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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant Filed by a party other than the Registrant
CHECK THE APPROPRIATE BOX:
Preliminary Proxy Statement
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Under (s)240.14a-12
La-Z-Boy Incorporated
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
No fee required
Fee paid previously with preliminary materials
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11
-------------------------------------------------------------------------------
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NOTICE OF 2024 ANNUAL MEETING
OF SHAREHOLDERS
To Our Shareholders:
La-Z-Boy Incorporated will hold its 2024 Annual Meeting of Shareholders (the
"Annual Meeting") on Tuesday, August 27, 2024, beginning at 9:30 a.m., Eastern
Daylight Time, in the Wright Room of The Westin Detroit Metropolitan Airport,
2501 Worldgateway Place, Detroit, Michigan.
Your Vote Is Important
To make sure your shares are represented, please cast your vote as soon as
possible in one of the following ways:
Online By Phone By Mail
www.proxyvote.com 1-800-690-6903 Completing, dating, signing and returning your proxy card
If you attend the Annual Meeting and prefer to vote in person, you will be
able to do so and your vote at the Annual Meeting will revoke any proxy you
have previously submitted.
Items of Business:
.
to elect the ten director nominees named in the attached Proxy Statement for
an annual term until the 2025 annual meeting;
.
to ratify the selection of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for FY 2025;
.
to approve, through a non-binding advisory vote, the compensation of our named
executive officers as disclosed in the attached Proxy Statement;
.
to approve the La-Z-Boy Incorporated 2024 Omnibus Incentive Plan; and
.
act upon such other business as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on June 28, 2024, are
entitled to notice of and to vote at the Annual Meeting. We hope you will read
the attached Proxy Statement, which contains detailed information about the
matters we are asking you to vote on. We recommend that you vote in accordance
with the Board of Directors' recommendations as set forth in the Proxy
Statement. Your vote is very important to us. Whether or not you attend the
Annual Meeting, we urge you to promptly vote and submit your proxy via a
toll-free number or over the Internet, as detailed above. If you received a
paper copy of the proxy card by mail, you may submit your proxy by signing,
dating and mailing the proxy card in the envelope provided.
BY ORDER OF THE BOARD OF DIRECTORS
Uzma Ahmad
Vice President, Deputy General Counsel and Corporate Secretary
Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting to be held on August 27, 2024
Our Proxy Statement and 2024 Annual Report are available online at
http://www.proxyvote.com.
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TABLE OF CONTENTS
Proxy Statement Summary 1
Board and Corporate Governance Matters 6
Proposal 1: Election of Directors 6
Director Nominee Qualifications 7
Board Composition and Director Selection 9
Director Nominees 10
Corporate Governance 20
Committees of the Board 25
Director Compensation 26
Audit Matters 28
Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm for Fiscal Year 2025 28
Audit Committee Report 28
Audit and Other Fees 29
Pre-Approval Policy and Procedures 29
Compensation Matters 30
Proposal 3: Approval, through a Non-Binding Advisory Vote, of the Compensation of our Named Executive Officers 30
Compensation and Talent Oversight Committee Report 30
Compensation Discussion and Analysis 31
Executive Compensation Tables 50
CEO Pay Ratio 61
Pay Versus Performance 61
Proposal 4: Approve the La-Z-Boy Incorporated 2024 Omnibus Incentive Plan 65
Securities Ownership 74
Security Ownership of Directors and Executive Officers 74
Security Ownership of 5% Beneficial Owners 75
Other Information 76
Appendix A A-
1
Appendix B B-
1
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PROXY STATEMENT SUMMARY
This summary is an overview of certain information in this Proxy Statement. As
this is only a summary, before you vote, please review the complete Proxy
Statement and our annual report to shareholders for the fiscal year ("FY")
ended April 27, 2024 (the "2024 Annual Report").
We will hold the 2024 Annual Meeting of Shareholders (the "Annual Meeting") of
La-Z-Boy Incorporated (the "company") on Tuesday, August 27, 2024, beginning
at 9:30 a.m., Eastern Daylight Time, in the Wright Room of The Westin Detroit
Metropolitan Airport, 2501 Worldgateway Place, Detroit, Michigan.
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of La-Z-Boy Incorporated (the "Board of Directors" or
"Board") of proxies to be voted at the Annual Meeting. This Proxy Statement,
Notice of 2024 Annual Meeting of Shareholders, accompanying proxy card and the
2024 Annual Report are available at http://www.proxyvote.com. This Proxy
Statement has been prepared by our management and approved by the Board, and
is being sent or made available to our shareholders on or about July 17, 2024.
Proposals and Voting Recommendations
Proposals Board's Voting Recommendation
1 Elect the ten director nominees named in the Proxy Statement for a one-year term FOR each nominee
2 Ratify the selection of our independent registered public accounting firm for FY 2025 FOR
3 Approve, through a non-binding advisory vote, the compensation of our named executive officers FOR
4 Approve the La-Z-Boy Incorporated 2024 Omnibus Incentive Plan FOR
Director Nominees
Nominee Independent Director Primary (or Former) Committees
Since Occupation
Erika L. Alexander a 2021 Chief Global Officer, N
Global Operations,
Marriott
International, Inc.
Sarah M. Gallagher a 2016 Former President, C
Ralph Lauren
North America e-Commerce
James P. Hackett a 2021 Former President and
CEO, Ford Motor Company
Raza S. Haider a 2023 Chief Product and N
Supply Chain
Officer, Bose Corporation
Janet E. Kerr a 2009 Professor Emeritus, N
Pepperdine
Caruso School of Law
Mark S. LaVigne a 2023 President and CEO, A
Energizer Holdings, Inc.
Michael T. Lawton* a 2013 Former Executive A C
Vice President
& CFO, Domino's
Pizza, Inc.
Rebecca L. O'Grady a 2019 Former CMO International
Marketing,
e-Commerce & Consumer
Insights, General Mills
Lauren B. Peters a 2016 Former Executive
Vice President
& CFO, Foot Locker, Inc.
Melinda D. Whittington 2021 Our President and CEO
A Audit l Committee Chair
C Compensation and Talent Oversight * Chair of the Board
N Nominating and Governance
2024 Proxy Statement 1
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Proxy Statement Summary
Corporate Governance Highlights
Our Board of Directors is committed to strong corporate governance as a driver
of long-term shareholder value. More information on our key corporate
governance practices can be found in this Proxy Statement as indicated below:
6 Annual election of directors; 23 Anti-hedging and anti-pledging
no classified Board policies in place
6 Majority voting/director resignation 23 Director overboarding policy
policy for uncontested elections in place and reviewed annually
20 9 of 10 director 23 Regular executive sessions
nominees are independent of independent directors
20 Independent, non-executive 25 All Board committees comprised
Chair of the Board of independent directors
22 Annual Board, committee and 76 One class of stock with each
director self-evaluations share entitled to one vote
22 Strong stock ownership guidelines for
directors and executive officers
Strategic, Financial and Operational Highlights
Our Purpose
We believe in the transformational power of comfort. Our purpose is to lead
the global furnishings industry by leveraging our expertise in comfort,
providing an excellent consumer experience, creating high quality products,
and empowering our people to transform rooms, homes, and communities.
Our Century Vision
In FY 2024, we relentlessly focused on executing our Century Vision growth
strategy. Our Century Vision goals are to grow sales at double the rate of the
furniture and home furnishings industry and deliver double-digit operating
margins over the long-term. The foundation of our strategic plan is to drive
disproportionate growth of our two consumer brands, La-Z-Boy and Joybird, by
delivering the transformational power of comfort with a consumer-first
approach.
Expand La-Z-Boy Brand Reach Profitably Grow Joybird Brand
Leverage iconic Drive Meet consumers Accelerate Expand brand awareness Leverage DTC strengths
brand and consumer-led where they omni-channel in modern furniture
compelling innovation want to shop capabilities
comfort message by expanding
La-Z-Boy Furniture
Galleries
(R)
network and wholesale
distribution
partnerships
Enhance Enterprise Capabilities
Continue to build agile Advance modern IT technology Deliver a human-centered employee experience
supply chain improving efficiencies and data capability
2 La-Z-Boy Incorporated
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Proxy Statement Summary
Our FY 2024 Operational Highlights
FY 2024 was a dynamic year highlighted by solid execution and strategic
investments to further strengthen our enterprise against a backdrop of
challenging macroeconomic trends and a further slowdown in the furniture and
home furnishings industry over the fiscal year. Despite this, we took
measurable steps towards our Century Vision growth strategy as we approach our
100-year anniversary and focused on our brand value proposition - comfortable
custom furniture with quick delivery - a key differentiator in the fragmented
market. As a result, we outperformed the industry and gained market share,
helping to position our company to capitalize on stronger macroeconomic and
industry trends when they emerge.
In FY 2024, we delivered solid results despite macroeconomic and furniture
industry headwinds. Consolidated sales were $2.0 billion, a decrease of 13%
from the prior fiscal year. Sales in FY 2023 were fueled by the delivery of a
significant backlog of approximately $300 million resulting from heightened
demand during prior periods. As a result, the decrease in sales during FY 2024
reflect a return to industry-wide seasonal trends relative to a historically
high comparative period combined with a challenging consumer environment.
Absent this backlog, sales were relatively flat in FY 2024 compared with FY
2023. As we faced a challenging macroeconomic environment in FY 2024, we
remained focused on investing prudently to strengthen our capabilities and
drive long-term profitable growth through our Century Vision strategic plan.
During the year, we made significant progress on a number of our Century
Vision objectives.
Specifically, for the La-Z-Boy brand:
.
Our Retail segment grew with the opening of six company-owned stores and the
acquisition of 11 independent La-Z-Boy Furniture Galleries(R) stores, the most
company-owned store openings and independent store acquisitions we have
completed in a single year since FY 2018 and FY 2017, respectively
.
Our Wholesale business also expanded into new channels and had growth with
existing partners. Our refined channel strategy has allowed us to grow both
our footprint and our share of voice, with strategic partnerships such as
Rooms to Go
.
This past fiscal year we also launched "Long Live The Lazy" ("LLTL"), our new
brand campaign that leverages data-based consumer insights research aimed at
broadening the appeal of La-Z-Boy to more consumers. Since launching the LLTL
brand campaign, we have been successful in increasing brand awareness,
consideration, and purchase intent, capturing the attention of a broader
consumer base
For Joybird, our digitally native brand:
.
Joybird opened its twelfth small-format urban showroom in FY 2024 and we
continued to optimize the brand to deliver a balance of sales growth and
profitability
We also strengthened foundational capabilities across the company:
.
We focused on building a more agile business model and made productivity
improvements to optimize our global supply chain
.
Heading into FY 2024, we made leadership organization changes designed to more
effectively align the operation of our business units across the La-Z-Boy
brand, our entire Furniture Galleries Network, and our portfolio of other
brands
2024 Proxy Statement 3
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Proxy Statement Summary
Our FY 2024 Financial Results
Consolidated sales of GAAP operating margin of Non-GAAP operating margin of
$2.0B 7.4% 7.8%
13% decrease from FY 2023 160 bps decrease from FY 2023 170 bps decrease from FY 2023
GAAP Diluted EPS of Non-GAAP Diluted EPS of GAAP operating cash flow
$2.83 $2.98 $158.1 M
19% decrease from FY 2023 23% decrease from FY 2023 23% decrease from FY 2023
See Appendix A of this Proxy Statement for information regarding non-GAAP
financial measures, including a reconciliation of non-GAAP financial measures
to the most directly comparable GAAP financial measures.
Long-Term Return to Shareholders
$132M $236M $368M
5-Year Total Dividends Paid 5-Year Total Share Repurchases Total Returned to Shareholders over 5 Years
Executive Compensation Highlights
Executive Compensation Approach
Our executive compensation program is designed to:
a pay for performance a reward for total shareholder return
a require significant stock ownership a provide market competitive opportunities
a support business strategy a manage costs
4 La-Z-Boy Incorporated
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Proxy Statement Summary
Summary of Executive Compensation Practices
What We Do What We Don't Do
a Pay for performance - Our named executive officer ("NEO") u Do not provide
compensation program emphasizes variable pay over fixed employment agreements
pay. A majority of NEO target annual compensation is at-risk
and linked to our financial and/or stock performance
a Establish and monitor compliance with stock u Do not gross up excise taxes
ownership guidelines for executives - Our upon a change in control
expectations for stock ownership further align
NEOs' interests with those of our shareholders
a Use relative total u Do not reprice options
shareholder return in without shareholder approval
long-term performance-based
share awards
a Mitigate undue risk - We have u Do not pay dividends on unearned
maximum caps on potential incentive performance-based shares or units
payments and a clawback policy on
performance-based compensation
a Appoint only independent u Do not have single
directors to the trigger vesting of
Compensation and Talent equity-based awards upon
Oversight Committee a change in control
a The Compensation and Talent Oversight u Do not provide
Committee engages an independent compensation excessive perquisites
consultant to assist it and the Board with
executive compensation program design and review
a Provide severance and change-in-control
arrangements that are designed to be aligned with
market practices, including the use of double-trigger
change-in-control severance agreements
Pay for Performance
As shown below, the majority of the target total direct compensation for our
chief executive officer ("CEO") and, on average, for our other NEOs is
performance-based and "at risk."
2024 Proxy Statement 5
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BOARD AND CORPORATE GOVERNANCE MATTERS
Proposal 1: Election of Directors
The Board of Directors has nominated ten director nominees to serve an annual
term that will expire at the following annual meeting of shareholders. Each
director will hold office until their successor has been elected and qualified
or until the director's earlier resignation or removal. Our Board currently
has ten directors. The Board has determined, upon the recommendation of the
Nominating and Governance Committee, to nominate the current ten directors for
election at the Annual Meeting. In addition, the Board remains committed to
seeking additional expertise and fresh perspective to advance our strategy.
The ten director nominees are:
Erika L. Alexander Raza S. Haider Michael T. Lawton Melinda D. Whittington
Sarah M. Gallagher Janet E. Kerr Rebecca L. O'Grady
James P. Hackett Mark S. LaVigne Lauren B. Peters
Each director nominee has consented to being named in this Proxy Statement and
has agreed to serve if elected. If a director nominee is unable to stand for
election, the Board may either reduce the number of directors to be elected or
select a substitute nominee. If a substitute nominee is selected, the proxy
holders may vote shares subject to proxies for the substitute nominee.
In accordance with Michigan law and our bylaws, directors will be elected at
the meeting by a plurality of votes cast. The director nominees who receive
the highest through the tenth highest number of votes will be elected,
regardless of any votes that are not cast for the election of those nominees,
including broker non-votes and withholding of authority. Under our Corporate
Governance Guidelines, however, any director who does not receive a majority
of the votes cast in an uncontested election must submit their resignation
promptly following certification of the vote. Within 90 days following
certification of the vote, the Board of Directors, excluding the director
failing to receive a majority of the votes cast, will decide whether to accept
the offered resignation and the company will promptly publicly disclose the
Board's decision. Any vacancy created by acceptance of an offered resignation
could then be filled by the Board pursuant to our bylaws.
a The Board recommends that you vote
"FOR"
the election of each of the ten Director Nominees named in this Proxy Statement.
6 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
Director Nominee Qualifications
The Board of Directors, acting through its Nominating and Governance
Committee, seeks directors who collectively possess the experience, skills,
backgrounds, and other qualifications necessary to effectively oversee our
company in our current and evolving business circumstances. The Nominating and
Governance Committee seeks directors with established records of significant
accomplishments in business and areas relevant to our business strategies. In
determining the slate of director nominees, the committee reviews the Board's
size and the experience, skills and other qualifications, and time commitments
of our current directors and director nominees.
The following chart summarizes each director nominee's key experience, skills,
and other qualifications.
Experience/Skills/Qualifications Erika Sarah James Raza Haider Janet Kerr Mark LaVigne Michael Rebecca
Alexander Gallagher Hackett Lawton O'Grady
Leadership
Experience
Public Company
Board
Experience
Finance
Technology
and Digital
Retail
Consumer
Marketing
Global
Perspective
Sourcing/Manufacturing
Human
Capital
Management
Risk
Management
Lauren Melinda
Peters Whittington
2024 Proxy Statement 7
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Board and Corporate Governance Matters
Experience, Skills & Qualifications How These Fit the How These Align with Our
Characteristics of Our Business Century Vision Strategy
Leadership Experience We believe that directors All strategic pillars
with executive leadership
experience, derived from their
service as executives and
entrepreneurs, provide
valuable insights. They have
an established record of
leadership and a practical
understanding of complex
organizations, strategy
development in a rapidly
changing business environment,
effective risk management,
and ways to maintain
top-level industry performance
and drive growth.
Public Company La-Z-Boy is committed to All strategic pillars
Board Experience the highest standards of
corporate governance and
ethical business conduct. We
believe that directors who
serve on the boards of
other publicly-traded companies
have a well-developed
understanding of corporate
governance and compliance
best practices. They also
share insights on enhancing
board effectiveness, maintaining
board independence,
and driving meaningful
succession planning.
Finance La-Z-Boy's reputation All strategic pillars
and success are partly
dependent on accurate
financial reporting and
robust financial
oversight. Therefore, we
seek to have directors
who qualify as audit
committee financial experts
(as defined by SEC
rules) and who are
financially literate. We
also seek directors with
mergers and acquisitions
experience to support
our growth strategy.
Technology and Digital Directors who understand All strategic pillars
digital technology, enabled
e-commerce platforms, and data
analytics provide critical
insight as we apply new
technologies and analysis to
transform our business operations
and enhance our customer
experience. In addition, our
directors' cybersecurity
experience is important to
our Board's risk management
responsibilities. Experience
or expertise in information
technology helps us pursue and
achieve our business objectives.
Retail Directors who understand Meet consumers where they
retail operations and want to shop & Expand
services, including the La-Z-Boy Furniture
traditional and e-commerce Galleries Network
market channels, help us
to better understand our
markets and the needs of
our retail customers.
Consumer Marketing Directors with knowledge Expand La-Z-Boy Brand Reach &
of consumer goods markets Profitably Grow Joybird Brand
and marketing provide
crucial insights as we
maintain and enhance our
brand, develop new and
existing markets, and implement
our growth strategies.
Global Perspective As one of the world's Expand La-Z-Boy Brand Reach,
leading residential Profitably Grow Joybird Brand
furniture producers & Enhance Enterprise Capabilities
with international - Agile Supply Chain
manufacturing and
sales operations, our
future success depends,
in part, on how well
we manage and grow our
businesses outside
the United States.
Directors with global
business or international
experience provide
valued perspectives
on our operations.
Sourcing/Manufacturing In our highly-competitive Enhance Enterprise Capabilities
industry, - Agile Supply Chain
innovation and continuous
improvement in sourcing and
manufacturing are key competitive
advantages. Having directors who
can bring insights from other
industries and companies is
fundamental to our success.
Human Capital Management Talent management is important at all Enhance Enterprise Capabilities -
levels of our company, but it is People First Employee Experience
particularly critical with respect
to succession planning for senior
executives. Having directors with
human capital management and talent
management experience is important to
ensure smooth transitions and appropriate
succession planning, as well as to
foster a productive and safe working
environment. This expertise also
covers risks and opportunities
associated with corporate culture,
diversity and inclusion, and employee
engagement, all areas that are drivers
of long-term shareholder value.
Risk Management Directors with risk All strategic pillars
management experience
provide critical insights
as the Board oversees
the company's enterprise
risk management processes
and the major risks
facing the company.
8 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
Board Composition and Director Selection
Our Nominating and Governance Committee is responsible for recommending to the
Board director candidates to fill current and anticipated Board vacancies. The
committee identifies and evaluates potential candidates from recommendations
from the committee's own members and referrals from other Board members,
management, shareholders, or other outside sources, including professional
recruiting firms. Shareholders may recommend director nominees for election at
an annual meeting of shareholders pursuant to the process set forth in our
Corporate Governance Guidelines. All such recommendations by shareholders will
be evaluated by the Nominating and Governance Committee. Shareholders may also
directly nominate candidates for election as directors pursuant to the
provisions of our bylaws, as described more fully on page
78
of this Proxy Statement. In evaluating proposed candidates, the committee may
review their resumes, obtain references, and conduct personal interviews.
When evaluating director candidates, the Nominating and Governance Committee
considers, among other factors, the Board's current and future needs for
specific skills and the candidate's integrity, independence, leadership,
substantial accomplishments, ethical reputation, ability to exercise sound
judgment and provide insightful counsel to management, and ability to make the
appropriate time commitment to the Board.
Although we do not have a formal diversity policy, as stated in our Corporate
Governance Guidelines, the Board believes that diversity helps to create a
high-functioning Board. The Board strives to ensure that it reflects a diverse
mix of relevant characteristics, including gender, race, ethnicity, culture,
experience, expertise, skills, backgrounds and other characteristics, to
address the company's evolving needs, as reflected by our ten director
nominees:
Erika Sarah James Hackett Raza Haider Janet Kerr Mark LaVigne Michael Rebecca Lauren Peters
Alexander Gallagher Lawton O'Grady
Tenure
Approx. 3 8 3.5 1 15.5 1.5 11 5
Years
on Board
(as of
Annual
Meeting)
Gender
Female a a a a a a
Male a a a a
Race/Ethnicity
Black or African American a
Asian/Middle Eastern a
White a a a a a a a a
Melinda
Whittington
8 3
2024 Proxy Statement 9
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Board and Corporate Governance Matters
Director Nominees
Set forth below is certain information concerning our director nominees.
Unless otherwise indicated, the principal occupation of each director nominee
has been the same for at least five years. Ages shown are as of the date of
the 2024 Annual Meeting.
Erika L. Alexander
Age: Executive Roles:
57 .
Director since: Chief Global Officer, Global Operations of Marriott
2021 International, Inc., a company that operates
Committee Membership: and franchises hotels and licenses vacation
Nominating and Governance ownership resorts globally (January 2021 - present)
.
Chief Lodging Services Officer, The Americas of Marriott
International, Inc. (July 2015 - December 2020)
.
Held various other senior leadership
roles with Marriott International,
Inc., including for several of Marriott's largest brands
.
Associate member of the Inclusion
and Social Impact Committee of the
Marriott International, Inc. board of directors (2020 - present)
Other Leadership Roles:
.
Executive committee member of the board of
directors of Metro Atlanta Chamber of Commerce
Key Qualifications and Board Impact:
.
Ms. Alexander's deep global operational experience, sustainability
and human capital management expertise, and keen understanding
of brands, the consumer and the dynamics associated with
their ever-evolving needs qualify her to serve on our Board.
.
As a Chief Global Officer with responsibility for
sustainability operations and climate strategy,
Ms. Alexander offers valuable experience and
insights in the Board's oversight of sustainability.
Leadership Technology Retail Consumer
Experience and Digital Marketing
Global Sourcing/ Human Capital Risk Management
Perspective Manufacturing Management
10 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
Sarah M. Gallagher
Age: Executive Roles:
72 .
Director since: Former executive Chairperson of Rebecca Taylor, a women's apparel
2016 division of Kellwood Company (August 2014 - August 2015)
Committee Membership: .
Compensation and Talent Oversight Former President of Ralph Lauren North America e-Commerce,
a subsidiary of a lifestyle brand (2007 - 2013)
.
Former President of Ralph Lauren Media LLC, a
subsidiary of a lifestyle brand (2001 - 2007)
.
Formerly held Senior Vice President roles at Banana
Republic Direct and Gap Direct (divisions of Gap,
Inc., an international retailer of clothing,
accessories and personal care products) (1997 - 2001)
.
Formerly held senior executive positions at various retailers including
Avon Products, Inc. (a direct seller of beauty and related products),
Victoria's Secret Catalogue (a retailer of women's lingerie and
beauty products), and Lord & Taylor (a retail department store chain)
Public Boards:
.
Previous Public Company Boards: Abercrombie & Fitch
Co., a specialty retailer with a portfolio of global
lifestyle brands including Abercrombie & Fitch, abercrombie
kids, Hollister, and Gilly Hicks (2014 - 2024)
Other Leadership Roles:
.
Member of the advisory board of ActionIQ, Inc. (a customer
data platform service provider) since September 2018
.
Executive Advisor of FitforCommerce
(retail consultants) since August 2016
Key Qualifications and Board Impact:
.
Ms. Gallagher's extensive retail experience with consumer-focused
and fashion-oriented brands and over 50 years of
experience in consumer-facing retail with 15 years of leadership
in e-commerce retail qualify her to serve on our Board.
.
As a former senior executive who led cross-functional teams
at several Fortune 500 retailers, Ms. Gallagher provides
valuable experience and insights in the Board's oversight
of the company's omni-channel and retail growth strategy.
Leadership Public Company Technology Retail
Experience Board Experience and Digital
Consumer Global Sourcing/ Human Capital
Marketing Perspective Manufacturing Management
2024 Proxy Statement 11
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Board and Corporate Governance Matters
James P. Hackett
Age: Executive Roles:
69 .
Director since: Former President and Chief Executive
2021 Officer (2017 - 2020) and Special Advisor
Committee Membership: (2020 - March 2021) of Ford Motor
Nominating and Governance (Chair) Company, an automotive manufacturer
.
Former Chairman of Ford Smart Mobility LLC, an emerging mobility
services subsidiary of Ford Motor Company (2016 - 2017)
.
Former interim Athletic Director of the
University of Michigan (2014 - 2016)
.
Former President and Chief Executive Officer of Steelcase
Inc., an office furniture company (1994 - 2014)
Public Boards:
.
Previous Public Company Boards (Past Five Years): Ford Motor
Company, an automotive manufacturer (2013 - 2016, 2017 - 2020)
Other Leadership Roles:
.
Member of the board of directors of State Farm Mutual Automobile
Company, a mutual insurance company (since March 2021)
Key Qualifications and Board Impact:
.
Mr. Hackett's long track record of innovative
leadership as the former chief executive
officer of two public companies with his
focus on the evolving needs of consumers in
multiple industries, demonstrated by his
leadership on smart vehicle technology and the
shift to the open office space environment,
qualify Mr. Hackett to serve on our Board.
.
With over 30 years of experience in the office furniture
industry, Mr. Hackett provides valuable experience and insights
on industry and competitive trends and in the Board's
oversight of the company's consumer-led innovation strategy.
Leadership Public Company Finance Technology
Experience Board Experience and Digital
Global Sourcing/ Human Capital Risk Management
Perspective Manufacturing Management
12 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
Raza S. Haider
Age: Executive Roles:
47 .
Director since: Chief Product and Supply Chain Officer of Bose Corporation,
2023 a global leader in audio systems (2023 - present)
Committee Membership: .
Nominating and Governance Chief Product Officer of Bose Corporation (2022 - 2023)
.
Senior Vice President - Dell Consumer Products
of Dell Technologies Inc. (2018 - 2022)
.
Formerly held other senior executive positions
at Dell Technologies Inc. (2013 - 2018)
.
Former Engagement Manager, McKinsey & Company, Inc. (2006 - 2012)
Key Qualifications and Board Impact:
.
Mr. Haider's extensive technology, digital, and
operational experience and his deep understanding
of consumer needs and consumer-centric
innovation qualify him to serve on our Board.
.
Mr. Haider is a proven technology leader who has
guided product-driven digital transformations
at multibillion dollar companies in the consumer
technology industry. Given his product and
supply chain expertise, he offers valuable
experience and insight in the Board's oversight of
the company's growth strategy, innovation strategy,
and operational efficiency and resiliency.
Leadership Finance Technology Retail
Experience and Digital
Consumer Global Sourcing/ Human Capital
Marketing Perspective Manufacturing Management
Risk Management
2024 Proxy Statement 13
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Board and Corporate Governance Matters
Janet E. Kerr
Age: Executive Roles:
70 .
Director since: Vice Chancellor, Pepperdine University (2016 - 2023)
2009 .
Committee Membership: Former strategic adviser to Bloomberg BNA (2014 -
Nominating and Governance 2015) after its acquisition of her technology company
.
Professor (1983 - 2013) and Professor Emeritus
(since 2013) of the Pepperdine Caruso School of Law
.
Co-founder and former chief strategy
officer of Exemplify, Inc., a technology
knowledge management company, until its
acquisition by Bloomberg BNA in 2014
.
Founder and former executive director of the Palmer Center for
Entrepreneurship and the Law at the
Pepperdine Caruso School of Law
.
First holder of Laure Sudreau-Rippe Endowed
Chair at the Pepperdine Caruso School of Law
.
A nationally recognized author, lecturer and
consultant in the area of securities law compliance,
environmental, social and governance issues, banking
law, corporate governance, and general corporate law
.
Co-founder (with HRL Laboratories,
LLC) of X-Laboratories, a technology
company, and founder or co-founder of
several other technology companies
.
Ms. Kerr has earned the CERT Certificate in Cybersecurity Oversight
from the Carnegie Mellon University Software Engineering Institute, the
Certificate from the University of Cambridge program in Disruptive
Technologies, and the Certificate in Artificial Intelligence from MIT.
Public Boards:
.
Other Public Company Boards: AppFolio, Inc.,
provider of cloud-based business management software
(since 2015); Tilly's, Inc., a retailer of
apparel, footwear and accessories (since 2011)
Key Qualifications and Board Impact:
.
Ms. Kerr's service on public and private
company boards and her skills and experience
in the practice of law and corporate
governance qualify her to serve on our Board.
.
As a founder or co-founder of multiple technology companies
and with her certifications in cybersecurity and technology,
Ms. Kerr provides valuable experience and insights in the
Board's effective oversight of our cybersecurity risks.
Leadership Public Company Finance Technology
Experience Board Experience and Digital
Retail Consumer Global Risk Management
Marketing Perspective
14 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
Mark S. LaVigne
Age: Executive Roles:
53 .
Director since: President and Chief Executive Officer of
2023 Energizer Holdings, Inc., a manufacturer
Committee Membership: of primary batteries, auto care and
Audit portable lighting products (2021 - present)
.
Formerly held senior executive
positions at Energizer Holdings, Inc.:
.
President and Chief Operating Officer (2019 - 2020)
.
Executive Vice President and Chief Operating Officer (2015 - 2019)
.
Formerly served as Vice President,
General Counsel and Secretary of
the former parent company of Energizer
Holdings, Inc. (2012 - 2015)
.
Formerly practiced law as a partner
at Bryan Cave LLP (2007 - 2010)
Public Boards:
.
Other Public Company Boards: Energizer
Holdings, Inc., a manufacturer and marketer
of primary batteries, auto care and
portable lighting products (since 2021)
Key Qualifications and Board Impact:
.
Mr. LaVigne's experience as CEO of a public
company that manufactures and markets a
portfolio of iconic consumer brands, along
with his experience on a public company board,
qualifies him to serve on our Board. With his
operational leadership and legal background,
Mr. Lavigne also has extensive experience
with risk management and oversight.
.
With his leadership of digital transformation initiatives across a
global enterprise and extensive
experience in the e-commerce channel,
Mr. LaVigne also provides valuable experience and insights in the
Board's oversight of the company's
technology and digital strategy.
Leadership Public Company Finance Technology
Experience Board Experience and Digital
Consumer Global Sourcing/ Human Capital
Marketing Perspective Manufacturing Management
Risk Management
2024 Proxy Statement 15
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Board and Corporate Governance Matters
Michael T. Lawton
Age: Executive Roles:
65 .
Director since: Former Executive Vice President and Chief Financial Officer of
2013 Domino's Pizza, Inc., a pizza restaurant chain (2010 - 2015)
Chair of the Board .
Committee Membership: Formerly held senior executive positions at Domino's Pizza, Inc.:
Audit .
Compensation and Talent Oversight Executive Vice President, Supply Chain Services (2014 - 2015)
.
Interim Chief Information Officer (2011 - 2012)
.
Executive Vice President of International (2004 - 2011)
.
Senior Vice President Finance and Administration of International
.
Formerly held various financial and
general management positions with
Gerber Products Company, including
Vice President Finance International
Public Boards:
.
Other Public Company Boards: Universal Corporation, a
leading global supplier of leaf tobacco (since 2016)
Key Qualifications and Board Impact:
.
Mr. Lawton's experience as CFO of a public company
and senior executive of a well-known consumer
brand, along with his experience on a public
company board, qualify him to serve on our Board.
.
As a former public company CFO and a vice president of
finance international at two companies, Mr. Lawton provides
valuable experience and insights in the Board's oversight
of risk management and international business operations.
Leadership Public Company Finance Technology
Experience Board Experience and Digital
Retail Consumer Global Sourcing/
Marketing Perspective Manufacturing
Human Capital Management Risk Management
16 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
Rebecca L. O'Grady
Age: Executive Roles:
56 .
Director since: Former President of Global Haagen-Dazs and Chief
2019 Marketing Officer for International Marketing,
Committee Membership: e-Commerce & Consumer Insights of General Mills,
Compensation and Talent Oversight (Chair) Inc., a global food company (2014 - 2016)
.
Former President of Yoplait USA, a
division of General Mills (2009 - 2014)
.
Joined General Mills in 1990, and
held leadership roles in a variety of
divisions and brands including Yoplait,
Cheerios, Progresso and Betty Crocker
Other Leadership Roles:
.
Director of Ripple Foods, a private
dairy alternative product company
.
Director and audit committee chair of Tropicale Foods, Inc., a
private manufacturer and distributor of frozen novelty products
.
Director of HALO Branded Solutions, Inc., a
private promotional marketing products company
Key Qualifications and Board Impact:
.
As a former chief marketing officer, Ms. O'Grady's
consumer marketing expertise and e-commerce
experience with well-known consumer brands and global
retailers qualifies her to serve on our Board.
.
With over 25 years of experience
leading businesses both domestically
and globally for General Mills, Inc., Ms. O'Grady provides
valuable experience and insight in the Board's oversight of risk
management, human capital management and international operations.
Leadership Finance Retail Consumer
Experience Marketing
Global Sourcing/ Human Capital Risk Management
Perspective Manufacturing Management
2024 Proxy Statement 17
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Board and Corporate Governance Matters
Lauren B. Peters
Age: Executive Roles:
63 .
Director since: Former Executive Vice President and Chief Financial
2016 Officer of Foot Locker, Inc., an omni-channel
Committee Membership: footwear retailer operating and franchising stores
Audit (Chair) globally under a portfolio of brands (2011 - 2021)
.
Senior Vice President of Strategic Planning
of Foot Locker, Inc. (2002 - 2011)
.
Formerly held various other senior
financial leadership roles at Foot
Locker, Inc. and Robinsons-May, a
division of May Department Stores
.
Former Audit Manager with Arthur Andersen & Company
.
Licensed Certified Public Accountant
Public Boards:
.
Other Public Company Boards: Allegion plc, a global
provider of security products and solutions (since
2021); Victoria's Secret & Co., a global intimates and
beauty brand and omni-channel retailer (since 2021)
Other Leadership Roles:
.
Member of the board of trustees and finance committee of the
Katharine Hepburn Cultural Arts Center (since June 2023)
Key Qualifications and Board Impact:
.
Ms. Peters' extensive financial and strategic planning
experience with consumer-facing, fashion-oriented omni-channel
and global retailers and her service on multiple public
company boards qualify her to serve on our Board.
.
With over 30 years of experience in the retail industry, leading large
financial organizations of public companies, Ms. Peters provides
valuable experience and insights in the Board's oversight of the
company's growth strategy and financial and other risk management.
Leadership Public Company Finance Technology
Experience Board Experience and Digital
Retail Consumer Global Human Capital
Marketing Perspective Management
Risk Management
18 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
Melinda D. Whittington
Age: Executive Roles:
57 .
Director since: Our President and Chief Executive Officer since April 2021
2021 .
Committee Membership: Our former Senior Vice President and Chief
None Financial Officer (2018 - April 2021)
.
Former Chief Financial Officer of
Allscripts Healthcare Solutions, Inc., a
publicly traded healthcare information
technology solutions company (2016 - 2017)
.
Former Senior Vice President, Corporate Controller and
Chief Accounting Officer of Kraft Foods Group, Inc.
(now The Kraft Heinz Company), a consumer packaged food
and beverage company (February 2015 - October 2015)
.
Formerly held various finance positions of increasing
responsibility with Kraft Foods Group, Inc. and The Procter &
Gamble Company, a multinational consumer goods corporation,
including expatriate assignments in Belgium and Costa Rica.
Public Boards:
.
Other Public Company Boards: Best Buy Co., Inc.,
a consumer electronics retailer (since 2023)
Other Leadership Roles:
.
Member of the board of directors of the
American Home Furnishings Alliance
.
Member of the board of directors of the
American Home Furnishings Hall of Fame
.
Member of the board of Business Leaders for Michigan
.
Member of the board of directors of the YMCA of Monroe, Michigan
.
Member of the Ohio State University Fisher
College of Business Dean's Advisory Council
Key Qualifications and Board Impact:
.
Ms. Whittington's over 30 years of leadership
experience at multiple public companies,
including extensive consumer products expertise
and proven capability in operational
and financial matters, her significant risk
management and human capital management
experience, and her international perspective
qualify her to serve on our Board.
.
Serving as our CEO, previously as our Chief
Financial Officer and in various industry-wide
leadership roles, Ms. Whittington
provides valuable experience and insights
on the business and financial performance
of the company and on industry trends and
transformation in the Board's oversight of
the company's strategy and performance.
Leadership Public Company Finance Technology
Experience Board Experience and Digital
Retail Consumer Global Sourcing/
Marketing Perspective Manufacturing
Human Capital Management Risk Management
2024 Proxy Statement 19
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Board and Corporate Governance Matters
Corporate Governance
Overview
Our Board of Directors is committed to good governance practices that further
the company's strategic growth plans and enhance shareholder value over the
long term, while also considering the interests of other stakeholders,
including our employees, customers, vendors, and the communities we impact.
The Board oversees the company's performance, including its strategic
direction and critical corporate policies that have the greatest impact on our
operations. In exercising its oversight responsibility, the Board evaluates
the performance of our President and CEO and monitors our strategic plan, our
performance against the plan, and management's assessment and remediation of
the company's risks. As part of the strategic planning process, the Board
reviews the company's capital allocation plan and its investment in research
and product development, information technology, and employee development,
with a focus on promoting the company's long-term growth. The Board regularly
reviews our governance practices and processes to ensure they remain
effective, making changes when appropriate. It also monitors the company's
culture to encourage a focus on sustainable growth and to ensure we maintain
the highest levels of ethics and integrity, especially with respect to our
financial statements and disclosures.
Director Independence
Our Board strongly supports the requirement for director independence.
Consistent with the New York Stock Exchange listing standards, our Corporate
Governance Guidelines require that a substantial majority of our directors be
independent, and we limit membership on each of our Board committees to
independent directors. Our Board annually reviews and determines if any
director has a material relationship with our company, our management, or our
other directors that would impede the director's independence. Applying the
New York Stock Exchange listing standards and our Corporate Governance
Guidelines, our Board has determined that each of our current directors, other
than Ms. Whittington, is independent, that is: Ms. Alexander, Ms. Gallagher,
Mr. Hackett, Mr. Haider, Ms. Kerr, Mr. LaVigne, Mr. Lawton, Ms. O'Grady, and
Ms. Peters are each independent. Ms. Whittington, our President and CEO, does
not serve on any Board committees. In addition, Mr. W. Alan McCollough, who
served on the Board until the 2023 Annual Meeting of Shareholders, was deemed
to be independent.
Leadership Structure
Our Board evaluates, from time to time as appropriate, our leadership
structure and whether to combine or separate the roles of Chair of the Board
and CEO, in light of all relevant facts and circumstances. Based on the
relevant facts and circumstances, including the demands of our internal
business plans and the external business environment, the Board determines the
leadership structure it considers to be in the best interests of the company
and our shareholders at that time. In 2022, our independent Lead Director
Michael Lawton became non-executive Chair of the Board, with Melinda
Whittington serving as our President and CEO and a member of the Board. Our
company has a history of adapting its leadership structure to best serve the
interests of the company and our shareholders at that time, and intends to
continue to do so, as appropriate.
2011 -
Positions combined, with an Positions
independent Lead Director director s
l
2021 -
Positions separated with the former Chairman and CEO serving as non-executive Chairman, and an independent L
2022 - }
separated with an independent
erving as non-executive Chairman
l l
ead Director
Our bylaws and Corporate Governance Guidelines provide that the Chair of the
Board establishes, in collaboration with the Chairs of the committees and the
CEO, the agendas for, and presides at, all meetings of the shareholders and of
the Board.
20 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
Board Risk Oversight
Our Board is responsible for risk oversight and our management is responsible
for the day-to-day assessment, monitoring and mitigation of the company's
risks.
Board Oversight
To ensure vigilant monitoring of risks, the Board believes that it is
important to maintain direct oversight of our enterprise risk management
process and significant risks, including: cybersecurity risks; strategic and
operational risks; reputational, brand and legal risks; and environmental and
sustainability risks. Our Board encourages open communication and appropriate
escalation of risk reporting throughout the enterprise. The Board annually
reviews management's enterprise risk management process, which is designed to
provide visibility to the Board on significant risks and risk mitigation
strategies. In conjunction with the Board's strategic plan review, management
identifies risks directly related to the strategic plan, as well as new and
emerging risks.
Board oversight of enterprise risk management process.
The company's enterprise risk management process engages key business and
functional leaders to identify the major risks that the company faces. In
addition to assessing major risks, management identifies ways to mitigate and
monitor such risks. At least annually, the company's executive leadership
reviews with the full Board the major risks identified in the enterprise risk
management process, as well as the steps identified to mitigate such risks.
Each of the business and functional leaders responsible for the management of
these identified risks also regularly discuss with the Board changes in
assessment of those risks and mitigation plans.
Board oversight of cybersecurity and information security risks.
With respect to cybersecurity risks, the company's
Chief Information Officer ("CIO") reports directly to the Board, at least
twice a year, on cybersecurity risks and strategy and attends Board meetings
to be available to discuss cybersecurity matters with the Board. Oversight of
the information security program at the Board level sits with the Audit
Committee. The CIO reports to the Audit Committee on risks and internal
controls related to cybersecurity and information technology and systems at
least annually and attends quarterly Committee meetings to be available to
discuss such matters with the Audit Committee.
Board oversight of environmental and sustainability risks.
As part of its oversight of environmental and sustainability risks, the Board
has a direct role in shaping the company's sustainability roadmap and is
integrally involved in our commitment to pursue a net-zero emissions goal. Our
Vice President of Sustainability and Environmental Health and Safety regularly
reports on environmental and sustainability progress and risks to the Board
and our Vice President, General Counsel and Chief Compliance Officer regularly
reports to the Board and Audit Committee on related compliance matters and
risks. In addition, the Audit Committee oversees legislative and regulatory
developments related to the disclosure of climate-related risks.
Committee Oversight
The Board has delegated to the appropriate standing committees the oversight
of certain risks within their respective areas of responsibility. The
Nominating and Governance Committee ensures that all risks, including any
emerging risks, are monitored by the Board or the appropriate standing
committee. Each committee regularly reviews and reports to the Board on its
respective risk categories. Throughout the year, our Board and Board
committees review and discuss the various risks confronting the company,
paying special attention to new operating and strategic initiatives.
Compensation and Human Capital Management Risks
The Compensation and Talent Oversight Committee, with assistance from its
independent compensation consultant, conducted a review of the risks arising
from the company's compensation policies and practices for employees,
including executives. Based on such review, the Compensation and Talent
Oversight Committee concluded that these risks are not reasonably likely to
have a material adverse effect on the company. In addition, the company's
Chief Human Resources Officer reports to the Compensation and Talent Oversight
Committee on human capital management matters and risks.
Board Refreshment and Tenure
Our Nominating and Governance Committee believes in the benefits of refreshing
the Board on an ongoing basis through the nomination and election of new
directors who can bring new ideas, perspectives and skills to the boardroom.
In selecting director nominees, the Nominating and Governance Committee weighs
the need for both director refreshment and institutional memory, and considers
average tenure of the non-employee members of our Board as part of its
holistic assessment of Board composition. It believes that the appropriate mix
of varied levels of tenure and experience can help to mitigate risk.
2024 Proxy Statement 21
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Board and Corporate Governance Matters
Our Nominating and Governance Committee seeks to achieve a balance in director
tenure through appropriate and deliberate Board refreshment and does not
believe that it is appropriate at this time to set absolute term limits on the
length of a director's service. Directors who have served on the Board for an
extended period of time are able to provide valuable insight into the
operation and future of the company based on their experience with, and
understanding of, our history, policies and objectives. The average tenure
(through their current term of service) of the non-employee members of our
Board standing for reelection at the Annual Meeting is approximately 6.3 years.
Succession Planning
Our Board engages in an effective planning process to identify, evaluate and
select potential successors to the CEO and other members of executive
management. The CEO and the Chief Human Resources Officer provide regular
updates to the Board on significant changes in key personnel and, at least
annually, the chief human resources officer reviews with the Board executive
management succession planning. Each director has complete and open access to
any member of management. The senior members of management are invited
regularly to make presentations at Board and committee meetings and meet with
directors in informal settings to allow the directors to form a more complete
understanding of the executive's skill and character. The Board periodically
reviews and revises, as necessary, the company's emergency management
succession plan, which details the actions to be taken by specific individuals
in the event the CEO suddenly dies or becomes incapacitated
.
Board Self-Evaluation Process
As required by our Corporate Governance Guidelines, annually, the Board
conducts a self-evaluation of its performance and effectiveness. In addition,
each of the standing committees of the Board conducts an annual self-evaluation
of its performance and effectiveness and discusses the results of such
assessment with the Board. Finally, the Chair of the Board conducts individual
performance evaluation discussions with each non-employee director. The
purpose of the self-evaluation process is to identify ways in which to enhance
the effectiveness of the Board's and committees' oversight of the company's
business and financial performance and its corporate governance. As part of
the self-evaluation process, each director completes written questionnaires
developed by the Nominating and Governance Committee to provide feedback on
the effectiveness of the Board and the committees on which they serve,
including the performance of the Chair of the Board (and Lead Director, if
applicable) and committee Chair, respectively. Given the Board's commitment to
the creation of long-term shareholder value, each Board and committee
self-evaluation questionnaire begins with the topic of shareholder value
creation. The Board self-evaluation questionnaire also covers the following
topics, among others: the company's strategic plan; management performance and
succession planning; oversight of risk management, diversity, inclusion and
belonging efforts, the ethics and compliance program, sustainability efforts,
and information security; and the Board's composition, structure, and
effectiveness.
Related Person Transactions
Our Code of Conduct, which applies to all of our employees, executive officers
and directors, requires that any potential conflict of interest be either
avoided or fully disclosed. Each year, we require our directors and executive
officers to disclose any transactions between them or their immediate family
members and the company that involve amounts in excess of $120,000. Pursuant
to our related person transactions policy, the Audit Committee reviews any
reported transactions related to directors or executive officers and takes
appropriate action. Since the beginning of FY 2024, there have been no related
person transactions requiring disclosure pursuant to Item 404 of Regulation
S-K.
Stock Ownership Guidelines
We encourage significant stock ownership by the Chair of the Board, directors,
and executive management to align the interests of our leadership with those
of our shareholders. We have established stock ownership guidelines that
require each non-employee director to own La-Z-Boy equity equal in value to a
multiple of their annual cash retainer. Our CEO and the other NEOs are
required to own La-Z-Boy equity equal in value to a multiple of their
respective base salary.
22 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
Current stock ownership guideline values for the Chair of the Board
, non-employee directors, and the NEOs are as follows:
Guideline Value
(Multiple of Salary or Annual Cash Retainer)
Chair of the Board 5x
Non-employee directors 5x
President and CEO 5x
Other NEOs 3x
In determining compliance with the guidelines, we include shares owned
directly, shares held in a family trust or qualified retirement program,
performance-based shares/units contingently earned in completed performance
periods but not yet paid, and time-based restricted stock/stock unit awards.
However, we do not include stock options (whether vested or unvested) or
unearned performance-based shares/units in determining compliance with the
guidelines.
Non-employee directors and NEOs are required to meet this ownership level by
the conclusion of a five-year period that begins in the first full calendar
year after they become subject to the guidelines or an increase in the
guidelines. As of April 27, 2024, all our non-employee directors who have
served on the Board for five or more years held sufficient equity of our
company to satisfy the stock ownership guidelines. As of April 27, 2024, all
our NEOs either held sufficient equity of our company to satisfy the stock
ownership guidelines or were within the five-year transition period.
Insider Trading Policy; Prohibition on Hedging and Pledging
We have adopted an Insider Trading Policy that governs the purchase, sale,
and/or other dispositions of the company's securities by directors, officers,
and employees that we believe is reasonably designed to promote compliance
with insider trading laws, rules and regulations and listing standards
applicable to the company. We prohibit directors, officers, and employees from
hedging or pledging our shares or engaging in short-term speculative trading,
including short sales, trading in puts and calls, and buying on margin. It is
also our policy that the company will not trade in company securities in
violation of applicable securities laws or stock exchange listing standards.
Meetings and Attendance; Overboarding Policy
Our Board met five times during FY 2024. At every Board meeting, the
non-employee directors met in executive session, chaired by the independent,
non-executive Chair of the Board, without management present. During FY 2024,
each of our directors attended at least 75% of the meetings of the Board and
committees on which the director served. All of the directors attended the
2023 annual meeting of shareholders, and consistent with the policy set forth
in our Corporate Governance Guidelines, we expect all directors to participate
in the Annual Meeting.
Our Corporate Governance Guidelines provide that directors who also serve as
named executive officers (or in equivalent positions) of public companies
should not serve on more than one board of a public company in addition to the
company's Board, unless approved by the Nominating and Governance Committee.
Other directors should not serve on more than three boards of public companies
in addition to the company's Board, unless approved by the Nominating and
Governance Committee. Directors serving on the company's Audit Committee shall
not serve on more than two audit committees of public companies in addition to
the company's Audit Committee, unless approved by the Nominating and
Governance Committee. The Corporate Governance Guidelines also require that
the Nominating and Governance Committee review the overboarding policy at
least annually and recommend any proposed changes to the Board for approval.
In addition, the Nominating and Governance Committee monitors the compliance
of each director with such overboarding policy.
Corporate Governance Guidelines and Code of Conduct
The company has adopted a Code of Conduct that applies to all of our
employees, executive officers and directors. Our Corporate Governance
Guidelines, Code of Conduct, and Board committee charters, as well as other
key governance documents, can be found on our website at http://investors.la-z-b
oy.com, under "Corporate Governance."
2024 Proxy Statement 23
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Board and Corporate Governance Matters
Sustainability
Reporting
Our unrelenting commitment to producing high-quality, comfortable furniture
has been a fundamental part of how our company has operated since our
founding. We are committed to doing what is right for our consumers,
employees, shareholders, and communities. Aligned with our core values, we
empower courage for a sustainable culture, embrace curiosity for sustainable
design, and operate with compassion for a sustainable planet.
Consistent with these values and our longstanding commitment to social
responsibility, we strive to provide our shareholders with important
information about our sustainability-related governance and performance. In an
effort to provide comparable information, we have adopted a framework through
which we can hold ourselves accountable for the environmental and social
impact of our business operations using the Sustainability Accounting
Standards Board ("SASB") Building Products and Furnishings Standard. In
addition, we are working to align our reporting with the climate-specific
recommendations developed by the Task Force on Climate-related Financial
Disclosures (the "TCFD"). Our climate ambition is to reach net-zero emissions
by 2050.
We publish an annual La-Z-Boy Incorporated Sustainability Report and expect
the FY 2024 Sustainability Report to be issued in the third quarter of FY
2024. We invite you to visit our website at http://investors.la-z-boy.com
under "Sustainability" to read our report to learn more about our
sustainability initiatives and impact.
Sustainability Highlights
In FY 2024, we implemented improved waste and recycling programs across the
enterprise. We entered into a partnership with a leading technology-based
commercial waste and recycling service provider. The collaboration will enable
us to enhance our operational efficiency and increase our waste diversion
rates, beginning in FY 2024. Our target is to greatly reduce waste being sent
to landfills and accelerate our journey toward achieving zero waste.
We have entered into new agreements to receive renewable energy at certain of
our North American sites. We have also elevated our focus on driving
responsible cotton and leather sourcing practices across our supply chain with
the development of cotton and leather sourcing policies and the mapping of our
leather supply chain. Internally, we are making progress in building a culture
where our employees can bring their best selves to work because we know our
people are our greatest assets.
Shareholder Engagement
We are committed to transparent and active engagement with our shareholders to
both share our perspectives and obtain valuable insight and feedback from
shareholders on matters of mutual interest. Our shareholder engagement is a
year-round process that may involve the Chair of the Board, Lead Director (if
applicable), executive management, and members of our investor relations,
corporate governance, environmental, and executive compensation teams.
Throughout the year, we meet with institutional investors and analysts to
inform and share our perspectives and to solicit their feedback on our
performance. This includes participation in investor and industry conferences
and other group and one-on-one meetings throughout the year. We also engage
with the corporate governance teams of our major shareholders, through
conference calls that occur during and outside of the proxy season. In FY
2024, we invited our top shareholders representing over 40% of the company's
outstanding common stock to engage with the Chair of the Board and certain
members of management on various strategic and other matters, including
company strategy and performance, Board diversity and refreshment, executive
compensation, and ESG priorities such as human capital management,
sustainability initiatives, oversight and performance, and corporate
governance practices. Feedback the company receives from shareholders is
regularly reported to the Board and its committees, as appropriate, and
informs the Board's deliberations on the company's strategy, operations,
governance practices, executive compensation program, and oversight of
sustainability initiatives. For further discussion of our shareholder
engagement on executive compensation matters, please see Say-on-Pay Vote and
Shareholder Engagement on page
35
.
Communication with Directors
Interested parties, including shareholders, may communicate with, or provide
recommendations to, our Board, the Chair of the Board or Lead Director (if
applicable), or other specified members or committees of the Board by sending
correspondence to our Corporate Secretary at La-Z-Boy Incorporated, One
La-Z-Boy Drive, Monroe, MI 48162, and specifying in such correspondence the
intended recipient or recipients of the communication or recommendation. The
Corporate Secretary reviews and compiles all communications received, provides
a summary of any lengthy or repetitive communications, and
24 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
forwards them to the specified recipient director or directors. The complete
communication is provided when requested by the relevant director, directors
or committee.
Committees of the Board
We have three standing committees of the Board: the Audit, Compensation and
Talent Oversight, and Nominating and Governance Committees. Each committee is
composed of only independent directors. Each committee operates under a
charter (which can be found at http://investors.la-z-boy.com, under "Corporate
Governance") and has the ability to engage independent consultants and
advisors at the company's expense to assist the committee in fulfilling its
duties. Mr. Lawton, our independent, non-executive Chair of the Board, serves
on the Audit Committee and Compensation and Talent Oversight Committee and
generally attends the meetings of the other committees. The current membership
and Chair of each of the committees are shown in the table below.
Name Audit Compensation and Talent Oversight Nominating
and Governance
Erika L. Alexander a
Sarah M. Gallagher a
James P. Hackett
a
(
Chair
)
Raza S. Haider a
Janet E. Kerr a
Mark S. LaVigne a
Michael T. Lawton (Chair of the Board) a a
Rebecca L. O'Grady
a
(
Chair
)
Lauren B. Peters
a
(
Chair
)
Melinda D. Whittington
Audit Committee
Members: Key risk oversight and other duties:
Lauren B. Peters (Chair) .
Mark S. LaVigne Financial reporting process
Michael T. Lawton .
FY 2024 meetings: Ethics and compliance-related matters
9 .
Independence: Legal and regulatory compliance matters
Each member of the committee is .
independent and financially literate Effectiveness of our internal and external audit functions
Audit Committee Financial Expert: .
Each member of the committee is an "audit committee Selection and oversight of our independent
financial expert," as defined by the SEC registered public accounting firm
.
Risks and internal controls related to information
technology and systems, cybersecurity and data privacy
.
Legislative and regulatory developments related
to disclosure of climate-related risks
The Audit Committee monitors the independence of the company's independent
registered public accounting firm, annually requests and reviews the firm's
written statement of relationships with the company, and reviews and limits
our use of the firm for non-audit work. The committee reviews the staff
assigned to our audit and ensures the lead partner is rotated at least once
every five years. The committee discusses with management and our independent
registered public accounting firm the quality and adequacy of our internal
controls over financial reporting.
Report:
The Audit Committee Report is set forth beginning on page
28
of this Proxy Statement.
2024 Proxy Statement 25
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Board and Corporate Governance Matters
Compensation and Talent Oversight Committee
Members: Key risk oversight and other duties:
Rebecca L. O'Grady (Chair) .
Sarah M. Gallagher Compensation of executive officers
Michael T. Lawton .
FY 2024 meetings: Executive and senior management incentive compensation program
4 .
Independence: Non-employee director equity and cash compensation program
Each member of the committee is .
independent; each is a "non-employee In conjunction with the Board, evaluating the CEO's performance
director" under the Securities Exchange Act of 1934, as amended .
Human capital management, including succession planning, talent
management, employee engagement, and
diversity, inclusion and belonging
The Compensation and Talent Oversight Committee receives advice on executive
compensation matters from outside compensation advisors. Each year, the
committee reviews and discusses the independence of its independent
compensation advisors and has determined that its independent compensation
consultant, Frederic W. Cook & Co., Inc., is independent and that their work
for the committee does not raise any conflicts of interest.
Report:
The Compensation and Talent Oversight Committee Report is set forth on page
30
of this Proxy Statement.
Nominating and Governance Committee
Members: Key risk oversight and other duties:
James P. Hackett (Chair) .
Erika L. Alexander Board governance practices
Raza S. Haider .
Janet E. Kerr Identification and evaluation of director candidates
FY 2024 meetings: .
4 In conjunction with the Board, enterprise risk management process
Independence: .
Each member of the committee is independent Company's governance structure and processes
The Nominating and Governance Committee makes recommendations on general
corporate governance issues, including the size, structure, and composition of
the Board and its committees. The committee also assists the Board in ensuring
that all risks are monitored by the Board or the appropriate standing
committee. See "Risk Oversight" above for further discussion of our risk
oversight process.
Director Compensation
Only our non-employee directors are compensated for service on the Board.
Non-employee director compensation is determined by the Board, after
considering the recommendation of the Compensation and Talent Oversight
Committee. In February 2023, the committee requested that its independent
compensation consultant, Frederic W. Cook & Co., Inc., provide an independent
assessment of the director compensation program to evaluate its continued
alignment with peer companies and sound governance practices. Based on such
assessment and the recommendation of the Compensation and Talent Oversight
Committee, the Board did not approve any changes to non-employee director
compensation for FY 2024.
For FY 2024, the compensation for our non-employee directors was a combination
of cash and restricted stock units ("RSUs"), as shown below.
Chair of the Board Retainer:
For the Chair of the Board, an additional annual cash retainer of $100,000 (in
addition to the annual cash retainer payable to all non-employee directors).
Annual Cash Retainer:
For each non-employee director, an annual cash retainer of $100,000.
Committee Chair Cash Retainers:
For the Chairs of our Audit, Compensation and Talent Oversight, and Nominating
and Governance Committees, an additional cash retainer of $20,000, $15,000,
and $10,000, respectively.
26 La-Z-Boy Incorporated
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Board and Corporate Governance Matters
Equity Grant (RSUs):
Following their election at our 2023 Annual Meeting, we granted each
non-employee director 3,890 RSUs with a grant date fair value of $120,006.50.
Mr. Haider also received a prorated annual equity grant when he joined our
Board on June 27, 2023. Each RSU is equivalent in value to one share of our
common stock. The RSUs do not include voting rights. With respect to the RSUs
granted in FY 2024, (1) we award dividend equivalents on RSUs at the same time
and in the same amount as dividends declared on our common stock but they are
not paid in cash until the RSUs vest, and (2) the RSUs vest and are settled,
in shares only, on the one-year anniversary of the grant date.
Miscellaneous:
We reimburse directors for their cost of travel, lodging, and related
reasonable expenses incurred in the performance of their duties, including for
participation in director education programs. We provide membership in the
National Association of Corporate Directors for each director. Each director
is eligible to purchase our products from us at a discount.
FY 2024 Director Compensation
Name Fees Earned RSU All Other Total
or Paid in Awards Compensation ($)
Cash ($) ($)
($) (2) (3)
(1)
Erika L. Alexander 100,000 120,007 4,953 224,960
Sarah M. Gallagher 100,000 120,007 17,370 237,377
James P. Hackett 110,000 120,007 6,480 236,487
Raza S. Haider 84,511 140,785 2,684 227,980
Janet E. Kerr 100,000 120,007 50,903 270,910
Mark S. LaVigne 100,000 120,007 3,305 223,312
Michael T. Lawton 200,000 120,007 24,580 344,587
W. Alan McCollough 32,880 0 12,855 45,735
(4)
Rebecca L. O'Grady 115,000 120,007 10,276 245,283
Lauren B. Peters 120,000 120,007 17,370 257,377
(1)
Includes annual cash retainer, Chair of the Board retainer, and committee
Chair cash retainers, as applicable. For Mr. Haider and Mr. McCollough, the
amount of the annual cash retainer was prorated to reflect the dates of their
election to and retirement from the Board, respectively.
(2)
The amounts reported in this column represent the grant date fair value of
RSUs granted in FY 2024, calculated in accordance with Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718
based on the closing stock price as of the date of grant. As of April 27,
2024, our non-employee directors held RSUs that settle in shares of common
stock as follows: Ms. Alexander - 6,327 units; Ms. Gallagher - 22,601 units;
Mr. Hackett - 8,328 units; Mr. Haider - 4,616 units; Ms. Kerr - 53,622 units;
Mr. LaVigne - 3,890 units; Mr. Lawton - 32,050 units; Mr. McCollough - 0
units; Ms. O'Grady - 13,303 units; and Ms. Peters - 22,601 units. As of such
date, our non-employee directors also held RSUs settleable in cash as follows:
Ms. Kerr - 12,927 units.
(3)
Reflects payment (or with respect to RSUs granted following August 30, 2022,
accrual) of dividend equivalents on RSUs at the time and in the amount that
dividends were declared on shares of our common stock.
(4)
Mr. McCollough retired from the Board on August 27, 2023.
2024 Proxy Statement 27
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AUDIT MATTERS
Proposal 2: Ratification of Selection of Independent Registered Public
Accounting Firm for Fiscal Year 2025
The Audit Committee selects the company's independent registered public
accounting firm and manages all aspects of the relationship, including the
firm's compensation, retention, replacement, and scope of work. The Audit
Committee conducts an annual evaluation of the independent registered public
accounting firm's qualifications, performance, and independence. In accordance
with SEC rules, the lead partner overseeing the company's independent audit
engagement rotates every five years and the Audit Committee and its Chair are
directly involved in the company's selection of the lead engagement partner.
Such lead partner rotation occurred as of the beginning of FY 2021.
The Audit Committee has selected PricewaterhouseCoopers LLP ("PricewaterhouseCoo
pers") as the company's independent registered public accounting firm
("independent auditor") for FY 2025. PricewaterhouseCoopers acted as our
independent auditor for FY 2024 and has served as the company's independent
auditor since 1968. The Audit Committee and the Board believe that the
continued retention of PricewaterhouseCoopers as the company's independent
auditor is in the best interests of the company and its shareholders.
Representatives of PricewaterhouseCoopers will be available at the Annual
Meeting to answer questions and will have the opportunity to make a statement.
We ask you to ratify the selection of PricewaterhouseCoopers as our
independent auditor. Although ratification is not required by our bylaws or
otherwise, the Board and the Audit Committee submit the selection of
PricewaterhouseCoopers to you for ratification as a matter of good corporate
practice. The Audit Committee may reconsider the selection if it is not
ratified. In addition, the Audit Committee, in its discretion, may select a
different independent registered public accounting firm at any time during the
year if it determines that such a change would be in the best interests of the
company and its shareholders.
Our management will present the following resolution at the Annual Meeting:
RESOLVED,
the Audit Committee's selection of PricewaterhouseCoopers LLP as the
independent registered public accounting firm for La-Z-Boy Incorporated for
fiscal year 2025 is ratified.
a The Board and the Audit Committee recommend that you vote
"FOR"
Proposal 2.
Audit Committee Report
In accordance with the charter adopted by the Board, the Audit Committee
assists the Board of Directors in overseeing our financial reporting process,
internal controls and procedures, and compliance with legal and regulatory
requirements. Management is responsible for the company's financial reporting
process and related internal controls, while the independent registered public
accounting firm is responsible for independently auditing the company's
financial statements and internal controls in accordance with the auditing
standards of the Public Company Accounting Oversight Board ("PCAOB"). The
current Audit Committee charter, which provides more information regarding the
committee's responsibilities and processes, is available on the La-Z-Boy
website at http://investors.la-z-boy.com, under "Corporate Governance."
The Audit Committee selects the company's independent registered public
accounting firm and manages all aspects of the relationship, including the
firm's compensation, retention, replacement, and scope of work. In selecting
PricewaterhouseCoopers LLP as the company's independent registered public
accounting firm for FY 2025, the committee evaluated the firm's independence,
including reviewing the written disclosures and letter from PricewaterhouseCoope
rs LLP required by the PCAOB, and discussed with PricewaterhouseCoopers LLP
its independence. The committee also discussed with PricewaterhouseCoopers LLP
the matters required to be discussed by the applicable requirements of the
PCAOB and the SEC. The committee also considered whether PricewaterhouseCoopers
LLP's provision of non-audit services to the company is compatible with the
firm's independence. The committee determined that PricewaterhouseCoopers LLP
is independent of the company and management.
28 La-Z-Boy Incorporated
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Audit Matters
In fulfilling its oversight responsibilities, the Audit Committee reviewed and
discussed with management and PricewaterhouseCoopers LLP the company's audited
financial statements for the fiscal year ended April 27, 2024. The Audit
Committee met nine times during FY 2024. The committee regularly meets with
the senior members of the company's financial management team and the
company's independent registered public accounting firm. The committee
selectively met with key managers of the company to review or discuss
potential financial risks related to the company. The committee also regularly
met in executive sessions, in separate private sessions with PricewaterhouseCoop
ers LLP, the key members of the senior management team, and the internal audit
team. At these meetings, the committee discussed the company's financial
estimates and judgments, internal controls over financial reporting,
accounting principles, and regulatory compliance.
Based on the reviews and discussions described above, the Audit Committee
recommended to the Board of Directors, and the Board of Directors approved,
the inclusion of the audited financial statements in La-Z-Boy's Annual Report
on Form 10-K for the fiscal year ended April 27, 2024, for filing with the SEC.
The Audit Committee
Lauren B. Peters, Chair
Mark S. LaVigne
Michael T. Lawton
Audit and Other Fees
For professional services rendered to the company for FY 2023 and FY 2024,
PricewaterhouseCoopers has billed us as follows:
FY 2024 FY 2023
($) ($)
Audit Fees 2,496,000 2,216,000
Audit-Related Fees 0 0
Tax Fees 73,000 57,000
All Other Fees 2,000 7,000
Total Fees 2,571,000 2,280,000
Audit Fees:
Consist of fees for the audit work performed on our annual financial
statements included in our annual report on Form 10-K, our internal controls
over financial reporting, management's assessment of our internal controls
over financial reporting, and reviews of the quarterly financial statements
included in our quarterly reports on Form 10-Q, as well as audit services that
are normally provided in connection with our statutory and regulatory filings.
Audit-Related Fees:
Consist of fees for assurance and related services that are traditionally
performed by the independent registered public accounting firm.
Tax Fees:
Consist of fees for services related to tax compliance and other tax services.
For FY 2024, these services related primarily to tax advisory services on
research tax credits and to international tax compliance.
All Other Fees:
Consist of subscription fees for PricewaterhouseCoopers' accounting research
software tool and disclosure checklist tool in FY 2023 and subscription fees
for PricewaterhouseCoopers' disclosure checklist tool in FY 2024.
Pre-Approval Policy and Procedures
The Audit Committee has a policy that all audit and non-audit services
provided by our independent auditor must be approved in advance by the Audit
Committee. Between meetings of the Audit Committee, the committee has
delegated authority to review and approve such services to its Chair. Any such
approval by the Chair must be reported to the entire Audit Committee at the
next scheduled Audit Committee meeting. The Audit Committee approved all audit
and non-audit services provided by the independent auditor, PricewaterhouseCoope
rs, in FY 2024 in accordance with its policy.
2024 Proxy Statement 29
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COMPENSATION MATTERS
Proposal 3: Approval, through a Non-Binding Advisory Vote, of the Compensation
of our Named Executive Officers
Pursuant to regulations under Schedule 14A of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), we ask you to approve, on an advisory
basis, the compensation of our named executive officers, as disclosed in this
Proxy Statement in accordance with the compensation disclosure rules of the
SEC, including Item 402 of the SEC's Regulation S-K.
As described in detail in the Compensation Discussion and Analysis, we seek to
closely align the interests of our named executive officers with those of our
shareholders. We have endeavored to design our compensation program to reward
our named executive officers for individual and company-wide achievements
without encouraging them to subject our company to excessive risks. Before
voting on this proposal, please read the Compensation Discussion and Analysis
and review the executive compensation tables and related narrative discussion.
Those materials provide a detailed explanation of our executive compensation
philosophy and practices.
The vote on this resolution is not intended to address any specific element of
compensation but is instead a vote on approving the overall compensation of
our named executive officers as described in this Proxy Statement. While the
vote is non-binding, we value the opinion of our shareholders, and will
consider the outcome of the vote when making future named executive officer
compensation decisions.
Our management will present the following resolution at the Annual Meeting:
RESOLVED,
the compensation paid to the company's named executive officers, as disclosed
pursuant to Item 402 of Regulation S-K, including the Compensation Discussion
and Analysis, compensation tables, and narrative discussion, is hereby
approved.
a The Board recommends that you vote
"FOR"
Proposal 3.
Compensation and Talent Oversight Committee Report
The Compensation and Talent Oversight Committee has reviewed and discussed
with management the Compensation Discussion and Analysis contained in this
Proxy Statement. Based on such review and discussions, the Compensation and
Talent Oversight Committee recommended to our Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy Statement and
be incorporated by reference into our Annual Report on Form 10-K for the
fiscal year ended April 27, 2024.
The Compensation and Talent Oversight Committee
Rebecca L. O'Grady, Chair
Sarah M. Gallagher
Michael T. Lawton
30 La-Z-Boy Incorporated
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Compensation Matters
Compensation Discussion and Analysis
This section describes our executive compensation philosophy and the material
components of our executive compensation program for our named executive
officers ("NEOs"). We also explain how and why the Compensation and Talent
Oversight Committee of our Board (or the "Compensation Committee") made the
specific compensation decisions involving the NEOs for FY 2024, which ended on
April 27, 2024.
Roadmap
Executive Summary
Our Purpose
Our Century Vision
Our FY 2024 Operational Highlights
Our FY 2024 Financial Results
Compensation Philosophy
Pay-for-Performance Overview
CEO Pay-for-Performance Alignment
Say-on-Pay Vote and Shareholder Engagement
Overview of Key Compensation Practices
Executive Compensation Framework
Compensation Objectives
Compensation Mix
Overview of Executive Compensation Program Elements
Determining Executive Compensation
Compensation Committee's Role
Pay-Setting Process Methodology and Peer Group
CEO and Other NEO Compensation
Base Salaries
Incentive Compensation
Retirement Benefits
Governance Features and Other Benefits
Executive Management Stock Ownership Guidelines
Severance Benefits
Recoupment of Incentive Payments
Our FY 2024 NEOs are:
Melinda D. Whittington
President and Chief Executive Officer
Robert G. Lucian
Senior Vice President and Chief Financial Officer
Rebecca M. Reeder
President, Retail La-Z-Boy Furniture Galleries
Robert Sundy II
President, La-Z-Boy Brand and Chief Commercial Officer
Michael A. Leggett
Senior Vice President and Chief Supply Chain Officer
2024 Proxy Statement 31
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Compensation Matters
Executive Summary
Our Purpose
We believe in the transformational power of comfort. Our purpose is to lead
the global furnishings industry by leveraging our expertise in comfort,
providing an excellent consumer experience, creating high quality products,
and empowering our people to transform rooms, homes, and communities.
Our Century Vision
In FY 2024, we relentlessly focused on executing our Century Vision growth
strategy. Our Century Vision goals are to grow sales at double the rate of the
furniture and home furnishings industry and deliver double-digit operating
margins over the long-term. The foundation of our strategic plan is to drive
disproportionate growth of our two consumer brands, La-Z-Boy and Joybird, by
delivering the transformational power of comfort with a consumer-first
approach.
Expand La-Z-Boy Brand Reach Profitably Grow Joybird Brand
Leverage iconic Drive Meet consumers Accelerate Expand brand awareness Leverage DTC strengths
brand and consumer-led where they omni-channel in modern furniture
compelling innovation want to shop capabilities
comfort message by expanding
La-Z-Boy Furniture
Galleries
(R)
network and wholesale
distribution
partnerships
Enhance Enterprise Capabilities
Continue to build agile Advance modern IT technology Deliver a human-centered employee experience
supply chain improving efficiencies and data capability
Our FY 2024 Operational Highlights
FY 2024 was a dynamic year highlighted by solid execution and strategic
investments to further strengthen our enterprise against a backdrop of
challenging macroeconomic trends and a further slowdown in the furniture and
home furnishings industry over the fiscal year. Despite this, we took
measurable steps towards our Century Vision growth strategy as we approach our
100-year anniversary and focused on our brand value proposition - comfortable
custom furniture with quick delivery - a key differentiator in the fragmented
market. As a result, we outperformed the industry and gained market share,
helping to position our company to capitalize on stronger macroeconomic and
industry trends when they emerge.
In FY 2024, we delivered solid results despite macroeconomic and furniture
industry headwinds. Consolidated sales were $2.0 billion, a decrease of 13%
from the prior fiscal year. Sales in FY 2023 were fueled by the delivery of a
significant backlog of approximately $300 million resulting from heightened
demand during prior periods. As a result, the decrease in sales during FY 2024
reflect a return to industry-wide seasonal trends relative to a historically
high comparative period combined with a challenging consumer environment.
Absent this backlog, sales were relatively flat in FY 2024 compared with FY
2023. As we faced a challenging macroeconomic environment in FY 2024, we
remained focused on investing prudently to strengthen our
32 La-Z-Boy Incorporated
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Compensation Matters
capabilities and drive long-term profitable growth through our Century Vision
strategic plan. During the year, we made significant progress on a number of
our Century Vision objectives.
Specifically, for the La-Z-Boy brand:
.
Our Retail segment grew with the opening of six company-owned stores and the
acquisition of 11 independent La-Z-Boy Furniture Galleries(R) stores, the most
company-owned store openings and independent store acquisitions we have
completed in a single year since FY 2018 and FY 2017, respectively
.
Our Wholesale business also expanded into new channels and had growth with
existing partners. Our refined channel strategy has allowed us to grow both
our footprint and our share of voice, with strategic partnerships such as
Rooms to Go
.
This past fiscal year we also launched "Long Live The Lazy" ("LLTL"), our new
brand campaign that leverages data-based consumer insights research aimed at
broadening the appeal of La-Z-Boy to more consumers. Since launching the LLTL
brand campaign, we have been successful in increasing brand awareness,
consideration, and purchase intent, capturing the attention of a broader
consumer base
For Joybird, our digitally native brand:
.
Joybird opened its twelfth small-format urban showroom in FY 2024 and we
continued to optimize the brand to deliver a balance of sales growth and
profitability
We also strengthened foundational capabilities across the company:
.
We focused on building a more agile business model and made productivity
improvements to optimize our global supply chain
.
Heading into FY 2024, we made leadership organization changes designed to more
effectively align the operation of our business units across the La-Z-Boy
brand, our entire Furniture Galleries Network, and our portfolio of other
brands
Our FY 2024 Financial Results
Consolidated sales of GAAP operating margin of Non-GAAP operating margin of
$2.0B 7.4% 7.8%
13% decrease from FY 2023 160 bps decrease from FY 2023 170 bps decrease from FY 2023
GAAP Diluted EPS of Non-GAAP Diluted EPS of GAAP operating cash flow
$2.83 $2.98 $158.1 M
19% decrease from FY 2023 23% decrease from FY 2023 23% decrease from FY 2023
See Appendix A of this Proxy Statement for information regarding non-GAAP
financial measures, including a reconciliation of non-GAAP financial measures
to the most directly comparable GAAP financial measures.
Long-Term Return to Shareholders
$132M $236M $368M
5-Year Total Dividends Paid 5-Year Total Share Repurchases Total Returned to Shareholders over 5 Years
2024 Proxy Statement 33
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Compensation Matters
Compensation Philosophy
Our compensation philosophy is to provide a total direct compensation ("TDC")
opportunity generally targeted to the median of the competitive market, with
consideration of performance, skills, experience and other factors in setting
individual pay levels. The majority of each NEO's annual target compensation
is at-risk with the amount realized, if any, based on company and stock price
performance. The pay level and at-risk portion increases as an NEO assumes
greater levels of responsibility with greater potential impact on the company.
Accordingly, our CEO's pay level and the at-risk pay portion of her TDC
opportunity are higher than those of other officers due to her greater level
of responsibility.
Pay-for-Performance Overview
Our company's performance drove our NEO compensation in FY 2024. Our annual
Management Incentive Plan ("MIP") and our performance-based shares for the FY
2022-2024 performance period utilized a subset of the following performance
metrics: sales, operating margin, operating cash flow, and relative total
shareholder return ("rTSR"). Based on the company's performance, our NEOs
earned the following incentive payouts:
2024 MIP Sales and operating margin were the two performance metrics measured by the MIP
92% Payout for FY 2024. Absent delivered sales from the significant backlog in FY 2023 that
resulted from heightened demand in prior periods, sales were relatively flat in FY
2024 compared with FY 2023. Although FY 2024 company financial performance fell below
the target performance goal for sales, it was at the target performance level for
the operating margin performance goal due to strong gross margin performance. As a
result, NEOs received a FY 2024 MIP payout that was below the target payout level,
commensurate with the achievement level of the pre-established performance goals.
2022-2024 LTIP Sales and operating cash flow were tw
66% Payout o of the performance metrics that were measured for the FY 2022-
2024
performance-based share award.
Over the three-year performance period, our company financial
performance on sales exceeded the maximum performance
goal for sales in two of the three annual periods and
was between the target and maximum performance goals in
the remaining annual period. Our performance was over the
maximum performance goal for operating cash flow in one
of the three annual periods but below the target or
threshold performance goal in the remaining annual periods
. Performance against the third metric,
rTSR, fell below the threshold
performance goal for the cumulative
three-year performance period. O
verall, NEOs received a payout for the FY 2022-2024
performance-based share award that was below the
target vesting level, commensurate with the achievement
level of the pre-established performance goals.
34 La-Z-Boy Incorporated
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Compensation Matters
CEO Pay-for-Performance Alignment
The chart below compares the realizable TDC for the company's CEO (for FY 2022
through FY 2024) relative to our peer group companies, with realizable pay for
the past fiscal year valued as of our fiscal year end, April 27, 2024.
-- Zone of aligned pay and performance represents area +/- 25% within
perfect alignment between TSR and Pay
For purposes of the above charts, we have included the following elements in
calculating "realizable pay" for the company and our peer groups companies:
.
actual base salary paid;
.
actual bonus earned for the year (typically paid in the subsequent year);
.
for long-term incentives, the intrinsic value as of the applicable measurement
date;
.
for stock options, the in-the-money value of stock options granted in the last
three years (vested and unvested) as of the applicable measurement date;
.
for restricted stock (or restricted stock units in the case of certain peer
companies), the number of shares or units granted multiplied by the stock
price as of the applicable measurement date, adjusted for dividend
reinvestments;
.
for performance shares, shares earned or target awards for cycles beginning in
the last three years multiplied by the stock price as of the applicable
measurement date, adjusted for dividend reinvestments; and
.
for performance cash in the case of certain peer companies, the dollar amount
earned or target awards for cycles beginning in the last three years.
Say-on-Pay Vote and Shareholder Engagement
The Compensation Committee considers whether the company's executive
compensation program is aligned with the interests of the company's
shareholders. As part of its review of the company's executive compensation
program, the Compensation Committee considered the approval by approximately
97% of the votes cast for the company's say-on-pay vote at our 2023 Annual
Meeting of Shareholders. The Compensation Committee determined that the
company's executive compensation philosophies and objectives and compensation
elements continued to be appropriate and did not make any changes to the
company's executive compensation program in response to the 2023 say-on-pay
vote.
2024 Proxy Statement 35
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Compensation Matters
In FY 2024, we invited our top shareholders representing over 40% of the
company's outstanding common stock to engage with our Chair of the Board and
select members of management on various strategic and other matters, including
company strategy and performance, Board diversity and refreshment, executive
compensation, and sustainability priorities such as human capital management,
sustainability initiatives, oversight and performance, and corporate
governance practices. The Compensation Committee and the Board reviewed a
summary of the shareholder feedback received on executive compensation-related
matters. The shareholders with whom we engaged were generally supportive of
our executive compensation program and approved of the extent to which it is
performance-based. For a description of our on-going shareholder engagement
efforts, please see page
24
.
Overview of Key Compensation Practices
What We Do What We Don't Do
a Pay for performance - Our NEO compensation program u Do not provide
emphasizes variable pay over fixed pay. A majority employment agreements
of NEO target annual compensation is at-risk and
linked to our financial and/or stock performance
a Establish and monitor compliance with stock u Do not gross up excise taxes
ownership guidelines for executives - Our upon a change in control
expectations for stock ownership further align
NEO's interests with those of our shareholders
a Use rTSR in long-term u Do not reprice options
performance-based share awards without shareholder approval
a Mitigate undue risk - We have u Do not pay dividends on unearned
maximum caps on potential incentive performance-based shares or units
payments and a clawback policy on
performance-based compensation
a Appoint only independent u Do not have single
directors to the trigger vesting of
Compensation and Talent equity-based awards upon
Oversight Committee a change in control
a The Compensation and Talent Oversight u Do not provide
Committee engages an independent compensation excessive perquisites
consultant to assist it and the Board with
executive compensation program design and review
a Provide severance and change-in-control
arrangements that are designed to be aligned with
market practices, including the use of double-trigger
change-in-control severance agreements
36 La-Z-Boy Incorporated
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Compensation Matters
Executive Compensation Framework
Compensation Objectives
We design our executive compensation program to:
.
Pay for performance.
We provide the majority of our NEOs' target TDC in annual and long-term
incentive awards that are earned, or increase in value, based on company
and/or stock performance.
.
Reward for TSR.
We align our NEOs' interests with our shareholders' interests by providing a
significant portion of their annual target pay opportunity in the form of
long-term equity incentives (for FY 2024, performance-based units and
restricted stock units), the value of which is dependent on our stock price,
and by basing a portion of the performance-based unit awards on rTSR.
.
Require significant stock ownership.
We require our NEOs to own meaningful amounts of our stock over a sustained
period to further align their interests with the interests of long-term
shareholders.
.
Provide market competitive opportunities.
We design our compensation packages, including base salaries and incentive
opportunities, to be market competitive.
.
Support our business strategy.
We provide meaningful award opportunities that are aligned with the
achievement of strategic and financial objectives.
.
Manage costs.
In designing our executive compensation program, we take into account the cost
of various elements (share usage, cash flow, and accounting impacts).
Compensation Mix
In line with our pay-for-performance philosophy, the majority of each NEO's
target TDC is performance-based and therefore, "at risk." Target TDC is
composed of base salary, target annual bonus, and the target value of annual
long-term equity incentives. Target TDC is used in the competitive review of
target pay opportunities for each NEO. The charts below show the percentage of
each element in the target TDC for our CEO and the average for our other NEOs.
2024 Proxy Statement 37
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Compensation Matters
Overview of Executive Compensation Program Elements
To best achieve our objectives for the FY 2024 executive pay program, we
provide a compensation package composed of the following primary elements:
Component Description
Base Salary Fixed compensation for services rendered.
Management Incentive Program (MIP) Short-term incentive plan that pays
cash bonuses to participants based on
performance against pre-established
goals for sales and operating margin.
Long-Term Incentives Annual equity awards (for FY 2024, performance-based
units and restricted stock units)
.
Performance-based units are earned based on
performance against pre-established goals for sales
and operating cash flow, and TSR relative to the
S&P 600 Consumer Durables and Apparel sub-index.
.
Restricted stock units vest in equal installments
over four years, subject to continued
service. Value of the awards fluctuates based
on the company's stock price performance.
Retirement Benefits A qualified 401(k) plan and non-qualified executive deferred compensation plan.
Amounts contributed to 401(k) and deferred compensation plans are determined
by an NEO's election. Matching contributions to 401(k) plans in excess of IRC
limitations may be credited to the executive deferred compensation plan.
The mechanics of these pay elements and our pay decisions are detailed below.
In addition, we have change-in-control agreements with our NEOs, and they
participate in an executive severance plan. Additional information regarding
the change-in-control agreements and executive severance plan can be found on
page
48
. We believe these elements assist us in attracting and retaining quality
executive talent and support continuity of our leadership.
Determining Executive Compensation
Compensation Committee's Role
Each year, the Compensation Committee reviews and approves the overall design
of our executive pay program and all pay elements for the NEOs. The CEO, chief
financial officer, and chief human resources officer provide input on program
design (including goals and weighting) and information on the company's and
the furniture industry's performance.
The Compensation Committee has sole authority to retain and terminate
consultants used by the Compensation Committee to evaluate executive
compensation. For FY 2024, the Compensation Committee retained Frederic W.
Cook & Co., Inc. ("FW Cook") as its independent executive compensation
consultant to advise the committee on matters related to executive
compensation. Under the Compensation Committee's direction, FW Cook interacted
with members of the senior executive team to provide insight into company and
industry practices, emerging best practices and market trends.
The Compensation Committee annually reviews the independence of its
consultants by considering the factors specified in the NYSE's rules related
to compensation advisor independence. With respect to FY 2024, FW Cook
provided a report addressing the following factors: (1) other services FW Cook
provided to us, if any; (2) the fees we paid as a percentage of FW Cook's
total revenue; (3) FW Cook's policies and procedures designed to prevent a
conflict of interest; (4) any business or personal relationship of members of
the consulting team with a member of the committee; (5) any company stock
owned by members of the consulting team; and (6) any business or personal
relationships between our executive officers and members of the consulting
team. In FY 2024, the Compensation Committee discussed FW Cook's independence
along with these factors and concluded that FW Cook's work did not present any
conflict of interest.
38 La-Z-Boy Incorporated
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Compensation Matters
Pay-Setting Process Methodology and Peer Group
For each NEO, we establish a salary range and the target annual and long-term
incentive award opportunities after considering market median pay levels. In
setting individual pay levels, we consider market pay data and company
performance. We also consider each NEO's duties and responsibilities, skills,
experience, and performance, as well as our business needs, cost, and internal
pay equity.
In setting individual NEO pay levels and opportunities, the Compensation
Committee annually reviews compensation data and practices for a peer group of
companies in sectors in which the company generally competes to attract
talented, high-performing executives. Reflecting the company's business model,
the company seeks executive talent with one or more of retail, wholesale,
manufacturing and e-commerce experience. Because the company has few
competitors comparable in terms of its vertically-integrated business model,
its peer group includes a mix of such types of companies.
The Compensation Committee worked with FW Cook to review and approve the
current peer group of companies. FW Cook screened for potential peers:
a in similar industries a in similar geographies
a with a business focus on furniture a with robust supply chain and manufacturing operations
a with recognizable brands a with brick-and-mortar and online retail presence
a of similar size a in related peer networks (e.g., proxy advisor peers, peers of peers)
The Compensation Committee evaluates each peer company annually to determine
whether its inclusion remains appropriate. Based on its review and the advice
of FW Cook, for the peer group used to evaluate FY 2024 executive compensation
decisions, the Compensation Committee did not make any changes to the peer
group. The Compensation Committee generally believes that peer group
consistency from year to year maximizes year-over-year comparability. The peer
group used to evaluate FY 2024 executive compensation decisions is composed of
the following 15 publicly-traded companies:
FY 2024 Peer Group
The Aaron's Company, Inc. HNI Corporation Sleep Number Corporation
Beyond, Inc. (formerly Overstock.com, Inc.) Interface, Inc. Steelcase Inc.
Ethan Allen Interiors Inc. iRobot Corporation Tempur Sealy International, Inc.
Haverty Furniture Companies, Inc. MillerKnoll, Inc. Topgolf Callaway Brands Corp. (formerly Callaway Golf Company)
Helen of Troy Limited RH Wolverine World Wide, Inc.
2024 Proxy Statement 39
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Compensation Matters
To aid in its oversight of our executive compensation program, in December
2022, the Compensation Committee requested that FW Cook conduct a market
competitive review of target pay opportunities, comprised of base salary,
short-term incentives, and long-term incentives, for each of the NEO
positions. The Compensation Committee reviewed compensation practices among
the compensation peer group and the industry generally in order to consider a
broader perspective on market practices. With the assistance of FW Cook, the
Compensation Committee reviewed a 25:75 blend of peer group and general
industry survey data (adjusted based on annual revenue) in establishing target
compensation levels and pay mix and evaluating whether our compensation
policies are in line with market data. The FY 2024 target TDC of our NEOs, on
average, was aligned with the median TDC for corresponding executives among
the comparison companies.
In addition, the Compensation Committee annually reviews current and
historical compensation for the NEOs, as well as estimated amounts to be paid
to the NEOs under various employment termination situations, including
severance and a change in control of the company. Periodically, we also review
market practices for executive retirement benefits and deferred compensation
plans.
Our process for setting compensation for our NEOs includes a formal,
individual performance evaluation each year for each NEO. The independent
members of our Board of Directors assess our CEO's performance each year. This
assessment includes an evaluation of critical areas, including strategic
direction, leadership and values, effective business relationships, business
results, and succession planning and management development. Every third year,
a third party consultant coordinates the committee's evaluation of the CEO's
performance focusing on the same criteria. The consultant compiles the
evaluations provided by each board member and prepares a summary report for
the board. The CEO assesses the individual performance of the other NEOs each
year based on their overall performance throughout the year, accomplishment of
specific goals, and their future potential within the organization, which is
used in determining their compensation.
CEO and Other NEO Compensation
Base Salaries
We set base salaries for our NEOs based on their scope of responsibility,
skills, experience, leadership, and performance. We consider market
competitiveness, specific job responsibilities, internal pay relationships,
and total cost. Consistent with our practices for all management employees,
NEOs are eligible for annual merit salary increases based on individual
performance, comparison with market levels, and the total salary budget.
Salary Changes for FY 2024
In May and June 2023, the Compensation Committee reviewed the base salary
levels for each of the NEOs other than Ms. Reeder and Mr. Sundy. As part of
the salary review process, the committee reviewed and considered the
performance of each NEO, relevant market data, the comparison of compensation
among various levels of management, and the company's overall performance.
Based on such review, the base salaries of Ms. Whittington, Mr. Lucian, and
Mr. Leggett were increased, as shown below, in recognition of their consistent
and sustained delivery of business and financial results and strong execution
of the Century Vision growth strategy. In February 2023, the Compensation
Committee approved the FY 2024 base salary for Mr. Sundy, as shown below, in
recognition of the increased scope of his executive responsibilities in
connection with his April 2023 promotion, as well as his strong performance.
In April 2023, the Compensation Committee approved the FY 2024 base salary for
Ms. Reeder as part of her recruitment compensation package when she joined the
company on April 17, 2023.
NEO FY 2023 Salary FY 2024 Salary % Change
($) ($) (%)
(1) (1)
Melinda D. Whittington 950,000 988,000 4.00
Robert G. Lucian 500,000 525,000 5.00
Rebecca M. Reeder N/A 460,000 N/A
(2)
Robert Sundy II 443,300 480,000 8.28
Michael A. Leggett 410,100 435,000 6.07
(1)
Salary increases for each of the NEOs other than Mr. Sundy were effective July
1, 2023, as is typical for the company's annual salary increases. Mr. Sundy's
salary increase was effective April 30, 2023 in connection with his promotion,
As a result, the amounts shown here for FY 2024 may differ from those shown in
the FY 2024 Summary Compensation Table on page
50
, which reflects the base salaries earned with respect to FY 2024.
(2)
Ms. Reeder joined the company and became an executive officer, effective as of
April 17, 2023.
40 La-Z-Boy Incorporated
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Compensation Matters
Incentive Compensation
We award incentive compensation under our shareholder-approved La-Z-Boy
Incorporated 2022 Omnibus Incentive Plan (the "2022 Omnibus Incentive Plan" or
the "2022 Plan") to reward participants for achievement of both short-term and
long-term company performance goals and to enhance our ability to attract and
retain employees. The Compensation Committee believes that designing the
incentive compensation program with multiple objectives and performance
periods promotes behavior that creates shareholder value while mitigating
incentives to pursue risky or unsustainable results.
Short Term Incentive Awards (Management Incentive Program)
Our annual cash bonus program, which we refer to as the Management Incentive
Program or MIP, is a short-term incentive award plan that we designed to
motivate and reward NEOs for achieving annual performance goals.
Pay-for-Performance Linkage - FY 2024 MIP Payouts Were Below Target,
Reflecting Solid Financial Performance in a Challenging Macroeconomic and
Industry Environment
Despite the continuing macroeconomic uncertainty and increased furniture and
furnishings industry challenges during FY 2024, the company exhibited solid
performance against the FY 2024 sales and operating margin performance goals.
Our company financial performance was below the target performance goal for
sales, but at the target performance goal for operating margin. In line with
our compensation philosophy and commensurate with the achievement level of the
pre-established performance goals, MIP payments to our NEOs for FY 2024 were
below target.
FY 2024 MIP Performance Goals
FY 2024 financial performance metrics were:
The Compensation Committee selected sales and operating margin as the
financial performance metrics to focus management on:
.
these major drivers of increased shareholder value in the company's long-term
strategic plan, and
.
the appropriate balance between top-line growth and improved profitability.
To reflect the NEOs' ability to influence the overall company and to promote
collaboration across the businesses, the NEOs' performance goals are based on
the company's consolidated financial performance.
2024 Proxy Statement 41
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Compensation Matters
In setting the performance goals shown below, the Compensation Committee
considered both prior-year results and then-current forecasted financial
results. Following this review, and upon consideration of the macroeconomic
uncertainty during FY 2024 as well as the fact that FY 2023 results reflected
the final delivery of approximately $300 million in backlog orders that
resulted from the heightened COVID-related demand in prior fiscal years, the
Compensation Committee approved FY 2024 targets for sales and operating margin
that were lower than FY 2023 results. Importantly, the FY 2024 targets reflect
a return to industry-wide seasonal trends reflected in the FY 2024 forecast at
the time goals were approved. Achievement between the threshold, target, and
maximum performance levels is calculated using straight-line interpolation
between the relevant performance levels.
Performance Level Payout Level Sales Operating
(% of Target) (in Millions) Margin
(%) ($) (%)
Maximum 200 2,350 9.6
Target 100 2,150 7.8
Threshold 50 1,850 3.9
Actual (as adjusted for compensation purposes) 2,047 7.8
(1)
Individual Metric Payout (% of Target) 83 % 100 %
Individual Metric Weight 50 % 50 %
Overall Payout (% of Target) 92 %
(1)
The Compensation Committee includes certain pre-established adjustments to the
operating margin performance metric to provide NEOs with an incentive to take
actions that are deemed to be in the long-term interests of the business, but
that might otherwise adversely affect payouts on the annual cash incentive
awards. In calculating FY 2024 performance for operating margin, pursuant to
the pre-established adjustments, purchase accounting charges and supply chain
optimization charges were excluded.
FY 2024 NEO Target Awards and Payouts
For FY 2024, the Compensation Committee established target incentive awards,
specified as a percentage of base salary earnings, for each NEO based on
consideration of competitive market median data and the company's historical
compensation practices for employees in those salary grades. The Compensation
Committee approved an increase to Ms. Whittington's target incentive award to
120% of eligible base salary (as compared to 110% for FY 2023) based on her
TDC compared to market data. The target incentive award for Ms. Reeder was set
reflecting the scope of her position and the company's historical compensation
practices with respect to such position. Mr. Sundy's target incentive award
was increased in connection with his April 2023 promotion, and reflected the
company's historical compensation practices with respect to his expanded
position. The company did not increase the target incentive awards for the
remaining NEOs for FY 2024. The NEOs have the opportunity to earn awards
between 50% of their target incentive award if we meet threshold performance
goals to 200% of their target incentive awards if we meet maximum performance
goals.
Our NEOs' FY 2024 target awards, achieved performance levels, and actual MIP
amount were as follows:
FY 2024 Target Incentive Achieved Performance Level Actual FY 2024 Incentive Payout
(% of eligible base salary (% of target performance) ($)
(1) (%)
)
(%)
Melinda D. Whittington 120 92 1,083,606
Robert G. Lucian 75 92 359,312
Rebecca M. Reeder 60 92 253,920
Robert Sundy II 60 92 264,960
Michael A. Leggett 75 92 297,224
(1)
Under the terms of the MIP, determined based on base salary in effect during
the fiscal year, as calculated in accordance with the company's payroll system.
42 La-Z-Boy Incorporated
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Compensation Matters
Our MIP Payout History Demonstrates the Rigor of Our Performance Goals
The Compensation Committee seeks to set target performance goals that are
challenging but reasonably achievable with strong management performance.
Maximum performance goals have been designed to be difficult to achieve given
historical financial performance and the company's forecasted financial
results at the time the performance metrics were approved. Over the last five
fiscal years, including during a period of unprecedented demand for furniture
during the COVID-19 pandemic, the actual performance results for the MIP have
averaged approximately 118% of target and ranged from a low of 75% of target
to a high of 150% of target as shown in the chart below. Please also see our
long-term incentive payout history shown on page
47
.
FY MIP Payout (as % of target)
(%)
FY 2024 92
FY 2023 131
FY 2022 144
FY 2021 150
FY 2020 75
Average Payout 118 %
Long-Term Incentive Equity Awards
The long-term incentive award provisions of our shareholder-approved 2022
Omnibus Incentive Plan provide for equity-based compensation (restricted
stock/stock unit awards, stock options, performance-based share/unit awards or
other forms of equity-based compensation) that we design to align NEO pay with
long-term shareholder returns, motivate our NEOs to focus on long-term
business objectives, and encourage long-term strategic thinking. The value our
NEOs receive from these awards varies based on the company's performance and
the future price appreciation of our common stock.
FY 2024 Equity Grants
Each year, the Compensation Committee establishes long-term incentive award
types, mix, and award levels for each eligible pay grade based on our
objectives for the equity grants and after considering market median
practices, total cost (including share usage, accounting, and tax impacts),
and past practices.
We review the accounting treatment of the relevant incentive award types,
including stock options, performance-based share/unit awards, and restricted
stock/stock unit awards. The Compensation Committee approves annual
equity-based awards that are generally granted in the first quarter of the
fiscal year.
Based on an overall market review of our executive compensation program and
each NEO's total compensation, the Compensation Committee approved target
long-term incentive equity awards, as a percentage of base salary, to each of
our NEOs as follows:
FY 2024 Long-Term Incentive Target (as % of base salary)
(%)
Melinda D. Whittington 360
Robert G. Lucian 175
Rebecca M. Reeder 110
(1)
Robert Sundy II 110
Michael A. Leggett 125
(1)
On occasion, the Compensation Committee makes selective equity awards to
attract talent, make whole executives who join our company and incentivize
such executives to remain with the company and work to enhance the value of
the company's stock over time. Such compensation arrangements may be subject
to clawback or vesting conditions so that the executives only receive value
from such arrangements if they remain employed with the company for a
specified period of time. In connection with her hiring as President, Retail
La-Z-Boy Furniture Galleries, Ms. Reeder received a make-whole, sign-on
restricted stock unit award with respect to 10,000 shares of the company's
common stock with a grant date value of $276,600. The restricted stock unit
award was granted to make Ms. Reeder whole
2024 Proxy Statement 43
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Compensation Matters
for compensation she forfeited by leaving her prior employer. Her restricted
stock unit award will vest over a four-year period in equal installments on
the first four anniversaries of the grant date, subject to her continued
employment through the applicable vesting date. Under the terms of the award
agreement, Ms. Reeder will receive shares and any accrued dividends when the
corresponding restricted stock units have vested. The FY 2024 Long-Term
Incentive Target in the table above reflects her long-term incentive target
exclusive of her one-time, sign-on grant.
In setting the long-term incentive award targets for Ms. Whittington and Mr.
Lucian, in particular, the Compensation Committee considered the input of FW
Cook with respect to TDC and made adjustments to further align the target
long-term incentive awards with market median. The long-term incentive award
targets for the remaining NEOs are based on historical compensation practices
with respect to their roles and their relative positioning versus market
median.
For the FY 2024 long-term incentive awards, the Compensation Committee
approved a change in the mix of the equity awards to 50% restricted stock
units and 50% performance-based units (as compared to FY 2023, in which our
then-serving NEOs received 25% restricted stock units, 25% stock options, and
50% performance-based units). In making this change, the committee considered
the limited use of stock option awards by our peer companies and sought to
provide a meaningful retention component in the overall equity mix in the form
of restricted stock units that is also aligned to long-term shareholder
interests.
Early in FY 2024, pursuant to the 2022 Omnibus Incentive Plan, we granted
performance-based units and restricted stock units to our NEOs.
Restricted Stock Unit Awards (50% of total FY 2024 long-term incentive
opportunity)
Restricted stock unit awards are an incentive for executives to remain with
our company and to work to enhance the value of the company's stock over time.
Executives receive value from restricted stock unit awards only if they are
still employed by the company when the awards vest, except in the case of
certain qualifying terminations of employment. The value of any earned shares
depends on La-Z-Boy's future stock price. For our NEOs, the restricted stock
units granted in FY 2024 vest in equal installments over four years (25% per
year).
Performance-Based Unit Awards (50% of total FY 2024 long-term incentive
opportunity)
Performance-based unit awards provide our NEOs the opportunity to earn a
defined number of shares of our common stock if we achieve pre-established
performance goals and the NEO remains employed through the conclusion of the
performance period, except in the case of certain qualifying terminations of
employment. The value of any earned shares depends on La-Z-Boy's future stock
price and the company's achievement against the pre-established performance
goals. An NEO's award opportunity ranges from 50% of the NEO's target number
of shares if we achieve threshold performance goals to a maximum of 200% of
the target number of shares if we achieve maximum performance goals. If the
performance goals are not achieved, the performance-based unit awards
associated with that performance metric will not vest. Following the
conclusion of the three-year performance period, we pay out the shares that
our NEOs earned.
The number of shares our NEOs receive, if any, will depend on how the company
performs against pre-established sales growth and operating cash flow
performance goals for each of FYs 2024, 2025, and 2026, and rTSR goals over
the three-year performance period. TSR is measured cumulatively over the
entire three-year performance period relative to the TSR of the constituents
of the S&P 600 Consumer Durables and Apparel sub-index. For the overall
payout, the weightings of each of the performance goals and the annual periods
in the three-year performance period are shown in the table below. For the
performance-based unit awards, the Compensation Committee seeks to set target
performance goals that are challenging but reasonably achievable with strong
management performance.
Metric (Total Weight) FY 2024 FY 2025 FY 2026
Weight Weight Weight
(%) (%) (%)
Sales Growth (25%) 8.33 8.33 8.33
Operating Cash Flow (25%) 8.33 8.33 8.33
Total Share Allocation by Year 16.66 16.66 16.66
rTSR (50%) 50
(1)
(1)
This 50% portion of the performance-based unit awards is earned based on the
company's rTSR performance, which is measured over the three-year cumulative
performance period, FY 2024-FY 2026.
44 La-Z-Boy Incorporated
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Compensation Matters
NEOs become vested in performance-based units based on each metric independent
of our performance on the other metrics. Each factor includes a threshold
performance level that must be achieved before any units vest based on that
metric. No units vest if the company performs below the threshold performance
level of all three factors. Payout for performance
between
threshold and target and between target and maximum is interpolated for
performance between levels. The actual number of units
NEOs
earn can be more or less than target level depending on the company's
performance against the pre-established performance goals. Following vesting,
the performance-based units are settled in shares of company common stock.
The Compensation Committee utilized sales performance as an element in both
the company's FY 2024 MIP and FY 2024-2026 long-term equity incentive program,
in recognition of the fact that this measure is viewed as a core driver of the
company's performance and shareholder value creation and is a strategic
priority in the company's Century Vision. In designing the company's executive
compensation program, the Compensation Committee supplemented this measure
with additional performance measures in order to strike an appropriate balance
with respect to incentivizing top-line growth, profitability, liquidity and
shareholder returns over both the short-term and long-term horizons.
Prior LTIP Equity Grant Performance Achievement and Payouts
Each of our NEOs that received the FY 2022 grant were eligible to earn payouts
on the performance-based share awards granted in FY 2022 for the three-year
performance period that ended with our FY 2024 year end. The design and
structure of these performance-based shares was similar to those subsequently
granted in FY 2023 and FY 2024. The following table shows how the company
performed against the sales and operating cash flow goals for each of the
three fiscal years, and the company's rTSR versus the S&P 600 Consumer
Durables and Apparel sub-index for the three-year performance period.
Following the end of the three-year performance period, we paid out earned
shares, the number and value of which are shown in the FY 2024 Option
Exercises and Stock Vested table on page
55
.
Performance Period FY 2022-2024 - Overall payout of 66% of target
Threshold, Target and Maximum Goals Results Payout as % of Target
Sales Operating Relative Sales Operating Relative Sales Operating Relative
(in Millions) Cash TSR Over (in Millions) Cash TSR Over Cash TSR Over
Flow (in 3 Years Flow (in 3 Years Flow 3 Years
Millions) Millions)
FY Maximum $2,150 $211.9 Maximum $ 2,357 $ 84.6 20th 200 % 0 % 0%
2022 75th Percentile
percentile
Target $2,050 $195.7
Threshold $1,950 $169.9
FY Maximum $2,110 $201.6 Target $ 2,349 $ 208.2 200 % 200 %
2023 50th
percentile
Target $2,010 $185.4
Threshold $1,860 $146.6
FY Maximum $2,130 $204.9 Threshold $ 2,047 $ 163.7 117 % 76 %
2024 25th
percentile
Target $2,030 $188.6
Threshold $1,830 $137.0
The Compensation Committee includes certain pre-established adjustments to the
operating cash flow performance metric to provide NEOs with an incentive to
take actions that are considered to be in the long-term interests of the
business, but that might otherwise adversely affect payouts on the awards. In
calculating FY 2024 performance for operating cash flow, pursuant to the
pre-established adjustments, supply chain optimization charges and purchase
accounting charges related to acquisitions were excluded.
The performance-based equity awards granted in FY 2023 and FY 2024 provide
NEOs with the opportunity to earn a portion of the awards based on sales and
operating cash flow targets established for each of the three years covered by
the grant and based on the company's rTSR versus the constituents of the S&P
600 Consumer Durables and Apparel sub-index over the three-year performance
period. Performance goals and results for performance through the end of FY
2024 are shown in the following tables. For the rTSR component, threshold,
target, and maximum performance levels are the 25th, 50th, and 75th
percentiles, respectively. While we set the sales and operating cash flow
goals for each of the three years at the start of the performance period, we
do not disclose the sales and operating cash flow goals for uncompleted years,
because we believe doing so would cause competitive harm.
2024 Proxy Statement 45
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Compensation Matters
Performance Period FY 2023-2025
Target Goals Results Payout as % of Target
Sales Operating Cash Flow (in Millions) Relative Sales Operating Sales Operating
(in Millions) TSR Over (in Millions) Cash Flow Cash Flow
3 Years* (in Millions)
FY 2023 $2,433 $141.0 Target $2,349 $208.2 88 % 200 %
50th
percentile
FY 2024 $2,396 $218.3 $2,047 $163.7 50 % 67 %
FY 2025 (in process)
*
For rTSR performance over the 3-year performance period, the threshold goal is
the 25th percentile and the maximum goal is the 75th percentile of the
constituents of the S&P 600 Consumer Durables and Apparel sub-index.
The Compensation Committee includes certain pre-established adjustments to the
operating cash flow performance metric to provide NEOs with an incentive to
take actions that are considered to be in the long-term interests of the
business, but that might otherwise adversely affect payouts on the awards. In
calculating FY 2023 performance for operating cash flow, pursuant to the
pre-established adjustments, business realignment charges, supply chain
optimization charges and purchase accounting charges related to acquisitions
were excluded. Additionally, in calculating FY 2024 performance for operating
cash flow, pursuant to the pre-established adjustments, supply chain
optimization charges and purchase accounting charges related to acquisitions
were excluded.
Performance Period FY 2024-2026
Target Goals Results Payout as % of Target
Sales Operating Cash Flow (in Millions) Relative Sales Operating Sales Operating
(in Millions) TSR Over (in Millions) Cash Flow Cash Flow
3 Years* (in Millions)
FY 2024 $2,150 $172.4 Target $2,047 $163.7 83 % 94 %
50th
percentile
FY 2025 (in process)
FY 2026
*
For relative TSR performance over the 3-year performance period, the threshold
goal is the 25th percentile and the maximum goal is the 75th percentile of the
constituents of the S&P 600 Consumer Durables and Apparel sub-index.
In calculating FY 2024 performance for operating cash flow, pursuant to the
pre-established adjustments, supply chain optimization charges and purchase
accounting charges related to acquisitions were excluded.
These awards for the grants made in FY 2023 and FY 2024 have been earned
contingent on the NEO remaining with the company through the end of the
respective three-year performance period, or an earlier qualifying termination
of employment, after which they will be settled in shares of company common
stock. For information on the treatment of these awards at retirement, see
Payments Made Upon Disability or Retirement on page
57
.
46 La-Z-Boy Incorporated
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Compensation Matters
Our LTI Payout History Demonstrates the Rigor of Our Performance Goals
The Compensation Committee seeks to set target performance goals that are
challenging but reasonably achievable with strong management performance.
Maximum performance levels have been designed to be difficult to achieve given
historical financial performance and the co
mpany's forecasted financial results at the time the performance metrics were
approved. Over the last five fiscal years, the actual performance results for
the performance-based share awards have averaged approximately 85% of target
and ranged from a low of 66% of target to a high of 111% of target as shown in
the chart below:
FY Award Performance Cycle Payout Achievement
(%)
FY 2022 FY22-23-24 66
FY 2021 FY21-22-23 84
FY 2020 FY20-21-22 89
FY 2019 FY19-20-21 111
FY 2018 FY18-19-20 76
Average Payout 85 %
Retirement Benefits
We provide retirement benefit plans as an incentive for employees to remain
with the company long-term and to assist with retirement planning. Our NEOs
are eligible to participate in the same retirement benefit programs that we
offer to salaried employees at the corporate level.
Our NEOs are eligible to participate in our 401(k) plan to which the company
may make matching contributions. For FY 2024, the match varied by operating
unit and ranged from 0% to a maximum of 6% if the employee contributed at
least 9% of their eligible compensation.
Financial Planning Services Reimbursement
We provide eligible executives with reimbursement of eligible expenses for
financial planning services up to the specified annual limit of $6,000. Our
objective is to support our executives as they plan for their future and
retirement, and to allow them to make the best use of the benefit programs
available to them. Eligible expenses include fees and expenses associated with
the following financial planning services provided by a qualified firm:
investment planning; retirement planning; income tax planning and preparation;
estate planning and preparation of wills and trusts; and benefit programs.
Performance Compensation Retirement Plan
Prior to FY 2023, our NEOs, executive management employees, and certain other
key management employees designated by the Compensation Committee participated
in our Performance Compensation Retirement Plan ("PCRP"), under which the
company made contributions to the plan only to the extent we achieved
pre-established performance goals. The Compensation Committee determined that
executive retention and engagement would be best served by eliminating company
contributions to the PCRP for FY 2023 and future years. While the PCRP was not
terminated and prior balances in the PCRP will continue to be credited for
earnings, the plan was frozen with respect to new participants, and no further
contributions have been made on behalf of existing participants.
Executive Deferred Compensation Plan
Our 2005 Executive Deferred Compensation Plan allows executives to defer pay
that they have earned. Participants may elect to defer up to 100% of their
salaries and annual cash incentive awards under the MIP (excluding any amounts
attributable to the exercise of positive discretion by the Compensation
Committee). In addition, the company may contribute to this plan any company
401(k) match that cannot be credited to executives' accounts under the 401(k)
plan due to the Internal Revenue Code compensation limitations that apply to
the tax-qualified retirement plans. Such limits may apply because the
executive's contributions and the company's matching contributions were
limited by either the annual contribution limit - $23,000 for 2024 - or the
annual compensation limit - $345,000 for 2024. NEOs' salary and bonus
deferrals are detailed in the FY 2024 Non-Qualified Deferred Compensation
table on page
56
.
2024 Proxy Statement 47
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Compensation Matters
Governance Features and Other Benefits
Executive Management Stock Ownership Guidelines
The Compensation Committee annually monitors compliance by our executive
management with stock ownership guidelines. We establish a minimum fixed
number of shares of company stock that we expect each executive to own based
on a multiple of the executive's annual base salary at the time we set the
guideline. Executives are expected to achieve compliance with the initial
guideline within five years. We reset the stock ownership requirement every
three years and did so in June 2022 based on each executive's salary and a
representative share price at the end of FY 2022. The committee will reassess
the share requirement again in 2025, and, subject to variation in our stock
price, executives can expect their requirements to increase as their
compensation increases. Current stock ownership guideline values and
approximate share requirements for the NEOs are as follows:
Guideline Value Share Requirement
(Multiple of Salary)
CEO 5x 167,000
Other NEOs 3x 44,000 - 53,000
In determining compliance with the guidelines, we include shares owned
directly, shares held in a family trust or qualified retirement program,
performance-based shares/units contingently earned for completed performance
periods but not yet paid out, and restricted stock/stock unit awards.
Unexercised stock options, whether unvested or vested, and performance-based
awards that remain subject to performance-based vesting conditions do not
count towards compliance with the guidelines. As of April 27, 2024
, each of the
NEOs was in compliance with the stock ownership guidelines or within the
five-year transition period.
Severance Benefits
Named Executive Officer Change-in-Control Agreements
We have change-in-control agreements with our NEOs to support continuity of
our leadership in the event the company's ownership changes. Under the
agreements, a change in control generally occurs when a person, entity or
group acquires ownership of 30% of a company's stock, increases its holding to
more than 50% of the value or voting power of a company's stock, or acquires
40% or more of a company's assets, or if a majority of a company's board of
directors is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the directors who
were serving before the date of the appointment or election.
Our agreements provide that an NEO will receive cash severance if we have a
change in control and in the succeeding two years (or three years for our
CEO), the NEO's employment terminates under certain conditions. In that event,
we would pay an NEO two times (or three times for our CEO) the sum of the
executive's base salary at the time of termination plus the average of the
annual bonuses the executive received over the previous three years. The NEO
is responsible for any excise tax, and the company does not pay any excise tax
gross-ups. We utilize a "best-net" approach where we reduce payments to the
safe harbor limit to avoid excise tax only if doing so results in a greater
after-tax benefit to the NEO. During the period that we pay severance,
we also continue to provide medical and dental benefits. Similar to this
severance arrangement, our executives may receive accelerated vesting in
outstanding equity awards issued under our 2022 Omnibus Incentive Plan or
prior equity plan following a change in control if their employment is
terminated. Additional information regarding the change-in-control severance
agreements and estimated termination payments to NEOs is presented on pages
56
-
60
.
Named Executive Officer Severance Plan
The severance plan for the NEOs is designed to assist the company in
attracting and retaining quality executive talent while providing the company
some protection against competition and solicitation by former executives. The
severance plan requires the company to pay an NEO severance if the company
discharges the executive other than "for cause" or if the NEO leaves the
company with "good reason." Following a qualifying termination of employment,
the company would pay the CEO severance for 24 months and pay the other NEOs
severance for 12 months at the level of their monthly base salary when their
employment ended plus the average of the three most recent annual cash
incentive bonuses paid to the executive divided by 12. In FY 2023, the
severance plan was amended to make certain administrative changes as well as
to factor in the annual cash incentive bonus as a component of the severance
payment based on the input of FW Cook after a review of market practices.
Termination "for cause" includes employee acts involving dishonesty, fraud,
illegality or moral turpitude; material
48 La-Z-Boy Incorporated
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Compensation Matters
misconduct in the performance of duties; habitual neglect of material duties;
and serious violation of company policies. Resignation for "good reason"
includes a resignation triggered by a reduction in the executive's monthly
base pay or target bonus opportunity unless similarly situated employees are
similarly affected or the executive is required to relocate to a work location
that would increase the distance of their commute by more than 50 miles. NEOs
will receive medical and dental benefits during the time they receive
severance. If an NEO's employment terminates following a change in control of
the company, the NEO receives benefits under the severance plan only to the
extent they exceed benefits the NEO receives pursuant to the NEO's
change-in-control agreement with the company. Information regarding the
benefits payable under the severance plan and estimated termination payments
to NEOs is presented on pages
56
-
60
.
We established the severance periods of 24 and 12 months based on the market
and peer company analysis. To receive severance, NEOs must execute a release
of claims and comply with non-competition and non-solicitation covenants for
the duration of the severance term.
Recoupment of Incentive Payments
The company has adopted a policy which provides for the recoupment of
incentive compensation in certain circumstances in the event of a restatement
of financial results by the company. This policy is intended to comply with
the requirements of Securities and Exchange Commission rules and New York
Stock Exchange listing standards implementing Section 954 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010.
In accordance with the terms of the PCRP, if we determine that any
contribution credits we previously made to such plan were based on erroneous
financial statements or other financial errors or misstatements, we will
adjust all participants' accounts to reflect contribution credits calculated
based on complete and accurate financial information.
In addition, in accordance with the terms of applicable award agreements, we
will require a management employee, including each of the NEOs, to reimburse
us for annual or long-term incentive payments we made to the employee, and we
will rescind any contribution credits we made for the employee under the PCRP,
to the extent our Board determines that the employee engaged in misconduct
that resulted in a material inaccuracy in our financial statements or the
performance metrics we used to make incentive payments or awards, and the
employee received a higher payment as a result of the inaccuracies.
Equity Grant Timing
The Compensation Committee and senior management monitor the company's equity
grant policies to evaluate whether such policies comply with governing
regulations and are consistent with good corporate governance practices.
Annual equity grants to the executive officers are generally made at the
Compensation Committee meeting held in June of each year, after results for
the preceding fiscal year become available and after review and evaluation of
each executive officer's performance, enabling the Compensation Committee to
consider both the prior year's performance and expectations for the succeeding
year in making equity grant decisions. However, the Compensation Committee may
make grants at any time during the year it deems appropriate.
2024 Proxy Statement 49
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Compensation Matters
Executive Compensation Tables
FY 2024 Summary Compensation Table
The FY 2024 Summary Compensation Table presents FY 2022, 2023, and 2024 "total
compensation" (see footnotes for the included pay elements) for the NEOs. Mr.
Leggett and Mr. Sundy were not NEOs in FY 2022 and Ms. Reeder was not a NEO
prior to FY 2024.
.
Actual value realized in FY 2024 for previously granted long-term incentives
is presented in the FY 2024 Option Exercises and Stock Vested table on page
55
.
.
Target annual and long-term incentive opportunities for FY 2024 are presented
in the FY 2024 Grants of Plan-Based Awards table on page
52
.
Name and Principal Fiscal Salary Stock Option Non-Equity All Other Total
Position Year ($) Awards Awards Incentive Plan Compensation ($)
($) ($) Compensation ($)
(1) ($) (3)
(2)
Melinda D. Whittington 2024 981,667 3,553,220 - 1,083,606 253,617 5,872,110
President and 2023 941,667 2,735,585 800,001 1,356,876 149,858 5,983,987
Chief Executive Officer 2022 913,037 1,449,683 1,250,004 1,425,600 760,470 5,798,794
Robert G. Lucian 2024 520,833 909,078 - 359,312 64,302 1,853,525
Senior Vice President and 2023 495,833 670,014 195,936 487,134 51,771 1,900,688
Chief Financial Officer 2022 478,403 344,302 296,877 513,000 242,978 1,875,560
Rebecca M. Reeder 2024 460,000 802,319 - 253,920 15,260 1,531,499
President, Retail La-Z-Boy
Furniture Galleries
Robert Sundy II 2024 480,000 548,541 - 264,960 48,442 1,341,943
President, La-Z-Boy Brand and 2023 436,583 344,503 100,749 314,532 35,212 1,231,579
Chief Commercial Officer
Michael A. Leggett 2024 430,850 532,616 - 297,224 50,541 1,311,231
Senior Vice President and 2023 408,417 427,450 125,002 401,260 26,939 1,389,068
Chief Supply Chain Officer
(1)
For FY 2024, reflects the total grant date fair market value of restricted
stock unit awards granted during the fiscal year, calculated in accordance
with FASB ASC Topic 718, as well as the total grant date fair value of the
performance-based unit awards granted during the fiscal year, with the
performance-based unit awards calculated based on the probable level of
achievement at the time of grant. In valuing the FY 2024 restricted stock unit
awards, the fair value of each share was $27.66, the market value of our
common stock on the date we granted the awards (the service inception date).
In valuing the FY 2024 performance-based unit awards, the fair value of each
share was $25.48, the market value of our common stock on the date we granted
the awards (the service inception date) less the dividends we expect to pay
before the shares vest. The grant date fair value, assuming maximum
achievement of the performance goals, of performance-based units is shown as
follows:
Name FY 2024
($)
Melinda D. Whittington 3,686,446
Robert G. Lucian 943,160
Rebecca M. Reeder 545,426
Robert Sundy II 569,108
Michael A. Leggett 552,582
50 La-Z-Boy Incorporated
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Compensation Matters
(2)
Consists of cash awards for the achievement of performance goals for the
respective year made under our MIP. Payments are generally made in the first
quarter following completion of the fiscal year.
(3)
All Other Compensation for FY 2024 consists of the following:
.
Company contributions to the 401(k) Plan and contributions or credits to the
Executive Deferred Compensation Plan of the following amounts: Ms. Whittington
- $140,068; Mr. Lucian - $62,778; Ms. Reeder - $14,950; Mr. Sundy - $47,789;
and Mr. Leggett - $50,144.
.
Company-paid life insurance premiums and tax reimbursements related to company
contributions to the deferred compensation plans (made in the prior year),
which tax reimbursements were of the following amounts: Ms. Whittington -
$2,396; Mr. Lucian - $1,157; Mr. Sundy - $300; and Mr. Leggett - $82.
.
For Ms. Whittington, reimbursement of eligible expenses for financial planning
services.
.
For Ms. Whittington, our incremental cost of $104,433 for her personal use of
the company aircraft, which is calculated by multiplying the aircraft's hourly
variable operating cost by the flight time for the applicable trip. Variable
operating costs consist of fuel, landing and parking fees, variable
maintenance, variable pilot expenses for travel, and any special catering
costs and other miscellaneous variable costs. On certain occasions, her spouse
and other family members or guests accompanied Ms. Whittington on a flight. No
additional incremental operating cost is incurred in such situations under the
foregoing methodology. We did not pay Ms. Whittington any amounts in
connection with taxes on income imputed to her for personal use of our
aircraft.
2024 Proxy Statement 51
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Compensation Matters
FY 2024 Grants of Plan-Based Awards
The following table provides details of all incentive plan-based awards
granted to the NEOs during FY 2024, all of which were granted under the 2022
Omnibus Incentive Plan. Specifically, the table presents the following FY 2024
incentive awards:
.
Annual management incentive award (MIP) potential award range (see "Estimated
Future Payouts Under Non-Equity Incentive Plan Awards" columns). The actual
awards are shown in the FY 2024 Summary Compensation Table (see page
50
).
.
Performance-based units
.
Restricted stock units
Estimated Estimated All Other All Other Exerc
Future Payouts Future Payout Stock Option or B
Under Non-Equity Under Equity Incentive Awards: Awards: Price
Incentive Plan Awards Number Number of Opt
Plan Awards (2) of Shares Securities Awa
(1) or Units Underlying ($/Sha
(3) Options
(#) (#)
Name Grant Threshold Target Maximum Threshold Target Maximum
Date ($) ($) ($) (#) (#) (#)
Melinda D. Whittington
2024 Annual Incentive (MIP) 294,458 1,177,833 2,355,666
Performance-Based 6/26/2023 5,152 61,822 123,644 1,843,223
Units
Restricted Stock Units 6/26/2023 61,822 1,709,997
Robert G. Lucian
2024 Annual Incentive (MIP) 97,639 390,556 781,112
Performance-Based 6/26/2023 1,318 15,817 31,634 471,580
Units
Restricted Stock Units 6/26/2023 15,817 437,498
Rebecca M. Reeder
2024 Annual Incentive (MIP) 69,000 276,000 552,000
Performance-Based 6/26/2023 762 9,147 18,294 272,713
Units
Restricted Stock Units 6/26/2023 19,147 529,606
Robert Sundy II
2024 Annual Incentive (MIP) 72,000 288,000 576,000
Performance-Based 6/26/2023 795 9,544 19,088 284,554
Units
Restricted Stock Units 6/26/2023 9,544 263,987
Michael A. Leggett
2024 Annual Incentive (MIP) 80,767 323,069 646,138
Performance-Based 6/26/2023 772 9,267 18,534 276,291
Units
Restricted Stock Units 6/26/2023 9,267 256,325
ise Grant Date
ase Fair Value
of of Stock
ion & Option
rds Awards
re) (4)
($)
(1)
The amounts consist of the threshold, target and maximum payout opportunities
under the MIP, with payout based on sales and operating margin performance
results.
(2)
The amounts consist of the threshold, target and maximum performance-based
units that could vest based on performance with respect to sales growth,
operating cash flow and relative TSR over the FY 2024-2026 performance period
and the NEO's continued employment through the end of the performance period.
The "Threshold" estimated future payout shown reflects meeting the threshold
for just the sales or operating cash flow goal in any one of the three
performance cycles.
(3)
The amounts reported in this column represent restricted stock units granted
to each NEO in FY 2024, including the portion of the annual restricted stock
unit award that represented the make-whole, sign-on grant made to Ms. Reeder
in connection with her hire. These restricted stock units vest in four
installments on each of the first four anniversaries of the grant date,
subject to the NEO's continued employment through the applicable vesting date.
During the vesting period, cash dividends accrue and will be paid in cash to
the NEO to the extent the underlying restricted stock units vest.
(4)
Reflects the total grant date fair value of the equity awards granted during
the fiscal year, with the performance-based units based on the probable level
of achievement. For additional information regarding the assumptions we used
in valuing the awards, refer to Note 14, "Stock-Based Compensation" of Item 8,
"Financial Statements and Supplementary Data" of our Form 10-K for the fiscal
year ended April 27, 2024, as filed with the SEC. In valuing the FY 2024
restricted stock unit awards, the fair value of each share was $27.66, the
market value of our common stock on the date we granted the awards (the
service inception date). In valuing the FY 2024 performance-based unit awards,
the fair value of each share was $25.48, the market value of our common stock
on the date we granted the awards (the service inception date) less the
dividends we expect to pay before the shares vest.
52 La-Z-Boy Incorporated
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Compensation Matters
Outstanding Equity Awards at 2024 Fiscal Year-End
The following table presents all outstanding stock options and unvested stock
awards (performance-based units and restricted shares/units) held by the NEOs
at the end of the fiscal year. Market values for the unvested stock awards are
presented based on the closing price of the company's stock on April 26, 2024
(the last trading day of FY 2024), of $33.11.
Option Awards Stock Awards
Name Grant Number of Number of Option Option Number of Market Equity
FY Securities Securities Exercise Expiration Shares Value of Incentive
Underlying Underlying Price Date or Units of Shares Plan Awards: Pl
Unexercised Unexercised ($) Stock or Units Number of
Options Options that Have of Stock That Unearned of
Exercisable Unexercisable Not Vested Have Not Shares, or
(#) (#) (#) Vested Units or
(1) (2) ($) other
Rights That
Have Not
Vested R
(#)
(3)
Melinda D. Whittington
Performance-Based Units 31,239 1,034,323 138,921 4,599,674
Stock Options 2023 25,316 75,950 24.41 6/28/2032
2022 50,854 50,855 37.93 6/21/2031
2021 25,953 8,652 27.54 6/22/2030
2020 21,919 - 30.24 6/17/2029
2019 34,003 - 33.15 6/18/2028
Restricted Stock/Stock Units 86,402 2,860,770
Robert G. Lucian
Performance-Based Units 7,749 256,569 34,590 1,145,275
Stock Options 2023 6,200 18,602 24.41 6/28/2032
2022 12,078 12,078 37.93 6/21/2031
2021 3,264 1,090 27.54 6/22/2030
2020 5,516 - 30.24 6/17/2029
Restricted Stock/Stock Units 22,237 736,267
Rebecca M. Reeder
Performance-Based Units 1,340 44,367 7,624 252,431
Stock Options - -
- -
Restricted Stock/Stock Units 19,147 633,957
Robert Sundy II
Performance-Based Units 4,192 138,797 18,960 627,766
Stock Options 2023 3,188 9,565 24.41 6/28/2032
2022 3,254 3,255 37.93 6/21/2031
Restricted Stock/Stock Units 16,695 552,771
Michael A. Leggett
Performance-Based Units 4,823 159,690 21,380 707,892
Stock Options 2023 - 11,868 24.41 6/28/2032
Restricted Stock/Stock Units 15,608 516,781
2024 Proxy Statement 53
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Compensation Matters
(1)
Unvested stock options will vest as follows:
Grant FY Options Vesting Schedule
2023 Unvested options vested or will vest 1/3 on June 28, 2024, 1/3 on June 28, 2025, and 1/3 on June 28, 2026.
2022 Unvested options vested or will vest 1/2 on June 21, 2024 and 1/2 on June 21, 2025.
2021 Unvested options vested on June 22, 2024.
(2)
The earned but unvested performance-based units will vest as follows:
FY 2024 Grant FY 2023 Grant Total
(a) (b) (#)
(#) (#)
Melinda D. Whittington 9,063 22,176 31,239
Robert G. Lucian 2,319 5,430 7,749
Rebecca M. Reeder 1,340 - 1,340
Robert Sundy II 1,399 2,793 4,192
Michael A. Leggett 1,358 3,465 4,823
(a)
Earned and unvested performance-based units are shown and will vest on April
25, 2026.
(b)
Earned and unvested performance-based units are shown and will vest on April
26, 2025.
Unvested restricted shares/units will vest as follows:
FY 2024 Grant FY 2023 Grant FY 2022 Grant FY 2021 Grant Total
(a) (b) (c) (d) (#)
(#) (#) (#) (#)
Melinda D. Whittington 61,822 24,580 - - 86,402
Robert G. Lucian 15,817 6,021 - 399 22,237
Rebecca M. Reeder 19,147 - - - 19,147
Robert Sundy II 9,544 3,096 1,055 3,000 16,695
Michael A. Leggett 9,267 3,841 2,500 - 15,608
(a)
Unvested restricted stock units vested or will vest 1/4 on June 26, 2024, 1/4
on June 26, 2025, 1/4 on June 26, 2026, and 1/4 on June 26, 2027.
(b)
Unvested restricted stock units vested or will vest 1/3 on June 28, 2024, 1/3
on June 28, 2025, and 1/3 on June 28, 2026.
(c)
For Mr. Sundy's award, unvested restricted stock vested or will vest 1/2 on
June 21, 2024 and 1/2 on June 21, 2025. For Mr. Leggett's award, unvested
restricted stock will vest 1/2 on January 15, 2025 and 1/2 on January 15, 2026.
(d)
For Mr. Lucian's award, unvested restricted stock vested on June 22, 2024. For
Mr. Sundy's award, unvested restricted stock will vest on January 27, 2025.
(3)
Unearned performance-based units are shown assuming maximum performance for FY
2023 grant and target performance for FY 2024 grant.
Name Performance-Based Units Total
(#)
FY 2024 Grant at Target FY 2023 Grant at
(a) Maximum
(#) (b)
(#)
Melinda D. Whittington 51,523 87,398 138,921
Robert G. Lucian 13,182 21,408 34,590
Rebecca M. Reeder 7,624 - 7,624
Robert Sundy II 7,954 11,006 18,960
Michael A. Leggett 7,724 13,656 21,380
(a)
Three-year performance period ends FY 2026 (April 2026).
(b)
Three-year performance period ends FY 2025 (April 2025).
54 La-Z-Boy Incorporated
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Compensation Matters
FY 2024 Option Exercises and Stock Vested
The following table provides details for each of the NEOs regarding stock
options exercised and stock awards that vested during FY 2024.
Name Option Awards Stock Awards
Number of Value Realized on Number of Value Realized on
Shares Acquired Exercise Shares Acquired Vesting
on Exercise ($) on Vesting ($)
(#) (1) (#) (2)
Melinda D. Whittington - - 29,941 954,314
Robert G. Lucian - - 7,930 248,962
Rebecca M. Reeder - - - -
Robert Sundy II - - 7,341 243,866
Michael A. Leggett 3,955 50,100 2,530 81,795
(1)
Amounts reflect the difference between the exercise price of the stock option
and the market price of La-Z-Boy's common stock at the time of exercise.
(2)
The dollar value of the vested performance-based shares is based on the
closing price of the company's common stock on April 26, 2024 (the last
trading day of FY 2024). The dollar value of the vested restricted stock/stock
units reflects the total pre-tax value realized (based on the closing price of
the company's common stock on the vesting date).
FY 2024 Non-Qualified Deferred Compensation Plans
As described in the Compensation Discussion and Analysis above, FY 2022 was
the last year in which the company made contributions on behalf of the NEOs
under the PCRP. During FY 2024, our participating NEOs remained eligible to
receive earnings credits under our PCRP, and were also eligible to participate
in our Executive Deferred Compensation Plan. The following table provides
details for the NEOs regarding the PCRP.
FY 2024 Non-Qualified Deferred Compensation Pursuant to PCRP
Name Executive Registrant Aggregate Aggregate Aggregate
Contribution Contributions Earnings Withdrawals/ Balance
in FY 2024 in FY 2024 in FY 2024 Distributions at FYE 2024
($) ($) ($) ($) ($)
(1) (2) (3) (4)
Melinda D. Whittington - - 59,597 - 1,296,042
Robert G. Lucian - - 21,312 - 463,478
Rebecca M. Reeder - - - - -
Robert Sundy II - - 7,583 - 164,904
Michael A. Leggett - - - - -
(1)
No executive contributions are permitted under the plan.
(2)
No company contributions were made with respect to FY 2024.
(3)
Earnings were not reported in the FY 2024 Summary Compensation Table because
they were not above-market or preferential. Aggregate earnings are based on an
interest rate that corresponds to yields on 20-year AA corporate bonds.
(4)
Aggregate balances include the FY 2024 earnings and accumulated balances from
prior years, which include prior company contributions and earnings credits.
Please refer to page
47
for a discussion of vesting and distribution criteria. Amounts in this column
include the following amounts that were previously reported in the FY 2024
Summary Compensation Table as compensation for FY 2022: Ms. Whittington -
$697,680 and Mr. Lucian - $217,360.
2024 Proxy Statement 55
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Compensation Matters
The following table provides details of each NEO's accounts under the
Executive Deferred Compensation Plan as of April 27, 2024. Company
contribution amounts reflect contributions that could not be made under the
401(k) plan due to IRS rules. Aggregate balances include deferred salary and
MIP awards earned in prior years but voluntarily deferred by the officers.
Additional discussion of the Executive Deferred Compensation Plan is presented
below the table.
FY 2024 Non-Qualified Deferred Compensation
Pursuant to Executive Deferred Compensation Plan
Name Executive Registrant Aggregate Aggregate Aggregate
Contribution Contributions Earnings Withdrawals/ Balance
in FY 2024 in FY 2024 in FY 2024 Distributions at FYE 2024
($) ($) ($) ($) ($)
(1) (2) (3) (4)
Melinda D. Whittington - 124,478 26,716 - 343,891
Robert G. Lucian 69,167 46,428 152,516 - 1,436,675
Rebecca M. Reeder - - - - -
Robert Sundy II - 32,388 1,433 - 58,072
Michael A. Leggett - 33,797 916 - 47,962
(1)
Elective deferrals of base salary and/or FY 2023 MIP awards paid in FY 2024.
(2)
Company contributions to the Executive Deferred Compensation Plan relating to
401(k) contributions that could not be made under the qualified plans.
Executive must elect to make sufficient 401(k) deferrals to be entitled to the
maximum employer matching contribution under the 401(k) plan for the plan
year. Amounts are included in All Other Compensation in the FY 2024 Summary
Compensation Table.
(3)
Earnings were not reported in the FY 2024 Summary Compensation Table because
they were not above-market or preferential.
(4)
Amounts shown are fully vested except with respect to company contributions
for Mr. Leggett, whose vested balance is $23,981 and Mr. Sundy, whose vested
balance is $43,554. Amounts in this column include the following amounts that
were previously reported in the FY 2024 Summary Compensation Table as
compensation for FY 2023 and/or FY 2022: Ms. Whittington - $136,917; Mr.
Lucian - $521,501; Mr. Sundy - $24,081; and Mr. Leggett - $13,156.
All of the executives' deferrals and any company match amounts are added to a
recordkeeping account. The account is credited with earnings or losses,
depending upon actual performance of the investment options (mutual funds and
similar vehicles) the participant has chosen. These are the same investment
options available to all other plan participants.
Payment of a participant's account balance is deferred until the date the
participant designated when making the deferral election. Permissible
distribution election changes require that the distribution be deferred at
least five years beyond the previously-scheduled payment commencement date and
to be effective, changes must be made at least one year before the termination
of employment. The deferral amounts are paid either in one lump sum or in
annual installments for up to 15 years. Upon a participant's death, any
remaining balance in the participant's account is paid to the participant's
designated beneficiary.
FY 2024 Estimated Payments Upon Termination or Change in Control
This section presents the estimated incremental payments that would be made to
the NEOs upon termination of their employment. Estimated payouts are provided
for the following termination events:
.
Amounts payable upon termination, regardless of manner.
.
Amounts potentially payable upon disability, retirement or death.
.
Amounts potentially payable upon a change in control and a subsequent
involuntary termination without cause or termination by the NEO with "good
reason" under the terms of the change in control severance agreements.
.
Amounts potentially payable upon involuntary termination without cause or
termination by the NEO with "good reason" under the terms of the severance
plan.
56 La-Z-Boy Incorporated
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Compensation Matters
Payments Made Upon Termination
When an NEO's employment terminates, the NEO is entitled to receive amounts
the NEO earned while employed. These amounts, which are not included in the
table below, consist of:
.
Accrued salary and any earned, but unused vacation time.
.
Amounts vested under retirement and non-qualified deferred compensation plans.
An NEO receives no other payments except when the termination is due to the
NEO's disability, retirement, or death, change in control of the company, or
involuntary termination without cause or termination by the NEO with "good
reason." Payments upon disability, retirement, or death are based on plan
provisions that apply to all participants in the pertinent plans. Payments
made to NEOs upon a termination of employment due to the executive's
disability, retirement, or death, or change in control of the company are
described below. Payments made upon involuntary termination without cause or
termination by the NEO with "good reason," in the absence of a change in
control, are described in Named Executive Officer Severance Plan on page
48
. We have change-in-control severance agreements with NEOs. The Table of
Estimated Payments Upon Termination or Change in Control on pages
58
-
60
details each type of payment.
Payments Made Upon Disability or Retirement
In the event of disability or retirement, the NEO will receive the following
incremental benefits:
.
Stock options:
Accelerated vesting of unvested options if an NEO becomes disabled. Unvested
options granted at least ten months prior to the retirement date will fully
vest upon retirement.
.
Performance-based shares/units:
The Compensation Committee may determine that the NEO is eligible to receive a
partial payout following the end of the three-year performance period based on
the company's performance in any fiscal years that have been completed at the
time the NEO retires or becomes disabled.
.
Restricted stock granted during or prior to FY 2022:
If an NEO becomes disabled, all restrictions lapse and shares will fully vest.
If an NEO retires, any shares that are still restricted will be forfeited.
.
Restricted stock units granted during or after FY 2023:
If an NEO becomes disabled, all restricted stock units continue to vest based
on the four-year vesting schedule established at the time of the grant. If an
NEO retires, unvested restricted stock units granted at least ten months prior
to the retirement date will continue to vest based on the four-year vesting
schedule established at the time of the grant.
.
MIP awards:
Payment of a MIP award following conclusion of the fiscal year, determined by
applying the bonus percentage the NEO would have been entitled to based on the
company's performance to the NEO's eligible earnings during the fiscal year.
The MIP awards earned and paid for FY 2024 performance, which are reported in
the FY 2024 Summary Compensation Table on page
50
, are not included in the table below.
For awards granted during or prior to FY 2022 under our La-Z-Boy Incorporated
2017 Omnibus Incentive Plan (the "2017 Omnibus Incentive Plan"), retirement
occurs after the employee has attained age 55 and been credited with 10 years
of service (as defined in such plan). For awards granted in FY 2023 under our
shareholder-approved 2022 Omnibus Incentive Plan, retirement occurs after the
employee's age and years of service (as defined in such plan) equal 65, with a
minimum age of 55.
Additionally, the NEO or his or her beneficiary will receive benefits under
disability plans available generally to all salaried employees. These
potential payments are not reflected in the table.
Payments Made Upon Death
In the event of death, the NEO's beneficiary will receive the following
incremental benefits:
.
Stock options:
Accelerated vesting of unvested options.
.
Performance-based shares/units:
The Compensation Committee may determine that the NEO is eligible to receive a
partial payout at the end of the performance period based on the company's
performance in any fiscal years that had been completed at the time of the
NEO's death.
.
Restricted stock/stock units:
All restrictions lapse and shares will fully vest.
.
MIP awards:
Payment of a MIP award following conclusion of the fiscal year, determined by
applying the bonus percentage the NEO would have been entitled to based on the
company's performance to the executive's eligible earnings during the fiscal
year. The MIP awards earned and paid for FY 2024 performance, which are
reported in the FY 2024 Summary Compensation Table on page
50
, are not included in the following table.
2024 Proxy Statement 57
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Compensation Matters
Additionally, the NEO or his or her beneficiary will receive benefits under
life insurance plans available generally to all salaried employees. These
potential payments are not reflected in the table.
Change in Control
We have change-in-control severance agreements with our NEOs to support
continued management in the event of an actual or threatened change in control
of the company. The agreements provide that if an NEO's employment is
terminated other than upon death, disability or for cause within two years
(three years for the CEO) after a change in control, the executive will be
entitled to the following:
.
For executives other than our CEO, two times the executive's base salary
(three times for the CEO) at the time of termination plus two times (three
times for the CEO) the average of the annual bonuses the executive received
over the previous three years.
.
Continuation of medical and dental benefits for three years for the CEO and
two years for the other NEOs.
.
Reimbursement of certain legal fees and expenses incurred by the executive in
enforcing the agreement.
The agreements automatically renew for an additional one-year period unless
either the company or the NEO gives the other at least 90 days' prior notice
of non-extension. If a change in control occurs, the agreements automatically
extend for 24 months (36 months for the CEO).
The NEO is responsible for any excise tax, and the company does not pay any
gross-up. We utilize a "best-net" approach where we reduce payments to the
safe harbor limit to avoid excise taxes only if doing so results in a greater
after-tax benefit to the NEO.
Performance-based shares/units granted under our 2017 Omnibus Incentive Plan
and 2022 Omnibus Incentive Plan will be paid as if their terms were complete
(with respect to awards grants prior to FY 2023) or converted to time-based
awards at the time of the transaction (in the case of awards granted beginning
in FY 2023), based on the best financial information available about the
company's performance as of the close of business on the day immediately
before a "corporate transaction" (as defined in the applicable plan), and
continued service through the performance period. In determining the extent to
which performance criteria have been satisfied, where the performance criteria
are based on results that accumulate over the term of the award or over one
year of the term, the performance requirement will be prorated in accordance
with the portion of the term or year that was completed before the corporate
transaction. With respect to performance-based units granted beginning in FY
2023, in the event that, within two years following the corporate transaction,
the employee is terminated by us without cause or by the employee for good
reason, then all of the employee's performance-based units will immediately
vest upon such termination and generally be settled within sixty (60) days
following such termination.
Beginning with grants made in FY 2023, NEOs will also be entitled to receive
full accelerated vesting of outstanding stock option, restricted stock, and
restricted stock unit awards if, following a corporate transaction, their
employment is terminated either (i) by the company without cause, or (ii) by
the NEO with good reason, in each case during the two (2) year period
following the corporate transaction.
Table of Estimated Payments Upon Termination or Change in Control
In the following table, we estimate incremental payments (payable as the
result of the specified termination event) that would have been payable to
NEOs in the event of change in control, disability, retirement, death, or
involuntary termination, assuming the event occurred on April 27, 2024. The
value of equity awards is based on the closing price of $33.11 of the
company's stock on April 26, 2024 (the last trading day of FY 2024). The
amounts provided below are estimates of amounts that would have been payable.
The actual amounts paid in future years, if any, will depend on the
executive's pay, terms of separation, severance plan, and change-in-control
agreement in place, and the company's stock price at the time of termination.
58 La-Z-Boy Incorporated
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Compensation Matters
Name and Benefit Change in Retirement Disability Death Involuntary Termination
Control ($) ($) ($) Other than for Cause or
($) (2)(3)(4) (2)(4) (2)(5) Resignation with Good
(1) Reason Under Severance Plan
($)
Melinda D. Whittington
Base Salary (3 times 2,964,000 - - - -
annual salary)
Annual Incentive (3 3,409,090 - - - -
times average actual
MIP amount paid
in prior 3 years)
Stock Options 708,957 - 708,957 708,957 -
(accelerated vesting)
Restricted Stock/Stock 2,860,770 - 2,860,770 2,860,770 -
Units (accelerated
vesting or
continued vesting)
Performance-Based 4,704,004 - 1,034,323 1,034,323 -
Shares/Units
(accelerated vesting)
Broad-Based Benefits 62,559 - - - 41,706
(6)
Severance Payment - - - - 4,248,727
Total Incremental Pay 14,709,380 - 4,604,050 4,604,050 4,290,433
(7)
Robert G. Lucian
(8)
Base Salary (2 times 1,050,000 - - - -
annual salary)
Annual Incentive (2 784,527 - - - -
times average actual
MIP amount paid
in prior 3 years)
Stock Options 167,909 161,837 167,909 167,909 -
(accelerated vesting)
Restricted Stock/Stock 736,267 723,056 736,267 736,267 -
Units (accelerated
vesting or
continued vesting)
Performance-Based 1,176,729 256,569 256,569 256,569 -
Shares/Units
(accelerated vesting)
Broad-Based Benefits 18,922 - - - 9,461
(6)
Severance Payment - - - - 917,264
Total Incremental Pay 3,934,354 1,141,462 1,160,745 1,160,745 926,725
(7)
Rebecca M. Reeder
Base Salary (2 times 920,000 - - - -
annual salary)
Annual Incentive (2 - - - - -
times average actual
MIP amount paid
in prior 3 years)
Stock Options - - - -
(accelerated vesting)
Restricted Stock/Stock 633,957 - 633,957 633,957 -
Units (accelerated
vesting or
continued vesting)
Performance-Based 333,153 - 44,367 44,367 -
Shares/Units
(accelerated vesting)
Broad-Based Benefits 616 - - - 308
(6)
Severance Payment - - - - 460,000
Total Incremental Pay 1,887,726 - 678,324 678,324 460,308
(7)
Robert Sundy II
Base Salary (2 times 960,000 - - - -
annual salary)
Annual Incentive (2 455,367 - - - -
times average actual
MIP amount paid
in prior 3 years)
2024 Proxy Statement 59
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Compensation Matters
Name and Benefit Change in Retirement Disability Death Involuntary Termination
Control ($) ($) ($) Other than for Cause or
($) (2)(3)(4) (2)(4) (2)(5) Resignation with Good
(1) Reason Under Severance Plan
($)
Stock Options 83,216 - 83,216 83,216 -
(accelerated vesting)
Restricted Stock/Stock 552,771 - 552,771 552,771 -
Units (accelerated
vesting or
continued vesting)
Performance-Based 656,439 - 138,797 138,797 -
Shares/Units
(accelerated vesting)
Broad-Based Benefits 11,166 - - - 5,583
(6)
Severance Payment - - - - 707,684
Total Incremental Pay 2,718,959 - 774,784 774,784 713,267
(7)
Michael A. Leggett
Base Salary (2 times 870,000 - - - -
annual salary)
Annual Incentive (2 494,763 - - - -
times average actual
MIP amount paid
in prior 3 years)
Stock Options 103,252 - 103,252 103,252 -
(accelerated vesting)
Restricted Stock/Stock 516,781 - 516,781 516,781 -
Units (accelerated
vesting or
continued vesting)
Performance-Based 720,705 - 159,690 159,690 -
Shares/Units
(accelerated vesting)
Broad-Based Benefits 24,834 - - - 12,417
(6)
Severance Payment - - - - 682,382
Total Incremental Pay 2,730,335 - 779,723 779,723 694,799
(7)
(1)
Amounts shown for performance-based shares/units reflect their values as of
April 27, 2024, as if the entire three-year performance period had been
completed, computed based on estimated financial performance information
available at that time. In the case of each payment, other than accelerated
vesting of the performance-based shares/units granted prior to FY 2023, these
calculations assume that the NEO undergoes a qualifying termination of
employment immediately following the change-in-control. Furthermore, with
respect to restricted stock/stock unit and stock option awards granted prior
to FY 2023, these calculations assume that the Board has exercised discretion
to provide for full accelerated vesting of such awards in connection with a
qualifying termination immediately following the change in control.
(2)
Reflects value as of April 27, 2024, of all outstanding unvested stock options.
(3)
Ms. Whittington, Ms. Reeder, Mr. Sundy, and Mr. Leggett were not eligible for
retirement as of April 27, 2024. Mr. Lucian was not eligible to retire under
the retirement definition applicable to the FY 2022 and prior grants as of
April 27, 2024; however, he was retirement eligible under the retirement
definition applicable to awards granted in or after FY 2023.
(4)
Amounts shown for performance-based shares/units reflect their values as of
April 27, 2024, based on targets for FY 2023 and FY 2024 and actual
performance against those targets. In its discretion, the Compensation
Committee may reduce or eliminate payments that otherwise would be made under
these awards upon disability or retirement.
(5)
Amounts shown for performance-based shares/units reflect their values as of
April 27, 2024, based on targets for FY 2023 and FY 2024 and actual
performance against those targets. In its discretion, the Compensation
Committee may eliminate payments that otherwise would be made under these
awards upon death.
(6)
Change in Control: two years' (three years for CEO) continuation of medical
and dental coverage. Severance Plan: continuation of medical and dental
insurance while the executive receives severance.
(7)
Under the terms of the change-in-control severance agreements, if the payments
and benefits to an NEO under his or her respective change-in-control severance
agreement would subject the NEO to the excise tax imposed by Section 4999 of
the Internal Revenue Code, then such payments will be reduced by the minimum
amount necessary to avoid such excise tax, if such reduction would result in
the NEO receiving a higher net after-tax amount. The amounts reflected in this
table do not reflect the application of any such reduction in compensation or
benefits pursuant to the terms of the change-in-control severance agreements.
(8)
The value for Mr. Lucian in the "Retirement" column reflects the value of only
those equity awards subject to the retirement treatment for stock options,
restricted stock/stock unit awards, and performance-based unit awards. Upon a
retirement as of April 27, 2024, Mr. Lucian would have been entitled to
receive accelerated vesting of the stock options granted to him during FY
2023, a partial payout with respect to his FY 2023 and FY 2024 performance-based
unit awards, and continued vesting of his FY 2023 and FY 2024 restricted
stock unit
awards.
60 La-Z-Boy Incorporated
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Compensation Matters
CEO Pay Ratio
For
FY 2024, our last completed fiscal year, the median annual total compensation
of all our employees (other than our CEO) wa
s $34,074 and the annual total compensation of our CEO was $5,872,110.
Accordingly, the ratio of our CEO's annual total compensation to the median
annual compensation of all other employees was estimated to be 172:1. We
believe this ratio is a reasonable estimate calculated in a manner consistent
with applicable SEC rules.
As the median employee selected on February 1, 2023 for last year's CEO pay
ratio disclosure transitioned to a new position within the company, which we
believe could result in a significant change to the CEO pay ratio, we selected
another employee whose compensation is substantially similar to the original
median employee's compensation based on the compensation measure used to
select the original median employee in 2023. To identify, and to determine the
annual total compensation of, the median employee, we used the following
methodology and assumptions:
.
We collected the compensation data of all of our employees globally, as of
February 1, 2023, for the prior twelve-month period.
.
We annualized compensation for newly hired employees who were hired between
February 1, 2022 and January 31, 2023. However, we did not annualize
compensation for employees who were rehired or furloughed during such period
and did not make full-time equivalent adjustments for any part-time employees.
In addition, we did not utilize the de minimis exception for employees in
other countries, statistical sampling or other similar methods, or any
cost-of-living adjustment, which approaches are allowed under SEC regulations,
in calculating the pay ratio.
.
Any compensation in non-U.S. currencies was converted to U.S. dollars using
exchange rates as of February 1, 2023.
.
We used total compensation received as our consistently applied compensation
measure, calculated as the sum of the following amounts: (i) base pay
(including overtime for hourly employees), (ii) bonuses (including non-cash
equivalents) and sales commissions, and (iii) with respect to employees on the
Mexican payroll system, cash allowances.
We calculated the median employee's FY 2024 annual total compensation using
the same methodology we used in the FY 2024 Summary Compensation Table.
Pay Versus Performance
Pursuant to Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and Item 402(v) of Regulation S-K, the Pay Versus Performance
Table (set forth below) is required to include "Compensation Actually Paid,"
as calculated per SEC disclosure rules, to the company's principal executive
officer ("PEO") and the company's non-PEO NEOs, as noted below. "Compensation
Actually Paid" represents a new required calculation of compensation that
differs significantly from the Summary Compensation Table calculation of
compensation, the NEO's realized or earned compensation, as well as from the
way in which the Compensation Committee views annual compensation decisions,
as discussed in the Compensation Discussion and Analysis. The amounts in the
table below are calculated in accordance with SEC rules and do not represent
amounts actually earned or realized by NEOs, including with respect to
performance-based share awards, stock options and restricted stock/stock unit
awards, which remain subject to forfeiture if the vesting conditions are not
satisfied.
Pay Versus Performance
Value of Initial Fixed $100 Investment Based On:
(4)
Year Summary Summary Compensation Compensation Average Average
(1) Compensation Compensation Actually Actually Summary Compensation Shar
Table Table Paid Paid Compensation Actually
Total for Total for to to Darrow Table Paid
Whittington Darrow Whittington ($) Total for to Non-PEO
($) ($) ($) (3) Non-PEO NEOs
(2) (2) (3) NEOs ($)
($) (3)
(2)
FY 2024 5,872,110 N/A 7,158,165 N/A 1,509,549 1,754,668 169.85 184.06
FY 2023 5,983,987 N/A 6,667,375 N/A 1,549,759 1,683,115 143.95 172.75
FY 2022 5,798,794 N/A 3,020,052 N/A 1,662,812 720,942 128.27 174.70
FY 2021 N/A 6,710,425 N/A 14,512,272 1,755,984 3,279,190 207.10 250.
Total Peer Group Net Income Sales
eholder Total ($000) ($000)
Return Shareholder (6)
($) Return
($)
(5)
122,626 2,047,027
150,664 2,349,433
150,017 2,356,811
51 106,461 1,734,244
2024 Proxy Statement 61
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Compensation Matters
(1)
The PEO and NEOs for the applicable fiscal years were as follows:
a.
FY 2024:
Melinda D. Whittington
served as the company's PEO for the entirety of FY 2024 and the company's
other NEOs were: Robert G. Lucian, Rebecca M. Reeder, Robert Sundy II, and
Michael A. Leggett.
b.
FY 2023:
Melinda D. Whittington
served as the company's PEO for the entirety of FY 2023 and the company's
other NEOs were: Robert G. Lucian, Otis S. Sawyer, Michael A. Leggett, and
Robert Sundy II.
c.
FY 2022:
Melinda D. Whittington
served as the company's PEO for the entirety of FY 2022 and the company's
other NEOs were: Robert G. Lucian, Darrell D. Edwards, Otis S. Sawyer, and
Raphael Z. Richmond.
d.
FY 2021:
Kurt L. Darrow
served as the company's PEO for the entirety of FY 2021 and the company's
other NEOs were: Melinda D. Whittington, Darrell D. Edwards, Otis S. Sawyer,
and Stephen K. Krull.
(2)
Amounts reported in this column represent (i) the total compensation reported
in the Summary Compensation Table for the applicable year(s) in which the
individual served as PEO (in the case of Ms. Whittington and Mr. Darrow) and
(ii) the average of the total compensation reported in the Summary
Compensation Table for the applicable fiscal year for the company's NEOs
reported for the applicable year other than the PEOs for such years.
(3)
To calculate compensation actually paid, adjustments were made to the amounts
reported in the Summary Compensation Table for the applicable years. A
reconciliation of the adjustments for Ms. Whittington and Mr. Darrow (in the
applicable year(s) in which such individuals served as PEO) and for the
average of the other NEOs is set forth following the footnotes to this table.
(4)
Pursuant to the rules of the SEC, the comparison assumes $100 was invested on
April 25, 2020 in our common stock. Historic stock price performance is not
necessarily indicative of future stock price performance.
(5)
The company used the Dow Jones U.S. Furnishings Index for its Total
Shareholder Return ("TSR") Peer Group. This is the same peer group used for
purposes of the 2023 Annual Report.
(6)
For FY 2024, the Compensation Committee determined that sales continues to be
viewed as a core driver of the company's performance and stockholder value
creation and is used as a component in the company's FY 2024 MIP and FY 2024 -
2026 long-term equity incentive program.
Sales
is measured on a GAAP basis and does not reflect any adjustments. Please see
the Compensation Discussion and Analysis for further information regarding the
use of sales in the company's executive compensation program.
CAP Adjustments
Year Summary Minus Plus Plus/(Minus) Plus/(Minus) Plus/(Minus) Minus P
Compensation Grant Date Fair Value at Change in Fair Value at Change in Fair Value Dollar Va
Table Total Fair Value of Fiscal Fair Value of Vesting Fair Value as of Prior of Divide
($) Stock Option Year-End Outstanding of Stock as of Vesting Fiscal or Ot
(a) and Stock of and Option and Date of Year-End Earni
Awards Outstanding Unvested Stock Awards Stock Option of Stock Paid
Granted in and Unvested Stock Granted in and Stock Option and Stock Awa
Fiscal Year Stock Option and Fiscal Awards Stock Awards in Fis
($) Option and Stock Awards Year that Granted in Granted Y
(b) Stock Awards Granted Vested During Prior Years in Prior and Prior
Granted in in Prior Fiscal Year for which Fiscal Years Vesting D
Fiscal Year Fiscal Years ($) Applicable that Failed
($) ($) (e) Vesting to Meet
(c) (d) Conditions Applicable
Were Vesting
Satisfied Conditions
During During
Fiscal Year Fiscal Year
($) ($)
(f) (g)
Melinda D. Whittington
FY 2024 5,872,110 ( 4,308,474 732,296 - ( - 56,452 7,158,165
3,553,220 257,947
) )
FY 2023 5,983,987 ( 4,172,324 111,389 - ( - 19,364 6,667,375
3,535,586 84,103
) )
FY 2022 5,798,794 ( 1,399,838 ( - ( - 5,928 3,020,052
2,699,687 1,115,543 369,278
) ) )
Kurt L. Darrow
FY 2021 6,710,425 ( 5,256,100 3,860,777 - 1,534,518 - 5,893 14,512,272
2,855,441
)
Non-PEOs (Average)
(i)
FY 2024 1,509,549 ( 845,458 100,581 - ( - 12,468 1,754,668
698,139 15,249
) )
FY 2023 1,549,759 ( 775,876 22,396 - ( - 6,279 1,683,115
657,470 13,725
) )
FY 2022 1,662,812 ( 277,482 ( - ( - 1,673 720,942
535,139 484,233 201,653
) ) )
FY 2021 1,755,984 ( 1,068,302 770,560 - 262,213 - 2,514 3,279,190
580,383
)
lus Equals
lue Compensation
nds Actually Paid
her ($)
ngs
on
rds
cal
ear
to
ate
($)
(h)
a.
Represents Total Compensation as reported in the Summary Compensation Table
for the indicated fiscal year. With respect to the non-PEOs, amount shown
represent averages.
b.
Represents the grant date fair value of the stock option and stock awards
granted during the indicated fiscal year, computed in accordance with the
methodology used for financial reporting purposes.
62 La-Z-Boy Incorporated
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Compensation Matters
c.
Represents the fair value as of the indicated fiscal year-end of the
outstanding and unvested option awards and stock awards granted during such
fiscal year, computed in accordance with the methodology used for financial
reporting purposes and, in the case of performance-based share awards, are
valued based on the probable outcome of the underlying performance-based
vesting conditions as of the applicable fiscal-year end.
d.
Represents the change in fair value during the indicated fiscal year of the
outstanding and unvested option awards and stock awards held by the applicable
NEO, granted in previous fiscal years, as of the last day of the indicated
fiscal year, computed in accordance with the methodology used for financial
reporting purposes and, for performance-based share awards, based on the
probable outcome of the underlying performance-based vesting conditions as of
the last day of the fiscal year.
e.
Represents the fair value at vesting of the option awards and stock awards
that were granted and vested during the indicated fiscal year, computed in
accordance with the methodology used for financial reporting purposes.
f.
Represents the change in fair value, measured from the prior fiscal year-end
to the vesting date, of each option award and stock award that was granted in
a prior fiscal year and which vested during the indicated fiscal year,
computed in accordance with the methodology used for financial reporting
purposes.
g.
Represents the fair value as of the last day of the prior fiscal year of the
option award and stock awards that were granted in a prior fiscal year and
which failed to meet the applicable vesting conditions in the indicated fiscal
year, computed in accordance with the methodology used for financial reporting
purposes.
h.
Represents the dollar value of any cash dividends or other earnings paid on
stock awards in the indicated fiscal year and prior to the vesting date that
are not otherwise included in the total compensation for the indicated fiscal
year.
i.
See footnote 1 above for the non-PEOs included in the average for each year.
As discussed above, Ms. Whittington is included in the average for the
non-PEOs for FY 2021.
Relationship Between Pay and Performance
We believe the "Compensation Actually Paid" in each of the years reported
above and over the four-year cumulative period are reflective of the
Compensation Committee's philosophy to create and reinforce a pay for
performance culture as the "Compensation Actually Paid" fluctuated
year-over-year, primarily due to our stock performance and our varying levels
of achievement against pre-established performance goals under our MIP and
long-term equity incentive program, including sales, operating margin,
operating cash flow, and relative TSR.
TSR: Company versus Peer Group and Compensation Actually Paid
As shown in the chart below, our four-year cumulative TSR for the period of FY
2021 through FY 2024 is slightly less than the four-year cumulative TSR for
companies included in our peer group TSR. As this chart demonstrates,
Compensation Actually Paid for our PEOs and our other NEOs was generally
aligned with our TSR during the applicable period.
2024 Proxy Statement 63
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Compensation Matters
Compensation Actually Paid versus Sales (Company Selected Measure)
The chart below demonstrates the relationship between Compensation Actually
Paid amounts for our PEOs and each of our other NEOs and our sales for the
applicable fiscal year. Variations in the Compensation Actually Paid amounts
for our PEOs and other NEOs are due in large part to the significant emphasis
the company places on long-term equity incentives, the value of which
fluctuates based on the vesting level of our performance-based equity awards
and changes in stock price over time.
Compensation Actually Paid versus Net Income
The chart below demonstrates the relationship between Compensation Actually
Paid amounts for our PEOs and our other NEOs and our net income. Net income is
not a direct component of our executive compensation program, although it is
correlated with other components of our executive compensation program, such
as our operating margin metric. Variations in the Compensation Actually Paid
amounts for our PEOs and other NEOs are due in large part to the significant
emphasis the company places on long-term equity incentives, the value of which
fluctuates based on the vesting level of our performance-based equity awards
and changes in stock price over time.
64 La-Z-Boy Incorporated
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Compensation Matters
The following is a list of financial performance measures, which in the
company's assessment represent the most important financial performance
measures used by the company to link Compensation Actually Paid to the NEOs
for FY 2024:
.
Sales
.
Operating Margin
.
Operating Cash Flow
.
Relative TSR
.
Stock Price (through the use of equity-based awards)
Proposal 4: Approve the La-Z-Boy Incorporated 2024 Omnibus Incentive Plan
Overview
On June 25, 2024, our Board of Directors unanimously approved and adopted the
La-Z-Boy Incorporated 2024 Omnibus Incentive Plan (the "2024 Plan"), subject
to the approval of our shareholders. The 2024 Plan provides the Board the
ability to design compensatory awards that are responsive to our company's
needs. The 2024 Plan provides for a variety of awards designed to advance our
company's interests and long-term success by encouraging share ownership among
our officers and other key executives, employees, non-employee directors, and
consultants and other advisors and otherwise linking their compensation to our
share price performance or the achievement of specific corporate goals.
Equity Grant Practices
We have historically granted equity awards under various plans, including most
recently the 2022 Plan, the only shareholder-approved equity plan under which
we can currently grant equity awards. If our shareholders approve the 2024
Plan, then effective as of the date of the Annual Meeting, we will not make
any additional awards under the 2022 Plan. As of April 27, 2024, under our
prior equity plans, stock options covering 1,129,341 shares of our common
stock were outstanding with a weighted average exercise price of $30.69 and a
weighted average remaining term of 6.0 years, 561,062 restricted shares/units
were outstanding, and 532,246 unearned performance-based shares/units (at
maximum) were outstanding. Under the 2022 Plan, there were approximately
1,741,512 shares available for grant as of April 27, 2024, which will cease to
be available for grant following the effectiveness of the 2024 Plan. The
closing price of our common stock on July 1, 2024, was $36.78 per share.
Overhang is a measure of the dilutive impact of equity programs. Our overhang
is equal to the number of shares subject to outstanding equity compensation
awards plus the number of shares available to be granted, divided by the total
number of outstanding shares. As of April 27, 2024, our overhang was 9.3%. As
of April 27, 2024, the 3,090,000 shares being requested under the 2024 Plan
(comprised of the 1,741,512 shares that remained available for grant under the
2022 Plan as of April 27, 2024, plus 1,348,488 "new" shares) would bring our
aggregate overhang to approximately 12.6%. Overhang percentages are based on
approximately 42,440,012 shares of common stock outstanding as of April 27,
2024, and include the 532,246 outstanding unearned performance-based
share/unit awards (at maximum).
Burn rate is a measure of the number of shares subject to equity awards that
we grant annually, which helps indicate the life expectancy of our equity
plans and is another measure of stockholder dilution. We determine our burn
rate by dividing the aggregate number of shares subject to awards granted
during the year by the weighted average number of shares outstanding during
the year. Our burn rate for the past three fiscal years has been as follows:
Full Value Awards
FY Options Restricted Performance Performance Non-Employee Options + Full Weighted Average Burn Rate
Granted Stock/Stock Shares/Units Shares/Units Director Value Awards Number of
Units Granted Granted Earned Restricted Stock Ordinary Shares
Units Granted Outstanding
2024 - 331,140 219,154 66,629 35,736 433,505 42,878,139 1.01 %
2023 318,411 256,128 240,833 100,165 38,509 713,213 43,148,464 1.65 %
2022 252,996 121,963 125,021 121,661 32,347 528,967 44,023,000 1.20 %
Our three-year average burn rate is 1.29%.
2024 Proxy Statement 65
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Compensation Matters
Certain Features of the 2024 Plan
The following features of the 2024 Plan are designed to reinforce alignment
between the equity compensation arrangements awarded pursuant to the 2024 Plan
and our shareholders' interests:
.
Subject to adjustment as provided for in the 2024 Plan, the number of shares
of common stock that will initially be available for all awards under the 2024
Plan, other than substitute awards, will be 3,090,000 shares (comprised of the
1,741,512 shares that remained available for grant under the 2022 Plan as of
April 27, 2024, plus 1,348,488 "new" shares), reduced on a one-for-one basis
for any shares of common stock granted under the 2022 Plan after April 27,
2024 and prior to the Annual Meeting;
.
Awards will be subject to a one-year minimum vesting period, subject to
limited exceptions set forth in the 2024 Plan as described below and the Plan
Committee's (as defined below) ability to provide for accelerated
exercisability or vesting of any award, including in cases of retirement,
death, disability or a change in control, in the terms of the Award Agreement
or otherwise;
.
No discounting of stock options or stock appreciation rights;
.
No repricing or replacement of underwater stock options or stock appreciation
rights without shareholder approval;
.
No liberal share recycling
.
No dividend equivalents on stock options or stock appreciation rights;
.
No dividends or dividend equivalents paid on unearned awards;
.
Annual non-employee director compensation limit of $800,000, which cannot be
amended without shareholder approval; and
.
No liberal definition of "change in control."
Summary of the 2024 Plan
The following summary of the 2024 Plan is qualified in its entirety by
reference to the complete text of the 2024 Plan included as Appendix A to this
Proxy Statement. You should read the complete text of the 2024 Plan for more
details regarding its operation.
Purpose
The Plan is intended to enhance our company's and its subsidiaries' ability to
attract and retain highly qualified officers, directors, key employees, and
other persons, and to motivate such persons to serve our company and its
subsidiaries and to expend maximum effort to improve the business results and
earnings of our company, by providing to such persons an opportunity to
acquire or increase a direct proprietary interest in the operations and future
success of our company.
Plan Term
The 2024 Plan will be effective as of the date of the Annual Meeting, subject
to approval by our shareholders. No new awards may be granted under the 2024
Plan after the ten-year anniversary of shareholder approval of the 2024 Plan;
provided that no incentive stock option shall be granted after June 25, 2034.
However, the term and exercise of awards granted before then may extend beyond
that date. The Board may terminate the 2024 Plan at any time with respect to
all future awards.
Eligibility
Participants in the 2024 Plan will consist of employees, officers, directors,
and certain natural person consultants or advisors to the company or any
subsidiary thereof and persons expected to become employees, officers,
directors, or certain natural person consultants or advisors of the company or
any subsidiary thereof as the Plan Committee may select from time to time.
The Plan Committee will determine which eligible persons will receive awards
and the award's size, terms, conditions and restrictions. As of April 27,
2024, approximately 10,200 employees and nine (9) non-employee directors would
be eligible to participate in the 2024 Plan if selected by the Plan Committee.
While natural person consultants or advisors of the company or one of its
subsidiaries are eligible to participate in the 2024 Plan if selected by the
Plan Committee, we historically have not granted awards to consultants or
advisors and do not anticipate that practice changing.
66 La-Z-Boy Incorporated
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Compensation Matters
Administration
The 2024 Plan is to be administered by the Board or a committee to which the
Board delegates the appropriate authority. The committee must consist of two
or more non-employee directors of the Board, each of whom is intended to (i)
qualify as a non-employee director within the meaning of Rule 16b-3 of the
Exchange Act, and (ii) comply with the independence requirements of the stock
exchange on which the company's common stock is listed. Historically, the
Compensation Committee has served as the plan committee for purposes of the
2022 Plan with respect to awards granted to participants other than
non-employee directors and the Board has administered the 2022 Plan with
respect to awards granted to non-employee directors. References in this
proposal to "Plan Committee" mean the Board or the committee delegated by the
Board.
The Plan Committee may delegate its authority under the 2024 Plan to a
subcommittee of the Board, a member of the Board, the President and Chief
Executive Officer of the company, or such other executive officer of the
company as the committee determines, provided that the Plan Committee may not
delegate its power and authority to a member of the Board or the President and
Chief Executive Officer or other executive officer with regard to the
selection for participation in the 2024 Plan of an officer, director or other
person subject to Section 16 of the Exchange Act or other decisions concerning
the timing, pricing or amount of an award to such an officer, director or
other person.
The Board may also appoint one or more separate committees of the Board who
may administer the 2024 Plan with respect to employees, natural person
consultants and advisors who are not persons subject to Section 16 of the
Exchange Act, and may grant and determine the terms of awards to such
individuals.
Available Awards
The 2024 Plan provides for equity-based compensation in the form of (1) stock
options in the form of incentive stock options ("ISOs") and non-qualified
stock options; (2) stock appreciation rights ("SARs"); (3) restricted stock
and restricted stock units ("RSUs"); (4) unrestricted stock awards; (5)
performance awards; (6) related dividend equivalent rights; and (7) Management
Incentive Plan awards granted in the form of short-term cash awards ("MIP
Awards"). Each type of award is described below under "Types of Awards
Authorized Under the 2024 Plan." Each award granted under the 2024 Plan will
be evidenced by an award agreement containing such terms and provisions,
consistent with the 2024 Plan, as the Plan Committee may approve.
Shares Available Under the 2024 Plan
Subject to adjustment as provided for in the 2024 Plan and the 2024 Plan's
share counting provisions, the number of shares of common stock that will
initially be available for all awards under the 2024 Plan, other than
substitute awards, will be 3,090,000 shares, reduced on a one-for-one basis
for any shares of common stock granted under the 2022 Plan after April 27,
2024 and prior to the effective date of the 2024 Plan. The initial share pool
is comprised of the 1,741,512 shares that remained available for grant under
the 2022 Plan as of April 27, 2024, plus 1,348,488 "new" shares. After the
effective date of the 2024 Plan, no awards will be granted under the 2022 Plan.
Award Limitations
Subject to adjustments as provided for in the 2024 Plan, no more than
3,090,000 shares of company common stock in the aggregate may be issued under
the 2024 Plan in connection with ISOs. The aggregate value of cash
compensation and the grant date fair value of shares of common stock that may
be awarded or granted during any fiscal year of our company to any
non-employee director for his or her service as a non-employee director shall
not exceed $800,000, subject to certain exceptions.
Share Counting
An outright award confers on the recipient greater value per share than an
option or SAR because it does not require payment of an exercise or base
price. Under the 2024 Plan, each share of common stock covered by an award
counts against the aggregate plan limit as one share. With respect to SARs
(but exclusive of SARs to be settled in cash), the number of shares subject to
an award of SARs will be counted against the aggregate number of shares
available for issuance under the 2024 Plan regardless of the number of shares
actually issued to settle the SAR upon exercise. For each share that is
forfeited, expires or is settled for cash (in whole or in part) under the 2024
Plan or a prior equity plan, one share will be added back to the aggregate
limit regardless of the applicable share reserve deduction ratio used in the
prior equity plan. The following will not increase the number of shares
available for grant under the 2024 Plan:
.
any shares tendered by a participant or withheld by us in full or partial
payment of the exercise price of stock options or the purchase of restricted
stock or other shares of stock subject to vested stock units or the full or
partial satisfaction of a tax-withholding obligation on any award under the
2024 Plan or any prior equity plan; or
2024 Proxy Statement 67
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Compensation Matters
.
shares we reacquire on the open market or otherwise using cash proceeds from
the exercise of stock options granted either under the 2024 Plan or any prior
equity plan.
In addition, the number of shares of stock available for awards under the 2024
Plan shall not be reduced by (i) the number of shares of stock subject to
substitute awards granted in connection with a corporate transaction or (ii)
available shares under a stockholder-approved plan of a company or other
entity which was a party to a corporate transaction with our company (as
appropriately adjusted to reflect such corporate transaction) which become
subject to awards granted under the 2024 Plan (subject to applicable stock
exchange requirements).
Repricing Prohibited
Except in connection with an adjustment involving a corporate transaction or
similar event, the Board may not authorize the amendment of any outstanding
stock option or SAR to reduce the exercise or base price, and no outstanding
stock option or SAR may be cancelled in exchange for other awards, or
cancelled in exchange for stock options or SARs having a lower exercise or
base price, or cancelled in exchange for cash, without the approval of our
shareholders.
Types of Awards Authorized under the 2024 Plan
Stock Options.
The Plan Committee may grant stock options that entitle the recipient to
purchase shares of company common stock at a price not less than fair market
value on the date of grant (except in the case of substitute awards). The
maximum term for stock options is ten years, except ISOs granted to anyone who
owns, as of the date of grant, stock with more than 10% of the total combined
voting power of all classes of our stock must have a term of not more than
five years and an exercise price not less than 110% of the fair market value
of the common stock on the grant date. We may grant stock options as ISOs,
non-qualified stock options, or combinations of the two. The exercise price
for each grant of stock options will be specified in the award agreement,
which will also provide whether the price is payable: (1) in cash or by cash
equivalents; (2) by the transfer to us of company common stock the option
recipient already owned; (3) with the Plan Committee's consent, by delivering
other consideration having a fair market value on the exercise date equal to
the total purchase price; (4) pursuant to a net exercise arrangement where,
when the participant exercises options, we deduct from the shares we are going
to issue to the recipient shares having a fair market value equal to the total
purchase price; (5) by delivering (on a form acceptable to the Plan Committee)
an irrevocable direction to a licensed securities broker acceptable to us to
sell shares and deliver all or part of the sales proceeds to us to pay the
option price and any withholding taxes; (6) by any other methods specified in
the award agreement; or (7) by a combination of these payment methods.
SARs.
A SAR is a right to receive from us an amount equal to a specified number of
shares of company common stock multiplied by the difference between the fair
market value of one share on the date of exercise and the grant price of the
SAR. The grant price may not be less than the fair market value per share at
the date of grant (except with respect to substitute awards). The SAR award
agreement will specify whether the SAR will be settled in stock, cash, or a
combination thereof. No SAR may be exercisable more than ten years from the
date of grant.
Restricted Stock and RSUs.
If the Plan Committee grants restricted stock, ownership of a specified number
of restricted shares of company common stock is transferred immediately to the
recipient in consideration of the recipient's performing services. Unless the
Plan Committee provides otherwise in an award agreement, the participant is
immediately entitled to vote the shares, receive dividends (subject to the
same restrictions and risks as the underlying shares), and other ownership
rights. An RSU represents the recipient's right to receive, when the RSU
vests, a specified number of shares of company common stock. In the Plan
Committee's discretion, RSUs may be settled in cash, shares of company common
stock or any combination thereof. RSUs may entitle the participant to receive
credits for dividend equivalents (subject to the same restrictions and risks
as the underlying RSUs), but unlike restricted stock, they do not convey
voting or other shareholder rights prior to the settlement of the award in
company common stock.
Unrestricted Stock Awards.
The Plan Committee may, subject to limitations under applicable law, grant to
any participant other stock awards, entitling the participant to receive
shares of company common stock free of any restrictions. The Plan Committee
will determine the terms and conditions of these awards.
Dividend Equivalent Rights.
Dividend equivalent rights may be granted to any recipient of an award under
the 2024 Plan, other than with respect to an award of stock options or SARs.
Dividend equivalents credited to a participant may be deemed to be reinvested
in additional shares of stock, which may thereafter accrue additional
equivalents. Unless otherwise set forth in the underlying award agreement, any
such reinvestment will be at the fair market value on the date the underlying
dividend was paid. In the Plan Committee's sole discretion, dividend
equivalent rights may be settled in cash or stock or a combination thereof,
and in a single installment or multiple installments. Any dividend or dividend
equivalent rights provided with respect to an award under the 2024 Plan will
be subject to the same restrictions and risk of forfeiture as the underlying
awards.
68 La-Z-Boy Incorporated
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Compensation Matters
Performance Awards.
The Plan Committee may grant performance awards in the form of performance
shares or performance units, as the Plan Committee determines in its sole
discretion. Performance shares are denominated in shares of company common
stock, the value of which at the time it is payable is determined based on the
attainment of performance goals over a performance period. Performance units
are denominated in units, the value of which at the time it is payable is
determined based on the attainment of performance goals over a performance
period.
To the extent they are earned, the performance awards will be paid to the
participant in the manner and at the time determined by the Plan Committee.
Any grant may specify in the Plan Committee's discretion that the amount
payable may be paid in cash, shares of company common stock or other property,
or any combination thereof. Performance awards may be paid in a lump sum or in
installments following the close of the performance period or, in accordance
with procedures established by the Plan Committee, on a deferred basis.
MIP Awards.
The 2024 Plan establishes a short-term cash incentive program known as the
Management Cash Incentive Program for employees of the company and its
subsidiaries, in which such employees are eligible to participate in each
fiscal year (unless otherwise determined by the Plan Committee). The Plan
Committee will determine the performance measures applicable to the MIP Awards
and the target incentive opportunity for each eligible employee in its sole
discretion. MIP Awards will be paid as soon as administratively feasible
following the close of the performance period to which the MIP Award relates
(but in any event no later than two and a half months following the conclusion
of the performance period).
Performance Measures
The Plan Committee will establish measurable performance objectives for
participants who receive performance awards under the 2024 Plan. One or more
of the following business criteria for our company, on a consolidated basis,
and/or for specified subsidiaries, business or geographical units or operating
areas of our company (except with respect to the total shareholder return and
earnings per share criteria) or individual basis, may be used by the Plan
Committee in establishing performance measures under the 2024 Plan: the
attainment by a share of stock of a specified fair market value for a
specified period of time; increase in stockholder value; earnings per share;
return on assets or net assets; return on equity; return on investments;
return on capital or invested capital; total stockholder return; productivity
ratios; earnings or income of our company before or after taxes and/or
interest; earnings before interest, taxes, depreciation and amortization
("EBITDA"); EBITDA margin; operating income; revenues; operating expenses,
attainment of expense levels or cost reduction goals; market share; cash flow,
cash flow per share, cash flow margin or free cash flow; interest expense;
expense targets; economic value created; gross profit or margin; operating
profit or margin; net cash provided by operations; price-to-earnings growth;
financial ratios as provided in credit agreements of our company and its
subsidiaries; working capital targets; and strategic business criteria,
consisting of one or more objectives based on meeting specified goals relating
to market penetration, customer acquisition, business expansion, cost targets,
customer satisfaction, reductions in errors and omissions, reductions in lost
business, management of employment practices and employee benefits,
supervision of litigation, supervision of information technology, quality and
quality audit scores, efficiency, environmental, social and governance
metrics, and acquisitions or divestitures, or such other goals as the Plan
Committee may determine whether or not listed herein.
In addition to the ratios specifically enumerated above, performance goals may
include comparisons relating to capital (including, but not limited to, the
cost of capital), shareholders' equity, shares outstanding, assets or net
assets, sales, or any combination thereof. In establishing a performance
measure or determining the achievement of a performance measure, the Plan
Committee may provide that achievement of the applicable performance measures
may be amended or adjusted to include or exclude components of any performance
measure, including, without limitation, foreign exchange gains and losses,
asset write-downs, acquisitions and divestitures, tax valuation allowance
reversals, environmental expenses, short-term cash incentive accruals, gains
or losses from the sales of assets, payments received relating to import
duties arising from anti-dumping orders, change in fiscal year, unbudgeted
capital expenditures, special charges such as restructuring or impairment
charges or any other reorganization or restructuring programs, debt
refinancing costs, extraordinary or noncash items, litigation or claim
judgements or settlements, unusual, infrequently occurring, nonrecurring or
one-time events affecting our company or its financial statements or changes
in law or accounting principles.
Amendment and Termination of the 2024 Plan
The Plan Committee may, at any time and from time to time, amend, suspend, or
terminate the 2024 Plan as to any shares of stock for which awards have not
been made, except that we must submit for shareholder approval any plan
amendment where shareholder approval is required by applicable law or stock
exchange listing requirements, or that would otherwise materially: (i)
increase the benefits accrued to participants under the 2024 Plan, (ii)
increase the numbers of securities that may be issued under the 2024 Plan
(other than an increase pursuant to the adjustment provisions in the plan),
(iii) modify the requirements for participation in the 2024 Plan, or (iv)
modify the non-employee compensation limit or the prohibition on repricing set
forth in the 2024 Plan.
2024 Proxy Statement 69
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Compensation Matters
The Plan Committee may not, without the impacted participant's consent, amend
the plan to impair in any material respect the participant's rights under any
award that the participant has already been granted.
Vesting and Exercise of an Award
The award agreement governing an award will specify the period during which
the right to exercise the award in whole or in part vests, including the
events or conditions on which the vesting will occur or may accelerate. All
equity-based awards will vest no earlier than the first anniversary of the
date on which the award is granted, provided that the following types of
awards shall not be subject to this minimum vesting requirement: (i)
substitute awards granted in connection with awards that are assumed,
converted or substituted pursuant to a merger, acquisition or similar
transaction entered into by our company or any of its subsidiaries; (ii) stock
delivered in lieu of full-vested cash obligations; (iii) awards delivered to
non-employee directors that vest on the earlier of the one-year anniversary of
the grant date and the next annual meeting of shareholders which is at least
fifty weeks after the immediately preceding year's annual meeting; and (iv)
any additional awards the committee may grant, up to a maximum of 5% of the
available share reserve authorized for issuance under the 2024 Plan; and
provided further that this minimum vesting restriction does not apply to the
Plan Committee's discretion to provide for accelerated exercisability or
vesting of any award, including in cases of retirement, death, disability, or
a corporate transaction, in the terms of the award agreement or otherwise. No
portion of an award that is not vested when a participant's service with us
terminates will vest, unless the award agreement provides otherwise or the
Plan Committee determines otherwise.
Adjustments
In the event of any equity restructuring that causes the per share value of
shares of stock to change, such as a stock dividend, stock split, spinoff,
rights offering or recapitalization through an extraordinary cash dividend,
the committee will make appropriate adjustments to the number and class of
securities available under the 2024 Plan, the terms of each outstanding stock
option and SAR (including the number and class of securities subject to each
outstanding stock option or SAR and the purchase price or base price per
share), the terms of each outstanding restricted stock award and stock unit
award (including the number and class of securities subject thereto), and the
terms of each outstanding MIP Award and performance award (including the
number and class of securities subject thereto), such adjustments to be made
in the case of outstanding stock options and SARs without an increase in the
aggregate exercise price or purchase price and in accordance with Section 409A
of the Internal Revenue Code. In the event of any other change in corporate
capitalization, including a merger, consolidation, reorganization, or partial
or complete liquidation of our company, the equitable adjustments described in
the foregoing sentence may be made as determined to be appropriate and
equitable by the Plan Committee to prevent dilution or enlargement of rights
of participants. Moreover, in the event of any such transaction or event, the
Plan Committee may provide in substitution for any outstanding awards such
alternative consideration (including cash), if any, at it in good faith may
determine to be equitable in the circumstances and will require in connection
with such substitution the surrender of all awards so replaced in a manner
that complies with Section 409A of the Internal Revenue Code. In either case,
the decision of the Plan Committee regarding any such adjustment shall be
final, binding and conclusive.
Corporate Transactions
Under the terms of the 2024 Plan, in the event of a corporate transaction,
except as otherwise provided in an award agreement, the Board may, in its
discretion, provide that: (i) some or all outstanding stock options and SARs
will become exercisable in full or in part, either immediately or upon a
subsequent termination of employment, (ii) the restriction period applicable
to some or all outstanding awards will lapse in full or in part, either
immediately or upon a subsequent termination of employment, (iii) the
performance period applicable to some or all outstanding awards will lapse in
full or in part, and (iv) the performance measures applicable to some or all
outstanding awards will be deemed satisfied at the target, maximum or any
other level. In addition, in the event of a change in control, the Board may,
in its discretion, require that shares of stock of the company resulting from
such change in control, or the parent thereof, or other property be
substituted for some or all of the shares of company common stock subject to
outstanding awards as determined by the Board, and/or require outstanding
awards, in whole or in part, to be surrendered to the company in exchange for
a payment of cash, other property, shares of capital stock in the company
resulting from the change in control, or the parent thereof, or a combination
of cash, other property and shares.
Under the terms of the 2024 Plan, "corporate transaction" means, with respect
to the company, any change in control event under Section 409A of the Internal
Revenue Code, and generally includes: (i) certain acquisitions of more than
50% of the total fair market value or 30% or more of the voting power of the
stock of the company; (ii) certain changes in the majority composition of the
members of the Board during any 12-month period; or (iii) a change in
ownership of a substantial portion of our company's assets pursuant to which
one person (or more than one person acting as a group) acquire assets from our
company with a gross fair market value equal to or more than 40% of the total
gross fair market value of all of the assets of our company immediately before
such transactions, subject in each case to certain exceptions.
70 La-Z-Boy Incorporated
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Compensation Matters
The Plan Committee (as constituted prior to the corporate transaction) may
determine the effect of a corporate transaction upon awards, and such effect
shall be set forth in the appropriate award agreement or as otherwise
determined by the Plan Committee in accordance with the 2024 Plan.
Limited Transferability
No award and no shares of company common stock that have not been issued or as
to which any applicable restriction, performance or deferral period has not
lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered,
other than by will or the laws of descent and distribution. During a
participant's life, an award may be exercised only by the participant or the
participant's guardian or legal representative. A participant may assign or
transfer a non-qualified stock option or SAR to: (1) the participant's spouse,
former spouse, children or grandchildren (including any adopted and step
children or grandchildren), parents, grandparents, siblings, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
or any person sharing the participant's household (other than a tenant or
employee); (2) a trust in which any one or more of the persons in clause (1)
have more than 50% of the beneficial interest, (3) a foundation in which any
one or more of the persons in clause (1) (or the participant) control the
management of assets; or (4) any other entity in which one or more of the
persons listed in clause (1) (or the participant) own more than 50% of the
voting interests, so long as, in each case, the permitted assignees are bound
by and subject to all of the terms and conditions of the 2024 Plan and the
award agreement relating to the transferred award and they execute an
agreement satisfactory to us evidencing those obligations.
Withholding Taxes
If we are required to withhold federal, state, local or foreign taxes in
connection with any payment made to or benefit realized by a participant or
other person under the 2024 Plan, and the amounts available to us for
withholding are insufficient, receipt of the payment or benefit will be
conditioned on the participant's or other person's making arrangements
satisfactory to us to pay the balance of the taxes we are required to
withhold, which arrangements (in the committee's discretion) may include
relinquishing a portion of the benefit. In certain circumstances, to settle
tax withholding obligations, we may withhold from a participant's wages
amounts that are otherwise due to the participant or shares of stock that are
deliverable to the participant. To satisfy tax withholding obligations,
participants may elect to have shares of common stock withheld or may deliver
other shares of common stock, but the value of any shares withheld will not
exceed the minimum amount of taxes required to be withheld.
Clawback of Awards
The 2024 Plan provides that any awards granted under that plan, as well as any
cash payment or shares of stock delivered pursuant to such an award, are
subject to forfeiture, recovery by the company or other action pursuant to the
applicable award agreement or company's clawback or recoupment policy as in
effect of the date of the grant, including without limitation the La-Z-Boy
Incorporated Policy on Recoupment of Incentive Compensation.
Termination
No grant under the 2024 Plan may be made after the ten-year anniversary of
shareholder approval of the 2024 Plan, but all grants made on or before the
ten-year expiration of the 2024 Plan will continue in effect after that date
unless they terminate under their terms or the terms of the plan.
Federal Income Tax Consequences
The following is a brief summary of some of the federal income tax
consequences of some types of transactions under the 2024 Plan based on
federal income tax laws currently in effect. This summary is not intended to
be complete and does not describe any gift, estate, social security or state
or local tax consequences. It is not intended as tax guidance to participants
in the plan.
Non-qualified Stock Options.
A recipient of non-qualified stock options will not realize any taxable income
when the options are granted. When the recipient exercises the options, the
recipient generally will realize ordinary income subject to tax equal to the
amount by which the shares' fair market value on that date exceeds the
exercise price. When a recipient subsequently sells shares of common stock
purchased with the option, the recipient will recognize short-term or
long-term capital gain or loss depending on his or her holding period of the
shares. Officers and directors subject to Section 16(b) of the Exchange Act
may be subject to special tax rules and income tax consequences concerning
their options. We will not (nor will the employing subsidiary) receive a
deduction when we grant options unless they have a readily ascertainable fair
market value (as determined under applicable tax law) at the time we grant
them. When a recipient exercises options, we (or the employing subsidiary)
will generally be allowed, subject to the limitations under Section 162(m) of
the Internal Revenue Code (as described below), a deduction equal to the
amount recognized by the recipient as ordinary income.
2024 Proxy Statement 71
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Compensation Matters
ISOs.
In general, a recipient will not realize taxable income, and we will not (nor
will the employing subsidiary) realize an income tax deduction, either when we
grant ISOs or when the recipient exercises them. For purposes of the
alternative minimum tax, however, the amount by which the fair market value of
shares a recipient acquired from exercising an ISO (determined at that time)
exceeds the ISO's exercise price generally will be considered income. Subject
to limited exceptions, if the recipient was continuously employed from the
date of grant at least until three months prior to exercising the ISO and the
recipient does not sell the shares received from exercising the ISO within
either (1) two years after the ISO's grant date, or (2) one year after
exercising the ISO, the recipient's subsequent sale of the shares will result
in long-term capital gain or loss to the recipient but will not result in a
tax deduction to us (or the employing subsidiary).
Subject to limited exceptions, if the recipient is not continuously employed
from the date of grant until at least three months prior to exercising an ISO,
or the recipient disposes of shares the recipient acquired from exercising of
an ISO within either of the time periods described in the immediately
preceding paragraph, the recipient will generally realize as ordinary income
subject to tax in the year of disposition equal to the lesser of (1) the
amount by which the fair market value of the shares on the date the recipient
exercises the ISOs exceeds the exercise price, or (2) the amount by which the
amount realized upon disposition exceeds the exercise price. In such event,
subject to the limitations under Section 162(m) of the Internal Revenue Code,
we (or the employing subsidiary) generally will be entitled to an income tax
deduction equal to the amount the recipient recognized as ordinary income. Any
gain the recipient realizes in excess of the amount the recipient realized as
ordinary income will be taxed at the rates applicable to short-term or
long-term capital gains, depending on how long the recipient held the shares.
SARs.
Participants will not recognize income when SARs are granted. When a
participant exercises a SAR, the participant normally realizes ordinary income
subject to tax equal to the cash the participant receives or the fair market
value of any unrestricted shares of company common stock the participant
receives. In such event, subject to the limitations under Section 162(m) of
the Internal Revenue Code, we (or the employing subsidiary) generally will be
entitled to an income tax deduction equal to the amount the recipient
recognized as ordinary income.
Restricted Stock.
A recipient will not recognize taxable income at the time restricted stock
(i.e., stock subject to restrictions constituting a substantial risk of
forfeiture) is granted and the company will not be entitled to a tax deduction
at that time, unless the recipient makes an election to be taxed at that time.
If such election is made, the recipient will recognize compensation taxable as
ordinary income at the time of the grant in an amount equal to the excess of
the fair market value for the shares at such time over the amount, if any,
paid for those shares. If such election is not made, the recipient of
restricted stock generally will recognize ordinary income subject to tax equal
to the fair market value of the restricted stock (reduced by any amount, if
any, the participant paid for the restricted stock) when the shares are no
longer subject to restrictions constituting a substantial risk of forfeiture.
Any dividends a recipient receives while the stock is subject to restrictions
constituting a substantial risk of forfeiture and for which the above-described
election has not been made generally will be treated as compensation that is
taxable as ordinary income to the participant and deductible by us (or the
employing subsidiary), subject to the limitations under Section 162(m) of the
Internal Revenue Code. Officers and directors subject to Section 16(b) of the
Exchange Act may be subject to special tax rules and income tax consequences
concerning their restricted stock.
RSUs.
Recipients of awards of RSUs generally will not be taxed when the awards are
granted but will recognize ordinary income subject to tax equal to the cash
transferred to the participant, or, if applicable, on the fair market value of
unrestricted shares of company common stock on the date they are transferred
to the participant (reduced in either case by any amount, if any, the
participant paid for the RSUs). Subject to the limitations under Section
162(m) of the Internal Revenue Code, we (or the employing subsidiary)
generally will be entitled to an income tax deduction equal to the amount the
recipient recognized as ordinary income.
Performance Awards.
Generally, recipients do not recognize income when they receive a grant of
performance shares pursuant to a performance award. When performance shares
are later paid out, the recipient generally will be required to include as
taxable ordinary income the amount of cash the participant receives or the
fair market value on the transfer date of unrestricted shares of company
common stock the participant receives. Subject to the limitations under
Section 162(m) of the Internal Revenue Code, we (or the employing subsidiary)
generally will be entitled to an income tax deduction equal to the amount the
recipient recognized as ordinary income.
MIP Awards.
When a participant receives a payment of MIP Awards in cash, the participant
will recognize ordinary income equal to the cash payment received and, subject
to the limitations under Section 162(m) of the Internal Revenue Code, we (or
the employing subsidiary) generally will be entitled to an income tax
deduction equal to the amount the recipient recognized as ordinary income.
72 La-Z-Boy Incorporated
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Compensation Matters
Section 162(m) of the Internal Revenue Code. Section 162(m) of the Internal
Revenue Code generally limits to $1 million the amount that a publicly held
corporation is allowed each year to deduct for the compensation paid to each
of the corporation's chief executive officer, the corporation's chief
financial officer and certain other current and former executive officers of
the corporation.
2024 Plan Benefits
Due to the nature of the proposed plan, we cannot predict in advance the
benefits that any employee or director ultimately may receive if the proposed
plan is approved. Please see the Fiscal Year 2024 Summary Compensation Table
and the FY 2024 Grants of Plan-Based Awards Table and the FY 2024 Director
Compensation table for a summary of equity grants made to our NEOs and
non-employee directors during FY 2024 under the 2022 Plan.
Other Matters
Our Board has determined that the proposed plan should be submitted for
shareholder approval so as to comply with the NYSE listing standards. To be
approved, the 2024 Plan must receive a majority of the votes cast on the
proposal, provided that a majority of shares entitled to vote actually vote
``For'' or ``Against'' the proposal. For this purpose, an abstention or broker
non-vote will be considered as not voted. If it is approved by shareholders,
the 2024 Plan will become effective as of the date of the Annual Meeting, and
thereafter we will not make any future grants under the 2022 Plan. If
shareholders do not approve the 2024 Plan, it will not become effective, and
the 2022 Plan, as it currently exists, will continue in effect. The results of
the vote will not affect any awards under the existing plans that are
outstanding at the time of the annual meeting.
a The Board recommends that you vote
"FOR"
Proposal 4, which approves the La-Z-Boy Incorporated 2024 Omnibus Incentive Plan.
Equity Compensation Plan Information as of April 27, 2024
The table below provides information, as of the end of FY 2024, on our
existing compensation plans under which we may issue common shares.
Plan category Number of securities to Weighted-average Number of securities remaining
be issued upon exercise exercise price of available for future issuance under
of outstanding options, outstanding options, equity compensation plans (excluding
warrants and rights warrants and rights securities reflected in column (i))
(i) (ii) (iii)
(1) (2) (3)
(#) ($) (#)
Equity compensation plans 2,155,807 30.69 1,741,512
approved by shareholders
(1)
Beginning August 30, 2022, all equity awards were issued under our 2022 Plan.
The total in this column includes: 1,129,341 stock options (of which 1,064,293
stock options were issued under the 2017 Omnibus Incentive Plan, under which
we could no longer issue shares as of August 30, 2022, and 65,048 stock
options were issued under the La-Z-Boy Incorporated 2010 Omnibus Incentive
Plan (the "2010 Plan"), under which we could no longer issue shares as of
April 28, 2018); 494,220 RSUs (of which 166,918 RSUs were outstanding under
the 2017 Omnibus Incentive Plan and 327,302 RSUs were outstanding under the
2022 Plan); and 532,246 unearned performance-based stock unit awards
outstanding under the 2022 Plan (assuming the maximum performance targets were
achieved). Outstanding non-employee director RSU awards under the 2022 Plan,
the 2017 Omnibus Incentive Plan, and the 2010 Plan are excluded; these awards
are shown in the Security Ownership of Directors and Executive Officers table.
(2)
Excludes RSU and performance-based stock unit awards settleable in shares from
determination of weighted-average exercise price.
(3)
This amount is the aggregate number of shares available for future issuance
under our 2022 Plan, which provides for awards of stock options, restricted
stock and restricted stock units, and performance awards (of our common stock
based on achievement of pre-set goals over a performance period) to selected
key employees and non-employee directors.
This table does not include shares that may be issued under the 2024 Plan if
it is approved by shareholders at the meeting. If it is approved by
shareholders, the 2024 Plan will become effective as of the date of the Annual
Meeting, and thereafter we will not make any other grants under the 2022 Plan.
2024 Proxy Statement 73
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SECURITIES OWNERSHIP
Security Ownership of Directors and Executive Officers
The following table shows the number of shares of the company's common stock
reported to us as beneficially owned by each of our directors and NEOs as of
June 28, 2024, and by all directors and executive officers as a group as of
that date, including shares of the company's common stock that they have a
right to acquire within 60 days after June 28, 2024, by the exercise of stock
options or settlement of RSUs.
No director or NEO beneficially owned 1% or more of the total number of
outstanding shares as of June 28, 2024. The directors and executive officers
as a group beneficially owned 1.7% of the total number of outstanding shares
as of June 28, 2024. Each person has sole voting and investment power for the
number of shares shown unless otherwise noted.
Name of Beneficial Owners Shares Owned RSUs Held by Shares Total Shares
Directly or Non-Employee Individuals Beneficially
Indirectly Directors Have Rights to Owned
(1) (2) Acquire within (#)
(#) (#) 60 Days
(#)
Erika L. Alexander 4,582 6,327 - 10,909
Sarah M. Gallagher 4,582 22,601 - 27,183
James P. Hackett 5,792 8,328 - 14,120
Raza S. Haider 726 3,890 - 4,616
Janet E. Kerr - 53,622 - 53,622
Mark S. LaVigne 1,853 3,890 - 5,743
Michael T. Lawton 4,582 32,050 - 36,632
Michael A. Leggett 8,498 - 3,955 12,453
Robert G. Lucian 18,381 - 76,416 94,797
Rebecca L. O'Grady 4,582 13,303 - 17,885
Lauren B. Peters 4,582 22,601 - 27,183
Rebecca M. Reeder 3,453 - - 3,453
Robert Sundy II 15,787 - 11,257 27,044
Melinda D. Whittington 76,644 - 217,440 294,084
All directors and executive officers as a group (18 persons) 196,910 166,612 374,221 737,743
(1)
Represents shares as to which the individual has sole voting and investment
power or for which the individual shares such power with his or her spouse.
None of these shares has been pledged as security. The shares shown include
restricted shares as follows: Mr. Leggett - 2,500 shares and Mr. Sundy - 3,528
shares.
(2)
RSUs held by each non-employee director that were granted prior to the August
30, 2022, vest and settle in shares of common stock when the director leaves
the Board. RSUs held by each non-employee director that were granted after
August 30, 2022, vest and settle in shares of common stock on the one-year
anniversary of the grant date.
74 La-Z-Boy Incorporated
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Securities Ownership
Security Ownership of 5% Beneficial Owners
The following table provides information about entities that beneficially
owned more than 5% of our common stock, as of June 28, 2024, according to
reports filed with the SEC. To our knowledge, except as noted in the table
below, no person or entity is the beneficial owner of more than 5% of our
common stock.
Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Class
(#) (%)
BlackRock, Inc. and subsidiaries
50 Hudson Yards
New York, NY 10001 6,865,941 16.3
(1)
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 5,116,149 12.2
(2)
Dimensional Fund Advisors LP
6300 Bee Cave Road
Building One
Austin, TX 78746 3,184,841 7.6
(3)
(1)
Based on a Schedule 13G/A filed with the SEC on January 22, 2024, in which
BlackRock, Inc., a parent holding company, reported that, as of December 31,
2023, it had sole voting power with respect to 6,750,007 shares and sole
dispositive power with respect to 6,865,941 shares, and shared voting and
dispositive power with respect to none of the shares.
(2)
Based on a Schedule 13G/A filed with the SEC on February 13, 2024, in which
The Vanguard Group, an investment adviser, reported that, as of December 29,
2023, it had sole voting power with respect to none of the shares, shared
voting power with respect to 45,111 shares, sole dispositive power with
respect to 5,021,277 shares, and shared dispositive power with respect to
94,872 shares.
(3)
Based on a Schedule 13G/A filed with the SEC on February 9, 2024, in which
Dimensional Fund Advisors LP, an investment adviser, reported that, as of
December 29, 2023, it had sole voting power over 3,135,482 shares, sole
dispositive power over 3,184,841 shares, and shared voting and dispositive
power with respect to none of the shares.
2024 Proxy Statement 75
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OTHER INFORMATION
Notice of Internet Delivery
We are making our proxy materials available to our shareholders on the
Internet. On July 17, 2024, we sent shareholders a Notice of internet
availability of proxy materials, which included instructions on how to access
our proxy materials. The materials, consisting of this Proxy Statement and our
2024 Annual Report, are available at www.proxyvote.com. The Notice of internet
availability of proxy materials also provides instructions on how to vote
shares. By making the materials available through the Internet, we expect to
reduce our costs, conserve natural resources, and expedite delivery of the
proxy materials. If, however, you prefer to receive paper copies of the proxy
materials, please follow the instructions included on the Notice of internet
availability of proxy materials. If you previously elected to receive our
proxy materials electronically, you will continue to receive them by e-mail
until you elect otherwise.
Voting
Voting.
Only shareholders of record at the close of business on June 28, 2024, the
record date for the Annual Meeting, will be eligible to vote. There is only
one class of stock entitled to vote at the meeting, our common stock, $1.00
par value, of which there were 42,057,328 shares outstanding on the record
date. A quorum, which is a majority of the outstanding shares entitled to vote
at the meeting, is needed to conduct a meeting. Each share is entitled to one
vote for each director position and one vote for each proposal; cumulative
voting is not available. If you received a paper copy of the proxy materials,
you may vote your shares by signing and dating each proxy card you received
and returning the cards in the enclosed envelope. The proxies will be voted
according to your directions on the proxy card. If you return a signed card
without specifying your vote, your shares will be voted:
.
FOR
the election of each of the ten director nominees named in this Proxy Statement;
.
FOR
the ratification of the selection of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for FY 2025;
.
FOR
the approval, through a non-binding advisory vote, of the compensation of our
NEOs as disclosed in this Proxy Statement; and
.
FOR
the approval of the La-Z-Boy Incorporated 2024 Omnibus Incentive Plan.
If you sign and return your proxy card, your shares will be voted on any other
business that properly comes before the meeting as determined by the persons
named in the proxy. We urge you to sign, date, and return your proxy card
promptly, or vote by telephone or on the Internet (see below), even if you
plan to attend the meeting in person. If you do attend in person, you will be
able to vote your shares at the meeting even if you previously signed a proxy
card or voted by telephone or on the Internet, as voting in person will cancel
any previously submitted vote and revoke any previously submitted proxy. All
votes cast via written proxy or by telephone or Internet must be received
prior to 11:59 p.m. Eastern Time on the day prior to the meeting.
Telephone and Internet Voting.
If your shares are held in your name, you can vote by telephone or on the
Internet by following the instructions on the proxy card or as explained in
the Notice of internet availability of proxy materials. If you are a
beneficial holder with your shares held in the name of your broker, bank, or
other financial institution, you will receive telephone or Internet voting
instructions from your institution.
Shares Held by Broker.
If you hold your shares through a broker, bank, or other financial
institution, you will receive your proxy materials and voting instructions
from the institution. Under New York Stock Exchange rules, your broker, bank,
or financial institution will not vote your shares in director elections
without your specific instructions. To ensure your vote is counted, you must
provide directions to your broker, bank, or financial institution by following
its instructions.
Shares Held in Retirement Savings Plan.
If you hold shares in the La-Z-Boy Incorporated Retirement Savings Plan, you
will receive voting instructions with regard to those shares. If you do not
provide instructions on how to vote such shares on or before August 22, 2024,
the plan shares will be voted in the same proportion as the shares for which
voting instructions are received from all other participants in the plan.
Changing Your Vote.
You may change your vote by submitting a new vote by proxy, telephone,
Internet, or in person at the meeting. A later vote will cancel an earlier
vote. For example, if you vote by Internet and later vote by telephone, the
telephone vote will count, and the Internet vote will be canceled. If you wish
to change your vote by mail, you should request a new proxy card from our
Corporate Secretary at One La-Z-Boy Drive, Monroe, Michigan, 48162. Your last
vote received before the
76 La-Z-Boy Incorporated
-------------------------------------------------------------------------------
Other Information
meeting will be the only one counted. You may also change your vote by voting
in person at the Annual Meeting. In that event, your vote at the Annual
Meeting will count and cancel any previous vote.
Vote Required.
Under applicable Michigan law and our bylaws, directors are elected by
plurality vote. Provided there is a quorum at the Annual Meeting, the nominees
who receive the highest through the tenth highest numbers of votes will be
elected, regardless of the number of votes cast. So long as each candidate
receives at least one vote, withheld votes and broker non-votes have no effect
on the election results. However, our Corporate Governance Guidelines require
that any director who fails to receive a majority of the votes cast in a
non-contested election must submit his or her resignation to the Board
following certification of the vote. Within 90 days following certification of
the vote, the Board, excluding the director failing to receive a majority of
the votes cast, will decide whether to accept such offered resignation and the
company will promptly publicly disclose the Board's decision. For purposes of
this provision of our Corporate Governance Guidelines, only votes FOR or
WITHHELD from a given candidate will be counted as votes cast. Broker
non-votes will not count.
Ratification of the selection of our independent auditor requires a majority
of votes cast on the proposal. Abstentions have no effect as they are
considered as votes not cast. Brokers will have discretionary authority to
vote on this proposal. Accordingly, there will not be any broker non-votes on
this proposal.
Approval of the advisory resolution to approve the compensation of our NEOs
must receive a majority of the votes cast on the proposal. Abstentions and
broker non-votes have no effect as they are considered votes not cast.
Approval of the La-Z-Boy Incorporated 2024 Omnibus Incentive Plan requires a
majority of votes cast on the proposal. Abstentions and broker non-votes have
no effect as they are considered votes not cast.
Number of Copies Sent to Household.
If there are two or more shareholders at your address, we have sent your
household only one copy of our 2024 Annual Report and Proxy Statement unless
you previously withheld your consent to "householding" or you instruct us
otherwise. Householding saves us the expense of mailing duplicate documents
and conserves natural resources. We will promptly deliver a separate copy of
this Proxy Statement and the accompanying 2024 Annual Report to any
shareholder at a shared address to which a single copy of these documents has
been delivered upon our receipt of written or oral request from the
shareholder directed to our address shown below or to us at 734-242-1444. You
may, at any time, revoke your consent to householding by contacting Broadridge
Financial Solutions, Inc., either by calling toll-free 866-540-7095, or by
writing to Broadridge Financial Solutions, Inc., Householding Department, 51
Mercedes Way, Edgewood, New York 11717. If you revoke your consent, you will
be removed from the householding program within 30 days of receipt of your
revocation, and each shareholder at your address will then begin receiving
individual copies.
Incorporation by Reference
The Audit Committee Report on pages
28-29
and the Compensation and Talent Oversight Committee Report on page
30
are not deemed filed with the SEC and shall not be deemed incorporated by
reference into any prior or future filings made by the company under the
Securities Act of 1933, as amended, or the Exchange Act, except to the extent
we specifically incorporate such information by reference. In addition, this
Proxy Statement includes several website addresses. These website addresses
are intended to provide inactive, textual references only. The information on
our website, including, but not limited to, the contents of our Sustainability
Report, is not, and shall not be deemed to be, a part of this Proxy Statement
or incorporated by reference herein or into any of our other filings with the
SEC.
Cautionary Note Regarding Forward-Looking Statements
In this Proxy Statement, we make "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by the fact that they do not relate strictly to
historical or current facts. Forward-looking statements may include words such
as "aim," "anticipates," "believes," "continues," "estimates," "expects,"
"feels," "forecasts," "hopes," "intends," "plans," "projects," "likely,"
"seeks," "short-term," "non-recurring," "one-time," "outlook," "target,"
"unusual," or words of similar meaning, or future or conditional verbs, such
as "will," "should," "could," or "may." A forward-looking statement is neither
a prediction nor a guarantee of future events or circumstances, and those
future events or circumstances may not occur. You should not place undue
reliance on forward-looking statements, which speak to our views only as of
the date of this Proxy Statement. These forward-looking statements are all
based on currently available operating, financial, and competitive information
and are subject to various risks and uncertainties, many of which are
unforeseeable and beyond our control. Additional risks and uncertainties that
we do not presently know about or that we currently consider to be immaterial
may also affect our business operations and financial performance.
2024 Proxy Statement 77
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Other Information
Our actual future results and trends may differ materially from those we
anticipate depending on a variety of factors, including, but not limited to,
the risks and uncertainties discussed in our Annual Report on Form 10-K for
the fiscal year ended April 27, 2024, filed with the SEC on June 17, 2024,
under Item 1A "Risk Factors" and Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations." Given these risks and
uncertainties, you should not rely on forward-looking statements as a
prediction of actual results. Any or all of the forward-looking statements
contained in this Proxy Statement or any other public statement made by us,
including by our management, may turn out to be incorrect. We are including
this cautionary note to make applicable and take advantage of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 for
forward-looking statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or for any other reason.
Additional Information
This Proxy Statement, Notice of the Annual Meeting and our 2024 Annual Report,
and all of our other filings with the SEC, may be accessed via the Investor
Relations page on our website at http://investors.la-z-boy.com or through the
SEC's website at www.sec.gov. Our 2024 Annual Report, Notice of the Annual
Meeting and this Proxy Statement are also available upon a shareholder's
written request to Investor Relations, La-Z-Boy Incorporated, One La-Z-Boy
Drive, Monroe, Michigan 48162.
Costs of Proxy Solicitation
We will pay the expense of soliciting proxies pursuant to this Proxy Statement.
Shareholder Proposals and Nominations for the 2025 Annual Meeting
Pursuant to the rules of the SEC, if a shareholder wishes to submit a proposal
for possible inclusion in La-Z-Boy Incorporated's 2025 proxy statement
pursuant to Rule 14a-8 under the Exchange Act, we must receive it on or before
March 19, 2025. All proposals submitted pursuant to Rule 14a-8 under the
Exchange Act must comply with the SEC rules regarding eligibility for
inclusion in our proxy statement.
Our bylaws provide that a shareholder may nominate a candidate for election as
a director at an annual meeting of shareholders, or propose business for
consideration at such meeting outside of Rule 14a-8, only by written notice
containing the information required by the bylaws delivered to the Secretary
at our principal executive offices not later than the 90th day, and not
earlier than the 120th day, prior to the first anniversary of the preceding
year's annual meeting. Accordingly, a shareholder nomination or proposal
intended to be considered at the 2025 annual meeting of shareholders must be
received by our Corporate Secretary on or after April 29, 2025, and no later
than May 29, 2025, and it must contain the information required by our bylaws.
In addition to satisfying the requirements under our bylaws, to comply with
the universal proxy rules, stockholders who intend to solicit proxies in
support of director nominees other than management's nominees must provide
notice that sets forth the information required by Rule 14a-19 under the
Exchange Act no later than June 30, 2025.
All proposals and nominations must be in writing and should be mailed to
La-Z-Boy Incorporated, to the attention of the Corporate Secretary, at our
principal executive office: One La-Z-Boy Drive, Monroe, MI 48162. A copy of
the bylaws may be obtained by written request to the same address.
78 La-Z-Boy Incorporated
-------------------------------------------------------------------------------
APPENDIX A
La-Z-Boy Incorporated 2024 Omnibus Incentive Plan
Table of Contents
Page
SECTION 1. PURPOSE A-
1
SECTION 2. DEFINITIONS A-
1
2.1 A-
" 1
Applicable Laws"
2.2 "Award" A-
1
2.3 "Award Agreement" A-
1
2.4 "Benefit Arrangement" A-
1
2.5 "Board" A-
1
2.6 "Cause" A-
1
2.7 "Code" A-
1
2.8 "Committee" A-
1
2.9 "Company" A-
1
2.10 "Company Achievement Percentage" A-
2
2.11 "Company Weighted MIP Component" A-
2
2.12 "Corporate Transaction" A-
2
2.13 "Disability" or "Disabled" A-
3
2.14 "Dividend Equivalent Right" A-
3
2.15 "Eligible Earnings" A-
3
2.16 "Effective Date" A-
3
2.17 "Employee" A-
3
2.18 "Exchange Act" A-
3
2.19 "Fair Market Value" A-
3
2.20 "Family Member" A-
3
2.21 "Fiscal Year" A-
3
2.22 "Grant Date" A-
3
2.23 "Grantee" A-
3
2.24 "Incentive Stock Option" A-
4
2.25 "Individual Achievement Percentage" A-
4
2.26 "Individual Weighted MIP Component" A-
4
2.27 "MIP Award" A-
4
2.28 "Non-qualified Stock Option" A-
4
2.29 "Option" A-
4
2.30 "Option Price" A-
4
2.31 "Other Agreement" A-
4
2.32 "Outside Director" A-
4
2.33 "Performance Award" A-
4
2.34 "Performance Measures" A-
4
2.35 "Performance Period" A-
5
2.36 "Performance Share" A-
5
2.37 "Performance Unit" A-
5
2.38 "Plan" A-
5
Page
2.39 "Prior Plan" A-
5
2.40 "Purchase Price" A-
5
2.41 "Reporting Person" A-
5
2.42 "Restricted Stock" A-
5
2.43 "Retired" or "Retirement" A-
5
2.44 "SAR Exercise Price" A-
5
2.45 "Securities Act" A-
5
2.46 "Service" A-
5
2.47 "Service Provider" A-
5
2.48 "Stock" A-
5
2.49 "Stock Appreciation Right" or "SAR" A-
5
2.50 "Stock Unit" A-
5
2.51 "Subsidiary" A-
5
2.52 "Substitute Award" A-
6
2.53 "Target MIP Incentive Opportunity" A-
6
2.54 "Ten Percent Stockholder" A-
6
2.55 "Unrestricted Stock" A-
6
2.56 "U.S. Grantee" A-
6
2.57 "Year of Service" A-
6
SECTION 3. ADMINISTRATION OF THE PLAN A-
6
3.1 Board A-
6
3.2 Committee A-
6
3.3 Jurisdictions A-
7
3.4 Terms of Awards A-
7
3.5 No Repricing A-
8
3.6 Deferral Arrangement A-
8
3.7 No Liability A-
8
3.8 Share Issuance/Book-Entry A-
8
SECTION 4. STOCK SUBJECT TO THE PLAN A-
8
4.1 Number of Shares Available for Awards A-
8
4.2 Share Usage A-
9
4.3 Substitute Awards A-
9
SECTION 5. EFFECTIVE DATE, DURATION AND AMENDMENTS A-
9
5.1 Effective Date A-
9
5.2 Term A-
9
5.3 Amendment and Termination of the Plan A-
9
SECTION 6. AWARD ELIGIBILITY A-
10
SECTION 7. AWARD AGREEMENT A-
10
-------------------------------------------------------------------------------
SECTION 8. TERMS AND CONDITIONS OF OPTIONS A-
10
8.1 Grant of Option A-
10
8.2 Option Price A-
10
8.3 Vesting A-
10
8.4 Term A-
10
8.5 Termination of Service A-
11
8.6 Limitations on Exercise of Option A-
11
8.7 Method of Exercise A-
11
8.8 Rights of Holders of Options A-
11
8.9 Delivery of Stock A-
11
8.10 Transferability of Options A-
11
8.11 Family Transfers A-
11
8.12 Limitations on Incentive Stock Options A-
12
8.13 Notice of Disqualifying Disposition A-
12
SECTION 9. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS A-
12
9.1 Right to Payment and Grant Price A-
12
9.2 Other Terms A-
12
9.3 Term A-
12
9.4 Termination of Service A-
12
9.5 Rights of Holders of SARs A-
12
9.6 Transferability of SARs A-
13
9.7 Family Transfers A-
13
SECTION 10. TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS A-
13
10.1 Grant of Restricted Stock or Stock Units A-
13
10.2 Restrictions A-
13
10.3 Restricted Stock Certificates A-
13
10.4 Rights of Holders of Restricted Stock A-
13
10.5 Voting and Dividend Rights A-
14
10.6 Termination of Service A-
14
10.7 Purchase of Restricted Stock and Shares Subject to Stock Units A-
14
10.8 Delivery A-
14
10.8.1 Delivery for Restricted Stock Awards A-
14
10.8.2 Delivery for Stock Unit Awards A-
14
SECTION 11. TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS A-
14
SECTION 12. TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS A-
15
12.1 Dividend Equivalent Rights A-
15
12.2 Termination of Service A-
15
SECTION 13. PAYMENT A-
15
13.1 General Rule A-
15
13.2 Surrender of Stock A-
15
13.3 Cashless Exercise A-
15
13.4 Other Forms of Payment A-
15
SECTION 14. TERMS AND CONDITIONS OF PERFORMANCE AWARDS A-
16
14.1 Grant of Performance Units/Performance Shares A-
16
14.2 Value of Performance Units/Performance Shares A-
16
14.3 Earning of Performance Units/Performance Shares A-
16
14.4 Form and Timing of Payment of Performance Units/Performance Shares A-
16
14.5 Performance Measures A-
16
14.6 Management Incentive Program A-
16
14.6.1 General Information and Eligibility A-
16
14.6.2 Amount of MIP Award A-
17
14.6.3 Time of Payment A-
17
14.6.4 Employment Transfers A-
17
14.6.5 Position Changes A-
17
SECTION 15. PARACHUTE LIMITATIONS A-
18
SECTION 16. REQUIREMENTS OF LAW A-
18
16.1 General A-
18
16.2 Rule 16b-3 A-
18
SECTION 17. EFFECT OF CHANGES IN CAPITALIZATION A-
19
17.1 Capitalization Adjustments A-
19
17.2 Corporate Transaction A-
19
17.3 Adjustments A-
20
17.4 No Limitations on Company A-
20
SECTION 18. GENERAL PROVISIONS A-
20
18.1 Disclaimer of Rights A-
20
18.2 Nonexclusivity of the Plan A-
20
18.3 Withholding Taxes A-
20
18.4 Clawback of Awards A-
21
18.5 Protected Rights A-
21
18.6 Creditor's Rights A-
21
18.7 Captions A-
21
18.8 Other Provisions A-
21
18.9 Number and Gender A-
21
18.10 Severability A-
21
18.11 Governing Law A-
21
18.12 Code Section 409A A-
21
18.13 Foreign Employees A-
22
-------------------------------------------------------------------------------
Appendix A
La-Z-Boy Incorporated 2024 Omnibus Incentive Plan
La-Z-Boy Incorporated, a Michigan corporation (the "Company"), sets forth
herein the terms of its 2024 Omnibus Incentive Plan (the "Plan"), as follows:
SECTION 1. PURPOSE
The Plan is intended to enhance the Company's and its Subsidiaries' ability to
attract and retain highly qualified officers, directors, key employees, and
other persons, and to motivate such persons to serve the Company and its
Subsidiaries and to expend maximum effort to improve the business results and
earnings of the Company, by providing to such persons an opportunity to
acquire or increase a direct proprietary interest in the operations and future
success of the Company. To this end, the Plan provides for the grant of stock
options, stock appreciation rights, restricted stock, stock units (including
deferred stock units), unrestricted stock, dividend equivalent rights, and
short-term cash incentive awards. Any of these awards may, but need not, be
made as performance incentives to reward attainment of annual or long-term
performance goals in accordance with the terms hereof. Stock options granted
under the Plan may be non-qualified stock options or incentive stock options,
as provided herein, except that stock options granted to outside directors and
any consultants or advisers providing services to the Company or a Subsidiary
shall in all cases be non-qualified stock options.
SECTION 2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:
2.1 "Applicable Laws"
means the legal requirements relating to the Plan and the Awards under
applicable provisions of corporate, securities, tax and other laws, rules,
regulations and government orders, and the rules of any applicable stock
exchange or national market system, of any jurisdiction applicable to Awards
granted to residents therein.
2.2 "Award"
means a grant of an Option, Stock Appreciation Right, Restricted Stock,
Unrestricted Stock, Stock Unit, Dividend Equivalent Rights, Performance Share,
Performance Unit or MIP Award under the Plan.
2.3 "Award Agreement"
means the agreement between the Company and a Grantee that evidences and sets
out the terms and conditions of an Award.
2.4 "Benefit Arrangement"
shall have the meaning set forth in Section 15 hereof.
2.5 "Board"
means the Board of Directors of the Company. Pursuant to Section 3.2 hereof,
matters or responsibilities allocated to the Board under this Plan are
(pursuant to the Board's adoption of this Plan) hereby delegated to the
Committee except to the extent such matters or responsibilities relate to the
compensation or benefits of one or more Outside Directors or as otherwise
determined by the Board.
2.6 "Cause"
means, as determined by the Committee and unless otherwise provided in the
Award Agreement or an applicable agreement with the Company or a Subsidiary in
effect on the Grant Date, (a) a Grantee's conviction of any crime (whether or
not involving the Company or Subsidiary) constituting a felony in the
jurisdiction involved; (b) conduct of a Grantee related to the Grantee's
employment for which either criminal or civil penalties against the Grantee or
the Company or Subsidiary may be sought; (c) material violation of the
Company's (or Subsidiary's) policies, including the disclosure or misuse of
confidential information, or those set forth in manuals or statements of
policy issued by the Company and/or any Subsidiary; or (d) serious neglect or
misconduct in the performance of a Grantee's duties for the Company or a
Subsidiary or willful or repeated failure or refusal to perform such duties.
2.7 "Code"
means the Internal Revenue Code of 1986, as now in effect or as hereafter
amended.
2.8 "Committee"
means a committee of, and designated from time to time by resolution of, the
Board, which shall be constituted as provided in Section 3.2. The initial
Committee shall be the Compensation and Talent Oversight Committee of the
Board; provided that the "Committee" means the Board (or a subcommittee of the
Board) with respect to awards granted to Outside Directors; provided, further,
that the Board may, in its discretion, serve as the Committee for any or all
purposes under the Plan.
2.9 "Company"
means La-Z-Boy Incorporated or any successor thereto.
2024 Proxy Statement A-1
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Appendix A
2.10 "Company Achievement Percentage"
means a percentage based on the achievement of Company-related performance
goals, as approved by the Committee, and may range between 0% and 200% or such
other performance range approved by the Committee.
2.11 "Company Weighted MIP Component"
means a percentage, which shall be established for the Employee by the
Committee or its delegatee and shall not exceed 100% (provided that the sum of
the Company Weighted MIP Component, the Individual Weighted MIP Component, and
any other component of a MIP Award provided for hereunder or in an Award
Agreement shall equal 100%).
2.12 "Corporate Transaction"
means, with respect to the Company, any change in control event pursuant to
Section 409A of the Code. A "change in control event" pursuant to Section 409A
of the Code includes the occurrence of a change in the ownership of the
Company (as defined in Reg. (s)1.409A-3 (i)(5)(v)), a change in effective
control of the Company (as defined in Reg. (s)1.409A-3(i)(5)(vi)), or a change
in the ownership of a substantial portion of the assets of the Company (as
defined in Reg. (s)1.409A-3(i)(5)(vii), and, in particular, any one or more of
the following events:
2.12.1
A change in ownership of the Company in which any one person, or more than one
person acting as a group acquires beneficial ownership of stock of the Company
that, together with stock held by such person or group, constitutes more than
50 percent of the total fair market value or total voting power of the stock
of the Company; provided, however, that for purposes of this subsection (a),
the following acquisitions shall not constitute a Change in Control: (i) any
acquisition by the Company, or (ii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or by any
Subsidiary.
2.12.2
A change in the effective control of the Company, pursuant to which either:
a.
Any one person, or more than one person acting as a group acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) beneficial ownership of stock of the
Company possessing 30 percent or more of the total voting power of the stock
of the Company.
b.
A majority of members of the Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the
members of the Board before the date of the appointment or election; provided,
however, that no individual initially elected or nominated as a director of
the Board as a result of an actual or threatened election contest with respect
to directors or as a result of any other actual or threatened solicitation of
proxies by or on behalf of any person other than the Board shall be treated as
a director endorsed by the majority of the members of the Board.
2.12.3
A change in the ownership of a substantial portion of the Company's assets
pursuant to which any one person, or more than one person acting as a group
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company
that have a total gross fair market value equal to or more than 40 percent of
the total gross fair market value of all of the assets of the Company
immediately before such acquisition or acquisitions. As used herein, gross
fair market value means the value of the assets of the Company, or the value
of the assets being disposed of, determined without regard to any liabilities
associated with such assets. However, there is no change in control event
under this paragraph when there is a transfer to a related person as described
in Reg. (s)1.409A-3(i)(5)(vii)(B).
Notwithstanding the foregoing, a Corporate Transaction shall not include a
merger of the Company with another entity, a consolidation involving the
Company, or the sale of all or substantially all of the assets or equity
interests of the Company to another entity if, in any such case, (a) the
holders of equity securities of the Company immediately prior to such event
beneficially own immediately after such event equity securities of the
resulting entity entitled to more than fifty percent of the votes then
eligible to be cast in the election of directors (or comparable governing
body) of the resulting entity in substantially the same proportions that they
owned the equity securities of the Company immediately prior to such event or
(b) the persons who were members of the Board immediately prior to such event
constitute at least a majority of the board of directors of the resulting
entity immediately after such event.
For purposes of this definition:
a.
"Beneficial owner" (or "beneficial ownership") includes ownership by
attribution as provided in Reg. (s)1.409A.
b.
Where applicable, "person" means a person as defined in Section 3(a)(9) of
Exchange Act.
c.
"Acting as a group" means so acting within the meaning of the applicable
portion of Reg. (s)1.409A-3(i)(5). Persons will be considered to be acting as
a group if they are owners of a corporation that enters into a merger,
consolidation,
A-2 La-Z-Boy Incorporated
-------------------------------------------------------------------------------
Appendix A
purchase or acquisition of stock, or similar business transaction with the
Company. If a person, including an entity, owns stock in both corporations
that enter into a merger, consolidation, purchase or acquisition of stock, or
similar transaction, such shareholder is considered to be acting as a group
with other shareholders only with respect to the ownership in that corporation
before the transaction giving rise to the change and not with respect to the
ownership interest in the other corporation. Where applicable, "group" means a
group as described in Rule 13d-5 promulgated under the Exchange Act or any
successor regulation.
2.13 "Disability" or "Disabled"
means, as determined by the Committee and unless otherwise provided in the
Award Agreement or an applicable agreement with the Company or a Subsidiary in
effect on the Grant Date, the Grantee is unable to perform each of the
essential duties of such Grantee's position by reason of a medically
determinable physical or mental impairment which is potentially permanent in
character or which can be expected to last for a continuous period of not less
than twelve (12) months; provided, however, that, with respect to rules
regarding expiration of an Incentive Stock Option following termination of the
Grantee's Service, Disability shall mean the Grantee is unable to engage in
any substantial gainful activity by reason of a medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
2.14 "Dividend Equivalent Right"
means a right, granted to a Grantee under Section 12 hereof, to receive cash,
Stock, other Awards or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other periodic payments.
2.15 "Eligible Earnings"
means an Employee's base compensation earned during a particular Fiscal Year,
as determined by the Committee for the particular Fiscal Year.
2.16 "Effective Date"
means the date on which the Plan is approved by the Company's shareholders at
the 2024 Annual Meeting of Shareholders.
2.17 "Employee"
means an officer or employee (as defined in accordance with Section 3401(c) of
the Code) of the Company or of any Subsidiary.
2.18 "Exchange Act"
means the Securities Exchange Act of 1934, as now in effect or as hereafter
amended.
2.19 "Fair Market Value"
means the value of a share of Stock, determined as follows: if on the Grant
Date or other determination date the Stock is listed on an established
national or regional stock exchange or is publicly traded on an established
securities market, the Fair Market Value of a share of Stock shall be the
closing price of the Stock on such exchange or in such market (if there is
more than one such exchange or market the Committee shall determine the
appropriate exchange or market) on the Grant Date or such other determination
date (or if there is no such reported closing price, the Fair Market Value
shall be the mean between the highest bid and lowest asked prices or between
the high and low sale prices on such trading day) or, if no sale of Stock is
reported for such trading day, on the closest preceding day for which a sale
shall have been reported; provided, however, that the Company may in its
discretion use the closing transaction price of a share of Stock on the day
preceding the date as of which such value is being determined to the extent
the Company determines such method is more practical for administrative
purposes, such as for purposes of tax withholding. If the Stock is not listed
on such an exchange or traded on such a market, Fair Market Value shall be the
value of the Stock as determined by the Committee by the reasonable
application of a reasonable valuation method, in a manner consistent with
Section 409A of the Code and the regulations promulgated thereunder ("Code
Section 409A").
2.20 "Family Member"
means a person who is a spouse, former spouse, child, stepchild, grandchild,
parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the Grantee, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which any
one or more of these persons have more than fifty percent of the beneficial
interest, a foundation in which any one or more of these persons (or the
Grantee) control the management of assets, and any other entity in which one
or more of these persons (or the Grantee) own more than fifty percent of the
voting interests.
2.21 "Fiscal Year"
means the twelve (12)-month accounting period maintained by the Company on
which it keeps its annual books and records.
2.22 "Grant Date"
means, as determined by the Committee, the latest to occur of (i) the date as
of which the Committee approves an Award and (ii) such other date as may be
specified by the Committee.
2.23 "Grantee"
means a person who receives or holds an Award under the Plan.
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2.24 "Incentive Stock Option"
means an Option, intended to be, and which qualifies as, an "incentive stock
option" within the meaning of Section 422 of the Code, or the corresponding
provision of any subsequently enacted tax statute, as amended from time to
time.
2.25 "Individual Achievement Percentage"
means the percentage established by the Committee or its delegate, which shall
be reflective of the participating Employee's performance towards measurable
goals that were previously set at the beginning of the Fiscal Year, and may
range between 0% and 200% or such other performance range approved by the
Committee.
2.26 "Individual Weighted MIP Component"
means a percentage, which shall be established for the Employee by the
Committee or its delegatee and shall not exceed 100% (provided that the sum of
the Individual Weighted MIP Component, the Company Weighted MIP Component, and
any other component of a MIP Award provided for hereunder or in an Award
Agreement shall equal 100%).
2.27 "MIP Award"
means an Award granted pursuant to Section 14.6 of the Plan (which shall be in
the form of a short-term cash incentive award unless otherwise specified in
the Award Agreement) made subject to attainment of performance goals over a
Performance Period of up to one year (the Company's fiscal year, unless
otherwise specified by the Committee).
2.28 "Non-qualified Stock Option"
means an Option that is not an Incentive Stock Option.
2.29 "Option"
means an option to purchase one or more shares of Stock pursuant to the Plan.
2.30 "Option Price"
means the exercise price for each share of Stock subject to an Option.
2.31 "Other Agreement"
shall have the meaning set forth in Section 15 hereof.
2.32 "Outside Director"
means a member of the Board who is not an officer or employee of the Company
or a Subsidiary.
2.33 "Performance Award"
means a Performance Unit, Performance Share, or MIP Award.
2.34 "Performance Measures"
shall mean the criteria and objectives, established by the Committee, which
shall be satisfied or met (i) as a condition to the grant or exercisability of
all or a portion of an Option or SAR or (ii) during the applicable Performance
Period as a condition to the vesting of the holder's interest, in the case of
a Performance Share Award, of the shares of Stock subject to such Award, or,
in the case of a Performance Unit Award, to the holder's receipt of the shares
of Stock subject to such award or of payment with respect to such Award. One
or more of the following business criteria for the Company, on a consolidated
basis, and/or for specified Subsidiaries, business or geographical units or
operating areas of the Company (except with respect to the total shareholder
return and earnings per share criteria) or individual basis, may be used by
the Committee in establishing Performance Measures under this Plan: the
attainment by a share of Stock of a specified Fair Market Value for a
specified period of time; increase in stockholder value; earnings per share;
return on assets or net assets; return on equity; return on investments;
return on capital or invested capital; total stockholder return; productivity
ratios; earnings or income of the Company before or after taxes and/or
interest; earnings before interest, taxes, depreciation and amortization
("EBITDA"); EBITDA margin; operating income; revenues; operating expenses,
attainment of expense levels or cost reduction goals; market share; cash flow,
cash flow per share, cash flow margin or free cash flow; interest expense;
expense targets; economic value created; gross profit or margin; operating
profit or margin; net cash provided by operations; price-to-earnings growth;
financial ratios as provided in credit agreements of the Company and its
Subsidiaries; working capital targets; and strategic business criteria,
consisting of one or more objectives based on meeting specified goals relating
to market penetration, customer acquisition, business expansion, cost targets,
customer satisfaction, reductions in errors and omissions, reductions in lost
business, management of employment practices and employee benefits,
supervision of litigation, supervision of information technology, quality and
quality audit scores, efficiency, environmental, social and governance
metrics, and acquisitions or divestitures, or such other goals as the
Committee may determine whether or not listed herein. Each such goal may be
determined on a pre-tax or post-tax basis or on an absolute or relative basis,
and may include comparisons based on current internal targets, the past
performance of the Company (including the performance of one or more
Subsidiaries, divisions, or operating units) or the past or current
performance of other companies or market indices (or a combination of such
past and current performance). In addition to the ratios specifically
enumerated above, performance goals may include comparisons relating to
capital (including, but not limited to, the cost of capital), shareholders'
equity, shares outstanding, assets or net assets, sales, or any combination
thereof. In establishing a Performance Measure or determining the achievement
of a Performance Measure, the Committee may provide that achievement of the
applicable Performance Measures may be amended or adjusted to include or
exclude components of any Performance Measure, including, without limitation,
foreign exchange gains and losses, asset write-downs, acquisitions and
divestitures, tax valuation allowance reversals, environmental expenses,
short-term cash incentive accruals, gains or losses from the sales of assets,
payments received relating to import duties arising from anti-dumping orders,
change in fiscal year, unbudgeted capital expenditures, special charges such
as restructuring or impairment charges or any other reorganization or
restructuring programs, debt
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refinancing costs, extraordinary or noncash items, litigation or claim
judgements or settlements, unusual, infrequently occurring, nonrecurring or
one-time events affecting the Company or its financial statements or changes
in law or accounting principles. Performance Measures shall be subject to such
other special rules and conditions as the Committee may establish at any time.
2.35 "Performance Period"
means the period of time during which the performance goals must be met in
order to determine the degree of payout and/or vesting with respect to an
Award.
2.36 "Performance Share"
means an Award granted under Section 14 herein and which is denominated in
shares of Stock, the value of which at the time it is payable is determined
based on the attainment of performance goals over a Performance Period.
2.37 "Performance Unit"
means an Award granted under Section 14 herein and which is denominated in
units, the value of which at the time it is payable is determined based on
attainment of performance goals over a Performance Period.
2.38 "Plan"
means this La-Z-Boy Incorporated 2024 Omnibus Incentive Plan, as herein
established and as hereafter amended from time to time.
2.39 "Prior Plan"
means the La-Z-Boy Incorporated 2022 Omnibus Incentive Plan, as amended from
time to time, the La-Z-Boy Incorporated 2017 Omnibus Incentive Plan, as
amended from time to time, and each other equity plan maintained by the
Company under which awards are outstanding as of the Effective Date.
2.40 "Purchase Price"
means the purchase price for each share of Stock pursuant to a grant of
Restricted Stock, Stock Units or Unrestricted Stock.
2.41 "Reporting Person"
means a person who is required to file reports under Section 16(a) of the
Exchange Act.
2.42 "Restricted Stock"
means shares of Stock, awarded to a Grantee pursuant to Section 10 hereof.
2.43 "Retired" or "Retirement"
means, as determined by the Committee and unless otherwise provided in the
Award Agreement or an applicable agreement with the Company or a Subsidiary in
effect on the Grant Date, an Employee's employment relationship with the
Company and all of its Subsidiaries has terminated after the Employee's age
and Years of Service equal sixty-five (65), with a minimum age of fifty-five
(55).
2.44 "SAR Exercise Price"
means the per share exercise price of a Stock Appreciation Right granted to a
Grantee under Section 9 hereof.
2.45 "Securities Act"
means the Securities Act of 1933, as now in effect or as hereafter amended.
2.46 "Service"
means service as a Service Provider to the Company or a Subsidiary. Unless
otherwise stated in the applicable Award Agreement, a Grantee's change in
position or duties shall not result in interrupted or terminated Service, so
long as such Grantee continues to be a Service Provider to the Company or a
Subsidiary. Subject to the preceding sentence, whether a termination of
Service shall have occurred for purposes of the Plan shall be determined by
the Committee, which determination shall be final, binding and conclusive, and
shall comply with Code Section 409A (and its applicable guidance), to the
extent applicable, and other Applicable Laws.
2.47 "Service Provider"
means an Employee, officer or director of the Company or a Subsidiary, or a
consultant or adviser currently providing services to the Company or a
Subsidiary, or expected to commence providing services to the Company, if and
only if (1) the consultant or adviser is a natural person, (2) the consultant
or advisor provides bona fide services to the Company, and (3) the services
are not in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
the Company's securities.
2.48 "Stock"
means the shares of common stock, $1 par value, of the Company.
2.49 "Stock Appreciation Right" or "SAR"
means a right granted to a Grantee pursuant to Section 9 hereof.
2.50 "Stock Unit"
means a bookkeeping entry representing the equivalent of one share of Stock
granted to a Grantee pursuant to Section 10 hereof.
2.51 "Subsidiary"
means any corporation, limited liability company, partnership, joint venture
or similar entity in which the Company owns, directly or indirectly, an equity
interest possessing more than 20% of the combined voting power of the total
outstanding equity interests of such entity, except that with respect to
Incentive Stock Options, "Subsidiary" means "subsidiary
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corporation" as defined in Section 424(f) of the Code. For purposes of
granting Options or Stock Appreciation Rights, an entity may not be considered
a Subsidiary unless the Company holds a "controlling interest" in such entity,
where the term "controlling interest" has the same meaning as provided in
Treasury Regulation 1.414(c)-2(b)(2)(i), provided that the language "at least
50 percent" is used instead of "at least 80 percent" and, provided further,
that where granting of Options or Stock Appreciation Rights is based upon a
legitimate business criteria, the language "at least 20 percent" is used
instead of "at least 80 percent" each place it appears in Treasury Regulation
1.414(c)-2(b)(2)(i).
2.52 "Substitute Award"
shall mean an Award granted under this Plan upon the assumption of, or in
substitution for, outstanding equity awards previously granted by a company or
other entity in connection with a corporate transaction, including a merger,
combination, consolidation or acquisition of property or stock; provided,
however, that in no event shall the term "Substitute Award" be construed to
refer to an Award made in connection with the cancellation and repricing of an
Option or SAR.
2.53 "Target MIP Incentive Opportunity"
means a predetermined percentage of Eligible Earnings or specified dollar
amount used to calculate the total incentive amount, which predetermined
percentage or dollar amount shall be approved by the Committee or its delegate.
2.54 "Ten Percent Stockholder"
means an individual who owns more than ten percent (10%) of the total combined
voting power of all classes of outstanding stock of the Company, its parent or
any of its Subsidiaries. In determining stock ownership, the attribution rules
of Section 424(d) of the Code shall be applied.
2.55 "Unrestricted Stock"
means an Award granted pursuant to Section 11 hereof.
2.56 "U.S. Grantee"
means any Grantee who is or becomes a taxpayer in the United States.
2.57 "Year of Service"
means a 12-month period, beginning with an Employee's employment commencement
date, and each successive 12-month period, during which an Employee is
credited with 1,000 hours of service (as defined in the Employee Retirement
Income Security Act of 1974, as amended) with the Company and/or a Subsidiary.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 Board
The Board shall have such powers and authorities related to the administration
of the Plan as are not inconsistent with the Company's articles of
incorporation and by-laws and Applicable Laws. The Board shall have full power
and authority to take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement, and shall have
full power and authority to take all such other actions and make all such
other determinations not inconsistent with the specific terms and provisions
of the Plan that the Board deems to be necessary or appropriate to the
administration of the Plan, any Award or any Award Agreement. All such actions
and determinations shall be by the affirmative vote of a majority of the
members of the Board present at a meeting or by unanimous consent of the Board
executed in writing in accordance with the Company's articles of incorporation
and by-laws and Applicable Laws. The interpretation and construction by the
Board of any provision of the Plan, any Award or any Award Agreement shall be
final, binding and conclusive.
3.2 Committee
The Board, from time to time, may delegate to the Committee such powers and
authorities related to the administration and implementation of the Plan, as
set forth in Section 3.1 above and other applicable provisions, as the Board
shall determine, consistent with the articles of incorporation and by-laws of
the Company and Applicable Laws. Upon adoption of this Plan by the Board, the
foregoing powers and authorities are delegated to the Committee except to the
extent specifically retained or hereafter withdrawn from the Committee by
Board action, or such powers and authorities involve Plan benefits or
compensation payable to Outside Directors. References in this Plan to the
administration of the Plan by the Committee shall also include the Board.
a.
Except as provided in Subsection (b) and except as the Board may otherwise
determine, the Committee appointed by the Board to administer the Plan shall
consist of two or more Outside Directors of the Company each of whom is
intended to: (1) qualify as a "Non-Employee Director" within the meaning of
Rule 16b-3 of the Exchange Act; and (2) comply with the independence
requirements of the stock exchange on which the Stock is listed.
b.
The Board may also appoint one or more separate committees of the Board, each
composed of one or more directors of the Company who need not be Outside
Directors, who may administer the Plan with respect to employees or other
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Service Providers who are not Reporting Persons, may grant Awards under the
Plan to such employees or other Service Providers, and may determine all terms
of such Awards.
In the event that the Plan, any Award or any Award Agreement entered into
hereunder provides for any action to be taken by or determination to be made
by the Board, such action may be taken or such determination may be made by
the Committee if the power and authority to do so has been delegated to the
Committee by the Board as provided for in this Section. Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final, binding and conclusive. The Committee may seek the
assistance or advice of any persons it deems necessary to the proper
administration of the Plan.
To the extent permitted by Applicable Law, the Committee may delegate its
authority under the Plan to a subcommittee of the Board, a member of the
Board, the President and Chief Executive Officer or such other executive
officer of the Company as the Committee deems appropriate; provided, however,
that the Committee may not delegate its power and authority to a member of the
Board or the President and Chief Executive Officer or other executive officer
of the Company with regard to the selection for participation in this Plan of
a Reporting Person or decisions concerning the timing, pricing or amount of an
award to a Reporting Person.
3.3 Jurisdictions
In order to assure the viability of Awards granted to Grantees employed in
various jurisdictions, the Committee may provide for such special terms as it
may consider necessary or appropriate to accommodate differences in local law,
tax policy, or custom applicable in the jurisdiction in which the Grantee
resides or is employed. Moreover, the Committee may approve such supplements
to, or amendments, restatements, or alternative versions of, the Plan as it
may consider necessary or appropriate for such purposes without thereby
affecting the terms of the Plan as in effect for any other purpose; provided,
however, that no such supplements, amendments, restatements, or alternative
versions shall increase the share limitations contained in Section 4.1 of the
Plan. Notwithstanding the foregoing, the Committee may not take any actions
hereunder, and no Awards shall be granted, that would violate any Applicable
Laws, including Code Section 409A.
3.4 Terms of Awards
Subject to the other terms and conditions of the Plan, the Committee shall
have full and final authority to:
a.
designate Grantees;
b.
determine the type or types of Awards to be made to a Grantee;
c.
determine the number of shares of Stock or cash amount subject to an Award;
d.
establish the terms and conditions of each Award (including, but not limited
to, the exercise price of any Option or SAR, the nature and duration of any
restriction or condition (or provision for lapse thereof) relating to the
vesting, exercise, transfer, or forfeiture of an Award or the shares of Stock
subject thereto, the treatment of an Award in the event of a Corporate
Transaction, and any terms or conditions that may be necessary to qualify
Options as Incentive Stock Options);
e.
prescribe the form of each Award Agreement evidencing an Award;
f.
the Committee may, in its sole discretion and for any reason at any time, take
action such that (i) any or all outstanding Options and SARs shall become
exercisable in part or in full, (ii) all or a portion of the restriction
period applicable to any outstanding Awards shall lapse, (iii) all or a
portion of the performance period applicable to any outstanding Awards shall
lapse and (iv) the Performance Measures (if any) applicable to any outstanding
awards shall be deemed to be satisfied at the target, maximum or any other
level; and
g.
amend, modify, or supplement the terms of any outstanding Award. Such
authority specifically includes the authority, in order to effectuate the
purposes of the Plan but without amending the Plan, to make or modify Awards
to U.S. Grantees and eligible individuals who are foreign nationals or are
individuals who are employed outside the United States to recognize
differences in local law, tax policy, or custom. Notwithstanding the
foregoing, no amendment, modification or supplement of any Award shall,
without the consent of the Grantee, materially impair the Grantee's rights
under such Award.
Notwithstanding any other provision of the Plan to the contrary, Awards
granted under the Plan (other than cash-based awards) shall vest no earlier
than the first anniversary of the date on which the Award is granted;
provided, that the following
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Awards shall not be subject to the foregoing minimum vesting requirement: any
(i) Substitute Awards granted in connection with awards that are assumed,
converted or substituted pursuant to a merger, acquisition or similar
transaction entered into by the Company or any of its Subsidiaries, (ii) Stock
delivered in lieu of fully vested cash obligations, (iii) Awards to Outside
Directors that vest on earlier of the one-year anniversary of the Grant Date
and the next annual meeting of shareholders which is at least 50 weeks after
the immediately preceding year's annual meeting, and (iv) any additional
Awards the Committee may grant, up to a maximum of five percent (5%) of the
available share reserve authorized for issuance under the Plan pursuant to
Section 4.1 (subject to adjustment under Section 17); and, provided, further,
that the foregoing restriction does not apply to the Committee's discretion to
provide for accelerated exercisability or vesting of any Award, including in
cases of Retirement, death, Disability or a Corporate Transaction, in the
terms of the Award Agreement or otherwise.
3.5 No Repricing
Notwithstanding anything in this Plan to the contrary, no amendment or
modification may be made to an outstanding Option or SAR, including, without
limitation, by replacement of Options or SARs with cash or other award type,
that would be treated as a repricing under the rules of the stock exchange on
which the Stock is listed or the applicable accounting rules, in each case,
without the approval of the stockholders of the Company, provided, that,
appropriate adjustments may be made to outstanding Options and SARs pursuant
to Section 5.3 or Section 17 and may be made to make changes to achieve
compliance with Applicable Law, including Code Section 409A.
3.6 Deferral Arrangement
The Committee may permit or require the deferral of any award payment into a
deferred compensation arrangement, subject to such rules and procedures as it
may establish, which may include provisions for the payment or crediting of
interest or Dividend Equivalent Rights, including converting such credits into
deferred Stock equivalents. Any such deferrals shall be made in a manner that
complies with Code Section 409A.
3.7 No Liability
No member of the Board or the Committee or any Employee shall be personally
liable for any action, omission or determination made in good faith with
respect to the Plan or any Award or Award Agreement. To the maximum extent
permitted in its articles of incorporation and bylaws, the Company shall
indemnify and hold harmless the members of the Committee, the Board and
Employees from and against any and all loss which results from liability to
which any of them may be subjected by reason of any act or conduct (except
willful misconduct or gross negligence, and excluding, for the avoidance of
doubt, any liability under any then-applicable Company clawback policy) in
their official capacities in connection with the administration of the Plan,
including all expenses reasonably incurred in their defense, in case the
Company fails to provide such defense. By participating in this Plan, each
Employee agrees to release and hold harmless the Company, its Subsidiaries and
its affiliates (and their respective directors, officers and employees), the
Board and the Committee, from and against any tax or other liability,
including without limitation, interest and penalties, incurred by the Employee
in connection with his or her participation in the Plan.
3.8 Share Issuance/Book-Entry
Notwithstanding any provision of this Plan to the contrary, the issuance of
the Stock under the Plan may be evidenced in such a manner as the Committee,
in its discretion, deems appropriate, including, without limitation,
book-entry or uncertificated registration or issuance of one or more Stock
certificates. If book-entry or uncertificated registration is used, the
Company's corporate governance records shall be consistent with this
procedure, and, at the time that certificates would otherwise be issued,
Awards shall be evidenced by confirmation or similar documents from the
Company's transfer agent. If required by Applicable Laws or Company governance
records, Stock certificates shall be issued upon appropriate request.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 Number of Shares Available for Awards
Subject to adjustment as provided in Section 17, the share usage language
below, and to all other limits set forth in this Plan, the number of shares of
Stock that shall initially be available for all awards under this Plan, other
than Substitute Awards, shall be 3,090,000, less one share for every one share
of Stock subject to an Award granted under the Prior Plan after April 27, 2024
and prior to the Effective Date. Subject to adjustment as provided in Section
17, no more than 3,090,000 shares of Stock in the aggregate may be issued
under the Plan in connection with Incentive Stock Options. Stock issued or to
be issued under the Plan shall be authorized but unissued shares; or, to the
extent permitted by applicable law, issued shares that have been reacquired by
the Company. The issuance of shares of Stock in connection with the exercise
of, or as other payment for, Awards under the Plan shall reduce the number of
shares of Stock available for future Awards under the Plan. For the
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avoidance of doubt, the La-Z-Boy Incorporated 2022 Omnibus Incentive Plan, as
amended from time to time, is the only plan pursuant to which the Company can
grant new awards between April 27, 2024 and prior to the Effective Date, and
from and after the Effective Date, no new awards shall be granted under the
La-Z-Boy Incorporated 2022 Omnibus Incentive Plan (or any other Prior Plan).
4.2 Share Usage
Shares covered by an Award shall be counted as used as of the Grant Date. The
number of shares of Stock that remain available for future grants under the
Plan shall be reduced by the sum of the aggregate number of shares of Stock
which become subject to outstanding Awards of Options, outstanding
free-standing SARs, Restricted Stock, Unrestricted Stock, Stock Units,
Dividend Equivalent Rights, Performance Shares, and Performance Units, other
than Substitute Awards. Awards settled or to be settled in cash shall not
reduce the number of shares of Stock available under the Plan. Any shares
covered by an Award, whether granted under the Plan or a Prior Plan, that at
any time after April 27, 2024 are not purchased or are forfeited or expire, or
if an Award granted under the Plan or a Prior Plan otherwise terminates
without delivery of any Stock subject thereto or is settled in cash in lieu of
shares, then the number of shares of Stock counted against the aggregate
number of shares available under the Plan or the Prior Plan with respect to
such Award shall, to the extent of any such forfeiture, termination or
expiration, again be available for making Awards under this Plan on a
one-for-one basis regardless of the applicable share reserve deduction ratio
in the Prior Plan. With respect to SARs (but exclusive of SARs to be settled
in cash), the number of shares subject to an award of SARs will be counted
against the aggregate number of shares available for issuance under the Plan
regardless of the number of shares actually issued to settle the SAR upon
exercise.The number of shares of Stock available for issuance under the Plan
shall not be increased by (i) any shares of Stock tendered or withheld or
Award surrendered in connection with the purchase of shares of Stock subject
to an Award (or award granted under a Prior Plan), including upon exercise of
an Option (or option granted under a Prior Plan) or the purchase of Restricted
Stock (or restricted stock granted under a Prior Plan) or shares of Stock
subject to vested Stock Units (or stock units granted under a Prior Plan) as
described in Section 13, (ii) any shares of Stock deducted or delivered from
an Award (or award granted under a Prior Plan) payment in connection with the
Company's tax withholding obligations as described in Section 18.3 or (iii)
any shares of Stock repurchased by the Company using proceeds from the
purchase of shares of Stock upon exercise of an Option (or option granted
under a Prior Plan) as described in Section 13.
4.3 Substitute Awards
The number of shares of Stock available for awards under this Plan shall not
be reduced by (i) the number of shares of Stock subject to Substitute Awards
or (ii) available shares under a shareholder approved plan of a company or
other entity which was a party to a corporate transaction with the Company (as
appropriately adjusted to reflect such corporate transaction) which become
subject to awards granted under this Plan (subject to applicable stock
exchange requirements).
SECTION 5. EFFECTIVE DATE, DURATION AND AMENDMENTS
5.1 Effective Date
This Plan shall be submitted to the shareholders of the Company for approval
and, if approved, shall become effective as of the date of such shareholder
approval.
5.2 Term
The Plan shall terminate automatically ten (10) years after the Effective Date
and may be terminated on any earlier date as provided in Section 5.3;
provided, however, that no Incentive Stock Options shall be granted after the
tenth anniversary of the date on which the Plan was approved by the Board.
Termination of this Plan shall not affect the terms or conditions of any Award
granted prior to termination. Awards hereunder may be made at any time prior
to the termination of this Plan.
5.3 Amendment and Termination of the Plan
The Board may, at any time and from time to time, amend, suspend, or terminate
the Plan as to any shares of Stock as to which Awards have not been made;
provided however, that the Company shall submit for shareholder approval any
amendment required to be submitted for shareholder approval by Applicable Law
or applicable stock exchange listing requirements, or that would otherwise
materially: (i) increase the benefits accrued to Participants under the Plan;
(ii) increase the numbers of securities which may be issued under the Plan
(other than an increase pursuant to the adjustment provisions of Section 17);
(iii) modify the requirements for participation in the Plan; or (iv) modify
the prohibition on repricing set forth in Section 3.5 of the Plan or the
Outside Director compensation limit set forth in Section 6 of the Plan. No
amendment, suspension, or termination of the Plan or an Award Agreement shall,
without the consent of the impacted Grantee, materially impair rights or
obligations under any Award previously awarded under the Plan.
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SECTION 6. AWARD ELIGIBILITY
Participants in this Plan shall consist of Service Providers to the Company or
any Subsidiary and persons expected to become Service Providers of the Company
and its Subsidiaries as the Committee in its sole discretion may select from
time to time. The Committee's selection of a person to participate in this
Plan at any time shall not require the Committee to select such person to
participate in this Plan at any other time. Except as provided otherwise in an
Award Agreement, for purposes of this Plan, references to employment by the
Company shall also mean employment by a Subsidiary, and references to
employment shall include service as an Outside Director or consultant. The
Committee shall determine, in its sole discretion, the extent to which a
participant shall be considered employed during any periods during which such
participant is on a leave of absence. The aggregate value of cash compensation
and the grant date fair value of shares of Stock that may be awarded or
granted during any fiscal year of the Company to any Outside Director, for his
or her services as an Outside Director, shall not exceed $800,000; provided,
further, that this limit shall not apply to distributions of previously
deferred compensation under a deferred compensation plan maintained by the
Company or compensation received by the director in his or her capacity as an
executive officer or employee of the Company.
SECTION 7. AWARD AGREEMENT
Each Award granted pursuant to the Plan shall be evidenced by an Award
Agreement, in such form or forms as the Committee shall from time to time
determine. Award Agreements granted from time to time or at the same time need
not contain similar provisions but shall be consistent with the terms of the
Plan and shall specify the terms, conditions and any rules applicable to the
Award, including but not limited to the effect of a Corporate Transaction, or
death, Disability, or other termination of employment of the Grantee on the
Award. Each Award Agreement evidencing an Award of Options shall specify
whether such Options are intended to be Non-qualified Stock Options or
Incentive Stock Options, and in the absence of such specification or to the
extent an Option designated as an Incentive Stock Option fails to so qualify,
such Options shall be deemed Non-qualified Stock Options.
SECTION 8. TERMS AND CONDITIONS OF OPTIONS
8.1 Grant of Option
Subject to the terms and provisions of the Plan and applicable law, the
Committee, at any time and from time to time, may grant Options to persons as
set forth in Section 6. The Committee shall have sole and complete discretion
in determining the type of Option granted, the Option Price, the duration of
the Option, the number of shares of Stock to which an Option pertains, any
conditions imposed upon the exercisability or the transferability of the
Option, including vesting conditions, the conditions under which the Option
may be terminated and any such other provisions as may be warranted to comply
with the law or rules of any securities trading system or stock exchange.
8.2 Option Price
The Option Price of each Option shall be fixed by the Committee and stated in
the Award Agreement evidencing such Option. Except with respect to Substitute
Awards, the Option Price of each Option shall be at least the Fair Market
Value on the Grant Date of a share of Stock; provided, however, that in the
event that a Grantee is a Ten Percent Stockholder, the Option Price of an
Option granted to such Grantee that is intended to be an Incentive Stock
Option shall be not less than one hundred ten percent (110%) of the Fair
Market Value of a share of Stock on the Grant Date. Unless otherwise permitted
by Applicable Laws, in no case shall the Option Price of any Option be less
than the par value of a share of Stock. No Option shall provide by its terms
for the re-setting of its exercise price, for its cancellation and reissuance,
or for a reload, in whole or in part; provided that the foregoing shall not
limit the authority of the Committee to grant additional Options hereunder.
8.3 Vesting
Subject to Section 3.4, Section 8.4, and Section 17 hereof, each Option
granted under the Plan shall become exercisable at such times and under such
conditions as shall be determined by the Committee and stated in the Award
Agreement, and need not be the same for each Grantee. For purposes of this
Section 8.3, fractional numbers of shares of Stock subject to an Option shall
be rounded down to the next nearest whole number.
8.4 Term
Each Option granted under the Plan shall terminate, and all rights to purchase
shares of Stock thereunder shall cease, upon the expiration of ten years from
the date such Option is granted, or under such circumstances and on such date
prior thereto as is set forth in the Plan or as may be fixed by the Committee
and/or stated in the Award Agreement relating to such Option;
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provided, however, that in the event that the Grantee is a Ten Percent
Stockholder, an Option granted to such Grantee that is intended to be an
Incentive Stock Option shall not be exercisable after the expiration of five
years from its Grant Date.
8.5 Termination of Service
All of the terms relating to the exercise, cancellation or other disposition
of an Option (i) upon a termination of Service with the Company or a
Subsidiary of the Grantee, whether by reason of disability, retirement, death
or any other reason, or (ii) during a paid or unpaid leave of absence, shall
be determined by the Committee and set forth in the applicable Award Agreement.
8.6 Limitations on Exercise of Option
Notwithstanding any other provision of the Plan, in no event may any Option be
exercised, in whole or in part, after the termination of the Option.
8.7 Method of Exercise
Subject to the terms of Section 13 and Section 18.3, an Option that is
exercisable may be exercised by the Grantee's delivery of notice of exercise
according to any method provided by the Committee, which may include but is
not limited to, physical delivery of notice on any business day to the
Company, at the Company's principal office (on the form specified by the
Company) or execution of delivery procedures provided by the Company through a
stock transfer or other agent in telephonic, electronic, website or similar
form regardless of whether default procedures may be used. The notices and
procedures shall specify, among other items requested, the number of shares of
Stock with respect to which the Option is being exercised and shall be
accompanied by payment in full of the Option Price of the shares for which the
Option is being exercised plus the amount (if any) of federal and/or other
taxes which the Company may, in its judgment, be required to withhold with
respect to an Award. The Company may deduct from the shares of Stock
deliverable to the Grantee upon exercise the number of shares of Stock
necessary to satisfy payment of the Option Price and all withholding
obligations.
8.8 Rights of Holders of Options
Unless otherwise stated in the applicable Award Agreement, an individual
holding or exercising an Option shall have none of the rights of a shareholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in Section 17 hereof, an individual
holding an Option shall not have any Dividend Equivalent Rights with respect
to the Option and no adjustment shall be made for dividends, distributions or
other rights for which the record date is prior to the date of such issuance.
8.9 Delivery of Stock
Subject to Section 3.8 (and specifically the discretion of the Company to use
book-entry or uncertificated registration), promptly after the exercise of an
Option by a Grantee and the payment in full of the Option Price and related
taxes, such Grantee shall be entitled to the issuance of a stock certificate
or certificates evidencing his or her ownership of the shares of Stock subject
to the Option.
8.10 Transferability of Options
Except as provided in Section 8.11, during the lifetime of a Grantee, only the
Grantee (or, in the event of legal incapacity or incompetency, the Grantee's
guardian or legal representative) may exercise an Option. Except as provided
in Section 8.11, no Option shall be assignable or transferable by the Grantee
to whom it is granted, other than by will or the laws of descent and
distribution.
8.11 Family Transfers
If authorized in the applicable Award Agreement, a Grantee may transfer, not
for value, all or part of an Option which is not an Incentive Stock Option to
any Family Member. For the purpose of this Section 8.11, a "not for value"
transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic
relations order in settlement of marital property rights; or (iii) unless
Applicable Law does not permit such transfers, a transfer to an entity in
which more than fifty percent of the voting interests are owned by Family
Members (or the Grantee) in exchange for an interest in that entity. Following
a transfer under this Section 8.11, any such Option shall continue to be
subject to the same terms and conditions as were applicable immediately prior
to transfer, and shares of Stock acquired pursuant to the Option shall be
subject to the same restrictions on transfer of shares as would have applied
to the Grantee. Subsequent transfers of transferred Options are prohibited
except to Family Members of the original Grantee in accordance with this
Section 8.11 or by will or the laws of descent and distribution. The
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events of termination of Service of Section 8.5 hereof shall continue to apply
with respect to the original Grantee, following which the Option shall be
exercisable by the transferee only to the extent, and for the periods
specified, in Section 8.5.
8.12 Limitations on Incentive Stock Options
An Option shall constitute an Incentive Stock Option only (i) if the Grantee
of such Option is an employee of the Company or any Subsidiary; (ii) to the
extent specifically provided in the related Award Agreement; and (iii) to the
extent that the aggregate Fair Market Value (determined at the time the Option
is granted) of the shares of Stock with respect to which all Incentive Stock
Options held by such Grantee become exercisable for the first time during any
calendar year (under the Plan and all other plans of the Grantee's employer
and its Subsidiaries) does not exceed one hundred thousand dollars ($100,000)
or such other limit specified in the Code. This limitation shall be applied by
taking Options into account in the order in which they were granted.
8.13 Notice of Disqualifying Disposition
If any Grantee shall make any disposition of shares of Stock issued pursuant
to the exercise of an Incentive Stock Option under the circumstances described
in Code Section 421(b) (relating to certain disqualifying dispositions), such
Grantee shall notify the Company of such disposition within ten (10) days
thereof.
SECTION 9. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
9.1 Right to Payment and Grant Price
A SAR shall confer on the Grantee to whom it is granted a right to receive,
upon exercise thereof, the excess of (i) the Fair Market Value of one share of
Stock on the date of exercise over (ii) the SAR Exercise Price as determined
by the Committee. The Award Agreement for a SAR shall specify the SAR Exercise
Price, which shall be at least the Fair Market Value of a share of Stock on
the Grant Date except with respect to Substitute Awards. SARs may be granted
in conjunction with all or part of an Option granted under the Plan or at any
subsequent time during the term of such Option, in conjunction with all or
part of any other Award or without regard to any Option or other Award.
9.2 Other Terms
The Committee shall determine, subject to Section 3.4, at the Grant Date or
thereafter, the time or times at which and the circumstances under which a SAR
may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the time or times at
which SARs shall cease to be or become exercisable following termination of
Service or upon other conditions, the method of exercise, method by or forms
in which Stock will be delivered or deemed to be delivered to Grantees,
whether or not a SAR shall be in tandem or in combination with any other
Award, and any other terms and conditions of any SAR. The Award Agreement
shall specify whether the SAR shall be settled in Stock, cash or a combination
of Stock and cash. In the event that a SAR is exercised after the close of the
business market on a particular day, the Fair Market Value of the applicable
share of Stock shall be measured by the price of the Stock at the close of the
next business day.
9.3 Term
Each SAR granted under the Plan shall terminate, and all rights thereunder
shall cease, upon the expiration of ten years from the date such SAR is
granted, or under such circumstances and on such date prior thereto as is set
forth in the Plan or as may be fixed by the Committee and/or stated in the
Award Agreement relating to such SAR.
9.4 Termination of Service
All of the terms relating to the exercise, cancellation or other disposition
of a SAR (i) upon a termination of Service with the Company or a Subsidiary of
the Grantee, whether by reason of disability, retirement, death or any other
reason, or (ii) during a paid or unpaid leave of absence, shall be determined
by the Committee and set forth in the applicable Award Agreement.
9.5 Rights of Holders of SARs
Unless otherwise stated in the applicable Award Agreement, an individual
holding or exercising an SAR shall have none of the rights of a shareholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the
subject shares of Stock) until the shares of Stock covered thereby are fully
paid and issued to him. Except as provided in Section 17 hereof, an individual
holding an SAR shall not have any Dividend Equivalent Rights with respect to
the SAR and no adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date of such issuance.
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9.6 Transferability of SARs
Except as provided in Section 9.7, during the lifetime of a Grantee, only the
Grantee (or, in the event of legal incapacity or incompetency, the Grantee's
guardian or legal representative) may exercise a SAR. Except as provided in
Section 9.7, no SAR shall be assignable or transferable by the Grantee to whom
it is granted, other than by will or the laws of descent and distribution.
9.7 Family Transfers
If authorized in the applicable Award Agreement, a Grantee may transfer, not
for value, all or part of a SAR to any Family Member. For the purpose of this
Section 9.7, a "not for value" transfer is a transfer which is (i) a gift,
(ii) a transfer under a domestic relations order in settlement of marital
property rights; or (iii) unless applicable law does not permit such
transfers, a transfer to an entity in which more than fifty percent of the
voting interests are owned by Family Members (or the Grantee) in exchange for
an interest in that entity. Following a transfer under this Section 9.7, any
such SAR shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, and shares of Stock acquired
pursuant to a SAR shall be subject to the same restrictions on transfer as
would have applied to the Grantee. Subsequent transfers of transferred SARs
are prohibited except to Family Members of the original Grantee in accordance
with this Section 9.7 or by will or the laws of descent and distribution.
SECTION 10. TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS
10.1 Grant of Restricted Stock or Stock Units
Except as required by Applicable Law, Awards of Restricted Stock or Stock
Units may be made for no consideration (other than par value of the shares
which is deemed paid by Services already rendered).
10.2 Restrictions
Subject to Section 3.4, at the time a grant of Restricted Stock or Stock Units
is made, the Committee may, in its sole discretion, establish a period of time
(a "restricted period") applicable to such Restricted Stock or Stock Units.
Each Award of Restricted Stock or Stock Units may be subject to a different
restricted period. The Committee may in its sole discretion, at the time a
grant of Restricted Stock or Stock Units is made, prescribe restrictions in
addition to or other than the expiration of the restricted period, including
the satisfaction of corporate or individual performance objectives, which may
be applicable to all or any portion of the Restricted Stock or Stock Units.
Neither Restricted Stock nor Stock Units may be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of during the restricted period or
prior to the satisfaction of any other restrictions prescribed by the
Committee with respect to such Restricted Stock or Stock Units.
10.3 Restricted Stock Certificates
Subject to Section 3.8 (and specifically the discretion of the Company to use
book-entry or uncertificated registration), the Company shall issue, in the
name of each Grantee to whom Restricted Stock has been granted, stock
certificates representing the total number of shares of Restricted Stock
granted to the Grantee, as soon as reasonably practicable after the Grant
Date. The Committee may provide in an Award Agreement that either (i) the
Secretary of the Company shall hold such certificates for the Grantee's
benefit until such time as the Restricted Stock is forfeited to the Company or
the restrictions lapse, or (ii) such certificates shall be delivered to the
Grantee, provided, however, that such certificates (or other appropriate
documentation if book-entry or uncertificated registration is used, such as
the confirmation documentation issued to the Grantee and the transfer agent
records) shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement.
10.4 Rights of Holders of Restricted Stock
Unless the Committee otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock; provided,
that any such dividends shall not vest or be paid with respect to any holders
of Restricted Stock prior to the vesting of such Restricted Stock and shall be
paid at the same time as the underlying Stock is vested consistent with this
Plan and the Award Agreement and in compliance with Code Section 409A (and
governing guidance), where applicable. The Committee may provide that any
dividends paid on Restricted Stock must be reinvested in shares of Stock,
subject to the same vesting conditions and restrictions applicable to such
Restricted Stock. All distributions, if any, received by a Grantee with
respect to Restricted Stock as a result of any stock split, stock dividend,
combination of shares, or other similar transaction shall be subject to the
restrictions applicable to the original grant of Restricted Stock.
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10.5. Voting and Dividend Rights
Holders of Stock Units shall have no rights as shareholders of the Company.
Subject to Section 12.1, the Committee may provide in an Award Agreement
evidencing a grant of Stock Units that the holder of such Stock Units shall be
entitled to receive, upon the Company's payment of a cash dividend on its
outstanding Stock, a cash payment for each Stock Unit held equal to the
per-share dividend paid on the Stock. Such Award Agreement may also provide
that such cash payment will be deemed reinvested in additional Stock Units at
a price per unit equal to the Fair Market Value of a share of Stock on the
date that such dividend is paid. Any Dividend Equivalent Rights credited to a
Stock Unit Award shall not vest or be paid with respect to the holders of the
Stock Units prior to the vesting of such Stock Units and shall be paid at the
same time as the payment of the underlying Stock Units consistent with this
Plan and the Award Agreement and in compliance with Code Section 409A (and
governing guidance), where applicable.
10.6 Termination of Service
Unless the Committee otherwise provides in an Award Agreement or in writing
after the Award Agreement is issued, upon the termination of a Grantee's
Service, any Restricted Stock or Stock Units held by such Grantee that have
not vested, or with respect to which all applicable restrictions and
conditions have not lapsed, shall immediately be deemed forfeited. Upon
forfeiture of Restricted Stock or Stock Units, the Grantee shall have no
further rights with respect to such Award, including but not limited to any
right to vote Restricted Stock or any right to receive dividends with respect
to shares of Restricted Stock or Stock Units.
10.7 Purchase of Restricted Stock and Shares Subject to Stock Units
The Grantee shall be required, to the extent required by Applicable Law, to
purchase the Restricted Stock or shares of Stock subject to vested Stock Units
from the Company at a Purchase Price equal to the greater of (i) the aggregate
par value of the shares of Stock represented by such Restricted Stock or Stock
Units and (ii) the Purchase Price, if any, specified in the Award Agreement
relating to such Restricted Stock or Stock Units. The Purchase Price shall be
payable in a form described in Section 13 or, in the discretion of the
Committee, in consideration for past or future Services rendered to the
Company or a Subsidiary.
10.8 Delivery
10.8.1 Delivery for Restricted Stock Awards
Upon the expiration or termination of any restricted period and the
satisfaction of any other conditions prescribed by the Committee, the
restrictions applicable to shares of Restricted Stock shall lapse, and,
subject to Section 3.8 and unless otherwise provided in the Award Agreement, a
stock certificate for such shares shall be delivered, free of all such
restrictions, to the Grantee or the Grantee's beneficiary or estate, as
applicable, no later than two and a half (2 1/2) months following the end of
the Company's Fiscal Year in which the vesting occurred (or the restrictions
lapsed).
10.8.2 Delivery for Stock Unit Awards
Upon the expiration or termination of any restricted period and the
satisfaction of any other conditions prescribed by the Committee, the
restrictions applicable to Stock Units shall lapse, and, subject to Section
3.8 and unless otherwise provided in the Award Agreement, a stock certificate
for such shares, or cash, as the case may be, shall be delivered, free of all
such restrictions, to the Grantee or the Grantee's beneficiary or estate, as
applicable, no later than two and a half (2 1/2) months following the end of
the Company's Fiscal Year in which the vesting occurred (or the restrictions
lapsed). Neither the Grantee, nor the Grantee's beneficiary or estate, shall
have any further rights with regard to a Stock Unit once the share of Stock,
or cash, represented by the Stock Unit has been delivered or the transfer has
been recorded on the Company's books and records. With respect to a vested
Stock Unit settled in cash, the cash payment for each Stock Unit shall be
equivalent to the Fair Market Value of one share of Stock measured as of the
date of vesting.
SECTION 11. TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS
Subject to Section 3.4, the Committee may, in its sole discretion, grant (or
sell at par value or such other higher purchase price determined by the
Committee) an Unrestricted Stock Award to any Grantee pursuant to which such
Grantee may receive shares of Stock free of any restrictions ("Unrestricted
Stock") under the Plan. Unrestricted Stock Awards may be granted or sold as
described in the preceding sentence in respect of past Service and other valid
consideration, or in lieu of, or in addition to, any cash compensation due to
such Grantee.
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SECTION 12. TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS
12.1 Dividend Equivalent Rights
A Dividend Equivalent Right may be granted hereunder to any Grantee of an
Award other than Options and SARs. The terms and conditions of Dividend
Equivalent Rights shall be specified in the Award Agreement. Dividend
equivalents credited to the holder of a Dividend Equivalent Right may be
deemed to be reinvested in additional shares of Stock, which may thereafter
accrue additional equivalents. Unless otherwise set forth in the underlying
Award Agreement, any such reinvestment shall be at Fair Market Value on the
date the underlying dividend was paid. Dividend Equivalent Rights may be
settled in cash or Stock or a combination thereof, in a single installment or
installments, all determined in the sole discretion of the Committee. A
Dividend Equivalent Right granted as a component of another Award may also
contain terms and conditions different from such other award. Notwithstanding
anything to the contrary contained herein, Dividend Equivalent Rights will be
subject to the same conditions as the underlying Award and shall not vest or
be paid with respect to any Award prior to the vesting of such Award, and any
such accrued Dividend Equivalent Rights shall be paid at the same time as the
underlying Stock or Award to which it relates vests and is distributed
consistent with this Plan and the Award Agreement, and such provision, right,
and payment must all be in compliance with Code Section 409A (and governing
guidance), where applicable, including any impact such a provision, right, or
payment may have on the deemed deferral of an Award in order to vest or be
paid. The provisions of this Section 12.1 apply to any dividends and Dividend
Equivalent Rights that may be attached to any Award.
12.2 Termination of Service
Except as may otherwise be provided by the Committee either in the Award
Agreement or in writing after the Award Agreement is issued, a Grantee's
rights in all Dividend Equivalent Rights or interest equivalents shall
automatically terminate upon the Grantee's termination of Service for any
reason.
SECTION 13. PAYMENT
13.1 General Rule
Subject to Section 13.3, payment of the Option Price for the shares purchased
pursuant to the exercise of an Option or the Purchase Price for Restricted
Stock, Stock Units, or Unrestricted Stock shall be made in a format acceptable
to the Company and as otherwise provided herein.
13.2 Surrender of Stock
Subject to Section 13.3, payment of the Option Price for shares purchased
pursuant to the exercise of an Option or the Purchase Price for Restricted
Stock, Stock Units, or Unrestricted Stock may be made all or in part through
the tender to the Company of shares of Stock, which shall be valued, for
purposes of determining the extent to which the Option Price or Purchase Price
has been paid thereby, at their Fair Market Value on the date of exercise or
surrender.
13.3 Cashless Exercise
With respect to an Award where payment is required, payment of the price for
shares may be made all or in part by (i) delivery (on a form acceptable to the
Committee) of an irrevocable direction to a licensed securities broker
acceptable to the Company to sell shares of Stock and to deliver all or part
of the sales proceeds to the Company in payment of the price and any
withholding taxes described in Section 18.3, or (ii) in its discretion, the
Company's issuance of the number of shares equal in value to the difference
between the price (and any withholding taxes described in Section 18.3) and
the Fair Market Value of the shares subject to the portion of the Option being
exercised, or the difference between the Purchase Price and the Fair Market
Value of any Restricted Stock or Stock Units. The Company may provide
procedures for executing the delivery of the irrevocable direction to the
licensed securities broker referenced in this Section 13.3 by various methods
including, but not limited to, those available by telephonic, electronic,
website or similar formats regardless of whether default elections may be used
by the procedures. In the Company's discretion, appropriate fees, expenses and
taxes may be deducted from, and reduce, the amount of shares received by the
Grantee.
13.4 Other Forms of Payment
To the extent the Award Agreement so provides or as otherwise provided in
writing by the Committee, payment of the price for shares purchased pursuant
to exercise of an Option or the Purchase Price for Restricted Stock or Stock
Units may be made in any other form that is consistent with Applicable Laws,
regulations, rules, and this Plan.
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SECTION 14. TERMS AND CONDITIONS OF PERFORMANCE AWARDS
14.1 Grant of Performance Units/Performance Shares
Subject to the terms and provisions of this Plan including Section 3.4 and
Section 12, the Committee, at any time and from time to time, may grant
Performance Units and/or Performance Shares to Grantees in such amounts and
upon such terms as the Committee shall determine.
14.2 Value of Performance Units/Performance Shares
Each Performance Unit shall have an initial value that is established by the
Committee at the time of grant. Each Performance Share shall have an initial
value equal to the Fair Market Value of a share of Stock on the Grant Date.
The Committee shall set performance goals in its discretion which, depending
on the extent to which they are met, will determine the value and/or number of
Performance Units/Performance Shares that will be paid out to the Grantee.
14.3 Earning of Performance Units/Performance Shares
Subject to the terms of this Plan, after the applicable Performance Period has
ended, the holder of Performance Units/Performance Shares shall be entitled to
receive payout on the value and number of Performance Units/Performance Shares
earned by the Grantee over the Performance Period, to be determined as a
function of the extent to which the corresponding performance goals have been
achieved. The Committee has the authority to provide for accelerated vesting
of any Award based on the achievement of performance goals pursuant to the
Performance Measures specified in this Section 14; provided that, no Award may
be accelerated (or may be granted with such provisions) if the grant or
acceleration would not be in compliance with Code Section 409A (including from
the Grant Date) or if it would subject an Award to Code Section 409A that was
not previously subject to Code Section 409A unless it would be compliant in
its entirety (including with a fixed payout date if necessary).
14.4 Form and Timing of Payment of Performance Units/Performance Shares
Payment of earned Performance Units/Performance Shares shall be as determined
by the Committee and as evidenced in the Award Agreement. Subject to the terms
of this Plan, the Committee, in its sole discretion, may pay earned
Performance Units/Performance Shares in the form of cash or in shares (or in a
combination thereof) equal to the value of the earned Performance
Units/Performance Shares. The payments for the Performance Units or
Performance Shares, as the case may be, shall be made at the close of the
applicable Performance Period, or as soon as practicable after the end of the
Performance Period, but in no event later than two and half (2 1/2) months
following the close of the Company's Fiscal Year in which the term of the
Award is complete (i.e., it vests). Any shares of Stock may be granted subject
to any restrictions deemed appropriate by the Committee. The determination of
the Committee with respect to the form of payout of such Awards shall be set
forth in the Award Agreement pertaining to the grant of the Award.
14.5 Performance Measures
The right of a Grantee to exercise or receive a grant or settlement of any
Award, and the timing thereof, may be subject to such Performance Measures as
may be specified by the Committee. The Committee may use such business
criteria and other measures of performance as it may deem appropriate in
establishing any Performance Measures.
14.6 Management Incentive Program
14.6.1 General Information and Eligibility
This Section 14.6 establishes a short-term cash incentive program (known as
the "Management Incentive Program" or "MIP") for Employees of the Company or a
Subsidiary. Eligibility to participate in the MIP shall be determined by the
Committee; however, unless the Committee (or its delegatee) determines
otherwise, an Employee is eligible to participate in the Management Incentive
Program for a particular Fiscal Year if all of the following requirements are
met:
a.
the Employee is designated in the records of the Company (or a Subsidiary) in
a position designated by the Committee as a participant in the MIP for a
particular Fiscal Year;
b.
the Employee was employed by the Company (or a Subsidiary) before February 1
of that particular Fiscal Year; and
c.
the Employee is actively employed on the last day of the Fiscal Year;
provided, that
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i.
the Employee may participate if the Employee was otherwise participating in
the Management Incentive Program during a Fiscal Year and died, became
Disabled in that Fiscal Year, or Retired in that Fiscal Year (in each case, on
a pro-rated basis or as otherwise determined by the Committee), and
ii.
the Employee may participate if the Employee was otherwise participating in
the Management Incentive Program during a Fiscal Year but was on an approved
leave of absence (including workers compensation leave, military leave, or
leave approved pursuant to the Family Medical Leave Act),
in which case, the total MIP Award (if any) shall be determined based on
Eligible Earnings during the applicable Fiscal Year while the Employee
participates in the MIP. In the event that a participating Employee dies prior
to the payout of any MIP Award (if any), the MIP Award shall be paid to his or
her estate.
In respect of each Employee, the Committee or its delegatee shall (at the time
of establishing applicable Performance Measures) also establish and
communicate a "Target MIP Incentive Opportunity" which shall be a dollar
amount or percentage of the Employee's eligible earnings payable with respect
to the applicable performance measurement period (normally, the Fiscal Year).
14.6.2 Amount of MIP Award
The MIP Award, if any, awarded to an eligible Employee shall be the product of
some or all of the following as the Committee in its sole discretion
determines: Target MIP Incentive Opportunity; Eligible Earnings; Company
Achievement Percentage, Individual Achievement Percentage, or both; and
Company Weighted MIP Component, Individual Weighted MIP Component, any
additional MIP component as determined by the Committee, or a combination
thereof.
14.6.3 Time of Payment
A Service Provider's MIP Award payment (if any) shall be paid as soon as
administratively feasible following the close of the performance period to
which the MIP Award relates (but in any event no later than two and half (2
1/2) months following the conclusion of the performance period). No MIP Award
may be paid without a certification by the Committee that the Company goals
under the applicable Performance Measures have been achieved. If awards are
made in whole or in part based on achievement by eligible Employees of
individual goals, a Reporting Person will receive such an award only after
determination by the Committee that the Reporting Person has achieved such
goals.
14.6.4 Employment Transfers
If a participating Service Provider transfers between locations, the
calculation of the MIP Award payment for him or her (if any) shall be subject
to the following rules:
a.
The MIP Award payment (if any) shall be based on Eligible Earnings earned at
the first location using the first location's Company Achievement Percentage
plus Eligible Earnings earned at the second location using the second
location's Company Achievement Percentage; and
b.
Only one Individual Achievement Percentage will be used, which shall be based
on the overall attainment of individual goals for the Fiscal Year;
provided, that the location of the participating Employee when the MIP Award
is paid shall be charged for the MIP Award payment.
14.6.5 Position Changes
If a participating Employee's position, salary level and Target MIP Incentive
Opportunity changes during a Fiscal Year in which that Employee is
participating in the Management Incentive Program, any MIP Award payment shall
be based on the Eligible Earnings pro-rated for the portion of the Fiscal Year
while in the beginning position and Target MIP Incentive Opportunity for the
beginning position, plus the Eligible Earnings pro-rated for the portion of
the Fiscal Year while in the subsequent position and Target MIP Incentive
Opportunity for the subsequent position.
2024 Proxy Statement A-17
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Appendix A
SECTION 15. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other agreement,
contract, or understanding heretofore or hereafter entered into by a U.S.
Grantee with the Company or any Subsidiary, except an agreement, contract, or
understanding that expressly addresses Section 280G or Section 4999 of the
Code (an "Other Agreement"), and notwithstanding any formal or informal plan
or other arrangement for the direct or indirect provision of compensation to
the U.S. Grantee (including groups or classes of U.S. Grantees or
beneficiaries of which the U.S. Grantee is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the U.S. Grantee (a "Benefit Arrangement"), if the U.S. Grantee is a
"disqualified individual," as defined in Section 280G(c) of the Code, any
Award held by that U.S. Grantee and any right to receive any payment or other
benefit under this Plan shall not become exercisable or vested (i) to the
extent that such right to exercise, vesting, payment, or benefit, taking into
account all other rights, payments, or benefits to or for the U.S. Grantee
under this Plan, all Other Agreements, and all Benefit Arrangements, would
cause any payment or benefit to the U.S. Grantee under this Plan to be
considered a "parachute payment" within the meaning of Section 280G(b)(2) of
the Code as then in effect (a "Parachute Payment") and (ii) if, as a result of
receiving a Parachute Payment, the aggregate after-tax amounts received by the
U.S. Grantee from the Company under this Plan, all Other Agreements, and all
Benefit Arrangements would be less than the maximum after-tax amount that
could be received by the U.S. Grantee without causing any such payment or
benefit to be considered a Parachute Payment. In the event that the receipt of
any such right to exercise, vesting, payment, or benefit under this Plan, in
conjunction with all other rights, payments, or benefits to or for the U.S.
Grantee under any Other Agreement or any Benefit Arrangement would cause the
U.S. Grantee to be considered to have received a Parachute Payment under this
Plan that would have the effect of decreasing the after-tax amount received by
the U.S. Grantee as described in clause (ii) of the preceding sentence, then
the rights, payments, or benefits under this Plan, any Other Agreements, and
any Benefit Arrangements that should be reduced or eliminated so as to avoid
having the payment or benefit to the U.S. Grantee under this Plan be deemed to
be a Parachute Payment shall be reduced as follows: by reducing first any
rights, payments or benefits that are exempt from Section 409A of the Code and
then reducing any rights, payments or benefits subject to Section 409A of the
Code in the reverse order in which such rights, payments or benefits would be
paid or provided (beginning with such right, payment or benefit that would be
made last in time and continuing, to the extent necessary, through to such
right, payment or benefit that would be made first in time).
SECTION 16. REQUIREMENTS OF LAW
16.1 General
The Company shall not be required to sell or issue any shares of Stock under
any Award if the sale or issuance of such shares would constitute a violation
by the Grantee, any other individual exercising an Option, or the Company of
any provision of any law or regulation of any governmental authority,
including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion,
that the listing, registration or qualification of any shares subject to an
Award upon any securities exchange or under any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the
issuance or purchase of shares hereunder, no shares of Stock may be issued or
sold to the Grantee or any other individual exercising an Option pursuant to
such Award unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company, and any delay caused thereby shall in no way affect
the date of termination of the Award. Without limiting the generality of the
foregoing, in connection with the Securities Act, upon the exercise of any
Option or any SAR that may be settled in shares of Stock or the delivery of
any shares of Stock underlying an Award, unless a registration statement under
the Securities Act is in effect with respect to the shares of Stock covered by
such Award, the Company shall not be required to sell or issue such shares
unless the Committee has received evidence satisfactory to it that the Grantee
or any other individual exercising an Option may acquire such shares pursuant
to an exemption from registration under the Securities Act. Any determination
in this connection by the Committee shall be final, binding, and conclusive.
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act. The Company shall
not be obligated to take any affirmative action in order to cause the exercise
of an Option or a SAR or the issuance of shares of Stock pursuant to the Plan
to comply with any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an Option (or SAR
that may be settled in shares of Stock) shall not be exercisable until the
shares of Stock covered by such Option (or SAR) are registered or are exempt
from registration, the exercise of such Option (or SAR) under circumstances in
which the laws of such jurisdiction apply shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.
16.2 Rule 16b-3
During any time when the Company has a class of equity security registered
under Section 12 of the Exchange Act, it is the intent of the Company that
Awards pursuant to the Plan and the exercise of Options and SARs granted
hereunder will qualify for the exemption provided by Rule 16b-3 under the
Exchange Act. To the extent that any provision of the Plan or action by the
A-18 La-Z-Boy Incorporated
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Appendix A
Committee does not comply with the requirements of Rule 16b-3, it shall be
deemed inoperative to the extent permitted by law and deemed advisable by the
Committee, and shall not affect the validity of the Plan. In the event that
Rule 16b-3 is revised or replaced, the Committee may exercise its discretion
to modify this Plan in any respect necessary to satisfy the requirements of,
or to take advantage of any features of, the revised exemption or its
replacement.
SECTION 17. EFFECT OF CHANGES IN CAPITALIZATION
The provisions in this Section 17 are intended to provide equivalency for
certain capitalization events, and, in all events, and notwithstanding
anything to the contrary contained herein, may not be accomplished, provided
for or be applicable to an Award, if, at any time, such Award is not in
compliance with Code Section 409A (including from the Grant Date), if it would
subject an Award to Code Section 409A that was not previously subject to Code
Section 409A unless it would be compliant in its entirety (including with a
fixed payout date if necessary).
17.1 Capitalization Adjustments
In the event of any equity restructuring (within the meaning of Financial
Accounting Standards Board Accounting Standards Codification Topic 718,
Compensation-Stock Compensation, or any successor or replacement accounting
standard) that causes the per share value of shares of Stock to change, such
as a stock dividend, stock split, spinoff, rights offering or recapitalization
through an extraordinary cash dividend, the number and class of securities
available under this Plan, the terms of each outstanding Option and SAR
(including the number and class of securities subject to each outstanding
Option or SAR and the purchase price or base price per share), the terms of
each outstanding Restricted Stock Award and Stock Unit Award (including the
number and class of securities subject thereto), and the terms of each
outstanding MIP Award and Performance Award (including the number and class of
securities subject thereto) shall be appropriately adjusted by the Committee,
such adjustments to be made in the case of outstanding Options and SARs
without an increase in the aggregate Option Price or purchase price and in
accordance with Code Section 409A. In the event of any other change in
corporate capitalization, including a merger, consolidation, reorganization,
or partial or complete liquidation of the Company, such equitable adjustments
described in the foregoing sentence may be made as determined to be
appropriate and equitable by the Committee to prevent dilution or enlargement
of rights of participants. Moreover, in the event of any such transaction or
event, the Committee may provide in substitution for any or all outstanding
Awards such alternative consideration (including cash), if any, as it, in good
faith, may determine to be equitable in the circumstances and shall require in
connection therewith the surrender of all Awards so replaced in a manner that
complies with Code Section 409A. In either case, the decision of the Committee
regarding any such adjustment shall be final, binding and conclusive.
17.2 Corporate Transaction
Subject to the terms of the applicable Award Agreements, in the event of a
"Corporate Transaction," the Board, as constituted prior to the Corporate
Transaction, may, in its discretion:
(i) require that (i) some or all outstanding Options and SARs shall become
exercisable in full or in part, either immediately or upon a subsequent
termination of employment, (ii) the restriction period applicable to some or
all outstanding Awards shall lapse in full or in part, either immediately or
upon a subsequent termination of employment, (iii) the performance period
applicable to some or all outstanding Awards shall lapse in full or in part,
and (iv) the Performance Measures applicable to some or all outstanding awards
shall be deemed to be satisfied at the target, maximum or any other level;
(ii) require that shares of capital stock of the corporation resulting from or
succeeding to the business of the Company pursuant to such Corporate
Transaction, or a parent corporation thereof, be substituted for some or all
of the shares of Stock subject to an outstanding award, with an appropriate
and equitable adjustment to such award as determined by the Committee in
accordance with Section 17.1; and/or
(iii) require outstanding Awards, in whole or in part, to be surrendered to
the Company by the holder, and to be immediately cancelled by the Company, and
to provide for the holder to receive (i) a cash payment or other property in
an amount equal to (A) in the case of an Option or an SAR, the aggregate
number of shares of Stock then subject to the portion of such Option or SAR
surrendered, whether or not vested or exercisable, multiplied by the excess,
if any, of the Fair Market Value of a share of Stock as of the date of the
Corporate Transaction, over the Option Price or SAR Exercise Price subject to
such Option or SAR, (B) in the case of an Award (other than an Option or SAR)
denominated in shares of Stock, the number of shares of Stock then subject to
the portion of such award surrendered to the extent the Performance Measures
applicable to such award have been satisfied or are deemed satisfied pursuant
to Section 17.2(i), whether or not vested, multiplied by the Fair Market Value
of a share of Stock as of the date of the Corporate Transaction, and (C) in
the case of an Award denominated in cash, the value of the Award then subject
to the portion of such Award surrendered to the extent the Performance
Measures applicable to such award have been satisfied or are deemed satisfied
pursuant to Section 17.2(i); (ii) shares of capital stock of the corporation
2024 Proxy Statement A-19
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Appendix A
resulting from or succeeding to the business of the Company pursuant to such
Corporate Transaction, or a parent corporation thereof, having a fair market
value not less than the amount determined under clause (i) above; or (iii) a
combination of the payment of cash or other property pursuant to clause (i)
above and the issuance of shares pursuant to clause (ii) above.
17.3 Adjustments
Adjustments under this Section 17 related to shares of Stock or securities of
the Company shall be made by the Committee (as constituted prior to the
Corporate Transaction), whose determination in that respect shall be final,
binding and conclusive. The Committee shall determine the effect of a
Corporate Transaction upon Awards, and such effect shall be set forth in the
appropriate Award Agreement or as otherwise determined by the Committee in
accordance with this Section 17. This Section 17.3 does not limit the
Company's ability to provide for alternative treatment of Awards outstanding
under the Plan in the event of change of control events that are not Corporate
Transactions.
17.4 No Limitations on Company
The making of Awards pursuant to the Plan shall not affect or limit in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.
SECTION 18. GENERAL PROVISIONS
18.1 Disclaimer of Rights
No provision in the Plan or in any Award or Award Agreement shall be construed
to confer upon any individual the right to remain in the Service of the
Company or any Subsidiary, or to interfere in any way with any contractual or
other right or authority of the Company either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any Service or other relationship between any individual and the Company. In
addition, notwithstanding anything contained in the Plan to the contrary,
unless otherwise stated in the applicable Award Agreement, no Award granted
under the Plan shall be affected by any change of duties or position of the
Grantee, so long as such Grantee continues to be a director, officer,
consultant or employee of the Company or a Subsidiary. The obligation of the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
Grantee or beneficiary under the terms of the Plan.
18.2 Nonexclusivity of the Plan
Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board or any committee thereof
to adopt such other incentive compensation arrangements (which arrangements
may be applicable either generally to a class or classes of individuals or
specifically to a particular individual or particular individuals) as the
Board in its discretion determines desirable, including, without limitation,
the granting of stock options otherwise than under the Plan.
18.3 Withholding Taxes
No shares of Stock shall be delivered under the Plan to any Grantee until such
Grantee has made arrangements acceptable to the Committee for the satisfaction
of any income and employment tax withholding obligations under Applicable
Laws. The Company or any Subsidiary shall have the authority and the right to
deduct or withhold, or require a Grantee to remit to the Company, an amount
sufficient to satisfy federal, state, local or foreign taxes (including the
Grantee's payroll tax obligations) required or permitted by law to be withheld
with respect to any taxable event concerning a Grantee arising as a result of
this Plan. The Committee may in its discretion and in satisfaction of the
foregoing requirement allow a Grantee to elect to have the Company withhold
shares of Stock otherwise issuable under an Award or allow the return of
shares of Stock having a Fair Market Value equal to the sums required to be
withheld. Notwithstanding any other provision of the Plan, the number of
shares which may be withheld with respect to the issuance, vesting, exercise
or payment of any Award (or which may be repurchased from the Grantee of such
Award after such shares of Stock were acquired by the Grantee from the
Company) in order to satisfy the Grantee's federal, state, local and foreign
income and payroll tax liabilities with respect to the issuance, vesting,
exercise or payment of the Award shall, unless specifically approved by the
Committee, be limited to the number of shares of Stock which have a Fair
Market Value on the date of withholding or repurchase equal to the aggregate
amount of such liabilities based on the minimum statutory withholding rates
for federal, state, local and foreign income tax and payroll tax purposes that
are applicable to such supplemental taxable income (or, if approved by the
Committee, such higher withholding rate permitted under applicable accounting
rules).
A-20 La-Z-Boy Incorporated
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Appendix A
18.4 Clawback of Awards
The Awards granted under this Plan and any cash payment or shares of Stock
delivered pursuant to such Award are subject to forfeiture, recovery by the
Company or other action pursuant to the applicable Award Agreement or any
Company clawback or recoupment policy as in effect on the date of grant,
including without limitation the La-Z-Boy Incorporated Policy on Recoupment of
Incentive Compensation and any such policy which the Company may be required
to adopt under Applicable Law or listing standards.
18.5 Protected Rights
Nothing contained in this Plan is intended to limit the participant's ability
to (i) report possible violations of law or regulation to, or file a charge or
complaint with, the Securities and Exchange Commission, the Equal Employment
Opportunity Commission, the National Labor Relations Board, the Occupational
Safety and Health Administration, the Department of Justice, the Congress, any
Inspector General, or any other federal, state or local governmental agency or
commission ("Government Agencies"), (ii) communicate with any Government
Agencies or otherwise participate in any investigation or proceeding that may
be conducted by any Government Agency, including providing documents or other
information, without notice to the Company or (iii) under applicable United
States federal law to (A) disclose in confidence trade secrets to federal,
state, and local government officials, or to an attorney, for the sole purpose
of reporting or investigating a suspected violation of law or (B) disclose
trade secrets in a document filed in a lawsuit or other proceeding, but only
if the filing is made under seal and protected from public disclosure.
18.6 Creditor's Rights
The Plan is intended to be an "unfunded" plan for incentive compensation. With
respect to any payments not yet made to a Grantee pursuant to an Award,
nothing contained in the Plan or any Award Agreement shall give the Grantee
any rights that are greater than those of a general creditor of the Company or
any Subsidiary.
18.7 Captions
The use of captions in this Plan or any Award Agreement is for the convenience
of reference only and shall not affect the meaning of any provision of the
Plan or such Award Agreement.
18.8 Other Provisions
Each Award granted under the Plan may contain such other terms and conditions
not inconsistent with the Plan as may be determined by the Committee, in its
sole discretion.
18.9 Number and Gender
With respect to words used in this Plan, the singular form shall include the
plural form, the masculine gender shall include the feminine gender, etc., as
the context requires.
18.10 Severability
If any provision of the Plan or any Award Agreement shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in
any other jurisdiction.
18.11 Governing Law
The validity and construction of this Plan and the instruments evidencing the
Awards hereunder shall be governed by the laws of the state of Michigan, other
than any conflicts or choice of law rule or principle that might otherwise
refer construction or interpretation of this Plan and the instruments
evidencing the Awards granted hereunder to the substantive laws of any other
jurisdiction.
18.12 Code Section 409A
The Committee intends to comply with Code Section 409A, or an exemption to
Code Section 409A, with regard to Awards hereunder that constitute
nonqualified deferred compensation within the meaning of Code Section 409A. To
the extent that the Committee determines that a Grantee would be subject to
the additional twenty percent (20%) tax imposed on certain nonqualified
deferred compensation plans pursuant to Code Section 409A as a result of any
provision of any Award granted under this Plan, such provision shall be deemed
amended to the minimum extent necessary to avoid application of such
2024 Proxy Statement A-21
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Appendix A
additional tax. The nature of any such amendment shall be determined by the
Committee. Notwithstanding anything to the contrary in the Plan (and unless
the Award Agreement specifically provides otherwise), if the shares of Stock
are publicly traded, and if a holder holding an award that constitutes
"deferred compensation" under Code Section 409A of the Code is a "specified
employee" for purposes of Code Section 409A, no distribution or payment of any
amount that is due because of a "separation from service" (as defined in Code
Section 409A without regard to alternative definitions thereunder) will be
issued or paid before the date that is six months following the date of such
holder's "separation from service" (as defined in Code Section 409A without
regard to alternative definitions thereunder) or, if earlier, the date of the
holder's death, unless such distribution or payment can be made in a manner
that complies with Code Section 409A, and any amounts so deferred will be paid
in a lump sum on the day after such six month period elapses, with the balance
paid thereafter on the original schedule.
18.13 Foreign Employees
Without amending this Plan, the Committee may grant awards to eligible persons
who are foreign nationals and/or reside outside of the United States on such
terms and conditions different from those specified in this Plan as may in the
judgment of the Committee be necessary or desirable to foster and promote
achievement of the purposes of this Plan and, in furtherance of such purposes
the Committee may make such modifications, amendments, procedures, subplans
and the like as may be necessary or advisable to comply with provisions of
laws in other countries or jurisdictions in which the Company or its
Subsidiaries operates or has employees.
To record adoption of the Plan by the Board as of June 25, 2024, and approval
of the Plan by the shareholders on
_________, 2024, the Company has caused its authorized officer to execute the
Plan.
A-22 La-Z-Boy Incorporated
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APPENDIX B
Reconciliation of GAAP to Non-GAAP Financial Measures
Year Ended
4/27/24 4/29/23
(Amounts in thousands, GAAP and Non-GAAP GAAP and Non-GAAP
except per share data) Operating Margin Operating Margin
(% of Sales) (% of Sales)
GAAP operating $ 150,796 7.4 % $ 211,439 9.0 %
income
Purchase accounting charges 1,105 338
Business realignment charges - 609
Supply chain optimization initiative charges 7,497 10,817
Non-GAAP $ 159,398 7.8 % $ 223,203 9.5 %
operating income
GAAP Diluted EPS $ 2.83 $ 3.48
(earnings per share)
Purchase accounting charges, 0.02 -
net of tax, per share
Business realignment charges, - 0.01
net of tax, per share
Supply chain optimization initiative 0.13 0.19
charges, net of tax, per share
Investment impairment, net of tax, per share - 0.18
Non-GAAP Diluted EPS $ 2.98 $ 3.86
(earnings per share)
Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with accounting
principles generally accepted in the United States ("GAAP"), this Proxy
Statement also includes Non-GAAP financial measures. Management uses these
Non-GAAP financial measures when assessing our ongoing performance. This Proxy
Statement contains references to Non-GAAP operating margin and Non-GAAP
Diluted EPS (earnings per share), each of which may exclude, as applicable,
purchase accounting charges, business realignment charges, supply chain
optimization initiative charges, and an investment impairment. The business
realignment charges include severance charges related to the closure of our
Newton, Mississippi manufacturing facility. The supply chain optimization
initiative charges include asset impairment costs, accelerated depreciation
expense, lease termination gains, severance costs, and employee relocation
costs resulting from the closure, consolidation, and centralization of various
global supply chain operations and includes the closure of our Torreon
manufacturing facility (previously disclosed as Mexico optimization). The
purchase accounting charges include incremental expense upon the sale of
inventory acquired at fair value and the amortization of intangible assets and
for FY 2023, an $0.8 million adjustment to the fair value of a contingent
consideration liability. These Non-GAAP financial measures are not meant to be
considered superior to or a substitute for La-Z-Boy Incorporated's results of
operations prepared in accordance with GAAP and may not be comparable to
similarly titled measures reported by other companies. Reconciliations of such
Non-GAAP financial measures to the most directly comparable GAAP financial
measures are set forth in the table above.
Management believes that presenting certain Non-GAAP financial measures will
help investors understand the long-term profitability trends of our business
and compare our profitability to prior and future periods and to our peers.
Management excludes purchase accounting charges because the amount and timing
of such charges are significantly impacted by the timing, size, number and
nature of the acquisitions consummated and the success with which we operate
the businesses acquired. While the company has a history of acquisition
activity, it does not acquire businesses on a predictable cycle, and the
impact of purchase accounting charges is unique to each acquisition and can
vary significantly from acquisition to acquisition. Similarly, business
realignment charges and supply chain optimization initiative charges are
dependent on the timing, size, number and nature of the operations being
closed, consolidated, or centralized, and the charges may not be incurred on a
predictable cycle. Management also excludes impacts from investment impairment
charges when assessing the company's operating and financial performance due
to the one-time and infrequent nature of the transactions. Management believes
that exclusion of these items facilitates more consistent comparisons of the
company's operating results over time. Where applicable, the above
"Reconciliation of GAAP to Non-GAAP Financial Measures" table presents the
excluded items net of tax calculated using the effective tax rate from
operations for the period in which the adjustment is presented.
2024 Proxy Statement B-1
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2024 ANNUAL MEETING
When:
August 27, 2024, at 9:30 a.m. (Eastern Daylight Time)
Proposals to Be Voted On:
Proposals Board's Voting Recommendation
1 Elect the ten director nominees FOR each nominee
named in the Proxy Statement:
. .
Erika L. Alexander Mark S. LaVigne
. .
Sarah M. Gallagher Michael T. Lawton
. .
James P. Hackett Rebecca L. O'Grady
. .
Raza S. Haider Lauren B. Peters
. .
Janet E. Kerr Melinda D. Whittington
2 Ratify the selection of our independent FOR
registered public accounting firm for FY 2025
3 Approve, through a non-binding advisory vote, the FOR
compensation of our named executive officers
4 Approve the La-Z-Boy Incorporated FOR
2024 Omnibus Incentive Plan
Vote:
Online By Phone By Mail In Person
www.proxyvote.com 1-800-690-6903 Completing, dating, signing With proof of ownership
and returning your proxy card and a valid photo ID
Where:
Wright Room, Westin Detroit Metropolitan Airport, 2501 Worldgateway Place,
Detroit, Michigan
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