Bed, Bath and Beyond 2007 Annual Report Download - page 50

BED BATH& BEYOND PROXY STATEMENT
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As described above, the Compensation Committee determined that for fiscal 2008 there should be no increase in aggregate
compensation for the top three named executive officers, with a reallocation of compensation among such officers such that the
total compensation of the Chief Executive Officer has been increased in an amount approximately equal to a reduction in total
compensation of the Co-Chairmen. Consequently, the aggregate equity awards to Mr. Temares for fiscal 2008 were increased from
fiscal 2007 by $1,600,000 to $7,000,000 (valued by the Committee as described below). The increase to Mr. Temares was comprised
entirely of stock options. Of the total of $7,000,000 of equity awards to Mr. Temares for fiscal 2008, $2,400,000 consisted of
restricted stock (based on the market value of the Company’s common stock on the date of grant) and $4,600,000 consisted of
stock options (based on the fair value determined on the date of grant in accordance with SFAS No. 123R [“Stock Option Fair
Value”]).
The equity awards to Messrs. Eisenberg and Feinstein for fiscal 2008 were decreased from fiscal 2007 by an aggregate of
$1,800,000 to $3,000,000 for each such executive, of which $2,000,000 consisted of restricted stock and $1,000,000 consisted of
stock options (valued on the same basis as Mr. Temares’ awards).
Unlike prior years in which stock option awards were made by the Committee based on the number of shares covered by the
options, the stock option awards for fiscal 2008 were made in dollars (with the number of shares covered by the options deter-
mined by dividing the dollar amount of the grant by the Stock Option Fair Value). The Committee believes that making stock
option awards in dollar amounts rather than share amounts is an increasingly prevalent practice and is advisable because making
stock option awards in dollar amounts allows the Compensation Committee to align stock option awards with the value of the
option grants. Making stock option awards in dollars also enables the Compensation Committee to more readily evaluate
appropriate aggregate compensation amounts and percentage increases or decreases for executives, in comparison to making
stock option awards in share amounts (the value of which varies depending on the trading price of the Company’s stock and
other factors).
In the view of the Compensation Committee, the base salary, stock option grants, and restricted stock awards constituted compen-
sation packages for the Chief Executive Officer and for the Co-Chairmen appropriate for a company with the revenues and earn-
ings of the Company. A higher award of stock options to the Chief Executive Officer than to the Co-Chairmen and the fiscal 2008
increase in equity compensation for the Chief Executive Officer and decrease in such compensation for the Co-Chairmen were
deemed appropriate in view of the Company’s succession planning and the analyses prepared by JFR, including the comparison of
current compensation of such executive officers to the Peer Groups described above. The increased reliance on stock options (as
opposed to restricted stock) for Mr. Temares for fiscal 2008 was viewed by the Committee to be appropriate in order to increase
the proportion of the Chief Executive Officer’s compensation which rewards him only if shareholder value is increased. The stock
options granted to the Chief Executive Officer vest in five equal annual installments, while the stock options awarded to the
Co-Chairmen vest in three equal annual installments, in each case commencing on the first anniversary of the grant date and
based on continued service to the Company. The restricted stock awards to each such executive are conditioned on the perform-
ance-based test described above with time vesting in five equal annual installments.
The base salaries of Mr. Stark in fiscal 2007 and 2006 were $950,000 and $850,000, respectively. The base salaries of Mr. Castagna
in fiscal 2007 and 2006 were $755,000 and $675,000, respectively. In each of the last two fiscal years, Mr. Stark and Mr. Castagna
both received option awards in the amount of 25,000 shares, vesting in five equal annual installments commencing on the third
anniversary of the grant date, based on continued service to the Company. Mr. Stark was awarded shares of restricted stock in
fiscal 2007 and 2006 having a market value on the date of grant of $1,000,000 and $750,000, respectively. Mr. Castagna was
awarded shares of restricted stock in fiscal 2007 and 2006 having a market value on the date of grant of $750,000 and $600,000,
respectively. The restricted stock awards to both Mr. Stark and Mr. Castagna for both fiscal 2007 and 2006 were conditioned
on the performance-based test described above with time vesting in five equal annual installments commencing on the third
anniversary of the grant date.
For fiscal 2008, the Compensation Committee determined, following consultation with the Co-Chairmen, Chief Executive Officer
and JFR, to award to Mr. Stark cash compensation of $1,055,000, restricted stock having a market value on the date of grant of
$1,000,000 and options having a Stock Option Fair Value of $590,000. For fiscal 2008, the Compensation Committee determined,
following consultation with the Co-Chairmen, Chief Executive Officer and JFR, to award to Mr. Castagna cash compensation of
$840,000, restricted stock having a market value on the date of grant of $750,000 and options having a Stock Option Fair Value of
$590,000. In approving the awards, the Compensation Committee took into account the percentage increase of the aggregate