JOSB Jos. A. Bank Clothiers, Inc. (MM)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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Exchange Act of 1934 (Amendment No.  )

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Jos. A. Bank Clothiers, Inc.

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JOS. A. BANK CLOTHIERS, INC.
500 Hanover Pike
Hampstead, Maryland 21074

 

Dear Stockholder:

 

You are cordially invited to attend the 2010 Annual Meeting of Stockholders of Jos. A. Bank Clothiers, Inc., which will be held at the Company’s corporate offices, 500 Hanover Pike, Hampstead, Maryland, commencing at 10:00 a.m., local time, on Thursday, June 17, 2010.

 

The following pages contain the formal notice of the Annual Meeting and the related Proxy Statement. The Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2010 is enclosed as a separate document with these materials.

 

The matters to be considered and voted on at the Annual Meeting are set forth in the Proxy Statement. You are encouraged to carefully review the Proxy Statement and attend the Annual Meeting in person. Whether or not you plan to attend the Annual Meeting, I hope you will vote as soon as possible by promptly signing, dating and returning the enclosed proxy or voting instruction card in the accompanying reply envelope. If you attend the Annual Meeting and wish to change your vote, you may be able to do so by voting in person at the Annual Meeting.

 

I look forward to meeting you on June 17th and discussing with you the business of your company.

 

 

Sincerely,

 

R. Neal Black,
President and Chief Executive Officer

 

May 14, 2010

 

JOS. A. BANK CLOTHIERS, INC.
500 Hanover Pike
Hampstead, Maryland 21074

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 17, 2010

 

 

 

By order of the Board of Directors,

 

Charles D. Frazer, Secretary

 

May 14, 2010

 

Important Notice Regarding the Availability of Proxy Materials for the 2010
Annual Meeting of Stockholders to Be Held on June 17, 2010.

 

The Proxy Statement and Annual Report on Form 10-K
are available at https://materials.proxyvote.com/480838.

 

JOS. A. BANK CLOTHIERS, INC.
PROXY STATEMENT TABLE OF CONTENTS

 

 

JOS. A. BANK CLOTHIERS, INC.

 

PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 17, 2010

 

 

 

 

Stockholder of Record

 

You are the stockholder of record of any of your shares registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company. With respect to such shares, these proxy materials are being sent to you by Jos. A. Bank. As the stockholder of record, you have the right to grant your voting proxy directly to our designees, R. Neal Black and Charles D. Frazer, or to any other person you wish to designate, or to vote in person at the Annual Meeting. We have enclosed a proxy card for you to grant your voting proxy to Messrs. Black and Frazer.

 

Shares Beneficially Held in Street Name

 

You are the beneficial owner of any of your shares held in street name. With respect to such shares held through a Broker, these proxy materials, together with a voting instruction card, are being forwarded to you by your Broker. As the beneficial owner, you have the right to direct your Broker how to vote. You may use the voting instruction card provided by your Broker for this purpose. Even if you have directed your Broker how to vote, you may also attend the Annual Meeting. However, you may not vote your shares in person at the Annual Meeting unless you obtain a “legal proxy” or other evidence from your Broker giving you the right to vote the shares at the Annual Meeting.

 

 

 

Notice Deadlines

 

In order for a stockholder proposal, including director nominations, to be considered at an Annual Meeting of Stockholders, a timely notice to the Secretary of such proposal and/or nominations must be delivered to or mailed and received at our principal executive offices no later than the date which is 120 calendar days prior to the anniversary date of the previous Annual Meeting of Stockholders, which date for the 2011 Annual Meeting of Stockholders will be February 17, 2011. In the event that the date of the Annual Meeting of Stockholders is advanced by more than 60 days or delayed by more than 90 days from such anniversary, notice by the stockholder to be timely must be so received not earlier than the one hundred twentieth day prior to such Annual Meeting of Stockholders and not later than the close of business on the

later of (a) the sixtieth day prior to such Annual Meeting of Stockholders or (b) the tenth day following the date on which notice of the date of the Annual Meeting of Stockholders was mailed or public disclosure thereof was made, whichever first occurs.

 

Stockholders’ Proposals

 

As to each matter of business a stockholder proposes to bring before an annual meeting of stockholders, the timely written notice must set forth the following:

 

 

Nomination of Director Candidates

 

In the case of nominations of persons for election to our Board, the notice must set forth as to each person whom the stockholder proposes to nominate for election or re-election as a director the following:

 

 

In addition, each stockholder making these nominations must provide:

 

 

Copy of Amended and Restated Bylaw Provisions

 

You may contact the Secretary of Jos. A. Bank at our principal executive offices for a copy of the relevant provisions of our Amended and Restated Bylaws regarding the requirements for making stockholder proposals and nominating director candidates.

 

The Company has adopted a Statement of Corporate Governance Standards, which may be found on our website at www.josbank.com (click “Company Information,” “Investor Relations” and “Governance”). We believe that our corporate governance practices are appropriate and in the best interest of our Company and our stockholders. Some of the key aspects of our corporate governance practices are as follows:

 

Six out of eight of our current directors are “independent directors” as defined in the Nasdaq Stock Market Rules (the “Nasdaq Rules”). Our remaining two directors, Robert N. Wildrick and R. Neal Black, bring special insight to the Board as a result of their service as the Company’s former or current, respectively, Chief Executive Officer.

 

Each of the following committees of the Board is composed entirely of independent directors: Audit Committee, Compensation Committee, Nominating and Governance Committee and Special Litigation Committee.

 

We maintain a Board leadership structure that separates the positions of Chairman of the Board, Lead Independent Director and Chief Executive Officer. By having separate individuals serve in these three distinct capacities, we believe that we provide for additional oversight by the Board and enable our Chief Executive Officer to focus his time and attention on the Company’s operations. Our current Chairman of the Board, Robert N. Wildrick, has been a director since 1994 and served as our Chief Executive Officer from November 1999 through December 2008. Our current Lead Independent Director, Andrew A. Giordano, has been a director since 1994, served as our interim Chief Executive Officer from May 1999 to October 1999 and has served as Lead Independent Director since November 1999. In addition, Mr. Giordano is chairman of our Nominating and Governance Committee and a member of our Audit Committee. These experiences enhance Mr. Wildrick’s and Mr. Giordano’s ability (and therefore the Board’s ability) to oversee the Chief Executive Officer and management of our Company. The Board as a whole engages in risk oversight as part of its functions. We believe that our Board leadership structure enables the Board to manage risk oversight effectively.

 

Our Nominating and Governance Committee has undertaken to coordinate annual evaluations of our Board, its committees and individual members.

 

All of our directors and executive officers own shares of our common stock. We believe that the directors and executive officers of the Company should own and hold our common stock or other qualifying shares to further align their interests and actions with the interests of the Company’s stockholders. Contingent upon the approval of the Equity Incentive Plan by our stockholders, the Board has adopted stock ownership guidelines applicable to all of our directors, our Chief Executive Officer and our Executive Vice Presidents. Pursuant to the guidelines, each of our directors will be required to accumulate and hold 5,000 qualified shares of equity in the Company; our Chief Executive Officer will be required to accumulate and hold 50,000 qualified shares of equity in the Company; and each of our Executive Vice Presidents will be required to accumulate and hold 10,000 qualified shares of equity in the Company. The guidelines further provide that each director is expected to be in compliance with the targeted share holdings within three years and each executive officer is expected to be in compliance with the targeted share holdings within five years. The Stock Ownership Guidelines will become effective on the date of the Annual Meeting if our stockholders approve the Equity Incentive Plan. The Stock Ownership Guidelines may be found on our website at www.josbank.com (click “Company Information,” “Investor Relations” and “Governance”).

 

For at least each of the three fiscal years for which we provide audited financial statements in our Annual Report on Form 10-K for Fiscal 2009: (a) Deloitte & Touche LLP, our independent registered public accounting firm, has expressed an unqualified opinion on the Company’s consolidated financial statements; (b) we have not restated any of our consolidated financial statements; (c) all of our financial disclosure filings have been timely; (d) no securities regulator has taken enforcement action against us; and (e) we have not had any material weaknesses in our internal controls.

INFORMATION REGARDING OUR BOARD OF DIRECTORS

 

The following table sets forth our current directors, their ages and the positions they hold:

 

 

The Board has affirmatively determined that each of Messrs. Ferstl, Giordano, Gladstein, Herron, Homes and Ritman (individually, an “Independent Director” and collectively, the “Independent Directors”) is an “independent director” as defined in the Nasdaq Rules. In making this determination, the Board found that none of the Independent Directors has a disqualifying relationship that would prohibit him from being considered “independent” under the Nasdaq Rules and that none of the Independent Directors has any relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

 

The Board has an Audit Committee, Compensation Committee, Executive Committee, Nominating and Governance Committee and Special Litigation Committee. The members and primary responsibilities of those committees are as follows:

 

The Audit Committee, comprised of Messrs. Giordano, Gladstein and Herron (Chairman), assists the Board with the oversight of: (a) the integrity of our financial statements; (b) the qualifications and independence of our registered public accounting firm; (c) the performance of our registered public accounting firm; (d) the adequacy of our systems of internal accounting and financial controls; and (e) our compliance with ethics policies and legal and regulatory requirements. As required by applicable law, rules or regulations and otherwise to the extent it deems necessary or appropriate, the Audit Committee also reviews and approves all related party transactions and considers information regarding potential relationships between the Company and the directors, executive officers or their immediate family members.

 

The Audit Committee is directly responsible for the appointment, compensation and oversight of the work of our registered public accounting firm for the purpose of preparing or issuing an audit report or related work. Such responsibility includes the resolution of disagreements between management and our registered public

accounting firm regarding financial reporting. There were no such disagreements in Fiscal 2009. Our registered public accounting firm reports directly to the Audit Committee. The Audit Committee has the authority, to the extent it deems necessary or appropriate to carry out its duties, to retain independent legal, accounting or other advisors. The Company covers all payments to these independent advisors. The Audit Committee has established procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

 

The Board has determined that Mr. Herron is an “audit committee financial expert,” as such term is defined in Item 407(d)(5)(ii) of Regulation S-K. All members of the Audit Committee are independent directors as defined in the Nasdaq Rules and Rule 10A-3 of the Exchange Act.

 

The Audit Committee operates pursuant to a charter duly adopted by the Board. A current copy of the charter is available on our website at www.josbank.com (click “Company Information,” “Investor Relations” and “Governance”).

 

The Compensation Committee, comprised of Messrs. Herron, Homes and Ritman (Chairman), determines the compensation of the Chief Executive Officer and other executive officers of the Company in compliance with the Nasdaq Rules; and may advise the Board, or take other action, on other matters of compensation. The Board has determined that all members of the Compensation Committee are independent directors as defined in the Nasdaq Rules. The Compensation Committee operates pursuant to a charter duly adopted by the Board. A current copy of the charter is available on our website at www.josbank.com (click “Company Information,” “Investor Relations” and “Governance”). The Compensation Committee may delegate any aspect of its responsibility and authority to subcommittees or individual Compensation Committee members.

 

The Executive Committee, comprised of Messrs. Giordano, Ritman and Wildrick (Chairman), is authorized to exercise all of the powers and authority of the Board at times when the Board is not meeting, provided, however, that the Executive Committee is not permitted to exercise such powers as are reserved for the Board under Delaware law or otherwise restricted under the terms of the Executive Committee’s charter duly adopted by the Board. A current copy of the charter is available on our website at www.josbank.com (click “Company Information,” “Investor Relations” and “Governance”).

 

The Nominating and Governance Committee, comprised of Messrs. Ferstl, Giordano (Chairman) and Ritman, proposes the slate of candidates for election as directors at each Annual Meeting of Stockholders; considers and reviews the qualifications of any individual nominated for election to the Board by stockholders; in the event of any vacancies which may arise on the Board, identifies and recommends to the Board candidates who are qualified to serve on the Board; recommends to the Board the assignment of directors to serve on committees of the Board; and develops and recommends to the Board (and reviews from time to time) corporate governance principles for the Company as the Nominating and Governance Committee may deem necessary or advisable. The Board has determined that all members of the Nominating and Governance Committee are independent directors as defined in the Nasdaq Rules. The Nominating and Governance Committee operates pursuant to a charter duly adopted by the Board. A current copy of the charter is available on our website at www.josbank.com (click “Company Information,” “Investor Relations” and “Governance”).

 

On October 17, 2006, two substantially identical shareholder derivative actions which had been filed against the directors of the Company were consolidated by the United States District Court for the District of Maryland (the “U.S. District Court for Maryland”) as In re Jos. A. Bank Clothiers, Inc. Derivative Litigation (1:06-cv-02095-BEL) (the “2006 Derivative Action”). The Amended Shareholder Derivative Complaint in the

2006 Derivative Action made claims for various violations of state law that allegedly occurred from January 5, 2006 through October 20, 2006. On September 13, 2007, upon motion of the Company, the court dismissed the 2006 Derivative Action. Among the reasons for dismissal was the failure of the plaintiff to demand that the Board pursue on behalf of the Company the claims alleged in the 2006 Derivative Action. By letter dated September 17, 2007 (the “Demand Letter”), the plaintiff in the Derivative Action, by and through his attorneys, made such demand.

 

The Special Litigation Committee, comprised of Messrs. Giordano, Herron and Ritman, was established by the Board in September 2007 to investigate, and determine the position of the Company with respect to, all matters relating to the Demand Letter. The Board has determined that all of members of the Special Litigation Committee are independent directors as defined in the Nasdaq Rules. The Special Litigation Committee, with the assistance of independent counsel, conducted an investigation into the claims presented in the Demand Letter and issued its findings in a “Report of the Special Litigation Committee of Jos. A. Bank Clothiers, Inc.,” dated February 7, 2008 (the “Report”). In the Report, the Special Litigation Committee concludes that, for a variety of reasons, “the institution of a lawsuit [as proposed in the Demand Letter] is neither appropriate nor in the best interest of the Company. First, and most important [among those reasons, the Special Litigation Committee found that] the proposed lawsuit is entirely without merit.”

 

On October 16, 2009, Norfolk County Retirement System (“NCRS”), derivatively and on behalf of the Company, filed a Verified Shareholder Derivative Complaint against the Company’s directors, one of its former directors, its Chief Financial Officer and, as nominal defendant, the Company, in the U.S. District Court for Maryland, Civil Action Number 1:09-cv-0269-BEL (the “2009 Derivative Action”). The 2009 Derivative Action includes, among other claims, factual allegations similar to those made in the in the 2006 Derivative Action.

 

On April 12, 2010, the U.S. District Court for Maryland approved a Stipulation entered into by the Company and NCRS whereby NCRS agreed that the 2009 Derivative Action will be voluntarily dismissed with prejudice as to NCRS, and dismissed without prejudice as to the Company and Company shareholders other than NCRS (the “Dismissal”). Neither NCRS nor its attorneys will receive from the Company, the individual defendants or their insurers payment of any kind with respect to the Dismissal. Unless the U.S. District Court for Maryland determines otherwise based upon any objections it receives, the Dismissal will be effective on May 26, 2010, forty days following publication of notice.

 

During Fiscal 2009, the Board held four meetings; the Audit Committee held four meetings; the Compensation Committee held two meetings; the Executive Committee held five meetings; and the Nominating and Governance Committee held one meeting. The Special Litigation Committee did not meet during Fiscal 2009. During Fiscal 2009, each director attended or participated in 75% or more of (a) the meetings of the Board and (b) the meetings of all committees of the Board on which such director served.

 

It is the policy of the Board that all Directors are expected to attend the Company’s annual meetings of stockholders. All of our directors were present at the 2009 Annual Meeting of Stockholders held on June 18, 2009. Our Chairman of the Board will be available to respond to appropriate questions and comments from stockholders following the 2010 Annual Meeting at the Company’s corporate offices on the day of the meeting. Stockholders may also communicate with the Board by sending a letter to Jos. A. Bank Clothiers, Inc. Board of Directors c/o General Counsel, 500 Hanover Pike, Hampstead, Maryland 21074. The General Counsel will receive the correspondence and forward it to the Chairman of the Board, the Chairman of the Audit Committee or to any individual director or directors to whom the communication is directed, as appropriate. Notwithstanding the above, the General Counsel has the authority to discard or disregard any communication which is unduly hostile, threatening, illegal or otherwise inappropriate or to take any other appropriate actions with respect to such communications.

 

The Board does not believe that it is in our best interests to establish rigid criteria for the selection of prospective director nominees. Rather, the Board recognizes that the challenges and needs we face will change over time and, accordingly, believes that the selection of prospective director nominees should be based on skill sets relevant to the issues we face or are likely to face at the time of nomination. At the same time, the Board strongly believes that we will benefit from a diversity of background and experience on the Board. The Board therefore seeks prospective director nominees who, in addition to general management experience and business knowledge, possess an expertise in one or more areas critical to the Company, such as: retail, finance, international business, investment banking, corporate governance, financial control systems, risk assessment, logistics and investor relations.

 

In addition, there are certain general attributes that the Board believes all prospective director nominees must possess in order to be recommended by the Nominating and Governance Committee, including:

 

 

In evaluating any prospective director, the Board and the Nominating and Governance Committee will also take into consideration whether such prospective director, if elected to the Board, would qualify as an independent director in accordance with the Nasdaq Rules.

 

The Nominating and Governance Committee uses a variety of methods for identifying nominees for director. Prospective director nominees may come to our attention through current directors, professional search firms, professional associations, stockholders or other persons.

 

The Nominating and Governance Committee will evaluate all prospective director nominees, including those recommended by stockholders, in the same manner. Generally, prospective director nominees will be evaluated at special meetings of the Nominating and Governance Committee. The Nominating and Governance Committee will make an initial determination as to whether to conduct a full evaluation of the prospective director nominee based upon various factors, including, but not limited to: (a) the information submitted with the nomination, (b) the Nominating and Governance Committee’s own knowledge of the prospective director nominee, (c) the current size of the Board and any anticipated vacancies or needs and (d) whether the prospective director nominee can satisfy any specific qualifications established by the Nominating and Governance Committee. The Nominating and Governance Committee may then decide to do a comprehensive evaluation of a prospective director nominee, which may include an interview of the candidate.

 

The policy of the Nominating and Governance Committee is to consider prospective director nominations properly submitted by a stockholder. For a description of the process for nominating directors in accordance with our Amended and Restated Bylaws, see “What is the deadline to propose actions for consideration at the Company’s 2011 Annual Meeting of Stockholders or to nominate individuals to serve as directors?” in the “Questions and Answers” section of this Proxy Statement. No stockholder has submitted a nominee for consideration by the Nominating and Governance Committee in connection with the Annual Meeting.

 

The Compensation Committee evaluates and sets the appropriate level and form of director compensation for all of the Directors other than Mr. Black (“Non-Employee Directors”). Management assists the Compensation Committee in connection with this process as needed. Mr. Black, as Chief Executive Officer, is not entitled to additional compensation for his services as a director.

 

Each Non-Employee Director receives an annual retainer of $40,000. Additional annual retainers are paid as follows: Chairman of the Board-$150,000; Lead Independent Director-$60,000; and the Chairmen of each of the Audit Committee, Compensation Committee and Nominating and Governance Committee-$30,000. Each Non-Employee Director also receives attendance fees of $3,000 per Board meeting and $1,500 per meeting of the Audit, Compensation, Nominating and Governance and Special Litigation Committees. No fees are paid for meetings of the Executive Committee. One-half of the usual meeting attendance fee (i.e., $1,500 and $750, respectively) is paid to each Non-Employee Director for participation in each telephonic Board or Committee meeting. All directors are reimbursed for actual out-of-pocket expenses incurred by them in connection with attending meetings of the Board or of a Committee.

 

If the Company’s stockholders approve the Equity Incentive Plan, it is the Company’s intention to award to each Non-Employee Director holding office on June 17, 2010 following the Annual Meeting a one-time grant of 1,000 restricted stock units and the first annual grant of 1,500 restricted stock units. In addition, the Equity Incentive Plan provides for certain automatic awards to Non-Employee Directors. Therefore, if the Company’s stockholders approve the Equity Incentive Plan and unless the Compensation Committee determines in its discretion to make a lesser award or no award, (a) on June 1, 2011 and each June 1 thereafter (or the next business day thereafter if June 1 is not a business day), each person then serving as a Non-Employee Director shall receive an annual award of 1,500 restricted stock units and (b) any person who first becomes a Non-Employee Director after June 17, 2010, shall receive upon his or her election to the Board an inaugural award of 1,000 restricted stock units on such date. All such restricted stock units will vest approximately (but not less than) twelve months following the date of grant. See Proposal Three for additional information regarding these potential future grants.

 

The tables below provide information concerning compensation of the Non-Employee Directors for Fiscal 2009.

 

 

 

 

INFORMATION REGARDING OUR EXECUTIVE OFFICERS

 

The following table sets forth our current executive officers (other than Mr. Black), their ages and the positions they hold:

 

 

For information regarding Mr. Black, see the section of this Proxy Statement entitled “Directors Whose Terms Expire in 2011” in “Proposal One-Election of Directors” below.

 

Robert B. Hensley has been our Executive Vice President for Human Resources, Real Estate and Loss Prevention since July 2007. Mr. Hensley was our Executive Vice President-Store Operations, Real Estate and Human Resources from April 2007 to July 2007 and our Executive Vice President-Stores and Operations from December 1999 to April 2007.

 

Gary M. Merry has been our Executive Vice President for Store and Catalog Operations since July 2007. Mr. Merry was our Senior Vice President for Operations from April 2007 to July 2007 and our Senior Vice President-Chief Information Officer from July 2001 to April 2007. Among his other duties, Mr. Merry was our Chief Information Officer from September 2000 to April 2008.

 

James W. Thorne has been our Executive Vice President for Merchandising and Chief Merchandising Officer since February 2009. Mr. Thorne joined the Company in 1986 and has held a variety of increasingly important merchandising positions, including Senior Vice President for Merchandising from September 2008 to January 2009; Senior Vice President for Planning and Allocation from June 2005 to September 2008; and Vice President/General Merchandise Manager for Tailored Clothing from February 2000 to June 2005.

 

David E. Ullman has been our Executive Vice President-Chief Financial Officer since September 1995. Mr. Ullman is our Principal Financial and Accounting Officer.

EXECUTIVE COMPENSATION AND RELATED INFORMATION

 

The following discussion and analysis discusses the principles underlying the Company’s compensation policies and decisions and the most important factors relevant to an analysis of these policies and decisions. This discussion focuses on the compensation of our five named executive officers. Generally, a named executive officer is a company’s chief executive officer, its chief financial officer and its three other most highly compensated executive officers. Our named executive officers are R. Neal Black, our Chief Executive Officer; David E. Ullman, our Chief Financial Officer; and Robert B. Hensley, Gary M. Merry and James W. Thorne, our three other most highly compensated executive officers. Messrs. Hensley, Merry, Thorne and Ullman are sometimes referred to collectively in this Proxy Statement as our “Executive Vice Presidents.” This discussion and analysis provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our named executive officers and is intended to place in perspective the data presented in the tables and narratives that follow.

 

Our Compensation Committee, comprised of Messrs. Herron, Homes and Ritman (Chairman), determines the compensation of our named executive officers and may advise the Board, or take other action, on other matters of compensation.

 

Since there are no shares currently available for issuance under our previously adopted equity incentive plans, our executive compensation program has, since our fiscal year ended February 3, 2007 (“Fiscal 2006”), consisted almost exclusively of cash payments in the form of base salary and non-equity incentive compensation. In Fiscal 2009, the Compensation Committee engaged Towers Watson & Co. (“Towers Watson”), an independent compensation consultant, to assist us in designing appropriate compensation programs for the future. Towers Watson did not provide to the Company any consulting or other services in Fiscal 2009 except as described below. Towers Watson has been retained by, and reports directly to, the Compensation Committee to develop recommendations related to all aspects of executive compensation. In particular, Towers Watson was asked to design a deferred compensation plan and an equity compensation plan and to provide an assessment of the acceptability of the equity incentive plan under guidelines established by a leading proxy advisory group. On March 30, 2010, the Compensation Committee recommended to the Board, and the Board adopted, the Equity Incentive Plan and the Jos. A. Bank Clothiers, Inc. 2010 Deferred Compensation Plan (the “2010 Deferred Compensation Plan”). Adoption of the Equity Incentive Plan was subject to approval of the plan by Company stockholders. Management provided and will provide to Towers Watson such information as it did or may request to carry out such responsibilities.

 

Management provides the Compensation Committee with material for review concerning the compensation of the named executive officers, including a history of salary and other compensation paid to each named executive officer. Our Chief Executive Officer presents to the Compensation Committee an annual review of executive and management compensation and recommendations for base salary increases and equity and non-equity incentive compensation (other than for himself). Our Chief Executive Officer is not present during the deliberation or determination by the Compensation Committee regarding his own compensation. Charles D. Frazer, our corporate Secretary, acts as Secretary to the Compensation Committee and is usually present during general, but not executive, sessions of the Compensation Committee. Mr. Frazer does not participate in the deliberations of the Compensation Committee. The Compensation Committee reviews the performance of each named executive officer against the established criteria for payment of incentive compensation for performance in the prior year and determines whether and in what amount incentive compensation should be paid. The Compensation Committee also considers compensation matters applicable to the current fiscal year and, when

appropriate, authorizes employment contracts, contract extensions, base salary increases and equity and non-equity incentive compensation targets.

 

Our Compensation Committee applies a consistent philosophy to compensation for our named executive officers. This philosophy is based on the premise that the Company’s achievements are the result of the coordinated efforts of all of our employees working toward common objectives. We strive to achieve those objectives through teamwork that is focused on meeting the expectations of our customers and stockholders.

 

The primary objectives of the compensation program are to:

 

 

We believe that this compensation program allows us to successfully attract and retain talented employees, enhance stockholder value and foster innovation.

 

To achieve these objectives, our Compensation Committee has established the following principles to guide the development of our compensation program and to provide a framework for all compensation decisions: (a) provide a total compensation package that will attract the best talent to the Company, motivate individuals to perform at their highest levels, reward outstanding performance and retain executives whose skills are critical for building long-term stockholder value; and (b) establish incentives that are directly tied to the overall financial performance of the Company.

 

Since Fiscal 2006, the primary elements of our executive compensation program have been:

 

 

There are no shares currently available for issuance under the Company’s previously adopted equity incentive plans. As a result, the Company’s executive compensation program consists almost exclusively of cash payments in the form of base salary and non-equity incentive compensation. If the Equity Incentive Plan is approved by the Company’s stockholders, as more fully set forth in Proposal Three, the Compensation Committee will have the authority to grant a range of different types of equity incentive awards, including restricted stock units, stock options and stock- or cash-based awards, which may include performance-based awards intended to comply with the requirements of Section 162(m) of the Internal Revenue Code.

 

In order to permit us to retain our named executive officers and to provide sufficient incentives for their highest possible level of performance, salaries and incentive compensation of such officers are reviewed at least annually and are usually adjusted after taking into account market conditions, individual responsibilities, experience, performance and other factors (including, where applicable, the terms of their employment agreements). Each named executive officer is employed by the Company pursuant an employment agreement which sets forth, among other matters, the executive officer’s annualized base salary and non-equity incentive opportunity (expressed as a percentage of base salary).

 

These agreements with our named executive officers provide for certain potential payments upon termination for a variety of reasons, including, for Mr. Black only, following a change in control of the Company. We have provided more detailed information about these benefits, along with estimates of their values under certain circumstances, below under the caption “Potential Payments on Termination or Change in

Control.” We believe these benefits help us compete for the services of talented individuals in a manner which is responsible and in the best interests of our Company and stockholders.

 

If the Equity Incentive Plan is approved by stockholders as more fully set forth in Proposal Three below, it is the Company’s intention to make grants to our named executive officers of restricted stock units under the Equity Incentive Plan intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. Unless otherwise provided in the employment agreement for a particular named executive officer, our compensation-setting process consists of establishing for each named executive officer a targeted overall compensation level intended to permit us to retain that officer and provide sufficient incentive for his highest possible level of performance. The targeted compensation level is then allocated between base salary and incentive compensation. If the Equity Incentive Plan is approved by our stockholders, we expect that a portion of the overall compensation level for each named executive officer will also be allocated to an equity award. Neither the targeted compensation nor the allocation thereof is fixed by formula. Rather, they are determined based on many factors including internal pay equity, external market factors, reasonable employee expectations, pay history and performance.

 

Base Salary

 

We pay a base salary to attract talented executives and provide a secure base of cash compensation. The Compensation Committee typically reviews compensation for the named executive officers at a time proximate to the filing of our Annual Report on Form 10-K for the prior fiscal year. Except where otherwise required by contract, annual increases are not assured. Generally, and for Fiscal 2010, increases (if any) in base salaries for the named executive officers go into effect at the same time as increases (if any) in base salaries go into effect for other employees of the Company. For example, base salaries for the named executive officers for pay year 2008 were set on April 9, 2008, and made effective May 4, 2008. No adjustments to base salary were made for Fiscal 2009. Generally, in deciding whether, and to what extent, to make an adjustment to the respective base salaries of the named executive officers (other than the Chief Executive Officer), an important factor considered by the Compensation Committee is the Chief Executive Officer’s evaluation of the individual performances of the other named executive officers. Generally, the Chief Executive Officer makes his recommendation based upon his evaluation of each other named executive officer’s individual contribution to the performance of the Company and such other factors as he may deem relevant.

 

The Compensation Committee’s approval of base salary increases for Fiscal 2010 for our Executive Vice Presidents is contingent upon base salary increases going into effect generally for other employees of the Company. It is anticipated that the Compensation Committee’s approval of a base salary increase for Fiscal 2010 for our chief executive officer will also be contingent upon base salary increases going into effect generally for other employees of the Company. The Compensation Committee will set the date for commencement of regular pay increases, if any, for the named executive officers. Such increases are not expected to take effect, if at all, prior to August 2010. The annualized base salaries for the named executive officers for Fiscal 2010 are, or are anticipated to be, as follows:

 

 

 

 

Non-Equity Incentive Compensation

 

In 2008 the Company adopted, and in 2009 the Company’s stockholders approved, the Jos. A. Bank Clothiers, Inc. Executive Management Incentive Plan (the “Management Incentive Plan”). The Management Incentive Plan is intended to permit award payments that may qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code. For each of Fiscal 2009 and Fiscal 2010, the Compensation Committee established under the Management Incentive Plan cash incentive programs designed to reward Company-wide performance through tying the payment of non-equity incentive compensation primarily to, among other things, the earning by the Company of certain net income goals. Such cash incentive programs are referred to herein respectively as the “2009 Cash Incentive Program” and the “2010 Cash Incentive Program” and collectively as the “Cash Incentive Programs.” For purposes of the Cash Incentive Programs, “net income” is the reported net income of the Company for the applicable fiscal year and is therefore determined after deduction for all incentive plan and other compensation expenses. All award payments under the 2009 Cash Incentive Program were paid in cash. If payable under the 2010 Cash Incentive Program, award payments are expected to be paid in cash. If the Company’s Equity Incentive Plan is approved by stockholders, the Compensation Committee will have the discretion to settle awards payable under the Management Incentive Plan in cash, shares of common stock or a combination of cash and stock.

 

The performance goals under each of the Cash Incentive Programs are based upon the Company earning net income within or above a specified range (the “Eligibility Range”) for the applicable fiscal year. As net income is a key factor in determining a company’s overall financial success, the Compensation Committee believes that using an Eligibility Range based on net income is an appropriate basis for establishing incentive compensation goals.

 

If the Company’s net income is below the Eligibility Range for a particular Cash Incentive Program, an award payment cannot be authorized under that program. If the Company’s net income is within the Eligibility Range, the percentage of the award target which participants are eligible to earn increases as net income increases, up to 100%. If the Company’s net income is at or above the highest level of net income within the Eligibility Range, each participant is eligible to earn the participant’s maximum award target.

 

The Company earning net income within or above the applicable Eligibility Range is the only performance goal under each of the Cash Incentive Programs for Mr. Black, our Chief Executive Officer. With respect to Messrs. Hensley, Merry, Thorne and Ullman, our Executive Vice Presidents (who are the only other named executive officers), the following “personal” goals may also be considered and utilized by the Compensation Committee in its exercise of negative discretion in reducing the amount of an award that would otherwise be paid as a result of the level of net income achieved by the Company: (a) the participant receiving an overall job performance rating of “Effective” or better (the equivalent of 3 out of 5); (b) the participant complying with the Company’s Code of Conduct, Associate Manual and other rules, regulations and policies and not engaging in any dishonest acts or other acts that are or may be detrimental to customers, fellow associates or the Company; and (c) attainment of specific goals for departmental or individual performance.

 

The Compensation Committee has the discretion to make award payments under the Cash Incentive Programs in an amount less than the pre-established award targets, even if the objective business criteria are achieved. In deciding whether, and to what extent, to pay an award payment to each named executive officer (other than Mr. Black), an important factor considered by the Compensation Committee, in exercising its discretion to reduce an award, is Mr. Black’s evaluation of the individual performance of the named executive officer. Generally, Mr. Black makes his recommendation based upon his evaluation of the named executive officer’s individual contributions to the performance of the Company and such other factors as he may deem relevant. The final determination of all award payments to the named executive officers is made by the Compensation Committee; however, the Compensation Committee may not use these subjective criteria to increase the amount of any award that is otherwise payable at a specific level based upon the attainment of the objectively determined amount of net income.

 

For the 2009 Cash Incentive Program, the Compensation Committee established an Eligibility Range of $57.5 million to $63.5 million of net income. If the Company earned less than $57.5 million of net income, no participant would have been entitled to an award payment under this program. At $57.5 million of net income

each participant would have been eligible to receive up to 20% of his award target. At or above $63.5 million of net income, each participant would have been eligible to receive up to 100% of his award target. Between $57.5 million and $63.5 million of net income, the percentage of the award target which each participant was eligible to receive increased as net income increased.

 

For the 2010 Cash Incentive Program, the Compensation Committee established an Eligibility Range of $71.2 million to $78.4 million of net income. If the Company earns less than $71.2 million of net income, no participant is entitled to an award payment under this program. At $71.2 million of net income, Mr. Black is eligible to receive up to 60% of his base salary and Messrs. Hensley, Merry, Thorne and Ullman are each eligible to receive up to 10% of their respective base salaries. At or above $78.4 million of net income, Mr. Black is eligible to receive up to 200% of his base salary and Messrs. Hensley, Merry, Thorne and Ullman are each eligible to receive up to 65% of their respective base salaries. Between $71.2 million and $78.4 million of net income, the percentage of base salary which each participant is eligible to receive will increase as net income increases. If the Equity Incentive Plan is approved by the stockholders, it is anticipated that Mr. Black will further align his interests with the interests of Company stockholders by agreeing to reduce his cash bonus potential to 150% of base salary in consideration of an equity incentive opportunity with an initial value of up to 250% of base salary.

 

Upon a review of the Company’s performance (which exceeded the maximum net income amount in the Eligibility Range set for the 2009 Cash Incentive Program) and the individual performance by each named executive officer in Fiscal 2009, the Compensation Committee approved the payment of the following amounts under the 2009 Cash Incentive Program for Fiscal 2009 performance:

 

 

For Fiscal 2009, the non-equity incentive compensation paid to the named executive officers was 100% of their maximum potential payments under the 2009 Cash Incentive Program.

 

In the face of the extraordinary downturn in the United States economy in general, and in the retail sector in particular, the Company earned $71.2 million of net income in Fiscal 2009 (an approximate 22% increase over net income earned for our fiscal year ended January 31, 2009 (“Fiscal 2008”)) and exceeded the maximum net income amount in the Eligibility Range established for the 2009 Cash Incentive Program by approximately $7.7 million. The Compensation Committee therefore determined that it was in the best interest of the Company and its stockholders to exercise its discretion and reward this performance with the payment to the named executive officers of the discretionary cash bonuses set forth below.

 

 

The Company also paid discretionary bonuses to the named executive officers for Fiscal 2008, but not for our fiscal year ended February 2, 2008 (“Fiscal 2007”).

Other Employee Benefits and Non-Cash Compensation

 

In addition to the cash compensation described above, certain perquisites and benefits are provided to our named executive officers in cash, in-kind or through direct payment to third party providers. The Company believes these perquisites and benefits help us to be competitive in attracting and retaining senior management and are commensurate with the experience and skill of our named executive officers. In Fiscal 2009, the total value of these perquisites and benefits for the named executive officers ranged from approximately 5.6% to approximately 7.4% of base salary of the applicable named executive officer.

 

Certain perquisites are provided in accordance with the respective employment agreements of the named executive officers. Messrs. Black, Hensley, Merry and Thorne each receive a car allowance. Mr. Ullman receives the use of a Company-leased car.

 

Certain benefits are made available by the Company under broad-based programs offered to most of our employees, including the named executive officers. Such benefits include insurance for medical, prescription drugs, dental, vision, long-term disability, life and accidental death and dismemberment and a legal services plan. For each of the named executive officers, the Company pays for these insurance benefits, as well as insurance for up to $2,500 of medical expense reimbursement. The Company also sponsors a 401(k) plan. The Company has generally elected, from year to year, to make a discretionary contribution to employees’ 401(k) accounts. In the event the Company elects to make a discretionary contribution, the named executive officers would be eligible to participate on the same basis as all other eligible employees; provided, however, that the contribution for certain executives may be limited by IRS rules.

 

In March 2010, the Board adopted the 2010 Deferred Compensation Plan, which is a nonqualified, unfunded plan designed to provide a select group of the Company’s senior management (which includes each of the named executive officers), highly compensated employees and non-employee directors with the opportunity to accumulate capital by deferring compensation on a pre-tax basis. The 2010 Deferred Compensation Plan strengthens the ability of the Company to attract, reward and retain eligible employees and non-employee directors by providing them with a means to defer receipt of cash and shares of common stock associated with future grants of restricted stock units, performance share awards and certain other cash- and stock-based awards.

 

Employees who participate in the 2010 Deferred Compensation Plan may defer either all or none of any future restricted stock unit awards and any performance share awards and up to 15% of base salary and up to 25% of cash bonuses and incentive awards. Non-employee directors who participate in the 2010 Deferred Compensation Plan may defer all or none of any future restricted stock unit awards and any other incentive compensation and all or none of their annual retainer fees, committee chairman fees, lead director fees and meeting fees.

 

All cash and awards that are to be deferred under the 2010 Deferred Compensation Plan will be deemed invested in Company common stock equivalent units. In the case of stock-based awards that are deferred, the number of common stock equivalent units credited to a participant’s account will be based on the number of shares underlying those awards. In the case of cash deferrals, the number of common stock equivalent units credited to a participant’s account will be based on the Company’s share price on the date of the deemed investment. If stock-based awards are subject to a vesting condition, the investment in stock unit equivalents will be deemed to occur on the date that the award vests.

 

In general (and subject to certain exceptions set forth in the 2010 Deferred Compensation Plan), elections to defer compensation must be made in the tax year prior to the year in which the compensation would otherwise be earned. At the time that an employee makes each deferral election, he or she may choose between a distribution upon separation from service (subject to a 6-month delay applicable to certain officers) or payment at a scheduled future date of 5 years or 10 years following the end of the year in which that election becomes irrevocable. Regardless of election, distributions to employees will be made upon the first to occur of (a) separation from service (subject to a 6-month delay applicable to certain officers), (b) occurrence of the 5 or 10 year scheduled distribution date, as applicable, (c) a change in control of the Company or (d) death. Distributions to Non-Employee Directors will be made upon the first to occur of (x) separation from

service, (y) change in control of the Company or (z) death. Distributions under the 2010 Deferred Compensation Plan will generally be paid in shares of Company common stock, with fractional shares paid in cash. However, the Company’s Compensation Committee will have the discretion to make a determination that distributions will be paid in cash or a combination of cash and shares. In the event of an unforeseeable emergency, a participant will be permitted, subject to plan rules, to elect a hardship distribution from his or her account prior to the otherwise applicable payment date.

 

The Company also maintains a nonqualified deferred compensation plan (the “Fidelity Deferred Compensation Plan”) that is administered by Fidelity Management Trust Company (“Fidelity”). Under the Fidelity Deferred Compensation Plan, certain executives, including the named executive officers, are entitled to defer up to 15% of their base salary and up to 25% of their annual non-equity incentive compensation. Effective salary deferral elections must be made by eligible executives prior to the end of the calendar year with respect to salary amounts to be earned in the following year; effective non-equity incentive compensation deferral elections must be made no later than six months prior to the end of the applicable performance period. Participants in the Fidelity Deferred Compensation Plan are entitled to direct the investment of the deferred amounts by selecting one or more permissible investment alternatives offered under the plan. Under the Fidelity Deferred Compensation Plan, participants are entitled to change their investment selection by contacting Fidelity. The Company does not restrict the frequency of changes in the investment selection. Fidelity maintains an excessive trading policy which generally prohibits exchanges in and then out of a fund option within 30 days (a “roundtrip”). Under Fidelity’s excessive trading policy, participants are limited to one roundtrip transaction per fund within any rolling 90-day period, subject to an overall limit of four roundtrip transactions across all funds over a rolling 12-month period. The value of the participant’s investment is based directly on the performance of the underlying mutual funds selected by the participants.

 

Under the Fidelity Deferred Compensation Plan, a participant is entitled to elect to receive distributions, either in a lump sum or in a series of substantially equal payments, either at separation of service or at the earlier of separation of service or reaching a pre-selected age. Regardless of any such election made by the participant, a lump sum distribution will automatically be made upon the earlier to occur of separation of service prior to age 62, death or a change in control of the Company.

 

We do not contribute to the Fidelity Deferred Compensation Plan or guarantee or supplement deemed investment returns on the participants’ accounts. The Fidelity Deferred Compensation Plan essentially operates as an uninsured, tax-advantaged personal brokerage account of the participant. Participation in this plan does not affect the participant’s base salary or annual non-equity incentive compensation. Amounts deferred under the Fidelity Deferred Compensation Plan are held in trust for payment of benefits under the plan, subject to the claims of the Company’s general creditors.

 

We offer the 2010 Deferred Compensation Plan and the Fidelity Deferred Compensation Plan because they provide an opportunity for the participants to save for future financial needs at little cost to the Company. Providing these nonqualified deferred compensation plans contributes to the Company’s attractiveness as an employer, by providing the Company with a method of rewarding and retaining these individuals.

 

For a more detailed discussion of the amounts earned in Fiscal 2009 under the Fidelity Deferred Compensation Plan by our named executive officers, see the Nonqualified Deferred Compensation table and accompanying narrative below.

 

Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the tax deductibility of non-performance-based compensation that is paid to a “covered employee” (generally, the five executive officers whose compensation is reported to stockholders in a proxy statement). Compensation that qualifies as “performance-based compensation” is excluded from the $1 million deductibility cap, and therefore remains fully deductible by the Company. In making compensation design and award decisions, the Company takes Section 162(m) into account in determining the total compensation cost which may be incurred by the Company. If, consistent with our business needs and without violating contractual obligations, we are able to structure compensation arrangements to eliminate the negative effects of Section 162(m), we will do so. If,

however, the Company’s business needs dictate hiring or making compensation decisions which may result in the Company incurring non-deductible compensation expense, the Company will take such actions as may be necessary to meet those needs. For example, a much sought-after candidate for employment may be able to command in the marketplace compensation arrangements which do not meet the exceptions to the deductibility limitations under Section 162(m). In Fiscal 2008 and Fiscal 2009, Section 162(m) did not limit the deductibility of any compensation paid by the Company. We were limited under Section 162(m) in prior years and may be limited in future years. To mitigate the impact of Section 162(m), the Company adopted the Management Incentive Plan and is seeking stockholder approval of the Equity Incentive Plan as described in Proposal Three of this Proxy Statement.

 

In Fiscal 2006, the Company adopted the Statement of Financial Accounting Standards No. 123R, now codified as FASB ASC Topic 718 — Stock Compensation (“FASB ASC 718”), which generally requires a public entity to measure the cost of employee services received for an award of equity instruments based on the grant-date fair value of the award. The adoption of FASB ASC 718 had no material effect on our financial statements, because, at the time of the adoption, all options issued under our previous equity incentive plans were fully vested. In the event the Equity Incentive Plan is approved by Company stockholders, FASB ASC 718 will govern the expense to the Company associated with any equity that may be issued under the plan. Generally, such equity will be expensed over the associated vesting period established pursuant to an equity award.

COMPENSATION COMMITTEE REPORT

 

The undersigned, constituting all of the members of the Compensation Committee, have reviewed and discussed with the management of the Company the foregoing Compensation Discussion and Analysis and, based on such review and discussion, have recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

Respectfully submitted, Compensation Committee:
Sidney H. Ritman (Chairman)
William E. Herron
Henry Homes, III

 

The following tables, narrative and footnotes discuss the compensation of our named executive officers for Fiscal 2009, Fiscal 2008 and Fiscal 2007. We follow the National Retail Federation’s “4-5-4” retail calendar, whereby for each fiscal quarter, the first month contains four weeks, the second month contains five weeks and the third month contains four weeks (each week containing the seven days from Sunday through Saturday). Dividing the retail calendar into 52 weeks of seven days each, or 364 days, leaves an extra day each year to be accounted for in a future fiscal period. As a result every five to six years a week is added to the fiscal calendar. Fiscal 2009, Fiscal 2008 and Fiscal 2007 were all 52 week years.

Summary Compensation Table

 

The following table sets forth information concerning compensation earned by our named executive officers for Fiscal 2009, Fiscal 2008 and Fiscal 2007.

 

 

 

 

Notes to Summary Compensation Table

 

Bonus

 

The amounts reported in column (d) represent discretionary bonuses earned for the applicable fiscal year. The Company paid no discretionary bonuses or other compensation which are reportable as bonuses as defined under SEC rules to the named executive officers in Fiscal 2007.

 

Stock and Option Awards

 

The Company issued no stock or option awards to the named executive officers in Fiscal 2009, Fiscal 2008 or Fiscal 2007.

Non-Equity Incentive Plan Compensation

 

The amounts reported in column (g) reflect amounts earned by, and paid to, each named executive officer for the applicable fiscal year under the Company’s cash incentive program for that year. The non-equity incentive compensation paid to the named executive officers in Fiscal 2010 and Fiscal 2009 for performance in Fiscal 2009 and Fiscal 2008, respectively, represented the maximum potential awards that could have been earned under the Cash Incentive Programs for those years. The non-equity incentive compensation paid to the named executive officers in Fiscal 2008 for performance in Fiscal 2007 ranged from 95% to 100% of the respective maximum potential awards that could have been earned under the cash incentive program adopted for Fiscal 2007.

 

Changes in Pension Value and Nonqualified Deferred Compensation Earnings

 

The Company does not maintain a pension plan for which the named executive officers are eligible. The amounts set forth in column (h) represent the above-market earnings, if any, by the named executive officers on their respective accounts in the Fidelity Deferred Compensation Plan. SEC regulations consider the “market rate” of interest to be 120% of the applicable federal long-term rate (the “AFR”). The above-market earnings credited to the participants in the Fidelity Deferred Compensation Plan were calculated as the difference between the return earned on such participants’ accounts during the applicable fiscal year and the interest that would have been earned at a rate equal to 120% of the AFR. None of the participants in the Fidelity Deferred Compensation Plan had above-market earnings in Fiscal 2008 or Fiscal 2007.

 

All Other Compensation

 

The tables below set forth the components of the amounts reported as All Other Compensation in column (i). These components are (a) either an allowance for a car or the use of a Company-leased car; (b) the cost of a legal services plan and of insurance for health, prescription drugs, medical expense reimbursement, dental, vision, long-term disability, life, and accidental death and dismemberment; and (c) amounts contributed by the Company for the named executive officer under the Company’s 401(k) plan. Except with respect to Mr. Ullman, the amounts shown in column (a) below are cash allowances and reflect the actual dollar amounts paid in the applicable fiscal year. With respect to Mr. Ullman, the amount shown in column (a) reflects the value of Mr. Ullman’s personal use of a Company-leased car during the applicable fiscal year.

 

 

 

 

Employment Agreements

 

We had employment agreements with all of our named executive officers during Fiscal 2009. The material terms of each employment agreement are discussed below. Each named executive officer is entitled to certain payments following the termination of his employment with the Company. Set forth in the section below entitled “Potential Payments on Termination or Change in Control” is information regarding potential payments on termination or change in control which may, under certain circumstances, be due to each named executive officer.

 

R. Neal Black

 

Mr. Black is employed by the Company pursuant to an employment agreement that expires on January 29, 2011 (the last day of our Fiscal 2010). Pursuant to his employment agreement, Mr. Black’s annual salary was $750,000 in Fiscal 2009. For Fiscal 2010, Mr. Black’s annualized base salary will remain $750,000 unless and until base salaries are increased generally for other employees of the Company. Contingent upon base salary increases going into effect generally for other employees of the Company, it is anticipated that Mr. Black’s base salary will increase to $775,000. The employment agreement provides for an annual non-equity incentive opportunity of up to 200% of base salary based upon the achievement of annual performance goals. The employment agreement also provides for benefits, perquisites, severance and an agreement not to compete with the Company, each of which is described in this Proxy Statement. If the Equity Incentive Plan is approved by the stockholders, it is anticipated that Mr. Black will further align his interests with the interests of Company stockholders by agreeing to reduce his cash bonus potential to 150% of base salary in consideration of an equity incentive opportunity with an initial value of up to 250% of base salary. Mr. Black was elected to the Board in December 2008 concurrently with his appointment as our Chief Executive Officer. Mr. Black’s employment agreement provides that he will serve without additional compensation as a director of the Company and, if he should so desire, any of its subsidiaries. Mr. Black has agreed to resign any and all such directorships concurrently with the expiration or other termination of his employment under the employment agreement.

 

David E. Ullman, Robert B. Hensley, Gary M. Merry and James W. Thorne

 

Each of the Executive Vice Presidents is employed pursuant to an employment agreement that expires on January 28, 2012 (the last day of our Fiscal 2011). Each of these employment agreements provides for an annual base salary and an annual non-equity incentive opportunity of up to 65% of base salary based upon the achievement of annual performance goals. Base salary increases and potential equity incentive compensation are in the discretion of the Compensation Committee. Although the base salary levels of the Executive Vice Presidents have historically been adjusted each year, no adjustments were made for Fiscal 2009. Each of these employment agreements also provides for benefits, perquisites, severance and the executive officer’s agreement not to compete with the Company, each of which is described in this Proxy Statement.

 

The Compensation Discussion and Analysis section above includes a detailed description of our non-equity incentive compensation program. Proposal Three below includes a detailed discussion of the proposed Equity Incentive Plan and anticipated grants to be made to the named executive officers if our stockholders approve the Equity Incentive Plan. If our stockholders approve the Equity Incentive Plan, it is the Company’s intention to make grants to our named executive officers of restricted stock units under the Equity Incentive

Plan, intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code, as described in more detail in Proposal Three.

Grants of Plan-Based Awards

 

The following table sets forth information concerning grants of non-equity awards earned by our named executive officers for Fiscal 2009 under the 2009 Cash Incentive Program.

 

 

 

Outstanding Equity Awards At Fiscal 2009 Year-End

 

The following table reflects outstanding stock options held by the named executive officers as of January 30, 2010.

 

 

 

Option Exercises And Stock Vested

 

The following table provides information regarding option awards exercised by the named executive officers during Fiscal 2009.

 

 

 

 

The Pension Benefits table is omitted as the Company does not offer pension benefits to the named executive officers.

Nonqualified Deferred Compensation

 

The following table shows the nonqualified deferred compensation benefits for each named executive officer during Fiscal 2009 under the Fidelity Deferred Compensation Plan. Mr. Merry and Mr. Thorne did not elect to defer compensation under the Fidelity Deferred Compensation Plan for Fiscal 2009.

 

 

The amounts reported in column (d) above represent the aggregate earnings (which include interest, dividends and dividend equivalents) on each named executive officer’s investment in the applicable named executive officer’s selected funds. Pursuant to SEC regulations, all earnings on nonqualified deferred compensation in excess of 120% of the AFR are deemed “above market” earnings.

 

The table below contains information concerning potential payments on termination or change in control which may be due under the respective employment agreements with our named executive officers based on the assumption that the event triggering such payments had taken place on the last day of Fiscal 2009. Non-equity incentive compensation earned by our named executive officers for Fiscal 2009 (award payments under the 2009 Cash Incentive Program and discretionary bonuses) was actually paid in April 2010. If the employment agreements had terminated on January 30, 2010 (the last day of Fiscal 2009), which they did not, the award payments under the 2009 Cash Incentive Program (but not the discretionary bonuses) would still have been paid in April 2010. The 2009 non-equity incentive compensation would not have been paid twice. Columns (b) through (f) each represent a different circumstance under which payments may potentially be due pursuant to the employment agreements. The “Total” in any one column for any one named executive officer

represents that officer’s maximum potential payment under the applicable circumstance. The “Totals” are independent of one another and not cumulative for any one named executive officer.