Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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Christopher & Banks Corporation
(Name of Registrant as Specified In Its Charter)
 
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http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12867526&doc=2



To Our Stockholders:

Christopher & Banks Corporation is holding its Annual Meeting of Stockholders (“Annual Meeting”) on Wednesday, June 26, 2019 at 9:00 a.m. Central Time. You may attend the Annual Meeting in person and vote and submit questions during the Annual Meeting.

The following pages include the formal notice of the Annual Meeting and the proxy statement. The proxy statement describes and provides information on the matters to be acted on at the Annual Meeting. It is important that your shares be represented at the meeting, regardless of whether you plan to attend. After reviewing the proxy statement, please vote your shares as soon as possible through the voting options available to you as described in the proxy statement.

On behalf of management and our Board of Directors, we thank you for your continued support of Christopher & Banks Corporation and encourage you to join us at the Annual Meeting.


 
Sincerely,
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12867526&doc=8
 
 
 
 
Keri L. Jones
 
President and Chief Executive Officer





Christopher & Banks Corporation
2400 Xenium Lane North
Plymouth, Minnesota 55441

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME:
 
9:00 a.m. Central Time on Wednesday, June 26, 2019
 
 
 
PLACE:
 
Dorsey & Whitney LLP
 
 
50 South Sixth Street, Suite 1500, 15th Floor, Minneapolis, Minnesota
 
 
 
ITEMS OF BUSINESS:
 
1.
To elect six directors as nominated by our Board of Directors to each serve a one-year term.
 
 
2.
To approve, on an advisory basis, the compensation of our named executive officers (the "Say-on-Pay Proposal").
 
 
3.
To ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending February 1, 2020 ("Fiscal 2019").
 
 
4.
To authorize the Company's Board of Directors, in its discretion, to amend the Company's Restated Certificate of Incorporation to effect a reverse stock split of the Company's common stock at a ratio of 1-for-3 to 1-for-8, such ratio to be determined by the Board of Directors.
 
 
5.
To consider such other business that properly comes before the Annual Meeting or any adjournment of the Annual Meeting.
 
 
 
 
ANNUAL REPORT AND PROXY STATEMENT:
 
A copy of our proxy statement and annual report is available at https://materials.proxyvote.com/171046.
 
 
 
DATE OF MAILING OR AVAILABILITY:
 
This Notice of Annual Meeting of Stockholders and the proxy statement are first being mailed or made available, as the case may be, to stockholders on or about May 15, 2019.
 
 
 
RECORD DATE:
 
You may vote at the Annual Meeting if you were a stockholder of record of Christopher & Banks Corporation, or if you hold shares through a broker or other nominee, as of the close of business on April 29, 2019.
 
 
 
PROXY VOTING:
 
Your vote is important to us. You may vote via proxy:
 
 
 
 
 
1.
By visiting www.proxyvote.com on the Internet;
 
 
2.
By calling (within the U.S. or Canada) toll-free at 1-800-690-6903; or
 
 
3.
By signing and returning the enclosed proxy card if you received printed copies of the proxy materials.

For shares held through a broker, bank or other nominee, you may vote by submitting voting instructions to your broker, bank or nominee.

Regardless of whether you expect to attend the meeting, please vote your shares in one of the ways outlined above.
Important Notice Regarding Availability of Proxy Materials on the Internet
We are furnishing proxy materials to certain stockholders over the Internet. On or about May 15, 2019, we began mailing to our stockholders a Notice of Internet Availability of Proxy Materials (“Notice of Availability”) containing instructions on how to access our 2019 proxy statement and Fiscal 2018 annual report and to vote online or via telephone. If you received the Notice of Availability and would like to receive a copy of the printed proxy materials, the Notice of Availability contains instructions on how you can request copies of these documents. Please vote your shares promptly to ensure that they are represented at the meeting.
 
 
 
For the Board of Directors
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12867526&doc=9
 
 
 
 
Luke R. Komarek
 
Senior Vice President, General Counsel & Corporate Secretary



PROXY STATEMENT SUMMARY

2019 ANNUAL MEETING OF STOCKHOLDERS
Date and Time:
June 26, 2019, 9:00 a.m. Central Time
 
 
Place:
Dorsey & Whitney LLP
 
50 South Sixth Street, Suite 1500, 15th Floor, Minneapolis, Minnesota
 
 
Record Date:
April 29, 2019

ATTENDING THE REGULAR MEETING OF STOCKHOLDERS

Registration opens at 8:30 a.m. Central Time.

Meeting starts at 9:00 a.m. Central Time.

If you plan to attend the meeting, photo identification may be requested in order to be admitted to the meeting.

You do not need to attend the meeting to vote if you submitted your proxy in advance of the meeting.

Attendees will be expected to follow the Rules of Conduct for the meeting.


MEETING AGENDA AND BOARD RECOMMENDATIONS
 
Item
 
Board Recommendation
 
Page
Reference
1.
Election of six director nominees.
 
FOR All Director Nominees
 
2.
Advisory vote on executive compensation.
 
FOR
 
3.
Ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for Fiscal 2019.
 
FOR
 
4.
Approval of a reverse stock split.
 
FOR
 




CORPORATE GOVERNANCE

Christopher & Banks understands that corporate governance practices change and evolve over time. We seek to adopt and use practices that we believe will be of value to our stockholders and will positively aid in the governance of the Company. Our current governance practices include the following:
Annual election of all directors.
 
Board attendance during Fiscal 2018 of between 87.5% and 100% for all of the directors who served in Fiscal 2018.
Majority voting and a director resignation policy for directors in uncontested elections.
 
Executive sessions of independent directors held periodically.
Independent Board Chair.
 
Company policy prohibiting pledging and hedging of Company stock.
Only two directors are not independent – our current CEO and former interim CEO.
 
Periodic Board and committee self-assessments.
Our directors are limited to service on four public company boards (three if also serving as a public company CEO). Current average is less than two.
 
Average Board tenure of less than four years.
Stock ownership guidelines for directors and executive officers.
 
Mandatory retirement age for independent directors.

BACKGROUND ON DIRECTOR NOMINEES

Our Board of Directors has nominated six directors for election at the Annual Meeting. Please see “Item 1 - Election of Directors” beginning on page 1 of this proxy statement for additional information about each nominee.
 
 
 
 
 
Committee Memberships
 
Current Membership on
Other Public  Boards
Name
Age
Director
Since
Position
Independent
AC
CC
G&NC
 
 
Jonathan Duskin
51
2016
Chief Executive Officer of Macellum Capital Management, LLC
Yes
M
M
M
 
1
Seth Johnson
65
2016
Former Chief Executive Officer of Pacific Sunwear
Yes
C
 
1
Keri Jones
55
2018
President & Chief Executive Officer of Christopher & Banks Corporation
No
 
Kent Kleeberger
67
2016
Chair of the Board of Directors; Former Executive Vice President, Chief Operating Officer, Chico's FAS, Inc.
Yes
C
M
 
1
William Sharpe, III
56
2012
Partner of Pathfinder Companies, LLC
Yes
M
M
 
Allison Wing
52
N/A
Chief Marketing/Digital Officer, Bright Health; Former Chief Marketing Officer and Executive Vice President, Digital Channels for Maurices Incorporated
Yes
 
1
AC
Audit Committee
C
Chair
CC
Compensation Committee
M
Member
G&NC
Governance & Nominating Committee
 
 



TABLE OF CONTENTS
 
Page
 
 
 
 
 
 
 
 
 
 



 
 
 
 
 
 
 
 
 
 
 
 



 
 
 
 
 
 
 
 
 
 
 
 
 
 



http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12867526&doc=2

PROXY STATEMENT
FOR THE
2019 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 26, 2019

The Board of Directors (the “Board”) of Christopher & Banks Corporation (the “Company”, “we”, “us” and “Christopher & Banks”) is soliciting proxies for use at the Christopher & Banks 2019 Annual Meeting of Stockholders (“Annual Meeting”) to be held at 9:00 a.m. Central Time on Wednesday, June 26, 2019, at Dorsey & Whitney LLP’s offices at 50 South Sixth Street, 15th Floor, Minneapolis, Minnesota and at any adjournment or postponement of the meeting. On or about May 15, 2019, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) containing instructions on how to access our proxy statement for our Annual Meeting and our Annual Report to Stockholders. Our proxy statement and 2018 Annual Report to Stockholders are available at https://materials.proxyvote.com/171046.

ITEM 1 — ELECTION OF DIRECTORS

Our Board currently has seven members. All of the current directors’ terms expire as of the Annual Meeting. The Board is proposing that the six nominees described below be elected for a term expiring at the 2020 Annual Meeting of Stockholders, or when their successors are duly elected and qualified.

Each of the nominees has agreed to serve as a director if elected. If, for any reason, any nominee becomes unable to serve before the election, the persons named as proxies will vote your shares for a substitute nominee if one is selected by the Board, subject, as applicable, to the terms of the Support Agreement described below. Alternatively, the Board, at its option, may reduce the number of directors that are nominated for election.

The Company’s by-laws require directors to be elected by a majority of votes cast with respect to such director in uncontested elections (meaning, the number of shares voted “For” a director must exceed the number of votes cast “Against” that director).

In accordance with the Company’s Corporate Governance Guidelines, if an incumbent director is not elected by a majority vote in an uncontested election, the director must promptly tender her or his resignation to the Board of Directors. The Governance & Nominating Committee will make a recommendation to the Board of Directors as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board of Directors will act on the resignation, taking into account the Governance & Nominating Committee’s recommendation, and publicly disclose (by a press release, a filing with the SEC or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within 90 days following certification of the election results. If such incumbent director’s resignation is not accepted by the Board of Directors, such director will continue to serve until the next annual meeting and until her or his successor is duly elected or her or his earlier resignation or removal.

2019 Director Nomination Process

Support Agreement

On March 10, 2016, after discussions with Macellum Retail Opportunity Fund, LP and certain of its affiliates (collectively, “Macellum”), whose Chief Executive Officer is Jonathan Duskin, one of our nominees for director, as well as discussions with certain other institutional stockholders regarding potential changes to the composition of our Board, we entered into a support agreement with Macellum (the “Support Agreement”). Pursuant to the Support Agreement, effective as of the 2016 Annual Meeting, the size of the Board was reduced from nine to seven members and the slate of directors nominated by the Board for the 2016 Annual Meeting included two nominees designated by Macellum: Jonathan Duskin and Seth Johnson (the “Macellum Designees”).


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The Support Agreement also provides that at least one Macellum Designee who meets all independence or other requirements under applicable law and the rules and regulations of New York Stock Exchange ("NYSE") for service on such committee will be appointed to each committee of the Board. The Board has determined that both Mr. Duskin and Mr. Johnson meet all such requirements and Mr. Duskin currently serves on the Audit, Compensation, and Governance & Nominating Committees and Mr. Johnson chairs the Audit Committee. Additionally, during the term of the Support Agreement, in the event either of the Macellum Designees ceases to serve subsequent to his election due to his resignation, only Macellum may fill the vacancy of a Macellum Designee. However, should Macellum cease to beneficially own an aggregate net long position (as such term is defined in Rule 14e-4 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of at least the lesser of (i) 1,853,974 shares of Common Stock (subject to adjustment for stock splits, reclassifications, combinations and similar adjustments); and (ii) 5% of the outstanding shares of the Company's Common Stock, then each of the Macellum Designees will be deemed to have resigned from the Board and any committee of the Board on which such designee then sits and Macellum will no longer be able to designate a replacement candidate. The Support Agreement will terminate on the earlier to occur of the mutual agreement of the Company and Macellum, or the date and time that no Macellum Designees serve on the Board.

The Support Agreement does not require the Board to nominate any specific candidates for director for the 2019 Annual Meeting or for any subsequent annual meetings, but during the term of the Support Agreement, the Board must provide Macellum notice of its decision not to nominate any Macellum Designee for election at an annual meeting at least twenty days prior to the deadline for Macellum to nominate director candidates in accordance with our by-laws, and the annual meeting may not be held less than ninety days after such notice.

Director Nominees

The Board has nominated five of the seven current directors, Jonathan Duskin; Seth Johnson; Keri Jones; Kent Kleeberger; and William Sharpe, III for election to the Board to serve until the 2020 Annual Meeting of Stockholders or until their successors are duly elected and qualified. In addition, the Board has nominated Allison Wing for election to the Board to serve until the 2020 Annual Meeting of Stockholders. Pursuant to the terms of his amended Employment Agreement with the Company, Joel Waller previously indicated that he did not intend to stand for re-election at the 2019 Annual Meeting and Laura Weil is not standing for re-election.

Board Recommendation

The Board recommends a vote FOR the election of each of Jonathan Duskin; Seth Johnson; Keri Jones; Kent Kleeberger; William Sharpe, III; and Allison Wing. Proxies will be voted FOR the election of each of the six nominees, unless otherwise specified.

Below is biographical information for each of the director nominees.

Biographies and Attributes of Director Nominees

Jonathan Duskin, 51, has served as one of our directors since the 2016 Annual Meeting. Mr. Duskin is currently Chief Executive Officer of Macellum Capital Management, LLC, a Delaware limited liability company which operates a New York-based pooled investment fund, a position he has held since July 2009. From January 2005 to February 2008, Mr. Duskin served as a Managing Director and Partner at Prentice Capital Management, LP, an investment management firm. From March 2002 to January 2005, Mr. Duskin was a Managing Director at S.A.C. Capital Associates LLC, a New York-based hedge fund. From January 1998 to January 2002, Mr. Duskin was a Managing Director at Lehman Brothers Inc., an investment bank, and served as Head of Product Management and Chairman of the Investment Policy Committee within the Research Department. Mr. Duskin currently serves on the board of directors of Citi Trends, Inc.

Mr. Duskin brings considerable business, financial services and retail investment expertise, having provided financial services and equity and debt capital to a variety of public and private companies as well as serving as a control investor. His prior service on the boards and committees of public companies and his familiarity with the retail industry positions him well to serve as a member of the Board and its three committees.


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Seth R. Johnson, 65, has served as one of our directors since the 2016 Annual Meeting. Mr. Johnson is currently on the board of directors of Tilly’s, Inc. (“Tilly’s”), a specialty retailer of West Coast inspired casual apparel, footwear and accessories, where he has served since April 2011. Mr. Johnson served as a member of the advisory committee to the Tilly’s board from July 2008 through 2011. From July 2014 to January 2018, Mr. Johnson served as a member of the board of directors of bebe stores, inc., a specialty retailer of women’s clothing and accessories. He was also a member of the board of directors and lead director of True Religion Apparel, Inc., a premium fashion apparel retailer, from 2010 to 2013. From 2007 to 2009, Mr. Johnson was an instructor in business strategy at Chapman University’s Argyros School of Business and Economics. From 2005 to 2006, Mr. Johnson served as the Chief Executive Officer of Pacific Sunwear of California, Inc. From 1999 to 2004, Mr. Johnson was the Chief Operating Officer of Abercrombie & Fitch Co., a specialty retailer, and was its Chief Financial Officer from 1992 to 1998.

Mr. Johnson has over 30 years of apparel retail experience, including significant experience as both a retail executive and board member. Mr. Johnson’s strong retail background and service on the boards and committees of public companies positions him well to serve as a member of our Board and to Chair its Audit Committee.

Keri L. Jones, 55, has served as our President and Chief Executive Officer ("CEO") and a director since March 12, 2018. From May 2017 until February 2018, Ms. Jones served as Executive Vice President, Chief Merchant of Dick's Sporting Goods ("Dick's"). Prior to Dick's, Ms. Jones spent 27 years at Target Corporation, where she served in a variety of leadership roles, including as Executive Vice President, Global Supply Chain, from 2015 to 2016; Executive Vice President, Merchandise Planning and Operations, from 2014 to 2015; Senior Vice President, Merchandise Planning, from 2011 to 2014; Senior Vice President, Health and Beauty, from 2008 to 2011; and Vice President, General Merchandise Manager, Toys and Sporting Goods, from 2001 to 2008.

Ms. Jones has over 30 years of retail experience with an extensive background in merchandising, operations, planning and allocation. Her extensive retail experience provides the Board with valuable insight into the marketing, merchandising and operational issues the Company faces. In her role as CEO, she provides valuable insight to the Board regarding the day-to-day issues at the Company and plays a key role with respect to the Company's strategies and initiatives. Her extensive and broad retail background makes her particularly well suited to serve as a member of our Board.

Kent A. Kleeberger, 67, has served as one of our directors since the 2016 Annual Meeting and as Chair of the Board since January 2017. He has been engaged as an independent consultant to certain private equity firms since April 2015. From February 2011 to March 2015, he was Executive Vice President, Chief Operating Officer of Chico’s FAS, Inc. (“Chico’s”), a specialty apparel retailer. Mr. Kleeberger joined Chico’s in November 2007 as the Executive Vice President, Chief Financial Officer & Treasurer. He was promoted to Chief Operating Officer in February 2011. Prior to joining Chico’s, Mr. Kleeberger was the Senior Vice President, Chief Financial Officer for Dollar Tree Stores, Inc. from July 2004 through October 2007. From 1998 to 2004, he served in numerous capacities, culminating as Chief Operating Officer, for Too, Inc., now known as Justice (part of Ascena Retail Group, Inc.). Prior to that, Mr. Kleeberger served in various financial positions with The Limited, Inc., including Corporate Controller. Before joining The Limited, Inc., Mr. Kleeberger was a Certified Public Accountant with KPMG for 13 years. Mr. Kleeberger also serves as Lead Director and Audit Committee Chair at Shoe Carnival, Inc. and was a member of the board of directors of Aeropostale, Inc. from August 2015 to February 2016 and of Too, Inc. from August 1999 until February 2004.

Mr. Kleeberger brings retail, operational, mergers and acquisitions and management experience together with a strong background in the areas of financial reporting, accounting, income taxes and audits, and risk management. His service on the boards and committees of public companies, together with his retail and business background, makes him a valuable member of our Board and the Governance & Nominating Committee, and an effective Chair of the Board and its Compensation Committee.

William F. Sharpe, III, 56, has served as one of our directors since May 2012. Mr. Sharpe has served as a Partner of Pathfinder Companies, LLC since December 2015. Mr. Sharpe also serves as Senior Advisor to Steeplechase Advisors, LLC, a business consulting firm. From September 2009 to December 2015, Mr. Sharpe served as a Partner and Managing Director of Quetico Partners, LLC, a boutique investment banking firm. From July 2007 to August 2009, he was Chief Operating Officer and a Managing Director of Lazard Middle Market, a subsidiary of Lazard, Ltd. which provides advice on mergers and acquisitions, restructuring, and public and private capital raising to the middle market, following the acquisition by Lazard, Freres & Company of Goldsmith Agio Helms & Lynner, LLC (“Goldsmith-Agio”). He was with Goldsmith-Agio, a private investment banking firm, from February 1998 to July 2007, most recently serving as Chief Operating Officer and Managing Director from 2002 to July 2007.


3


Mr. Sharpe brings considerable business, investment banking and corporate experience to our Board, given his more than 15 years as an investment banker. Mr. Sharpe’s experience as a board and committee member at both private and non-profit companies, together with his broad investment banking, corporate and financial background, positions him well to serve as a member of our Board and of its Audit and Compensation Committees.

Allison M. Wing, 52, is Chief Marketing/Digital Officer for Bright Health a health insurance company, a position she has held since April 2018. From 2014 to 2017, she served as Chief Marketing Officer and Executive Vice President of Digital Channels at Maurices Incorporated, a division of Ascena Retail Group, Inc., an apparel and accessories retailer. Ms. Wing is the founder of giggle, Inc. a multichannel retailer, wholesaler and licensor of baby products, where she served as Chief Executive Officer and Chairperson from 2004 to 2014. She began her career at Nike and later spent several years in Silicon Valley, California working for a variety of on-line, software and e-commerce companies. Ms. Wing currently serves on the board of directors of Casey’s General Stores, Inc. and was on the board of directors of Bazaarvoice, Inc. from April 2017 to February 2018. Ms. Wing was recommended by a non-management director to be a director nominee.

Ms. Wing is an experienced retail and brand marketing executive who brings years of digital, retail and customer insight experience to our Board. In addition, she has considerable operational experience as a CEO of a multi-channel business. Ms. Wing also has experience serving on several public company boards all of which makes her a valuable addition to our current Board.

INFORMATION REGARDING THE BOARD AND CORPORATE GOVERNANCE

The Board conducts its business through meetings and written consents of the Board and the following standing committees: Audit, Compensation, and Governance & Nominating. Each of the three committees has adopted and operates under a written charter, all of which are available on our website at www.christopherandbanks.com—select the “For Investors” link and then the “Corporate Governance” link. Other corporate governance documents available on our website include our Corporate Governance Guidelines and Code of Conduct.

Code of Conduct

We have adopted a Code of Conduct applicable to all of our employees, directors and officers, including our principal executive officer, principal financial officer, principal accounting officer, controller and any other employees performing similar functions.

Director Independence

Our Corporate Governance Guidelines provide that a majority of our directors shall meet the independence requirements of the NYSE. Under the NYSE rules, no director qualifies as independent unless the Board affirmatively determines that the director has no material relationship with us (directly, or as a partner, stockholder or officer of an organization that has a relationship with us).

In assessing the independence of our directors, the Board considers all of the business relationships between the Company and our directors and their respective affiliated companies. This review is based primarily on the Company’s review of its own records and on responses of the directors to a questionnaire regarding employment, business, familial, compensation and other relationships with the Company and our management. Where relationships exist, the Board determines whether the relationship between the Company and the director or the director’s affiliated companies impairs the director’s independence.

After consideration of the directors’ relationships with the Company, the Board has affirmatively determined, in accordance with the standards set forth in the Corporate Governance Guidelines, that other than Mr. Waller, none of the individuals serving as non-employee directors during Fiscal 2018 had a material relationship with us and that each of such non-employee directors is independent. Additionally, the Board has affirmatively determined, in accordance with the standards set forth in the Corporate Governance Guidelines, that none of the nominees for director, other than Keri Jones, has a material relationship with us, and that, other than Ms. Jones, each such nominee for director is independent. Ms. Jones is not considered an independent director because of her employment as our President and CEO. Mr. Waller is not considered an independent director because of his prior employment as our interim President and CEO.


4


Board Leadership Structure

The Board believes it is important to maintain flexibility in its board leadership structure and, therefore, has not mandated either the combination or separation of the positions of Chair of the Board and CEO. Given the demanding nature of both the Chair and CEO positions, the Board continues to believe that it is appropriate to have two different persons occupying each role. Our independent director Chair has the typical responsibilities of a Board Chair, including responsibility for setting Board agendas, chairing Board and stockholder meetings, liaising between the other members of the Board, and the CEO and other members of senior management, as well as presiding over the sessions of Board meetings at which only the independent directors are present. Kent Kleeberger, one of our independent directors, has served as Chair of our Board since January, 2017.

If in the future the two roles were to be combined, the Board believes it would likely appoint a lead independent director, given its view of the importance of strong independent leadership at the Board level.

Meetings of the Independent Directors

At both the Board and committee levels, our non-employee directors meet periodically in executive sessions in which our CEO and other members of management do not participate. Our Board Chair serves as the presiding director of executive sessions of the Board, and the Chair of each committee serves as the presiding director at executive sessions of that committee. During Fiscal 2018, our independent directors met in executive sessions of the Board without management present during three Board meetings and in addition, the non-employee directors met in executive sessions without management present on two other occasions. Each of the Board’s committees also held sessions without management present in Fiscal 2018.

Stock Ownership Guidelines

To provide a direct link between director and stockholders’ interests, the Board has established stock ownership guidelines for non-employee directors. Each director is expected to achieve and maintain stock ownership of stock having a value of $100,000 by the third anniversary of the date he or she joined our Board.

Term/Age Limits

The Board does not believe it is advisable to establish arbitrary term limits on a director’s service. The Board has a mandatory retirement age under which an independent director must complete her or his term before age 76. The Board has the authority to re-nominate an independent director who has reached her or his 76th birthday for another term, due to special or extraordinary circumstances as determined by the Board. Given his prior employment with the Company, Mr. Waller is not considered an independent director and therefore is not subject to the Board's mandatory retirement policy. As part of its responsibilities, the Governance & Nominating Committee evaluates each incumbent director’s qualifications, performance and ability to continue to contribute productively before recommending the nomination of that director for an additional term.

Limitations on Board Service

Limitations on All Non-Employee Directors. Our Corporate Governance Guidelines provide that no member of the Board shall simultaneously serve on the boards of directors of more than three public companies in addition to ours.

Limitations on Non-Employee Directors who are Chief Executive Officers of a Public Company. Our Corporate Governance Guidelines also provide that an independent director who is a chief executive officer of a public company shall not sit on the boards of directors of more than three public companies as follows: (i) the Company; (ii) the company at which he or she serves as chief executive officer; and (iii) one other public company.

A Company director is to notify the Chair of the Board prior to becoming a director of another public company, in order to avoid potential conflicts of interest and to address whether the aggregate number of directorships held by such director would interfere with her or his ability to carry out her or his responsibilities as one of our directors. In the event that the Board determines that the additional directorship constitutes a conflict of interest or interferes with such director’s ability to carry out her or his responsibilities as one of our directors, such director, upon the request of the Board, shall either offer her or his resignation or not accept the other directorship.


5


Limitations on the Company’s Officers. Our Corporate Governance Guidelines further provide that an officer of the Company may not serve on the board of directors of another public company unless the Company’s Board has reviewed and consented to, in advance, the officer serving on such board of directors. In addition, Ms. Jones’ Employment Agreement provides that she is not to serve on the board of directors of a public or private company unless the Board has reviewed and consented to, in advance, Ms. Jones’ service on such Board.

As of the date of this proxy statement, all of the Company’s director nominees were in compliance with the Corporate Governance Guidelines’ limitations on board service.

Board Involvement in Risk Oversight

The Company’s management is responsible for defining the various risks facing the Company, formulating risk management policies and procedures, and managing the Company’s risk exposures on a day-to-day basis. The Board’s responsibility is to monitor the Company’s risk management processes concerning the Company’s material risks and evaluating whether management has processes in place to address these material risks; the Board is not responsible, however, for defining or managing the Company’s various risks.

While the Board periodically reviews and discusses the overall risks the Company faces, as well as risk management and mitigation in the context of specific plans or projects being proposed or implemented, the Board also exercises its overall responsibility for risk oversight through its committees. The Audit Committee of the Board is primarily responsible for overseeing management’s processes for managing financial and operational risks at the Company. The Audit Committee also has primary responsibility at the Board level with respect to overseeing the management of risks relating to the reliability of our financial reporting processes and system of internal control. In connection with that responsibility, the Audit Committee has sole authority to retain and terminate the Company's independent public accounting firm and is directly responsible for the overall compensation and oversight of the work of the independent public accounting firm. The Audit Committee meets with management and the independent public accounting firm to review and discuss the annual audited and quarterly unaudited financial statements and reviews the integrity of our accounting and financial reporting processes and audits of our financial statements.

Similarly, the Compensation Committee of the Board oversees risks associated with its areas of responsibility, including the risks associated with our compensation programs, policies and practices with respect to both executive compensation and compensation generally. The Compensation Committee has sole authority to retain and terminate its compensation consultants and is responsible for approving the overall compensation and oversight of the work of its compensation consultants.

The Governance & Nominating Committee of the Board oversees risks associated with its areas of responsibility, including the risks associated with non-employee director compensation. In addition, the Governance & Nominating Committee periodically analyzes corporate governance practices in order to assist the Board in its risk oversight activities.


To keep the Board informed regarding the Company’s risk management efforts, management periodically reports to the Audit Committee, as well as to the Board, on risk management and mitigation activities. The Compensation Committee annually reviews and discusses any risks associated with the design of the Company's executive compensation programs. In addition, the Chair of each Board committee typically reports to the full Board at each regular Board meeting regarding the matters discussed at any committee meetings held since that committee’s prior report to the Board, unless all of the Board members attended the committee meeting.

We believe that the Board’s role in risk oversight of the Company is consistent with the Company’s leadership structure, with the CEO and other members of management having responsibility for assessing and managing the Company’s risk exposure, and the Board, through the leadership of our independent Chair, and its committees providing oversight in connection with those efforts.


6


MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors held 14 meetings during Fiscal 2018. Each of the directors serving on the Board during Fiscal 2018 attended at least 87.5% or more of the aggregate number of the meetings of the Board (held during the period he or she served as a director) and meetings of the committees on which he or she served (held during the period he or she served as a committee member). The attendance record of four of the director nominees was 100%.

As of April 29, 2019, the members and Chairs of the Board's three committees were:
Independent Directors
 
Audit
 
Compensation
 
Governance &
Nominating
Jonathan Duskin
 
X
 
X
 
X
Seth Johnson
 
Chair
 
 
 
 
Kent Kleeberger
 
 
 
Chair
 
X
William Sharpe, III
 
X
 
X
 
 
Laura Weil
 
 
 
X
 
Chair

The Audit Committee

All of the Audit Committee members are “independent” under applicable NYSE listing standards and Securities and Exchange Commission (the "SEC") rules and regulations. Our Board of Directors has determined that all three members of the Audit Committee, Jonathan Duskin, Seth Johnson and William Sharpe, III, meet the definition of an “audit committee financial expert” as established by the SEC. The Audit Committee provides assistance to the Board in fulfilling its oversight responsibilities relating to the quality and integrity of the financial reports of the Company. The Audit Committee has the sole authority to appoint, review and discharge our independent public accountants, and has established procedures for the receipt, retention, response to and treatment of complaints regarding accounting, internal controls and audit matters. In addition, the Audit Committee is responsible for:

reviewing the scope, results, timing and costs of the audit with our independent accountants and reviewing the results of the annual audit examination and any accompanying management letters;

assessing the independence of the independent public accountants on an annual basis, including receipt and review of a written report from them regarding their independence consistent with the requirements of the Public Company Accounting Oversight Board;

reviewing and approving the services provided by the independent public accountants;

overseeing the internal audit function; and

reviewing our significant accounting policies, financial results and earnings releases, and the adequacy of our internal controls and procedures.

The responsibilities of the Audit Committee are more fully described in the Audit Committee’s charter.

The Audit Committee held six meetings during Fiscal 2018. The Audit Committee has engaged Deloitte & Touche LLP as our independent registered public accountants for the fiscal year ending February 1, 2020 and is recommending that our stockholders ratify this selection at the Annual Meeting. The report of the Audit Committee is found on page 35 of this proxy statement.


7


The Compensation Committee

All of the Compensation Committee members are “independent” under applicable NYSE listing standards. The Compensation Committee assists the Board in fulfilling its oversight responsibilities relating to executive compensation, employee compensation and benefit programs and plans, and succession planning for senior management. In addition, the Compensation Committee is responsible for:

reviewing the performance of our CEO;

recommending or determining, respectively, the compensation and benefits for our CEO and other executive officers;

establishing our executive compensation policies and practices;

overseeing and evaluating the risks associated with our executive compensation policies and practices;

administering our incentive compensation and stock plans, other than the equity plan applicable to our non-employee directors (which is administered by the Governance & Nominating Committee);

approving the adoption of material changes to or the termination of our benefit plans; and

meeting periodically with the CEO to discuss succession planning and management development.

The Compensation Committee has delegated authority to the CEO and the Senior Vice President, Chief Human Resources Officer to make awards to employees and consultants pursuant to guidelines approved by the Compensation Committee with respect to both the amount and type of awards such employees or consultants may be eligible to receive. This delegation expressly excludes the ability to make awards to the CEO and any of her direct management reports. It is also subject to an overall aggregate limit of 100,000 shares and an individual limit on the number of stock options and shares of restricted stock that may be awarded to an individual employee or consultant in a calendar year.

The Compensation Committee reviews and discusses with management the disclosures regarding executive compensation to be included in our annual proxy statement, and recommends to the Board inclusion of the “Compensation Discussion and Analysis” in our annual proxy statement. The responsibilities of the Compensation Committee are more fully described in the Compensation Committee’s charter. For more information regarding the Compensation Committee’s process in setting compensation and the role played by our CEO in compensation decisions, please see “Compensation Discussion and Analysis” below.

The Compensation Committee held 6 meetings during Fiscal 2018. The “Compensation Committee Report” is found on page 22 of this proxy statement.

Compensation Committee Interlocks and Insider Participation

Current directors, Mr. Duskin, Mr. Kleeberger, Mr. Sharpe and Ms. Weil each served on the Compensation Committee for all of Fiscal 2018. None of the members of the Compensation Committee during Fiscal 2018 was or is an officer or employee of the Company. During Fiscal 2018, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the Board or the Compensation Committee. Based on our review of the annual questionnaires completed by our current directors and publicly available information, we know of no relationship involving these individuals or our other directors which requires disclosure in this proxy statement as a “compensation committee interlock”.


8


The Governance & Nominating Committee

All of the members of the Governance & Nominating Committee are “independent” under applicable NYSE listing standards. The Governance & Nominating Committee serves in an advisory capacity to the Board on matters of organization and the conduct of Board activities. The Governance & Nominating Committee is responsible for:

identifying and recommending candidates for service on the Board;

staying abreast of corporate governance developments;

annually reviewing the charters of each Board committee;

reviewing and revising our Corporate Governance Guidelines and Code of Conduct;

leading the Board in its periodic review of the performance of the Board and the Board’s committees;

periodically reviewing and making recommendations to the Board as to the size and composition of the Board and the criteria for selecting director nominees;

periodically reviewing and making recommendations to the Board regarding the role and responsibilities of the Board Chair; and

periodically reviewing and making recommendations to the Board as to the cash and equity compensation of non-employee directors.

The responsibilities of the Governance & Nominating Committee are more fully described in the Committee’s charter.

The Governance & Nominating Committee will consider Board nominees recommended by stockholders that are submitted in accordance with the process described below under the caption “Procedures for Recommending, Nominating and Evaluating Director Candidates”.

The Governance & Nominating Committee held four meetings during Fiscal 2018.

Stockholder Engagement Policy - Procedures for Contacting the Board

Because the Board values the input and insights of the Company’s stockholders and believes that effective Board-stockholder engagement and communication strengthens the Board’s role as an active, informed and engaged body, it has adopted a Stockholder Engagement Policy. The Chair of the Board and the Company’s Chief Executive Officer oversee this policy and the Board’s stockholder engagement and communications. The goal of this policy is to promote and develop improved and more in-depth two-way communications between the Company’s stockholders and the Board, and to establish and communicate an appropriate structure for such communications.

The Board has designated the Corporate Secretary as its agent to receive and review written communications and meeting requests addressed to the Board, any Board Committee or any individual Director. Such communications should be sent by U.S. mail addressed to:

Christopher & Banks Corporation Board of Directors
c/o Christopher & Banks Corporation
Attention: Corporate Secretary
2400 Xenium Lane North
Plymouth, MN 55441

The Corporate Secretary will review all such communications and if appropriate, will promptly forward the communications so received to the full Board, the non-management directors or the individual Board member(s) specifically addressed in the communication.


9


Procedures for Recommending, Nominating and Evaluating Director Candidates

Recommending Director Candidates for Nomination by the Board

The Governance & Nominating Committee will consider director candidates recommended by stockholders. A stockholder who wishes to recommend a director candidate for nomination by the Board at an annual meeting of stockholders or for vacancies of the Board that arise between annual meetings must provide the Governance & Nominating Committee with sufficient written documentation to permit a determination by the Board as to whether such candidate meets the required and desired director selection criteria set forth in our by-laws and our Corporate Governance Guidelines described below. Such documentation and the name of the director candidate should be sent by U.S. mail addressed as described above under "Stockholder Engagement Policy - Procedures for Contacting the Board".

Nominating Director Candidates

Under our by-laws, only persons nominated in accordance with the procedures set forth in the by-laws will be eligible to serve as directors. In order to nominate a candidate for service as a director, you must be a stockholder at the time you give the Board notice of your nomination, and you must be entitled to vote for the election of directors at the annual meeting at which your nominee will be considered. In accordance with our by-laws, director nominations by stockholders must be made pursuant to notice delivered to or mailed and received at our principal executive offices at the address above, not later than the 90th day, nor earlier than the 120th day, prior to the first anniversary of the prior year’s annual meeting of stockholders. However, in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 30 days from such anniversary date, notice by the stockholder must be delivered not earlier than the close of business on the 120th day prior to such annual meeting date and not later than the close of business on the later of the 90th day prior to such annual meeting date or the 10th day following the day on which public announcement of the date of the annual meeting is first made. Your notice must set forth, in addition to the requirements contained in our by-laws, all information relating to the nominee that is required to be disclosed in solicitations of proxies for the election of directors, or as otherwise required, pursuant to Regulation 14A under the Exchange Act (including the nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected). The notice also must contain (1) the name and address of the stockholder giving notice and the beneficial owner, if any, on whose behalf the nomination is made and (2) the class and number of shares owned by the stockholder and such beneficial owner.

Evaluating Director Candidates

Our Corporate Governance Guidelines require the Governance & Nominating Committee to consider several factors when evaluating the appropriate characteristics of candidates for service as a director. The Governance & Nominating Committee initially evaluates a prospective nominee based on her or his resume and other background information that has been provided to the Governance & Nominating Committee. At a minimum, director candidates must demonstrate high standards of ethics, integrity, independence, sound judgment, strength of character, and meaningful experience and skills in business or other appropriate endeavors. In addition to these minimum qualifications, the Governance & Nominating Committee considers other factors it deems appropriate based on the current needs and desires of the Board, including specific business and professional experience that is relevant to the Board’s needs, including, but not limited to, Board diversity. A member of the Governance & Nominating Committee will contact, for further review, those candidates who the Governance & Nominating Committee believes are qualified, who may fulfill a specific Board need and who would otherwise best make a contribution to the Board. The Governance & Nominating Committee is responsible for conducting, with the assistance of the Corporate Secretary, and subject to applicable law, any inquiries into the background and qualifications of the candidate. Based on the information the Governance & Nominating Committee learns during this process, it determines which nominee(s) to recommend to the Board to submit for election. The Governance & Nominating Committee uses a comparable process for evaluating all director candidates, regardless of the source of the recommendation.

The Governance & Nominating Committee is authorized to use, as it deems appropriate or necessary, an outside consultant to identify and screen potential director candidates. The Governance & Nominating Committee will reassess the qualifications of a current director, including the director’s attendance and contributions at Board and committee meetings, prior to recommending a director for re-election.


10


Compensation Program for Non-Employee Directors

In 2018, the Company’s stockholders approved the Amended and Restated 2013 Directors' Equity Incentive Plan, which was originally approved by our stockholders in 2013 and was amended in 2016 (as amended and restated, the "Directors’ Plan"). The Directors’ Plan is administered by the Governance & Nominating Committee and the Board. They have broad powers to: (i) establish rules for the administration of the Directors’ Plan; (ii) select the participants in the Directors’ Plan; (iii) determine the types of awards to be granted and the number of shares covered by such awards; and (iv) set the terms and conditions of such awards.

In October 2008, the Board adopted the Christopher & Banks Corporation Non-Employee Director Deferred Stock Plan (as amended, the “Deferred Stock Plan”), which provides an opportunity for non-employee members of the Board to voluntarily defer the receipt of shares of our Common Stock granted by the Company in connection with the performance of their services as a director in return for the right to receive such shares at a later date.

The Governance & Nominating Committee is responsible for reviewing director compensation and making recommendations to the Board. The recommendations of the Governance & Nominating Committee are based on industry and peer group data, independent third party comparisons of director compensation and the Company’s past practices. Based on the Governance & Nominating Committee’s recommendations, our Board determines the compensation of our directors on an annual basis. A director who is our employee or has recently served as an employee does not receive compensation for her or his service as a director.

In connection with the election of directors at the 2018 Annual Meeting of Stockholders, the Governance & Nominating Committee made recommendations to the Board of Directors regarding director's compensation. Following the 2018 Annual Meeting of Stockholders, no changes were made with respect to director's compensation other than to increase the annual cash retainer to $60,000 per year.

For service in Fiscal 2018, non-employee directors received an annual cash retainer of $55,000 for service on our Board. The Chair of the Board received an additional annual cash retainer of $65,000. The Chairs of the Audit, Compensation, and Governance & Nominating Committees each received a retainer for Fiscal 2018 of $15,000, $10,000 and $9,000, respectively. For Fiscal 2018, the other members of the Audit Committee received an additional retainer of $9,000, the other members of the Compensation Committee received an additional retainer of $6,000, and the other members of the Governance & Nominating Committee received an additional retainer of $5,000. The cash retainer fees are paid quarterly in arrears and are pro-rated if the non-employee director did not serve for the entire period.

In addition to the cash retainers, we also grant equity awards to our independent directors in order to further align their interests with those of our stockholders. Effective June 13, 2018, each independent director, other than Mr. Sharpe, received 50,000 shares of restricted stock issued under the Directors’ Plan representing $41,500 in value based on the closing price of our stock on the NYSE on that date as compared to an equity grant in fiscal 2017 having a value of approximately $67,000 in Fiscal 2017. The shares of restricted stock vest on the earlier of June 13, 2019 or the date of the 2018 Annual Meeting of Stockholders. Mr. Sharpe elected to defer receipt of his award under the Deferred Stock Plan and was granted 50,000 restricted stock units in lieu of restricted stock. Pursuant to the terms of the Directors' Plan, the number of shares that can be granted to a non-employee director in a calendar year (other than the Board Chair) is capped at 50,000 shares. No stock options were granted to non-employee directors in Fiscal 2018.




(This space intentionally left blank.)


11



Non-Employee Director Compensation for Fiscal 2018

The following table sets forth the cash earned by and non-cash compensation awarded to each person who served as a non-employee director during Fiscal 2018.

Name
 
Fees Earned
and Paid in
Cash ($)(1)
 
Stock Awards
($)(2)(3)
 
Option
Awards ($)
 
All Other
Compensation ($)
 
Total ($)
Jonathan Duskin
 
74,567
 
41,500

 

 

 
116,067
Seth Johnson
 
69,567
 
41,500

 

 

 
111,067
Kent Kleeberger
 
134,567
 
41,500

 

 

 
176,067
William Sharpe, III
 
69,567
 
41,500

 

 

 
111,067
Laura Weil
 
69,567
 
41,500

 

 

 
111,067
Joel Waller (4)
 
17,419
 

 

 

 
17,419
 
 
 
 
 
(1)
The amounts in this column consist of cash fees paid to the non-employee directors as described in “Compensation Program for Non-Employee Directors” above.

(2)
The amounts in this column represent the grant date fair values of the restricted stock or restricted stock unit awards made in Fiscal 2018, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Share-Based Payment” (“ASC 718”), and based on the closing share price of one share of our Common Stock on the NYSE on the date of grant. Additional information related to the calculation of the grant date fair values is set forth in Note 6 of the Notes to the Consolidated Financial Statements included in our Report on Form 10-K for the period ended February 2, 2019 (the “10-K Report”).

(3)
Effective on June 13, 2018, following her or his election as a director at the Company’s 2018 Annual Meeting of Stockholders, each non-employee director was awarded 50,000 shares of restricted stock (or in the case of Mr. Sharpe 50,000 restricted stock units) with a grant date fair value of $41,500, computed in accordance with ASC 718.

(4)
Given his continued service as a Board member, following the conclusion of his consulting services on October 17, 2018, the Board approved paying Mr. Waller a pro-rated annual cash retainer beginning when his consulting services concluded. Mr. Waller's compensation as an employee and as a consultant is discussed below under "Executive Compensation".

Director Education and Expense Reimbursement

The Company’s director education policy encourages all members of the Board to attend director education programs appropriate to their individual backgrounds to stay abreast of developments in corporate governance and best practices relevant to the Board, as well as their specific committee assignments. The director education policy provides for a fixed amount that the Company will pay or reimburse directors for the costs associated with attending director education programs every two fiscal years. We also provide an in-house orientation program for our new directors and periodically provide updates on relevant topics of interest to our Board and committees. We also pay for or reimburse directors for travel expenses related to attending Board and committee meetings and director education programs.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

In this Compensation Discussion and Analysis we describe the executive compensation philosophy and related programs regarding our Named Executive Officers (“NEOs”) that we have implemented in an effort to achieve the Company’s performance objectives and to serve the long-term interests of our stockholders. We also discuss the compensation decisions made by the Compensation Committee (the “Committee”), and the factors considered in making those decisions with respect to our Fiscal 2018 NEOs, who were the following individuals:

12


Keri L. Jones
President and Chief Executive Officer ("CEO")
Joel Waller
Former Interim President and CEO
Richard Bundy
Senior Vice President, Chief Financial Officer
Marc Ungerman
Former Interim Chief Financial Officer and Vice President, Controller
Monica Dahl
Former Senior Vice President, Chief Marketing Officer, Omni-Channel and Public Relations
Andrea Kellick
Senior Vice President, Chief Merchandising Officer
Luke Komarek
Senior Vice President, General Counsel and Corporate Secretary
Patricia Perket
Former Senior Vice President, Merchandising
Michelle Rice
Former Senior Vice President, Chief Stores Officer

The Compensation Discussion and Analysis should be read together with the executive compensation tables and related footnotes found later in this proxy statement.

Results of Advisory Vote to Approve Named Executive Officer Compensation

At our 2018 Annual Meeting of Stockholders (the "2018 Annual Meeting"), approximately 94.2% of the shares voted were cast in favor of approving, on an advisory basis, the compensation of our named executive officers ("Say-on-Pay"). The Committee believes that the outcome of our 2018 Say-on-Pay vote reflects stockholders’ support of our compensation approach. At the 2017 Annual Meeting of Stockholders, 92.1% of the votes cast by our stockholders was in favor of holding the advisory Say-on-Pay vote on an annual basis versus every two or three years. The Board has taken those results into consideration and has determined to continue offering stockholders the opportunity to vote on Say-on-Pay on an annual basis.

Our Board and the Committee value the opinions of our stockholders and the Committee will continue to consider the outcome of the Company’s Say-on-Pay proposals when reviewing the principal elements of our current compensation program and making future compensation decisions. The Committee also expects to continue to periodically refine the Company’s executive compensation program in response to emerging best practices, as well as the Company’s evolving business strategies and operating goals.

Executive Compensation Philosophy

While our executive compensation decisions are influenced by a variety of factors, the Committee is guided by the following key objectives and reward philosophies in the design and implementation of our executive compensation program:

Pay for Performance. A meaningful portion of each NEO’s total potential compensation consists of “at-risk” pay that is realized only upon the achievement of pre-established performance criteria or an increase in the value of our common stock. It is designed to reward both short and long-term financial and operating performance, as well as an individual’s performance.

Competitive Compensation Opportunity. In order to attract, retain, motivate and reward talented executives, our compensation program is designed to provide a total compensation opportunity that is reasonably competitive based on market data for the comparable position and factoring in the Company's recent financial performance and future financial objectives.

Alignment with Stockholders Interests. By providing our executive officers with cash and equity incentives based on improved financial performance and which constitutes a meaningful part of their total compensation opportunity, we believe that our executive officers’ interests are closely aligned with the interests of our stockholders.

As a women's clothing retail company, we operate in a highly competitive and challenging industry. As a result, our compensation program is dynamic and a reflection of the changing marketplace in which we compete. We believe it appropriately balances the factors described above. The Committee will continue to evaluate our executive compensation program in order to ensure that the relationship among Company performance, our stockholders’ interests and our executives’ compensation remains aligned.

13


Executive Compensation Practices

Highlights of our current compensation program are presented below.
 
WHAT WE DO
 
 
WHAT WE DON'T DO
 
 
 
 
 
ü

A Meaningful Portion of Total Targeted Compensation is Performance-Based and at Risk.
 
X
No Employment Contracts, Except for the Individual Serving as CEO.
ü

Strong Link between Performance Measures and Operating Priorities.
 
X
No Guaranteed Annual Salary Increases.
ü

Limits on Annual Cash Incentive Compensation Payouts and Equity Awards.
 
X
No Special Retirement Benefits for Executives.
ü

Independent Compensation Committee has Access to Independent Compensation Consultant and Other Independent Advisers.
 
X
No Tax Gross-Ups, other than one-time, in connection with the CEO's and CFO's relocation expenses.
ü
Limited Change-in-Control Benefits.
 
X
No Repricing or Buyout of Underwater Stock Options.
ü

Annual Say-on-Pay Vote.
 
X
No Plans that Encourage Excessive Risk Taking.
ü
Stock Ownership Guidelines.
 
X
No Trading in our Stock by Directors or Executives without Pre-Approval and only During Pre-Established Window Periods.
ü

Utilize Stock Options which Provide Value to Executives only if the Stock Price Appreciates.
 
X
No Excessive Perquisites.
ü
Clawback Policy that Applies to Certain Incentive Awards.
 
X
No Hedging or Pledging of Company Stock.

Elements of Executive Compensation Program

Overview

This section describes the major elements of our compensation program for our NEOs and discusses the objectives, processes and decisions underlying the compensation of our NEOs. Each element fulfills one or more of our executive compensation objectives disclosed under "Executive Compensation Philosophy."

The principal elements of our executive compensation program for Fiscal 2018 were:

base salary;

annual cash incentive opportunity; and

performance and time-based equity awards that vest over two or three years.

While we also provide benefits to our NEOs, they are consistent with those provided to other eligible full-time employees. We also provide nominal perquisites of limited economic value to some of our NEOs.

Base Salary

The Committee establishes base salaries at levels designed to enable us to attract and retain talented executives. The Committee determines executive base salaries based on the executive’s role, experience, individual performance and market data.

Annual merit increases are not automatic or guaranteed. Any merit increase for our CEO is determined by our Board, based on the recommendation of the Committee following its evaluation of the CEO's and the Company's performance. Merit increases for the other NEOs are determined by the Committee, with input and recommendations from our CEO. Any such increases are a reflection of the Committee's evaluation of both the NEO's and the Company's performance.

None of the executives who were NEOs during Fiscal 2018 received a merit increase in Fiscal 2018.

14



Annual Incentive Program (“AIP”) Compensation

Overview. AIP compensation is performance-based, at-risk compensation intended to motivate and reward executives for the attainment of goals that are measured typically over a twelve-month period. In Fiscal 2014, the Committee adopted, and our stockholders approved, the Christopher & Banks Corporation 2014 Annual Incentive Plan for our employees (the “Annual Incentive Plan”). The primary objective of our Annual Incentive Plan is to provide incentives annually for our key employees to achieve our strategic and/or financial goals. This is consistent with our pay-for-performance philosophy. Historically, under our annual incentive programs, the Committee each fiscal year sets one or more financial goals or metrics against which actual results are measured to determine whether, and in what amounts, incentives would be paid.

Fiscal 2018 AIP ("FY18 AIP") Design. The design of the FY18 AIP was consistent with the Company's historical practice of using performance measures based on results for the entire fiscal year. All of the NEOs were participants in the FY18 AIP, other than Joel Waller, whose service as interim President and CEO ended in March of 2018.

The FY18 AIP design reflected that the Company's operating plan for Fiscal 2018 was planned to achieve meaningful improvement in operating income as compared to the negative operating income in Fiscal 2017 of approximately $22.6 million. In addition, as discussed below, awards were conditioned upon achieving positive cash flow in Fiscal 2018. The design of the FY18 AIP reflected the Committee's belief that (i) given the Company's continued focus on improving operating income results, the awards at Target performance should be at or near market-based levels; (ii) a challenging FY18 AIP would be both a significant motivational tool for our NEOs, as well as other members of management; and (iii) an appropriate goal was to achieve positive operating income at the Target performance level after the cost and expense of the FY18 AIP.

The FY18 AIP design consisted of both a cash incentive and a performance-based stock option award with stated amounts at Threshold, Target and Maximum with the equity awards capped at Target (see below for a discussion of the FY18 AIP performance metrics). For performance between Threshold and Target, the amount of the cash incentive and number of stock options would be interpolated. For performance between Target and Maximum, the award would be interpolated and be solely in the form of cash. For the NEOs participating in the program, the award at Threshold represented 12.5% of their potential award at Target. The total incentive award at Target (using a presumed value of $1.50 for the equity awards or $1.03 in the case of Ms. Jones) represented at the time of grant, approximately 100%, 50% and 30% of the individual's annual salary in the case of the President and Chief Executive Officer, Senior Vice Presidents and Vice Presidents, respectively, except for Mr. Bundy and Ms. Kellick, as described below. The total incentive award at Maximum (using a presumed value of $1.50 for the equity awards or $1.03 in the case of Ms. Jones) represented at the time of grant, approximately 150%, 75% and 45% of the individual's annual salary in the case of the President and Chief Executive Officer; Senior Vice Presidents and Vice Presidents, respectively, except for Mr. Bundy and Ms. Kellick, as described below.

In the case of Richard Bundy and Andrea Kellick, who joined the Company in July of 2018, their FY18 AIP potential was based on their pro-rated salary for Fiscal 2018. In the case of Ms. Jones, her potential award was weighted 92.5% cash and 7.5% equity while for the other NEO's it was weighted 50% cash and 50% equity. Ms. Jones' award was more heavily weighted on cash given the 2014 Stock Incentive Plan's limitation on the number of equity awards that may be granted to an individual in a calendar year. The performance-based stock option awards were granted on March 9, 2018, with an exercise price per share of $1.06, the closing price of one share of common stock of the Company on the NYSE on the date of grant, other than in the case of Ms. Jones, Mr. Bundy and Ms. Kellick, who were not then employed by the Company. Ms. Jones', Mr Bundy's, and Ms. Kellick's stock option awards were granted on their first day of employment with an exercise price reflecting the fair market value on the date of grant: Ms Jones, March 12, 2018 with an exercise price of $1.03; Mr. Bundy, July 9, 2018 with an exercise price of $0.99 and Ms. Kellick, July 16, 2018 with an exercise price of $1.08. In addition, Mr. Bundy's and Ms. Kellick's offer letters provided for a guaranteed cash bonus for Fiscal 2018 of $50,000 and $75,000, respectively.

The cash incentive component, if any, would be calculated and paid, and 50% of the performance-based stock options earned would vest, if at all, following a determination by the Compensation Committee that operating income for Fiscal 2018 (as described below) was at or above Threshold and the Company's cash flow (as defined below) was positive. The remaining 50% of the stock options earned, if any, would vest on March 16, 2019.


15


FY18 AIP Performance Metrics and Results. In approving the FY18 AIP, the Committee selected operating income and positive cash flow as the metrics on which the FY18 AIP was based, as both were a key component of the Company's FY18 operating plan and metrics that the Committee considered to be of significant importance to the Company's stockholders.
    
"Operating Income" was defined, for purposes of the FY18 AIP, as “net earnings (loss), plus income tax provision (benefit), less other income (expense), plus interest expense, net as reported in the Company's audited financial statements, but excluding the impact (whether positive or negative) thereon of any change in accounting standards, impairment charges or extraordinary items and before the payment of any cash incentives or expense for stock incentives pursuant to the Fiscal 2018 Annual Incentive Program.” “Positive cash flow” was defined as “cash flow provided by operating activities less capital expenditures and excluding the net proceeds (and rent) associated with any sale-leaseback of the building and the impact (both positive and negative) of any extraordinary items.”

In order to establish an appropriate relationship between the Company's actual performance and the NEOs’ potential incentive related compensation, the Committee established a Threshold (entry point), a Target and a Maximum for the Operating Income metric.

The Committee set the Target performance level for Operating Income at $3.0 million, which represented achievement (before payment of any incentive awards) of the Company’s Fiscal 2018 operating plan, as reflected in the Budget approved by the Board for Fiscal 2018. The Committee set the Threshold performance level for Operating Income at $(2.4) million and the Maximum performance level for Operating Income at $7.0 million. All of the Operating Income performance levels established by the Committee represented substantial improvement over the actual Fiscal 2017 Operating Income results.

The Committee desired to place a meaningful portion of a participating NEO’s annual target compensation at risk, thereby aligning the NEO’s compensation both with the Company’s performance, and with our stockholders’ interests.

The table below shows the cash incentive amount and number of stock options that each of the NEOs would have earned at Threshold, Target and Maximum-level Operating Income performances under the FY18 AIP, assuming the NEO remained employed with the Company through the end of fiscal 2018.

 
Threshold
 
Target
 
Maximum
 
Cash
 
Number of Stock Options
 
Cash
 
Number of Stock Options
 
Cash
 
Number of Stock Options
Keri Jones
80,938
 
6,371
 
647,500
 
50,970
 
971,500
 
50,970
Joel Waller*
 
 
 
 
 
Richard Bundy
6,344
 
4,229
 
50,750
 
33,833
 
76,125
 
33,833
Marc Ungerman
4,406
 
2,937
 
35,250
 
23,500
 
52,875
 
23,500
Monica Dahl
11,406
 
7,604
 
91,250
 
60,833
 
136,875
 
60,833
Andrea Kellick
6,888
 
4,591
 
55,100
 
36,733
 
82,650
 
36,733
Luke Komarek
10,094
 
6,729
 
80,750
 
53,833
 
121,125
 
53,833
Patricia Perket
9,688
 
6,458
 
77,500
 
51,666
 
116,250
 
51,666
Michelle Rice
9,844
 
6,562
 
78,750
 
52,500
 
118,125
 
52,500

The Company's Operating Income did not meet the Threshold performance level nor did the Company's results meet the positive cash flow metric. Therefore, no cash incentive was paid to any NEO for Fiscal 2018, and all of the performance-based stock option awards granted to the NEOs under the FY18 AIP have been forfeited.
 
 
 
 
 
(*)
Joel Waller was not a participant in the Plan.


16


Long-Term Equity Incentive Compensation

Program Design. The primary objectives of our long-term equity incentive program ("LTIP") are to:

align executive interests with stockholder interests by conditioning a meaningful portion of the executive’s target compensation on the performance of the Company's stock price, thereby ensuring that realized compensation reflects positive changes in stockholder value over time;

reward our executives for stock price appreciation over the long-term, rather than focusing solely on short-term financial success, thereby mitigating incentives for management to pursue short-term objectives; and

attract, motivate, reward and retain key executives in a competitive market for talent.

Fiscal 2018 LTIP ("FY18 LTIP"). In Fiscal 2018, LTIP equity awards were only made to the NEOs who commenced employment in Fiscal 2018 (i.e. Ms. Jones, Mr. Bundy and Ms. Kellick). All of the other NEOs were not granted an LTIP award in Fiscal 2018. The LTIP equity award granted by the Committee in Fiscal 2018 to Ms. Jones was a time-based non-qualified stock option of 548,544 shares that vests in one-third increments on the first three anniversaries of the date of grant. The exercise price of these stock options is $1.03 per option share, which represents the closing price on the NYSE of one share of the Company's common stock on the date of grant (“Grant Date Fair Value”). Mr. Bundy received two LTIP Awards: (i) a time-based restricted stock award of 75,757 shares and (ii) a time-based non-qualified stock option of 75,757 shares at an exercise price of $0.99 per share, representing the Grant Date Fair Value. Ms. Kellick was granted (i) a time-based restricted stock award of 92,952 shares and (ii) a time-based non-qualified stock option of 92,952 shares at an exercise price of $1.08 per share, representing the Grant Date Fair Value. Mr. Bundy's and Ms. Kellick's equity awards vest one-third each on the first three anniversaries of the date of grant.

The Committee’s practice for making equity awards to the NEOs is to determine the value of compensation that it desires to provide in the form of equity as part of the total target compensation for that NEO. As part of this process, our CEO and the Senior Vice President, Chief Human Resources Officer, recommends to the Committee, for executives other than the CEO, the award level and types of equity awards. The Committee then reviews that recommendation and considers the value of such awards to each for the NEOs, as well as the criteria described below under “Analysis”.

Analysis. The Committee believes that the use of long-term equity incentives as a significant potential component of total compensation is consistent with our philosophies of aligning the interests of our executive officers with those of our stockholders and of pay-for-performance. The determination of the targeted value of equity awards at the time of grant includes consideration by the Committee of the following factors: (i) the executive officer’s experience, background and performance; (ii) level of responsibility; (iii) award value and current stock price; (iv) historical grant practices; (v) the costs and potential dilution to stockholders of the award(s); (vi) the Company's recent and projected financial performance; (vii) targeted total compensation; and (viii) incentive and retention objectives.

The specific number of time-based restricted stock and non-qualified stock options, if any, that were awarded to each of the NEOs in Fiscal 2018 is set forth in the “Grants of Plan-Based Awards for Fiscal 2018” table at pages 26-27 of this proxy statement.

Benefits and Perquisites

Primary Benefits. The NEOs are eligible to participate in the same employee benefit plans in which all other eligible full-time employees are eligible to participate. These plans include medical, dental, life insurance, disability and a qualified retirement savings plan. The Company does not maintain any benefit programs which are exclusive to executives (other than nominal perquisites and severance agreements as discussed below).

Perquisites. Perquisites represent a very nominal component of our overall executive compensation program. The Committee does not view perquisites to be an important element of the executive compensation program. Detailed information regarding the personal benefits and perquisites, if any, paid to the NEOs in Fiscal 2018 is provided in footnote 5 to the “Summary Compensation Table” at page 25 of this proxy statement.


17


Compensation Methodology

Committee Independence

The Committee is composed entirely of independent directors, as determined under the applicable SEC and NYSE rules. The Committee oversees our executive compensation and incentive programs and sets the compensation for the NEOs, except that the compensation of the CEO is recommended by the Committee and approved by all of the non-executive members of the Board. The Committee annually reviews the components of compensation for our CEO and other executive officers. In making its compensation decisions, the Committee takes into account the recommendations of the CEO as described above. Other than providing such recommendations, our CEO does not participate in the Committee’s decisions regarding executive compensation. All such decisions are made by the Committee or the independent members of the Board.

Use of Independent Compensation Consultants

The Committee periodically retains an external, independent compensation consultant for objective advice and assistance on executive compensation matters. In Fiscal 2018, it engaged Frederic W. Cook & Co., Inc. ("F.W. Cook") on a limited basis to provide consultation and assistance to the Committee in connection with an analysis of the "shareholder value transfer" limits under Institutional Shareholder Services' voting policy in connection with the proposed 2018 Stock Incentive Plan that was submitted to (and approved by) the Company's shareholders at its 2018 Annual Meeting. F.W. Cook did not perform any other services for the Company in Fiscal 2018.

The Committee has sole authority to (i) hire F.W. Cook; (ii) approve its compensation and the appropriate funding by the Company for such compensation; (iii) determine the nature and scope of F.W. Cook’s services; (iv) evaluate F.W. Cook’s performance; and (v) terminate F.W. Cook’s engagement.

The Committee annually assesses the independence of its external compensation consultant(s), taking into account the various factors required for consideration under NYSE and SEC listing standards for advisor independence.

F.W. Cook has provided the Committee with appropriate assurances and confirmation of their independent status. The Committee believes that F.W. Cook was independent throughout its service to the Committee, and that there was no conflict of interest between F.W. Cook and the Committee.

Compensation Peer Group

Periodically, the Committee conducts a review of the peer group used to benchmark executive compensation at the Company and revises the peer group as circumstances warrant. The Committee considers the following factors when assessing the appropriate peer group: how similar is the peer company's business to that of Christopher & Banks; the market cap, annual revenues and the number of retail stores it has; and whether Christopher & Banks is in its compensation peer group, as well as the overall number of companies to be included in the peer group. The Committee conducted its last such review in September 2017 and, following that review, the Committee determined that the Company's compensation peer group was the following 14 companies:
• Boot Barn Holdings, Inc.
 
• Destination Maternity Corporation
 
• Shoe Carnival, Inc.
• Build-A-Bear Workshop, Inc.
 
• Destination XL Group, Inc.
 
• Tilly’s, Inc.
• The Buckle, Inc.
 
• Francesca’s Holdings Corp.
 
• Vera Bradley, Inc.
• The Cato Corporation
 
• J. Jill, Inc.
 
• Zumiez, Inc.
• Citi Trends, Inc.
 
• New York & Company, Inc.
 
 
Executive Evaluation Process

CEO. The Committee and the Board typically review our CEO’s performance against pre-established financial, operational, strategic and individual goals for the prior fiscal year. Our CEO is responsible for sharing with the Board and the Committee accomplishments with respect to the fiscal year just completed, as well as proposed objectives for the upcoming fiscal year. The Committee reviews the CEO’s goals and overall performance, and reviews and discusses its observations with the Board. Our CEO does not play a role in this process, other than discussing the performance of the Company and the status of the CEO's goals for the fiscal year.


18


We had two CEO's in Fiscal 2018; Joel Waller and Keri Jones. Both Mr. Waller's and Ms. Jones' compensation is discussed below under "Employment and Severance Agreements with Named Executive Officers" and "Compensation Tables".

Other NEOs. The Committee consults with the CEO concerning the performance of the Company’s other executive officers, including each of the other NEOs. The Committee approves the compensation of such officers, taking into account the recommendations of the CEO. Our CEO and Senior Vice President, Chief Human Resources Officer assist the Committee in reaching compensation decisions regarding executives by providing the Committee with background materials and market data. Our NEOs do not play a role in determining their own compensation except that our CEO and certain of the NEOs make recommendations regarding performance goals under our AIP and LTIP programs for the Committee's review and consideration. The Committee reviews the recommendations and approves the AIP and LTIP programs in such form as it determines, in its sole discretion, to be in the best interests of our stockholders.

Compensation Recovery or “Clawback” Policy

In November 2015, the Board adopted the Christopher & Banks Corporation Recoupment Policy (the “Clawback Policy”). The Clawback Policy applies to “Incentive Compensation”, as defined in the Clawback Policy, paid or provided to current or former executive officers and to current or former officers of the Company with the title of Vice President or above (“Covered Executives”). Incentive Compensation includes cash and stock-based compensation that is granted, earned or vests based on the attainment of a financial metric.

In the event the Company is required to restate its financial statements due to the Company’s material noncompliance with the federal securities laws as a result of fraud or misconduct, the Company will, unless impracticable, require reimbursement or forfeiture from a Covered Executive of any excess Incentive Compensation for the three fiscal years immediately preceding the date on which the Company is required to prepare such an accounting restatement.

Prohibition on Derivatives Trading and Hedging and Pledging of Our Securities

Our Stock Trading Policy prohibits all directors and officers, including the NEOs, from trading in any puts, calls, covered calls or other derivative products involving any Company securities. Additionally, our policy prohibits these individuals from engaging in any hedging transactions with respect to any Company securities, which includes the purchase of certain instruments (including “cashless collars”, forward sales contracts, equity swaps or any other similar instruments) designed to hedge, monetize or offset any decrease in the market value of such securities. The policy also prohibits our officers and directors from pledging, or using as collateral, Company securities in order to secure personal loans or obligations, which includes holding shares of Company stock in a margin account.

Stock Ownership Guidelines

We believe that our executive officers should have a meaningful equity stake in the Company to ensure that their interests are aligned with those of our stockholders. To that end, our Board has adopted stock ownership guidelines that define stock ownership expectations for our executive officers. Under these guidelines, executive officers are expected to own shares of our Common Stock at certain levels within five years of becoming an executive officer.

By the fifth year of service as an executive officer, these guidelines call for:

the CEO to hold shares of our Common Stock equal in value to at least one times her or his annual salary;

each Executive Vice President to hold shares of our Common Stock equal in value to at least .75 times her or his annual salary;

each Senior Vice President to hold shares of our Common Stock equal in value to at least .5 times her or his annual salary; and

each Vice President to hold shares of our Common Stock equal in value to at least .25 times her or his annual salary.

The Committee intends to continue its practice of periodically reviewing the stock ownership guidelines in conjunction with future equity incentive programs and its overall compensation strategy.


19


The Board has also established stock ownership guidelines for non-employee directors, which are discussed on page 5 of this proxy statement.

Employment and Severance Agreements with Named Executive Officers

As described below, we have entered into an employment agreement with Ms. Jones, an amended employment agreement with Mr. Waller and have severance (but not employment) agreements with our other NEOs.

Employment Agreement with Keri Jones

In connection with Ms. Jones' election as President and Chief Executive Officer, the Company entered into an employment agreement with her as of February 1, 2018 (the “Agreement”) and Ms. Jones commenced employment with the Company on March 12, 2018. The principal terms of the Agreement are:

Term. The Agreement has a three-year term, commencing on the Start Date, with automatic one-year extensions thereafter, unless either party exercises a right to terminate the Agreement.

Base Salary. Ms. Jones' initial annual base salary is $700,000. Her salary will be reviewed annually and any adjustments approved by the Board.

Annual Bonus Opportunity. Ms. Jones is eligible for an annual bonus under the Company's Annual Incentive Program, beginning with the fiscal year ending February 2, 2019 (“Fiscal 2018”). The target annual potential bonus opportunity will be equal to 100% of her then-current base salary with the Fiscal 2018 bonus potential based on the amount of salary paid to her in Fiscal 2018. In connection with her participation in the Fiscal 2018 Annual Incentive Program, Ms. Jones received a performance-based non-qualified stock option at an exercise price of $1.03 for 50,970 shares at Target performance, as discussed on pages 15-16.

Long-Term Equity Incentive Program (“LTIP”) Opportunity. Ms. Jones is eligible to participate in the Company's LTIP beginning in Fiscal 2018. For Fiscal 2018, Ms. Jones' LTIP equity award consisted of a non-qualified stock option for 548,544 shares at an exercise price of $1.03 which was based on the closing price of the Company's stock on the NSYE on the date of grant. The option vests one-third each on the first three anniversaries of the date of grant.

Benefits and Perquisites. Ms. Jones is eligible to participate in all existing benefit plans generally available to the Company's senior executives. Ms. Jones agreed to relocate her primary residence to the Minneapolis, Minnesota area within six months of her Start Date (the “Relocation”) and has done so. In connection with the Relocation, Ms. Jones was eligible for up to $150,000 of Relocation costs in the aggregate, plus any eligible tax gross up adjustments in connection with her Relocation costs and she was paid $88,642 in Relocation Costs, inclusive of the tax gross up. There is a repayment obligation by Ms. Jones if she voluntarily resigns her employment with the Company without “Good Reason” (as defined in the Agreement) or is terminated for “Cause” (as defined in the Agreement) during the first 24 months of employment; that repayment obligation is 100% of the gross amount for a termination in the first year of employment and 50% of the gross amount for a termination in the second year of employment.

Inducement Awards and Bonuses. To induce Ms. Jones to join the Company, as well as in lieu of potentially foregone compensation, the Company granted to Ms. Jones certain inducement and bonus awards, summarized below:

(1) a cash signing bonus of $300,000, payable on the Start Date and subject to repayment in full if Ms. Jones resigns without Good Reason or is terminated for Cause during the first year of her employment;

(2) an employment inducement award, consisting of a non-qualified stock option to purchase 500,000 shares of the Company's Common Stock at an exercise price of $1.03 which option has a ten-year term and vests approximately 1/36th each month so long as Ms. Jones remains employed with the Company; and

(3) an employment inducement award, consisting of a grant of 250,000 shares of time-based restricted stock of the Company's Common Stock, which will vest approximately 1/36th each month so long as Ms. Jones remains employed with the Company.


20


Employment Termination Absent a Change in Control. In the event that Ms. Jones' employment with the Company is terminated without Cause or she voluntarily resigns for Good Reason, in each case, in the absence of a Change in Control of the Company, Ms. Jones will be entitled to receive a severance payment equal to: (i) one times her annual base salary, (ii) payment of any annual incentive bonus otherwise payable (but for the cessation of Ms. Jones' employment) with respect to a performance period that ended prior to the last day of Ms. Jones' employment, and (iii) payment of a pro-rata annual incentive bonus for the performance period in which the termination occurs, determined and paid in the same manner and at the same time as Ms. Jones' annual incentive bonus would otherwise have been determined and paid for the applicable performance period, but for the cessation of Ms. Jones' employment. Ms. Jones will also be entitled to receive payments equivalent to her cost of COBRA insurance premiums for a period not to exceed 18 months after her employment termination, if she is eligible for and timely elects COBRA.

Employment Termination in Connection with a Change in Control. In the event of Ms. Jones' termination by the Company without Cause or her voluntary resignation for Good Reason six months prior to or within 12 months after a Change in Control of the Company, Ms. Jones shall be entitled to receive cash severance in an amount equal to two times the sum of her annual base salary and one-times her then on-target bonus and, if applicable, payment of any annual incentive bonus otherwise payable (but for the cessation of Ms. Jones' employment) with respect to a performance period ended prior to her termination of employment. She will also be entitled to receive payments equivalent to her cost of COBRA insurance premiums for a period not to exceed 18 months after her employment termination, if she is eligible for and timely elects COBRA.

Severance Commitment and Offset of Severance. The Company has agreed to continue the severance commitment to Ms. Jones, described above, after the termination of the Agreement, for so long as Ms. Jones remains employed by the Company. The severance payment is conditioned upon Ms. Jones entering into and not rescinding, a release of claims and compliance with certain restrictive covenants for the benefit of the Company. In the event of a termination of Ms. Jones' employment, not in connection with a Change in Control, the cash severance obligations due under the Agreement shall be reduced by any cash compensation received by Ms. Jones from other employment during the period of time severance is being paid.

Restrictive Covenants. In consideration for the payments and benefits provided under the Agreement, Ms. Jones has agreed to certain restrictive covenants to protect the Company, including restrictions on post-termination disclosure of confidential information, competitive activity and solicitation of the Company's employees. Ms. Jones also agrees and acknowledges that she will be subject to the Company's performance award Clawback Policy as it relates to her performance-based awards.

Amended Employment Agreement with Joel Waller

In connection with Mr. Waller's joining the Company as interim President and CEO in January of 2017, the Company entered into an employment agreement with Mr. Waller (the "Waller Agreement") and elected him to the Board. On several subsequent occasions the Waller Agreement was amended (as so amended the "Amended Waller Agreement"). The relevant terms of the Amended Waller Agreement include:

Conversion to a Consulting Role. In connection with the Company's successful search for a new CEO, Mr. Waller agreed to serve as a consultant to the Company once a new CEO was hired. In connection with Keri Jones joining the Company as President and CEO on March 12, 2018, Mr. Waller began serving as a consultant which services and his compensation in connection with such services, ended October 17, 2018.

Continued Board Service. In connection with the cessation of his services as a consultant, the Board and Mr. Waller agreed, effective October 17, 2018, to amend the Amended Waller Agreement to provide that Mr. Waller would continue to serve as a member of the Board until the 2019 Annual Meeting unless the Board were to elect a new member to replace him. Mr. Waller also acknowledged that he does not intend to stand for re-election as a member of the Board at the 2019 Annual Meeting.

Severance Agreements with Other NEOs

We also have severance agreements with each of the other NEOs. These agreements provide for severance benefits in the event the NEO's employment is terminated by the Company without "Cause" (as defined in the applicable agreement) or in connection with a "Change-in-Control" (as defined in the applicable agreement). The type and amount of payments vary for the NEOs and also by the nature of the termination, and require a "double trigger" in connection with a change-in-control.

21



The Company provides these involuntary termination severance benefits to protect the NEO from events outside his or her control and to offer compensation packages similar to those provided in the retail market for comparable executive talent. In addition, the Company provides these benefits to protect the Company against disruption in the event of a change-in-control as these severance benefits allow the NEOs to assess takeover bids objectively without regard to the potential impact on her or his job security. The Committee believes that these severance agreements serve as an important retention element of the compensation package provided to the NEOs but does not consider severance benefits to be a significant factor in determining annual total compensation. The potential severance benefits payable to our NEOs are described in “Potential Payments upon Termination or a Change-in-Control” on pages 31-32 of this proxy statement.

Retention Agreement with Marc Ungerman

In connection with Mr. Ungerman's election as interim Chief Financial Officer, the Company entered into a retention agreement (the "Retention Agreement") with Mr. Ungerman. The Retention Agreement provided that, if Mr. Ungerman remained employed with the Company through July 17, 2018, he would receive a cash retention bonus in the amount of $50,000 (the "Retention Bonus"). Mr. Ungerman was actively employed by the Company on July 17, 2018, and was paid the Retention Bonus shortly thereafter.

Compensation Committee Report

The Committee has reviewed and discussed the “Compensation Discussion and Analysis” section set forth above with our management. Based on this review and discussion with management, the Committee recommended to our Board that the “Compensation Discussion and Analysis” be included in this proxy statement and in our Report on Form 10-K for the period ended February 2, 2019.
 
Members of the Compensation Committee
 
 
 
Kent Kleeberger, Chair
 
Jonathan Duskin
 
William Sharpe, III
 
Laura Weil

Compensation Risk Analysis

The Committee, with the input of management, continues to actively engage in reviewing and modifying aspects of the Company’s executive compensation program in light of the current business environment and the Company’s recent and projected financial performance. As part of that analysis, the Committee has considered and discussed potential risks that could arise from the Company’s compensation policies and practices and the extent to which any of those risks could be reasonably likely to have a material adverse effect on the Company. Based on that review and analysis, the Committee believes that the Company’s compensation program reflects an appropriate mix of compensation elements that balances current and long-term performance objectives, cash and equity compensation, and risks and rewards associated with executives’ roles. The following items illustrate this point:

all members of the Committee are independent within the meaning of the NYSE listing standards;

the Committee approves goals and objectives in our incentive programs that the Committee believes are reasonable and can be achieved by our executive officers without taking undue risks for the Company;

equity and cash incentives typically provide for a defined range of payout opportunities and the potential award value is capped, which mitigates undue risk;

the Committee reviews and determines annually the design of our incentive and equity award programs, including any applicable performance goals under such programs;

the Committee periodically receives advice from an independent compensation consultant;


22


the Company’s Stock Trading Policy requires our executives to pre-clear trades in our stock and only trade during pre-established windows; it also prohibits our executives from hedging the Company’s stock, pledging the Company’s stock or engaging in transactions involving derivative products related to the Company’s stock;

certain incentive-based compensation is subject to the Company’s Clawback Policy;

equity incentive awards are typically granted annually with multi-year vesting, so executives typically have equity awards that are unvested and which could decrease in or have no value if our business is not managed for the long-term; and

we provide periodic training on our Code of Conduct to educate our employees as to appropriate behaviors and the consequences of taking inappropriate actions.

Based on the above combination of items, the Committee, with the input of management, believes that (i) our executives are encouraged to manage the Company prudently; and (ii) our incentive programs are designed in a manner to encourage our senior business leaders not to take risks that are inconsistent with the Company’s best interests or that are reasonably likely to have a material adverse effect on the Company.










(This space intentionally left blank.)

23


Compensation Tables

Summary Compensation Table

The following table shows the cash and non-cash compensation for Fiscal 2018 and the previous two fiscal years that was awarded to or earned by individuals who served as our CEO or Chief Financial Officer at any point during Fiscal 2018, to each of our three other most highly compensated executive officers who were serving as executive officers at the end of Fiscal 2018 and to two former executive officers who were not executive officers at the end of Fiscal 2018 (collectively the “NEOs”).


Name and Principal Position
 
Fiscal
Year
 
Salary
($)
 
Bonus
($)(1)
 
Stock
Awards
($)(2)
 
Option
Awards
($)(3)
 
Non-Equity
Incentive Plan
Compensation($)(4)
 
All Other
Compensation
($)(5)
 
Total
($)
Keri Jones
 
2018
 
619,231

 
300,000

 
257,500

 
658,059

(7)

 
88,642

 
1,923,432

President and Chief Executive Officer (6)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Joel Waller
 
2018
 
69,231

 

 

 

 

 
265,077

 
334,308

Former Interim President and
 
2017
 
600,000

 

 

 
274,013

 

 
4,294

 
878,307

Chief Executive Officer(8)
 
2016
 
20,769

 

 
284,000

(9)
335,063

 

 
1,593

 
641,425

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Richard Bundy
 
2018
 
195,192

 
50,000

 
74,999

 
63,376

(7)

 
140,000

 
523,567

Senior Vice President, Chief Financial Officer (10)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Marc Ungerman
 
2018
 
139,192

 
50,000

 

 
14,065

(7)

 
4,821

 
208,078

Former Interim Chief Financial Officer and Vice President, Controller (11)
 
2017
 
225,769

 

 

 
49,702

(12)

 
4,521

 
279,992

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Monica Dahl
 
2018
 
365,000

 

 

 
36,409

(7)

 

 
401,409

Former Senior Vice President, Chief Marketing Officer,
 
2017
 
365,000

 

 

 
112,733

(12)

 
6,750

 
484,483

Omni-Channel and Public Relations (13)
 
2016
 
362,692

 

 
16,863

 
65,073

 
60,545

 
6,625

 
511,798

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Andrea Kellick
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Vice President, Chief Merchandising Officer (14)
 
2018
 
204,615

 
75,000

 
99,999

 
81,345

(7)

 

 
460,959

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Luke Komarek
 
2018
 
323,000

 

 

 
32,219

(7)

 

 
355,219

Senior Vice President,
 
2017
 
323,000

 

 

 
96,290

(12)

 
5,901

 
425,191

General Counsel and Corporate Secretary
 
2016
 
321,769

 

 
16,863

 
65,073

 
53,850

 
6,625

 
464,180

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Patricia Perket
 
2018
 
134,731

 

 

 
30,922

(7)

 
344,553

 
510,206

Former Senior Vice President, Merchandising (15)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michelle Rice
 
2018
 
231,404

 

 

 
31,421

(7)

 
328,487

 
591,312

Former Senior Vice President,
 
2017
 
315,000

 

 

 
106,505

(12)

 
2,696

 
424,201

Chief Stores Officer (16)
 
2016
 
315,000

 

 
16,863

 
65,073

 
52,920

 
3,886

 
453,742

 
 
 
 
 
(1)
While the Company does not typically pay NEOs discretionary bonuses, it did pay a signing bonus to Ms. Jones per the terms of her Employment Agreement. In connection with the offers of employment to Mr. Bundy and Ms Kellick, incentive bonuses were paid for Fiscal 2018 in the amounts of $50,000 and $75,000 respectively. In addition, Mr. Ungerman received a retention bonus in Fiscal 2018.

(2)
The amounts shown in this column represent the grant date fair values of performance-based restricted stock unit awards at Target performance and/or time-based restricted stock awards made in Fiscal 2018, Fiscal 2017 and Fiscal 2016, calculated in accordance with ASC 718 and based on the closing share price of our Common Stock on the date of grant. Additional information related to the calculation of the grant date fair value is set forth in Note 6 of the “Notes to the Consolidated Financial Statements” included in our 10-K Report.


24


(3)
The amounts shown in this column represent the grant date fair values of non-qualified stock option awards. In accordance with ASC 718, the grant date fair values for these awards have been determined using the Black-Scholes method and are based on the assumptions presented in Note 6 of the “Notes to the Consolidated Financial Statements” included in our 10-K Report.

(4)
The amounts shown in this column represent amounts awarded and earned under the Company’s annual incentive plan for Fiscal 2016.

(5)
All other compensation for Fiscal 2018 consisted of the following:
Name
 
Accrued Vacation Payout
 
Car Lease
 
Moving & Relocation (A)
 
Moving & Relocation Expenses Gross-Up (B)
 
Consulting Fees (C)
 
Severance Payments (D)
 
Total
Keri Jones
 

 

 
$
61,518

 
$
27,124

 

 

 
$
88,642

Joel Waller
 
$
6,923

 

 

 

 
$
258,154

 

 
$
265,077

Richard Bundy
 

 

 
$
94,681

 
$
45,319

 

 

 
$
140,000

Marc Ungerman
 
$
4,821

 

 

 

 

 

 
$
4,821

Monica Dahl
 

 

 

 

 

 

 

Andrea Kellick
 

 

 

 

 

 

 

Luke Komarek
 

 

 

 

 

 

 

Patricia Perket
 
$
17,388

 

 

 

 

 
$
327,165

 
$
344,553

Michelle Rice
 
$
9,087

 
$
4,400

(E) 

 

 

 
$
315,000

 
$
328,487

 
 
 
 
 
(A)
Represents the cost of temporary living (in the case of Mr. Bundy) and relocation expenses paid or reimbursed by the Company.

(B)
Represents the amount of tax gross up paid to the individual in connection with moving and relocation expenses paid or reimbursed by the Company.

(C)
Represents consulting fees paid to Mr. Waller following his service as interim CEO per the terms of the Amended Waller Agreement.

(D)
Represents the total amount of severance to be paid to Ms. Perket ($310,000) and Ms. Rice ($315,000) per the terms of their respective severance agreement with the Company and in the case of Ms. Perket, also includes $17,165 in health and dental premiums per the terms of her severance agreement.

(E)
Represents the taxable amount added to Ms. Rice’s income based on personal use of a vehicle leased by the Company for her use.

(6)
Ms Jones became a director and President and Chief Executive Officer of the Company on March 12, 2018.

(7)
The amounts include the grant date fair values at Target, the maximum performance level for performance based non-qualified stock options as follows: Ms. Jones, $30,506 and granted on March 12, 2018; Mr. Bundy, $19,566 and granted on July 9, 2018; Mr. Ungerman, $14,065 and granted on March 9, 2018; Ms. Dahl, $36,409 and granted on March 9, 2018; Ms. Kellick, $23,106 and granted on July 16, 2018; Mr. Komarek, $32,219 and granted on March 9, 2018; Ms. Perket, $30,922 and granted on March 9, 2018; and Ms. Rice, $31,421 and granted on March 9, 2018.

(8)
Mr. Waller became interim President and CEO on January 17, 2017 and his service in that role ended on March 12, 2018 when Keri Jones joined the Company as President and CEO.

(9)
The amount includes the total value of a performance-based restricted stock award which consists of two tranches of 100,000 shares each.

(10)
Mr. Bundy became Senior Vice President, Chief Financial Officer of the Company on July 9, 2018.

(11)
Mr. Ungerman resigned his employment with the Company effective as of August 30, 2018.


25


(12)
The amounts include the grant date fair values at Target, the maximum performance level, for performance-based non-qualified stock options granted on March 16, 2017 as follows: Mr. Ungerman $16,069; Ms. Dahl $45,467; Mr. Komarek $40,235 and Ms. Rice $39,239.

(13)
Ms. Dahl's employment with the Company ended April 30, 2019.

(14)
Ms. Kellick became Senior Vice President, Chief Merchandising Officer on July 16, 2018.

(15)
Ms. Perket's employment with the Company ended July 10, 2018.

(16)
Ms. Rice's employment with the Company ended October 22, 2018.

Grants of Plan-Based Awards for Fiscal 2018

The following table provides information regarding the grants of plan-based awards made to the NEOs during Fiscal 2018.

Name
Approval Date
 
Grant
Date
 
Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1)
 
Estimated Future Payouts Under Equity Incentive Plan Awards (2)
 
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)(2)
 
All Other
Option Awards:
Number of
Securities
Underlying
Options (#)(2)
 
 
Exercise or Base
Price of Option
Awards ($/Sh)
Grant Date
Fair Value
of Stock
and Option
Awards ($)(3)
Threshold
($)
 
Target
($)
 
Maximum
($)
Threshold
(#)
 
Target
(#)
 
Maximum
(#)
Keri
N/A
 
N/A
 
80,938

 
647,500

 
971,500

 

 

 

 

 

 
 


Jones
3/7/2018
 
3/12/2018
 

 

 

 
6,371

(4)
50,970

(4)
N/A

 

 
 
 
 
1.03

30,506

 
3/7/2018
 
3/12/2018
 

 

 

 

 

 

 

 
548,544

(5)
 
1.03

328,304

 
1/26/2018
 
3/12/2018
 

 

 

 

 

 

 
250,000

(6)

 
 
1.03

257,500

 
1/26/2018
 
3/12/2018
 

 

 

 

 

 

 

 
500,000

(7)
 
1.03

299,250

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Joel

 

 

 

 

 

 

 

 

 

 
 


Waller
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Richard
N/A
 
N/A
 
10,938

 
50,750

 
76,125

 

 

 

 

 

 
 


Bundy
6/13/2018

 
7/9/2018
 

 

 

 
4,229

(4)
33,833

(4)
N/A

 

 

 
 
0.99

19,566

 
6/13/2018

 
7/9/2018
 

 

 

 

 

 

 
75,757

(8)

 
 
0.99

74,999

 
6/13/2018

 
7/9/2018
 

 

 

 

 

 

 

 
75,757

(9)
 
0.99

43,810

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Marc
N/A
 
N/A
 
4,406

 
32,250

 
52,875

 

 

 

 

 

 
 


Ungerman
3/7/2018
 
3/12/2018
 

 

 

 
2,937

(10)
23,500

(10)
N/A

 

 

 
 
1.06

14,065

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Monica
N/A
 
N/A
 
11,406

 
91,250

 
136,875

 

 

 

 

 

 
 


Dahl
3/7/2018
 
3/9/2018
 

 

 

 
7,604

(4)
60,833

(4)
N/A

 

 

 
 
1.06

36,409

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Andrea
N/A
 
N/A
 
6,888

 
55,000

 
82,650

 

 

 

 

 

 
 


Kellick
6/13/2018
 
7/16/2018
 

 

 

 
4,591

(4)
36,733

(4)
N/A

 

 

 
 
1.08

23,105

 
6/13/2018
 
7/16/2018
 

 

 

 

 

 

 
92,592

(11)

 
 
1.08

99,999

 
6/13/2018
 
7/16/2018
 

 

 

 

 

 

 

 
92,592

(12)
 
1.08

58,240

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Luke
N/A
 
N/A
 
10,094

 
80,750

 
121,125

 

 

 

 

 

 
 


Komarek
3/7/2018
 
3/9/2018
 

 

 

 
6,729

(4)
53,833

(4)
N/A

 

 

 
 
1.06

32,219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Patricia
N/A
 
N/A
 
9,688

 
77,500

 
116,250

 

 

 

 

 

 
 


Perket
3/7/2018
 
3/9/2018
 

 

 

 
6,458

(13)
51,666

(13)
N/A

 

 

 
 
1.06

30,922

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michelle
N/A
 
N/A
 
9,844

 
78,750

 
118,125

 

 

 

 

 

 
 


Rice
3/7/2018
 
3/9/2018
 

 

 

 
6,562

(14)
52,500

(14)
N/A

 

 

 
 
1.06

31,421

 
 
 
 
 
(1)
The amounts in these columns show the potential payout, if any, for each NEO under the FY18 AIP (calculated as a percent of the NEO's salary for the applicable bonus period) if the Threshold or Target goals, as applicable, are met. These potential payouts are performance-driven and at risk and there was no incentive payout under the FY18 AIP. See pages 15-16 in this proxy statement for a description of the performance metrics and the method of calculating potential payouts under the FY18 AIP.


26


(2)
The awards in this column were made pursuant to the 2014 Stock Incentive Plan or the 2018 Stock Incentive Plan, except for certain of Ms. Jones' awards as noted in footnotes 6 and 7 below.

(3)
The dollar values of stock options disclosed in this column are equal to the grant date fair values computed in accordance with ASC 718. A discussion of the assumptions used in calculating the grant date fair values is set forth in Note 6 of the “Notes to the Consolidated Financial Statements” included in the 10-K Report. The value listed for the awards under the "Estimated Future Payouts Under Equity Incentive Plan Awards" are based on Target.

(4)
All of these options were forfeited as the Company did not achieve the Threshold performance targets (entry point) with respect to the Fiscal 2018 Annual Incentive Program.

(5)
Options vest as to one-third of the shares on March 12, 2019; March 12, 2020, and March 12, 2021; assuming Ms. Jones remains employed on such dates.

(6)
This represents an employee inducement award of restricted stock in connection with Ms. Jones' employment agreement, which award vests approximately 1/36th each on the monthly anniversary of the date of grant; assuming Ms. Jones remains employed on such date.

(7)
This represents an employee inducement award of time-based non-qualified stock options in connection with Ms. Jones' employment agreement, which award vests approximately 1/36th each on the monthly anniversary of the date of grant, assuming Ms. Jones remains employed on such date.

(8)
One-third of the shares of restricted stock will vest on each of July 9, 2019; July 9, 2020 and July 9, 2021; assuming Mr. Bundy remains employed on such dates.

(9)
One-third of the options will vest on each of July 9, 2019; July 9, 2020 and July 9, 2021; assuming Mr. Bundy remains employed on such dates.

(10)
The unvested equity award held by Mr. Ungerman was forfeited on August 30, 2018, the date his employment with the Company ended.

(11)
One-third of the shares of restricted stock will vest on each of July 16, 2019; July 16, 2020 and July 16, 2021; assuming Ms. Kellick remains employed on such dates.

(12)
One-third of the options will vest on each of July 16, 2019; July 16, 2020 and July 16, 2021; assuming Ms. Kellick remains employed on such dates.

(13)
The unvested equity award held by Ms. Perket was forfeited on July 10, 2018, the date her employment with the Company ended.

(14)
The unvested equity award held by Ms. Rice was forfeited on October 22, 2018, the date her employment with the Company ended.


(This space intentionally left blank.)


27


Outstanding Equity Awards at the End of Fiscal 2018

The following table sets forth certain information concerning equity awards held by each NEO as of the last day of Fiscal 2018.


 
 
Option Awards
 
 
 
Stock Awards
 
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
 
Option
Exercise
Price ($)(1)
 
Option Expiration
Date
 
Equity Incentive Plan Awards: Number of Unearned Options That Have Not Vested $ (#)
 
Equity Incentive Plan Awards: Market or Payout Value of Unearned Options That Have Not Vested (2)
 
Number of
Shares of
Stock or Units
That Have Not
Vested (#)
 
Market Value of
Shares of
Stock or Units
That Have Not
Vested ($)(3)(4)
 
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested (#)
 
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested ($)(3)(4)
Keri
 

 
548,544

(5) 
1.03

 
3/12/2028
 

 

 

 

 

 

Jones
 
138,890

 
361,110

(6) 
1.03

 
3/12/2028
 

 

 

 

 

 

 
 

 

 
1.03

 
3/12/2023
 
50,970

(7) 
30,582

 

 

 

 

 
 

 

 

 
N/A
 

 

 
180,550

(8) 
103,275

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Joel
 
375,000

 

 
1.42

 
1/17/2022
 

 

 

 

 

 

Waller
 
375,000

 

 
1.26

 
1/15/2023
 

 

 

 

 

 

 
 

 

 

 
N/A
 

 

 

 

 
200,000

(9) 
114,000