Bed, Bath and Beyond 2015 Annual Report Download - page 31

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PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Say on Pay Results and Shareholder Outreach
Over the past several years we have expanded our shareholder outreach program. The feedback received through our
engagement efforts led us to make initial changes to our executive compensation program in 2014, which were announced
prior to the Annual Meeting of Shareholders in July 2014 and included in our 2014 Proxy Statement. The program remained
consistent in fiscal 2015. While this engagement and enhanced disclosure was generally well received by our shareholders,
the advisory vote on our executive compensation at our 2015 Annual Meeting of Shareholders was below expectations, with
approximately 35% of votes cast in favor, down from 72% support the prior year.
Since that time, we have continued to engage with our shareholders to discuss various compensation and governance
matters:
• Contacted top twenty-five shareholders representing approximately 68% of the total shares outstanding (as of March 26,
2016).
• Representatives of the Compensation Committee, along with the Co-Chairmen and management, met in person with
nine institutional shareholders representing approximately 31% of the total outstanding shares, as well as held
conversations with a leading proxy advisory firm.
• Representatives of the Compensation Committee and management spoke with an additional six institutional
shareholders by phone, representing approximately 18% of the total outstanding shares.
• In these meetings, our shareholders expressed a wide range of viewpoints relating to compensation and governance
practices. This engagement process was very informative and productive.
Key feedback included the following:
Shareholder Feedback Our Responses
Concerns regarding magnitude of CEO pay Following our shareholder engagement after the 2015 Annual Meeting and
after consideration of the issues discussed with our shareholders, the
Compensation Committee approved the following actions with respect to our
CEO compensation in 2016:
• No salary increase for our CEO, marking third consecutive year.
• Reduced CEO target compensation from $19.6 million to $16.9 million,
or by approximately 14%.
• In addition, the Compensation Committee enhanced the rigor of and
amended our PSU compensation performance goals applicable to our
CEO and other senior executives as described in this chart below.
Concerns regarding rigor of performance
goals
Payouts tied to PSU performance goals are contingent upon achievement of
various levels of Earnings Before Interest and Taxes (EBIT) margin and
Return on Invested Capital (ROIC) as well as the continued performance of
service by the executives. After consideration of shareholder feedback, the
Compensation Committee has enhanced the rigor of and amended these
performance goals for fiscal 2016 by:
• Adjusting the weighting of one-year and three-year performance goals
from 75/25 to 50/50, respectively, increasing the weighting of the three-
year goal.
• Applying a more strict achievement threshold for PSUs subject to the
three-year performance goal by increasing the achievement percentage
from 80-164% to 100-144%, to earn 100% payment.
• Applying a Total Shareholder Return (TSR) “Regulator” to achievement
thresholds of each performance goal, capping PSU awards at 100% of
the target if the Company’s TSR over the performance period is
negative.
• Adjusting the vesting periods for PSUs to maintain a rate of equal
vesting over four years, if performance goals are met.
21