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Notice of Annual Meeting of Shareholders
The annual meeting of shareholders of Genesco Inc. (the Company) will be held at the Companys executive offices, Genesco Park, 1415 Murfreesboro Road, Nashville, Tennessee, on Wednesday, June 27, 2012, at 10:00 a.m. Central Time.
The agenda will include the following items:
1. a proposal to elect 9 directors;
2. a non-binding, advisory vote on the Companys executive compensation;
3. a proposal to ratify the appointment of Ernst & Young LLP as independent registered public accounting firm to the Company for the current fiscal year; and
4. any other business that properly comes before the meeting or any adjournment or postponement thereof.
Shareholders of record at the close of business on April 27, 2012, are entitled to receive this notice and vote at the meeting and any adjournment or postponement thereof.
|By order of the board of directors,|
It is important that your shares be represented at the meeting. Please vote by telephone or over the internet or sign, date and return the enclosed proxy promptly so that your shares will be voted. A return envelope which requires no postage if mailed in the United States is enclosed for your convenience. Please do not return the enclosed paper ballot if you are voting by telephone or over the internet.
FOR ANNUAL MEETING OF SHAREHOLDERS
JUNE 27, 2012
The board of directors of Genesco Inc. (Genesco or the Company) is requesting proxies to be voted at the annual meeting of shareholders. The meeting will be held at the Companys executive offices at 10:00 a.m. Central Time, on Wednesday, June 27, 2012. The Companys executive offices are located at Genesco Park, 1415 Murfreesboro Road, Nashville, Tennessee 37217. The notice that accompanies this statement describes the items on the meeting agenda.
The Company will pay the cost of the proxy solicitation. The Company has retained Georgeson Inc. to assist in the proxy solicitation. It will pay Georgeson a proxy solicitation fee of $11,000, plus $6.50 per completed telephone call to shareholders in the event that active solicitation is required, and reimburse its expenses. In addition to this request, officers, directors and regular employees of the Company may solicit proxies personally and by mail, facsimile or telephone. They will receive no extra compensation for any solicitation activities. The Company will request brokers, nominees, fiduciaries and other custodians to forward soliciting material to the beneficial owners of shares and will reimburse the expenses they incur in doing so.
All valid proxies will be voted as the board of directors recommends, unless otherwise specified. A shareholder may revoke a proxy before the proxy is voted at the annual meeting by giving written notice of revocation to the secretary of the Company, by executing and delivering a later-dated proxy, by casting a new vote by telephone or the internet or by attending the annual meeting and voting in person the shares the proxy represents.
The board of directors does not know of any matter that will be considered at the annual meeting other than those the accompanying notice describes. If any other matter properly comes before the meeting, persons named as proxies will use their best judgment to decide how to vote on it.
This proxy material was first mailed to certain shareholders on or about May 14, 2012. Also on that date, the Company mailed to all shareholders of record at the close of business on April 27, 2012, a Notice of Internet Availability of Proxy Materials containing instructions on how to access this proxy statement and the Companys annual report online and how to vote online.
The proxy statement for the annual meeting and the annual report for the fiscal year ended January 28, 2012 are available at www.edocumentview.com/GCOB.
The various classes of voting preferred stock and the common stock will vote together as a single group at the annual meeting.
April 27, 2012 was the record date for determining who is entitled to receive notice of and to vote at the annual meeting. On that date, the number of voting shares outstanding and the number of votes entitled to be cast were as follows:
|Class of Stock||Shares||per Share||Total Votes|
|Subordinated Serial Preferred Stock:|
|$2.30 Series 1||29,268||1||29,268|
|$4.75 Series 3||11,643||2||23,386|
|$4.75 Series 4||3,397||1||3,397|
|$1.50 Subordinated Cumulative Preferred|
|Employees Subordinated Convertible Preferred|
A majority of the votes entitled to be cast on a matter constitutes a quorum for action on that matter. Once a share is represented at the meeting, it is considered present for quorum purposes for the rest of the meeting. Abstentions and shares represented at the meeting, but not voted on a particular matter due to a brokers lack of discretionary voting power (broker non-votes), will be counted for quorum purposes but not as votes cast for or against a matter. The ratification of the independent registered public accounting firm is a routine matter as to which, under applicable New York Stock Exchange (NYSE) rules, a broker will have discretionary authority to vote if instructions are not received from the client at least 10 days prior to the annual meeting. The election of directors and the advisory vote on executive compensation are not matters as to which a broker may exercise discretionary voting authority.
Each of the director nominees must receive affirmative votes from a plurality of the votes cast to be elected. The proposal to ratify the selection of Ernst & Young LLP as the independent registered public accounting firm to the Company will be approved if the votes cast in favor of the proposal exceed the votes cast against it. The executive compensation of the Companys named executive officers will be deemed approved if it receives the affirmative vote of a majority of votes present, in person or by proxy; however, this is an advisory vote and is not binding on the board of directors.
ELECTION OF DIRECTORS
Nine directors are to be elected at the meeting. They will hold office until the next annual meeting of shareholders and until their successors are elected and qualify. A plurality of the votes cast by the shares entitled to vote in the election is required to elect a director. All the nominees are presently serving as directors, and all have agreed to serve if elected. All directors except Mr. Marshall were elected by the Companys shareholders. The shares represented by valid proxies will be voted FOR the election of the following nominees, unless the proxies specify otherwise. If any nominee becomes unable or unwilling to serve prior to the annual meeting, the board of directors will reduce the number of directors comprising the board, pursuant to the Companys Bylaws, or the proxies will be voted for a substitute nominee recommended by the board of directors.
The board of directors recommends that the shareholders vote FOR all of the director nominees.
Information Concerning Nominees
All the Companys directors have demonstrated business acumen, the ability to exercise sound business judgment, and a commitment to serve the Company as directors. They also bring a variety of professional backgrounds and leadership experience that contribute to the effectiveness of the board in fulfilling its responsibilities to the Company. Set forth below is biographical information about each director and a discussion of factors in his or her experience that the board views as supporting his or her continued service on the board.
JAMES S. BEARD, 71, Retired President, Caterpillar Financial Services Corporation. Mr. Beard retired as vice president of Caterpillar Inc., a leading manufacturer of construction and mining equipment, engines and turbines, and as president of Caterpillar Financial Services Corporation in 2005, after a 40-year career with Caterpillar. He joined Genescos board in October 2005. He is a director of Ryder System, Inc., a publicly-held provider of transportation, logistics and supply chain management solutions, and Rogers Group, Inc., a privately-held producer of construction products. The board believes that Mr. Beards extensive experience in global operations with a major public company and his financial expertise are beneficial to the board and to the Company.
LEONARD L. BERRY, Ph.D., 69, Presidential Professor for Teaching Excellence, Distinguished Professor of Marketing and Professor of Humanities in Medicine, Texas A&M University. Dr. Berry has been a professor of marketing at Texas A&M University since 1982. He is the founder of the Center for Retailing Studies, holds the M.B. Zale Chair in Retailing and Marketing Leadership at Texas A&M and is the author of numerous books. He is a director of Lowes Companies, Inc., a publicly-held home improvement
retailer, and Darden Restaurants Inc., a publicly-held casual dining restaurant company, and became a Genesco director in 1999. Dr. Berry brings to the board the benefits of years of thinking, writing, and teaching about the role of service in successful retailing, as well as the perspective gained from service on other boards in the retail and hospitality industry.
WILLIAM F. BLAUFUSS, JR., 71, Retired Partner, KPMG LLP, Certified Public Accountant. Mr. Blaufuss, who became a Genesco director in 2004, retired as a partner from the public accounting firm of KPMG LLP in 2000. He was associated with KPMG for 37 years in various capacities, including Nashville Practice Unit Managing Partner and Partner in Charge of the Southeast Area Public Sector Practice. From 2000 to 2002, he performed special projects for KPMG International regarding its operations outside the United States and has since performed a number of consulting projects, including involvement in acquisition due diligence, corporate governance evaluations, and litigation support for a variety of clients. He is a director of NBT Holdings, Inc. and Nashville Bank and Trust Company and a member of the Tennessee State Board of Accountancy. The board believes that Mr. Blaufusss experience with a major public accounting firm is valuable to the board in its oversight of the Companys financial performance, accounting and financial reporting, and internal controls.
JAMES W. BRADFORD, 65, Dean, Owen Graduate School of Management, Vanderbilt University. Mr. Bradford, who joined Genescos board in 2005, was named Dean and Ralph Owen Professor for the Practice of Management in the Owen Graduate School of Management of Vanderbilt University in 2005. He joined the Owen School faculty and administration in 2002. He was president and chief executive officer of United Glass Corporation from 1999 to 2001 and president and chief executive officer of AFG Industries, Inc. from 1992 to 1999, having joined that company in 1984 as general counsel after 11 years in private law practice. Mr. Bradford is a director of Clarcor Inc., a publicly-held provider of filtration products, systems and services, Granite Construction Incorporated, a publicly-held heavy civil contractor and construction materials producer and Cracker Barrel Old Country Store, Inc., a publicly-held restaurant holding company. The board views Mr. Bradfords extensive leadership experience at the University and in private industry as providing a significant perspective to the board.
ROBERT J. DENNIS, 58, Chairman, President and Chief Executive Officer, Genesco. Mr. Dennis joined Genesco in April 2004 as chief executive officer of Hat World Corporation. Mr. Dennis was named senior vice president of the Company in June 2004 and executive vice president and chief operating officer in 2005, with oversight responsibility for all the Companys operating divisions, and became a director of the Company in 2006. He was named president in 2006, chief executive officer in August 2008 and chairman in April 2010. Prior to joining the Company, Mr. Dennis joined Hat World in 2001 from Asbury Automotive, where he was employed in senior management roles beginning in 1998. Mr. Dennis was with McKinsey and Company, an international
consulting firm, from 1984 to 1997, becoming a partner in 1990. Mr. Dennis is also a director of Teavana Holdings, Inc., a publicly-traded retailer of premium loose-leaf teas, authentic artisanal teawares, and other tea-related merchandise. Mr. Dennis brings to his board service a knowledge of the Companys business and responsibility for its strategic direction and operating performance, as well as a broad background in retailing.
MATTHEW C. DIAMOND, 43, President and Chief Executive Officer, Alloy, Inc. Mr. Diamond co-founded Alloy, Inc. in 1996. Alloy, which was publicly traded until 2011, is a privately-held marketing and media company focusing on youth market through television, film, and digital media. Mr. Diamond has been a director of that company since its founding, and was named its chairman and chief executive officer in 1999. He has been a director of Genesco since 2001. The board considers Mr. Diamonds experience in marketing to a key demographic of the Companys Journeys and Lids businesses, his knowledge of digital media and direct marketing, and his senior management experience as important contributors to the effectiveness of Genescos board.
MARTY G. DICKENS, 64, Retired President, AT&T-Tennessee. Mr. Dickens, who joined Genescos board in 2003, retired from AT&T-Tennessee in 2007, after serving as its president for nine years. He held a number of positions with BellSouth/AT&T Corp. and its predecessors and affiliates since 1999, following more than six years as an executive vice president with BellSouth International. Mr. Dickens is also lead director of Avenue Bank-Tennessee, chairman of the board of Harpeth Companies, a privately-held investment banking, consulting, and ventures company, and a director of a number of charitable and community organizations. The board believes that Mr. Dickens experience in various positions with BellSouth and AT&T, including his international experience, and his extensive involvement in the Companys headquarters community, are beneficial to the board and to the Company.
THURGOOD MARSHALL, JR., 55, Partner, Bingham McCutchen LLP. Mr. Marshall is a partner in the Washington, D.C. office of the law firm of Bingham McCutchen LLP and a principal in Bingham Consulting Group LLC, an affiliate of the firm that assists business clients with communications, political, and legal strategies. He also serves on the boards of Corrections Corporation of America, a publicly-held owner and operator of correction and detention facilities, Ethics Resource Center, and the Ford Foundation and as chairman of the board of governors of the United States Postal Service. Mr. Marshalls professional background includes service in all three branches of the federal government and in the private sector. Prior to joining a predecessor of Bingham McCutchen LLP as a partner in 2001, he served in roles including Assistant to the President and Cabinet Secretary from 1997 to 2001, co-chair of the White House Olympic Task Force in connection with the 2002 Winter Olympics, director of legislative affairs and deputy counsel to the Vice President, and counsel to the
Senate Judiciary Committee, the Committee on Commerce, Science & Transportation, and the Governmental Affairs Committee. The board believes that Mr. Marshalls extensive experience in government service and his expertise in corporate governance and oversight gained through service as a director in for-profit, non-profit, and public sectors, bring unique and valuable perspective to Genesco.
KATHLEEN MASON, 63, President and Chief Executive Officer, Tuesday Morning Corporation. Ms. Mason, who joined Genescos board in 1996, became president and chief executive officer of Tuesday Morning Corporation, an operator of first-quality discount and closeout home furnishing and gift stores, in 2000. She has served as a director of Tuesday Morning Corporation since 2000. She was president and chief merchandising officer of Filenes Basement, Inc. in 1999. She was president of the HomeGoods division of The TJX Companies, Inc., an apparel and home fashion retailer, from 1997 to 1999. She was employed by Cherry & Webb, a womens apparel specialty chain, from 1987 until 1992, as executive vice president, then, until 1997, as chairman, president and chief executive officer. Her previous business experience includes senior management positions with retailers May Company, The Limited Inc. and the Mervyns Stores division of Dayton-Hudson Corp. Ms. Mason is also a director of Office Depot, Inc., a publicly-held supplier of office products and services, and was a director of The Mens Wearhouse, Inc., a retailer of mens clothing from 2000 until 2007, and Hot Topic, Inc., a retailer of apparel, accessories, and gifts, from 2004 until 2007. Ms. Masons senior executive and board experience with other national retail companies provide her with a valuable perspective on a number of issues directly relevant to the Companys business.
The board has determined that Mr. Beard, Dr. Berry, Mr. Blaufuss, Mr. Bradford, Mr. Diamond, Mr. Dickens, Mr. Marshall and Ms. Mason are independent under applicable SEC and NYSE rules. The board considered the following payments made by the Company in the fiscal year ended January 28, 2012 (Fiscal 2012):
The board determined that none of such payments affected the independence of the directors affiliated with the recipient organizations.
Certain Relationships and Related Transactions
The Company is not aware of any related-party transactions since the beginning of the last fiscal year between the Company and any of its directors, executive officers, 5% shareholders or their family members that are required to be disclosed under Item 404 of Regulation S-K under the Securities Exchange Act of 1934 (the Exchange Act).
Each year, the Company requires its directors and executive officers to complete a comprehensive questionnaire, one of the purposes of which is to disclose any related-party transactions with the Company, including any potential Item 404 transactions. No such transactions were disclosed for Fiscal 2012. The Company does not have a history of engaging in related-party transactions with its directors or executive officers or their respective related persons or affiliates and does not have a formal or other written policy regarding the analysis or approval of such transactions. Any material proposed related-party transaction, including any Item 404 transaction irrespective of materiality, would, however, be brought before the board of directors or a specially designated committee thereof (with any interested director recusing himself or herself from the proceedings) to be specifically considered and approved before the Company would knowingly engage in any such transaction.
Board Committees and Meetings
The board of directors met seven times during Fiscal 2012. No director was present at fewer than 75% of the total number of meetings of the board of directors and the committees of the board on which he or she served during Fiscal 2012. The board of directors has standing audit, nominating and governance, compensation, and finance committees. All committees are composed entirely of independent directors. It is the policy of the board of directors that no current or former employee of the Company will serve on the audit, nominating and governance, or compensation committee. A description of each board committee and its membership follows.
Members: William F. Blaufuss, Jr. (chairman), James S. Beard, Robert V. Dale and Kathleen Mason
The Company has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The audit committee is currently composed of four independent directors (as defined under the applicable rules of the NYSE) and operates under a written charter adopted by the board of directors, a current copy of which is available on the Companys website, www.genesco.com. The audit committee assists the board of directors in monitoring (i) the processes used by the Company to produce financial statements, (ii) the Companys systems of internal
accounting and financial controls and (iii) the independence of the Companys registered public accounting firm. The audit committee met 11 times in Fiscal 2012. The board of directors has determined that William F. Blaufuss, Jr., James S. Beard, Robert V. Dale and Kathleen Mason each qualifies as an audit committee financial expert, as defined in Item 407(d) of Regulation S-K under the Exchange Act, and is independent, as defined by the NYSE rules and Rule 10A-3 of the Exchange Act.
Nominating and Governance Committee
Members: Robert V. Dale (chairman), Leonard L. Berry, James W. Bradford and Marty G. Dickens
The nominating and governance committee, currently composed of four directors who are independent under applicable NYSE rules, met two times in Fiscal 2012. The functions of the nominating and governance committee are specified in a charter available on the Companys website, www.genesco.com. They include making recommendations to the board of directors with respect to (i) the size of the board of directors, (ii) candidates for election to the board of directors, (iii) the designation of committees of the board of directors, their functions and members, (iv) the succession of the executive officers of the Company and (v) board policies and procedures and other matters of corporate governance. The chairman of the nominating and governance committee serves as the Lead Director and presides over the boards executive sessions of non-management directors and at other times when the chairman is absent and as the primary liaison between management and the board. Further information on the committee is set forth under the caption Corporate Governance, below.
Members: Matthew C. Diamond (chairman), Leonard L. Berry, Marty G. Dickens and Kathleen Mason
The compensation committee, currently composed of four independent directors, met six times in Fiscal 2012. The functions of the compensation committee are specified in a charter available on the Companys website, www.genesco.com. They include (i) approving the compensation of certain officers of the Company and other management employees reporting directly to the chief executive officer, (ii) making recommendations to the board of directors with respect to the compensation of directors, (iii) reviewing and providing assistance and recommendations to the board of directors with respect to (a) management incentive compensation plans and (b) the establishment, modification or amendment of any employee benefit plan (as that term is defined in the Employee Retirement Income Security Act of 1974) to the extent that action taken by the board of directors is required, (iv) serving as the primary means of communication
between the administrator of the Companys employee benefit plans and the board of directors, (v) administering the Companys equity incentive and stock purchase plans, and (vi) reviewing and making recommendations to the board with respect to the Compensation Discussion and Analysis and the compensation committee report required by SEC regulations for inclusion in the Companys proxy statement.
Members: James W. Bradford (chairman), James S. Beard, William F. Blaufuss, Jr., Matthew C. Diamond and Ben T. Harris
The finance committee, currently composed of five independent directors, met five times in Fiscal 2012. The committee (i) reviews and makes recommendations to the board with respect to (a) the establishment of bank lines of credit and other short-term borrowing arrangements, (b) the investment of excess working capital funds on a short-term basis, (c) significant changes in the capital structure of the Company, including the incurrence of long-term indebtedness and the issuance of equity securities and (d) the declaration or omission of dividends; (ii) approves the annual capital expenditure and charitable contribution budgets; (iii) serves as the primary means of communication between the board of directors and the investment committee of the Companys employee benefits trusts and the chief financial officer regarding certain of the Companys employee benefit plans; and (iv) appoints, removes and approves the compensation of the trustees under any employee benefit plan.
Nominating and Governance Committee
The charter of the nominating and governance committee is available on the Companys website, www.genesco.com. The members of the committee satisfy the independence requirements of the NYSE. In addition, the board of directors has adopted a policy pursuant to which no former employee of the Company will be eligible to serve as a member of the nominating and governance committee.
The nominating and governance committee and the board of directors will consider nominees for the board of directors recommended by shareholders if shareholders comply with the Companys advance notice requirements. The Companys Bylaws provide that a shareholder who wishes to nominate a person for election as a director at a meeting of shareholders must deliver written notice to the secretary of the Company. This notice must contain, as to each nominee, all of the information relating to such person that would be required to be disclosed in a proxy statement meeting the requirements of Regulation 14A under the Securities Exchange Act of 1934 if such person had been nominated by the board of directors, the written consent of such person to being named as a nominee in soliciting material and to serving as a director, if elected, and the name and address of the shareholder delivering the notice as it appears on the stock records of the Company, along with the number and class of shares held of record by such shareholder. In the case of an annual meeting to be held on the fourth Wednesday in the month of June or within thirty days thereafter, the notice must be delivered not less than sixty nor more than ninety days prior to the fourth Wednesday in June. In the case of an annual meeting which is being held on any other date (or in the case of any special meeting), the notice must be delivered within ten days after the earlier of the date on which notice of the meeting is first mailed to shareholders or the date on which public disclosure is first made of the date of such meeting. There are no differences in the process pursuant to which the committee is to evaluate prospective nominees based on whether the nominee is recommended by a shareholder.
Upon receipt of a recommendation from any source, including shareholders, the committee will take into account whether a board vacancy exists or is expected or whether expansion of the board is desirable. In making this determination, the committee may solicit the views of all directors. If the committee determines that the addition of a director is desirable, it will assess whether the candidate presented should be nominated for board membership. While the committee may consider
whatever factors it deems appropriate in its assessment of a candidate for board membership, candidates nominated to serve as directors will, at a minimum, in the committees judgment:
The committee may also take into consideration whether a candidates background and skills meet any specific needs of the board that the committee has identified and will take into account diversity in professional and personal experience, skills, background, race, gender and other factors of diversity that it considers appropriate. The committee will preliminarily assess the candidates qualifications with input from the chief executive officer. If, based upon its preliminary assessment, the committee believes that a candidate is likely to meet the criteria for board membership, the chairman will advise the candidate of the committees preliminary interest and, if the candidate expresses sufficient interest to the chairman, with the assistance of the Corporate Secretarys office, will arrange interviews of the candidate with members of the committee and with the chief executive officer, either in person or by telephone. After the members of the committee and the chief executive officer have had the opportunity to interview the candidate, the committee will formally consider whether to recommend to the board that it nominate the candidate for election to the board.
Board Leadership Structure
On April 1, 2010, Robert J. Dennis, the Companys chief executive officer, assumed the additional office of chairman upon Hal N. Penningtons retirement from the latter office. Prior to the appointment of Mr. Dennis as chief executive officer in 2008, Mr. Pennington had served as both chairman and chief executive officer since his predecessor as chairman and chief executive officer relinquished the chairmans office in 2002, replicating a long-term succession plan that has been followed in the Companys three most recent senior management transitions. Having observed no differences in the functioning of the board or the performance of the Company that it considers attributable to the separation or conjunction of the two offices, the board has retained flexibility in the Corporate Governance Guidelines with respect to the structure of the board
leadership. The Corporate Governance Guidelines provide that the board will select the chairman and the chief executive officer in the manner that it determines to be in the best interests of the Companys shareholders.
The Corporate Governance Guidelines also provide that if the positions of chairman and chief executive officer are held by the same person or if the chairman is otherwise employed by the Company, the chairman of the nominating and governance committee will serve as Lead Director, with the following responsibilities:
Generally, the board believes that having a chairman who is also a member of the Companys management team, whether or not the offices of chairman and chief executive officer are held by the same person, has been highly effective for Genesco -- avoiding the perception of a divergence of interests between the board and management; minimizing any potential disjunction between the development and execution of corporate strategies; and reducing the potential for confusion and duplication of effort in the areas of overlap between the responsibilities of the board and senior management. The board believes that the current leadership structure, in combination with strong governance policies, regular executive sessions, and a supermajority of independent directors, provides the appropriate balance of strategy, execution and oversight for the Company at this time.
The Boards Role in Risk Oversight
The board of directors views the identification and management of risk as a primary responsibility of the Companys chief executive officer, who reports directly to the board. In addition to general review and discussion of various aspects of risk management throughout the year, at least once annually, the board receives a report from the chief executive officer on his overall assessment of the Companys risk management processes and systems, including the identification of major risks associated with the Companys business and strategies, a description of the Companys approach to monitoring and managing each category of risk, and an assessment of residual exposures and whether and how they may be more effectively mitigated.
In the boards most recent review of the Companys risk management processes and systems with the chief executive officer, the following major categories of risk associated with the Companys business and strategies were identified:
In addition to the boards ongoing oversight of risk management and the chief executive officers annual review with the board of the Companys risk management processes and systems, specific risk categories fall within the oversight of individual committees of the board. For example, the audit committee has oversight of most of the risks falling within the integrity and compliance risk categories, which it addresses primarily through its ongoing review of internal controls over accounting and financial reporting pursuant to Section 404 of the Sarbanes Oxley Act. Additionally, the nominating and governance committee has direct oversight of governance-related risks, the finance committee of risks related to the availability of capital resources, and the compensation committee of certain aspects of workforce-related risks as well as risks arising from compensation policies and practices.
In connection with its annual review of the Companys compensation programs in February 2012, the compensation committee specifically considered whether risks arising from the Companys compensation policies and practices for employees are reasonably likely to have a material adverse effect on the Company. In its analysis, the committee considered, among other things, the following:
As a result of its analysis, the committee determined that the Companys compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
The members of the boards committees believe that they have sufficient access to the members of management with direct responsibility for the management of risks within their oversight to be able to understand and monitor such risks effectively. Each committee regularly reports to the full board on matters related to the categories of risk within its oversight.
Communications with Directors by Shareholders, Employees and Other Interested Parties
Shareholders and employees of the Company and other interested parties may address communications to directors, either collectively or individually (including to the Lead Director or to the non-management directors as a group), in care of the Corporate Secretary, Genesco Inc., 1415 Murfreesboro Road, Suite 490, Nashville, Tennessee 37217. The Secretarys office delivers to directors all written communications, other than commercial mailings, addressed to them.
Directors Annual Meeting Attendance
The Company encourages all directors to be present at the annual meeting of shareholders. All directors except Mr. Bradford, who was unable to attend, were present at last years annual meeting.
Corporate Governance Guidelines
The board of directors has adopted Corporate Governance Guidelines for the Company. They are accessible on the Companys website, www.genesco.com.
Code of Business Conduct and Ethics for Employees and Directors
The Company has adopted a code of business conduct and ethics that applies to all employees and directors. The Company has made the code of business conduct and ethics available and intends to provide disclosure of any amendments or waivers of the code within five business days after an amendment or waiver on its website, www.genesco.com.
The charters of the nominating and governance, compensation and audit committees, the Corporate Governance Guidelines and the Code of Business Conduct and Ethics for Employees and Directors are available on the Companys website, www.genesco.com. All references to the Companys website in this proxy statement are inactive textual references only. Print copies of these documents will be provided to any shareholder who sends a written request to the Corporate Secretary, Genesco Inc., 1415 Murfreesboro Road, Suite 490, Nashville, Tennessee 37217.
SECURITY OWNERSHIP OF OFFICERS,
The following table sets forth the ownership according to the most recent filings of Schedules 13G and 13D and amendments thereto, as applicable, by the beneficial owners which, as of the record date for this meeting, own beneficially more than 5% of the Companys common stock and the persons who, according to the Companys stock transfer records, own more than 5% of any of the other classes of voting securities described on page 2. Percentages are calculated based on outstanding shares as of April 27, 2012.
|Name and Address||Class of||No. of||Percent of|
|of Beneficial Owner||Stock||Shares||Class|
|Eagle Asset Management, Inc.(1)||Common||3,254,751||13.3|
|880 Carillon Parkway|
|St. Petersburg, Florida 33716|
|40 East 52nd Street|
|New York, New York 10022|
|Dimensional Fund Advisors LP(3)||Common||1,346,864||5.5|
|Palisades West, Building One|
|6300 Bee Cave Road|
|Austin, Texas 78746|
|The Vanguard Group(4)||Common||1,231,055||5.0|
|100 Vanguard Boulevard|
|Malvern, Pennsylvania 19335|
|James H. Cheek, Jr.||Subordinated||2,413||8.0|
|11 Burton Hills Boulevard||Cumulative|
|Nashville, Tennessee 37215||Preferred|
|(1)||Based upon a Schedule 13G dated January 18, 2011, showing sole dispositive and voting power with respect to 3,254,751 shares.|
|(2)||Based upon a Schedule 13G dated January 20, 2012, showing sole dispositive and voting power with respect to 1,892,083 shares.|
|(3)||Based upon a Schedule 13G dated February 10, 2012, showing sole voting power with respect to 1,331,772 shares, and sole dispositive power with respect to 1,346,864 shares.|
|(4)||Based upon a Schedule 13G dated February 6, 2012, showing sole voting power with respect to 35,827 shares, shared dispositive power with respect to 35,827 shares, and sole dispositive power with respect to 1,195,228 shares.|
Security Ownership of Directors and Management
The following table sets forth information as of April 27, 2012, regarding the beneficial ownership of the Companys common stock by each of the Companys directors, the persons required to be named in the Companys summary compensation table appearing elsewhere in the proxy statement and the directors and executive officers as a group. None of such persons owns any equity securities of the Company other than common stock.
|Name||No. of Shares(1)(2)|
|James S. Beard||14,387|
|Leonard L. Berry||19,625|
|William F. Blaufuss, Jr.||13,315|
|James W. Bradford||11,387|
|Robert V. Dale||17,489|
|Robert J. Dennis||351,339|
|Matthew C. Diamond||18,338|
|Marty G. Dickens||11,959|
|Ben T. Harris||36,488|
|Thurgood Marshall, Jr.||336|
|Jonathan D. Caplan||80,939|
|James C. Estepa||101,286|
|James S. Gulmi||230,696|
|Kenneth J. Kocher||89,709|
|Current Directors and Executive Officers as a Group|
|(1)||Each director and officer owns less than 1% of the outstanding shares of the Companys common stock, except for Mr. Dennis who owns 1.4%.|
|(2)||Includes shares that may be purchased within 60 days upon the exercise of options granted under the Companys common stock option plans, as follows: Mr. Dennis 98,036; Mr. Gulmi 39,159; Mr. Kocher 16,791; current executive officers and directors as a group 213,507. Also includes shares of restricted stock which remain subject to forfeiture. See Election of Directors Director Compensation, above, and Executive Compensation Summary Compensation Table, below.|
|(3)||Constitutes approximately 5% of the outstanding shares of the Companys common stock.|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Companys officers and directors and persons who own more than 10% of a registered class of the Companys equity securities to file reports of ownership and changes in ownership with the SEC. Such officers, directors and shareholders are required by SEC regulations to furnish the Company with copies of all such reports that they file. Based solely on a review of copies of reports filed with the SEC and of written representations by officers and directors, the Company believes that during Fiscal 2012 all officers and directors subject to the reporting requirements of Section 16(a) filed the required reports on a timely basis.
COMPENSATION DISCUSSION AND ANALYSIS
Genescos compensation programs are intended to attract and retain employees with skills necessary to enable the Company to achieve its financial and strategic objectives and to motivate them through appropriate incentives tied to the Companys performance and market value to achieve those objectives. The Company recognizes that the goals of employee attraction, retention and motivation must be balanced against the necessity of controlling compensation expense. With respect to senior management (executive officers and heads of the Companys operating units and staff departments, including the principal executive officer, the principal financial officer and the three additional officers listed in the Summary Compensation Table which follows this discussion, who are referred to in this discussion as the named executive officers), the compensation committee of the board of directors (the compensation committee or, in the Compensation Discussion and Analysis section, the committee) has the responsibility to design a compensation program and set levels of compensation that attempt to achieve the optimal balance between employee attraction, retention and motivation on the one hand and control of compensation expense on the other.
1. Overview. Genescos compensation programs are designed to incorporate a significant element of pay for performance.
Compensation mix. The Company targets base salaries at or somewhat below the market median, while providing upside potential through performance-based compensation, in a combination of annual incentives linked to operating results and stock-based compensation.
Performance based compensation.
Annual incentive compensation for the Companys named executive officers is designed to reward increasing earnings in an amount sufficient to provide a return on incremental capital greater than the Companys cost of capital -- a demanding measure of performance intended to ensure that incentives are awarded only for performance that increases the Companys value. Annual incentive compensation varies directly with performance, as evidenced by significant variances in individual bonus multiples (compared to bonus targets) across individual business units and performance years. In addition, through a combination of the potential for negative bonus accruals and a multi-year bonus banking mechanism, annual incentive compensation is designed to reward only sustainable performance and includes significant downside risk and upside potential. To illustrate the variability of incentive awards based on operating results, bonus multiples for corporate performance in fiscal years 2008, 2009, 2010, 2011, and 2012 were -3.84, +0.37, +0.24, +4.95, and +7.88, respectively. In addition, a total
of $5.7 million of bonuses earned for Fiscal 2012 by the named executive officers were deferred pursuant to the banking mechanism and are thus subject to be applied against future negative awards, and $329,000 of such bonuses were applied to negative bank balances from prior years.
The remaining portion of performance-based compensation is stock-based. Equity compensation is intended to align the financial interests of management with those of the Companys shareholders. Vesting of equity compensation is based on executives continued service, to complement the significant emphasis on operating performance in annual incentive compensation.
Share ownership guidelines. The Companys executives are required to hold a minimum number of shares. Because the guidelines are enumerated in shares rather than as a multiple of salary, they are not subject to fluctuations in the Companys share price over time.
Change in control arrangements and severance plan. No executive of the Company is subject to an individual employment contract. Change in control arrangements and the severance plan were structured according to competitive norms.
At the annual meeting of shareholders in 2011, the compensation of the named executive officers of the Company was submitted for an advisory vote by shareholders. Eighty-eight percent of shares voting, representing 82% of outstanding shares eligible to vote, were voted in favor of the compensation paid to the named executive officers, and 6% of shares voted, representing 5% of outstanding shares, were voted against. The compensation committee considered these results in its review of compensation philosophy in connection with its approval of named executive officer compensation for Fiscal 2013 and determined that neither the compensation philosophy nor its implementation should be changed. The committee will continue to consider shareholder views on compensation philosophy and implementation when setting compensation.
2. Compensation Committee Process. In seeking to balance employee attraction and retention with appropriate management of compensation expense, the compensation committee looks primarily to market data. It retains an independent compensation consultant to work directly with the committee in gathering and analyzing data. The committee selected PricewaterhouseCoopers LLP as its independent compensation consultant in July 2010, and the firms analysis and observations are reflected in the committees decisions about compensation for Fiscal 2012 and 2013. Prior to the selection of PricewaterhouseCoopers, the firm of Longnecker & Associates had served as the committees compensation consultant, and its analysis and recommendations are reflected in the compensation information for Fiscal 2011. PricewaterhouseCoopers LLP
did not perform any other services for the Company in Fiscal 2011 or Fiscal 2012 and Longnecker & Associates did not perform any other services in prior years. The committee and its consultant also solicit input from the chief executive officer on subjective considerations such as individual performance and perceptions of internal equity that he believes should be taken into account in individual cases. On the basis of the market data, management input and the consultants knowledge of trends and developments in compensation design, the consultant annually prepares analyses and observations regarding the material elements of senior management direct compensation for the compensation committees consideration. The final compensation decision rests with the committee.
In recent years, the committee has approached its analysis of senior management compensation from the perspective of total direct compensation (consisting of base salary, annual incentives and long-term, stock-based incentives). To assess the competitiveness of the Companys executive compensation in its decision-making process for Fiscal 2012, it considered (i) proxy statement data from a peer group of public companies identified by the compensation committees consultant with input from the committee and (ii) data reported in published surveys from companies in the retail industry with annual revenues and market capitalization similar to the Companys, taking into account an average of proxy statement data for comparable position, proxy statement data for equivalent rank among named executive officers, and survey data. For its analysis of compensation levels established for Fiscal 2012, the committee referenced the following peer group, which the committee considered relevant for comparison because of the nature of their businesses or target markets, their size and market value, and the likelihood that the Company competes against them for management personnel: Aeropostale, Inc.; Ann Taylor Stores Corporation; Brown Shoe Company, Inc.; Chicos FAS Inc.; The Childrens Place Retail Stores, Inc.; J Crew Group, Inc.; The Dress Barn, Inc.; DSW Inc.; Express, LLC; The Finish Line, Inc.; Foot Locker Inc.; The Mens Wearhouse, Inc.; Pacific Sunwear of California, Inc.; Skechers USA, Inc.; Stage Stores, Inc.; Stein Mart, Inc.; The Talbots Inc.; The Timberland Company; Urban Outfitters, Inc.; and Wolverine Worldwide, Inc. The peer group is identical to that used in the prior years analysis.
3. Elements of Direct Compensation. Direct compensation to the Companys executive officers consists of annual base salary, annual incentive bonuses and long-term incentives in the form of stock-based awards. The compensation committee generally seeks to pay base salaries at or somewhat below the market median, using the bonus to provide the prospect of above-median cash compensation for superior performance against annual benchmarks. Additionally, certain features of the bonus plan are intended to encourage a longer-term focus, as is the long-term incentive element of the compensation program. The long-term incentive element is stock-based, intended
to align managements interests with those of the shareholders. The compensation committee also considers targeted total cash levels (base salary plus the target bonus) and total direct compensation (total cash plus the targeted value of long-term incentives) in relation to the peer group companies and the survey data.
A. Base Salary. The Company pays base salaries to its employees in order to provide a level of assured compensation reflecting an estimate of the value in the employment market of the employees skills and the demands of his or her position. Consistent with its goal to pay base salaries at or slightly below the market midpoint, the compensation committee set Fiscal 2012 base salaries for the senior management group in the aggregate at approximately 94% of the midpoint, based on the consultants survey and peer group data. For Fiscal 2013, the committee maintained base salaries for the named executive officers in the aggregate at approximately 91% of the market midpoint identified by the consultant. Consistent with its overall approach to base salaries, for Fiscal 2012 the committee granted a 2% increase to members of the management group whose base salaries were at or less than 10% below the median for the peer group. For those with base salaries more than 10% below the median but not more than 20% below, the committee granted increases sufficient to reach the 10% below median target. For those more than 20% below the median, the committee granted increases of not more than half of the difference between actual levels and 10% below median target. For Fiscal 2013, the committee granted a 2% increase to all members of the management committee except those who were more than 20% below the median in the prior year, who were granted the same dollar increase as for Fiscal 2012, despite the fact that the salary gap to the peer group widened for Fiscal 2013.
B. Annual Incentive Compensation. (i) Overview. Executive officers other than the chief executive officer participate in the Companys EVA Plan, which is designed to reward increasing earnings in an amount sufficient to provide a return on incremental capital greater than the Companys cost of capital. (The compensation committee has historically awarded the chief executive officers annual bonus on the same basis as if he were a corporate business unit participant in the plan and has voted to do so with respect to Fiscal 2013.) The plan also incorporates incentives for individual strategic objectives that may not be immediately reflected in the annual financial performance of the participants business unit, as well as incentives designed to reward senior operational management for their contributions to corporate interests that may be broader than those of their individual business units. The compensation committee reviews and adopts the plan with input from its independent consultant and from senior management. The consultant makes recommendations with regard to target bonus levels based on its peer group and survey comparisons of target bonuses as a percentage of base salary and total targeted cash compensation. The compensation committee sets the targets.
(ii) Bonus Targets. Target bonuses for all the named executive officers other than the chief executive officer were set at 75% of base salary for Fiscal 2012. The chief executive officers target bonus was set at 100% for Fiscal 2012. The Fiscal 2012 targets for the named executive officers in the aggregate were approximately 9% above the market midpoint for annual incentive pay identified by the compensation committees consultants data.
(iii) Award Components. The named executive officers participating in the Fiscal 2012 EVA Plan were eligible to receive a fraction or multiple of their target awards based on the factors described below. Bonuses earned can be negative, offsetting awards carried over from prior years or, subject to certain limitations described below, awards from future years. Presidents of the Companys operating divisions were eligible to earn cash awards equal to the sum of (a) 75% of their bonus targets multiplied by a factor determined by changes in Economic Value Added (EVA1) for their respective business units for the year, and (b) 25% of the targets multiplied by (i) the business unit EVA change factor and (ii) the percentage of achievement of individual strategic goals (discussed in greater detail below) agreed upon by the participant and the chief executive officer during the first quarter of the fiscal year. Business unit assignments for operating division presidents include a factor for performance of the Company as a whole. Heads of corporate staff departments were eligible to receive cash awards equal to the sum of (a) 75% of their bonus targets multiplied by the EVA change factor for the Company as a whole and (b) 25% of their bonus targets multiplied by the EVA change factor for the Company as a whole and the product multiplied by their percentage of achievement of their individual performance goals. Each participants business unit is assigned by the chief executive officer, who also determines the weighting of the various business unit components for participants with responsibility for multiple units. In Fiscal 2012, Mr. Gulmi was assigned to the Corporate Total business unit. Mr. Kochers business unit allocation was 85% Lids Sports Group and 15% Corporate Total. Mr. Estepas business unit allocation was 75% Journeys Group, 10% Underground Station Group, and 15% Corporate Total. Mr. Caplans business unit allocation was 65% Johnston & Murphy Group, 17% Licensed Brands (excluding Keuka), 3% Keuka, and 15% Corporate Total.
See Bonus Calculation Factors, below, for additional information on the performance factors for each primary business unit and for the Company as a whole for Fiscal 2012.
(iv) EVA Calculations. EVA is determined by subtracting from a business units net operating profit after taxes (NOPAT) a charge of 12% of the average net assets (total assets minus non-interest bearing current liabilities) employed to generate the profit.
|1||EVA is a trademark of Stern Stewart & Co.|
The 12% capital charge is the Companys estimate of its weighted average cost of debt and equity capital. The plan is designed to encourage efficient use of assets, since profit improvement that is less than 12% of the incremental net assets employed reduces the participants bonus. Incentive awards are determined by the amount of actual EVA change during the year relative to EVA change targets for the year.
NOPAT and net assets employed for incentive plan purposes are not necessarily the same as the corresponding accounting measures calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for financial reporting purposes. The Companys NOPAT for purposes of the EVA Plan in Fiscal 2012 was equal to earnings from operations excluding Restructuring and other, net lines on the Consolidated Statement of Operations, plus $7.2 million related to deferred purchase price on the acquisition of Schuh Group Limited (Schuh) which is treated as compensation expense for accounting purposes; plus $4.9 million of accrued expense related to a contingent, earn-out bonus payable in the future to certain Schuh employees for the achievement of operating targets, which was capitalized for EVA purposes; plus stock-based compensation expense of $6.8 million and other adjustments of $0.4 million; less taxes at the Companys 39% targeted effective tax rate for the year. Stock-based compensation is added back in the calculation of NOPAT because applicable accounting standards did not require expensing of options when the applicable performance intervals for the EVA Plan were last calibrated. Interest expense is added back in the calculation because it would be duplicative of the 12% capital charge discussed above. Interest income is included in the calculation.
In connection with the Companys acquisition of Schuh in June 2011, the committee determined that operating results by Schuh for the balance of the fiscal year equal to the budget presented to the Companys board of directors when it approved the acquisition (adjusted for acquisition expenses, for deferred purchase consideration required by GAAP to be expensed as compensation because it is contingent on the payees remaining employees of Schuh until the payment date and for earn-out bonus accruals for Schuh) would neither increase nor decrease the awards that would have been payable to participants under the plan for Fiscal 2012 had the acquisition not occurred. The committee further determined that variances from Schuhs budgeted EVA performance, adjusted as noted above, either positive or negative, would increase or decrease the corporate business units EVA on a dollar-for-dollar basis. Ultimately, Schuhs performance during the relevant period, calculated in accordance with the committees determination described above, exceeded the budgeted EVA performance, increasing the corporate business units EVA by $3,826,000, and resulting in a 2.83 times increase in the corporate incentive multiple for the year.
(v) Bonus Calculation Factors. The following table shows for each of the Companys primary business units in Fiscal 2012: (a) the amount of EVA improvement required to earn a target bonus award, (b) the incremental EVA change required to earn each additional whole-number multiple of the target, (c) the actual EVA for the business unit, and (d) the multiple of the target bonus actually earned. Fractional multiples are earned for incremental changes less than the full improvement interval shown in column (b). Negative bonuses accrue to the extent that shortfalls from the target improvement (column (a)) exceed the interval shown in column (b). See the discussion under the heading Bonus Bank below for the consequences of a negative bonus. As discussed below, named executive officers with responsibilities for more than one business unit receive incentive compensation reflecting the weighted average EVA changes in all the relevant business units.
|Target EVA||Improvement||FY 2012||FY 2012 Bonus|
|Business Unit||Improvement||Interval||EVA Change||Multiple|
|Lids Sports Group||1,253,000||1,382,800||10,062,000||7.37|
|Underground Station Group||213,000||1,156,000||1,478,000||2.09|
|Johnston & Murphy Group||271,000||656,600||2,871,000||4.96|
|1||Reduced $5,791,000 by items related to the Schuh acquisition.|
Each business units target for EVA improvement (shown in column (a), above) is determined in advance by allocating the Companys total expected EVA improvement among all its business units. The Company calculates the amount of EVA improvement which it believes is expected by the market from the amount by which its current market value exceeds the capitalized value of current EVA plus invested capital in other words, the amount of value associated with the Companys future growth. Target EVA improvement is the amount of improvement required to give investors a cost of capital return on this future growth value, and thus on the market value of their investment. The incremental improvement interval (shown in column (b), above), is both the amount of additional EVA improvement above the amount in column (a) that is required to earn a bonus of two times the participants target and also the amount of shortfall from the column (a) target that will result in a zero bonus. The calibration of the
intervals shown in column (b) reflects an effort to give the business units comparable shares of above-target EVA improvement for a given bonus pool with some adjustment for differences in unit size, and a similar likelihood of multi-year zero bonuses.
(vi) Individual Strategic Objectives. As noted above, the payment of a portion of each participants annual incentive award for EVA improvement is contingent on his or her achievement of individual strategic goals agreed upon in advance with the participants supervisor. Failure to achieve these strategic objectives can reduce an EVA Plan award that is otherwise payable, but cannot serve to increase the amount of any such award. Individual strategic goals for the named executive officers typically involve initiatives that the executive officer group considers important to the long-term prospects of the participants business units, but that may not be adequately incented by the portion of the bonus calculated on current financial performance. Examples include retail divisions opening a targeted number of new retail stores on schedule and planning for the launch of new retail concepts or of new product lines. No individual strategic goal was material to any named executive officers compensation or to any component of it in Fiscal 2012. The participants supervisor, generally in consultation with the participant, determines whether and to what extent the participants individual strategic goals have been met. Certain strategic goals are quantitative, allowing an objective determination of the extent to which they are achieved, while others are more qualitative in nature, requiring a subjective determination of achievement. The plan permits full credit for strategic goals if they have been at least 95% achieved. Each of the named executive officers received full credit for his strategic goals for Fiscal 2012.
No portion of the award for achievement of individual strategic goals is ordinarily to be paid unless some portion of the applicable award for operating results is earned, although the plan authorizes the committee to consider exceptions for extraordinary strategic successes upon the recommendation of the chief executive officer. No exceptions of this nature have ever been made.
(vii) Bonus Bank. The plan includes the following bonus bank feature: awards for better than expected EVA are uncapped and negative awards for worse than expected results are possible. Any award in excess of three times the target bonus and any negative award is credited to the participants account in the bonus bank. Each year, a participant will receive a payout equal to (i) the current years award, up to three times the target, plus (ii) one-third of any amount in excess of three times the target in the current year, and (iii) the current installments of banked awards from previous years, if any, which are paid out in three equal annual installments. If the participants bonus bank balance is negative, 50% of any positive award in excess of two times the target will be applied toward repaying the negative balance and 50% will be paid out to the participant up to three times the target plus one-third of any amount in excess of three times the target in the current year. Any negative balance from a single year will be
canceled to the extent not repaid after three years. If the current years award is negative, any positive balance in the participants bank is applied against it. Any positive balance is forfeited if the participant voluntarily resigns from employment by the Company or is terminated for cause. The committee believes that the bonus bank feature of the plan offers improved incentives for management to focus on building long-term value in the Company, and that the forfeiture provisions aid the retention of key employees. Including Fiscal 2012 payouts and accruals, bonus bank balances for the named executive officers are as follows:
|Robert J. Dennis||$||2,584,773|
|James S. Gulmi||$||1,018,700|
|Jonathan D. Caplan||$||(124,978||)|
|James C. Estepa||$||1,603,523|
|Kenneth J. Kocher||$||804,907|
Bonuses reported in column (f) of the Summary Compensation Table below are bonuses actually earned for the years indicated, reflecting, where applicable, reductions of amounts otherwise payable by the recapture of previously accrued negative balances pursuant to the banking feature of the plan. For Fiscal 2012, Mr. Caplans payout was reduced by $198,314 and Mr. Estepas by $131,100.
C. Stock-Based Compensation. Grants of stock options and restricted stock to key executives of the Company including the named executive officers are intended to provide them with an incentive to make decisions which are in the long-term best interests of the Company and to balance the shorter-term annual cash incentive component of executive compensation. Stock-based compensation is also intended to align the financial interests of management with those of the Companys shareholders, since the value of an option or a share of restricted stock is dependent upon the Companys performance and the recognition of that performance in the market for the Companys stock.
Stock-based incentive awards, including restricted stock and/or options, are typically granted to executive officers and other key employees once annually. The compensation committee does not attempt to time stock-based incentive grants in relation to the Companys release of material information. For more than a decade, until Fiscal 2008, when the committee did not make the customary annual grants because of a pending and since-terminated merger, the committee has made annual stock-based incentive grants as part of its annual compensation planning meeting held in conjunction with the regularly scheduled October board meeting. The committee met after termination of the merger in March 2008 and awarded grants of restricted stock to the Companys management, including the named executive officers. Because of a shortage of shares available for grant under the 2005 Equity Incentive Plan, the committee did not
resume its practice of granting stock-based incentive awards in October in Fiscal 2009 and instead granted restricted shares in June 2009, upon the approval by shareholders of the 2009 Equity Incentive Plan. Annual grants for 2010 and 2011 were also awarded in June. The committee has also occasionally made grants to newly-hired key employees at its next meeting after their employment commenced. All option grants currently outstanding carry an exercise price equal to the fair market value of the underlying stock on the actual date of grant. Grants of all options currently outstanding became exercisable in equal annual installments over a period of four years. Annual vesting requires the executive to remain employed by the Company for the entire four-year vesting period to realize fully the gain on the total number of shares covered by the option. All outstanding options expire ten years after the date of grant.
Prior to the adoption in 2006 of FAS 123(R) (an accounting standard requiring that employee stock options be reflected as compensation expense in issuing companies financial statements), employee options that satisfied certain criteria, unlike restricted stock, did not involve compensation expense. Consequently, options were the Companys favored form of stock-based compensation. Restricted stock became a component of the compensation of all executive officers (including the named executive officers) in Fiscal 2006. The committee believes that the inclusion of restricted stock in the stock-based component of executive compensation better serves its goal of aligning the interests of management with those of shareholders than granting options alone. Because options have no value to the employee if the market price of the Companys stock is at or below the exercise price, the use of options as the exclusive form of stock-based compensation may lead to an exaggerated perception of downside risk and greater risk aversion on the part of option holders as compared to shareholders. Additionally, because the compensation committee believes that shares of restricted stock represent a greater value to recipients upon grant than do options, fewer shares of restricted stock than options may be granted, resulting in lower earnings per share dilution than a stock-based compensation program consisting solely of options. Reflecting this analysis, the committee substituted for a portion of the shares that had in previous years been granted as options a lesser number of restricted shares. The restricted stock is subject to forfeiture upon termination of the grantees employment prior to vesting, which generally occurs in four equal annual increments. Because no stock-based compensation had been granted during Fiscal 2008, the committee made the March 2008 grants vest in three equal annual increments rather than the usual four. All subsequent grants have been made subject to risk of forfeiture lapsing in four equal annual increments.
Since 2008, the committee has made awards consisting solely of restricted stock, initially because the number of shares available for grant under the 2005 Equity Incentive Plan was insufficient to reach the target long-term incentive value for the grantee population if stock options were included in the grants. Subsequently, the committee has determined that grants consisting solely of restricted stock to deliver
targeted value continue to represent a better use of shares than the large number of options that would be necessary to deliver equivalent value. The committee expects to continue to consider whether to include some options in future long-term incentive grants. The committee has also considered the addition of performance conditions to restricted stock awards. It has concluded that the annual incentive plan, with its potential for wide, positive and negative swings in compensation based on performance and the multi-year effects of its banking features, adequately addresses the compensation policy goals that would be served by incorporating performance conditions in equity grants. The committee intends to continue to consider performance conditions and their effect on the overall balance of incentives in the context of future equity grants.
As with other elements of direct compensation, the compensation committee has considered market data to determine the magnitude of stock-based compensation awards. The grant date value of shares granted in June 2011 represented 2.5 times base salary for the chief executive officer and 1.6 times base salary for each of the other named executive officers, between the 50th and 75th percentile of the relevant market, based upon the consultants peer group and survey data.
The nominating and governance committee of the Companys board has adopted share ownership guidelines for directors and executive officers, including the named executive officers. The guidelines require that named executive officers hold at least the number of shares specified below:
|Chief Executive Officer||60,000 shares|
|Chief Financial Officer||20,000 shares|
|Senior Vice Presidents-Operations||20,000 shares|
|Other Senior Vice Presidents||15,000 shares|
The guidelines, adopted in Fiscal 2008, allow covered executives up to five years from their adoption (or from subsequently appointed executives appointment dates) to comply with the guidelines. All executive officers currently comply with the guidelines. Restricted stock grants and vested stock option awards may be used to satisfy the guidelines, consistent with the intent that such awards align executive officers interests with those of shareholders.
4. Other Compensation.
A. Change of Control Arrangements and Severance Plan.
(i) Change of Control. All the named executive officers are parties to employment protection agreements. The agreements become effective only in the event of a change of control, which will be deemed to have occurred if a person or group acquires securities representing 20% or more of the voting power of the Companys outstanding securities or if there is a change in the majority of directors in a contested
election. Each agreement provides for employment by the Company for a term of three years following a change of control. In the event that the executives employment is terminated under certain circumstances during the contractual employment period after a change of control, the executive is entitled to a lump sum payment and the continuation of certain benefits, as described below under the heading Change of Control Arrangements, Employment Agreements and Severance Plan. Additionally, all stock options and restricted stock granted by the Company under the Companys equity incentive plans become immediately vested and (in the case of options) exercisable upon a change of control as defined in the plans.
The Company believes that reasonable severance and change in control benefits are necessary in order to recruit and retain effective senior managers. These severance benefits reflect the fact that it may be difficult for such executives to find comparable employment within a short period of time, and are a product of a generally competitive recruiting environment within our industry. The Company also believes that a change in control arrangement will provide an executive security that will likely reduce the reluctance of an executive to pursue a change in control transaction that could be in the best interests of our shareholders.
(ii) Severance Plan. The Company maintains a Severance Plan for monthly-paid salaried employees to provide for certain benefits to covered employees (including the named executive officers) in the event of a Company-initiated separation from the Company other than for cause (as defined in the severance plan). Under the terms of the plan, an eligible employee is entitled to one week of base salary at the termination date multiplied by each year of service with the Company with a maximum of 24 weeks and a minimum of two weeks. The Severance Plan is discussed in further detail under the heading Change of Control Arrangements, Employment Agreements and Severance Plan.
B. Defined Benefit, Defined Contribution and Deferred Income Plans.
(i) Defined Benefit Plan. The Genesco Retirement Plan is a noncontributory, qualified pension plan. Prior to December 31, 1995, it provided retirement benefits to eligible participants based on a formula taking into consideration the average of the ten highest consecutive years earnings of the participant, years of benefit service and other factors.
Effective January 1, 1996, the Retirement Plan was amended to establish a cash balance formula. Benefits earned prior to that date under the 10-year average formula were preserved as of that date. Effective January 1, 2005, the cash balance formula was frozen and benefit accruals ceased. Beginning in 2005, participant accounts are credited annually with the lesser of (a) 7% or (b) the annual rate of interest on 30-year Treasury securities for the month of December immediately preceding the Plan Year for which the rate applied. The Company makes a supplemental, makeup payment outside
the Retirement Plan equal to the amount, if any, by which (a) exceeds (b), and the amount of other contributions that were lost when the Retirement Plan was frozen, equal to 2.5% of compensation up to the Social Security wage base and 4% of compensation above it. For Fiscal 2012, the named executive officers who are participants in the Retirement Plan received the following makeup payments:
A participant had no vested benefits under the Retirement Plan until he or she had five years service with the Company. Because they had no vested benefits under the Retirement Plan as of January 1, 2005, when the cash balance formula was frozen and benefit accruals ceased, Mr. Dennis and Mr. Kocher are not participants in the Retirement Plan.
The years of benefit service of the participating named executive officers, frozen at January 1, 2005, are: Jonathan D. Caplan 12 years; James C. Estepa 20 years; and James S. Gulmi 33 years. The Internal Revenue Code limited the amount of salary which was taken into account in calculating Retirement Plan benefits. Taking into account the preserved benefits under the average of the ten highest years and the accumulated funds in cash balance formula, and assuming that the participants accrued benefits at normal retirement are taken in the form of single life annuity, the estimated annual benefit payable for each participating named executive officer at retirement is as follows: Mr. Caplan $10,552; Mr. Estepa $24,332; and Mr. Gulmi $63,836.
(ii) Defined Contribution Plan. The Company also offers to all employees (including the named executive officers) a voluntary defined contribution plan designed to comply with Section 401(k) of the Internal Revenue Code of 1986. Participants in the plan (including all the named executive officers) may defer a percentage of their qualifying pre-tax compensation for each year. Beginning with calendar year 2006, the Company has made a matching contribution equal to 100% of deferrals up to 3% of compensation (limited to $245,000) plus 50% of the next 2% of compensation (similarly limited) deferred.
In Fiscal 2012, each of the named executive officers received a matching contribution of $9,800.
Such amounts are included in column (h) of the Summary Compensation Table, below. Deferrals and matching contributions to the defined contribution plan may be invested in any of a number of mutual fund investments and in a guaranteed income option. Participants may also self-direct their investments, subject to certain restrictions.
(iii) Deferred Income Plan. The named executive officers, in addition to other eligible employees, may participate in the Deferred Income Plan. Under this Plan, the participant may elect to defer up to 15% of base salary, 100% of bonus payouts, and 15% of the supplemental makeup payment discussed above. Deferrals in the plan are not matched by the Company. The Deferred Income Plan is discussed in further detail under the heading Nonqualified Deferred Compensation, below.
C. Perquisites. The Company provides named executive officers with perquisites and other personal benefits that the Company and the committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions.
In addition to participation in the plans and programs described above, the named executive officers are provided financial or estate planning and tax preparation assistance. All employees, including named executive officers, are entitled to a discount on merchandise sold by the Company equal to 40% off the suggested retail price. Additionally, named executive officers are provided with life insurance with a death benefit equal to their base salary up to $500,000 and participate in a supplemental medical and dental insurance plan available to middle- and senior-management employees that covers deductibles, co-payments and certain exclusions under the standard health insurance programs available to all employees.
Attributed costs of the personal benefits described above for the named executive officers are included in column (h) of the Summary Compensation Table, below.
5. Tax Considerations.
Tax Deductibility of Compensation. The compensation committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which provides that the Company may not deduct compensation of more than $1,000,000 that is not performance-based and that is paid to certain individuals. The committee may choose to approve compensation that will not meet these requirements when it considers the potential benefit to the Company to exceed the value of the tax deduction.
COMPENSATION COMMITTEE REPORT
The compensation committee of the Company 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 discussions, the compensation committee recommended to the Board that the Compensation Discussion and Analysis be included in the Proxy Statement.
|By the Committee:|
|Matthew C. Diamond, Chairman|
|Leonard L. Berry|
|Marty G. Dickens|
The foregoing report of the compensation committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.
Compensation Committee Interlocks and Insider Participation
During Fiscal 2012, no member of the compensation committee had at any time been an officer or employee of the Company or any of its subsidiaries. In addition, there are no relationships among the Companys executive officers, members of the compensation committee or entities whose executives serve on the board of directors or the compensation committee that require disclosure under applicable SEC regulations.
SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation earned by each of the named executive officers for Fiscal 2012, Fiscal 2011 and Fiscal 2010.
|Robert J. Dennis||2012||794,500||-0-||2,134,219||3,675,887||7,125||26,274||6,638,005|
|Chairman, President and||2011||778,500||-0-||1,835,968||2,164,230||106,056||28,860||4,913,614|
|Chief Executive Officer||2010||778,500||-0-||1,601,966||149,472||115,374||29,097||2,674,409|
|James S. Gulmi||2012||417,500||-0-||717,771||1,448,725||77,906||42,138||2,704,040|
|Senior Vice President||2011||408,972||-0-||675,164||852,706||185,678||44,520||2,167,040|
|Finance and Chief||2010||408,972||-0-||414,607||58,892||283,301||43,215||1,208,987|
|Jonathan D. Caplan||2012||353,500||-0-||607,720||728,564||15,890||35,146||1,740,820|
|Senior Vice President||2011||346,500||-0-||572,007||742,099||151,325||35,534||1,847,465|
|James C. Estepa||2012||566,500||-0-||973,941||2,141,937||29,654||41,500||3,753,532|
|Senior Vice President||2011||555,330||-0-||916,762||1,029,582||20,131||43,061||2,564,866|
|Kenneth J. Kocher||2012||362,000||-0-||622,345||1,216,954||-0-||24,630||2,225,929|
|Senior Vice President||2011||325,500||-0-||537,347||704,399||15,839||22,987||1,606,072|
|(1)||The amounts in column (c) include salary voluntarily deferred in the Defined Contribution Plan and the Deferred Income Plan described under the heading Other Compensation Defined Benefit, Defined Contribution and Deferred Income Plans in the Compensation Discussion and Analysis section, above, in the following amounts:|
|Name||Fiscal 2012||Fiscal 2011||Fiscal 2010|
|Robert J. Dennis||$||6,630||$||9,026||$||7,216|
|James S. Gulmi||28,248||39,591||33,919|
|Jonathan D. Caplan||39,750||53,923||73,238|
|James C. Estepa||9,461||22,000||9,283|
|Kenneth J. Kocher||3,026||14,198||8,383|
[Footnotes continued on next page.]
|(2)||The amounts in column (e) represent the aggregate grant date fair value of restricted stock awards, calculated by multiplying the closing price of the Companys common stock on the NYSE on the grant date by the number of shares granted.|
|(3)||The amounts in column (f) are cash awards under the Companys EVA Plan, discussed in greater detail under the heading Annual Incentive Compensation in the Compensation Discussion and Analysis section above. They include amounts voluntarily deferred by the named executive officers in the Companys 401(k) Plan and Deferred Income Plan, discussed under the heading Other Compensation Defined Benefit, Defined Contribution and Deferred Income Plans in the Compensation Discussion and Analysis section, above. Of the amounts reported in column (f), the named executive officers elected to defer the following amounts in the 401(k) Plan and/or the Deferred Income Plan:|
|Amount Deferred ($)|
|Name||Fiscal 2012||Fiscal 2011||Fiscal 2010|
|Robert J. Dennis||10,307||15,434||7,474|
|James S. Gulmi||375,662||18,718||2,945|
|Jonathan D. Caplan||195,531||167,784||-0-|
|James C. Estepa||5,843||12,628||-0-|
|Kenneth J. Kocher||13,826||13,624||900|
|(4)||The amounts in column (g) are the sum of (i) any actuarial increase in the present value of the named executive officers benefits under the Genesco Retirement Plan, determined using interest rate and mortality assumptions consistent with those used in the Companys financial statements and (ii) the amount of earnings or loss on nonqualified deferred compensation under the Companys Deferred Income Plan described under the heading Other Compensation Defined Benefit, Defined Contribution and Deferred Income Plans in the Compensation Discussion and Analysis above that exceed 120% of the applicable federal long-term interest rate. Negative changes in the actuarial value of Retirement Plan benefits are not reflected in column (g).|
[Footnotes continued on next page.]
|For each of the named executive officers, the components of the sum reported in column (g) are as follows:|
|Change in Present Value||Excess Deferred Income|
|of Pension Benefits||Plan Earnings|
|Name||Fiscal 2012||Fiscal 2011||Fiscal 2010||Fiscal 2012||Fiscal 2011||Fiscal 2010|
|Robert J. Dennis||-0-||-0-||-0-||7,125||106,056||115,374|
|James S. Gulmi||48,296||52,978||90,943||29,610||132,700||192,358|
|Jonathan D. Caplan||15,890||8,695||16,666||(17,327||)||142,630||177,977|
|James C. Estepa||29,654||20,131||36,546||-0-||-0-||-0-|
|Kenneth J. Kocher||-0-||-0-||-0-||-0-||15,839||64,794|
|(5)||The amounts in column (h) include, for each executive officer, life, medical, dental and long-term disability insurance premiums paid by the Company, matching contributions to the Companys 401(k) Plan, and an employee discount on merchandise sold by the Company that is available to all full-time employees. For all the named executive officers except Mr. Dennis and Mr. Kocher, the amounts in column (h) include the supplemental retirement payment discussed under the heading Defined Benefit, Defined Contribution and Deferred Income Plans, and the premiums for a basic amount of long-term care insurance available to all employees. For all the named executive officers except Mr. Caplan, the amounts in column (h) include tax preparation services. For Mr. Estepa, they include a matching charitable contribution, available to all employees.|
GRANTS OF PLAN BASED AWARDS FOR FISCAL 2012
The following table shows, for each of the named executive officers, information regarding his target award under the Companys EVA Plan for Fiscal 2012 and grants of restricted stock under the Amended and Restated 2009 Equity Incentive Plan in Fiscal 2012.
|All Other||All Other|
|Number of||Number of||or Base||Grant Date|
|Estimated Possible Payouts Under||Shares of||Securities||Price of||Fair Value|
|Non-Equity Incentive Plan Awards||Stock or||Underlying||Option||of Stock|
|Robert J. Dennis||N/A||$||794,500|||||||||
|June 22, 2011||||||||47,280||||||$||2,134,219|
|James S. Gulmi||N/A||$||313,125|||||||||
|June 22, 2011||||||||15,901||||||$||717,771|
|Jonathan D. Caplan||N/A||$||265,125|||||||||
|June 22, 2011||||||||13,463||||||$||607,720|
|James C. Estepa||N/A||$||424,875|||||||||
|June 22, 2011||||||||21,576||||||$||973,941|
|Kenneth J. Kocher||N/A||$||271,500|||||||||
|June 22, 2011||||||||13,787||||||$||622,345|
|(1)||Columns (c), (d) and (e) relate to the Companys EVA Plan. As discussed in detail under the heading Annual Incentive Compensation in the Compensation Discussion and Analysis, potential awards are uncapped (although any award in excess of three and one-third times the target is mandatorily deferred and at risk for future performance) and negative awards that may be offset against positive bonus bank balances deferred from past years and from future positive awards are possible. Consequently, no threshold (column (c)) or maximum (column (e)) is applicable.|
|(2)||Column (f) reflects awards of restricted stock under the Companys Amended and Restated 2009 Equity Incentive Plan.|
OUTSTANDING EQUITY AWARDS AT FISCAL 2012 YEAR-END
The following table shows, for each named executive officer, certain information concerning vested and unvested equity awards outstanding at January 28, 2012. The awards include stock options and restricted stock, as described under the heading Stock-Based Compensation in the Compensation Discussion and Analysis, above.
|Option Awards||Stock Awards|
|Number of||Number of|
|Securities||Securities||Number of||Market Value|
|Underlying||Underlying||Shares or||of Shares or|
|Unexercised||Unexercised||Units of Stock||Units of Stock|
|Options||Options||Option||Option||That Have||That Have|
|(#)||(#)||Exercise Price||Expiration||Not Vested||Not Vested|
|Robert J. Dennis||40,000||-0-||23.54||04/01/2014||137,709||8,484,251|
|James S. Gulmi||15,000||-0-||16.76||11/13/2012||44,493||2,741,214|
|Jonathan D. Caplan||25,000||-0-||16.76||11/13/2012||37,252||2,295,096|
|James C. Estepa||-0-||-0-||--||--||60,400||3,721,244|
|Kenneth J. Kocher||10,000||-0-||23.54||04/01/2014||36,135||2,226,277|
|(1)||All options were granted under the 1996 Stock Incentive Plan and the 2005 Equity Incentive Plan on the dates which are ten years before the expiration dates shown, and vest in four equal annual installments beginning on the first anniversary of the grant date.|
[Footnotes continued on next page.]
|(2)||The shares of restricted stock vest on the following schedule:|
|Name||Grant Date||Outstanding||Vesting Increments|
|Robert J. Dennis||8/1/2008||12,676||12,676 on 8/1/2012|
|6/24/2009||29,285||14,643 on 6/24/2012|
|14,642 on 6/24/2013|
|6/22/2010||48,468||16,156 on 6/22/2012|
|16,156 on 6/22/2013|
|16,156 on 6/22/2014|
|6/22/2011||47,280||11,820 on 6/22/2012|
|11,820 on 6/22/2013|
|11,820 on 6/22/2014|
|11,820 on 6/22/2015|
|James S. Gulmi||6/24/2009||10,769||5,385 on 6/24/2012|
|5,384 on 6/24/2013|
|6/22/2010||17,823||5,941 on 6/22/2012|
|5,941 on 6/22/2013|
|5,941 on 6/22/2014|
|6/22/2011||15,901||3,976 on 6/22/2012|
|3,975 on 6/22/2013|
|3,975 on 6/22/2014|
|3,975 on 6/22/2015|
|Jonathan D. Caplan||6/24/2009||8,689||4,345 on 6/24/2012|
|4,344 on 6/24/2013|
|6/22/2010||15,100||5,033 on 6/22/2012|
|5,034 on 6/22/2013|
|5,033 on 6/22/2014|
|6/22/2011||13,463||3,366 on 6/22/2012|
|3,366 on 6/22/2013|
|3,366 on 6/22/2014|
|3,365 on 6/22/2015|
|James C. Estepa||6/24/2009||14,623||7,312 on 6/24/2012|
|7,311 on 6/24/2013|
|6/22/2010||24,201||8,067 on 6/22/2012|
|8,067 on 6/22/2013|
|8,067 on 6/22/2014|
|6/22/2011||21,576||5,394 on 6/22/2012|
|5,394 on 6/22/2013|
|5,394 on 6/22/2014|
|5,394 on 6/22/2015|
|Kenneth J. Kocher||6/24/2009||8,163||4,082 on 6/24/2012|
|4,081 on 6/24/2013|
|6/22/2010||14,185||4,728 on 6/22/2012|
|4,729 on 6/22/2013|
|4,728 on 6/22/2014|
|6/22/2011||13,787||3,447 on 6/22/2012|
|3,447 on 6/22/2013|
|3,447 on 6/22/2014|
|3,446 on 6/22/2015|
|(3)||Market value is calculated based on the closing price of the Companys common stock on the NYSE on January 27, 2012 ($61.61).|
OPTION EXERCISES AND STOCK VESTED IN FISCAL 2012
The following table shows, for each named executive officer, certain information about his stock option exercises, if any, and shares of restricted stock that vested, during Fiscal 2012:
|Option Awards||Stock Awards|
|Shares Acquired||Value Realized||Acquired on||Value Realized|
|on Exercise||on Exercise||Vesting||on Vesting|
|Robert J. Dennis||-0-||-0-||55,103||2,599,301|
|James S. Gulmi||25,000||879,280||(2)||18,064||806,113|
|Jonathan D. Caplan||-0-||-0-||14,680||655,983|
|James C. Estepa||46,743||1,238,332||24,528||1,094,575|
|Kenneth J. Kocher||-0-||-0-||13,855||618,747|
|(1)||Amounts reflect the product of the closing price of the Companys common stock on the NYSE on the vesting date multiplied by the number of shares vested.|
|(2)||Amount reflects the difference between (a) the product of (i) the closing price of the Companys common stock on the NYSE on the exercise date multiplied by (ii) the number of shares acquired on exercise, minus (b) the total exercise price for the shares so acquired.|
PENSION BENEFITS IN FISCAL 2012
The following table shows, for each of the named executive officers, his number of years credited service and the actuarial present value of his accumulated benefit under the Genesco Retirement Plan, discussed in Compensation Discussion and Analysis Defined Benefit, Defined Contribution and Deferred Income Plans, above. Both credited service and the present value of the accumulated benefit are calculated as of January 28, 2012, the plan measurement date used for financial statement reporting purposes with respect to the Companys audited financial statements for Fiscal 2012. The valuation method and material assumptions reflected in the calculation of the present value of the accumulated benefit are those included in footnote 10 to the Companys audited financial statements included in the Companys Annual Report on Form 10-K, filed with the SEC on March 28, 2012.
|Number of||Present Value||Payments|
|Years Credited||of Accumulated||During Last|
|Robert J. Dennis||Genesco Retirement Plan||-0-||-0-||-0-|
|James S. Gulmi||Genesco Retirement Plan||33||776,620||-0-|
|Jonathan D. Caplan||Genesco Retirement Plan||12||108,288||-0-|
|James C. Estepa||Genesco Retirement Plan||20||287,350||-0-|
|Kenneth J. Kocher||Genesco Retirement Plan||-0-||-0-||-0-|
NON-QUALIFIED DEFERRED COMPENSATION
The following table shows, for each named executive officer, his contributions to and investment earnings on balances in the Companys Deferred Income Plan, described under the heading Deferred Income Plan in the Defined Benefit, Defined Compensation, and Deferred Income Plans section of the Compensation Discussion and Analysis, above. Earnings on plan balances are from investments selected by the participants, which may not include Company securities.
|Contributions in||Contributions||Earnings in||Withdrawals/||Balance at Last|
|Last FY||in Last FY||Last FY||Distributions||FYE|
|Robert J. Dennis||-0-||-0-||7,125||-0-||574,498|
|James S. Gulmi||24,880||-0-||29,610||-0-||946,999|
|Jonathan D. Caplan||186,612||-0-||(17,327||)||-0-||1,035,760|
|James C. Estepa||-0-||-0-||-0-||-0-||-0-|
|Kenneth J. Kocher||-0-||-0-||-0-||-0-||-0-|
All amounts reported in column (b) are included in the salary reported for each named executive officer in column (c) of the Summary Compensation Table for Fiscal 2012.
Because no named executive officers deferred compensation earnings for Fiscal 2012 constituted above-market interest under the disclosure requirements applicable to the Summary Compensation Table, above, none of the amounts reported in column (d) are reflected in column (h) of the Summary Compensation Table.
The amount reported in column (f) includes, for each named executive officer, the following amount reported as compensation in the Summary Compensation Table for each of the three years in the Summary Compensation Table.
|Fiscal 2012||Fiscal 2011||Fiscal 2010|
|Robert J. Dennis||-0-||-0-||-0-|
|James S. Gulmi||$||24,880||$||20,530||$||36,258|
|Jonathan D. Caplan||$||186,612||$||38,062||$||59,074|
|James C. Estepa||-0-||-0-||-0-|
|Kenneth J. Kocher||-0-||-0-||-0-|
CHANGE OF CONTROL ARRANGEMENTS,
AND SEVERANCE PLAN
All the named executive officers are parties to employment protection agreements. The agreements become effective only in the event of a Change of Control, which is defined as occurring when (i) any person (as defined in Section 3(a)(9) of the Exchange Act, and as used in Sections 13(d) and 14(d) thereof), excluding the Company, any majority owned subsidiary of the Company (a Subsidiary) and any employee benefit plan sponsored or maintained by the Company or any Subsidiary (including any trustee of such plan acting as trustee), but including a group as defined in Section 13(d)(3) of the Exchange Act (a Person), becomes the beneficial owner of shares of the Company having at least 20% of the total number of votes that may be cast for the election of directors of the Company (the Voting Shares); provided, however, that such an event shall not constitute a Change of Control if the acquiring Person has entered into an agreement with the Company approved by the Board which materially restricts the right of such Person to direct or influence the management or policies of the Company; (ii) the shareholders of the Company shall approve any merger or other business combination of the Company, sale of the Companys assets or combination of the foregoing transactions (a Transaction) other than a Transaction involving only the Company and one or more of its Subsidiaries, or a Transaction immediately following which the shareholders of the Company immediately prior to the Transaction (excluding for this purpose any shareholder of the Company who also owns directly or indirectly more than 10% of the shares of the other company involved in the Transaction) continue to have a majority of the voting power in the resulting entity; or (iii) within any 24-month period beginning on or after the date of the agreements, the persons who were directors of the Company immediately before the beginning of such period (the Incumbent Directors) shall cease (for any reason other than death) to constitute at least a majority of the Board or of the board of directors of any successor to the Company, provided that any director who was not a director as of the date hereof shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually or by prior operation of this section. Each agreement provides for employment by the Company for a term of three years following a Change of Control. The executive is to exercise authority and perform duties commensurate with his authority and duties immediately prior to the Change of Control. He is also to receive compensation (including incentive compensation) during the term in an amount not less than that which he was receiving immediately prior to the Change of Control. If the executives employment is terminated by death or disability during the term of the agreement, he is entitled to receive his accrued but unpaid salary, any deferred compensation, all amounts owing to him under any applicable employee benefit plans, and a bonus equal to the average of the two most recent annual bonuses received by the executive
(excluding any year in which no bonus was paid), prorated for the number of days in the current fiscal year that the executive was employed. If the executive is terminated for cause or quits voluntarily during the employment period, he is entitled to receive the same compensation payable in case of termination by death or disability, except that the prorated bonus would not be payable.
If the executives employment is actually or constructively terminated by the Company without cause during the term of the agreement, the executive will be entitled to receive his base salary through the termination date, and a lump-sum severance allowance equal in Mr. Denniss case to three times and in the case of the other named executive officers to two times (i) his annual base salary, plus (ii) the average of his two most recent annual bonuses, plus (iii) the present value of the annual cost to the Company of obtaining coverage equivalent to the coverage provided by the Company prior to the Change of Control under any welfare benefit plans (including medical, dental, disability, group life and accidental death insurance) plus the annualized value of fringe benefits provided to the executive prior to the change of control, plus reimbursement for any excise tax owed thereon and for taxes payable by reason of the reimbursement. Amounts payable under the employment protection agreements are to be reduced by any amount received under the general severance plan described below.
All stock options and restricted stock granted by the Company under the Companys equity incentive plans generally become immediately vested and (in the case of options) exercisable upon a Change of Control as defined in the plans, provided (in the case of certain of the options) that at least six months have lapsed since the date the option was granted.
The following table shows for each of the named executive officers, assuming that a Change of Control, followed by immediate involuntary termination of his employment, occurred on January 28, 2012, the estimated amounts payable with respect to (a) salary, (b) bonus, (c) the value, based on the closing price of the Companys stock on the NYSE on January 27, 2012 (the last trading day of the fiscal year) of all previously unvested stock options (less the applicable exercise price) and restricted stock subject to accelerated vesting, (d) the estimated value of the payment related to benefits provided under the Change of Control agreement, (e) the non-qualified deferred compensation (which would be paid upon termination for any reason regardless of whether a Change of Control has occurred, under the terms of the Deferred Income Plan), (f) the gross-up related to excise taxes that would have been reimbursable to the officer (assuming a 35% marginal federal income tax rate), and (g) the total of items (a) through (f). The actual awards and amounts payable can only be determined at the time of each executives termination of employment.
|Robert J. Dennis||2,383,500||8,760,176||4,318,944||160,813||574,498||5,063,514||21,261,445|
|James S. Gulmi||835,000||2,301,431||1,431,426||149,719||946,999||1,610,524||7,275,099|
|Jonathan D. Caplan||707,000||1,470,663||1,203,974||128,509||1,035,760||1,333,516||5,879,422|
|James C. Estepa||1,133,000||3,171,519||1,942,984||172,053||-0-||-0-||6,419,556|
|Kenneth J. Kocher||724,000||1,921,353||1,182,479||89,587||-0-||-0-||3,917,419|
|1)||For Mr. Dennis three times, and for all others two times, the annual base salary of the named executive officer as of January 28, 2012.|
|2)||For Mr. Dennis three times, and for all others two times, the average of the last two annual bonuses earned by the named executive officer.|
|3)||The value, based on the closing price of the Companys common stock on the NYSE on January 27, 2012, of the previously unvested restricted stock and stock options that would have vested on an accelerated basis upon the Change of Control.|
|4)||Includes the present value, calculated using the annual federal short-term rate as determined under Section 1274(d) of the Internal Revenue Code of (a) the annual cost to the Company of obtaining coverage under the welfare benefit plans discussed above and (b) the annualized value of fringe benefits provided to the named executive officer immediately prior to January 28, 2012.|
|5)||Reimbursement of the excise tax payable on the Change of Control payment plus income taxes payable on the reimbursement.|
The following table shows, for each of the named executive officers, assuming that a Change of Control, followed by immediate termination of his employment because of death or disability, occurred on January 28, 2012, the estimated amounts payable with respect to (a) salary, (b) bonus, (c) the value, based on the closing price of the Companys common stock on the NYSE on January 27, 2012 (the last trading day of the fiscal year), of all previously unvested stock options (less the applicable exercise price) and restricted stock subject to accelerated vesting, (d) non-qualified deferred compensation, and (e) the total of items (a) through (d):
|Robert J. Dennis||-0-||2,920,059||4,318,944||574,498||7,813,501|
|James S. Gulmi||-0-||1,150,716||1,431,426||946,999||3,529,141|
|Jonathan D. Caplan||-0-||735,332||1,203,974||1,035,760||2,975,066|
|James C. Estepa||-0-||1,585,760||1,942,984||-0-||3,528,744|
|Kenneth J. Kocher||-0-||960,677||1,182,479||-0-||2,143,156|
|1)||Accrued and unpaid salary of the named executive officers at January 28, 2012.|
|2)||The average of the last two years bonuses paid to the named executive officers.|
|3)||The value, based on the closing price of the Companys common stock on the NYSE on January 27, 2012, of the previously unvested restricted stock and stock options that would have vested on an accelerated basis upon the Change of Control.|
The following table shows, for each of the named executive officers, assuming a Change of Control, followed by an immediate voluntary termination or termination for cause of his employment, occurred on January 28, 2012, the estimated amounts payable with respect to (a) salary, (b) the value, based on the closing price of the Companys stock on the NYSE on January 27, 2012 (the last trading day of the fiscal year), of all previously unvested stock options (less the applicable exercise price) and restricted stock subject to accelerated vesting, (c) non-qualified deferred compensation, and (d) the total of items (a) through (c):
|Robert J. Dennis||-0-||4,318,944||574,498||4,893,442|
|James S. Gulmi||-0-||1,431,426||946,999||2,378,425|
|Jonathan D. Caplan||-0-||1,203,974||1,035,760||2,239,734|
|James C. Estepa||-0-||1,942,984||-0-||1,942,984|
|Kenneth J. Kocher||-0-||1,182,479||-0-||1,182,479|
|1)||Accrued and unpaid salary of the named executive officers at January 28, 2012.|
|2)||The value, based on the closing price of the Companys common stock on the NYSE on January 27, 2012, of the previously unvested restricted stock and stock options that would have vested on an accelerated basis upon the Change of Control.|
General Severance Plan. The Company maintains a severance plan for monthly-paid salaried employees to provide for certain benefits in the event of a Company-initiated separation from the Company other than for cause (as defined in the plan). Under the terms of the plan, an eligible employee is entitled to one week of his or her base salary at the termination date multiplied by each year of service with the Company with a maximum of 24 weeks and a minimum of two weeks. If their employment had been terminated without cause as of January 28, 2012, the named executive officers would have been entitled to the following severance payments under the plan, which reduce payments due under the employment protection agreements described above: Mr. Dennis $152,788; Mr. Gulmi $192,692; Mr. Caplan $129,164; Mr. Estepa $261,462; and Mr. Kocher $97,462.
The following table shows, for each director of the Company who is not also a named executive officer, information about the directors compensation in Fiscal 2012.
|James S. Beard||66,750||73,467||990||141,207|
|Leonard L. Berry||59,500||73,467||990||133,957|
|William F. Blaufuss, Jr.||84,750||73,467||990||159,207|
|James W. Bradford||60,500||73,467||990||134,957|
|Robert V. Dale||74,250||73,467||990||148,707|
|Matthew C. Diamond||73,000||73,467||990||147,457|
|Marty G. Dickens||60,250||73,467||990||134,707|
|Ben T. Harris||57,500||73,467||-0-||130,967|
|Thurgood Marshall, Jr.(4)||-0-||-0-||-0-||-0-|
|(1)||Cash fees include annual directors retainer and, where applicable, committee chair fees.|
|(2)||The amounts in column (c) represent the aggregate grant date fair value of restricted stock amounts, calculated by multiplying the closing price of the Companys common stock on the NYSE on the grant date by the number of shares granted. On June 22, 2011, the board granted shares of restricted stock with a value (at the average closing price of the stock on the NYSE for the first five trading days in June 2011) of $70,000 to each of the non-employee directors pursuant to the Amended and Restated 2009 Equity Incentive Plan. The shares vest in three equal annual installments beginning on the first anniversary of the grant date, subject|
[Footnotes continued on next page.]
For Fiscal 2012, non-employee directors received an annual retainer of $40,000, the restricted stock grant valued at $70,000, as described above in footnote 2, and fees of $2,000 for each board meeting they attended in person, $1,000 for each committee meeting they attended in person and $750 for each meeting they attended by telephone. The chairman of the audit committee received a retainer of $15,000 in addition to his directors retainer; the chairman of the compensation committee, $10,000; the chairman of the nominating and governance committee, $7,500; and the chairman of the finance committee, $4,000.
The Company also pays the premiums for non-employee directors on $50,000 of coverage under the Companys group term life insurance policy, plus additional cash compensation to offset taxes on their imputed income from such premiums. Directors who are full-time Company employees do not receive any extra compensation for serving as directors.
[Footnotes continued from previous page.]
to continued service on the board. At January 28, 2012, directors who were not also named executive officers had the following stock options and restricted stock awards outstanding:
|James S. Beard||5,965||-0-|
|Leonard L. Berry||5,965||4,000|
|William F. Blaufuss, Jr.||5,965||-0-|
|James W. Bradford||5,965||-0-|
|Robert V. Dale||5,965||-0-|
|Matthew C. Diamond||5,965||-0-|
|Marty G. Dickens||5,965||-0-|
|Ben T. Harris||5,965||-0-|
[Footnotes continued on next page.]
[Footnotes continued from previous page.]
|As of April 27, 2012, 242,548 shares of common stock or options had been issued to non-employee directors pursuant to the Companys 1996 Stock Incentive Plan, of which 28,745 had been forfeited; 46,345 shares of restricted stock had been issued to such directors under the 2005 Equity Incentive Plan, of which 546 had been forfeited; 39,042 shares of restricted stock had been issued to such directors under the 2009 Equity Incentive Plan; and 14,643 shares of restricted stock had been issued to such directors under the Amended and Restated 2009 Equity Incentive Plan.|
|(3)||The amounts reported in column (g) include, for each director, the premium paid by the Company for life insurance coverage as described above and the gross up for income taxes payable with respect to such premiums.|
|(4)||Mr. Marshall was elected to the board effective March 1, 2012.|
ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
The U.S. Congress has enacted requirements commonly referred to as the Say on Pay rules. As required by those rules, the Company seeks your non-binding, advisory vote to approve the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis section, the accompanying tables and related narrative discussion contained in this Proxy Statement.
As described in detail in the Compensation Discussion and Analysis section, our executive compensation programs are designed to attract and retain executive officers with the skills necessary to achieve our financial and strategic objectives. Our executives are rewarded for their contributions through appropriate incentives tied to the Companys performance and market value and align the interests of our executive officers with our shareholders. We believe that the compensation of our named executive officers was reasonable and rewarded our named executive officers for attaining specified goals which do not promote the taking of an unreasonable amount of risk. We urge you to read the Compensation Discussion and Analysis section of this Proxy Statement and the related tables and narrative discussion for additional details on our executive compensation, including our compensation philosophy and objectives and the Fiscal 2012 compensation of our named executive officers.
The Say on Pay proposal that shareholders are being asked to vote on is reflected in the following resolution:
RESOLVED: That the shareholders of Genesco Inc. approve the compensation of the Companys named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis section and related compensation tables, notes and narrative in the Proxy Statement for the Companys 2012 Annual Meeting of Shareholders.
Because your vote is advisory, it will not be binding on the board or the Company. However, the board will review the voting results and take them into consideration when making future decisions regarding executive compensation for our named executive officers.
The board of directors unanimously recommends a vote FOR the approval of the Companys compensation of our named executive officers on an advisory basis.
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of Ernst & Young LLP served as the independent registered public accounting firm to the Company in the fiscal year ended January 28, 2012, and has been retained by the audit committee in the same capacity for the current fiscal year. The firms appointment is submitted for shareholder ratification at the annual meeting. If shareholders do not ratify the firms appointment, the audit committee will reconsider the appointment. The board of directors recommends a vote FOR ratification of this appointment and your proxy will be so voted unless you specify otherwise. Representatives of the firm are expected to be present at the annual meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.
Audit Committee Report
The audit committee is composed of four independent directors as defined under the current rules of the NYSE and applicable SEC regulations. The audit committee oversees the Companys financial reporting process on behalf of the board of directors. The committees charter is available on the Companys website, www.genesco.com. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal control over financial reporting.
The committee has met and held discussions with management and the Companys independent registered public accounting firm, Ernst & Young LLP. The committee met with management and the independent registered public accounting firm to review and discuss with them each of the Companys consolidated quarterly and annual financial statements. Management represented to the committee that the Companys consolidated financial statements were prepared in accordance with generally accepted accounting principles. The committee discussed with the independent registered public accounting firm the matters required to be discussed by the Statement on Auditing Standards No. 61 (Communications With Audit Committees), as amended.
In addition, the committee has discussed with the independent registered public accounting firm the factors which might be deemed to bear upon the registered public accounting firms independence from the Company and its management, including the matters in the written disclosures and the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firms communications with the audit committee concerning independence, which were reviewed by the committee. The committee considered, among other factors,
the distribution of fees paid to the firm among those for audit services, those for audit-related services, those for tax services and all other fees, as described below under the caption Fee Information, and considered whether the provision of services other than the audit and audit-related services is compatible with the registered public accounting firms independence.
The committee discussed with the Companys internal auditors and independent registered public accounting firm the overall scope and plan for their respective activities. The committee meets with the internal auditors and independent registered public accounting firm, with and without management present, to discuss the results of their examinations, the evaluations of the effectiveness of the Companys internal controls over financial reporting, and the overall quality of the Companys financial statements and reporting process.
In reliance on the reviews and discussions described in this report, the committee recommended to the board of directors and the board of directors approved inclusion of the audited financial statements in the Companys Annual Report on Form 10-K for the year ended January 28, 2012, filed with the SEC on March 28, 2012.
|By the Committee:|
|William F. Blaufuss, Jr., Chairman|
|James S. Beard|
|Robert V. Dale|
The foregoing report of the audit committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.
The following table sets forth summary information regarding fees for services by the Companys independent registered public accounting firm during Fiscal 2012 and Fiscal 2011.
|Fiscal 2012||Fiscal 2011|
|Tax Fees Total||758,135||235,600|
|Tax planning and advice||741,634||221,330|
|All Other Fees||1,995||1,995|
Audit fees include fees paid by the Company to Ernst & Young in connection with annual audits of the Companys consolidated financial statements, internal controls over financial reporting and their review of the Companys interim financial statements. Audit fees also include fees for services performed by the independent registered public accounting firm that are closely related to the audit and in many cases could be provided only by the Companys independent registered public accounting firm.
Audit-related services include due diligence services related to mergers and acquisitions, accounting consultations, employee benefit plan audits and certain attest services.
Tax fees include fees paid by the Company for compliance services and planning and advice. The latter category included consultations related to employee tax credits and other matters for Fiscal 2011 and consultations on acquisition-related tax matters, employee tax credits and other matters for Fiscal 2012.
All Other Fees
In both Fiscal 2012 and Fiscal 2011, the Company paid other fees to Ernst & Young for access to an online accounting and auditing information resource.
The audit committee has adopted a policy pursuant to which it pre-approves all services to be provided by the Companys independent registered public accounting firm and a maximum fee for such services. As permitted by the policy, the committee has delegated authority to its chairman to pre-approve services the fees for which do not exceed $100,000, subject to the requirement that the chairman report any such pre-approval to the audit committee at its next meeting.
All fees paid to the Companys independent registered public accounting firm in Fiscal 2012 were pre-approved pursuant to the policy.
PROPOSALS FOR THE 2013 ANNUAL MEETING
Proposals of shareholders intended for inclusion in the proxy material for the 2013 annual meeting of shareholders must be received at the Companys offices at Genesco Park, 1415 Murfreesboro Road, Nashville, Tennessee 37217, attention of the Corporate Secretary, no later than January 16, 2013.
In addition, the Companys Bylaws contain an advance notice provision requiring that, if a shareholders proposal is to be brought before and considered at the next annual meeting of shareholders, such shareholder must provide timely written notice thereof to the Secretary of the Company. In order to be timely, the notice must be delivered to or mailed to the Corporate Secretary of the Company and received at the principal executive offices of the Company not less than sixty days nor more than ninety days prior to the meeting (or, if less than seventy days notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made). In the event that a shareholder proposal intended to be presented for action at the next annual meeting is not received timely, then the persons designated as proxies in the proxies solicited by the board of directors in connection with the annual meeting will be permitted to use their discretionary voting authority with respect to the proposal, whether or not the proposal is discussed in the proxy statement for the annual meeting.
FINANCIAL STATEMENTS AVAILABLE
A copy of the Companys annual report to shareholders containing audited financial statements accompanies this proxy statement. The annual report does not constitute a part of the proxy solicitation material.
A copy of the Companys Annual Report on Form 10-K for the fiscal year ended January 28, 2012, excluding certain of the exhibits thereto, may be obtained, without charge, by any shareholder, upon written request to Roger G. Sisson, Secretary, Genesco Inc., Genesco Park, 1415 Murfreesboro Road, Nashville, Tennessee 37217.
|TABLE OF CONTENTS|
June 27, 2012
|Proposal 1: Election of|
|Security Ownership of|
|Officers, Directors and|
|Section 16(a) Beneficial|
|Proposal 2: Advisory Vote on|
|Compensation of Named|
|Proposal 3: Ratification of|
|Independent Registered Public|
|Proposals for the 2013 Annual|
IMPORTANT ANNUAL MEETING INFORMATION
Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
|Instead of mailing your
proxy, you may choose one of the two voting methods outlined below to vote
your proxy. |
|VALIDATION DETAILS ARE
LOCATED BELOW IN THE TITLE BAR.|
|Proxies submitted by the
Internet or telephone must be received by 1:00 a.m., Eastern Time, on June
||Vote by Internet|
|Vote by telephone|
|Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.||
|Annual Meeting Proxy Card|
|6 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6|
|Proposals The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3.|
|1.||Election of Directors:||01 - James S. Beard|
|04 - James W. Bradford|
|07 - Marty G. Dickens|
|02 - Leonard L. Berry
05 - Robert J. Dennis
08 - Thurgood Marshall, Jr.
|03 - William F. Blaufuss,
07 - Matthew C. Diamond
09 - Kathleen Mason
||Mark here to vote FOR all nominees|
||Mark here to WITHHOLD vote from all nominees|
||For All EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) to the right.||
|2.||Say on Pay - an advisory vote on the approval of executive compensation.||
|3.||Ratification of Independent Registered Public Accounting Firm.||
|Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below|
|NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, administrator, trustee or guardian, please sign in full corporate name by duly authorized officer. By signing, you revoke all proxies heretofore given.|
|Date (mm/dd/yyyy) Please print date below.||Signature 1 Please keep signature within the box.||Signature 2 Please keep signature within the box.|
|6IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.6|
|Proxy GENESCO INC.|
Proxy Solicited on Behalf of the Board of Directors of the Company for Annual Meeting on June 27, 2012
|Change of Address Please print new address below.||Comments Please print your comments below.|