Bed, Bath and Beyond 2015 Annual Report Download - page 33

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PROPOSAL 3—APPROVAL, BY NON-BINDING VOTE, OF 2015 EXECUTIVE COMPENSATION
Summary of Executive Compensation and Relevant Governance Changes
In furtherance of the objectives of aligning compensation awards with performance, while retaining an executive team that
drives the long-term success of the Company, the Compensation Committee has made significant changes to the Company’s
executive officer compensation program over the last three years.
FY 2016
• No increase in base salary of the Company’s CEO (third consecutive year of no increase in CEO base pay) and Co-Chairmen.
• Reduced CEO target compensation from $19.6 million to $16.9 million, or by approximately 14%.
• Enhanced the rigor of and amended our Performance Stock Unit (PSU) performance-based equity plan as follows:
OAdjusted weighting of one-year and three-year performance goals from 75/25 to 50/50, respectively, increasing the weighting of the
three-year goal.
OApplied 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.
OApplied 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.
OAdjusted the vesting periods for PSUs to maintain a rate of equal vesting over four years, if performance goals are met.
• Maintained practice of not awarding cash bonuses.
FY 2015
• CEO annual base salary amount remained unchanged since 2014 (second consecutive year of no increase).
FY 2014
• The Company significantly redesigned its 2014 equity incentive program for the Named Executive Officers, with a view toward further
strengthening the direct link between pay and performance and providing performance metrics that are fundamental to the business
and aligned with shareholder value creation.
• The features of the program for fiscal 2014 included the following:
ONo increase in base salary for the Company’s CEO or Co-Chairmen. The Company also maintained its practice of not awarding
cash bonuses.
OA revised performance-based equity plan with the following components:
▪One-year performance goal based upon EBIT margin relative to a retail industry peer group, under which awards vest in three
equal annual installments from date of grant. The Compensation Committee believed it appropriate to set a target based upon
EBIT margin when compared to a retail industry peer group, to incentivize continued operational and fiscal discipline as
management executes against the Company’s strategic goals.
▪Three-year performance goal based upon ROIC relative to a retail industry peer group, under which awards vest four years
after grant. The Compensation Committee believed that, as a relative measure compared to a retail industry peer group, ROIC
over a three-year period provides a suitable metric to measure how the Company’s investments are returning value to the
enterprise.
OAwards of stock options, which were intended to be valued at no more than one-third of total performance-based equity, vesting
over a five-year period (three years for the Co-Chairmen). The Compensation Committee believed stock options provide further
incentives aligned with the long-term interests of shareholders.
• In addition, the Board of Directors adopted the following:
OStock ownership guidelines that require the Company’s CEO and each outside director to hold the Company’s common stock with
a value of at least $6,000,000 and $300,000, respectively.
ORestrictions on engaging in hedging transactions involving the Company’s common stock and on pledging such common stock, in
each case, by the Company’s directors and executive officers.
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