Notice of

2019

Annual Meeting

of Stockholders

Columbus, Ohio

May 2, 2019

LETTER TO OUR STOCKHOLDERS

FROM THE BOARD OF DIRECTORS

Dear Fellow Stockholders,

After a positive start to 2018, business performance declined in the back half of the year, and in particular Q4. The retail sector continues to face challenges but the Board believes in the growth potential of the Company, and remains committed to maximizing long-term value for our stockholders. With a view toward the future, the Board determined in January that a change of leadership at the CEO level was necessary and replaced Chief Executive Officer David Kornberg. In line with the Board’s succession plan, we have appointed Matthew Moellering, our EVP and COO, to serve as Interim CEO, and the Board is making good progress on the search for a new CEO.

I want to assure you, as fellow stockholders, that while the CEO search is ongoing, the Board and management are actively working on several important initiatives that are intended to address the Company’s underperformance and to reposition the business for future growth and improved profitability. These initiatives include getting the right product assortment, ensuring that our brand and product voice is clear to our customers, acquiring new customers, and retaining those we have with a focus on fashion and newness. Additional details on these initiatives are included in this proxy statement and in our annual report.

While 2018 financial performance fell short of expectations, there are reasons to be optimistic, including our e-commerce business, which grew on a comparable sales basis by 21% on top of 22% comparable sales growth the previous year. In addition, the Company remains in a strong financial position, ending the 2018 fiscal year with $172 million in cash and no debt financing.

As we address the underlying issues that have led to the disappointing financial performance, we continue to acknowledge the critical role that corporate governance plays in carrying out our commitment to you, and we remain committed to focusing on issues important to our stockholders. I want to highlight a few of these items.

We continue to focus on having a diverse and deeply knowledgeable Board. We understand the importance of having the right combination of skills and experience on the Board to oversee the Company as it carries out its strategy to transform and position itself for success in the ever-changing retail environment in which we operate. During 2018, we added Winnie Park to our Board, who brings deep retail experience, both domestically and internationally, amongst other skills, to the Board. With this addition, three of our seven directors are female, and each of the directors brings broad diversity of experience and expertise.

We continue to strategically evaluate our capital use strategy to maximize long-term value. The Board, together with the management team, regularly evaluates the Company’s capital use strategy and we remain committed to deploying capital in ways that will generate long-term value for our stockholders. As such, in 2018, we repurchased 10 million shares of our outstanding common stock at an aggregate cost of $83 million, and have repurchased 13 million shares for $105 million life to date under the $150 million share repurchase program approved in November 2017 as part of a capital return plan for our stockholders.

We continue to emphasize a strong pay-for-performance culture for our senior leadership team. It is important to us that the interests of our executives are aligned with the interests of stockholders by setting rigorous performance targets that are tied to key financial results and strategic objectives that further the Company’s long-term strategy. While we believe in providing a target pay opportunity that is competitive with the market, actual compensation should align with Company performance. In 2018, our outgoing CEO’s target compensation did not increase from 2017 and his actual compensation, exclusive of a one-time separation payment, was significantly less than target, reflecting business results. In addition, in 2018 we further aligned the interests of our executives with our stockholders by introducing a relative total shareholder return modifier into our long-term incentive program. Finally, while the Company focuses on addressing the underlying issues that have led to financial underperformance, the senior management team’s compensation will in general remain the same in 2019 as 2018, reflecting a continued pay-for-performance culture below the CEO level as well.

We continue to engage with you, our stockholders. During 2018, we reached out to stockholders representing a majority of our outstanding common stock. We highly value our conversations with stockholders and as a Board, discuss and take into consideration feedback shared. We appreciate those who took the time to engage and share their viewpoints with us in 2018 and we look forward to continued engagement with stockholders in 2019.

Express continues to be a relevant and resilient brand. We believe in its future, and thank you for your continued support.

Mylle H. Mangum

Chairman of the Board

Notice of

2019 Annual Meeting of Stockholders

This proxy statement is issued in connection with the solicitation of proxies by the Board of Directors of Express, Inc. for use at the 2019 Annual Meeting of Stockholders and at any adjournment or postponement thereof. On or about May 2, 2019, we will begin distributing print or electronic materials regarding the annual meeting to each stockholder entitled to vote at the meeting. Shares represented by a properly executed proxy will be voted in accordance with instructions provided by the stockholder.

How to Vote

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the 2019 Annual Meeting of Stockholders, we urge you to vote your shares now in order to ensure the presence of a quorum.

Stockholders of record may vote:

By Internet: go to www.proxyvote.com;

By telephone: call toll free (800) 690-6903; or

By mail: if you received paper copies in the mail of the proxy materials and proxy card, mark, sign, date, and promptly mail the enclosed proxy card in the postage-paid envelope.

Beneficial Stockholders. If you hold your shares through a broker, bank, or other nominee, follow the voting instructions you receive from your broker, bank, or other nominee, as applicable, to vote your shares.

By Order of the Board of Directors,

Melinda R. McAfee

Senior Vice President, General Counsel and Corporate Secretary

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on June 12, 2019: this Notice of Annual Meeting and Proxy Statement and our 2018 Annual Report are available in the investor relations section of our website at www.express.com/investor. Additionally, and in accordance with the Securities and Exchange Commission (“SEC”) rules, you may access our proxy materials at www.proxyvote.com, a site that does not have “cookies” that identify visitors to the site.

Table of Contents

Election of Class III Directors

(Proposal No. 1)

The Board and its Compensation and Governance Committee are committed to ensuring that the Board possesses the right diversity of backgrounds, skills, experience, and perspectives to constitute an effective Board. The Board currently consists of seven members and is divided into three classes of directors, with two Class I directors, two Class II directors, and three Class III directors. The current term of our Class III directors expires at the Annual Meeting, while the terms for Class I and Class II directors will expire at our 2020 and 2021 annual meetings of stockholders, respectively.

Mr. Davenport and Mses. Leever and Park currently serve as Class III directors and are independent. Upon the recommendation of the Compensation and Governance Committee, the Board has nominated Mr. Davenport and Mses. Leever and Park for re-election as Class III directors, to each serve three-year terms expiring at the 2022 annual meeting of stockholders. Mr. Davenport and Ms. Leever have each served as a director since 2016 and Ms. Park joined the Board in June 2018.

Mr. Davenport and Mses. Leever and Park have consented to serve if elected. If re-elected, each of Mr. Davenport, Ms. Leever, and Ms. Park will hold office until his or her respective successor has been duly elected and qualified or until his or her earlier resignation or removal. If Mr. Davenport, Ms. Leever, or Ms. Park becomes unavailable to serve as a director, the Board may either designate a substitute nominee or reduce the number of directors. If the Board designates a substitute nominee, the persons named as proxies will vote for the substitute nominee designated by the Board.

Information with respect to our Class III director nominees and our continuing Class I and Class II directors, including their recent employment or principal occupation, a summary of select qualifications, skills, and experience that led to the conclusion that they are qualified to serve as directors, the names of other public companies for which they currently serve as a director or have served as a director within the past five years, their period of service on the Board, and their ages as of the Record Date, are provided in this section. The Board believes that our continuing directors, together with our director nominees, possess a complementary and diverse set of qualifications, skills, and experience to allow the Board to function at a high-level and fulfill its responsibilities to our stockholders. Please refer to “Corporate Governance—Board Composition” on page 13 for other information about our Board, including a description of the qualifications, skills, and experience that the Board believes are important in order to effectively oversee the Company as it carries out its growth strategy and commitment to long-term value creation.

Nominees For Class III Directors For Election at the 2019 Annual Meeting

TERRY DAVENPORT

KAREN LEEVER

WINNIE PARK

Class I Directors With Terms Continuing Until the 2020 Annual Meeting

Class II Directors With Terms Continuing Until the 2021 Annual Meeting

MICHAEL F. DEVINE
		Director Since: May 2010 Age: 60 Audit Committee Member (Chair of the Audit Committee May 2010 - March 2019)
				Select Qualifications, Skills, and Experience:   ·  Accounting, finance, and capital structure   ·  Risk management   ·  Corporate governance and public company board practices   ·  Investor relations   ·  Executive leadership of complex organizations   ·  Retail merchandising
Business Experience   Mr. Devine was appointed Senior Vice President and Chief Financial Officer of Coach in December 2001 and Executive Vice President in August 2007, a role he held until he retired in August 2011. Prior to joining Coach, Mr. Devine served as Chief Financial Officer and Vice President—Finance of Mothers Work, Inc. (now known as Destination Maternity Corporation) from February 2000 until November 2001. From 1997 to 2000, Mr. Devine was Chief Financial Officer of Strategic Distribution, Inc. Mr. Devine was Chief Financial Officer at Industrial System Associates, Inc. from 1995 to 1997, and for the six years prior to that, he was the Director of Finance and Distribution for McMaster-Carr Supply Co. Mr. Devine previously served as a director of Nutrisystems, Inc. He currently serves as a director of Deckers, Inc. and Five Below, Inc.

MYLLE MANGUM
		Director Since: August 2010 Age: 70 Chairman of the Board; Compensation and Governance Committee Member; Audit Committee Member
				Select Qualifications, Skills, and Experience:   ·  Business development and strategic planning   ·  Corporate governance and public company board practices   ·  Executive leadership of complex organizations   ·  Leadership development and succession planning   ·  International and franchise operations   ·  Accounting, finance, and capital structure   ·  Executive compensation
Business Experience   Ms. Mangum is the Chief Executive Officer of IBT Holdings, LLC, a position she has held since October 2003. Prior to that, Ms. Mangum served as Chief Executive Officer of True Marketing Services, LLC since July 2002. She served as Chief Executive Officer of MMS Incentives, Inc. from 1999 to 2002. From 1997 until 1999, she served as President-Global Payment Systems and Senior Vice President-Expense Management and Strategic Planning for Carlson Wagonlit Travel, Inc. From 1992 until 1997 she served as Executive Vice President-Strategic Management for Holiday Inn Worldwide. Ms. Mangum was previously employed with BellSouth Corporation as Director-Corporate Planning and Development from 1986 to 1992 and President of BellSouth International from 1985 to 1986. Prior to that, she was with the General Electric Company. Ms. Mangum previously served as a director of Emageon, Inc., Scientific-Atlanta, Inc., and Respironics, Inc. Ms. Mangum currently serves as a director of PRGX Global, Inc., Barnes Group Inc., and Haverty Furniture Companies, Inc.

Corporate Governance

Board Responsibilities

The Board is responsible for overseeing the affairs of the Company in order to generate sustainable long-term value for our stockholders and does so through oversight of the Company’s (1) strategy and performance, (2) management, including succession planning, (3) risk management program, (4) compliance and corporate responsibility programs, and (5) other corporate governance practices, including stockholder engagement.

The Board believes that effective oversight is best achieved through (1) having the right combination of people on the Board, (2) an effective Board leadership and committee structure, and (3) effective Board practices. The Board continually reassesses the composition of the Board, the Board’s leadership and structure, and its governance practices and believes that the continuing directors, along with the director nominees, together have a complementary and diverse set of skills, backgrounds, experiences, and perspectives to constitute an effective Board; and furthermore, that the Board’s leadership and committee structure as well as its governance practices are effective. See “Board Composition” below and “Election of Class III Directors (Proposal No. 1)” on page 8 for more information about the composition of the Board; see “Board Leadership and Structure” on page 16 for more information about the Board’s leadership structure and its committees; and see “Board Practices” on page 19 for more information about the Board’s governance practices.

Board Composition

The Board and its Compensation and Governance Committee (in this “Corporate Governance” section, the “Committee”) are committed to ensuring that the Board possesses the right diversity of backgrounds, skills, experience, and perspectives to constitute an effective Board. The Committee is responsible for developing the criteria for, and reviewing periodically with the Board, the skills and characteristics of nominees, as well as the composition of the Board as a whole. These criteria include independence, diversity, age, skills, tenure, and experience in the context of the needs of the Board. The Committee also considers a number of other factors, including the ability to represent all stockholders without a conflict of interest; the ability to work in and promote a productive environment; sufficient time and willingness to fulfill the substantial duties and responsibilities of a director; a high level of character and integrity; broad professional and leadership experience and skills necessary to effectively respond to complex issues encountered by a publicly-traded company; and the ability to apply sound and independent business judgment.

BOARD COMPETENCIES AND EXPERIENCE

The Board believes that it has the right mix of qualifications, skills, experience, and perspectives that allow it to fulfill its responsibilities, including overseeing management’s execution of the Company’s corporate strategy, which is designed to create long-term stockholder value. The information below shows how the Board’s collective qualifications, skills, and experience relate to the Company’s corporate strategy. For biographical information regarding each of our directors and their individual qualifications, skills, and experience see, “Election of Class III Directors (Proposal No. 1)” beginning on page 8.

Long-Term Strategy for Value Creation				Strategic Competencies and Experience				Corporate Governance Competencies and Experience
				·  Retail merchandising & operations   · Apparel merchandising & design   ·  E-commerce and omni-channel     retailing   ·  Business development & strategic     planning   ·  Supply chain   ·  International and franchise     operations   ·  Technology development and     management experience   · Data analytics   · Leadership development				·  Accounting, finance, and capital     structure   · Investor relations   · Executive compensation   · Mergers and acquisitions   ·  Executive leadership of complex     organizations   · Corporate responsibility   ·  Corporate governance and public     company board practices   · Risk management   · Succession planning
Improving Profitability Through a Balanced Approach to Growth
Increasing Brand Awareness and Elevating the Customer Experience
Transforming and Leveraging Information Technology Systems
Cultivating a Strong Company Culture

BOARD DEMOGRAPHICS AND REFRESHMENT

As previously noted, in addition to ensuring that the Board collectively has a diverse set of competencies, experience, and perspectives, the Committee and Board also consider independence as well as diversity, age, and tenure. The charts below show certain demographic information about our Board as of April 16, 2019.

In order to assure the appropriate balance between members with new and different perspectives and those with a deep understanding of the Company built up over many years, the Committee reviews a director’s continuation on the Board each time such director’s term of office expires. In addition, the Company’s Corporate Governance Guidelines (the “Corporate Governance Guidelines”) provide that a director will not be nominated for re-election if he or she is 72 years of age or older at the time of nomination. The Board believes that together these practices are effective at ensuring an appropriate balance between experience and a fresh perspective on the Board.

IDENTIFYING AND EVALUATING DIRECTOR CANDIDATES

The Committee is responsible for identifying, recruiting, and recommending candidates for the Board and is responsible for reviewing and evaluating any candidates recommended by stockholders.

The following shows our nomination process for candidates to our Board:

Conduct a Needs Assessment

The Committee determines the director skills, experience, and attributes needed for the Board to exercise effective oversight of the Company. The Committee assesses the skills, experience, and attributes of existing directors against desired director skills, experience, and attributes to identify any skills, experience, and attributes that would strengthen the collective skills and experience of the Board.

Develop a New Director Profile

The Committee develops a profile that sets forth the skills, experience, and attributes desired for the new director, which satisfies the needs identified in the needs assessment.

Identify New Director Candidates

The Committee may identify new director candidates through professional search firms, professional networks of sitting directors, and nominations suggested by stockholders.

Selection of New Director

The Committee makes a recommendation to the Board based on an initial round of interviews, reference checks, and a final round of interviews with all directors.

Due Diligence and Onboarding

Once due diligence is performed and the nominee is appointed to the Board, the Company provides a robust onboarding program which includes a full day of in-person meetings with senior leadership at the Company’s headquarters and participation in a multi-day new director education program for first-time directors.

The Committee followed the process described above in connection with the appointment of Ms. Winnie Park to the Board in June 2018 and such process included the engagement of a third party search firm to identify and pre-qualify Ms. Park.

The Committee considers all director candidates, including candidates proposed by stockholders in accordance with our Bylaws, based on the same criteria. As noted above, the Committee may engage third party search firms to identify potential director nominees.

Board Leadership and Structure

LEADERSHIP STRUCTURE

Ms. Mangum has served as the Company’s independent Chairman since assuming the role at our 2016 Annual Meeting of Stockholders. The independent Chairman’s roles and responsibilities include: (1) establishing the Board agendas and schedules to confirm that appropriate topics are reviewed and sufficient time is allocated to each; (2) providing input to the CEO with respect to the information provided to the Board; (3) serving as a liaison between the independent directors and the CEO; (4) presiding at the executive sessions of independent directors; (5) facilitating communications and coordination of activities among the committees as appropriate; and (6) approving and coordinating the retention of advisors and consultants to the Board.

Our Corporate Governance Guidelines provide that the roles of Chairman and CEO may be separated or combined. The Board exercises its discretion in combining or separating these positions as it deems appropriate. The Board believes that the combination or separation of these positions should be considered as part of the succession planning process. In the event that the Chairman is not independent, the Board believes that it is beneficial for the independent directors to appoint an independent Lead Director. Currently, the Board believes that having an independent Chairman best serves the Board in its oversight role.

BOARD COMMITTEES

The Board has two standing committees: an Audit Committee and a Compensation and Governance Committee. The composition and leadership of these committees are shown in the table below. In the future, the Board may establish other committees, as it deems appropriate, to assist it with its responsibilities. The committees report to the Board as they deem appropriate and as the Board may request. Each standing committee operates under a charter that has been approved by the Board and each is comprised solely of independent directors.

AUDIT COMMITTEE

Audit Committee Responsibilities

The Audit Committee also prepares the Audit Committee Report that SEC rules require to be included in our annual proxy statement. This report is on page 62 of this proxy statement.

Audit Committee Meetings

The Audit Committee met eight times in 2018. The Audit Committee generally has eight regularly scheduled meetings per year and has an opportunity at each meeting to speak with the lead audit partner from the Company’s independent registered public accounting firm as well as the Company’s director of internal audit without any other members of management present. In addition, the Audit Committee Chair has regularly scheduled teleconferences with each of the Company’s Chief Financial Officer and the lead audit partner from the Company’s independent registered public accounting firm.

Audit Committee Practices

At the end of each quarter, the Audit Committee reviews and discusses with management and the Company’s independent registered public accounting firm the Company’s financial results, press releases concerning the Company’s financial performance and earnings estimates, any significant control deficiencies identified and steps management has taken or plans to take to remediate the deficiencies, significant estimates and proposed adjustments to the financial statements, reports to the Company’s ethics hotline, internal audit activities and reports, risk management activities, and the results of the independent registered public accounting firm’s review or audit of the Company’s financial statements, among other things.

Each year the Audit Committee evaluates the performance of the Company’s independent registered public accounting firm and considers whether it is in the best interests of the Company and its stockholders to engage the firm for another year. As part of its evaluation, the Audit Committee considers the qualifications of the persons who will be staffed on the Company’s engagement, including the lead audit partner, quality of work, firm reputation, independence, fees, retail experience, and understanding of the Company’s financial reporting processes, policies, and procedures. The Audit Committee solicits feedback from management as part of its evaluation process.

Audit Committee Independence and Expertise

The Board has affirmatively determined that (1) each of our Audit Committee members meets the definition of “independent director” for purposes of serving on the Audit Committee under both Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the NYSE listing rules, and (2) each qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K.

Audit Committee Charter

The Audit Committee Charter may be viewed in the investor relations section of our website at www.express.com/investor. We will also provide a copy of the charter in print without charge upon written request delivered via email to IR@express.com or by mail to Express, Inc. 1 Express Drive, Columbus, OH 43230, Attention: Investor Relations.

COMPENSATION AND GOVERNANCE COMMITTEE

Compensation and Governance Committee Responsibilities

The Compensation and Governance Committee also prepares the Compensation and Governance Committee Report that SEC rules require to be included in our annual proxy statement. This report is on page 44 of this proxy statement.

Compensation and Governance Committee Independence

The Board has affirmatively determined that each of our Compensation and Governance Committee members meets the definition of “independent director” for purposes of serving on the Compensation and Governance Committee under both Rule 10C-1 of the Exchange Act and the NYSE listing rules.

Compensation and Governance Committee Meetings

The Compensation and Governance Committee met seven times in 2018. The Compensation and Governance Committee generally has six regularly scheduled meetings per year and has an opportunity at each meeting to speak with the Compensation and Governance Committee’s independent compensation consultant.

Compensation and Governance Committee Practices

See “Executive Compensation—Compensation Discussion & Analysis—Executive Compensation Practices” on page 41 for additional information about the Compensation and Governance Committee’s practices.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation and Governance Committee has been an officer or employee of the Company. No interlocking relationships exist between the members of the Board or Compensation and Governance Committee and the board of directors or compensation committee of any other company.

Compensation and Governance Committee Charter

The Compensation and Governance Committee Charter may be viewed in the investor relations section of our website at www.express.com/investor. We will also provide a copy of the charter in print without charge upon written request delivered via email to IR@express.com or by mail to Express, Inc. 1 Express Drive, Columbus, OH 43230, Attention: Investor Relations.

Board Practices

STRATEGY OVERSIGHT

The Board has deep experience in the area of strategy and business development, with much of that experience gained in the retail sector. At least once per year, the Board and management engage in an in-depth discussion and align on the Company’s corporate strategy which is designed to create long-term stockholder value and serves as the foundation upon which goals are established and decisions are made. Short and medium term objectives are developed to support achievement of the long-term strategy and the Board monitors management’s progress against such objectives.

RISK OVERSIGHT

MANAGEMENT OVERSIGHT AND SUCCESSION PLANNING

As part of its management oversight responsibilities, the Board assesses whether the Company has the management talent needed to successfully pursue the Company’s strategy, monitors management’s execution of the Company’s strategy, and provides advice to management as a strategic partner. The Board believes that open communications between the Board and management play a key role in effective oversight. Accordingly, in addition to formal meetings, individual directors and members of management engage in frequent dialogue concerning the Company in between meetings.

The Board is responsible for succession planning for the CEO position and for monitoring and advising on management’s succession planning for other executive officers and key contributors. The Board reviews and discusses succession plans for the CEO position and the Company’s other executive officers and key contributors at least once annually, usually as part of the annual talent review of the executive leadership and key contributors in the Company. As part of the annual talent review process, the CEO shares his or her evaluation of the executive leadership in the business and makes recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals. Directors become familiar with potential successors for key management positions through various means, including annual talent reviews, presentations to the Board, and communications outside of meetings.

The Board followed its succession plan for the CEO position when it determined near the end of fiscal 2018 that a change of leadership at the CEO level was necessary and replaced our then President and CEO David Kornberg with Matthew Moellering, our EVP and COO, to serve as Interim CEO and Interim President, until a permanent CEO and President is appointed.

COMPLIANCE & CORPORATE RESPONSIBILITY

The Board is committed to ensuring that the Board and the management team together cultivate a high-performing, collaborative corporate culture that emphasizes the importance of acting according to high ethical standards and in compliance with legal requirements. The Board receives a compliance update each quarter from the Company’s General Counsel who has day-to-day oversight responsibilities for the Company’s compliance program. On an annual basis, the Board reviews with management the Company’s top compliance risks based on an updated risk assessment, steps management is taking to reduce compliance risk, and key compliance initiatives for the upcoming year.

The Company’s reputation and commitment to corporate responsibility, including respect for human rights, the environment, our communities, and associates, play an important role in our ability to create long-term stockholder value. While matters of corporate responsibility are integrated within various Board discussions, the Board also dedicates specific time during each year to review and discuss the Company’s corporate responsibility program, including plans and progress against key initiatives.

STOCKHOLDER ENGAGEMENT

Our stockholders’ views on corporate governance and executive compensation are important to us and we value and utilize the feedback and insights that we receive. Each year, as part of our annual stockholder engagement cycle described below, we reach out to our largest stockholders who collectively hold over a majority of the shares of our outstanding common stock, which generally includes approximately our 20 largest stockholders. Our Chief Executive Officer, Chief Financial Officer, and Vice President of Investor Relations also routinely engage with stockholders throughout the year outside of our annual stockholder engagement program. Stockholders may request meetings with management or directors by sending a written request to the Office of the Corporate Secretary at 1 Express Drive, Columbus, OH 43230 or via email to IR@express.com.

STOCKHOLDER ENGAGEMENT CYCLE

The Board’s decision to approve a capital return program for our stockholders and the Company’s repurchase of approximately 10 million shares in 2018 was based in part on feedback received from our stockholders. We also received feedback from several investors that helped to inform our proposal for a new equity incentive plan in 2018. In addition, Mr. Kornberg’s compensation package was originally designed based in part on feedback received from stockholders on our executive compensation in prior years.

For more information regarding our 2018 stockholder engagement efforts, see “Executive Compensation—Compensation Discussion and Analysis—Executive Compensation Practices—Stockholder Engagement and Annual Advisory Vote on Executive Compensation” on page 42.

COMMUNICATIONS WITH THE BOARD

Stockholders and other interested parties may contact an individual director, including the independent Chairman, the Board as a group, or a specified Board committee or group, including the independent directors as a group, at the following address: Office of the Corporate Secretary, Express, Inc., 1 Express Drive, Columbus, OH 43230 Attn: Board of Directors. Any correspondence should clearly indicate whether the correspondence is intended for an individual director, the Board as a group, or a specified committee or group of directors.

All such reports or correspondence will be forwarded to the appropriate director or group of directors as indicated on the correspondence unless the correspondence is of a trivial nature, irrelevant to the Board’s responsibilities, or already addressed by the Board. A report will be made to the Audit Committee of all communications to the Board, and all such correspondence is made available to all directors.

BOARD MEETINGS

The Board held a total of 10 meetings, all held in person and by telephone, during 2018. Each director attended at least 75% of Board meetings held during the year, as well as at least 75% of meetings of the committees on which he or she served during 2018. Directors are expected to attend our annual meetings of stockholders. All of our directors attended our 2018 annual meeting of stockholders.

The independent directors are given an opportunity to meet in executive session at each Board meeting and do so routinely.

CORPORATE GOVERNANCE PRINCIPLES

The Board has adopted policies and procedures to ensure effective governance of Express. Our Corporate Governance Guidelines may be viewed in the investor relations section of our website at www.express.com/investor. We will also provide the Corporate Governance Guidelines in print without charge upon request by telephone at (888) 423-2421, via email to IR@express.com, or via mail delivered to Express, Inc., 1 Express Drive, Columbus, OH 43230, Attention: Investor Relations.

The Compensation and Governance Committee reviews our Corporate Governance Guidelines from time to time as necessary, but no less than annually, and may propose modifications to the principles and other key governance practices from time to time for adoption by the Board. No changes were made to our Corporate Governance Guidelines in the most recent year.

DIRECTOR ELECTION STANDARDS

Our Bylaws and Corporate Governance Guidelines provide for a majority voting standard in uncontested director elections. Therefore, in uncontested director elections, a director nominee must receive more votes cast for than against his or her election in order to be elected to the Board. The Board expects a director to tender his or her resignation if he or she fails to receive the required number of votes for election or re-election.

The Company has a classified Board, with each class of directors serving 3-year terms. Our certificate of incorporation provides that, subject to any rights applicable to any then-outstanding preferred stock, the Board shall consist of such number of directors as is determined from time to time by resolution adopted by a majority of the total number of authorized directors, whether or not there are any vacancies in previously authorized directorships. Subject to any rights applicable to any then-outstanding preferred stock, any vacancies resulting from an increase in the size of the Board or otherwise must be filled by the directors then in office unless otherwise required by law or by a resolution passed by the Board. The term of office for each director will be until his or her successor is elected at an annual meeting of stockholders or his or her death, resignation, or removal, whichever is earliest to occur. Any additional directorships resulting from an increase in the size of the Board will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the total number of directors.

BOARD EVALUATIONS

The Board conducts a comprehensive annual self-evaluation to determine whether it and its committees are functioning effectively and to identify potential areas of improvement. The evaluation process includes written questionnaires and one-on-one interviews with each director. The Chairman shares a summary of the results with the full Board and action plans are created to address identified improvement opportunities.

OUTSIDE BOARD MEMBERSHIPS

Our Corporate Governance Guidelines provide that directors should not serve on more than four other public company boards. Directors are expected to advise the Chairman in advance of accepting an invitation to serve on another public company board or for-profit private company board and before accepting an assignment to any other public company’s audit or compensation committee. No director may serve as a director, officer, or employee of a competitor of ours.

CODE OF CONDUCT

Our Code of Conduct serves as the foundation for our compliance program and sets forth the ethical standards, legal requirements, and other policies we expect our directors, officers, and associates to comply with at all times. Stockholders may access a copy of our Code of Conduct in the investor relations section of our website at www.express.com/investor. We will also provide the Code of Conduct in print without charge upon request by telephone at (888) 423-2421, via email to IR@express.com or via mail delivered to the Office of the Corporate Secretary at 1 Express Drive, Columbus, OH 43230.

We will promptly disclose any waivers of our Code of Conduct involving our directors or executive officers. We intend to satisfy any disclosure requirements regarding any amendment or waiver of our Code of Conduct by posting the information on the “Corporate Governance” page of our website which can be found at www.express.com/investor.

RELATED PERSON TRANSACTIONS

Under our current Related Person Transaction policy, a “Related Person Transaction” is any transaction, arrangement, or relationship between us or any of our subsidiaries and a Related Person where the amount involved exceeds $120,000 and the Related Person has or will have a direct or indirect material interest. A “Related Person” is any of our executive officers, directors, director nominees, any stockholder beneficially owning in excess of 5% of our stock or securities exchangeable for our stock, any immediate family member of any of the foregoing persons, and any firm, corporation, or other entity in which any of the foregoing persons is an executive officer, a partner or principal, or in a similar position, or in which such person has a 5% or greater beneficial ownership interest in such entity.

All Related Person Transactions must be approved or ratified by a majority of the disinterested directors on the Board or a designated committee thereof consisting solely of disinterested directors in accordance with our Related Person Transaction Policy. In approving any Related Person Transaction, the Board or the committee must determine that the transaction is on terms no less favorable in the aggregate than those generally available to an unaffiliated third-party under similar circumstances.

Since February 4, 2018, there has not been, and there is not currently proposed, any transaction or series of transactions to which we were or will be a party in which the amount involved exceeded or will exceed $120,000 and in which any Related Person had or will have a direct or indirect interest.

Director Compensation

OVERVIEW

Non-employee directors receive compensation for Board service, which is designed to fairly compensate them for their time and effort, be competitive with the market, and align their interests with the long-term interests of our stockholders. Employee directors receive no compensation for Board service. The Compensation and Governance Committee, together with its independent compensation consultant, periodically review the form and amount of director compensation and recommend changes to the Board, as appropriate. As part of its review, the Compensation and Governance Committee considers how the Company’s director compensation program compares to the programs at the peer companies we refer to in the executive compensation setting process. See “Executive Compensation—Compensation Discussion and Analysis—Executive Compensation Practices—The Role of Peer Companies and Benchmarking” beginning on page 41 for more information about our peer companies. The Compensation and Governance Committee believes that director compensation should be competitive with the market and geared towards attracting and retaining highly-qualified independent professionals to oversee the Company and represent the interests of the Company’s stockholders.

NON-EMPLOYEE DIRECTOR COMPENSATION

The annual cash retainers for our non-employee directors in 2018 are shown in the following table.

Non-employee directors also receive equity grants on an annual basis. In 2018, non-employee directors were granted restricted stock units that had a fair value of approximately $125,000 on the date of grant and that vest on May 15, 2019, subject to continued service. The Company’s non-employee Chairman was entitled to an additional grant of restricted stock units that had a value of approximately $40,000 on the date of grant and that vest on May 15, 2019, subject to continued service. All directors receive reimbursement for reasonable out-of-pocket expenses incurred in connection with their Board service.

REASONABLE INDIVIDUAL LIMITATIONS FOR NON-EMPLOYEE DIRECTORS

In connection with the approval of the Express Inc. 2018 Incentive Compensation Plan (the “2018 Plan”), the Board adopted an individual compensation limitation for non-employee directors. Under the 2018 Plan, the aggregate value of all compensation paid or granted to any individual for service as a non-employee director during any calendar year, including awards granted under the 2018 Plan and cash fees paid by us, will not exceed $600,000, calculating the value of any awards granted during such calendar year based on the grant date fair value of such awards for financial reporting purposes, other than with respect to any special compensation paid to any non-employee director for his or her service as Chairman of the Board.

DIRECTOR STOCK OWNERSHIP GUIDELINES

The Board has director stock ownership guidelines which call for non-employee directors to own an amount of our common stock equal to five times their annual cash retainer. Directors have five years to meet the guidelines. Under these guidelines, directors are generally not permitted to sell any shares of our common stock until they achieve the ownership guideline and thereafter are only permitted to sell shares to the extent that such sale would not cause the director to fall below the ownership guideline. To avoid fluctuating ownership requirements, once a director has achieved the applicable stock ownership guideline, he or she is considered to have satisfied the guideline, provided that the shares used to meet the underlying requirement are retained. As of the end of fiscal 2018, all non-employee directors have met or are on track to meet the stock ownership guidelines.

2018 DIRECTOR COMPENSATION TABLE

The following table sets forth information regarding compensation earned for each of our non-employee directors in fiscal 2018.

Executive Officers

The following table sets forth the names, ages, and titles of our executive officers as of April 16, 2019:

Our executive officers are appointed by the Board and serve until their successors have been duly elected and qualified or their earlier resignation or removal. There are no family relationships among any of our directors or executive officers.

Set forth below is a description of the background of the persons named above.

Matthew Moellering has served as our Interim Chief Executive Officer and Interim President since January 22, 2019. He continues to serve as our Executive Vice President and Chief Operating Officer, a role he has held since September 2011. Prior to that, he served as our Executive Vice President, Chief Administrative Officer, Chief Financial Officer, Treasurer and Secretary from October 2009 until September 2011, Senior Vice President, Chief Financial Officer, Treasurer and Secretary from July 2007 until October 2009, and our Vice President of Finance from September 2006 until July 2007. Prior to that, he served in various roles with Limited Brands (now known as L Brands) from February 2003 until September 2006, including Vice President of Financial Planning. Prior to that, Mr. Moellering served in various roles with Procter and Gamble where he was employed from July 1995 until February 2003. Prior to that he served as an officer in the United States Army. Mr. Moellering serves on the board of directors of L.L.Bean, Inc. which is a privately held company.

Colin Campbell has served as our Executive Vice President of Sourcing and Production since June 2005. Prior to that, from March 1997 until June 2005, Mr. Campbell held a number of leadership positions for various divisions of Limited Brands (now known as L Brands) including Cacique and Limited Stores and was an Executive Vice President of Western Hemisphere Operations at Mast from 2003 until 2005. Prior to that, from 1985 until 1997, Mr. Campbell was Vice President of Operations for the dress division of Liz Claiborne. He has also worked in production leadership positions with Bentwood Brothers LTD in England and Daks-Simpson LTD in Scotland.

John J. (“Jack”) Rafferty has served as our Executive Vice President of Planning and Allocation since 1999 after joining Express as Vice President of Planning and Allocation in 1998. Prior to joining Express, Mr. Rafferty held a number of planning and allocation leadership roles with Limited Brands (now known as L Brands). These roles included Vice President of Planning and Allocation for Lerner from 1990 until 1998, Vice President of Lane Bryant from 1988 until 1990, and Director of Planning and Allocation for Sizes Unlimited from 1984 until 1986. Mr. Rafferty started his career in various planning and allocation roles with Korvettes, Casual Corner, and Brooks Fashion.

Douglas Tilson has served as our Executive Vice President of Real Estate since October 2009. Prior to that, he served as our Senior Vice President of Real Estate from October 2007 until October 2009. Prior to that, he was with Steiner & Associates as Senior Vice President of Leasing from April 2005 until October 2007. Prior to that, Mr. Tilson was Senior Vice President of Real Estate for Tween Brands from July 1999 until April 2005 and served in a number of senior real estate positions with Limited Brands (now known as L Brands) from January 1987 until July 1999. Prior to that, he was a labor attorney with the law firm Porter, Wright, Morris & Arthur LLP from June 1984 until January 1987.

Periclis (“Perry”) Pericleous has served as our Senior Vice President, Chief Financial Officer and Treasurer since July 2015. Prior to this appointment, he held a number of other leadership positions within our finance organization, including Vice President of Finance from December 2010 until July 2015, Director of Financial Planning & Analysis from April 2010 until December 2010, and Director of Store Finance from November 2007 until April 2010. Mr. Pericleous joined Express in August 1999 and served in a variety of roles of increasing responsibility across the finance organization, including in store finance and financial reporting. He began his career in 1996, serving in various accounting roles at Drug Emporium and then Value City Department Stores. Mr. Pericleous is a Certified Public Accountant.

Executive Compensation

Compensation Discussion and Analysis

EXECUTIVE SUMMARY

OVERVIEW OF FISCAL 2018 BUSINESS RESULTS

Overall financial performance proved challenging in 2018 due to comparable sales and earnings declines during the Fall 2018 season, which more than offset positive year over year growth in comparable sales and earnings during the Spring 2018 season. Our e-commerce business continued to be a strength, generating record sales of over $600 million in 2018. We also continued to generate strong cash flow in 2018 and ended the year with more than $172 million in cash and no debt on our balance sheet. The Company’s ability to generate cash flow beyond its investment needs allowed for the return of $83 million in value to our stockholders through share repurchases in 2018. The retail sector continues to face challenges and opportunities that come from rapid change. We continue to believe in the opportunities presented by the changing dynamics in retail and our ability to generate long-term value for our stockholders. To fully capitalize on this opportunity, the Board determined a change in leadership was necessary and in January 2019 terminated the employment of our President and Chief Executive Officer and commenced a search for a new President and Chief Executive Officer.

		Net Sales		Adjusted Operating Income(1)		Adjusted EPS(1)

CHIEF EXECUTIVE OFFICER TRANSITION AND FORWARD LOOKING STRATEGY

The end of fiscal 2018 was marked by a leadership change at the Chief Executive Officer level. David Kornberg ceased to serve as President and Chief Executive Officer of the Company and resigned as a member of the Board, effective January 22, 2019. Mr. Kornberg remained employed by the Company through February 21, 2019. On January 22, 2019 Matthew Moellering, our Executive Vice President and Chief Operating Officer, was appointed Interim Chief Executive Officer and Interim President until a permanent Chief Executive Officer and President is appointed.

In 2019, led by the Interim CEO, the Company is focused on three key areas of the business including product, brand and product clarity, and customer acquisition and retention to reposition the business for future growth and improved profitability.

Across these focus areas, the Company has several initiatives underway, including:

In addition, the Company continues its efforts to capture the benefits from systems investments as well as its disciplined approach to managing expenses.

2018 NAMED EXECUTIVE OFFICERS

This Compensation Discussion and Analysis (“CD&A”) focuses on the compensation of our named executive officers (our “NEOs”) for 2018, who are listed below:

2018 COMPENSATION HIGHLIGHTS

The last day of our 2018 fiscal year was Saturday February 2, 2019. Mr. Kornberg served as our President and CEO for all but the last two weeks of our fiscal year. Accordingly, this CD&A focuses on Mr. Kornberg’s compensation for 2018, including information showing the relationship between the CEO’s 2018 target compensation and 2018 actual realizable compensation. Unless otherwise noted, compensation related references in this proxy statement to the “CEO” are references to Mr. Kornberg.

Our executive compensation program is designed to strongly align executive compensation with the Company’s financial performance. In 2018:

Summary Compensation Table Total Direct Compensation

For 2016 through 2018, Mr. Kornberg’s pay structure was the same: $1 million salary, 130% target bonus, and long-term incentives with a value of $5 million.

As reported in the Summary Compensation Table on page 45, the corresponding actual total direct compensation numbers for 2016, 2017, and 2018 were approximately $6 million, $6.4 million, and $5.5 million, reflecting that (1) no short-term cash incentive compensation was paid for 2016, (2) 2017 short-term cash incentive compensation was $400,000, and (3) 2018 short-term cash incentive compensation was $700,000 (including $195,000 reflected in the all other compensation column). The portion of the 2018 long-term incentive award denominated in performance-based cash ($1,250,000) is not reflected in the Summary Compensation Table.

Total Direct Compensation excludes non-qualified deferred compensation and all other compensation as reported in the Summary Compensation Table, including Mr. Kornberg’s separation compensation provided under his employment agreement. For a discussion of Mr. Kornberg’s separation compensation, see “Compensation Discussion and Analysis—What We Pay and Why: Elements of Compensation—Chief Executive Officer Transition” on page 39.

CEO Realizable Total Direct Compensation⁽¹⁾: Target vs. Actual

The chart below illustrates CEO actual realizable total direct compensation compared to target realizable total direct compensation for the 2016, 2017, and 2018 fiscal years. Actual realizable total direct compensation reflects the actual amount of pay our CEO can expect to receive from equity awards.

For more information on the computation of CEO realizable compensation, which does not include the CEO’s separation compensation provided under his employment agreement, refer to “Compensation Discussion and Analysis—What We Pay and Why: Elements of Compensation—CEO Realizable Pay” on page 38.

For more information on the CEO’s separation compensation, refer to “Compensation Discussion and Analysis—What We Pay and Why: Elements of Compensation—Chief Executive Officer Transition” on page 39.

For more information on our short-term cash incentive program, refer to “—What We Pay And Why: Elements of Compensation—Performance-Based Incentives—Short-Term Incentives” beginning on page 32. For information on our long-term incentive program, see “—What We Pay And Why: Elements of Compensation—Performance-Based Incentives—Long-Term Incentives” beginning on page 35.

EXECUTIVE COMPENSATION OBJECTIVES AND PRACTICES

Below we highlight the core objectives that serve as the foundation for our compensation program, the practices we have implemented to achieve those objectives, and practices we have not implemented because we do not believe they would serve the Company’s long-term interests.

Program     Objective				What We DO:
Pay for     Performance						Variable Compensation. A significant portion of our executives’ compensation opportunity is variable and is tied to achievement of challenging financial performance targets and changes in the Company’s stock price. In 2018, 86% of CEO target total direct compensation was variable.
						Short-Term and Long-Term Incentive Compensation with Challenging Performance Targets. 75% of our short-term cash incentive awards and 50% of our long-term incentive awards are subject to the achievement of challenging financial performance targets that incentivize the creation of stockholder value. The remaining 25% of our short-term cash incentive awards depends on the achievement of an operational performance goal that is tied to our strategic initiatives.
						Performance-Based Equity Awards. In 2018, we granted a mix of long-term incentives, comprised of (i) 50% time-based restricted stock units, and (ii) 50% performance-based incentives comprised of one-half performance-based restricted stock units and one-half performance-based cash, with performance based on adjusted diluted earnings per share goals over a three-year period which may be increased or decreased by 20% based upon Company TSR performance relative to the Dow Jones U.S. Retail Apparel Index.
Pay     Competitively						Robust Compensation Setting Process. We utilize market data without strict benchmarking in order to make sure executives are paid commensurate with their experience and performance. Executive compensation packages are heavily weighted on performance but also include base salary and other benefits that make them competitive with our peers.
Pay     Responsibly						Long-Term Vesting Requirements. Stock options and time-based restricted stock units granted to our NEOs vest ratably over 4 years, and performance-based restricted stock units and performance-based cash awards vest after 3 years, in order to align the interests of our executives with our stockholders. No stock options were granted to our NEOs in 2018.
						Annual Stockholder Engagement Process. As part of our annual stockholder engagement cycle, we reach out to our largest stockholders who collectively hold over a majority of the shares of our outstanding common stock, which generally includes our 20 largest stockholders. We also offer our stockholders the opportunity to vote annually on the Company’s executive compensation program. We value the feedback we receive from stockholders and consider it when making decisions on behalf of the Company, including with respect to executive compensation. Refer to page 64 for more information about this year’s non-binding say-on-pay proposal.
						Stock Ownership Guidelines. Each of our executives is subject to substantial stock ownership requirements. Under the guidelines, executives are generally not permitted to sell any shares until they achieve the ownership guideline and thereafter are only permitted to sell shares to the extent that such sale would not cause the executive to fall below the ownership guideline.
						Mitigate Undue Risk. The mix between short-term incentives and long-term incentives is intended to discourage executives and associates from maximizing short-term performance at the expense of long-term performance. In 2018, our short-term cash-incentive program had financial performance goals based on operating income and operational goals based on achievement of key strategic objectives, while our long-term performance-based awards had performance targets based on earnings per share and a potential adjustment based on Relative TSR thereby discouraging participants from focusing on the achievement of one performance measure at the expense of another.
						Capped Payouts. Payouts are capped under our cash and equity incentive award programs.
						Independent Compensation Consulting Firm. The Compensation and Governance Committee (in this “Executive Compensation” section, the “Committee”) is advised by an independent compensation consultant that provides no other services to the Company.
						Clawback Policy. Our executives are subject to a clawback policy.
				What We DON’T DO:
Pay     Responsibly						No Special Tax Gross-Ups. We do not provide special tax gross-ups to executives.
						No Pension Plans or Other Post-Employment Defined Benefit Plans; Deferred Compensation Plan Terminated. We do not provide any qualified or non-qualified post-employment defined benefit plans. We terminated our non-qualified deferred compensation plan in 2017 as a cost-saving measure and final payouts occurred in April 2018.
						No Special Executive Perquisites. We do not provide our executives with any special perquisites.
						No Liberal Share Recycling, Repricing of Underwater Stock Options, or Reloads of Stock Options. The Company’s 2018 Plan prohibits the repricing of stock options without the consent of stockholders, does not allow for reloads of stock options to the extent stock options are used to pay the exercise price or taxes with respect to stock option exercises, and includes an explicit prohibition on liberal share recycling.
						No Hedging or Pledging Transactions. We prohibit associates, including NEOs, and directors from hedging or pledging any securities of the Company held by them.
						No Single Trigger Change-in-Control Payments. Our NEOs are not currently entitled to any single-trigger special vesting, severance, or other benefits in a change-in-control.

WHAT WE PAY AND WHY: ELEMENTS OF COMPENSATION

Our executive compensation program is designed to strongly align executive compensation with the Company’s financial performance. The elements of our compensation program for 2018 were as follows:

The Committee strives to achieve an appropriate mix between the various elements of our compensation program to meet our compensation objectives; however, it does not apply any rigid allocation formula in setting our executive compensation, and the Committee may make adjustments to this approach for various positions on a case-by-case basis as appropriate. A significant portion of executive compensation is intended to be variable and tied to the Company’s financial performance and stock price. The following charts show that, for 2018, 86% of CEO compensation and 66% of other NEO compensation at target was variable.

BASE SALARY

We provide a base salary to our executive officers to compensate them for their services during the year and to provide them with a stable source of income. NEO base salaries are determined by an annual assessment of a number of factors, including the individual’s current base salary, job responsibilities, peer group and other data, relevant market survey data, and individual and Company performance.

The annual base salaries in effect for each of our NEOs as of February 2, 2019 are shown in the following table:

Annual base salaries for Messrs. Moellering, Rafferty, Campbell, and Pericleous are expected to remain the same in 2019.

PERFORMANCE-BASED INCENTIVES

Short-Term Incentives

Our short-term performance-based cash incentive compensation program provides our NEOs with incentive payment opportunities for each six-month operating season that corresponds to the traditional retail selling seasons of Spring (February through July) and Fall (August through January). The target short-term cash incentive compensation opportunity for each eligible executive is set at a percentage of base salary. 40% of each executive’s annual target bonus is allocated to the six-month Spring season and 60% is allocated to the six-month Fall season which is intended to align with the seasonality in our business where higher portions of our net sales and net income are typically realized in the six-month Fall season due primarily to the impact of the holiday season. The seasonal design allows us to establish appropriately challenging performance targets that align business

performance expectations with the seasonal nature of the way we manage our business and prevailing market and economic conditions which can change quickly in the retail apparel sector. For example, this structure allows for mid-year development of performance targets and provides an incentive for our executives to focus on meeting goals in the six-month Fall season in circumstances when business performance and macro-economic conditions decline or improve relative to our operating plans.

2018 Short-Term Cash Incentive Compensation

Our seasonal short-term performance-based cash incentive compensation program includes a financial performance goal and an operational goal based on the achievement of key strategic initiatives that tie to our long-term strategy. For each season, 75% of the target payout opportunity was based on a financial performance goal while 25% was based on an operational performance goal.

Financial Performance Goal (75% Weighting). The financial performance goals under the short-term cash incentive program for 2018 were based on operating income, subject to adjustments for certain extraordinary items. We continue to use operating income as a financial performance goal because it is a performance measure over which executives can have significant impact, and is also directly linked to the Company’s seasonal operating plans and long-range plan. The financial goal continues to have a threshold, target, and maximum payout which allows participating executives to double the incentive payout associated with achievement of the financial goal if the maximum operating income goal is achieved.

The only adjustment made to operating income in 2018 was for the purpose of excluding expense associated with the departure of our CEO which is consistent with adjustments reflected in supplemental non-GAAP financial information publicly reported by the Company. The Company provides supplemental non-GAAP financial information to exclude non-core operating items that may not be indicative of, or are unrelated to, our underlying operating results and that we believe provide a better baseline for analyzing trends. See Appendix A for adjustments made for non-core operating items in 2018 for purposes of determining whether the performance targets had been achieved.

Operational Performance Goal (25% Weighting). The operational performance goals under the short-term cash incentive program for 2018 were (1) for the Spring season based on achievement of cost savings goals, expansion of ship-from-store capabilities, retail to outlet store conversions, and roll-out of in-store sustainability initiatives, and (2) for the Fall season based on rent-savings initiatives, and the launch of a new concept store and rental subscription service, with all goals for each season required to be achieved in order for there to be a payout for that season on account of the operational goal. The operational goal is binary and pays out at target only. The operational goal no longer includes an Adjusted EBITDA threshold, which was added to the 2017 operational goal solely so that payouts could qualify as performance-based compensation under Section 162(m) of the Code and avoid the limits on tax deduction that would otherwise be available. This exception for performance-based compensation was repealed, effective for the 2018 year. For more information on accounting and tax considerations, see, “Compensation Discussion and Analysis—Executive Compensation Practices—Accounting and Tax Considerations” on page 44.

The Committee sets the performance goals near the beginning of each six-month season based on an analysis of (i) historical performance, (ii) internal financial plans, (iii) strategic objectives, and (iv) general economic conditions.

Both financial and operational performance goals are set at the same targets for all leadership in the business. We believe it is important to have all members of leadership working towards the same goals and that those goals are clear, understandable, and within their control.

For 2018, the amount of performance-based cash incentive opportunity for participating executives ranged from zero to 175% of their incentive target, based upon the extent to which the performance goals were achieved. The threshold, target, and maximum short-term performance-based cash incentive payout opportunities for our NEOs for 2018 are set forth in the “Grants of Plan-Based Awards” table on page 47.

The target cash incentive compensation opportunity as a percentage of base salary in effect for each of our NEOs for 2018 is shown below:

Final payout amounts for each six-month season are approved by the Committee at its first regularly scheduled in-person Committee meeting following the end of each six-month operating season and are paid out to executives after such approval.

2018 Short-Term Cash Incentive Compensation Goals and Results

Spring Season (40% weighting)

Financial Performance Goals. The following table illustrates the financial performance goals and actual payout levels for the six-month Spring season. Our performance targets are intended to be challenging and the financial target goal for the Spring season was set significantly higher than the prior Spring season’s actual results. Based on the Company’s Spring season financial performance, the operating income goal paid out at 104% of target under the Company’s seasonal short-term cash incentive program for the 2018 Spring season.

Operational Performance Goals. The following table illustrates the operational performance goals and payout level for the six-month Spring season. The operational goal is binary and pays out at target only and only if all goals are achieved.

Fall Season (60% weighting)

Financial Performance Goals. The following table illustrates the financial performance goals and actual payout levels for the six-month Fall season. Our performance targets are intended to be challenging and the financial target goal for the Fall season was set significantly higher than the prior Fall season’s actual results. Based on the Company’s Fall season financial performance, the operating income goal did not pay out under the Company’s seasonal short-term cash incentive program for the 2018 Fall season.

Operational Performance Goals. The following table illustrates the operational performance goals and payout level for the six-month Fall season. The operational goal is binary and pays out at target only and only if all goals are achieved.

2019 Short-Term Cash Incentive Compensation

In 2019, we expect to continue with our seasonal short-term cash incentive compensation program with 75% of the target payout opportunity based on financial goals and 25% based on operational goals. For 2019, we expect to use adjusted operating income as the financial performance metric. We expect the operational goal for 2019 to be tied to various strategic goals, including store conversion rate and customer acquisition and retention goals, with all goals required to be achieved in order for there to be a payout on account of the operational goal.

Target cash incentive compensation opportunity as a percentage of base salary is expected to remain the same for Messrs. Moellering, Rafferty, Campbell, and Pericleous in 2019.

Long-Term Incentives

For 2018, the Committee and Board determined that our NEOs would receive a mix of long-term incentives comprised of the following:

Our long-term incentive awards are generally intended to accomplish the following main objectives: (1) create a direct correlation between the Company’s financial performance and stock price and compensation paid to our NEOs; (2) retention of our NEOs; (3) assist in building equity ownership of our NEOs to increase alignment with long-term stockholder interests; (4) attract and motivate key associates; (5) reward participants for performance in relation to the creation of stockholder value; and (6) deliver competitive levels of compensation consistent with our compensation objectives. The total grant date fair value of awards for our NEOs are determined on a position-by-position basis using market data for corresponding positions in our peer group and other relevant market survey data, the individual’s job responsibilities, and individual performance.

Executives are generally granted long-term incentive awards as part of our annual merit review process. During this process, the Committee determines the appropriate overall value and mix of long-term incentive grants for our NEOs. For more information on our executive compensation practices, including the annual merit review process and the objectives and factors considered by the Committee as part of the executive compensation decision making process, see “—Executive Compensation Practices—“Determining Compensation for the CEO” and “Determining Compensation for the Other NEOs” beginning on page 41.

2018 Updates to Long-Term Incentive Award Program

Modification of Long-Term Incentive Mix. While performance-based awards continue to represent 50% of the annual long-term incentive grant, to help manage share usage and overhang, in 2018 performance-based long-term incentive awards were delivered half in the form of equity and half in the form of cash so that long-term incentives in 2018 were comprised of 25% performance-based restricted stock units, 25% performance-based cash, and 50% restricted stock units with time-based vesting. No stock options were granted to our NEOs in 2018.

Inclusion of Relative TSR Modifier. Performance-based long-term incentive awards continue to be dependent on the achievement of challenging 3-year Adjusted EPS performance targets. However, beginning in 2018, long-term incentive payouts may be increased or decreased by 20% based on Company TSR performance relative to the Dow Jones U.S. Retail Apparel Index during the three-year performance period (“Relative TSR”). The inclusion of a Relative TSR modifier helps to ensure that actual long-term pay delivered to our executives more closely aligns with stockholder returns and further incentivizes the creation of long-term stockholder value.

Relative TSR is measured for the applicable performance period based upon the change in each company’s stock price during that period. Stock prices are adjusted for dividends paid. A 20-day trading averaging period is used to determine the beginning and ending stock price values used to calculate the total shareholder return of the Company and the other companies in the Dow Jones U.S. Retail Apparel Index (“Index”). The change in value from the beginning to the end of the period is divided by the beginning value to determine total shareholder return. The Company’s total shareholder return is compared to the total shareholder return of other companies in the Index, ranked by percentile, to determine whether to modify payout for the applicable performance period based on Adjusted EPS.

Modification of the payout amount is based on the Company’s percentile rank within the Index. No modifications are made if Company TSR falls between the 25^th and 75^th percentile of the Index. Payouts are decreased by 20% if Company TSR is below the 25^th percentile of the Index and payouts are increased by 20% if Company TSR exceeds the 75^th percentile of the Index except that payouts are capped at 200% of target. The table below illustrates the payout adjustments.

2018 Time-Based Restricted Stock Units

In 2018, the Company granted our NEOs the time-based restricted stock units set forth in the Grants of Plan Based Awards table on page 47. One-fourth of the restricted stock units are scheduled to vest on each of April 15, 2019, 2020, 2021, and 2022, subject to continued employment with the Company.

Performance-Based Awards

Long-term performance-based awards granted to our NEOs are subject to three-year Adjusted EPS performance goals. The Adjusted EPS performance goal has a threshold goal (50% payout), target goal (100% payout), and a maximum goal (200% payout). The number and amounts of long-term performance-based awards that vest is determined using straight line interpolation if Adjusted EPS over the performance period is an amount between performance goals. No portion of performance-based awards are payable in the event the Company fails to achieve the threshold Adjusted EPS goal. Beginning in 2018, the long-term incentive awards are also subject to a TSR modifier such that payouts may be increased or decreased by 20% based upon Relative TSR.

For grant and vesting purposes, “Adjusted EPS” means the Company’s diluted earnings per share calculated in accordance with GAAP, adjusted to exclude the impact of any non-core operating costs consistent with past practice for debt extinguishment and one-time transaction costs. The Company provides supplemental non-GAAP financial information to exclude non-core operating items that may not be indicative of, or are unrelated to, our underlying operating results and that we believe provide a better baseline for analyzing trends. Refer to Appendix A for more information on Adjusted EPS, a non-GAAP measure, and a reconciliation of Adjusted EPS for 2016, 2017, and 2018 to reported EPS, the most directly comparable GAAP measure.

2018 Performance-Based Awards

In 2018, the Company granted our NEOs performance-based awards comprised of 50% performance-based restricted stock units and 50% performance-based cash. The performance awards are set forth in the Grants of Plan Based Awards table on page 47 and have performance goals based on Adjusted EPS measured over a 3-year performance period commencing on the first day of the Company’s 2018 fiscal year and ending on the last day of the Company’s 2020 fiscal year, and may be increased or decreased by 20% based on Relative TSR during the 3-year performance period. Any performance-based awards that are earned based on the achievement of performance goals are scheduled to vest in April 2021.

The following chart identifies the performance metric, performance levels, the performance levels as a percentage of the target goal, and corresponding payouts as a percentage of the target performance-based award grant for the Company’s performance-based restricted stock unit awards and performance-based cash awards granted in 2018.

Adjusted EPS was $0.32 in 2018. Cumulative Adjusted EPS in 2019 and 2020 must equal at least $0.76 in order for the 2018 performance-based awards to pay out at the threshold level, subject to modification based on Relative TSR. Company TSR in 2018 was -28.41% and its percentile ranking among the other companies in the Index was at the 26th percentile.

2017 Performance-Based Restricted Stock Units

In 2017, the Company granted our NEOs performance-based restricted stock units that were subject to performance goals based on Adjusted EPS measured over a three-year performance period commencing on the first day of the Company’s 2017 fiscal year and ending on the last day of the Company’s 2019 fiscal year. Any performance-based restricted stock units that are earned based on the achievement of performance goals are scheduled to vest in April 2020.

The following chart identifies the performance metric, performance levels, the performance levels as a percentage of the target goal, and corresponding payouts as a percentage of the target performance-based restricted stock unit grant for the Company’s performance-based restricted stock unit awards granted in 2017.

Adjusted EPS was $0.37 in 2017 and $0.32 in 2018. Adjusted EPS must equal at least $1.25 in 2019 in order for the 2017 performance-based restricted stock units to pay out at the threshold level. These awards are not expected to pay out.

2016 Performance-Based Restricted Stock Units

In 2016, our NEOs were granted performance-based restricted stock units that were subject to performance goals based on the Company’s Adjusted EPS measured over the three-year period commencing on the first day of the Company’s 2016 fiscal year and ending on the last day of the Company’s 2018 fiscal year. The performance-based restricted stock units that would have been earned if performance goals had been achieved would have vested in April 2019.

The following chart identifies the performance metric, performance levels, the performance levels as a percentage of the target goal, and corresponding payouts as a percentage of the target performance-based restricted stock unit grant for the Company’s performance-based restricted stock unit awards granted in 2016.

The following table shows the performance metric, performance levels, the shares earned as a percentage of the target goal, actual performance goals, and the actual percentage of performance-based restricted stock units that were earned based upon achievement of the performance goals.

2019 Long-Term Incentive Compensation

For 2019, the elements and design of our long-term incentive program will stay the same except that the mix of long-term incentive awards for our executives will be comprised of 50% long-term performance-based cash incentives and 50% time-based restricted stock units. The financial goals for the performance-based cash incentives will require achievement of challenging 3-year Adjusted EPS goals subject to modification based on Relative TSR, except that no performance-based cash incentives will vest if the sales price reported for the Company’s common stock on the last day of the performance period, based on the 90-day moving average stock price prior to such date, is lower than the last sales price reported for the Company’s common stock as of the trading day immediately prior to the date of grant. The long-term incentive program in 2019 continues to have 50% of its award value dependent on the achievement of challenging performance targets, consistent with our pay for performance philosophy, with the performance-based portion of the long-term incentive awards comprised of entirely performance-based cash in order to help manage share usage and overhang.

CEO REALIZABLE PAY

The following chart shows realizable total direct compensation (“TDC”) at target and actual for Mr. Kornberg in 2016, 2017, and 2018. For 2016, 2017, and 2018, the chart details the significant difference between realizable TDC at target versus actual realizable TDC, which illustrates the rigor of our performance targets which serve to strongly align CEO pay with the Company’s financial performance. The significant difference between target and actual also reflects the partial forfeiture of unvested long-term incentive awards in connection with the Board’s decision to terminate the employment of the CEO near the end of fiscal 2018.

Realizable TDC is comprised of base salary, short-term cash incentives, and long-term equity and cash incentives (“LTI”). In 2016 and 2017, long-term incentives included performance-based restricted stock units, time-based restricted stock units, and stock options. In 2018, long-term incentives included performance-based restricted stock units, performance-based cash, and time-based restricted stock units.

Actual realizable TDC is intended to measure the actual amount of pay Mr. Kornberg can expect to receive from his base salary and performance-based compensation awards taking into account his separation from the Company, which became effective on February 21, 2019. Actual realizable TDC consists of base salary plus actual cash bonus payouts and the actual amount of pay delivered from equity awards including the value of equity awards that had not yet vested but were accelerated in connection with Mr. Kornberg’s departure, and excludes long-term incentive awards that were forfeited as of the effective date of termination.

Realizable TDC is supplemental information and should not be considered a substitute for information in the Summary Compensation Table on page 45. Realizable TDC does not include one-time cash separation payments in an amount equal to 1.5 times the sum of Mr. Kornberg’s base salary and target bonus ($3,450,000) that he was entitled to under his employment agreement. For more information on CEO separation compensation refer to “Compensation Discussion and Analysis—What We Pay and Why: Elements of Compensation—Chief Executive Officer Transition” on page 39.

For 2016, 2017, and 2018, actual realizable TDC varied significantly from the total compensation reported in the Summary Compensation Table in part because the Summary Compensation Table requires the inclusion of the grant date fair value of the performance-based restricted stock units granted to Mr. Kornberg at target, even though Mr. Kornberg will not earn any of the performance-based restricted stock units granted to him in 2016, 2017, and 2018.

Furthermore, the Summary Compensation Table reports the grant date fair value of stock options as calculated in accordance with GAAP, while actual realizable TDC reflects any amounts actually received by the CEO through the exercise of stock options plus the estimated fair value of outstanding and unexercised stock options as of fiscal year end. No stock options were granted in 2018.