HELEN OF TROY LTD
10-Ks and 10-Qs
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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. )
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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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 under §240.14a-12
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required
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Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
WL v1
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HELEN OF TROY LIMITED
Clarendon House
2 Church Street
Hamilton, Bermuda
July 12, 2019
Dear Shareholders:
It is my pleasure to invite you to the 2019 Annual General Meeting of the Shareholders of Helen of Troy Limited. The meeting will be held at 1:00 p.m., Mountain Daylight Time, on Wednesday, August 21, 2019, at Southwest University Park, WestStar Bank Club, 1 Ball Park Plaza, El Paso, Texas, 79901. In addition to the official business to be transacted at the meeting, members of management will present information about the Company’s operations and will be available to respond to your questions.
We encourage you to help us reduce printing and mailing costs and conserve natural resources by submitting your proxy with voting instructions via the Internet. It is convenient and saves us significant postage and processing costs. You may also submit your proxy via telephone or by mail if you received paper copies of the proxy materials. Instructions regarding all three methods of voting are included in the Important Notice Regarding Internet Availability of Proxy Materials, the proxy card and the proxy statement.
At our meeting, we will vote on proposals (1) to elect the nine nominees to our Board of Directors, (2) to provide advisory approval of the Company’s executive compensation, and (3) to appoint Grant Thornton LLP as the Company’s auditor and independent registered public accounting firm and to authorize the Audit Committee of the Board of Directors to set the auditor’s remuneration, and transact such other business as may properly come before the meeting. The accompanying Notice of Annual General Meeting of Shareholders and proxy statement contains information that you should consider when you vote your shares. For your convenience, you can appoint your proxy via touch-tone telephone or the internet at:
1-800-690-6903 or
WWW.PROXYVOTE.COM
It is important that you vote your shares whether or not you plan to attend the meeting. Prior to the meeting, I encourage you to sign and return your proxy card or appoint your proxy by telephone or on the Internet, so that your shares will be represented and voted at the meeting. If you plan to attend the meeting and wish to vote in person, you may revoke your proxy and vote in person at that time. I look forward to seeing you at the meeting. On behalf of the management and directors of Helen of Troy Limited, I want to thank you for your continued support and confidence.
Sincerely,
Julien R. Mininberg
Chief Executive Officer
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HELEN OF TROY LIMITED
Clarendon House
2 Church Street
Hamilton, Bermuda
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 21, 2019
Notice is hereby given that the 2019 Annual General Meeting of the Shareholders (the “Annual Meeting”) of Helen of Troy Limited, a Bermuda company (the “Company”), will be held at the Southwest University Park, WestStar Bank Club, 1 Ball Park Plaza, El Paso, Texas, 79901, on Wednesday, August 21, 2019, at 1:00 p.m., Mountain Daylight Time, for the following purposes:
1. To elect the nine nominees to our Board of Directors;
2. To provide advisory approval of the Company’s executive compensation;
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3.
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To appoint Grant Thornton LLP as the Company’s auditor and independent registered public accounting firm for the 2020 fiscal year and to authorize the Audit Committee of the Board of Directors to set the auditor’s remuneration; and
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4. To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.
The record date for determining shareholders entitled to receive notice of and to vote at the Annual Meeting is June 24, 2019. You are urged to read carefully the attached proxy statement for additional information concerning the matters to be considered at the Annual Meeting.
In accordance with Securities and Exchange Commission (“SEC”) rules, we are furnishing proxy materials to our shareholders on the Internet, rather than by mail. We believe this e-proxy process expedites our shareholders’ receipt of proxy materials, lowers our costs and reduces the environmental impact of our Annual Meeting. The proxy statement and the Company’s 2019 Annual Report to Shareholders and any other proxy materials are available on our hosted website at
HTTP://MATERIALS.PROXYVOTE.COM/G4388N
. For additional related information, please refer to the Important Notice Regarding Internet Availability of Proxy Materials in the enclosed proxy statement. If you do not expect to be present in person at the Annual Meeting, please sign and return your proxy card, or appoint your proxy by telephone or on the Internet, so that your shares will be represented and voted at the meeting. For your convenience, you can appoint your proxy via touch-tone telephone or internet at:
1-800-690-6903 or
WWW.PROXYVOTE.COM
You are cordially invited and encouraged to attend the Annual Meeting in person.
Tessa Judge
General Counsel and Secretary
El Paso, Texas
July 12, 2019
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SUBMIT YOUR PROXY AS SOON AS POSSIBLE. IF YOU DO ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON. MOST SHAREHOLDERS HAVE THREE OPTIONS FOR SUBMITTING THEIR PROXIES PRIOR TO THE ANNUAL MEETING: (1) VIA THE INTERNET, (2) BY PHONE OR (3) BY SIGNING AND RETURNING THE ENCLOSED PROXY. IF YOU HAVE INTERNET ACCESS, WE ENCOURAGE YOU TO APPOINT YOUR PROXY ON THE INTERNET. IT IS CONVENIENT, AND IT SAVES THE COMPANY SIGNIFICANT POSTAGE AND PROCESSING COSTS.
TABLE OF CONTENTS
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Page
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Proxy Statement Summary
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1
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Solicitation of Proxies
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4
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Voting Securities and Record Date
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5
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Quorum; Voting
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5
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Attending the Annual Meeting
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5
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Proposal 1
: Election of Directors
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6
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Corporate Governance
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Board Leadership and the Board’s Role in Risk Oversight
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Board Committees and Meetings
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Shareholder Communications to the Board of Directors
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Compensation Committee Interlocks and Insider Participation
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13
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Director Compensation
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Security Ownership of Certain Beneficial Owners and Management
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Executive Officers
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Report of the Compensation Committee
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Compensation Discussion and Analysis
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Executive Compensation
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Summary Compensation Table
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All Other Compensation for Fiscal Year 2019
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Grants of Plan-Based Awards in Fiscal Year 2019
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Outstanding Equity Awards at Fiscal Year-End 2019
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Option Exercises and Stock Vested During Fiscal Year 2019
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Employment Contract for our Chief Executive Officer (“CEO”)
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46
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Equity Compensation Plan Information
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Potential Payments Upon Termination or Change in Control
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CEO Pay Ratio for Fiscal Year 2019
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Compensation Risks
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Certain Relationships - Related Person Transactions
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Audit Committee Matters
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56
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Audit and Other Fees For Services Provided by Our Independent Registered Public Accounting Firm
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Proposal 2
: Advisory Approval of the Company’s Executive Compensation
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Proposal 3
: Appointment of Auditor and Independent Registered Public Accounting Firm for the 2020 fiscal year and Authorization of the Audit Committee of the Board of Directors to set the Auditor’s Remuneration
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Shareholder Proposals
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Section 16(a) Beneficial Ownership Reporting Compliance
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Other Matters
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Householding of Materials
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Important Notice Regarding Internet Availability of Proxy Materials
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How to Obtain Our Annual Report, Proxy Statement and Other Information about the Company
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Annex A:
Reconciliation of GAAP Diluted Earnings Per Share (“EPS”) from continuing operations to Adjusted Diluted EPS (non-GAAP) from continuing operations
Reconciliation of GAAP Operating Income to Adjusted Operating Income (non-GAAP)
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A-1
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Proxy Statement Summary
Below are the highlights of important information you will find in this proxy statement. As it is only a summary, please review the complete proxy statement before you vote.
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Helen of Troy Fiscal Year 2019 Proxy Statement Highlights
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HOW TO VOTE:
You can vote by any of the following methods:
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Via the internet by going to
WWW.PROXYVOTE.COM
and following the instructions at that website.
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Via touch-tone telephone at 1-800-690-6903.
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If you received a proxy card or voting instruction in the mail, by completing, signing, dating and returning the enclosed proxy card in the accompanying envelope as soon as possible.
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If you plan to attend the meeting and wish to vote in person, you may revoke your proxy and vote in person at that time.
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ANNUAL MEETING INFORMATION:
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Date and Time:
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August 21, 2019 at 1:00 PM,
Mountain Daylight Time |
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Record Date:
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June 24, 2019
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Location:
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Southwest University Park
WestStar Bank Club
1 Ball Park Plaza
El Paso, Texas, 79901
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VOTING MATTERS:
Proposal
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Voting
Recommendation of the Board |
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Elect the nine nominees to our Board of Directors
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FOR
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Provide advisory approval of the Company’s executive compensation
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FOR
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Appoint Grant Thornton LLP as the Company’s auditor and independent registered public accounting firm for the 2020 fiscal year and to authorize the Audit Committee of the Board of Directors to set the auditor’s remuneration
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FOR
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1
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BOARD NOMINEES:
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Name
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Age
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Director
Since |
Independent
Director |
Compensation
Committee |
Audit
Committee |
Nominating
Committee |
Corporate
Governance Committee |
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Julien R. Mininberg
CEO
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2014
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Timothy F. Meeker
Chairman
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2004
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ü
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Chair
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Gary B. Abromovitz
Deputy Chairman
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1990
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ü
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ü
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ü
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ü
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ü
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Krista L. Berry
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2017
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ü
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ü
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Vincent D. Carson
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2018
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Thurman K. Case
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2017
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Chair
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Beryl B. Raff
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2014
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ü
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ü
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William F. Susetka
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2009
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ü
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Chair
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ü
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Darren G. Woody
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2004
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ü
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ü
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ü
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ü
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Chair
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PERFORMANCE HIGHLIGHTS:
The following items summarize our performance highlights from continuing operations for fiscal year 2019:
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We achieved cumulative total shareholder returns of 17.6 and 71.7 percent over the past three and five fiscal years, respectively.
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We achieved net revenue compound annual growth rates of 4.2 and 3.7 percent over the past three and five fiscal years, respectively.
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We achieved adjusted operating income compound annual growth rates of 7.2 and 5.5 percent over the past three and five fiscal years, respectively.
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We achieved diluted earnings per share from continuing operations compound annual growth rates of 27.0 and 20.0 percent over the past three and five fiscal years, respectively.
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We achieved adjusted diluted earnings per share from continuing operations compound annual growth rates of 11.7 and 12.4 percent over the past three and five fiscal years, respectively.
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*
Three-year cumulative return for the Compensation Peer Group is less than negative 1 percent.
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CORPORATE GOVERNANCE:
We are committed to a corporate governance approach that ensures mutually beneficial results for the Company and its shareholders. In pursuit of this approach, we have implemented the following policies:
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We maintain separate roles for Chairman and Chief Executive Officer (the "CEO").
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We require majority voting for all Directors.
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We require annual election for all Directors.
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Our Nominating Committee’s policy is to review director qualifications and skill sets on an annual basis to maintain a balance between refreshed and seasoned Directors with knowledge of the Company’s business.
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We maintain stock retention guidelines for both our directors and executive officers, further aligning them with our shareholders.
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We require independent directors to meet in executive session without management present at every regular Board meeting and throughout the year as needed.
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The Board of Directors periodically evaluates the rotation of committee chairs.
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EXECUTIVE COMPENSATION FEATURES:
Overall, our executive compensation program emphasizes performance- and equity-based compensation to align it with shareholder interests and includes other practices that we believe serve shareholder interests such as paying for performance and maintaining policies relating to claw backs of incentive awards and prohibitions on hedging or pledging Company stock. Important features of our executive compensation program include the following:
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Feature
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Terms
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Rigorous Performance Metrics
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Established rigorous performance goals based on multiple metrics that are not duplicative between short-term and long-term incentive awards.
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Long-Term Incentives
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Established multi-year performance periods for long-term incentive awards, with minimum vesting periods for Company equity grants.
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Pay for Performance
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Our executive compensation programs are designed to demonstrate our execution on our pay for performance philosophy. Approximately 71 percent of target CEO pay and 58 percent of target Chief Financial Officer pay in fiscal year 2019 was at risk based on performance of the Company.
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Adjusted operating income and adjusted diluted earnings per share from continuing operations may be considered non-GAAP financial measures as set forth in SEC Regulation G, Rule 100. See Annex A for a reconciliation of non-GAAP financial measures to our results as reported under GAAP and an explanation of the reasons why the Company believes the non-GAAP financial information is useful and the nature and limitations of the non-GAAP financial measures. On December 20, 2017, we completed the divestiture of the Nutritional Supplements segment through the sale of Healthy Directions LLC and its subsidiaries to Direct Digital, LLC. Following the sale, we no longer consolidate our former Nutritional Supplements segment’s operating results. All results presented above are from continuing operations, which exclude the operating results from the former Nutritional Supplements segment for all periods presented.
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HELEN OF TROY LIMITED
Clarendon House
2 Church Street
Hamilton, Bermuda
PROXY STATEMENT
FOR
ANNUAL GENERAL MEETING OF SHAREHOLDERS
August 21, 2019
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Helen of Troy Limited (the "Company") for use at its Annual General Meeting of Shareholders (the "Annual Meeting") to be held in the WestStar Bank Club at Southwest University Park, 1 Ball Park Plaza, El Paso, Texas, 79901 on Wednesday, August 21, 2019, at 1:00 p.m., Mountain Daylight Time, and at any adjournment thereof, for the purposes set forth in the accompanying Notice of Annual General Meeting of Shareholders. A proxy may be revoked by filing a written notice of revocation or an executed proxy bearing a later date with the Secretary of our Company any time before exercise of the proxy or by attending the Annual Meeting and voting in person. The Notice of Internet Availability and the proxy materials are to be distributed to shareholders on or about July 12, 2019.
If you complete and submit your proxy, the persons named as proxies will vote the shares represented by your proxy in accordance with your instructions. If you submit a proxy card but do not fill out the voting instructions on the proxy card, the persons named as proxies will vote the shares represented by your proxy as follows:
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FOR
electing the nine nominees to the Board of Directors, as set forth in Proposal 1.
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FOR
the advisory approval of the Company's executive compensation, as set forth in Proposal 2.
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FOR
the appointment of
Grant Thornton LLP as the Company’s auditor and independent registered public accounting firm for the 2020 fiscal year and to authorize the Audit Committee of the Board of Directors to set the auditor’s remuneration
, as set forth in Proposal 3.
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In addition, if other matters are properly presented for voting at the Annual Meeting or any adjournment thereof, the persons named as proxies will vote on such matters in accordance with their judgment. We have not received notice of other matters that may properly be presented for voting at the Annual Meeting. Your vote is important. If you do not vote your shares, you will not have a say in the important issues to be voted upon at the Annual Meeting. To pass, each proposal included in this year's proxy statement requires an affirmative vote of a majority of the votes cast on such proposal at the Annual Meeting. To ensure that your vote is recorded promptly, please submit your proxy as soon as possible, even if you plan to attend the Annual Meeting in person.
The Annual Report to Shareholders for the year ended February 28, 2019 ("fiscal year 2019"), including financial statements, is enclosed. It does not form any part of the material provided for the solicitation of proxies.
The cost of solicitation of proxies will be borne by the Company. In addition to solicitation by mail, officers and employees of the Company may solicit the return of proxies by telephone, facsimile, electronic mail, personal interview, and other methods of communication.
We will request brokerage houses and other nominees, fiduciaries and custodians to forward soliciting materials to beneficial owners of the Company's common shares, par value $0.10 per share (the "Common Stock"), for which we will, upon request, reimburse the forwarding expense.
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VOTING SECURITIES AND RECORD DATE
The close of business on June 24, 2019, is the record date for determination of shareholders entitled to notice of, and to vote at, the Annual Meeting. As of June 24, 2019, there were 25,106,348 shares of Common Stock issued and outstanding, each entitled to one vote per share.
QUORUM; VOTING
Shareholders may hold their shares either as a "shareholder of record" or as a "street name" holder. If your shares are registered directly in your name with our transfer agent, you are considered the shareholder of record with respect to those shares and this proxy statement is being sent directly to you by the Company. If your shares are held in a brokerage account or by another nominee, you are considered to be the beneficial owner of shares held in "street name," and these proxy materials, together with a voting instruction card, are being forwarded to you by your broker, trustee or other nominee. As the beneficial owner of the shares, you have the right to direct your broker, trustee or other nominee how to vote.
The presence in person of two or more persons, representing throughout the Annual Meeting, in person or by proxy, at least a majority of the issued shares of Common Stock entitled to vote is necessary to constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes are also counted for purposes of determining whether a quorum is present. "Broker non-votes" occur when shares held in street name by a broker or nominee are represented at the Annual Meeting, but such broker or nominee is not empowered to vote those shares on a particular proposal because the broker has not received voting instructions from the beneficial owner.
Under the rules that govern brokers who are voting with respect to shares held by them in a street name, if the broker has not been furnished with voting instructions by its client at least ten days before the meeting, those brokers have the discretion to vote such shares on routine matters, but not on non-routine matters. Routine matters include the appointment of the auditor and related matters, submitted to the shareholders in Proposal 3. Non-routine matters include the election of Directors submitted to shareholders in Proposal 1 and the advisory approval of the Company's executive compensation submitted to shareholders in Proposal 2. As a result, with regard to Proposals 1 and 2, brokers have no discretion to vote shares where no voting instructions are received, and no vote will be cast if you do not vote on those proposals.
We therefore urge you to vote on ALL voting items.
If a quorum is present, each nominee for Director receiving a majority of the votes cast (the number of shares voted "for" a director nominee must exceed the number of votes cast "against" that nominee) at the Annual Meeting in person or by proxy shall be elected. The affirmative vote of the majority of the votes cast at the Annual Meeting in person or by proxy shall also be the act of the shareholders with respect to Proposal 3. Abstentions and broker non-votes are not counted in determining the total number of votes cast and will have no effect with respect to any of the proposals because abstentions and broker non-votes are not considered to be votes cast under the applicable laws of Bermuda.
The advisory vote on executive compensation is non-binding. Although the vote is non-binding, the Compensation Committee and the Board of Directors will review and carefully consider the outcome of the advisory vote to approve the Company's executive compensation and those opinions when making future decisions regarding executive compensation programs. Notwithstanding the advisory nature of the vote, the resolution in Proposal 2 will be considered passed with the affirmative vote of a majority of the votes cast at the Annual Meeting in person or by proxy.
If within half an hour from the time appointed for the Annual Meeting a quorum is not present in person or by proxy, the Annual Meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place the Board of Directors may determine, provided that at least two persons are present at such adjourned meeting, representing throughout the meeting, in person or by proxy, at least a majority of the issued shares of Common Stock entitled to vote. At any such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the Annual Meeting as originally called.
ATTENDING THE ANNUAL MEETING
A person is entitled to attend the Annual Meeting only if that person was a shareholder or joint shareholder as of the close of business on the record date or that person holds a valid proxy for the Annual Meeting. If you hold your shares in street name and desire to vote your shares at the Annual Meeting, you must provide a signed proxy directly from the holder of record giving you the right to vote the shares or a letter from the broker or nominee appointing you as their proxy. The proxy card enclosed with this proxy statement is not sufficient to satisfy this requirement. If you hold your shares in street name and desire to attend the Annual Meeting, you must also
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provide proof of beneficial ownership on the record date, such as your most recent account statement prior to the record date or other similar evidence of ownership. If you are the shareholder of record or hold a valid proxy for the Annual Meeting, your name or the name of the person on whose behalf you are proxy must be verified against the Company's list of shareholders of record on the record date prior to being admitted to and prior to voting at the Annual Meeting. All shareholders must, if requested by representatives of the Company, present photo identification for admittance. If you do not provide photo identification or comply with the other procedures outlined above upon request, you will not be admitted to the Annual Meeting and/or will not be permitted to vote, as applicable.
PROPOSAL 1: ELECTION OF DIRECTORS
The bye-laws of the Company state the number of our Directors shall be established by the Board from time to time but shall not be less than two. The Company currently has nine members who serve on the Board of Directors. The Nominating Committee has nominated nine candidates for election to the Board of Directors. The nine persons named below are the nominees for election as Directors. Each nominee has consented to serve as a Director if elected. Two of the nine candidates are not considered independent Directors as defined in the applicable listing standards for companies traded on the NASDAQ Stock Market LLC ("NASDAQ"). Those two candidates are Julien R. Mininberg, the Company’s CEO and Vincent D. Carson, the Company's former Chief Legal Officer and Secretary. Mr. Carson retired from his positions as Chief Legal Officer and Secretary effective as of August 22, 2018. The Board of Directors has determined that the remaining seven candidates, Gary B. Abromovitz, Krista L. Berry, Thurman K. Case, Timothy F. Meeker, Beryl B. Raff, William F. Susetka and Darren G. Woody are considered independent Directors. Therefore, the majority of persons nominated to serve on our Board of Directors are independent as so defined. Each Director elected shall serve as a Director until the next annual general meeting of shareholders or until his or her successor is elected or appointed.
Nominees for the Election of Directors
Set forth below are descriptions of the business experience of the nominees for election to our Board of Directors, as well as their qualifications:
JULIEN R. MININBERG
, age 54, has served as our CEO and a member of the Board since March 2014. Prior to his appointment as CEO, Mr. Mininberg had served as the Chief Executive Officer of Kaz Inc. (“Kaz”), a wholly-owned subsidiary of the Company since December 2010. Kaz comprises the Health & Home segment of the Company, which is the Company’s largest and most global business segment. Mr. Mininberg joined Kaz in 2006, serving as Chief Marketing Officer and was appointed President in September 2007, where he served until he was appointed Chief Executive Officer of Kaz in September 2010. Before joining Kaz, Mr. Mininberg worked 15 years at The Procter & Gamble Company (“P&G”), where he spent an equal amount of time in the United States and Latin America serving in a variety of marketing and general management capacities. In the U.S., he worked in brand management, serving as Brand Manager in P&G’s Health Care division. He was promoted to Marketing Director in 1997 and transferred to Latin America, where he served in the Fabric & Home Care division before being promoted to Country Manager for P&G’s Home Care business in Latin America. In 2003, he became Country Manager for Central America overseeing all P&G business in that region. Mr. Mininberg earned his Bachelor’s degree and a Masters of Business Administration from Yale University. He currently serves on the Board of Advisors for Yale School of Management and serves as Past President of its global Alumni Association Board of Directors.
Mr. Mininberg brings a 30-year track record of building market-leading multinational brands and organizations, a strategic mindset, operational expertise, and seasoned leadership skills. As our CEO, Mr. Mininberg provides essential oversight of the business and organization, and a link between management and the Board. He plays a key role in communication with shareholders and leading the Company’s acquisition activities. Additionally, he provides crucial insight to the Board on the Company’s strategic planning and operations.
TIMOTHY F. MEEKER
, age 72, has been a Director of the Company since 2004. In January 2014, Mr. Meeker was appointed as Chairman of the Board. Mr. Meeker is also Chairman of the Nominating Committee and serves as a member of the Compensation Committee. Since 2002, Mr. Meeker has served as President and principal in Meeker and Associates, a privately-held management consulting firm. Mr. Meeker served as Senior Vice President, Sales & Customer Development for Bristol-Myers Squibb, a consumer products and pharmaceutical company, from 1996 through 2002. From 1989 to 1996, Mr. Meeker served as Vice President of Sales for Bristol-Myers’ Clairol Division.
Mr. Meeker has over forty years of experience in the consumer products industry resulting in extensive general management experience with responsibilities for sales, distribution, finance, human resources, customer service and facilities. In addition, he has a valued perspective on operational matters that is an asset to the Board of Directors. Mr. Meeker has served as a chairman of the National Association of Chain Drug Stores advisory committee, which allows him to bring an extensive understanding of retail mass market sales and marketing to our Board of Directors.
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GARY B. ABROMOVITZ
, age 76, has been a Director of the Company since 1990. He is Deputy Chairman of the Board and during his tenure has served as Chair of the Compensation, Nominating, Governance, and Audit Committees. He currently serves as a member of each of those Committees and chairs the executive sessions of the independent Directors. Mr. Abromovitz is a retired attorney and has acted as a consultant to several law firms in business related matters. He also has been active for more than thirty years in various real estate development and acquisition transactions.
Mr. Abromovitz provides the Board with a significant leadership role as Deputy Chairman and an in-depth knowledge of the history and operations of the Company providing the Board with a unique historical perspective and focus on long-term interests of the Company. He has strong regulatory knowledge with a deep understanding of corporate governance and compensation guidelines, as well as experience managing board affairs. Further, Mr. Abromovitz’s background and skill sets as an attorney and his practical business experience provides a necessary and valuable complement to the skills of other board members.
KRISTA L. BERRY,
age 54, was elected to our Board of Directors in March 2017. Ms. Berry was the Chief Revenue Officer at Everlane, Inc., an online clothing retailer from September 2017 to September 2018. Previously Ms. Berry was the Chief Digital Officer for the Kohl’s Corporation, an operator of over 1,160 department stores across the U.S. and a direct to consumer ecommerce business selling exclusive and national brand apparel, footwear, beauty and home products from 2014 to 2016. Ms. Berry also served in the role of Executive Vice President of Multi-Channel Commerce from 2012 to 2014. Prior to her tenure at Kohl’s, Ms. Berry served as the General Manager of North American Direct to Consumer at Nike, Inc. from 2009 to 2011, and as the General Manager of North American Digital Commerce from 2007 to 2009. Ms. Berry also held various management and leadership roles at Target Corporation from 1987 to 2007.
Ms. Berry brings valuable experience in developing digital strategy and execution, direct to consumer ecommerce platforms, consumer data analytics and digital marketing strategy. She also brings a wealth of consumer insight from her experience at world-class retailers and direct to consumer businesses.
VINCENT D. CARSON
, age 59, was elected to our Board of Directors in August 2018 and concurrently retired from his positions as the Company’s Chief Legal Officer and Secretary, which he held since May 2014. Prior to his appointment as Chief Legal Officer and Secretary, he served in the capacity of Vice President, General Counsel and Secretary from November 2001 to September 2010. From September 2010 to April 30, 2014, he served as Senior Vice President, General Counsel, and Secretary of the Company. Prior to joining the Company, Mr. Carson had a 16-year legal career in private practice in El Paso, Texas.
As a result of his service as our Chief Legal Officer and Secretary, Mr. Carson brings his unique knowledge of our Company and our industry to the Board of Directors. This prior experience, knowledge of the Company’s structure, vast experience in the consumer products industry and Federal, state and other jurisdictions’ laws applicable to the Company bring great value and benefit to our Board of Directors and the Company.
THURMAN K. CASE,
age 62, was elected to our Board of Directors in January 2017 and has served as the Chairman of the Audit Committee since March 2017. Mr. Case has been the Chief Financial Officer of Cirrus Logic, Inc., a leader in high performance, low-power integrated circuits for audio and voice signal processing applications since 2007. Prior to being appointed to his current position, Mr. Case served in various positions at Cirrus Logic, including as Vice President, Treasurer, Financial Planning and Analysis from 2004 to 2007, Vice President, Finance from 2002 to 2004, and Director of Finance from 2000 to 2002. Before his tenure at Cirrus Logic, Mr. Case served in a variety of financial leadership positions, including at Case Associates, Inc. and Public Service Company of New Mexico. Mr. Case received a Bachelor of Economics degree and a Masters of Business Administration from New Mexico State University.
Mr. Case brings broad experience in business strategy, operations, accounting, information technology, auditing and SEC reporting matters. In addition, his experience as a public company executive contributes to his knowledge of corporate governance and public company matters.
BERYL B. RAFF,
age 68, was elected to our Board of Directors in August 2014 and serves as a member of the Audit Committee. Ms. Raff also served as a member of the Compensation Committee from August 2014 through March 2017. Since April 2009, Ms. Raff has served as Chairman and Chief Executive Officer at Helzberg Diamond Shops Inc., a jewelry retailer and a wholly owned subsidiary of Berkshire Hathaway Inc. From 2005 through April 2009, she served as Executive Vice President-General Merchandise Manager for the fine jewelry division of J.C. Penney Company, Inc., a retailer of apparel and home furnishings. From 2001 through 2005, Ms. Raff served as Senior Vice President-General Merchandise Manager for the fine jewelry division of J.C. Penney. Prior to joining J.C. Penney, Beryl served in various leadership roles of Zale Corporation, a national retail jewelry chain, last serving as its Chairman and Chief Executive Officer. Ms. Raff served on the Board of Directors of Group 1 Automotive, Inc., an automotive retail operator, as a member of its Compensation Committee and Chairman of the Governance/Nomination Committee from 2007 to 2015. Since September 2014, Ms. Raff has served on the Board of Directors of The Michaels Stores, Inc., a national retail chain of arts and crafts
7
specialty stores, and is a member of its Compensation Committee. Ms. Raff serves on the Advisory Board of Jewelers Circular Keystone, a trade publication and industry authority. Ms. Raff has previously served as a Director of the NACD Heartland Chapter, a non-profit organization dedicated to excellence in board leadership. From 2001 through February 2011, Ms. Raff served on the Board of Directors, the Corporate Governance Committee and the Compensation Committee (which she chaired from 2008 to 2011) of Jo-Ann Stores, Inc., a national specialty retailer of craft, sewing and decorating products. Ms. Raff graduated from Boston University with a Bachelor of Business Administration degree and from Drexel University with a Masters of Business Administration.
Ms. Raff is well known throughout the retail industry and brings to the Board of Directors her experience and perspective as an outstanding merchant and multi-store retail executive. The Board benefits from Ms. Raff's extensive knowledge of the retail industry and her valuable insight on how we can best serve our retail partners. Ms. Raff's current and previous service on other boards also provides important perspectives on key corporate governance matters.
WILLIAM F. SUSETKA
, age 66, has been a Director of the Company since 2009. In August 2014, Mr. Susetka was appointed as Chairman of the Compensation Committee. He also serves as a member of the Nominating Committee. Mr. Susetka spent thirty years in marketing and senior management for Clairol, Inc. and Avon Products, Inc. From 1999 to 2001, Mr. Susetka was President of the Clairol U.S. Retail Division, with additional responsibility for worldwide research and development and manufacturing. From 2002 through 2005, Mr. Susetka was President of Global Marketing at Avon Products, Inc. where he led worldwide marketing, advertising and research and development and served on Avon’s Executive Committee. Prior to 1999, he held positions as President of the Clairol International Division and Vice President/General Manager for the Clairol Professional Products Division. He served as a Board Member of the Cosmetics, Toiletry and Fragrance Association from 1999 to 2005 and as a member of the Avon Foundation Board from 2004 to 2005. From October 2005 to January 2006, Mr. Susetka was Chief Operating Officer of Nice Pak Products, Inc., a manufacturer of private labeled pre-moistened wipes and other antiseptic wipes. From 2007 through May 2009, he served as Chief Marketing Officer for the LPGA (Ladies Professional Golf Association). In September 2015, Mr. Susetka completed a six-year term on the LPGA Board of Directors.
Mr. Susetka provides a wealth of global consumer products industry knowledge and leadership experience to the Board of Directors. Mr. Susetka is also instrumental in helping to monitor and adjust the strategic direction of the Company’s consumer product categories and provides valuable insight to senior management.
DARREN G. WOODY
, age 59, has been a Director of the Company since 2004. Mr. Woody chairs the Corporate Governance Committee and also serves as a member of the Compensation, Audit and Nominating Committees. Mr. Woody is President and Chief Executive Officer of Jordan Foster Construction, LLC, a construction firm with offices in Austin, Dallas, El Paso, Houston, and San Antonio, Texas and field operations throughout the United States. The firm specializes in military, commercial, multi-family, and highway construction. He has served in this capacity since August of 2000. Previously, Mr. Woody was a partner in the law firm of Krafsur, Gordon, Mott, Davis and Woody P.C., where he specialized in real estate, business acquisitions and complex financing arrangements.
Mr. Woody brings a multi-disciplined perspective to our Board of Directors given his executive leadership and legal experience. This background enables him to provide oversight with regard to many of the Company’s legal matters, significant transactional negotiations and the management of challenging complex projects.
Vote Required for Approval and Recommendation
The receipt of a majority of the votes cast (the number of shares voted “for” a director nominee exceeding the number of votes cast “against” that nominee) at the Annual Meeting is required to elect each of the nine nominees for Director. In the event that any of the Company’s nominees are unable to serve, proxies will be voted for the substitute nominee or nominees designated by our Board of Directors, or will be voted for fewer than nine nominees, as the Board may deem advisable in its discretion.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” EACH OF THE NINE NOMINEES NAMED ABOVE.
8
CORPORATE GOVERNANCE
Corporate Governance.
Corporate governance is typically defined as the system that allocates duties and authority among a company’s shareholders, Board of Directors and management. The shareholders elect the Board and vote on extraordinary matters.
Our Corporate Governance Guidelines, as well as our Code of Ethics, and the charters of the Audit Committee, Compensation Committee, Nominating Committee, and Corporate Governance Committee are available under the “Corporate Governance” heading of the investor relations page of our website at the following address: www.helenoftroy.com.
Our Company believes that it is in compliance with the corporate governance requirements of the NASDAQ listing standards. The principal elements of these governance requirements as implemented by our Company are:
|
•
|
affirmative determination by the Board of Directors that a majority of the Directors are independent;
|
|
•
|
regularly scheduled executive sessions of independent Directors;
|
|
•
|
Audit Committee, Nominating Committee and Compensation Committee comprised of independent Directors and having the purposes and charters described below under the separate committee headings; and
|
|
•
|
specific Audit Committee responsibility, authority and procedures outlined in the charter of the Audit Committee.
|
Independence.
The Board of Directors has determined that the following directors and nominees for election at the Annual Meeting are independent Directors as defined in the NASDAQ listing standards: Timothy F. Meeker, Gary B. Abromovitz, Krista L. Berry, Thurman K. Case, Beryl B. Raff, William F. Susetka and Darren G. Woody. Other than Julien R. Mininberg, our CEO, and Vincent D. Carson, our former Chief Legal Officer and Secretary, each member of the Board, including each person nominated to serve on our Board of Directors, is independent as so defined and each other person who served on the Board in fiscal year 2019 was independent as so defined. The foregoing independence determination of our Board of Directors included the determination that each of these seven nominated Board members, if elected and appointed to the Audit Committee, Compensation Committee or Nominating Committee, or as discussed above, respectively, is:
|
•
|
independent for purposes of membership on the Audit Committee under Rule 5605(c)(2) of the NASDAQ listing standards, that includes the independence requirements of Rule 5605(a)(2) and additional independence requirements under SEC Rule 10A-3(b);
|
|
•
|
independent under the NASDAQ listing standards for purposes of membership on the Nominating Committee; and
|
|
•
|
independent under the NASDAQ listing standards for purposes of membership on the Compensation Committee, as a “non-employee director” under SEC Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
|
9
BOARD LEADERSHIP AND THE BOARD’S ROLE IN RISK OVERSIGHT
Separation of Chairman and CEO Roles
The Board has separated the roles of the Chairman and the CEO in order to further diversify and strengthen its leadership structure. The Board separated these roles in recognition of the differences between the two roles and the value to our Company of having the distinct and different perspectives and experiences of a separate Chairman and CEO. Our CEO is responsible for the day-to-day management and supervision of the business and affairs of our Company (such as reviewing performance and allocating resources as the Company’s chief operating decision maker) and for ensuring that the directives of the Board are carried into effect. Our Chairman, on the other hand, is charged with presiding over all meetings of the Board and our shareholders and providing advice and counsel to the CEO and our Company’s other officers regarding our business and operations, as well as focusing on oversight and governance matters.
By separating the roles of CEO and Chairman, our CEO is able to focus his time and energy on managing the Company’s complex daily operations, while our Chairman can devote his time and attention to addressing matters relating to the responsibilities of our Board. Our CEO and Chairman have an excellent working relationship, and, with more than thirty-eight years of experience in the consumer products industry, our Chairman is well positioned to provide our CEO with guidance, advice, and counsel regarding our Company’s business, operations and strategy. Moreover, we believe that having a separate Chairman focused on oversight and governance matters allows the Board to more effectively perform its risk oversight role as described below. In connection with the Board’s self-evaluation process, as required by our Corporate Governance Guidelines, the Board evaluates its organization and processes to ensure that the Board is functioning effectively. For the foregoing reasons, we believe that our separate CEO/Chairman structure is the most appropriate and effective leadership structure for our Company and our shareholders.
Deputy Chairman
The Deputy Chairman’s authority and responsibilities include presiding at all meetings of the Board when the Chairman is not present, presiding over all executive sessions of the independent Directors and interacting with committee Chairs to efficiently address Board issues for presentation at Board meetings. The Deputy Chairman also consults with the Chairman regarding Board agendas and outreach to shareholders.
Executive Sessions
Independent Directors regularly meet without management present. In regard to executive sessions, any independent Director has the authority to call meetings of independent Directors.
The Board’s Role in Risk Oversight
Our management is responsible for the ongoing assessment and management of the risks we face, including risks relating to capital structure, strategy, liquidity and credit, financial reporting and public disclosure, operations, and governance. The Board oversees management’s policies and procedures in addressing these and other risks. Additionally, each of the Board’s four committees (the Audit Committee, Compensation Committee, Nominating Committee, and Corporate Governance Committee) monitor and report to the Board those risks that fall within the scope of such committee’s area of oversight responsibility. For example, the full Board directly oversees strategic risks. The Nominating Committee directly oversees risk management relating to Director nomination and independence. The Corporate Governance Committee directly oversees risk management regarding corporate governance. The Compensation Committee directly oversees risk management relating to employee compensation, including any risks of compensation programs encouraging excessive risk-taking. Finally, the Audit Committee directly oversees risk management relating to financial reporting, public disclosure legal and regulatory compliance, data protection and cybersecurity. The Audit Committee is also responsible for assessing the steps management has taken to monitor and control these risks and exposures and evaluating guidelines and policies with respect to our risk assessment and risk management.
Management has identified risks, designated associated “risk owners” within the organization and receives appropriate reports from the various risk owners as conditions change. Management works with the Board to communicate risk factors to the Board and to enable the Board to understand our risk identification, risk management and risk mitigation measures relating to strategic matters. Additional review or reporting of risks is conducted by management as needed or when requested by the Board or a committee. Additionally, the Chairman and Deputy Chairman, working with the Audit Committee and the Corporate Governance Committee, assess corporate governance practices and risks. The Corporate Governance Committee periodically assesses the effectiveness of our corporate governance policies in light of the applicable listing standards and laws and reports their findings to the Board.
10
BOARD COMMITTEES AND MEETINGS
Our Board of Directors has four committees: the Audit Committee, the Nominating Committee, the Corporate Governance Committee, and the Compensation Committee. The Independent Directors listed in the table below also meet in executive sessions without management present. The following table shows the composition of these committees as of February 28, 2019 and the number of meetings held during fiscal year 2019:
|
Independent Director
|
Executive Sessions of Independent Directors
|
Compensation Committee
|
Audit Committee
|
Nominating Committee
|
Corporate Governance Committee
|
|
|
Gary B. Abromovitz
|
Chair
|
M
|
M
|
M
|
M
|
|
|
Krista L. Berry
|
M
|
M
|
||||
|
Thurman K. Case
|
M
|
Chair
|
M
|
|||
|
Timothy F. Meeker
|
M
|
M
|
Chair
|
|||
|
Beryl B. Raff
|
M
|
M
|
||||
|
William F. Susetka
|
M
|
Chair
|
M
|
|||
|
Darren G. Woody
|
M
|
M
|
M
|
M
|
Chair
|
|
|
Number of Meetings Held in Fiscal Year 2019
|
4
|
8
|
6
|
1
|
1
|
|
M = Member as of February 28, 2019.
Audit Committee.
Our Audit Committee is established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee operates under a written charter that has been adopted by the Board of Directors. The primary purposes of this committee are to oversee, on behalf of the Company’s Board of Directors: (1) the accounting and financial reporting processes and integrity of our Company’s financial statements, (2) the audits of our Company’s financial statements and the appointment, compensation, qualifications, independence, and performance of our independent registered public accounting firm, (3) our compliance with legal and regulatory requirements, (4) the staffing and ongoing operation of our internal audit function, and (5) primary responsibility for overseeing risks related to data protection and cybersecurity, although the full Board also exercises oversight over these risks. The Audit Committee meets periodically with our Chief Financial Officer and other appropriate officers in the discharge of its duties. The Audit Committee also reviews the content and enforcement of the Company’s Code of Ethics, consults with legal counsel on various legal compliance matters and on other legal matters if those matters could materially affect our financial statements.
The Board of Directors has determined that each of the members of the Audit Committee is independent as previously described. In addition, the Board of Directors determined that Darren G. Woody and Thurman K. Case both qualify as an “audit committee financial expert” (as defined by the SEC in Item 407(d)(5) of Regulation S-K promulgated by the SEC). Additionally, the Board of Directors determined that all of the members of the Audit Committee meet the requirement of the NASDAQ listing standards that each member be able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.
Compensation Committee
. The Compensation Committee operates under a written charter that has been adopted by the Board of Directors. The primary purposes of the committee are to (1) evaluate and approve the corporate goals and objectives set by the CEO, (2) evaluate the CEO’s performance in light of those goals and objectives, (3) make recommendations to the Board of Directors with respect to CEO and non-CEO compensation, incentive compensation plans and equity-based plans, (4) oversee the administration of our incentive compensation plans and equity-based plans, and (5) produce an annual report on executive compensation for inclusion in the Company’s proxy statement. The Board of Directors has determined that the members of this committee are independent as previously described. In addition to formal meetings, the committee also conducted numerous informal telephonic discussions and consulted its legal advisors throughout the year. The Compensation Committee has the independent authority to hire compensation, accounting, legal, or other advisors. The Compensation Committee engaged Frederic W. Cook & Company (“FW Cook”) as its independent compensation consultant to assist the Compensation Committee with its compensation
11
decisions for our named executive officers for fiscal year 2019. The Compensation Committee has determined that FW Cook had no conflicts of interest relating to its engagement by the Compensation Committee.
Nominating Committee.
The Nominating Committee operates under a written charter that has been adopted by the Board of Directors. The primary purposes of the Nominating committee are to (1) recommend to our Board of Directors individuals qualified to serve on our Board of Directors for election by shareholders at each annual general meeting of shareholders and to fill vacancies on the Board of Directors, and (2) implement the Board’s criteria for selecting new Directors. The Nominating Committee also oversees the evaluation of the Board members and seeks to annually review Director qualifications and skill sets with the goal of maintaining fresh perspectives on the Board and complementing the skill sets of the other Board members. The Nominating Committee receives recommendations from its members, other members of the Board of Directors, outside advisors, and consultants for candidates to be considered for the Board. The Nominating Committee receives recommendations from its members or other members of the Board of Directors for candidates to be appointed to committee positions, reviews and evaluates such candidates and makes recommendations to the Board of Directors for nominations to fill or add committee positions.
The Nominating Committee’s current process for identifying and evaluating nominees for Director positions consists of general periodic evaluations of the size and composition of the Board of Directors, applicable listing standards and laws, and other appropriate factors with a goal of maintaining continuity of appropriate industry expertise and knowledge of our Company. The Nominating Committee looks for a number of personal attributes in selecting candidates as specified in our Corporate Governance Guidelines including: sound reputation and ethical conduct; business and professional activities that are complementary to those of the Company; the availability of time and a willingness to carry out their duties and responsibilities effectively; an active awareness of changes in the social, political and economic landscape; an absence of any conflicts of interest; a level of health that allows for attendance and active contribution to most Board and committee meetings; limited service on other boards; and a commitment to contribute to our overall performance, placing it above personal interests. The Nominating Committee does not have a diversity policy regarding its selection criteria for determining Director nominees. However, as specified in our Corporate Governance Guidelines, the Nominating Committee makes efforts to maintain members on the Board who have substantial and direct experience in areas of importance to the Company. Additionally, the Nominating Committee seeks independent Directors who represent a mix of backgrounds and experiences that will enhance the quality of the Board’s deliberations and decisions. The Nominating Committee considers all attributes, business diversity, professional qualifications, and experience of all candidates the committee believes will benefit the Company and increase shareholder value, without regard to gender, race or ethnic background. The Nominating Committee does not assign specific weights to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees.
The Nominating Committee will consider candidates recommended by shareholders. A shareholder desiring to nominate a candidate for election to the Board at the Annual Meeting must provide timely written notice in proper form to the Secretary of the Company, at Clarendon House, 2 Church Street, Hamilton, Bermuda in accordance with our bye-laws. To be in proper form, the notice of a Director nomination should be accompanied by supporting materials required by our bye-laws, including, among other things, written consent of the proposed candidate to serve as a Director if nominated and elected, information about the proposed nominee for Director, information about the shareholder submitting the nomination, and information about any other shareholders or beneficial owners known to support the nomination. The Nominating Committee may request that the shareholder submitting the proposed nominee furnish additional information to determine the eligibility and qualifications of such candidate. Additionally, any candidate recommended by shareholders must meet the general requirements outlined in the Company’s bye-laws. Any shareholder recommendation will be considered for nomination as a Director at the sole discretion of the Nominating Committee. Neither the Board of Directors nor the Nominating Committee is required to include any shareholder nominee recommendation as a proposal in the proxy statement and proxy card mailed to shareholders. We did not receive any such Director nominee recommendations for the Annual Meeting. Under the Company's bye-laws, if a shareholder intends to nominate a person for election to the Board of Directors directly (rather than by recommending such person as a candidate to our Nominating Committee), the shareholder must submit the nomination as described in "Shareholder Proposals."
In addition, Section 79 of the Companies Act 1981 provides that (i) any number of shareholders representing not less than 5 percent of the total voting power of the shares eligible to vote at a general meeting of shareholders, or (ii) not less than 100 shareholders may propose any resolution which may properly be moved at the next annual general meeting of shareholders. Upon timely receipt of a requisition and compliance with Section 79, we will, at the expense of such shareholder(s), give our other shareholders entitled to receive notice of the next annual general meeting of shareholders notice of the proposed resolution. To be timely, the requisition requiring notice of a resolution must be deposited at our registered office at least six weeks before the next annual general meeting of shareholders. Shareholders satisfying the criteria of Section 79 may also require us to circulate a statement in respect of any matter to come before an annual general meeting of shareholders by requisition deposited at our registered office not less than one week prior to the annual general meeting of shareholders.
Corporate Governance Committee.
The Corporate Governance Committee operates under a written charter that has been adopted by the Board of Directors. The primary purposes of the Corporate Governance Committee are to (1) develop, assess and
12
recommend to the Board our corporate governance policies, and (2) evaluate, develop and recommend to the Board succession plans for all of our senior management. The Corporate Governance Committee works with the Compensation Committee to develop and recommend succession plans to the Board of Directors.
Meetings of the Board of Directors and its Committees.
The Board of Directors held four regularly scheduled meetings and one other meeting (which was telephonic) during fiscal year 2019. Each Board member attended at least 75 percent of the Board of Director meetings and committee meetings for which they were members. Our policy regarding Director attendance at the annual general meetings of shareholders is that we encourage and expect, but do not require, the members of the Board of Directors to attend annual general meetings. Last year, all of our Directors attended the annual general meeting of shareholders.
Committee Rotation.
The Board will consider the rotation of committee assignments and of committee chairs at such intervals as the Board determines on the recommendation of the Corporate Governance Committee. Consideration of rotation will seek to balance the benefits derived from continuity and experience, on the one hand, and the benefits derived from gaining fresh perspectives and enhancing Directors’ understanding of different aspects of our business and enabling functions. The Board did not rotate any committee chairs in fiscal year 2019.
SHAREHOLDER COMMUNICATIONS TO THE BOARD OF DIRECTORS
Any record or beneficial owner of our shares of Common Stock who has concerns about accounting, internal accounting controls or auditing matters relating to our Company may contact the Audit Committee directly. Any record or beneficial owner of our Common Stock who wishes to communicate with the Board of Directors on any other matter should also contact the Audit Committee. The Audit Committee has undertaken on behalf of the Board of Directors to be the recipient of communications from shareholders relating to our Company. If particular communications are directed to the full Board, independent Directors as a group, or individual Directors, the Audit Committee will route these communications to the appropriate Directors or committees so long as the intended recipients are clearly stated.
Communications intended to be anonymous may be made by calling our national hotline service at 844-317-9054 or online at www.helenoftroy.ethicspoint.com. If calling, please identify yourself as a shareholder of our Company intending to communicate with the Audit Committee. This third-party service undertakes to forward the communications to the Audit Committee if so requested and clearly stated. You may also send communications intended to be anonymous by mail, without indicating your name or address, to Helen of Troy, 1 Helen of Troy Plaza, El Paso, Texas, 79912, USA, Attention: Chairman of the Audit Committee. Communications not intended to be made anonymously may be made by calling the hotline number or by mail to that address, including whatever identifying or other information you wish to communicate.
Communications from employees or agents of our Company will not be treated as communications from our shareholders unless the employee or agent clearly indicates that the communication is made solely in the person’s capacity as a shareholder.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2019, none of the members of the Compensation Committee was an officer (or former officer) or employee of the Company, and no executive officer of the Company served on the Compensation Committee (or equivalent), or the Board of Directors of another entity whose executive officer(s) served on the Company’s Compensation Committee or Board.
13
DIRECTOR COMPENSATION
The following table summarizes the total compensation earned by all non-employee Directors during fiscal year 2019:
|
Director Compensation for Fiscal Year 2019
|
|||
|
Name
|
Fees Earned
or Paid in Cash ($) |
Stock
Awards
($)
(1)
|
Total
($)
|
|
Gary B. Abromovitz
|
120,000
|
100,000
|
220,000
|
|
Krista L. Berry
|
100,000
|
100,000
|
200,000
|
|
Thurman K. Case
|
115,000
|
100,000
|
215,000
|
|
Timothy F. Meeker
|
210,000
|
100,000
|
310,000
|
|
Beryl B. Raff
|
100,000
|
100,000
|
200,000
|
|
William F. Susetka
|
115,000
|
100,000
|
215,000
|
|
Darren G. Woody
|
105,000
|
100,000
|
205,000
|
|
(1)
|
The amounts in this column are based on the grant date fair values of $89.10, $90.45, $120.70 and $144.99 per share on March 1, June 1, September 4, and December 3, 2018, respectively, computed in accordance with FASB ASC Topic 718. Each of the restricted stock awards vested on the grant date. With respect to stock awards, approximately 30 percent of the value of the grant is settled with cash in order for the Directors to satisfy any tax liabilities associated with the grant. Further information regarding the awards is included in “Non-Employee Director Equity Compensation Plan” below.
|
Our Directors who were also employees of the Company during the fiscal year ended February 28, 2019 were Julien R. Mininberg, our CEO, and Vincent D. Carson, who retired from his position as Chief Legal Officer and Secretary effective as of August 22, 2018, and was elected to the Board of Directors at the 2018 Annual Meeting. Mr. Mininberg did not receive any remuneration for his service as a member of the Board of Directors. Mr. Carson joined the Board of Directors on August 22, 2018 and received director compensation for the portion of the year for which he served as a non-employee Director. For additional information on the compensation of Mr. Mininberg and Mr. Carson, see “Executive Compensation - Summary Compensation Table.” Under the Company's compensation guidelines, the remaining non-employee Directors received annual compensation for their services in the form of a cash retainer equal to $100,000 and pre-tax Common Stock valued at $100,000. The grants of Common Stock are made in quarterly equal value installments on the first business day of each fiscal quarter based on fair market value of the Common Stock as of the close of business of the grant date. The additional annual cash compensation of the Chairman of the Board of Directors is $105,000 annually. The Deputy Chairman received an additional $20,000 annually in cash compensation, and the Chairperson of each committee of the Board of Directors received the following additional annual cash compensation:
|
Audit Committee
|
|
$15,000
|
|
|
Compensation Committee
|
|
$15,000
|
|
|
Nominating Committee
|
|
$5,000
|
|
|
Governance Committee
|
|
$5,000
|
|
No other meeting attendance or committee fees are paid.
14
In fiscal year 2019, the following cash compensation was paid to our non-employee Directors.
Directors Fees Earned or Paid in Cash for Fiscal Year 2019
|
Name
|
Board
Retainers ($) (1) |
Chairman
And Deputy Chairman Fees ($) |
Committee
Chair Fees ($) |
Total
($) |
|
|
Gary B. Abromovitz
(2)
|
100,000
|
20,000
|
-
|
120,000
|
|
|
Krista L. Berry
|
100,000
|
-
|
-
|
100,000
|
|
|
Thurman K. Case
(3)
|
100,000
|
-
|
15,000
|
115,000
|
|
|
Timothy F. Meeker
(4)
|
100,000
|
105,000
|
5,000
|
210,000
|
|
|
Beryl B. Raff
|
100,000
|
-
|
-
|
100,000
|
|
|
William F. Susetka
(5)
|
100,000
|
-
|
15,000
|
115,000
|
|
|
Darren G. Woody
(6)
|
100,000
|
-
|
5,000
|
105,000
|
|
|
(1)
|
All non-employee Directors received a quarterly cash retainer of $25,000.
|
|
(2)
|
For his services as Deputy Chairman, Mr. Abromovitz received quarterly cash fees of $5,000.
|
|
(3)
|
For his services as Chairman of the Audit Committee, Mr. Case received quarterly cash fees of $3,750.
|
|
(4)
|
For his services as Chairman of the Board, Mr. Meeker received quarterly cash fees of $26,250. For his services as Chairman of the Nominating Committee, he received quarterly cash fees of $1,250.
|
|
(5)
|
For his services as Chairman of the Compensation Committee, Mr. Susetka received quarterly cash fees of $3,750.
|
|
(6)
|
For his services as Chairman of the Corporate Governance Committee, Mr. Woody received quarterly cash fees of $1,250.
|
Director Stock Ownership and Compensation Guidelines
The Compensation Committee and the Board of Directors believe that Directors should own and hold Common Stock to further align their interests and actions with the interests of our shareholders. During fiscal year 2019, our guidelines required our Directors to hold shares of Common Stock equal in value to at least twice their annual cash retainer. Beginning in fiscal year 2020, we updated our guidelines to require our Directors to hold shares of Common Stock equal in value to at least three times their annual cash retainer. Our guidelines provide that equity awards to non-employee Directors vest when granted. The Compensation Committee will review stock ownership levels on the first trading day of the calendar year based on the fair market value of the shares on such date.
The Board of Directors also believes compensation arrangements should be flexible enough to allow the Directors to receive a balanced mix of equity and cash keeping in mind the Board’s guidelines for achieving and maintaining stock ownership. In this respect, the Board of Directors will seek to target Director average compensation at a mix of approximately 50 percent cash and 50 percent equity, not including any cash fees paid to the Chairman and Deputy Chairman, or chair fees paid to the Chairpersons of the Board committees. Each Director receives approximately 30 percent of the value of the stock grant award in cash in order to pay any tax liabilities associated with the grant.
Stock Plans
2008 Non-Employee Directors Stock Incentive Plan
At the 2008 annual general meeting of shareholders, the Company's shareholders approved the Helen of Troy Limited 2008 Non-Employee Directors Stock Incentive Plan (the "2008 Director Plan"). The 2008 Director Plan expired on August 19, 2018. The purpose of the 2008 Director Plan was to (1) aid the Company in attracting, securing, and retaining Directors of outstanding ability and (2) motivate such persons to exert their best efforts on behalf of the Company by providing incentives through the granting of awards under the plan. Only non-employee Directors of the Company were eligible to participate in the 2008 Director Plan. Because Julien Mininberg is an employee of the Company, he was not eligible to participate in the 2008 Director Plan.
The 2008 Director Plan was administered by the Compensation Committee of the Board of Directors. The 2008 Director Plan permitted grants of restricted stock, restricted stock units and other stock-based awards to the Company's non-employee Directors. The vesting criteria and other terms and conditions of restricted stock, restricted stock units and other stock-based awards were determined by the Compensation Committee. Restricted stock awards granted to our non-employee directors on March 1 and June 1, 2018 were
15
granted under the 2008 Director Plan. Following its expiration on August 19, 2018, no additional awards will be granted under the 2008 Director Plan.
2018 Stock Incentive Plan
At the 2018 annual general meeting, the Company's shareholders approved the Helen of Troy Limited 2018 Stock Incentive Plan (the “2018 Stock Plan”). The 2018 Stock Plan is intended to replace the 2008 Director Plan. The 2018 Stock Plan is administered by the Compensation Committee of the Board of Directors and permits the granting of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to Company employees, directors, and consultants. The plan will expire by its terms on August 22, 2028. For additional information on the 2018 Stock Plan, see “Equity Plan Compensation Information - 2018 Stock Incentive Plan.” Restricted stock awards granted to our non-employee directors on September 4 and December 3, 2018 were granted under the 2018 Stock Plan.
16
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 15, 2019 (except as noted below), the beneficial ownership of the Common Stock of the Directors, nominees for Directors and the executive officers of the Company; the Directors, nominees for Director and executive officers of the Company as a group; and each person known to the Company to be the beneficial owner of more than five percent of the Common Stock:
|
Name of Beneficial Owner
|
Number of Common Shares Beneficially Owned
|
Percent *
|
||
|
Julien R. Mininberg
|
104,620
|
**
|
|
|
|
Brian L. Grass (1)
|
37,045
|
**
|
|
|
|
Vincent D. Carson (1)
|
20,349
|
**
|
|
|
|
Gary B. Abromovitz
|
7,695
|
**
|
|
|
|
Timothy F. Meeker
|
6,285
|
**
|
|
|
|
William F. Susetka
|
5,252
|
**
|
|
|
|
Darren G. Woody
|
4,985
|
**
|
|
|
|
Beryl B. Raff
|
3,705
|
**
|
|
|
|
Thurman K. Case
|
1,570
|
**
|
|
|
|
Krista L. Berry
|
1,392
|
**
|
|
|
|
All Directors, nominees for Directors and executive officers as a group (10 persons) (1)
|
192,898
|
0.77
|
%
|
|
|
BlackRock Inc. (2)
55 East 52 nd Street New York, New York 10055 |
3,197,246
|
12.76
|
%
|
|
|
FMR LLC (3)
245 Summer Street Boston, Massachusetts 02210 |
3,027,282
|
12.09
|
%
|
|
|
The Vanguard Group (4)
100 Vanguard Boulevard Malvern, Pennsylvania 19355 |
2,435,527
|
9.72
|
%
|
|
|
*
|
Percent ownership is calculated using a base denominator of 25,047,097 shares of the Common Stock outstanding on May 15, 2019, adjusted in the case of Directors and executive officers, individually and as a group, for stock options exercisable within sixty days of May 15, 2019.
|
|
**
|
Ownership of less than one percent of the outstanding Common Stock.
|
|
(1)
|
Includes shares subject to stock options that are exercisable within sixty days of May 15, 2019 as follows:
|
|
Options
(#)
|
||
|
Vincent D. Carson
|
1,500
|
|
|
Brian L. Grass
|
9,932
|
|
|
Total
|
11,432
|
|
|
(2)
|
Based on the Schedule 13G/A filed on January 28, 2019. According to the filing, BlackRock, Inc. has sole dispositive power for 3,197,246 shares, shared dispositive power for zero shares, sole voting power for 3,118,898 shares, and shared voting power for zero shares.
|
|
(3)
|
Based on the Schedule 13G/A filed on February 13, 2019. According to the filing, FMR LLC currently has sole dispositive power for 3,027,282 shares, shared dispositive power for zero shares, sole voting power for 566,600 shares, and shared voting power for zero shares.
|
|
(4)
|
Based on the Schedule 13G/A filed on February 11, 2019. According to the filing, The Vanguard Group currently has sole dispositive power for 2,406,553 shares, shared dispositive power for 28,974 shares, sole voting power for 28,038 shares, and shared voting power for 3,415 shares.
|
17
EXECUTIVE OFFICERS
Our executive officers are currently Julien R. Mininberg and Brian L. Grass. Mr. Mininberg also serves as a Director of the Company and stands for nomination at the Annual Meeting. His biography is included above under “Proposal 1: Election of Directors.”
BRIAN L. GRASS
, age 49, joined the Company in 2006 and has served as the Chief Financial Officer since 2014. Prior to his appointment as the Chief Financial Officer, he served as the Company’s Assistant Chief Financial Officer. Prior to joining the Company, Mr. Grass spent seven years in public accounting at KPMG LLP and six years in various financial leadership roles at Tenet Healthcare Corporation, a healthcare services company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the “Compensation Committee”) has reviewed and discussed with management the Compensation Discussion and Analysis for the fiscal year ended February 28, 2019 to be included in the proxy statement for the Annual Meeting filed pursuant to Section 14(a) of the Exchange Act. Based on its review and discussion referred to above, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the proxy statement on Schedule 14A for the Company’s Annual Meeting and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2019.
Members of the Compensation Committee:
William F. Susetka, Chairman
Gary B. Abromovitz
Timothy F. Meeker
Darren G. Woody
This Compensation Committee Report is not “soliciting material,” and is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference.
18
COMPENSATION DISCUSSION AND ANALYSIS
|
EXECUTIVE OFFICERS
Julien R. Mininberg
CEO
Brian L. Grass
Chief Financial Officer
Vincent D. Carson
Former Chief Legal Officer and Secretary
|
This section of the proxy statement explains how the Compensation Committee oversees our executive compensation programs and discusses the compensation earned by our named executive officers below, as presented in the tables under “Executive Compensation.” Under applicable SEC rules, our “named executive officers” for fiscal year 2019 include Messrs. Mininberg, Grass, and Carson. We sometimes refer to Messrs. Grass and Carson as “other named executive officers.” Mr. Carson, our former Chief Legal Officer and Secretary, retired from his positions effective as of August 22, 2018.
|
Executive Summary
This Compensation Discussion and Analysis describes our executive compensation program for fiscal year 2019. During fiscal year 2019, the Compensation Committee was responsible for approving executive compensation and overseeing the administration of our incentive plans and employee benefit plans.
Overall, our executive compensation program emphasizes performance- and equity-based compensation to align it with shareholder interests and includes other practices that we believe serve shareholder interests such as paying for performance and maintaining policies relating to clawbacks of incentive awards and prohibitions on hedging or pledging Company stock. Important features of our fiscal year 2019 executive compensation program include the following:
|
Feature
|
Terms
|
|
Rigorous Performance Metrics
|
• Established rigorous performance goals based on multiple metrics that are not duplicative between short-term and long-term incentive awards.
|
|
Long-Term Incentives
|
• Established multi-year performance periods for long-term incentive awards, with minimum vesting periods for Company equity grants.
|
|
Pay for Performance
|
• Our executive compensation programs are designed to demonstrate our execution on our pay for performance philosophy. Approximately 71 percent of target CEO pay and 58 percent of target Chief Financial Officer pay in fiscal year 2019 was at risk based on the performance of the Company.
|
At the 2018 annual general meeting, over 99 percent of votes present (excluding abstentions and broker non-votes) voted for the “Say-on-Pay” proposal related to our compensation policies. Following the end of each fiscal year, the Compensation Committee conducts a review of all components of the Company’s compensation program. In consideration of the results on the “Say-on-Pay” vote, the Compensation Committee acknowledged the support received from our shareholders and viewed the results as a confirmation of the Company’s executive compensation policies and decisions. Accordingly, we did not significantly change our compensation principles and objectives for our named executive officers in fiscal year 2019. However, on November 7, 2018, we entered into an amended and restated employment agreement with our CEO effective beginning with fiscal year 2020 (the "New Employment Agreement"), that, among other matters:
|
•
|
extends the term of his employment through the end of the Company’s fiscal year 2023;
|
|
•
|
eliminates time-vested award grants, putting 100 percent of his go-forward target long-term incentive compensation at risk based on Company performance and multi-year performance periods (an increase from 75 percent under his prior employment agreement), which places 88 percent of his total target compensation at risk (an increase from 71 percent under his prior employment agreement); and
|
|
•
|
modifies certain other compensation terms.
|
The Company entered into this New Employment Agreement with Mr. Mininberg as a result of his demonstrated strong performance as our CEO, the Company’s strong financial performance during his time as CEO, and the leadership and direction he provides to our employees. Pursuant to its terms, Mr. Mininberg’s prior employment agreement (the "Employment Agreement") expired on February 28, 2019. For further information, see “- Fiscal Year 2020 Compensation Changes.”
19
Fiscal Year 2019 Performance Overview
We were able to meet a number of objectives aimed to further our core initiatives to grow our business and increase shareholder value, including:
|
•
|
cumulative total shareholder returns of 17.6 and 71.7 percent over the past three and five fiscal years, respectively;
|
|
•
|
net revenue compound annual growth rates of 4.2 and 3.7 percent over the past three and five fiscal years, respectively;
|
|
•
|
adjusted operating income compound annual growth rates of 7.2 and 5.5 percent over the past three and five fiscal years, respectively;
|
|
•
|
diluted earnings per share from continuing operations compound annual growth rates of 27.0 and 20.0 percent over the past three and five fiscal years, respectively; and
|
|
•
|
adjusted diluted earnings per share from continuing operations compound annual growth rates of 11.7 and 12.4 percent over the past three and five fiscal years, respectively.
|
*
Three-year cumulative return for the Compensation Peer Group is less than negative 1 percent.
20
Adjusted operating income and adjusted diluted earnings per share from continuing operations may be considered non-GAAP financial measures as set forth in SEC Regulation G, Rule 100. See Annex A for a reconciliation of non-GAAP financial measures to our results as reported under GAAP and an explanation of the reasons why the Company believes the non-GAAP financial information is useful and the nature and limitations of the non-GAAP financial measures. On December 20, 2017, we completed the divestiture of the Nutritional Supplements segment through the sale of Healthy Directions LLC and its subsidiaries to Direct Digital, LLC. Following the sale, we no longer consolidate our former Nutritional Supplements segment’s operating results. All results presented above are from continuing operations, which exclude the operating results from the former Nutritional Supplements segment for all periods presented.
21
Elements of Executive Compensation
The Compensation Committee structured the fiscal year 2019 compensation of our named executive officers as follows:
|
Element
|
Type
|
Terms
|
|
Base Salary
|
Cash
|
• Fixed amount of compensation for performing day-to-day responsibilities.
• Named executive officers are generally eligible for annual increases.
|
|
Annual Incentives and Bonuses
|
Cash; Restricted Stock Units (RSUs)
|
• Competitively-based annual incentive awards for achieving short-term financial goals (such as annual adjusted income and net sales targets) and other strategic objectives.
The Compensation Committee may also award discretionary cash or RSU bonuses for exceptional performance, extraordinary efforts or milestone company events.
|
|
Performance Long-Term Incentives
|
Performance Restricted Stock Units (Performance RSUs)
|
• Performance RSUs vest at the end of a three-year performance period.
• Number of Performance RSUs earned by executive officers is based upon cumulative adjusted earnings per share, adjusted cash flow productivity and relative total shareholder return performance metrics.
|
|
Time-Vested Long-Term Incentives
|
Time-Vested RSUs
|
• Time-Vested RSUs vest equally over a three-year period for our CEO and over a three-year period for our other named executive officers with 50 percent vesting on the first day of each fiscal year during the second and third years after the date of grant.
|
|
Other
|
Perquisites
|
• Very limited perquisites.
|
Under the New Employment Agreement, effective beginning with fiscal year 2020, Mr. Mininberg's compensation structure was changed so that all long-term incentive awards will be based on performance goals and multi-year performance periods, and no such awards will be time-vested.
Overview of Compensation Practices
Oversight of Our Executive Compensation Program
The Compensation Committee oversees the compensation of our named executive officers and is composed entirely of independent Directors, as defined under the listing standards of NASDAQ. The Compensation Committee is responsible for evaluating the CEO’s performance in light of the goals and objectives of the Company. It also makes compensation recommendations with respect to our other named executive officers, including approval of awards for incentive compensation and equity-based plans. The Compensation Committee and the Corporate Governance Committee also assist the Board of Directors in developing succession planning for our named executive officers.
The Role of the CEO in Determining Executive Compensation
The Compensation Committee, working with the CEO, evaluates and approves all compensation regarding our other named executive officers. Our other named executive officers report directly to our CEO who supervises the day to day performance of those officers. Accordingly, the CEO establishes the criteria and any targets used to determine bonuses, including each other named executive officer’s individual performance and Company-based performance factors, and makes recommendations to the Compensation Committee regarding salaries, bonuses and equity awards for the other named executive officers. The Compensation Committee strongly considers the compensation recommendations and the performance evaluations of the CEO in making its decisions and any recommendations to the Board of Directors with respect to other named executive officers’ compensation, incentive compensation plans and equity-based plans that are required to be submitted to the Board. In deliberations or approvals regarding the compensation of the other named executive officers, the Compensation Committee may elect to invite the CEO to be present but not vote. In any deliberations or approvals of the Compensation Committee regarding the CEO’s compensation, the CEO is not invited to be present.
Objectives of Our Compensation Program
Our compensation program is designed to attract, motivate and retain key employees and to align the long-term interests of the named executive officers with those of our shareholders. The philosophy that the Compensation Committee uses to set executive compensation levels and structures is based on the following principles:
|
•
|
compensation for our named executive officers should be linked to performance;
|
22
|
•
|
a higher percentage of compensation should be performance-based as an executive officer’s range of responsibility and ability to influence the Company’s results increase;
|
|
•
|
compensation should be competitive in relation to the marketplace and in consideration of sources of talent, experience and industry expertise; and
|
|
•
|
outstanding achievement should be recognized.
|
In addition, we believe that our compensation programs should be appropriately tailored to encourage our executive officers to grow our business, but not encourage them to do so in a way that poses unnecessary or excessive material risk to the Company.
Compensation Consultant and Other Advisors
The Compensation Committee has the independent authority to hire compensation, accounting, legal, or other advisors. In connection with any such hiring, the Compensation Committee can determine the scope of the consultant’s assignments and their fees. The scope of a consultant’s services may include providing the Compensation Committee with data regarding compensation trends, assisting the Compensation Committee in the preparation of market surveys or otherwise helping it evaluate compensation decisions.
The Compensation Committee retained Frederic W. Cook & Company (“FW Cook”) as its independent compensation consultant to assist in the evaluation of the compensation packages of our CEO and the other named executive officers for fiscal year 2019. FW Cook works directly with the Compensation Committee (and not on behalf of management) to assist the Compensation Committee in meeting its responsibilities. FW Cook has not performed any other services for the Company nor undertaken any projects on behalf of management. The Compensation Committee has determined that FW Cook had no conflicts of interest relating to its engagement by the Compensation Committee.
Competitive Pay Position for our CEO
To assist in setting appropriate compensation for our CEO, the Compensation Committee analyzed competitive market conditions drawing from third-party compensation surveys and publicly available executive compensation data. The Compensation Committee also evaluated compensation trends and market practice in setting the compensation of our CEO. Furthermore, the Compensation Committee used compensation data for similar positions in a peer group analysis as a guide to setting fiscal year 2019 compensation for our CEO. We believe that a peer group analysis permits the Compensation Committee to assess an appropriate total value and mix of pay for our CEO and to set the compensation of our CEO in a manner that is competitive in relation to the marketplace and in consideration of sources of talent and Mr. Mininberg’s experience and industry expertise. Accordingly, in fiscal year 2018, the Compensation Committee engaged FW Cook to prepare a peer group list for the Compensation Committee to consider in determining the total compensation of our CEO (the “Compensation Peer Group”). In fiscal year 2019, the Compensation Committee reconsidered the composition of the Compensation Peer Group in consultation with FW Cook. The Compensation Committee determined that the organizations in the Compensation Peer Group were still appropriate at the time of that determination, other than the removal of Vitamin Shoppe, Inc., due to the sale of the Company’s Nutritional Supplements segment in fiscal year 2018, and NACCO Industries Inc., which divested its small electrics business in September 2017, and as a result, is no longer a competitor of the Company. The Compensation Committee also determined it would be appropriate to add The Clorox Co. to the Compensation Peer Group because it is a direct competitor of Helen of Troy’s Health & Home segment and appears in publicly disclosed peer groups of six of the companies in the fiscal year 2018 Compensation Peer Group. As a result, in fiscal year 2019, the Compensation Peer Group consisted of the following 14 companies:
|
The Clorox Co.
|
Lifetime Brands, Inc.
|
|
Church & Dwight Co. Inc.
|
Nu Skin Enterprises, Inc.
|
|
Coty Inc.
|
Prestige Brands Holdings, Inc.
|
|
Edgewell Personal Care Company
|
Revlon Inc.
|
|
Energizer Holdings, Inc.
|
Spectrum Brands Holdings Inc.
|
|
La-Z-Boy Incorporated
|
Tempur Sealy International Inc.
|
|
Libbey Inc.
|
Tupperware Brands Corp
|
In compiling the Compensation Peer Group, the Compensation Committee considered management input and the input of its independent compensation consultant. The Compensation Peer Group includes a mix of companies identified as being within our peer group by proxy advisors or recommended by our compensation consultant or management. The organizations ultimately included in the Compensation Peer Group were chosen because they are a source of talent, are within the general industry of the Company and have comparable revenues, are competitors of the Company or have similar distribution channels as the Company. The Compensation Committee screened companies included in the Compensation Peer Group with a focus on including those with revenues of one-third to
23
three times the revenue of the Company. The Compensation Committee supplements this analysis with additional market information with respect to our CEO’s role with data on external opportunities potentially available to our CEO. The Compensation Committee reviewed the Compensation Peer Group in advance of setting fiscal year 2020 compensation for its other named executive officers and made no changes to the peer group other than the addition of Newell Brands Inc., as it is a direct industry competitor and also competes with the Company for executive talent.
While the Compensation Committee used the peer group analysis, market data and compensation survey data as a guide to understand the range of compensation opportunities in setting fiscal year 2019 compensation for our CEO, it did not tie our CEO’s compensation to specific market percentiles. In addition, the actual total compensation and/or amount of each compensation element may be more or less than peers because of factors like expertise, performance, and responsibilities. In setting Mr. Mininberg’s compensation for fiscal year 2019, the Compensation Committee considered his extraordinary efforts and leadership as our CEO, as well as his extensive industry experience and expertise, that have led to strong growth in the revenue, cash flow and market capitalization of the Company during his tenure. The Compensation Committee views Mr. Mininberg’s role as involving greater scope and complexity than similar positions at companies in the Compensation Peer Group and believes his performance would be above the median level of similar positions at companies in the Compensation Peer Group. As such, the Compensation Committee considers his total compensation for fiscal year 2019 to be an appropriate total level and mix of pay in light of the competitive market for executive level talent that can provide innovative leadership and perform demanding roles leading large global organizations. The Compensation Committee believes the compensation program of the Company’s CEO is closely aligned with the interests of the shareholders and reflective of the competitive marketplace for executive level talent with the industry experience and expertise of Mr. Mininberg.
Competitive Pay Positions for our Other Named Executive Officers
To assist in setting appropriate compensation levels for our other named executive officers, the Compensation Committee analyzed competitive market conditions drawing from third-party compensation surveys and publicly available executive compensation data. The Compensation Committee supplemented this analysis with additional market information related to each named executive officer’s role with data on external opportunities potentially available to our other named executive officers and companies it believes are a source of talent. The Compensation Committee also evaluated compensation trends and market practice for the other named executive officers. While the Compensation Committee used the market data and compensation survey data as a guide in setting fiscal year 2019 compensation targets for these executive officers, it did not tie executive officer compensation to specific market percentiles. In determining target compensation for our other named executive officers in fiscal year 2019, the Compensation Committee applied its independent judgment and considered the recommendations of the CEO and input from the market data, compensation survey data and compensation trends, as well as factors like expertise, performance and responsibilities.
Our Pay Practices and Corporate Governance
A summary of our current pay practices includes the following:
|
WHAT WE DO
|
WHAT WE DO NOT DO
|
|
Pay for Performance
– We heavily link our executive compensation program to the Company’s operating performance and the Compensation Committee’s evaluation of individual performance. We ensure that a significant portion of our named executive officers’ compensation opportunities are performance-based. The amount of the payout to our named executive officers is contingent on the degree to which the Company achieves pre-established performance goals that the Compensation Committee has determined are aligned with the Company’s short- and long-term operating and financial objectives. Under the New Employment Agreement, approximately 88 percent of Mr. Mininberg’s total target compensation is at risk based on the Company's performance over multi-year performance periods.
|
No Incentive Compensation Performance Goals that Would Encourage Unnecessary or Excessive Risk Taking
- Our annual and long-term incentive program are designed to incorporate performance criteria that promote our short-term and long-term business strategies, build long-term shareholder value and discourage excessive risk-taking.
|
24
|
Focused Incentive Goals
– Our annual and long-term incentive program includes multiple and rigorous performance goals that are not duplicative between short- term and long-term incentive awards. Long-term awards are measured over a three-year period. By using different performance measures in our annual cash incentive program and our long-term stock incentive program, we mitigate the risk that our named executive officers would be motivated to pursue results with respect to one performance measure to the detriment of the Company as a whole.
|
No Pledging of Common Stock
- Our Insider Trading Policy prohibits Board members and our named executive officers from pledging Common Stock. None of our Directors or executive officers has any existing pledging arrangements.
|
|
Limitation of Employment Term for our CEO –
Mr. Mininberg’s New Employment Agreement has a termination date of February 28, 2023.
|
No Use of Common Stock as Collateral for Margin Loans -
Board members and our named executive officers are prohibited from using Common Stock as collateral for any margin loan.
|
|
Compensation Recoupment Policies
– In order to discourage excessive risk-taking and misconduct on the part of the executive officers, each of our annual cash incentive plan and our principal equity compensation plan includes a clawback provision and is subject to our clawback policy.
|
No Excessive Perquisites
– We provide only a limited number of perquisites and supplemental benefits to attract talented executives to the Company and to retain our current executives.
|
|
Annual Shareholder “Say on Pay”
– Because we value our shareholders’ input on our executive compensation programs, our Board has chosen to provide shareholders with the opportunity each year to vote to approve, on a non-binding, advisory basis, the compensation of the named executive officers in our proxy statement.
|
No Hedging
– Board members and our named executive officers are prohibited from engaging in transactions (such as trading in options) designed to hedge against the value of the Company’s Common Stock, which would eliminate or limit the risks and rewards of the Common Stock ownership.
|
|
Limitation on Employment Contracts
– We employ all of our named executive officers, other than our CEO, on an at-will basis. Each executive officer has post-termination and non-competition obligations with the Company pursuant to which the executive officer has agreed that he will not participate in a business that competes with us for a defined period of time.
|
No Speculative Trading
– Board members and our named executive officers are prohibited from short-selling the Common Stock, buying or selling puts and calls of the Common Stock, or engaging in any other transaction that reflects speculation about the Common Stock price or that might place their financial interests against the financial interests of the Company.
|
|
Stock Ownership Guidelines
– Our named executive officers are subject to certain stock ownership and holding requirements. The CEO is required to own Common Stock equal in value to at least three times annual salary, and each other executive officer is required to own Common Stock equal in value to at least one times annual salary.
|
No Unapproved Trading Plans
– Board members and our named executive officers are prohibited from entering into securities trading plans pursuant to SEC Rule 10b5-1 without pre-approval; further, no Board member or any executive officer may trade in our Common Stock without pre-approval.
|
Our Compensation Program for Our CEO
On January 7, 2016, we entered into an amended and restated employment agreement with Mr. Mininberg, effective March 1, 2016 (the “Employment Agreement”). On November 7, 2018, we entered into an amended and restated employment agreement with Mr. Mininberg, effective March 1, 2019 (the “New Employment Agreement”). For further information regarding the compensatory terms of the New Employment Agreement, see “- Fiscal Year 2020 Compensation Changes - Amended and Restated Employment Agreement of our CEO.” Mr. Mininberg sets the overall strategic vision for our Company, and oversees the senior management team and the Company’s growth and acquisition strategy. While the Compensation Committee used the peer group analysis, market data and compensation survey data as a guide in setting fiscal year 2019 compensation for our CEO, we do not tie our CEO’s compensation to specific market percentiles. The Compensation Committee evaluated the compensation relative to organizations in the Compensation Peer Group. For more information, see “Overview of Compensation Practices - Competitive Pay Position for our CEO.”
Pay for Performance
Total compensation for the CEO varies with both individual performance and the Company’s performance in achieving financial and non-financial objectives. The CEO’s compensation is designed to reward his contribution to the Company’s results and objectives. Accordingly, in addition to considering a comparative peer group, market surveys and other external data, each year, the Compensation Committee reviews individual and Company performance of the CEO and makes corresponding adjustments to compensation.
25
The Compensation Committee also believes that performance-based compensation aligns our CEO’s interests with our annual corporate goals and that a substantial majority of his compensation should be performance-based considering the scope and level of his business responsibilities. For fiscal year 2019 and the remaining term of the New Employment Agreement, Mr. Mininberg’s performance compensation was, and will continue to be based on a balanced mix of equity and cash awards. Under the Employment Agreement, the New Employment Agreement and related compensation programs, the Compensation Committee uses targeted, performance-based compensation goals for our CEO. These targets are designed to incorporate performance criteria that promote our short-term and long-term business strategies, build long-term shareholder value and discourage excessive risk-taking.
For fiscal year 2019, approximately 71 percent of Mr. Mininberg’s total target compensation was at risk based on the Company's performance.
* At risk based on the performance of the Company
.
Under the New Employment Agreement, the compensation structure was changed so that all long-term incentive awards will be based on performance goals and multi-year performance periods, and no such awards will be time-vested. As result, under the New Employment Agreement, 100 percent of Mr. Mininberg’s target long-term incentive compensation is at risk based upon on multi-year performance periods, whereas prior to the New Employment Agreement, 25 percent of his target long-term incentive awards were time-vested and not at risk. Beginning in fiscal year 2020, approximately 88 percent of Mr. Mininberg’s total target compensation will be at risk based on Company performance over multi-year performance periods (compared to 71 percent under the prior employment agreement).
Elements of the Compensation Program for Our CEO
For fiscal year 2019, the principal components of compensation for our CEO were:
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base salary;
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incentive awards (annual and long-term);
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•
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very limited perquisites; and
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•
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post-termination benefits.
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The Compensation Committee reviews total compensation for the CEO annually and evaluates his performance. Each year, the Compensation Committee also certifies that the amounts of any bonus payments under the 2011 Annual Incentive Plan (“2011 Bonus Plan”) have been accurately determined and that the performance targets, and any other material terms previously established by the Compensation Committee, were in fact satisfied. The Compensation Committee believes that performance-based compensation should constitute a substantial portion of our CEO’s total compensation. As a result, the Compensation Committee anticipates that the CEO’s base salary will represent a small percentage of the CEO’s total compensation in any given fiscal year. Mr. Mininberg’s total compensation is primarily performance-based and tied directly to the success of the Company. In addition, Mr. Mininberg’s performance-based compensation consists of a mix of cash and performance-based equity awards to provide an appropriate balance of incentives to achieve both the short-term and long-term goals of the Company.
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Base Salary of Our CEO
We provide our named executive officers and other executives with a base salary to provide a fixed amount of compensation for regular services rendered during the fiscal year. The Employment Agreement sets Mr. Mininberg’s salary at no less than $950,000 per year. As a result of his demonstrated strong performance as our CEO, the Company’s strong financial performance during his time as CEO, and the leadership and direction he provides to our employees, the Compensation Committee increased Mr. Mininberg’s base salary from $975,000 to $1,000,000 per year for fiscal year 2019.
Incentive Awards for Our CEO
The Compensation Committee also designed Mr. Mininberg’s compensation package to include a balance of short-term incentive compensation awarded on an annual basis and long-term incentive compensation measured over a three-year performance period. Both short-term and long-term incentive compensation for Mr. Mininberg is based on multiple performance measures.
Annual Incentive Awards
The Compensation Committee believes that performance-based awards align our executives’ interests with our annual corporate goals and are important to the success of the Company. Accordingly, Mr. Mininberg is entitled to receive an annual incentive bonus, subject to the achievement of specific performance conditions that are not duplicative of the performance conditions of his long-term incentive awards. The Compensation Committee also based the annual incentive award on two performance measures, which are intended to measure identified short term goals of the Company. Mr. Mininberg’s annual incentive compensation is not based on a set performance measure over the term of the Employment Agreement. Accordingly, the Compensation Committee is able to reevaluate and establish the performance measures on an annual basis to reflect shareholder input and changes in market trends.
The fiscal year 2019 annual incentive opportunity was based on the achievement of adjusted income and net sales targets, with no annual incentive award to be paid if the threshold adjusted income target was not met. In determining adjusted income, the Compensation Committee determined that it would begin with consolidated adjusted income from continuing operations of the Company, as reported in the Company's fiscal 2019 Annual Report on Form 10-K. The Compensation Committee adjusted this performance target for the amortization of intangible assets and non-cash share-based compensation, each of which was net of tax and as reported in the Company's fiscal 2019 Annual Report on Form 10-K. The Compensation Committee values both goals as important to the Company’s success. For fiscal year 2019, the Compensation Committee set the threshold, target and maximum adjusted income and net sales values from continuing operations at the following levels:
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Performance Metric
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Threshold
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Target
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Maximum
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Adjusted Income
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$157.5 million
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$175.0 million
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$192.5 million
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Net Sales
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$1,357.0 million
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$1,508.0 million
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$1,583.0 million
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Depending upon the achievement of the above performance goals, for fiscal year 2019, Mr. Mininberg was eligible for a cash payout under the 2011 Bonus Plan targeted at $2,000,000 with a maximum payout of $3,050,000 and a threshold payout of 50 percent of the target amount. For adjusted income and net sales results that fall in between the threshold and the target and the target and maximum values, the payout percentage of the award is calculated as a percent of the target amount using a non-linear curve.
Eighty percent (80%) of the annual incentive opportunity was based on the achievement of the adjusted income performance measure and twenty percent (20%) of the annual incentive opportunity was based on the achievement of the net sales performance measure. The committee placed a higher weight on the adjusted income goal over the net sales goal because it believes that adjusted income is the most relevant and significant factor in measuring our performance. Additionally, the emphasis on the adjusted income metric reflects the importance the Board places on achieving profitability through disciplined business expansion and expense management. If the adjusted income threshold had not been achieved, because of the importance the Compensation Committee places on adjusted income, no annual incentive would have been earned or payable with respect to fiscal year 2019. Additionally, Mr. Mininberg is not entitled to that portion of the annual incentive attributed to any performance measure if the threshold amount associated with such performance measure is not achieved.
The adjusted income and net sales targets are subject to adjustment in the event the Company or any of its subsidiaries divests any of its stock or assets. Additionally, the Company’s actual results measured to determine the achievement of these targets are subject to adjustment in the event the Company completes an acquisition of any stock or assets. Accordingly, the results of operations attributed to divestitures and acquisitions are effectively excluded from determining whether performance goals have been achieved. The Compensation Committee believes these adjustments properly modify performance results under the 2011 Bonus Plan to account for the impact of divestitures and acquisitions.
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For fiscal year 2019, the Company’s adjusted income was $177.6 million, representing 101.5 percent of the target measure and resulting in a payout percentage relating to that target of 106.0 percent, and the Company’s net sales were $1,564.2 million, representing 103.7 percent of the target measure and resulting in a payout percentage relating to that target of 165.0 percent. As a result, the Compensation Committee determined Mr. Mininberg had earned an annual incentive of $2,360,000 under the 2011 Bonus Plan (a blended percentage of 118 percent of the target award).
Long-Term Incentive Awards
The Compensation Committee believes that executive compensation should be linked, in part, to building long-term shareholder value. This objective is met by providing long-term incentives in the form of equity-based awards, such as Performance RSUs. These grants make the performance of the Company’s Common Stock a targeted incentive. The Compensation Committee established what it believes are rigorous performance goals that are not duplicative between short-term and long-term incentive awards. Additionally, the Compensation Committee established a three-year performance period for long-term incentive awards of our CEO.
As part of this objective, with respect to fiscal year 2019, Mr. Mininberg is eligible to receive a long-term incentive award for a three-year performance period ending February 28, 2021, pursuant to the Helen of Troy Amended and Restated 2008 Stock Plan (the “2008 Stock Plan”). Pursuant to the Employment Agreement, (1) 25 percent of the target amount of the long-term incentive award is in the form of a grant of time-vested RSUs and (2) 75 percent of the target amount of the long-term incentive award is in the form of a grant of Performance RSUs. Time-vested RSUs granted in fiscal 2019 vest over a three-year period from date of grant in three equal installments on March 1, 2019, March 1, 2020 and March 1, 2021. This grant is targeted at 9,280 shares of Common Stock subject to time-vested RSUs (with a grant date fair value of $800,000). The fiscal year 2019 Performance RSU grant is targeted at 27,842 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $2,400,000), with the opportunity to earn up to 55,684 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $4,800,000) and a threshold achievement payout of 13,921 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $1,200,000). The fiscal year 2019 long-term incentive grant is based on the achievement of cumulative adjusted earnings per share (as described below), adjusted cash flow productivity (as described below) and relative total shareholder return targets. Fifty percent (50%) of the fiscal year 2019 long-term incentive grant is based on the cumulative adjusted earnings per share performance measure, twenty-five percent (25%) of the fiscal year 2019 long-term incentive grant is based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the fiscal year 2019 long-term incentive grant is based on the achievement of the relative total shareholder return performance measure. The comparison group for purposes of the relative total shareholder return measure is the Compensation Peer Group.
Adjusted diluted earnings per share is calculated by dividing adjusted income by the number of diluted shares outstanding for each fiscal year. The cumulative adjusted earnings per share metric is calculated as the sum of adjusted diluted earnings per share for each year in the performance period. The adjusted income metric is determined in the same manner as the adjusted income metric in Mr. Mininberg’s annual incentive award, as described above, other than the results relating to acquisitions during the performance period, which are included in the results for purposes of achieving the long-term incentive targets. The Compensation Committee used cumulative adjusted earnings per share because it believes it is viewed by our shareholders as an important reflection of the Company’s financial health and it measures how the Company is performing with respect to profitability and value creation. Due to the importance of cumulative adjusted earnings per share to the Company’s shareholders over the long-term, the Compensation Committee elected to use the measure as the highest weighted metric in the determination of Mr. Mininberg’s long-term incentive award.
The adjusted cash flow productivity metric is calculated by dividing (1) net cash provided by operating activities of the Company, less capital and intangible asset expenditures, plus pre-tax cash adjustments included in adjusted income, by (2) adjusted income. The Compensation Committee chose this metric because it measures how the Company’s operations are effectively using its investments to generate cash flow. The metric also reflects the importance of cash flow as a means of assessing the fiscal soundness of the Company. The Compensation Committee chose the relative total shareholder return metric because it provides a direct link between Mr. Mininberg’s compensation and shareholder results allowing his performance to be judged in comparison to peer group performance, while also allowing positive and negative adjustments for unexpected market conditions. Mr. Mininberg is not entitled to that portion of the award attributed to any performance measure if the threshold amount associated with such performance measure is not achieved.
In fiscal year 2017, Mr. Mininberg received a long-term incentive award under the 2008 Stock Plan, with a three-year performance period that ended on February 28, 2019, targeted at 25,020 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $2,400,000), with the opportunity to earn up to 50,040 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $4,800,000) and a threshold achievement payout of 12,510 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $1,200,000). Pursuant to the terms of the fiscal year 2017 award, the amount of the long-term incentive award paid is determined based on the achievement of cumulative adjusted earnings per share (based on earnings per share without asset impairment charges, restructuring charges, total gains or losses from dispositions, costs and expenses incurred in
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connection with acquisitions and dispositions, litigation charges (including in connection with settlements of litigation but excluding product liability litigation charges and settlements), non-market based currency devaluations and CEO succession costs), adjusted cash flow productivity (as described above) and relative total shareholder return targets. Fifty percent (50%) of the fiscal year 2017 Performance RSU grant was based on the achievement of the cumulative adjusted earnings per share performance measure, twenty-five percent (25%) of the fiscal year 2017 Performance RSU grant was based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the fiscal year 2017 Performance RSU grant is based on the achievement of the relative total shareholder return performance measure. The comparison group for purposes of the relative total shareholder return measure was the compensation peer group approved for fiscal 2017.
In April 2019, the Compensation Committee certified the level of attainment of established performance goals for the fiscal year 2017 Performance RSU award. For the three fiscal years ending February 28, 2019, our adjusted cumulative earnings per share was $18.03, representing 115.1 percent of the target measure and resulting in a payout percentage relating to that target of 200 percent. Additionally, our adjusted cash flow productivity over the three-year period was 119 percent, representing 148.8 percent of the target measure and resulting in a payout percentage relating to that target of 200 percent. Finally, our relative total shareholder return over the three-year period was at the 65 percentile of the comparative peer group, representing 130.0 percent of the target measure and resulting in payout percentage relating to that target of 160 percent. As a result, the Compensation Committee determined Mr. Mininberg had earned 47,538 shares of Common Stock subject to Performance RSUs with respect to the fiscal year 2017 Performance RSU grant under the 2008 Stock Plan (a blended percentage of 190 percent of the target award).
Limited Perquisites and Other Personal Benefits Provided to Our CEO
Mr. Mininberg is entitled to participate in various benefit plans available to all employees of the Company, such as a 401(k) plan (including matching contributions), group medical, group life and group dental insurance, as well as vacation and paid holidays. In addition, the Company pays or reimburses Mr. Mininberg for reasonable travel and other expenses incurred by him in performing his obligations. Additionally, in fiscal year 2019, the Company paid $35,000 in legal fees on Mr. Mininberg’s behalf in connection with the negotiation of the New Employment Agreement.
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Potential Post-Termination Benefits for our CEO
The Employment Agreement provided for certain payments and benefits upon Mr. Mininberg’s termination of employment, as described below:
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Death or Disability
. If Mr. Mininberg’s employment is terminated by reason of death or disability, then he (or his estate) would be entitled receive (1) any portion of unpaid base salary earned but not yet paid to him as of the date of termination, (2) any unpaid incentive payment earned by Mr. Mininberg with respect to any award under the 2011 Bonus Plan or the 2008 Stock Plan prior to the effective date of termination, (3) pro rata annual and long-term incentive compensation for the year in which his death or disability occurred, as the Compensation Committee, in its reasonable discretion, determines he likely would have received for the performance period during which his employment was terminated, and (4) any death or disability benefits under the life insurance and disability programs of the Company and its subsidiaries to which he is entitled.
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•
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Termination by Company for Cause or by Mr. Mininberg Other Than for Good Reason
. If Mr. Mininberg’s employment is terminated for cause by the Company or other than for good reason by Mr. Mininberg, then he would be entitled to receive (1) any portion of unpaid base salary earned but not yet paid to him as of the date of termination and (2) any unpaid incentive payment earned by Mr. Mininberg and vested with respect to any award under the 2011 Bonus Plan or the 2008 Stock Plan prior to the effective date of termination.
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•
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Termination by Mr. Mininberg for Good Reason or by Company Other Than for Cause (and Not in Connection with a Change of Control)
. If Mr. Mininberg’s employment is terminated by Mr. Mininberg for good reason or by the Company other than for cause and not in connection with a change of control of the Company, then he would be entitled to receive: (1) any portion of unpaid base salary or other benefit earned and vested but not yet paid to him as of the date of termination, (2) a cash payment of two times Mr. Mininberg’s base salary at the time of termination, in 24 equal installments, (3) a pro rata bonus under the 2011 Bonus Plan for the year in which the termination occurred based upon the actual performance of the Company, (4) a pro rata portion of any outstanding Performance RSUs granted under the 2008 Stock Plan based upon the actual performance of the Company during the applicable performance periods; (5) a pro rata portion of any installment of time-vested RSUs that would have vested as of the anniversary of the grant date that immediately follows the date of termination, (6) an additional cash payment, if applicable, to achieve an aggregate payment amount or value equal to $4,000,000, to the extent the aggregate amount or value of the payments upon such termination is less than $4,000,000, and (7) to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, the continuation of health insurance benefits under COBRA for Mr. Mininberg and his family for a maximum of 18 months after the date of termination or until Mr. Mininberg is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months. All payments and benefits due to Mr. Mininberg, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency, will be contingent upon Mr. Mininberg’s execution of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates and their respective and former directors, employees and agents pursuant to the Employment Agreement.
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•
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Termination by Mr. Mininberg for Good Reason or by Company Other Than for Cause (and in Connection with a Change of Control)
. If Mr. Mininberg’s employment is terminated by Mr. Mininberg for good reason or by the Company other than for cause and in connection with a change of control, then he would be entitled to receive: (1) any portion of unpaid base salary or other benefit earned and vested but not yet paid to him as of the date of termination, (2) a lump sum cash payment equal to two times both: (i) Mr. Mininberg’s then-applicable base salary at the time of the change of control or the date of termination of employment, whichever is higher, plus (ii) an amount equal to the target annual incentive under the 2011 Bonus Plan for the performance period in which his employment terminated, (3) the pro rata portion of the target annual incentive bonus under the 2011 Bonus Plan for the year in which the termination occurred, (4) accelerated vesting of all unvested, time-vested RSUs issued pursuant to the 2008 Stock Plan as of the date of termination, (5) accelerated vesting at target of all outstanding, unearned, Performance RSUs issued pursuant to the 2008 Stock Plan as of the date of termination, (6) an additional cash payment, if applicable, to achieve an aggregate payment amount or value equal to $4,000,000, to the extent the aggregate amount or value of the payments upon such termination is less than $4,000,000, and (7) to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, the continuation of health insurance benefits under COBRA for Mr. Mininberg and his family for a maximum of 18 months after the date of termination or until Mr. Mininberg is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months. In the event of any severance payment to Mr. Mininberg that constitutes “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and would be subject to excise taxes imposed by Section 4999 of the Code, a “best-of” calculation will be made comparing (a) the total benefit to Mr. Mininberg from the payments after consideration of the excise tax, to (b) the total benefit to Mr. Mininberg if the payments are reduced to the extent necessary to avoid being subject to the excise tax. Mr. Mininberg would be entitled to the payments equal to the more favorable outcome, as calculated in the Company’s reasonable judgment. All payments and benefits due to Mr. Mininberg, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency, will be contingent upon Mr. Mininberg’s execution of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates and their respective and former directors, employees and agents pursuant to the Employment Agreement.
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Additionally, in the event any outstanding equity awards issued to Mr. Mininberg pursuant to the 2008 Stock Plan are not assumed in connection with a change of control, such awards will vest immediately in accordance with the terms of the 2008 Stock Plan. The Compensation Committee believes the severance provisions of the Employment Agreement are a competitive compensation
30
element in the executive labor market at the time the Employment Agreement was negotiated and are more beneficial to the Company and its shareholders than conducting an individual negotiation with our CEO in the event of a termination of his employment. The Compensation Committee believes the change of control severance benefits provide incentive for our CEO to fully consider potential changes that are in the best interest of the Company and our shareholders, even if such changes would result in the executive’s termination. As noted above, the Employment Agreement limits the potential severance payable to our CEO over the term of the Employment Agreement for the termination events described in the preceding paragraph. On March 1, 2019, the New Employment Agreement became effective, which amends certain post-termination benefits our CEO is eligible to receive. For further information, see “- Fiscal Year 2020 Compensation Changes” and “Executive Compensation - Potential Payments Upon Termination Or Change In Control - CEO.”
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The Company’s Compensation Program for our Other Named Executive Officers
Our other named executive officers for fiscal year 2019 are Mr. Grass, Chief Financial Officer, and Mr. Carson, our former Chief Legal Officer and Secretary. Mr. Carson retired from his positions as Chief Legal Officer and Secretary on August 22, 2018. Neither of these other named executive officers is party to an employment agreement. As a result, their compensation is reviewed and determined by the Compensation Committee on an annual basis. The Compensation Committee may also review an executive officer’s compensation if that executive officer is promoted or experiences a change in responsibilities.
Our other named executive officers report directly to our CEO who supervises the day to day performance of those officers. Our CEO annually reviews our executive compensation program (other than for himself) and makes compensation recommendations to the Compensation Committee with respect to the other named executive officers, among others. The Compensation Committee strongly considers the recommendations of the CEO in making its decisions and any recommendations to the Board of Directors with respect to non-CEO compensation, incentive compensation plans and equity-based plans that are approved by the Board. Additionally, for fiscal year 2019, the Compensation Committee evaluated compensation trends and market practice for the other named executive officers. The Compensation Committee also used compensation survey data as a guide to help set fiscal year 2019 compensation targets for the other named executive officers. For further information, see “Overview of Compensation Practices - Competitive Pay Positions for our Other Named Executive Officers.”
Pay for Performance
Total compensation for each other named executive officer varies with both individual performance and the Company’s performance in achieving financial and non-financial objectives. Each other named executive officer’s compensation is designed to reward his contribution to the Company’s results and objectives. Accordingly, in addition to considering CEO recommendations, market surveys and other external data, each year, the Compensation Committee reviews individual and Company performance and makes corresponding adjustments to compensation.
The Compensation Committee believes that a significant portion of compensation to our named executive officers should be at risk based on the financial performance of the Company and the individual performance of the executive. The Compensation Committee also believes that the performance compensation should promote both a near- and long-term outlook. As a result, each of the other named executive officers is eligible to earn a performance-based cash annual incentive award and a mix of long-term performance-based and time-vested RSU incentive awards, similar to the compensation structure of our CEO. Multiple performance criteria have been established for both annual performance awards (based on adjusted income and net sales targets) and long-term performance awards (based on cumulative adjusted earnings per share, adjusted cash flow productivity and relative total shareholder return targets).
For fiscal year 2019, approximately 58 percent of the total target compensation for Mr. Grass was at risk based on the Company's performance. For additional information regarding these awards, see “- Annual Incentive Awards for our Other Named Executive Officers” and “- Long-Term Incentive Awards for our Other Named Executive Officers.”
* At risk based on the performance of the Company
.
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For fiscal year 2019, approximately 56 percent of the total target compensation of Mr. Carson was at risk based on the Company's performance.
* At risk based on the performance of the Company
.
Elements of Our Compensation Program for Our Other Named Executive Officers
The principal components of compensation for our other named executive officers in fiscal year 2019 were:
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Base salary;
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Annual performance-based incentives;
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Long-term performance-based and time-vested equity compensation; and
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Other personal benefits.
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For fiscal year 2019, Messrs. Grass and Carson were each eligible to earn a performance-based annual incentive award paid in cash and a mix of performance-based and time-vested long-term incentive awards in the form of equity, similar to the compensation structure of our CEO. The Compensation Committee used compensation survey data as a guide to setting fiscal year 2019 compensation targets for these executive officers. Additionally, the Company’s policy is to provide severance arrangements for the other named executive officers. For additional information regarding the severance policy and potential severance payments, see “- Potential Post-Termination and Change of Control Benefits for our Other Named Executive Officers.” On June 17, 2019, the Company
entered into a severance agreement with Mr. Grass. For further information, see “- Fiscal Year 2020 Compensation Changes - Severance Agreement with our Chief Financial Officer.”
Base Salary of Our Other Named Executive Officers
The Company provides our other named executive officers with a base salary to provide a fixed amount of compensation for regular services rendered during the fiscal year. In setting or increasing base salaries, the Compensation Committee strongly considers the recommendations made by our CEO. In addition, the committee considers each executive’s job responsibilities, qualifications, experience, performance history and length of service with the Company and comparable salaries paid by our competitors. The Compensation Committee may, in its discretion, change the base salary of other named executive officers based on that named executive officer’s performance.
During fiscal year 2019, the Compensation Committee, upon the recommendation of our CEO, approved an increase in Mr. Grass's annual base salary of $35,000 (effective June 1, 2018) for fiscal year 2019. The Compensation Committee approved the increase because it believes his compensation was below market levels and in recognition of his performance. The Compensation Committee strongly considered the recommendation of the CEO in making its determination. The Compensation Committee also reviewed market data and trends in evaluating the increase in his base salary. Prior to his resignation from the Company, the annual base salary of Mr. Carson for fiscal year 2019 was $465,000. The Compensation Committee believes the compensation program of our other named executive officers is closely aligned with the interests of the shareholders and reflective of the marketplace for executive level talent with the industry experience and expertise of Messrs. Grass and Carson.
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Annual Incentive Awards for Our Other Named Executive Officers
Our other named executive officers are eligible to earn a cash annual incentive award. These awards are intended to align our executives’ interests with our annual corporate goals. After considering the recommendations of the CEO, for fiscal year 2019, the Compensation Committee established multiple performance criteria for the cash annual incentive award of each other named executive officer.
The fiscal year 2019 bonus opportunity was based on the achievement of adjusted income and net sales targets, with no annual incentive award to be paid if the threshold adjusted income metric was not met. The Compensation Committee values both goals as important to the Company’s success. For fiscal year 2019, the Compensation Committee set the threshold, target and maximum adjusted income and net sales values from continuing operations at the following levels:
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Performance Metric
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Threshold
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Target
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Maximum
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Adjusted Income
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157.5 million
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$175.0 million
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$192.5 million
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Net Sales
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$1,357.0 million
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$1,508.0 million
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$1,583.0 million
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The annual incentive threshold, target and maximum award for each of Messrs. Grass and Carson are based upon a percentage of such respective executive officer’s base salary for fiscal 2019, as follows:
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Name
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Threshold
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Target
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Maximum
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B. Grass
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37.5%
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75%
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150%
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V. Carson
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37.5%
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75%
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150%
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For adjusted income and net sales results that fall between either the threshold and the target or the target and maximum values, the payout percentage of the award of each other named executive officer is calculated as a percent of the target amount using a non-linear curve.
Eighty percent (80%) of the annual incentive award is based on the achievement of the adjusted income performance measure and twenty percent (20%) is based on the achievement of the net sales performance measure. If the adjusted income threshold had not been achieved, because of the importance the Compensation Committee places on adjusted income, no bonus would have been earned or payable with respect to fiscal year 2019. Additionally, none of our other named executive officers is entitled to that portion of the bonus attributed to any performance measure if the threshold amount associated with such performance measure is not achieved. For a discussion concerning the Compensation Committee’s decisions relating to the establishment of these performance measures, see “- Our Fiscal Year 2019 Compensation Program for our CEO - Performance-Based Incentive Awards for our CEO - Annual Incentive Awards.”
For fiscal year 2019, the Company’s adjusted income was $177.6 million, representing 101.5 percent of the target measure and resulting in a payout percentage relating to that target of 106.0 percent, and the Company’s net sales were $1,564.2 million, representing 103.7 percent of the target measure and resulting in a payout percentage relating to that target of 165.0 percent. As a result, the Compensation Committee approved an annual incentive award payout for Mr. Grass of $434,756. This award represents a blended payout percentage of 118 percent of the target award. In connection with his retirement from the Company, Mr. Carson forfeited his fiscal year 2019 annual incentive award.
Long-Term Incentive Awards for Our Other Named Executive Officers
In fiscal year 2019, the Company granted equity awards to its named executive officers and to key employees pursuant to the 2008 Stock Plan. Beginning in fiscal year 2020, the Company will grant equity awards to its named executive officers and to key employees pursuant to its 2018 Stock Plan, which replaced the 2008 Stock Plan during fiscal year 2019. Equity-based compensation and ownership give these individuals a continuing stake in the long-term success of the Company, and the delayed vesting of RSUs helps to encourage retention. The Compensation Committee and the Board of Directors believe that the executive officers and key employees of the Company should be rewarded for performance that may result from their efforts and that this should be accomplished, in part, by awarding equity compensation to these individuals, which increases their stake in the Company’s long-term success and further aligns their interests with those of shareholders. For more information regarding the Company’s long-term equity compensation, see “Executive Compensation - Equity Compensation Plan Information.”
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Our Chief Financial Officer
After considering the recommendations of the CEO, the Compensation Committee also established multiple performance criteria for the long-term incentive awards in the form of Performance RSUs for Mr. Grass. Fifty percent (50%) of the fiscal year 2019 Performance RSU awards are based on the achievement of the cumulative adjusted earnings per share performance measure, twenty-five percent (25%) of the fiscal year 2019 Performance RSU awards are based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the fiscal year 2019 Performance RSU awards are based on the achievement of the relative total shareholder return performance measure. Mr. Grass is not entitled to that portion of the award attributed to any performance measure if the threshold amount associated with such performance measure is not achieved. The values of the threshold, target and maximum award for the 2019 Performance RSUs are as follows:
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Name
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Threshold
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Target
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Maximum
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B. Grass
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$290,625
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$581,250
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$1,162,500
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The Compensation Committee also granted time-vested RSUs to Mr. Grass that will vest over a three-year period with equal (50%) vesting on March 1, 2020, and March 1, 2021. The time-vested RSUs are targeted at $193,750 in grant date fair value for fiscal year 2019.
In fiscal year 2017, Mr. Grass received a long-term incentive award under the 2008 Stock Plan in the form of a grant of Performance RSUs with a three-year performance period that ended on February 28, 2019. Pursuant to the terms of the fiscal year 2017 award, the amount of the long-term incentive award paid is determined based on the achievement of cumulative adjusted earnings per share, adjusted cash flow productivity and relative total shareholder return targets. Fifty percent (50%) of the fiscal year 2017 Performance RSU grant was based on the achievement of the cumulative adjusted earnings per share performance measure, twenty-five percent (25%) of the fiscal year 2017 Performance RSU grant was based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the fiscal year 2017 Performance RSU grant was based on the achievement of the relative total shareholder return performance measure. The grant date fair values of the threshold, target and maximum award for these 2017 Performance RSUs are as follows:
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Threshold
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Target
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Maximum
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$187,500
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$375,000
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$750,000
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In April 2019, the Compensation Committee certified the level of attainment of established performance goals for the fiscal year 2017 Performance RSU award. For the three fiscal years ending February 28, 2019, our cumulative adjusted earnings per share was $18.03, representing 115.1 percent of the target measure and resulting in a payout percentage relating to that target of 200 percent. Additionally, our adjusted cash flow productivity over the three-year period was 119 percent, representing 148.8 percent of the target measure and resulting in a payout percentage relating to that target of 200 percent. Finally, our relative total shareholder return over the three-year period was at the 65
th
percentile of the comparative peer group, representing 130 percent of the target measure and resulting in payout percentage relating to that target of 160 percent. As a result, the Compensation Committee determined that Mr. Grass had earned the award payable with respect to the fiscal year 2017 Performance RSU grant (a blended percentage of 190 percent of the target award) of 7,427 Performance RSUs.
Beginning in fiscal year 2020, Mr. Grass will receive long-term incentive awards pursuant to the 2018 Stock Plan. For additional information on the 2018 Stock Incentive Plan, see “Executive Compensation - Equity Plan Information - 2018 Stock Plan.”
35
Our Former Chief Legal Officer and Secretary
In fiscal year 2019, the Compensation Committee granted Mr. Carson a fiscal year 2019 Performance RSU award with a three-year performance period ending February 28, 2021, targeted at 4,350 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $375,000), with the opportunity to earn up to 8,700 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $750,000) and a threshold achievement payout of 2,175 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $187,500). As described above, fifty percent (50%) of the fiscal year 2019 Performance RSU awards are based on the achievement of the cumulative adjusted earnings per share performance measure, twenty-five percent (25%) of the fiscal year 2019 Performance RSU awards are based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the fiscal year 2019 Performance RSU awards are based on the achievement of the relative total shareholder return performance measure.
The Compensation Committee also granted Mr. Carson time-vested RSUs targeted at $125,000 in grant date fair value. The awards vest over a three-year period with equal (50%) vesting on each of March 1, 2020, and March 1, 2021.
In fiscal year 2017, the Compensation Committee granted Performance RSUs to Mr. Carson with a three-year performance period ending February 28, 2019, targeted at 3,909 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $375,000), with the opportunity to earn up to 7,818 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $750,000) and a threshold achievement payout of 1,955 shares of Common Stock subject to Performance RSUs (with a grant date fair value of $187,500). As described above, in April 2019, the Compensation Committee certified the level of attainment of established performance measures for the fiscal year 2017 Performance RSU award for the three-year performance period ended February 28, 2019. Pursuant to the 2008 Stock Plan, participants are eligible to receive and vest their awards granted under the plan so long as they provide services to the Company. During fiscal year 2019, Mr. Carson continuously served as Chief Legal Officer and Secretary through August 22, 2018, and then as a member of the Board through the remainder of the fiscal year. As a result, under the terms of his Performance RSUs and the 2008 Stock Plan, the Compensation Committee determined that Mr. Carson had earned the award payable with respect to the fiscal year 2017 Performance RSU grant (a blended percentage of 190 percent of the target award) of 7,427 Performance RSUs.
Other Benefits Provided for Our Other Named Executive Officers
We provide other benefits to the other named executive officers, such as participation in a 401(k) plan, including matching contributions, group medical, group life and group dental insurance, as well as vacation and paid holidays. These benefits are available to all our full-time employees, including each named executive officer, and we believe they are comparable to those provided at other companies.
Potential Post-Termination and Change of Control Benefits for our Other Named Executive Officers
Severance Arrangements
For fiscal year 2019, the Company’s policy was to provide severance for the other named executive officers of the Company in accordance with the terms authorized by the Compensation Committee. The severance arrangement during fiscal year 2019 included the following terms:
|
•
|
For a termination by the Company without cause (not in connection with a change in control), the other named executive officer will receive (1) cash severance equal to 100 percent of his base salary and 100 percent of his target annual incentive award for the year in which the termination occurred, (2) the pro rata portion of his annual incentive award for the year in which the termination occurred based upon the actual performance of the Company during the performance period, (3) the pro rata portion of his outstanding performance-based long-term incentive awards based upon the actual performance of the Company during the applicable performance periods, (4) pro rata acceleration of all time-vested equity awards held by the other named executive officer that are not vested at the time of termination, and (5) to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, the continuation of health insurance benefits under COBRA for him and his family for a maximum of 12 months after the date of termination or until he is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 12 months.
|
|
•
|
For a termination in connection with a change in control (whether by the Company without cause or by the other named executive officer for good reason within 6 months prior to or 18 months after the change in control), the other named executive officer will receive (1) cash severance equal to 150 percent of his base salary and 100 percent of his target annual incentive award for the year in which the termination occurred, (2) the pro rata portion of his target annual incentive award for the year in which the termination occurred, (3) acceleration of all time-vested equity awards held by the other named executive officer that are not vested at the time
|
36
of termination, (4) acceleration of all unvested performance-based equity awards at target held by the named executive officer at the time of termination (5) a modified tax gross-up similar to that received by our CEO, and (6) to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, the continuation of health insurance benefits under COBRA for him and his family for a maximum of 18 months after the date of termination or until he is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months.
In addition to the above, as of February 28, 2019, Mr. Grass held 1,500 unvested shares subject to options granted before August 31, 2015. These options will accelerate if there is a termination of employment by the Company without cause, a termination of employment due to death or disability or the occurrence of a change in control. Beginning in fiscal year 2016, the Compensation Committee no longer granted stock options to our other named executive officers.
The Compensation Committee believes these severance provisions are a competitive compensation element in the current executive labor market and are more beneficial to the Company and its shareholders than conducting an individual negotiation with each executive officer in the event of a termination of his employment. Furthermore, the Compensation Committee believes the change of control severance benefits provide incentive for our other named executive officers to fully consider potential changes that are in the best interest of the Company and our shareholders, even if such changes would result in the executive's termination. The Company competes for executives in a highly competitive market in which companies routinely offer similar benefits to senior executives. As a result, the Compensation Committee views these amounts as reasonable and appropriate for the other named executive officers. On June 17, 2019, the Company entered into a severance agreement with Mr. Grass (the “Severance Agreement”). For further information, see “- Fiscal Year 2020 Compensation Changes - Severance Agreement with our Chief Financial Officer.”
Under the 2008 Stock Plan, if an option holder’s employment with the Company is terminated due to his death or disability, to the extent the participant was entitled to exercise the option on the date of death or disability, the option may be exercised within one year after such termination. If an option holder’s employment is terminated without cause, all of his options that are exercisable as of the date of termination will remain exercisable for ninety days. Beginning in fiscal year 2016, the Compensation Committee no longer granted stock options to our other named executive officers. Any equity awards granted under the 2008 Stock Plan to our other named executive officers would accelerate based on a “double trigger,” which means that the acceleration of those awards would generally occur if, during the employment period, the other named executive officer’s employment is involuntarily terminated by the Company other than for cause or by the other named executive officer for good reason, in each case, within a specified period following a change of control or if the equity award is not assumed or substituted in connection with the change of control. For further information, see “Executive Compensation - Equity Compensation Plan Information.”
In the event of death or disability, each of the other named executive officers would receive his annual incentive award on a pro rata basis based on the number of days he was employed with the Company during the entire year in which his employment was terminated.
Fiscal Year 2020 Compensation Changes
Amended and Restated Employment Agreement of our CEO
Pursuant to its terms, Mr. Mininberg’s Employment Agreement expired on February 28, 2019. During his tenure as CEO, the Company has experienced tremendous growth in revenue and in market capital. Mr. Mininberg’s leadership and performance during this time has been integral to the Company’s success. Because of his demonstrated strong performance as our CEO, the Company’s strong financial performance during his time as CEO, and the leadership and direction he provides to our employees, the Board determined that it was in the best interests of the Company and its shareholders to extend the term of his employment agreement. The Compensation Committee engaged the services of independent counsel and FW Cook to assist in the negotiation of a revised employment agreement with Mr. Mininberg. The Company entered into the New Employment Agreement with Mr. Mininberg on November 7, 2018, which took effect on March 1, 2019, and extended the term of his employment through February 28, 2023.
The Compensation Committee believes the revised compensation program of Mr. Mininberg remains closely aligned with the interests of the shareholders and reflective of the competitive marketplace for executive level talent with the industry experience and expertise of Mr. Mininberg. Under the New Employment Agreement, all long-term incentive awards granted will be based on performance goals and multi-year performance periods, and no such awards will be time-vested. As a result, beginning in fiscal year 2020, 100 percent of Mr. Mininberg’s target long-term incentive compensation is at risk based on multi-year performance periods. Prior to the New Employment Agreement, 25 percent of his target long-term incentive awards were time-vested. Beginning in fiscal year 2020, approximately 88 percent of Mr. Mininberg’s total target compensation will be at risk based on Company performance over multi-year performance periods (compared to 71 percent under the prior employment agreement). The Compensation Committee strongly considered the elimination of time-vested equity awards under the New Employment Agreement in evaluating the changes made to the level of Mr. Mininberg’s compensation elements and total compensation.
37
While many of the provisions of the New Employment Agreement match that of Mr. Mininberg’s former Employment Agreement, certain compensation provisions were amended. The significant changes include the following:
|
Element
|
Compensation Changes
|
Reasoning for Changes
|
|
Annual Incentives and Bonuses
|
Annual performance bonus maximum was increased from $3,050,000 to $3,200,000. The Compensation Committee continues to determine the performance goals and other terms for the annual performance bonus.
|
The Compensation Committee increased the maximum annual incentive bonus Mr. Mininberg is eligible to receive in order to correspond with the increases in base salary Mr. Mininberg has received since entering into his previous employment agreement.
|
|
Long-Term Incentives
|
Long-term performance incentive now consists solely of performance-based restricted shares (“Performance RSAs”), as opposed to consisting of both time-vested RSUs (25 percent of the total incentive) and Performance RSUs (75 percent of the total incentive) under the previous agreement. The Compensation Committee continues to determine the performance goals and other terms for the long-term performance incentive. Additionally, the Compensation Committee may increase or decrease targets, thresholds or maximums for these awards.
The target long-term performance incentive was increased from $3,200,000 under the previous agreement to $5,200,000 under the New Employment Agreement. Maximum equity award is now $10,400,000 (200 percent of the target award amount) or the value of the common shares that may be granted to a participant under the 2018 Stock Plan (the “Maximum Grant Amount”).
|
The changes made to the Mr. Mininberg’s long-term incentives were made to reflect what the Compensation Committee believes is reflective of a competitive marketplace for executive level talent with the industry experience and expertise of Mr. Mininberg. In particular, the Compensation Committee eliminated all time-vested awards and 100 percent of Mr. Mininberg’s long-term incentive compensation is based on Company performance over multi-year performance periods, which was strongly considered by the Compensation Committee in setting the level of Mr. Mininberg’s compensation elements and total compensation. The Compensation Committee also believes this element of compensation is consistent with our goal to align Mr. Mininberg’s interests to building long-term shareholder value.
|
|
Severance Benefits in the Event of Termination by Mr. Mininberg for Good Reason or by the Company other than for Cause (and not in Connection with a Change of Control)
|
The minimum severance benefit was increased from $4,000,000 under the Employment Agreement to $6,000,000 under the New Employment Agreement.
|
The Compensation Committee believes the severance provisions of the New Employment Agreement, including the increased minimum severance payment, are a competitive compensation element in the current executive labor market and are more beneficial to the Company and its shareholders than conducting an individual negotiation with our CEO in the event of a termination of his employment.
|
38
|
Element
|
Compensation Changes
|
Reasoning for Changes
|
|
Severance Benefits in the Event of Termination by Mr. Mininberg for Good Reason or by the Company other than for Cause (and in Connection with a Change of Control)
|
The minimum severance benefit was increased from $4,000,000 under the Employment Agreement to $6,000,000 under the New Employment Agreement.
|
The change of control severance benefits provide incentive for our CEO to fully consider potential changes that are in the best interest of the Company and our shareholders, even if such changes would result in the executive’s termination. The Company competes for executives in a highly competitive market in which companies routinely offer similar benefits to senior executives. The Compensation Committee views these amounts as reasonable and appropriate for the CEO, who may not be in a position to obtain comparable employment following a change of control.
|
|
Retirement Benefits upon Retirement of Mr. Mininberg at the End of the Term of the New Employment Agreement
|
Retirement benefits of earned and vested incentive compensation plus the following:
(1) continued eligibility to vest all outstanding, unearned Performance RSAs as of the date of retirement based on actual performance; and
(2) certain health insurance benefits for him, his spouse and his children (to the extent eligible) until 2029.
There is no accelerated vesting of any outstanding, unearned Performance RSAs upon retirement.
|
As the Company did not have a stand alone retirement policy for its executives, these provisions were added to the New Employment Agreement. The Compensation Committee believes these retirement provisions further strengthen Mr. Mininberg’s commitment to high performance standards by maintaining a focus on the long-term performance of the Company, covering periods even following his retirement, and are a competitive compensation element in the current executive labor market.
|
|
Accelerated Vesting in the Event of a Change of Control
|
In the event any outstanding equity awards issued pursuant to the 2008 Stock Plan or the 2018 Stock Plan are not assumed in connection with a change of control (including any change of control following Mr. Mininberg’s retirement while he remains eligible to receive his retirement benefits), such awards will vest immediately in accordance with the terms of the 2008 Stock Plan and 2018 Stock Plan, respectively.
|
The Compensation Committee continued this benefit to provide incentive for our CEO to fully consider potential changes that are in the best interest of the Company and our shareholders.
|
Severance Agreement with our Chief Financial Officer
On June 17, 2019, the Company entered into the Severance Agreement with Mr. Grass to govern potential termination of employment in certain circumstances. The Severance Agreement provides for certain payments and benefits upon Mr. Grass’s termination of employment, including (1) any termination by Mr. Grass for good reason or by Company without cause and not in connection with a change of control of the Company, (2) any termination by Mr. Grass for good reason or by Company without cause and in connection with a change of control, and (3) upon the retirement of Mr. Grass from the Company. In consideration for the
39
payment and benefits provided under the Severance Agreement, Mr. Grass will be subject to reasonable and necessary restrictive covenants to protect the Company, including restrictions on disparagement of Company or its officers, directors, employees or agents in any manner likely to be harmful to it or them or its or their business, business reputation or personal reputation. The material terms of the Severance Agreement are consistent with the severance arrangement terms the Compensation Committee authorized for fiscal year 2019 for its other named executive officers as described under “The Company’s Compensation Program for our Other Named Executive Officers - Potential Post-Termination and Change of Control Benefits for our Other Named Executive Officers,” other than as follows:
|
•
|
with respect to the cash severance payment for a termination in connection with a change in control (whether by the Company without cause or by Mr. Grass for good reason within 6 months prior to or 18 months after the change in control), Mr. Grass will receive a payment equal to 150 percent of his base salary and 150 percent of his target annual incentive award for the year in which the termination occurred (compared to 100 percent of his target annual incentive award under the severance arrangement in place in fiscal year 2019); and
|
|
•
|
with respect to the time-vested equity awards, for a termination in connection with a change in control (whether by the Company without cause or by Mr. Grass for good reason within six months prior to or 18 months after the change in control), in addition to the benefits provided to other named executive officers, Mr. Grass receives an extended exercisability period for time-vested options that vest in connection with his termination.
|
Additionally, if Mr. Grass voluntarily terminates his employment with the Company for any reason other than for cause, death or good reason any time after the date (1) the sum of Mr. Grass’s age and number of years of service of employment with the Company or any of its affiliates or subsidiaries is 65 and (2) Mr. Grass attains ten consecutive years of employment with the Company or any of its affiliates or subsidiaries, in addition to any unpaid earned and vested incentive compensation, Mr. Grass will entitled to the following termination benefits:
|
•
|
continued eligibility to vest all outstanding, unearned Performance RSAs granted at least six months prior to his date of retirement (other than any Performance RSAs that may not be vested pursuant to the terms of the applicable award agreement);
|
|
•
|
continued vesting of the pro rata portion of any unvested tranche of time-vested eligible RSAs; and
|
|
•
|
to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, the continuation of health insurance benefits under COBRA for him and his family for a maximum of 18 months after the date of termination or until he is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months.
|
All payments and benefits due to Mr. Grass, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency, will be contingent upon Mr. Grass’s execution of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates and their respective and former directors, employees and agents pursuant to the Severance Agreement.
The Compensation Committee believes the Severance Agreement is a competitive compensation element in the current executive labor market and is more beneficial to the Company and its shareholders than conducting an individual negotiation with Mr. Grass in the event of a termination of his employment, Furthermore, the Compensation Committee believes the change of control severance benefits provide incentive for Mr. Grass to fully consider potential changes that are in the best interest of the Company and our shareholders, even if such changes would result in his termination. Additionally, the Compensation Committee believes the retirement provisions of the Severance Agreement further strengthen Mr. Grass’s commitment to high performance standards by maintaining a focus on the long-term performance of the Company, covering periods even following his retirement. The Company competes for executives in a highly competitive market in which companies routinely offer similar benefits to senior executives. As a result, the Compensation Committee views these amounts as reasonable and appropriate for its Chief Financial Officer.
40
Stock Ownership Guidelines
Beginning in May 2014, our named executive officers became subject to stock ownership and holding requirements. Our CEO is required to own Common Stock equal in value to at least three times his annual salary, and each other named executive officer is required to own Common Stock equal in value to at least one times his annual salary. For purposes of these requirements, ownership includes not only shares owned directly by the executive, but also shares in-the-money, stock options that are exercisable within 60 days of the date of determination and certain restricted stock units or awards held through various plans and programs of the Company. We have also established milestone guidelines that we use to monitor progress toward meeting these targets over a five-year period, at the end of which the executive is expected to have reached the applicable ownership level.
Until an executive reaches the applicable milestone, he or she must hold and may not sell any shares (except to meet tax withholding obligations); once the ownership level is met, he or she must hold and may not sell shares if doing so would cause his or her ownership to fall below that level. Although the Company does not require its executive officers to hold Common Stock for specified periods of time, we believe that the above holding requirements result in the ownership by our executives of significant amounts of Common Stock for substantial periods of time and align the interests of our executives with those of our shareholders. For fiscal year 2019, all our named executive officers met their stock ownership requirements.
Prohibition on Pledging and Hedging and Restrictions on Other Transactions Involving Common Stock
Our Insider Trading Policy prohibits Board members and our named executive officers from pledging Common Stock or using Common Stock as collateral for any margin loan. In addition, the Insider Trading Policy contains the following restrictions:
|
•
|
Board members and our named executive officers are prohibited from engaging in transactions (such as trading in options) designed to hedge against the value of the Company’s Common Stock, which would eliminate or limit the risks and rewards of the Common Stock ownership;
|
|
•
|
Board members and our named executive officers are prohibited from short-selling the Common Stock, buying or selling puts and calls of the Common Stock, or engaging in any other transaction that reflects speculation about the Common Stock price or that might place their financial interests against the financial interests of the Company;
|
|
•
|
Board members and our named executive officers are prohibited from entering into securities trading plans pursuant to SEC Rule 10b5-1 without pre-approval; further, no Board member or any named executive officer may trade in our Common Stock without pre-approval; and
|
|
•
|
Board members and our named executive officers may trade in Common Stock only during open window periods, and only after they have pre-cleared transactions.
|
Currently, none of our Directors or executive officers has any pledging arrangements in place involving Common Stock.
Tax Implications of Executive Compensation
Section 162(m) of the Code places a limit of $1,000,000 on the amount of compensation that a publicly traded company may deduct for federal tax purposes in any one year with respect to certain of its executive officers.
For taxable years beginning prior to December 31, 2017 (prior to changes in U.S. tax law), compensation that constituted “qualified performance-based” under Section 162(m) was excluded from the deductibility limit if, among other requirements, the compensation was payable only upon the attainment of pre-established, objective performance goals under a plan approved by a company’s shareholders. Historically, we have had the ability to grant compensation to Section 162(m) “covered employees” under both the 2011 Bonus Plan and the 2008 Stock Incentive Plan that was designed to qualify under this exception to maintain the deductibility of that compensation when we have determined that performance-based compensation was appropriate for those executive officers. Effective for tax years beginning after December 31, 2017, U.S. tax law changes expanded the definition of covered employees under Section 162(m) to include, among others, our Chief Financial Officer, and eliminated the performance-based compensation exception. Therefore, for our 2019 tax year and thereafter, compensation payable to our covered employees in excess of $1,000,000 will not be deductible even if it was intended to constitute qualified performance-based compensation unless it is eligible for transition relief under the newly modified Section 162(m) and any rules promulgated thereunder.
41
The Compensation Committee has considered and will continue to consider tax deductibility in structuring compensation arrangements. However, the Compensation Committee retains discretion to establish executive compensation arrangements that it believes are consistent with the principles described earlier and in the best interests of our Company and its shareholders, even if those arrangements may not be fully deductible under Section 162(m).
42
EXECUTIVE COMPENSATION
The following table sets forth the summary of compensation during fiscal years 2017 through 2019 for the Company’s CEO, Chief Financial Officer and other named executive officer whose total compensation exceeded $100,000 and who was serving as a named executive officer during fiscal 2019 (such persons referred to, collectively, as the "named executive officers").
Summary Compensation Table
|
Name and Principal Position
|
Fiscal
Year |
Salary
($) |
Stock
Awards ($) (1) |
Non-Equity Incentive Plan Compensation
($) (2) |
All Other Compensation
($) (3) |
Total
($) |
|||||
|
Julien R. Mininberg
CEO
|
2019
|
1,000,000
|
|
3,206,000
|
|
(4)
|
2,360,000
|
|
48,541
|
|
6,614,541
|
|
2018
|
975,000
|
|
3,200,000
|
|
2,618,850
|
|
13,245
|
|
6,807,095
|
||
|
2017
|
950,000
|
|
3,200,000
|
|
2,637,200
|
|
37,331
|
|
6,824,531
|
||
|
Brian L. Grass
Chief Financial Officer |
2019
2018
2017
|
491,250
457,500
419,963
|
|
781,000
700,000
500,000
|
|
(5)
|
434,756
460,817
378,890
|
|
12,493
12,260
11,729
|
|
1,719,499
1,630,577
1,310,582
|
|
Vincent D. Carson
Former Chief Legal Officer and Secretary |
2019
2018
2017
|
221,198
464,625
460,125
|
|
550,000
500,000
500,000
|
|
(6)
|
-
467,994
415,125
|
|
84,706
14,422
14,524
|
|
855,904
1,447,041
1,389,774
|
|
(1)
|
These amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Long-term incentive awards were granted in fiscal year 2019 under the 2008 Stock Plan in the form of Performance RSUs and time-vested RSUs to Messrs. Mininberg, Grass and Carson. The reported value of the Performance RSUs is computed based on the probable outcome of the performance conditions, which is “target.” For each of the named executive officers, the ultimate payout for the Performance RSUs can range from zero shares to a maximum of 200 percent of target. Further information regarding the awards is included in the tables entitled “Grants of Plan-Based Awards in Fiscal Year 2019,” “Outstanding Equity Awards at Fiscal Year-End 2019” and “Equity Compensation Plan Information.”
|
|
(2)
|
The fiscal year 2019 amounts in this column represent annual cash incentives under the 2011 Bonus Plan that were earned in fiscal year 2019. These amounts were accrued in the Company’s financial statements in fiscal year 2019, but were paid to Messrs. Mininberg and Grass after fiscal year end 2019, when the Compensation Committee certified that the related performance goals had been achieved. Mr. Carson forfeited his annual incentive upon his resignation from his position as an executive officer. For further information regarding these awards, see “Grants of Plan Based Awards in Fiscal Year 2019.”
|
|
(3)
|
For fiscal year 2019, the following compensation was paid to our named executive officers, which comprises “All Other Compensation”:
|
|
Name
|
401(k) Plan
($) |
Group Life Insurance
($) |
Legal Fees
($) |
Other Payments
($)
|
Total
($) |
|
Julien R. Mininberg
|
11,167
|
2,212
|
35,000
|
162
|
48,541
|
|
Brian L. Grass
|
11,233
|
1,260
|
-
|
-
|
12,493
|
|
Vincent D. Carson
|
7,900
|
1,806
|
-
|
75,000
|
84,706
|
Other Payments for Mr. Carson reflect three $25,000 quarterly cash retainer payments for his service as a Director during fiscal year 2019. For further information regarding Director compensation, see "Director Compensation."
|
(4)
|
Includes 9,280 shares subject to time-vested RSUs (or $800,000), which vest equally over a three-year period and 27,842 shares subject to Performance RSUs (or $2,400,000), which represents the target award, calculated using a price per share of $86.20, the closing market price of the Common Stock on March 6, 2018, the date of the grant. At the date of the grant, the maximum potential value of the Performance RSUs, assuming the achievement of the highest level of performance conditions, is 55,684 shares subject to Performance RSUs (or $4,800,000). Also includes 50 shares subject to time-vested RSUs (or $6,000) as a "Transformation Share" bonus granted to all employees, which vest equally over a three-year period. The Compensation Committee awarded this bonus to commemorate the Company's 50th anniversary and completion of Phase I of the Company's transformation plan, as well as to entice Company ownership by its employees. This represents the aggregate grant date fair value of the awards, calculated in accordance with FASB ASC Topic 718.
|
|
(5)
|
Includes 2,235 shares subject to time-vested RSUs (or $193,750), which vest equally on March 1, 2020 and March 1, 2021, and 6,705 shares subject to Performance RSUs (or $581,250), which represents the target award, calculated using a price per share of $86.20 and $91.45, the closing market prices of the Common Stock on March 6, 2018 and May 8, 2018, respectively, the dates of the grants. At the dates of the grants, the maximum potential value of the Performance RSUs, assuming the achievement of the highest level of performance conditions, is 13,410 shares subject to Performance RSUs (or $1,162,500). Also includes 50 shares subject to time-vested RSUs (or $6,000) as a "Transformation Share" bonus granted to all employees, which vest equally over a three-year period. The Compensation Committee awarded this bonus to commemorate the Company's 50th anniversary and completion of Phase I of the Company's transformation plan, as well as to entice Company
|
43
ownership by its employees. This represents the aggregate grant date fair value of the awards, calculated in accordance with FASB ASC Topic 718.
|
(6)
|
Includes 1,450 shares subject to time-vested RSUs (or $125,000), which vest equally on March 1, 2020 and March 1, 2021, and 4,350 shares subject to Performance RSUs (or $375,000), which represents the target award, calculated using a price per share of $86.20, the closing market price of the Common Stock on March 6, 2018, the date of the grant. At the date of the grant, the maximum potential value of the Performance RSUs, assuming the achievement of the highest level of performance conditions, is 8,700 shares subject to Performance RSUs (or $750,000). Also includes 266 restricted stock awards (or $50,000) for his service as a Director during fiscal 2019, subsequent to his resignation from his position as an executive officer. This represents the aggregate grant date fair value of the awards, calculated in accordance with FASB ASC Topic 718. With respect to stock awards earned as a Director, approximately 30 percent of the value of the grant is settled with cash in order for the Directors to satisfy any tax liabilities associated with the grant. For further information regarding Director compensation, see “Director Compensation.”
|
For fiscal year 2019, the following plan-based compensation was awarded to the named executive officers:
Grants of Plan-Based Awards in Fiscal Year 2019
|
Name
|
Grant
Date
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards |
Estimated
Future Payouts Under Equity Incentive Plan Awards (1) |
All Other Stock Awards; Number of Shares of Stock or Units
(#) |
Grant Date Fair Value of Stock and Option Awards
($) |
||||
|
Threshold
($) |
Target
($) |
Maximum
($) |
Threshold
(#) |
Target
(#) |
Maximum
(#) |
||||
|
Julien R. Mininberg
Annual Incentive Award
Performance RSUs
Time-Vested RSUs
|
03/06/18 (2)
03/06/18
03/06/18
09/18/18
|
1,000,000
|
2,000,000
|
3,050,000
|
13,921
|
27,842
|
55,684
|
9,280 (3)
50 (5)
|
2,400,000 (6)
800,000 (6)
6,000 (6)
|
|
Brian L. Grass
Annual Incentive Award
Performance RSUs
Time-Vested RSUs
|
03/06/18 (2)
03/06/18
05/08/18
03/06/18
05/08/18
09/18/18
|
184,219
|
368,437
|
736,875
|
3,045
308
|
6,090
615
|
12,180
1,230
|
2,030 (4)
205 (4)
50 (5)
|
525,000 (6)
56,250 (6)
175,000 (6)
18,750 (6)
6,000 (6)
|
|
Vincent D. Carson
Performance RSUs
Time-Vested RSUs
Restricted Stock Awards
|
03/06/18
03/06/18
09/01/18
12/03/18
|
2,175
|
4,350
|
8,700
|
1,450 (4)
145 (7)
121 (7)
|
375,000 (6)
125,000 (6)
25,000 (8)
25,000 (8)
|
|||
|
(1)
|
The number of shares listed represents long-term equity incentive awards in the form of Performance RSUs. The performance criteria for these awards is based on the achievement of cumulative adjusted earnings per share, adjusted cash flow productivity and relative total shareholder return targets over a three-year performance period, as described in further detail in “Compensation Discussion and Analysis.”
|
|
(2)
|
Under the 2011 Bonus Plan, the performance metrics are based on the achievement of adjusted income and net sales targets. For further information regarding these amounts, see “Compensation Discussion and Analysis.” The actual payouts for fiscal year 2019 were 118 percent of the target amount for each of the named executive officers, with the exception of Mr. Carson who forfeited his award upon resignation of his position as an executive officer.
|
|
(3)
|
The amounts shown reflect the number of time-vested RSUs granted to our CEO in fiscal year 2019, which vest in three equal installments on March 1, 2019, March 1, 2020, and March 1, 2021.
|
|
(4)
|
The amounts shown reflect the number of time-vested RSUs granted to each applicable named executive officer in fiscal year 2019, which vest in two equal installments on March 1, 2020 and March 1, 2021.
|
|
(5)
|
The amounts shown reflect the number of time-vested RSUs granted to Messrs. Mininberg and Grass, which vest equally over equally over three years on the anniversary of the grant date.
|
|
(6)
|
The amounts shown reflect the aggregate grant date fair value of the subject awards, based on the expected achievement of performance targets, where applicable. These were computed in accordance with FASB ASC Topic 718.
|
|
(7)
|
The amounts shown reflect the number of restricted stock awards granted to Mr. Carson for his service as a Director, which vested on the grant date. With respect to Director stock awards, approximately 30 percent of the value of the grant is settled with cash in order for the Directors to satisfy any tax liabilities associated with the grant. For further information on Director compensation, see “Director Compensation.”
|
|
(8)
|
The amounts shown reflect the aggregate grant date fair values of $120.70 and $144.99 per share on September 4, and December 3, 2018, respectively, computed in accordance with FASB ASC Topic 718.
|
44
The following table sets forth certain information with respect to outstanding equity awards at February 28, 2019 with respect to our named executive officers.
Outstanding Equity Awards at Fiscal Year-End 2019
|
Name
|
Option Awards
(1)
|
|||||
|
Number of Securities Underlying Unexercised Options
(#)
Exercisable |
Number of Securities Underlying Unexercised Options
(#)
Unexerciseable |
Option
Exercise Price ($) |
Option
Expiration Date (2) |
Equity Incentive Plan Awards: Number of Units or Other Rights That Have Not Vested
(#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($) (9) |
|
|
Julien R. Mininberg
|
-
-
-
-
-
-
-
-
|
-
-
-
-
-
-
-
-
-
|
-
-
-
-
-
-
-
-
-
|
-
-
-
-
-
-
-
-
-
|
47,538 (3)
24,378 (4)
2,780 (10)
27,842 (6)
5,444 (11)
9,280 (12)
50 (13)
|
5,329,485
2,733,018
311,666
3,121,367
610,327
1,040,381
5,606
|
|
Brian L. Grass
|
3,750
5,000
7,500
7,500
-
-
-
-
-
-
-
|
-
- - 1,500 - - - - - - - |
32.90
34.72
36.03
64.19
-
-
-
-
-
-
-
|
5/17/21
5/01/22
5/06/23
5/02/24
-
-
-
-
-
-
-
|
-
-
-
-
7,427 (3)
651 (5)
5,384 (4)
1,794 (7)
6,705 (6)
2,235 (8)
50 (13)
|
-
- - - - 832,641 72,984
603,600
201,125
751,698
250,566
5,606
|
|
Vincent D. Carson
|
1,500
-
-
-
-
-
-
|
-
-
-
-
-
-
-
|
64.19
-
-
-
-
-
-
|
5/02/24
-
-
-
-
-
-
|
-
7,427 (3)
651 (5)
3,809 (4)
1,269 (7)
4,350 (6)
1,450 (8)
|
-
832,641 72,984 427,027 142,268 487,679 162,560 |
|
(1)
|
All options granted had five annual vesting periods commencing on the first anniversary of each grant date. Options granted through May 6, 2013 vested at graduated rates per year of 10, 15, 20, 25, and 30 percent. Options granted on or after May 2, 2014 vested equally at a rate of 20 percent per year.
|
|
(2)
|
All options listed in this table have an expiration date of ten years from the date of grant.
|
|
(3)
|
These shares represent Performance RSUs granted under the 2008 Stock Plan, based on 190 percent performance achievement. The Performance RSUs vest if the performance conditions under the awards are achieved based on a three-year performance period ended February 28, 2019. Payouts can range from zero shares to a maximum of 200 percent of target. In April 2019, the Compensation Committee certified the level of attainment of established performance goals and the Performance RSUs vested at 190 percent of target.
|
|
(4)
|
These shares represent Performance RSUs granted under the 2008 Stock Plan, based on “target.” The Performance RSUs vest if the performance conditions under the awards are achieved based on a three-year performance period ending February 29, 2020. Payouts can range from zero shares to a maximum of 200 percent of target. The number of shares reflected assumes the target level of performance achievement, which would result in the Performance RSUs vesting at 100 percent of target.
|
|
(5)
|
These shares represent time-vested RSUs granted to Messrs. Grass and Carson, which vest fifty percent on March 1, 2018 and fifty percent on March 1, 2019.
|
|
(6)
|
These shares represent Performance RSUs granted under the 2008 Stock Plan, based on “target.” The Performance RSUs vest if the performance conditions under the awards are achieved based on a three-year performance period ending February 28, 2021. Payouts can range from zero shares to a maximum of 200 percent of target. The number of shares reflected assumes the target level of performance achievement, which would result in the Performance RSUs vesting at 100 percent of target.
|
|
(7)
|
These shares represent time-vested RSUs granted to Messrs. Grass and Carson, which vest fifty percent on March 1, 2019 and fifty percent on March 1, 2020.
|
|
(8)
|
These shares represent time-vested RSUs granted to Messrs. Grass and Carson, which vest fifty percent on March 1, 2020 and fifty percent on March 1, 2021.
|
|
(9)
|
Calculated using a price per share of $112.11, the closing market price of the Common Stock as reported by NASDAQ Stock Market on February 28, 2019, the end of the Company’s last completed fiscal year.
|
45
|
(10)
|
These shares represent time-vested RSUs granted to Mr. Mininberg, which vest in three equal installments on March 1, 2017, 2018 and 2019.
|
|
(11)
|
These shares represent time-vested RSUs granted to Mr. Mininberg, which vest in three equal installments on March 1, 2018, 2019 and 2020.
|
|
(12)
|
These shares represent time-vested RSUs granted to Mr. Mininberg, which vest in three equal installments on March 1, 2019, 2020 and 2021.
|
|
(13)
|
These shares represent time-vested RSUs granted to Messrs. Grass and Mininberg, which vest equally over three years from the grant date on September 18, 2019, 2020 and 2021.
|
The following table provides information on all exercises of stock options and vesting of stock awards for our named executive officers during fiscal year 2019:
Option Exercises and Stock Vested During Fiscal Year 2019
|
Name
|
Option Awards
|
Stock Awards
|
||
|
Number of Shares
Acquired on Exercise (#) |
Value Realized on Exercise
($) |
Number of Shares
Acquired on Vesting (#) |
Value Realized
on Vesting ($) |
|
|
Julien R. Mininberg
|
-
|
-
|
42,168
|
3,819,571
|
|
Brian L. Grass
|
2,400
|
166,953
|
7,647
|
692,269
|
|
Vincent D. Carson
|
33,500
|
1,809,847
|
10,643
|
963,891
|
EMPLOYMENT CONTRACT FOR OUR CEO
Mr. Mininberg and the Company entered into the Employment Agreement as of January 7, 2016, which became effective March 1, 2016. The Employment Agreement expired by its terms on February 28, 2019. Mr. Mininberg and the Company entered into the New Employment Agreement as of November 7, 2018, which became effective March 1, 2019. Pursuant to the New Employment Agreement, Mr. Mininberg is to serve as the Company’s CEO for a fixed term through February 28, 2023, subject to earlier termination by either party. For additional information regarding Mr. Mininberg’s New Employment Agreement, see “Compensation Discussion and Analysis – Amended and Restated Employment Agreement of our CEO.”
Annual Incentive Bonus
. With respect to fiscal year 2019, Mr. Mininberg was eligible for an annual performance bonus (the “Fiscal 2019 APB”) payable in cash under 2011 Bonus Plan targeted at $2,000,000, with the opportunity to earn up to $3,050,000 and a threshold achievement payout of fifty percent (50%) of the target amount. The Fiscal 2019 APB was based on the achievement of adjusted income (as defined in the Plan) and net sales targets from continuing operations. Eighty percent (80%) of the Fiscal 2019 APB was based on the achievement of the adjusted income performance measure and twenty percent (20%) of the Fiscal 2019 APB was based on the achievement of the net sales performance measure. If the adjusted income threshold had not been achieved, no Fiscal 2019 APB would have been earned or payable. Mr. Mininberg would not have been entitled to a bonus with respect to any performance measure if the threshold amount associated with such performance measure had not been achieved.
Long-Term Incentive Compensation
. With respect to fiscal year 2019, Mr. Mininberg is eligible to receive a long-term incentive award for a three-year performance period ending February 28, 2021 (the “Fiscal 2019 LTPB”), pursuant to the 2008 Stock Plan. Pursuant to the Employment Agreement, this award is in the form of a grant of time-vested RSUs and Performance RSUs. The Fiscal 2019 LTPB is targeted at $3,200,000, with the opportunity to earn up to $5,600,000 and a threshold achievement payout of $2,000,000. The Fiscal 2019 LTPB is based on the achievement of cumulative adjusted earnings per share, adjusted cash flow productivity and relative total shareholder return targets. Fifty percent (50%) of the Fiscal 2019 LTPB is based on the achievement of the cumulative adjusted earnings per share performance measure, twenty-five percent (25%) of the Fiscal 2019 LTPB is based on the achievement of the adjusted cash flow productivity performance measure and twenty-five percent (25%) of the Fiscal 2019 LTPB is based on the achievement of the relative total shareholder return performance measure. Mr. Mininberg is not entitled to an incentive with respect to any performance measure if the threshold amount associated with such performance measure is not achieved.
Other Benefits.
For information regarding other limited perquisites and other benefits provided to Mr. Mininberg pursuant to the Employment Agreement, see “Compensation Discussion and Analysis — Our Fiscal Year 2019 Compensation Program for Our CEO — Limited Perquisites and Other Personal Benefits Provided to Our CEO.”
Employment Termination
. The Employment Agreement provided for certain payments and benefits upon Mr. Mininberg’s termination of employment. See “Compensation Discussion and Analysis — Our Fiscal Year 2019 Compensation Program for Our CEO — Potential Post-Termination Benefits for our CEO.”
46
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes certain equity compensation plan information as of February 28, 2019:
Equity Compensation Plan Information
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants, and rights
|
Weighted-average exercise price of outstanding options, warrants, and rights (2)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)(1)
|
||
|
Equity compensation plans approved by security holders
|
162,938
|
|
$63.47
|
|
2,659,396
|
|
(1)
|
Includes 1,923,619 shares authorized and available for issuance in connection with the 2018 Stock Plan and 735,777 shares authorized and available for issuance under the 2018 ESPP (as defined below).
|
|
(2)
|
The weighted average exercise price does not take into account the shares issuable upon vesting of time-based RSUs and Performance RSUs.
|
As of May 15, 2019, (1) there were options to purchase 126,291 shares of Common Stock outstanding under the equity compensation plans of the Company; (2) the weighted average exercise price for such outstanding options was $66.62; (3) the weighted average remaining term for such outstanding options was 3.6 years; and (4) there were 245,966 granted but unvested full-value awards under the equity compensation plans of the Company.
2008 Stock Plan
The Company's shareholders approved the 2008 Stock Plan (as amended and restated) at the 2015 annual general meeting of shareholders. The 2008 Stock Plan expired by its terms on August 19, 2018. The 2008 Stock Plan was administered by the Compensation Committee of the Board of Directors. The 2008 Stock Plan permitted the granting of stock options, including ISO's and NSO's, unrestricted shares of Common Stock, stock appreciation rights ("SAR's"), restricted stock, restricted stock units, and other stock-based awards. Following its expiration, no awards will be granted under the 2008 Stock Plan. The 2018 Stock Plan is intended to replace the 2008 Stock Plan.
The 2008 Stock Plan provided that the option price pursuant to which Common Stock may be purchased would be determined by the Compensation Committee, but would not be less than the fair market value of the Common Stock on the date the option is granted. No option granted under the 2008 Stock Plan is exercisable more than ten years after the date of grant. If a participant's service terminates by reason of death or disability (as defined in the 2008 Stock Plan), to the extent the participant was entitled to exercise the option on the date of death or disability, the option may be exercised within one year after the date of death or disability. If a participant's service with the Company terminates for any reason (other than death or disability), each option then held by the participant may be exercised within ninety days after the date of such termination, but only to the extent such option was exercisable at the time of termination of service. Notwithstanding the foregoing, the Compensation Committee may accelerate the vesting of unvested options held by a participant if the participant is terminated without "cause" by the Company (as determined by the Compensation Committee).
The 2008 Stock Plan also provided for certain terms and conditions pursuant to which restricted stock and restricted stock units could be granted under the 2008 Stock Plan. The vesting of a restricted stock award or restricted stock unit granted under the 2008 Stock Plan could be conditioned upon the completion of a specified period of employment with the Company or a subsidiary, upon attainment of specified performance goals, and/or upon such other criteria as the Compensation Committee may determine in its sole discretion. If a participant's service is terminated for any reason, the participant will only be entitled to the restricted stock or restricted stock units vested at the time of such termination of service. The participant's unvested restricted stock and restricted stock units will be forfeited. Notwithstanding the foregoing, the Compensation Committee may accelerate the vesting of unvested restricted stock or restricted stock units held by a participant if the participant is terminated without "cause" by the Company (as determined by the Compensation Committee), provided that with respect to Awards granted to Covered Employees that are intended to qualify as "performance-based compensation" under Section 162(m) of the Code and that are eligible for transition relief from changes to the tax laws in November 2017, such acceleration must be done in a manner that complies with Section 162(m) of the Code.
The terms and conditions of other stock-based awards will be determined by the Compensation Committee. Other stock-based awards granted prior to the changes to the tax laws in November 2017 or future awards that are eligible for transition relief from the
47
changes to the tax laws in November 2017 may be granted in a manner that will enable the Company to deduct any amount paid by the Company in compliance with the "performance-based compensation" exemption from Section 162(m) of the Code. Performance-based awards are rights to receive amounts denominated in cash or shares of Common Stock, based on the Company's or a participant's performance between the date of grant and a pre-established future date.
Under the 2008 Stock Plan, the acceleration of equity awards to participants is based on a "double trigger", which means that the acceleration of those awards would generally occur if, during the employment period, the participant's employment is involuntarily terminated by the Company other than for cause or by the participant for good reason, in each case, within a specified period following a Change of Control (as defined under the plan) or if the equity award is not assumed or substituted in connection with the Change of Control. In the event of a Change of Control, with respect to awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change of Control, if within one year after the effective date of the Change of Control, a participant's employment is involuntarily terminated other than for cause or by the participant for good reason, then (1) the participant will have the right to exercise or settle from and after the date of termination any option or SAR held by such participant in whole or in part, notwithstanding that such option or SAR may not be fully exercisable or vested, (2) any and all time-based vesting restrictions on such participant's other stock-based award will lapse and such stock will immediately vest in the participant, notwithstanding that the other stock-based award was unvested and (3) the payout level under such participant's outstanding stock-based awards that vest in whole or in part based on performance conditions shall be deemed to have been earned as of the date of termination based upon achievement of relevant performance goals or based on performance at the "target" level, either in full or pro rata based upon the length of time within the performance period that has elapsed.
With respect to awards not assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change of Control, upon the occurrence of the Change of Control, (1) the participant will have the right to exercise or settle from and after the date of the Change of Control any option or SAR held by such participant in whole or in part, notwithstanding that such option or SAR may not be fully exercisable or vested, (2) any and all time-based vesting restrictions on such participant's other stock-based award will lapse and such stock will immediately vest in the participant, notwithstanding that the other stock-based award was unvested and (3) the payout level under such participant's outstanding stock-based awards that vest in whole or in part based on performance conditions shall be deemed to have been earned as of the effective date of the Change of Control based upon achievement of relevant performance goals or based on performance at the "target" level, either in full or pro rata based upon the length of time within the performance period that has elapsed.
2018 Stock Incentive Plan
The Company’s shareholders approved the 2018 Stock Plan at the 2018 annual general meeting. The 2018 Stock Plan is administered by the Compensation Committee of the Board of Directors. The 2018 Stock Plan permits the granting of stock options, including ISO’s and NSO’s, unrestricted shares of Common Stock, SAR’s, restricted stock, restricted stock units, and other stock-based awards. As of February 28, 2019, the maximum number of shares reserved for issuance under the 2018 Stock Plan is 1,923,619 shares and the maximum number of shares with respect to which awards of any and all types may be granted during a calendar year to any participant is limited, in the aggregate, to 2,000,000 shares, subject to adjustment for certain events as described in the plan. The plan will expire by its terms on August 22, 2028.
The 2018 Stock Plan provides that the Compensation Committee may authorize one or more officers to grant awards of up to an aggregate of 2,000,000 shares of Common Stock (subject to adjustment in certain circumstances), provided that any such grants will be subject to the terms and conditions of the Compensation Committee authorization and that such officer must notify the Compensation Committee of any such grants. Currently, employees, directors and consultants (including agents, independent contractors leased employees and advisors) of the Company, its subsidiaries and affiliates are eligible to participate in the 2018 Stock Plan.
The 2018 Stock Plan provides that the option price pursuant to which Common Stock may be purchased will be determined by the Compensation Committee, but will not be less than the fair market value of the Common Stock on the date the option is granted. The Compensation Committee will determine the term of each option, but no option will be exercisable more than 10 years after the date of grant. Payment of the purchase price will be (1) in cash, (2) in shares of Common Stock held for at least six months, (3) partly in cash and partly in such shares, (4) through the delivery of irrevocable instructions to a broker to deliver promptly to the Company an amount equal to the aggregate option price for the shares being purchased, (5) through having shares withheld by the Company from any shares that would have otherwise been received by the participant, or (6) through such other means as will be prescribed in the award agreement. If a participant’s service terminates by reason of death or Disability (as defined in the 2018 Stock Plan), to the extent the participant was entitled to exercise the option on the date of death or Disability, the option may be exercised within one year after the date of death or Disability (or such other period specified in the applicable award agreement). If a participant’s service with the Company terminates for any reason (other than death or Disability), each option then held by the participant may be exercised within ninety days (or such other period specified in the applicable award agreement) after the date of such termination, but only to the extent such option was exercisable at the time of termination of service. Notwithstanding the foregoing, the Compensation Committee may
48
accelerate the vesting of unvested options held by a participant if the participant is terminated by the Company without “cause” (as determined by the Compensation Committee).
The 2018 Stock Plan also provides for certain terms and conditions pursuant to which restricted stock and restricted stock units may be granted under the 2018 Stock Plan. Each grant of restricted stock and restricted stock units must be evidenced by an award agreement in a form approved by the Compensation Committee. The vesting of a restricted stock award or restricted stock unit granted under the 2018 Stock Plan may, but shall not be required to, be conditioned upon the completion of a specified period of service, upon attainment of specified performance goals, and/or upon such other criteria as the Compensation Committee may determine in its sole discretion. If a participant’s service is terminated for any reason, the participant will only be entitled to the restricted stock or restricted stock units vested at the time of such termination of service unless the participant is party to an employment or severance agreement that provides otherwise, or the participant is eligible for benefits under the Company's retirement plan. The participant’s unvested restricted stock and restricted stock units will be repurchased or forfeited at the time of the participant’s termination. Notwithstanding the foregoing, the Compensation Committee may accelerate the vesting of unvested restricted stock or restricted stock units held by a participant if the participant is terminated by the Company without “cause” (as determined by the Compensation Committee). Except as provided in the applicable award agreement, no shares of restricted stock may be assigned, transferred or otherwise encumbered or disposed of by the participant until such shares have vested in accordance with the terms of such award agreement. If and to the extent that the applicable award agreement so provides, a participant will have the right to vote and, to the extent vested, receive dividends on the shares of restricted stock granted to him or her under the 2018 Stock Plan. Unless otherwise provided in the applicable award agreement, any shares received as a dividend on such restricted stock or in connection with a stock split or subdivision of the shares of restricted stock will be subject to the same restrictions as the restricted stock.
The Compensation Committee has the authority under the 2018 Stock Plan to grant SARs independent of stock options. Each SAR granted independently of an option entitles a participant to exercise the SAR in whole or in part and, upon such exercise, to receive from the Company an amount equal to (1) the excess of (i) the fair market value on the exercise date of one share of Common Stock over (ii) the exercise price per share, times (2) the number of shares covered by the portion of the SAR so exercised.
The terms and conditions of other stock-based awards will be determined by the Compensation Committee. Other stock-based awards may be granted in a manner that will enable the Company to deduct any amount paid by the Company under Section 162(m) of the Code. Such performance-based awards are rights to receive amounts denominated in cash or shares of Common Stock, based on the Company’s or a participant’s performance during a designated period in which attainment of the performance goals is measured. Performance goals, the length of the performance period and time of payment of the Performance-Based Award are established in writing by the Compensation Committee: (1) at a time when the outcome for that performance period is substantially uncertain and (2) not later than ninety days after the commencement of the performance period to which the performance goal relates, but in no event after 25 percent of the relevant performance period has elapsed.
Under the 2018 Stock Plan, the acceleration of equity awards due to a Change of Control is based on a “double trigger,” which means that the acceleration of those awards would generally occur if, during the employment period, the participant’s employment is involuntarily terminated by the Company other than for cause or by the participant for good reason, in each case, within a specified period following a Change of Control or if the equity award is not assumed or substituted in connection with the Change of Control. Accordingly, in the event of a Change of Control, with respect to awards assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change of Control, if within one year after the effective date of the Change of Control, a participant’s service is involuntarily terminated other than for cause or by the participant for good reason, then (1) the participant will have the right to exercise or settle from and after the date of termination any option or SAR held by such participant in whole or in part, notwithstanding that such option or SAR may not be fully exercisable or vested, (2) any and all time-based vesting restrictions on such participant’s other stock-based award will lapse and such stock will immediately vest in the participant, notwithstanding that the other stock-based award was unvested and (3) the payout level under such participant’s outstanding stock-based awards that vest in whole or in part based on performance conditions shall be deemed to have been earned as of the date of termination based upon achievement of relevant performance goals or based on performance at the “target” level, either in full or pro rata based upon the length of time within the performance period that has elapsed.
With respect to awards not assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change of Control, upon the occurrence of the Change of Control, (1) the participant will have the right to exercise or settle from and after the date of the Change of Control any option or SAR held by such participant in whole or in part, notwithstanding that such option or SAR may not be fully exercisable or vested, (2) any and all time-based vesting restrictions on such participant’s other stock-based award will lapse and such stock will immediately vest in the participant, notwithstanding that the other stock-based award was unvested and (3) the payout level under such participant’s outstanding stock-based awards that vest in whole or in part based on performance conditions shall be deemed to have been earned as of the effective date of the Change of Control based upon achievement of relevant performance goals or based on performance at the “target” level, either in full or pro rata based upon the length of time within the performance period that has elapsed. Regardless of whether a Change of Control has occurred, the Compensation Committee may in its sole discretion at any time determine that, upon the termination of service of a participant for any reason or the occurrence of a Change of Control, all or a portion of such participant’s options or SARs shall become fully or partially exercisable, that such Participant’s awards shall lapse, and/or that any performance-based criteria shall be deemed to be wholly or partially satisfied.
49
Employee Stock Purchase Plans
At the 2008 annual general meeting, the shareholders approved the Helen of Troy Limited 2008 Employee Stock Purchase Plan (the "2008 ESPP") and reserved 350,000 shares of Common Stock for issuance under the plan. It was the intention of the Company that the 2008 ESPP qualify as an "employee stock purchase plan" under Section 423 of the Code. The 2008 ESPP expired by its terms on September 1, 2018. The 2008 ESPP provided that eligible full-time employees of the Company or its designated subsidiaries could purchase shares of Common Stock with payroll deductions accumulated on behalf of such employees. Employees could authorize payroll deductions of up to 15 percent of their compensation, subject to certain limitations under section 423(b) of the Code, which was accumulated over an option period and then used to purchase Common Stock. Option periods ended in February and August of each fiscal year. The purchase price was 85 percent of the closing price of the Common Stock on NASDAQ on either the first day or last day of each option period, whichever was less.
At the 2018 annual general meeting of shareholders, the shareholders approved the Helen of Troy Limited 2018 Employee Stock Purchase Plan (the "2018 ESPP") and reserved 750,000 shares of Common Stock for issuance under the plan. It is the intention of the Company that the 2018 ESPP qualify as an “employee stock purchase plan” under Section 423 of the Code.
The purpose of the 2018 ESPP is to provide employees of the Company or its subsidiaries or affiliates designated by the Compensation Committee of the Board of Directors as eligible to participate in the 2018 ESPP an opportunity to purchase shares of Common Stock and thereby have an additional incentive to contribute to the prosperity of the Company. The aggregate number of shares of Common Stock that may be sold pursuant to all offerings of the Company’s Common Stock under the 2018 ESPP will not exceed 750,000 shares, as adjusted for any recapitalization or reorganization of the Company as set forth in the 2018 ESPP. The 2018 ESPP provides that eligible full-time employees of the Company or certain of its subsidiaries or affiliates may purchase shares of Common Stock with payroll deductions accumulated on behalf of such employees. Employees may authorize payroll deductions of up to 15 percent of their compensation, subject to certain limitations under section 423(b) of the Code, which is accumulated over an option period and then used to purchase Common Stock. Option periods end in February and August of each fiscal year. Upon the expiration date of each offering, the funds accumulated in the stock purchase account of each participating employee will be applied to the purchase of shares of Common Stock at a price per share equal to the lesser of (a) a percentage (not less than 85%) established by the Committee (the “Designated Percentage”) of the fair market value per share of Common Stock on the date on which an option is granted, or (b) the Designated Percentage of the fair market value (as determined under the 2018 ESPP) per share of Common Stock on the date on which the option is exercised and the Common Stock is purchased.
50
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
CEO
The information below describes certain compensation that would be paid to Mr. Mininberg under the terms of the Employment Agreement, in the event of a termination of his employment with the Company and/or change in control of the Company. The amounts shown in the table below assume that such a termination of employment and/or change in control occurred on February 28, 2019 and thus includes amounts earned through such date and are estimates of the amounts that would be paid out to Mr. Mininberg upon his termination and/or a change in control (based upon his compensation and service levels as of such date). The actual amounts to be paid out can only be determined at the time of a change in control and/or termination of employment with the Company. In addition to the amounts in the table below, Mr. Mininberg would have been entitled to receive earned and unpaid annual incentive compensation of $2,360,000 as of February 28, 2019. Any outstanding equity awards issued pursuant to the 2008 Stock Plan or 2018 Stock Plan that are not assumed in connection with a change of control will vest immediately in accordance with the terms of the 2008 Stock Plan or 2018 Stock Plan, as applicable. Mr. Mininberg’s equity awards are otherwise subject to a double trigger and would not vest unless within one year after a change of control, his employment was involuntarily terminated by the Company other than for cause or by Mr. Mininberg for good reason. For further information regarding the terms of the Employment Agreement and a description of Mr. Mininberg’s potential payments upon termination and/or a change of control, see “Executive Compensation — Employment Contract for our CEO” and “Compensation Discussion and Analysis — Our Fiscal Year 2019 Compensation Program for Our CEO — Potential Post-Termination Benefits for our CEO.”
CEO – Julien R. Mininberg
In addition to any portion of unpaid base salary and annual incentive earned but not yet paid to him as of the date of termination, if Mr. Mininberg’s employment had been terminated as of February 28, 2019, Mr. Mininberg would be entitled to receive the following:
|
Triggering Event
|
Compensation Component
|
How Paid
|
Payout
|
||||||||||
|
Death
|
•
|
Death benefits
(2)
|
Third party payment
|
|
$750,000
|
|
|||||||
|
Disability
(1)
|
•
|
Disability benefits
(2)
|
Third party payment
|
|
$3,757,400
|
|
|||||||
|
Termination for Good Reason or
|
•
|
Cash payment of 2 times base salary
|
Over 24 months
|
|
$2,000,000
|
|
|||||||
|
without Cause
(1) (3) (6)
|
•
|
Pro rata portion of any outstanding Performance RSUs based on actual performance
|
Over time
(4)
|
|
$8,192,784
|
|
|||||||
|
•
|
Pro rata portion of any time-vested RSUs
|
Within 60 days
|
|
$1,456,119
|
|
||||||||
|
•
|
Health benefits
(5)
|
Over time
|
|
$36,863
|
|
||||||||
|
Total
|
|
$11,685,731
|
|
||||||||||
|
Change of Control
(1) (6) (7)
|
•
|
Cash payment of 2 times both base salary and target annual incentive
|
Within 75 days
|
$
|
6,000,000
|
|
|||||||
|
•
|
Accelerated vesting at target of outstanding Performance RSUs
|
Over time
(4)
|
|
$11,183,870
|
|
||||||||
|
•
|
Accelerated vesting of time-vested RSUs
|
Within 60 days
|
|
$1,962,373
|
|
||||||||
|
•
|
Health benefits
(5)
|
Over time
|
|
$36,863
|
|
||||||||
|
Total
|
|
$19,183,106
|
|
||||||||||
|
(1)
|
The terms “disability,” “good reason,” “cause” and "change of control" have the same meanings as defined in the Employment Agreement.
|
51
|
(2)
|
These represent third party payments from insurers. In the event of death, this would include the payment under a life insurance policy in the amount of $750,000. In the event of disability, the amount of the payment(s) would depend upon the circumstances and nature of the disability, with a maximum payment of $25,000 per month until age 67.
|
|
(3)
|
Under the terms of the Employment Agreement, Mr. Mininberg would receive a minimum of $4,000,000 in severance payments. If Mr. Mininberg’s employment had been terminated as of February 28, 2019, the aggregate amount or value of severance payments payable to him would be greater than $4,000,000, as shown in the table above. The value of the pro rata portion of outstanding Performance RSUs based upon the actual performance of the Company and the pro rata portion of the time-vesting RSUs are calculated assuming that the market price per share of the Common Stock on the date of the event was equal to the closing price of the Common Stock on the last trading day of the fiscal year ended February 28, 2019 ($112.11).
|
|
(4)
|
A pro rata portion of any outstanding Performance RSUs based on the actual performance of the Company at the end of the applicable performance periods would be payable at the time that such payment would be made during the course of Mr. Mininberg’s regular employment with the Company. The amount disclosed in the table for Performance RSUs is based on 190 percent actual performance achievement for the performance period ended February 28, 2019 and target performance achievement of 100 percent for the performance periods ended February 29, 2020 and February 28, 2021.
|
|
(5)
|
Reflects the estimated value of 18 monthly COBRA payments. Under the terms of the Employment Agreement, to the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, Mr. Mininberg is entitled to the continuation of health insurance benefits under COBRA for Mr. Mininberg and his family for a maximum of 18 months after the date of termination or until Mr. Mininberg is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months.
|
|
(6)
|
In the event of Mr. Mininberg’s termination without cause or for good reason, all payments and benefits due to him, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency, will be contingent upon Mr. Mininberg’s execution of a general release of all claims against the Company, its affiliates and their respective and former directors, employees and agents to the maximum extent permitted by law, pursuant to the Employment Agreement.
|
|
(7)
|
Reflects the payment obligation to Mr. Mininberg under the Employment Agreement in the event of a change of control in connection with a termination of employment. Under the terms of the Employment Agreement, Mr. Mininberg would receive a minimum of $4,000,000 in severance payments. If Mr. Mininberg’s employment had been terminated in connection with a change of control as of February 28, 2019, the aggregate amount or value of severance payments payable to him would be greater than $4,000,000, as shown in the table above. The value of the acceleration of all outstanding Performance RSUs and the acceleration of all time-vesting RSUs are calculated assuming that the market price per share of the Common Stock on the date of the event was equal to the closing price of the Common Stock on the last trading day of the fiscal year ended February 28, 2019 ($112.11). Amount disclosed in the table assumes actual performance of 190% to target for performance RSUs with a performance period ending on February 28, 2019, and target performance for RSUs with performance periods ending February 29, 2020 and February 28, 2021. Any outstanding equity awards issued to Mr. Mininberg that are not assumed in connection with a change of control will vest immediately in accordance with the terms of the 2008 Stock Plan or 2018 Stock Plan. Mr. Mininberg’s other equity awards are subject to a double trigger and would not vest unless his employment was involuntarily terminated by the Company other than for cause or by Mr. Mininberg for good reason, in each case, within a specified period following a change of control.
|
Mr. Mininberg entered into the New Employment Agreement, which was effective as of March 1, 2019. The New Employment Agreement altered certain payments and benefits that Mr. Mininberg would be entitled to receive in the event his employment is terminated for good reason, without cause, or in connection with a change of control. The New Employment Agreement also provides certain retirement benefits to Mr. Mininberg. For additional information, see “Compensation Discussion and Analysis – Fiscal Year 2020 Compensation Changes – Amended and Restated Employment Agreement with our CEO.”
Other Named Executive Officers
The Compensation Committee has authorized the Company to provide severance arrangements for the other named executive officers, and the Company entered into the Severance Agreement with Mr. Grass on June 17, 2019. In fiscal year 2019, prior to entering into the Severance Agreement with Mr. Grass, the Company’s policy was to provide severance in accordance with the terms authorized by the Compensation Committee. On August 19, 2015, the Company's shareholders approved certain amendments to the 2008 Stock Plan. Any equity awards granted to the other named executive officers prior to August 19, 2015 remain subject to the provisions of the 2008 Stock Plan before the plan was amended. Awards granted to the other named executive officers on or after August 19, 2015 are subject to the terms of the 2008 Stock Plan (as amended and restated). In addition to the amounts in the table below for each triggering event, Mr. Grass would have been entitled to receive earned and unpaid annual incentive compensation of $434,756, as of February 28, 2019. This amount represents the annual incentive compensation earned for fiscal year 2019, which was paid to Mr. Grass in the first quarter of fiscal year 2020. For additional information, see “Compensation Discussion and Analysis — The Company’s Compensation Program for our Other Named Executive Officers —Potential Post-Termination and Change of Control Benefits for our Other Named Executive Officers” and “Equity Compensation Plan Information.”
52
Chief Financial Officer – Brian L. Grass
In addition to any portion of unpaid base salary and annual incentive earned but not yet paid to him as of the date of termination, if Mr. Grass’s employment had been terminated as of February 28, 2019, Mr. Grass would be entitled to receive the following:
|
Triggering Event
|
Compensation Component
|
How Paid
|
Payout
|
||||||||||
|
Death
|
•
|
Death benefits
(2)
|
Third party payment
|
|
$750,000
|
|
|||||||
|
Disability
|
•
|
Disability benefits
(2)
|
Third party payment
|
|
$5,309,000
|
|
|||||||
|
Termination for Good Reason or without Cause
(1) (5)
|
•
|
Cash payment of 1 times base salary and target annual incentive
|
Over 12 months
|
|
$875,000
|
|
|||||||
|
•
|
Pro rata portion of any outstanding Performance RSUs based on actual performance
(3)
|
Over time
|
|
$1,485,791
|
|
||||||||
|
•
|
Pro rata portion of any time-vested RSUs
|
Within 60 days
|
|
$344,980
|
|
||||||||
|
•
|
Health benefits
(4)
|
Over time
|
|
$24,219
|
|
||||||||
|
Total
|
|
$2,729,990
|
|
||||||||||
|
Change of Control
(6)
|
•
|
Cash payment of 1.5 times base salary and target annual incentive
|
Within 75 days
|
|
$1,125,000
|
|
|||||||
|
•
|
Accelerated vesting at target of any outstanding Performance RSUs
|
Within 60 days
|
|
$2,187,939
|
|
||||||||
|
•
|
Accelerated vesting of any time-vested RSUs
|
Within 60 days
|
|
$524,675
|
|
||||||||
|
•
|
Health benefits
(7)
|
Over time
|
|
$36,328
|
|
||||||||
|
Total
|
|
$3,873,942
|
|
||||||||||
|
(1)
|
Under the Company’s severance policy, Mr. Grass would receive severance benefits upon a termination of his employment by the Company without cause or by Mr. Grass for good reason. The value of the pro rata portion of outstanding Performance RSUs based on actual performance and time-vesting RSUs are calculated assuming that the market price per share of the Common Stock on the date of the event was equal to the closing price of the Common Stock on the last trading day of the fiscal year ended February 28, 2019 ($112.11).
|
|
(2)
|
These represent third party payments from insurers. In the event of death, this would include the payment under a life insurance policy in the amount of $750,000. In the event of disability, the amount of the payment(s) would depend upon the circumstances and nature of the disability, with a maximum payment of $25,000 per month until age 67.
|
|
(3)
|
A pro rata portion of any outstanding Performance RSUs based on the actual performance of the Company at the end of the applicable performance periods would be payable at the time that such payment would be made during the course of Mr. Grass’s regular employment with the Company. The amount disclosed in the table for Performance RSUs is based on 190 percent actual performance achievement for the performance period ended February 28, 2019 and target performance achievement of 100 percent for the performance periods ended February 29, 2020 and February 28, 2021.
|
|
(4)
|
Reflects the estimated value of 12 monthly COBRA payments. To the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, under the Company’s severance policy, Mr. Grass is entitled to the continuation of health insurance benefits under COBRA for Mr. Grass and his family for a maximum of 12 months after the date of termination or until Mr. Grass is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 12 months.
|
|
(5)
|
In the event of Mr. Grass’s termination without cause or for good reason, all payments and benefits due to him, other than any portion of unpaid base salary and any payment or benefit otherwise required by any rule or regulation issued by any state or federal governmental agency,
|
53
will be contingent upon Mr. Grass’s execution of a general release of all claims to the maximum extent permitted by law against the Company, its affiliates and their respective and former directors, employees and agents.
|
(6)
|
Reflects the payment obligation under the Company's severance policy to Mr. Grass in the event of a change of control in connection with a termination of employment. In addition, in the event any other outstanding equity awards issued to Mr. Grass are not assumed in connection with a change of control, such awards will vest immediately in accordance with the terms of the 2008 Stock Plan or 2018 Stock Plan. Mr. Grass's other equity awards are subject to a double trigger and would not vest unless his employment was involuntarily terminated by the Company other than for cause or by Mr. Grass for good reason, in each case, within a specified period following a change of control. The value of the acceleration of outstanding Performance RSUs and the acceleration of all time-vesting RSUs are calculated assuming that the market price per share of the Common Stock on the date of the event was equal to the closing price of the Common Stock on the last trading day of the fiscal year ended February 28, 2019 ($112.11). The amount disclosed in the table for Performance RSUs is based on 190 percent actual performance achievement for the performance period ended February 28, 2019 and target performance achievement of 100 percent for the performance periods ended February 29, 2020 and February 28, 2021.
|
|
(7)
|
Reflects the estimated value of 18 monthly COBRA payments. To the extent permitted by benefit plans of the Company and its subsidiaries, and applicable law, Mr. Grass is entitled to the continuation of health insurance benefits under COBRA for Mr. Grass and his family for a maximum of 18 months after the date of termination or until Mr. Grass is covered by or eligible for coverage under another health insurance policy, if that occurs earlier than 18 months.
|
Effective as of June 17, 2019, Mr. Grass and the Company entered into the Severance Agreement, which alters certain payments and benefits that Mr. Grass would be entitled to receive in the event his employment is terminated for good reason, without cause, or in connection with a change of control. The Severance Agreement also provides certain retirement benefits to Mr. Grass. For additional information, see “Compensation Discussion and Analysis – Fiscal Year 2020 Compensation Changes – Severance Agreement with our Chief Financial Officer.”
Chief Legal Officer – Vincent D. Carson
Mr. Carson retired from his role as an executive officer effective as of August 22, 2018 and was elected to the Board of Directors of the Company. Mr. Carson did not receive any new payments or benefits in connection with his retirement as an executive officer.
54
CEO Pay Ratio for Fiscal Year 2019
Pay Ratio
Our CEO to median employee pay ratio has been calculated in accordance with the adopted rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act and is calculated in a manner consistent with Item 402(u) of Regulation S-K. Mr. Mininberg's annual total compensation for fiscal year 2019, as shown in the Summary Compensation Table above, was $6,614,542. The median Helen of Troy Limited employee's annual total compensation in fiscal year 2019 (other than Mr. Mininberg) was $63,602, calculated using the same methodology as used in the calculation of the Summary Compensation Table, consisting of base salary, bonus, stock awards, non-equity incentive plan compensation, and all other compensation. As a result, the ratio of Mr. Mininberg's annual total compensation in fiscal year 2019 to the median annual total compensation of all Helen of Troy Limited employees (other than Mr. Mininberg) in fiscal year 2019 was 104.0, when calculated in a manner consistent with Item 402(u) of Regulation S-K.
Identification of Median Employee
For purposes of determining the median Helen of Troy Limited employee, we evaluated all employees, other than Mr. Mininberg, employed by the Company as of February 28, 2019 and calculated each such employee's annual total compensation received from March 1, 2018 through February 28, 2019. Annual total compensation consists of total cash compensation, including actual wages earned (including overtime), annual performance based incentive cash actually received, holiday cash bonuses and one time bonuses. We did not make any material assumptions, adjustments, or estimates with respect to annual total compensation and we annualized the compensation for any full-time employees that were not employed by us for all of fiscal year 2019. The annual total compensation of each employee other than Mr. Mininberg was then ranked lowest to highest to determine the median employee.
Annual Total Compensation
After identifying the median employee based on annual total compensation, as described above, we calculated annual total compensation for such employee using the same methodology we use for our Named Executive Officers as set forth in the Summary Compensation Table above.
COMPENSATION RISKS
The Company has reviewed and assessed its compensation policies and practices to determine whether they are reasonably likely to have a material adverse effect on the Company. The Company’s management reviews compensation policies for the presence of certain elements that could encourage employees to take unnecessary or excessive risks; the ratios and level of incentive to fixed compensation, annual to long-term compensation and cash to equity compensation; and the comparison of compensation expense to earnings of the Company. Management’s assessment of the Company’s compensation policies is reviewed by the Compensation Committee as part of its risk oversight function.
The Company believes that its compensation programs for employees and executive officers are appropriately tailored to encourage employees to grow our business, but not to encourage them to do so in a way that poses unnecessary or excessive material risk. In particular, the Company’s compensation programs are designed to provide the following: elements that reward short-term and long-term performance; for our executive officers, incentive compensation that rewards individual and Company performance; incentive or equity compensation awards that vest based on performance and/or over time; and compensation with fixed and variable components, so that executive officers and key employees have both competitive remuneration to encourage retention and opportunities to earn more by successfully executing the Company’s business strategy.
Overall, the Compensation Committee does not believe that the compensation policies and practices give rise to risks that are reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the Compensation Committee noted that:
|
•
|
Our compensation program is designed to provide a balanced mix of base salary, annual cash incentive compensation and long-term equity incentives, which provides the incentive to perform at high levels and maximize Company performance without focusing exclusively on compensation performance metrics to the detriment of other important business metrics;
|
|
•
|
Our 2011 Bonus Plan provides for authority to adjust the performance targets for annual incentive bonuses to take into account divestitures of the Company to reduce the incentive to engage in activities that would have a short-term focus and would be inconsistent with the Company’s long-term business objectives;
|
55
|
•
|
Our principal equity compensation plan and our 2011 Bonus Plan include clawback provisions in the event of a financial restatement or misconduct;
|
|
•
|
The annual cash incentive opportunity for our CEO and other named executive officers contains maximum payout levels, which helps avoid excessive total compensation and reduces the incentive to engage in unnecessarily risky behavior; and
|
|
•
|
Our insider trading policy prohibits executives from pledging Common Stock or using Common Stock as collateral for any margin loan and from engaging in transactions (such as trading in options) designed to hedge against the value of the Common Stock.
|
Based on the recent actions taken by the Company and considering that we received over 99 percent of votes present (excluding abstentions and broker non-votes) in favor of the compensation of our named executive officers described in our 2018 proxy statement (“say on pay”), the Compensation Committee concluded that the executive compensation program is consistent with our executive compensation objectives and principles. As a result, since the 2018 annual general meeting, the Compensation Committee has not significantly changed our compensation principles and objectives in response to that vote.
CERTAIN RELATIONSHIPS - RELATED PERSON TRANSACTIONS
Procedures for the Approval of Related Person Transactions
The Audit Committee Charter provides that the Audit Committee has the authority to establish, and communicate to the full board and management, policies that restrict the Company and its affiliates from entering into related person transactions without the Audit Committee’s prior review and approval. In accordance with these policies, the Audit Committee on a timely basis reviews and, if appropriate, approves all material related person transactions.
At any time in which an executive officer, Director or nominee for Director becomes aware of any contemplated or existing transaction that, in that person’s judgment may be a material related person transaction, the executive officer, Director or nominee for Director is expected to notify the Chairman of the Audit Committee of the transaction. Generally, the Chairman of the Audit Committee reviews any reported transaction and may consult with outside legal counsel regarding whether the transaction is, in fact, a material related person transaction requiring approval by the Audit Committee. If the transaction is considered to be a material related person transaction, then the Audit Committee will review the transaction at its next scheduled meeting or at a special meeting of the committee.
Related Person Transactions
The Audit Committee was not requested to, and did not approve, any transactions required to be reported under SEC rules in fiscal year 2019.
AUDIT COMMITTEE MATTERS
Composition
The Audit Committee of the Board of Directors of the Company (the “Audit Committee”) is composed of four Directors: Thurman K. Case, Darren G. Woody, Gary B. Abromovitz, and Beryl B. Raff. Each member of the Audit Committee meets the independence and financial experience requirements under both SEC and NASDAQ rules. In addition, the Board has determined that each of Darren G. Woody and Thurman K. Case qualify as an “audit committee financial expert” as defined by SEC rules.
Responsibilities
The Audit Committee operates under a written charter that has been adopted by the Board. The charter is reviewed annually for changes, as appropriate.
The Audit Committee is responsible for oversight, on behalf of the Board of Directors, of:
|
•
|
The Company’s auditing, accounting and financial reporting processes, and the integrity of its financial statements;
|
|
•
|
The audits of the Company’s financial statements and the appointment, compensation, qualifications, independence and performance of the Company’s auditor and independent registered public accounting firm;
|
|
•
|
The Company’s compliance with legal and regulatory requirements; and
|
|
•
|
The staffing and ongoing operation of the Company’s internal audit function.
|
56
The Company’s management is responsible for: (a) maintaining the Company’s books of account and preparing periodic financial statements based thereon; and (b) maintaining the system of internal controls. The independent registered public accounting firm is responsible for auditing the Company’s consolidated annual financial statements.
The Audit Committee serves a board-level oversight role in which it provides advice, counsel and direction to management and the auditors on the basis of the information it receives, its discussions with the auditors and the committee members' experience in business, financial and accounting matters. The committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management and the independent auditor.
In accordance with Audit Committee policy and the requirements of law, the Audit Committee pre-approves all services to be provided by the Company’s auditor and independent registered public accounting firm. Pre-approved services include audit services, audit-related services, tax services, and other services. In some cases, the full Audit Committee provides pre-approval for up to a year related to a particular defined task or scope of work and subject to a specific budget. In other cases, the Chairman of the Audit Committee has the delegated authority from the Audit Committee to pre-approve additional services, and the Chairman then communicates such pre-approvals to the full Audit Committee for ratification. To avoid potential conflicts of interest, the law prohibits a publicly traded company from obtaining certain non-audit services from its independent registered public accounting firm. The Company obtains these services from other service providers as needed.
Report of Audit Committee
The Audit Committee hereby reports as follows:
|
1.
|
The Audit Committee has reviewed and discussed with management and the independent registered public accounting firm, together and separately, the Company’s audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for fiscal year 2019.
|
|
2.
|
The Audit Committee has discussed with the auditor and independent registered public accounting firm matters required to be discussed in applicable Public Company Accounting Oversight Board (“the PCAOB”) rules. This review included a discussion with management of the quality, not merely the acceptability, of the Company’s accounting principles, the reasonableness of significant estimates and judgments, and the clarity of disclosure in the Company’s financial statements, including the disclosures related to critical accounting estimates.
|
|
3.
|
The Audit Committee has received from the auditor and independent registered public accounting firm the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and the Audit Committee has held discussions regarding independence with its auditor and independent registered public accounting firm.
|
Based on the review and discussions referred to in paragraphs 1-3 above, the Audit Committee recommended to the Board, and the Board has approved, that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for fiscal year 2019 for filing with the SEC.
Members of the Audit Committee:
Thurman K. Case (Chairman)
Gary B. Abromovitz
Beryl B. Raff
Darren G. Woody
Darren G. Woody
The foregoing report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
57
AUDIT AND OTHER FEES FOR SERVICES PROVIDED BY OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
REGISTERED PUBLIC ACCOUNTING FIRM
The following table presents fees for professional audit services provided by Grant Thornton LLP for the audits of the Company’s annual consolidated and stand-alone financial statements for fiscal years ended 2019 and 2018, and fees for other services provided by Grant Thornton LLP associated with those.
|
Type of Fee
|
2019
|
2018
|
||||
|
Audit Fees
|
$
|
1,331,800
|
|
$
|
1,386,000
|
|
|
Audit-Related Fees
|
—
|
|
—
|
|
||
|
Tax Fees
|
18,200
|
|
9,100
|
|
||
|
All Other Fees
|
33,600
|
|
36,000
|
|
||
|
Total
|
$
|
1,383,600
|
|
$
|
1,431,100
|
|
Audit Fees:
Consist of fees for professional services rendered for the audit of the Company’s consolidated and stand-alone financial statements and review of the interim condensed consolidated financial statements included in quarterly reports and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings or engagements, including services in connection with assisting the Company in its compliance with its obligations under Section 404 of the Sarbanes-Oxley Act and related regulations and attest services, except those not required by statute or regulation.
Audit-Related Fees:
Consist of fees for professional services rendered by our independent registered public accounting firm for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements, due diligence, accounting consultations concerning financial accounting and reporting standards, and other similar services which have not been reported as audit fees.
Tax Fees:
Consist of tax compliance/preparation fees for professional services rendered by our independent registered public accounting firm to certain subsidiaries of the Company.
All Other Fees:
These are fees for other permissible work performed by Grant Thornton LLP that does not meet the above category descriptions and are primarily for the provision of certain consents or certain procedures related to the issuance of our registration statements on Form S-8.
The Audit Committee pre-approved all of the services described above that were provided in fiscal years 2019 and 2018 in accordance with the pre-approval requirements of the Sarbanes-Oxley Act. There were no services for which the de minimis exception, as defined in Section 202 of the Sarbanes-Oxley Act, was applicable.
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PROPOSAL 2: ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION
In accordance with Section 14A of the Exchange Act, we are asking shareholders to approve the following advisory resolution at the Annual Meeting:
RESOLVED, that the shareholders of Helen of Troy Limited approve, on an advisory basis, the compensation of the Company’s named executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narratives in the Proxy Statement for the Company’s 2019 Annual General Meeting of Shareholders.
This advisory resolution, commonly referred to as a “say on pay” resolution, is non-binding on the Board of Directors. Although non-binding, the Board of Directors and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.
Our executive compensation program emphasizes performance- and equity-based compensation to align it with shareholder interests. In addition, our executive compensation program includes other practices that we believe serve shareholder interests such as paying for performance, establishing rigorous performance goals and maintaining clawback terms for incentive awards and prohibitions on hedging or pledging Company stock. The Compensation Committee believes that the Company’s executive compensation program uses appropriate structures and sound pay practices. Accordingly, the Compensation Committee recommends a vote “For” this Proposal 2.
We urge shareholders to read the “Compensation Discussion and Analysis” beginning on page 19 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL.
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PROPOSAL 3: APPOINTMENT OF AUDITOR AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2020 FISCAL YEAR AND AUTHORIZATION OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS TO SET
THE AUDITOR’S REMUNERATION
Under Bermuda law, our shareholders have the responsibility to appoint the auditor and independent registered public accounting firm of the Company to hold office until the close of the next annual general meeting and are able to authorize the Audit Committee of the Board of Directors to set the auditors’ remuneration.
The Audit Committee has nominated Grant Thornton LLP as the Company’s auditor and independent registered public accounting firm for fiscal year 2020. A representative of Grant Thornton LLP, the Company’s auditor and independent registered public accounting firm for fiscal year 2019, is expected to be present at the Annual Meeting with the opportunity to make a statement if the representative desires to do so. The Grant Thornton LLP representative is also expected to be available to respond to appropriate questions.
Vote Required for Approval and Recommendation
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to appoint Grant Thornton LLP as our auditor and independent registered public accounting firm for fiscal year 2020 and authorize the Audit Committee to set the auditor’s remuneration as described in this Proposal 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL.
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SHAREHOLDER PROPOSALS
We currently expect that our 2020 annual general meeting of shareholders will be held on or about Wednesday, August 26, 2020. Shareholders intending to present proposals at the 2020 annual general meeting of shareholders and desiring to have those proposals included in the Company's proxy statement and form of proxy relating to that meeting must submit such proposals, in compliance with Rule 14a-8 of the Exchange Act, to be received at the executive offices of the Company no later than March 14, 2020. Under the Company's bye-laws, if a shareholder does not want to submit a proposal for inclusion in our proxy statement but wants to introduce it at our 2020 annual meeting, or intends to nominate a person for election to the Board directly (rather than by recommending such person as a candidate to our Nominating Committee as described under "Board Committees and Meetings – Nominating Committee"), the shareholder must submit the proposal or nomination in writing between May 28, 2020 and June 27, 2020. The nomination or proposal and supporting materials must comply with the requirements set forth in our bye-laws. To be in proper form, the notice of a director nomination should be accompanied by supporting materials required by our bye-laws, including, among other things, written consent of the proposed candidate to serve as a director if nominated and elected, information about the proposed nominee for director, information about the shareholder submitting the nomination, and information about any other shareholders or beneficial owners known to support the nomination. Additionally, any candidate nominated by shareholders must meet the general requirements outlined in the Company's bye-laws. Unless submitted in accordance with Rule 14a-8 of the Exchange Act, neither the Board of Directors nor the Nominating Committee is required to include any shareholder nominee or proposal as a proposal in the proxy statement and proxy card mailed to shareholders. Unless the shareholder notifies the Company of such intent between those dates, any proxy solicited by the Company for that annual general meeting will confer on the holder of the proxy discretionary authority to vote on the proposal so long as the proposal is properly presented at the meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s Directors and executive officers, and persons who own more than 10 percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Directors, executive officers and greater than 10 percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.
To the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during fiscal year 2019, all Section 16(a) filing requirements applicable to the Directors, executive officers and greater than 10 percent shareholders were satisfied, except that one Form 4 for Mr. Abromovitz was filed late and two Form 4's for Mr. Grass were filed late, each with respect to an exempt transaction.
OTHER MATTERS
Except as described in this proxy statement, the Board of Directors knows of no other matters to be presented at the Annual Meeting. If other matters that require the vote of the shareholders, including a question of adjourning the Annual Meeting, properly come before the Annual Meeting or any adjournment thereof, the holders of the proxies are authorized to vote on these matters in accordance with management’s discretion. The accompanying proxy card confers discretionary authority to take action with respect to any additional matters that may come before the Annual Meeting or any adjournment thereof.
HOUSEHOLDING OF MATERIALS
To reduce the expenses of delivering duplicate proxy materials, we participate in the practice of “householding” proxy statements and annual reports. This means that we deliver one Notice of Internet Availability and, if applicable, annual report and proxy statement, to multiple shareholders sharing the same mailing address unless otherwise requested. The Company will promptly deliver a separate copy of either document to any shareholder upon request by contacting Helen of Troy Investor Relations, Attention: Anne Rakunas (915) 225-4841, or via e-mail at Arakunas@helenoftroy.com, or send written correspondence to Helen of Troy Limited, Attention: Investor Relations, 1 Helen of Troy Plaza, El Paso, Texas 79912. Some banks, brokers, and other nominee record holders may also be participating in the practice of “householding” proxy statements and annual reports. Any shareholder who wants to receive separate copies of the annual report and proxy statement in the future, or who is currently receiving multiple copies and would like to receive only one copy for his or her household, should contact his or her bank, broker, or other nominee record holder, or contact the Company at the above address and phone number.
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IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS
Pursuant to SEC rules, we may furnish proxy materials, including this proxy statement and the Company’s 2019 Annual Report to Shareholders, to our shareholders by providing access to such documents on the Internet instead of mailing printed copies. Most shareholders will not receive printed copies of the proxy materials unless they request them. Instead, a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”), which was mailed to most of our shareholders, will explain how you may access and review the proxy materials and how you may submit your proxy on the Internet. If you would like to receive a paper or electronic copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability. Shareholders who requested paper copies of proxy materials or previously elected to receive proxy materials electronically did not receive the Notice of Internet Availability and are receiving the proxy materials in the format requested. You may submit your proxy via the Internet, by telephone, or, if you have received a printed version of these proxy materials, by mail.
This proxy statement and the Company’s 2019 Annual Report to Shareholders are available electronically on our hosted website at
HTTP://MATERIALS.PROXYVOTE.COM/G4388N.
To access and review the materials made available electronically:
1. Go to HTTP://MATERIALS.PROXYVOTE.COM/G4388N and input the 12-digit control number from the Notice of Internet Availability or proxy card.
2. Click the “2019 Proxy Statement” or “2019 Annual Report”.
3. Have your proxy card or voting instructions available.
We encourage you to review all of the important information contained in the proxy materials before voting. The Notice of Internet Availability and the proxy materials are first being made available to our shareholders on or about July 12, 2019.
HOW TO OBTAIN OUR ANNUAL REPORT, PROXY STATEMENT
AND OTHER INFORMATION ABOUT THE COMPANY
AND OTHER INFORMATION ABOUT THE COMPANY
From time to time, we receive calls from shareholders asking how they can obtain more information regarding the Company. The following options are available:
1. Our Investor Relations site, which can be accessed from our main Internet website located at WWW.HELENOFTROY.COM, contains Company press releases, earnings releases, financial information and stock quotes, as well as corporate governance information and links to our SEC filings. This proxy statement and our 2019 Annual Report to Shareholders are both available at this site.
2. You may also request a free copy of our Annual Report or proxy statement by contacting Helen of Troy Investor Relations, Attention: Anne Rakunas (915) 225-4841, or via e-mail at Arakunas@helenoftroy.com, or send written correspondence to Helen of Troy Limited, Attention: Investor Relations, 1 Helen of Troy Plaza, El Paso, Texas 79912.
YOUR VOTE IS IMPORTANT
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Annex A
Reconciliation of GAAP Diluted Earnings Per Share (EPS) from Continuing Operations
to Adjusted Diluted EPS (non-GAAP) from Continuing Operations
Reconciliation of GAAP Operating Income
to Adjusted Operating Income
Adjusted operating income and adjusted diluted earnings per share (“EPS”) from continuing operations may be considered non-GAAP financial measures as set forth in SEC Regulation G, Rule 100. The tables above report operating income and diluted EPS from continuing operations without the impact of non-cash asset impairment charges, restructuring charges, the Toys "R" Us ("TRU") bankruptcy charge, CEO succession costs, acquisition-related expenses, tax reform, Venezuelan currency re-measurement related charges, patent litigation charges, amortization of intangible assets, and non-cash share-based compensation for the periods presented, as applicable. During fiscal 2018, we divested our Nutritional Supplements segment, therefore fiscal 2018 and prior fiscal years 2015 to 2017 have been restated to reflect the divestiture. The tables reconcile adjusted operating income and adjusted diluted EPS from continuing operations to their corresponding GAAP-based measures, operating income and diluted EPS from continuing operations, presented in our consolidated statements of income in our Annual Report on Form 10-K for the fiscal year ended February 28, 2019. We believe adjusted operating income and adjusted diluted EPS from continuing operations provide useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations. We believe these non-GAAP financial measures, in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective regarding the impact of such charges on net income, earnings per share and operating income. We also believe that these non-GAAP measures facilitate a more direct comparison of our performance with our competitors. We further believe that including the excluded charges would not accurately reflect the underlying performance of our continuing operations for the period in which the charges are incurred, even though such charges may be incurred and reflected in our GAAP financial results in the near future. The material limitation associated with the use of the non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of our activities. Our adjusted operating income and adjusted diluted EPS from continuing operations are not prepared in accordance with GAAP, are not an alternative to GAAP financial information and may be
A-1
calculated differently than non-GAAP financial information disclosed by other companies. Accordingly, undue reliance should not be placed on non-GAAP information.
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