Bed, Bath and Beyond 2011 Annual Report Download - page 65

BED BATH & BEYOND PROXY STATEMENT
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Increase the Aggregate Share Reserve. The current aggregate share reserve will be increased by an additional 14,300,000
shares for a total share reserve of 43,200,868 shares under the 2012 Plan (which represents the additional 14,300,000 shares, plus
19,000,000 shares reserved under the 2004 Plan plus 9,900,868 shares reserved under the plans in effect prior to adoption of the
2004 Plan and which were transferred to the 2004 Plan in 2004). We continue to maintain a “fungible share limit” where each
share of common stock subject to full value awards (e.g., restricted stock or restricted stock units) will be counted as 2.2 shares
against the aggregate share reserve under the 2012 Plan. Our Board of Directors believes that stock ownership by key employees,
consultants, officers and directors provides performance incentives and fosters long-term commitment to our benefit and the
benefit of our shareholders and that the proposed increase in the share reserve is necessary to insure that a sufficient reserve of
common stock remains available for issuance to allow us to continue to utilize equity incentives to attract and retain the services
of key individuals essential to our long-term growth and financial success.
Term Extension. We extended the term of the 2012 Plan through May 18, 2022, provided the requisite shareholder approval of
the 2012 Plan is obtained (currently the 2004 Plan is scheduled to expire on May 13, 2014).
Corporate Governance Best Practices. The 2012 Plan also adopts the following key features that are designed to protect our
shareholders’ interests and to reflect corporate governance best practices:
฀฀฀฀฀฀฀฀฀฀฀฀฀ The 2012 Plan provides that the total number
of shares of common stock available for awards will be reduced by (i) the total number of stock options or stock
appreciation rights (“SARs”) that have been exercised, regardless of whether any of the shares of common stock
underlying such awards are not actually issued to the participant as the result of a net settlement and (ii) any shares
of common stock used to pay any exercise price or tax withholding obligation with respect to any stock option or SAR.
Further, the Company may not use the cash proceeds it receives from award exercises to repurchase shares of common
stock on the open market for reuse under the 2012 Plan.
฀฀฀฀฀ The 2012 Plan ensures all equity-based awards will require at least a one year period
vesting period for awards where vesting is based on the attainment of performance goals and at least a three year
pro-rata vesting period for awards where vesting is based solely on continued service with the Company. Accelerated
vesting is permitted in the case of death, disability, retirement or change of control. Up to 5% of the maximum
available shares may be granted under the 2012 Plan without regard to the minimum vesting requirement.
฀฀฀฀ We have clarified that dividend payments on restricted stock awards and other stock-based
awards will be deferred until, and conditioned upon, the lapsing of the restrictions on the award.
฀฀ To enhance the Company’s flexibility in designing awards, the 2012 Plan has the ability to grant
incentive stock options (“ISOs”), which may provide the participant with the opportunity for favorable tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), subject to certain conditions and requirements.
Although ISOs have been added to the 2012 Plan to provide future flexibility, we intend to continue our practice of granting non-
qualified stock options.
฀฀฀฀฀ When calculating the previously approved performance goals
under Section 162(m) of the Code, the 2012 Plan has been amended to establish a default rule to exclude the impact of certain
events, occurrences or circumstances, such as: restructurings, discontinued operations, disposal of a business, extraordinary
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
In addition to the foregoing, shareholders are being asked to reapprove the Section 162(m) performance goals under the 2012
Plan so that certain incentive awards granted under the 2012 Plan to executive officers of the Company may qualify as exempt
performance–based compensation under Section 162(m) of the Code. Otherwise, Section 162(m) of the Code generally disallows