Bed Bath & Beyond (BBBY)

Why is equity compensation an important part of the Board's compensation policies?

        In connection with the compensation review mentioned above, the outside consulting group advised the Board that, generally, our executives receive less total cash compensation than they could earn at other peer companies and have in the past relied heavily on gains from stock options. Other companies use substantial cash bonuses as a major part of executive compensation, while this Company historically has not. Furthermore, in many cases, our executives' interest in their vested options makes up a high proportion of their net worth and, consequently, executives may need diversification in their portfolios. Accordingly, the Board does not believe that it is in the interests of the Company to place restrictions on an executive's ability to realize gains on vested stock options. Moreover, the granting of restricted stock on the terms established by the Compensation Committee results in executives' long-term retention of equity interest in the Company.

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        The Company's recently reviewed and updated executive compensation policies give us flexibility in attracting and retaining executive talent and are designed to provide competitive compensation in the marketplace. The Board believes that the majority of our peer companies do not impose limitations similar to those set forth in the proposal on the sale of shares acquired on exercise of stock options or otherwise. As a result, the Board believes that requiring our executives to hold for a predetermined period of time a certain percentage of the stock acquired through stock option exercise would make it more difficult to attract, recruit, motivate and retain the quality of executive talent the Company needs to maintain its record of successful growth. We believe it is in the best interests of our shareholders for the Board to retain the flexibility to compensate executive management with the terms that we believe to be most appropriate for attracting and retaining top caliber talent.