Bed, Bath and Beyond 2009 Annual Report Download - page 50

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BED BATH & BEYOND PROXY STATEMENT
48
Equity Compensation
The Company’s overall approach to equity compensation is to make equity awards comprised of a combination of stock options
and restricted stock to all executive officers, including the named executive officers, and a small number of other executives.
These grants are made on May 10 of each year (or the following trading day should such date fall on a weekend or holiday).
The vesting provisions relating to equity compensation have been and continue to be determined with the principal purpose of
retaining the Company’s executives and key associates. The Company believes its equity compensation policies have been highly
successful in the long term retention of its executives and key associates, including its named executive officers.
Consistent with the Company’s historic practice, the stock options vest over time, subject, in general, to the named executive offi-
cers remaining in the Company’s employ on specified vesting dates. Vesting of the restricted stock awarded to these named exec-
utive officers is dependent on (i) the Company’s achievement of a performance-based test for the fiscal year in which the grant is
made, and (ii) assuming achievement of the performance-based test, time vesting, subject, in general, to the executive remaining
in the Company’s employ on the specified vesting dates.
The performance-based test requires that the Company’s net income in the fiscal year exceed the Company’s net income in the
prior fiscal year or that the Company’s net income as a percentage of sales place it in the top half of the companies in the S&P
500 Retailing Index with respect to such measurement. Net income is adjusted for such purpose to reflect (i) mergers, acquisi-
tions, consolidations or dispositions, (ii) changes in accounting methods, and (iii) extraordinary items, as defined in Accounting
Standards Codification Topic No. 225, “Income Statement”, or stock repurchase or dividend activity. The Company believes that
this performance-based test meets the standard for performance-based compensation under Section 162(m) (“Section 162(m)”) of
the Code so that the restricted stock awards will be deductible compensation for certain executives if their annual compensation
exceeds $1 million.
For fiscal 2009, the performance-based test was satisfied in that the Company’s net income exceeded the Company’s net income
for fiscal 2008. For fiscal 2008, the performance-based test was satisfied in that the Company’s net income as a percentage of
sales for the prior fiscal year placed it in the top quartile of the S&P 500 Retailing Index. The S&P 500 Retailing Index included
the following companies: Abercrombie & Fitch, Amazon.com, AutoNation, AutoZone, Best Buy, Big Lots, Expedia, Family Dollar,
Game Stop, GAP, Genuine Parts, Home Depot, J.C. Penney, Kohl’s, Limited Brands, Lowe’s, Macy’s, Nordstrom, Office Depot, Radio
Shack, Sears, Sherwin-Williams, Staples, Target, Tiffany & Co. and The TJX Companies.
All executives (other than our named executive officers and other key executives whose compensation is determined by the
Committee) and associates awarded incentive compensation receive grants consisting solely of restricted stock. Vesting of restrict-
ed stock awarded to these associates is based solely on time-vesting with no performance-based test.
All awards of restricted stock and stock options are made under the Company’s 2004 Incentive Compensation Plan, approved by
the Company’s shareholders, which is the only equity incentive plan under which the Company can currently make awards of
equity compensation.
Senior Executive Compensation
In addition to considering the Company’s compensation policies generally, the Compensation Committee reviews executive com-
pensation and concentrates on the compensation packages for the Company’s senior executive officers, namely, the Co-Chairmen
(Warren Eisenberg and Leonard Feinstein, who are the Company’s Co-Founders) and the Chief Executive Officer (Steven H.
Temares), believing that these three named executive officers are the most important and influential in determining the contin-
ued success of the Company. The Company has enjoyed considerable success in the 18 years it has been a public company, and in
fiscal 2009 achieved strong financial results.