DEF 14A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant  
                             Filed by a Party other than the Registrant  
Check the appropriate box:
 
 
Preliminary Proxy Statement
   
 
Confidential, for Use of the Commission Only (as
permitted
by Rule
14a-6(e)(2))
   
 
Definitive Proxy Statement
   
 
Definitive Additional Materials
   
 
Soliciting Material under
§240.14a-12
 
 
 
VERA BRADLEY, INC.
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
 
No fee required.
 
Fee paid previously with preliminary materials.
   
 
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14(a)-6(i)(1) and 0-11.


Table of Contents

LOGO


Table of Contents

LOGO

 

Welcome to the Vera Bradley, Inc.

 

Annual Meeting of Shareholders

 

Dear Shareholder of Vera Bradley, Inc.:

 

You are cordially invited to attend the 2023 Annual Meeting of Shareholders of Vera Bradley, Inc., to be held at 8:00 a.m., Eastern Time, on May 25, 2023 at our Design Center at 12420 Stonebridge Road, Roanoke, IN 46783.

 

The attached Notice of 2023 Annual Meeting of Shareholders and Proxy Statement provide information concerning the matters to be considered and voted on at the Annual Meeting. Please take the time to carefully read each of the proposals.

 

Regardless of the number of shares you hold or whether you plan to attend the meeting in person, your vote is important. Accordingly, please vote your shares as soon as possible by following the instructions you received on your proxy card. Voting your shares prior to the Annual Meeting will not prevent you from voting your shares in person if you subsequently choose to attend the meeting.

 

To make it easier for you to vote, Internet and telephone voting are available. The instructions for voting via the Internet and telephone can be found on your proxy card.

 

Thank you for your continued support of Vera Bradley, Inc.

 

Sincerely,

 

LOGO

 

Jacqueline M. Ardrey

President and Chief Executive Officer

 

April 21, 2023

 

 

 


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LOGO

 

    

 

LOGO

 

NOTICE OF 2023 ANNUAL MEETING
OF SHAREHOLDERS

 

Date:

May 25, 2023

 

Time:

8:00 a.m., Eastern Time

 

Place:

Vera Bradley Design Center

12420 Stonebridge Road Roanoke, IN 46783

 

Record Date:

March 31, 2023. You are entitled to vote at the Annual Meeting only if you were a shareholder at the close of business on the record date.

 

Items of Business:

To elect seven Directors for a one-year term to expire at the 2024 Annual Meeting of Shareholders; To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2024; To approve, on an advisory basis, the compensation of the Company’s named executive officers; To approve, on an advisory basis, the frequency of future advisory votes on the compensation of the Company’s named executive officers; To approve an amendment to the Company’s 2020 Equity Incentive Plan for an additional authorization of shares to be available for future issuance; and To transact any other business as may properly come before the meeting or at any adjournments or postponements thereof.

    

Proxy Voting:

Shareholders of record may vote in person at the Annual Meeting in Roanoke, but may also appoint proxies to vote their shares in one of the following ways

 

     LOGO  

Via Internet

Cast your vote at

www.proxyvote.com 24/7 until

11:59 p.m., Eastern Time on

May 24, 2023

     LOGO  

Via Phone

Cast your vote by phone at

1-800-690-6903 24/7 until

11:59 p.m., Eastern Time on

May 24, 2023

     LOGO  

Via Mail

Mark, sign, and date your

proxy card and return it in the

postage-paid envelope provided

 

      
      
      
      
      

 

Shareholders whose shares are held by a bank, broker, or other nominee (in “street name”) may instruct such record holders how to vote their shares. Any proxy may be revoked at any time prior to its exercise at the meeting by following the procedures described in the proxy solicitation materials. If you hold your shares in “street name” and wish to vote your shares in person at the Annual Meeting, you must obtain a legal proxy from your bank, broker, or other holder of record, giving you the right to vote the shares.

 

By Order of the Board of Directors,

 

LOGO

 

Mark C. Dely

Corporate Secretary

 

April 21, 2023

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on May 25, 2023: This 2023 Proxy Statement and Notice of Annual Meeting of Shareholders and our Fiscal 2023 Annual Report are available in the “Investor Relations” section of our website at www.verabradley.com.

 

 

    

 


Table of Contents

LOGO

 

    

 

TABLE OF CONTENTS

 

PROXY SUMMARY

     1  
Fiscal 2023 Business Highlights      1  

Strategic Progress

     1  

Financial Results

     2  
Corporate Responsibility and our Environmental, Social, and Governance Efforts      3  
Executive Compensation      3  
Corporate Governance      4  
Shareholder Engagement      5  
Questions and Answers      5  
Note About Forward-Looking Statements      5  

PROPOSAL NO. 1 ELECTION OF DIRECTORS

     1  
VOTE REQUIRED AND BOARD RECOMMENDATION      1  

THE BOARD OF DIRECTORS

     2  
Director Qualifications and Selection Process      2  
Director Nominees for Election at the 2023 Annual Meeting      3  

CORPORATE GOVERNANCE

     6  
Corporate Governance Guidelines      6  
Conflict of Interest and Business Ethics Policy      6  
Code of Ethics for Senior Financial Officers      6  
Risk Oversight      6  
Stock Ownership Guidelines      7  
Hedging, Derivatives and Pledging      7  
Compensation Committee Interlocks and Insider Participation      7  
Policy on Related Party Transactions      7  
Related Party Transactions for Fiscal 2023      8  
Family Relationships      8  
Copies of Governance Documents      8  

THE BOARD AND ITS COMMITTEES

     9  
Board Responsibilities      9  
Board Independence      9  
Board Leadership Structure and Lead Independent Director      10  
Standing Committees and Meetings of the Board      10  
Annual Board and Committee Evaluations      11  
Committee Charters      11  
Communications with Directors      12  

DIRECTOR COMPENSATION

     13  
Cash Compensation for Non-Employee Directors      13  
Restricted Stock Units for Non-Employee Directors      13  
Fiscal 2023 Director Compensation      13  
PROPOSAL NO. 2 RATIFICATION OF INDEPENDENT AUDITOR      14  
Proposal      14  
Principal Accounting Fees and Services      14  
VOTE REQUIRED AND BOARD RECOMMENDATION      14  

AUDIT COMMITTEE REPORT

     15  
PROPOSAL NO. 3 ADVISORY VOTE ON EXECUTIVE COMPENSATION      16  
Proposal      16  
VOTE REQUIRED AND BOARD RECOMMENDATION      16  
PROPOSAL NO. 4 FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION      17  
Proposal      17  
VOTE REQUIRED AND BOARD RECOMMENDATION      17  
PROPOSAL NO. 5 2020 EQUITY AND INCENTIVE PLAN AMENDMENT      18  
Proposal      18  
VOTE REQUIRED AND BOARD RECOMMENDATION      22  
EXECUTIVE COMPENSATION      23  
COMPENSATION COMMITTEE REPORT      23  
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS      23  
Our Compensation Philosophy and Objectives      24  
Compensation Mix and Pay for Performance      25  
How We Make Executive Compensation Decisions      26  
Elements of Our Executive Compensation Program in Fiscal 2023      27  
Agreements with Named Executive Officers      33  
Compensation and Risk      34  
Effect of Accounting and Tax Treatment on Compensation Decisions      35  
COMPENSATION TABLES      36  
Summary Compensation Table      36  
Grants of Plan-Based Awards      37  
Outstanding Equity Awards at Fiscal Year-End      38  
Option Exercises and Shares Vested      39  
Pension Benefits      39  
Nonqualified Deferred Compensation      39  
Potential Payments Upon Termination or Change in Control      40  
Severance Agreements and Arrangements      42  
PAY RATIO DISCLOSURE      46  
PAY VERSUS PERFORMANCE DISCLOSURE      47  
QUESTIONS AND ANSWERS ABOUT THE PROXY AND THE 2023 ANNUAL MEETING      50  
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      53  
OTHER BUSINESS & ADDITIONAL INFORMATION      55  
Delinquent Section 16(a) Reports      55  
Requirements, Including Deadlines, for Submission of Proxy Proposals, Nomination of Directors, and Other Business of Shareholders      55  
APPENDIX A – VERA BRADLEY, INC. AMENDED AND RESTATED 2020 EQUITY AND INCENTIVE PLAN      A-1  
 

 

 

    

 


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PROXY SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider, and we encourage you to read the entire Proxy Statement before voting.

FISCAL 2023 BUSINESS HIGHLIGHTS

 

 
Strategic Progress

We ended the fiscal year with consolidated revenues of $500 million. During the year, we began to see stabilization in our supply chain, diligently controlled our expenses, and carefully managed our cash.

Although fiscal 2023 had its challenges, we took actions that laid the groundwork to position the Company for the future.

 

On a corporate basis:

 

 

In the middle of the fiscal year, we collaboratively identified $25 million in annualized cost-reduction initiatives and efficiency processes. The expense savings were derived across various areas of the Company, including payroll reductions, retail store efficiencies, marketing expenses, information technology contracts and projects, professional services, and logistics and operational costs. Many of the savings were realized in fiscal 2023.

 

 

In January 2023, we further streamlined our corporate structure by eliminating the positions of Vera Bradley Brand President, Chief Creative Officer, and Chief Revenue Officer, and added the position of Chief Marketing Officer, designed to drive additional annual cost savings of approximately $2 million, add more focus on marketing and merchandising, and position the Company to deliver steady top- and bottom-line growth. These decisions were made in order to right-size our leadership team and cost structure for the size of our business, to address the continuing challenging macro environment, and to best position us to achieve our long-term strategic plans.

 

 

Subsequent to the end of fiscal 2023, in January 2023, we acquired the remaining 25% interest in Pura Vida from founders Griffin Thall and Paul Goodman for $10 million.

 

 

We continued to make investments in customer data science, business analytics, and pricing optimization, allowing us to collect and analyze data and make fact-based decisions to more efficiently run our business.

At the Vera Bradley brand:

 

 

We expanded our robust product innovation pipeline, including launching our Featherweight Collection; continued another year of iconic product collaborations, including with Disney, Harry Potter, and Crocs; and expanded our cozy, sleep, and outerwear collections.

 

 

We continued to strengthen and rationalize our store base. We opened five new factory stores and closed 19 underperforming full line stores and one factory store, ending the fiscal year with 51 full line and 79 factory locations. We also continued to expand options for customers to shop, such as enhancing our presence in third-party marketplaces and adding boutiques in select high-traffic airports.

At the Pura Vida brand:

 

 

We entered into several high-profile product collaborations, with brands such as Hello Kitty, Disney, and Harry Potter, and expanded our product offerings by launching our demi-fine collection and expanding our assortment of engravable jewelry, all designed to bring new customers to our brand.

 

 

We focused on building a more diverse, innovative, effective, and performance-based marketing program to drive Pura Vida e-commerce sales. We began the process of implementing a comprehensive customer data platform to build a single, coherent, complete view of each Pura Vida customer so that we can better target and personalize marketing and become less reliant on third-party marketing. This project is scheduled for

 

 

  VERA BRADLEY, INC.   2023 Proxy Statement         1

 

 


Table of Contents

 

Proxy Summary

 

 

 

 

   

completion this spring. We continued to engage our micro influencers, significantly expanded our TikTok presence, launched impactful ads on connected TV, optimized SMS, and aggressively explored other methods to effectively reach our customers.

 

 

We opened three new Pura Vida full line stores during the year, bringing our full line store count to

   

four, which collectively are exceeding our expectations. These four stores are playing a role in driving new customer acquisition as we continue to diversify our marketing platforms, and they demonstrate the power a retail presence can have in driving digital sales, omni-channel loyalty, and spending.

 

 

FINANCIAL RESULTS

 

In the Company’s second quarter of fiscal 2020, Vera Bradley acquired a 75% interest in Creative Genius, Inc., which also operates under the name Pura Vida Bracelets (“Pura Vida”). Financial results for Pura Vida have been consolidated beginning July 17, 2019, the first full day following the acquisition. Figures prior to fiscal 2020 have not been restated to reflect the purchase transaction.

The graphs below provide a ‘‘snapshot’’ of our performance in accordance with accounting principles generally accepted in the United States (“GAAP”) in fiscal 2023 and the previous four fiscal years.

Fiscal 2023 items impacting comparability. During fiscal 2023, Vera Bradley, Inc. net loss was impacted by $67.4 million of after-tax charges including $40.6 million of goodwill and intangible asset impairment charges; $12.2 million of inventory adjustments associated with Pura Vida excess inventory and mask products, the exit of certain technology products, and discounted inventory, as well as PO cancellation fees; $7.4 million of severance, retention, and former CEO stock-based compensation charges associated with retirement; $3.3 million of consulting and professional fees primarily associated with cost savings initiatives, the CEO search, and strategic initiatives; $1.8 million for the amortization of definite-lived intangible assets; $1.0 million of store and right-of-use asset impairment charges; $0.8 million related to the new CEO sign-on bonus and relocation expenses; and $0.3 million of goodMRKT brand exit costs. Collectively, these charges negatively impacted EPS by approximately $2.14 in fiscal 2023. Refer to Notes 15 and 16 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023 for additional information.

 

Fiscal 2022 items impacting comparability. During fiscal 2022, Vera Bradley, Inc. net income was impacted by $1.8 million of charges primarily related to the amortization of definite-lived intangible assets.

Fiscal 2021 items impacting comparability. During fiscal 2021, Vera Bradley, Inc. net income was impacted by $12.7 million of charges including after-tax charges of $4.8 million for amortization of definite-lived intangible assets; $4.5 million of store impairment charges; $2.1 million of technology-related re-platforming charges (“Project Novus”); $1.1 million of COVID-19-related charges including the cancellation of certain purchase orders and certain department store exit costs; and $0.2 million for an adjustment upon payment of the earn-out liability associated with the Pura Vida transaction. These charges negatively impacted diluted EPS by approximately $0.38 in fiscal 2021. The COVID-19 pandemic significantly impacted our operating results for the year.

Fiscal 2020 items impacting comparability. During fiscal 2020, Vera Bradley, Inc. net income was impacted by $12.1 million of charges including after-tax Pura Vida purchase-related net charges of $9.7 million and after-tax charges of $2.4 million related to Project Novus, while net revenues were positively impacted by $65.9 million of incremental revenue attributable to Pura Vida. The Pura Vida purchase-related net charges and the Project Novus charges negatively impacted diluted EPS by approximately $0.35 in fiscal 2020. Refer to Note 16 of the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020 for additional information.

 

 

2        2023 Proxy Statement   VERA BRADLEY, INC.  

 

 


Table of Contents

 

Proxy Summary

 

 

 

 

LOGO

Corporate Responsibility and our Environmental, Social, and Governance Efforts

 

Every day, we have the opportunity to inspire and connect with our devoted customers through our two iconic lifestyle brands, dedicated associates, innovative products, diverse communities, and global efforts. We strive to create a Company that is a great place to work, shop, and invest. ENSURING GOOD GOVERNANCE, CARING FOR PEOPLE, AND CARING FOR OUR PLANET are just some of the ways we do this.

Our Corporate Responsibility and Sustainability Report outlines details about the progress we have made related to our many environmental, social, and governance (“ESG”) initiatives and our plans going forward. This report can be found on verabradley.com/ESG, and as we continue on our ESG journey, we will update you on our progress.

Last year, among other things, we continued to foster sound corporate governance policies; further

developed and engaged our nearly 2,200 associates; and elevated our efforts on responsible sourcing, product safety, and climate change. We are proud to once again be recognized by Forbes as one of America’s Best Mid-Size Employers.

At both brands, we are embarking on Project Restoration and will focus on four key pillars – Consumer, Brand, Product, and Channel – to drive this long-term profitable growth. As we restore our brands to health and drive transformation of our Company, we remain committed to being a positive force in the ESG movement. We will take the opportunity this year to diligently reexamine all areas of our ESG efforts, assuring we are devoting the appropriate resources and making the right strategic investments in the ESG areas that are most impactful to our stakeholders — our customers, our associates, our shareholders, and our communities.

 

 

EXECUTIVE COMPENSATION

 

Sound program design. We have designed our executive officer compensation programs to attract, motivate, and retain the key executives who drive our success. Pay that reflects performance and alignment with the interests of long-term shareholders are key principles. We achieve our objectives through compensation that:

 

 

Provides a competitive total pay opportunity;

 

 

Links a significant portion of total compensation to performance that we believe will create long-term shareholder value;

 

 

Enhances retention by subjecting a meaningful portion of total compensation to multi-year vesting; and

 

 

Does not encourage unnecessary and excessive risk taking.

Pay practices. We believe that appropriate corporate governance of our executive compensation program is enhanced by a number of practices, including use by the Compensation Committee of its own independent consultant and compensation tools, the absence of tax gross-ups in any of our compensation programs (including no excise tax gross-ups), and stock ownership guidelines applicable to directors and officers that align shareholder interests by requiring executives to own stock in the Company.

Pay for performance. Our compensation program allows our Compensation Committee to determine pay based on a comprehensive view of quantitative and qualitative factors designed to produce long-term

 

 

  VERA BRADLEY, INC.   2023 Proxy Statement         3

 

 


Table of Contents

 

Proxy Summary

 

 

 

 

business success. The correlation between our financial results and executive officer compensation awarded, as described in the “Executive Compensation Discussion and Analysis” or “CD&A” which follows in this proxy statement, aligns the interests of our executive officers with those of the Company. Specifically in fiscal 2023:

 

 

The Company’s earnings per share, revenue, and operating income were down compared to the prior year, resulting in reduced payouts under the Company’s long-term and short-term incentive plans.

 

 

The Company achieved below-threshold levels for Vera Bradley Brand, Pura Vida Brand, and Enterprise net revenue metrics. Vera Bradley Brand, Pura Vida Brand, and Enterprise net operating income threshold levels similarly were not achieved. Therefore, there were no

   

payouts for any of these elements of the Company’s short-term incentive plans.

 

 

The Company achieved below-threshold levels of its adjusted EPS metric for the fiscal 2023 performance year and of the prior-year performance-based restricted stock unit grants. No long-term incentive was earned for these performance grants.

 

 

In addition to financial goals, the annual incentive opportunity included key strategic objectives tied to our Vera Bradley, Inc. long-term strategic plan and intended to focus the team on making progress towards the Company’s strategic objectives. These strategic objectives paid out at 75% for the Vera Bradley Brand program, 75% for the Pura Vida Brand program and 100% for the Enterprise program, as described herein.

 

 

Grants under the Company’s fiscal 2023 Plans vest over a three-year period to promote retention and long-term thinking.

 

 

CORPORATE GOVERNANCE HIGHLIGHTS

 

Our governance principles and practices include a number of policies and structures that we believe are “best practices” in corporate governance, including:

 

 

Election of Directors for one-year terms;

 

 

Appointment of a Lead Independent Director who participates in the process of preparing meeting agendas and schedules and presides over executive sessions of each Board meeting;

 

 

Separation of Chair of the Board and Chief Executive Officer (“CEO”) roles;

 

 

Holding executive sessions with only independent directors present at each meeting of the Board;

 

 

Minimum stock ownership guidelines applicable to directors and executive officers;

 

Holding requirements for equity grants made to directors and executive officers until minimum stock ownership guidelines are met;

 

 

Policies prohibiting hedging, pledging, and other problematic transactions involving Company securities by executive officers, directors, and key employees;

 

 

Practice of no excise tax gross-ups for directors and executive officers;

 

 

Allowing shareholders to unilaterally amend our bylaws; and

 

 

Inclusion of double triggers for Severance Plan benefits upon a change in control.

 

 

4        2023 Proxy Statement   VERA BRADLEY, INC.  

 

 


Table of Contents

 

Proxy Summary

 

 

 

 

SHAREHOLDER ENGAGEMENT

 

The Board maintains a process for shareholders and interested parties to communicate with the Board. Shareholders and interested parties may write or email our Board as provided below:

 

LOGO

 

Write:

Corporate Secretary

Vera Bradley, Inc.

12420 Stonebridge Road

Roanoke, Indiana 46783

LOGO

 

Internet:

http://investors.verabradley.com/corporate-governance/contact-the-board or

http://investors.verabradley.com/contact-us

 

Email:

investorrelations@verabradley.com

We understand the importance of a robust shareholder engagement program. To that end, our Chief Executive Officer and appropriate members of management routinely attend meetings with shareholders and investor conferences, as well as regular meetings with institutional shareholders. Our meetings and interactions with shareholders are designed to help us better understand how our shareholders perceive Vera Bradley and to provide our shareholders an opportunity to discuss matters that they believe deserve attention. We believe our engagement has been productive and provides an open exchange of ideas and perspectives for both our shareholders and us.

 

 

QUESTIONS AND ANSWERS

 

See “Questions and Answers” on page 50 for additional information.

Please see the Questions and Answers section beginning on page 50 for important information

about the proxy materials, voting, the Annual Meeting, Vera Bradley documents, communications, and the deadlines to submit shareholder proposals for the 2024 Annual Meeting of Shareholders.

 

 

Note about forward-looking statements

 

 

Certain statements in this proxy statement, other than purely historical information, which may include estimates, projections, statements relating to our business plans, objectives, and expected operating results and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this Proxy Statement, including without limitation, this Proxy Summary and “Executive Compensation Discussion and Analysis.” These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” of our Forms 10-K and 10-Q. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may materially impact such forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

  VERA BRADLEY, INC.   2023 Proxy Statement         5

 

 


Table of Contents

LOGO

 

PROPOSAL NO. 1

ELECTION OF DIRECTORS

VOTE REQUIRED AND BOARD RECOMMENDATION

The Company’s directors are elected for one-year terms, and below are the Directors nominated for election by shareholders at this year’s annual shareholders’ meeting. The Board recommends a vote “FOR” each of the Directors. Each Director nominee will be elected by a plurality of votes cast, which means that the nominees receiving the highest number of votes will be elected as directors. Abstentions and broker non-votes will have no effect on the vote.

 

           

NAME AND OCCUPATION

       AGE        DIRECTOR
SINCE
  

INDEPENDENT

(Y/N)

   OTHER
PUBLIC
BOARDS

Jacqueline Ardrey

President and Chief Executive Officer, Vera Bradley, Inc.

   54    2022    N    —  

Barbara Bradley Baekgaard

Co-Founder, Vera Bradley, Inc.

   84    1982    N    —  

Kristina Cashman

Former Chief Financial Officer, several restaurant companies

   56    2020    Y    1

Robert J. Hall

President, Green Gable Partners

   64    2007    N    —  

Mary Lou Kelley

Retired President, E-Commerce for Best Buy

   62    2015    Y    2

Frances P. Philip

Retired Chief Merchandising Officer, L.L. Bean, Inc.

   65    2011    Y    2

Carrie M. Tharp

VP, Retail and Consumer, Google Cloud

   42    2020    Y    —  

Additional information regarding each director nominee follows below.

The Board of Directors has no reason to believe that any of the nominees will be unable to serve as a director. If, however, any nominee becomes unable to serve as a director prior to the Annual Meeting, the proxies will have discretionary authority to vote for a substitute nominee. Unless authority to do so is withheld, the persons named as proxies will vote “FOR” the election of the nominees.

 

 
VERA BRADLEY’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE-LISTED NOMINEES TO THE BOARD OF DIRECTORS.

 

 

  VERA BRADLEY, INC.   2023 Proxy Statement         1


Table of Contents

PROPOSAL NO. 1 Election of Directors

 

 

 

THE BOARD OF DIRECTORS

DIRECTOR QUALIFICATIONS AND SELECTION PROCESS

Each year at the Company’s annual meeting of shareholders, the Board recommends a slate of director nominees for election by shareholders. In addition, the Board fills vacancies on the Board when necessary or appropriate. The Board’s recommendations or determinations are based on the recommendations of, and information supplied by, the Nominating, Corporate Governance and Sustainability Committee as to the suitability of each individual and, where applicable, the slate as a whole to serve as directors, taking into account the criteria described below and other factors, including the requirements for Board committee membership.

The Nominating, Corporate Governance and Sustainability Committee is responsible for, among other things, reviewing on an annual basis the appropriate skills and characteristics required of directors in the context of prevailing business conditions and for making recommendations regarding the size and composition of the Board. The objective is a Board that brings to the Company a variety of perspectives and skills that are derived from high-quality business and professional experience and that are aligned with the Company’s strategic objectives. The Board has determined the most effective size of the Board currently to be seven to nine members and, effective at the Annual Meeting, has set the number of directors at seven.

Nominees for the Board must be committed to enhancing long-term shareholder value and possess a high level of personal and professional ethics, sound business judgment, appropriate experience and achievements, personal character, and integrity. Board members are expected to understand our business and the industry in which we operate, regularly attend Board and relevant committee meetings, participate in meetings and decision-making processes in an objective and constructive manner and be available to advise our officers and management. Evaluations of candidates generally involve a review of background materials, internal discussions, and interviews with selected candidates, as appropriate. Upon selection of a qualified candidate, the Nominating, Corporate Governance and Sustainability Committee recommends the candidate to the Board.

The Board also seeks members from diverse backgrounds so that the Board consists of members with a broad spectrum of experience and expertise and with a reputation for integrity. As a company founded by women, for women, the Company is thrilled to have six strong, accomplished women serve on our Board of Directors. With 78% current female board membership, Vera Bradley is one of only a few public companies with such high female representation Below is a chart depicting the Board’s diversity statistics as of April 21, 2023:

BOARD DIVERSITY MATRIX

TOTAL NUMBER OF DIRECTORS: 9(1)

 

       
    FEMALE   MALE  

NON-

BINARY

 

DID NOT  

DISCLOSE  

GENDER  

Part I: Gender Identity

Directors

  7   2        

Part II: Demographic Background

African American or Black

  1            

Alaskan Native or Native American

               

Asian

               

Hispanic or Latinx

               

Native Hawaiian or Pacific Islander

               

White

  6   2        

Two or More Races or Ethnicities

               

LGBTQ+

               

Did Not Disclose Demographic Background

               
(1)

One female, Ms. Twine, and one male, Mr. Schmults, are not standing for re-election.

The Nominating, Corporate Governance and Sustainability Committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees. In recommending nominees, the Nominating, Corporate Governance and Sustainability Committee considers nominees recommended by the Company’s shareholders in the same manner as described above provided any such shareholder follows the procedures set forth in the Company’s bylaws.

 

 

2        2023 Proxy Statement   VERA BRADLEY, INC.  


Table of Contents

PROPOSAL NO. 1 Election of Directors

 

 

 

DIRECTOR NOMINEES FOR ELECTION AT THE 2023 ANNUAL MEETING

 

Jacqueline Ardrey

  Age(1) 54 

President and CEO

  Director Since 2022 

Ms. Ardrey joined Vera Bradley as its President and Chief Executive Officer in November 2022. At that same time she also joined the Company’s Board of Directors. Between 2018 and October 2022, she held the post of President at home furnishings and seasonal décor catalog retailer Grandin Road, part of the Qurate Retail Group. In 2017 and 2018, Ms. Ardrey was CEO of home furnishings and seasonal décor retailer, Trading Company Holdings. Prior to that, she was Founder and CEO of Oregon Home Gourmet and Senior Vice President of Merchandising and Supply Chain for iconic omnichannel gourmet food and gifting brand Harry and David. Previously, she spent 14 years at multi-channel high-end children’s retailer Hanna Andersson in various roles of increasing responsibility, including Senior Vice President of Merchandising, Design, and Wholesale. Ms. Ardrey began her retail career with the May Company.

 

Qualifications: Ms. Ardrey is an accomplished, results-oriented leader with over 25 years of experience in multi-channel retail enterprises. She has demonstrated success in motivating and coaching teams through strategic change while consistently delivering results. She has a deep background in strategic planning and execution; brand positioning; product development; buying and merchandising; inventory management; planning and allocation; and financial planning and analysis.

Barbara Bradley Baekgaard

  Age(1) 84 

Co-Founder

  Director Since 1982 

Ms. Baekgaard co-founded Vera Bradley in 1982. From 1982 through June 2010, she served as Co-President, and in May 2010, she was appointed Chief Creative Officer. In 2017, Ms. Baekgaard became emeritus from the Chief Creative Officer but still serves as an active brand ambassador for the Vera Bradley brand. She currently serves as a board member of the Indiana University Melvin and Bren Simon Cancer Center Development Board and the Vera Bradley Foundation for Breast Cancer.

 

Qualifications: As Co-Founder of Vera Bradley, Ms. Baekgaard serves a key leadership role on our Board of Directors and provides the Board with a broad array of institutional knowledge and historical perspective. Since our founding, Ms. Baekgaard has provided leadership and strategic direction in our brand’s development by providing creative vision to areas such as marketing, product design, assortment planning, and the design and visual merchandising of our stores.

 

Kristina Cashman

  Age(1) 56 
  Director Since 2020 

Since 2019, Ms. Cashman has served as President and Chief Executive Officer of Cashman Restaurant & Retail Consulting. Ms. Cashman’s prior experience includes Chief Financial Officer, Upward Projects, LLC from 2018 to 2019; Chief Financial Officer, Hopdoddy Burger Bar, Inc. from 2014 to 2018; President of Guy and Larry Restaurants, Inc. from 2011 to 2014; Chief Financial Officer of Eddie V’s Restaurants, Inc. from 2006 through 2011; and Chief Financial Officer and Secretary of P.F. Chang’s China Bistro, Inc. from 2001 to 2006.

 

Ms. Cashman serves as a director of and Chair of the Audit Committee for publicly-held Basset Furniture Industries, Inc. and privately-held Munchkin, Inc., an infant and toddler lifestyle brand.

 

Qualifications: Ms. Cashman brings to the Board of Directors particular knowledge and experience in finance, accounting, tax, and capital structure, as well as strategic planning, real estate strategy and selection, operations, and incentive compensation plan development.

 

 

  VERA BRADLEY, INC.   2023 Proxy Statement         3


Table of Contents

PROPOSAL NO. 1 Election of Directors

 

 

 

Robert J. Hall

  Age(1) 64 

Chair

  Director Since 2007 

Mr. Hall has served as Chair of the Board since September 2010. Mr. Hall is the President of Green Gables Partners, a private investment firm that he founded in 2010. Prior to founding Green Gables, Mr. Hall started Andesite Holdings, a private equity firm, where he served as principal from 2007 to 2014. Mr. Hall served as an Executive Director for UBS Financial Services from 2000 to 2007.

 

Mr. Hall serves as a director of FlyLow Gear Co., a privately-held manufacturer of outerwear; a director of Glade Optics, a privately-held retailer of ski goggles and casual apparel and accessories; and Co-Chair of the U.S. Biathlon Association.

 

Qualifications: Mr. Hall provides our Board of Directors with insight and perspective on general strategic and financial matters stemming from his extensive experience in investment banking, investment management, financial planning, and private placements.

 

Mary Lou Kelley

  Age(1) 62 
  Director Since 2015 

Ms. Kelley served as President, E-Commerce for electronics retailer Best Buy from April 2014 through March 2017. Prior to joining Best Buy, Ms. Kelley served as Senior Vice President, E-Commerce for Chico’s FAS Inc. from June 2010 to March 2014. Ms. Kelley formerly held the posts of Vice President of Retail Real Estate and Marketing and Vice President of E-Commerce for L.L. Bean.

 

Ms. Kelley serves on the public company boards of YETI Holdings, Inc. a premium cooler and drinkware company, and Finning International, the world’s largest Caterpillar equipment dealer with operations in Canada, South America, the United Kingdom, and Ireland. She also is an advisor to the Board of Directors and senior leadership of Falabella Retail, the largest department store retailer in South America.

 

Qualifications: Ms. Kelley has deep capabilities in developing retail omni-channel experience, as well as e-commerce, marketing, and strategic planning. She provides insight and counsel on a variety of issues as the Company continues to pursue our long-term strategic plan, which includes elevating our digital-first strategy and our marketing efforts.

Frances P. Philip

  Age(1) 65 
  Director Since 2011 

Ms. Philip assumed the role of Lead Independent Director in May 2022.

 

From 1994 to 2011, Ms. Philip held positions of increasing responsibility at L.L. Bean, Inc., a privately-held outdoor apparel and equipment retailer based in Freeport, Maine, including Chief Merchandising Officer from 2002 to 2011. Prior to working at L.L. Bean, Ms. Philip was one of three principals who launched the innovative fresh flower catalog, Calyx & Corolla, and she served in a variety of roles with other specialty retailers, including The Nature Company, Williams-Sonoma, and The Gap.

 

Ms. Philip also serves on the boards of Coats Group plc., a UK-based company traded on the London Stock Exchange that is the world’s leading industrial thread company; publicly-held Vista Outdoor, Inc., a leading global designer, manufacturer and marketer of consumer products in the outdoor sports and recreation markets; Sea Bags, a privately-held manufacturer and retailer of handcrafted tote bags and accessories made from recycled sails; and Totes-Isotoner Corporation, a privately-held international umbrella, footwear, and cold-weather accessory supplier.

 

Qualifications: Ms. Philip brings to our Board of Directors extensive experience in product design and development, multi-channel merchandising, branding, marketing, creative, and the retail and consumer products industry.

 

 

4        2023 Proxy Statement   VERA BRADLEY, INC.  


Table of Contents

PROPOSAL NO. 1 Election of Directors

 

 

 

Carrie M. Tharp

  Age(1) 42 
  Director Since 2020 

Ms. Tharp has served as Vice President, Retail and Consumer, for Google Cloud, a global cloud provider since August 2019. Between October 2016 and July 2019, she was Executive Vice President, Chief Digital Officer of luxury retailer Neiman Marcus Group and served as Interim Neiman Marcus Brand President from January 2019 until July 2019. Neiman Marcus filed for Chapter 11 bankruptcy in May 2020. From June 2013 until September 2016, Ms. Tharp served as Senior Vice President, Chief Marketing Officer and Head of eCommerce for Fossil Group, a multi-brand watch and accessories business. Prior to that, she held various management positions with Travelocity and Dean Foods.

 

Ms. Tharp is a member of the board of privately-held premier off-price, ecommerce company, Rue Gilt Groupe, Inc.

 

Qualifications: Ms. Tharp has extensive omni-channel retail experience, including in the handbag and accessories categories; a track record of growth and profit performance improvement; and expertise in e-commerce, marketing with vertically integrated consumer brands, brand management, digital fluency, social media, customer insights, analytics, customer strategy, and omni-channel retailing.

 
(1)

Represents age as of the Annual Meeting date.

 

  VERA BRADLEY, INC.   2023 Proxy Statement         5


Table of Contents

Corporate Governance

 

 

 

CORPORATE GOVERNANCE

We believe corporate governance should promote the long-term interests of our shareholders, as well as maintain internal checks and balances, strengthen management accountability, engender public trust, and foster responsible decision making and accountability. We continue to strengthen existing governance practices and develop new policies that make us a better company. To that end, the following policies and practices are used to guide and regulate various actions, in addition to the Company’s Articles of Incorporation and Bylaws.

 

CORPORATE GOVERNANCE GUIDELINES

Our Corporate Governance Guidelines set out various rules and principles for self-governance and address such matters as Board composition and structure, duties and responsibilities of directors and the Board and the duties of the Lead Independent Director, among other matters.

CONFLICT OF INTEREST AND BUSINESS ETHICS POLICY

We believe that credibility, integrity, trustworthiness, and our core values are critical components of the current and future success of our business. Our Conflict of Interest and Business Ethics Policy is intended to help uphold high ethical standards in all of our operations by promoting ethical conduct and compliance with applicable laws, rules, regulations, and standards. Our Board recognizes that no code of ethics can replace the thoughtful behavior of an ethical director or employee, but such a Code can provide guidance to help recognize and deal with ethical issues and to foster a culture of accountability.

CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS

In addition to being subject to the Conflict of Interest and Business Ethics Policy, our CEO, Chief Financial Officer (“CFO”), and Corporate Controller and Treasurer are also subject to our Code of Ethics for Senior Financial Officers. We will disclose on our website (www.verbradley.com) any amendment to, or waiver from, a provision of the Conflict of Interest and Business Ethics Policy or the Code of Ethics for Senior Financial Officers that applies to our CEO, CFO, Corporate Controller and Treasurer, or persons performing similar functions and that relates to:

 

 

Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.

 

 

Full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with the SEC and in other public communications we make.

 

Compliance with applicable governmental laws, rules, and regulations.

 

 

The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code.

 

 

Accountability for adherence to the Code.

RISK OVERSIGHT

Our Board has and exercises ultimate oversight responsibility with respect to enterprise risk assessment and to the management of the strategic, operational, financial, and legal risks facing our Company and its operations and financial condition. The Board is involved in setting our business and financial strategies and establishing what constitutes the appropriate level of risk for us and our business segments. Various committees of the Board provide assistance to the Board in its oversight of, among other things, risk assessment and risk management. The Board also monitors the process by which risk assessment and management is developed and implemented by management and reported to the full Board.

Our Audit Committee assists the Board in its oversight of our policies relating to risk assessment and risk management generally, with particular focus on our management of major financial risk exposures.

Our Compensation Committee assists the Board in assessing the nature and degree of risk that may be created by our compensation policies and practices to ensure both their appropriateness in terms of the level of risk-taking and consistency with our business strategies. In conjunction with its assessment, the Committee, with the assistance of independent consultants and independent compensation resources, reviews our compensation policies and practices. That review encompasses each of our incentive plans, eligible participants, performance measurements, parties responsible for certifying performance achievement and sums that could be earned, including caps on the amount of bonus and performance share units that can be earned.

 

 

6        2023 Proxy Statement   VERA BRADLEY, INC.  


Table of Contents

Corporate Governance

 

 

 

STOCK OWNERSHIP GUIDELINES

Our Board of Directors has adopted stock ownership guidelines for directors, executive officers, and other senior executives. These guidelines are a means to motivate directors and executives to perpetuate enduring shareholder value and to ensure that the interests of directors and executives are aligned with those of shareholders.

The stock ownership guidelines require that all non-employee directors own share units (as defined below) of the Company’s common stock with a value equal to four times the annual cash retainer, or $198,000 in fiscal 2023. Until such time as a director has attained the applicable share ownership guideline, he or she is expected to retain share units awarded to him or her by the Company, with certain allowances to sell in order to meet tax obligations. The guideline is automatically revised in the event that the annual retainer is changed.

The CEO is required to hold share units with a value equal to four times her annual base salary rate, or $3,400,000 in fiscal 2023. The guideline is automatically revised in the event the CEO’s annual base salary rate changes. Certain executive officers, as determined by the Compensation Committee, are required to hold share units with a value equal to two times their annual base salary rate. Until such time as the CEO or another officer covered by the guidelines has attained the applicable share ownership guideline, they are expected to retain the share units awarded to him or her by the Company, with certain allowances to sell in order to meet tax obligations.

The guidelines define a “share unit” as each share of Vera Bradley common stock beneficially owned, including shares of restricted stock and restricted stock units (but excluding any stock options). Both vested and unvested shares of restricted stock and restricted stock units are included in calculating share units. Unvested equity awards subject to performance criteria are included at achieved performance levels for completed performance years and at estimated performance levels for incomplete performance years. All directors and officers subject to the stock ownership guidelines were in compliance with the guidelines as of March 31, 2023.

HEDGING, DERIVATIVES AND PLEDGING

The Company has adopted an Insider Trading Policy, which, among other things, prohibits directors and employees from:

 

 

Entering into hedging (making an investment to reduce the risk of adverse price movements or to offset potential losses/gains in a Company security) or other monetization transactions or similar arrangements with respect to the Company’s securities.

 

 

Engaging in transactions in publicly-traded options on Company securities (such as puts, calls, and other derivative securities).

 

 

Entering into pledging arrangements with respect to Company securities.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee as of January 28, 2023 were Frances P. Philip, Edward M. Schmults, and Carrie M. Tharp. None of the members of the Compensation Committee are now serving or previously have served as employees or officers of the Company or any subsidiary, nor has any member of the Compensation Committee engaged in any related party transaction with the Company. None of the Company’s executive officers serve as directors of, or in any compensation-related capacity for, companies with which members of the Compensation Committee are affiliated.

POLICY ON RELATED PARTY TRANSACTIONS

In accordance with the rules of The NASDAQ Stock Market and our Audit Committee Charter, our Audit Committee reviews and, prior to consummation, approves any transaction, arrangement, or relationship in which the Company is a participant; the amount involved exceeds $120,000; and one of our executive officers, directors, director nominees, or 5% or greater shareholders (or their immediate family members) (each, a “related party”) has a direct or indirect material interest. Based on its consideration of all relevant facts and circumstances, the Audit Committee decides whether or not to approve the particular transaction and will generally approve only those transactions that are on terms no less favorable to us than those that we could obtain from unaffiliated third parties and have terms and conditions that are reasonable and customary.

 

 

  VERA BRADLEY, INC.   2023 Proxy Statement         7


Table of Contents

Corporate Governance

 

 

 

RELATED PARTY TRANSACTIONS FOR FISCAL 2023

Certain Employees of the Company. Doug Wallstrom, the brother of Robert Wallstrom, is employed by us as our Photography Studio Director. In fiscal 2023, he earned compensation of $161,195 and received a restricted stock grant in the amount of $7,500 in connection with his employment.

Vera Bradley Foundation for Breast Cancer. The Company routinely makes charitable contributions to the Vera Bradley Foundation for Breast Cancer (the “Foundation”) and also provides employees and office space to the Foundation. The Foundation was founded by the co-founders of the Company, Barbara Bradley Baekgaard and Patricia R. Miller. Ms. Baekgaard is an employee and director of the Company, and Ms. Miller was a director of the Company until August 2019. Each serves on the board of directors of the Foundation. In addition, P. Michael Miller, a former director of the Company, serves on the board of directors of the Foundation. There were approximately $191,000 of Company contributions made to the Foundation in fiscal 2023.

 

FAMILY RELATIONSHIPS

Barbara Bradley Baekgaard and Patricia Miller founded the Company in 1982 in Fort Wayne, Indiana. Ms. Baekgaard is an employee and director of the Company. Robert J. Hall, our Chair, is the son-in-law of Ms. Baekgaard.

COPIES OF GOVERNANCE DOCUMENTS

You may view the following documents at http://investors.verabradley.com/corporate-governance (please note that our website is not a part of this proxy statement):

 

 

Corporate Governance Guidelines

 

 

Conflicts of Interest and Business Ethics Policy

 

 

Code of Ethics for Senior Financial Officers

 

 

Insider Trading Policy

 

 

Stock Ownership Guidelines

 

 

Disclosure Policy

 

 

8        2023 Proxy Statement   VERA BRADLEY, INC.  


Table of Contents

The Board and its Committees

 

 

 

THE BOARD AND ITS COMMITTEES

 

BOARD RESPONSIBILITIES

Being elected to serve on the Board of Directors is a high honor and privilege, and one that carries with it a serious responsibility to serve the interests of the Company and its shareholders. It is our desire that all Board members conduct themselves and perform their duties in an exemplary fashion, commensurate with the position of leadership that has been bestowed upon them by the shareholders.

Each Board member has the following basic responsibilities:

 

 

To support the mission and purpose of the Company, and to abide by its Articles of Incorporation, Bylaws, and policies.

 

 

To be diligent in preparation for, attendance at, and participation in Board meetings and related activities on behalf of the Company.

 

 

To ensure that the financial and business affairs of the Company are, to the best of the Board member’s awareness, managed in a responsible manner.

 

 

To act always in good faith and in the best interest of the Company, above any personal interest.

 

 

To maintain the confidentiality of sensitive or proprietary information obtained as a result of Board service.

The primary duties of the Board include maximizing long-term shareholder value, by:

 

 

Ensuring that the Company operates in a legal, ethical, and socially responsible manner.

 

 

Selecting, evaluating, and offering substantive advice and counsel to the CEO and working with the CEO to develop effective measurement systems that will evaluate and determine the Company’s degree of success in creating long-term economic value for its shareholders.

 

 

Reviewing, approving, and monitoring fundamental financial and business strategies and major corporate actions.

 

 

Overseeing the Company’s capital structure and financial policies and practices.

 

Assessing major risks facing the Company and reviewing options for their mitigation.

 

 

Providing counsel and oversight on the selection, evaluation, development, and compensation of executive officers and providing critical and candid feedback on their performance.

BOARD INDEPENDENCE

A majority of our directors are independent of the Company and management. The Board (with the input of the Nominating, Corporate Governance and Sustainability Committee) has evaluated all business and charitable relationships between the Company and the Company’s current non-employee directors and nominees for election at the May 2023 Annual Meeting and all other relevant facts and circumstances. As a result of the evaluation, the Board determined, as required by the Company’s Corporate Governance Guidelines, that the following non-employee directors or nominees are “independent” as defined by the standards for director independence established and described below: Kristina Cashman, Mary Lou Kelley, Frances P. Philip, and Carrie M. Tharp. Under these same standards, the Board of Directors has determined that Jacqueline Ardrey, Barbara Bradley Baekgaard, and Robert J. Hall are not independent. Current directors Edward Schmults and Nancy R. Twine, who are not standing for re-election at the May Annual Meeting, were also determined to be independent.    

Under the corporate governance requirements of The NASDAQ Stock Market (“NASDAQ”) our Board of Directors has a responsibility to make an affirmative determination that our directors serving as independent directors have no relationships with the Company that would impair their independence. Subject to some exceptions, the standards for independent directors established by NASDAQ and the Securities and Exchange Commission (“SEC”) generally provide that a non-employee director will not be independent if (a) the director is, or in the past three years has been, an employee of the Company; (b) the director or a member of the director’s immediate family is, or in the past three years has been, an executive officer of the Company; (c) the director or a member of the director’s immediate family has, in the past three years, received more than $120,000 per year in direct compensation from the Company (other than for service as a director or, for the

 

 

  VERA BRADLEY, INC.   2023 Proxy Statement         9


Table of Contents

The Board and its Committees

 

 

 

immediate family member, as a non-executive employee); (d) the director is an employee, or the director or a member of the director’s immediate family is employed as a partner, of Deloitte & Touche LLP, the Company’s independent registered public accountants, or the director has an immediate family member who is a current employee of such firm and works in any capacity on the Company’s audit, or the director or an immediate family member was within the last three years a partner or employee of such firm and personally worked on the Company’s audit within that time; (e) the director or a member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a company where a Vera Bradley executive officer at the same time serves or served on the compensation committee; or (f) the director is an employee, or a member of the director’s immediate family is an executive officer, of a company that makes payments to, or receives payments from, Vera Bradley in an amount which, in any twelve-month period during the past three years, exceeds the greater of $200,000 or five percent of the consolidated gross revenues of the company receiving the payment.

The Company’s Corporate Governance Guidelines require that the independent directors meet in executive session at each regular meeting of the Board and, in fiscal 2023, they met in executive session during each regular meeting for a total of four times. These executive sessions are chaired by the Lead Independent Director, Ms. Philip.

BOARD LEADERSHIP STRUCTURE AND LEAD INDEPENDENT DIRECTOR

Our Board of Directors believes that one of its most important functions is to protect shareholders’ interests through independent oversight of management, including the CEO; however, the Board of Directors does not believe that effective management oversight necessarily mandates a particular management structure, such as a separation of the role and identities of the Chair of the Board of Directors and CEO. The Board considers it important to retain flexibility to exercise its judgment as to the most appropriate management structure for us, based on the particular circumstances facing us from time to time. Currently, the positions of Chair of the Board of Directors and CEO are held by separate persons.

John E. Kyees served as the Lead Independent Director from 2011 until his retirement from the Board in May 2022. Upon his retirement, Frances P. Philip assumed the role as Lead Independent Director. Pursuant to the Company’s Corporate Governance Guidelines, the lead director is an independent director who is elected from time to time, but not less frequently than annually, by the affirmative vote of a majority of the independent directors. The Lead Independent Director, among other things, chairs executive sessions of the independent directors, reviews the meeting agenda with our CEO, leads the discussion with our CEO following the independent directors’ executive sessions, ensures that the Board’s individual group and committee self-assessments are done annually and leads periodic discussions with other Board members and management concerning the Board’s information needs. The Board believes this structure allows all of the independent directors to participate in the full range of the Board’s responsibilities with respect to its oversight of the Company’s management. The Board of Directors has determined that this leadership structure is appropriate given the size and complexity of the Company, the number of directors overseeing the Company, and the Board of Directors’ oversight responsibilities. Further, the Board of Directors believes that these responsibilities appropriately and effectively complement the roles of our Chair of the Board and CEO.

STANDING COMMITTEES AND MEETINGS OF THE BOARD

Our Board of Directors has established an Audit Committee; a Compensation Committee; and a Nominating, Corporate Governance and Sustainability Committee. Only independent directors are members of these three committees.

Our Board of Directors held seven meetings during fiscal 2023, and each of our directors attended at least 75% of the total number of meetings of the Board and at least 75% of the committees of the Board of which such director was a member held during the period in which such director served. Directors are encouraged to attend our annual meetings of shareholders, and all directors serving at that time attended the annual shareholders meeting held on May 26, 2022.

 

 

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The Board and its Committees

 

 

 

CURRENT COMMITTEE MEMBERSHIP

 

COMMITTEE

   INDEPENDENT
MEMBERS
   CHAIR

Audit

   Kristina Cashman   
   Mary Lou Kelley   
   Edward M. Schmults*   
   Nancy R. Twine*     

Compensation

   Edward M. Schmults*   
   Frances P. Philip   
     Carrie M. Tharp     

Nominating, Corporate Governance

and

Sustainability

  

Frances P. Philip

Mary Lou Kelley

Nancy R. Twine*

  
*

Not standing for re-election at the Annual Meeting

Audit Committee. Our Audit Committee reviews and recommends to the Board of Directors internal accounting and financial controls, accounting principles and auditing practices to be employed in the preparation and review of our financial statements. In addition, our Audit Committee has the authority to engage, oversee and dismiss public accountants to audit our annual financial statements and determine the scope of the audit to be undertaken by such accountants. Our Audit Committee also reviews the fairness of related party transactions and assists the Board in managing enterprise risk and capital spending. The Board of Directors has determined that both Kristina Cashman, the Chair of the Audit Committee, and John E. Kyees, former chair and former member of the Audit Committee are both “audit committee financial experts” (as defined by Item 407(d)(5)(ii) of Regulation S-K) and are “independent” (under the definitions and interpretations of NASDAQ Stock Market), in accordance with the rules of The NASDAQ Stock Market. The Audit Committee met ten times in fiscal 2023.

Compensation Committee. Our Compensation Committee reviews and determines policies, practices and procedures relating to the compensation of executive officers, including the CEO, and the establishment and administration of certain employee benefit plans for executive officers. The Compensation Committee has the authority to administer our 2020 Equity and Incentive Plan (“2020 Plan”) and to advise and consult with our officers regarding managerial personnel policies. Our 2010 Equity and Incentive Plan expired in October 2020 but is maintained for grants awarded prior to the effectiveness of the 2020 Plan. The Compensation Committee met four times in fiscal 2023.

Nominating, Corporate Governance and Sustainability Committee. Our Nominating, Corporate Governance and Sustainability Committee assists the Board of Directors with its responsibilities regarding the identification of individuals qualified to become directors, the selection of the director nominees for the next annual meeting of shareholders and the selection of director candidates to fill any vacancies on the Board of Directors. It also has responsibility for the company’s ESG (Environmental, Social, and Governance) efforts, including reviewing and making recommendations to the Board regarding the Company’s ESG strategy and compliance with corporate governance, environmental sustainability, and social responsibility. The Nominating, Corporate Governance and Sustainability Committee also reviews our efforts to audit our suppliers to ensure compliance with our vendor code of conduct. It reviews and makes recommendations to the Board regarding the preparation, review of and compliance with corporate governance policies, succession planning for the CEO, and tenure and retirement policies for directors. The Nominating, Corporate Governance and Sustainability Committee and management are responsible for director continuing education programs to assist directors in maintaining skills and knowledge necessary or appropriate for the performance of their responsibilities. Continuing education programs for directors may include a combination of internally developed materials and presentations, programs presented by third parties, and financial and administrative support for attendance at qualifying academic or other independent programs. The Nominating, Corporate Governance and Sustainability Committee met four times in fiscal 2023.

ANNUAL BOARD AND COMMITTEE EVALUATIONS

Our Board and each of our standing committees annually conduct self-evaluations to identify opportunities to improve Board and committee performance.

COMMITTEE CHARTERS

The charters of the three standing committees of the Board of Directors describe the governance framework for each Committee. The charters, along with the Corporate Governance Guidelines, are intended to ensure our Board has the necessary authority and practices in place to review and evaluate our business operations and to make decisions that are independent of management. These charters are reviewed by each Committee on an annual basis and any recommended changes are made and approved by the Board.

 

 

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The Board and its Committees

 

 

 

You may view the charters at http://investors.verabradley.com/corporate-governance

COMMUNICATIONS WITH DIRECTORS

Shareholders may communicate with our directors by transmitting correspondence to our investor relations desk via the internet at http://investors.verabradley.com/corporate-governance/contact-the-board or to our Secretary at:

Corporate Secretary

c/o Vera Bradley, Inc.

12420 Stonebridge Road

Roanoke, Indiana 46783

 

The Secretary will, as appropriate, forward communications to the Board of Directors or to any individual director, directors, or committee to whom the communication is directed.

 

 

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Director Compensation

 

 

 

DIRECTOR COMPENSATION

 

The Compensation Committee annually reviews the compensation for our Board of Directors and looks at director compensation relative to the Company’s Peer Group. The tables below reflect the cash and equity compensation provided for service on our Board. All directors other than Ms. Ardrey and Ms. Baekgaard participate in our non-employee director compensation program. Mr. Wallstrom also did not participate in our non-employee director compensation program.

CASH COMPENSATION FOR NON-EMPLOYEE DIRECTORS

The fee for our non-employee directors under the cash compensation element of the program during fiscal 2023 was $49,500. We pay the Chair of our Board of Directors an additional $27,000 retainer and the Lead Independent Director an additional retainer of $9,000. In addition, we pay the following annual retainers for committee service:

FISCAL 2023 ANNUAL BOARD RETAINERS

 

  

Audit Committee Chair

   $ 13,500  

Audit Committee Members

     9,000  

Compensation Committee Chair

     9,000  

Compensation Committee Members

     6,300  

Nominating, Corporate Governance and Sustainability Committee Chair

     7,875  

Nominating, Corporate Governance and Sustainability Committee Members

     5,400  

All of our directors are reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the Board of Directors and its committees.

RESTRICTED STOCK UNITS FOR NON-EMPLOYEE DIRECTORS

We also provide each of our non-employee directors with an annual equity grant with a grant date value of approximately $85,000. These restricted stock units vest and settle in our common shares, on a one-for-one basis, on the first anniversary of the grant date. The applicable award agreement also provides that the units shall vest immediately upon the death or disability of the director and upon the occurrence of a change in control of the Company, as defined in the agreement.

FISCAL 2023 DIRECTOR COMPENSATION

The following table summarizes compensation that our non-employee directors earned during fiscal 2023 for services as members of our Board of Directors.

FISCAL 2023 DIRECTOR COMPENSATION

 

                                                                                
        

NAME(1)

   FEES
EARNED
OR PAID
IN CASH
     STOCK
AWARDS
(2)
     TOTAL  

Kristina Cashman

   $ 63,000      $ 85,001      $ 148,001  

Robert J. Hall

     76,500        85,001        161,501  

Mary Lou Kelley

     62,100        85,001        147,101  

John E. Kyees(3)

     22,500        85,001        107,501  

Frances P. Philip

     69,675        85,001        154,676  

Edward M. Schmults

     66,300        85,001        151,301  

Carrie M. Tharp

     55,800        85,001        140,801  

Nancy Twine

     60,900        85,001        145,901  
(1)

We did not pay our employee directors, Ms. Ardrey, Mr. Wallstrom, and Ms. Baekgaard, any compensation for their services on our Board of Directors in fiscal 2023.

(2)

Represents the aggregate grant date fair value of restricted stock awarded during the fiscal year computed in accordance with FASB ASC Topic 718. Additional information regarding the calculation of these values is included in Notes 2 and 8 to our consolidated financial statements.

(3)

Mr. Kyees retired from the Board of Directors at the 2022 Annual Meeting.

 

 

  VERA BRADLEY, INC.   2023 Proxy Statement         13


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PROPOSAL NO. 2 Ratification of independent Auditor

 

 

 

PROPOSAL NO. 2

RATIFICATION OF INDEPENDENT AUDITOR

PROPOSAL

The Audit Committee has selected Deloitte & Touche LLP, or Deloitte, as our independent registered public accounting firm to audit the consolidated financial statements of Vera Bradley for the fiscal year ending February 3, 2024. The Audit Committee and the Board of Directors seek to have the shareholders ratify the Audit Committee’s appointment of Deloitte. Representatives of Deloitte will be present at the Annual Meeting and will have the opportunity to make a statement, if they desire to do so, and to respond to appropriate questions. Deloitte also served as our independent registered public accounting firm for fiscal 2023.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth the aggregate fees billed by Deloitte to Vera Bradley for fiscal years 2023 and 2022:

FEES PAID TO DELOITTE

 

   
    FISCAL
2023
    FISCAL
2022
 

Audit Fees(1)

  $ 1,229,369     $ 1,041,343  

Audit-Related Fees

           

Tax Fees(2)

    98,357       66,726  

All Other Fees(3)

    1,895       1,895  

Total

  $ 1,329,621     $ 1,109,964  
(1)

Audit Fees for fiscal years 2023 and 2022 consist of fees for professional services rendered by Deloitte in connection with the integrated audit of the consolidated financial statements and the effectiveness of the Company’s controls over financial reporting and reviews of our interim consolidated financial statements.

(2)

Tax Fees consist primarily of fees associated with tax compliance, advice, and planning services.

(3)

All Other Fees consist of fees for products and services other than the above-described services. In fiscal years 2023 and 2022, these fees related to an online research database subscription.

The Audit Committee’s written charter requires the Audit Committee to pre-approve, prior to engagement, all audit and permissible non-audit services provided by the independent registered public accounting firm on an individual basis. All of the services described in the table above were pre-approved by the Audit Committee. The Audit Committee considered the services listed above to be compatible with maintaining Deloitte’s independence.

VOTE REQUIRED AND BOARD RECOMMENDATION

This proposal will be approved if a quorum is present, in person or by proxy, at the Annual Meeting and the votes properly cast favoring the proposal exceed the votes properly cast opposing the proposal. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any effect on the outcome of the proposal.

 

 
VERA BRADLEY’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2024

 

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Audit Committee Report

 

 

 

AUDIT COMMITTEE REPORT

Management is responsible for the preparation, presentation and integrity of Vera Bradley’s consolidated financial statements and the Company’s internal control over financial reporting. The independent registered public accounting firm of Deloitte & Touche LLP, or Deloitte, was responsible in fiscal 2023 for performing an integrated audit of the Company’s consolidated financial statements and the effectiveness of the Company’s controls over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes. The Audit Committee is also responsible for selecting and evaluating the independence of the Company’s independent registered public accounting firm and for pre-approving the services rendered by that firm.

In this context, the Audit Committee reports as follows:

 

1.

The Audit Committee has reviewed and discussed with management Vera Bradley’s audited consolidated financial statements for the fiscal year ended January 28, 2023;

 

2.

The Audit Committee has discussed with Deloitte the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Commission;

 

3.

The Audit Committee has received and reviewed the written disclosures and the letter from Deloitte required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte’s communications with the Audit Committee concerning independence and has discussed with Deloitte its independence; and

 

4.

The Audit Committee has considered whether the provision by Deloitte of non-audit services to Vera Bradley is compatible with maintaining Deloitte’s independence.

Based on these procedures and discussions, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements referred to above be included in Vera Bradley’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023, for filing with the Securities and Exchange Commission.

SUBMITTED BY THE AUDIT COMMITTEE

Kristina Cashman, Chair

Mary Lou Kelley

Edward M. Schmults

Nancy Twine

 

  VERA BRADLEY, INC.   2023 Proxy Statement         15


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LOGO

 

PROPOSAL NO. 3

ADVISORY VOTE ON EXECUTIVE COMPENSATION

PROPOSAL

The guiding principles of our compensation policies and decisions include aligning each executive’s compensation with our business strategy and the interests of our shareholders and providing incentives needed to attract, motivate, and retain key executives who are important to our long-term success. Consistent with this philosophy, a significant portion of the total incentive compensation for each of our executives is directly related to our earnings and to other performance factors that measure our progress against the goals of our strategic and operating plans.

Shareholders are urged to read the “Executive Compensation Discussion and Analysis” section of this proxy statement, which discusses how our compensation design and practices reflect our compensation philosophy. The Compensation Committee and the Board of Directors believe that our compensation design and practices are effective in implementing our guiding principles.

We are required to submit a proposal to shareholders for a (non-binding) advisory vote to approve the compensation of our named executive officers (“NEOs”) pursuant to Section 14A of the Securities Exchange Act of 1934, as amended, or the Exchange Act. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on the compensation of our NEOs. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the principles, policies, and practices described in this proxy statement. Accordingly, the following resolution is submitted for shareholder vote at the Annual Meeting:

“RESOLVED, that the shareholders of Vera Bradley, Inc. approve, on an advisory basis, the compensation of its NEOs as disclosed in the proxy statement for the Annual Meeting, including the Summary Compensation Table, the Executive Compensation Discussion and Analysis, and other related tables and disclosures set forth in such proxy statement.”

Because this vote is advisory, the result will not be binding on us, our Board of Directors, or our Compensation Committee, although our Compensation Committee will consider the outcome of the vote when evaluating our compensation principles, design, and practices. Proxies submitted without direction pursuant to this solicitation will be voted “FOR” the approval of the compensation of our NEOs, as disclosed in this proxy statement, except with respect to shares held in street name, for which you must direct your broker to vote such shares. A say-on-pay vote will take place every year as determined by the Board of Directors and based on the advice provided by the shareholders.

VOTE REQUIRED AND BOARD RECOMMENDATION

This proposal will be approved if a quorum is present, in person or by proxy, at the Annual Meeting and the votes properly cast favoring the proposal exceed the votes cast opposing the proposal. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any effect on the outcome of the proposal.

 

 
VERA BRADLEY’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT INCLUDING RELATED TABLES AND DISCLOSURES.

 

 

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LOGO

 

PROPOSAL NO. 4

FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION

PROPOSAL

Pursuant to Section 14A of the Exchange Act, we are required to submit to shareholders an advisory vote regarding whether future shareholder advisory votes to approve the compensation of our named executive officers — similar to Proposal No. 3 above — should occur every one, two, or three years. You may cast your vote by choosing yearly, every two years, or every three years, or you may abstain from voting when you vote for the resolution set forth below. The Dodd-Frank Act requires us to hold the advisory vote on the frequency of the say-on-pay vote at least once every six years.

The Board of Directors believes that the optimal frequency for the say-on-pay vote is every year. A say-on-pay vote every year provides shareholders and advisory firms the opportunity to evaluate our executive compensation program on an annual basis and provide feedback and advice on a timely basis. The Board of Directors has found that receiving feedback only once every three years does not provide a timely enough opportunity for shareholders to provide advice on compensation.

Accordingly, the following resolution is submitted for shareholder vote at the Annual Meeting:

“RESOLVED, that the shareholders advise the Board of Directors that the option set forth below that receives the highest number of votes cast by the shareholders of Vera Bradley at this meeting shall be the preferred frequency with which the Company is to hold an advisory vote on the approval of the compensation of its named executive officers included in the proxy statement:

 

   

every year; or

 

   

every two years; or

 

   

every three years.

VOTE REQUIRED AND BOARD RECOMMENDATION

The option of every year, every two years, or every three years that receives the highest number of votes cast by shareholders will be deemed the frequency for future advisory votes on executive compensation that has been selected by our shareholders. Because this vote is advisory, however, the result will not be binding on us, our board of directors, or our compensation committee. Our compensation committee will consider the outcome of the vote when determining how often we should submit to our shareholders an advisory vote to approve the compensation of our named executive officers included in our proxy statement. Proxies submitted without direction pursuant to this solicitation will be voted for the option of “every year,” except with respect to shares held in street name, a broker must be so directed to vote such shares.

 

 
VERA BRADLEY’S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE OPTION OF “EVERY YEAR” AS THE FREQUENCY WITH WHICH SHAREHOLDERS ARE PROVIDED AN ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS INCLUDED IN OUR PROXY STATEMENT.

 

 

  VERA BRADLEY, INC.   2023 Proxy Statement         17


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LOGO

 

PROPOSAL NO. 5

2020 EQUITY AND INCENTIVE PLAN AMENDMENT

 

PROPOSAL

At the 2020 Annual Shareholder Meeting, the shareholders approved and the Company adopted a new Vera Bradley, Inc. 2020 Equity and Incentive Plan (the “2020 Plan”) to take effect upon expiration of the 2010 Plan on October 21, 2020.

As further described below, the 2020 Plan provides for grants of equity awards to our directors, advisors, and employees in order to align their interests with long-term shareholder interests, motivate and reward them for achieving long-term results, and help us retain key executives and employees in a competitive market for talent. The availability of an adequate number of shares available for issuance under the 2020 Plan is a critical factor in fulfilling these purposes. In FY23, the Company’s CEO Robert Wallstrom retired and the Company hired a new CEO, Jacqueline Ardrey. As part of Ms. Ardrey’s hiring the Company provided an initial hire grant of 579,270 shares that will vest over a three-year period depending on Company performance and Ms. Ardrey’s continued employment with the Company. In addition, Mr. Wallstrom also received an annual equity grant in FY23, a portion of which vested under the terms of his employment agreement due to his retirement from the Company. As such, the Company issued significantly more shares in FY23 than has typically been issued and that the Company plans on issuing on an annual basis in the future.

Under the terms of the 2020 Plan, as described below, 3,000,000 shares of Common Stock were made available for future issuances. Through April 21, 2023, the Company had utilized approximately 1,971,484, shares under the 2020 Plan. In order to ensure that sufficient shares are available for grant under the Plan, the Board has approved, and is requesting shareholder approval for, an amendment to the 2020 Plan to add an additional 3,000,000 shares of common stock to be available for future issuances (the “2020 Plan Amendment”). The Board believes that this number of Shares represents a reasonable amount of potential equity dilution to current shareholders and allows the Company to continue awarding equity incentives, which are an important component of our overall compensation program.

The Board of Directors believes Vera Bradley’s future success depends on our ability to attract and retain talented team members, and the ability to grant awards under the 2020 Plan is a critical recruiting and retention tool to obtain the quality employees we need to move our business forward. We ask our shareholders to approve the 2020 Plan Amendment to increase the shares authorized thereunder so that Vera Bradley can continue to attract and retain outstanding and highly skilled employees, including key executive officers, and independent directors that add value to our Board of Directors. The Board of Directors considers the impact of dilution on the shareholders in making this recommendation, which has typically been less than 2% per year, other than in FY23 due to the retirement of its CEO and hiring of a new CEO. The Board believes it is in the best interest of Shareholders to approve the 2020 Plan Amendment to add additional shares in order to continue to attract and retain high caliber employees, officers, and members of the Board of Directors. If shareholders do not approve the 2020 Plan Amendment, we may not be able to continue our equity incentive program in the future. This could preclude us from successfully attracting and retaining highly skilled employees, advisors, executive officers, and independent directors for our Board of Directors.

Plan Highlights

The 2020 Plan includes a number of specific terms and limitations that the Compensation Committee believes reflect our pay for performance philosophy and are consistent with the long-term interests of our shareholders. These features include:

 

1.

Minimum Vesting Period. The 2020 Plan includes at least a one-year vesting period for all awards under the plan, other than those clearly identified.

 

2.

Recoupment Policy. All grants made under the 2020 Plan shall be subject to the Company’s Compensation Recoupment Policy that provides for repayment of compensation in the event of certain misconduct.

 

3.

No stock option repricing. The 2020 Plan includes an express prohibition on repricing of stock options, including stock appreciation rights (SARs).

 

 

 

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PROPOSAL NO. 5 2020 Equity and incentive Plan Amendment

 

 

 

4.

No discounted awards. The 2020 Plan requires the exercise price of incentive stock options and SARs to be not less than the fair market value of our Common Stock on the date of grant.

 

5.

No “evergreen” provision. The 2020 Plan provides for a limited number of shares for grant and does not provide for any automatic annual increase of available shares for future issuance.

 

6.

Nontransferable Awards. The 2020 Plan explicitly prohibits the transfer of equity awards other than to an employee’s immediate family for no consideration.

 

7.

Ten-Year Plan Term. The 2020 Plan prohibits the making of awards after October 21, 2030, and limits the exercise term of stock options and stock appreciation rights to ten years from the grant date.

 

8.

Independent Committee Administration. The 2020 Plan is administered by our Compensation Committee, which is comprised solely of independent, outside, non-employee Directors.

Dilution and Burn Rate

The following information summarizes, as of April 21, 2023, the equity awards outstanding under the 2020 Plan were as follows:

 

 

Number of restricted share units unvested: 878,872

 

 

Number of performance share units unvested: 649,831

 

 

Shares available for grant under the 2020 Plan: 1,028,516

Under the proposal, the 2020 Plan Amendment will increase the number of shares of our Common Stock available for issuance under the 2020 Plan by 3,000,000 shares. The number of shares available for grant under the 2020 Plan may increase in connection with the cancellation or forfeiture of awards outstanding under the 2020 Plan, but not by shares tendered to pay the exercise price of awards or tax withholding obligations.

Under the 2020 Plan the potential shareholder dilution is approximately 15% if the 2020 Plan Amendment is approved and all shares available for grant are granted under the plan. This would be roughly 2% per year over the remaining term of the 2020 Plan (assuming awards are made ratably over the remaining years of the 2020 Plan). However, it should be noted that all shares will not necessarily be granted under the 2020 Plan and future amendments to the 2020 Plan could add additional shares.

In addition to assessing dilution to shareholders, the Compensation Committee reviews our “burn rate” to measure how much equity we are granting to employees as compared to the total number of shares outstanding. The

burn rate is measured as the (i) total number of equity-related awards granted in any given fiscal year divided by (ii) the number of common shares outstanding at the end of that fiscal year. Our FY24 burn rate is 1.8%. The FY23 burn rate was 5.4%. The FY22 burn rate was 2.0%. Equity grants are typically made in April of each fiscal year, which means most of the grants for FY24 should have already been made. Fiscal 23 contains a grant for then CEO Robert Wallstrom, as well as a new hire grant for new CEO Jacqueline Ardrey.

Based on the number of equity awards underlying shares granted in each of the last three fiscal years, we estimate that the requested increase in shares would be sufficient for approximately four to five years of grants based on historical granting practice, although there is no guarantee as to the number of equity awards that will be granted each year.

Summary of 2020 Plan

Is the following summary of the 2020 Plan complete?

No. The following pages summarize the principal features of the 2020 Plan, but this summary is not intended to be exhaustive and is qualified in its entirety by reference to the 2020 Plan itself, a copy of which is attached to this proxy statement as Appendix A.

What is the term of the 2020 Plan?

Unless the 2020 Plan is earlier terminated in accordance with its provisions, no awards will be made thereunder after October 21, 2030, but awards granted on or prior to such date will continue to be governed by the terms and conditions of the 2020 Plan and the applicable award agreement.

Who administers the 2020 Plan, and who is eligible for awards under the 2020 Plan?

The 2020 Plan is administered by the Compensation Committee. Employees, Advisors, and Directors of the Company and its subsidiaries are eligible to participate (“Participants”) in the 2020 Plan.

The Compensation Committee has the exclusive discretion to select the Participants and to determine the type, size, and terms of each award, to modify the terms of awards, to determine when awards will be granted and paid, and to make all other determinations which it deems necessary or desirable in the interpretation and administration of the 2020 Plan. The 2020 Plan remains in effect until all awards under the 2020 Plan either have been satisfied by the issuance of shares of the Company’s Common Stock or the payment of cash or have expired or otherwise terminated; provided, however, that no awards may be granted after

 

 

  VERA BRADLEY, INC.   2023 Proxy Statement         19


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PROPOSAL NO. 5 2020 Equity and incentive Plan Amendment

 

 

 

October 21, 2030. Generally, a Participant’s rights and interest under the 2020 Plan will not be transferable except by will or by the laws of descent and distribution.

What are the details of the types of awards authorized under the 2020 Plan?

The 2020 Plan provides for the grant of the following types of incentive awards: stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and performance awards.

Stock Options. Options, which include non-qualified stock options and incentive stock options, are rights to purchase a specified number of shares of the Company’s Common Stock at a price fixed by the Compensation Committee. The exercise price for stock options issued under the 2020 Plan that qualify as incentive stock options within the meaning of Section 422(b) of the Code shall not be less than 100% of the fair market value as of the date of grant. The Compensation Committee has broad discretion as to the terms and conditions upon which options granted shall be exercised. Options have a maximum term of ten years from the date of grant.

Stock Appreciation Rights. Stock Appreciation Rights (“SAR”) are rights to receive cash or shares, or a combination thereof, as the Compensation Committee may determine, in an amount equal to the excess of (i) the fair market value of the shares with respect to which the SAR is exercised over (ii) a specified price which must not be less than 100% of the fair market value of the shares at the time the SAR is granted.

Restricted Shares and Restricted Share Units. Awards of restricted shares or restricted share units under the 2020 Plan may be made at the discretion of the Compensation Committee and consist of shares of stock granted to a participant and subject to a stock restriction agreement or a right to receive shares of stock once certain conditions are satisfied or certain restrictions are lifted. At the time of an award, the Committee in its discretion may prescribe in award agreements that a Participant may have the benefits of ownership in respect of such shares, including the right to vote such shares and receive dividends thereon and other distributions subject to the restrictions set forth in the 2020 Plan and in the stock restriction agreement. Any shares of the Company’s common stock issued shall be held by the Company until all conditions and/or restricts have been satisfied. The Compensation Committee has broad discretion as to the specific terms and conditions

of each award, including applicable rights upon certain terminations of employment.

Performance Shares, Performance Units and Performance Awards. Performance shares, performance units, and performance awards shall be earned in whole or in part based upon the achievement of pre-established performance criteria. The Compensation Committee shall set the performance criteria of any grant no later than the 90th day after the performance period begins. The Compensation Committee has discretion to determine the Participants to whom performance unit awards are to be made, the times in which such awards are to be made, the size of such awards, and all other conditions of such awards, including any restriction, deferral periods, or performance criteria.

How are withholding taxes on awards handled?

The Company has the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount (either in cash or Shares, at the Company’s discretion) sufficient to satisfy any federal, state, local and/or other taxes, domestic or foreign, required by law or regulation.

What is the effect of a change in control or occurrence of certain unusual or nonrecurring events that happen to change the nature of the Company’s Common Stock?

If there occurs a “Change in Control” of the Company, as defined in the 2020 Plan, the Committee may provide in the applicable Award Agreement that an Award will vest on an accelerated basis upon a Participant’s termination of service in connection with a Change in Control or upon the occurrence of any other event the Compensation Committee may set forth in the Award Agreement.

If the Company’s Common Stock Shares are changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation (whether because of merger, consolidation, recapitalization, reclassification, split, reverse split, combination of shares, or otherwise, but not including a public offering or other capital infusion from any source) or if the number of Shares is increased through the payment of a stock dividend, provision shall be made so that the Participants shall be entitled to receive, upon vesting of such Shares, the number of Shares to which a Participant would have been entitled on such merger, consolidation, recapitalization, reclassification, split, reverse split, combination of shares, or payment of stock dividend.

 

 

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PROPOSAL NO. 5 2020 Equity and incentive Plan Amendment

 

 

 

Can the 2020 Plan be amended or terminated?

The Board of Directors or Compensation Committee may alter, amend, modify, or terminate the 2020 Plan in whole or in part at any time, except that neither the Board of Directors nor the Compensation Committee may, without the approval of the Company’s shareholders, increase the number of shares that may be issued or transferred to Participants under the 2020 Plan. No modification of an Award will, without the prior consent of the Participant, materially impair any rights or obligations under any Award already granted. The Compensation Committee will not modify or replace any outstanding Option or SAR so as to lower the exercise price without approval of the Company’s shareholders.

A copy of the Amended and Restated 2020 Plan is attached to this Proxy Statement as Appendix A.

Federal Income Tax Consequences

The following discussion is limited to a summary of the U.S. federal income tax consequences of the grant, exercise, and vesting of awards under the 2020 Plan. The tax consequences of the grant, exercise, or vesting of awards may vary depending upon the particular circumstances, and it should be noted that income tax laws, regulations, and interpretations change frequently. Participants should rely upon their own tax advisors for advice concerning the specific tax consequences applicable to them, including the applicability and effect of state, local, and foreign tax laws.

Non-Qualified Stock Options. In general, the Company anticipates that (i) a Participant will not recognize

income at the time a non-qualified option is granted, (ii) a Participant will recognize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares on the date of exercise over the option exercise price paid for the shares and (iii) at the time of sale of shares acquired pursuant to the exercise of the non-qualified option, appreciation (or depreciation) in value of the shares after the date of exercise will be treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held.

Incentive Stock Options. The Company anticipates that a Participant will not recognize income at the time an incentive option is granted or exercised. However, the excess of the fair market value of the shares on the date of exercise over the option exercise price paid may constitute a preference item for the alternative minimum tax. If shares are issued to the optionee pursuant to the exercise of an incentive option, and if no disqualifying

disposition of such shares is made by such optionee within two years after the date of the grant or within one year after the issuance of such shares to the optionee, then upon the sale of such shares, any amount realized in excess of the option price will be taxed to the optionee as a long-term capital gain and any loss sustained will be a long-term capital loss. If shares acquired upon the exercise of an incentive option are disposed of prior to the expiration of either holding period described above, the optionee generally will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of such shares as of the time of exercise (or, if less, the amount realized on the disposition of such shares if a sale or exchange) over the option price paid for such shares. Any further gain (or loss) realized by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period.

Stock Appreciation Rights. In general, the Company anticipates that a Participant will not recognize income upon the grant of stock appreciation rights. The Participant generally will recognize ordinary income when the stock appreciation rights are exercised in an amount equal to the cash and the fair market value of any unrestricted shares received on the exercise.

Restricted Stock. In general, the Company anticipates that a Participant will not be subject to tax until the shares of restricted stock are no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Code. At that time, the participant will be subject to tax at ordinary income rates on the fair market value of the restricted shares (reduced by any amount paid by the Participant for such restricted shares). However, a Participant who so elects under Section 83(b) of the Code within 30 days of the date of award of the shares will have taxable ordinary income on the date of award of the restricted shares equal to the excess of the fair market value of such shares (determined without regard to the restrictions) over the purchase price, if any, of such restricted shares. Any appreciation (or depreciation) realized upon a later disposition of such shares will be treated as long-term or short-term capital gain depending upon how long the shares have been held. If a Section 83(b) election has not been made, any dividends received with respect to restricted shares that are subject to forfeiture and transfer restrictions generally will be treated as compensation that is taxable as ordinary income to the Participant.

Restricted Stock Units and Performance Shares or Units. In general, the Company anticipates a Participant will not recognize income upon the grant of a restricted stock

 

 

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unit award or a performance share or unit award. Upon settlement of the awards, the Participant generally will recognize ordinary income in an amount equal to the cash and the fair market value of any unrestricted shares received.

Dividends or Dividend Equivalents. Any dividend or dividend equivalents awarded with respect to awards granted under the 2020 Plan and paid in cash or unrestricted shares will be taxed to the Participant at ordinary income rates when such cash or unrestricted shares are received by the Participant.

Section 409A. The 2020 Plan permits the grant of various types of awards that may or may not be exempt from Section 409A of the Internal Revenue Code. In general, if an award is subject to Section 409A, and if the requirements of Section 409A are not met, the award could be subject to tax at an earlier time than described above and could be subject to additional taxes and penalties. All awards granted under the 2020 Plan will be designed either to be exempt from, or to comply with the requirements of, Section 409A.

Tax Consequences to the Company. To the extent that a Participant recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business

expense, and is not an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code.

SEC Registration

We intend to file with the SEC a registration statement on Form S-8 covering the additional common stock reserved for issuance under the 2020 Plan if the 2020 Plan Amendment is approved.

VOTE REQUIRED AND BOARD RECOMMENDATION

This proposal will be approved if a quorum is present, in person or by proxy, at the Annual Meeting and the votes properly cast favoring the proposal exceed the votes cast opposing the proposal. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum but will not have any effect on the outcome of the proposal.

 

 
VERA BRADLEY’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE VERA BRADLEY, INC. 2020 EQUITY & INCENTIVE PLAN AMENDMENT TO ADD AN ADDITIONAL 3,000,000 SHARES OF COMMON STOCK TO THE PLAN.
 

 

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Executive Compensation

 

 

 

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors has reviewed and discussed the following Executive Compensation Discussion and Analysis with management and, based on such review and discussion, has recommended to the Board of Directors that the Executive Compensation Discussion and Analysis be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023.

SUBMITTED BY THE COMPENSATION COMMITTEE

Edward M. Schmults, Chair

Frances P. Philip

Carrie M. Tharp

EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”)

This CD&A provides a summary of the material elements of our compensation philosophy and practices, with a particular focus on our named executive officers or “NEOs.” As used in this CD&A, the “Committee” refers to the Compensation Committee of the Board of Directors.

The following is a list of our NEOs who served during fiscal 2023:

 

  

NAME

   TITLE

Jacqueline Ardrey

   President and CEO, Vera Bradley, Inc.

John Enwright

   Chief Financial Officer, Vera Bradley, Inc.

Mark C. Dely

   Chief Administrative & Legal Officer, Vera Bradley, Inc.

Robert Wallstrom(1)

   Former President and CEO, Vera Bradley, Inc.

Daren Hull(1)

   Former Brand President, Vera Bradley

Kevin Korney(1)

   Former Chief Merchandising Officer, Vera Bradley
(1)

Mr. Wallstrom left the Company on December 31, 2022, Mr. Hull left the Company on January 23, 2023, and Mr. Korney left the Company on August 2, 2022.

 

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Executive Compensation

 

 

 

To assist in understanding our NEO compensation program, we have included a discussion of our compensation policies and decisions for periods before and after fiscal 2023, where relevant. Our compensation program is designed to provide some common standards throughout the Company. Therefore, much of what is disclosed below applies to executives in general and is not limited to our NEOs. The Committee constantly evaluates industry and corporate governance best practices in its compensation programs. Below is a summary of what the Company does and does not do with respect to its compensation programs:

CORPORATE GOVERNANCE BEST PRACTICES

 

WHAT WE DO

LOGO

 

Pay for Performance: In fiscal 2023, 50% of CEO compensation and an average of 36% of other NEO compensation was tied to performance.

LOGO

 

Double-Trigger Change of Control: Following a change in control, severance payments will only be triggered upon an involuntary termination of employment or where employee terminates for good reason.

LOGO

 

Use of Third-Party Consultants: We utilize compensation consultants and third-party benchmarking to evaluate and compare our compensation programs.

LOGO

 

Share Ownership Guidelines: Executive officers are expected to hold Company common stock between 2 and 4 times their annual base salary, and non-employee directors are expected to hold common stock of 4 times their annual cash retainer.

LOGO

 

Compensation Recoupment Policy: All cash incentive awards or performance-based equity awards are subject to recoupment in the event of earnings restatements resulting from unlawful activity, or other unlawful activity, fraud, or intentional misconduct.

LOGO

 

Limited use of Employment Agreements: Only our CEO has an employment agreement.

WHAT WE DON’T DO

LOGO

 

No Hedging or Pledging: Under the Company’s Insider Trading Policy, executives are not allowed to enter into hedging/pledging or other monetization transactions with Company securities.

LOGO

 

No Grants of Stock and Options Below Fair Market Value: All restricted stock units and options are priced and granted at the fair market value at the time of grant. Stock or options are not granted below fair market value.

LOGO

 

No Repricing of Underwater Options/RSUs: The Committee has not repriced any underwater options or otherwise changed the value of RSUs granted despite change in the value of the stock.

LOGO

 

No Short-Term Vesting of Equity Awards: The Company utilizes a three-year time horizon to vest equity granted as part of its Long-Term Incentive Program.

LOGO

 

No Tax Gross-Ups: The Company does not utilize tax gross-ups for executives.

 

 

OUR COMPENSATION PHILOSOPHY AND OBJECTIVES

We believe that the Company’s compensation philosophy should act as the “blueprint” for the total compensation design and targeted value to be delivered to the executive officers. Our compensation philosophy is intended to ensure that the framework for the Company’s compensation program supports the

strategic needs of the business, that the components of the pay system work in concert to influence executive behavior in support of organization imperatives, and that the mechanics of the executive reward structure reinforce the corporate culture and management style of the organization.

Our compensation philosophy includes two identifiable components: compensation objectives and pay goals.

 

 

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Executive Compensation

 

 

 

Compensation Objectives. These objectives serve as a set of “guiding principles” that provide an overview of the intended purpose of our compensation program. Our compensation objectives are:

 

 

To attract and retain key personnel and drive effective results.

 

 

To encourage our NEOs to focus on:

 

   

Building shareholder value.

 

   

Maximizing growth and profitability.

 

   

Leadership to drive change while exemplifying Company values.

 

   

Building a strong brand and focusing on long-term strategic objectives.

 

 

To provide our NEOs with a compensation package that is competitive within our industry.

Pay Goals. The Committee has determined that it is beneficial to establish ranges of compensation, both in total and with respect to each of the Company’s main compensation components, around the 50th percentile of peer group compensation. A primary focus of the Committee in setting executive compensation is to target total compensation within the established ranges noted below, although competitiveness of the other pay components is also strongly considered. For the CEO and the other NEOs, the Compensation Committee considers the following ranges when assessing the competitiveness of each pay component:

 

 

COMPENSATION ELEMENT

  PAY GOAL RELATIVE TO PEER
GROUP

Annual base salary rate:

  50th percentile, +/- 10%

Target annual incentive:

  50th percentile, +/- 10%

Target long-term incentive:

  50th percentile, +/- 15%

Target total compensation:

  50th percentile, +/- 15%

COMPENSATION MIX AND PAY FOR PERFORMANCE

Annually, the Committee considers the total compensation opportunities for each NEO and determines how total potential compensation should be allocated across the different elements of compensation. The Committee does not follow a definitive policy when determining the mix of and structure for total compensation. Instead, it considers factors such as achievement of corporate and individual goals, level of experience, responsibilities, demonstrated performance, time with the corporation, risk associated with any payout, and retention considerations.

Generally, the Committee considers market practices as reflected in the peer group data for the peer group identified below and more generally for the Company’s industry to obtain a baseline of total potential compensation for each NEO. Using this analysis as a starting point, the Committee engages in discussions with the objective of ensuring that a material portion of each NEO’s total compensation is at-risk and dependent on performance. Care is taken to balance incentives to drive performance in the short-term and the long-term. In this way, we encourage NEOs to vigorously pursue financial and other performance while discouraging incentives to take excessive risks that may be beneficial in the short term, but harmful in the long run. We believe that these practices align the interests of the NEOs with those of the shareholders year-over-year, as well as over the long term.

 

 

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Executive Compensation

 

 

 

The Committee seeks to ensure that a substantial portion of the total compensation awarded to the NEOs is performance-based and is comprised of both annual and long-term incentives. The fiscal 2023 mix of target compensation for the CEO and other NEOs is set forth below:

 

FISCAL 2023 TARGET COMPENSATION FOR CEO AS PERCENTAGE OF TOTAL COMPENSATION(1):   FISCAL 2023 AVERAGE TARGET COMPENSATION FOR NEOs AS PERCENTAGE OF TOTAL COMPENSATION:
LOGO   LOGO

 

(1)

Represents our former CEO’s, Mr. Wallstrom, target compensation. Excluding Ms. Ardrey’s sign-on award and sign-on bonus, her target compensation for fiscal 2023 was 57% fixed and 43% performance-based.

 

HOW WE MAKE EXECUTIVE COMPENSATION DECISIONS

Role of the Compensation Committee. The Committee is responsible to the Board for overseeing the development and administration of our compensation programs. The Committee is comprised of three independent directors and is responsible for the review and approval of all aspects of executive compensation, including the approval of compensation packages of newly hired executive officers. The Committee is supported in its work by the CEO, the Chief Administrative & Legal Officer, the Vice President of Human Resources, their staff, and independent executive compensation consultants, as needed.

Role of Management. The Committee generally seeks input from our CEO when discussing the performance and compensation levels of the other NEOs. The Committee also works with our CEO, our Chief Financial Officer, our Chief Administrative & Legal Officer, and our Vice President of Human Resources in evaluating the financial, accounting, tax, and retention implications of our various compensation programs. Neither Ms. Ardrey, Mr. Wallstrom, nor any of our other executives participates in deliberations relating directly to her or his own compensation.

Role of Compensation Consultants. The Committee has utilized compensation consultants in assisting with benchmarking, regulatory changes and updates, and analysis and design of the Company’s compensation program. The Committee also used consultants to help review the Company’s compensation peer group. The Committee has utilized Pearl Meyer & Partners, LLC (“Pearl Meyer”) and Equilar, Inc. (“Equilar”) as executive compensation consultants. Both Pearl Meyer and Equilar were retained by the Committee, and the Committee may replace them or hire additional consultants at any time. Our Committee makes all final decisions regarding the compensation of our NEOs.

Role of Shareholders: Response to Advisory Vote on Executive Compensation. At the 2022 Annual Meeting of Shareholders, approximately 98% of the votes cast on the advisory vote on our executive compensation program were in support of the compensation paid to the NEOs. The Committee took these results into account in formulating its executive compensation plans moving forward for fiscal 2023. In light of the strong support from shareholders, in setting fiscal 2023 compensation the Committee materially maintained the compensation program currently in place.

 

 

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Executive Compensation

 

 

 

Peer Group and Benchmarking. At least annually, the Committee utilizes peer group and industry third-party benchmarking data to ensure that the NEO’s and other officers are appropriately compensated. As part of analyzing peer group data the Committee conducts a review of its identified peer group used for executive compensation comparisons to ensure all peer companies remain an appropriate basis for comparison. In selecting peer companies, the Committee aims to

identify companies with similar characteristics to our Company. Specifically, we look for peer group companies that are in the retail industry or another related industry, have a strong consumer brand, are profitable, and are of a comparable size (based principally on revenue and market capitalization). In fiscal 2023, the Committee removed Francesca’s Holding Corp. from the Peer Group due to its bankruptcy reorganization and subsequent sale of assets.

 

 

FISCAL 2023 COMPENSATION PEER GROUP
The Buckle, Inc.    Boot Barn, Inc.    J. Jill. Inc.
Duluth Holdings    Land’s End, Inc.    Delta Apparel Group

Vince Holding Corp.

   Build-a-Bear Workshop, Inc.    Zumiez Inc.
Movado Group, Inc.    Oxford Industries, Inc.    YETI, Holdings, Inc.
Destination XL Group, Inc.    Tilly’s Inc.    Crocs, Inc.
           

ELEMENTS OF OUR EXECUTIVE COMPENSATION PROGRAM IN FISCAL 2023

 

HIGHLIGHTS

Recent highlights of our executive compensation program include:

 

 

In addition to financial goals, the annual incentive for fiscal 2023 included key strategic objectives each with its own objective metric tied to our long-term strategic plan and intended to focus the team on making progress towards the Company’s long-term strategic plan.

 

 

The Company achieved below threshold levels for Vera Bradley Brand, Pura Vida Brand, and Enterprise net revenue metrics. Vera Bradley Brand, Pura Vida Brand, and Enterprise net operating income threshold levels similarly were not achieved. Therefore, there were no payouts for any of these elements of the Company’s short-term incentive plans.

 

 

The actual achievement for individual tranches associated with the fiscal 2023 performance year for the performance-based units of the Company’s Long-Term Incentive Plan was 0%.

 

 

All stock equity grants under our long-term incentive program vest over a three-year period in order to incentivize retention and long-range performance.

BASE SALARY

Purposes of Base Salary. We utilize base salary as the primary means of providing compensation for

performing the essential elements of an executive’s job. Base salaries are intended to provide a certain level of fixed compensation commensurate with an executive’s position, responsibilities, tenure, historical compensation, retention risk, and current and expected future contributions to the Company. In particular, we set base salaries keeping in mind that we are often recruiting from a fashion and retail marketplace that is not typically found in the Company’s hometown of Fort Wayne, Indiana. With these principles in mind, base salaries are reviewed at least annually by our Committee and may be adjusted from time to time based on the results of this review.

Setting Fiscal 2023 Base Salary. In fiscal 2023, the Compensation Committee provided for base salary increases for the NEOs ranging from 2.0% to 4.5%. Ms. Ardrey’s base salary was established in accordance with her Employment Agreement. Mr. Wallstrom, the Company’s former CEO did not receive a base salary increase during the fiscal year.

The Committee approved base salary increases based on analysis of the median peer group and industry benchmarking base salary information, performance and/or changes in NEO responsibilities, and to align with the market and the Company’s compensation philosophy.

 

 

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Executive Compensation

 

 

 

The following table shows annual base salary rates for each of our NEOs at the end of fiscal 2022 and fiscal 2023. Amounts represent a base rate of pay; actual earnings during a fiscal year may vary based upon a variety of factors, including the number of weeks in the fiscal year.

FISCAL 2023 BASE SALARY CHANGES

 

   
    FISCAL 2022 BASE
SALARY RATE
    FISCAL 2023 BASE
SALARY RATE
 

Jacqueline Ardrey

  $ —       $ 850,000  

John Enwright

    416,000       428,480  

Mark C. Dely

    400,000       418,000  

Robert Wallstrom

    871,250       871,250  

Daren Hull

    565,000       581,950  

Kevin Korney

    385,400       393,108  

ANNUAL INCENTIVE COMPENSATION

Purposes of Annual Incentive. Our annual incentive compensation, in the form of an annual cash payment, is intended to compensate our NEOs for meeting our short-term corporate financial and strategic objectives and to incentivize our NEOs to meet these objectives. Our financial and strategic objectives are intended to build shareholder value, maximize growth and profitability, build a strong brand, and execute against the annual milestones of the long-term strategic plan.

Setting Annual Incentive Compensation Levels. Our objective is generally to be within the competitive range of the peer group median, on average, for annual incentive opportunities of our executive officers, including our NEOs. We consider a range of +/-10% around the market median (50th percentile) to be competitive but still capable of recognizing differences among executives.

Fiscal 2023 Annual Incentive Performance Metrics. For fiscal 2023, the Committee largely left the compensation program unchanged from fiscal 2022. The Company utilizes a Brand program and an Enterprise program to

reflect the different objectives of the Company and its multiple brands, and to incentivize each NEO on the areas each have the greatest ability to impact for both financial metrics and strategic objectives. The strategic objectives tie back to either the individual Brand or Enterprise objectives, which are updated annually as appropriate. The program applicable to each NEO for fiscal 2023 was as follows:

FISCAL 2023 ANNUAL INCENTIVE PROGRAM

 

 
    PROGRAM

Jacqueline Ardrey

  Enterprise

John Enwright

  Enterprise

Mark C. Dely

  Enterprise

Robert Wallstrom

  Enterprise

Daren Hull

  Vera Bradley Brand

Kevin Korney

  Vera Bradley Brand

Selecting the Financial Metrics. Consistent with fiscal 2022, revenue and operating income were the financial metrics used for fiscal 2023. The Committee selected net revenue because we believe it is important to our shareholders and to the ultimate performance of the Company. Top line performance, however, must be accompanied by operating performance as well, so operating income was selected as a second performance metric. In the future, the Committee will review the application of other financial performance measures. The Committee typically sets a target level of performance at which the full target bonus can be earned. The Committee also sets a threshold level of performance below which no bonus is earned and a maximum level of performance that results in a maximum bonus.

For the Brand program, 80% of the financial metrics are related to Brand performance with 20% related to Enterprise operating income. For the Enterprise program, 100% of the financial metrics are based upon Enterprise results.

 

 

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Executive Compensation

 

 

 

ENTERPRISE ANNUAL INCENTIVE PLAN STRUCTURE

 

         

FINANCIAL METRICS

  Weight     Payout by Performance Level as a Percentage of Target Incentive  
          Threshold     Target     Maximum  

Enterprise Operating Income

    25%       25%       100%       200%  

Enterprise Net Revenue

    25%       25%       100%       200%  

Total

    50%                          

STRATEGIC METRICS

  Weight     Payout by Performance Level as a Percentage of Target Incentive  
          Met Most     Met All     Exceed     Significantly Exceed  

Enterprise Strategic Objectives(1)

    25%       25%       100%       125%       200%  

Individual Financial Objectives

    25%       50%       100%       125%       200%  

Total

    50%                                  

TOTAL

                                    200% (2) 
(1)

The payout for strategic objectives is capped at 100% in the event that either or both of the operating income or net revenue metrics are not achieved at the threshold performance level or higher.

(2)

Ms. Ardrey and Mr. Wallstrom’s total annual incentive payout is capped at 200% of their base salary.

BRAND ANNUAL INCENTIVE PLAN STRUCTURE

 

         

FINANCIAL METRICS

  Weight     Payout by Performance Level as a Percentage of Target Incentive  
          Threshold     Target     Maximum  

Brand Operating Income

    20%       25%       100%       200%  

Enterprise Operating Income

    10%       25%       100%       200%  

Brand Net Revenue

    20%       25%       100%       200%  

Total

    50%                          

STRATEGIC METRICS

  Weight     Payout by Performance Level as a Percentage of Target Incentive  
          Met Most     Met All     Exceed     Significantly Exceed  

Brand Strategic Objectives(1)

    25%       25%       100%       125%       200%  

Individual Financial Objectives

    25%       50%       100%       125%       200%  

Total

    50%                                  

TOTAL

                                    200%  
(1)

The payout for strategic objectives is capped at 100% in the event that either or both of the operating income or net revenue metrics are not achieved at the threshold performance level or higher.

 

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Executive Compensation

 

 

 

Selecting the Strategic Metrics. In fiscal 2023, the Committee once again included corporate-level strategic objectives as a component of the annual incentive compensation program. The Committee believes that this metric is appropriate to incentivize the management team to meet significant strategic objectives key to achieving the Company’s long-term strategic plan. Each strategic objective measure is tied to an objective metric where performance is based on the level of achievement against the metric.

In fiscal 2023 the Vera Bradley Brand corporate strategic goals were as follows:

 

 

Product Innovation and Product Margin Management

 

 

Direct Customer Traffic Growth of +1.2%

 

 

Improvement of Omnichannel Cross-Channel Shopping

 

 

Achieving a Balanced Footprint Across Channels for Revenue

 

 

Management of Expenses/SG&A

In fiscal 2023 the Pura Vida Brand corporate strategic goals were as follows:

 

 

Improvement in Performance Marketing Management, including Marketing Expense Ratio and Return on Ad Spend (“ROAS”)

 

 

Build and Expand Retail Presence

 

 

Improve Product Margin

 

 

Optimization of Brand Marketing

 

 

Growth in the 25-44 Consumer Demographic

 

 

Management of Expenses/SG&A

In fiscal 2023 the Enterprise corporate strategic goals were as follows:

 

 

Management of Supply Chain and Gross Margin

 

 

Drive Shareholder Return

 

 

Improve Associate Engagement

 

 

Drive Execution of Company’s ESG Strategy

 

 

Management of Expenses/SG&A

In addition to these corporate-level strategic goals, the Committee also continued to include a metric for the measurement of personal objectives for each of the NEOs. The Committee believes it is important to provide individual incentive against defined goals at the level of each major business function in order to ensure that the management team is focused equally on execution in each of their areas in order to meet the long-term strategic objectives of the Company. The individual financial objectives varied by individual and department,

but all had clear metrics and measurements and in general were designed to be challenging but achievable.

In the future, the Committee will continue to evaluate both payout levels and performance levels in accordance with business conditions and prevailing market practices.

Fiscal 2023 Annual Incentive Payout. In fiscal 2023, the Vera Bradley Brand adjusted operating income and net revenue were below the threshold performance levels of $15.9 million and $413.2 million, respectively, resulting in no payouts for these metrics. Vera Bradley Brand operating income was adjusted to exclude inventory adjustments related to excess mask products, the exit of certain technology products and the goodMRKT brand, and discounted inventory; PO cancellation fees; severance charges; consulting fees associated with cost savings and strategic initiatives, CEO search, as well as certain professional fees related to leadership changes and certain fixture obsolescence; CEO sign-on bonus and relocation expenses; store and right-of-use asset impairment charges; and former CEO November and December salary payments and stock-based compensation associated with retirement.

In fiscal 2023, the Pura Vida Brand adjusted operating income and net revenue were below the threshold performance levels of $16.2 million and $116.1 million, respectfully, resulting in no payout for these metrics. Operating income was adjusted to exclude goodwill and intangible asset impairment charges; inventory adjustments related to excess inventory (including mask products), the exit of certain technology products, and discounted inventory; intangible asset amortization; severance charges; and certain professional fees related to leadership changes.

In fiscal 2023, the Enterprise adjusted operating income and net revenue were below the threshold performance levels of $32.1 million and $529.3 million, respectfully, resulting in no payout for these metrics. Enterprise operating income was adjusted as previously stated for the Vera Bradley and Pura Vida Brands.

For financial performance metrics, payout levels are determined using linear interpolation for results falling between the three performance levels.

The Committee determined that the Vera Bradley Brand performance to its strategic goals were achieved at 75%, the Pura Vida Brand strategic objectives were achieved at 75% and the Enterprise strategic objectives were achieved at 100%. These percentages were determined based on metrics identified at the beginning of fiscal 2023 and how the Company performed with respect to each of these metrics.

 

 

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For the NEOs, the payout for individual objectives was determined based upon achievement of the goals as rated by Ms. Ardrey and the Compensation Committee. Mr. Enwright, Mr. Korney, and Mr. Hull met most of their objectives. Mr. Dely exceeded with respect to his individual objectives. The Committee determined that Mr. Wallstrom performed at expectations for his individual objectives.

The following table sets forth the payout opportunities at each performance level, as well as actual bonus earned as a percentage of base salary:

FISCAL 2023 ANNUAL INCENTIVE PAYOUT AS A PERCENTAGE OF BASE SALARY

 

       
    OPPORTUNITY        
    Threshold     Target     Max     ACTUAL(1)  

Jacqueline Ardrey

                       

John Enwright

    15.6     50     100     18.8

Mark C. Dely

    15.6     50     100     28.1

Robert Wallstrom

    31.3     100     200     50.0

Daren Hull

    21.9     70     140     21.9

Kevin Korney

    12.5     40     80     12.5
(1)

Actual reflected as a percentage of eligible earnings during fiscal 2023. Represents totals for each category; however, for fiscal 2023 some metric thresholds were not met for revenue and operating income categories and so no payouts were made for these categories.

LONG-TERM INCENTIVE COMPENSATION

Purposes of Long-Term Incentive Compensation. We grant long-term equity awards under our executive compensation program in order to compete for executive talent and align the interests of our employees, including our NEOs, with those of the Company’s shareholders. These awards are intended to motivate executives by tying a portion of their incentive compensation to the performance of our common stock over the long term and, in turn, also motivate employees to remain with the Company as the value of these awards is intended to increase over time. We believe these awards also serve as motivation for executives to continue to improve the long-term performance of the Company.

Fiscal 2023 Long-Term Incentive Vehicles, Mix, and Grant Size. The fiscal 2023, fiscal 2022, and fiscal 2021 grants to each NEO were made up of 50% performance-based restricted stock units and 50% time-based restricted stock units. The terms of the fiscal 2023, fiscal 2022, and fiscal 2021 grants were similar.

LOGO

Based on the Compensation Committee’s assessment the following reflect the fiscal 2023 long-term grant values for the NEOs.

FISCAL 2023 LONG-TERM INCENTIVE GRANTS

 

       
    TARGET
GRANT
VALUE
    AS A %
OF
BASE
SALARY
RATE
    % OF GRANT
PERFORMANCE-
BASED
    % OF
GRANT
TIME-
BASED
 

Jacqueline Ardrey

  $ 1,900,006       224     50     50

John Enwright(1)

    320,000       75     50     50

Mark C. Dely(1)

    310,006       74     50     50

Robert Wallstrom

    1,399,998       161     50     50

Daren Hull

    565,000       97     50     50

Kevin Korney

    224,996       57     50     50
(1)

Excludes time-based retention grant of $250,000 for Mr. Enwright and Mr. Dely.

Terms of the Fiscal 2023 Time-Based RSU Grant. The time-based restricted stock units vest and settle in our common shares, on a one-for-one basis in three equal annual installments on the first, second, and third anniversaries of the date of grant. The applicable award agreement provides that the units vest immediately upon the NEO’s disability (as defined in the Incentive Plan) or death or, provided the NEO remains employed through the effective date, upon a change in control (which is more specifically defined in the award agreement). The units will also vest upon the NEO’s retirement (as defined in the Incentive Plan) on a prorated basis based on service through the retirement date.

 

 

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Terms of the Fiscal 2023 Performance-Based RSU Grant. The performance-based restricted stock unit grant is structured to be earned over three annual performance periods (fiscal 2023, fiscal 2024, and fiscal 2025) and for any earned units to vest and settle in our common shares, on a one-for-one basis in a single tranche on the third anniversary of the date of grant.

The performance-based restricted stock units granted in fiscal 2023 are divided into three equal tranches of one-third each of the total award and allocated to each of the three fiscal years of the Company ending with fiscal 2025, with each such fiscal year being considered a performance year. Each tranche of performance-based restricted stock units must be both “earned” and “vested” before it will be settled in the form of the Company’s common shares. Each tranche of performance-based restricted stock units will be deemed earned only if the earnings per share threshold is met in the applicable fiscal year, and each will be deemed vested only if the executive is continuously employed with the Company through the third anniversary of the grant date. For fiscal 2023, threshold and maximum performance levels for the performance-based restricted stock units were set at 88% and 112%, respectively, of target earnings per share performance and payout levels range from 25% for threshold performance up to 200% for maximum performance.

FISCAL 2023 PERFORMANCE-BASED RSU GRANT – TRANCHE ONE PERFORMANCE MEASURES

 

   
PERFORMANCE
LEVEL
  EPS GOAL FOR
FISCAL 2023
  SHARES VESTING
AS A
PERCENTAGE OF
TARGET GRANT

Threshold

  $0.61 per share   25%

Target

  $0.69 per share   100%

Maximum

  $0.77 per share   200%

For the second and third tranches of the performance-based restricted stock unit grant, target earnings per share goals will be based on a pre-determined percentage increase in earnings per share over the prior year, and threshold and maximum performance levels will again be set at 88% and 112%, respectively, of target earnings per share. In each year, shares vesting as a percentage of the NEO’s target grant will be as set forth in the table above. The Compensation Committee will continue to evaluate both payout levels and performance levels in accordance with business conditions and prevailing market practices.

Results of Fiscal 2021 through Fiscal 2023 Performance-Based RSU Cycle. The Company’s Long-Term Incentive

Plan Performance-based restricted stock units are earned over a three year period and therefore the discussion below includes discussion over the last three fiscal years. Performance-based restricted stock units granted on April 7, 2020 were subject to a three-year performance period established by the Committee that ended on January 28, 2023, which represents performance periods covered by fiscal 2021, fiscal 2022, and fiscal 2023. The following table shows the target number of restricted stock units granted to each NEO for this period.

FISCAL 2021 PERFORMANCE-BASED RSU GRANTS

 

  
     TARGET GRANT
(NUMBER OF RSUs)
 

Jacqueline Ardrey

     —    

John Enwright

       33,701  

Mark C. Dely

       30,637  

Robert Wallstrom

     171,569  

Daren Hull

       49,020  

Kevin Korney

       30,637  

The target number of performance-based restricted stock units was equally divided into three tranches with the first tranche earned based on fiscal 2021 Q2 to Q4 performance (“FY21 Tranche”), the second tranche earned based on fiscal 2022 performance (“FY22 Tranche”), and the third tranche earned based on fiscal 2023 performance (“FY23 Tranche”). As a result of the COVID-19 pandemic, the Committee determined to remeasure the FY21 tranche target to be actual Q2 to Q4 fiscal 2021 earnings per share.

In order to earn shares under the FY21 Tranche, the Committee set a diluted earnings per share target for Q2 to Q4 of $1.10 per share, with maximum performance at $1.23 per share and threshold performance of $0.97 per share. Actual fiscal 2021 adjusted diluted earnings per share for Q2 to Q4 was $0.93 per share, resulting in no payout of the FY21 Tranche. GAAP diluted EPS for Q2 to Q4 was adjusted in accordance with the requirements of the incentive plan, for intangible asset amortization, store impairment charges, COVID-19-related charges, and an adjustment to the earn-out liability related to the Pura Vida acquisition.

At the time of grant, it was determined that target performance for the FY22 Tranche was 110% of actual fiscal 2021 diluted earnings per share and for the FY23 Tranche was 110% of actual fiscal 2022 adjusted diluted earnings per share.

 

 

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Adjusted diluted earnings per share for fiscal 2022 of $0.66 exceeded the threshold earnings per share of $0.61, but fell below the target performance level, resulting in a payout of 73% for the FY22 Tranche. GAAP diluted EPS of $0.52 was adjusted in accordance with the requirements of the incentive plan, for incremental expense associated with the expiration of the GSP tariff relief, intangible asset amortization, and store impairment charges.

Adjusted diluted earnings per share for fiscal 2023 of $0.24 fell below the threshold performance level, resulting in no payout for the FY23 Tranche. GAAP diluted loss per share of $(1.90) was adjusted in accordance with the requirements of the incentive plan, for goodwill and intangible asset impairment charges; inventory adjustments (associated with Pura Vida excess inventory and excess mask products, the exit of certain technology products and the goodMRKT brand, and discounted inventory); PO cancellation fees; expenditures associated with leadership changes and cost saving initiatives (severance charges; consulting fees associated with cost savings and strategic initiatives; CEO search fees, sign-on bonus, and relocation fees; certain professional fees associated with leadership changes; former CEO November and December salary expense, and stock-based compensation associated with retirement); intangible asset amortization; and store and right-of-use asset impairment charges.

Therefore, in total, Mr. Enwright, Mr. Dely, and Mr. Wallstrom, earned 8,200 shares, 7,454 shares, and 41,748 shares pursuant to the FY21, FY22, and FY23 Tranches of the fiscal 2021 grant, respectively. Mr. Hull and Mr. Korney’s shares were forfeited upon their separation from the Company in January 2023 and August 2022, respectively. Mr. Wallstrom’s shares were earned in accordance with his retirement under his Employment Agreement.

BENEFITS

The NEOs are eligible for the same level and offering of benefits available to other employees. Our benefits, such as our basic health benefits, 401(k) plan, life insurance, paid time off, matching charitable gifts program, and discounts on certain Company products, are intended to provide a stable array of support to our employees and their families throughout various stages of their careers, and these core benefits are provided to all full-time employees. The 401(k) plan allows participants to defer amounts of their annual compensation before taxes, up to the cap set by the Internal Revenue Code, which was

$20,500 per person for calendar year 2022 (or $27,000 for employees over age 50). Employees’ elective deferrals are immediately vested and non-forfeitable upon contribution to the 401(k) plan. For fiscal 2023, we provided matching contributions equal to 100% for the first 3% of an employee’s individual contribution and 50% for the next 2% of individual contributions, for a maximum employer match of 4% of individual contributions, subject to certain other limits, including vesting requirements.

AGREEMENTS WITH NAMED EXECUTIVE OFFICERS

Ms. Ardrey’s Employment Agreement. Ms. Ardrey’s employment agreement with the Company was effective November 1, 2022 (the “Employment Agreement”). The Employment Agreement will renew automatically for successive one-year periods unless either the Company or Ms. Ardrey gives notice to the other of its or her intention not to renew.

Ms. Ardrey’s annual base salary rate during fiscal 2023 was $850,000. Under her employment agreement, Ms. Ardrey has a target annual fiscal bonus of 100% of her annual base salary rate, with a maximum annual cash bonus of up to 200% of her annual base salary rate and she is also eligible for long-term incentive grants.

Ms. Ardrey’s Employment Agreement contains non-compete restrictions. During the period of his employment and for a period of two years following her termination, Ms. Ardrey may not engage in, manage, join or work for (as an employee, consultant or independent contractor) or permit the use of her name by, or provide financial or other assistance to, any competitor that engages in the design, production, marketing and retailing of (i) handbags and other bags and related accessories or (ii) accessories such as jewelry, travel and leisure items, and baby clothes and accessories. In order to be treated as a competitor pursuant to Ms. Ardrey’s Employment Agreement, an enterprise would have to have received in the prior fiscal year at least 25% of its revenues from the design, production, marketing and/or retailing of handbags, other bags and related accessories or more than 50% of its revenues from the combination of the design, production, marketing and/or retailing of handbags, other bags and related accessories, accessories such as jewelry, travel and leisure items and baby clothes and accessories. Ms. Ardrey’s Employment Agreement also contains customary confidentiality provisions.

 

 

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For a description of severance benefits that Ms. Ardrey would be entitled to receive under certain circumstances, please see “Potential Payments Upon Termination or Change in Control – CEO.”

Mr. Wallstrom’s Employment Agreement. Mr. Wallstrom’s employment agreement with the Company was effective November 11, 2013 (the “Employment Agreement”) and was automatically renewed for fiscal 2023. The Employment Agreement was terminated upon Mr. Wallstrom’s retirement on December 31, 2022.

Mr. Wallstrom’s annual base salary rate during fiscal 2023 was $871,250. Under his employment agreement, Mr. Wallstrom had a target annual fiscal bonus of 100% of his annual base salary rate, with a maximum annual cash bonus of up to 200% of his annual base salary rate and he was also eligible for long-term incentive grants.

Mr. Wallstrom’s Employment Agreement contained non-compete restrictions. During the period of his employment and for a period of two years following his termination, Mr. Wallstrom may not engage in, manage, join or work for (as an employee, consultant or independent contractor) or permit the use of his name by, or provide financial or other assistance to, any competitor that engages in the design, production, marketing and retailing of (i) handbags and other bags and related accessories or (ii) accessories such as jewelry, travel and leisure items, and baby clothes and accessories. In order to be treated as a competitor pursuant to Mr. Wallstrom’s Employment Agreement, an enterprise would have to have received in the prior fiscal year at least 25% of its revenues from the design, production, marketing and/or retailing of handbags, other bags and related accessories or more than 50% of its revenues from the combination of the design, production, marketing and/or retailing of handbags, other bags and related accessories, accessories such as jewelry, travel and leisure items and baby clothes and accessories. Mr. Wallstrom’s Employment Agreement also contains customary confidentiality provisions.

For a description of severance benefits that Mr. Wallstrom received upon his retirement, please see “Potential Payments Upon Termination or Change in Control – CEO.”

COMPENSATION AND RISK

The Committee has evaluated the risk profile of our compensation policies and practices and concluded that they do not motivate imprudent risk taking. In its evaluation, the Committee reviewed our employee compensation structures and noted numerous factors and design elements that manage and mitigate risk without diminishing the incentive nature of the compensation, including a unique and strong corporate culture that attracts passionate and motivated employees who are excited about our products and our brand (as opposed to being motivated by purely financial considerations); a balanced mix between cash and equity and annual and longer-term incentives under our executive compensation program; ownership of our shares by senior management, which aligns their interests with the long-term interests of the Company and our shareholders; reasonable limits on annual incentive awards (as determined by a review of our current business plan); with respect to annual incentive awards, a balanced mix of performance measures, linear payouts between target levels and maximum payouts capped in fiscal 2023 at 200% of target for the CEO and other NEOs; and subjective considerations (including a review of individual performance) and discretion in compensation decisions, which limit the influence of formulae or objective factors on excessive risk taking.

The Committee also reviewed our compensation programs for certain design features that may have the potential to encourage excessive risk-taking, including over-weighting towards annual incentives, highly-leveraged payout curves, unreasonable thresholds, and steep payout cliffs at certain performance levels that may encourage short-term business decisions to meet payout thresholds. The Committee concluded that our compensation programs do not include such elements. In addition, the Committee analyzed our overall enterprise risks and how compensation programs may impact individual behavior in a manner that could exacerbate these enterprise risks. In view of these analyses, the Committee concluded that we have a balanced pay and performance program that does not encourage excessive risk-taking that is reasonably likely to have a material adverse effect on the Company.

 

 

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EFFECT OF ACCOUNTING AND TAX TREATMENT ON COMPENSATION DECISIONS

In the review, establishment, and operation of our compensation programs, the Committee considers, among other factors, the anticipated accounting and tax implications to us and our executives. Section 162(m) of the Internal Revenue Code limits the amount of compensation that we may deduct in any one year with respect to our NEOs. The Tax Cuts and Jobs Act (the “Tax Act”) generally eliminated the exception that allowed

for the deductibility of certain performance-based compensation for covered employees (as defined in the Tax Act). The Committee seeks to maintain flexibility in compensating our executives in a manner designed to promote our corporate goals and therefore we have not adopted a policy requiring all compensation to be deductible. The Committee will continue to evaluate what, if any, changes should be made to the Company’s compensation programs regarding the deductibility of compensation.

 

 

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COMPENSATION TABLES

Summary Compensation Table

The table below shows information concerning the annual compensation for services to the Company in all capacities of the Company’s NEOs, and certain former NEOs, during the last three completed fiscal years, each of which contained 52 weeks. The salary figures include a 75% reduction to base compensation for Mr. Wallstrom and a 30% reduction to base compensation for the other NEOs during a portion of fiscal 2021 to conserve cash as a result of the COVID-19 pandemic. Information regarding fiscal years 2022 and 2021 is omitted for Ms. Ardrey, Mr. Dely, and Mr. Korney because they were not NEOs during the relevant years.

 

NAME AND PRINCIPAL POSITION

  FISCAL
YEAR
    SALARY     BONUS     STOCK
AWARDS
(2)
    NON-EQUITY
INCENTIVE
PLAN
COMPEN-
SATION
(3)
    ALL OTHER
COMPEN-
SATION
    TOTAL
COMPEN-
SATION
 

Jacqueline Ardrey

    2023     $ 209,231     $ 860,000     $ 1,900,006           $ 163,400 (1)    $ 3,132,637  

President and CEO, Vera Bradley, Inc.

                                                       

John Enwright

    2023       427,520             570,000       80,160       11,638 (4)      1,089,318  

Chief Financial Officer, Vera Bradley, Inc.

    2022       413,846             324,998       141,742       11,729 (4)      892,315  
      2021       343,677             275,000       117,564       11,251 (4)      747,492  

Mark C. Dely

    2023       416,616             560,006       117,173       11,648 (4)      1,105,443  

Chief Administrative & Legal Officer, Vera Bradley, Inc.

                                                       

Robert Wallstrom

    2023       804,231             1,399,998       402,116       3,530,829 (5)      6,137,174  

Former President and CEO, Vera Bradley, Inc.

    2022       869,616             1,649,992       541,336       11,600 (4)      3,072,544  
      2021       646,500             1,400,004       654,500       7,761 (4)      2,708,765  

Daren Hull

    2023       571,693             565,000       125,058       23,403 (6)      1,285,154  

Former Brand President, Vera Bradley

    2022       565,000             549,990       266,172       11,882 (4)      1,393,044  
      2021       446,476             400,004       173,813       11,265 (4)      1,031,558  

Kevin Korney

    2023       198,985             224,996       24,873       731,694 (7)      1,180,548  

Former Chief Merchandising Officer, Vera Bradley

                                                       
(1)

Represents relocation expenses.

(2)

Represents the aggregate grant date fair value of restricted stock units awarded during the fiscal year computed in accordance with FASB ASC Topic 718. The grant date fair value of each individual award of restricted stock units for fiscal 2023 is set forth in the Fiscal 2022 Grants of Plan-Based Awards table below. Additional information regarding the calculation of these values is included in Notes 2 and 8 to our consolidated financial statements. Performance-based awards are reflected at target. If the maximum level of performance-based awards were to be achieved for the awards granted in fiscal 2023, the aggregate grant date fair value would be $2,850,009 for Ms. Ardrey; $730,000 for Mr. Enwright; $715,009 for Mr. Dely; $2,099,997 for Mr. Wallstrom; $847,500 for Mr. Hull; and $337,494 for Mr. Korney.

(3)

Represents annual incentive compensation paid under the Company’s Annual Incentive Bonus Program.

(4)

Represents 401(k) matching contributions made by the Company.

(5)

Includes $3,485,000 for severance; $33,510 for accrued vacation time; and $12,319 for 401(k) matching contributions made by the Company.

(6)

Includes $11,751 for accrued vacation time and $11,652 for 401(k) matching contributions made by the Company.

(7)

Includes $688,939 for severance; $28,727 for accrued vacation time; $10,414 for 401(k) matching contributions made by the Company; and $3,614 for other taxable fringe benefits.

 

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Fiscal 2023 Grants of Plan-Based Awards

The following table sets forth information regarding grants of plan-based awards in fiscal 2023. In this table “TRSU” stands for time-based restricted stock unit and “PRSU” stands for performance-based restricted stock unit.

 

            ESTIMATED POSSIBLE PAYOUTS
UNDER
NON-EQUITY INCENTIVE PLAN
AWARDS
(1)
    ESTIMATED FUTURE PAYOUTS
UNDER
EQUITY INCENTIVE PLAN
AWARDS
(2)
             
    TYPE OF
AWARD
  GRANT
DATE
  THRESHOLD     TARGET     MAXIMUM     THRESHOLD     TARGET     MAXIMUM     ALL
OTHER
STOCK
AWARDS
    GRANT DATE
FAIR VALUE OF
STOCK
AWARDS
(3)
 

Jacqueline Ardrey

  Annual Incentive     $     $     $            
  TRSUs   November 1, 2022                 289,635     $ 950,003  
    PRSUs   November 1, 2022                             72,409       289,635       579,270               950,003  

John Enwright

  Annual Incentive     $ 66,800     $ 213,760     $ 427,520            
  TRSUs   April 1, 2022                 21,419       160,000  
  TRSUs   December 9, 2022                 53,305       250,000  
    PRSUs   April 1, 2022                             5,355       21,419       42,838               160,000  

Mark C. Dely

  Annual Incentive     $ 65,096     $ 208,308     $ 416,616            
  TRSUs   April 1, 2022                 20,750       155,003  
  TRSUs   December 9, 2022                 53,305       250,000  
    PRSUs   April 1, 2022                             5,188       20,750       41,500               155,003  

Robert Wallstrom

  Annual Incentive     $ 272,266     $ 871,250     $ 1,742,500            
  TRSUs   April 1, 2022                 93,708       699,999  
    PRSUs   April 1, 2022                             23,427       93,708       187,416               699,999  

Daren Hull

  Annual Incentive     $ 127,016     $ 406,452     $ 812,904            
  TRSUs   April 1, 2022                 37,818       282,500  
    PRSUs   April 1, 2022                             9,455       37,818       75,636               282,500  

Kevin Korney

  Annual Incentive     $ 49,064     $ 157,006     $ 314,012            
  TRSUs   April 1, 2022                 15,060       112,498  
    PRSUs   April 1, 2022                             3.765       15,060       30,120               112,498  
(1)

Awards available under the Company’s fiscal 2023 Annual Incentive Bonus Program. For Mr. Enwright and Mr. Dely, the amounts shown above are based upon fiscal 2023 eligible earnings. Mr. Wallstrom, Mr. Hull, and Mr. Korney’s target possible payout is based on fiscal 2023 eligible earnings had they not left the Company.

(2)

Awards made under the Incentive Plan to certain employees and directors, including our NEOs. TRSUs vest in three equal annual installments on the first, second, and third anniversaries of the grant date. PRSUs have a three-year cliff-vesting schedule based on continued employment and performance. The performance feature is based on earnings per share growth over the three-year performance period. Vesting would be accelerated in the event of death, disability, or a change in control. See “— Potential Payments on Termination or Change in Control.” If the Company were to declare any cash dividend on its common shares, an equivalent amount per RSU would be credited to an account for each holder and paid to the holder in cash (or forfeited) at the time the shares underlying the RSU are delivered to the holder (or forfeited). Amounts in this account would bear interest at the prime rate reported in the Midwest Edition of The Wall Street Journal from the date of deposit until paid to the holder or forfeited in accordance with the Incentive Plan.

(3)

Represents the grant date fair value of each award computed in accordance with FASB Topic 718.

 

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Outstanding Equity Awards at 2023 Fiscal Year-End

The following table sets forth information regarding outstanding equity awards as of January 28, 2023.

 

    STOCK AWARDS  
    RESTRICTED
STOCK UNIT
GRANT DATE
 

NUMBER OF SHARES
OR UNITS OF
STOCK

THAT
HAVE NOT VESTED
(#)
(1)

   

MARKET
VALUE OF

SHARES
OR

UNITS OF
STOCK
THAT

HAVE NOT

VESTED

($)(2)

    EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER
OF
UNEARNED
SHARES,
UNITS OR
OTHER
RIGHTS
THAT HAVE
NOT
VESTED
(#)
(1)
   

EQUITY
INCENTIVE
PLAN
AWARDS:
MARKET
OR
PAYOUT
VALUE OF
UNEARNED
SHARES,
UNITS OR
OTHER
RIGHTS
THAT HAVE
NOT
VESTED

($)(2)

 

Jacqueline Ardrey

  November 1, 2022     289,635 (3)    $ 1,607,474       289,635 (5)    $ 1,607,474  

John Enwright

  April 7, 2020     19,434 (7)      107,859       (4)       
  April 2, 2021     10,580 (8)      58,719       1,322 (6)      7,337  
  April 1, 2022     21,419 (9)      118,875       3,570 (6)      19,814  
    December 9, 2022     53,305 (10)      295,843       (4)       

Mark C. Dely

  April 7, 2020     17,667 (11)      98,052       (4)       
  April 2, 2021     9,766 (12)      54,201       1,220 (6)      6,771  
  April 1, 2022     20,750 (13)      115,163       3,458 (6)      19,192  
    December 9, 2022     53,305 (10)      295,843       (4)       

Robert Wallstrom

  April 7, 2020     94,172 (14)      522,655       (4)       
  April 2, 2021     39,164 (15)      217,360       (4)       
    April 1, 2022     42,949 (16)      238,367       (4)       

Daren Hull(17)

  April 7, 2020                        
  April 2, 2021                        
    April 1, 2022                        

Kevin Korney(17)

  April 7, 2020                        
  April 2, 2021                        
    April 1, 2022                        
(1)

Time-based restricted stock units (TRSUs) vest in three equal annual installments on the first, second, and third anniversaries of the grant date. Performance-based restricted stock units (PRSUs) have a three-year cliff-vesting schedule based on continued employment and performance. The performance feature is based on earnings per share growth over the three-year performance period. See “—Potential Payments on Termination or Change in Control” for details of outstanding awards where vesting would be accelerated in the event of death, disability, retirement, or upon a change in control.

(2)

Based on the closing price of $5.55 of the Company’s common shares on January 27, 2023 (the last trading day prior to the end of the fiscal year) as reported by The NASDAQ Stock Market.

(3)

Includes 289,635 TRSUs granted under the Incentive Plan.

(4)

There are no unearned PRSUs for this award.

(5)

Includes the number of PRSUs subject to incomplete performance years. The shares are reflected at the target payout level.

(6)

Includes the number of PRSUs subject to incomplete performance years. The shares are reflected at the threshold payout level, or 25% of target.

(7)

Includes 11,234 TRSUs and 8,200 PRSUs granted under the Incentive Plan. The first, second, and third installments of the TRSUs vested on April 7, 2021, April 7, 2022, and April 7, 2023, respectively. The PRSUs vested on April 7, 2023.

(8)

Includes 10,580 TRSUs granted under the Incentive Plan. The first and second installments of the TRSUs vested on April 2, 2022 and April 2, 2023, respectively.

(9)

Includes 21,419 TRSUs granted under the Incentive Plan. The first installment of the TRSUs vested on April 1, 2023.

(10)

Includes 53,305 TRSUs granted under the Incentive Plan.

(11)

Includes 10,213 TRSUs and 7,454 PRSUs granted under the Incentive Plan. The first, second, and third installments of the TRSUs vested on April 7, 2021, April 7, 2022, and April 7, 2023, respectively. The PRSUs vested on April 7, 2023.

(12)

Includes 9,766 TRSUs granted under the Incentive Plan. The first and second installments of the TRSUs vested on April 2, 2022 and April 2, 2023, respectively.

(13)

Includes 20,750 TRSUs granted under the Incentive Plan. The first installment of the TRSUs vested on April 1, 2023.

 

38        2023 Proxy Statement   VERA BRADLEY, INC.  


Table of Contents

Executive Compensation

 

 

 

(14)

Includes 52,424 TRSUs and 41,748 PRSUs granted under the Incentive Plan. Due to Mr. Wallstrom’s retirement as defined in his Third Amended and Restated Employment Agreement, the TRSUs were prorated based on the number of full fiscal months service was provided during the restricted period and the PRSUs were earned to the extent of actual performance in the performance year. The TRSUs and PRSUs vested on April 7, 2023.

(15)

Includes 39,164 TRSUs granted under the Incentive Plan. Due to Mr. Wallstrom’s retirement as defined in his Third Amended and Restated Employment Agreement, the TRSUs were prorated based on the number of full fiscal months service was provided during the restricted period. The TRSUs vested on April 7, 2023.

(16)

Includes 42,949 TRSUs granted under the Incentive Plan. Due to Mr. Wallstrom’s retirement as defined in his Third Amended and Restated Employment Agreement, the TRSUs were prorated based on the number of full fiscal months service was provided during the restricted period. The TRSUs vested on April 7, 2023.

(17)

Mr. Hull and Mr. Korney left the Company in January 2023 and August 2022, respectively; therefore, all unvested TRSUs and PRSUs were forfeited.

Option Exercises and Shares Vested

We have no outstanding stock options.

The following table shows the number of restricted stock units which vested for each NEO in fiscal 2023:

 

   
    NUMBER OF SHARES
OR UNITS
ACQUIRED ON
VESTING
(#)
   

NET VALUE REALIZED ON

VESTING(1)

 

Jacqueline Ardrey

        $  

John Enwright

    29,468       213,842  

Mark C. Dely

    26,743       194,050  

Robert Wallstrom

    141,003       1,020,678  

Daren Hull

    46,001       334,620  

Kevin Korney

    26,337       191,017  
(1)

Computed by multiplying the number of shares vested by the Company’s closing stock price the day prior to the scheduled vesting date(s).

Pension Benefits

Aside from our 401(k) plan, we do not maintain any pension plan or arrangement under which our NEOs are entitled to participate or receive post-retirement benefits.

Nonqualified Deferred Compensation

We do not maintain any nonqualified deferred compensation plan or arrangements under which our NEOs are entitled to participate.

 

  VERA BRADLEY, INC.   2023 Proxy Statement         39


Table of Contents

Executive Compensation

 

 

 

Potential Payments Upon Termination or Change in Control

Severance Benefits. With the exception of Mr. Wallstrom, Mr. Hull, and Mr. Korney, the following table shows the value of cash severance benefits that would have been payable to each of our NEOs under arrangements or contracts described below, as well as the value of equity awards that would vest, assuming a termination of employment as of January 28, 2023. For Mr. Wallstrom, Mr. Hull, and Mr. Korney, the table reflects actual severance benefits earned based on separation from the Company. In this table “TRSU” stands for time-based restricted stock units and “PRSU” stands for performance-based restricted stock units.

 

       
    TERMINATION
BY COMPANY
WITHOUT
CAUSE/ BY
EXECUTIVE FOR
GOOD REASON
    TERMINATION
BY COMPANY
FOR CAUSE/ BY
EXECUTIVE
WITHOUT GOOD
REASON
    CHANGE IN
CONTROL
TERMINATION
    TERMINATION
FOLLOWING
DEATH OR
DISABILITY
(12)
 

Jacqueline Ardrey

       

Cash

  $ 4,260,000 (1)          $ 5,960,000 (2)    $ 860,000 (3) 

COBRA(4)

                       

Value of unvested shares that would be accelerated(5)

       

—TRSU

                1,607,474 (6)      1,607,474 (6) 

—PRSU

                1,607,474 (7)      (7) 

Other(11)

    817       817       50,817       817  

John Enwright(16)

       

Cash

    1,133,560 (8)            1,589,000 (9)      330,160 (10) 

COBRA(4)

    20,259             20,259       20,259  

Value of unvested shares that would be accelerated (5)

       

—TRSU

                535,786 (6)      535,786 (6) 

—PRSU

                154,124 (7)      45,510 (7) 

Other(11)

    18,952       18,952       48,952       18,952  

Mark C. Dely(16)

       

Cash

    1,150,923 (8)            1,556,250 (9)      367,173 (10) 

COBRA(4)

    13,904             13,904       13,904  

Value of unvested shares that would be accelerated (5)

       

—TRSU

                521,889 (6)      521,889 (6) 

—PRSU

                145,249 (7)      41,370 (7) 

Other(11)

    10,048       10,048       40,048       10,048  

Robert Wallstrom(13)

       

Cash

    3,887,116