Bed, Bath and Beyond 2015 Annual Report Download - page 56

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PROPOSAL 5—SHAREHOLDER PROPOSAL REGARDING AN EQUITY RETENTION
POLICY FOR SENIOR EXECUTIVES
We have been notified that the following shareholder proposal will be presented for consideration at the Annual Meeting.
Promptly upon receipt of an oral or written request we will provide you with the name and address of, and number of shares
held by, each proponent.
RESOLVED: Shareholders of Bed Bath & Beyond Inc. (the “Company”) urge the Compensation Committee of the Board of
Directors (the “Committee”) to adopt a policy requiring that senior executives retain a significant percentage of shares acquired
through equity compensation programs until reaching normal retirement age or terminating employment with the Company.
For the purpose of this policy, normal retirement age shall be defined by the Company’s qualified retirement plan that has the
largest number of plan participants. The shareholders recommend that the Committee adopt a share retention percentage
requirement of at least 50 percent of net after-tax shares. The policy should prohibit hedging transactions for shares subject to
this policy which are not sales but reduce the risk of loss to the executive. This policy shall supplement any other share
ownership requirements that have been established for senior executives, and should be implemented so as not to violate the
Company’s existing contractual obligations or the terms of any compensation or benefit plan currently in effect.
SUPPORTING STATEMENT
Equity-based compensation is an important component of senior executive compensation at our Company. While we
encourage the use of equity-based compensation for senior executives, we are concerned that our Company’s senior
executives are generally free to sell shares received from our Company’s equity compensation plans. In our opinion, the
Company’s current share ownership guidelines for its senior executives do not go far enough to ensure that the Company’s
equity compensation plans continue to build stock ownership by senior executives over the long-term.
As detailed in last year’s proxy statement, our Company’s share ownership guidelines required the CEO Steven Temares to
hold stock with a value of at least $6,000,000 or approximately 111,982 shares according to the current trading price. For
comparison, in 2014 Mr. Temares’ targeted amount of equity awards was 155,796 shares and 231,682 option awards. In other
words the supposed “long-term” share ownership requirement could be met with less than half of one year’s worth of stock and
option awards. In addition Mr. Temares already owns 2,018,624 shares or roughly 18 times the requirement.
We believe that requiring senior executives to only hold shares equal to a set target loses effectiveness over time. After
satisfying these target holding requirements, senior executives are free to sell all the additional shares they receive in equity
compensation.
Our proposal seeks to better link executive compensation with long-term performance by requiring a meaningful share
retention ratio for shares received by senior executives from the Company’s equity compensation plans. A 2009 report by the
Conference Board Task Force on Executive Compensation observed that such hold-through-retirement requirements give
executives “an ever growing incentive to focus on long-term stock price performance as the equity subject to the policy
increases” (available at http://www.conference-board.org/pdf_free/ExecCompensation2009.pdf).
We urge shareholders to vote FOR this proposal.
The Board of Directors Recommends a Vote Against Proposal 5
The Board of Directors believes that equity interest by our senior executives is an important part of our executive
compensation program and, along with other aspects of our compensation program, aligns the interests of our shareholders
and our executives. The Company’s active engagement with shareholders is, and will continue to be, a more productive
means of ensuring an appropriate level of equity interest rather than the proposal’s requirements of an inflexible mandatory
policy.
The Board recommends a vote against proposal 5 because:
• The proposal’s policy is unnecessary because our Named Executive Officers currently hold a substantial amount of, and
have a substantial economic interest in, our common stock.
• Our current executive compensation program and policies already align our senior executives’ interests with the long-
term interests of shareholders.
• The proposed policy could be harmful in several respects and limit our ability to attract and retain qualified candidates for
senior executive positions.
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