Bed, Bath and Beyond 2015 Annual Report Download - page 32

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PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Shareholder Feedback Our Responses
Suggestion to better articulate our business
strategy and linkage to executive
compensation program
In 2016, we significantly expanded our disclosure regarding our investment
strategy to become a world-class omnichannel retailer and the progress we
have made in transforming our business over the past several years. We
believe that a combination of a one-year performance goal based on EBIT
margin and a three-year goal based on ROIC, in each case relative to a retail
industry peer group, are appropriate to support this long-term strategy. A
performance goal based on EBIT margin incentivizes short-term fiscal
discipline as these investments are being made, while a performance goal
based on ROIC measures how these investments are returning value to the
enterprise over the long term.
Suggestion to better articulate our
philosophy regarding cash bonuses
The Compensation Committee firmly believes that annual cash bonuses
promote short-term thinking and are in direct contrast to the Bed Bath &
Beyond culture which is rooted in a commitment to customer service and a
desire to achieve long-term success. The Committee believes that paying a
fair base salary and putting all other compensation in the form of long-term
equity awards and performance-based compensation creates alignment with
the Company’s and shareholders’ goal of incenting management to continue
to enhance shareholder value over the long term.
The Compensation Committee will continue to actively engage with shareholders to discuss various compensation and
governance matters and will consider their feedback in any future changes to the Company’s executive compensation
program.
Fiscal 2016 Executive Compensation Program Decisions
The Compensation Committee continues to believe that a combination of Performance Stock Units (including an EBIT
performance metric requiring fiscal discipline in a short-term one-year period with vesting that extends over two years, and an
ROIC performance metric that measures the return on the investments being made to address a rapidly changing industry
over a three-year period with vesting after years three and four), together with stock options vesting over three or five years,
appropriately aligns the compensation program with both the short- and long-term interests of the Company’s shareholders.
Subsequent to the recent shareholder engagement efforts and in discussion with the full Board of Directors, the Compensation
Committee made further changes to the Company’s executive compensation program for fiscal 2016, building on changes
made during the prior two years. The Compensation Committee believes these changes further strengthen the direct link
between pay and performance.
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