknowledges the Compensation Committees
efforts in reducing target CEO pay for a second year in a row and maintaining his base salary for a fourth consecutive year, reducing the compensation of the
co-chairmen,
adopting post-vesting holding
periods for the CEOs PSUs, adjusting weightings for PSUs to more heavily weight three-year performance, and adding an EBIT margin metric and TSR limiter to PSU awards.
Based on the foregoing reasons, as well as the discussion in the Companys proxy statement for the 2017 Annual Meeting, the Board
recommends that you vote FOR each nominee in Proposal 1 and FOR Proposal 3.
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Supplemental Disclosure Concerning
Re-Approval
of Performance Goals
under the 2012 Incentive Compensation Plan (Proposal 5)
The disclosure under the heading Eligibility and Types of Awards
in PROPOSAL
5RE-APPROVAL
OF THE PERFORMANCE GOALS UNDER THE COMPANYS 2012 INCENTIVE COMPENSATION PLAN on page 48 of the Proxy Statement is supplemented by the addition of the paragraph
below.
The approximate number of employees is 65,000, the approximate number of consultants is 400 and our Board consists of seven
non-employee
directors.
The disclosure under PROPOSAL
5RE-APPROVAL
OF THE PERFORMANCE GOALS UNDER THE COMPANYS 2012 INCENTIVE COMPENSATION PLAN of the Proxy Statement is supplemented by the addition of the information below.
Purpose of the 2012 Plan
The
2012 Plan states that its purpose is, among other things, to enhance the profitability and value of the Company for the benefit of its shareholders by enabling the Company to offer employees, consultants and
non-employee
directors stock-based and other incentives, thereby creating a means to raise the level of equity ownership by such individuals and provide other incentives to attract, retain and reward such
individuals and strengthen the mutuality of interests between such individuals and the Companys shareholders.
The fourth paragraph
under PROPOSAL
5RE-APPROVAL
OF THE PERFORMANCE GOALS UNDER THE COMPANYS 2012 INCENTIVE COMPENSATION PLAN on page 48 of the Proxy Statement is amended and restated to omit a sentence, as
reflected below.
The Board recommends that shareholders
re-approve
the performance goals under the
2012 Plan.
If the requisite shareholder approval of the performance goals is not obtained, we may continue to grant awards under the 2012 Plan in accordance with its current terms.
However, certain awards under the Plan may not
constitute performance-based compensation under Section 162(m) of the Code and accordingly, may not be tax deductible by the Company depending on the facts and circumstances.
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