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Finish Line DEF 14A 2009 SCHEDULE 14A
INFORMATION>
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment
No. _______)
Filed by the
Registrant x
Filed by a Party
other than the Registrant o
Check the
appropriate box:
(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):
Dear
Shareholder:
You are
cordially invited to attend the 2009 Annual Meeting of Shareholders of The
Finish Line, Inc., on Thursday, July 23, 2009, at 9:00 a.m. EDT, to be held at
The Finish Line, Inc. Corporate Office, 3308 N. Mitthoeffer Road, Indianapolis,
Indiana 46235. Members of your Board of Directors and management again look
forward to greeting those shareholders who are able to attend.
The
accompanying Notice and Proxy Statement describe the matters to be acted upon at
the meeting.
It is
important that your shares be represented and voted at the meeting. Whether or
not you plan to attend, please sign, date and mail the enclosed proxy card at
your earliest convenience. If you attend the meeting, you may withdraw your
proxy and vote in person.
Your
interest and participation in the affairs of the Company are greatly
appreciated.
The
Finish Line, Inc.
3308
N. Mitthoeffer Road
Indianapolis,
Indiana 46235
Notice
of Annual Meeting of Shareholders
to
be held July 23, 2009
TO THE
SHAREHOLDERS OF THE FINISH LINE, INC.:
Notice is
hereby given that the 2009 Annual Meeting of Shareholders of The Finish Line,
Inc. (the “Company”) to be held at the Company’s Corporate Office at 3308 N.
Mitthoeffer Road, Indianapolis, Indiana 46235 on Thursday, July 23, 2009, at
9:00 a.m. EDT, will be conducted for the following purposes:
Only
shareholders of record at the close of business on May 22, 2009, will be
entitled to notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof.
Indianapolis,
Indiana
June 23,
2009
Your
vote is important. Accordingly, you are asked to complete, sign, date and return
the accompanying Proxy Card in the envelope provided, which requires no postage
if mailed in the United States. The
Finish Line, Inc.
3308
N. Mitthoeffer Road
Indianapolis,
Indiana 46235
________________________
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF SHAREHOLDERS
JULY
23, 2009
________________________
GENERAL
INFORMATION
This
Proxy Statement and the accompanying Notice of Annual Meeting and Proxy Card are
being mailed on or about June 23, 2009, in connection with the solicitation of
proxies by the Board of Directors (the “Board”) of The Finish Line, Inc.
(“Finish Line” or the “Company”) for use at the 2009 Annual Meeting of
Shareholders of the Company (the “Annual Meeting”) to be held at the Company’s
Corporate Office at 3308 N. Mitthoeffer Road, Indianapolis, Indiana 46235, on
Thursday, July 23, 2009, at 9:00 a.m. local time, and any adjournment or
postponement thereof.
At the
Annual Meeting, the Company’s shareholders will be asked to:
(1) elect
two Class II directors to serve on the Board until the 2012 Annual Meeting of
Shareholders;
(2) to
adopt an amendment to the Company’s Articles of Incorporation that will convert
all outstanding high voting Class B Common Shares into Class A Common Shares as
of the day after the Company’s shareholder meeting to be held in 2012 (in lieu
of the current provision which converts those shares only once they constitute
less than 5% of the total Class A Common Shares and Class B Common Shares
outstanding as of a record date for an annual meeting), and will also limit the
aggregate voting power of the Class B Common Shares to 41% should the total
voting power of the Class B Common Shares ever exceed that amount in the
future;
(3) to
adopt an amendment to the Company’s Articles of Incorporation that will
automatically convert all Class B Common Shares that may be issued to Company
employees or directors in the future into Class A Common Shares upon their death
or termination of employment or service;
(4) to
approve and ratify an amendment to the Company’s 2002 Stock Incentive Plan (the
“2002 Plan”) to add the Company’s Class B Common Shares as a class of shares
that may be awarded under the 2002 Plan in order to permit, if authorized by the
Company’s Board of Directors in the future, the exchange of Class B Common
Shares for Class A Common Shares that remain unvested under the 2002 Plan, and,
to the extent the 2009 Incentive Plan is not approved (Item 5), to grant awards
of Class B Common Shares;
(5) to
approve and adopt the Company’s 2009 Incentive Plan;
(6) to
ratify the selection of Ernst & Young LLP as the Company’s independent
registered public accounting firm for the Company’s fiscal year ending February
27, 2010; and
(7) vote
on such other matters as may properly come before the Annual Meeting or any
adjournments or postponements thereof.
This
Proxy Statement and related proxy materials are being first mailed to
shareholders on or about June 23, 2009. With this proxy statement, we are
sending you our 2009 Annual Report, which includes our financial statements for
the fiscal year ended February 28, 2009. If you did not receive our Annual
Report, we will send it to you without charge. The Annual Report includes a list
of important documents that we have filed as exhibits with the Securities and
Exchange Commission (“SEC”), but does not include copies of the exhibits. If you
wish to receive
copies of the exhibits, we will send them to you. Please send your written
request by facsimile to our Corporate Secretary at (317) 613-6523 or by mail to:
The
Finish Line, Inc.
3308 N.
Mitthoeffer Road
Indianapolis,
Indiana 46235
Attn:
Corporate Secretary
In
addition, you may obtain copies of our public filings, including this proxy
statement, our 2009 Annual Report on Form 10-K, and the form of proxy relating
to the annual meeting, without charge from our web site at http://www.finishline.com,
click on the “Our Company” link and then on the “Investor Relations” link, or
from the SEC’s web site at http://www.sec.gov,
the Company’s ticker symbol is FINL. You also may request a copy of these
materials by sending an email to IR@finishline.com. For meeting directions
please call (317) 899-1022, extension 4.
Throughout
this Proxy Statement, fiscal 2007, fiscal 2008, and fiscal 2009 represent the
fiscal years ended March 3, 2007, and March 1, 2008, and February 28, 2009
respectively.
Persons
Making the Solicitation
The Company is making this
solicitation and will bear the expenses of preparing, printing and mailing proxy
materials to the Company’s shareholders. In addition to the mailing of this
proxy statement, proxies may be solicited personally or by telephone or
fax by officers or employees of the Company, none of whom will receive
additional compensation there from. The Company will also reimburse brokerage
houses and other nominees for their reasonable expenses in forwarding proxy
materials to beneficial owners of the Class A Common Shares.
Voting
at the Meeting
Shareholders
of record of the Company’s Class A Common Shares and Class B Common Shares at
the close of business on May 22, 2009 (the “Record Date”), are entitled to
notice of and to vote at the Annual Meeting and any adjournment or postponement
thereof. On that date, 51,373,497 Class A Common Shares and 3,545,702 Class B
Common Shares were outstanding and entitled to vote. Each outstanding Class A
Common Share entitles the holder thereof to one vote and each outstanding Class
B Common Share entitles the holder thereof to ten votes. The holders of a
majority of all the votes entitled to be cast at the Annual Meeting must be
represented at the meeting, either in person or by proxy, to constitute a
quorum. There must be a quorum of all the Company’s common shares for
the Annual Meeting to be held. Additionally, with respect to the
action to be taken on Proposals II and III (the approval of which also requires
the approval of the holders of the Class B Common Shares voting as a separate
class), the holders of a majority of the Class B Common Shares must be
represented at the meeting, either in person or by proxy, to constitute a quorum
of the holders of the Class B Common Shares.
In the
election of directors, the two nominees receiving the highest number of
affirmative votes of the shares present or represented and entitled to be voted
for such nominee shall be elected. Votes withheld from any director are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business. Shareholders do not have the right to cumulate their
votes in the election of directors.
For the
proposals regarding the amendments to the Company’s Articles of Incorporation to
be approved, more votes must be cast by all holders of common shares, voting
together as a single class, in favor of the proposals than are cast against
them, and more votes must be cast by the holders of the Class B Common Shares,
voting as a separate class, in favor of the proposals than are cast against
them. For the selection of Ernst & Young LLP as the Company’s
independent registered public accounting firm for the Company’s fiscal year
ending February 27, 2010 to be ratified, more votes must be cast by all holders
of common shares, voting together as a single class, in favor of the proposal
than are cast against it. Abstentions and broker non-votes will have no effect
on the vote for these proposals.
The
affirmative vote of the holders of a majority of voting power of the Company’s
Class A Common Shares and Class B Common Shares entitled to vote at the Annual
Meeting is required to approve the amendment to the 2
2002 Plan
and the adoption of the Company’s 2009 Incentive Plan. With respect to these
proposals, abstentions will be treated as “No” votes, but broker non-votes will
have no effect on the vote.
Abstentions
will be counted for purposes of determining whether a quorum is present at the
Annual Meeting for the transaction of business. The Company intends to count
broker non-votes as present or represented for purposes of determining the
presence or absence of a quorum for the transaction of business.
Revocability
of Proxy
A proxy
may be revoked by a shareholder prior to voting at the Annual Meeting by written
notice to the Secretary of the Company, by submission of another proxy bearing a
later date or by voting in person at the Annual Meeting. Such notice or later
proxy will not affect a vote on any matter taken prior to the receipt thereof by
the Company. The mere presence at the Annual Meeting of a shareholder who has
appointed a proxy will not revoke the prior appointment.
If not
revoked, the proxy will be voted at the Annual Meeting in accordance with the
instructions indicated on the Proxy Card by the shareholder or, if no
instructions are indicated, will be voted “FOR” the election of the two Class II
director nominees indicated herein to serve on the Board until the 2012 Annual
Meeting of Shareholders, “FOR” the approval of the proposed amendments to the
Company’s articles of incorporation, “FOR” the approval and ratification of the
amendment to the Company’s 2002 Plan, “FOR” the adoption and approval of the
Company’s 2009 Incentive Plan, “FOR” the ratification of the selection of Ernst
& Young LLP as the Company’s independent registered public accounting firm,
and, as to any other matter that may be properly brought before the Annual
Meeting, in accordance with the judgment of the proxy.
ELECTION
OF CLASS II DIRECTORS
(Item
1 on your Proxy)
The
Company’s Bylaws provide for dividing the Board into three classes, as nearly
equal in number as possible, with the term of office of one class expiring each
year, and with each director to hold office until his or her successor is duly
elected and qualified, except in the event of his or her death, resignation or
removal. The term of the Class I Directors, consisting of Alan H. Cohen and
Delores A. Kunda, will expire at the 2011 Annual Meeting of Shareholders. The
term of the Class II directors, consisting of Larry J. Sablosky, Bill Kirkendall
and William P. Carmichael, will expire at the 2009 Annual Meeting of
Shareholders, and the term of the Class III directors, consisting of David I.
Klapper, Stephen Goldsmith and Catherine A. Langham, will expire at the 2010
Annual Meeting of Shareholders.
The
persons named in the accompanying Proxy Card as proxies for this meeting will
vote in favor of the two nominees as Class II directors of the Company unless
otherwise indicated by the shareholder on the Proxy Card. Mr. Larry J.
Sablosky, a Class II director, has determined to not stand for reelection at the
upcoming Annual Meeting of Shareholders. The remaining Class II directors
elected at the 2009 Annual Meeting will serve for a three-year term expiring at
the 2012 Annual Meeting of Shareholders, and until their successors are duly
elected and qualified, except in the event of their respective death,
resignation, or removal. Management has no reason to believe that the nominees
will be unable or unwilling to serve if elected. If any nominee should become
unavailable prior to the election, the accompanying Proxy Card will be voted for
the election in his or her stead of such other person as the Board of Directors
may recommend.
Nominees
The
nominees for election as Class II directors of the Company are Bill Kirkendall
and William P. Carmichael. Each of such persons currently serves as a director
of the Company. The nominees for election as Class II directors of the Company
were selected by the Board upon the recommendation of the independent directors
of the Board, meeting in executive session. See “Management - Executive Officers
and Directors” for additional information concerning the nominees, and “Board of
Directors, Committees and Meetings - Nomination Process” for additional
information regarding the Board’s criteria for selecting director
nominees. 3
Recommendation
of the Board of Directors
The Board
unanimously recommends that shareholders vote “FOR” the Class II director
nominees set forth above. Proxies solicited by the Board will be so voted unless
shareholders specify otherwise on their Proxy Cards (Item 1 on your
Proxy).
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of May 22, 2009, information relating to the
beneficial ownership of the Company’s common shares by each person known to the
Company to be the beneficial owner of more than five percent of the outstanding
Class A Common Shares or Class B Common Shares, by each director or nominee for
director, by each of the executive officers named below, and by all directors
and executive officers as a group.
4
MANAGEMENT
Executive
Officers and Directors
The
executive officers, directors and nominees for director of the Company (other
than Larry J. Sablosky, who has determined not to stand for reelection at the
Annual Meeting) are as follows:
5
6
7
Officers
are appointed by and serve at the discretion of the Board. Unless otherwise
stated, there are no family relationships among any directors or executive
officers of the Company.
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires the Company’s officers and directors and persons
who beneficially own more than 10 percent of the Company’s Class A Common Shares
to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with
the SEC. Officers, directors and 10 percent shareholders are required by the SEC
to furnish the Company with copies of all Forms 3, 4 and 5 that they
file.
Based
solely on the Company’s review of the copies of the forms it has received and
representations from certain reporting persons that they were not required to
file a Form 5 for certain fiscal years, the Company believes that all
of its officers, directors and greater than 10 percent shareholders have
complied with all of the filing requirements applicable to them with respect to
transactions during the fiscal year ended February 28, 2009.
Code
of Ethics
The
Company’s Code of Ethics, applicable to its directors and officers, is available
on the Company’s website at www.finishline.com. The Company intends to disclose
waivers under this Code of Ethics, or amendments thereto, on the Company’s
website at www.finishline.com or in a report on Form 8-K as
required.
BOARD
OF DIRECTORS, COMMITTEES AND MEETINGS
Independence
of Directors
The Board
has determined that the majority of its members are “independent directors”
under the criteria for independence set forth in the listing standards of the
Nasdaq Stock Market (“Nasdaq”). The independent directors of the Board include
Dolores A. Kunda, Stephen Goldsmith, Bill Kirkendall, William P. Carmichael and
Catherine A. Langham. In addition, all members of the Audit Committee
and the Compensation and Stock Option Committee of the Board are independent
directors and all members of the Audit Committee satisfy the independence
requirements set forth in Securities and Exchange Commission ("SEC")
rules.
Meetings
and Committees of the Board of Directors
The Board
held 9 meetings in fiscal 2009 and all directors attended at least 75% of
the meetings of the Board and the committees of the Board of which they were
members. Members of the Board are expected to attend the 2009 Annual Meeting.
Except for Dolores Kunda, who joined the Board in October 2008, all Board
members attended the 2008 Annual Meeting of Shareholders.
The Board
of Directors has 3 committees. The Audit Committee is comprised of
Ms. Langham and Messrs. Goldsmith, Kirkendall and Carmichael, Chair. The
Compensation and Stock Option Committee is comprised of Ms. Langham,
Mr. Kirkendall and Ms. Kunda. The Finance Committee is comprised of
Messrs. Klapper and Carmichael. The Company does not have a nominating committee
nor any committee performing such functions. The Board has determined that,
because a majority of its members are independent directors, it is appropriate
for the independent directors to fulfill the role of nominating potential
directors to the Board. Nominees are recommended to the Board by at least a
majority of independent directors, meeting in executive session.
8
contemplated
related party transactions. The duties of the Audit Committee are set forth in
its Charter which is available on the Company’s website at www.finishline.com,
specifically at the ‘Our Company’ tab, then through the ‘Investor Relations’
tab. The Audit Committee met 7 times during fiscal 2009.
Meetings
of the Independent Directors. The
Company’s independent directors meet regularly in executive sessions outside the
presence of Company management. An executive session is generally held in
conjunction with each regularly scheduled meeting of the Board. The Company has
not formally appointed a single director to preside at executive sessions of the
independent directors. Rather, the responsibility to preside at each such
meeting of independent directors is rotated among the independent directors,
depending on the subject matter to be discussed at such
meeting.
Nomination
Process
In determining whether to
nominate a candidate for election to the Company’s Board of Directors, the Board
considers various criteria, such as the recommendations of the independent
directors, the candidate’s relevant business skills and experience,
commitment to enhancing shareholder value, and professional ethics and
values, bearing in mind the requirements of the Board at that point in time. The
Board believes it is appropriate that a majority of its members be independent
directors and that at least one member, who also serves on the Audit Committee,
be an “audit committee financial expert” as defined by SEC rules. Candidates are
identified through a variety of sources, including other members of the Board,
senior Company executives, individuals personally known by the members of the
Board, and research. The Company will consider shareholder recommendations of
candidates when the recommendations are properly submitted. To be considered,
any such shareholder recommendation must be submitted as set forth under the
section of this Proxy Statement entitled “Proposals of Shareholders,” and must
comply with the notice, information and consent provisions set forth in the
Company’s Bylaws. Shareholder nominees will be evaluated under the criteria set
forth above. To recommend a prospective nominee for the Board’s consideration, a
shareholder may submit a candidate’s name and qualifications to The Finish Line,
Inc., Board of Directors (or the applicable Board member) at the Company’s
principal offices (3308 N. Mitthoeffer Road, Indianapolis, Indiana 46235) in
care of the Secretary. The Board of Directors of the Company has adopted a
resolution addressing the nomination process described above.
Communications
with the Board of Directors
Shareholders
may communicate with the Board of Directors, its committees, the independent
directors as a group, or one or more members of the Board or its committees, by
sending a letter to The Finish Line, Inc., Board of Directors (or the applicable
member of the Board of Directors), at the Company’s principal offices (3308 N.
Mitthoeffer Road, Indianapolis, Indiana 46235) in care of the Secretary. If the
Secretary deems appropriate, the Secretary will forward such correspondence to
the Chairman of the Board or to the applicable Board member.
The 9
process
by which the Secretary reviews and forwards correspondence deemed appropriate
has been approved by a majority of the Board’s independent
directors.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The
following is an overview and analysis of the Company’s executive compensation
structure and pertains to those named executive officers listed in the Summary
Compensation Table on page 23.
Compensation
Committee Objectives
The
Compensation and Stock Option Committee (the “Committee” or “Compensation
Committee”) remains focused on establishing a balanced compensation structure
for the Company’s executive officers; a structure that motivates the Company’s
executive leadership to attain specified annual performance goals with a
particular emphasis on longer-term strategy that will ensure sustainable
improvement of shareholder value. The Committee strives to ensure that
compensation levels remain competitive to attract and retain key individuals and
maintains a commitment to ensure that executive officer compensation is
perceived as fundamentally fair to the Company’s shareholders.
Executive
Officer Compensation Overview
The basic
components that comprise an executive officer’s compensation structure remain a
fixed base salary and a sufficiently balanced at-risk component that consists of
annual performance based incentive compensation, and long-term equity and
non-equity incentive compensation. The Committee met several times at the
beginning of the fiscal year to permit adequate time for evaluation and
confirmation of executive officer compensation. At these meetings the Committee
first evaluated the achievement of performance goals for each executive officer
for fiscal year 2008. Based on these evaluations the Committee then considered
and set the performance criteria and metrics that comprised the compensation
structure of each executive officer for fiscal year 2009 (also “fiscal 2009” or
“FY09”).
In
setting FY09 executive compensation the Committee also considered special
circumstances that developed during the previous fiscal year, such as the
protracted litigation that resulted from the failed merger between the Company and Genesco
Inc., and the resolution of the litigation via a settlement between the parties
in early March 2008. The Committee recognized the exceptional services of
several key executives during this challenging period, including those of
Mr. Gary Cohen, Mr. Steven Schneider and Mr. Kevin Wampler. Each
of these named executive officers was therefore granted an additional award
that, depending on the individual executive and his role, consisted of both
equity and monetary value. These additional awards are set forth in the Summary
Compensation Table on page 23, and further described in footnotes 7, 9, 10,
11, 13, 14 and 15 thereto.
When
setting executive officer compensation for fiscal 2009 the Committee considered
recommendations from Mr. Alan Cohen, the Company’s current Chairman of the
Board and the Chief Executive Officer for most of fiscal 2009. The Committee
also considered recommendations from other members of Company management. The
executive officers for whom compensation recommendations are discussed are not
present during those discussions. When setting the compensation structure for
the Chief Executive Officer no member of Company management is present. The
Compensation Committee retains the discretion to accept, adjust or reject any
recommendations concerning executive officer compensation.
Compensation
Consultant and Benchmarking
The
Committee continues to evaluate the elements that make up an executive officer’s
compensation in the context of Company performance and the competitive retail
market within which the Company operates. To assist the Committee in setting
executive officer base salary amounts, bonus incentive amounts, and equity based
awards for fiscal 2009 the Committee retained the consulting services of Mercer
Human Resource Consulting (“Mercer”). 10
As part
of its analysis in setting executive officer compensation for fiscal 2009, the
Committee considered the compensation structures of executives in comparable
positions at competitive companies. In setting this peer group of companies the
Committee, in consultation with Mercer, considered criteria that included market
capitalization, revenue, industry (specialty-retail), competitive market data
provided by Mercer, and merchandise type. For fiscal 2009 this peer group
consisted of:
The
Committee strives to set the basic components of executive officer compensation
near the median of the peer group (“FY09 Peer Group”). However, the compensation
structure for each named executive officer will often vary from this average
because of varied performance factors and/or performance metrics the Committee
incorporates into each individual executive officer’s compensation
structure.
Base
Compensation
A
fundamental component of overall executive compensation remains an executive
officer’s base salary. Target performance bonus amounts and actual performance
bonus payout amounts remain directly based on a percentage of an executive
officer’s base salary. When setting an executive officer’s base salary for
fiscal 2009 the Committee considered competitive base salary amounts for similar
executives in the FY09 Peer Group, the executive officer’s position, tenure, the
responsibilities of the position, and the respective level of accountability.
The Committee continues to consider internal pay equity a significant criterion
when setting final base salary amounts.
Mr. Alan
Cohen retired from his position as Chief Executive Officer effective December 1,
2008, and retained his position as the Chairman of Board. On that date
Mr. Glenn Lyon, the Company’s then President, assumed the position of Chief
Executive Officer, and Mr. Steven Schneider, the Company’s then Chief
Operating Officer assumed the position of President and Chief Operating Officer.
As a result of their new positions the base salary amounts for both
Mr. Lyon and Mr. Schneider were adjusted at that time to reflect their
new responsibilities. These adjustments were based on the same criteria as
specified above. The base salary amounts for each named executive officer
for fiscal 2009, including the adjusted base salaries for Mr. Lyon and
Mr. Schneider, are reflected in the Summary Compensation Table on page 23,
and in footnotes 2 and 3 thereto.
Performance
Based Incentive Compensation
For
fiscal 2009 the Committee designated nine of the Company’s executive officers
with a title of ‘executive vice president’ or higher, including each of the
named executive officers, to participate in the fiscal 2009
executive 11
officer
bonus program (“EOBP” or “EOBP09”). The Committee concluded that
these individuals with their respective responsibilities were in the most
opportune positions to drive overall company financial performance for fiscal
2009. Each such executive officer was established with a specified target bonus
amount expressed as a percentage of such executive officer’s base salary. The
Committee set the target bonus amounts by considering each executive officer’s
responsibilities against how those responsibilities are expected to affect
overall financial performance.
The
EOBP09 is established and administered under the authority of the Company’s
shareholder approved 2002 Stock Incentive Plan (as amended and restated). For
fiscal 2009 the EOBP consisted of two primary categories;
Both
categories remain based on financial performance. The first category is
comprised of performance criteria as individually specified in the Company’s
2002 Stock Incentive Plan (“Company Financial Performance Category”), and the
second executive team performance category (“Executive Team Performance
Category”) is based on performance criteria that concerns the collective
performance of the executive management team for which the Committee retained
final discretion on achievement. Because both categories were comprised of
quantifiable performance criteria it was the intent of the Committee that both
categories qualify as deductible performance based compensation for purposes of
Section 162(m) of the Internal Revenue Code (the “Code”).
For the
Chief Executive Officer the Company Financial
Performance Category of the EOBP09 bonus amount was set at 85% of base salary,
and the Executive Team Performance Category was set at 20% of base salary
equating to a total maximum bonus potential under the EOBP09 of 105% of base
salary.
For the
President the Company Financial Performance Category of the EOBP09 bonus amount
was set at 75% of base salary as a target, and the Executive Team Performance
Category was set at 15% of base salary equating to a total maximum bonus
potential under the EOBP09 of 90% of base salary.
For the
Chief Operating Officer the Company Financial
Performance Category of the EOBP09 bonus amount was set at 65% of base salary,
and the Executive Team Performance Category was set at 15% of base salary
equating to a total maximum bonus potential under the EOBP09 of 80% of base
salary.
For the
General Counsel and Chief Financial Officer the Company Financial
Performance Category of the EOBP09 bonus amount was set at 60% of base salary,
and the Executive Team Performance Category was set at 10% of base salary
equating to a total maximum bonus potential under the EOBP09 of 70% of base
salary.
Code
Section 162(m) generally disallows a federal tax deduction to any publicly
traded corporation for compensation paid in excess of $1,000,000, in a taxable
year. The Committee endeavors to structure EOBP amounts that may be paid to
qualify as performance based compensation provided that preserving the tax
deduction does not inhibit the Committee’s ability to achieve executive officer
compensation objectives.
Qualifying
Company Financial Performance Criteria
12
Qualifying
Company Financial Performance Criteria Measurement
Each
Company financial performance criteria was measured within a percentage range
against fiscal 2008 financial performance. The performance criterion of
improving pre-tax operating income was generally determined by comparing the
increase in the Company’s consolidated operating earnings for fiscal 2009 to
fiscal 2008, and is subject to the following adjustments: asset impairments,
material gains and/or losses from insurance costs, stock compensation expenses,
all bonus payment amounts to senior management, and material legal costs
incurred by the Company during the fiscal year.
For
fiscal 2009 the percentage metric for improving pre-tax operating income ranged
from 11% to 25% over fiscal 2008, for improving comparable
store sales revenue the percentage metric ranged from 0.18% up to 1.80% over
fiscal 2008, for improving the Company’s consolidated gross margin the
performance metric was based on a basis point improvement over fiscal 2008 and
ranged from 13 basis points to a 40 basis point improvement, and for reducing
consolidated aged inventory the percentage metric ranged from 1.0% to 2.0% of
total year-end inventory balance. For purposes of calculating the performance
metric for aged inventory the Committee considered aged inventory as existing
Company inventory that is 365 days or older. For the performance criteria of
share price performance the Committee established that the share base price
against which the fiscal 2009 share performance would be measured would be the
average closing price of the Company’s shares for the last 20 days of fiscal
2008, which was $2.64 (“Comparator Price”). Improvement in share price
performance for fiscal 2009 would be measured by comparing the average of the
closing price of the Company’s shares for the last 20 business days of fiscal
2009 to the Comparator Price. The percentage metric for share price performance
ranged from 89.0% to 146.0%.
The
performance criterion of reducing the selling, general and administrative
expense of the Company was measured by comparing an upward monetary deviation
(measured as a percentage) from a predetermined budget of the Company’s selling,
general and administrative expense (“SG&A”) for fiscal 2009. For purposes of
bonus criteria measurement the SG&A budget included occupancy costs, but
excluded asset impairments, material gains and/or losses from insurance costs,
stock compensation expenses, all bonus payment amounts to senior management, and
material legal costs incurred by the Company during the fiscal year. The
percentage metric for reducing the selling, general and administrative expense
of the Company ranged from .04% to .40%.
Qualifying
Financial Performance Criteria Achievement and Allocation for Each Named
Executive Officer
Performance
criteria allocation to an EOBP09 participant remains based on such participant’s
accountability, influence on Company operations, tenure with the Company, and
the competitive challenges of a participant’s position within the Company and
within the specialty-retail industry at large. The Committee strives to allocate
the criteria in such a way that the challenge of achieving the performance goals
is relatively consistent from year to year. As indicated above, the program’s
target award opportunities are set as a percentage of a participant’s base
salary. The percentage allocations for each named executive officer are
indicated below.
For
fiscal 2009 the performance criteria of improving pre-tax operating income,
improving consolidated gross margin, reducing aged inventory, and reducing the
Company’s SG&A were each achieved at metric thresholds resulting in the full
achievement of each such criterion. The performance criteria of improving
comparable store sales revenue and share price performance were not achieved at
their respective target metrics, and therefore were not included in the
calculation of final earned bonus amounts under the EOBP09.
Individual
Business Unit Performance Criteria
Individual
business unit performance objectives for the named executive officers, other
than the Chief Executive Officer, varied depending on functional role,
responsibility, and alignment with strategic Company objectives. Each named
executive officer’s individual business unit performance objectives were
established by the executive officer then reviewed and approved by the Committee
at the beginning of the fiscal year. An individual business unit performance
category was excluded from the Chief Executive Officer’s EOBP09 criteria because
of this position’s overall responsibility for the financial performance of the
Company.
As
President through November 30, 2008, Mr. Glenn Lyon’s individual business
unit performance objectives for FY09 were comprised of: measured reduction in
year-end differential between general ledger inventory and individual business
unit inventory as compared to fiscal year 2008, and measured improvement in
gross-margin- 13
return-on-investment
for athletic shoes as compared to fiscal 2008. Individual business unit
performance objectives comprised 10% of Mr. Lyon’s qualifying financial
performance criteria allocation; he achieved 5.8% of this criterion in his
capacity as President. Once Mr. Lyon assumed the role of Chief Executive
Officer on December 1, 2008, he no longer had an individual business unit
performance component as part of his EOBP09 criteria.
Mr. Steven
Schneider’s individual business unit performance objectives for FY09 were
comprised of: achieving minimum store labor benchmarks, achieving minimum
consolidated store occupancy costs as compared to fiscal 2008, measured
improvement in lease audit savings as compared to fiscal 2008, achieving minimum
departmental savings in the Company’s purchasing and
transportation-and-distribution departments, and improving leadership
development of Company management. Individual business unit performance
objectives comprised 10% of Mr. Schneider’s qualifying financial
performance category; he retained this percentage allocation under the EOBP09
when he assumed the role of both President and Chief Operating Officer on
December 1, 2008. Mr. Schneider achieved 100% of this
criterion.
Mr. Gary
Cohen’s individual business unit performance objectives for FY09 were comprised
of: the development and effective management of a cost effective reorganization
of the Company’s human resource department, implementation of several cost
effective human resource management software programs, implementation of an
electronic Board communication process, measurable control of contract-review
efficiency, revision and update of the Company’s insider trading policy,
measured control of legal and human resource departmental budgets, and the
timely resolution of lease obligations and general liability claims. Individual
business unit performance objectives comprised 25% of Mr. Gary Cohen’s
qualifying financial performance category; he achieved 100% of this
criterion.
Mr. Kevin
Wampler’s individual business unit performance objectives were comprised of:
implementation of an efficient communication process with executive management
on periodic financial results, achievement of purchasing department cost
savings, measured control of departmental budgets; and measured control of
direct Company expenses. Individual business unit performance objectives
comprised 25% of Mr. Wampler’s qualifying financial performance category;
Mr. Wampler voluntarily left the Company on November 25, 2008 thereby
forfeiting all components and payments under the EOBP09.
Qualifying
financial performance criteria allocation and the resulting amounts earned by
each named executive officer under this category for fiscal 2009 are as
follows:
Mr. Alan
Cohen achieved 75% of the qualifying company financial performance portion under
the EOBP09.
Mr. Cohen’s
base salary for fiscal 09 was set at $614,000. He retired on November 30, 2008
earning $460,495 of his annual base salary. Upon his retirement from the
position of Chief Executive Officer on November 30, 2008, Mr. Cohen
received a retirement severance in the amount of $100,000. This retirement
severance amount was added to Mr. Cohen’s then earned base salary amount
totaling $560,495. For purposes of calculating the percentage of qualifying
company financial performance criteria allocation to Mr. Cohen, the amount
of $560,495 was used as his base salary. The total bonus amount
Mr. Cohen is eligible for under the qualifying financial performance
category of the EOBP09 is $357,319. 14
Mr.
Lyon’s base salary as President was set at $485,000, and as Chief Executive
Officer at $620,000. As President thru 11-30-08 Mr. Lyon earned $363,750 in base
salary, and as Chief Executive Officer he earned $155,000 in base salary. Mr.
Lyon’s earned base salary amounts were used for the calculation of bonus amounts
earned under the EOBP09. As President Mr. Lyon achieved 76% of the qualifying
company financial performance portion under the EOBP09 equating to an earned
bonus amount of $206,792. As Chief Executive Officer Mr. Lyon achieved 75% under
this criteria allocation equating to an earned bonus amount of $98,813.
The total
bonus amount Mr. Lyon is eligible for under the qualifying financial
performance category of the EOBP09 is $305,605.
Mr.
Schneider’s base salary as Chief Operating Officer was set at $420,000, and as
President and Chief Operating Officer at $500,000. As COO thru 11-30-08 Mr.
Schneider earned $315,000 in base salary, and as President & COO he earned
$125,000. Mr. Schneider’s earned base salary amounts were used for the
calculation of bonus amounts earned under the EOBP09. Mr. Schneider achieved a
total of 80% of the qualified company financial performance portion under the
EOBP09 under both his positions as Chief Operating Officer, and as President and
Chief Operating Officer. As Chief Operating Officer Mr. Schneider earned a bonus
amount of $163,800 under this criteria allocation, and as President and Chief
Operating Officer Mr. Schneider earned a bonus amount of $75,000.
The total
bonus amount Mr. Schneider is eligible for under the qualifying financial
performance category of the EOBP09 is $238,800.
15
Mr. Gary
Cohen achieved 85% of the qualified company financial performance portion under
the EOBP09. Mr. Cohen’s base salary for fiscal 2009 was $318,000. The total
bonus amount Mr. Gary Cohen is eligible for under the qualifying financial
performance category of the EOBP09 is $162,180.
Mr. Wampler
voluntarily left the Company on November 25, 2008 thereby forfeiting all
components and payments under the EOBP09.
Executive
Team Performance Category
For
fiscal 2009 the Committee added an Executive Team Performance Category to the
EOBP09. This category consisted of the following five measurable performance
criteria:
Each of
the named executive officers was eligible for a performance bonus under this
Executive Team Performance Category, quantified as a percentage of each
officer’s base salary, if the Company achieved at least three of the five listed
criteria. For the Chief Executive Officer the Executive Team Performance
Category was set at 20% of base salary. For the President it was set at 15% of
base salary, for the Chief Operating Officer it was set at 15% of base salary
and for the General Counsel and Chief Financial Officer it was set at 10% of
each individual’s respective base salary.
The
Company did not improve its sales per average square foot over that of fiscal
2008, therefore it was concluded that the first criterion of this category was
not achieved. The Company was able to improve the percentage of consolidated
inventory that is 180 days or less in fiscal 2009 by approximately 3.4% over
that of fiscal 16
2008,
resulting in the achievement of the second criterion. The Company was able to
improve its inventory turnover rate for fiscal 2009 over that of fiscal 2008
by approximately 10%, resulting in the achievement of this category. The
Company was also successful in its effort to reduce its total occupancy costs in
fiscal 2009 by approximately 1.4% over that of fiscal 2008, achieving the
fourth criterion. The Company successfully reduced the return-to-vendor footwear
units over those of fiscal 2008 by approximately 50%, achieving the fifth
criterion of this category to the satisfaction of the Committee.
With four
of the five criteria that comprised the Executive Team Performance Category
achieved to the satisfaction of the Committee, the Committee concluded that each
executive that was a participant in this Executive Team Performance Category of
the EOBP09, including each of the named executive officers, was eligible for the
maximum performance bonus amount under this category. Amounts earned by each
named executive officer under this category are as follows:
Alan
H. Cohen, as Chief Executive Office thru 11-30-08
The
Executive Team Performance Category of the EOBP09 was calculated to equal 20% of
Mr. Alan Cohen’s base salary. For purposes of EOBP09 calculations the
amount of $560,495 was used as his base salary. As described above, the Company
achieved at least three of the five performance criteria meeting the threshold
to qualify Mr. Cohen for the maximum performance bonus amount under this
category: $112,100.
Glenn
S. Lyon -
The
Executive Team Performance Category of the EOBP09 was calculated to equal 15% of
Mr. Lyon’s base salary. As described above the Company achieved at least
three of the five performance criteria meeting the threshold to qualify
Mr. Lyon for the maximum performance bonus amount under this category. As
President through November 30, 2008 Mr. Lyon earned $54,563 under this
category, and as Chief Executive Officer from December 1, 2008, Mr. Lyon
earned $31,000 under this category for a total of $85,563.
Steven
J. Schneider -
The
Executive Team Performance Category of the EOBP09 was calculated to equal 15% of
Mr. Schneider’s base salary. As described above, the Company achieved at
least three of the five performance criteria meeting the threshold to qualify
Mr. Schneider for the maximum performance bonus amount under this category.
As Chief Operating Officer through November 30, 2008, Mr. Schneider earned
$47,250 under this category, and as President and Chief Operating Officer from
December 1, 2008, Mr. Schneider earned $18,750 under this category for a
total of $66,000.
Gary
D. Cohen -
The
Executive Team Performance Category of the EOBP09 was calculated to equal 10% of
Mr. Gary Cohen’s base salary. As described above, the Company achieved at
least three of the five performance criteria meeting the threshold to qualify
Mr. Gary Cohen for the maximum performance bonus amount under this
category: $31,800.
Kevin
S. Wampler -
The
Executive Team Performance Category of the EOBP09 was calculated to equal 10% of
Mr. Wampler’s base salary. Mr. Wampler voluntarily left the Company on
November 25, 2008 thereby forfeiting all components and payments under the
EOBP09.
All
EOBP09 compensation is paid after the end of the fiscal year once the Committee
has evaluated the Company’s performance relative to the performance goals
established at the beginning of the fiscal year. EOBP09 award amounts are
reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary
Compensation Table on page 23.
Retention
Bonus Plan
In light
of the litigation that developed from the Company’s contemplated merger with
Genesco Inc. during fiscal 2008, the Committee implemented a Retention Plan
applicable to certain key members of executive 17
management.
The purpose of implementing the Retention Plan was to enhance the ability of the
Company to retain key employees who were considered critical to the successful
resolution of the Genesco related litigation as well as to the continuing
business operations of the Company. Other than Mr. Alan Cohen who served as the
chief executive officer through November 30, 2008, each of the named executive
officers was named as a participant in the Retention Plan. The Retention Plan
consisted of three payments to each Retention Plan participant with each payment
structured to be made at three-month intervals. The dollar amount of the first
payment to each Retention Plan participant was set to be equal to the dollar
amount of the second payment, and the third and final payment was set to be
equal to the sum of the first two payment amounts. To receive the second and
third payments, Retention Plan participant employees needed to remain employed
by the Company at the time of payment of those amounts. The first payment under
the Retention Plan was paid to each plan participant on February 29, 2008. The
remaining payments under the plan were made on May 30, 2008, and August 29,
2008, to those named executive officers and in the amounts as set forth in the
Summary Compensation Table on page 23 and in footnote (5)
thereto.
Long
Term Executive Officer Bonus Program
The
Committee determined to continue its establishment of a new long term incentive
bonus plan for fiscal 2009 based on a three year performance cycle that includes
fiscal 2009, fiscal 2010, and fiscal 2011 (“LTIB09”). Operating
earning threshold amounts under the LTIB09 are subject to the following
adjustments: asset impairments, material gains and/or losses from insurance
costs, stock compensation expenses, bonus payment amounts to senior management,
and material legal costs incurred by the Company during the applicable fiscal
year. Under the LTIB09 each of the named executive officers set forth below is
eligible to earn up to the target amount specified below if, over the three-year
performance cycle, the Company improves adjusted operating earnings by 30% (or
what equates to an average of 10% per year) over adjusted operating earnings for
fiscal 2008 of $41,609,000.
The
purpose of the LTIB09 is to continue to encourage the Company’s executive
management, including each of the named executive officers, to focus on
longer-term Company performance. The Committee believes that the fixed cash
based incentive component of this plan continues to serve as an adequate long
term incentive as compared to a share-based plan where the value of the reward
component remains uncertain and subject to a variety of factors outside of the
control of plan participants.
For Mr.
Alan Cohen the LTIB09 target amount was set at $225,000, for Mr. Glenn Lyon
$150,000, for Mr. Steven Schneider $125,000, for Mr. Gary Cohen $75,000 and for
Mr. Kevin Wampler $75,000 (which was forfeited by Mr. Wampler when he
voluntarily left the Company on November 25, 2008). These threshold payment
amounts have remained consistent for at least the prior three fiscal year long
term incentive bonus plans and the Committee determined that the amounts should
continue to remain consistent for the LTIB09.
To the
extent that operating earnings for the three-year performance cycle are less
than the stated goal but are within 90% of such goal, then the bonus award
amount will be one half of the proposed bonus award. To remain eligible for an
award under this program the executive officer must remain employed throughout
the three-year performance cycle at such officer’s present or superior position.
The LTIB09 is not required to be funded by the Company, and if amounts are
earned under the plan the amounts will be paid out of the general assets of the
Company. The Committee retains sole discretion to administer the LTIB09,
including the ability to reduce award amounts and whether to grant any award
amount under the program. The Committee also retains discretion to confirm
eligibility under the program in the event of an eligible executive’s
termination of employment. In such an event the Committee will consider the
circumstances of the termination including voluntarily separation, separation
due to death or disability, and retirement. Because of his retirement on
November 30, 2008, Mr. Alan Cohen is considered to no longer be eligible
for any bonus payments under any long-term incentive bonus program. The
Committee concluded that Mr. Lyon and Mr. Schneider will remain
eligible under the LTIB09 at the payment amounts set at the inception of the
program provided they remain in their current or superior positions at the time
of payout under the program, and provided the threshold criteria are met.
Potential bonus amounts under the LTIB09 for each named executive officer are
also reflected in the Fiscal Year 2009 Grants of Plan-Based Awards Table on page
25. 18
Restricted
Share and Stock Option Incentive Compensation
In
keeping with the Committee’s objective of providing a sufficiently balanced
executive compensation structure the Committee incorporated an
equity component into each of the named executive officer’s annual compensation
for fiscal 2009. Before confirming the amount of equity based
compensation that would be allocated to each named executive the Committee
considered an equity compensation report prepared by Mercer. The Mercer report
included an assessment of equity distribution among those companies that
comprise the FY09 Peer Group. The Committee then considered recommendations from
the Chief Executive Officer as to which key employees should receive equity
grants and the recommended amounts. Included in the Chief Executive Officer’s
recommendations were the grants of additional special equity awards to
Mr. Steven Schneider, Mr. Gary Cohen and to Mr. Kevin Wampler,
for their extraordinary individual contributions to the resolution of the failed
merger between the Company and Genesco and the resulting litigation that
followed. The Committee concluded that the recommendations of the Chief
Executive Officer were within industry trends and did not exceed comparable
position limits. The Committee also concluded to approve the special equity
awards to the above named executive officers.
Special
equity awards made to Mr. Steven Schneider, Mr. Gary Cohen and to
Mr. Kevin Wampler were comprised of both stock options and restricted
shares. Restricted shares granted as part of a special equity award to these
three named executive officers carried the same three year cliff vesting
schedule as those shares that comprised their annual incentive based
compensation, and the options granted as part of the special equity award had a
shortened vesting schedule from those granted as part of annual incentive based
compensation. Special equity awards, as well as all other equity
awards granted to the named executive officers during fiscal 2009, are reflected
in the Summary Compensation Table on page 23 and the Fiscal Year 2009
Grants of Plan-Based Awards Table on Page 25.
When
determining to grant equity based compensation to the Company’s executives the
Committee considers the recipient’s prior performance, the importance of
retaining the recipient’s services, and the potential for the recipient’s
performance in helping the Company achieve long-term performance objectives.
Company equity awards that are part of annual executive compensation are
determined at the beginning of the fiscal year, although equity awards may be
granted at other times in the event of a new hire or promotion, or other special
circumstances. Equity grants to newly-hired or newly-promoted
employees with titles of vice president or below that fall within guidelines
previously approved by the Committee may be approved by written action of the
Chief Executive Officer acting under a delegation from the Committee. All other
equity grants are approved by resolution of the Committee.
Scheduling
of the Committee’s meetings continues to be made without regard to anticipated
earnings or other potential material announcements by the
Company. Unless otherwise specified by the Committee, the grant date
for annual equity grants to executive officers is the same date of the Committee
meeting at which they are approved. The exercise price of each stock option to
be awarded is calculated to equal the average of the high and low sales price of
the Company’s Class A common stock on Nasdaq on the grant date. Once equity
grant awards are approved by the Committee, grant award letters are prepared and
distributed as soon as administratively possible reflecting the number of stock
options and/or restricted shares granted.
Vesting
Schedule for Option Awards Granted To Named Executive Officers
The grant
date for annual executive compensation options granted to the named executive
officers in fiscal 2009 was March 11, 2008. Other than the special equity awards
referenced above, the tiered vesting schedule for fiscal 2009 executive
compensation options granted to the named executive officers is the same for
each such named executive:
19
The
vesting schedule for options granted as part of the special equity awards
awarded to Mr. Steven Schneider, Mr. Gary Cohen and to Mr. Kevin
Wampler are as follows:
Options
granted to independent directors of the Company as part of their service on the
Board vest one year from their grant date. Prior to the exercise of an option
grant, the recipient has no rights as a shareholder with respect to shares
subject to such option grant, including voting rights and the right to receive
dividends. There were no stock options granted to independent directors in
fiscal 2009
Vesting
Schedule for Stock Awards Granted
Stock
awards granted by the Committee as part of annual executive compensation, as
well as those granted as part of special equity awards to Mr. Gary Cohen, Mr.
Wampler and Mr. Schneider for fiscal 2009 vest under a three year cliff-vesting
schedule where 100% of the restrictions on all such stock grants lapse and the
shares granted vest on March 11, 2011. The grant date for all stock awards
granted to named executive officers in fiscal 2009 was March 11, 2008.
Dividends, if any, are paid on all restricted shares at the same rate as those
received by all other shareholders of the Company. Option and stock
awards made to named executive officers for fiscal 2009 are reflected in the
Fiscal Year 2009 Grants of Plan-Based Awards Table on page 25. Restricted
shares granted to independent directors vest in one year and are reflected in
the Fiscal Year 2009 Director Compensation Table on page 35.
Employment
Agreements and Change in Control
On
December 31, 2008, the Company entered into amended and restated employment
agreements with Mr. Glenn Lyon, Mr. Steven Schneider, and
Mr. Gary Cohen. Mr. Alan Cohen retired from his position as the
Company’s Chief Executive Officer on November 30, 2008. He remains as
the Chairman of the Board and is not a party to any employment agreement with
the Company. Mr. Kevin Wampler voluntarily left the Company on November 25,
2008, and is therefore no longer subject to any employment agreement with the
Company. Each of the remaining named executive officer’s employment agreements
obligates the Company to make certain payments to the executives in the event of
termination or a change in control. The Company maintains these
agreements as a means of remaining competitive, focusing each such executive
officer on shareholder interests when considering strategic alternatives, and
providing income protection in the event of involuntary loss of employment.
Information regarding applicable payments to each named executive officer under
such agreements is provided in the section entitled Potential Payments in the
Event of Termination or a Change in Control beginning on page
30.
Pension
Benefits
The
Company does not currently provide pension benefits to its executives or
employees.
Non-Qualified
Deferred Compensation
The
Finish Line, Inc. Non-Qualified Deferred Compensation Plan (“NQDC Plan”), is a
non-qualified deferred compensation plan offered to certain officers and key
employees, including each of the named executive officers, of the Company who
may elect to defer a specified percentage of their future compensation, and
performance based compensation (up to a maximum of 80%) on a pre-tax basis. The
NQDC Plan is designed to coordinate with The Finish Line Inc. Profit Sharing and
401(k) Plan (the “401(k) Plan”) so that compensation deferrals are made to the
NQDC Plan only to the extent such deferrals cannot be made to the 401(k) Plan
due to limits applicable to qualified plans. Deferred compensation under the
NQDC Plan is credited with earnings, gains and losses, in accordance with
investment options that may be selected by the participant from time to time,
based on investment options available under the 401(k) Plan. In general the
plan’s investment options consist of various mutual and index funds comprised of
stocks, bonds and money market accounts. Amounts deferred under the NQDC Plan by
a participant are credited to a bookkeeping account and are adjusted
periodically for hypothetical investment options based on participant directed
allocation of the account funds from a menu of fund options chosen by the NQDC
Plan administrator. The NQDC Plan directs the Company to make matching
contributions to the NQDC Plan equal to 3% of the amounts 20
deferred
under both the NQDC Plan and the 401(k) Plan less any matching contributions
made on behalf of the participant under the 401(k) Plan. Upon retirement or
other separation from service or, if previously elected, upon a change in
control of the Company a participant is entitled to payment of their vested
account balance in a manner as previously elected by such participant. The NQDC
Plan is intended to comply with the provisions of Section 409A of the Code
applicable to deferred compensation arrangements. Compensation amounts deferred
under the NQDC Plan by named executive officers are listed in the Fiscal Year
2009 Non-Qualified Deferred Compensation Table on page 30, and are included in
the Salary column of the Summary Compensation Table on page 23.
Qualified
Deferred Compensation
The
Finish Line Inc. Profit Sharing and 401(k) Plan is a defined contribution
plan qualified under Sections 401(a) and 401(k) of the Code and is
applicable to all eligible employees of the Company including each of the named
executive officers. In fiscal 2009 eligible employees could elect to contribute
a portion of their salary to the plan up to a maximum amount of $15,500, and the
Company provided matching contributions at 100% for up to 3% of each employee’s
eligible earnings. Matching contributions made by the Company to
named executive officers are reflected in the Summary Compensation Table on page
23.
Perquisites
It
remains the practice of the Company to not provide perquisites to its named
executive officers other than to the Chief Executive Officer. Through the date
of Mr. Alan Cohen’s retirement as Chief Executive Officer the Company paid
Mr. Cohen’s annual country club membership dues and also provided
Mr. Cohen with use of a Company vehicle. For that portion of
Mr. Cohen’s use of the Company vehicle that did not meet the Internal
Revenue Service’s standard for business use, the cost was imputed as income and
a gross up payment for taxes was provided.
When
Mr. Glenn Lyon assumed the role of Chief Executive Officer on December 1,
2008, the Company began providing Mr. Lyon with an allowance for his
country club membership dues and for an automobile. The Committee considers
these payments to be reasonable and consistent with its compensation structure
objectives.
Tax
and Accounting Considerations
To the
extent readily determinable, the Compensation Committee takes into consideration
the accounting and tax treatment of the various aspects of the Company’s
executive compensation structure. The Company’s executive compensation plans are
designed to be in part deductible under Section 162(m) of the Code. However,
since some types of compensation payments and their deductibility depend upon
factors outside of the Committee’s or the Company’s control and because
interpretations and changes in the tax laws and other factors beyond the
Committee’s control may affect the deductibility of compensation, the Committee
will not necessarily limit executive compensation to that which is deductible
under applicable provisions of the Code. The Committee will consider various
alternatives to preserving the deductibility of compensation payments and
benefits to the extent reasonably practicable and to the extent consistent with
its other compensation objectives.
The
Company does not currently have a policy requiring a specific course of action
with respect to compensation adjustments following later restatements of
financial results. Under those circumstances, the Committee would evaluate
whether adjustments, including implementation of recoupment procedures, are
appropriate based upon the facts and circumstances surrounding the restatement
and existing laws.
Additionally,
Section 409A of the Code governs the timing of deferrals and form of payment
under the Company’s recently implemented non-qualified deferred compensation
program. The Committee believes that the Company has been operating the
non-qualified plan in good faith compliance with Section 409A.
Related
Party Transactions
In
accordance with the Company’s Audit Committee charter, the Audit Committee
maintains responsibility for reviewing and approving any related party
transactions. The Company did not enter into any financial
transactions
21
with any
related party or immediate family member of a director or executive officer of
the Company during fiscal 2009. If any such material financial transaction were
contemplated, the terms of any such transaction would be reviewed and approved
by the Audit Committee prior to the Company entering into any such
transaction.
Compensation
Committee Report
The
Company’s Compensation and Stock Option Committee has reviewed and discussed the
foregoing Compensation Discussion and Analysis with management and based on such
review recommended to the Board that the Compensation Discussion and Analysis be
included in this Proxy Statement and incorporated by reference into the
Company’s Form 10-K for fiscal 2009.
This
report is respectfully submitted by the members of the Compensation and Stock
Option Committee set forth below:
Bill
Kirkendall
Dolores
Kunda
Catherine
Langham
Compensation
Committee Interlocks and Insider Participation
Members of the Compensation and Stock
Option Committee have no interlocks or insider participation, and no member is
or has been a former employee or officer of the Company.
22
SUMMARY COMPENSATION TABLE>
23
24
FISCAL YEAR 2009 GRANTS OF PLAN-BASED AWARDS
TABLE>
25
26
27
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END TABLE
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