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Hanesbrands DEF 14A 2009 Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (Amendment
No. )
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to §240.14a-12
HANESBRANDS 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):
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1000 East Hanes Mill Road
Winston-Salem, North Carolina 27105
March 12, 2009
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Hanesbrands Inc., a Maryland corporation, which
is being held on Tuesday, April 28, 2009, at
8:00 a.m., Eastern time, at the Jumeirah Essex House, Grand
Salon, 160 Central Park South, New York, New York 10019.
At this year’s Annual Meeting, you will be asked to
(i) elect nine directors, (ii) ratify the appointment
of PricewaterhouseCoopers LLP as Hanesbrands’ independent
registered public accounting firm for our 2009 fiscal year and
(iii) transact such other business as may properly come
before the meeting.
We are taking advantage of the Securities and Exchange
Commission rule that allows us to furnish proxy materials to our
stockholders over the Internet. We believe that this
“e-proxy”
process expedites stockholders’ receipt of proxy materials
and lowers the costs and reduces the environmental impact of our
Annual Meeting. On March 12, 2009, we mailed to our
stockholders a Notice of Annual Meeting and Internet
Availability containing instructions on how to access our 2009
Proxy Statement and Annual Report and authorize a proxy to vote
your shares. The Proxy Statement and the Notice of Annual
Meeting and Internet Availability also contain instructions on
how you can receive a paper or
e-mail copy
of the Proxy Statement and Annual Report.
If you requested and received a paper copy of the proxy card by
mail, you may sign, date and mail the proxy card in the envelope
provided. You can authorize a proxy by telephone or over the
Internet as described in the enclosed materials.
We appreciate your continued support and interest in Hanesbrands.
Sincerely yours,
Richard A. Noll
Chairman of the Board of Directors and
Chief Executive Officer
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HANESBRANDS
INC.
NOTICE
OF THE 2009
The 2009 Annual Meeting of Stockholders of Hanesbrands Inc., a
Maryland corporation, will be held on Tuesday, April 28,
2009, at 8:00 a.m., Eastern time, at the Jumeirah Essex
House, Grand Salon, 160 Central Park South, New York, New York
10019 for the following purposes:
1. to elect nine directors;
2. to ratify the appointment of PricewaterhouseCoopers LLP
as our independent registered public accounting firm for our
2009 fiscal year; and
3. to transact such other business as may properly come
before the meeting or any adjournment or postponement thereof.
Stockholders of record at the close of business on
February 20, 2009 are entitled to notice of and to vote at
the Annual Meeting.
Whether or not you plan to attend the meeting, we urge you to
authorize a proxy to vote your shares via the toll-free
telephone number or over the Internet, as described in the
enclosed materials. If you requested and received a copy of the
proxy card by mail, you may sign, date and mail the proxy card
in the envelope provided.
By Order of the Board of Directors
Joia M. Johnson
Executive Vice President, General Counsel and
Corporate Secretary
March 12, 2009
Winston-Salem, North Carolina
ADMISSION TO
THE 2009 ANNUAL MEETING
An admission ticket (or other proof of stock ownership) and some
form of government-issued photo identification (such as a valid
driver’s license or passport) will be required for
admission to the Annual Meeting. Only stockholders who own
Hanesbrands common stock as of the close of business on
February 20, 2009 will be entitled to attend the Annual
Meeting. An admission ticket will serve as verification of your
ownership.
No cameras, recording devices or large packages will be
permitted in the meeting room. Bags will be subject to a search.
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HANESBRANDS
INC.
1000 EAST HANES MILL ROAD WINSTON-SALEM, NORTH CAROLINA 27105
PROXY
STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 28, 2009
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
You have received these proxy materials because the Board of
Directors of Hanesbrands Inc., a Maryland corporation
(“Hanesbrands”), is soliciting your proxy to vote your
shares at Hanesbrands’ 2009 Annual Meeting of Stockholders
(the “Annual Meeting”) and at any postponement or
adjournment of the Annual Meeting. This Proxy Statement includes
information that we are required to provide to you under the
rules of the Securities and Exchange Commission and that is
designed to assist you in voting your shares.
You will not receive a printed copy of the Proxy Statement or
our Annual Report to stockholders in the mail unless you request
a printed copy. As permitted by the Securities and Exchange
Commission, we are delivering our Proxy Statement and Annual
Report via the Internet. On March 12, 2009, we mailed to
our stockholders a Notice of Annual Meeting and Internet
Availability containing instructions on how to access our Proxy
Statement and Annual Report and authorize a proxy to vote your
shares online or by telephone. If you wish to request a printed
or e-mail
copy of the Proxy Statement and Annual Report, you should follow
the instructions included in the Notice of Annual Meeting and
Internet Availability. The Notice of Annual Meeting and Internet
Availability is not a proxy card or ballot.
The Annual Meeting will be held on April 28, 2009 at
8:00 a.m., Eastern time, at the Jumeirah Essex House, Grand
Salon, 160 Central Park South, New York, New York 10019. If you
plan to attend the Annual Meeting and have a disability or
require special assistance, please contact our Investor
Relations department at
(336) 519-4710.
At the Annual Meeting, stockholders will:
1. consider and vote upon a proposal to elect nine
directors;
2. consider and vote upon a proposal to ratify the
appointment of PricewaterhouseCoopers LLP
(“PricewaterhouseCoopers”) as our independent
registered public accounting firm for our 2009 fiscal
year; and
3. transact such other business as may properly come before
the Annual Meeting or any postponement or adjournment thereof.
The Board of Directors is not aware of any matter that will be
presented at the Annual Meeting that is not described above. If
any other matter is properly presented at the Annual Meeting,
the persons named as proxies on the proxy card will, in the
absence of stockholder instructions to the contrary, vote the
shares for which such persons have voting authority in
accordance with their discretion on any such matter.
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If you were a stockholder of Hanesbrands at the close of
business on February 20, 2009 (the “Record
Date”), you are entitled to notice of, and to vote at, the
Annual Meeting. You have one vote for each share of Hanesbrands
common stock (each, a “Share”) you held at the close
of business on the Record Date on each matter that is properly
submitted to a vote at the Annual Meeting, including Shares:
On the Record Date there were 94,693,130 Shares outstanding
and entitled to vote at the Annual Meeting and there were 44,366
record holders of Shares. The Shares are the only outstanding
class of voting securities of Hanesbrands.
Only stockholders who owned Shares as of the close of business
on the Record Date will be entitled to attend the Annual
Meeting. An admission ticket (or other proof of stock ownership)
and some form of government-issued photo identification (such as
a valid driver’s license or passport) will be required for
admission to the Annual Meeting. An admission ticket will serve
as verification of your ownership.
No cameras, recording devices or large packages will be
permitted in the meeting room. Bags will be subject to a search.
The presence in person or by proxy of stockholders entitled to
cast a majority of all the votes entitled to be cast at the
Annual Meeting constitutes a quorum for the transaction of
business. Your Shares are counted as present at the Annual
Meeting if you:
Abstentions and broker non-votes are counted for purposes of
determining whether a quorum is present at the Annual Meeting.
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If a quorum is not present when the Annual Meeting is convened,
the Annual Meeting may be adjourned by the presiding officer.
Directors will be elected by a plurality of all the votes cast
at the Annual Meeting, either in person or represented by
properly completed or authorized proxy. This means that the nine
nominees who receive the highest number of “FOR” votes
cast will be elected as directors. Stockholders cannot cumulate
votes in the election of directors.
Ratification of the appointment of PricewaterhouseCoopers as
Hanesbrands’ independent registered public accounting firm
requires “FOR” votes from a majority of the votes cast
at the Annual Meeting, either in person or represented by
properly completed or authorized proxy. If the appointment of
PricewaterhouseCoopers as our independent registered public
accounting firm for our 2009 fiscal year is not ratified by the
stockholders, the adverse vote will be considered a direction to
the Audit Committee to consider another independent registered
public accounting firm for next year. However, because of the
difficulty in making any substitution of independent registered
public accounting firm so long after the beginning of the
current year, the appointment for our 2009 fiscal year will
stand, unless the Audit Committee finds other good reason for
making a change.
If you have Shares that are held by a broker, you may give the
broker voting instructions and the broker must vote as you
directed. If you do not give the broker any instructions, the
broker may vote at its discretion on all routine matters (such
as the election of directors and the ratification of an
independent registered public accounting firm). For non-routine
matters, however, the broker may NOT vote using its discretion.
A broker’s failure to vote on a matter under these
circumstances is referred to as a broker non-vote.
Shares not voted due to withheld votes, abstentions or broker
non-votes will not be counted as votes for or votes against and
will have no effect on the outcome of the matters being voted
upon at the Annual Meeting.
You may vote in person at the Annual Meeting or you may
authorize a proxy to vote on your behalf. There are three ways
to authorize a proxy:
Internet: By accessing the Internet at
www.proxyvote.com and following the instructions on the proxy
card.
Telephone: By calling toll-free
1-800-690-6903
and following the instructions on the proxy card.
Mail: If you requested and received your proxy
materials by mail, by signing, dating and mailing the enclosed
proxy card.
If you authorize a proxy to vote your shares over the Internet
or by telephone, you should not return your proxy card.
The Notice of Annual Meeting and Internet Availability is not
a proxy card or ballot.
Each Share represented by a proxy properly authorized over the
Internet or by telephone or by a properly completed written
proxy will be voted at the Annual Meeting in accordance with the
stockholder’s instructions specified in the proxy, unless
such proxy has been revoked. If no instructions are specified,
such Shares will be voted FOR the election of each of the
nominees for director, FOR ratification of the
appointment of PricewaterhouseCoopers as Hanesbrands’
independent registered public accounting firm for our 2009
fiscal year, and in the discretion of the proxy holder on any
other business as may properly come before the Annual Meeting.
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If you participate in one of the 401(k) Plans and have
contributions invested in the Hanesbrands stock fund in that
401(k) Plan as of the close of business on the Record Date, you
will receive a voting authorization form, which will serve as
voting instructions for the trustee of the 401(k) Plans. You
must return your voting authorization form to Broadridge
Financial Solutions, Inc. (“Broadridge”) on or prior
to April 23, 2009. If your voting authorization form is not
received by Broadridge by that date, or if you sign and return
your proxy card without instructions marked in the boxes, the
trustee of the 401(k) Plans will vote Shares attributable to
your investment in the Hanesbrands stock fund in the 401(k) Plan
in which you participate in the same proportion as other Shares
held in that Hanesbrands stock fund for which the trustee
received timely instructions.
If you participate in the Employee Stock Purchase Plan, you will
receive a voting authorization form, which will serve as voting
instructions for the administrator of the Employee Stock
Purchase Plan. Shares will be voted only at the direction of
participants in the Employee Stock Purchase Plan. You must
return your voting authorization form to Broadridge on or prior
to April 23, 2009. If your voting authorization form is not
received by Broadridge by that date or if you sign and return
your proxy card without instructions marked in the boxes, your
Shares held in the Employee Stock Purchase Plan will not be
voted.
You may revoke (cancel) a proxy at any time before the Annual
Meeting by (i) giving written notice of revocation to the
Corporate Secretary of Hanesbrands with a date later than the
date of the previously submitted proxy, (ii) properly
authorizing a new proxy with a later date by mail, Internet or
telephone, or (iii) attending the Annual Meeting and voting
in person, although attendance at the Annual Meeting will not,
by itself, constitute revocation of a proxy. Any notice of
revocation should be sent to: Hanesbrands Inc., 1000 East Hanes
Mill Road, Winston-Salem, North Carolina 27105, Attention:
Corporate Secretary.
If you receive more than one Notice of Annual Meeting and
Internet Availability, it means your Shares are not all
registered in the same way (for example, some are registered in
your name and others are registered jointly with a spouse) and
are in more than one account. In order to ensure that you vote
all of the shares that you are entitled to vote, you should
authorize a proxy to vote all proxy cards to which you are
provided access.
Hanesbrands has a policy that all proxies, ballots and votes
tabulated at a meeting of stockholders shall be confidential,
and the votes will not be revealed to any Hanesbrands employee
or anyone else, other than to the non-employee tabulator of
votes or an independent election inspector, except (1) as
necessary to meet applicable legal requirements, or (2) in
the event a proxy solicitation in opposition to the election of
the Board of Directors is filed with the Securities and Exchange
Commission. Broadridge will tabulate votes for the Annual
Meeting and will provide an Inspector of Election for the Annual
Meeting.
The Board of Directors recommends that you vote FOR each
of the director nominees and FOR ratification of the
appointment of PricewaterhouseCoopers as Hanesbrands’
independent registered public accounting firm for our 2009
fiscal year.
CORPORATE
GOVERNANCE INFORMATION
Our Board of Directors has adopted Corporate Governance
Guidelines, which provide a framework for our corporate
governance and cover topics including, but not limited to,
composition of the Board of Directors
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and its committees, director qualifications and director
responsibilities. The Governance and Nominating Committee is
responsible for overseeing and reviewing the Corporate
Governance Guidelines and reporting and recommending to the
Board of Directors any changes to the Corporate Governance
Guidelines.
Our directors are elected at the annual meeting of stockholders
and will serve until our next annual meeting of stockholders.
Our Board of Directors currently has ten members: Lee A. Chaden,
Bobby J. Griffin, James C. Johnson, Jessica T. Mathews, J.
Patrick Mulcahy, Ronald L. Nelson, Richard A. Noll, Alice
M. Peterson, Andrew J. Schindler and Ann E. Ziegler. Seven
of the ten members of our Board of Directors, Mr. Griffin,
Mr. Johnson, Ms. Mathews, Mr. Mulcahy,
Mr. Nelson, Ms. Peterson and Mr. Schindler, are
independent under New York Stock Exchange listing standards and
under our Corporate Governance Guidelines. Mr. Noll is our
Chief Executive Officer, and the nine directors other than
Mr. Noll are currently non-management directors. During
2008, Mr. Charles Coker, who resigned as a member of our
Board effective in December 2008, served as the Presiding
Director until July 22, 2008; at that time, the Board
selected Mr. Mulcahy to serve as the Presiding Director.
Mr. Mulcahy served as the Presiding Director for the
remainder of 2008.
The Board has determined to decrease the size of the Board from
ten to nine members effective on the date of the Annual Meeting
and, therefore, only nine directors will be elected.
Our Corporate Governance Guidelines provide that the Governance
and Nominating Committee will from time to time consider whether
the positions of Chairman of the Board and Chief Executive
Officer should be held by the same person or by different
persons. During 2008, the Board of Directors, upon
recommendation of the Governance and Nominating Committee,
determined that Mr. Noll, our Chief Executive Officer,
should be elected to also serve as Chairman of the Board
effective January 1, 2009. We believe that by serving in
these dual capacities, Mr. Noll will be well-situated to
execute our business strategy and business plans to maximize
stockholder value. Mr. Noll maintains primary management
responsibility with respect to the day to day business
operations of our company and is in the most effective position
to chair regular meetings of the Board of Directors and to help
ensure that key business issues and interests of all our
company’s stakeholders (stockholders, employees,
communities and customers) are communicated to the Board.
Our corporate governance structure ensures that independent
directors will continue to effectively oversee our management
and key issues related to strategy, risk and integrity. In
addition, because of enhancements to corporate governance rules
and regulations effected by the Sarbanes-Oxley Act of 2002 and
the New York Stock Exchange listing requirements, we believe
that independent directors play an important role. Only
independent directors serve on our Audit Committee, Compensation
Committee and Governance and Nominating Committee.
Non-management and independent directors regularly hold
executive sessions outside the presence of the Chief Executive
Officer or any other employee of the company.
In connection with the decision to combine the positions of
Chairman of the Board and Chief Executive Officer, the Board of
Directors determined to replace the position of Presiding
Director with the newly created position of Lead Director
effective January 1, 2009. We believe that the designation
of a Lead Director, together with the combination of the
positions of Chairman of the Board and Chief Executive Officer,
contributes to a more efficient and effective corporate
governance structure. The Lead Director is chosen by the
independent directors of the Board of Directors, after
considering the recommendation of the Governance and Nominating
Committee. Mr. Mulcahy is currently serving as the Lead
Director. The Lead Director chairs all meetings of the
non-management
and/or
independent directors in executive session, and also has other
authority and responsibilities, including:
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In 2008, our Board of Directors met seven times and also held
regularly scheduled executive sessions without management,
presided over by the Presiding Director. During 2008, our Audit
Committee met nine times, our Compensation Committee met four
times and our Governance and Nominating Committee met seven
times. In 2008, each incumbent director attended 75% or more of
the meetings of the Board and of each committee during the
periods that each such director served on the Board or such
committee. Our Corporate Governance Guidelines provide that,
except in extenuating circumstances, each director will be
expected to attend all meetings of the Board of Directors and of
committees to which he or she is appointed, and all annual
meetings of stockholders. All of the members of the Board then
in office attended our 2008 annual meeting of stockholders.
Our Board of Directors has three standing committees: the Audit
Committee, the Compensation Committee and the Governance and
Nominating Committee. Below is a list of committee memberships,
which is followed by a description of each committee. The
directors who are nominated for election as directors at the
Annual Meeting will, if re-elected, retain the committee
memberships described below immediately following the Annual
Meeting, and the chairs of the committees will also remain the
same.
Committee
Membership
(as of February 20, 2009)
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The Audit Committee currently is comprised of Mr. Griffin,
Ms. Mathews, Mr. Nelson and Ms. Peterson;
Mr. Nelson is its chair. Each of the members of our Audit
Committee is financially literate, as required under applicable
New York Stock Exchange listing standards and is independent
under those listing standards. In addition, the Board of
Directors has determined that each of Mr. Nelson and
Ms. Peterson possesses the experience and qualifications
required of an “audit committee financial expert” as
defined by the rules of the Securities and Exchange Commission.
No member of the Audit Committee serves on the audit committees
of more than three public companies.
The Audit Committee is responsible for assisting the Board of
Directors in fulfilling the oversight of:
The Audit Committee is also responsible for discussing policies
with respect to risk assessment and risk management, including
significant financial risk exposures and the steps our
management has taken to monitor, control and report such
exposures.
Under SEC rules and the Audit Committee’s charter, the
Audit Committee must prepare a report that is to be included in
our proxy statement relating to the annual meeting of
stockholders or annual report filed on
Form 10-K
with the Securities and Exchange Commission. In addition, the
Audit Committee must review and discuss our annual audited
financial statements and quarterly financial statements with
management and the independent auditor and recommend, based on
its review, that the Board of Directors include the annual
financial statements in our annual report on
Form 10-K.
The Compensation Committee currently is comprised of
Mr. Johnson, Mr. Mulcahy and Mr. Schindler, with
Mr. Schindler serving as its chair. The Compensation
Committee is responsible for assisting the Board of Directors in
discharging its responsibilities relating to the compensation of
our executive officers and the Chief Executive Officer
performance evaluation process, and for preparing a report on
executive compensation that is to be included in our proxy
statement relating to the annual meeting of stockholders.
The Compensation Committee is also responsible for:
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The Governance and Nominating Committee currently is comprised
of Mr. Johnson, Mr. Mulcahy and Mr. Schindler;
Mr. Johnson is its chair. The Governance and Nominating
Committee is responsible for:
In order to assist our Board of Directors in making the
independence determinations required by the New York Stock
Exchange listing standards, the Board of Directors has adopted
categorical standards of independence. These standards, which
are contained in our Corporate Governance Guidelines, are
included as Appendix A to this Proxy Statement and are also
available on our corporate Web site, www.hanesbrands.com,
on the “Investors” page under the link
“Corporate Governance.” Seven of the ten current
members of our Board of Directors, Mr. Griffin,
Mr. Johnson, Ms. Mathews, Mr. Mulcahy,
Mr. Nelson, Ms. Peterson and Mr. Schindler, are,
and Charles W. Coker and Harry A. Cockrell were, at
the times they served on our Board during 2008, independent
under New York Stock Exchange listing standards and under our
Corporate Governance Guidelines. In determining director
independence, the Board of Directors did not discuss, and was
not aware of, any related person transactions, relationships or
arrangements that existed with respect to any of these
directors. Mr. Chaden and Ms. Ziegler do not currently
satisfy the independence standards of the New York Stock
Exchange or our Corporate Governance Guidelines due to their
prior employment by Hanesbrands and Sara Lee Corporation
(“Sara Lee”), respectively. Under the New York Stock
Exchange listing standards and our Corporate Governance
Guidelines, Ms. Ziegler’s prior employment with Sara
Lee will no longer preclude her from being independent as of
September 5, 2009, which is three years after date of our
spin off from Sara Lee, and Mr. Chaden’s prior
employment with Hanesbrands will no longer preclude him from
being independent as of December 29, 2010, which is three
years after the date on which his employment with Hanesbrands
ended.
Our Audit Committee’s charter requires that the Audit
Committee be composed of at least three members, all of whom
must be independent under New York Stock Exchange listing
standards and the rules of the Securities and Exchange
Commission. Each of the members of our Audit Committee is an
independent director under the New York Stock Exchange listing
standards and meets the standards of independence applicable to
audit committee members under applicable Securities and Exchange
Commission rules.
Our Compensation Committee’s charter requires that all of
the members of the Compensation Committee be independent under
New York Stock Exchange listing standards, “non-employee
directors” within the meaning of Securities and Exchange
Commission
Rule 16b-3
under the Securities Exchange Act of 1934 (the “Exchange
Act”) and “outside directors” within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Internal Revenue Code”) and the
regulations thereunder. Each of the members of our Compensation
Committee is an independent director under the New York Stock
Exchange listing standards, a non-employee director within the
meaning
Rule 16b-3
under the Exchange Act and an outside director within the
meaning of Section 162(m) of the Internal Revenue Code.
Our Governance and Nominating Committee’s charter requires
that all of the members of the Governance and Nominating
Committee be independent under New York Stock Exchange listing
standards. Each of the members of our Governance and Nominating
Committee is an independent director under the New York Stock
Exchange listing standards.
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Our Board of Directors has adopted a written policy setting
forth procedures to be followed in connection with the review,
approval or ratification of “related person
transactions.” For purposes of this policy, the phrase
“related person transaction” refers to any financial
transaction, arrangement or relationship in which Hanesbrands or
any of its subsidiaries is a participant and in which any
director, nominee for director, or executive officer, or any of
their immediate family members, has a direct or indirect
material interest.
Each director, director nominee and executive officer must
promptly notify our Chief Executive Officer and our Corporate
Secretary in writing of any material interest that such person
or an immediate family member of such person had, has or will
have in a related person transaction. The Governance and
Nominating Committee is responsible for the review, approval or
ratification of all related person transactions involving a
director, director nominee or executive officer. At the
discretion of the Governance and Nominating Committee, the
consideration of a related person transaction may be delegated
to the full Board of Directors, another standing committee, or
to an ad hoc committee of the Board of Directors comprised of at
least three members, none of whom has an interest in the
transaction.
The Governance and Nominating Committee, or other governing body
to which approval or ratification is delegated, may approve or
ratify a transaction if it determines, in its business judgment,
based on its review of the available information, that the
transaction is fair and reasonable to us and consistent with our
best interests. Factors to be taken into account in making a
determination of fairness and reasonableness may include:
If the Governance and Nominating Committee decides not to
approve or ratify a transaction, the transaction may be referred
to legal counsel for review and consultation regarding possible
further action, including, but not limited to, termination of
the transaction on a prospective basis, rescission of such
transaction or modification of the transaction in a manner that
would permit it to be ratified and approved by the Governance
and Nominating Committee.
During 2008, there were no related person transactions, or
series of similar transactions, involving us and our directors
or executive officers.
Stockholders and other interested parties may send written
communications directly to our Board of Directors or to
specified individual directors, including our Lead Director or
any of our non-management directors, by sending such
communications to Hanesbrands Inc., 1000 East Hanes Mill Road,
Winston-Salem, North Carolina 27105, Attention: Corporate
Secretary. Such communications will be reviewed by our legal
department and, depending on the content, will be:
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The Governance and Nominating Committee is responsible for
screening potential director candidates and recommending
qualified candidates to the full Board of Directors for
nomination. The Governance and Nominating Committee will
consider director candidates proposed by the Chief Executive
Officer, by any director or by any stockholder. From time to
time, the Governance and Nominating Committee also retains
search firms to assist it in identifying and evaluating director
nominees. In evaluating potential director candidates, the
Governance and Nominating Committee seeks to present candidates
to the Board of Directors who have distinguished records of
leadership and success in their arena of activity and who will
make substantial contributions to the Board of Directors. The
Governance and Nominating Committee considers the qualifications
listed in Hanesbrands’ Corporate Governance Guidelines,
which include:
Mr. Nelson, who joined the Board of Directors in July 2008,
was identified as a potential candidate by a third-party search
firm retained by the Governance and Nominating Committee at
Hanesbrands’ expense. Ms. Ziegler, who joined the
Board of Directors in December 2008, was identified as a
potential candidate by Mr. Chaden. The third-party search
firm was provided guidance as to the particular skills,
experience and other characteristics the Governance and
Nominating Committee was seeking in potential candidates, and
considered these characteristics both in identifying and
screening potential candidates. The third party search firm
prepared background materials on potential candidates, including
both Mr. Nelson and Ms. Ziegler, and those materials
were provided to the members of the Governance and Nominating
Committee for their review. The third-party search firm
interviewed those candidates the Governance and Nominating
Committee determined merited further consideration, and assisted
in arranging interviews of selected candidates with members of
the Governance and Nominating Committee, other members of the
Board of Directors, and certain of Hanesbrands’ executive
officers. The third-party search firm also completed reference
checks on all the candidates interviewed. This process
culminated in the Governance and Nominating Committee
recommending each of Mr. Nelson and Ms. Ziegler to the
full Board of Directors for election. The Governance and
Nominating Committee recommended to the Board that
Mr. Nelson and Ms. Ziegler be nominated by the Board
for election by stockholders at the 2009 Annual Meeting of
Stockholders, along with seven other candidates who were elected
by the stockholders at the 2008 Annual Meeting of Stockholders.
Any recommendation submitted by a stockholder to the Governance
and Nominating Committee should include information relating to
each of the qualifications outlined above concerning the
potential candidate along with other information required by our
Bylaws. The Governance and Nominating Committee applies the same
standards in evaluating candidates submitted by stockholders as
it does in evaluating candidates submitted by other sources.
Suggestions regarding potential director candidates, together
with the required information described above, should be
submitted in writing to Hanesbrands Inc., 1000 East Hanes Mill
Road, Winston-Salem, North Carolina 27105, Attention: Corporate
Secretary. The Governance and Nominating Committee has not
received any stockholder recommendations for director nominees
for the Annual Meeting. Stockholders who want to nominate a
director for consideration at next year’s annual meeting
should refer to the procedures described in “Stockholder
Proposals for Next Annual Meeting” on Page 48.
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Our Global Business Standards, which serve as our code of
ethics, apply to all directors and officers and other employees
of our company and its subsidiaries. Any waiver of applicable
requirements in the Global Business Standards that is granted to
any of our directors, to our principal executive officer, to any
of our senior financial officers (including our principal
financial officer, principal accounting officer or controller)
or to any other person who is an executive officer of
Hanesbrands requires the approval of the Audit Committee. Any
waiver of the Global Business Standards will be disclosed on our
corporate Web site, www.hanesbrands.com, on the
“Investors” page, or in a Current Report on
Form 8-K.
Copies of our corporate governance documents, including the
written charters for the Audit Committee, Compensation Committee
and Governance and Nominating Committee, as well as our
Corporate Governance Guidelines, Global Business Standards and
other corporate governance information are available on our
corporate Web site, www.hanesbrands.com, on the
“Investors” page under the link “Corporate
Governance.” You may obtain printed copies of these
documents by writing to Hanesbrands Inc., 1000 East Hanes Mill
Road, Winston-Salem, North Carolina 27105, Attention: Corporate
Secretary.
The information contained in this Audit Committee Report
shall not be deemed to be “soliciting material” or
“filed” or “incorporated by reference” in
future filings with the Securities and Exchange Commission, or
subject to the liabilities of Section 18 of the Securities
Exchange Act of 1934 (the “Exchange Act”), except to
the extent that Hanesbrands specifically incorporates it by
reference into a document filed under the Securities Act of 1933
or the Exchange Act.
Each of the members of our Audit Committee, which was
established in accordance with Section 3(a)(58) of the
Exchange Act, meets the standards of independence applicable to
audit committee members under applicable Securities and Exchange
Commission rules and New York Stock Exchange listing standards.
The Audit Committee assists the Board of Directors in oversight
of the integrity of Hanesbrands’ financial statements,
financial reporting process and systems of internal accounting
and financial controls, Hanesbrands’ compliance with legal
and regulatory financial disclosure requirements, the
independent auditors’ qualifications and independence, and
the performance of Hanesbrands’ internal audit function and
independent auditors. The Audit Committee operates under a
written charter, a copy of which is available on our corporate
Web site, www.hanesbrands.com, on the
“Investors” page under the link “Corporate
Governance.”
Management is primarily responsible for establishing and
maintaining adequate internal financial controls, for preparing
the financial statements and for the public reporting process.
PricewaterhouseCoopers, the Audit Committee-appointed
independent registered public accounting firm for the fiscal
year ended January 3, 2009, is responsible for expressing
opinions on the conformity of Hanesbrands’ audited
financial statements with accounting principles generally
accepted in the United States of America. In addition,
PricewaterhouseCoopers expresses its opinion on the
effectiveness of Hanesbrands’ internal control over
financial reporting.
In this context, the Audit Committee reviewed and discussed with
management and PricewaterhouseCoopers the audited financial
statements for the fiscal year ended January 3, 2009,
management’s assessment of the effectiveness of
Hanesbrands’ internal control over financial reporting and
PricewaterhouseCoopers’ evaluation of Hanesbrands’
internal control over financial reporting. The Audit Committee
met nine times (including telephone meetings) during the fiscal
year ended January 3, 2009. The Audit Committee has
discussed with PricewaterhouseCoopers the matters that are
required to be discussed by Statement on Auditing Standards
No. 61 (Communication With Audit Committees), as modified
or supplemented. In addition, the Audit Committee has
discussed various matters with PricewaterhouseCoopers related to
Hanesbrands’ financial statements, including critical
accounting policies and practices used, alternative treatments
for material items that have been discussed with management, and
other material written communications between
PricewaterhouseCoopers and
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management. The Audit Committee has also received written
disclosures and the letter from PricewaterhouseCoopers required
by Public Company Accounting Oversight Board
Rule No. 3526 “Communications with Audit
Committees Concerning Independence” and has discussed with
PricewaterhouseCoopers its independence from Hanesbrands and its
management. In addition, the Audit Committee has received
written material addressing PricewaterhouseCoopers’
internal quality control procedures and other matters, as
required by the New York Stock Exchange listing standards. The
Audit Committee understands the need for PricewaterhouseCoopers
to maintain objectivity and independence in its audit of our
financial statements and internal control over financial
reporting. The Audit Committee pre-approves all services,
including both audit and non-audit services, provided by our
independent registered public accounting firm.
Based on the considerations referred to above, the Audit
Committee recommended to our Board of Directors that the audited
financial statements for the fiscal year January 3, 2009 be
included in our Annual Report on
Form 10-K
for 2008 and selected PricewaterhouseCoopers as our independent
registered public accounting firm for the fiscal year ending
January 2, 2010.
By the members of the
Audit Committee consisting of:
Ronald L. Nelson (Chair)
Bobby J. Griffin
Jessica T. Mathews
Alice M. Peterson
The following table sets forth the fees billed to us by
PricewaterhouseCoopers for services in the fiscal years ended
January 3, 2009 and December 29, 2007:
In the above table, in accordance with applicable Securities and
Exchange Commission rules, “Audit fees” include fees
billed for professional services for the audit of our
Consolidated Financial Statements included in our Annual Report
on
Form 10-K
and review of our financial statements included in our Quarterly
Reports on
Form 10-Q,
fees billed for services that are normally provided by the
principal accountant in connection with statutory and regulatory
filings or engagements, fees related to services rendered in
connection with securities offerings and for the fiscal years
ended January 3, 2009 and December 29, 2007, the audit
of our internal control over financial reporting and
consultations concerning financial accounting and reporting
standards.
“Audit-related fees” are fees billed for assurance and
related services that are reasonably related to the performance
of the audit or review of our financial statements and are not
reported under the caption “Audit fees.” For the
fiscal years ended January 3, 2009 and December 29,
2007, these fees primarily relate to social security audits and
other spin off related consultations.
“Tax fees” for the fiscal years ended January 3,
2009 and December 29, 2007 include consultation,
preparation and compliance services for domestic and certain
foreign jurisdictions.
Our Audit Committee pre-approves all services, including both
audit and non-audit services, provided by our independent
registered public accounting firm. For audit services (including
statutory audit engagements as
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required under local country laws), the independent registered
public accounting firm provides the Audit Committee with an
engagement letter outlining the scope of the audit services
proposed to be performed during the year. The independent
registered public accounting firm also submits an audit services
fee proposal, which is approved by the Audit Committee before
the audit commences. The Audit Committee may delegate the
authority to pre-approve audit and non-audit engagements and the
related fees and terms with the independent auditors to one or
more designated members of the Audit Committee, as long as any
decision made pursuant to such delegation is presented to the
Audit Committee at its next regularly scheduled meeting. All
audit and permissible non-audit services provided by
PricewaterhouseCoopers to Hanesbrands since our spin off from
Sara Lee were pre-approved by the Audit Committee.
PROPOSALS TO
BE VOTED ON AT THE ANNUAL MEETING
Under our charter, each of our directors is elected to serve
until the next annual meeting of stockholders and until his or
her successor is duly elected and qualified. If a nominee is
unavailable for election, proxy holders may vote for another
nominee proposed by the Board of Directors or, as an
alternative, the Board of Directors may reduce the number of
directors to be elected at the Annual Meeting. Each nominee has
agreed to serve on the Board of Directors if elected. Set forth
below is information as of February 20, 2009, regarding the
nominees for election, which has been confirmed by each of them
for inclusion in this Proxy Statement.
No family relationship exists among any of our director nominees
or executive officers. To the best of our knowledge, there are
no pending material legal proceedings to which any of our
directors or nominees for director, or any of their associates,
is a party adverse to us or any of our affiliates, or has a
material interest adverse to us or any of our affiliates.
Additionally, to the best of our knowledge, there have been no
events under any bankruptcy act, no criminal proceedings and no
judgments or injunctions that are material to the evaluation of
the ability or integrity of any of our directors or nominees for
director during the past five years.
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Our Board of Directors unanimously recommends a vote FOR
election of these nominees.
The Audit Committee has appointed PricewaterhouseCoopers as our
independent registered public accounting firm for our 2009
fiscal year. While not required by law, the Board of Directors
is asking the stockholders to ratify the selection of
PricewaterhouseCoopers as a matter of good corporate practice.
Representatives of PricewaterhouseCoopers are expected to be
present at the Annual Meeting, will have an opportunity to make
a statement, if they desire to do so, and will be available to
respond to appropriate questions.
If the appointment of PricewaterhouseCoopers as our independent
registered public accounting firm for our 2009 fiscal year is
not ratified by the stockholders, the adverse vote will be
considered a direction to the Audit Committee to consider
another independent registered public accounting firm for next
year. However, because of the difficulty in making any
substitution of independent registered public accounting firm so
long after the beginning of the current year, the appointment
for our 2009 fiscal year will stand, unless the Audit Committee
finds other good reason for making a change.
PricewaterhouseCoopers was first appointed as our independent
registered public accounting firm for our fiscal year ended
July 1, 2006. For additional information regarding our
relationship with PricewaterhouseCoopers, please refer to the
Audit Committee Report on page 11 and the Auditor Fees and
Services disclosure on page 12.
Our Board of Directors unanimously recommends a vote FOR
ratification of the appointment of PricewaterhouseCoopers as
our independent registered public accounting firm for our 2009
fiscal year.
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The following table sets forth information, as of March 3,
2009 regarding beneficial ownership by (1) each person who
is known by us to beneficially own more than 5% of our common
stock, (2) each director, director nominee and executive
officer and (3) all of our directors, director nominees and
executive officers as a group. The address of each director and
executive officer shown in the table below is
c/o Hanesbrands
Inc., 1000 East Hanes Mill Road, Winston-Salem, North Carolina
27105. On March 3, 2009 there were 94,693,130 shares
of our common stock outstanding.
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DIRECTOR
COMPENSATION
In 2008, we compensated each non-employee director for service
on our Board of Directors as follows:
The Chairman of the Board of Directors during 2008
(Mr. Chaden) received an additional cash retainer of
$320,000 in 2008. Directors who are also our employees receive
no additional compensation for serving as a director.
During 2008, after consultation with its compensation
consultant, Frederic W. Cook & Co., the Compensation
Committee determined to make decisions regarding 2009
compensation for non-employee
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directors at its meeting in December 2008, so that such
decisions could be made prior to the January 1, 2009
effective date for any changes in compensation rather than
retroactively, and to approve equity grants simultaneously with
those decisions. Regarding 2008 compensation, the Compensation
Committee made decisions and approved equity grants at its
meeting in January 2008. Therefore, two restricted stock unit
grants were made to non-employee directors during calendar year
2008. Both of these grants are reflected in the table below.
The following table summarizes the compensation paid to our
non-employee directors for the fiscal year ended January 3,
2009.
Director
Compensation — 2008
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In January 2008, after reviewing information about the
compensation paid to non-employee directors at the Benchmark
Companies (this term is defined below), the Compensation
Committee determined to increase the amount of the annual equity
retainer from $95,000 to $110,000 and to increase the annual
retainers paid to the chair of the Audit Committee from $10,000
to $15,000 and to the chairs of the Compensation Committee and
the Governance and Nominating Committee from $5,000 to $10,000.
After a similar review conducted in December 2008, the
Compensation Committee determined not to make any changes to
compensation for non-employee directors for 2009, other than to
provide for an additional annual cash retainer of $20,000 to be
paid to our Lead Director (currently Mr. Mulcahy), a
position newly created for 2009. We expect that the Compensation
Committee will conduct a similar review each year and may alter
director compensation following any such review. Mr. Noll,
who is also our Chief Executive Officer, became Chairman of the
Board of Directors on January 1, 2009. As an employee of
Hanesbrands, Mr. Noll receives no additional compensation
for serving as a member of our Board of Directors or as its
Chairman.
Under the Director Deferred Compensation Plan, a nonqualified,
unfunded deferred compensation plan, our non-employee directors
may defer receipt of all (but not less than all) of their annual
retainer and any additional cash retainers. At the election of
the director, amounts deferred under the Director Deferred
Compensation Plan will (i) earn a return equivalent to the
return on an investment in an interest-bearing account earning
interest based on the Federal Reserve’s published rate for
five-year constant maturity Treasury notes at the beginning of
the calendar year, which was 3.28% for 2008 and will be 1.72%
for 2009, or (ii) be deemed to be invested in a stock
equivalent account and earn a return based on our stock price.
Receipt of awards of restricted stock or restricted stock units
to non-employee directors may also be deferred under the
Director Deferred Compensation Plan. Amounts deferred, plus any
dividend equivalents or interest, will be paid in cash or in
shares of our common stock, as applicable, with any shares of
common stock being issued from the Hanesbrands Inc. Omnibus
Incentive Plan of 2006 (the “Omnibus Incentive Plan”).
The amount payable to participants will be payable either on the
withdrawal date elected by the participant or upon the
occurrence of certain events as provided under the Director
Deferred Compensation Plan. A participant may designate one or
more beneficiaries to receive any portion of the obligations
payable in the event of death; however, neither participants nor
their beneficiaries may transfer any right or interest in the
Director Deferred Compensation Plan.
We believe that our directors who are not employees of
Hanesbrands should have significant ownership stakes in
Hanesbrands. Our non-employee directors receive a substantial
portion of their compensation in the form of restricted stock
units and also may elect to receive their entire annual cash
retainer and additional cash retainers in the form of options to
purchase our common stock or to defer receipt of such amounts
under the Director Deferred Compensation Plan and have such
deferred amounts deemed invested in a stock equivalent account.
To promote such equity ownership and further align the interests
of these directors with our stockholders, we have adopted share
retention and ownership guidelines for these directors. A
non-employee director may not dispose of any shares of our
common stock until such director holds shares of
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common stock with a value equal to at least five times the
current annual equity retainer, and may then only dispose of
shares in excess of those with that value. In addition to shares
directly held by a non-employee director, shares held for such
director in the Director Deferred Compensation Plan (including
hypothetical share equivalents held in that plan) will be
counted for purposes of determining whether the ownership
requirements are met.
Under our insider trading policy, directors and executive
officers are required to clear in advance all transactions in
Hanesbrands securities with Hanesbrands’ legal department.
Further, no director, executive officer or other employee of
Hanesbrands is permitted to engage in “short sales” or
“sales against the box” or trade in puts, calls or
other options on our securities. These provisions are part of
our overall program to prevent any Hanesbrands directors,
officers or employees from trading on inside information.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This compensation discussion and analysis provides information
about our compensation objectives and policies for our principal
executive officer, our principal financial officer and our three
other most highly compensated executive officers (we refer to
these officers as our “named executive officers”), who
for the fiscal year ended January 3, 2009 are Richard A.
Noll, our Chief Executive Officer, E. Lee Wyatt Jr., our
Executive Vice President, Chief Financial Officer, William J.
Nictakis, our President, Chief Commercial Officer, Gerald W.
Evans Jr., our President, International Business and Global
Supply Chain who, until February 11, 2009, was our
President, Global Supply Chain and Asia Business Development,
and Kevin W. Oliver, our Executive Vice President, Human
Resources. It also contains analysis about how and why
significant compensation decisions were made, and places in
context the information contained in the tables that follow this
discussion. This section is organized as follows:
The Compensation Committee is a standing committee of our Board
of Directors. It is composed solely of independent directors who
have no employment or business connection with Hanesbrands. The
Compensation Committee is responsible to our Board of Directors,
and to our stockholders, for developing and administering our
compensation program for our Chief Executive Officer and other
executives. The Compensation Committee has the authority to
retain an independent executive compensation consultant to
assist in the evaluation of compensation for our executive
officers, including our named executive officers, and to help
ensure the objectivity and appropriateness of the actions of the
Compensation Committee. The Compensation Committee has the sole
authority to retain, at our expense, and terminate any such
consultant, including the sole authority to approve such
consultant’s fees and other terms of engagement. Frederic
W. Cook & Co.,
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or the Cook firm, serves as the Compensation Committee’s
executive compensation consultant. The Cook firm assists in the
development of compensation programs for our executive officers
and our non-employee directors by providing information about
compensation by the Benchmark Companies (this term is defined
below), relevant market trend data, information on current
issues in the regulatory environment, recommendations for
program design and best practices, and corporate governance
guidance. The Cook firm does not provide any other services to
Hanesbrands, and this independence was an important factor in
the Compensation Committee’s selection of the Cook firm.
The Compensation Committee selected the Cook firm as its
compensation consultant during 2007, after conducting a rigorous
search and examining multiple firms; the Cook firm had been
serving as its executive compensation consultant prior to such
search.
At the direction of the Compensation Committee, our management
has worked with the Cook firm to develop information about the
compensation of our executive officers. Our Chief Executive
Officer uses this information to make recommendations to the
Compensation Committee regarding compensation of our executive
officers, other than the Chief Executive Officer, and the Cook
firm provides guidance to the Compensation Committee about those
recommendations. The Cook firm makes independent recommendations
to the Compensation Committee regarding the compensation of our
Chief Executive Officer without the foreknowledge of management.
The Compensation Committee uses this information and considers
these recommendations in making decisions about executive
compensation for all of our executive officers. All decisions
regarding compensation of executive officers, including our
named executive officers, are made solely by the Compensation
Committee. Members of management and a representative of the
Cook firm participated in meetings of the Compensation Committee
during 2008. The Compensation Committee meets in executive
session at each of its meetings, and each executive session
includes some time when no persons other than the members of the
Compensation Committee are present. Members of management and
representatives of the Cook firm may be asked to attend portions
of an executive session where the Compensation Committee wishes
such persons to provide information to the Compensation
Committee or where such attendance will otherwise be helpful to
the Compensation Committee.
We are committed to providing market competitive total
compensation packages to attract and motivate talented
employees. We believe in pay for performance, and we link total
compensation to performance throughout our organization to
create the appropriate level of incentives and risks. We
actively manage our compensation structures and levels to adapt
to changes in the marketplace and the continuing evolution of
our company. We also seek to align the interests of our
executives, including our named executive officers, with our
stockholders. The Compensation Committee reviewed our
compensation philosophy during 2008 and did not make any changes
to our overall philosophy.
The goal of our compensation programs is to create a sustainable
competitive advantage by achieving higher productivity and lower
costs than our competitors. Our compensation objectives at all
compensation levels, including for our named executive officers,
support this goal by:
To accomplish these goals, we use the following operating
principles:
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As noted above, one objective of our compensation program is to
attract and motivate highly qualified and talented employees
through compensation packages that are appropriately competitive
with compensation packages offered by other companies in the
apparel and consumer products industries. To determine what
constitutes a “competitive” compensation package for
named executive officers, the Compensation Committee generally
considers total compensation, comprised of base salary, annual
incentive compensation (which we refer to as the annual bonus)
and long-term equity compensation, as well as the allocation
among those elements of compensation, at benchmarks determined
by market rates of compensation paid by selected comparable
companies. For these purposes, the Compensation Committee
determines “market” rates by considering compensation
paid by two groups of companies: Peer Benchmark Companies and
Validation Benchmark Companies, which we refer to collectively
as the “Benchmark Companies.” During 2008, the
Compensation Committee reviewed the companies comprising the
Peer Benchmark Companies and the Validation Benchmark Companies
and did not make any changes, except that Kellwood Company was
removed as a Peer Benchmark Company after it ceased being a
publicly traded company in February 2008. The Benchmark
Companies were identified and selected with the assistance of
the Cook firm. Hanesbrands’ annual revenue is similar to
the median revenue of the Benchmark Companies.
Peer Benchmark Companies. Our primary peer
benchmark companies, which we refer to collectively as the
“Peer Benchmark Companies,” were selected due to their
similarity to us primarily in terms of industry and to a lesser
extent revenue size. Our Peer Benchmark Companies are V.F.
Corporation., Jones Apparel Group, Inc., Liz Claiborne, Inc.,
Quiksilver, Inc., Phillips-Van Heusen Corporation, The Warnaco
Group, Inc. and Carter’s, Inc.
Validation Benchmark Companies. Twelve
additional companies were selected for purposes of validation
because of the relatively small number of Peer Benchmark
Companies. These companies, which we refer to collectively as
the “Validation Benchmark Companies,” are companies
with revenue sizes similar to ours from the consumer durables
and apparel, food and beverage and household and personal
product groups. The Validation Benchmark Companies are Fortune
Brands, Inc., The Black & Decker Corporation, Newell
Rubbermaid Inc., Brunswick Corporation, Hormel Foods
Corporation, Mattel, Inc., The Hershey Company, The Clorox
Company, Jarden Corporation, The Stanley Works, Hasbro, Inc. and
Del Monte Foods Company.
As one illustration of our use of benchmarking, we consider
compensation information from the Benchmark Companies to set
target total compensation for our named executive officers. We
consider total compensation paid at the median level by the
Benchmark Companies, as well as total compensation paid at the
25th and 75th quartile levels, with a goal of
targeting total compensation opportunities for our named
executive officers at levels that are reasonable in comparison
to this range based upon the relative experience and scope of
responsibilities of the named executive officers, the
marketability of their experience and how critical their
position is to our efforts to execute our consolidation and
globalization strategy. While our preference is that total
compensation opportunities for all of our executives, including
our named executive officers, be near the median total
compensation opportunities for similar officers at the Benchmark
Companies, consideration of the foregoing factors in some
circumstances requires us to set total compensation
opportunities that are closer to the 75th percentile level.
When we evaluate benchmark information on this basis, we refer
to it as applying our “executive compensation benchmarking
criteria.”
Once we have set total compensation in this manner, we consider
the allocation of compensation among the various compensation
elements by the Benchmark Companies in allocating the total
compensation opportunities of our named executive officers among
the elements of compensation that we offer. We also consider
relative experience and scope of responsibilities of the named
executive officers, the marketability of their experience and
how critical their position is to our efforts to execute our
consolidation and globalization strategy. After considering
these other factors, we confirm that the result is reasonable by
applying the executive compensation benchmarking criteria.
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Our compensation program seeks to link the total compensation we
pay to our named executive officers to our company’s
performance as reflected by its annual operating performance and
stockholder value. We believe that the performance of individual
officers is best viewed through the impact of their performance
on our company’s performance as reflected by achievement of
annual operating goals that are considered to be drivers of
long-term stockholder value. As a result, our compensation
programs focus on the performance of our company, rather than
individual performance. We pursue our goal of linking total
compensation to performance through both the equity-based
compensation and non-equity based elements of total
compensation. Our executives with the most senior leadership
positions within our organization have the greatest ability to
influence our company’s performance. As discussed below in
“Elements of Compensation and Analysis of Compensation
Decisions,” both the long-term incentive awards as a
percentage of total compensation and the bonus opportunity as a
percentage of total compensation of these executives are greater
than that of our other employees. Because both the value of
equity compensation and bonus opportunities are tied to the
performance of our company as reflected by its annual operating
performance and stockholder value, the total compensation of our
named executive officers has the potential to increase or
decrease based on our performance and that of our common stock.
Our compensation program also seeks to align the interests of
our executives, including our named executive officers, with
those of our stockholders. The long-term equity compensation
element of our compensation package serves this purpose. A
greater portion of the total compensation opportunity for our
named executive officers is comprised of long-term equity
compensation as compared to our other employees. See
“Elements of Compensation and Analysis of Compensation
Decisions” below for a comparison of the portion of the
compensation paid to our named executive officers that consists
of long-term equity compensation. We grant named executive
officers a mix of stock options and restricted stock units that
vest over time, the value of which depends on the performance of
our common stock over time.
Recoupment. To further align the interests of
employees with the interests of our stockholders and strengthen
the link between total compensation and our company’s
performance, under the Omnibus Incentive Plan the Compensation
Committee may make retroactive adjustments to, and employees,
including named executive officers, would be required to
reimburse us for, any cash or equity-based incentive
compensation paid to employees where such compensation was
predicated upon achieving certain financial results that were
substantially the subject of a restatement, if as a result of
the restatement it is determined that the employees otherwise
would not have been paid such compensation, regardless of
whether or not the restatement resulted from the employees’
misconduct. While the foregoing decision is made in the
discretion of the Compensation Committee, the Omnibus Incentive
Plan provides that Hanesbrands shall, to the extent permitted by
governing law, require reimbursement of any cash or equity based
incentive compensation paid to any named executive officer
where: (i) the payment was predicated upon the achievement
of certain financial results that were subsequently the subject
of a substantial restatement, and (ii) in the view of the
Compensation Committee the named executive officer engaged in
fraud or misconduct that caused or partially caused the need for
the substantial restatement.
In addition to the equity incentive compensation element of our
compensation package, the Hanesbrands Inc. Annual Incentive Plan
(the “AIP”), our annual incentive program, provides
for payouts tied to the achievement of key annual financial and
operating metrics that are considered to be key measures of the
success of our business strategy. Payments made pursuant to the
AIP are also subject to recoupment in the same circumstances as
described above for the Omnibus Incentive Plan.
Elements
of Compensation and Analysis of Compensation
Decisions
As discussed above, in setting total compensation opportunities
for our named executive officers, we apply the executive
compensation benchmarking criteria, and also consider the
relative experience and scope
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of responsibilities of the named executive officers, the
marketability of their experience and how critical their
position is to our efforts to execute our consolidation and
globalization strategy. This process results in total
compensation opportunities at different levels among the named
executive officers.
Once we have set total compensation opportunities in this
manner, we consider the allocation of compensation among the
various compensation elements by the Benchmark Companies in
allocating the total compensation opportunities of our named
executive officers among the elements of compensation that we
offer. We consider the factors used in determining total
compensation in allocating compensation opportunities among the
elements of compensation. After considering these factors, we
confirm that the result is reasonable by applying the executive
compensation benchmarking criteria. After reviewing information
about the allocation among the elements of compensation at the
Benchmark Companies, the Compensation Committee approves an
allocation among these elements for our named executive officers
that is intended to further the objectives of our compensation
policy, such as our objective of aligning the interests of our
named executive officers with those of our stockholders through
equity compensation. The allocations approved by the
Compensation Committee result in different allocations among the
elements of compensation for the named executive officers.
In January 2008, the Compensation Committee reviewed total
compensation opportunities for Hanesbrands’ executive
officers, including the named executive officers, applying the
executive compensation benchmarking criteria. As a result of
such review, the Compensation Committee determined not to
increase the total compensation opportunity of Mr. Noll or
change the allocation among Mr. Noll’s base salary,
bonus and long-term equity compensation. The entire value of
Mr. Noll’s equity award for 2008 was in the form of
stock options, unlike the award he received in 2007, 75% of the
value of which was in the form of stock options and 25% of the
value of which was in the form of restricted stock units. The
Compensation Committee determined that a change in the mix of
stock options and restricted stock units issued to Mr. Noll
was appropriate as a means of further linking pay to performance.
Also as a result of such review, the Compensation Committee
determined to increase the total compensation opportunities of
Mr. Wyatt, Mr. Evans and Mr. Oliver. In addition
to the executive compensation benchmarking criteria, the
Compensation Committee considered other factors, such as, for
Mr. Evans, the critical nature of his position to
Hanesbrands and his unique skill set that combines marketing and
supply chain expertise and, for Mr. Oliver, the global
nature of his position, in making its determination.
The Compensation Committee next considered the allocation of the
compensation of each of Mr. Wyatt, Mr. Evans and
Mr. Oliver among the various elements of compensation,
again applying the executive compensation benchmarking criteria.
After also considering that Mr. Wyatt’s base salary
had not changed since he joined our company in September 2005,
the Compensation Committee increased Mr. Wyatt’s base
salary from $550,000 to $585,000. After also considering that
Mr. Evans’ base salary had not changed since July 2006
and the critical nature of his position to Hanesbrands and his
unique skill set that combines marketing and supply chain
expertise, the Compensation Committee increased
Mr. Evans’ base salary from $425,000 to $600,000.
After also considering that Mr. Oliver’s cash
compensation had not changed since 2005, the Compensation
Committee increased Mr. Oliver’s base salary from
$330,000 to $375,000, and also increased the target bonus
opportunity for Mr. Oliver from 85% to 100% of his base
salary and the maximum target bonus opportunity from 127.5% to
150% of his base salary. The Compensation Committee also
increased his equity compensation from 150% to 200% of his base
salary. As a result, Mr. Oliver’s bonus opportunity
and equity compensation, expressed as a percentage of base
salary, are the same as that of the other named executive
officers, other than the Chief Executive Officer.
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For our named executive officers, the percentage of total
compensation opportunity for 2008 represented by base salary,
annual bonus at target levels and long-term equity incentive
awards is illustrated in the chart below.
In December 2008, the Compensation Committee engaged in a
further review of total compensation opportunities for
Hanesbrands’ executive officers, including the named
executive officers, applying the executive compensation
benchmarking criteria. As a result of such review, the
Compensation Committee determined not to increase the total
compensation opportunity of Mr. Noll or change the
allocation among Mr. Noll’s base salary, bonus and
long-term equity compensation. Unlike the award Mr. Noll
received in 2008, all of the value of which was in the form of
stock options, 50% of the value of Mr. Noll’s 2009
award is in the form of restricted stock units and 50% is in the
form of stock options. The Committee changed the allocation of
Mr. Noll’s equity compensation in this manner to more
closely align with practices of the Benchmark Companies and to
align his long-term incentive mix with that of the other named
executive officers.
Also as a result of such review, the Compensation Committee
determined to increase Mr. Wyatt’s total target
compensation opportunity from $2,340,000 to $2,600,000. In
making its decision, the Compensation Committee considered, in
addition to the executive compensation benchmarking criteria,
the value in the current economic environment of
Mr. Wyatt’s experience as chief financial officer at
companies with leveraged financial capital structures such as
ours. The Compensation Committee next considered the allocation
of Mr. Wyatt’s compensation among the various elements
of compensation, again applying the executive compensation
benchmarking criteria. The Compensation Committee determined not
to change the allocation of the elements of
Mr. Wyatt’s compensation. As a result of the increase
in his total target compensation, Mr. Wyatt’s base
salary was increased from $585,000 to $650,000, and his annual
bonus opportunity as a percentage of his base salary remains
unchanged and would result in an annual bonus of $650,000 at the
target level. Mr. Wyatt received an equity award for 2009
with a grant date value of $1,300,000; 50% of the value consists
of stock options and 50% of the value consists of restricted
stock units.
No changes were made to the total compensation opportunities of
the other named executive officers as a result of the
Compensation Committee’s review.
The base salaries for our named executive officers are
determined based on their experience and the scope of their
responsibilities, both on an individual basis and in relation to
the experience and scope of responsibilities of other
executives. The Compensation Committee also applies the
executive compensation benchmarking criteria. These factors
result in different compensation levels among the named
executive officers. Base salaries are reviewed annually, and
adjusted from time to time to reflect individual
responsibilities, performance and experience, as well as market
compensation levels.
Annual
Bonus
Bonus compensation pursuant to the AIP is designed to motivate
performance and to advance the interests of Hanesbrands by
linking a portion of annual compensation to the achievement of
financial objectives and
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key performance indicators, while contributing to increased
long-term stockholder value. Because, as noted above, our
compensation programs focus on the performance of our company
rather than the performance of individual officers, individual
performance targets are not set for our executives. The design
of the AIP is intended to make it easy for participants to
understand what performance is required to earn bonuses,
consistent with our operating principles of transparency and
clarity in communicating our compensation programs.
Bonus opportunities exist for performance at a target level and
for performance at a maximum level. No bonus opportunity exists
for performance at or below the threshold level, but a pro rated
amount may be earned if performance is above the threshold level
but below the target level. Our executives with the most senior
leadership positions within our organization have the greatest
ability to influence our company’s performance, and their
bonus opportunity, which is tied to the performance of the
company, as a percentage of their base salary is greater than
that of our other executives and employees. In addition, the
Compensation Committee considers information about the bonus
opportunities available to comparable officers at the Benchmark
Companies, and this may result in bonus opportunities differing
among the named executive officers. The chart below illustrates
the 2008 bonus opportunity, expressed as percentages of base
salary, for each of our named executive officers at the
threshold, target and maximum levels.
Discussion of 2008 AIP Payments. Given our
business model, we consider the performance measures we have
chosen to determine bonus amounts under the AIP to be key
measures of the success of our business strategy. For 2008, the
components used to determine bonus amounts under the AIP for our
Chief Executive Officer were sales growth and net operating
profit excluding actions after taxes, which we also refer to as
“NOPAT.” We chose NOPAT as a measure to encourage
efficient use of Hanesbrands’ capital by our executives and
other employees. Sales growth was weighted 20% and NOPAT was
weighted 80%. For example, our Chief Executive Officer would be
eligible to receive 20% of his target bonus if sales increase at
the target level over sales for the previous year, and would be
eligible to receive 20% of his maximum bonus if sales increase
by the maximum level over such prior period sales.
Sales Growth. We previously announced a
long-term goal of annual sales growth of 1% to 3%, excluding
acquisitions and divestitures. Under the AIP for 2008, sales
growth of 2%, the mid-point of the range of our long-term goal,
would result in participating employees being eligible for the
portion of their bonus attributable to sales growth at the
target level, while sales growth of 4% would result in
participating employees being eligible for the portion of their
bonus attributable to sales growth at the maximum level. The
threshold level of sales growth was set at 0%. For the fiscal
year ended January 3, 2009, sales declined by approximately
5%. Because this is below the threshold of 0%, participating
employees, including the named executive officers, did not
receive any bonus attributable to sales growth.
Net Operating Profit After Taxes. Under the
AIP for 2008, net operating profit after taxes of
$298 million would result in participating employees being
eligible for the portion of their bonus attributable to net
operating profit after taxes at the target level, while net
operating profit after taxes of $447 million would result
in participating employees being eligible for the portion of
their bonus attributable to net operating profit after taxes at
the maximum level. As discussed below, setting targets by
reference to net operating profits after taxes takes into
consideration the return that holders of our equity and debt
expect to receive, further linking total compensation to
performance and aligning the interests of our executive
officers, including our named executive officers, with those of
our stockholders. We set the targets by reference to net
operating profit after taxes for a fiscal year by multiplying
our net invested capital as of the end of our previous
fiscal
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year by our weighted average cost of capital for our
previous fiscal year. These components are discussed below.
These targets are set objectively by reference to our capital
employed.
Our net invested capital is equal to our total assets minus
total current liabilities. Our investors and employees can
determine those amounts by reference to our earnings releases
and other information that we file with the Securities and
Exchange Commission. As of December 29, 2007, we reported
total assets of $3.44 billion and total current liabilities
of $0.69 billion, resulting in net invested capital of
$2.75 billion.
Our weighted average cost of capital is a weighted average of
the cost of our equity (determined by reference to the return on
20-year US
Treasury bonds and a risk premium determined by reference to
materials published by Ibbotson Associates) and the cost of our
long-term debt and the current portion of long-term debt (the
average interest rate paid during the year on the amount of our
debt that is outstanding at the end of our fiscal year, as
adjusted for taxes). As of December 29, 2007, our cost of
equity was 11.6% after tax, our cost of debt was 5.3%, and our
weighted average cost of capital was 8.68%.
We multiplied our net invested capital of $2.75 billion as
of December 29, 2007 by our weighted average cost of
capital of 8.68%, and we set our 2008 target level of net
operating profit after taxes at 125% of that amount, or
approximately $298 million. We multiplied this number by
75% and 150% to set the threshold and maximum levels of
approximately $224 million and $447 million,
respectively. We disclose our operating profit, excluding
certain actions and our net operating profit after taxes, and
how these measures relate to our net operating profit as
determined in accordance with generally accepted accounting
principles, when we release our earnings information for
completed fiscal periods. Other than those reflected in our
publicly disclosed earnings information, no adjustments are made
to our operating profit, excluding actions, in determining net
operating profit after taxes for purposes of the AIP. For the
fiscal year ended January 3, 2009, net operating profit
after taxes excluded accelerated depreciation included in cost
of sales, accelerated depreciation included in selling, general
and administrative expenses, restructuring and inventory
write-off included in cost of sales. For the fiscal year ended
January 3, 2009, net operating profit after taxes was
$320 million, or 107.4% of the target amount.
For 2008, the components used to determine bonus amounts under
the AIP for participants, including our named executive
officers, other than our Chief Executive Officer, were
(i) sales growth, (ii) net operating profit after
taxes and (iii) four key non-financial performance
indicators that are described in greater detail below. For these
participants, each of the three categories of components was
weighted from 20% to 50% (0% to 80% in the case of the Chief
Executive Officer), so that the total of the three categories
represents 100% of the bonus amount. For example, if sales
growth is assigned a weight of 20% for a participating employee,
that participating employee would be eligible to receive 20% of
his or her target bonus if sales increase at the target level
over sales for the previous year, and would be eligible to
receive 20% of his or her maximum bonus if sales increase by the
maximum level over such prior period sales. The chart below
illustrates for each of our named executive officers the weight
assigned to each of three categories of performance components
for 2008.
Key Performance Indicators. Our Chief
Executive Officer uses the key performance indicators as a tool
to drive behavior throughout the top levels of our organization.
The bonus opportunities of over 800 employees are tied to
our company’s performance relative to the key performance
indicators. The targets associated with the key performance
indicators for 2008 were recommended to the Compensation
Committee by our Chief Executive Officer, whose bonus, as
discussed above, was not derived from the key performance
indicators.
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Key performance indicators for 2008 were workforce diversity,
product quality, customer service and Asia transformation labor
levels. These key performance indicators are described below:
For the fiscal year ended January 3, 2009, Hanesbrands
reached the maximum level for two key performance indicators,
exceeded the target level (but did not reach the maximum level)
for one key performance indicator and did not reach the
threshold level for one key performance indicator. Because our
Chief Executive Officer uses the key performance indicators as a
tool to drive behavior throughout the top levels of our
organization, we put action plans in place designed to deliver
these results. Although we set challenging goals with respect to
the key performance indicators, we believed that our strong
focus on these areas and the resources that we expected to
devote to meeting the desired performance levels would allow us
to meet our goals. Therefore, at the time the 2008 targets were
set, we believed that it was likely that Hanesbrands would
perform at least at the target performance level with respect to
each of the key performance indicators.
As a result of Hanesbrands’ performance for the fiscal year
ended January 3, 2009, our named executive officers
received bonuses at the following approximate percentages of
their target bonus amounts: Mr. Noll, 85.9%;
Mr. Wyatt, 85.1%; Mr. Nictakis, 85.1%; Mr. Evans,
85.1%; and Mr. Oliver, 85.1%.
2009 Targets. For 2009, key performance
indicators will no longer be a performance component used to
determine the bonus amounts under the AIP for any of our named
executive officers, although they will continue to be a
performance component used to determine bonus amounts for other
employees at the top levels of our organization. The
Compensation Committee made this decision, based on the
recommendation of management, in order to focus our most senior
executives on our most important objectives. The Compensation
Committee also determined to use operating profit, excluding
certain publicly disclosed actions, rather than net operating
profit after taxes, as a performance metric for 2009. The
Compensation Committee made this change to allow employees and
investors to more easily track our progress on meeting these
targets by reference to our earnings releases and other
information we file with the Securities and Exchange Commission,
in which we report our results for these metrics. As a result,
for 2009 the components used to determine bonus amounts under
the AIP for our named executive officers will be sales and
operating profit, excluding certain publicly disclosed actions.
For each of the named executive officers, sales will be weighted
25% and operating profit, excluding actions, will be weighted
75%.
In recognition of the severe U.S. recession and more
specifically the unprecedented downturn in the domestic retail
environment, we recognize that in 2009 sales may be below 2008
levels. Given that 2008 sales declined significantly, and in an
effort to incent our executives and management team to maximize
our sales in this difficult environment, we have set our sales
target at minus 3%, which if achieved would be lower than the
2008 decline. The threshold and maximum levels have been set at
five percentage points below and above the target level, or
minus 8% and 2%, respectively.
We determined our targets for operating profit, excluding
actions, by reference to net operating profit after taxes, which
we again calculated by multiplying our net invested capital of
$2.818 billion as of January 3, 2009 by our weighted
average cost of capital of 9.2%. We divided the result, $259, by
one minus our estimated tax rate for 2009 of 22%, and then set
our 2009 target level of operating profit, excluding actions, at
125% of that amount, or approximately $415 million. We
multiplied this number by 75% and 150% to set the threshold and
maximum levels of approximately $311 million and
$622 million, respectively.
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The Omnibus Incentive Plan permits the issuance of equity
incentive awards to our employees, non-employee directors and
employees of our subsidiaries to promote the interests of our
company and our stockholders. The Omnibus Incentive Plan is
designed to promote these interests by providing such
individuals with a proprietary interest in pursuing the
long-term growth, profitability and financial success of our
company. During 2008, the two types of grants awarded to our
executive officers were stock options and time-vested restricted
stock units. Restricted stock units and options vest according
to schedules established at grant, conditioned on continued
employment with Hanesbrands, with vestings in the event of a
qualifying termination of employment for death, disability,
retirement or involuntary termination or a change in control as
determined at the time of grant. We believe stock options align
the interests of our employees with those of our stockholders,
because the stock options, with exercise prices equal to the
closing price of our common stock on the date of grant, have
value only if our share price increases after the date of grant.
We believe that restricted stock units similarly align the
interests of our employees with those of our stockholders
because the value of this element of compensation increases or
decreases with our stock price. Additional details regarding the
awards made pursuant to the Omnibus Incentive Plan during the
fiscal year ended January 3, 2009 are discussed below under
“Discussion of Summary Compensation Table and Grants of
Plan-Based Awards Table.”
Equity awards to executive officers and other employees are
approved as a dollar amount, which on the grant date is
converted into a specific number of restricted stock units and,
in the case of certain executive officers, including the named
executive officers, stock options. The number of restricted
stock units is determined by using the closing price of our
common stock on the date of grant. The number of stock options
is determined by a third party using a Black-Scholes
option-pricing model, with the closing price of our common stock
on the date of grant as one of the factors used. The exercise
price of the stock options granted is the closing price of our
common stock on the date of grant.
During 2008, after consultation with the Cook firm, the
Compensation Committee determined to make decisions regarding
2009 compensation for executive officers at its meeting in
December 2008, so that such decisions could be made prior to the
January 1, 2009 effective date for any changes in total
compensation opportunities rather than retroactively, and to
approve equity grants simultaneously with those decisions.
Regarding 2008 compensation, the Compensation Committee made
decisions and approved equity grants at its meeting in January
2008. Therefore, two equity awards were made to the named
executive officers and other employees during calendar year
2008. Both of these grants are reflected in the Summary
Compensation Table and the Grants of Plan-Based Awards Table
below.
Discussion of 2008 Long-Term Incentive Plan
Grants. Our executives with the most senior
leadership positions within our organization have the greatest
ability to influence our company’s performance. Therefore,
the value of their long-term incentive awards as a percentage of
their base salary is greater than that of our other employees.
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The table below shows the value of total target cash
compensation and equity incentive compensation compared to total
target compensation for each of the named executive officers for
2009 and 2008. This table presents information that is
supplemental to, and should not be considered a substitute for,
the information contained in the Summary Compensation Table
which appears below under “Summary of Compensation.”
This table is not required by Securities and Exchange Commission
rules, and we have chosen to include it to help investors better
understand how our named executive officers are compensated.
Amounts are target amounts and do not necessarily reflect exact
amounts that were or will be paid.
Target
Cash and Equity Compensation
Our named executive officers are eligible to receive
post-employment compensation pursuant to the Hanesbrands Inc.
Pension and Retirement Plan, or the “Pension Plan,”
and the Hanesbrands Inc. Supplemental Employee Retirement Plan,
or the “SERP,” and pursuant to Severance/Change in
Control Agreements, or “Severance Agreements.” Each of
these arrangements is discussed below.
Pension Plan. The Pension Plan is a defined
benefit pension plan under which benefits have been frozen since
December 31, 2005, intended to be qualified under
Section 401(a) of the Internal Revenue Code, that provides
the benefits that had accrued for any of our employees,
including our named executive officers, under the Sara Lee
Corporation Consolidated Pension and Retirement Plan as of
December 31, 2005. Because the Pension Plan is frozen, no
additional employees will become eligible to participate in the
Pension Plan, and existing participants in the Pension Plan do
not accrue any additional benefits after December 31, 2005.
SERP. The SERP is a nonqualified supplemental
retirement plan that provides two types of benefits that we
refer to collectively as the “Defined Contribution
Component” of the SERP. First, the SERP provides for
employer contributions to employees whose compensation exceeds a
threshold set by the Internal Revenue Service. Although, as
described below, the Hanesbrands Inc. Retirement Savings Plan,
or the “401(k) Plan,” provides for employer
contributions to our executive officers, including our named
executive officers, at the same percent of their eligible
compensation as provided for all employees who participate in
the 401(k) Plan, compensation and benefit limitations imposed on
the 401(k) Plan by the Internal Revenue Code generally prevent
us from making the entire amount of the employer contributions
contemplated by the 401(k) Plan with respect to any employee
whose compensation exceeds a threshold set by Internal Revenue
Code provisions, which threshold was $230,000 for 2008 and is
$245,000 for 2009. Our named executive officers are among those
employees whose compensation exceeds this threshold. The SERP
provides to those employees whose compensation exceeds this
threshold benefits that would be earned under the 401(k) Plan
but for these limitations. Second, the SERP provides benefits
consisting of transitional defined contribution credits for one
to five years and ranging from 4% to 15% of eligible
compensation for certain executives. These transitional credits
are being provided to a broad group of executives in connection
with our transition (prior to the spin off) from providing both
a defined benefit plan (as discussed above, the Pension Plan is
frozen) and a defined contribution plan to providing only
defined contribution plans, to mitigate the negative impact of
that
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transition. The determination of the credits provided to an
executive was based on the extent to which such executive was
negatively impacted by the transition, including the
executive’s age and years of service as an executive as of
January 1, 2006. As discussed below under
“Nonqualified Deferred Compensation,” at the end of
2008, we provided all active participants in the SERP with an
election to receive the accrued Defined Contribution Component
of their SERP benefit as of December 31, 2008 in the form
of a lump sum payment in 2009 or 2010.
The SERP also provides benefits, which we refer to as the
“Defined Benefit Component” of the SERP, consisting of
those supplemental retirement benefits that had been accrued
under the Sara Lee Corporation Supplemental Executive Retirement
Plan as of December 31, 2005. As discussed below under
“Pension Benefits,” at the end of 2008, we provided
all active participants in the SERP with an election to receive
the accrued Defined Benefit Component of the SERP benefit in the
form of a lump sum payment in 2009 or 2010.
Severance Agreements. We have entered into
Severance Agreements with all of our executive officers,
including our named executive officers. The Severance Agreements
provide our executive officers with benefits upon the
involuntary termination of their employment other than for
wrongful behavior or misconduct. The Severance Agreements also
contain change in control benefits for our executive officers to
help keep them focused on their work responsibilities during the
uncertainty that accompanies a change in control, to provide
benefits for a period of time after a change in control
transaction and to help us attract and retain key talent. We
determined the levels of severance provided to our named
executive officers under the Severance Agreements by reference
to market studies conducted prior to entering into the first
Severance Agreements in connection with our spin off. We believe
the levels of benefits offered by the Severance Agreements are
appropriate and conservatively competitive and that these
benefits were reasonable in light of Hanesbrands’ status as
a newly public company following the spin off. Compensation that
could potentially be paid to our named executive officers
pursuant to the Severance Agreements is described below in
“Potential Payments upon Termination or Change in
Control.” Each agreement is effective for an unlimited
term, unless we give at least 18 months prior written
notice that the agreement will not be renewed. In addition, if a
change in control occurs during the term of the agreement, the
agreement will automatically continue for two years after the
end of the month in which the change in control occurs. Each of
the Severance Agreements was amended during 2008 as part of the
required changes to compensation arrangements mandated by
Section 409A of the Internal Revenue Code
(“Section 409A”).
Plans and Arrangements. Our executive
officers, including our named executive officers, are eligible
to participate in certain employee benefits plans and
arrangements offered by our company. These include the 401(k)
Plan, the Hanesbrands Inc. Executive Deferred Compensation Plan,
or the Executive Deferred Compensation Plan, the Hanesbrands
Inc. Executive Life Insurance Plan, or the Life Insurance Plan,
and the Hanesbrands Inc. Executive Disability Plan. Under the
401(k) Plan, our executive officers and generally all full-time
domestic exempt and non-exempt salaried employees may contribute
a portion of their compensation to the plan on a pre-tax basis
and receive a matching employer contribution of up to a possible
maximum of 4% of their eligible compensation not in excess of
certain dollar limits mandated by the Internal Revenue Code
($230,000 for calendar year 2008). In addition, exempt and
non-exempt salaried employees are eligible to receive an
employer contribution of up to an additional 4% of their
eligible compensation. Under the Executive Deferred Compensation
Plan, a group of approximately 260 executives at the director
level and above, including our named executive officers, may
defer receipt of cash and equity compensation. We offer the
Executive Deferred Compensation Plan because programs of its
kind are offered by some of the Benchmark Companies, and because
we wanted to allow those of our executives who were
participating in a similar plan offered by Sara Lee prior to the
spin off to maintain a similar benefit after the spin off.
The Life Insurance Plan provides life insurance benefits to a
group of approximately 80 employees at the level of vice
president or above, including our named executive officers, who
contribute materially to the continued growth, development and
future business success of Hanesbrands. The Life Insurance Plan,
which includes both a death benefit and a cash value, provides
life insurance coverage during active employment in an amount
equal to three times annual base salary, and, depending on the
performance of investments in the plan, may offer continuing
coverage following retirement. The Life Insurance Plan also
provides executives
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with the opportunity to make voluntary, after-tax contributions
that may be allocated by the executive into a range of
investment options. The Hanesbrands Inc. Executive Disability
Plan provides long-term disability benefits for persons employed
by Hanesbrands and its subsidiaries as eligible executives. The
Hanesbrands Inc. Executive Disability Plan provides disability
coverage for a group of approximately 80 employees at the
level of vice president and above, including our named executive
officers. If an eligible employee becomes totally disabled, the
program will provide a monthly disability benefit equal to
1/12
of the sum of (i) 75% of the employee’s annual base
salary up to an amount not in excess of $500,000, and
(ii) 50% of the three-year average of the employee’s
annual short-term incentive bonus up to an amount not in excess
of $250,000. The maximum monthly disability benefit is $41,667
and is reduced by any disability benefits that an employee is
entitled to receive under Social Security, workers’
compensation, a state compulsory disability law or another plan
of Hanesbrands providing benefits for disability.
Perquisites. We offer limited perquisites to
our executive officers, including our named executive officers,
including an executive car allowance and company-paid medical
examinations.
We believe that our executives should have significant ownership
stakes in Hanesbrands. To promote such equity ownership and
further align the interests of our executives with our
stockholders, we have adopted share retention and ownership
guidelines for our key executives, including our named executive
officers. These ownership guidelines vary based upon the
executive’s level and range from a minimum of one times
base salary to, in the case of the Chief Executive Officer, four
times base salary. The Compensation Committee reviewed the
guidelines during the fiscal year ended January 3, 2009 and
did not make any changes.
Our key executives have a substantial portion of their incentive
compensation paid in the form of our common stock. In addition
to shares directly held by a key executive, shares held for such
executive in the 401(k) Plan, the Executive Deferred
Compensation Plan and the SERP (including hypothetical share
equivalents held in the latter two plans) will be counted for
purposes of determining whether the ownership requirements are
met. Although it is currently the practice of our executive
officers not to participate in the Employee Stock Purchase Plan
and thereby not to benefit from the discounted purchase price
for our common stock available under that plan, any shares held
in that plan in the future would also be counted.
Until the stock ownership guidelines are met, an executive is
required to retain 50% of any shares received (on a net after
tax basis) under our equity-based compensation plans. The
Compensation Committee reviewed compliance by our executive
officers, including our named executive officers, at the end of
October 2008 and determined that, with the exception of Joia M.
Johnson, our Executive Vice President, General Counsel and
Corporate Secretary, and William J. Nictakis, our President,
Chief Commercial Officer, who joined our company in January 2007
and November 2007, respectively, each of our executive officers
had achieved ownership of between 40% and 125% of the shares set
forth in the guidelines during the time following the spin off
in September 2006.
Under our insider trading policy, directors and executive
officers are required to clear in advance all transactions in
Hanesbrands securities with Hanesbrands’ legal department.
Further, no director, executive officer or other employee of
Hanesbrands is permitted to engage in “short sales” or
“sales against the box” or trade in puts, calls or
other options on our securities. These provisions are part of
our overall program to prevent any Hanesbrands directors,
officers or employees from trading on inside information.
Section 162(m) of the Internal Revenue Code limits the tax
deductibility of certain compensation paid to our chief
executive officer and our three other executive officers, other
than our chief financial officer, with the highest total
compensation. This provision disallows the deductibility of
certain compensation in excess of $1 million per year
unless it is considered performance-based compensation under the
Internal Revenue Code. We have adopted policies and practices
that are intended to take into account the maximum tax deduction
possible under Section 162(m) of the Internal Revenue Code
for our annual bonus payments and stock option awards; however,
there can be no guarantee that the IRS will agree on the amount
of those deductions. In
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addition, we may forgo any or all of the tax deduction if we
believe it to be in the best long-term interests of our
stockholders. Time-vested restricted stock units are not deemed
“performance based,” and therefore are not tax
deductible if the value at vesting, in combination with other
non-performance-based compensation such as salary, exceeds
$1 million for an executive officer. Although most
compensation paid to our named executive officers for the fiscal
year ended January 3, 2009 is expected to be tax
deductible, we expect that approximately $305,925 and $65,982 of
the compensation payable to Mr. Nictakis and
Mr. Evans, respectively, will not be deductible.
In making decisions about executive compensation, we also
consider the impact of other regulatory provisions, including
the provisions of Section 409A regarding non-qualified
deferred compensation and the “golden parachute”
provisions of Section 280G of the Internal Revenue Code.
For example, we have attempted to structure the Severance
Agreements so that they will not result in adverse tax
consequences under Section 409A. In making decisions about
executive compensation, we also consider how various elements of
compensation will impact our financial results. In this regard,
we consider the impact of SFAS 123(R), which determines how
we recognize the cost of employee services received in exchange
for awards of equity instruments.
The following table sets forth a summary of compensation earned
by or paid to our named executive officers for the fiscal years
ended January 3, 2009 and December 29, 2007 and the
six months ended December 30, 2006.
Summary
Compensation Table
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The following table sets forth a summary of grants of plan-based
awards to the named executive officers for the fiscal year ended
January 3, 2009.
Grants of
Plan-Based Awards in 2008
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As discussed above under “Elements of Compensation and
Analysis of Compensation Decisions,” the base salaries for
our named executive officers are determined based on their
experience and the scope of their responsibilities both on an
individual basis and in relation to the experience and scope of
responsibilities of other executives. The Compensation Committee
also applies the executive compensation benchmarking criteria.
For the fiscal year ended January 3, 2009, bonuses were
paid in accordance with the performance targets set under the
AIP. See “Elements of Compensation and Analysis of
Compensation Decisions” for an analysis of the salary and
bonus paid to our named executive officers for the fiscal year
ended January 3, 2009.
During 2008, consistent with the objectives of the Omnibus
Incentive Plan of providing employees with a proprietary
interest in our company and aligning employee interest with that
of our stockholders, we made long-term incentive equity awards
in respect of our 2008 and 2009 fiscal years, as described
above. For executive officers, including the named executive
officers, the form of these awards was split evenly between
stock options and restricted stock units (except that
Mr. Noll received his entire 2008 award in the form of
stock options) that vest 33%, 33% and 34% on the first
anniversary, second anniversary and third anniversary,
respectively, of the date of grant. As discussed above, the
Compensation Committee determined that a change in the mix of
stock options and restricted stock units issued to Mr. Noll
was appropriate as a means of further linking pay to
performance. The number of stock options granted to each
recipient was determined based on a Black-Scholes option-pricing
model. The exercise price of the stock options is 100% of the
fair market value of our common stock on the grant date. For the
2009 awards, the Compensation Committee, upon the recommendation
of the Cook firm and after reviewing benchmark information,
determined to grant stock options that expire ten years after
the grant to be more consistent with current market practice.
Stock options previously awarded generally expire seven years
after the date of grant date. The awards made to our named
executive officers are reflected in the “Summary
Compensation Table” and the “Grants of Plan-Based
Award Table” above and are discussed above in
“Elements of Compensation and Analysis of Compensation
Decisions.”
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The following table sets forth certain information with respect
to outstanding equity awards at January 3, 2009 for each of
the named executive officers.
Outstanding
Equity Awards at Fiscal 2008 Year-End
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The following table sets forth certain information with respect
to options exercised and stock awards vested during the fiscal
year ended January 3, 2009 with respect to the named
executive officers.
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Certain of our executive officers, including certain of our
named executive officers, participate in the Pension Plan and
the SERP. The Pension Plan is a frozen defined benefit pension
plan, intended to be qualified under Section 401(a) of the
Internal Revenue Code, that provides the benefits that had
accrued for our employees, including certain of our named
executive officers, under the Sara Lee Corporation Consolidated
Pension and Retirement Plan as of December 31, 2005. The
Defined Benefit Component of the SERP is an unfunded deferred
compensation plan that, in part, will provide the nonqualified
supplemental pension benefits that had accrued for certain of
our employees, including certain of our named executive
officers, under the Sara Lee Corporation Supplemental Executive
Retirement Plan with respect to benefits accrued through
December 31, 2005 that could not be provided under the Sara
Lee Corporation Consolidated Pension and Retirement Plan because
of various Internal Revenue Code limitations.
Normal retirement age is age 65 for purposes of both the
Pension Plan and the SERP. The normal form of benefits under the
Pension Plan is a life annuity for single participants and a
qualified joint and survivor annuity for married participants.
The normal form of benefits under the SERP is a lump sum. None
of our named executive officers is eligible for early retirement
under the Pension Plan or the SERP, each of which provides that
participants who have attained at least age 55 and
completed at least ten years of service are eligible for
unreduced benefits at age 62, or benefits reduced by
5/12
of one percent thereof for each month by which the date of
commencement of such benefit precedes the first day of the month
coincident with or next following the month in which the
participant attains age 62.
At the end of 2008, we provided all active participants in the
SERP with an election to receive the accrued Defined Benefit
Component of their SERP benefit in the form of a lump sum
payment in 2009 or 2010. We offered this election as part of the
required changes mandated by Section 409A, and eligible
participants could make this election in addition to or instead
of any election with respect to the Defined Contribution
Component of the SERP. The value of the lump sum payment with
respect to the Defined Benefit Component of the SERP was
calculated based on the participant’s age 65 SERP
Defined Benefit Component benefit and an interest rate of 5.25%.
The lump sum amounts do not include the value of any early
retirement subsidies and accordingly may be significantly less
valuable than the amount the participant could have received if
the participant had been eligible for early retirement (at least
age 55 with 10 years of service) when the
participant’s employment with us terminates. Any SERP
participant who elected to receive this lump sum payment will
not be entitled to any additional payments with respect to the
Defined Benefit Component of the SERP. Payments to
Mr. Noll, who elected to receive a lump sum payment in
2009, will be shown in the Pension Benefits table for 2009; none
of the named executive officers elected to receive a lump sum
payment in 2010.
The following table sets forth certain information with respect
to the value of pension benefits accumulated by our named
executive officers during the fiscal year ended January 3,
2009.
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Under the Executive Deferred Compensation Plan, a group of
approximately 260 executives at the director level and above,
including our named executive officers, may defer receipt of
cash and equity compensation. The amount of compensation that
may be deferred is determined in accordance with the Executive
Deferred Compensation Plan based on elections by each
participant. At the election of the executive, amounts deferred
under the Executive Deferred Compensation Plan will
(i) earn a return equivalent to the return on an investment
in an interest-bearing account earning interest based on the
Federal Reserve’s published rate for five-year constant
maturity Treasury notes at the beginning of the calendar year,
which was 3.28% for 2008 and will be 1.72% for 2009, or
(ii) be deemed to be invested in a stock equivalent account
and earn a return based on our stock price. The amount payable
to participants will be payable either on the withdrawal date
elected by the participant or upon the occurrence of certain
events as provided under the Executive Deferred Compensation
Plan. A participant may designate one or more beneficiaries to
receive any portion of the obligations payable in the event of
death; however, neither participants nor their beneficiaries may
transfer any right or interest in the Executive Deferred
Compensation Plan.
Nonqualified deferred compensation is also provided pursuant to
the SERP. At the end of 2008, we provided all active
participants in the SERP with an election to receive the accrued
Defined Contribution Component of their SERP benefit as of
December 31, 2008 in the form of a lump sum payment in 2009
or 2010. As with the election we provided with respect to the
accrued Defined Benefit Component of the SERP, we offered this
election as part of the required changes mandated by
Section 409A which took full effect at the end of 2008, and
eligible participants could make this election in addition to or
instead of any election
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with respect to the Defined Benefit Component of the SERP.
Payments to Mr. Evans, who elected to receive a lump sum
payment in 2009, will be shown in the Nonqualified Deferred
Compensation table for 2009; payments to Mr. Noll and
Mr. Oliver, who elected to receive a lump sum payment in
2010, will be shown in the Nonqualified Deferred Compensation
table for 2010. After January 1, 2009, we will distribute
all new contributions to the SERP to participants, including the
named executive officers, on an annual basis.
The following table sets forth certain information with respect
to contributions to and withdrawals from nonqualified deferred
compensation plans by our named executive officers during the
fiscal year ended January 3, 2009.
Nonqualified
Deferred Compensation — 2008
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The termination benefits provided to our executive officers,
including our named executive officers, upon their voluntary
termination of employment, or termination due to death or total
and permanent disability, do not discriminate in scope, terms or
operation in favor of our executive officers compared to the
benefits offered to all salaried employees. The following
describes the potential payments to executive officers upon an
involuntary severance or a termination of employment in
connection with a change in control. The information presented
in this section is computed assuming that the triggering event
took place on January 2, 2009, the last business day of the
fiscal year ended January 3, 2009, and that the value of a
share of our common stock is $13.18, the closing price per share
of our common stock on January 2, 2009.
Termination
or Change in Control Payments
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The information contained in this Compensation Committee
Report shall not be deemed to be “soliciting material”
or “filed” or “incorporated by reference” in
future filings with the Securities and Exchange Commission, or
subject to the liabilities of Section 18 of the Securities
Exchange Act of 1934 (the “Exchange Act”), except to
the extent that Hanesbrands specifically incorporates it by
reference into a document filed under the Securities Act of 1933
or the Exchange Act.
Mr. Schindler and Mr. Johnson served as members of the
Compensation Committee during the entire fiscal year ended
January 3, 2009; Mr. Schindler became its chair on
July 22, 2008. Mr. Mulcahy joined the Compensation
Committee on July 21, 2008. During the fiscal year ended
January 3, 2009, Harry A. Cockrell, who ceased serving as a
member of our Board of Directors on April 22, 2008, and
Mr. Coker, who ceased serving as a member of our Board of
Directors on December 8, 2008, also served as members of
the Compensation Committee; Mr. Coker was its chair until
July 22, 2008. The Compensation Committee was at all times
during the fiscal year ended January 3, 2009 comprised
solely of non-employee directors each of whom was:
(i) independent as defined under New York Stock Exchange
listing standards, (ii) a non-employee director for
purposes of
Rule 16b-3
under the Exchange Act, and (iii) an outside director for
purposes of Section 162(m) of the Internal Revenue Code.
The Compensation Committee has reviewed and discussed the
“Compensation Discussion and Analysis” required by
Item 402(b) of
Regulation S-K
with management. Based on such review and discussions, the
Compensation Committee recommended to the Board of Directors
that the “Compensation Discussion and Analysis” be
included in this Proxy Statement.
Respectfully submitted,
Andrew J. Schindler, Chair
James C. Johnson J. Patrick Mulcahy
The current members of the Compensation Committee are
Mr. Schindler, Mr. Johnson and Mr. Mulcahy.
During the fiscal year ended January 3, 2009, Harry A.
Cockrell, who ceased serving as a member of our Board of
Directors on April 22, 2008, and Mr. Coker, who ceased
serving as a member of our Board of Directors on
December 8, 2008, also served as members of the
Compensation Committee. No interlocking relationship exists
between our Board of Directors or Compensation Committee
(including those who served on the Compensation Committee during
the fiscal year ended January 3, 2009 who are no longer
serving on the Compensation Committee) and the Board of
Directors or compensation committee of any other company, nor
has any interlocking relationship existed in the past.
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OTHER
MATTERS
We will provide without charge to each person solicited
pursuant to this Proxy Statement, upon the written request of
any such person, a copy of our Annual Report on
Form 10-K
for the fiscal year ended January 3, 2009, including the
financial statements and the financial statement schedules
required to be filed with the Securities and Exchange
Commission, or any exhibit to that Annual Report on
Form 10-K.
Requests should be in writing and directed to Hanesbrands Inc.,
1000 East Hanes Mill Road, Winston-Salem, North Carolina 27105,
Attention: Corporate Secretary.
Section 16(a) of the Exchange Act requires our directors
and executive officers, certain of our other officers and
persons who beneficially own more than ten percent of a
registered class of our equity securities to file reports of
ownership and changes in ownership of these securities with the
Securities and Exchange Commission. Directors, officers and
greater than ten percent beneficial owners are required by
applicable regulations to furnish us with copies of all
Section 16(a) forms they file. Based solely upon a review
of the forms furnished to us with respect to the fiscal year
ended January 3, 2009 or written representations that no
other reports were required, all Section 16(a) filing
requirements applicable to our directors, officers and greater
than ten percent beneficial owners were complied with.
We do not know of any matters to be acted upon at the Annual
Meeting other than those discussed in this Proxy Statement. If
any other matter is properly presented at the Annual Meeting,
proxy holders will vote on the matter in their discretion.
We will pay the cost of soliciting proxies for the Annual
Meeting, including the cost of mailing. The solicitation is
being made by mail and may also be made by telephone or in
person using the services of a number of regular employees of
Hanesbrands at nominal cost. We will reimburse banks, brokerage
firms and other custodians, nominees and fiduciaries for
expenses incurred in sending proxy materials to beneficial
owners of Shares. We have engaged Laurel Hill Advisory Group,
LLC to solicit proxies and to assist with the distribution of
proxy materials for a fee of $7,500 plus reasonable
out-of-pocket expenses.
Stockholders residing in the same household who hold their stock
through a bank or broker may receive only one Notice of Annual
Meeting and Internet Availability (or Proxy Statement, for those
who receive a printed copy of the Proxy Statement) in accordance
with a notice sent earlier by their bank or broker. This
practice of sending only one copy of proxy materials is called
“householding,” and saves us money in printing and
distribution costs. This practice will continue unless
instructions to the contrary are received by your bank or broker
from one or more of the stockholders within the household.
If you hold your shares in “street name” and reside in
a household that received only one copy of the proxy materials,
you can request to receive a separate copy in the future by
following the instructions sent by your bank or broker. If your
household is receiving multiple copies of the proxy materials,
you may request that only a single set of materials be sent by
following the instructions sent by your bank or broker.
If you want to make a proposal for consideration at next
year’s Annual Meeting and have it included in our proxy
materials, Hanesbrands must receive your proposal no later than
the 120th day prior to the
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anniversary of the date of these proxy materials,
November 12, 2009, and the proposal must comply with the
rules of the Securities and Exchange Commission.
If you want to make a proposal or nominate a director for
consideration at next year’s Annual Meeting without having
the proposal included in our proxy materials, you must comply
with the current advance notice provisions and other
requirements set forth in our Bylaws. Under our Bylaws, a
stockholder may nominate a director or submit a proposal for
consideration at an annual meeting by giving adequate notice to
our Corporate Secretary. To be adequate, that notice must
contain information specified in our Bylaws and be received by
us not earlier than the 150th day nor later than
5:00 p.m., Eastern time, on the 120th day prior to the
first anniversary of the date of the proxy statement for the
preceding year’s annual meeting. If, however, the date of
the annual meeting is advanced or delayed by more than
30 days from the first anniversary of the date of the
preceding year’s annual meeting, notice by the stockholder
to be timely must be so delivered not earlier than the
150th day prior to the date of such annual meeting and not
later than 5:00 p.m., Eastern time, on the later of the
120th day prior to the date of such annual meeting or the
tenth day following the day on which public announcement of the
date of such meeting is first made. Therefore, Hanesbrands must
receive your nomination or proposal on or after October 13,
2009 and prior to 5:00 p.m., Eastern time, on
November 12, 2009, unless the date of the Annual Meeting is
advanced or delayed by more than 30 days from the
anniversary date of the 2009 Annual Meeting.
If Hanesbrands does not receive your proposal or nomination by
the appropriate deadline, then it may not be brought before the
2009 Annual Meeting. The fact that we may not insist upon
compliance with these requirements should not be construed as a
waiver by our right to do so at any time in the future.
You should address your proposals or nominations to Hanesbrands
Inc., 1000 East Hanes Mill Road, Winston-Salem, North Carolina
27105, Attention: Corporate Secretary.
By Order of the Board of Directors
HANESBRANDS INC.
Joia M. Johnson
Executive Vice President, General Counsel and Corporate Secretary
March 12, 2009
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Appendix A
CATEGORICAL
STANDARDS FOR DETERMINING DIRECTOR INDEPENDENCE
No director will qualify as an independent director of
Hanesbrands unless the Board has affirmatively determined that
the director meets the standards for being an independent
director established from time to time by the New York Stock
Exchange (“NYSE”), the U.S. Securities and
Exchange Commission and any other applicable governmental and
regulatory bodies. To be considered independent under the rules
of the NYSE, the Board must affirmatively determine that a
director has no material relationship with Hanesbrands (either
directly or as a partner, shareholder or officer of an
organization that has a relationship with Hanesbrands). To
assist it in determining each director’s independence in
accordance with the NYSE’s rules, the Board has established
guidelines, which provide that a Hanesbrands director will be
presumed to be independent unless:
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For purposes of these guidelines, an “immediate family
member” includes a person’s spouse, parents, children,
siblings, mothers and
fathers-in-law,
sons and
daughters-in-law,
brothers and
sisters-in-law,
and anyone (other than domestic employees) who shares such
person’s home, and references to “Hanesbrands”
include all subsidiaries and divisions that are consolidated
with Hanesbrands Inc.
The Board annually will review all commercial and charitable
relationships between its directors and Hanesbrands to determine
whether the directors meet these categorical independence tests.
If a director has a relationship with Hanesbrands that is not
covered by these independence guidelines, those Hanesbrands
directors who satisfy such guidelines will consider the relevant
circumstances and make an affirmative determination regarding
whether such relationship is material or immaterial, and whether
the director would therefore be considered independent under the
NYSE’s rules.
Hanesbrands will disclose in its proxy statement (a) the
basis for any Board determination that a relationship was
immaterial despite the fact that it did not meet the categorical
independence tests set forth above, and (b) any charitable
contributions made by Hanesbrands to any charitable organization
in which a Hanesbrands director serves as an executive officer
if, within the preceding three years, contributions in any
single fiscal year exceeded the greater of $1 million, or
two percent (2%) of such charitable organization’s
consolidated gross revenues.
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TO
AUTHORIZE A PROXY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK
INK AS FOLLOWS:
HNSBI1 KEEP
THIS PORTION FOR YOUR RECORDS
DETACH
AND RETURN THIS PORTION ONLY
THIS PROXY CARD
IS VALID ONLY WHEN SIGNED AND DATED.
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Δ DETACH PROXY
CARD HERE
Δ HNSBI2
The undersigned
holder of common stock of Hanesbrands Inc., a Maryland
corporation (the “Company”), hereby appoints Richard
A. Noll and Joia M. Johnson, or either of them, as proxies for
the undersigned, with full power of substitution in each of
them, to attend the Annual Meeting of the Stockholders of
Hanesbrands Inc. to be held at the Jumeirah Essex House, Grand
Salon, 160 Central Park South, New York, New York 10019, on
April 28, 2009, at 8:00 a.m., Eastern time, and any
postponement or adjournment thereof, to cast on behalf of the
undersigned all votes that the undersigned is entitled to cast
at such meeting and otherwise to represent the undersigned at
the meeting with all powers possessed by the undersigned if
personally present at the meeting. The undersigned hereby
acknowledges receipt of the Notice of the Annual Meeting of
Stockholders and of the accompanying Proxy Statement, the terms
of each of which are incorporated by reference, and revokes any
proxy heretofore given with respect to such meeting. The
votes entitled to be cast by the undersigned will be cast as
instructed. If this Proxy is executed, but no instruction is
given, the votes entitled to be cast by the undersigned will be
cast “FOR” each of the nominees for director and
“FOR” proposal 2, which is set forth on the
reverse side hereof. The votes entitled to be cast by the
undersigned will be cast in the discretion of the Proxy holder
on any other matter that may properly come before the meeting
and any adjournment or postponement thereof. The Board of
Directors recommends a vote “FOR” each nominee for
director and “FOR” proposal 2.
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