Retail & Apparel Board Index

Transcription

1 201 Retail & Apparel Board Index

2 Contents Introduction 2 Board Composition 4 Board Size 4 Board Independence 5 New Independent Directors 5 Chair/CEO Split 5 Age of Directors 6 Female Representation 7 Lead/Presiding Directors 8 Board Organization and Process 9 Number of Board Meetings 9 Director Term Length 10 Mandatory Retirement 11 Board Committees 12 Director Compensation 13 Board Retainers 13 Meeting Fees 14 Stock Compensation 15 Comparative Board Data 17

3 Introduction 6% increase over last year in average cash retainer $63,849 average cash retainer 78% of board directors are independent Shifting personal behaviors and enabling technologies are redefining the retail industry customers increasingly expect to receive the products and services they want when they want them and how they want them. Data and analytics have become even more valuable tools as companies compete for an increasingly informed and thus more powerful customer. As retailers strive to provide customers with seamless experiences, many are rethinking the types of leaders and organizational structures they will need in a connected world. In order to help their companies capture the attention, spending dollars and loyalty of customers with a growing number of retail options, retail boards not only need a grasp of the overall strategy and risks facing the business, but also a deep customer orientation and understanding of the technologies the customer uses every day. Now in its 10th year, Spencer Stuart s Retail & Apparel Board Index explores governance trends affecting the boards of the largest U.S. retail and apparel companies, helping board members understand and respond to the key issues impacting their boards. The 2014 index examines the board practices of 99 of the nation s top retail and apparel companies, all of which have revenues of at least $1 billion. Seven new companies have been added to this year s study: Burlington Stores, Lumber Liquidators, Publix Supermarkets, Conn s, Murphy USA, Sears Hometown and Outlet Stores, and Under Armour. Six companies found in last year s index were not included this year: OfficeMax, Susser Holdings, Harris Teeter, Jos. A. Bank, Saks and Zale Corporation. Some merged with or were purchased by other companies, or their revenues fell below the $1 billion threshold for this study. Fifth and Pacific changed its name to Kate Spade & Company in early The index compares data from this year s proxies to 2013 findings, as well as to previous years, when noteworthy. We also provide comparisons between retail and apparel companies and the S&P 500, where relevant. 2

4 Below are some key findings from the 2014 Retail & Apparel Board Index: > The majority (78%) of retail and apparel board members are independent. Over the past few years, the majority of board members have consistently come from the outside. > We ve seen a spike, from 46% in the 2013 index to 57% in the 2014 index, in the percentage of retail companies that split the chairman and CEO roles. Retail boards outpace the S&P 500 in this area, where less than half (47%) split these roles. > Retail boards fall slightly behind the S&P 500 in the percentage of boards that have at least one female director, but industry boards continue to have a higher rate of women per board: 20% of retail board directors are female versus 19% of S&P 500 boards. > More S&P 500 boards (73%) report a mandatory retirement age than retail boards (61%). > The average retail board cash retainer is $63,849, a 6% increase over the 2013 index. S&P 500 board retainers also continue to increase and remain higher than retail board retainers at an average of $107, % increase over last year s index in boards splitting the chair and ceo roles 20% of directors are female > Fewer retail and apparel boards are paying meeting attendance fees. In 2007, 64% paid meeting attendance fees versus only 23% in > A significantly smaller percentage of retail and apparel boards today provide stock options when directors first join a board. In 2007, one-quarter provided them compared with just 4% in > The industry falls behind the S&P 500 in identifying a lead or presiding director, where 90% of boards identify them versus just 56% of retail boards. 56% identify a lead or presiding director Editor s Note: The retail and apparel companies included in this index are publicly traded on one of the major stock exchanges (NYSE or NASDAQ), are based in the United States and have retail revenues of $1 billion or more. Data for the Retail & Apparel Board Index are obtained from Equilar, a leading independent provider of executive and board compensation data and analysis. The data were derived from the most recent proxies released as of June 13,

5 Board Composition Board size grows slightly, but remains smaller than S&P 500 The average size of retail and apparel boards in this year s index has increased slightly to 9.6 members from 9.4 members in the 2013 index. Industry boards remain smaller than the boards of S&P 500 companies, which have an average size of 10.8 members. As in past years, there is a correlation between retail company size and the size of its board: Of the top five largest boards, nearly all have revenues more than $20 billion; Genuine Parts Company, which has $14 billion in revenues, is new to the list of companies with the largest boards at 13 members. Costco and Wal-Mart have the largest boards at 14 members. Only 5% of industry boards have more than 12 directors. The Pantry, Burlington Stores, Weis Markets, and Sears Hometown and Outlet Stores have the smallest boards with only six board directors each Average Board Size Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B Average Board Size Comparison 8 or Fewer Directors 9 to 12 Directors 13 or More Directors Retail & Apparel 29% 66% 24% 5% S&P 500 9% 74% 24% 17% Majority of directors continue to come from the outside In this year s index, the total number of directors on retail boards increased to 947 from 902 in last year s index. Of those, 78% are independent and 22% are affiliated. Retail companies with more than $10 billion in revenues surpass the average; 81% of their directors are independent. The overall percentage of independent directors is largely unchanged from last year s index increasing by a single percentage point. In general, over the past three years, the majority of board directors were independent. Similarly, 84% of S&P 500 boards are independent, a percentage that has remained relatively consistent over the past several years Director Representation Directors Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B Inside 22% 19% 19% 24% 22% 27% Outside 78% 81% 81% 76% 78% 73% 4

6 Greater number of new independent directors this year Of the 99 retailers in our 2014 study, 43 hired new independent directors for a total of 85 new independent board directors. In the 2013 index, 44 retailers hired a total of 52 new independent board directors. Of the 741 independent directors on retail and apparel boards in the 2014 index, 11% of them are new to their boards, a slight increase from the 2013 index (7%). Spike in number of retail boards splitting chair and CEO roles The percentage of retailers who split the roles of chairman and CEO had steadily increased from 2008 to 2011, but has declined over the past two years. The percentage of retail boards splitting the responsibilities of the chairman and CEO jumped by 11 percentage points in the 2014 index to 57% over 46% in the 2013 index. This upward trend is most dramatic at retailers with revenues of $1 billion to $2 billion: In the 2014 index, 64% of these companies split the chairman and CEO roles, up from just 21% the 2013 index. The other segments reported percentages that remain fairly consistent with last year. Retailers with revenues of more than $20 billion remain the most likely to split the roles, at 67%. The percentage of S&P 500 companies splitting the chairman and CEO roles remained relatively consistent between the 2014 and 2013 indexes. In the 2014 index, 47% of S&P 500 boards split their chairman and CEO roles, up just slightly from the previous year s study, when 45% split the two roles. Companies Splitting the Chairman and CEO Roles Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-2B % 67% 37% 50% 62% 64% % 53% 62% 55% 41% 21% % 56% 25% 45% 63% 69% 5

7 Board Composition Shifts in age brackets of retail boards In the 2014 index, the average age of outside retail and apparel board directors was 62, the same as the 2013 index. Retail board directors continue to be slightly younger than S&P 500 directors, who have an average age of 63. Overall, the distribution of the average age of retail board directors has remained consistent over the past several years, with most boards having an average age between 60 to 63 years. Interestingly, this is followed by the 64 to 69 range, which represents a change from past years when 57 to 59 was the second most common average age range. Costco had the oldest board with an average age of 71 years. Sears Hometown and Outlet Stores had the youngest board with an average age of 53 years Average Age of Outside Directors* Directors Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B Under 50 0% 0% 0% 0% 0% 0% % 6% 5% 0% 3% 14% % 11% 16% 21% 18% 43% % 50% 58% 43% 41% 21% % 28% 21% 36% 38% 14% 70 & up 2% 6% 0% 0% 0% 7% * Percentage may not total 100 due to rounding. 6

8 Female representation has grown only 2% since 2007 After years of surpassing the S&P 500 in female representation, retail boards continued to fall slightly behind. In the 2014 index, 94% of retail and apparel boards had at least one female director, while the S&P 500 average was 95%. In the 2013 index, 93% of retail and apparel boards had at least one female director, while 93% of S&P 500 boards had at least one female director Female Directors as a Percentage of All Directors Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B Retail 20% 22% 18% 17% 22% 20% Despite falling behind on the percentage of boards that have at least one female director, industry boards continue to have a slightly higher rate of women per board: 20% of retail board members are female versus 19% of S&P 500 boards. The pace of change in female representation has been slow, with the percentage of women on industry boards increasing only 2 percentage points since This percentage has remained fairly consistent over the past several years, with female representation reaching 20% in 2013, 19% in 2012, 18% in 2011 and 2010, 19% in 2009 and 18% in 2008 and The total number of female directors on retail and apparel boards has increased 10% to 189 in 2014 from 172 in Female Directors as a Percentage of All Directors Retail 20% 20% 19% 18% 18% 19% 18% 7

9 Board Composition With regard to women in the corner office, retail companies slightly outpace the S&P 500: 6% of retail companies in this study have female CEOs versus 4.6% of S&P 500 companies. Both retail companies and the S&P 500 show a correlation between women CEOs and the number of women directors on the board. The average percentage of women directors on boards of retail companies with female CEOs is 35%, versus 15% for retail companies with male CEOs. When the female CEO is excluded, the average is 20%. In S&P 500 companies led by women, 30% of all directors are women. When the female CEO is excluded, the percentage is 23%. In companies with a male CEO, the average is 18%. Retail Company Female CEOs and Their Boards* Company CEO Total directors Women directors Women directors as % of total ANN Kay Krill % Brown Shoe Company Diane M. Sullivan % The Children s Place Jane Elfers % The TJX Companies Carol Meyrowitz % ULTA Salon, Cosmetics & Fragrance Mary Dillon % Williams-Sonoma Laura Alber % Average % women directors for retail companies with female CEOs** 35% Average % women directors for retail companies with male CEOs 15% * Accurate as of each company s most recent proxy released by June 13, ** Excluding the CEO, the average is 20%. Far fewer retail boards than S&P 500 boards identify lead or presiding directors In the 2014 index, 56% of retail boards identified a lead or presiding director, decreasing slightly from 58% the 2013 index. Of note, 74% of retail companies with revenues of $10 billion to $20 billion had identified a lead or presiding director. This percentage has been particularly volatile in this revenue bracket in recent years: 71% in 2013, 75% in 2012, 82% in 2011, 56% in 2010, 100% in 2009 and 60% in Consistently fewer retail and apparel boards identify a lead or presiding director compared with S&P 500 boards. The vast majority (90%) of S&P 500 boards identified a lead or presiding director in the 2014 index, remaining consistent with the previous year Companies with Leading/Presiding Director (%) Directors Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B Yes 56% 61% 74% 64% 44% 43% No 44% 39% 26% 36% 56% 57% 8

10 Board Organization and Process Slight uptick in number of board meetings In the 2014 index, retail and apparel boards had an average of 7.7 meetings, slightly increasing from 7.6 in the 2013 study. The number of meetings held by any retail board ranged from four to 31. Office Depot had the most board meetings, 31, likely due to its merger with OfficeMax. J.C. Penney Company had the next highest number of board meetings at 24 meetings. The median number of annual meetings in the 2014 index increased slightly from six in the 2013 index to seven; the mode increased from five to six. The discrepancy between the average number of board meetings between retail and apparel boards versus S&P 500 boards remains close to a difference of less than one additional meeting. In the 2014 index, the S&P 500 had an average of 8.1 meetings per year versus an average of 7.7 meetings for retail and apparel boards. More than half (51%) of retail and apparel boards had at least seven meetings, whereas 64% of S&P 500 boards had at least seven meetings. Overall, S&P 500 boards continue to meet more often than retail and apparel boards Average Number of Meetings Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B Distribution of Board Meetings: Retail vs. S&P or fewer meetings or more Retail 30% 53% 8% 9% S&P % 54% 19% 9% 9

11 Board Organization and Process Director term length continues to fall In the 2014 index,, the average term length decreased to 1.5 years from 1.6 years in the 2013 index. More than three-quarters (76%) of retail boards have a term length of one year, a percentage that has increased in recent years (in 2007, only 56% of retail boards had one-year terms) partly in light of the continued emphasis on one-year term lengths from governance activists; in addition, three companies are in the process of declassifying or have shareholder proposals to declassify their boards. In the 2014 index, the remaining 24% of boards had three-year terms. Interestingly, boards of companies with revenues of $1 billion to $2 billion had the highest average term length at 1.9 years. A greater percentage of S&P 500 boards than retail boards have adopted one-year term lengths. The vast majority (93%) of S&P 500 boards have one-year terms, no companies reported two-year terms and 7% have three-year terms. Percentage of Boards with One-Year Terms % 71% 72% 72% 70% 65% 63% 2014 Average Term Length Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B

12 Retail boards continue to diverge from S&P 500 on mandatory retirement age The majority (73%) of S&P 500 boards report a mandatory retirement age, whereas only 61% of the retail companies in our study report a mandatory retirement age. The average mandatory retirement age of retail boards reporting one is 73. The majority of both S&P 500 boards and retail boards reporting a mandatory retirement age have a mandatory retirement age of 72. More than half (58%) of the retail boards reporting a mandatory retirement age had a retirement age of 72, with the remainder ranging from age 70 to 80. Fifty-two percent of the S&P 500 boards with a mandatory retirement age had a retirement age of 72 with the remainder ranging from age 70 to 80. The companies with the oldest reported mandatory retirement age are PriceSmart, which reported a mandatory retirement age of 80, followed by O Reilly Automotive with a mandatory retirement age of 78. Mandatory Retirement Age in 2014: Retail vs. S&P 500* Retail** S&P and younger 5% 7% 71 0% 1% 72 58% 52% 73 0% 4% 74 5% 6% 75 and older 32% 30% * Of boards that have set a mandatory retirement age. ** Retirement age statistics were supplemented by Spencer Stuart research. 11

13 Board Organization and Process Retailers with the highest revenues continue to have the most committees The average number of committees has decreased slightly to 3.8 in the 2014 index from 3.9 in the 2013, 2012 and 2011 indexes. Retailers with revenues of $20 billion or more once again reported the highest number of committees at 4.4, up from 4.3 in the 2013 index. All the retail and apparel boards have audit committees and all but one have compensation committees, with Ingles Markets being the exception in both the 2014 and 2013 indexes. Every S&P 500 company has audit and compensation committees. In the 2014 index, 92% of retail and apparel boards have a nominating or governance committee, compared with 99% of S&P 500 boards that have a nominating or governance committee. There has been a slight increase in the percentage of retail boards with an executive committee, to 33% in the 2014 index from 32% in the 2013 index; in 2014, 34% of S&P 500 boards have an executive committee. The percentage of industry boards with finance committees also rose slightly to 27% in the 2014 index versus 26% in the 2013 index. Retail and apparel boards are consistently less likely to have a finance committee compared with the S&P 500, where 31% have finance committees. Average Number of Committees Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B Prevalence of Standing Committees Audit 100% 100% Compensation/HR 99% 99% Nominating/Governance 92% 92% Finance 27% 26% Executive 33% 32% 12

14 Director Compensation Average cash retainer jumps 6% this year All but two retail and apparel boards in this study provide cash retainers to directors. The average cash retainer rose to $63,849 in the 2014 index from $60,288 in the 2013 index a 6% increase compared with the 1.5% increase from the 2012 index to the 2013 index. S&P 500 board retainers continue to be higher than retail board retainers, but grew by a smaller margin than those of retail boards. S&P 500 board directors are compensated $43,534 more than retail and apparel boards in board retainer. In the 2014 index, the average retainer of S&P 500 boards increased only 5% to $107,383 compared with a 17% increase in the 2013 index, 10% increase in the 2012 index and 9.5% increase in the 2011 index. The median annual retainer for retail and apparel boards in the 2014 index was $60,000, up slightly from $55,000 in the 2013 index. The S&P 500 median also increased from $80,000 in the 2013 index to $85,000 in the 2014 index. The highest retail board cash retainer in 2014 was $180,000. Average Board Cash Retainer Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B 2014 $63,849 $69,761 $69,342 $63,885 $60,809 $55, $60,288 $66,029 $69,743 $57,184 $57,500 $54, $58,741 $66,250 $67,889 $54,667 $56,217 $52, Board Cash Retainer Distribution Company % of Companies 2014 % of Companies 2013 % of Companies 2012 $1-$19,999 2% 2% 1% $20,000-24,999 1% 2% 4% $25,000-$29,999 1% 1% 0% $30,000-$34,999 3% 3% 4% $35,000-$39,999 8% 9% 6% $40,000-$49,999 10% 11% 12% $50,000-$59,999 26% 29% 29% $60,000 & up 49% 47% 44% 13

15 Director Compensation Snapshot of Retail Board Compensation % of boards paying this type Average paid Type of compensation % change in value Board retainer 98% 100% $63,849 $60,288 6% Board meeting fee 23% 30% $2,194 $2,240-2% Chair retainer 29% 25% $164,582 $165, % Total equity awards* 14% 21% $114,647* $108,111* 6% * Dollar value of equity awards. Continued decline in the prevalence of meeting attendance fees The percentage of retail and apparel boards paying meeting attendance fees continues to decline: In the 2014 index, only 23% of retail and apparel boards had meeting attendance fees compared with 30% in the 2013 index, 32% in the 2012 index, 41% in the 2011 index, 46% in in the 2010 index, 53% in the 2009 index, 58% in the 2008 index and 64% in the 2007 index. Similarly, fewer S&P 500 boards are providing meeting attendance fees, with just 25% of S&P 500 boards paying them in the 2014 study. Of retail companies that do pay meeting attendance fees, the average fee increased just 1% in the 2014 index to $2,194. S&P 500 boards that pay meeting attendance fees pay only slightly more than industry boards at $2,229. The median attendance fee for both retail and apparel and S&P 500 boards was $2,000. The highest meeting attendance fee for retail and apparel boards was $7,500. Regular Meeting Fees* Fees % of companies 2014 % of companies 2013 % of companies 2012 No fee 77% 70% 68% $1-$1000 3% 3% 3% $1001-$ % 18% 23% $2001-$3000 5% 7% 3% >$3001 2% 2% 3% * Percentages may not total 100 due to rounding Regular Meeting Fees Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B Average $2,194 $1,250 $2,092 $3,625 $1,750 $2,100 Median $2,000 $1,250 $1,500 $2,500 $1,750 $2,000 14

16 Ongoing decline in use of initial and annual options The percentage of retail boards with a stock option program for directors declined 9 percentage points from 20% in the 2013 index to 11% in the 2014 index.. The number has steadily dropped in recent years, with 33% granting directors options in the 2011 index and 24% in the 2012 index. Additionally, a significantly smaller percentage of retail and apparel boards are providing initial options when directors first join the board. In 2007 and 2008, approximately one-quarter of retail and apparel boards provided initial options versus only 4% in Of the companies that granted initial options, the number ranged from 4,000 to 20,000. The percentage of retail and apparel boards providing options to directors annually has also continued to decrease year over year. In the 2014 index, 7% of retail and apparel boards provided annual options compared with 14% in the 2013 index and 42% in the 2007 index.. Unlike past years when the number of annual options has decreased, the average number of annual options increased significantly to 10,592 in the 2014 index, compared with 7,466 in the 2013 index Average Options Granted Initially Directors Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B % Providing 4% 0% 0% 14% 3% 7% Initial Options Average Initial Options Granted 10,375 N/A 0 13,750 10,000 4,000 Boards Granting Options Annually % 14% 20% 29% 31% 34% 39% 42% 2014 Average Options Granted Annually Directors Overall >$20B $10B-$20B $5B-$10B $2B-$5B $1B-$2B % Providing 7% 6% 16% 7% 6% 0% Annual Options Average Annual Options Granted 10,592 14,000 11, ,

17 How does your board measure up? How does your board measure up? Use the index below to measure how your board compares in size and makeup to the top retail and apparel companies in the United States, as well as S&P 500 boards. Note that in some cases, the averages mask wide variations in individual companies. Board Index of Top Retail and Apparel Companies in the U.S. Average Highest Lowest S&P 500 Your Board Number of Directors Percentage of Independent Directors 78% 100% 0% 84% Average Director Age Number of Meetings per Year Average Retainer $63,849 $180,000 $10,000* $107,383 Female Representation 20% 44% 0% 19% * Lowest of those retail companies paying board retainers. 16

18 comparative board data

19 Comparative Board Data number of directors board composition compensation stock compensation total inside company revenues ($ in millions) women outside a length of term average age (outside directors) mandatory retirement age b meetings per year (regular) c ceo/chair same? board cash retainer meeting attendance fee (regular) audit committee cash retainer initial options grant initial restricted stock grant annual options grant annual restricted stock grant Abercrombie & Fitch ($4,116.9) N $55,000 N/A $25,000 N/A N/A N/A N/A Advance Auto Parts ($6,493.8) N $67,500 N/A N/A N/A N/A N/A N/A Aéropostale ($2,090.9) N/A 6 N $50,000 N/A $20,000 10,000 N/A N/A 7,721 American Eagle Outfitters ($3,305.8) Y $55,000 N/A $20,000 N/A N/A N/A N/A ANN ($2,493.5) N $55,000 N/A $15,000 N/A N/A N/A N/A Apple ($170,910.0) N $50,000 N/A N/A N/A N/A N/A N/A Ascena Retail Group ($4,714.9) N/A 6 N $75,000 N/A $15,000 N/A N/A N/A N/A AutoNation ($17,517.6) N/A 14 Y $50,000 N/A $10,000 N/A N/A 20,000 N/A AutoZone ($9,147.5) Y N/A N/A N/A N/A N/A N/A N/A Barnes & Noble ($6,839.0) N/A 16 N $65,000 N/A $15,000 N/A N/A N/A 8,680 Bed Bath & Beyond ($10,914.6) N/A 7 N $100,000 N/A $10,000 N/A N/A N/A 1,268 Best Buy Co. ($42,410.0) N $75,000 N/A N/A N/A N/A N/A N/A Big Lots ($5,301.9) N $70,000 N/A $15,000 N/A N/A N/A 2,972 The Bon-Ton Stores ($2,834.1) N/A 6 N $50,000 N/A $5,000 N/A N/A N/A N/A Brown Shoe Company ($2,513.1) Y $75,000 N/A N/A N/A N/A N/A 6,050 Buckle ($1,128.0) N/A 5 N $12,000 $3,000 N/A N/A 750 N/A 2,250 Burlington Stores ($4,427.5) N/A 4 Y $50,000 N/A $10,000 N/A 3,456 N/A N/A Cabela s ($3,599.6) N $35,000 $2,500 $15,000 N/A N/A 5,000 N/A Casey s General Stores ($7,250.8) N/A 7 Y $40,000 N/A $6,000 N/A N/A N/A N/A Chico s FAS ($2,586.0) N $75,000 N/A N/A N/A N/A N/A 7,180 The Children s Place ($1,765.8) N/A 6 N $60,000 N/A $13,500 N/A N/A N/A N/A Coach ($5,075.4) N/A 6 Y $75,000 N/A N/A N/A N/A N/A N/A Conn s ($1,193.8) Y $50,000 N/A N/A N/A N/A N/A N/A Costco Wholesale Corporation ($105,156.0) N/A 5 N $30,000 $1,000 N/A N/A N/A N/A N/A CVS Caremark Corporation ($126,761.0) N $65,000 N/A N/A N/A N/A N/A 3,222 18

20 number of directors board composition compensation stock compensation total inside company revenues ($ in millions) women outside a length of term average age (outside directors) mandatory retirement age b meetings per year (regular) c ceo/chair same? board cash retainer meeting attendance fee (regular) audit committee cash retainer initial options grant initial restricted stock grant annual options grant annual restricted stock grant Dick s Sporting Goods ($6,213.2) N/A 7 Y $20,000 $7,500 N/A 20,000 N/A N/A N/A Dillard s ($6,691.7) N/A 5 Y $80,000 N/A N/A N/A N/A N/A 1,200 Dollar General Corporation ($17,504.2) Y $75,000 N/A N/A N/A N/A N/A N/A Dollar Tree ($7,840.3) N/A 7 N $180,000 N/A $20,000 N/A N/A N/A N/A DSW ($2,368.7) N/A 8 N $55,000 N/A $15,000 N/A N/A N/A N/A Express ($2,219.1) N/A 6 Y $100,000 N/A $10,000 N/A N/A N/A N/A Family Dollar Stores ($10,391.5) N/A 8 Y $50,000 $1,500 N/A N/A N/A N/A 1,293 The Finish Line ($1,670.4) N/A 4 Y $35,000 $2,000 N/A N/A N/A N/A N/A Foot Locker ($6,182.0) Y $55,000 $2,000 N/A N/A N/A N/A N/A Fred s ($1,939.2) N/A 9 N $34,200 N/A $4,500 N/A N/A N/A 2,500 The Fresh Market ($1,511.7) N $40,000 N/A N/A N/A N/A N/A N/A GameStop Corp. ($9,039.5) N $55,000 N/A N/A N/A N/A N/A 4,560 The Gap ($16,148.0) Y $75,000 $0 N/A N/A N/A N/A N/A Genesco ($2,625.0) N/A 7 Y $50,000 $2,000 N/A N/A N/A N/A N/A Genuine Parts Company ($14,077.8) Y $50,000 $1,250 N/A N/A N/A N/A N/A GNC Holdings ($2,630.3) Y $70,000 N/A $12,500 N/A N/A N/A N/A Guess? ($2,569.8) N/A 6 N $35,000 $1,500 N/A N/A N/A N/A 6,936 hhgregg ($2,338.6) N $50,000 N/A N/A N/A N/A N/A N/A The Home Depot ($78,812.0) Y $50,000 N/A N/A N/A N/A N/A 2,915 Ingles Markets ($3,738.5) N/A 4 Y $10,000 $1,000 $15,000 N/A N/A N/A N/A J.C. Penney Company ($11,859.0) N/A 24 N $70,000 N/A N/A N/A N/A N/A N/A Kate Spade & Company ($1,264.9) N $50,000 $1,000 N/A N/A N/A N/A 7,764 Kohl s Corporation ($19,031.0) Y $100,000 N/A $15,000 N/A N/A N/A 1,922 The Kroger Co. ($98,375.0) N $85,000 N/A $10,000 N/A N/A N/A 4,370 L Brands ($10,773.2) N/A 5 Y $90,000 N/A $12,500 N/A N/A N/A N/A 19

21 Comparative Board Data number of directors board composition compensation stock compensation total inside company revenues ($ in millions) women outside a length of term average age (outside directors) mandatory retirement age b meetings per year (regular) c ceo/chair same? board cash retainer meeting attendance fee (regular) audit committee cash retainer initial options grant initial restricted stock grant annual options grant annual restricted stock grant Lowe s Companies ($53,417.0) Y $80,000 N/A N/A N/A N/A N/A N/A Lumber Liquidators Holdings ($1,000.2) N N/A N/A N/A N/A N/A N/A N/A Macy s ($27,931.0) Y $65,000 N/A $10,000 N/A N/A N/A N/A Mattress Firm Holding Corporation ($1,222.4) N/A 6 N $40,000 N/A $5,000 N/A N/A N/A N/A The Men s Wearhouse ($2,473.2) N $100,000 N/A $10,000 N/A N/A N/A N/A Murphy USA ($16,199.3) N $40,000 $2,000 N/A N/A N/A N/A N/A Nike ($25,313.0) N $85,000 N/A $5,000 N/A N/A 14,000 N/A Nordstrom ($12,540.0) N $60,000 N/A N/A N/A N/A N/A N/A O Reilly Automotive ($6,649.2) N $40,000 $2,500 N/A N/A N/A N/A 914 Office Depot ($11,242.0) Y $75,000 N/A N/A N/A N/A N/A 31,646 The Pantry ($7,822.0) N $30,000 $2,500 N/A N/A N/A N/A N/A Penske Automotive Group ($14,705.4) N/A 7 Y $40,000 N/A $5,000 N/A N/A N/A 4,000 The Pep Boys - Manny, Moe & Jack ($2,066.6) N $35,000 N/A $12,000 N/A N/A N/A N/A PetSmart ($6,916.6) N $68,000 N/A N/A N/A N/A N/A 1,694 Pier 1 Imports ($1,771.7) N $150,000 N/A N/A N/A N/A N/A N/A PriceSmart ($2,299.8) N $25,000 N/A N/A N/A N/A N/A N/A Publix Super Markets ($29,147.5) N $58,200 N/A $14,000 N/A N/A N/A N/A PVH Corp. ($8,186.4) Y $70,000 N/A $20,000 N/A N/A N/A N/A RadioShack Corporation ($3,434.3) N $85,000 N/A N/A N/A N/A N/A N/A Ralph Lauren Corporation ($7,450.0) N/A 4 Y $60,000 N/A N/A 7,500 N/A Restoration Hardware Holdings ($1,551.0) N/A 8 Y $120,000 $2,500 $25,000 N/A N/A N/A N/A Rite Aid Corporation ($25,526.4) Y $100,000 N/A $10,000 N/A N/A N/A N/A Ross Stores ($10,230.4) N/A 5 N $50,000 $1,500 N/A N/A N/A N/A 1,918 Roundy s ($3,949.9) N/A 16 Y $50,000 N/A N/A N/A N/A N/A N/A Safeway ($36,139.1) N $82,500 N/A $7,500 N/A N/A N/A N/A 20

22 number of directors board composition compensation stock compensation total inside company revenues ($ in millions) women outside a length of term average age (outside directors) mandatory retirement age b meetings per year (regular) c ceo/chair same? board cash retainer meeting attendance fee (regular) audit committee cash retainer initial options grant initial restricted stock grant annual options grant annual restricted stock grant Sally Beauty Holdings ($3,622.2) Y $35,000 $2,000 N/A N/A N/A N/A N/A Sears Holdings Corporation ($36,188.0) Y $60,000 N/A N/A N/A N/A N/A N/A Sears Hometown & Outlet Stores ($2,421.6) N/A 13 N $100,000 N/A N/A N/A N/A N/A N/A The Sherwin-Williams Company ($10,185.5) Y $95,000 N/A N/A N/A N/A N/A 742 SpartanNash Co. ($2,597.2) N $45,000 $1,500 N/A N/A N/A N/A N/A Stage Stores ($1,633.6) N $50,000 N/A N/A N/A N/A N/A 4,417 Staples ($23,114.3) Y $75,000 N/A N/A N/A N/A N/A 13,715 Starbucks Corporation ($14,892.2) Y $120,000 N/A N/A N/A N/A N/A N/A Stein Mart ($1,263.6) N/A 4 Y $36,000 $2,000 N/A 4,000 N/A N/A 2,708 SUPERVALU ($17,155.0) N $80,000 N/A $15,000 N/A N/A N/A N/A Target Corporation ($72,596.0) N $90,000 N/A N/A N/A N/A N/A N/A Tiffany & Co. ($4,031.1) Y $75,000 N/A N/A N/A N/A N/A N/A The TJX Companies ($27,422.7) N $50,000 $1,500 $10,000 N/A N/A N/A N/A Tractor Supply Company ($5,164.8) N $65,000 N/A N/A N/A N/A N/A N/A ULTA Salon, Cosmetics & Fragrance ($2,670.6) N/A 15 N $75,000 N/A N/A N/A N/A N/A 979 Under Armour ($2,332.1) Y $55,000 N/A N/A N/A N/A N/A N/A Urban Outfitters ($3,086.6) N/A 4 Y $100,000 N/A N/A N/A N/A 20,000 N/A V.F. Corporation ($11,419.6) Y $60,000 $1,500 N/A N/A N/A 7,092 N/A Village Super Market ($1,476.5) N/A 5 Y $45,000 N/A N/A N/A N/A N/A N/A Wal-Mart Stores ($476,294.0) N $75,000 N/A N/A N/A N/A N/A 2,293 Walgreen Co. ($72,217.0) N $80,000 N/A N/A N/A N/A N/A 4,789 Weis Markets ($2,692.6) N/A 4 N $40,000 N/A N/A N/A N/A N/A N/A Whole Foods Market ($12,917.0) N/A 7 N $37,496 $6,897 N/A N/A N/A 7,250 1,200 Williams-Sonoma ($4,387.9) N/A 7 N $92,500 N/A N/A N/A N/A N/A N/A Source: Equilar 21

23 footnotes Data for the Retail & Apparel Board Index were obtained from Equilar, a leading independent provider of executive and board compensation analysis, except where noted. The data were derived from the most recent proxies as of June 13, Annual revenues are reported at time of most recent proxy. a As reported by company. If a company did not disclose an independence list, non-employee directors were classified as independent. b Mandatory retirement age data supplemented by Spencer Stuart research. c Board meetings include regularly scheduled meetings. additional company information Abercrombie & Fitch Non-employee directors receive an annual grant of 3,000 restricted stock units subject to the provision that the minimum and maximum market values of the grants are $120,000 and $300,000, respectively. AutoZone Non-employee directors receive their retainers in restricted stock units. The Bon-Ton Stores Directors receive a retainer of $120,000 ($50,000 in cash and $70,000 in units). Coach Directors receive an annual equity grant with a value of $150,000, of which 50% is paid in stock options and 50% in restricted stock units. Dollar General Corporation Directors receive an annual equity award with an estimated value of $125,000 payable $75,000 in options and $50,000 in restricted stock units. DSW Directors receive a retainer of $165,000 ($55,000 in cash and $110,000 in equity). Foot Locker Retainers are paid half in cash and half in stock. Guess? Non-U.S. residents receive their annual equity award of $180,000 in restricted stock units. Kate Spade & Company Directors receive an annual retainer of $150,000, payable $50,000 in cash and $100,000 in common stock. L Brands Directors receive an annual retainer of $180,000, payable $90,000 in cash and $90,000 in stock. The Pantry Non-employee directors receive an annual equity grant of stock options, restricted stock, restricted stock units, or a combination thereof valued at $70,

24 Ralph Lauren Corporation Directors receive an equity grant valued at $100,000. One-half of the target equity value was delivered in the form of options to purchase shares of our Class A Common Stock and one-half was delivered in the form of restricted shares of Class A Common Stock. Staples New outside directors receive a one-time initial grant of restricted stock or restricted stock units equal to $150,000. Target Corporation Non-employee directors receive an annual retainer of $260,000, of which $170,000 is paid in restricted stock units. Williams-Sonoma Directors receive an annual retainer of $185,000, payable 50 percent in cash and 50 percent in restricted stock units. 23

25 About Spencer Stuart Spencer Stuart is one of the world s leading executive search consulting firms. Privately held since 1956, Spencer Stuart applies its extensive knowledge of industries, functions and talent to advise select clients ranging from major multinationals to emerging companies to nonprofit organizations and address their leadership requirements. Through 55 offices in 30 countries and a broad range of practice groups, Spencer Stuart consultants focus on senior-level executive search, board director appointments, succession planning and in-depth senior executive management assessments. Retail, Apparel & Luxury Goods Practice Over the past decade, our Retail, Apparel & Luxury Goods Practice has successfully conducted more than 1,400 assignments, recruiting and placing board directors, CEOs and senior functional executives for leading organizations in the industry. Our team knows and has deep relationships with the most sought-after global executives in retail and from across other industries. We serve as trusted advisers to our clients, who turn to us for our retail sector and functional expertise, access to exceptional candidates, and understanding of the talent and marketplace issues that influence the recruitment process. Spencer Stuart s global omnichannel expertise includes the following sectors: > Mass Retail > Department Stores > Specialty Retail > Fashion and Luxury Goods > Grocery, Drug and Convenience > Online Retail stay connected to spencer stuart 2014 Spencer Stuart. All rights reserved. For information about copying, distributing and displaying this work, contact permissions@spencerstuart.com.

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