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o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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(4) | Date Filed: | |
(1) | To elect eight directors; |
(2) | To ratify the selection of Grant Thornton LLP as our independent registered public accounting firm for our fiscal year ending December 28, 2013; |
(3) | To approve, on an advisory basis, the compensation of our named executive officers; and |
(4) | To transact such other business as may properly come before the Annual Meeting. |
Sincerely, | ||
/s/ Randolph K. Repass | ||
Randolph K. Repass Chairman of the Board |
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VII. | |||
I. | GENERAL INFORMATION | |||
• | This proxy statement for our Annual Meeting (“Proxy Statement”); |
• | Our Annual Report on Form 10-K for our fiscal year ended December 29, 2012 (“Annual Report”); and |
• | For those receiving printed versions, a proxy card. |
• | The election to our Board of Directors (“Board”) of the eight nominees named in this Proxy Statement; |
• | Ratification of the selection of Grant Thornton LLP as our independent registered public accounting firm ("Independent Auditors”) for our fiscal year ending December 28, 2013; and |
• | Approval, on an advisory basis, of the compensation of our Named Executive Officers (or "NEOs"). |
• | IN PERSON at the Annual Meeting. We will give you a ballot when you arrive; |
• | VIA THE INTERNET at www.envisionreports.com/wmar by following the instructions provided in the Notice; |
• | BY TELEPHONE using a touch-tone telephone at 1-800-652-8683; or |
• | BY MAIL if you requested printed copies, by completing, signing and returning your proxy card to us in the postage-paid envelope provided with the Proxy Materials. |
We anticipate that our 2014 annual meeting of stockholders (“2014 Annual Meeting”) will be held in May 2014. Any stockholders who intend to present proposals at, and who wish to have them included in the proxy statement for, the 2014 Annual Meeting must ensure that such proposals are addressed to West Marine at the address stated above and received no later than December 3, 2013. In addition, all proposals will need to comply with our Bylaws and Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which lists the requirements for the inclusion of stockholder proposals in company-sponsored proxy materials. |
II. | DIRECTOR MATTERS | |||
PROPOSAL #1: ELECTION OF DIRECTORS |
DIRECTOR QUALIFICATIONS AND EXPERIENCE; DIRECTOR NOMINEES |
Name, Years of Service & Age | Position with West Marine | Other Public Company Board / Committee Service | Experience, Qualifications and Other Information | |||||
Randolph K. Repass Incumbent Director since: 1968 Age: 69 | • Chairman of the Board ("Chairman") • Does not serve on any Committees | None | Experience Mr. Repass served as West Marine's Chief Executive Officer, from 1968 to April 1995 and from July 1998 to November 1998, and as President, from 1968 to 1990 and from August 1993 to March 1994. Qualifications for Board Service Mr. Repass, as the founder of West Marine and one of its major stockholders, defines the Company and its mission statement and values. He is being re-nominated as a Director because his vision, knowledge of the industry, understanding of the business and our customers' needs, combined with his strategic insight, are invaluable in guiding our Board and management in realizing our mission, in balancing short and long term goals, and in enhancing value for all of our stockholders. Boating Experience Mr. Repass has an extensive boating background including sailboat racing and cruising on sail and power boats. | |||||
Name, Years of Service & Age | Position with West Marine | Other Public Company Board / Committee Service | Experience, Qualifications and Other Information | |||||
Matthew L. Hyde Director since: 2012 Age: 50 | •Inside Director • Chief Executive Officer ("CEO") and President • Does not serve on any Committees | Zumiez Inc. • Board Member/Lead Independent Director • Member - Governance/Nominating Committee | Experience Mr. Hyde has served as our CEO and President since June 19, 2012. Previously, he was the Executive Vice President of Recreational Equipment Inc. (“REI”), a retailer and online merchant of outdoor gear and equipment. Beginning his career with REI in 1986, Mr. Hyde held various positions, and most recently until joining West Marine, as their Executive Vice President, he oversaw marketing, e-commerce and direct sales, real estate, store development, retail and customer experience functions. Mr. Hyde previously led REI's online division, championing its award-winning omni-channel strategy. Qualifications for Board Service Mr. Hyde's specialty retail background, along with his online retail, brand-building, marketing, merchandising and operational expertise, provide valuable insight to our Company and our Board. In addition, Mr. Hyde's service on the Board of a leading multi-channel specialty retailer of action sports related apparel, footwear, equipment and accessories not only aligns well with West Marine's merchandise expansion strategy, but also provides comparative expertise for our operational plans as well as for our compensation and leadership development programs. Boating Experience Mr. Hyde has been boating all of his life. From fishing with his family on a wooden skiff, to kayaking, to an annual trek to Alaska to go salmon fishing, Mr. Hyde loves all things outdoors. | |||||
Dennis F. Madsen Incumbent Director since: 2010 Age: 64 | • Independent Director From 2010 - March 2013 • Member -Governance and Compensation Committee Since March 2013 • Chair -Compensation and Leadership Development Committee | Alaska Air Group (including subsidiaries: Alaska Airlines & Horizon Airlines) • Board Member • Member - Compensation and Leadership Development Committee • Member - Audit Committee Member | Experience Mr. Madsen served as President and Chief Executive Officer from April 2000 to March 2005, of REI. Mr. Madsen also served as REI's Executive Vice President and Chief Operating Officer from 1987 to March 2000, and prior to that, held numerous positions throughout REI. Qualifications for Board & Committee Service Mr. Madsen is being re-nominated as a Director because, among his other qualifications, he has demonstrated proven leadership capability and knowledge of the complex operational and financial issues facing an organization such as West Marine. His experience on other public company boards and in leading a customer-service driven organization, and his knowledge of compensation and governance trends and best practices, also makes him a valuable contributor in all operational risks and strategies facing West Marine, and in executive compensation and leadership development. Boating Experience Mr. Madsen has spent the last 22 years sailing throughout the Pacific Northwest and Canadian waters. Recently spending five years as a live-aboard, Mr. Madsen has a keen understanding of boater needs and lifestyle. | |||||
Name, Years of Service & Age | Position with West Marine | Other Public Company Board / Committee Service | Experience, Qualifications and Other Information | |||||
Barbara L. Rambo Incumbent Director since: 2009 Age: 60 | • Independent Director From September 2008 - November 2009 • Board Consultant From 2009 - March 2013 • Chair-Governance and Compensation Committee • Member-Audit Committee Since March 2013 • Chair-Nomination and Governance Committee • Member -Compensation and Leadership Development Committee • Member-Audit and Finance Committee • Lead Independent Director | CURRENT PG&E Corporation • Board Member • Chair - Finance Committee • Member - Compensation Committee • Member - Nominating and Governance Committee International Rectifier Corporation • Board Member • Member - Compensation Committee • Member - Nominating and Governance Committee. PAST From 1995-2007: Gymboree Corporation • Board Member • Member - Audit Committee • Member - Executive Compensation Committee | Experience Since October 2009, Ms. Rambo has served as the Chief Executive Officer of Taconic Management Services, a management consulting and services company. Prior to joining Taconic Management Services, she was Chief Executive Officer, Vice Chair and a director of Nietech Corporation (payments technology company) during the period 2001 to 2009, and Chief Executive Officer of OpenClose Technologies (financial services technology company) during the period 2000 to 2002. Ms. Rambo previously held various executive and management positions at Bank of America, including head of national commercial banking. She has developed skills in corporate finance, capital markets, sales, strategic planning, marketing, operations and executive management. Qualifications for Board & Committee Service Ms. Rambo is being re-nominated as a Director because of the depth of her executive management and leadership experience with companies in the financial services and technology sectors and her experience on other public company boards. She brings a wealth of knowledge in corporate governance and risk management practices, which enables her to serve as a member of our Audit and Finance and Compensation and Leadership Development Committees, as Chair of our Nomination and Governance Committee and as our Lead Independent Director. Boating Experience Ms. Rambo is a sculler and sails in San Francisco and the Caribbean. | |||||
Alice M. Richter Incumbent Director since: 2005 Age: 59 | • Independent Director From January 2005 - January 2006 • Member - Audit Committee From January 2006 - March 2013 • Chair-Audit Committee Since March 2013 • Chair - Audit and Finance Committee • Member - Nomination and Governance Committee | G&K Services, Inc. • Board Member • Chair - Audit Committee | Experience Ms. Richter was a certified public accountant with KPMG LLP for 26 years, until her retirement in June 2001. She joined KPMG's Minneapolis office in 1975 and was admitted to the KPMG partnership in 1987. During her tenure at KPMG, Ms. Richter served as the National Industry Director of KPMG's U.S. Food and Beverage practice and also served as a member of the Board of Trustees of the KPMG Foundation from 1991 to 2001. Qualifications for Board & Committee Service Ms. Richter is being re-nominated as a Director because with her long career in public accounting and expertise in the accounting and finance areas, including a client-base in the retail industry, her experience in international operations, her service on another public company board, and her experience in reviewing internal controls, tax saving strategies, potential fraud, acquisitions and reorganizations, she possesses a keen understanding of complex financial accounting issues which provides the Board with an overall business and financial leadership perspective. In addition, Ms. Richter has vast experience in financial planning and investment and capital structure strategies, along with risk management and compliance matters, which enables her to make valuable contributions in her role as Chair of our Audit and Finance Committee. In 2012, Ms. Richter received her Board Leadership Fellow certification from the National Association of Corporate Directors. Boating Experience An avid water skier, Ms. Richter is never far from a boat. | |||||
Name, Years of Service & Age | Position with West Marine | Other Public Company Board / Committee Service | Experience, Qualifications and Other Information | |||||
Christiana Shi Incumbent Director since: 2011 Age: 53 | • Independent Director From 2011 - March 2013 • Member - Audit Committee Since March 2013 • Member - Audit and Finance Committee • Member - Compensation and Leadership Development Committee | None | Experience Since April 2012, Ms. Shi has served as Vice President and General Manager of NIKE, Inc. Global E-Commerce. In this role, she is responsible for the performance and growth of Nike.com around the world, including merchandising, experience design, consumer services, and digital commerce technology. Prior to that, Ms. Shi was the Vice President and Chief Operating Officer of NIKE, Inc.'s global direct-to-consumer division. In this role, she was responsible for the division's global store, real estate, finance, information technology and supply chain operations. From 2000 to 2010, Ms. Shi was director and senior partner of McKinsey & Company, Inc., a global management consulting firm, and she was a principal (partner) at McKinsey from 1994 to 2000. Prior to 1994, she held numerous positions throughout McKinsey. From 1981 to 1984, Ms. Shi also held numerous positions at Merrill Lynch & Company, Inc. Qualifications for Board & Committee Service As Vice President and General Manager of Nike's global e-commerce business, her past roles as Chief Operating Officer of NIKE, Inc.'s direct-to-consumer division, and as a former senior partner at McKinsey & Company, Ms. Shi has a unique global perspective acquired through 20 years of work on four continents across an extensive array of consumer brands and retail operations. Further, her expertise in global retail expansion, category strategy, new concept development, store operations, inventory management, performance transformation and the direct/e-commerce business makes her well-qualified to serve on our Board and as a member of our Audit and Finance Committee and our Compensation and Leadership Development Committee. Boating Experience Ms. Shi is an enthusiastic sailor and boater. | |||||
James F. Nordstrom, Jr. Incumbent Director since: 2012 Age: 40 | • Independent Director • Member- Compensation and Leadership Development Committee | None | Experience Mr. Nordstrom has been Executive Vice President and President of Nordstrom Direct for Nordstrom, Inc. since February 2005. His position supports Nordstrom.com, mobile, catalogs and fulfillment center operations. He previously served as Corporate Merchandise Manager - Children's Shoes from May 2002 to February 2005, and as a project manager for the design and implementation of Nordstrom's inventory management system from 1999 to May 2002. Mr. Nordstrom is a great-grandson of the company founder and has been employed by Nordstrom's since 1986. Qualifications for Board & Committee Service Mr. Nordstrom is being re-nominated to the Board because his e-commerce insights and expertise, coupled with his extensive executive and operational experience, provides us with information and advice on leadership development and compensation matters relevant to the retail industry. In addition, as one of the industry's leading spokesmen, Mr. Nordstrom's expert guidance is sought by our management and Board on omni-channel retailing as we continue to evolve and grow our business. Additionally, his senior executive status provides our Compensation and Leadership Development Committee with key insights into relevant compensation practices in the retail industry and in executive development. Boating Experience Mr. Nordstrom grew up boating in the San Juan Islands and British Columbia with his family, and has continued that tradition with his wife and children aboard their 36 foot sports fisher. | |||||
Name, Years of Service & Age | Position with West Marine | Other Public Company Board / Committee Service | Experience, Qualifications and Other Information | |||||
Robert D. Olsen New Director Nominee Age: 60 | • If elected, anticipated appointment to Audit and Finance Committee | None | Experience Between 2000 and his retirement in January of 2013, Mr. Olsen worked in numerous roles at AutoZone, Inc. Most recently Mr. Olsen served as Corporate Development Officer, Customer Satisfaction. In this role, he was responsible for the Mexico and ALLDATA businesses and strategic growth initiatives that included AutoZone's store expansion into Brazil and ALLDATA's entry into Europe. He previously served as Executive Vice President, Store Operations, Commercial, Mexico and ALLDATA from 2007 to 2009, as Executive Vice President, Supply Chain, IT, Mexico and Store Development from 2005 to 2007, as Senior Vice President, Mexico and Store Development from 2001 to 2005, and as Senior Vice President, Planning and Store Development from 2000 to 2001. Prior to that, Mr. Olsen was Executive Vice President and Chief Financial Officer for Leslie's Poolmart, a specialty retailer of swimming pool supplies and accessories from 1993 to 2000. From 1990 to 1993 he served as Executive Vice President and Chief Financial Officer of Tuneup Masters, a California-based chain of quick tuneup and lube outlets. Prior to that, he held various positions at AutoZone, including the role of Senior Vice President, Finance Administration and Chief Financial Officer, and at Pepsico. Qualifications for Board & Committee Service Mr. Olsen is being nominated to our Board because, in addition to his broad based retail operational experience, he will bring a hard goods retailing perspective to the Board. In addition, Mr. Olsen's recent experience with compensation and management succession planning activities at AutoZone, together with his experience in team and leadership development planning, will be valuable to our Board in its focus on these areas. Additionally, Mr. Olsen's prior experience as a Chief Financial Officer makes him well qualified to serve on the Board's Audit and Finance Committee and if elected, Mr. Olsen will join Ms. Richter as our second financial expert. Boating Experience Mr. Olsen enjoys pleasure boating and fishing with his family and friends at his home on Pickwick Lake in Tennessee. | |||||
III. | CORPORATE GOVERNANCE FRAMEWORK | |||
BOARD OF DIRECTORS AND ITS COMMITTEES |
ROLE OF THE BOARD; CORPORATE GOVERANCE PRINCIPLES |
BOARD & COMMITTEE INDEPENDENCE |
• | It is the intent of our Board that a majority of its members qualify as independent Directors. Our Board has affirmatively determined (i) that six of our eight Director nominees (or 75%) qualify as independent Directors as defined by the applicable NASDAQ listing standards, SEC rules and other applicable law (ii) that each member of the Audit and Finance Committee and Mr. Olsen meet the heightened independence requirements of Section 10A(m)(3) of the Exchange Act and (iii) that Ms. Richter and, if elected, Mr. Olsen both qualify as financial experts under SEC rules. |
• | Our Board considers all relevant facts and circumstances related to transactions and relationships between each Director or Director nominee (and his or her immediate family and affiliates) and West Marine and its management to determine whether any such relationships or transactions would prohibit an incumbent Director or nominee from being able to exercise independent judgment in carrying out the responsibilities of a Director. |
• | Our Audit and Finance Committee has determined the independence of, and selected Grant Thornton to serves as, our Independent Auditors for fiscal year 2013. |
• | Our Compensation and Leadership Development Committee has retained a compensation consultant, Frederic W. Cook & Co., Inc. ("FW Cook"), that is independent of West Marine and management. FW Cook provides no services to West Marine other than consulting services provided to the Committee. |
SEPARATE CEO & CHAIRMAN POSITIONS; LEAD INDEPENDENT DIRECTOR |
• | By policy, we separate the roles of CEO and Chairman in recognition of the differences between the two roles. Our CEO, Matthew L. Hyde, is responsible for setting our strategic direction and the day to day leadership and performance goals, while our Chairman, Randy Repass, provides guidance to the CEO, sets the agenda for Board meetings and generally presides over meetings of the full Board. |
• | Recognizing that Mr. Repass has a significant ownership stake in West Marine and has other relationships with the Company, he is not considered an independent Director. Accordingly, our Board has appointed the Chair of our Nomination and Governance Committee, Barbara L. Rambo, as the Board's Lead Independent Director. |
• | Our Lead Independent Director's authority and responsibilities include: collaborating with our Chairman and CEO on setting the agenda for Board meetings; calling, setting the agenda for, and leading the executive sessions of the independent Directors; serving as a liaison between our CEO, Chairman and/or independent Directors; being available for consultation and direct communication with our major stockholders; calling special meetings of the Board on an as-needed basis; briefing the Chairman and CEO on issues that arise in executive session meetings; and presiding over other matters as directed by the Board. |
BOARD & COMMITTEE MEETING ATTENDANCE |
• | Each Director is expected to attend and participate in, either in person or by means of telephonic conference, all scheduled Board meetings and meetings of Committees on which such Director serves. |
• | During fiscal year 2012, our Board met six times, our Audit Committee met nine times and our Governance and Compensation Committee met six times; 100% of our Directors attended all Board and applicable Committee meetings as well as our 2012 Annual Meeting. |
ONE-YEAR TERMS & DIRECTOR RESIGNATION POLICY BASED ON STOCKHOLDER VOTE |
• | Terms for all Directors are set at one year, rather than staggered. |
• | In lieu of a mandatory age or term limits, Board and Committee performance is evaluated annually. |
• | Our Bylaws contain provisions for a simple majority stockholder vote for election of our Board, for Charter or Bylaw amendments and for special meetings called by, and action to be taken by written consent of, stockholders. |
• | Our Bylaws also require that any Director nominee who does not receive the affirmative vote of a majority of the votes cast at our Annual Meeting is required to promptly submit in writing his or her irrevocable offer of resignation, subject to the Board's acceptance. |
COMMITTEE STRUCTURE & CHARTERS |
• | Pursuant to our Bylaws, our Board established two standing committees, the Audit Committee and the Governance and Compensation Committee, which were in effect during fiscal 2012. Recognizing the increased responsibilities and time commitments necessary in connection with audit, governance, compensation and succession planning matters, at its March 14, 2013 meeting, the Board re-organized its standing Committees and established the following three Committees: |
◦ | Audit and Finance Committee (comprised of our independent Directors who are financially literate with public audit committee experience); |
◦ | Compensation and Leadership Development Committee (comprised of our independent Directors who are active executives and/or have other public compensation committee experience); and |
◦ | Nomination and Governance Committee (comprised of our independent Directors who are the most seasoned West Marine Directors and who have the most public board experience). |
• | Unless otherwise expressly stated, references in this Proxy Statement to any Board Committee include the former and the newly-formed Committee structures. |
• | The Board has adopted a written Charter for each Committee and each updated Charter was approved by our Board in March 2013. The Charters can be accessed, free of charge, at http://www.westmarine.com under “Investor Relations” and are available in print to any stockholder who submits a written request to our Secretary. |
• | Each Committee meets at least quarterly. |
Independent Director | 2012 Audit Committee | 2012 Governance and Compensation Committee(1) | 2013 Audit and Finance Committee | 2013 Nomination and Governance Committee | 2013 Compensation and Leadership Development Committee |
David McComas | Member | Member (2) | |||
Alice M. Richter | Chair | Chair | Member | ||
Barbara L. Rambo (3) | Member | Chair | Member | Chair | Member |
Dennis F. Madsen | Member | Member | Chair | ||
Christiana Shi | Member | Member | Member | ||
James F. Nordstrom, Jr. | Member | Member | |||
Robert D. Olsen | Proposed Member (if elected) |
(1) | Included the nominating function. |
(2) | Also served as Lead Independent Director until March 14, 2013. Mr. McComas was not re-nominated for election to the Board for 2013 and will serve on the Board and this Committee in 2013 until the Annual Meeting date. |
(3) | Was appointed by the Board as Lead Independent Director on March 14, 2013. |
PRINCIPAL FUNCTIONS OF EACH BOARD COMMITTEE |
• | Annually review the qualifications and performance of the Independent Auditors, including whether to retain or replace such firm (subject, if applicable, to stockholder ratification) and of our head of internal audit ("Internal Auditor"), both of whom report directly to our Committee; |
• | Pre-approve all audit and non-audit services (including the Independent Audit Plan) to be performed by, and all fees to be paid to, the Independent Auditors; |
• | Review West Marine's accounting, auditing and financial reporting processes, including annual and quarterly review of financial statements and filings made with the SEC and recommend to the Board inclusion each year of audited financial statements in the Annual Report on Form 10-K; |
• | Meet with management, our Independent Auditors and our Internal Auditor prior to the filing of officers' certifications with the SEC to receive and review information concerning, among other things, business and financial risks and the control environment, including significant deficiencies, if any, in the design or operation of internal control over financial reporting; and communications required from the Independent Auditors under applicable rules and standards; |
• | Establish clear hiring policies for employees and former employees of the Independent Auditors; |
• | Review and approve the Internal Audit Plan and Internal Audit Charter and assess the performance of the Internal Auditor annually; |
• | Review reports resulting from the performance of audits by the Independent Auditors and the Internal Auditor; |
• | Review West Marine's financial plans, capital structure, key investment objectives and strategies and review with management policies and practices covering significant financial matters; |
• | Meet regularly, including in separate executive sessions, with our Independent Auditors, Chief Financial Officer ("CFO"), Internal Auditor and other key management on relevant accounting, financial reporting and risk management, including compliance with laws and regulations; |
• | Assess the adequacy of the Committee's performance, annually; |
• | Assess the adequacy of the Committee's Charter annually; |
• | Assess the independence of, and retain and oversee, the work of other consultants and advisors as it may deem appropriate and approve related fees and other retention terms; and |
• | Prepare the Committee report for inclusion in the annual proxy statement. |
• | Set performance goals and objectives relevant for our compensation programs. See "Compensation Discussion and Analysis" "Executive Summary" and "Executive Compensation Philosophy & Principles." |
• | Annually review and approve the compensation of our NEOs and other members of our senior management (collectively, with the NEOs, “Executives”) and assess our CEO's performance in light of established goals; |
• | Approve any benefit and/or severance, retirement or deferred compensation plans and other perquisites offered to our NEOs and other eligible employees (who we refer to as our "associates"); |
• | Approve the West Marine, Inc. Omnibus Equity Incentive Plan ("Equity Incentive Plan") and the West Marine, Inc. Associates Stock Buying Plan ("Stock Buying Plan") and grant equity awards permitted thereunder; |
• | Approve the Stock Ownership Policy for our Directors, and Executives at the Sr. Vice Presidential level and above; |
• | Recommend Director compensation and benefits policies; |
• | Develop and/or approve leadership development and succession plans, initiatives and programs; |
• | Assess the adequacy of the Committee's performance, annually; |
• | Assess the adequacy of the Committee's Charter annually; |
• | Assess the independence of, retain and oversee the work of consultants and advisors as it may deem appropriate and approve related fees and other retention terms; and |
• | Prepare the Committee report required for the annual proxy statement. |
• | Evaluate the nature, structure and composition of the Board and its Committees; |
• | Recommend individuals for nomination as members of the Board and its Committees; |
• | Make recommendations to the Board regarding membership and the appointment of Committee Chairs, Chairman of the Board and Lead Independent Director; |
• | Recommend to the Board revisions to the Company's Governance Principles, Code of Ethics, Committee Charters and other policies and practices of the Company in the area of corporate governance; |
• | Establish guidelines and procedures for evaluating new Director nominees; |
• | Produce and provide to the Board an annual performance evaluation of the Board and each of its Committees; |
• | Assess the adequacy of the Committee's Charter annually; and |
• | Retain and oversee the work of consultants and advisors as it may deem appropriate and approve related fees and other retention terms. |
OTHER GOVERNANCE PRACTICES |
• | Directors must submit a letter of resignation upon a job change; |
• | Members of our Board may not serve as directors for more than four public companies; |
• | Our CEO may not serve as a director for more than one other public company; |
• | Our organizational documents do not contain “poison pill” provisions; |
• | We offer no pension plans or other retirement benefits for Directors; |
• | We provide a new Director orientation program which outlines the role and responsibilities of the Board, provides an overview of West Marine's operations, and provides Directors with opportunities to meet with our management team; and |
• | A number of our Directors attend continuing education programs. |
DIRECTOR NOMINATION GUIDELINES & PROCESS |
DIRECTOR NOMINATION PROCESS & PROCEDURES |
ELECTION AT ANNUAL MEETING |
STOCKHOLDERS PROPOSALS |
RISK MANAGEMENT OVERSIGHT |
• | Periodically performs an enterprise risk assessment designed to assist in the identification, assessment and monitoring of high risk areas, including, without limitation, strategic, financial, operating and regulatory compliance risks, and to share information and efforts to mitigate these risks; |
• | Formed several steering committees/advisory boards, including a real estate steering committee to monitor our real estate optimization strategy and an information technology advisory board to oversee our overall IT strategy, which includes capital expenditures and capital project management; and |
• | Established a number of other policies including a Delegation of Authority Policy and a Contract Review and Signing Authority Policy, which provide proper levels of review and control of expenditures designed to safeguard assets, to minimize risks and to ensure the appropriate segregation of duties. |
• | Provides risk oversight by reviewing our strategic business plans, which includes evaluating the objectives of and risks associated with these plans and their potential impact (e.g., competitive, industry, economic, financial and other operating risks); and |
• | Reviews other significant risks, such as pending or threatened litigation, business development risks, succession planning and overall policies and practices for enterprise risk management. |
• | Reviews financial risk exposures, including credit and liquidity risks; |
• | Discusses with management, our Internal Auditor and our Independent Auditors our policies with respect to risk assessment and risk management, including the risk of fraud, our financial statements, our certification process for periodic reports and the adequacy and effectiveness of our internal control over financial reporting; |
• | Monitors risk related to our internal accounting staff, our Internal Auditor and our Independent Auditors; |
• | Meets periodically with management to review our major financial exposures and the steps management has taken to monitor and control such exposures; |
• | Reviews and approves related party transactions; and |
• | Monitors our compliance and ethics programs, including administration of our Whistleblower Policy and Procedures. |
• | Manages risks associated with corporate governance, including risks associated with Board leadership, independence and effectiveness; and |
• | Monitors compliance with our Code of Ethics and Governance Principles, including risks associated with potential conflicts of interest affecting our Directors and Executives. |
• | Monitors risks arising from our compensation policies and programs, including incentive compensation; and |
• | Oversees risks related to Executive recruitment, assessment, development, retention and succession planning programs to ensure that we attract and retain a pool of qualified associates to accommodate future growth. |
STOCKHOLDER COMMUNICATIONS |
STOCKHOLDER ENGAGEMENT |
• | In 2012, our stockholder outreach efforts included active dialog with investors and proxy advisory firms on corporate governance issues. |
• | We continued our “Say-on-Pay" vote for a second year and the results reflect stockholder approval of our Executive Compensation programs. For more information on last year's voting results see “Executive Compensation - Proposal #3: Advisory Vote on the Compensation of our NEOs.” |
• | We issue annual guidance and host quarterly earnings calls to discuss our results of operations and progress made on our strategic growth initiatives. |
• | We maintain a Corporate Governance section on our website that provides current information, such as our governance policies and practices, a link to real time filings with the SEC and the ability for investors and other interested parties to receive automatic email notification of all such filings. |
STOCKHOLDER COMMUNICATION POLICY & PROCESS |
GOVERNANCE PRINCIPLES & CODE OF ETHICS |
NO COMPENSATION COMMITTEE INTERLOCKS |
OTHER GOVERNANCE POLICIES & PRACTICES |
• | Our Insider Trading Policy: |
◦ | Prohibits all associates, including our NEOs and members of our Board, from engaging in any hedging transactions with respect to West Marine equity securities, which includes the purchase of any financial instrument (including prepaid variable forward contracts, equity swaps, collars and exchange funds) designed to hedge or offset any decrease in the market value of such equity securities; |
◦ | Prohibits all of our associates, including our NEOs and members of our Board, from pledging or using as collateral West Marine securities in order to secure personal loans or other obligations, which includes holding shares of our common stock in a margin account; and |
◦ | Establishes trade pre-clearance requirements for Directors, Executives and other key associates, and procedures for compliance with the reporting requirements of the SEC. |
• | Our disclosure committee, comprised of certain Executives and other management-level associates, assists our CEO and our CFO in the design, development, implementation and maintenance of our internal control over financial reporting and disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports that we file with or submit to the SEC is recorded, processed, summarized and reported accurately and on a timely basis. |
• | Our West Marine Information Disclosure Policy-Investment Community, which is posted on our website, is designed to ensure the fair and timely public disclosure of material information about West Marine in compliance with Regulation FD. |
TRANSACTIONS WITH RELATED PARTIES |
• | The nature and business purpose of the transaction, including its potential benefits to West Marine; |
• | Whether the transaction is proposed to be (or was) entered into on terms no less favorable to West Marine than terms that could have been reached with an unrelated third party; |
• | The material terms of the transaction, such as the financial interest to, and the impact on, the related party involved, including impact on independence, if the related party is a Director; |
• | The results of market comparables and/or independent appraisals of the value of the property or services which are subject of the related party transaction; and |
• | The availability of other sources for comparable products or services. |
Lease Location | Lease Amendment Date | Expiration | Comparable Property - Avg. Rental Rate % | Approximate Net Savings to West Marine |
Watsonville Support Center | 2009 | 2016 | 30% higher | $1.3 million |
Adjacent Warehouse | 2011 | 2016 | ||
Santa Cruz Retail Store | 2010 | 2015 | 11% higher | $0.1 million |
Braintree Retail Store | 2012 | 2014 | No suitable locations in the area | N/A |
IV. | AUDIT AND FINANCE COMMITTEE MATTERS | |||
PROPOSAL #2: SELECTION OF OUR INDEPENDENT AUDITORS |
OTHER AUDIT AND FINANCE COMMITTEE MATTERS |
FEES PAID TO OUR INDEPENDENT AUDITORS |
(in thousands) | Fiscal Year 2012 | Fiscal Year 2011 | ||||||||
Audit Fees | $ | 650 | $ | 638 | ||||||
Audit-Related Fees (1) | 14 | 18 | ||||||||
Tax Fees (2) | 7 | 5 | ||||||||
All Other Fees | — | — |
(1) | Includes fees primarily related to statutory audits. |
(2) | Includes fees for tax advice and tax return assistance. |
PRE-APPROVAL OF INDEPENDENT AUDITOR SERVICES |
• | We may engage our Independent Auditors to provide audit and permissible non-audit services that have been pre-approved by our Committee with monetary limits on each service, before the services are rendered, except that no services may be provided to West Marine or any of its subsidiaries which would cause the SEC or the NASDAQ Stock Market to no longer consider our Independent Auditors to be independent or if such engagement would otherwise cause West Marine or any of its subsidiaries to violate any other applicable laws, regulations or policies. |
• | Our Audit and Finance Committee has designated our CFO to monitor the performance of all services provided by our Independent Auditors and to determine whether such services are in compliance with the policy. Our CFO will report promptly to our Audit and Finance Committee Chair any non-compliance (or attempted non-compliance) with this policy of which our CFO becomes aware. |
• | Before approving any services, our Committee considers the appropriate ratio between the total amount of fees for audit, audit-related and tax services and the total amount of fees for certain permissible non-audit fees paid to the Independent Auditor to ensure that they are not excessive. |
• | Ms. Richter has been delegated the authority, as necessary and appropriate between regularly scheduled Audit and Finance Committee meetings to pre-approve additional services or increases in previously approved monetary limits for such services, provided that such services would not impair the independence of our Independent Auditors, that fees relative to such services do not exceed $50,000 per project and that Ms. Richter report any such interim approvals at the next regularly scheduled meeting. |
WHISTLEBLOWER POLICY AND PROCEDURES |
AUDIT AND FINANCE COMMITTEE REPORT |
April 2, 2013 | Audit and Finance Committee | |
Alice M. Richter, Chair Barbara L. Rambo Christiana Shi |
V. | EXECUTIVE COMPENSATION | |||
OUR NAMED EXECUTIVE OFFICERS |
• | Matthew Hyde, our Chief Executive Officer and President (effective as of June 19, 2012); |
• | Thomas R. Moran, our Chief Financial Officer and Senior Vice President - Finance; |
• | Bruce Edwards, our Executive Vice President of Stores, Port Supply and Direct-to-Consumer; and |
• | Ronald Japinga, our Executive Vice President of Merchandising, Replenishment and Logistics. |
Name & Age | Position Held & Hire Date | Work Experience and Other Information | ||||
Thomas R. Moran Age: 52 | Position: Chief Financial Officer, Senior Vice President and Assistant Secretary Hired: 2007 | Work Experience In his role as Chief Financial Officer, Mr. Moran oversees all of West Marine's financial activities including all accounting functions, preparation of financial statements, monitoring expenditures and liquidity, managing investment and taxation issues and recommending capital structure of the business. Previous to joining West Marine in 1997, Mr. Moran served as the Chief Financial Officer of the Wearguard-Crest Division of ARAMARK Corporation, ARAMARK's work apparel and uniform division, from June 2004 until January 2007. Prior to joining ARAMARK, Mr. Moran was a Director of Finance of Limited Brands, Inc. from 2000 to 2004 and was the Director of Planning for CarMax Auto Superstores from 1995 to 2000. Boating Experience Mr. Moran and his wife have many years of power-boating experience and enjoy California's year-round boating season and exploring the sights of the Monterey Bay area. | ||||
Bruce Edwards Age: 50 | Position: Executive Vice President of Stores, Port Supply and Direct-to-Consumer Hired: 1986 | Work Experience Mr. Edwards is responsible for the sales and operations of our 300 stores, Port Supply wholesale division and Direct-to-Consumer division (i.e., retail ecommerce website operations, direct mail, catalogs and virtual call center operations). He joined West Marine in December 1986, and prior to his promotion to Executive Vice President in May 2007, he held the positions of Executive Vice President of Stores and Port Supply, Senior Vice President of Stores, Vice President of Retail Operations, Regional Vice President, Director of Store Operations and District Manager for West Marine. Boating Experience Mr. Edwards has been actively involved in the marine industry for more than 20 years, and has been a lifelong boater, racing sailboats competitively for over 30 years. | ||||
Ronald Japinga Age: 50 | Position: Executive Vice President of Merchandising, Replenishment and Logistics Hired: 2006 | Work Experience Mr. Japinga oversees all of West Marine's merchandising and supply chain activities, including product procurement, development, replenishment and transportation. Prior to Mr. Japinga's promotion in June 2007 to his current role, he had served as our Senior Vice President of Merchandising. Previously, Mr. Japinga served as Vice President/Divisional Merchandise Manager of Kohl's Department Stores from 2001 until he joined West Marine in February 2006. Prior to joining Kohl's, he held several positions with Duty Free Shops Group Limited from 1997 to 2001, including Vice President/Divisional Merchandise Manager/Director of Stores, Vice President/General Merchandise Manager/Visual and Divisional Merchandise Manager. Prior to that, Mr. Japinga served as President of a start-up specialty apparel store, Wish Superstore, from 1996 to 1997, served as Vice President/Divisional Merchandise Manager for Federated Department Stores from 1991 to 1996 and was a Buyer for Macy's Department Stores prior to 1991. Boating Experience Mr. Japinga has been an avid boater since his youth and enjoys taking his powerboat out on the weekends with his wife and children for fishing, waterskiing and basic pleasure boating. | ||||
PROPOSAL #3: ADVISORY VOTE ON THE COMPENSATION OF OUR NEOs |
COMPENSATION DISCUSSION AND ANALYSIS |
A. EXECUTIVE SUMMARY |
• | Pre-tax income for the full year increased by 14.6% over the prior year; |
• | Twelve consecutive quarters of year-over-year growth in net revenues and comparable store sales; |
• | Strong balance sheet and liquidity; |
• | Debt free, with over $56 million in cash at year-end; |
• | Approximately $92 million in available borrowings at year-end; |
• | Continued strength in our stores, driven by our key strategies of adding larger store formats, targeted expansions of our merchandise assortments, and pursuit of more Port Supply wholesale business through our store locations; and |
• | Continued growth in our Direct-to-Consumer division (i.e., our domestic and international e-Commerce, direct mail and call center businesses). |
Key Financial Performance Measures ($ in millions, except per share data and ROIC) | 2012 | 2011 | % Change | |||||||
Net sales | $ | 675.3 | $ | 643.4 | 4.9 | |||||
Gross profit | $ | 198.1 | $ | 185.0 | 7.1 | |||||
Pre-bonus, pre-tax profit | $ | 30.0 | $ | 25.1 | 19.7 | |||||
Pre-tax income | $ | 24.3 | $ | 21.2 | 14.6 | |||||
Non-GAAP adjusted net income (1) | $ | 15.5 | $ | 13.5 | 14.6 | |||||
Non-GAAP adjusted net income per share (diluted) (1) | $ | 0.65 | $ | 0.58 | 12.4 | |||||
Total assets | $ | 354.3 | $ | 335.7 | 5.5 | |||||
Non-GAAP Return on Invested Capital (ROIC) (2) | 7.9 | % | 7.6 | % |
(1) | 2011 net Income has been adjusted to exclude the large tax benefit recorded during the second quarter of 2011. Adjusted net income removes income tax expense (benefit) as reported and applies our 2012 effective tax rate of 44.6% and 36.2% to fiscal fourth quarter 2011 and fiscal 2011 pre-tax income, respectively. |
(2) | ROIC is defined as adjusted net income divided by average total capital. Net income is adjusted to normalize our income tax rate and to exclude interest and fixed rent expense as well as any one-time or unusual items, such as impairment charges and gains or losses on the sale of assets. The exclusions from net income are calculated on an after-tax basis. Total capital is calculated by adding total debt, operating leases capitalized at eight times annual rent expense and total stockholders' equity, minus cash and cash equivalents. |
• | Maintain a performance-based and risk appropriate compensation package that aligns with long-term stockholder values; |
• | Provide a competitive level of total compensation necessary to attract and retain talented and experienced Executives with relevant retail and boating experience who are enthusiastic about our mission and culture; and |
• | Appropriately motivate and reward our Executives to deliver high performance to our stockholders, customers and the communities in which we operate, to contribute to our short-and long-term success and to help drive total return to our stockholders. |
• | Annual Say-on-Pay vote; meaningful stock ownership requirements (see "Stock Ownership Policy" below); |
• | Having a significant portion of Executive Compensation be stock-based; |
• | Using compensation plan goals that are tied to key financial metrics; |
• | Adopting a $10 million share repurchase program primarily to mitigate the dilutive impact of shares issued under our Equity Incentive Plan and the Stock Buying Plan; |
• | Having an Insider Trading Policy applicable to all associates, including our NEOs and members of our Board; |
• | Annual cash bonus tying to multiple performance goals; |
• | Evaluating our peer group annually for demonstrated best practices and positive financial returns to their investors; |
• | Active oversight and risk management of compensation-related risk; |
• | Detailed and transparent financial reporting to provide strong, timely insight into operating performance; |
• | Engagement of an independent compensation consultant by our Committee; |
• | No tax gross-ups (including no tax gross-ups for option exercises or restricted stock vesting); |
• | No employment agreements; |
• | No Executive defined benefit pension plan; |
• | CEO compensation (as measured by base salary, target bonus and equity-based incentives) compared to that of our next highest paid Executive is well under the Institutional Shareholders Services threshold; |
• | Reasonable post-employment severance plan for our Executives at the vice-president level and above: |
◦ | No change-in-control provisions; |
◦ | Well under 3x the Executive's base salary plus bonus; |
◦ | No automatic acceleration of vesting of equity awards upon termination; Equity Award Grant Policy and our Equity Incentive Plan provide: |
◦ | No re-pricing of underwater stock options and stock appreciation rights (including no cash buyouts and voluntary surrender of underwater options, without prior stockholder approval); |
◦ | Fixed grant dates; |
◦ | No equity grants below 100% of fair market value; |
◦ | No hedging or pledging transactions of West Marine equity securities permitted pursuant to our Insider Trading Policy; |
◦ | No liberal share counting (for example, the share pool is reduced by shares withheld on option exercise); |
◦ | “Fungible share pool design” in plan (where “full value” awards count as 2x compared to stock options and stock appreciation rights); and |
◦ | No evergreen provisions; |
• | Risk oversight on compensation policies and practices; and |
• | Stockholder accessibility to our Board in general and to Compensation and Leadership Development Committee in particular. |
Component | Key Characteristics | Link to Philosophy | Key Actions for 2012 and 2013 |
Base Salary | • Fixed • Reviewed annually | • Provide reasonable and competitive fixed pay based on level of performance, contribution and experience, as well as relative position to peer companies • Attract and retain talented Executives | • NEO base salary increases ranged from 0% to 5% |
Short-Term Incentive Award | • Variable • Based on performance ° Total sales ° Pre-tax profit | • Drive overall, business unit and individual performance year-to-year • Focus on growing net revenue, profitability, share of retail sales and delivering strategic business objectives | • Set minimum threshold for bonus eligibility • Set sliding scale for bonus payout at significant pre-tax profit and total sales metrics • Capped payout at 140% • Realized 56.6% of target goals |
Long-Term Incentive Award | • Variable • Time vested • Based on appreciation in share price | • Align interests of Executives with stockholders and reward achievement of long-term performance goals • Motivate Executives to deliver performance that will result in sustained long-term growth in West Marine's stock price | • For 2012: Added 50/50 mix of stock options and Restricted Stock Units ("RSUs") • For 2013: Modified Long-Term Incentive program to 67/33% mix of RSUs and stock options |
Health Benefits | • Fixed • NEOs participate in the same health plans as other associates | • Provide competitive levels of benefits that promote health and wellness | • No Changes |
Retirement Plan | • Fixed • NEOs participate in the same retirement plans as other associates | • Provide competitive levels of benefits that promote financial security • Attract and retain talented executives | • No Changes |
Perquisites | • Fixed • Limited to Executive life insurance premiums without tax gross-ups | • Provide a business-related benefit to West Marine, and to assist in attracting and retaining executive officers | • No Changes |
Post Employment Compensation | • Fixed • Benefits provided under Executive Severance Plan or long-standing agreements • No Change-in-Control agreements | • Provide temporary levels of income following termination of employment • Attract and retain talented Executives • Provide competitive benefits | • No Changes |
B. ROLES & RESPONSIBILITIES |
C. DECISION MAKING PROCESS |
(1) | FW Cook reviewed recent proxy statements filed by our 14 peer companies referenced below and the base salary, annual cash compensation and total cash compensation data from the annual Mercer LLC/National Retail Federation 2011 US Retail Compensation and Benefits Survey with respect to companies with revenues between $300 million and $700 million, which covered 125 retail companies of which eight are in the Morningstar Industry Group - Specialty Retail index that we use as peer groups for the performance graph that appears in our Annual Report. The Mercer survey covered 7-Eleven, Inc., addidas America, Aeropostale, Inc., Ahold USA, Alex Lee, Inc., Ashland, Inc. - The Valvoline Company, AutoZone, Inc., Avis Budget Group, Inc., Axcess Financial Services, BI-LO, LLC, Belk, Inc., Big Lots, Inc., Boy Scouts of America, Brookstone, Inc., Brown Shoe Company, Inc., Build-A-Bear Workshop, Burlington Coat Factory, CVS/Caremark, Caribou Coffee Company, Carter's Inc., Charming Shoppes, Inc., Chevron Stations, Inc., Chico's FAS, Inc., Chipotle Mexican Grill, Inc., Christopher & Banks, Circle K Stores, Inc., Collective Brands, Inc., Cracker Barrel Old Country Store, Inc., Crate and Barrel, DFS, Deckers Outdoor Corporation, Dick's Sporting Goods, Disney Stores, Dollar General Corporation, Dollar Tree, Inc., Eastern Mountain Sports, Exxon Mobil Corporation, FedEx Office, Foot Locker, Inc., Fossil, Inc., GameStop, Inc., General Nutrition, Inc., Genesco, Inc., HDS Retail North America, HSN, Inc., Half Price Books, Inc., Hallmark Cards, Inc., Hanesbrands, Inc., Harley-Davidson, Inc., Harris Teeter, Inc., Helzberg's Diamond Shops, Inc., Hennes and Mauriz, LP, Hess Corporation, Hot Topic, Inc., InMotion Entertainment, Ingles Markets, Inc., J.C. Penney Company, Inc., J. Crew, J. Jill, Jo-Ann Fabric & Craft Stores, Inc., Jockey International Inc., Knowledge Learning Corporation, Kohl's Corporation, L.L. Bean, Inc., LF USA, Limited Brands, Inc., Limited Stores LLC, Liz Claiborne, Inc., Lord & Taylor, Lowe's Companies, Inc., lululemon athletica usa, Luxottica Retail US, Macy's, Inc., Marathon Oil Company, McDonald's Corporation, Michaels Stores, Inc., Navy Exchange Service Command, New Balance Athletic Shoe, Inc., Nordstrom, Inc., Office Depot, Oxford Industries, Inc., PETCO Animal Supplies, Inc., Panda Restaurant Group, Inc., Papa John's International, Inc., Phillips-Van Heusen Corporation, Pier 1 Imports, Inc., Polo Ralph Lauren, Price Chopper Supermarkets, Publix Super Markets, Inc., QVC, Inc., Rack Room Shoes, Inc., RadioShack Corporation, |
Big 5 Sporting Goods Corp. | Golfsmith International Holdings, Inc. | REI |
Cabela's Incorporated | Haverty Furniture Companies, Inc | Sports Chalet |
Cost Plus, Inc. | Hibbett Sports, Inc | Vitamin Shoppe |
The Finish Line, Inc. | Marine Max | Zumiez, Inc. |
Fred's, Inc. | Orchard Supply Hardware |
D. ELEMENTS OF EXECUTIVE COMPENSATION |
• | Base salary; |
• | Annual cash incentive compensation; |
• | Long-term equity incentive awards; and |
• | A modest perquisite in the form of paying nominal Executive life insurance premiums (without tax gross-ups). |
Base Salary | Performance-Based Annual Cash Bonus As % of Base Salary | Equity Grants (in #s) | ||||||
Name | Options | RSUs | Options | RSUs | ||||
FY2012 | FY2011 | FY2012 | FY2011 | FY2012 | FY2012 | FY2012 | FY2011 | |
Matthew L. Hyde | $600,000(1) | N/A | 100 | N/A | 100,000(2) | 40,000 (2) | N/A | N/A |
Thomas R. Moran | $331,563 | $325,000 | 50 | same | 16,500 | 8,250 | same | same |
Bruce Edwards | $372,115 | $360,000 | 50 | same | 16,500 | 8,250 | same | same |
Ronald Japinga | $357,067 | $350,000 | 50 | same | 16,500 | 8,250 | same | same |
(1) | Annualized base salary. |
(2) | Equity awards were granted as part of Mr. Hyde's new hire incentive compensation package. 60,000 constituted options granted as a new hire incentive and 40,000 as regular compensation. The options have a term of seven years and vest over a three-year period. In additions, Mr. Hyde was awarded 40,000 RSUs (20,000 as a new hire incentive and 20,000 as regular compensation), which vest over a three-year period. |
Performance Metrics | Weighting | Minimum $ Threshold for Payout | Minimum % Payout | Target Amount for 100% Payout | Allocation of 100% Payout(2) | Target Amount for Maximum 140% Payout | Allocation of Maximum 140% Payout(2) | Actual % Met | Actual $ Met |
Pre-bonus, Pre-tax Profit(1) | 80% | $24.2 | 20.0% | $37.7 | 80.0% | $448 | 112.0% | 45.5% | $30.0 |
Total Company Sales | 20% | $640 | 5.0% | $687 | 20.0% | $690 | 28.0% | 11.1% | $675.3 |
Total | 100% | 25.0% | 100.0% | 140.0% | 56.6% |
(1) | Pre-bonus, pre-tax profit is defined as income before taxes adjusted to exclude expenses related to gain from foreign currency conversion, bonus accruals for all bonus-eligible stores, support center and distribution center associates and any unusual, non-operating items as approved by the Committee. |
(2) | The bonus payout potential increased on a sliding scale to 100% for meeting stretch, or target, goals with a maximum bonus payout potential of 140%. |
NEO | Actual bonus earned $ |
Matthew L. Hyde(1) | $340,000 |
Thomas R. Moran | $93,788 |
Bruce Edwards | $105,259 |
Ronald Japinga | $101,002 |
Geoffrey A. Eisenberg(2) | $136,807 |
(1) | Mr. Hyde received a guaranteed minimum bonus for 2012 as part of his hiring incentive. No further guaranteed bonuses are contemplated for any NEO. |
(2) | Mr. Eisenberg received a pro-rated bonus for the period of time he served as CEO in 2012 based on actual performance. |
• | Strengthen the link among our financial performance, stockholder value and long-term incentive compensation; |
• | Promote increased equity ownership by our Executives; |
• | Encourage Executive retention through use of multiple-year vesting periods; and |
• | Provide competitive levels of total compensation to our Executives. |
E. COMPENSATION RISK ANALYSIS |
F. STOCK OWNWERSHIP POLICY |
Stock Ownership Multiples of Base Salary | |
Position | Multiple Base Salary Used to Establish Ownership Target |
CEO & President - Matthew L. Hyde | 4x |
Executive Vice Presidents - Bruce Edwards & Ronald Japinga | 1.5x |
CFO - Thomas R. Moran & other Sr. Vice Presidents | 1x |
Position | Multiple of Annual Retainer |
Non-employee director | 6x |
• | Common stock (including vested RSUs) |
• | Shares purchased through Stock Buying Plan |
• | Unvested or vested stock options |
• | Unvested RSUs |
• | A one-year holding period for any stock purchased through our Stock Buying Plan; |
• | Executives are required to hold shares until stock ownership requirements are met as follows: |
◦ | 50% of the after-tax shares from exercised options and stock purchased under our Stock Buying Plan; and |
◦ | 75% of the after-tax shares from RSUs, must be retained by our Executives subject to the Stock Ownership Policy; |
• | Executives must maintain the stock ownership threshold requirement for the term of his or her employment; and |
• | Directors must maintain the stock ownership threshold for so long as they serve on our Board. |
G. LIMITED PERQUISITES AND PERSONAL BENEFITS |
• | Merchandise discounts |
• | Use of company-owned equipment (such as use of the company-leased sailboat, kayaks and other equipment) |
• | Ability to exchange for cash up to 80 hours of accrued paid time off per year (increased from 40 hours permitted in prior years) |
• | Participation in our Stock Buying Plan |
• | Group health, life and disability coverage |
H. POST EMPLOYMENT & SEVERANCE AGREEMENTS/ NO CHANGE-IN-CONTROL AGREEMENTS |
I. TAX DEDUCTIBILITY |
COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE REPORT ON EXECUTIVE COMPENSATION |
March 27, 2013 | Compensation and Leadership Development Committee (1) | |
Dennis F. Madsen, Chair Barbara L. Rambo David McComas |
(1) | Christiana Shi and James F. Nordstrom, Jr. each were appointed to the Compensation and Leadership Development Committee in March 2013 and, therefore, did not participate in Executive Compensation discussions or decisions for 2012 or in the preparation and review of the CD&A. |
Summary Compensation Tables |
Name and Principal Position | Year | Salary ($)(3) | Bonus ($)(4) | Restricted Stock Units ($)(5) | Option Awards ($)(6) | All Other Compensation ($)(7) | Total ($) |
Matthew L. Hyde(1) Chief Executive Officer | 2012 | 311,538 | 340,000 | 473,600 | 474,798 | 13,408 | 1,613,344 |
Thomas R. Moran Chief Financial Officer | 2012 2011 2010 | 331,563 325,000 325,000 | 93,788 74,239 172,368 | 84,563 85,470 — | 67,756 70,517 137,069 | 7,738 3,878 7,189 | 585,407 559,104 641,626 |
Bruce Edwards Executive Vice President of Stores, Port Supply and Direct-to-Consumer | 2012 2011 2010 | 372,115 360,000 360,000 | 105,259 82,234 190,931 | 84,563 85,470 — | 67,756 70,517 137,069 | 7,170 3,878 12,207 | 636,863 602,099 700,207 |
Ronald Japinga Executive Vice President of Merchandising, Replenishment and Logistics | 2012 2011 2010 | 357,067 350,000 350,000 | 101,002 79,949 185,627 | 84,563 85,470 — | 67,756 70,517 137,069 | 13,147 3,878 12,358 | 623,535 589,814 685,054 |
Geoffrey A. Eisenberg(2) Former Chief Executive Officer & Consultant | 2012 2011 2010 | 241,823 499,000 499,000 | 136,807 227,970 529,303 | — 129,500 — | — 106,843 207,680 | 346,279 7,108 16,051 | 724,909 970,421 1,252,034 |
(1) | Mr. Hyde became the President and CEO effective June 19, 2012 and is paid an annual base salary of $600,000. Mr Hyde received an annual equity award of 40,000 stock options and 20,000 RSU's and as an incentive to join West Marine, he received 60,000 stock options and 20,000 RSU's. |
(2) | Mr. Eisenberg resigned as CEO and President, effective June 19, 2012. From that date, Mr. Eisenberg was engaged as a consultant for a period of 18 months. For more information regarding the payments and other benefits to be paid to Mr. Eisenberg for such consulting services, see “Post-Employment Payment” below. Mr. Eisenberg's annual base salary was $499,000 until his resignation as our CEO and Director. |
(3) | Includes any employee contributions to our 401(k) and non-qualified deferred compensation plans. |
(4) | Amounts for 2012 represent a performance bonus earned for fiscal year 2012, paid in 2013. Amounts for 2011 represent a performance bonus earned for fiscal year 2011, paid in 2012. Amounts for 2010 represent a performance bonus earned for fiscal year 2010, paid in 2011. |
(5) | This column shows the aggregate grant date fair value of RSUs granted in each year presented. These amounts are used to calculate accounting expense and do not necessarily represent the actual value that will be realized by the NEOs. For a description of the methodology and assumptions used to determine the amounts recognized in 2012, see Note 2 to our consolidated financial statements set forth in our annual report on Form 10-K for the fiscal year ended December 29, 2012 (“2012 Financial Statements”). |
(6) | This column shows the aggregate grant date fair value of stock options granted in each year presented. These amounts are used to calculate accounting expense and do not necessarily represent the actual value that will be realized by the NEOs. For a description of the methodology and assumptions used to determine the amounts recognized in 2012, see Note 2 to our 2012 Financial Statements. |
(7) | The amounts reported as All Other Compensation for 2012 consist of the following: |
401(k) Plan Matching | Life Insurance Premiums | Executive Relocation(8) | Payout of Accrued Paid-Time-Off | Post-Employment/ Severance Payments | |
Matthew L. Hyde | $— | $— | $13,408 | $— | $— |
Thomas R. Moran | 3,878 | 3,860 | — | — | — |
Bruce Edwards | 3,878 | 1,490 | — | 1,803 | — |
Ronald Japinga | 3,878 | 2,370 | — | 6,899 | — |
Geoffrey A. Eisenberg | 3,878 | 3,230 | — | 58,848 | 280,323 |
(8) | On May 15, 2012, the Board of Directors approved Mr. Hyde's employment offer which included reimbursement for reasonable relocation expenses for his move from Seattle, Washington to the greater Watsonville, California area. |
Grants of Plan-Based Awards in 2012 |
Name | Grant Date | Date Approved(1) | Awards of Stock Options Under Equity Incentive Plan (#Sh) | Awards of Restricted Stock Units Under Equity Incentive Plan (#Sh) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(2) | ||
Matthew L. Hyde | July 16, 2012 | May 16, 2012(3) | 100,000 | 40,000 | 11.84 | 948,398 | ||
Thomas R. Moran | June 1, 2012 | March 14, 2012 | 16,500 | 8,250 | 10.25 | 152,319 | ||
Bruce Edwards | June 1, 2012 | March 14, 2012 | 16,500 | 8,250 | 10.25 | 152,319 | ||
Ronald Japinga | June 1, 2012 | March 14, 2012 | 16,500 | 8,250 | 10.25 | 152,319 |
(1) | The Governance and Compensation Committee met and approved the awards, other than Mr. Hyde's, on March 14, 2012, but the awards were made effective as of June 1, 2012 in accordance with the terms of our Equity Incentive Plan and Equity Award Grant Policy, with an exercise price determined as of the effective date. |
(2) | Represents the grant date fair value of the stock option grant and RSU award. For a description of the methodology and assumptions used to determine the grant date fair market value, see Note 2 to the 2012 Financial Statements. |
(3) | The Governance and Compensation Committee met and approved the awards on May 16, 2012, but this award was made effective as of July 16, 2012 in accordance with the terms of our Equity Incentive Plan and Equity Award Grant Policy, with an exercise price determined as of the effective date. |
Outstanding Equity Awards at Fiscal Year-End |
Option Awards | Restricted Stock Units | |||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Restricted Stock Units That Have Not Vested (#) | Market Value of Restricted Stock Units That Have Not Vested ($) |
Matthew L. Hyde(1) | — | 100,000(2) | 11.8400 | July 16, 2019 | 40,000(9) | 427,600 |
Thomas R. Moran | — 5,502 21,780 11,200 | 16,500(2) 10,998(2) 11,220(3) — | 10.2500 10.3600 10.9700 5.7950 | June 1, 2019 June 1, 2018 June 1, 2015 June 1, 2014(5) | 8,250(9) 5,498(9) | 88,193 58,774 |
Bruce Edwards | — 5,502 21,780 23,100 18,368 19,000 19,000 | 16,500(2) 10,998(2) 11,220(3) — — — — | 10.2500 10.3600 10.9700 5.7950 4.5000 29.7000 16.1100 | June 1, 2019 June 1, 2018 June 1, 2015 June 1, 2014(6) June 2, 2013(7) February 27, 2014 March 28, 2013 | 8,250(7) 5,498(7) | 88,193 58,774 |
Ronald Japinga | — 5,502 21,780 33,000 36,216 50,000 | 16,500(2) 10,998(2) 11,220(3) — — — | 10.2500 10.3600 10.9700 5.7950 4.5000 15.1150 | June 1, 2019 June 1, 2018 June 1, 2015 June 1, 2014 June 2, 2013(8) March 31, 2013 | 8,250(9) 5,498(9) | 88,193 58,774 |
Geoffrey A. Eisenberg | 8,334 50,000 50,000 3,000 2,000 2,000 | 16,666(4) — — — — — | 10.3600 10.9700 5.7950 17.2650 26.2800 16.7466 | June 1, 2018 June 1, 2015 June 1, 2014 May 11, 2015 May 12, 2014 May 7, 2013 | 8,332(10) | 89,069 |
(1) | Represents Mr. Hyde's option and RSU awards upon hiring. |
(2) | These stock options vest in three installments of 33%, 33% and 34% on each anniversary of the grant date. The stock options are exercisable for a period of seven years from the date of grant, subject to earlier termination. See “Post-Employment Payments” for a description of earlier termination events. |
(3) | These stock options vest in three installments of 33%, 33% and 34% on each anniversary of the grant date. The stock options are exercisable for a period of five years from the date of grant, subject to earlier termination. See “Post-Employment Payments” for a description of earlier termination events. |
(4) | As of the effective date of Mr. Eisenberg’s resignation, we amended this stock option award to fully vest over their original term and allowed him to exercise such options (in accordance with their terms) at any time for a period of seven years from the date of grant. |
(5) | Mr. Moran exercised 11,220 stock options and sold 7,510 of the underlying shares in March 2013. |
(6) | Mr. Edwards exercised 10,775 stock options and sold 8,614 of the underlying shares in February 2013. |
(7) | Mr. Edwards exercised 18,368 stock options and sold 14,368 of the underlying shares in February 2013. |
(8) | Mr. Japinga exercised 36,216 stock options and sold 22,536 of the underlying shares in January 2013. |
(9) | Grants made in 2011 and 2012 vest in three installments of 33%, 33% and 34% on each anniversary of the grant date. |
(10) | As of the effective date of Mr. Eisenberg's resignation, we amended this RSU award to fully vest over their original term. |
Option Exercises and Restricted Stock Unit Vesting |
Stock Options | Restricted Stock Units | |||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||
Matthew L. Hyde | — | — | — | — | ||
Thomas R. Moran(1) | — | — | 2,752 | 28,208 | (5) | |
Bruce Edwards(2) | 32,393 | 172,050 | 2,752 | 28,208 | (5) | |
Ronald Japinga(3) | 19,150 | 112,541 | 2,752 | 28,208 | (5) | |
Geoffrey A. Eisenberg(4) | 400,000 | 1,650,667 | 4,168 | 42,722 | (5) |
(1) | Mr. Moran was awarded 8,250 RSUs on June 1, 2011 with a vesting to occur in three equal installments, on June 1, 2012, June 1, 2013 and June 1, 2014. |
Date of Transaction | Number of Stock Options Exercised (#) | Number of Shares Sold (#) | Number of Shares Held (#) | Option Exercise Price ($) | Average Sales Price ($) |
March 8, 2012 | 4,125 | 3,384 | 741 | $4.5000 | $10.6783 |
March 8, 2012 | 4,125 | 3,543 | 582 | $5.7950 | $10.6783 |
October 31, 2012 | 18,368 | 14,989 | 3,379 | $4.5000 | $10.0461 |
October 31, 2012 | 5,775 | 4,962 | 813 | $5.7950 | $10.0461 |
Date of Transaction | Number of Stock Options Exercised (#) | Number of Shares Sold (#) | Number of Shares Held (#) | Option Exercise Price ($) | Average Sales Price ($) |
July 30, 2012 | 4,150 | 3,344 | 806 | $4.5000 | $10.5340 |
August 16, 2012 | 5,000 | 4,090 | 910 | $4.5000 | $10.0000 |
November 1, 2012 | 8,200 | 6,789 | 1,411 | $4.5000 | $10.5000 |
November 2, 2012 | 1,800 | 1,301 | 499 | $4.5000 | $10.5000 |
(4) | Mr. Eisenberg was awarded 12,500 RSUs on June 1, 2011 and such RSUs will vest over their original term. In addition, Mr. Eisenberg exercised 400,000 stock options during the period from March 13, 2012 through December 18, 2012 all of which had an exercise price of $4.50 per share. Mr. Eisenberg sold all 400,000 shares at an average price of $10.5867 per share immediately subsequent to exercise. |
(5) | Based on a price per share of $10.25, which was the average share price of West Marine's common stock on the NASDAQ Global Market on June 1, 2012, the date the RSUs vested. |
Nonqualified Deferred Compensation |
Name | Executive contributions in last fiscal year ($) | Registrant contributions in last fiscal year ($) | Aggregate earnings in last fiscal year ($) | Aggregate withdrawals/ distributions ($) | Aggregate balance at December 29, 2012 ($) |
Matthew L. Hyde | — | — | — | — | — |
Thomas R. Moran | — | — | — | — | — |
Bruce Edwards(1) | — | — | 5,800 | 13,762 | 91,332 |
Ronald Japinga | — | — | — | — | — |
Geoffrey A. Eisenberg | — | — | — | — | — |
(1) | Mr. Edwards elected to receive an in-service payout over a five-year period commencing in April 2010. |
West Marine, Inc. | |
Deferred Compensation Plan — 2012 Annual Returns | |
Frontier Money Market | —% |
Western Asset U.S. Government | 3.37% |
MIST Clarion Global REIT | 26.30% |
Legg Mason Social Awareness | 10.71% |
T. Rowe Price Large Cap Growth | 18.67% |
MFS Total Return | 11.36% |
Janus Aspen Worldwide | 19.86% |
Harris Oakmark International | 29.47% |
Frontier Aggressive Growth | 10.88% |
Russell 2000 Index Portfolio | 16.35% |
Dreyfus Opport Small Cap | 20.56% |
MFS MetLife Stock Index | 15.55% |
Post-Employment Payments |
EXECUTIVE SEVERANCE PLAN |
• | Cash severance payments equal in the aggregate to the participant's Base Salary multiplied by the applicable severance period set forth in the chart below (“Cash Severance”). |
POSITION | LESS THAN 1 YEAR | 1 YEAR OR MORE BUT LESS THAN 5 YEARS | 5 YEARS OR MORE |
Chief Executive Officer/President | Base Salary x 52 weeks | Base Salary x 60 weeks | Base Salary x 78 weeks |
Executive Vice President | Base Salary x 35 weeks | Base Salary x 40 weeks | Base Salary x 52 weeks |
Senior Vice President | Base Salary x 27 weeks | Base Salary x 31 weeks | Base Salary x 40 weeks |
Vice President/ Regional Vice President | Base Salary x 17 weeks | Base Salary x 20 weeks | Base Salary x 26 weeks |
◦ | Cash Severance, is payable in substantially equal installments over the severance period on regularly-scheduled payroll dates, commencing as of the first payroll date following forty-five days following termination. |
◦ | Cash Severance is reduced to the extent participants receive compensation from other sources. |
• | Annual Cash Bonus. If termination occurs during the second half of a fiscal year, the Executive will receive a pro-rata bonus, if any. |
• | Equity. Executive may exercise his or her vested stock options in accordance with the terms of his or her stock option award agreement (generally 90 days). Unexercised vested stock options and unvested stock options or restricted stock awards automatically are forfeited. |
• | Death of a Participant. All severance benefits immediately cease upon death. |
• | Re-employment During Severance Period. Severance benefits terminate if the Executive is re-employed by West Marine. |
• | Tax Withholding. We may withhold for payroll taxes and the Executive is responsible for all taxes. |
• | Section 409A. Payments are subject to Section 409A of the Code for any Executive defined as "specified employee" thereunder. |
POST EMPLOYMENT COMPENSATION FOR FORMER CEO & OTHER NEOs |
Name | Geoffrey Eisenberg | Thomas R. Moran | Bruce Edwards | Ronald Japinga |
Position | Former CEO/President | SVP - CFO | EVP - Stores, Port Supply & Direct-to-Consumer | EVP - Merchandising, Planning & Replenishment |
Type of Post Employment Compensation (1) | Transition Services | Severance | Severance | Severance |
Effective Date of Plan or Agreement | June 19, 2012 | December 2006 (amended Sept 2007) | February 1, 2006 | September 1, 2004 |
Triggering Event | Resignation as CEO/President | Termination for any reason other than cause, death or disability, including constructive termination | Termination for any reason other than cause, death or disability. Includes adverse job change (substantial reduction in job responsibilities, title, position or full-time employment. | Termination for any reason other than cause, death or disability |
Cash Payment Term & Amount | 18 months of base salary(2) | 12 months of base salary (3) | 12 months of base salary | 12 months of base salary |
Bonus | Pro-rated bonus (4) | Pro-rated bonus (5) | Pro-rated bonus (5) | Pro-rated bonus (5) |
Medical | Cash amount equal to 18 months of COBRA premium | None | Group health insurance benefits for 12 months | Group health insurance benefits for 12 months (6) |
Equity | Vesting of his 25,000 stock options and 12,500 RSUs granted in 2011 continue to fully vest over their original term as if he had continued to be employed by West Marine. | Exercisability of vested stock options for 90 days(7) | Exercisability of vested stock options for 15 months(7) | Exercisability of vested stock options for 15 months(7) |
(1) All agreements contain standard general release, non-disparagement and non-solicitation provisions in exchange for such consideration. | ||||
(2) Payable in substantially equal installment payments over the 18-month period on regularly-scheduled payroll dates. The first six month installments aggregating $280,323 were withheld and paid to him on December 19, 2012 (to ensure compliance with IRS deferred compensation rules). | ||||
(3) Severance amounts are reduced by the amount of compensation earned or paid either as a result of new employment or serving as an independent consultant. | ||||
(4) Pro-rated for period of time he served as CEO in 2012. | ||||
(5) If termination occurs after the first six months of the year for which the bonus relates. | ||||
(6) Subject to termination with new health plan. | ||||
(7) Unvested equity awards are forfeited on termination. |
NEO POST-EMPLOYMENT SUMMARY PAYMENT TABLES |
Executive Benefit and Payments Upon Termination | Voluntary Termination | Involuntary (Not for Cause or Constructive) Termination | For Cause Termination | Change in Control | Death | ||||||||||
Compensation: | |||||||||||||||
Base Salary | — | $ | 600,000 | — | — | — | |||||||||
Benefits and Perquisites: | |||||||||||||||
Accrued vacation pay | $ | 13,338 | $ | 13,338 | $ | 13,338 | $ | 13,338 | $ | 13,338 | |||||
Total: | $ | 13,338 | $ | 613,338 | $ | 13,338 | $ | 13,338 | $ | 13,338 |
Executive Benefit and Payments Upon Termination | Voluntary Termination | Involuntary (Not for Cause or Constructive) Termination | For Cause Termination | Change in Control | Death | ||||||||||
Compensation: | |||||||||||||||
Base Salary | — | $ | 333,125 | — | — | — | |||||||||
Benefits and Perquisites: | |||||||||||||||
Life insurance proceeds | — | — | — | — | $ | 750,000 | |||||||||
Accrued vacation pay | $ | 27,752 | $ | 27,752 | $ | 27,752 | $ | 27,752 | 27,752 | ||||||
Total: | $ | 27,752 | $ | 360,877 | $ | 27,752 | $ | 27,752 | $ | 777,752 |
Executive Benefit and Payments Upon Termination | Voluntary Termination | Involuntary (Not for Cause or Constructive) Termination | For Cause Termination | Change in Control | Death | ||||||||||
Compensation: | |||||||||||||||
Base Salary | — | $ | 375,000 | — | — | — | |||||||||
Benefits and Perquisites: | |||||||||||||||
Post-termination health care | — | $ | 10,023 | — | — | — | |||||||||
Life insurance proceeds | — | — | — | — | $ | 1,000,000 | |||||||||
Accrued vacation pay | $ | 34,251 | $ | 34,251 | $ | 34,251 | $ | 34,251 | 34,251 | ||||||
Total: | $ | 34,251 | $ | 419,274 | $ | 34,251 | $ | 34,251 | $ | 1,034,251 |
Executive Benefit and Payments Upon Termination | Voluntary Termination | Involuntary (Not for Cause or Constructive) Termination | For Cause Termination | Change in Control | Death | ||||||||||
Compensation: | |||||||||||||||
Base Salary | — | $ | 358,750 | — | — | — | |||||||||
Benefits and Perquisites: | |||||||||||||||
Post-termination health care | — | $ | 10,023 | — | — | — | |||||||||
Life insurance proceeds | — | — | — | — | $ | 1,000,000 | |||||||||
Accrued vacation pay | $ | 39,697 | $ | 39,697 | $ | 39,697 | $ | 39,697 | 39,697 | ||||||
Total: | $ | 39,697 | $ | 408,470 | $ | 39,697 | $ | 39,697 | $ | 1,039,697 |
Executive Benefit and Payments Upon Termination | Voluntary Termination | Involuntary (Not for Cause or Constructive) Termination | For Cause Termination | Change in Control | Death | ||||||||||
Compensation: | |||||||||||||||
Base Salary | — | $ | 541,677 | — | — | — | |||||||||
Benefits and Perquisites: | |||||||||||||||
Life insurance proceeds | — | — | — | — | $ | 1,500,000 | |||||||||
Total: | $ | — | $ | 541,677 | $ | — | $ | — | $ | 1,500,000 |
VI. | NON-EMPLOYEE DIRECTOR COMPENSATION | |||
Annual Compensation Package |
DIRCTOR COMPENSATION ITEM(1) | FY 2012 | FY 2013 |
Board Retainer | • $25,000 | • $40,000 |
Board Meeting Fee | • $2,000 | • No fees up to seven scheduled (plus two unscheduled) meetings • $2,000 per any additional meeting |
Compensation and Leadership Committee Retainer | • Member: $9,500 • Chair: $15,000 | • Member: $7,500 • Chair: $15,000 (no change) |
Nomination and Governance Committee Retainer | • n/a | • Member: $5,000 • Chair: $10,000 |
Audit and Finance Committee Retainer | • Member: $13,000 • Chair: $20,000 | • Member: $13,000 (no change) • Chair: $20,000 (no change) |
Lead Director Retainer | • n/a | • $15,000 |
Chairman of Board Retainer(2) | • $100,000 • No other cash/Board fees • No equity awards | • $115,000 • No other cash/Board fees • No equity awards |
Annual Equity Grant(3) | • $40,000 | • $50,000 |
(1) | All annual Board and Committee retainers are paid in quarterly installments. |
(2) | Our Chairman of the Board, Randolph K. Repass, started receiving his $100,000 retainer in April 2011. Mr. Repass beneficially owns 6,973,629 shares, or approximately 28.9%, of our outstanding common stock. Mr. Repass has not been granted any stock options since our initial public offering in 1993 and receives no other cash compensation. |
(3) | All equity awards are granted as in accordance with the following terms: |
• | Granted on the date of each annual meeting. |
• | Granted in the form of RSUs (except a Director may elect to receive up to 50% in the form of stock options). |
• | RSUs, as full value shares, count as 2x the shares granted to every one stock option granted. |
• | The options are granted with an exercise price equal to 100% of the fair market value of West Marine's common stock on the grant date and have a term of seven years. |
• | All options and RSUs vest on the earlier of one year following the date of grant or the subsequent year's annual meeting date. |
Expense Reimbursement |
Non-Employee Director Summary Compensation Table |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(3) | Option Awards ($)(3) | Total ($) |
Randolph K. Repass | 100,000 | — | — | 100,000 |
Dennis F. Madsen | 42,500 | 20,006 | 7,385(4) | 62,506 |
David McComas | 42,500 | 40,013 | — | 82,513 |
Barbara L. Rambo | 61,000 | 40,013 | — | 101,013 |
James F. Nordstrom, Jr. (1) | — | — | — | — |
Alice M. Richter | 53,000 | 40,013 | — | 93,013 |
Christiana Shi | 46,000 | 40,013 | — | 86,013 |
Peter Roy (2) | 21,000 | — | — | 21,000 |
(1) | Mr. Nordstrom was appointed to the Board effective December 28, 2012. His cash compensation for Committee and Board service commenced with the March 2013 meeting and, if re-elected at the Annual Meeting, he will receive equity awards commensurate with those granted annually to independent Directors. |
(2) | Mr. Roy received pro-rated Director fees through the 2012 Annual Meeting. |
(3) | These two columns show the aggregate grant date fair value of restricted stock awards and stock options granted in 2012 to our independent Directors. These amounts are used to calculate accounting expense and do not necessarily represent the actual value that will be realized by our independent Directors. For a description of the methodology and assumptions used to determine the amounts recognized in 2012, see Note 2 to the 2012 Financial Statements. |
(4) | In 2012, Mr. Madsen was the only Director who elected to receive half of his annual equity award in stock options. When West Marine issued the equity award to Mr. Madsen, it inadvertently issued the same number of stock options as he had received in restricted stock, even though he should have received a higher number of stock options because each stock option has a lower economic value than a share of restricted stock. To correct this, the Board has approved the issuance of additional stock options to Mr. Madsen as of the date of the Annual Meeting with an exercise price equal to the greater of the market price of our common stock as of the 2012 Annual Meeting or the 2013 Annual Meeting. To the extent the market price of our common stock as of the date of the 2013 Annual Meeting is higher than it was as of the date of the 2012 Annual Meeting, Mr. Madsen will receive additional stock options such that the Black-Scholes valuation of the new option grant is equal to the Black-Scholes value of the additional options he should have received as of the 2012 Annual Meeting. |
Option Awards | Restricted Stock Awards | |||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Nonexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares That Have Not Vested (#) | Market Value of Shares That Have Not Vested ($)(1) |
Randolph K. Repass | — | — | — | — | — | — |
Dennis F. Madsen | — | 2,027 | $9.8700 | May 17, 2019 | 2,027 | 21,669 |
David McComas | — 3,000 2,000 2,000 | — | — $17.2650 $26.2800 $16.7466 | — May 11, 2015 May 12, 2014 May 7, 2013 | 4,054 | 43,337 |
James F. Nordstrom, Jr.(2) | ||||||
Barbara L. Rambo | — 3,000 4,500 | — | — $5.9700 $5.7700 | — May 20, 2014 October 14, 2013 | 4,054 | 43,337 |
Alice M. Richter | — | — | — | — | 4,054 | 43,337 |
Christiana Shi | — | — | — | — | 4,054 | 43,337 |
Peter Roy(3) | 3,000 3,000 2,000 2,000 | — | $10.9800 $17.2650 $26.2800 $16.7466 | May 20, 2015 May 11, 2015 May 12, 2014 May 7, 2013 | — | — |
(1) | Based on a price per share of $10.69 which was the closing share price of our common stock on the NASDAQ Global Market on December 28, 2012. |
(2) | Mr. Nordstrom was appointed to the Board effective December 28, 2012, with service commencing on the first Compensation and Leadership Development meeting that was held on March 13, 2013. |
(3) | Mr. Roy will be able to exercise such stock options for the balance of the remaining term of each award. |
VII. | OTHER INFORMATION | |||
(a) | (b) | (c) | |||||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (#) | Weighted-average exercise price of outstanding options, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (#) | ||||||||||
Equity compensation plans/arrangements approved by securityholders | 2,516,731 | (1) | $ | 11.05 | (1) | 1,836,467 | (2) | ||||||
Equity compensation plans/arrangements not approved by securityholders | — | — | — |
(1) | Pertains to stock options outstanding under the Equity Incentive Plan. Does not include 274,851 RSUs issued under the Equity Incentive Plan. Also does not include purchase rights accruing under the Stock Buying Plan as the number of shares issuable and the exercise price under that plan will not be determinable until the end of the current offering period, April 30, 2013. |
(2) | Consists of shares of common stock reserved for future issuance under the Equity Incentive Plan. Does not include 504,743 shares of common stock currently reserved for issuance under the Stock Buying Plan. |
Common Stock Beneficially Owned as of March 18, 2013(1) | ||||||||
Beneficial Owner | Number of Shares | Percent | ||||||
Randolph K. Repass | 6,973,629 | (2) | 28.9 | % | ||||
Matthew L. Hyde | — | (3) | — | |||||
Thomas R. Moran | 88,081 | (4) | * | |||||
Bruce Edwards | 130,622 | (4) | * | |||||
Ronald Japinga | 180,554 | (4) | * | |||||
Dennis F. Madsen | 9,858 | (5) | * | |||||
David McComas | 42,884 | (5) | — | |||||
James F. Nordstrom, Jr. | — | * | ||||||
Barbara L. Rambo | 21,457 | (5) | * | |||||
Alice M. Richter | 18,188 | (5) | * | |||||
Christiana Shi | 7,907 | (5) | * | |||||
All Directors and executive officers as a group (11 persons) | 7,473,180 | (6) | 30.9 | % | ||||
Geoffrey A. Eisenberg | 591,900 | (7) | 2.5 | % | ||||
Franklin Resources, Inc. | 3,284,530 | (8) | 13.6 | % | ||||
Dimensional Fund Advisors LP | 1,830,279 | (9) | 7.6 | % | ||||
Paradigm Capital Management, Inc. | 1,373,566 | (10) | 5.7 | % | ||||
Royce & Associates, LLC | 1,353,225 | (11) | 5.6 | % |
* | Less than one percent. |
(1) | Except as otherwise noted, each person has sole voting and investment power over the common stock shown as beneficially owned, subject to community property laws where applicable. |
(2) | The address of Mr. Repass is 500 Westridge Drive, Watsonville, California 95076-4100. Includes 254,600 shares held by Mr. Repass’ wife, 306,415 shares held in trust for Mr. Repass’ minor son, 176,500 shares held in trust for Mr. Repass' adult son, 40,400 shares held in trust for the benefit of Mr. Repass’ grandchildren and 378,201 shares held by the Repass-Rodgers Family Foundation Inc. Mr. Repass has sole voting and dispositive power with respect to 4,932,315 shares and is deemed to have shared voting and dispositive power with respect to 254,600 shares. Mr. Repass disclaims beneficial ownership of all shares attributed to his spouse and all shares held by the Repass-Rodgers Family Foundation. The beneficial ownership reported also includes 580,196 shares held by the Randolph K. Repass 2009 Grantor Retained Annuity Trust dated July 8, 2009, and 305,002 shares held by the Randolph K. Repass 2010 Grantor Retained Annuity Trust dated March 23, 2010. Although Mr. Repass retains a limited pecuniary interest in the shares held by the two grantor retained annuity trusts, Mr. Repass retains sole investment control over the shares in such trusts and his brother, as co-trustee, has sole voting power over the shares. |
(3) | Mr. Hyde has no exercisable stock options nor any RSUs that vest within 60 days. |
(4) | Includes stock options exercisable within 60 days to purchase shares as follows: Thomas R. Moran, 49,446 shares; Bruce Edwards, 99,771; and Ronald Japinga, 132,446 shares. Includes RSUs that vest in 60 days as follows: Thomas R. Moran, 8,220 units; Bruce Edwards, 7,295 units; and Ronald Japinga, 7,295 units. |
(5) | Includes stock options exercisable within 60 days to purchase shares as follows: Dennis F. Madsen, 2,027 shares; David McComas, 7,000 shares; and Barbara L. Rambo, 7,500. Includes RSUs that vest on May 17, 2013 as follows: Dennis F. Madsen, 2,027 units; David McComas, 4,054 units; Barbara L. Rambo, 4,054 units; Alice M. Richter, 4,054 units; and Christiana Shi, 4,054 units. |
(6) | Includes stock options exercisable within 60 days to purchase 298,190 shares. |
(7) | Includes stock options exercisable for the balance of the remaining term of the options to purchase 123,667 shares and 6,934 RSUs that vest within 60 days. |
(8) | The information contained in the table and this footnote with respect to Franklin Resources, Inc. is based solely on a statement on Schedule 13G/A filed February 11, 2013 reporting beneficial ownership as of December 31, 2012 by Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr., Franklin Templeton Investments Corp. and Franklin Advisory Services, LLC to the effect that (a) each (directly or indirectly) has dispositive and voting power over these shares to the extent disclosed therein and (b) these shares are held by investment companies or other managed accounts which are advised by subsidiaries of Franklin Resources, Inc. pursuant to investment management contracts which grant to such subsidiaries all investment and voting power over these shares. The business address for Franklin Resources, Inc., Charles B. Johnson and Rupert H. Johnson, Jr. is One Franklin Parkway, San Mateo, California 94403-1906. |
(9) | The information contained in the table and this footnote with respect to Dimensional Fund Advisors LP is based solely on a statement on Schedule 13G/A filed February 11, 2013 reporting beneficial ownership as of December 31, 2012 by Dimensional Fund Advisors LP to the effect that (a) it has sole dispositive power over all of these shares and (b) it has sole voting power over 1,781,409 shares. The business address for Dimensional Fund Advisors LP is Palisades West, Building One, 6300 Bee Cave Road, Austin, Texas 78746. |
(10) | The information contained in the table and this footnote with respect to Paradigm Capital Management, Inc. is based solely on a statement on Schedule 13G filed February 12, 2013 reporting beneficial ownership as of December 31, 2012 by Paradigm Capital Management, Inc. to the effect that it has sole dispositive and voting power over all of these shares. The business address for Paradigm Capital Management, Inc. is Nine Elk Street, Albany, New York 12207. |
(11) | The information contained in the table and this footnote with respect to Royce & Associates, LLC is based solely on a statement on Schedule 13G/A filed January 24, 2013 reporting beneficial ownership as of December 31, 2012 by Royce & Associates, LLC to the effect that it has sole dispositive and voting power over all of these shares. The business address for Royce & Associates, LLC is 745 Fifth Avenue, New York, New York 10151. |
By Order of the Board of Directors | ||
/s/ Pamela J. Fields | ||
Pamela J. Fields, Esq. Secretary |