Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

 

 

Filed by the Registrant ☒

 

Filed by a Party other than the Registrant ☐

 

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a‑6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a‑12

 

 

 

 

THE MICHAELS COMPANIES, INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a‑6(i)(1) and 0‑11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

Fee paid previously with preliminary materials.

 

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0‑11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

 

 

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

Filing Party:

 

 

 

 

(4)

Date Filed:

 

 

 

 

 

 

 

Table of Contents

Picture 10

8000 Bent Branch Drive

Irving, Texas 75063

April 30,  2020

Dear Stockholder:

We cordially invite you to attend our 2020 Annual Meeting of Stockholders on Wednesday, June 10,  2020, at 8:00 a.m. (local time), to be held at 8000 Bent Branch Drive, Irving, Texas 75063.

We are monitoring the coronavirus (COVID-19) situation closely, and we want to ensure that we are doing our part to protect the health and safety of our employees and stockholders. As the Annual Meeting approaches, we may choose to replace the in-person meeting at the Michaels Support Center with a virtual-only event, or have a hybrid meeting, with the option to attend virtually or in-person.  Any such change will be announced via press release, which will be filed as additional proxy materials with the Securities and Exchange Commission.

The Michaels Companies, Inc. has elected to deliver our proxy materials to our stockholders under the Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the Internet. This delivery process allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering the cost of delivery. On April 30,  2020, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement for our 2020 Annual Meeting of Stockholders and our 2019 Annual Report to Stockholders. The Notice also provides instructions on how to vote online or by telephone and includes instructions on how to receive a paper copy of the proxy materials by mail.

The Notice will serve as an admission ticket for one stockholder (or proxyholder) to attend the 2020 Annual Meeting of Stockholders. If you request and receive a paper copy of the proxy materials in the mail, the proxy card includes an admission ticket for one stockholder (or proxyholder) to attend the Annual Meeting of Stockholders. All stockholders and proxyholders must also present a valid form of government‑issued picture identification in order to attend.

The proxy statement accompanying this letter describes the business we will consider at the meeting. Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the Annual Meeting, we encourage you to consider the matters presented in the proxy statement and vote as soon as possible.

We hope that you will be able to join us on June 10th.

Sincerely,

 

 

Picture 7

Picture 6

James A. Quella

Ashley Buchanan

Chairman of the Board

Chief Executive Officer and Director

 

 

Table of Contents

Picture 3

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

JUNE 10, 2020

 

The 2020 Annual Meeting of Stockholders (the “Annual Meeting”) of The Michaels Companies, Inc. (the “Company” or “Michaels”) will be held at the Company’s Support Center*, 8000 Bent Branch Drive, Irving, Texas 75063 on Wednesday,  June 10,  2020 at 8:00 a.m. (local time).  

 

The Annual Meeting will be held for the following purposes as further described in the proxy statement accompanying this notice:

*

to elect the directors standing for election as specifically named in the proxy statement;

*

to approve the amendment and restatement of the Second Amended and Restated Michaels 2014 Omnibus Long-Term Incentive Plan (such amendment and restatement, the “Proposed Plan”),  which provides for an increase of the shares of Common Stock available for award under the Proposed Plan and the removal of certain technical changes to provisions that are no longer applicable following the enactment of the Tax Cuts and Jobs Act of 2017; 

*

to ratify the appointment of Ernst & Young, LLP as the independent registered public accounting firm of the Company for the current fiscal year; and

*

any other business properly brought before the meeting.

 

Stockholders of record at the close of business on April 15, 2020 are entitled to notice of, and entitled to vote at, the Annual Meeting and any adjournments or postponements thereof.

 

To attend the Annual Meeting, you must demonstrate that you were a Michaels stockholder as of the close of business on April 15, 2020, or hold a valid proxy for the Annual Meeting from such a stockholder. If you received a Notice of Internet Availability of Proxy Materials, the Notice will serve as an admission ticket for one stockholder to attend the 2020 Annual Meeting of Stockholders. If you request and receive a paper copy of the proxy materials in the mail, the proxy card includes an admission ticket for one stockholder to attend the Annual Meeting of Stockholders. You may alternatively present a brokerage statement showing proof of your ownership of Michaels stock as of April 15, 2020.  All stockholders must also present a valid form of government‑issued picture identification in order to attend. Please allow additional time for these procedures.

 

 

 

 

By Order of the Board of Directors

 

 

 

Picture 2

 

Tim Cheatham

 

Secretary

 

Irving, Texas

April 30, 2020

 

 

* Special COVID-19 Note: Michaels is monitoring the impact of COVID-19 closely, and we want to ensure that we are doing our part to protect the health and safety of our employees and stockholders. As the Annual Meeting approaches, we may choose to replace the in-person meeting at the Michaels Support Center with a virtual-only event, or have a hybrid meeting, with the option to attend virtually or in-person. Any such change will be announced via press release, which will be filed as additional proxy materials with the Securities and Exchange Commission.

 

Table of Contents

TABLE OF CONTENTS

 

 

 

 

PROPOSAL 1 – ELECTION OF DIRECTORS

    

2

BOARD STRUCTURE AND BOARD COMMITTEES

 

5

Board Committees

 

5

CORPORATE GOVERNANCE

 

6

Compensation Committee Interlocks and Insider Participation

 

8

Our Board’s Role in Risk Oversight

 

8

Related Person Transactions Policy

 

8

EXECUTIVE OFFICERS

 

10

STOCK OWNERSHIP INFORMATION

 

11

Beneficial Ownership

 

11

EXECUTIVE COMPENSATION

 

13

Compensation Discussion and Analysis

 

13

Compensation Committee Report

 

23

Summary Compensation Table

 

24

Grants of PlanBased Awards for Fiscal 2019

 

26

Outstanding Equity Awards at Fiscal YearEnd 2019

 

27

Option Exercises and Stock Vested for Fiscal 2019

 

29

Deferred Compensation Plan

 

29

Potential Payments upon Termination or Change of Control

 

30

Compensation of Directors

 

35

Equity Compensation Plan Information

 

36

AUDIT COMMITTEE MATTERS

 

37

PROPOSAL 2 – APPROVAL OF AMENDMENT AND RESTATEMENT OF MICHAELS SECOND AMENDED AND RESTARTED 2014 OMNIBUS LONG-TERM INCENTIVE PLAN

 

39

PROPOSAL 3 – RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

44

VOTING REQUIREMENTS AND PROXIES

 

45

STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS

 

45

OTHER MATTERS

 

45

APPENDIX A THE MICHAELS COMPANIES, INC. THIRD AMENDED AND RESTATED 2014 OMNIBUS LONG-TERM INCENTIVE PLAN

 

A-1

 

 

 

 

Table of Contents

THE MICHAELS COMPANIES, INC.

 

ANNUAL MEETING OF STOCKHOLDERS

 

June 10, 2020

 

PROXY STATEMENT

 

The Board of Directors of The Michaels Companies, Inc. is soliciting your proxy for the 2020 Annual Meeting. Attendance in person or by proxy of a majority of the shares outstanding and entitled to vote at the meeting is required for a quorum for the meeting. 

 

You may vote on the Internet, using the procedures and instructions described on the Notice of Internet Availability of Proxy Materials (the “Notice”) that you received. If you request and receive a paper copy of these proxy materials, included with such copy is a proxy card or a voting instruction card from your bank, broker or other nominee for the Annual Meeting. You may vote by telephone using the toll‑free telephone number contained on the Notice, proxy card, or voting instruction card. Both Internet and telephone voting provide easy‑to‑follow instructions and have procedures designed to authenticate your identity and permit you to confirm that your voting instructions are accurately reflected.

 

You may revoke your proxy at any time before it is voted by voting later by telephone or Internet, returning a later‑dated proxy card, or delivering a written revocation to the Secretary of Michaels.

 

Stockholders of record at the close of business on April 15, 2020 are entitled to vote at the meeting. Each of the 147,327,746 shares of Common Stock outstanding on the record date is entitled to one vote.

 

This proxy statement, the proxy card and the 2019 Annual Report to Stockholders for our fiscal year ended February 1,  2020 (fiscal 2019) are being first mailed or made available to stockholders on or about the date of the notice of meeting. Our address is 8000 Bent Branch Drive, Irving, Texas 75063.

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on June 10, 2020: Our proxy statement is attached. Financial and other information concerning Michaels is contained in our 2019 Annual Report to Stockholders for the fiscal year ended February 1, 2020. The proxy statement and our 2019 Annual Report to Stockholders are available on our website at http://investors.michaels.com. Additionally, you may access our proxy materials at www.proxyvote.com, a site that does not have “cookies” that identify visitors to the site.

 

 

 

Table of Contents

PROPOSAL 1

 

ELECTION OF DIRECTORS

 

Our Second Amended and Restated Certificate of Incorporation (the “Charter”) provides for no fewer than three and no more than fifteen Directors, with the exact number to be fixed by our Board of Directors. Our Board currently consists of ten Directors. The current term of all of our Directors expires at the Annual Meeting.

 

On December 27, 2019, the Company announced the appointment of Ashley Buchanan as President and Chief Executive Officer Designate of the Company and a member of the Company’s Board of Directors, both effective as of January 6, 2020. After a transition period ending April 1, 2020, Mr. Buchanan succeeded Mark S. Cosby as Chief Executive Officer. Following the Chief Executive Officer transition, Mr. Cosby remained employed by the Company as a Senior Advisor and a member of the Board of Directors.

 

All of our current Directors are standing for election at the Annual Meeting and have been recommended for nomination by our Nominating and Governance Committee and nominated by our Board for election at the Annual Meeting.

 

In making its recommendations for nominees, the Nominating and Governance Committee seeks nominees with established strong professional reputations, sophistication and experience in the retail and consumer industries. We also seek nominees with experience in substantive areas that are important to our business such as marketing and brand management; sales, buying and distribution; accounting, finance and capital structure; strategic planning and leadership of complex organizations; technology and social and digital media; human resources and development practices; and strategy and innovation. Our nominees hold or have held senior executive positions in large, complex organizations or in businesses related to important substantive areas, and in these positions have also gained experience in core management skills and substantive areas relevant to our business. Our nominees also have experience serving on boards of directors and board committees of other public companies, and each of our nominees has an understanding of corporate governance practices and trends.

 

We believe that each of our nominees possesses the professional and personal qualifications necessary for board service, and we have highlighted particularly noteworthy attributes for each director in the individual biographies below. The Board believes that each of the nominees listed brings strong skills and experience to the Board, giving the Board as a group the appropriate skills to exercise its responsibilities.

 

In connection with our initial public offering, we entered into an investor agreement (the “Investor Agreement”) with our significant stockholders at the time, affiliates of or funds advised by Bain Capital Private Equity, L.P. (“Bain”) and The Blackstone Group Inc. (“Blackstone”). The Investor Agreement, among other things, granted each of Bain and Blackstone the right, subject to certain conditions, to name representatives to our Board. Bain currently has the right to designate up to three nominees for election to our Board and has designated Joshua Bekenstein and Ryan Cotton.  On October 11, 2019, Blackstone entered into a letter agreement with the Company and Bain pursuant to which Blackstone irrevocably waived their rights under the Investor Agreement to nominate and/or designate persons to the Board. Peter Wallace subsequently resigned from the Board. For more information, see “– Corporate Governance – Investor Agreement.”

 

Each nominee has consented to be named as a nominee for election as a Director and has agreed to serve if elected. If any of the nominees is not available for election at the time of the Annual Meeting, discretionary authority will be exercised to vote for substitutes designated by our Board of Directors, unless the Board chooses to reduce further the number of Directors. Management is not aware of any circumstances that would render any nominee unavailable. Directors elected at the Annual Meeting will hold office until the 2021 Annual Meeting or until their successors are elected and qualified.

 

Members of the Board are elected by a plurality of the votes cast at the Annual Meeting. This means that the director nominees with the most votes will be elected. Shares voting “Abstain” or broker non‑votes will have no effect on the election of Directors. Brokers, banks and other nominees have no discretionary voting power in respect of this item. See, “Voting Requirements and Proxies.”

 

2 |  A picture containing meter, clock

Description automatically generated

Table of Contents

Your Board of Directors unanimously recommends that you vote FOR the election of each of the nominees as director.

 

Set forth below is information concerning each of the incumbent directors standing for election, including their ages as of April 15, 2020, present principal occupations, other business experiences during at least the last five years, membership on committees of the Board, public company directorships held during the last five years and certain other directorships.

 

 

 

 

 

 

 

 

Name

    

Age

    

Director Since

    

Committee Membership

Josh Bekenstein

 

61

 

October 31, 2006

 

Ashley Buchanan

 

46

 

January 6, 2020

 

Mark S. Cosby

 

61

 

February 28, 2019

 

Ryan Cotton

 

41

 

December 8, 2017

 

Compensation Committee

Monte E. Ford

 

60

 

September 10, 2015

 

Audit Committee; Nominating and Governance Committee

Karen Kaplan

 

60

 

April 8, 2015

 

Audit Committee; Nominating and Governance Committee

Matthew S. Levin

 

54

 

October 31, 2006

 

Compensation Committee

John J. Mahoney

 

68

 

September 18, 2013

 

Audit Committee; Nominating and Governance Committee

James A. Quella

 

70

 

October 31, 2006

 

Compensation Committee

Beryl B. Raff

 

69

 

September 23, 2014

 

Compensation Committee

 

Mr. Bekenstein is Co-Chair of Bain, having joined Bain at its inception in 1984. Prior to joining Bain, Mr. Bekenstein spent two years at Bain & Company as a consultant, where he was involved with companies in a variety of industries. Mr. Bekenstein serves as a director of Bright Horizons Family Solutions, BRP Inc., Canada Goose Holdings Inc. and Dollarama Inc. Mr. Bekenstein received an M.B.A. from Harvard Business School and a B.A. from Yale University. Mr. Bekenstein has extensive experience with capital markets transactions and investments for public and private companies.  Mr. Bekenstein’s experience as a senior executive of a leading alternative investment firm and as a director of companies in various business sectors makes him uniquely qualified to serve on our Board.

 

Mr. Buchanan became Chief Executive Officer on April 1, 2020. He initially joined the Company as President and Chief Executive Officer Designate and as a  member of the Board of Directors, each effective January 6, 2020. Prior to joining the Company, Mr. Buchanan served in various roles of increased leadership and responsibility across Walmart Inc. (previously Walmart Stores, Inc.), most recently as Chief Merchant for Walmart U.S. eCommerce since July 2019.  From February 2017 to July 2019, he also served as the Chief Merchant at Sam’s Club where he led a merchandising team and oversaw activities including assortment, private brand strategy, pricing, global sourcing, packaging, replenishment and supply chain. Mr. Buchanan has also served in a broad set of senior merchandising roles at Walmart Inc. since joining in 2007. Prior to his tenure at Walmart, Mr. Buchanan held a variety of positions in finance at Dell and spent five years at Accenture focused on the retail industry.

 

Mr. Cosby was named Interim Chief Executive Officer and member of the Board of Directors in February 2019. In October 2019, he was named Chief Executive Officer, before transitioning out of the role on April 1, 2020. Prior to joining the Company, Mr. Cosby served as President, North America for Office Depot from July 2014 until December 2016. From September 2011 to November 2013, Mr. Cosby served as President, Retail at CVS Caremark Corporation, where he was responsible for all aspects of the $65 billion retail business, including 7,600 retail stores, 19 distribution centers, retail merchandising, supply chain, marketing, real estate and store pharmacy operations. Prior to CVS, Mr. Cosby spent five years at Macy’s, Inc., where he served in a number of executive roles, including President, Stores from April 2009 to August 2011. Prior to Macy’s, Inc., Mr. Cosby served as President, Full-line Stores at Sears, Roebuck & Company and Chief Operating Officer and Chief Development Officer at YUM! Brands, Inc. Mr. Cosby serves on the Board of Directors of 2nd Swing, a specialty retailer and online seller of new and used golf equipment and accessories. 

 

Mr. Cotton is a Managing Director of Bain, having joined in 2003. He currently serves on the Board of Directors of Canada Goose Holdings Inc., as the chair of the Nominating and Governance Committee and as a member of its Compensation Committee. He also serves on the boards of private companies, including Blue Nile Inc., Maesa, Varsity Brands and Virgin Voyages. Mr. Cotton also currently serves on the board of directors and board of trustees for city Year New York and St. Mark’s School of Texas, respectively. Mr. Cotton received his B.A. from Princeton University and received an M.B.A. from Stanford University. Mr. Cotton adds value to our Board through his extensive retail experience and prior public and private board service.

2020 PROXY STATEMENT | 3

Table of Contents

Mr. Ford is currently the Principal Partner at the CIO Strategy Exchange, an organization of the top 50 sitting Chief Information Officers in business. From February 2012 until September 2013, he was the Chief Executive Officer of Aptean Software Corporation, a provider of enterprise application software. Prior to joining Aptean, he served as Senior Vice President and Chief Information Officer of American Airlines, Inc. from December 2000 through December 2011. Mr. Ford currently sits on the board of directors of Akamai Technologies, Inc., a leading internet network and security company where he serves on the Compensation Committee and Nominating and Corporate Governance Committee, and Iron Mountain Incorporated, a storage and information management company where he serves on the Compensation Committee and Risk and Safety Committee. Mr. Ford’s diverse leadership experience as well as extensive background in Information Technology make him a valuable contributor to our Board.

 

Ms. Kaplan has served as Chairman and Chief Executive Officer of Hill Holliday, Inc., one of the nation’s largest advertising agencies, since 2013, and has served in various roles for Hill Holliday since 1982. Ms. Kaplan is a Trustee of Fidelity Investments, a multinational financial services corporation, where she serves on the Audit and Compliance Committee and Nominating and Governance Committee. Ms. Kaplan was previously a member of the board of directors of each of Vera Bradley, Inc. and DSM USA Insurance Company, Inc. Ms. Kaplan holds a B.A. from the University of Massachusetts. Ms. Kaplan’s significant marketing and branding experience, as well as her strong tactical and financial background, allow her to provide valuable insight and make important contributions to our Board.

 

Mr. Levin retired as a Senior Advisor for Bain in September 2019, a role that he held since 2016. From 2001 through 2015, Mr. Levin was a Managing Director of Bain in Bain’s Private Equity business. Prior to joining Bain in 1992, Mr. Levin was a consultant at Bain & Company where he consulted in the consumer products and manufacturing industries. Mr. Levin received an M.B.A from Harvard Business School where he was a Baker Scholar, and a B.S. from the University of California Berkeley. Mr. Levin’s significant experience in and knowledge of corporate finance and managing companies put him in a position to provide important contributions to our Board.

 

Mr. Mahoney retired as Vice Chairman of Staples, Inc. in July 2012, having served as Vice Chairman since January 2006. Mr. Mahoney also served as Chief Financial Officer for Staples, Inc. from 1996 through January 2012. Prior to 1996, Mr. Mahoney was a partner at Ernst & Young, LLP. He currently serves on the Board of Directors of Bloomin’ Brands, Inc., Burlington Stores, Inc. and Chico’s FAS, Inc. In addition to serving on the Audit Committees of each of Bloomin’ Brands, Inc. and Chico’s FAS, Inc., Mr. Mahoney also serves on the Nominating and Governance Committee of Bloomin’ Brands, Inc. and the Compensation Committees of both of Burlington Stores, Inc. and Chico’s FAS, Inc. Previously, Mr. Mahoney served on the Board of Directors of Advo, Inc. and Zipcar, Inc. Mr. Mahoney holds an M.B.A. from Northeastern University, as well as an undergraduate degree from the College of the Holy Cross. Mr. Mahoney’s strong financial background and experience as a Vice Chairman and former Chief Financial Officer of a Fortune 500 retail company enables him to provide valuable counsel to our management and Board.  

 

Mr. Quella was named Chairman of the Board in April 2019, having previously served as Lead Independent Director since November 2018. Mr. Quella retired as a Senior Managing Director, Senior Operating Partner and co-head of the Portfolio Operations Group at Blackstone in the Private Equity Group in June 2014, having served in these roles since 2003. Mr. Quella received a B.A. in International Studies from The University of Wisconsin-Madison and an M.B.A. with Dean’s Honors from the University of Chicago Graduate School of Business. Mr. Quella serves as a director of Dun and Bradstreet Corporation and FGL Holdings, and serves on the Compensation Committees of FGL Holdings, the Audit Committee of Dun and Bradstreet Corporation and the Nominating and Corporate Governance Committee of FGL Holdings. Mr. Quella was formerly a director of Allied Waste, Catalent Pharma Solutions, Inc., Columbia House, Celanese Corporation, DJO Global, Inc., Freescale Semiconductor, Inc., Graham Packaging Company, L.P., Houghton Mifflin Harcourt Company, Intelenet Global Services, Lionbridge Technologies, Inc., The Nielsen Company and Vanguard Health Systems, Inc. Due to contributions that Mr. Quella can provide to our Board resulting from his financial expertise, as well as his significant experience in working with companies transitioning from control by private equity sponsors, he is qualified to be on and is an asset to our Board.

 

4 |  A picture containing meter, clock

Description automatically generated

Table of Contents

Ms. Raff has been Chief Executive Officer and Chairman of Helzberg Diamond Shops, Inc., a wholly owned subsidiary of Berkshire Hathaway Inc., since April 2009. From 2001 to 2009, and prior to joining Helzberg, Ms. Raff served in various management positions at J. C. Penney Company, Inc., most recently as Executive Vice President and General Merchandising Manager since September 2005. Prior to joining J.C. Penney, Ms. Raff served as Chairman and CEO of Zale Corporation. Ms. Raff is a director of Helen of Troy, Ltd., and serves on its Audit Committee. Ms. Raff was previously a director of Group 1 Automotive, Inc., Jo‑Ann Stores, Inc., The Make-A-Wish Foundation and Zale Corporation. Ms. Raff received her B.B.A. from Boston University and her M.B.A. from Drexel University. Ms. Raff adds value to our Board through her extensive experience in operating and managing large retail companies, as well as her prior public board service.

 

BOARD STRUCTURE AND BOARD COMMITTEES

 

Board Committees

 

We have an Audit Committee, a Compensation Committee and a Nominating and Governance Committee, which have the composition and responsibilities described below. Each committee operates under a charter that has been approved by our Board. A copy of each charter can be found by clicking on “Governance” in the Investor Relations section of our website www.michaels.com.  The Board considers the Nominating and Governance Committee’s recommendation prior to appointing the individuals to serve as members of each committee. Each member serves until his or her successor is elected and qualified, unless he or she is earlier removed or resigns. In addition, from time to time, special committees may be established under the direction of the Board when necessary to address specific issues.

 

Audit Committee

 

The purpose of the Audit Committee is to assist the Board in fulfilling the Board’s oversight responsibilities with various aspects of the Company’s business, including but not limited to the integrity of the Company’s financial statements and the Company’s compliance with legal and regulatory requirements. The Audit Committee’s primary duties and responsibilities are to:

*

appoint, compensate, retain and oversee the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services and review and appraise the audit efforts of our independent accountants;

*

establish procedures for (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and (ii) confidential and anonymous submissions by our employees of concerns regarding questionable accounting or auditing matters;

*

determine funding of various services provided by accountants or advisers retained by the committee;

*

review our financial reporting processes and internal controls;

*

review and approve related‑party transactions or recommend related‑party transactions for review by independent members of our Board; and

*

provide an open avenue of communication among the independent accountants, financial and senior management and the Board.

The Audit Committee consists of Mr. Ford, Ms. Kaplan and Mr. Mahoney, each of whom has been determined to be an independent director by our Board. Mr. Mahoney, the Audit Committee Chair, is also an “audit committee financial expert” within the meaning of Item 407 of Regulation S‑K. A copy of the Audit Committee charter is available on our website. The Audit Committee met eight times in fiscal 2019.

 

Compensation Committee

 

The purpose of the Compensation Committee is to assist the Board in fulfilling responsibilities relating to oversight of the Company’s incentive and equity‑based compensation programs as well as the compensation of our directors, executive officers and certain other employees. The Compensation Committee reviews and provides recommendations and guidance to our Board with respect to compensation plans, policies and programs and specific compensation levels for all executive officers. In fiscal 2019, the Compensation Committee met 19 times. The Compensation Committee currently consists of Ms. Raff and Messrs. Cotton, Levin and Quella, each of whom has been

2020 PROXY STATEMENT | 5

Table of Contents

determined to be an independent director by our Board. Mr. Levin currently serves as the Compensation Committee Chair. Mr. Cotton was appointed to the Compensation Committee on October 3, 2019.  Mr. Wallace resigned from the Compensation Committee effective October 11, 2019 in connection with his resignation from the Board. A copy of the Compensation Committee charter is available on our website.

 

Nominating and Governance Committee

 

The purpose of the Nominating and Governance Committee is to oversee the director nomination process and maintain the Company’s corporate governance guidelines. The Nominating and Governance Committee’s primary duties and responsibilities are to review recommendations and nominations for individuals to serve as directors, recommend a slate of director nominees to the Board, taking into account each candidate’s ability, judgment and experience and the overall diversity and composition of the Board, determine and recommend for Board approval independence of our directors and manage the Board and committee evaluation process. The committee is also responsible for recommending to the Board qualified individuals to serve as committee members on the various Board committees, annually reviewing the Company’s corporate governance guidelines and identifying best practices with respect to corporate governance. A copy of the Nominating and Governance Committee charter is available on our website.

 

The Nominating and Governance Committee consists of Mr. Ford, Ms. Kaplan and Mr. Mahoney, each of whom has been determined to be an independent director by our Board. Ms. Kaplan currently serves as the Nominating and Governance Committee Chair. In fiscal 2019, the Nominating and Governance Committee met five times.

 

CORPORATE GOVERNANCE

 

Our Board is responsible for governing the business and affairs of the Company. Highlights of our corporate governance practices are described below.

 

Board Independence. The Board evaluates any relationships of each director and nominee and makes an affirmative determination whether or not such director or nominee is independent. Under our Corporate Governance Guidelines, an “independent” director is one who meets the qualification requirements for being independent under applicable laws and the corporate governance listing standards of Nasdaq. Our Board reviews any transactions and relationships between each non‑management director or any member of his or her immediate family and the Company. The purpose of this review is to determine whether there are any such transactions or relationships and if so, whether they are inconsistent with a determination that the director was independent. The Nominating and Governance Committee also reviews such transactions and relationships when recommending which directors are to serve on the committees of the Board. The Board has determined that each of Messrs. Bekenstein,  Cotton, Ford, Levin, Mahoney and Quella and Mses. Kaplan and Raff is independent under our Corporate Governance Guidelines and Nasdaq listing standards.

 

Board Expertise and Diversity. Our Corporate Governance Guidelines provide that the Board shall be committed to a diversified membership, in terms of both the individuals involved as well as their personal backgrounds, various experiences and areas of expertise. We also seek a Board that reflects a range of talents, ages, skills, viewpoints, professional experience, educational background and expertise to provide sound and prudent guidance with respect to our operations and interests. All of our directors are financially literate, and at least one member of our Audit Committee is an audit committee financial expert.

 

Board Annual Performance Reviews. Our Corporate Governance Guidelines and Nominating and Governance Committee charter provide that the Nominating and Governance Committee shall be responsible for periodically, and at least annually, conducting an evaluation of the Board as a whole, as well as each of the committees’ performance, on an annual basis. Using criteria developed to conduct these evaluations, the Nominating and Governance Committee shall report to the Board on its findings.

 

Board Nominees. Our Nominating and Governance Committee is responsible for recommending for Board approval the candidates for election to the Board at the Company’s annual meeting of stockholders and for recommending individuals to fill vacancies on the Board that may occur between annual meetings of stockholders. It is the policy of the Nominating and Governance Committee to consider recommendations for director nominees from all sources, including stockholders, and to evaluate all recommendations under the same standards and criteria. Stockholders may recommend a director candidate for the consideration of the Nominating and Governance Committee 

6 |  A picture containing meter, clock

Description automatically generated

Table of Contents

by submitting the candidate’s name and biography c/o Office of the Corporate Secretary, The Michaels Companies, Inc., 8000 Bent Branch Drive, Irving, Texas 75063. The Corporate Governance Guidelines provide that nominees for director shall be selected on the basis of their character, wisdom, judgment, ability to make independent analytical inquiries, business experiences, understanding of the Company’s industry and business environment, time commitment and acumen. Board members are expected to become and remain informed about the Company, its business and its industry and rigorously prepare for, attend and participate in all Board and applicable committee meetings. The Nominating and Governance Committee evaluates each individual in the context of the Board as a whole, with the objective of recommending a group that can best perpetuate the success of our business, represent stockholder interests and exercise sound judgment using its diversity of experience. In addition, the Nominating and Governance Committee considers, in light of our business, each director nominee’s experience, qualifications, attributes and skills. See “Proposal 1 Election of Directors” for the biographical information of the director nominees. Stockholders may also nominate director candidates for election at an annual meeting of stockholders, according to the procedures set forth in our bylaws, which are posted on our website, www.michaels.com. See also “Stockholder Proposals and Director Nominations.”

 

Board Leadership Structure. Under our Corporate Governance Guidelines, our Board may select a Chairman of the Board of Directors at any time, who may, but is not required to, also be an executive officer of the Company. In fiscal 2019, the Board decided to separate the roles of Chairman and Chief Executive Officer.  James Quella has served as the Chairman of the Board since April 2019. The Board currently believes that separating the roles allows the Chief Executive Officer to focus on the business and day to day operations of the Company while the Chairman handles the Board governance processes.  

 

Policies Relating to Board Service. It is our policy that no director shall be nominated who has attained the age of 73 prior to or on the date of his or her election or re‑election. We also expect each of our directors to attend the Annual Meeting of Stockholders. Under our Audit Committee Charter, members of the Audit Committee should serve on no more than three separate public company audit committees simultaneously without prior review and determination by the Board that such simultaneous service would not impair the ability of such member to effectively serve on the Audit Committee.

 

Attendance. Our Board of Directors held 13 meetings in fiscal 2019. During fiscal 2019, each of our current directors attended at least 75% of the Board and committee meetings on which he or she served during the periods that he or she served. Our independent directors also met separately in executive session at each of our regularly scheduled Board meetings during the year. Nine of our then ten directors attended the 2019 Annual Meeting of Stockholders.  

 

Code of Business Ethics and Conduct. We have adopted a written Code of Business Ethics and Conduct (the “Code of Ethics”) that applies to our directors, officers and employees, including our executive officers, and is designed to ensure that our business is conducted with integrity. The Code of Ethics covers professional conduct, conflicts of interest, the protection of confidential information, as well as adherence to laws and regulations applicable to the conduct of our business. A copy of the Code of Ethics is posted on our website, at www.michaels.com. We intend to disclose any future amendments to, or waivers from, the Code of Ethics for our executive officers within four business days of the waiver or amendment through a website posting or by filing a Current Report on Form 8‑K with the Securities and Exchange Commission, or the SEC.

 

Environmental and Corporate Social Responsibility. We operate by a set of core values, including giving back and doing the right thing. Our environmental sustainability and social responsibility efforts reflect those values. Michaels has long pursued initiatives that are good for society as well as our profitability, and in 2019, we published our first Corporate Social Responsibility Report. We believe in the value of environmentally sound business practices throughout our operations, including energy conservation as well as recycling and waste reduction efforts. We also expect our merchandise vendors and their factories to follow a certain set of standards and principles, including with respect to human rights. Each merchandise vendor must agree in writing to comply with our Vendor Code of Conduct and Human Rights Policy (the “Vendor Code”) as a prerequisite to doing business with us. Those principles include, among others, respecting an employee’s basic human rights, non-discriminatory hiring practices, fair compensation, a ban on child or slave/forced labor, and maintaining a safe working environment. The latest 2020 Corporate Social Responsibility Report as well as the Vendor Code are posted on our website.

 

Communications with Directors. Stockholders and other interested parties may communicate directly with the Board, the non‑management directors or the independent directors as a group, or specified individual directors by writing to such individual or group c/o Office of the Corporate Secretary, The Michaels Companies, Inc., 8000 Bent

2020 PROXY STATEMENT | 7

Table of Contents

Branch Drive, Irving, Texas 75063. The Secretary will forward such communications to the relevant group or individual at or prior to the next meeting of the Board.

 

Online Availability of Information. The current versions of our Charter, bylaws, Corporate Governance Guidelines, Code of Ethics, Vendor Code and charters for our Audit, Compensation and Nominating and Governance Committees are available on our website at www.michaels.com.

 

Compensation Committee Interlocks and Insider Participation

 

None of our executive officers serves as a member of the board of directors or compensation committee of any other entity (other than a subsidiary of the Company) that has one or more executive officers who serve on our Board or Compensation Committee.

 

Our Board’s Role in Risk Oversight

 

The Board has oversight responsibility for the systems established to report and regularly monitor the most significant risks applicable to Michaels. The Board administers its risk oversight role directly and through its committee structure and the committees’ regular reports to the Board at Board meetings. The Board reviews strategic, financial and execution risks and exposures associated with the annual plan and multi‑year plans, major litigation and other matters that may present material risk to the Company’s operations, plans, prospects or reputation, acquisitions and divestitures and senior management succession planning. The Audit Committee reviews risks associated with financial and accounting matters, including financial reporting, accounting, disclosure, internal controls over financial reporting, ethics and compliance programs, data security and cybersecurity. The Compensation Committee reviews risks related to executive compensation and the design of compensation programs, plans and arrangements. The Nominating and Governance Committee reviews risks and best practices with respect to corporate governance guidelines.  

 

It is also management’s responsibility to manage risk and bring to the Board’s attention risks that are material to Michaels, including risks related to cybersecurity. The Company’s management provides quarterly reports to the Audit Committee on cybersecurity updates and preventive measures being taken to avoid attacks. As the Company reviews and updates its cybersecurity plans and policies, it plans to continue to take the steps it believes are necessary to ensure effective Board oversight of this area.

 

Related Person Transactions Policy

 

In accordance with the charter of our Audit Committee and our Related Person Transaction Policy, our Audit Committee is be responsible for reviewing and approving related person transactions.

 

The Related Person Transaction Policy applies to transactions, arrangements and relationships (or any series of similar transactions, arrangements or relationships) where the aggregate amount involved will, or may be expected to, exceed $120,000 in any calendar year, and where we (or our subsidiaries) are a participant and in which a related person has or will have a direct or indirect material interest. A related person is: (1) any person who is, or at any time since the beginning of our fiscal year was, a director or executive officer of the Company, or a nominee for director or executive officer of the Company; (2) any person who is known to be the beneficial owner of more than 5% of any class of our voting securities; (3) any immediate family member of the foregoing persons; and (4) any firm, corporation or other entity in which any of the foregoing persons has a position or relationship, or in which such person, together with his or her immediate family members, has a 10% or greater beneficial ownership.

 

In the course of its review and approval of related person transactions, our Audit Committee will consider the relevant facts and circumstances to decide whether to approve such transactions. In particular, our policy with respect to related person transactions will require our Audit Committee to consider, among other factors it deems appropriate:

*

the benefits to the Company;

*

the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director has a position or relationship;

*

the availability of other sources for comparable products or services;

*

the terms of the transaction; and

8 |  A picture containing meter, clock

Description automatically generated

Table of Contents

*

the terms available to unrelated third parties or to employees generally.

The Audit Committee may only approve those transactions that are in, or are not inconsistent with, our best interests and those of our stockholders, as the Audit Committee determines in good faith.

 

Our Related Person Transaction Policy is available on our website www.michaels.com.  

 

Investor Agreement

 

As described above, we entered into an Investor Agreement with Bain and Blackstone that in addition to certain indemnification rights, grants each of them the right, subject to certain conditions, to name representatives to our Board. On October 11, 2019, Blackstone entered into a letter agreement with the Company and Bain pursuant to which Blackstone irrevocably waived their rights under the Investor Agreement to nominate and/or designate persons to the Board. Bain has maintained the right to designate up to three nominees for election to our Board until such time as it owns less than 25% of our outstanding Common Stock, up to two nominees if its ownership level is 10% or more but less than 25% of our outstanding Common Stock and one nominee if its ownership level is 3% or more but less than 10% of our outstanding Common Stock.

 

Subject to the terms of the Investor Agreement, each of Bain and Blackstone originally agreed to vote its shares in favor of the election of the director nominees designated by each other pursuant to the agreement. In the October 11, 2019 letter agreement, Blackstone agreed that, with respect to any vote, consent or other approval to come before the Company’s stockholders, they would vote their shares of the Company’s common stock in excess of 9.99% of the outstanding common stock in the same manner and in the same proportion as those shares voted by the other holders of the Company’s common stock. For more information with respect to their ownership, please see “Stock Ownership Information” herein.

 

Amended and Restated Registration Rights Agreement

 

In connection with our initial public offering, our existing registration rights agreement with Bain, Blackstone and certain other stockholders was amended and restated. The amended and restated registration rights agreement provided Bain and Blackstone certain demand registration rights in respect of their shares of our Common Stock. In addition, in the event that we registered additional shares of Common Stock for sale to the public, we were required to give notice of such registration to each of Bain and Blackstone and the other stockholders party to the agreement of our intention to effect such a registration, and, subject to certain limitations, Bain, Blackstone and such holders have piggyback registration rights providing them with the right to require us to include shares of Common Stock held by them in such registration. We were required to bear the registration expenses, other than underwriting discounts and commissions and transfer taxes, associated with any registration of shares by Bain, Blackstone or other holders described above. As a result of Mr. Wallace’s resignation from our board of directors and the October 11, 2019 letter agreement among Blackstone, Bain and the Company, Blackstone no longer holds registrable securities under the amended and restated registration rights agreement. Bain is currently the only stockholder with registrable securities under this agreement. The amended and restated registration rights agreement includes customary indemnification provisions.

 

2020 PROXY STATEMENT | 9

Table of Contents

EXECUTIVE OFFICERS

 

Our current executive officers, their ages as of April 15, 2020, and their business experience during at least the past five years are set forth below.

 

 

 

 

 

 

Name

    

Age

    

Position

Ashley Buchanan

 

46

 

Chief Executive Officer

Vidya Jwala

 

48

 

Chief Customer Officer

Tim Cheatham

 

56

 

Executive Vice President – General Counsel, Chief Compliance Officer and Secretary

J. Robert Koch

 

55

 

Executive Vice President – Stores and Development

James E. Sullivan

 

56

 

Senior Vice President – Chief Accounting Officer and Controller

 

Effective January 31, 2020, Denise Paulonis resigned from her role as the Company’s Chief Financial Officer. The Company promptly initiated a search to identify and recruit a new candidate for the role of Chief Financial Officer. Mr. Sullivan has been appointed as the principal financial officer, on an interim basis until a permanent Chief Financial Officer is named.

 

See “Proposal 1 – Election of Directors” for a description of Mr. Buchanan’s business experience.

 

Mr. Jwala was named Chief Customer Officer in November 2019. Prior to joining the Company, Mr. Jwala was the Chief eCommerce and Supply Chain Officer at Dick’s Sporting Goods, Inc. from August 2018 to November 2019, overseeing omnichannel integration of eCommerce and supply chain efforts. While there, Mr. Jwala was instrumental in accelerating the company’s eCommerce business as well improving the digital experience and loyalty for their customers through content, pricing, assortment, and convenience. Prior to his role at Dick’s Sporting Goods, Inc., he served as Senior Vice President of Merchandising, Supply Chain, Technology & Customer Service at Overstock.com, from August 2016 to August 2018. At Overstock.com, he was responsible for growing the organization’s business along with the overall vendor-engagement program and private label brands. Previously, he was Vice President of Merchandising & Operations at Walmart Inc. (previously Walmart Stores, Inc.) from February 2009 to August 2016. Throughout his career, Mr. Jwala has held a variety of leadership roles at retailers, including Tractor Supply Company and Jo-Ann Stores, Inc.

 

Mr. Cheatham was named Executive Vice President – General Counsel, Chief Compliance Officer and Secretary in April 2020. Prior to joining the Company, Mr. Cheatham served in various roles of legal leadership at Walmart, most recently as Senior Vice President – General Counsel of Walmart U.S. From March 2015 to March 2020, Mr. Cheatham served in that role on the executive team and led the legal function of the U.S. business unit. He also served as Senior Vice President and General Counsel, Walmart International from February 2011 to March 2015 and Vice President and General Counsel over Information Technology, Intellectual Property and Walmart.com from March 2004 to February 2011. In addition to his 16-year tenure at Walmart, Mr. Cheatham has extensive in-house and private practice experience.

 

Mr. Koch was named Executive Vice President – Stores and Development in May 2018. Prior to joining the Company, Mr. Koch served as Executive Vice President of Business Development at Office Depot, Inc. from August 2017 to May 2018, after having served as Senior Vice President of Real Estate at Office Depot since December 2013. In his 20 years with Office Depot, he has held various key leadership positions in both Finance and Operations, including Senior Vice President, Merchandising; Senior Vice President, Real Estate, Construction and Strategy; Vice President, North American Finance; and Vice President of Financial Planning and Corporate Development. Prior to joining Office Depot in 1994, Mr. Koch held various positions in the corporate finance division of Blockbuster Entertainment.

 

Mr. Sullivan has served as the Company’s Chief Accounting Officer and Controller since November 2015. In June 2014, he joined the Company as Vice President — Finance from June 2014 to December 2014 and served as Vice President — Chief Accounting Officer and Controller of the Company from December 2014 to November 2015.  He was designated the principal financial officer, on an interim basis, on February 2, 2020.  Prior to joining the Company, Mr. Sullivan served as the Vice President – Controller and Chief Accounting Officer of Zale Corporation.

 

10 |  A picture containing meter, clock

Description automatically generated

Table of Contents

STOCK OWNERSHIP INFORMATION

 

Beneficial Ownership 

 

The following table sets forth information regarding the beneficial ownership of our Common Stock as of April 15, 2020 by (i) such persons known to us to be beneficial owners of more than 5% of our Common Stock, (ii) each director, director nominee and Named Executive Officer (as defined in “Executive Compensation – Compensation Discussion and Analysis” below) , and (iii) all directors, nominees and executive officers as a group. Unless otherwise indicated by footnote, the address for each listed director, officer and stockholder is c/o The Michaels Companies, Inc., 8000 Bent Branch Drive, Irving, Texas 75063 and each beneficial owner exercises sole voting and investment power over the shares noted below. The percentage of beneficial ownership for our directors and executive officers, both individually and as a group, and beneficial owners of 5% or more of Common Stock is calculated based on 147,327,746 shares of Common Stock outstanding as of April 15, 2020, and the number of unissued shares as to which such person or persons has the right to acquire voting and/or investment power within 60 days. The beneficial ownership information set forth below was provided or disclosed by or on behalf of our executive officers, our directors, and our beneficial owners of 5% or more of our Common Stock.  As such, the Company has not independently verified the accuracy or completeness of the information so provided.

 

 

 

 

 

 

 

 

    

Number of

    

 

 

Name and address of beneficial owner(1)

 

Shares Owned

 

Percent

 

Beneficial Owners of 5% or More of Our Common Stock:

 

 

 

 

 

Bain Capital Investors, LLC and related funds  (2)

 

52,798,929

 

35.8

%

Affiliates of The Blackstone Group L.P. (3)

 

20,393,531

 

13.8

%

BlackRock, Inc. and affiliates (4)

 

12,565,107

 

8.5

%

The Vanguard Group (5)

 

8,307,258

 

5.6

%

 

 

 

 

 

 

Directors and Named Executive Officers:

 

 

 

 

 

Joshua Bekenstein  (6)

 

 

 

Ashley Buchanan

 

 

 

Mark Cosby (7)

 

115,190

 

*

 

Ryan Cotton (6)

 

 

 

Monte E. Ford

 

27,471

 

*

 

Karen Kaplan

 

29,637

 

*

 

Matthew S. Levin  (8)

 

15,905

 

*

 

John J. Mahoney

 

39,503

 

*

 

James A. Quella (9)

 

32,690

 

*

 

Beryl B. Raff

 

41,063

 

*

 

Carl S. Rubin (10)

 

1,614,848

 

1.1

%

Denise A. Paulonis (11)

 

43,097

 

*

 

Vidya Jwala

 

 

 

J. Robert Koch

 

53,046

 

*

 

Philo Pappas (12)

 

267,180

 

*

 

All directors and executive officers as a group (14 persons) (13)

 

519,477

 

*

 


*Less than one percent. 

(1)

Pursuant to Rule 13d‑3 under the Exchange Act, a person has beneficial ownership of any securities as to which such person, directly or indirectly, through any contract, arrangement, undertaking, relationship or otherwise has or shares voting power and/or investment power or as to which such person has the right to acquire such voting and/or investment power within 60 days. Percentage of beneficial ownership by a person as of a particular date is calculated by dividing the number of shares beneficially owned by such person by the sum of the number of shares outstanding as of such date and the number of unissued shares as to which such person has the right to acquire voting and/or investment power within 60 days. Unless otherwise indicated, the number of shares shown includes outstanding shares of Common Stock owned as of April 15, 2020 by the person indicated.

(2)

The shares included in this table consist of: (i) 52,644,833 shares of Common Stock held by Bain Capital Integral Investors 2006, LLC (“Integral 06”); and (ii) 154,096 shares of Common Stock held by BCIP TCV, LLC (“TCV”). Bain Capital Investors, LLC (“BCI”) is the administrative member of Integral 06 and governs the investment strategy and decision-making process with respect to investments held by TCV. As a result, BCI may be deemed to share voting and dispositive power with respect to the shares held by Integral 06 and TCV (collectively, the “Bain Capital Entities”). Each of the Bain Capital Entities has an address c/o Bain Capital Private Equity, L.P., 200 Clarendon Street, Boston, Massachusetts 02116.

(3)

Includes 15,397,191 shares of our Common Stock owned by Blackstone Capital Partners V L.P. (“BCP V”), 3,521,509 shares of our Common Stock owned by BCP V‑S L.P. (“BCP V‑S”), 220,529 shares of our Common Stock owned by Blackstone Family Investment Partnership V L.P.

2020 PROXY STATEMENT | 11

Table of Contents

(“Family”), 46,810 shares of our Common Stock owned by Blackstone Participation Partnership V L.P. (“Participation”), 686,552 shares of our Common Stock owned by BCP V Co‑Investors L.P. (“BCP Co‑Investors”) and 520,940 shares of our Common Stock owned by Blackstone Family Investment Partnership V‑SMD L.P. (“Family‑SMD”) (collectively, “the “Blackstone Funds”). The general partner of BCP V, BCP V‑S and BCP Co‑Investors is Blackstone Management Associates V L.L.C. BMA V L.L.C. is the sole member of Blackstone Management Associates V L.L.C. BCP V Side‑by‑Side GP L.L.C. is the general partner of Family and Participation. Blackstone Holdings III L.P. is the managing member and majority in interest owner of BMA V L.L.C. and the sole member of BCP V Side‑by‑Side GP L.L.C. The general partner of Blackstone Holdings III L.P. is Blackstone Holdings III GP L.P. The general partner of Blackstone Holdings III G.P. is Blackstone Holdings III GP Management L.L.C. The sole member of Blackstone Holdings III GP Management L.L.C. is The Blackstone Group L.P. The general partner of The Blackstone Group L.P. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. The general partner of Family‑SMD is Blackstone Family GP L.L.C., which is controlled by its founder Mr. Schwarzman. As a result of his control of Blackstone Group Management L.L.C. and Blackstone Family GP L.L.C., Mr. Schwarzman has voting and investment power with respect to the shares held by the Blackstone Funds. Each of such Blackstone entities and Mr. Schwarzman may be deemed to beneficially own the shares beneficially owned by the Blackstone Funds directly or indirectly controlled by it or him, but each (other than the Blackstone Funds to the extent of their direct holdings) disclaims beneficial ownership of such shares. The address for each of the Blackstone Funds, Blackstone Management Associates V L.L.C., BMA V L.L.C., BCP V Side‑by‑Side GP L.L.C., Blackstone Holdings III L.P., Blackstone Holdings III GP L.P., Blackstone Holdings III GP Management L.L.C., The Blackstone Group L.P., Blackstone Group Management L.L.C., Blackstone Family GP L.L.C. and Mr. Schwarzman is c/o The Blackstone Group L.P., 345 Park Avenue, New York, New York 10154.

(4)

The information regarding BlackRock, Inc. and its affiliates is based solely on information included in its Amendment No. 2 to its Schedule 13G filed by BlackRock, Inc. with the SEC on February 5, 2020, which reflected sole voting power with respect to 12,343,458 shares and sole dispositive power with respect to 12,565,107 shares. BlackRock, Inc. reported its address as 55 East 52nd Street, New York, New York 10055.

(5)

The information regarding The Vanguard Group is based solely on information included in Amendment No. 1 to its Schedule 13G filed by The Vanguard Group with the SEC on February 12, 2020, which reflected sole voting power with respect to 80,485 shares, sole dispositive power with respect to 8,225,789 shares and shared dispositive power with respect to 81,469 shares. The Vanguard Group reported its address as 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.

(6)

Does not include shares indirectly held by the Bain Capital Entities. Mr. Bekenstein and Mr. Cotton are each Managing Directors of BCI. As a result, by virtue of the relationships described above, each may be deemed to share beneficial ownership of the shares of Common Stock held by the Bain Capital Entities. The address of Mr. Bekenstein and Mr. Cotton is c/o Bain Capital Private Equity, L.P., 200 Clarendon Street, Boston, Massachusetts 02116.

(7)

Includes 58,337 shares of unvested restricted stock for which Mr. Cosby holds voting rights. Includes 14,448 restricted stock units and 11,081 shares of restricted stock to vest on May 1, 2020. Includes 2,368 shares of restricted stock to vest as of May 28, 2020.

(8)

Mr. Levin is a former employee of Bain but disclaims beneficial ownership of the shares beneficially owned by the Bain Capital Entities.

(9)

Mr. Quella is a former employee,  of affiliates of The Blackstone Group L.P., but disclaims beneficial ownership of the shares beneficially owned by the Blackstone Funds.

(10)

Mr. Rubin’s role as Chairman of the Board and as an employee of Michaels Stores, Inc. (“MSI”) terminated effective April 1, 2019. Includes 1,340,170 vested stock options.

(11)

Ms. Paulonis’s role as Chief Financial Officer ended effective January 31, 2020.

(12)

Mr. Pappas’s role as Interim President – Merchandising and Supply Chain ended effective April 3, 2020. Includes 53,897 shares of unvested restricted stock for which Mr. Pappas holds voting rights. Includes 182,422 vested options. Includes 12,222 shares of restricted stock to vest on May 6, 2020.

(13)

Consistent with the disclaimers of beneficial ownership of Messrs. Bekenstein,  Cotton, Levin and Quella contained in notes (2), (3), (7), (9) and  (10) above, this number does not include the 73,192,460 shares of Common Stock that may be deemed to be beneficially owned by each of (a) the Bain Capital Entities (b) affiliates of The Blackstone Group L.P. The total includes 184,433 vested options or options that will vest within 60 days of April 15, 2020 held by current executive officers of the Company. For a list of the current directors and executive officers of the Company, please see page 3 and page 10, respectively.

 

Delinquent Section 16(a) Reports

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers to file reports of holdings and transactions in our Common Stock with the SEC and Nasdaq. To facilitate compliance, we have undertaken the responsibility to prepare and file these reports on behalf of our officers and our independent directors. Based on our records and other information, all reports were timely filed in fiscal 2019 except that (i) on April 3, 2019, we filed a Form 4 on behalf of each of Stephen Carlotti, Denise Paulonis and James Sullivan, relating to the vesting of restricted stock units on March 31, 2019; (ii) on April 5, 2019, we filed a Form 4 on behalf of Carl S. Rubin, relating to the vesting of restricted stock units on March 31, 2019 and April 1, 2019; (iii) on April 19, 2019, we filed a Form 4 on behalf of Philo Pappas, relating to the vesting of restricted stock units on March 29, 2019 and March 31, 2019; and (iv) on October 23, 2019, we filed a Form 4 on behalf of J. Robert Koch, relating to the vesting of restricted stock units on June 29, 2019. Each of these filings also disclosed the forfeiture of shares in order to satisfy withholding tax obligations related to the equity vesting. The failure to report these transactions on time was inadvertent and each filing was corrected promptly upon discovery.

12 |  A picture containing meter, clock

Description automatically generated

Table of Contents

EXECUTIVE COMPENSATION

 

COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis and the executive compensation discussion and tables that immediately follow describe the objectives, strategy and elements of our compensation program as applied to our executive officers for fiscal 2019. These individuals, referred to herein as our “Named Executive Officers” are:

*

Ashley Buchanan, Chief Executive Officer (previously President and Chief Executive Officer Designate);

*

Mark S. Cosby, former Chief Executive Officer;

*

Carl S. Rubin, former Chairman and Chief Executive Officer;

*

Denise A. Paulonis,  former Executive Vice President – Chief Financial Officer; 

*

Vidya Jwala, Chief Customer Officer;

*

J. Robert Koch, Executive Vice President – Stores and Development; and

*

Philo Pappas, former President – Merchandising and Supply Chain.

 

Fiscal 2019 Overview

 

Our fiscal 2019 performance included the following:

*

Net sales of $5,072.0 million, a 3.8% decrease compared to last year;

*

Comparable store sales decreased 1.9%, or 1.8% at constant exchange rates;

*

We reported operating income of $515.0 million, a decrease of 8.6% from the prior year and net income of $272.6 million, a decrease of 14.7% from the prior year;

*

We redeemed our 2020 senior subordinated notes with proceeds from the issuance of our 2027 senior notes, together with cash on hand, and extended the due date for our senior secured asset-based revolving credit facility to August 30, 2024; and

*

On November 22, 2019, we acquired certain intangible assets from A.C. Moore Incorporated for $62.1 million, including customer relationships and tradenames totaling $56.0 million and $5.2 million, respectively. In connection with the transaction, we also leased a distribution facility in New Jersey and 19 store locations. 

 

Fiscal 2019 Compensation Highlights

 

The compensation program for our Named Executive Officers is driven by the need to recruit, develop, motivate, and retain top talent both in the short- and long-term and also align the interests of our Named Executive Officers and stockholders. Key actions taken in fiscal 2019 included:

*

Chief Executive Officer Transitions. During fiscal 2019, we experienced leadership transition, including in the Chief Executive Officer role. The Board believes these changes reposition the Company for long-term successful performance.

§

Mr. Buchanan currently serves as our Chief Executive Officer, after joining the Company as President and Chief Executive Officer Designate in January 2020. The Board set Mr. Buchanan’s base salary at $1,200,000, and he will be eligible for an annual bonus and to participate in the Company’s annual long-term incentive program, beginning in fiscal 2021. In addition to his base salary and bonus package, he received (i) relocation reimbursement, (ii) one-time equity grants of options and restricted stock units and (iii) a signing bonus.

§

Mr. Cosby, our prior Chief Executive Officer, was initially appointed as Interim Chief Executive Officer on February 28, 2019, when Mr. Rubin’s service with the Company as Chief Executive Officer was terminated. Mr. Cosby played an active and engaged role in transitioning Mr. Buchanan into the Chief Executive Officer role and continues to serve on the Board and as a Senior Advisor to the Company. Mr. Cosby’s base salary was $1,202,000, and he was eligible to receive a bonus for fiscal

2020 PROXY STATEMENT | 13

Table of Contents

2020, based on the Company’s financial performance. He also received quarterly restricted stock grants and a signing bonus in connection with his joining the Company, and an additional stock option grant and restricted stock unit grant in connection with his transition to permanent Chief Executive Officer in October 2019. 

§

Mr. Rubin ceased to serve as Chief Executive Officer on February 28, 2019. His role as Chairman of the Company and his service as an employee of MSI each ended April 1, 2019.

*

Chief Customer Officer. In November 2019, Mr. Jwala was appointed to the Company as Chief Customer Officer, a new role overseeing the Consumer Insights and Business Analytics, eCommerce, Information Technology and Marketing functions of the Company. In addition to a base salary of $625,000 and a guaranteed fiscal 2019 bonus, the Company granted Mr. Jwala (i) relocation reimbursement, (ii) one-time equity grants of options and restricted stock units and (iii) a signing bonus in connection with his joining the Company.

*

Interim President – Merchandising and Supply Chain. In February 2019, Mr. Pappas was appointed as Interim President – Merchandising and Supply Chain. Mr. Pappas had been with the Company since 2009 both as Executive Vice President – Merchandising and President – Michaels Stores Procurement Company, Inc. Mr. Pappas’s extensive merchandising and procurement experience and institutional knowledge made him a key leader of the Company during a time of transition. Mr. Pappas retired from the Company on April 3, 2020.

*

Base Salaries and Annual Bonuses. Other than those in the Chief Executive Officer role, each of our eligible Named Executive Officers received base salary increases in early fiscal 2019 in consideration of market compensation levels and their ongoing contributions to our success. Other than Mr. Jwala’s guaranteed fiscal 2019 bonus, the Company did not pay annual bonuses to our Named Executive Officers due to our overall fiscal 2019 performance.

*

Signing Bonuses. During fiscal 2019, we granted an aggregate amount of $4.1 million in signing bonuses to Messrs. Buchanan, Cosby and Jwala to incentivize them to join the Company. Mr. Buchanan’s signing bonus was also intended to make him whole for certain bonus and equity awards from his previous employer which were forfeited when he joined Michaels.

*

Annual Long-Term Equity-Based Compensation. For fiscal 2019, the Compensation Committee decided to grant the same mix of equity awards as fiscal 2018, which consisted of a combination of stock option and restricted stock unit grants that vest over four years.

*

Special Equity Awards. Special equity awards were granted in fiscal 2019 in an effort to retain key leadership, drive long-term Company performance and motivate the leadership team to achieve long-term financial objectives. Ms. Paulonis and Mr. Koch received restricted stock units in October 2019 as retention awards.

 

Compensation Program

 

The principal objectives of our compensation program are:

*

attracting and retaining highly qualified individuals whose contributions to Michaels result in us meeting or exceeding our financial and strategic goals;

*

motivating officers to achieve exceptional levels of operating and financial performance; and

*

aligning officer interests with the long‑term goals of our stockholders.

For fiscal 2019, the total compensation for our Named Executive Officers, consisted of three main components: base salary, annual cash incentive bonuses and long‑term equity‑based incentive compensation awards. The strategy of our annual cash incentive compensation program is to provide higher annual cash incentive compensation for exceptional corporate and business financial performance. We also believe that by placing a significant equity opportunity in the hands of executives who are capable of driving and sustaining longer‑term growth, our stockholders will benefit along with the executives who helped create stockholder value.

 

14 |  A picture containing meter, clock

Description automatically generated

Table of Contents

Compensation Strategy: Policies and Procedures

 

Role of Compensation Committee and Chief Executive Officer in Compensation Decisions

 

The Compensation Committee reviews and recommends to the Board for approval the compensation for all executive officers at the level of Executive Vice President and above. The Board is ultimately responsible for determining the compensation of our executive officers at the level of Executive Vice President and above, which includes our Named Executive Officers. Both the Compensation Committee and the Board receive recommendations from senior management (principally the Chief Executive Officer and Executive Vice President – Chief Human Resources Officer) with respect to compensation‑related decisions regarding our executive officers, other than the Chief Executive Officer.  

 

In determining compensation levels for the executive officers, the Compensation Committee considers:

 

 

 

*     the scope of an individual’s responsibilities;

*     the competitive market salary at comparable companies; 

*     an individual’s performance and prior experience; 

*     the performance of the Company; and

*     the attainment of planned financial and strategic initiatives.

 

These factors are evaluated by the Compensation Committee and the Board, with the attainment of planned financial and strategic initiatives given greater weight with respect to executive bonuses. The Compensation Committee considers overall past compensation and incentives in determining the compensation of executive officers and seeks to assure that the executives have appropriate incentives to achieve high levels of Company performance. Through its members’ involvement in other companies, the Compensation Committee also has experience evaluating compensation programs for executive officers.

 

Competitive market data and use of compensation consultants

 

On behalf of the Compensation Committee, the Company has engaged Korn Ferry Hay Group (“Korn Ferry”), a compensation consulting firm. As part of the compensation review process, Korn Ferry provides market survey data on executive total compensation levels and general information regarding executive compensation practices in our industry to the Compensation Committee. In 2018, the Compensation Committee directed Korn Ferry to evaluate our fiscal 2019 peer group. Korn Ferry used a variety of factors, including company revenue, profitability, other financial metrics, type of retail business, and competition for executive talent. Following the evaluation, Korn Ferry developed, and our Compensation Committee approved, the following companies as our peer group for fiscal 2019:

 

Advance Auto Parts, Inc.

Dick’s Sporting Goods, Inc.

Ross Stores Inc.

AutoZone, Inc.

DSW, Inc.

Sally Beauty Holdings, Inc.

Big Lots, Inc.

GNC Holdings, Inc.

Signet Jewelers Limited

Burlington Stores Inc.

O’Reilly Automotive, Inc.

Tractor Supply Company

Chico’s FAS, Inc.

Party City Holdco Inc.

Williams‑Sonoma, Inc.

The Compensation Committee used our fiscal 2019 peer group to assess the appropriateness of the following key components of our Named Executive Officers’ compensation: base salary, annual cash bonuses and long‑term equity incentives. The Compensation Committee also considered retail industry survey data provided by Korn Ferry and information gathered through its members’ involvement in other companies for purposes of setting the fiscal 2019 compensation for the Named Executive Officers (other than the Chief Executive Officer). The Compensation Committee may request that Korn Ferry provide other periodic market data on our peer group of companies for purposes of reviewing our compensation programs or making executive compensation decisions.

 

2020 PROXY STATEMENT | 15

Table of Contents

COMPENSATION ELEMENTS

 

Base Salaries

 

Base salaries for our executive officers are established based on the scope of their responsibilities, individual performance and prior experience, Michaels operating and financial performance and the attainment of planned financial and strategic initiatives.  Base salaries are reviewed and adjusted annually as deemed appropriate by the Compensation Committee and the Board, as applicable, based on performance and business results, among other factors. 

 

The recommendations made by the Compensation Committee and subsequent Board approvals also consider:

*

the advice of Korn Ferry regarding competitive market compensation paid by companies for similar positions;  

*

the compensation levels needed to attract and retain highly qualified individuals who make contributions that result in Michaels meeting its operating and financial goals; and

*

the knowledge of the members of the Compensation Committee.

In March 2019, the Compensation Committee reviewed recommendations regarding fiscal 2019 annual base salary rates for the executive officer group based on the criteria set forth under “Compensation Strategy: Policies and Procedures.” Merit guidelines for fiscal 2019 were determined by reviewing surveys of market data provided by Korn Ferry, as well as giving consideration to the Company’s overall budget for team member compensation. The Compensation Committee also reviewed the Company’s financial results for fiscal 2018. Annual base salary rates for Named Executive Officers for fiscal 2018 and 2019, are shown below.

 

 

 

 

 

 

 

 

Name

    

2018 Base Salary

    

2019 Base Salary

Ashley Buchanan(1)

 

$

 

$

1,200,000

Mark S. Cosby(2)

 

$

 

$

1,202,000

Carl S. Rubin(3)

 

$

1,202,000

 

$

1,202,000

Denise A. Paulonis

 

$

575,000

 

$

635,000

Vidya Jwala(4)

 

$

 —

 

$

625,000

J. Robert Koch

 

$

 425,000

 

$

464,000

Philo Pappas

 

$

563,732

 

$

750,000

(1)

Mr. Buchanan joined the Company as President and Chief Executive Officer Designate on January 6, 2020 and became the Chief Executive Officer on April 1, 2020. Pursuant to Mr. Buchanan’s employment agreement, his base salary was set at $1,200,000.

(2)

Mr. Cosby joined the Company in February 2019 as Interim Chief Executive Officer and transitioned to the role of Chief Executive Officer on October 21, 2019. Pursuant to Mr. Cosby’s employment agreement, his base salary was set at $1,202,000. Mr. Cosby transitioned out of his role as Chief Executive Officer on April 1, 2020 and continued to serve the Company as a Senior Advisor.

(3)

Mr. Rubin ceased to serve as Chief Executive Officer on February 28, 2019. His role as Chairman of the Company and his service as an employee of MSI each ended April 1, 2019.

(4)

Mr. Jwala joined the Company in November 2019. Pursuant to Mr. Jwala’s offer letter, his base salary was set at $625,000.

 

Annual Bonuses

Since fiscal 2015, annual cash award opportunities for executive officers, including our Named Executive Officers, and other key team members have been granted under The Michaels Companies, Inc. Annual Incentive Plan (the “Annual Plan”). The Annual Plan provides financial incentives to these individuals and those other members of management who are in positions to make important contributions to the success of Michaels. The structure of the fiscal 2019 bonus plan, including the bonus targets and the specific objectives relating to bonus payments were proposed by the Chief Financial Officer and Chief Human Resources Officer and were reviewed by the Compensation Committee in consultation with Korn Ferry. In March 2019, the Compensation Committee recommended that the Board approve the fiscal 2019 bonus targets and performance criteria for executive officers under the Annual Plan, which the Board subsequently approved (the “2019 Bonus Plan”).

Pursuant to the terms of both Mr. Cosby’s employment agreement and Mr. Pappas’s offer letter, 100% of their 2019 Bonus Plan opportunity was tied solely to Michaels attainment of a financial objective (earnings before interest and taxes, with certain adjustments, or “EBIT”) in fiscal 2019. For Ms. Paulonis and Koch, the 2019 Bonus Plan tied 80% of their bonus opportunity to Michaels attainment of EBIT, and 20% to individual performance. Individual management

16 |  A picture containing meter, clock

Description automatically generated

Table of Contents

business objectives for Ms. Paulonis and Mr. Koch were also reviewed with the members of the Compensation Committee at such time, and approved by the Chief Executive Officer. Pursuant to the terms of his offer letter, the Company guaranteed Mr. Jwala’s fiscal 2019 bonus in the amount of $400,000, partly to recognize what Mr. Jwala may have earned from his prior employer as a bonus (had he not accepted employment with Michaels). Mr. Jwala’s bonus guarantee was not tied to any financial objective of the Company or individual management business objectives. Mr. Rubin’s role as Chief Executive Officer of the Company ended February 28, 2019, and Mr. Buchanan joined the Company late fiscal 2019. As such, Messrs. Buchanan and Rubin were not eligible to participate in the 2019 Bonus Plan.

Under the 2019 Bonus Plan, before any business unit or individual performance payout would be earned, the actual results of the financial objective (EBIT) was required to meet the threshold established by the Compensation Committee, which represented approximately 90% of target. Each participating Named Executive Officer was entitled to a bonus equal to a certain percentage of that executive officer’s base salary, depending on the achievement of the threshold, target or maximum performance level. The Compensation Committee set threshold, target and maximum performance levels for all participating executive officers of the Company. The final award depended on the actual level of performance achieved; however, the Compensation Committee retained the right to make adjustments in its sole discretion. The Compensation Committee and the Board believed the performance levels to be reasonably achievable in view of Michaels historical annual performance. In the Compensation Committee’s view, taking into account comparative data provided to the Committee by Korn Ferry, the compensation payable to the participating Named Executive Officers upon reaching target levels of performance, when added to their base salaries, should create a level of total cash compensation competitive with that paid by comparable companies for similar positions. Additional information regarding the targets and objectives is set forth below.

 

For fiscal 2019 annual bonuses, the threshold, target and maximum percentages of base salary, as well as the bonus element weightings, for each of the Named Executive Officers were as follows:

 

 

 

Percentage of Base Salary

 

Bonus Element Weighting

 

 

    

Threshold

    

Target

    

Maximum

    

Overall
Company
Performance

    

Individual
Performance

 

Ashley Buchanan (1)

 

— 

 

— 

 

— 

 

— 

 

— 

 

Mark S. Cosby

 

22.5 

%  

125 

%  

200 

%  

100 

%  

— 

 

Carl S. Rubin (1)

 

— 

 

— 

 

— 

 

— 

 

— 

 

Denise Paulonis

 

11.7 

%

65 

%

130 

%

80 

%

20 

%

Vidya Jwala (1)

 

— 

 

— 

 

— 

 

— 

 

— 

 

J. Robert Koch

 

11.7 

%

65 

%

130 

%

80 

%

20 

%

Philo Pappas

 

11.7 

%

65 

%

130 

%

100 

%

— 

 


(1)

As described above, this individual was not included in the 2019 Bonus Plan due to the date of such individual’s appointment to, or termination of employment from, the Company, as applicable.

 

Company Financial Measures

 

At the beginning of fiscal 2019, the Compensation Committee established, and the Board approved, the EBIT threshold for bonuses under the 2019 Bonus Plan at $621.0 million, with a target level of $690.0 million, and a maximum of $745.2 million. In March 2020, the Compensation Committee reviewed the Company’s financial results and determined that for fiscal 2019, the Company achieved financial performance of $579.9 million, which was below the threshold level. As a result, bonuses were not earned under the 2019 Bonus Plan.

 

Individual Performance Measures

 

Although the financial objective threshold applicable to all Named Executive Officers was not met, the Company still evaluated individual performance. Individual management business objectives, both quantitative and subjective, were assessed in the aggregate to determine the individual’s level of performance and bonus achieved. No specified weight was given to a single measure within the group of individual management business objectives, and the assessment reflected a generalized view of overall achievement of the group of measures. In addition, the individual management business objectives for all executives included an assessment of the executive’s job knowledge and skills, communication skills, interpersonal skills, effectiveness of management, judgment and decision‑making, drive and commitment, leadership and customer satisfaction.

2020 PROXY STATEMENT | 17

Table of Contents

As described above, Ms. Paulonis and Messrs. Jwala and Koch were the Named Executive Officers with individual management business objectives for fiscal 2019. Ms. Paulonis’s group of individual management business objectives were focused primarily on sales, EBIT, cash flow, supporting new business growth, managing the Company’s banking matters and integral partnerships across the other operations of the business. Mr. Koch’s group of individual management business objectives were primarily focused on sales, EBIT, cash flow, leading the store operations organization, enhancing in-store processes, managing the Company’s real estate portfolio, including leasing and site location, and directing the business development function primarily focused on identifying and pursuing new growth opportunities. Due to Mr. Jwala joining the Company in late fiscal 2019, he was evaluated on overall individual performance. The Compensation Committee determined that Ms. Paulonis and Mr. Koch each achieved their individual objectives at 75% of target.

 

Actual Payouts

 

Other than Mr. Jwala’s guaranteed fiscal 2019 bonus payment of $400,000 (pursuant to his offer letter with the Company), no bonuses were paid out to participating Named Executive Officers under the 2019 Bonus Plan due to the Company not meeting its fiscal 2019 financial measures. For more information with respect to annual bonus amounts paid to our Named Executive Officers, please see “Executive Compensation – Summary Compensation Table.”

 

Fiscal 2019 Signing Bonuses

 

The Company granted signing bonuses to each of Messrs. Buchanan, Cosby and Jwala. These bonuses were meant to attract and incentivize exceptional talent to join the Company’s executive management.

 

On February 28, 2019, the Company paid Mr. Cosby an amount equal to $250,000 in connection with his appointment as Interim Chief Executive Officer. Mr. Cosby would have been required to reimburse the full amount of the signing bonus to the Company if on or before August 28, 2019, he (i) resigned prior to the appointment of a new Chief Executive Officer or (ii) his employment was terminated by the Company for cause (as defined in the Omnibus Plan).

 

On November 18, 2019, Mr. Jwala received an amount equal to $200,000 in connection with his appointment as Chief Customer Officer. If Mr. Jwala resigns from the Company or is terminated for misconduct on or before November 18, 2020, he is required to reimburse the full amount of the signing bonus to the Company.

 

On January 6, 2020, Mr. Buchanan, upon his appointment as President and Chief Executive Officer Designate, received an amount equal to $3,667,652. In addition to being a retention incentive, this signing bonus was intended to make him whole for a bonus payment and certain equity awards from his prior employer (that he would have otherwise earned had he not accepted employment with Michaels). Mr. Buchanan is entitled to keep the full amount of his signing bonus in the event his employment is terminated by the Company without cause (as defined in his employment letter agreement), he resigns for good reason (as defined in his employment letter agreement), or his employment terminates due to his death or Disability (as defined in the Omnibus Plan) prior to January 6, 2022. If Mr. Buchanan resigns from Michaels on or before January 6, 2022 other than for good reason, he will be required to repay the Company a pro-rata portion of the signing bonus (based on the number of days remaining until January 6, 2022). Further, Mr. Buchanan will have to repay the signing bonus in full if he breaches any non-competition, non-solicitation, non-hire or breaches in any material respect any other material restrictive covenant to which he is bound prior to January 6, 2022.

 

Long‑Term Equity‑Based Compensation

 

On April 14, 2020, the Board approved the Proposed Plan and, following stockholder approval, all equity-based awards, including to our Named Executive Officers will be granted under the Proposed Plan. See “Proposal 2 – Approval of Amendment and Restatement of Michaels Second Amended and Restated 2014 Omnibus Long-Term Incentive Plan” for additional information with respect to the Proposed Plan.

 

Equity awards granted by the Company are intended to align the long‑term incentives of our Named Executive Officers and stockholders. Target long-term incentive values are based on market data for comparable roles provided by Korn Ferry. This award value is then converted into a number of shares based on the Company’s stock price on the grant date. Since 2016, the Company has issued a combination of annual option and restricted stock unit grants that vest over four years. For fiscal 2019 annual grants, the ratio of stock options to restricted stock units awarded to each participant

18 |  A picture containing meter, clock

Description automatically generated

Table of Contents

was approximately one to five. In September 2018, performance-based awards were also granted to certain Named Executive Officers. 

 

Annual option and restricted stock unit grant amounts are generally awarded based on the midpoint of the award grant range for such officer’s level, with occasional exceptions based on an individual’s performance. Grants are also typically awarded when an executive is hired and may be awarded for subsequent promotions. New hire grants and promotion‑related grants are generally issued at a multiple of the range midpoint, on a case‑by‑case basis, but subject to Company grant guidelines approved by the Compensation Committee. All stock option grants made in fiscal 2019 were at exercise prices set at or above the grant date fair market value of the underlying stock as determined by our Board. For more information regarding option and grants of restricted stock and restricted stock units made to our Named Executive Officers in fiscal 2019 and awards outstanding at the end of fiscal 2019, please see the “Grants of Plan‑Based Awards for Fiscal 2019” and “Outstanding Equity Awards at Fiscal Year-End 2019” tables, respectively.

 

Cosby, Pappas Quarterly Grants

 

As Interim Chief Executive Officer and Interim President – Merchandising and Supply Chain, respectively, Messrs. Cosby and Pappas were appointed on an interim basis in February 2019. As a component of their compensation, the Company granted restricted stock to both Messrs. Cosby and Pappas on February 28, 2019, and subsequently, the first day of each fiscal quarter. Beginning November 4, 2019, Mr. Cosby received restricted stock units for each of his quarterly grants. For more information regarding these awards, including their vesting terms see the “Grants of Plan-Based Awards for Fiscal 2019” and “Outstanding Equity Awards at Fiscal Year-End 2019” tables.

 

Fiscal 2019 Signing Equity Awards

 

In connection with the hiring of Messrs. Buchanan, Cosby and Jwala,  and the retention of Mr. Pappas, the Company also made equity grants to each individual. These awards were meant to immediately retain the individual and align their goals with those of the stockholder.  

 

In connection with his appointment as President and Chief Executive Officer Designate, Mr. Buchanan received options to purchase 500,000 shares of the Company’s common stock, vesting annually over four years. The Company also granted Mr. Buchanan 795,000 restricted stock units, vesting annually over two years. The options and restricted stock units were intended to provide Mr. Buchanan a long-term incentive opportunity and to make him whole for certain equity awards from his prior employer (that he would have otherwise earned had he not accepted employment with Michaels). Upon the restricted stock units vesting, those shares are subject to minimum holding period requirements, and the Company will have repurchase rights on the restricted stock unit awards in the event Mr. Buchanan’s employment terminates before January 6, 2024.

 

On November 18, 2019, and in connection with his appointment as the Company’s Chief Customer Officer, Mr. Jwala received options to purchase 32,622 shares of the Company’s common stock and 303,652 restricted stock units, both vesting annually over four years. The terms of his awards were consistent with the forms of option and restricted stock unit award agreements used in March 2019 for the executive officers’ annual grants of long-term incentive compensation.

 

For more information regarding these awards, including their vesting terms, see the “Grants of Plan-Based Awards for Fiscal 2019” and “Outstanding Equity Awards at Fiscal Year-End 2019” tables.

 

October 2019 Special Equity Awards

 

In October 2019, the Company granted restricted stock units to each of Mr. Cosby, Ms. Paulonis and Mr. Koch. The Company also granted options to purchase Company common stock to Mr. Cosby. The goal of these one-time equity grants was to retain key leadership, drive long-term Company performance and motivate the leadership team to achieve long-term financial objectives. Mr. Cosby’s grants were also made in connection with his appointment as the permanent Chief Executive Officer on October 21, 2019 and amended on December 26, 2019, in connection with Mr. Buchanan’s hire.

 

In connection with her employment termination on January 31, 2020, Ms. Paulonis forfeited her October 2019 restricted stock unit grant.  

2020 PROXY STATEMENT | 19

Table of Contents

For more information regarding these awards, including their vesting terms, see the “Grants of Plan-Based Awards for Fiscal 2019” and “Outstanding Equity Awards at Fiscal Year-End 2019” tables.

Stock Ownership Guidelines

 

In March 2017, Michaels updated its ownership guidelines applicable to all officers, including the Named Executive Officers. The Chief Executive Officer’s ownership is expected to equal five times his base salary. Each of the remaining Named Executive Officer’s ownership is expected to equal three times his or her base salary. For those officers not already meeting the parameters outlined in the guidelines, compliant ownership is to be achieved before their fifth anniversary with Michaels, and they are expected to continuously own sufficient shares to meet the guideline once attained. Individuals who become subject to a greater ownership level due to promotion are expected to meet the applicable guideline no more than five years after first becoming subject to the greater ownership level. Ownership includes shares held outright, unvested restricted shares, unvested restricted stock units, the in‑the‑money value of vested stock options, and shares held in trusts.

 

Margin Accounts, Pledging and Hedging Transactions

 

With limited exceptions, the Company’s directors, officers and employees are generally prohibited from holding Company securities in margin accounts and pledging Company securities as collateral. Directors, officers and employees are also prohibited from entering into hedging transactions, as such transactions can cause the interest of such person to not be aligned with the interest of the Company’s other stockholders. The Board believes these prohibitions, as found in the Company’s Insider Trading Policy, prevent the misuse of confidential information, promote compliance with securities laws and maintain alignment with the long-term goals of its stockholders. The Insider Trading Policy, adopted in June 2014, is available on our website at www.michaels.com.

 

Other Benefits and Perquisites

 

Our Named Executive Officers also receive certain other benefits and perquisites. During fiscal 2019, these benefits included contributions to certain Company‑paid medical benefits, Company-paid life insurance premiums, 401(k) account contributions, relocation benefits, and, in some cases, reimbursement for income taxes on long-term disability insurance premiums and medical benefits. Prior to the discontinuation of the perquisite, each of Messrs. Cosby and Rubin were entitled to the use of a Company‑owned or leased automobile. The Compensation Committee and the Board believe that these benefits and perquisites are reasonable and consistent with the nature of the executives’ responsibilities, provide a competitive level of total compensation to our executives and serve as an important element in retaining those individuals. The cost to Michaels of these benefits to the Named Executive Officers is set forth in the Summary Compensation Table under the column “All Other Compensation” and detail about each element is set forth in the table presented in footnote 5 to the Summary Compensation Table.

 

Clawback Policy

 

In March 2017, the Board approved a Policy for Recovery of Incentive Compensation, which allows the Company to recover incentive compensation from a current or former Named Executive Officer in the event the individual engaged in knowing or intentional fraudulent or illegal conduct that materially contributed to the need for a restatement of the Company’s financial statements. The Policy for Recovery of Incentive Compensation is available on our website at www.michaels.com.

 

Employment and Severance Agreements

 

Buchanan Employment Agreement

 

We entered into an employment agreement with Mr. Buchanan, which became effective on January 6, 2020, the date he commenced employment as the Company’s President and Chief Executive Officer Designate and a member of the Board (such agreement, the “Buchanan Agreement”). Pursuant to the Buchanan Agreement, Mr. Buchanan transitioned into the role of Chief Executive Officer on April 1, 2020. The Buchanan Agreement included certain severance benefits in the event of termination other than for “cause” or by Mr. Buchanan for “good reason”, as such terms are defined in the Buchanan Agreement. The specific terms of the Buchanan Agreement are discussed under 

20 |  A picture containing meter, clock

Description automatically generated

Table of Contents

“Executive Compensation – Potential Payments upon Termination or Change of Control – Estimated Separation Payments.”

 

Cosby Employment Agreement

 

We entered into an employment agreement with Mr. Cosby, which became effective on February 28, 2019, the date he commenced employment as the Company’s Interim Chief Executive Officer and a member of the Board. The employment agreement was subsequently amended on October 21, 2019 (in connection with his appointment as permanent Chief Executive Officer) and December 26, 2019 (in connection with the appointment of Mr. Buchanan as President and Chief Executive Officer Designate) (such agreement, as amended, the “Cosby Agreement”). The Cosby Agreement provided for certain severance benefits in the event of his termination other than for “cause”, as such term is defined in the Cosby Agreement. Mr. Cosby transitioned out of his role as Chief Executive Officer on April 1, 2020 and currently serves as Senior Advisor to the Company. The specific terms of the Cosby Agreement are discussed under “Executive Compensation – Potential Payments upon Termination or Change of Control – Estimated Separation Payments.”

 

Rubin Separation Agreement

 

We entered into an employment agreement with Mr. Rubin (the “Rubin Agreement”), which became effective on March 18, 2013, the date he commenced employment. The Rubin Agreement included certain severance benefits in the event of termination other than for “cause” or by Mr. Rubin for “good reason”, as such terms are defined in the agreement. Mr. Rubin’s role as Chief Executive Officer of the Company ended effective February 28, 2019. His role as Chairman of the Board, and his employment as an employee of the Company terminated, effective April 1, 2019. In connection with his separation, the Company entered into a Separation Letter, dated February 27, 2019 and an Addendum and Amendment to Separation Letter, dated March 20, 2019 (together, the “Rubin Separation Agreement”). The specific terms of the Rubin Separation Agreement are discussed under “Executive Compensation – Potential Payments upon Termination or Change of Control – Estimated Separation Payments.”

 

Officer Severance Pay Plan

 

In April 2008, the Board approved the Company’s Officer Severance Pay Plan (as amended, the “OSPP”). The OSPP was established by the Company to provide certain severance benefits, subject to the terms and conditions of the OSPP, to designated officers (those with a position of Vice President or above, or an equivalent title as approved by the Compensation Committee, and excluding the Chief Executive Officer) in the event that their employment is terminated as a result of a “Qualifying Termination” (as defined in the OSPP and described below). A more detailed description of the OSPP may be found under “Potential Payments upon Termination or Change of Control.”

 

Tax Considerations 

 

While the Compensation Committee takes into account tax and accounting considerations in structuring the components of the Company’s compensation program, these considerations are secondary to the primary objectives of the program. Section 162(m) of the Code (“Section 162(m)”) disallows a U.S. federal income tax deduction to any publicly held corporation for compensation exceeding $1 million in any taxable year. Prior to the Tax Cuts and Jobs Act (the “Tax Reform Law”) that was enacted on December 22, 2017, the limitation only applied to the corporation’s chief executive officer and its other three most highly paid named executive officers other than its chief financial officer, and certain compensation that qualified as performance‑based was eligible for an exemption from Section 162(m). Effective for taxable years beginning after December 31, 2017, the Tax Reform Law expanded the deduction limitation to apply to a corporation’s chief financial officer and repealed the exemption for performance-based compensation except for certain grandfathered compensation arrangements. Although the Compensation Committee may take the deductibility limitations of Section 162(m) into account in its compensation decisions, the Compensation Committee expects it will authorize compensation payments that are not deductible under Section 162(m) to attract and retain talent.

 

The Company’s Compensation Policies and Practices as They Relate to Risk Management

 

In accordance with the applicable disclosure requirements, to the extent that risks may arise from the Company’s compensation policies and practices that are reasonably likely to have a material adverse effect on the Company, the Company is required to discuss those policies and practices for compensating the employees of the

2020 PROXY STATEMENT | 21

Table of Contents

Company (including employees that are not Named Executive Officers) as they relate to the Company’s risk management practices and the possibility of incentivizing risk‑taking.

 

The Compensation Committee has evaluated the policies and practices of compensating the Company’s employees in light of the relevant factors, including the following:

*

the financial performance targets of the Company’s annual cash incentive program are the budgeted objectives that are reviewed and approved by the Board and/or the Compensation Committee;

*

other than for certain senior executives whose bonuses are based entirely on Company performance, bonus payouts for most employees are not based solely on Company performance, but also have achievement of individual performance objectives as a component, provided that Company performance thresholds are met;

*

bonus awards generally are not contractual entitlements, but are reviewed by the Compensation Committee and/or the Board and can be modified at their discretion;

*

the financial opportunity in the Company’s long‑term equity‑based compensation is best realized through long‑term appreciation of the Company’s stock price, which mitigates excessive short‑term risk‑taking;

*

results of the most recent stockholder advisory votes on executive compensation; and

*

the allocation of compensation between cash and equity awards and the focus on stock‑based compensation, including options and restricted stock awards generally vesting over a period of years, thereby mitigating against short‑term risk taking.

Based on such evaluation, the Compensation Committee has determined that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. 

22 |  A picture containing meter, clock

Description automatically generated

Table of Contents

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S‑K with management and, based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and be incorporated by reference into our Annual Report on Form 10‑K for the fiscal year ended February 1,  2020.

 

 

 

THE COMPENSATION COMMITTEE

 

 

 

Matthew S. Levin, Chair

 

Ryan Cotton

James A. Quella

 

Beryl B. Raff

 

 

2020 PROXY STATEMENT | 23

Table of Contents

Summary Compensation Table 

 

The following table and footnotes include specific compensation information for each of the Named Executive Officers previously identified in the Compensation Discussion and Analysis above.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock

 

Option

 

Non-Equity
Incentive
Plan

 

All Other

 

 

 

Name and Principal

 

 

 

Salary

 

Bonus

 

Awards

 

Awards

 

Compensation

 

Compensation

 

Total

 

Position

    

Year

    

($) (1)

    

($) (2)

    

($)  (3)

    

($)  (3)

    

($)  (4)

    

($)  (5)

    

($)

 

Ashley Buchanan  (6)

 

2019

 

69,346

 

3,667,652

 

6,936,375

 

1,511,744

 

 

7,648

 

12,192,765

 

Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark S. Cosby (7)

 

2019

 

1,095,669

 

250,000

 

2,133,098

 

2,998,998

 

 

30,659

 

6,508,424

 

Former Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carl S. Rubin (8)

 

2019

 

208,038

 

 

 

 

 

2,807,851

 

3,015,889

 

Former Chairman and Chief

 

2018

 

1,202,000

 

 

5,416,579

 

3,040,065

 

471,424

 

342,779

 

10,472,847

 

Executive Officer

 

2017

 

1,202,000

 

 

1,666,667

 

2,716,226

 

1,640,610

 

336,817

 

7,562,320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denise A. Paulonis (9)

 

2019

 

617,548

 

 

1,170,337

 

351,471

 

 

16,432

 

2,155,788

 

Former Executive Vice President –

 

2018

 

575,000

 

 

2,183,326

 

321,358

 

173,305

 

15,614

 

3,268,603

 

Chief Financial Officer

 

2017

 

500,000

 

 

183,329

 

286,509

 

322,350

 

11,891

 

1,304,079

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vidya Jwala (10)

 

2019

 

120,192

 

600,000

 

2,559,786

 

94,455

 

 

17,250

 

3,391,683

 

Chief Customer Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

J. Robert Koch (11)

 

2019

 

453,769

 

 

654,830

 

309,283

 

 

24,959

 

1,442,841

 

Executive Vice President –

 

2018

 

310,577

 

100,000

 

833,313

 

604,059

 

96,071

 

83,496

 

2,027,516

 

Stores and Development 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Philo Pappas (12)

 

2019

 

728,508

 

 

510,713

 

 

 

23,823

 

1,263,044

 

Former President –

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandising and Supply Chain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


(1)

Represents actual base salary paid in fiscal 2019, 2018 and 2017, as applicable.

(2)

Each amount in this column reflects a signing bonus, payable within 30 days of such individual’s start date, pursuant to the terms of such individual’s employment agreement or offer letter with the Company, as applicable. For Mr. Jwala, the amount also includes a guaranteed annual bonus of $400,000 for fiscal 2019 payable under his offer letter.

(3)

Represents the aggregate grant date fair value of the restricted stock, restricted stock unit or option awards on the date of the grant as calculated in accordance with FASB ASC Topic 718. With respect to equity granted in fiscal 2019, the underlying valuation assumptions are discussed in Note 10 to the Consolidated Financial Statements for the fiscal year ended February 1, 2020, included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2020. With respect to equity granted in fiscal 2018, the underlying valuation assumptions are discussed in Note 11 to the Consolidated Financial Statements for the fiscal year ended February 2, 2019, included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019. With respect to equity granted in fiscal 2017, the underlying valuation assumptions are discussed in Note 10 to the Consolidated Financial Statements for the fiscal year ended February 3, 2018, included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2018.

(4)

Other than amounts received by Mr. Jwala (as detailed in footnote 2 above), the amounts in this column for fiscal 2019 reflect that no cash awards were paid to Named Executive Officers under the 2019 Bonus Plan for executive officers for fiscal 2019, as discussed in further detail in the preceding section “Compensation Discussion and Analysis – Compensation Elements – Annual Bonuses.” The amounts in this column for fiscal 2018 and 2017 reflect the cash awards paid to Named Executive Officers under the Company’s Annual Plan for executive officers for the applicable year.  

(5)

The table below reflects the fiscal 2019 components of this column.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Ashley

 

Mark S.

 

Carl S.

 

Denise A.

 

Vidya

 

J. Robert

 

Philo

 

 

Buchanan

 

Cosby

 

Rubin

 

Paulonis

 

Jwala

 

Koch

 

Pappas

Medical Benefits(a)

 

$

 

$

12,923

 

$

9,384

 

$

8,780

 

$

1,384

 

$

15,865

 

$

18,968

Insurance Premiums

 

 

 

 

2,262

 

 

834

 

 

3,201

 

 

150

 

 

2,976

 

 

2,992

Company Contributions to 401(k)

 

 

 

 

 

 

1,413

 

 

2,869

 

 

 

 

 

 

577

Car Allowances / Company-Owned/Leased Automobile

 

 

 

 

14,572

 

 

2,810

 

 

 

 

 

 

 

 

Relocation Reimbursements

 

 

7,648

 

 

 

 

 

 

 

 

 

15,716

 

 

4,760

 

 

Severance Payments(b)

 

 

 

 

 

 

2,793,048

 

 

 

 

 

 

 

 

Tax Reimbursements(c)

 

 

 

 

902

 

 

362

 

 

1,582

 

 

 

 

1,358

 

 

1,286

Total Other

 

$

7,648

 

$

30,659

 

$

2,807,851

 

$

16,432

 

$

17,250

 

$

24,959

 

$

23,823

(a)

The amounts in this row for all executive officers include Company‑paid medical benefits, including executive and spouse physicals.

(b)

The amounts in this row reflect severance payments paid to Mr. Rubin pursuant to the Rubin Separation Agreement. Over a period of two years, Mr. Rubin is to be paid his base salary, two times his target bonus, certain medical benefits and reimbursement of certain legal expenses.

(c)

Reimbursement of income taxes is related to relocation, long‑term disability insurance premiums and medical expenses.

24 |  A picture containing meter, clock

Description automatically generated

Table of Contents

(6)

Mr. Buchanan joined the Company in January 2020 as President and Chief Executive Officer Designate and transitioned to the role of Chief Executive Officer effective April 1, 2020.  

(7)

Mr. Cosby joined the Company in February 2019, and, effective April 1, 2020, transitioned out of his role as Chief Executive Officer and became a Senior Advisor to the Company.

(8)

Mr. Rubin’s role as Chief Executive Officer ended effective February 28, 2019. Effective April 1, 2019, he ceased to serve as Chairman of the Board and his employment as an employee of MSI terminated.

(9)

Ms. Paulonis’s employment as Executive Vice President – Chief Financial Officer ended effective January 31, 2020.

(10)

Mr. Jwala joined the Company in November 2019.

(11)

Mr. Koch joined the Company and became a Named Executive Officer in May 2018. As such, compensation details are only given for such years.

(12)

Mr. Pappas became a Named Executive Officer in February 2019 upon his appointment as President – Merchandising and Supply Chain, and his employment with the Company terminated April 3, 2020. As such, compensation details are only given for such year.

 

Chief Executive Officer Pay Ratio

 

For 2019, the total compensation of Mr. Cosby, the Company’s Chief Executive Officer as of the end of fiscal 2019, was $6,508,424, as presented in the Summary Compensation Table, and approximately 681 times the total compensation of the Company’s median employee of $9,561 calculated in the same manner.

 

The employee population was determined as of January 31, 2020. On that date, the Company had a total employee population of 41,730 employees in the United States, Canada, China and Hong Kong. With a total of 121 employees in China and Hong Kong, the de minimis exemption under SEC regulations was applied. The median employee was determined from the active employee population of the United States and Canada on the determination date, excluding Mr. Cosby, the Chief Executive Officer as of the determination date. All active Company employees were included, whether employed on a full-time or part-time or seasonal basis. Adjustments were made to annualize the compensation of employees who were not employed by the Company for the entire year. The median employee, a part-time employee in our stores, was identified by reviewing the wages of our employees as reflected in our payroll records for 2019. We converted earnings paid in Canadian dollars to U.S. dollars using the published exchange rate as of January 31, 2020. After identifying the median employee, the 2019 annual total compensation was calculated for the median employee using the same methodology used for the Company’s former Chief Executive Officer as presented in the Summary Compensation Table above.

 

Nearly 75% of our employees are part-time and / or seasonal employees in our stores or distribution centers. In comparison, the total compensation of the Company’s former Chief Executive Officer was approximately 205 times the total compensation of the Company’s median full-time employee of $31,727 calculated in the same manner as mentioned above.

 

The SEC rules allow us the flexibility to select a methodology for identifying our median employee in a manner that is most appropriate based on our size, organizational structure, policies and procedures. As such, the pay ratios reported by other companies, including by our peer companies or other companies in the arts and craft specialty retail industry, which may have employed other permitted methodologies or assumptions, may not be comparable to our pay ratio.

 

2020 PROXY STATEMENT | 25

Table of Contents

Grants of Plan‑Based Awards for Fiscal 2019

 

The following table sets forth the plan‑based awards granted to our Named Executive Officers pursuant to Company plans during fiscal 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All

 

All Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

Option

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock

 

Awards:

 

Exercise or

 

Grant Date

 

 

 

 

 

Estimated Future Payouts

 

Awards:

 

Number of

 

Base

 

Fair Value

 

 

 

 

 

Under Non-Equity Incentive

 

Number

 

Securities

 

Price of

 

of Stock

 

 

 

 

 

Plan Awards(1)

 

Shares of

 

Underlying

 

Option

 

and

 

 

    

Grant

    

Threshold

    

Target

    

Maximum

    

Stock

    

Options

    

Awards

    

Option

 

Name 

 

Date

 

($)

 

($)

 

($)

 

(#)(2)

 

(#)(2)(3)

 

($/Sh)(3)

 

Awards ($) (4)

 

Ashley Buchanan (5)

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1/6/2020

(6)

 

 

 

 

 

 

795,000

 

 

 

 

 

 

 

6,936,375

 

 

 

1/6/2020

(7)

 

 

 

 

 

 

 

 

500,000

 

 

8.73

 

 

1,511,744

 

Mark Cosby

 

N/A

 

270,450

 

1,502,500

 

3,005,000

 

 

 

 

 

 

 

 

 

 

 

 

 

2/28/2019

(8)

 

 

 

 

 

 

18,943

 

 

 

 

 

 

 

267,854

 

 

 

5/6/2019

(9)

 

 

 

 

 

 

33,333

 

 

 

 

 

 

 

374,996

 

 

 

8/5/2019

(9)

 

 

 

 

 

 

55,310

 

 

 

 

 

 

 

375,002

 

 

 

10/21/2019

(10)

 

 

 

 

 

 

75,000

 

 

 

 

 

 

 

740,250

 

 

 

11/4/2019

(9)

 

 

 

 

 

 

40,584

 

 

 

 

 

 

 

374,996

 

 

 

10/21/2019

(10)

 

 

 

 

 

 

 

 

860,000

 

 

9.87

 

 

2,998,998

 

Carl S. Rubin (11)

 

N/A

 

 

 

 

 

 

 

 

 

 

Denise A. Paulonis (9) 

 

N/A

 

74,295

 

412,750

 

825,500

 

 

 

 

 

 

 

 

 

 

 

 

 

3/29/2019

(7)

 

 

 

 

 

 

 16,054

 

 

 

 

 

 

 

183,337

 

 

 

10/21/2019

(7)

 

 

 

 

 

 

100,000

 

 

 

 

 

 

 

987,000

 

 

 

3/29/2019

(7)

 

 

 

 

 

 

 

 

96,324

 

 

11.42

 

 

351,471

 

Vidya Jwala (12)

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11/18/2019

(7)

 

 

 

 

 

 

303,652

 

 

 

 

 

 

 

2,559,786

 

 

 

11/18/2019

(7)

 

 

 

 

 

 

 

 

32,622

 

 

8.43

 

 

94,455

 

J. Robert Koch

 

N/A

 

54,288

 

301,600

 

603,200

 

 

 

 

 

 

 

 

 

 

 

 

 

3/29/2019

(7)

 

 

 

 

 

 

 14,127

 

 

 

 

 

 

 

161,330

 

 

 

10/21/2019

(7)

 

 

 

 

 

 

50,000

 

 

 

 

 

 

 

493,500

 

 

 

3/29/2019

(7)

 

 

 

 

 

 

 

 

84,762

 

 

11.42

 

 

309,283

 

Philo Pappas

 

N/A

 

87,750

 

487,500

 

975,000

 

 

 

 

 

 

 

 

 

 

 

 

 

2/28/2019

(13)

 

 

 

 

 

 

6,946

 

 

 

 

 

 

 

98,216

 

 

 

5/6/2019

(13)

 

 

 

 

 

 

12,222

 

 

 

 

 

 

 

137,498