Bed, Bath and Beyond 2012 Annual Report Download - page 56

purpose to reflect items, such as: (i) mergers, acquisitions, consolidations or dispositions, (ii) changes in accounting methods,
(iii) extraordinary items, as defined in Accounting Standards Codification Topic No. 225, ‘‘Income Statement,’’ and (iv) funds
deployed for stock repurchase or dividend activity, to the extent permitted by Section 162(m) of the Code. The Company
believes that this performance-based test meets the standard for performance-based compensation under Section 162(m)
(‘‘Section 162(m)’’) of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’), so that the restricted stock awards will be
deductible compensation by the Company for certain executives if their annual compensation exceeds $1 million. The
Compensation Committee believes that this test is an appropriate measure of performance for companies in the retail industry
and, specifically, for companies in the Company’s sector. In addition, even if the performance-based test is met, the executive
must remain in the Company’s employ for an extended period in order to earn the restricted stock, further aligning the
executive’s interest with the long-term interests of the Company.
For each of fiscal 2012 and fiscal 2011, the performance-based test was satisfied in that the Company’s net income exceeded
the Company’s net income for the prior fiscal year.
All executives (other than named executive officers and other key executives whose compensation is determined by the
Compensation Committee) and associates awarded incentive compensation receive grants consisting solely of restricted stock.
Vesting of restricted stock awarded to these associates is based solely on time-vesting with no performance-based test.
Consistent with the Company’s practice since fiscal 2008, stock option awards are made in dollars (with the number of shares
covered by the options determined by dividing the dollar amount of the grant by the Stock Option Fair Value, as described
below). The Compensation Committee believes that making stock option awards in dollar amounts rather than share amounts
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 making the awards, the Compensation Committee considered the fair value of
these options on the date of grant determined in accordance with Accounting Standards Codification Topic No. 718,
‘‘Compensation — Stock Compensation’’ (the ‘‘Stock Option Fair Value’’).
All awards of restricted stock and stock options are made under the Company’s 2012 Incentive Compensation Plan (formerly
known as the 2004 Incentive Compensation Plan), approved by the Company’s shareholders (the performance goals under such
plan having been re-approved in 2012), 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
compensation 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 continued success of the Company. The Company has enjoyed considerable success in the years it has been a public
company, and in both fiscal 2011 and fiscal 2012 achieved strong financial results.
Fiscal 2012 executive compensation decisions were made effective May 10, 2012, before the advisory vote on executive
compensation took place at the 2012 annual meeting of shareholders held on June 22, 2012. At that meeting, approximately
94% of votes cast approved the compensation paid to the Company’s named executive officers. The Compensation Committee
evaluated these results and concluded that this vote reflects the stockholders’ support of the Company’s approach to executive
compensation. Accordingly, in 2012, the Company did not change its approach to executive compensation or make any
significant changes to its executive compensation program based on stockholder feedback. The Compensation Committee
expects to continue to consider the outcome of the Company’s say-on-pay votes and other shareholder discussions when
making future executive compensation decisions.
For fiscal 2012, the base salaries for the Co-Chairmen remained at $1,100,000, the same as they were for the prior six fiscal
years. For fiscal 2012, the base salary for Mr. Temares increased by $450,000 to $3,450,000. The Compensation Committee
determined that Mr. Temares’ base salary increase was warranted based on the Company’s strong financial performance and
Mr. Temares’ strong individual performance. According to the analysis prepared by JFR, Mr. Temares’ increased base salary for
fiscal 2012 was at the 76
th
percentile of the total cash compensation of the 23-company peer group.
BED BATH & BEYOND PROXY STATEMENT
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