DEF 14A 1 formdef14a2015.htm DEF 14A


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. )
Filed by the Registrant
ý
Filed by a Party other than the Registrant
o
Check the appropriate box:
 
o
Preliminary Proxy Statement
ý
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
o
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

United Natural Foods, Inc.
(Name of Registrant as Specified in its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
ý
No fee required.
 
 
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
(1)
Title of each class of securities to which transaction applies:
 
(2)
Aggregate number of securities to which transaction applies:
 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
 
(4)
Proposed maximum aggregate value of transaction:
 
(5)
Total fee paid:
 
 
 
o
Fee paid previously with preliminary materials.
 
 
o
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
(1)
Amount Previously Paid:
 
(2)
Form, Schedule or Registration Statement No.:
 
(3)
Filing Party:
 
(4)
Date Filed:





UNITED NATURAL FOODS, INC.
Notice of Annual Meeting of Stockholders
to be held on December 16, 2015
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of United Natural Foods, Inc., which will be held on Wednesday, December 16, 2015 at 4:00 p.m. eastern standard time at the Radnor Hotel, 591 Lancaster Ave., Wayne, PA 19087, and any adjournments or postponements of the annual meeting. For your convenience, we are also offering you the option to attend the annual meeting on the Internet through a virtual web conference at www.virtualshareholdermeeting.com/unfi2015.
We are holding the annual meeting for the following purposes:
1.
To elect eight nominees as directors to serve until the 2016 annual meeting of stockholders.
2.
To ratify the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending July 30, 2016.
3.
To approve, on an advisory basis, our executive compensation.
4.
To approve the amendment and restatement of the United Natural Foods, Inc. 2012 Equity Incentive Plan.
5.
To consider a stockholder proposal on a policy regarding limitations on accelerated vesting of equity awards of senior executive officers upon a change in control, if properly presented at the annual meeting.
These matters are more fully described in the accompanying proxy statement, which is made a part of this notice. We are not aware of any other business to be transacted at the annual meeting.
Only stockholders of record on our books at the close of business on Monday, October 19, 2015 will be entitled to vote at the annual meeting and any adjournments or postponements of the annual meeting. For 10 days prior to the annual meeting, a list of stockholders entitled to vote will be available for inspection at our principal executive offices located at 313 Iron Horse Way, Providence, RI 02908. If you would like to view the stockholder list, please call our Investor Relations Department at (401) 528-8634 to schedule an appointment. The stockholder list will also be available at the annual meeting and on the Internet through the virtual web conference at the beginning of the annual meeting.
In accordance with rules approved by the Securities and Exchange Commission, this year we are again furnishing proxy materials to our stockholders over the Internet. On or about November 6, 2015 we mailed to all stockholders of record as of the close of business on October 19, 2015 a notice containing instructions on how to access our Annual Report to Stockholders, which contains our audited consolidated financial statements for the fiscal year ended August 1, 2015, our proxy statement, proxy card and other items of interest to stockholders on the Internet website indicated in our notice, as well as instructions on how to vote your shares of common stock in connection with the annual meeting. That notice also provided instructions on how you can request a paper copy of our proxy materials and Annual Report to Stockholders if you desire.




If you do not attend the annual meeting, you may vote your shares via the Internet, by telephone or by completing, dating, signing and promptly returning your proxy card to us in the envelope provided, if you received a paper copy of the proxy card by mail. The proxy materials provide you with details on how to vote by these three methods. Whether or not you plan to attend the annual meeting, we encourage you to vote in the method that suits you best so that your shares will be voted at the annual meeting. If you decide to attend the annual meeting in person or virtually through the Internet, you may revoke your proxy and cast your vote during the meeting.
By Order of the Board of Directors,
Michael S. Funk,
Chair of the Board

November 6, 2015
PLEASE VOTE. STOCKHOLDERS MAY VOTE IN PERSON OR BY THE INTERNET, TELEPHONE OR MAIL. PLEASE REFER TO YOUR PROXY CARD OR THE NOTICE OF PROXY AVAILABILITY DISTRIBUTED TO YOU ON NOVEMBER 6, 2015 FOR INFORMATION ON HOW TO VOTE BY THE INTERNET, TELEPHONE OR MAIL.







TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
 
 
 
 
PROPOSAL 4APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE UNITED NATURAL FOODS, INC. 2012 EQUITY INCENTIVE PLAN
Proposed Amendments to the 2012 Equity Incentive Plan
 
 
PROPOSAL 5—STOCKHOLDER PROPOSAL ON POLICY REGARDING LIMITATIONS ON ACCELERATED VESTING OF EQUITY AWARDS OF SENIOR EXECUTIVE OFFICERS UPON A CHANGE IN CONTROL
The Company's Statement in Opposition to Proposal 5
 
 
 
 
APPENDIX AUNITED NATURAL FOODS, INC. AMENDED AND RESTATED 2012 EQUITY INCENTIVE PLAN





UNITED NATURAL FOODS, INC.
313 Iron Horse Way
Providence, Rhode Island 02908
PROXY STATEMENT
For the Annual Meeting of Stockholders
To Be Held On December 16, 2015
This proxy statement is being furnished in connection with the solicitation of proxies by the Board of Directors of United Natural Foods, Inc., for use at the Annual Meeting of Stockholders to be held on Wednesday, December 16, 2015 at 4:00 p.m. (eastern standard time) at the Radnor Hotel, 591 Lancaster Ave., Wayne, PA 19087, and any adjournments or postponements of the annual meeting, and on the Internet through a virtual web conference at www.virtualshareholdermeeting.com/unfi2015. The Board of Directors (which we sometimes refer to as the Board in this proxy statement) is soliciting proxies for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. We will bear the cost of soliciting the proxies.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on December 16, 2015:
As outlined on the notice we mailed to you on November 6, 2015 (the “Notice of Proxy Availability”), the proxy statement, proxy card and Annual Report to Stockholders for the fiscal year ended August 1, 2015 are available on the Internet at http://www.proxyvote.com.
INFORMATION ABOUT THE MEETING
Record Date and Share Ownership
Only stockholders of record on our books at the close of business on Monday, October 19, 2015 (the “Record Date”) will be entitled to vote at the annual meeting and any adjournments or postponements of the annual meeting. As of the close of business on October 19, 2015, we had 50,195,171 shares of common stock outstanding. Each share of common stock entitles the record holder to one vote on each matter to be voted upon at the annual meeting. Copies of the Notice of Annual Meeting of Stockholders, this proxy statement, the proxy card and our Annual Report to Stockholders for the fiscal year ended August 1, 2015, were first made available to stockholders of record on or about November 6, 2015. The Board is making these materials available to you on the Internet or, upon your request, is delivering printed versions of these materials to you without charge by mail. On or about November 6, 2015, we mailed to all stockholders of record as of the Record Date the Notice of Proxy Availability, which contains instructions on how to access these materials and vote.
We will, upon written request of any stockholder, furnish without charge a copy of our Annual Report on Form 10-K for the fiscal year ended August 1, 2015, as filed with the Securities and Exchange Commission (the “SEC”), without exhibits. Please address all such requests to the attention of Barbara Guyer, Executive Assistant, United Natural Foods, Inc., 313 Iron Horse Way, Providence, Rhode Island 02908. Exhibits will be provided upon written request to Ms. Guyer and payment of an appropriate processing fee.
Submitting and Revoking Your Proxy
If you complete and submit a proxy, the persons named as proxies will vote the shares represented by your proxy in accordance with your instructions. If you submit a proxy but do not complete the voting instructions, the persons named as proxies will vote the shares represented by your proxy as follows:
FOR the election of Eric F. Artz, Ann Torre Bates, Denise M. Clark, Michael S. Funk, Gail A. Graham, James P. Heffernan, Peter A. Roy, and Steven L. Spinner as directors to serve until the 2016 annual meeting of stockholders (Proposal 1);
FOR the ratification of the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending July 30, 2016 (Proposal 2);
FOR the advisory approval of our executive compensation (Proposal 3);
FOR the approval of the amendment and restatement of the United Natural Foods, Inc. 2012 Equity Incentive Plan (Proposal 4); and

1



AGAINST the stockholder proposal on a policy regarding limitations on accelerated vesting of equity awards of senior executive officers upon a change in control (Proposal 5).

If other matters come before the annual meeting, the persons named as proxies will vote on such matters in accordance with their best judgment. We have not received notice of other matters that may properly be presented at the annual meeting.
You may revoke or revise your proxy at any time before it is exercised by (1) delivering to us a signed proxy card with a date later than your previously delivered proxy, (2) voting via the Internet while attending the virtual annual meeting, (3) granting a subsequent proxy through the Internet or telephone, (4) voting in person at the annual meeting; or (5) sending a written revocation to our corporate secretary at 313 Iron Horse Way, Providence, Rhode Island 02908. Attendance at the annual meeting in person or virtually through the Internet will not itself be deemed to revoke your proxy unless you vote in person or via the Internet while attending the virtual annual meeting. Your most current proxy card or telephone or Internet proxy at the time of the meeting is the one that is counted.
If you hold shares of common stock in a stock brokerage account or through a bank or other nominee, you are considered to be the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by your broker, bank or nominee. You may not vote directly any shares held in street name; however, as the beneficial owner of the shares, you have the right to direct your broker, bank or nominee on how to vote your shares. If you do not provide your broker, bank or nominee instructions on how to vote your shares on non-discretionary items, a “broker non-vote” will occur. Proposals 1 and 3 through 5 are non-discretionary items for which your broker, bank or nominee will not be able to vote your shares without your instructions. Proposal 2 (ratification of the selection of KPMG LLP) is a discretionary item, and your broker, bank or nominee may vote your shares in their discretion even without voting instructions from you. Accordingly, it is possible for there to be broker non-votes for Proposals 1 and 3 through 5, but not for Proposal 2. In the case of a broker non-vote, your shares would be included in the number of shares considered present at the meeting for the purpose of determining whether there is a quorum. A broker non-vote, being shares not entitled to vote, would not have any effect on the outcome of the vote on Proposals 1 and 3 through 5.
If you participate in our Employee Stock Ownership Plan (the “ESOP”), you will receive a separate voting instructions card which will serve as a voting instruction for Mrs. Lisa N'Chonon, a trustee of the ESOP. If Mrs. N'Chonon does not receive voting instructions for your ESOP shares, she will vote your ESOP shares in the same proportion as other ESOP participants’ shares for which she has received voting instructions. Mrs. N'Chonon will vote unallocated shares of common stock in the ESOP in the same proportion as participants have directed the trustee to vote their allocated shares of common stock.
If you participate in the United Natural Foods, Inc. Stock Fund (the “Stock Fund”) through the United Natural Foods, Inc. Retirement Plan (the “401(k) Plan”), you will receive a separate voting instructions card which will serve as a voting instruction for Fidelity Management Trust Company (“Fidelity”), the trustee of the plan. If Fidelity does not receive voting instructions for your shares, it will not vote your shares.
In addition to solicitations by mail and the Internet, our directors, officers and employees may, without additional remuneration, solicit proxies by telephone, facsimile and personal interviews. We will request brokerage houses, banks, and nominees to forward copies of the proxy materials to those persons for whom they hold shares and request instructions for voting the proxies. We will reimburse such brokerage houses, banks and other nominees for their reasonable expenses in connection with this distribution.
How to Vote
For Proposal 1, you may vote “FOR” or “AGAINST” each of the nominees to the Board. You may also abstain from voting “FOR” or “AGAINST” any nominee. For each of Proposals 2 through 5, you may vote “FOR” or “AGAINST” or abstain from voting.
Stockholders of Record: If you are a stockholder of record, there are four ways to vote:
by completing, signing, dating and returning your proxy card by mail, if you request a paper copy of the proxy materials;
by written ballot at the annual meeting;
by making a toll-free telephone call within the United States or Canada using a touch-tone telephone to the toll-free number provided on your Notice of Proxy Availability; or
by voting on the Internet. To vote on the Internet, go to the website address indicated on your Notice of Proxy Availability to complete an electronic proxy card prior to the annual meeting. You will be asked to provide the control number from the Notice of Proxy Availability. You may also vote on the Internet while attending the meeting virtually through the Internet.

2



If you plan to vote by telephone or Internet in advance of the meeting, your vote must be received by 11:59 p.m., eastern standard time, on December 15, 2015 to be counted. Internet voting during the annual meeting is also permissible through the virtual web meeting hosted at www.virtualshareholdermeeting.com/unfi2015.
Street Name Holders: If you hold your shares in street name, the Notice of Proxy Availability was forwarded to you by your brokerage firm, bank or other nominee and you should follow the voting instructions provided by your broker, bank or nominee. You may complete and return a voting instruction card to your broker, bank or nominee. Please check your Notice of Proxy Availability for more information. If you hold your shares in street name and wish to vote at the annual meeting in person, you must obtain a legal proxy from your broker and bring that proxy to the meeting. If you wish to vote at the annual meeting while attending through the virtual annual meeting, you must have your 12 digit control number from your Notice of Proxy Availability.
Holders Through the ESOP: If you hold your shares through the ESOP, a voting instructions card was forwarded to you, which will serve as a voting instruction for Mrs. Lisa N'Chonon, the trustee of the ESOP. You must submit your voting instructions to Mrs. N'Chonon by the close of business on December 11, 2015 to allow time to receive your voting instructions. If Mrs. N'Chonon does not receive voting instructions for your ESOP shares, she will vote your ESOP shares in the same proportion as other ESOP participants’ shares for which she has received voting instructions.
Holders Through the 401(k) Plan: If you hold your shares through the 401(k) Plan’s Stock Fund, you will receive a separate voting instructions card which will serve as a voting instruction for Fidelity, the trustee of the 401(k) Plan. You must submit your voting instructions to Fidelity by 5:00 p.m. eastern standard time on December 11, 2015 to allow time to receive your voting instructions. If Fidelity does not receive voting instructions for your shares, it will not vote your shares.
We provide Internet proxy voting to allow you to vote your shares online both before and during the meeting, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies.
Quorum
Presence in person, by attendance through the virtual annual meeting, or by proxy of a majority of the shares of common stock outstanding at the close of business on the Record Date and entitled to vote at the annual meeting will be required for a quorum. Shares of common stock present in person or by attendance through the virtual annual meeting or represented by proxy (including shares that abstain or do not vote with respect to one or more of the matters presented for stockholder approval) will be counted for purposes of determining whether a quorum exists at the annual meeting.
Votes Required
Proposal 1 (election of a total of eight nominees as directors) is an uncontested director election. In uncontested elections, our Amended and Restated Bylaws, as amended ("the "Bylaws") require that each nominee be elected by a majority of votes cast with respect to such nominee. Therefore, a director will be elected if the number of shares voted “FOR” the director exceeds the number of shares voted “AGAINST” the director. Since each nominee is already a director, our Bylaws require any nominee who does not receive the affirmative vote of at least a majority of the votes cast to offer to tender his or her resignation to the Board. The Nominating and Governance Committee of the Board will make a recommendation to the Board on whether to accept or reject the director’s resignation, or whether other action should be taken. The Board will act on such recommendation within 90 days from the date of the certification of the election results. Abstentions and broker non-votes, if applicable, will have no effect on this item because they are not considered votes cast.
For each of Proposal 2 (ratification of the selection of KPMG LLP), Proposal 3 (advisory approval of our executive compensation), Proposal 4 (the amendment and restatement of the UNFI 2012 Equity Incentive Plan), and Proposal 5 (the stockholder proposal regarding a policy on limitations on accelerated vesting of equity awards of senior executive officers upon a change in control) the affirmative vote of a majority of votes cast on the proposal is necessary for approval. Abstentions and broker non-votes will have no effect on the results of Proposals 2 through 5 because they are not considered votes cast.
Attending the Annual Meeting
We will be hosting the 2015 Annual Meeting of Stockholders at the Radnor Hotel, 591 Lancaster Ave., Wayne, PA 19087, as well as live via the Internet. A summary of the information you need to attend the annual meeting online is provided below:
    Any stockholder as of the record date can attend the annual meeting in person or virtually through the Internet at www.virtualshareholdermeeting.com/unfi2015.
Meeting starts at 4:00 p.m. eastern standard time.

3



If attending the annual meeting virtually through the internet, please have your 12-digit control number to enter the annual meeting.
If you hold your shares in street name and wish to vote at the annual meeting in person, you must obtain a legal proxy from your broker, bank or nominee and bring that proxy to the meeting.
Stockholders may vote and submit questions while attending the annual meeting in person or through the Internet.
Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/unfi2015.
Webcast replay of the annual meeting will be available at www.virtualshareholdermeeting.com/unfi2015 until December 16, 2016.
Householding
We have adopted a procedure for stockholders whose shares are held in street name called “householding,” pursuant to which stockholders of record who have the same address and the same last name will receive only one Notice of Proxy Availability each and, as applicable, one set of any additional proxy materials that are delivered, unless one or more of these stockholders notifies us that they wish to continue receiving multiple copies. This procedure provides extra convenience for stockholders and a cost savings for us. Currently, we are not providing householding to stockholders of record.
If at any time you no longer wish to participate in householding and would prefer to receive a separate Notice of Proxy Availability and, as applicable, any additional proxy materials that are delivered, or if your shares are held in street name and you are receiving multiple copies of our Notice of Proxy Availability and, as applicable, any additional proxy materials that are delivered and wish to receive only one, please notify your bank, broker, trust or other holder of record. For more information, please contact our Investor Relations Department at 313 Iron Horse Way, Providence, Rhode Island 02908.
Stockholders who participate in householding will continue to receive separate control numbers for use in voting their shares, and, if requested, separate proxy cards.

4



STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This table includes information regarding the amount of our common stock beneficially owned as of October 19, 2015 by (i) each of our directors, (ii) each of our executive officers named in the EXECUTIVE COMPENSATION TABLES—Summary Compensation Table—Fiscal Years 2013-2015, (iii) all of our directors and current executive officers as a group, (iv) our Employee Stock Ownership Trust (the "ESOT"), and (v) each person or entity known to us to own more than 5% of our outstanding common stock.
Name and Address of Beneficial Owner (1)
 
 
Number of Shares
Beneficially
Owned(2)(3)
 
Percentage
Ownership
Directors and Named Executive Officers:
 
 
 
 
 
Michael S. Funk
 
 
54,469

 
**

Steven L. Spinner (4)
 
 
193,066

 
**

Eric F. Artz
 
 
2,145

 
**

Ann Torre Bates
 
 
7,585

 
**

Denise M. Clark
 
 
8,835

 
**

Gail A. Graham
 
 
20,039

 
**

James P. Heffernan
 
 
48,853

 
**

Peter A. Roy
 
 
45,721

 
**

Richard J. Schnieders
 
 
13,117

 
**

Sean F. Griffin
 
 
28,316

 
**

Donald P. McIntyre
 
 
3,557

 
**

Mark E. Shamber
 
 
100,795

 
**

Joseph J. Traficanti
 
 
31,210

 
**

All directors and executive officers, as a group (18 persons)
 
 
640,499

 
1.3
%
Other Stockholders:
 
 
 
 
 
Employee Stock Ownership Trust (5)
 
 
1,026,051

 
2.0
%
Baron Capital Group, Inc. and related persons (6)
 
 
4,945,645

 
9.9
%
BlackRock, Inc. (7)
 
 
3,986,533

 
8.0
%
The Vanguard Group, Inc. (8)
 
 
2,987,828

 
6.0
%
** Less than 1%
(1)
The address for each listed director and executive officer is c/o United Natural Foods, Inc., 313 Iron Horse Way, Providence, Rhode Island 02908. The address for the ESOT is c/o Lisa N'Chonon, Trustee, c/o United Natural Foods, Inc., 313 Iron Horse Way, Providence, Rhode Island 02908. The address for BlackRock, Inc. is 55 East 52nd Street, New York, New York 10022. The address for Baron Capital Group, Inc. and related persons is 767 Fifth Avenue, 49th Floor, New York, New York 10153. The address for The Vanguard Group, Inc. is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
(2)
The number of shares of common stock beneficially owned by each stockholder is determined under SEC rules, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which a person has sole or shared voting power or investment power and also any shares which a person has the right to acquire within 60 days after October 19, 2015 through the vesting and/or exercise of any equity award or other right. The inclusion herein of such shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner of such shares. Unless otherwise indicated, each person named in the table has sole voting power and investment power (or shares such power with his or her spouse) with respect to all shares of common stock listed as owned by such person.
(3)
The shares of common stock shown in the table include the following numbers of shares that are issuable upon the exercise of stock options and that are exercisable within 60 days following October 19, 2015: Mr. Funk—12,625; Mr. Spinner—82,349; Mr. Heffernan—17,290; Mr. Roy—18,630; Mr. Schnieders—2,660; Mr. Griffin—15,433; Mr. McIntyre—3,348; Mr. Shamber—63,711; Mr. Traficanti—11,472; all directors and executive officers as a group—283,292.
The shares of common stock shown in the table do not include any shares issuable pursuant to restricted stock units.
The shares of common stock shown in the table include the following numbers of shares that are issuable pursuant to phantom stock in the Company's Deferred Compensation and Deferred Stock Plans (the "Deferral Plans"): Mr. Spinner

5



—8,124; Ms. Clark—1,673; Ms. Graham—6,384; Mr. Griffin—1,002; Mr. Heffernan—18,756; Mr. Shamber—25,203; Mr. Traficanti—9,660; all directors and executive officers as a group—70,802.
The shares of common stock shown in the table include the following numbers of shares held in trust by the ESOT and allocated to the individuals under the ESOP: Mr. Funk—4,232; Mr. Spinner—651; Mr. Griffin—317; Mr. McIntyre—58; Mr. Shamber—2,396; Mr. Traficanti—393; all directors and executive officers as a group—11,200.
The shares of common stock shown in the table include the following numbers of shares that are allocated to the individual's account under our 401(k) Plan's Stock Fund: Mr. Griffin—1,391; Mr. Shamber—1,811; Mr. Traficanti—446; all directors and executive officers as a group—4,081.
(4)
Includes 3,470 shares of common stock held by, or by a custodian for, his children.
(5)
The ESOT disclaims beneficial ownership of allocated shares of common stock in the ESOP to the extent that the beneficial ownership of such shares is attributable to participants in the ESOP.
(6)
Beneficial ownership information based on information contained in a Schedule 13G/A filed with the SEC on February 17, 2015 by Baron Capital Group, Inc., BAMCO, Inc., Baron Capital Management, Inc. and Ronald Baron. BAMCO, Inc. and Baron Capital Management, Inc. are subsidiaries of Baron Capital Group, Inc. Ronald Baron owns a controlling interest in Baron Capital Group, Inc. Baron Capital Group, Inc. and Ronald Baron have shared voting power with respect to 4,628,004 shares and shared dispositive power with respect to 4,945,645 shares. BAMCO, Inc. has shared voting power with respect to 4,334,244 shares and shared dispositive power with respect to 4,651,885 shares. Baron Capital Management, Inc. has shared voting power and dispositive power with respect to 293,760 shares.
(7)
Beneficial ownership information on information contained in Schedule 13G/A filed with the SEC on January 23, 2015 by BlackRock, Inc. BlackRock, Inc. has sole voting power with respect to 3,875,172 shares and sole dispositive power with respect to 3,986,533 shares.
(8)
Beneficial ownership information based on information contained in a Schedule 13G/A filed with the SEC on February 10, 2015 by The Vanguard Group, Inc. The Vanguard Group, Inc. has sole voting power with respect to 66,130 shares, sole dispositive power with respect to 2,925,698 shares and shared dispositive power with respect to 62,130 shares. Vanguard Fiduciary Trust Company ("VFTC"), a wholly-owned subsidiary of The Vanguard Group, Inc., beneficially owns 62,130 shares as a result of VFTC's serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd. ("VIA"), a wholly-owned subsidiary of The Vanguard Group, Inc., beneficially owns 4,000 shares as a result of VIA's serving as investment manager of Australia investment offerings.

6



CORPORATE GOVERNANCE
Summary
We are committed to maintaining strong corporate governance practices and principles. The Board actively monitors developments relating to the corporate governance of public corporations, and the Board has consulted with our legal counsel to evaluate our current corporate governance and other practices in light of these developments. Our policies and practices reflect our reviews of corporate governance best practices and are compliant with the requirements of the Sarbanes-Oxley Act of 2002, SEC rules and regulations and the NASDAQ Stock Market ("NASDAQ") listing standards. For example:
The Board has adopted clear corporate governance principles, which were most recently revised in September 2014, that outline the roles and responsibilities of the Board and its committees and establish policies regarding governance matters such as Board meetings and communications, performance evaluations of the Board and our Chief Executive Officer, stock ownership guidelines, and director orientation and continuing education;
A majority of the members of the Board are independent within the NASDAQ listing standards' definition, and the Board makes an affirmative determination regarding the independence of each director annually;
All members of the Board's standing committees—the Audit Committee, the Compensation Committee and the Nominating and Governance Committee—are independent within the NASDAQ listing standards' definition and applicable SEC rules and regulations;
The independent members of the Board meet regularly without the presence of management;
Our chairman of the Board is not our chief executive officer and we have designated an independent director to serve as our "Lead Independent Director" to coordinate the activities of the other independent members of the Board;
We have a clear code of business conduct and ethics that applies to our principal executive officers and all members of our finance department, including our principal financial officer and principal accounting officer;
The charters of the Board's committees clearly establish their respective roles and responsibilities;
The Compensation Committee has considered whether any of the Compensation Committee's consultants have any relationships with us or our directors or executive officers that would call into question the consultant's independence or constitute a conflict of interest; and
The Audit Committee has procedures in place for the anonymous submission of employee complaints on accounting, internal controls or auditing matters.
In addition, our corporate governance principles limit our independent directors to serving on no more than a total of four public company boards and limit our executive officers to serving on no more than a total of two public company boards, in each case, including our Board. Directors and executive officers must notify the chair of the Nominating and Governance Committee in advance of accepting an invitation to serve on another corporate board. Directors are also required to notify the Nominating and Governance Committee when their principal occupation or business association changes, at which point the committee will evaluate the propriety of continued service on our Board by the director.
As discussed under PROPOSAL 1—ELECTION OF DIRECTORS—Majority Vote Standard for Election of Directors, our Bylaws provide for a majority voting standard for uncontested elections of directors. The Nominating and Governance Committee's charter sets forth the procedures for the Nominating and Governance Committee's deliberations regarding whether to accept an offer by a nominee for director to resign from the Board if that nominee does not receive more votes cast “FOR” his or her election than votes cast “AGAINST” his or her election.
As a result of the amendments to our Certificate of Incorporation and our Bylaws to declassify the Board that were approved at our 2013 annual meeting of stockholders all directors elected at or after the annual meeting will be elected for one-year terms.
We maintain a corporate governance page on our website that includes key information about our corporate governance initiatives. The corporate governance page can be found at www.unfi.com, by clicking on "Investor Overview" and then on "Corporate Governance" or "Code of Conduct" as applicable. Copies of our corporate governance principles, our code of business conduct and ethics, the charters for each of the Board's committees and the charter of the Lead Independent Director can be found on the investor overview pages of our website. Information contained on our website is not incorporated by reference in this proxy statement or considered to be part of this document.

7



Director Independence
Our corporate governance principles require a majority of the members of the Board to be independent directors as such term is defined in the NASDAQ listing standards. The Board, upon the recommendation of the Nominating and Governance Committee, has determined that seven of its nine current members are independent. Our seven independent directors are Eric F. Artz, Ann Torre Bates, Denise M. Clark, Gail A. Graham, James P. Heffernan, Peter A. Roy and Richard J. Schnieders. Michael S. Funk and Steven L. Spinner are our employees and therefore are not independent directors.
Our corporate governance principles and the charter for each of the Boards' standing committees—the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee—require all members of such committees to be independent within the meaning of NASDAQ listing standards and the SEC's rules. The charter of the Audit Committee also requires each of its members to meet the definition of independence under Section 10A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the SEC's rules thereunder. The charter of the Compensation Committee requires each of its members to be a non-employee director within the meaning of Rule 16b-3 under the Exchange Act and an outside director within the meaning of Section 162(m) of the Internal Revenue Code, as amended (the "Code").
Lead Independent Director
The Lead Independent Director is elected annually by the independent directors of the Board. Mr. Heffernan currently serves as the Lead Independent Director. In accordance with our corporate governance principles and the charter of the Lead Independent Director, the Lead Independent Director must be independent. The Lead Independent Director is responsible for coordinating the activities of the other independent directors and for performing such other duties and responsibilities as the Board may determine from time to time, including:
Serving as a liaison between the Chair of the Board, independent directors, and the President and Chief Executive Officer;
Recommending to the Board the membership of the Board's committees, and recommending to the Chair of the Board the retention of advisers and consultants who report directly to the Board;
Advising the Chair of the Board as to an appropriate schedule of and agenda for the Board's meetings and ensuring the Board's input into the agenda for the Board's meetings; and
Serving as the Chair for executive sessions of the Board's independent directors and acting as Chair of the Board's regular and special meetings when the Chair is unable to preside.
A complete description of the duties of the Lead Independent Director is included in the charter of the Lead Independent Director, a copy of which can be found in the corporate governance section of our website at www.unfi.com.
Board Leadership Structure
The Board is currently led by the Chair of the Board, Mr. Funk, and by the Lead Independent Director, Mr. Heffernan. The Board believes that it is in our best interests for two separate members of the Board to lead the Board. This dual leadership role combines the benefits of Mr. Heffernan's guidance as an independent director and Mr. Funk's prior executive management experience with the Company, and its predecessor company, from 1976 to 2008. Our corporate governance principles do not require the Chair of the Board to be independent and do not specify whether the positions of Chair of the Board and Chief Executive Officer must be separated. Furthermore, the Board believes that having a Lead Independent Director vested with key duties and responsibilities (as discussed above) and the Board's standing committees comprised of and chaired by independent directors (as discussed below) provides a formal structure for strong independent oversight of our management team.
Risk Oversight
The Board has overall responsibility for risk oversight. The Board exercises its oversight responsibilities with respect to strategic, operational and competitive risks, as well as risks related to the planning for succession of our Chief Executive Officer and other members of senior management. The Board has delegated responsibility for the oversight of specific risks to the Board's committees as follows: the Audit Committee discusses with management and the independent auditor significant financial risk exposures and the steps management has taken to monitor, control, and report such exposures; and the Compensation Committee is responsible for ensuring that compensation policies and programs do not encourage our executives to take unnecessary and excessive risks that could threaten our long-term value. All committees report to the full Board as appropriate, including when a matter rises to the level of a material or enterprise level risk. We believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing our company.

8



Compensation Risk
We performed a comprehensive assessment for the Compensation and Audit Committees to determine whether the risks arising from any of our compensation policies or practices are reasonably likely to have a material adverse effect on us. Our assessment covered each material element of executive and non-executive employee compensation and any risk mitigating factors as discussed below. We believe that our policies and practices do not create risks that are reasonably likely to have a material adverse effect on us. In addition, the structure of our compensation program for executive officers does not incentivize unnecessary or excessive risk taking. The base salary component of compensation does not encourage risk-taking because it is a fixed amount. In addition, performance-based cash incentive awards and long-term equity-based incentive awards made in fiscal 2015 have the following risk-limiting characteristics:
Our overall compensation levels are competitive with the market.
Our compensation mix for fiscal 2015 was balanced among (i) fixed components like salary and benefits, (ii) annual incentives that reward total Company financial performance and individual performance, and (iii) a portfolio approach for stock awards with a balance among stock options, performance share units and time-based vesting restricted stock units.
Time-based vesting equity awards for the Named Executive Officers were granted with a grant date fair value equal to the sum of approximately one-half of the total grant date fair value of the core long-term equity based compensation awarded in fiscal 2015.
Equity awards in the form of stock options were limited to approximately 40% of the time-based vesting award value, which reduces the incentive to take unnecessary or excessive risks to increase our stock price. The remaining approximately 60% of the time-based vesting award value was delivered in the form of time-based vesting restricted stock units, which aligns the interests of our executive officers to long-term stockholder interests.
A significant portion of our executive compensation is tied to how our stock performs over multiple years. Time-based vesting equity awards to employees generally have graded vesting with 25% of the grant vesting on each anniversary of the grant date. This minimizes the benefit of a temporary increase in stock price.
Our incentive programs are based on a sliding scale with amounts interpolated between threshold, target and stretch. These awards can vest at a value of up to 200% of the grant date value if the stretch performance targets are achieved.
The Compensation Committee has discretion to reduce performance-based awards when it determines that such adjustments would be appropriate based on our interests and the interests of our stockholders.
Payouts for awards under our Annual Cash Incentive Plan and the vesting of performance shares and units are based on results included in the audited consolidated financial statements.
Executive officers are subject to our executive stock ownership guidelines as described in EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Other Programs, Policies and Considerations and all non-employee directors are subject to stock ownership requirements as described in DIRECTOR COMPENSATION—Stock Ownership Requirement.
Members of the Compensation Committee approve the final incentive compensation pool based on the minimum performance hurdle as described in EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Components of our Executive Compensation Program—Minimum Performance Hurdle after reviewing corporate performance.
Equity awards and cash-based incentive plan awards are subject to our Recoupment Policy as described in EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Other Programs, Policies and Considerations.
Committees of the Board of Directors
The Board currently has three standing committees: the Compensation Committee, the Audit Committee and the Nominating and Governance Committee. Upon recommendation of the Nominating and Governance Committee, the full Board appoints members of each committee. Each committee is responsible for appointing its chair.
Compensation Committee. The Compensation Committee establishes or approves all policies and procedures related to our human resources function, including employee compensation, incentive programs, and our 401(k) plan, and administers our stock incentive plans, including the United Natural Foods, Inc. Amended and Restated 1996 Stock Option Plan (the "1996 Equity Plan"), the United Natural Foods, Inc. 2002 Stock Incentive Plan (the "2002 Equity Plan"), the United Natural Foods, Inc. Amended and Restated 2004 Equity Incentive Plan (the "2004 Equity Plan") and the United Natural Foods, Inc. 2012 Equity Incentive Plan (the "2012 Equity Plan"). Additionally, this committee evaluates and establishes the compensation of our executive officers whose compensation is described below in EXECUTIVE COMPENSATION TABLES—Summary Compensation Table—Fiscal Years

9



2013-2015, including our Chief Executive Officer and Chief Financial Officer. The Compensation Committee also reviews the compensation of the other members of our senior management team and recommends to the Board the compensation for our non-employee directors. For a description of the role of the Compensation Committee, its consultants and management in setting executive compensation, please see EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—How We Make Decisions Regarding Executive Pay. The Compensation Committee also approves our annual compensation discussion and analysis included in our annual proxy statements.
The agenda for meetings of the Compensation Committee is determined by its Chair with the assistance of our Chief Executive Officer, Chief Financial Officer, Chief Human Resources and Sustainability Officer and Secretary and General Counsel. Compensation Committee meetings are regularly attended by the Chair of the Board, the Chief Executive Officer, the Chief Financial Officer, the General Counsel and the Chief Human Resources and Sustainability Officer. At certain meetings during fiscal 2015, the Compensation Committee met in executive session. The Compensation Committee's Chair reports the committee's recommendations on executive compensation to the Board. Independent advisors and the Company's finance, human resources, benefits and legal departments support the Compensation Committee in its duties and may be delegated authority to fulfill certain administrative duties regarding the compensation programs. The Compensation Committee has authority under its charter to retain, approve fees for and terminate a compensation consultant, legal counsel or other advisor as it deems necessary to assist in the fulfillment of its responsibilities. Moreover, the Compensation Committee annually evaluates the independence of its consultants.
The Compensation Committee's charter is available on our website, www.unfi.com. The Compensation Committee held four meetings during fiscal 2015. The current members of the Compensation Committee are Messrs. Heffernan (chair) and Artz, and Mmes. Bates and Clark, each of whom is an independent director.
Audit Committee. The Board has an Audit Committee that is a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee is responsible for monitoring the integrity of our financial reporting process and systems of internal controls regarding finance, accounting, and legal compliance; monitoring the independence of our independent registered public accounting firm; and monitoring the performance of our independent registered public accounting firm, management and our internal audit department. Among the Audit Committee's duties are to review the results and scope of the audit and other services provided by our independent registered public accounting firm.
The Audit Committee's charter is available on our website, www.unfi.com. The Audit Committee held seven meetings during fiscal 2015. The current members of the Audit Committee are Ms. Bates (chair) and Messrs. Artz, Heffernan and Schnieders, each of whom is an independent director. The Board has determined that Ms. Bates and Messrs. Artz and Heffernan are audit committee financial experts, as defined by the rules and regulations of the SEC.
Nominating and Governance Committee. The Nominating and Governance Committee is responsible for developing, reviewing and recommending to the Board for adoption our corporate governance principles; identifying and nominating candidates for election to the Board; assessing and making recommendations to the Board regarding the size and composition of the Board and the size, composition, scope of authority, responsibilities and reporting obligations of each of the Board's committees; and assisting the Board in conducting performance reviews of the Board and its committees and members. For additional information regarding the director nomination process undertaken by the Nominating and Governance Committee, please refer to PROPOSAL 1—ELECTION OF DIRECTORS—Nomination of Directors.
The Nominating and Governance Committee's charter is available on our website, www.unfi.com. The Nominating and Governance Committee held five meetings during fiscal 2015. The current members of the Nominating and Governance Committee are Messrs. Roy (chair) and Schnieders, and Ms. Graham, each of whom is an independent director.
Board Meetings
During fiscal 2015, the Board met ten times and following each of the Board's meetings, the independent directors met in executive session without the presence of management (in each case, including by telephone conference). All directors attended at least 85% of the meetings of the Board and of the committees on which they served. We encourage each member of the Board to attend our annual meetings of stockholders. Seven of our current directors (all current directors, except for Ms. Bates and Mr. Artz who was appointed effective October 1, 2015) attended the annual meeting held in December 2014 either in person or through the virtual annual meeting.

10



PROPOSAL 1—ELECTION OF DIRECTORS
Directors and Nominees for Director
The Board is comprised of nine directors. As a result of the amendment to our Certificate of Incorporation and Bylaws to declassify the Board that was approved at our 2013 annual meeting of stockholders, all directors elected at the annual meeting will be elected for one-year terms.
The term of each director will expire at the 2016 annual meeting, unless elected to a new term by our stockholders. Mmes. Bates, Clark and Graham and Messrs. Artz, Funk, Heffernan, Roy, and Spinner have been nominated to stand for election as a director at the 2015 annual meeting to hold office until the annual meeting of stockholders to be held in 2016 and until their successors are elected and qualified. Each nominee has indicated his or her willingness to continue to serve if elected by our stockholders. If any nominee should be unable to serve, the person acting under the proxy may vote the proxy for a substitute nominee. We have no reason to believe any of the nominees will be unable to serve if elected.
Mr. Schnieders was not nominated to stand for re-election at the annual meeting. In connection with Mr. Schnieders' term expiring at the annual meeting, we will be reducing the size of the Board to eight members.
We have described below information concerning the business experience and qualification of each of our director nominees.
The Board unanimously recommends that stockholders vote “FOR” each of the director nominees. Proxies received by the Board will be voted “FOR” each of the nominees unless a contrary choice is specified in the proxy.
NOMINEES FOR ELECTION AS DIRECTORS FOR A TERM EXPIRING IN 2016
Eric F. Artz, age 47, has served as a member of the Board since October 2015. Mr. Artz is a member of the Audit Committee and Compensation Committee. Mr. Artz has served as Executive Vice President, Chief Financial Officer and Treasurer of Recreational Equipment, Inc. since May 2012 and as Chief Operating Officer since August 2014. Prior to that role, Mr. Artz served as Chief Financial Officer for Urban Outfitters, Inc. from February 2010 to April 2012. From August 1992 until January 2010, Mr. Artz served in various positions of increasing responsibility at VF Corporation.
Mr. Artz's professional experience brings valuable knowledge and insight to our Board. The Board values his experience as a Chief Financial Officer, which provides him with valuable knowledge and insight regarding operations of retailers as well as the background and experience in overseeing the audits of financial statements, communicating with independent auditors and assisting with the general oversight of accounting and financial reporting processes.
Ann Torre Bates, age 57, has served as a member of the Board since October 2013. Ms. Bates serves as the chair of the Audit Committee and is a member of the Compensation Committee. Ms. Bates has served as a member of the board of directors of Navient Corporation since April 30, 2014. She served on the board of directors of Navient's predecessor, SLM Corporation, since 1997. Ms. Bates has also served as a member of the board of Ares Capital Corporation since 2010, and held a directorship at Allied Capital Corporation until it was acquired by Ares Capital Corporation in 2010.
    Ms. Bates also serves as director or trustee of 17 investment companies in the Franklin Templeton Group of Mutual Funds. Ms. Bates was a strategic and financial consultant from 1997 to 2012. From 1995 to 1997, Ms. Bates served as Executive Vice President, Chief Financial Officer and Treasurer of NHP, Inc., a national real estate services firm.
Ms. Bates' professional experience and service on other boards brings valuable knowledge and insight to our Board. The Board values her experience serving on audit committees, which provide her with the background and experience in overseeing the audits of financial statements, communicating with independent auditors and assisting with the general oversight of accounting and financial reporting processes.
Denise M. Clark, age 57, has served as a member of the Board since February 2013. Ms. Clark is a member of the Compensation Committee. Ms. Clark has served as Senior Vice President and Global Chief Information Officer for The Estée Lauder Companies Inc. since November 2012. Prior to that role, Ms. Clark served as Senior Vice President and Chief Information Officer for Hasbro Inc. from October 2007 to November 2012. Ms. Clark also served at Mattel, Inc., where she was Global Chief Technology Officer and later Chief Information Officer for the Fisher Price brand between January 2000 and February 2007. Ms. Clark's previous experience includes two other consumer goods companies, Warner Music Group, formerly a division of Time Warner Inc., and Apple Inc. Ms. Clark has over 20 years of experience in the delivery of ERP, digital platforms, and innovative business transformation initiatives.
Ms. Clark's extensive background, particularly her expertise involving information technology, allows her to provide the Board valuable guidance on our strategic path, especially as it relates to information technology solutions.

11



Michael S. Funk, age 61, has served as Chair of the Board since September 2008, a position which he also held from January 2003 to December 2003, and has been a member of the Board since February 1996. Mr. Funk served as our President and Chief Executive Officer from October 2005 to September 2008. Mr. Funk also served as Vice Chair of the Board from February 1996 until December 2002, as our Chief Executive Officer from December 1999 until December 2002 and as our President from October 1996 until December 1999. From its inception in July 1976 until April 2001, Mr. Funk served as President of Mountain People's Warehouse, Inc., now known as United Natural Foods West, Inc., one of our wholly-owned subsidiaries.
Mr. Funk's extensive knowledge of our industry and our historical operations as well as his past service as our Chief Executive Officer brings to the Board valuable insight into the day-to-day operations of our company and a deep understanding of the natural and organic products distribution business. His institutional knowledge of all operational aspects of our business resulting from his long-time involvement with our Company is also valuable to the Board.
Gail A. Graham, age 64, has served as a member of the Board since October 2002. Ms. Graham is a member of the Nominating and Governance Committee. Ms. Graham has served as the General Manager of Mississippi Market Natural Foods Cooperative, a consumer owned and controlled cooperative in St. Paul, Minnesota, since October 1999. Ms. Graham served as Vice Chair of the Board of Directors of Blooming Prairie Cooperative Warehouse from November 1994 until October 1998 and from November 2000 until October 2002. Ms. Graham served as the Chair of the Board of Directors of Blooming Prairie Cooperative Warehouse from November 1998 until October 2000. Ms. Graham resigned from the Board of Directors of Blooming Prairie Cooperative Warehouse in October 2002, concurrent with our purchase of the cooperative and her appointment to the Board.
Ms. Graham's active involvement in the natural products industry for over 30 years, including her experience in managing natural food cooperatives and her deep understanding of the issues facing our industry bring to the Board a unique perspective on the issues facing our company and industry generally.
James P. Heffernan, age 69, has served as a member of the Board since March 2000. Mr. Heffernan serves as Lead Independent Director, Chair of the Compensation Committee and is a member of the Audit Committee. Mr. Heffernan has served as a Director of Command Security Corp. since October 2010 and as a Director of Quinpario Acquisition Corp. since August 2013. Mr. Heffernan previously served as Vice Chairman and Trustee of the New York Racing Association from November 1998 until 2012, a member of the Board of Directors of Solutia, Inc. from February 2008 until July 2012, and a member of the Board of Directors of Columbia Gas System, Inc. from January 1993 until November 2000.
The totality of Mr. Heffernan's professional experience, together with his other board service has provided him with the background and experience of board processes, function, compensation practices and oversight of management which is valuable to the Board.
Peter A. Roy, age 59, has served as a member of the Board since June 2007. Mr. Roy serves as Chair of the Nominating and Governance Committee. Mr. Roy is an entrepreneur and since 1999 has been a strategic advisor to North Castle Partners. In connection with his role as a strategic advisor to North Castle Partners, Mr. Roy served on the boards of Avalon Natural Products, Inc. and Naked Juice Company. From 1993 to 1998, Mr. Roy served as President of Whole Foods Market, Inc. and, for five years prior to that, served as President of that company's West Coast Region.
Mr. Roy's experience as the President of Whole Foods Market, Inc. allows him to provide the Board essential insight and guidance into the day-to-day operations of natural and organic products retailers, including a key customer of ours. In addition, his experience in the healthy lifestyle industry helps the Board maintain its focus on our core values, including our sustainability goals.
Steven L. Spinner, age 55, has served as our President and Chief Executive Officer and as a member of the Board since September 2008. Mr. Spinner also served as our Interim President of the Eastern Region from September 2010 to December 2010. Prior to joining the Company in September 2008, Mr. Spinner served as a director and as Chief Executive Officer of Performance Food Group Company ("PFG") from October 2006 to May 2008, when PFG was acquired by affiliates of The Blackstone Group and Wellspring Capital Management. Mr. Spinner previously had served as PFG's President and Chief Operating Officer beginning in May 2005. Mr. Spinner served as PFG's Senior Vice President and Chief Executive Officer—Broadline Division from February 2002 to May 2005 and as PFG's Broadline Division President from August 2001 to February 2002. Mr. Spinner has served as a Director of Arkansas Best Corporation since July 2011.
Mr. Spinner's extensive experience in the wholesale food distribution business, including most recently having served as the president and chief executive officer of one of the largest publicly traded foodservice distribution businesses in the United States, brings valuable insight to the Board beyond the knowledge and insight he brings from being our president and chief executive officer.
Majority Vote Standard for Election of Directors
We adopted a majority voting standard for the election of directors as an amendment to our bylaws in 2007. If the number of nominees exceeds the number of directors to be elected in an election (a contested election), directors will be elected by a

12



plurality standard. However, when the number of nominees does not exceed the number of directors to be elected (an uncontested election) as is the case at this year's annual meeting, our bylaws require each of the directors to be elected by a majority of the votes cast (that is, the number of shares voted “for” a director must exceed the number of shares voted “against” that director). If a nominee who is serving as a director is not elected at the annual meeting, under Delaware law the director would continue to serve on the Board as a "holdover director." However, under our bylaws, any director who fails to be elected must offer to tender his or her resignation to the Board. The Nominating and Governance Committee would then make a recommendation to the Board whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Nominating and Governance Committee's recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date the election results are certified. The director who offers to tender his or her resignation will not participate in the Board's decision or the Nominating and Governance Committee's deliberations (if the director is a member of that committee). If a nominee who was not already serving as a director is not elected at the annual meeting, under Delaware law that nominee would not become a director and would not serve on the Board as a "holdover director." All nominees for election as directors at the 2015 annual meeting are currently serving on the Board.
Nomination of Directors
The Nominating and Governance Committee reviews the qualifications of every person recommended as a nominee to the Board to determine whether the recommended nominees are qualified to serve on the Board. The Nominating and Governance Committee has adopted qualitative standards by which it determines if nominees are qualified to serve on the Board. The Nominating and Governance Committee evaluates recommended nominees in accordance with the following criteria:
Personal characteristics. The Nominating and Governance Committee considers the personal characteristics of each nominee, including the nominee's integrity, accountability, ability to make informed judgments, financial literacy, professionalism and willingness to meaningfully contribute to the Board (including by possessing the ability to communicate persuasively and address difficult issues). In addition, the Nominating and Governance Committee evaluates whether the nominee's previous experience reflects a willingness to establish and meet high standards of performance, both for him or herself and for others.
Core Competencies. The Nominating and Governance Committee considers whether the nominee's knowledge and experience would contribute to the Board's achievement of certain core competencies. The Nominating and Governance Committee believes that the Board, as a whole, should possess competencies in accounting and finance, business judgment, management best practices, crisis response, industry knowledge, leadership, strategy and vision.
Board Independence. The Nominating and Governance Committee considers whether the nominee would qualify as "independent" under SEC rules and NASDAQ listing standards.
Director Commitment. The Nominating and Governance Committee expects that each of our directors will prepare for and actively participate in meetings of the Board and its committees, provide advice and counsel to our management, develop a broad knowledge of our business and industry and, with respect to an incumbent director, maintain the expertise that led the Nominating and Governance Committee to initially select the director as a nominee. The Nominating and Governance Committee evaluates each nominee on his or her ability to provide this level of commitment if elected to the Board.
Additional Considerations. Each nominee also is evaluated based on the overall needs of the Board and the diversity of experience he or she can bring to the Board, whether in terms of specialized knowledge, skills or expertise. Although we do not have a formal policy with regard to the consideration of diversity in identifying director nominees, the Nominating and Governance Committee strives to nominate directors with a variety of complementary skills so that, as a group, the Board will possess the appropriate talent, skills and expertise to oversee our businesses.
Following this evaluation, the Nominating and Governance Committee will make recommendations for membership on the Board and review such recommendations with the Board, which will decide whether to invite the candidate to be a nominee for election to the Board.
Director Nominees Recommended by Stockholders
The Nominating and Governance Committee evaluates nominees recommended by stockholders on the same basis as nominees recommended by any other sources, including making a determination whether the candidate is qualified to serve on the Board based on the qualitative standards described above. To be considered by the Nominating and Governance Committee, a stockholder who wishes to recommend a director nominee must deliver or send by first class U.S. mail a written notice addressed to Joseph J. Traficanti, Corporate Secretary, United Natural Foods, Inc., 313 Iron Horse Way, Providence, RI 02908. Generally, to be timely, the written notice must be received by our Corporate Secretary within the following time periods:

13



in the case of an annual meeting, no earlier than 120 days and no later than 90 days prior to the first anniversary of the date of the preceding year’s annual meeting; provided, however, that if (A) the annual meeting is not within 30 days before or after such anniversary date, or (B) no annual meeting was held during the preceding year, to be timely the stockholder notice must be received no later than the tenth day after the day on which notice of the date of the meeting was mailed or public disclosure of the date of such meeting is first made, whichever occurs first; and
in the case of a nomination of a person or persons for election to the Board of Directors at a special meeting of the stockholders called for the purpose of electing directors, no earlier than 120 days before such special meeting and no later than 90 days before such special meeting or, if later, the tenth day after the day on which public disclosure of the date of such meeting is first made.
We recently adopted a proxy access right to permit a stockholder, or a group of up to 20 stockholders, owning continuously for at least three years shares of our stock representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, to nominate and include in our proxy materials director nominees constituting up to 20% of the Board of Directors, provided that the stockholder(s) and the nominee(s) satisfy the requirements in our bylaws. Under our bylaws, to be considered timely, compliant notice of proxy access director nominations must be submitted to the Corporate Secretary at the address specified above no earlier than 150 days and no later than 120 days prior to the first anniversary of the date the Company mailed its proxy statement for the preceding year’s annual meeting; provided, however, that if (A) the annual meeting is not within 30 days before or after such anniversary date, or (B) no annual meeting was held during the preceding year, to be timely the stockholder notice must be received no later than 90 days prior to such annual meeting or, if later, the tenth day after the day on which notice of the date of the meeting was mailed or public disclosure of the date of such meeting is first made, whichever occurs first.

The foregoing is a summary of the requirements for stockholders to nominate persons for election to our Board of Directors, which requirements are set out fully in our bylaws and the foregoing description is qualified by reference to the full text of our bylaws. You should consult our bylaws for more detailed information regarding the processes by which stockholders may nominate directors, including the specific requirements regarding the content of the written notices and other related requirements.
Communication with the Board of Directors
Our stockholders may communicate directly with the Board. All communications should be in written form and directed to Joseph J. Traficanti, Corporate Secretary, United Natural Foods, Inc., 313 Iron Horse Way, Providence, RI 02908. Communications should be enclosed in a sealed envelope that prominently indicates that it is intended for the Board. Each communication intended for the Board and received by the corporate secretary that is related to our operation and is relevant to a specific director's service on the Board will be forwarded to the specified party following its clearance through normal review and appropriate security procedures.

14



DIRECTOR COMPENSATION
The Board and the Compensation Committee review and determine compensation for our non-employee directors, in part, based on a review of the annual Director Compensation Survey prepared by the National Association of Corporate Directors. The Compensation Committee and the Board believe that we should fairly compensate non-employee directors for work required in a company of our size and scope and that compensation should align the non-employee directors' interests with the long-term interest of our stockholders. Our non-employee director stock ownership guidelines, which are discussed in greater detail below, are also designed to align the interests of our non-employee directors with those of our stockholders. Mr. Spinner, our President and Chief Executive Officer, does not receive compensation for his service on the Board. Mr. Funk does not receive cash compensation for his service as a director and our Chair of the Board. He receives equity-based compensation for his service as Chair of the Board and cash compensation for his service as an executive advisor.
Non-Employee Director Compensation
The components of our non-employee director compensation are cash fees and awards of restricted stock units. Each non-employee director is also reimbursed for direct expenses incurred in connection with his or her attendance at meetings of the Board and its committees.
Each non-employee director who served during fiscal 2015 received the following compensation (as applicable):
Annual cash retainer of:
$52,000 for serving as the Lead Independent Director;
$30,000 for serving as a director;
$15,000 for serving as the chair of the Audit Committee;
$8,000 for serving as chair of the Compensation Committee; and
$8,000 for serving as chair of the Nominating and Governance Committee.
Meeting attendance fees of:
$2,200 for each in-person meeting of the Board;
$1,100 for each telephonic meeting of the Board;
$1,700 for each meeting of the Audit Committee; and
$1,100 for each meeting of the Compensation Committee and the Nominating and Governance Committee.
Annual equity grants of restricted stock units having a value, based on the stock price on the date of grant, of (without duplication):
$162,000 for serving as a director;
$190,000 for serving as chair of the Audit Committee; and
$236,000 for serving as Lead Independent Director
With respect to equity awards to non-employee directors in fiscal 2015, in connection with the declassification of the board, directors that were elected at the 2013 and 2014 annual meetings had one half of the annual grant vest immediately and the remaining half vest on the six month anniversary of the date of grant. For those directors elected at the annual meeting of stockholders held in December 2012, one-third of the annual grants vested immediately, and the remaining two-thirds vest in equal annual installments beginning on the first anniversary of the date of grant.
Fiscal 2016 Changes to Non-Employee Director Compensation
On September 10, 2015, the Board modified the cash compensation to be received by non-employee directors effective for fiscal 2016. Beginning in 2016, the Company's non-employee directors will be paid $26,000 cash retainers in addition to the annual retainer they are paid under the Company's existing compensation arrangements. These retainers, which will be paid in quarterly pro rata increments, replacing the Company's existing meeting fees, and a non-employee director will no longer receive cash compensation for each meeting he or she attends. In addition, all awards of restricted stock units granted to all non-employee directors, now vest one-half on the grant date and one-half on the six month anniversary of the grant date. The annual cash retainers payable to the directors, in addition to the new quarterly cash retainers, are unchanged from fiscal 2015.

15



Compensation of Mr. Funk
Mr. Funk, our current Chair of the Board and our former President and Chief Executive Officer, serves as an executive advisor to us and makes himself generally available to our executive officers. We pay him a base salary and provide him with the health and welfare benefits and other employee benefits generally available to our executives. Mr. Funk's base salary during fiscal 2015 was $134,100. Mr. Funk does not receive fees for attending meetings of the Board or its committees. During fiscal 2015, Mr. Funk received an award of 6,000 restricted stock units, of which one half vested immediately and the remaining half vested on the six month anniversary of the date of grant.
We are currently a party to a severance agreement with Mr. Funk. The severance agreement includes confidentiality, non-competition and intellectual property assignment provisions. For a period of one year following either his termination for a reason other than Cause, death or disability, or his resignation for Good Reason, the agreement requires us to pay to Mr. Funk his base salary in effect as of the termination date of his employment and provide certain medical benefits. In the event of either Mr. Funk's termination for a reason other than Cause, death or disability or his resignation for Good Reason within one year of a Change in Control, he will be entitled to the severance payments and medical benefits provided in the previous sentence, acceleration and full vesting of all unvested stock options, restricted stock units, and the full vesting of his account under the ESOP. When used in regard to Mr. Funk's severance arrangement, the terms "Cause", "Good Reason" and "Change in Control" have the meanings described below in EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Other Programs, Policies and Considerations—Severance Agreements and Change in Control Agreements.
Deferred Compensation
Our non-employee directors are eligible to participate in the United Natural Foods, Inc. Deferred Compensation Plan (the "Deferred Compensation Plan") and the United Natural Foods, Inc. Deferred Stock Plan (the "Deferred Stock Plan", collectively, the "Deferral Plans"). For a description of the Deferral Plans, please see EXECUTIVE COMPENSATION TABLES—Nonqualified Deferred Compensation—Fiscal 2015.
Director Compensation Table—Fiscal 2015
The following table summarizes compensation provided to our Chair of the Board and each individual who served as a non-employee director during fiscal 2015.
DIRECTOR COMPENSATION
Name
 
Fees Earned
or Paid in
Cash ($)(1)
 
Stock
Awards
($)(2)
 
Option
Awards
($)(3)
 
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)(4)
 
All Other
Compensation
($)(5)
 
Total ($)
Eric P. Artz (6)
 

 

 

 

 

 

Ann Torre Bates
 
72,200

 
190,000

 

 

 


262,200

Denise M. Clark
 
49,800

 
162,000

 

 

 

 
211,800

Michael S. Funk
 

 
387,000

 

 

 
134,100

 
521,100

Gail A. Graham
 
50,900

 
162,000

 

 

 

 
212,900

James P. Heffernan
 
88,300

 
236,000

 

 

 

 
324,300

Peter A. Roy
 
58,900

 
162,000

 

 

 

 
220,900

Richard J. Schnieders
 
56,600

 
162,000

 

 

 

 
218,600

(1)
This column shows the amount of cash compensation earned in fiscal 2015 for service on the Board and its committees.
(2)
The amounts contained in this column represent the grant date fair value for the restricted stock units (including those which are not yet vested) granted in fiscal 2015 calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification 718, Stock Compensation ("ASC 718"). The grant date fair value for restricted stock units is calculated using the intrinsic value method based on the closing price of our common stock on the NASDAQ Global Select Market on the date of grant. At August 1, 2015, the directors had restricted stock units representing the right to acquire the following number of shares of common stock: Mr. Artz—none; Ms. Bates—none; Ms. Clark—2,473; Mr. Funk—2,000 shares; Ms. Graham—none; Mr. Heffernan—1,167 shares; Mr. Roy—2,473 shares; and Mr. Schnieders—2,473 shares.

16



(3)
At August 1, 2015, the directors had options (including those which are not yet vested) to purchase the following number of shares of common stock: Mr. Artz—none; Ms. Bates—none; Ms. Clark—none; Mr. Funk—12,625 shares; Ms. Graham—none; Mr. Heffernan—17,290 shares; Mr. Roy—18,630 shares; and Mr. Schnieders—2,660 shares.
(4)
As of August 1, 2015, three of our non-employee directors, Mmes. Clark and Graham and Mr. Heffernan have elected to defer restricted stock units under the Deferred Compensation Plan. Deferred shares are valued at the current market price of our common stock, and therefore have no above market or preferential earnings. As of August 1, 2015, Ms. Clark is the only director to defer a portion of their director fees paid in cash under the Deferred Compensation Plan.
(5)
The amount in this column represents the amount of cash compensation that Mr. Funk earned in fiscal 2015 in his capacity as our executive advisor. Mr. Funk does not receive fees for attending meetings of the Board or its committees.
(6)
Eric F. Artz was appointed to the Board effective October 1, 2015. He did not receive any compensation in fiscal 2015.
Stock Ownership Requirement
All non-employee directors are required to hold shares of our stock in an amount that is determined in accordance with a formula based upon the compensation expense recorded by us in connection with annual equity grants to our non-employee directors. The minimum share ownership level for each non-employee director is equal to 50% of the number of shares that would have been covered by a stock option grant having an equal compensation expense to that of the director's combined equity grants for the prior fiscal year. Our corporate governance principles recommend that non-employee directors who are elected or appointed to the Board are required to attain this level of stock ownership within four years following their election or appointment to the Board. Once attained, each non-employee director is required to maintain this level of stock ownership for as long as the director serves on the Board. All our directors with more than one full year of service own our stock.
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee are Mmes. Bates and Clark and Messrs. Artz and Heffernan. All members of the Compensation Committee are independent within the meaning of the NASDAQ listing standards and no member is an employee or former employee of the Company. During fiscal 2015, no member of the Compensation Committee had any relationship requiring disclosure under Certain Relationships and Related Transactions. During fiscal 2015, none of our executive officers served as a director or a member of the compensation committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers served as a director on the Board or as a member of the Compensation Committee.
Certain Relationships and Related Transactions
Review and Approval of Related Person Transactions
We review all relationships and transactions in which the Company and our directors, nominees for director, executive officers, greater than 5% beneficial owners or any of their immediate family members are participants (or any entity in which they have an interest is a participant), to determine whether such persons have a direct or indirect material interest in the relationships or transactions. Our legal department, in conjunction with the corporate finance department and outside legal counsel, is primarily responsible for the development and implementation of processes and controls to obtain information from these "related persons" regarding such transactions and relationships and for determining, based on the facts and circumstances and SEC regulations, whether we or a related person has a direct or indirect material interest in the transaction. The Nominating and Governance Committee also reviews this information. Our policies and procedures for the review, approval or ratification of transactions that are required by SEC rules to be reported under Transactions with Related Persons are not in writing, rather, they fall under the general responsibilities of our corporate finance department and Nominating and Governance Committee. We require any related party transactions to be on terms no less favorable to the Company than could be obtained from unaffiliated third parties. As required under SEC regulations, transactions between us and any related person in which the amount involved exceeds $120,000 and a related person has a direct or indirect material interest are disclosed in this proxy statement.
Each of our executive officers, directors and nominees for director is required to complete and deliver to us an annual questionnaire that includes, among other things, a request for information relating to any transactions in which both the executive officer, director, nominee, beneficial owner or any of their respective immediate family members, on the one hand, and the Company, on the other hand, participates, and in which the executive officer, director, nominee, beneficial owner or immediate family member, has a material interest. We review the responses to these questionnaires as part of our process for determining whether disclosure is required to be made under the SEC's related person disclosure rules.
Transactions with Related Persons
One of our non-employee directors, Ms. Graham, has been the General Manager of one of our customers, Mississippi Market Natural Foods Cooperative, a consumer owned and controlled cooperative in St. Paul, Minnesota since October 1999. Mississippi Market Natural Foods Cooperative purchased approximately $6.7 million of products from us during fiscal 2015. We

17



do not believe that Ms. Graham has a material direct or indirect financial interest in this commercial relationship. Terms provided to this customer are the same as other customers with similar volumes and purchasing patterns.

18



AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is comprised solely of independent directors, as defined by NASDAQ listing standards and Section 10A of the Exchange Act and SEC rules thereunder, and it operates under a written charter adopted by the Board of Directors. The composition of the Audit Committee, the attributes of its members and its responsibilities, as reflected in its charter, are intended to be in accordance with applicable requirements for corporate audit committees. The Audit Committee reviews and assesses the adequacy of its charter on an annual basis. A copy of the Audit Committee's current charter can be found in the Investors section of our website, www.unfi.com. The Board has made a determination that the Audit Committee has at least one member, Ms. Bates, the Chair of the Audit Committee, who qualifies as an "audit committee financial expert" within the meaning of SEC regulations, and that she has accounting and related financial management expertise in accordance with NASDAQ listing standards. All committee members are financially literate.
The Audit Committee has prepared the following report on its activities with respect to the audited consolidated financial statements for the fiscal year ended August 1, 2015 (for purposes of this report, the "audited financial statements"). The following report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other of our filings under the Securities Act or the Exchange Act, except to the extent we specifically incorporate this report by reference in the specified filing.
As part of its specific duties, the Audit Committee reviews the Company's financial reporting process on behalf of the Board of Directors; reviews the financial information issued to stockholders and others, including a discussion of the quality, and not only the acceptability, of our accounting principles, the reasonableness of significant judgments, and the clarity of discussions in the financial statements; and monitors our systems of internal control over financial reporting and the audit process. Management is responsible for the preparation, presentation and integrity of our financial statements, accounting and financial reporting principles, and disclosure controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. Management also is responsible for objectively reviewing and evaluating the adequacy, effectiveness and quality of our own systems of internal control over financial reporting. Our independent registered public accounting firm, KPMG LLP, is responsible for performing an independent integrated audit of the consolidated financial statements and the effectiveness of internal control over financial reporting and expressing an opinion as to whether the consolidated financial statements conform with accounting principles generally accepted in the United States of America and as to whether the Company maintained effective internal control over financial reporting.
The Audit Committee has met and held discussions with management and our independent registered public accounting firm. In our discussions, management has represented to the Audit Committee that the Company's consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States. The Audit Committee has reviewed and discussed the audited financial statements with management and KPMG LLP, our independent registered public accounting firm. The Audit Committee meets with our internal auditors and independent registered public accounting firm, with and without management present, to discuss the results of their examinations, the evaluations of the Company's internal controls and the overall quality of the Company's financial reporting.
The Audit Committee held seven formal meetings in fiscal 2015. These meetings included quarterly pre-earnings release telephone conference calls. The Audit Committee discussed with the independent registered public accounting firm all matters required to be discussed in accordance with auditing standards, including the statement on Auditing Standards No. 16, as amended (AICPA, Professional Standards, Vol. 1 AU section 380) as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Company's independent registered public accounting firm has also provided to the Committee the written disclosures and the letter required by the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Audit Committee concerning independence, and the Audit Committee has considered and discussed with KPMG LLP the firm's independence and the compatibility of any non-audit services provided by the firm with its independence.
Based on the Audit Committee's review of the audited financial statements and the review and discussions noted above, the Audit Committee recommended that the Board of Directors include the audited financial statements in the Company's Annual Report on Form 10-K for the year ended August 1, 2015, for filing with the SEC. The Board has approved this recommendation.
 
 
Ann Torre Bates, Chair
 
 
James P. Heffernan
 
 
Richard J. Schnieders
    

19



EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Overview
In this section, we describe the principles, policies and practices that formed the basis for our executive compensation program in fiscal 2015 and explain how they were applied to the Named Executive Officers. This Compensation Discussion and Analysis presents historical and current information and analysis related to the compensation programs for the Named Executive Officers and is not necessarily indicative of the compensation that the Named Executive Officers will receive from us in the future. For purposes of this Compensation Discussion and Analysis, the following individuals were our Named Executive Officers for fiscal 2015:
President and Chief Executive Officer (Steven L. Spinner);
Senior Vice President, Chief Financial Officer and Treasurer (Mark E. Shamber);
Chief Operating Officer (Sean F. Griffin);
Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary (Joseph J. Traficanti); and
Senior Vice President, National Supply Chain and Strategy (Donald P. McIntyre).
Executive Compensation Program Highlights
Our executive compensation program incorporates the following best practices:
For fiscal 2015, approximately 60% of total target compensation for our President and Chief Executive Officer and approximately 30-40% of total target compensation for the other Named Executive Officers was performance-based and could be earned only upon the achievement of challenging corporate and divisional or individual goals selected to motivate executives to achieve our corporate objectives and enhance stockholder value. None of our Named Executive Officers earned any performance-based compensation for fiscal 2015.
The compensation of our executives differs based on individual experience, role and responsibility and performance.
We are not a party to any currently effective employment agreements with any of our Named Executive Officers.
Portions of Named Executive Officers' incentive compensation are earned over different and overlapping time periods, ensuring that performance is not maximized during one period at the expense of other periods.
A significant portion of each Named Executive Officer's compensation is at risk of forfeiture in the event of conduct detrimental to us, termination of employment prior to vesting or a material negative restatement of our financial condition or operating results.
We have a recoupment (clawback) policy applicable to our executive officers, including the Named Executive Officers, which provides that if we restate all or a portion of our financial statements within two years of filing the financial statements, all or a portion of any bonus or incentive compensation paid or granted after May 28, 2009 may be recouped by us in the sole discretion of the Board.
We have stock ownership guidelines for Named Executive Officers and our other executive officers.
We have a formal policy under which we may not enter into new or amended agreements which provide for "gross ups" for excise tax obligations payable by our executives upon termination of employment following a change in control.
Any benefits to be paid upon a change in control under the change in control agreements with our Named Executive Officers are "double trigger," which requires both a Change in Control and a termination of a Named Executive Officer by us for a reason other than Cause, death or disability or a resignation by the executive for Good Reason within one year of the date of the Change in Control.
Our Named Executive Officers participate in the same retirement, health, welfare and other benefits programs as all of our other executive officers.
We conduct periodic reviews and assessments of potential compensation-related risks in our programs. Based on these assessments, we have concluded that our executive compensation program as it is currently designed does not encourage behaviors that would create risks reasonably likely to have a material adverse effect on us.
We have not repriced equity awards.
The Compensation Committee is comprised solely of independent directors.

20



The Compensation Committee was advised by Semler Brossy Consulting Group LLC ("Semler Brossy"), an independent compensation consultant, in fiscal 2015. The consultant was retained directly by the Compensation Committee and performed no other consulting or other services for us.
Fiscal 2014 Stockholder Advisory Vote on Executive Compensation
At our annual meeting of stockholders in December 2014, we submitted a proposal to our stockholders to approve on an advisory basis our executive compensation for our Named Executive Officers for fiscal 2014. Our stockholders approved our fiscal 2014 compensation to our Named Executive Officers with more than 98% of the votes cast being cast in favor of the proposal.
When discussing our executive compensation program, the Compensation Committee considered the positive outcomes of the advisory vote on executive compensation at last year's annual meeting and other earlier positive votes and viewed the stockholders' prior votes in favor of our executive compensation as a signal that our stockholders are generally supportive of our compensation approach. As a result of these discussions, the Compensation Committee reaffirmed for the most part our existing executive compensation program philosophy described below. We value the opinions of our stockholders and will continue to consider the outcome of future advisory votes on the compensation of our Named Executive Officers when making compensation decisions for our Named Executive Officers.
Executive Compensation Program Philosophy
Our executive compensation program is designed to:
Attract individuals with the skills and culture necessary for us to achieve our business plan;
Motivate our executive talent;
Reward our executives fairly over time for performance that enhances stockholder value;
Retain those individuals who continue to ensure our success and culture; and
Instill a pay for performance work environment.
Our executive compensation program is also designed to reinforce a sense of ownership in the Company, urgency with respect to meeting deadlines and overall entrepreneurial spirit. The program links rewards, including both short- and long-term awards, as well as cash and non-cash awards, to measurable corporate and individual performance metrics established by the Compensation Committee.
The program measures achievement of corporate and business unit financial goals and individual goals tied to the executive’s specific areas of concentration. These goals support our short- and long-term business strategies and are aligned with the interests of our stockholders. In addition, our executive compensation program is designed to balance our growth strategies with a managed approach to risk tolerance.
In applying these principles, we seek to integrate compensation with our short- and long-term strategic plans and to align the interests of our executives with the long-term interests of our stockholders through equity-based opportunities.
How We Make Decisions Regarding Executive Pay
The Compensation Committee, management and the Compensation Committee's independent compensation consultant each play a role in designing our executive compensation program and determining performance levels and associated payouts. The roles of the Compensation Committee, management and the independent compensation consultant are carefully determined to reflect best corporate governance practices and to comply with rules and regulations applicable to the setting of our Named Executive Officers' compensation.
Role of the Compensation Committee
The Compensation Committee is responsible for establishing, implementing and monitoring our executive compensation program and its adherence to our compensation philosophy. The Compensation Committee approves the minimum performance thresholds applicable to our annual cash incentive plan as described in Components of our Executive Compensation Program—Minimum Performance Hurdle and sets performance metrics applicable to the performance-based component of our long-term equity incentive plan as described in Long Term Equity-Based Incentive Program. The Compensation Committee also evaluates actual corporate and individual performance against the established goals and determines appropriate levels of compensation for our executives. The Compensation Committee makes all decisions with respect to the compensation of our Chief Executive Officer and other executive officers.
As part of the compensation approval process for our executive officers, other than our Chief Executive Officer, the Compensation Committee considers the views and recommendations of management, particularly our Chief Executive Officer, and in setting the compensation for all of our executive officers the Compensation Committee considered the recommendation of its independent compensation consultant as described in greater detail below.

21



Role of Management
Our President and Chief Executive Officer, Chief Human Resources and Sustainability Officer and Chief Financial Officer provide the Compensation Committee with an assessment of our corporate performance and the performance of our other executive officers, and make recommendations for the compensation of our other executive officers based on this assessment. Additionally, our President and Chief Executive Officer, Chief Human Resources and Sustainability Officer, and Chief Financial Officer discuss with the Compensation Committee management's internal projections with respect to a variety of performance metrics and operations goals for future fiscal years on which performance-based compensation will be based. Other members of management assist the Compensation Committee on an as needed basis.
No executive officer makes any decision on any element of his or her own compensation, and our President and Chief Executive Officer does not participate in deliberations regarding his compensation.
Role of Independent Compensation Consultant
The Compensation Committee selected and directly retained Semler Brossy as its compensation consultant during fiscal 2015 to provide independent, third-party advice and expertise on all aspects of executive compensation and related corporate governance matters, including designing and establishing our executive compensation program for fiscal 2015 and fiscal 2016. Semler Brossy provided input and guidance related to our fiscal 2015 and fiscal 2016 incentive plan design, reviewed our Compensation Discussion and Analysis and associated disclosures, and summarized and provided perspective on market developments related to executive compensation, including regulatory requirements and related disclosures. Semler Brossy does not provide any other services to us. The Compensation Committee assessed the independence of Semler Brossy pursuant to SEC and Nasdaq rules and concluded that no conflict of interest exists that would prevent Semler Brossy from serving as an independent consultant to the Compensation Committee. In the future, the Compensation Committee may retain other similar consultants.
Competitive Marketplace Assessment
In making compensation decisions, the Compensation Committee has in the past periodically reviewed the compensation packages for officers in like positions with similar responsibilities at organizations similar to ours. In addition to compensation levels, the Compensation Committee also has historically reviewed program designs, including an assessment of pay vehicles and performance metrics. In fiscal 2015, the Compensation Committee determined that it would review base salaries every two years, or more frequently as the need arises, and in connection with that decision decided not to conduct a competitive market assessment annually. The Compensation Committee also considered the comparability of the companies remaining in the comparator group previously utilized by the Compensation Committee in setting the compensation of the Named Executive Officers and concluded that as a result of acquisitions and other transactions affecting certain of the companies in the group, the companies remaining in the comparator group bore less resemblance to the Company than was previously the case, and as a result a more broad-based market assessment would be a more appropriate comparative tool when the Compensation Committee next analyzed the Named Executive Officers’ compensation. Accordingly, and as described below, when setting the Named Executive Officers’ compensation for fiscal 2016, the Compensation Committee reviewed a Mercer general industry survey. In selecting appropriate data, the Compensation Committee considered companies with revenue between $5 and $10 billion and the market midpoint was defined as the average of the 25th and 50th percentiles to account for the low-margin nature of our business relative to general industry companies.
As a result of the Compensation Committee’s decision to not perform a competitive market assessment annually, a competitive assessment was not undertaken in connection with setting fiscal 2015 compensation. Accordingly, the Compensation Committee made no changes to our compensation structure for our Named Executive Officers for fiscal 2015 when compared to fiscal 2014.
Market data is only one factor that the Committee considers when making determinations regarding executive compensation.  Other factors considered include individual performance, internal equity, scope of responsibilities, tenure, criticality of the position and executive, retention concerns, and the need to recruit new officers. Consequently, the Committee does not target a specific positioning versus the market for each role, and takes into account all the above factors in determining the competitiveness of our compensation.
Components of our Executive Compensation Program
Our executive compensation philosophy is reflected in the principal elements of our executive compensation program. The four key components of our executive compensation program in fiscal 2015 were:
Base salary;
Performance-based annual cash incentives;
Long-term equity-based incentive awards in the form of stock options, time-based vesting restricted stock units, and performance-based vesting restricted stock units, which we sometimes refer to as performance units, and in the case of

22



our Chief Executive Officer performance-based vesting restricted stock, which we sometimes refer to as performance shares; and
Other compensation and benefits including minimal perquisites and participation in the Deferral Plans (as described in EXECUTIVE COMPENSATION TABLES—Nonqualified Deferred Compensation—Fiscal 2015 below) as well as participation in benefit plans generally available to all of our employees, such as participation in the 401(k) Plan and ESOP.
Pay Mix
When setting targeted total compensation for fiscal 2015, for the Named Executive Officers other than our Chief Executive Officer, the Compensation Committee determined that target cash compensation and equity-based compensation would each be approximately 50% of such Named Executive Officer's total target compensation, and that base salary and performance-based cash incentives would contribute approximately 55% or 70% and 30% or 45%, respectively, to targeted total cash compensation. The Compensation Committee determined that target cash compensation and equity-based compensation would be approximately 33% and 67% respectively, of our Chief Executive Officer's total compensation for fiscal 2015. Total target cash compensation of our Chief Executive Officer was comprised of approximately 57% base salary and 43% performance-based cash incentives. The Compensation Committee determined that a separate pay structure for our Chief Executive Officer is necessary to ensure competitive pay and the weighting of the design more towards incentive compensation was most appropriate.
Base Salary
Base salaries provide a fixed rate of pay designed to compensate executives for day-to-day responsibilities and are established based on the scope of their respective responsibilities, competitive market conditions, individual performance and tenure.
Base salaries are generally reviewed every two years in the first quarter of the fiscal year in which the review occurs, and are typically effective as of the first day of the fiscal year, but may be adjusted from time to time to realign salaries with market levels, taking into account the Named Executive Officers' responsibilities, performance, experience and proven capability. Merit increases for our executive officers, including our Named Executive Officers, if given at all, are expected to be modest unless the executive takes on additional responsibility or is promoted or an increase is determined by the Compensation Committee to be necessary as a result of a compensation analysis. Since we did not undertake a comparative assessment in setting our Named Executive Officers' fiscal 2015 compensation, base salaries for our Named Executive Officers were not changed for fiscal 2015.
The table below reflects the fiscal 2014 and fiscal 2015 base salaries for the Named Executive Officers, and the percentage change in base salaries between those two periods:
Named Executive Officer
 
Fiscal 2014
Base Salary (1)
 
Fiscal 2015
Base Salary (1)
 
Percentage
Change
Steven L. Spinner
 
$
872,300

 
$
872,300

 
%
Mark E. Shamber
 
$
393,950

 
$
393,950

 
%
Sean F. Griffin
 
$
440,300

 
$
440,300

 
%
Joseph J. Traficanti
 
$
367,150

 
$
367,150

 
%
Donald P. McIntyre
 
$
366,100

 
$
366,100

 
%
(1)
For each Named Executive Officer, fiscal 2014 Base Salaries were effective as of August 4, 2013 and fiscal 2015 Base Salaries were effective as of August 3, 2014.
Performance-Based Annual Cash Incentive Compensation
The Compensation Committee is responsible for setting the minimum thresholds of our performance-based annual cash incentive compensation discussed below. Receipt of this compensation is contingent upon satisfaction of these Company-wide metrics established by the Compensation Committee together with specific Company-wide, division-level or individual financial or operational performance goals. In the case of our President and Chief Executive these goals are determined by the Compensation Committee. For all other Named Executive Officers these goals are recommended by our President and Chief Executive Officer, Chief Human Resources and Sustainability Officer and Chief Financial Officer and approved by the Compensation Committee. The factors considered in setting this target compensation vary depending on the individual executive, but generally relate to strategic projects or financial factors such as net sales, gross margin, operating income, return on invested capital and other measures of our profitability.
Minimum Performance Hurdle. For fiscal 2015, as a condition for paying out annual cash incentive compensation to any of the Named Executive Officers, we required that we maintain a ratio of total debt to earnings before interest, taxes, depreciation

23



and amortization ("EBITDA") not to exceed 3.0x, maintain compliance with our debt covenants under our credit facilities, and achieve a minimum level of consolidated operating income of $243.0 million. If these thresholds were not met, our Named Executive Officers were not eligible to receive annual performance-based cash incentive payouts, regardless of their individual respective achievements. For fiscal 2015, our actual operating income of $242.0 million failed to reach the minimum performance hurdle and therefore, no Named Executive Officers were eligible to receive annual performance-based cash incentive payouts.
Performance Based Annual Incentive Targets. Despite the fact that the minimum performance hurdle of our annual cash incentive plan was not achieved and accordingly no payments were made to our Named Executive Officers under the plan, we believe it is appropriate to describe the possible payments that our Named Executive Officers could have received had we achieved the minimum performance hurdles necessary to fund payments under the plan. As discussed in more detail below, for the Named Executive Officers, the targeted annual cash awards for fiscal 2015 were as follows:
 
 
Applicable Targets as % of Base Salary
Named Executive Officer
 
Threshold
Target
Stretch
Steven L. Spinner
 
35%
75%
150%
Mark E. Shamber
 
35%
75%
150%
Sean F. Griffin
 
35%
75%
150%
Joseph J. Traficanti
 
25%
50%
100%
Donald P. McIntyre
 
25%
50%
100%
In setting the performance targets for fiscal 2015, the Compensation Committee reviewed historical levels of performance, the competitive environment and company-specific initiatives contemplated for fiscal 2015. In establishing the intended degree of difficulty of the payout levels for each performance metric, the Compensation Committee set the performance targets at levels that required successful implementation of corporate operating objectives for meaningful payouts to occur. The Compensation Committee believed that the targets related to "threshold" performance were achievable in light of budgeted expectations, but the payouts for "target" performance and "stretch" performance each required significant improvement over the prior year's comparable performance after taking into account the impact of important company-specific initiatives designed to support our growth and enhance our long-term operating results. We believe that one of the best indicators of how difficult a particular performance metric was to achieve is reflected in what level of payout the executive actually received with respect to the metric. Generally, company-level financial goals, including consolidated operating income, consolidated earnings per diluted share, consolidated gross profit percentage, return on invested capital, and regional or division-level operating income made up 80% of the Named Executive Officer's targeted performance-based annual incentive compensation. One or more strategic goals tailored for each Named Executive Officer based on his responsibilities made up the remaining 20% of the Named Executive Officer’s targeted performance-based annual incentive compensation. This was true in fiscal 2015 for all Named Executive Officers except for Mr. Shamber, who had 100% of his targeted performance-based annual incentive compensation made up of company-level financial goals. The Compensation Committee concluded that given his role as Chief Financial Officer, it was appropriate to have 100% of Mr. Shamber's goals be based on company-level results. The Compensation Committee believes that linking a majority of the Named Executive Officers' annual cash incentive compensation to company-level financial metrics is appropriate.  The mix of company-level metrics provides a balanced performance-measurement framework that captures earnings, profitability, and capital efficiency.  Weightings on company-wide measures for each Named Executive Officer are determined based on each executive’s role and the factors that the executive can influence.  The Compensation Committee also believes that in most cases it is appropriate to link a portion of a Named Executive Officer's annual cash incentive compensation to individual objectives related to the executive’s area of responsibility.
The following is a breakdown of which company-level financial goals apply to each of the Named Executive Officers:
 
 
Performance Measures
Named Executive Officer
 
Consolidated operating income
Consolidated gross margin percentage
Consolidated earnings per diluted share
Return on invested capital
Steven L. Spinner
 
 
 
X
X
Mark E. Shamber
 
 
X
X
X
Sean F. Griffin
 
X
X
 
X
Joseph J. Traficanti
 
X
X
 
X
Donald P. McIntyre
 
X
X
 
X

24




The performance targets tied to company-level financial goals selected by the Compensation Committee for the Named Executive Officers for fiscal 2015 included, among others, the following:
 
 
Applicable Targets
 
Performance Measures (1)
Threshold
Target
Stretch
Actual
Performance
Consolidated operating income
$242,985,000
$256,956,000
$265,593,000
$241,957,000
Consolidated gross margin
16.45%
16.76%
16.96%
15.4%
Consolidated earnings per diluted share
$2.88
$2.96
$3.03
$2.76
Return on invested capital (2)
8.70%
8.85%
9.05%
7.96%
(1)
Details regarding the performance measures and the associated levels of performance payout percentage for each of our Named Executive Officers are included below.
(2)
Return on invested capital for purposes of the performance-based annual cash incentive compensation represents net operating profit after income taxes, divided by the sum of total debt and stockholders' equity.
In addition to the above-listed performance targets, certain of the Named Executive Officers had other performance goals that were specific to the individual for fiscal 2015 that are described in more detail below.
Determination of Performance-Based Annual Cash Incentive Plan Payouts. If the minimum performance hurdles of our annual cash incentive plan are achieved, the Compensation Committee reviews the performance of each Named Executive Officer during the performance period and determines the level of performance-based compensation, if any, to be awarded to each Named Executive Officer. This amount may not exceed the amount of payouts for "stretch" performance. However, the Compensation Committee may, in its discretion, award an amount less than the amount attributable to a certain level of performance that was attained.
As a result of the minimum performance hurdle not being achieved, no performance-based annual cash incentive plan payouts were made to any of our Named Executive Officers for fiscal 2015 performance. Had the minimum performance hurdle been met, the actual amount to be earned by the Named Executive Officer would have been determined and paid in a single lump sum in the first quarter of the fiscal year following the fiscal year in which the award was earned by the Named Executive Officer, unless the executive had previously elected to defer such compensation into the Deferred Compensation Plan.
The following table sets forth for each Named Executive Officer the total amount of performance-based annual incentive awards targeted for the Named Executive Officer (which represents the "target" level) and the actual amount of performance-based annual incentive awards earned by the Named Executive Officer expressed in dollars, as a percentage of the Named Executive Officer's base salary, and as a percentage of the such targeted amount:
 
 
Performance-Based Annual
Incentive Payment
 
Actual Performance-Based Annual
Incentive Payment
Named Executive Officer
 
Target
 
Actual
 
As a Percentage of
Base Salary
 
As a Percentage of
Target
Steven L. Spinner
 
$
654,225

 
$

 
%
 
%
Mark E. Shamber
 
$
295,463

 
$

 
%
 
%
Sean F. Griffin
 
$
330,225

 
$

 
%
 
%
Joseph J. Traficanti
 
$
183,575

 
$

 
%
 
%
Donald P. McIntyre
 
$
183,050

 
$

 
%
 
%
Details regarding the performance targets and the associated levels of performance payout percentage that could have been paid for fiscal 2015 for each of our Named Executive Officers are included below. Set forth below is the amount of annual incentive compensation, expressed as a percentage of base salary, that each Named Executive Officer earned and could have earned based on "threshold", "target" and "stretch" fiscal 2015 performance:

25



Steven L. Spinner
 
 
Annual Incentive Payout as % of Base Salary
Individual Goals
 
Threshold
 
Target
 
Stretch
 
Actual
Return on invested capital
 
10.5
%
 
37.5
%
 
75.0
%
 
%
Consolidated earnings per diluted share
 
17.5
%
 
22.5
%
 
45.0
%
 
%
Succession planning (1)
 
7.0
%
 
15.0
%
 
30.0
%
 
%
Total:
 
35.0
%
 
75.0
%
 
150.0
%
 
%
(1)
In setting the performance metric applicable to Mr. Spinner based on succession planning, we based the performance metric on results that were improvements over existing strategies and included specific identification of potential internal candidates to replace our Chief Executive Officer as well as certain other executive officers, the initiation of programs designed to further the development of these individuals and the hiring of an internal resource to further these individuals and others at all levels within the Company. We believe that one of the best indicators of how difficult a particular performance metric was to achieve is reflected in what level of payout the executive actually received with respect to the metric. Because the minimum performance hurdles necessary to fund the annual cash incentive plan were not reached, no payouts under the annual cash incentive plan were made to Mr. Spinner. Accordingly, his performance against the targets related to succession planning was not evaluated for purposes of calculating any payouts to him under the plan.
Mark E. Shamber
 
 
Annual Incentive Payout as % of Base Salary
Individual Goals
 
Threshold
 
Target
 
Stretch
 
Actual
Return on invested capital
 
10.5
%
 
37.5
%
 
75.0
%
 
%
Consolidated earnings per diluted share
 
17.5
%
 
22.5
%
 
45.0
%
 
%
Consolidated gross margin
 
7.0
%
 
15.0
%
 
30.0
%
 
%
Total:
 
35.0
%
 
75.0
%
 
150.0
%
 
%
Sean F. Griffin
 
 
Annual Incentive Payout as % of Base Salary
Individual Goals
 
Threshold
 
Target
 
Stretch
 
Actual
Consolidated operating income
 
17.5
%
 
37.5
%
 
75.0
%
 
%
Return on invested capital
 
5.3
%
 
11.3
%
 
22.5
%
 
%
Consolidated gross margin
 
5.2
%
 
11.2
%
 
22.5
%
 
%
Service level plus days on hand (1)
 
7.0
%
 
15.0
%
 
30.0
%
 
%
Total:
 
35.0
%
 
75.0
%
 
150.0
%
 
%
(1)
In setting the performance metrics applicable to Mr. Griffin based on the performance of our service level to customers and days on hand, we considered historical levels of performance and based the performance metric on results that were improvements over the prior year's results. We believe that one of the best indicators of how difficult a particular performance metric was to achieve is reflected in what level of payout the executive actually received with respect to the metric. Because the minimum performance hurdles necessary to fund the annual cash incentive plan were not reached, no payouts under the annual cash incentive plan were made to Mr. Griffin. Accordingly, his performance against the targets related to service level plus days on hand was not evaluated for purposes of calculating any payouts to him under the plan.

26



Joseph J. Traficanti
 
 
Annual Incentive Payout as % of Base Salary
Individual Goals
 
Threshold
 
Target
 
Stretch
 
Actual
Consolidated operating income
 
12.5
%
 
25.0
%
 
50.0
%
 
%
Return on invested capital
 
3.8
%
 
7.5
%
 
15.0
%
 
%
Consolidated Gross Margin
 
3.7
%
 
7.5
%
 
15.0
%
 
%
Manage legal expenses (1)
 
5.0
%
 
10.0
%
 
20.0
%
 
%
Total:
 
25.0
%
 
50.0
%
 
100.0
%
 
%
(1)
In setting the performance metric applicable to Mr. Traficanti based on legal expenses, we based the performance metric on results that would provide a measurable cost savings compared to the prior year's results. For the performance metric, a target of approximately $2.9 million was set for "target" and a target of approximately $2.7 million was set for "stretch." Because the minimum performance hurdles necessary to fund the annual cash incentive plan were not reached, no payouts under the annual cash incentive plan were made to Mr. Traficanti. Accordingly, his performance against the targets related to managing legal expenses was not evaluated for purposes of calculating any payouts to him under the plan.
Donald P. McIntyre
 
 
Annual Incentive Payout as % of Base Salary
Individual Goals
 
Threshold
 
Target
 
Stretch
 
Actual
Consolidated operating income
 
12.5
%
 
25.0
%
 
50.0
%
 
%
Return on invested capital
 
3.8
%
 
7.5
%
 
15.0
%
 
%
Consolidated gross margin
 
3.7
%
 
7.5
%
 
15.0
%
 
%
Service level plus days on hand (1)
 
5.0
%
 
10.0
%
 
20.0
%
 
%
Total:
 
25.0
%
 
50.0
%
 
100.0
%
 
%
(1)
In setting the performance metrics applicable to Mr. McIntyre based on the performance of our service level to customers and days on hand, we considered historical levels of performance and based the performance metric on results that were improvements over the prior year's results. We believe that one of the best indicators of how difficult a particular performance metric was to achieve is reflected in what level of payout the executive actually received with respect to the metric. Because the minimum performance hurdles necessary to fund the annual cash incentive plan were not reached, no payouts under the annual cash incentive plan were made to Mr. McIntyre. Accordingly, his performance against the targets related to service level plus days on hand was not evaluated for purposes of calculating any payouts to him under the plan.
Long-term Equity-Based Incentive Program
Our core long-term equity-based incentive program in fiscal 2015 consisted of time-based vesting stock options and restricted stock units and performance-based vesting restricted stock units. The grant date fair values of time-based vesting restricted stock units, performance-based vesting restricted stock units, and time-based vesting options represented approximately 50%, 30%, and 20%, respectively, of the aggregate grant date fair value of the long-term equity-based awards to each of the Named Executive Officers.
In setting our Named Executive Officers' compensation for fiscal 2015, the Compensation Committee believed that stock options and a mix of time- and performance-based vesting restricted stock units provided a Named Executive Officer with an incentive to improve our stock price performance and a direct alignment with stockholders' interests, as well as a continuing stake in our long-term success. In addition, because the time-based equity awards vest ratably over four years, and the performance units vest two years from the date of grant, if earned, we believe these awards provide strong incentives for the executives to remain employees of ours.
In addition to the grants made under our core long-term equity-based incentive program described above, we granted Mr. Spinner performance units with performance metrics tied to our performance during fiscal 2015 as described below.
All of our equity awards are made pursuant to plans that have been approved by stockholders.
Timing of Awards. The Compensation Committee generally makes equity-based grants in September of each year when the Compensation Committee also approves changes to our executive officers' annual base salaries, if any. These grants are effective

27



after we have publicly released our preliminary results of operations for the recently completed fiscal year. The Compensation Committee may also make equity-based grants from time to time for new executive officers or upon a significant change in an executive officers' job scope and responsibility.
Determinations of Awards. The Compensation Committee reviews and approves annual equity-based awards for all of our eligible employees, including our Named Executive Officers. In fiscal 2015, the Compensation Committee determined the target grant date fair value of equity awards based on percentages of the recipient's prior fiscal year base salary and annual performance-based cash compensation earned for the prior fiscal year dependent on the eligible employee's position within the company. For our executive officers, including our Named Executive Officers, the percentages used for fiscal 2015 grants were 125% of fiscal 2014 base salary and 50% of the annual cash incentive paid based on fiscal 2014 performance, for a total of 50% target cash pay. Our Chief Executive Officer received additional performance units in order to incentivize him to achieve financial results for fiscal 2015 and deliver a target total pay opportunity that the Compensation Committee considered to be competitive with the market.
The Compensation Committee may disregard these guideline ranges for an employee, including a Named Executive Officer, upon a determination that other factors should result in an equity award that exceeds or is less than the specified range based on the executive's position with us. These factors may include consideration of competitive compensation data, a recent change in assigned duties, retention considerations or the historical performance of the executive. The Compensation Committee also considers the recommendations of members of senior management with respect to the mix of stock options and restricted stock units.
Time-Based Vesting Restricted Stock Units. For fiscal 2015, the Compensation Committee awarded approximately 50% of the grant date fair value of the Named Executive Officers' long-term, equity-based incentive compensation under our core program in the form of time-based vesting restricted stock units pursuant to the 2004 Equity Plan on September 19, 2014. The time-based vesting restricted stock units vest in four equal annual installments beginning on the first anniversary of the date of grant and are shown in the table in EXECUTIVE COMPENSATION TABLES—Grants of Plan-Based Awards in Fiscal 2015.
Performance-Based Vesting Restricted Stock Units. The following information summarizes our long-term equity grants made in fiscal 2015 and the settlement of our long-term equity grants made in fiscal 2014, which had performance criteria tied to the one and two-year periods ended August 1, 2015, respectively.
Fiscal 2015 Grant. For fiscal 2015, the Compensation Committee awarded approximately 30% of the grant date fair value of the Named Executive Officers' long-term, equity-based incentive compensation under our core program in the form of performance units denominated in dollars pursuant to the 2012 Equity Plan. The dollar value of this award that may vest at the “threshold,” “target” and “stretch” levels of performance are shown in the table in EXECUTIVE COMPENSATION TABLES—Grants of Plan-Based Awards in Fiscal 2015. These awards are denominated in dollars but may be settled in cash or shares of our common stock based on the closing price of our common stock on the last trading day prior to the last day of the performance period.
The fiscal 2015 awards of the performance units utilize two equally-weighted performance criteriareturn on invested capital ("ROIC"), which for purposes of the fiscal 2015 award we define as net operating profit after income taxes, divided by the sum of total debt and stockholders' equity, and our total shareholder return relative to the total shareholder return of the S&P 400 Mid Cap Index ("Relative TSR"). For ROIC, the relevant measurement period is the second year of the performance period (i.e., fiscal 2016) in order to reflect our performance at the end of the performance period, and for Relative TSR, the relevant measurement period is the full two years of the performance period beginning August 3, 2014 and ending July 30, 2016. The performance metrics underlying these performance units were established by the Compensation Committee based on our business planning process with target level of performance established at levels that are consistent with our internally prepared projections with significant improvements over those projections required to achieve above target payouts and a threshold level of ROIC established below which none of the performance units would be earned, regardless of how well we perform on the Relative TSR performance metric.
The following table illustrates the Relative TSR performance metric and the corresponding payout levels for the measurement period expressed as a percentage of the total amount of the performance units that may be earned as a result of this performance metric:
Payout (1)
Relative TSR
50%
-1253 BPS
100%
S&P 400 Mid Cap Index
150%
+512 BPS
200%
+1025 BPS

28



(1)
The payout percentages included in the table apply with respect to the portion of the performance units' performance metric tied to Relative TSR, which accounts for 50% of the total performance metrics applicable to the award. For example, if our total shareholder return for the relevant measurement period was 1,253 basis points or less below the S&P 400 Mid Cap Index, 50% of the portion of the award tied to Relative TSR would vest (or 25% of the total award), with the vesting of the remaining portion of the total award being dependent on our performance against the ROIC performance metrics.
Settlement of Fiscal 2014 Awards. At the conclusion of fiscal 2015, the two-year performance period concluded with respect to performance units granted to our Named Executive Officers that were employed by the Company in September 2013. Like the fiscal 2015 grants, the fiscal 2014 awards of performance units had two equally-weighted performance criteria. The Named Executive Officers were eligible to earn between 0% and 200% of their targeted award, depending on our performance during the relevant measurement periods with respect to five levels of performance for ROIC and four levels of performance for Relative TSR. For ROIC, the relevant measurement period was the second year of the performance period (i.e., fiscal 2015) in order to reflect our performance at the end of the performance period, and for Relative TSR, the relevant measurement period was the full two years of the performance period beginning on August 4, 2013 and ending on August 1, 2015. The following table illustrates the Relative TSR and ROIC performance metrics and the corresponding payout levels for the measurement period:
Payout (1)
ROIC
Relative TSR
25%
9.25%
 
50%
9.37%
- 1,000 BPS
100%
9.49%
S&P 400 Mid Cap Index
150%
9.61%
+ 600 BPS
200%
9.73%
+1,200 BPS
(1)
The payout percentages apply with respect to each of the equally-weighted performance criteria. For example, if our ROIC for the relevant measurement period was 9.49% and our total shareholder return for the relevant measurement period was 1,000 basis points or less below the S&P 400 Mid Cap Index, 100% of the portion of the award tied to ROIC would vest (or 50% of the total award) and 50% of the portion of the award tied to Relative TSR would vest (or 25% of the total award), resulting in an aggregate of 75% of the total award vesting.
On September 9, 2015, the Compensation Committee met to determine what percentage of the fiscal 2014 performance-units had been earned. When calculating our ROIC for fiscal 2015, the Compensation Committee adjusted our GAAP-based ROIC in accordance with the terms of the award agreement pursuant to which the performance units had been granted to eliminate the impact of the approximately $20.4 million of pre-tax income generated by Trudeau and Tony's, $0.8 million of pre-tax impairment and restructuring costs incurred in connection with closing of a Canadian distribution facility located in Scotstown, Quebec, and $0.3 million related to pre-tax acquisition related expenses we incurred in connection with the Tony's transaction in fiscal 2015. In addition to the income statement adjustments noted above, an adjustment was made to total debt to exclude approximately $219.5 million of long term debt we incurred to finance our acquisitions of Trudeau and Tony's and approximately $13.8 million in additional debt we incurred related to the capital lease treatment of our Providence, Rhode Island headquarters. ROIC for fiscal 2015 was 7.96%, or 8.35% after these adjustments, which was below the “threshold” performance levels. As a result, the Compensation Committee did not approve the vesting of any units of the portion of the fiscal 2014 award tied to ROIC.
In addition, the Compensation Committee determined that our total shareholder return for the two-year period ended August 1, 2015 was 2,051 basis points below the S&P Mid Cap 400 Index TSR. As a result, the Compensation Committee did not approve the vesting of any units of the portion of the fiscal 2014 award tied to Relative TSR.
Options. For fiscal 2015, the Compensation Committee awarded approximately 20% of the grant date fair value of the Named Executive Officers' long-term, equity-based incentive compensation under our core program in the form of stock options to the Named Executive Officers pursuant to the 2012 Equity Plan. The grants were effective September 19, 2014, following the September 17, 2014 release of our fiscal 2014 results of operations. These stock options have exercise prices equal to the closing price of our common stock on the NASDAQ Global Select Market on the date of grant. The stock options vest in four equal annual installments beginning on the first anniversary of the date of grant and are shown in the table in EXECUTIVE COMPENSATION TABLES—Grants of Plan-Based Awards in Fiscal 2015.
Additional Performance Units Granted to CEO. For fiscal 2015 our Chief Executive Officer received additional performance units in order to incentivize him to achieve financial results for fiscal 2015 and deliver a target total pay opportunity that the Compensation Committee considered to be competitive with the market. On September 9, 2014, the Compensation Committee granted Mr. Spinner an award of performance units based on a targeted grant value of $1.5 million from the 2012 Equity Plan with two equally-weighted performance criteriaROIC and consolidated operating income. For this award, ROIC

29



was defined as net operating profit after tax divided by the sum of total debt and equity. Mr. Spinner was eligible to earn between 0% and 200% of his targeted award, depending on our performance during fiscal 2015 based on the following performance matrix:
 
 
Consolidated Operating Income ($ Millions)
 
 
<$242,985
$249,971
$256,956
$261,275
$265,593
Return on Invested Total Capital
>9.05%
60%
75%
125%
150%
200%
8.95%
50%
60%
110%
125%
150%
8.85%
0%
50%
100%
110%
125%
8.78%
0%
0%
50%
60%
75%
8.70%
0%
0%
0%
50%
60%
On September 9, 2015, the Compensation Committee met to determine what percentage of the fiscal 2015 performance-units with a one-year performance period granted to Mr. Spinner had been earned. When calculating our ROIC for fiscal 2015, the Compensation Committee adjusted our GAAP-based ROIC in accordance with the terms of the award agreement pursuant to which the performance units had been granted to eliminate the impact of the approximately $0.8 million of pre-tax impairment and restructuring costs incurred in connection with closing of a Canadian distribution facility located in Scotstown, Quebec, and $0.3 million related to pre-tax acquisition related expenses we incurred in connection with the Tony's transaction in fiscal 2015. In addition to the income statement adjustments noted above, an adjustment was made to total debt to exclude approximately $13.8 million in additional debt we incurred related to the capital lease treatment of our Providence, Rhode Island headquarters. ROIC for fiscal 2015 was 7.96%, or 8.03% after these adjustments, which was below the “threshold” performance levels. As a result, our consolidated operating income level was not relevant for whether the performance units had been earned and the Compensation Committee did not approve the vesting any of the performance units for Mr. Spinner that were granted in September 2014 and tied to our fiscal 2015 performance.
Other Compensation and Benefits
The Named Executive Officers are eligible for the same level and offering of benefits that we make available to other employees, including our ESOP, 401(k) plan, health care plan, life insurance plans, and other welfare benefit programs. In addition to the standard benefits offered to all employees, the Named Executive Officers are eligible to participate in the Deferral Plans. We provide the Named Executive Officers with the ability to defer compensation as a competitive pay practice so they may save amounts in a non-qualified retirement plan that are greater than the amount permitted to be deferred under the 401(k) Plan. For a description of the Deferral Plans, see EXECUTIVE COMPENSATION TABLES—Nonqualified Deferred Compensation—Fiscal 2015 below. We do not have any defined benefit pension plans available to our Named Executive Officers.
Perquisites and Other Benefits. We provide certain Named Executive Officers with perquisites and other benefits that we believe are reasonable and consistent with our overall executive compensation program. The costs of these benefits constitute only a small portion of each Named Executive Officer's total compensation and includes, for certain Named Executive Officers, contributions to our defined contribution plan, the payment of premiums for life insurance, automobile allowances, corporate housing and commuting air travel reimbursement. We offer perquisites and other benefits that we believe to be competitive with benefits offered by companies with whom we compete for talent for purposes of recruitment and retention.
Fiscal 2016 Compensation Changes
For fiscal 2016, the Compensation Committee made certain changes to the compensation program for the Named Executive Officers tied to base salary, performance-based annual cash incentive and long-term equity based incentive compensation.
As described above in Competitive Marketplace Assessment, when setting fiscal 2015 compensation the Compensation Committee determined to conduct competitive market assessments when analyzing and setting the compensation of our Named Executive Officers every two years as opposed to annually and did not perform such an assessment in setting fiscal 2015 compensation. Accordingly, when it established the compensation for fiscal 2016, the Compensation Committee, with the assistance of Semler Brossy, reviewed a broad-based market assessment in fiscal 2015 in connection with its determination to review our Named Executive Officers’ base salaries every two years. In selecting appropriate data for purposes of setting fiscal 2016 compensation, the Compensation Committee considered companies with revenue between $5 and $10 billion and the market midpoint was defined as the average of the 25th and 50th percentiles to account for the low-margin nature of our business relative to general industry companies.
Base Salary. Base salary remains an important component of a Named Executive Officer's total compensation and for fiscal 2016 base salaries are generally targeted in the 40th to 50th percentile of the market assessment. For fiscal 2016, the base salary for each of the Named Executive Officers has been increased over fiscal 2015 levels by the percentage noted below, with the exception of Mr. Shamber, who ceased to serve as our Chief Financial Officer on October 16, 2015. With the exception of Mr.

30



Griffin, the percentage increases noted below are consistent with the merit pool for the Company as a whole and take into account that the base salaries for those individuals had not been increased since September 2013. In the case of Mr. Griffin, the competitive market place assessment performed determined that his base salary was below market for an employee performing comparable duties and is indicative of the Company's attempt to close this gap. Set forth below are the fiscal 2015 and fiscal 2016 base salaries for the Named Executive Officers and the percentage change between periods.
Named Executive Officer
 
Fiscal 2015
Base Salary
 
Fiscal 2016
Base Salary (1)
 
Percentage
Change
Steven L. Spinner
 
$
872,300

 
$
900,000

 
3.2
%
Mark E. Shamber (2)
 
$
393,950

 
$
393,950

 
%
Sean F. Griffin
 
$
440,300

 
$
500,000

 
13.6
%
Joseph J. Traficanti
 
$
367,150

 
$
380,000

 
3.5
%
Donald P. McIntyre
 
$
366,100

 
$
377,083

 
3.0
%
(1) For each Named Executive Officer, with the exception of Mr. Shamber, fiscal 2016 Base Salaries will be effective as of January 1, 2016.
(2) On September 15, 2015, we announced an executive team transition plan pursuant to which Michael Zechmeister succeeded Mr. Shamber as Senior Vice President, Chief Financial Officer, and Treasurer effective October 16, 2015. Mr. Shamber will continue to assist the Company with business strategy and development through December 31, 2015. Mr. Zechmeister's base salary for 2016 is $450,000.
Performance-Based Annual Cash Incentive Compensation - For fiscal 2016, the only change to the performance-based annual cash incentive program for the Named Executive Officers is an increase in the target-level payout for Mr. Spinner which increased from 75% of his base salary in fiscal 2015 to 100% in fiscal 2016.
Long-Term Equity-Based Incentive Compensation - For fiscal 2016, the Named Executive Officers have been awarded a mixture of time-based restricted stock units and performance-based vesting restricted stock units. Mr. Spinner and Mr. Griffin were granted an award equal to $1,417,488 and $770,000, respectively, or 162.5% and 175% of their fiscal 2015 base salaries at target level payout. Each additional Named Executive Officer, with the exception of Mr. Shamber, was granted an award equal to 150% of their fiscal 2015 base salaries at target level payout, or $550,725 and $549,150 in the case of Mr. Traficanti and Mr. McIntyre, respectively. No stock options were granted to Named Executive Officers for fiscal 2016.
The time-based vesting restricted stock units and performance-based vesting restricted stock units each account for 50% of the total targeted grant date fair value of the award. The time-based vesting restricted stock units will vest in four equal installments beginning on the first anniversary of the date of grant. The amount of each Named Executive Officer's award was based on a percentage of the individual's fiscal 2015 base salary as opposed to a percentage of the individual's prior year base salary and actual annual cash incentive award paid for the prior year, as was the case in fiscal 2015. The performance-based vesting restricted stock units will be denominated in shares based on the closing stock price of our common stock on the date of grant pursuant to the 2012 Equity Plan rather than being denominated in dollars with the number of shares to be issued based on the closing price of our common stock at the end of the performance period as was the case for the fiscal 2015 performance awards. The performance-based vesting restricted stock units, other than Mr. Spinner's units tied to performance in fiscal 2016, have two equally-weighted performance criteria - ROIC and consolidated operating income for fiscal 2017. The Named Executive Officers, with the exception of Mr. Shamber, are eligible to earn between 0% and 200% of their targeted award, depending on our performance during the relevant measurement period with respect to five levels of performance for ROIC and consolidated operating income, respectively. In addition to the performance criteria tied to ROIC and consolidated operating income, the Compensation Committee approved the ability to adjust the number of units that will vest upward or downward by up to 10% depending on how our common stock price performs relative to the S&P Mid Cap 400 Index. In addition to his two-year performance-based restricted stock unit award described above, Mr. Spinner was awarded $1,500,000 of performance-based restricted stock units (at target-level performance) with performance metrics tied to fiscal 2016. Mr. Spinner can earn up to 200% of the targeted award. These performance units have performance criteria tied to ROIC and consolidated operating income similar to the structure of his one-year performance award granted in September 2014. This performance award was denominated in shares based on the closing price of our common stock on the date of grant rather than being denominated in dollars with the number of shares to be issued based on the closing price of our common stock at the end of the performance period as was the case for his one-year performance award in fiscal 2015.
Additional Long-Term Equity-Based Incentive Compensation - In addition to the above-described grants that each of our Named Executive Officers received pursuant to our long-term equity incentive plan program, certain Named Executive Officers were awarded additional time-based vesting restricted stock units. Mr. Spinner was granted an award equal to $729,372, Mr. Griffin was granted an award equal to $385,263, and Mr. Traficanti was granted an award equal to $137,681. These additional grants were provided to those Named Executive Officers whose total compensation package was determined to be below market

31



based on their responsibilities in comparison to individuals with similar responsibilities within the competitive market assessment performed in fiscal 2015 and are meant to bring total targeted compensation in line with market.
New Chief Financial Officer in Fiscal 2016 - On September 15, 2015, the Company announced an executive team transition plan. Michael P. Zechmeister was appointed Senior Vice President, effective as of September 15, 2015, and he succeeded Mark Shamber as Senior Vice President, Chief Financial Officer and Treasurer, effective October 16, 2015. The offer letter and term sheet with Mr. Zechmeister provides him with the following benefits in consideration of his service as the Company’s Chief Financial Officer and Senior Vice President in fiscal 2016:
annual base salary of $450,000, which will be prorated for any portion of a fiscal year during which Mr. Zechmeister is employed as the Company’s Chief Financial Officer and Senior Vice President;
an annual cash bonus with a value of 75% of his base salary at target levels of performance, which may be reduced or increased to between 0% and 150% of his base salary, based on the Company’s and Mr. Zechmeister’s performance, which will be pro-rated for the period of time during which Mr. Zechmeister is employed by the Company during fiscal year 2016;
an initial equity grant with a value of $2,020,000 in order to compensate Mr. Zechmeister for outstanding equity grants and other compensation forfeited from his previous employer payable 25% in options to purchase shares of the Company’s common stock and 75% in time-based vesting restricted stock units, which awards will vest in four equal annual installments beginning on the first anniversary of the grant date of the award; provided however, that the unvested portion of the awards will vest immediately upon involuntary termination of Mr. Zechmeister's employment with the Company without cause;
up to $100,000 for reimbursement for relocation and temporary living expenses; and
participation in the Company’s welfare and benefit plans in accordance with the terms of such plans and change in control and severance agreements substantially similar to those we have entered into with our other Named Executive Officers.
Other Programs, Policies and Considerations
Potential Impact on Compensation from Executive Misconduct
If the Board determines that a Named Executive Officer has engaged in fraudulent or intentional misconduct, the Board will take action to remedy the misconduct, prevent its recurrence, and impose such discipline on the wrongdoers as appropriate. Discipline would vary depending on the facts and circumstances, and may include, without limitation, (1) termination of employment, (2) initiating an action for breach of fiduciary duty, and (3) if the misconduct resulted in a significant restatement of the our financial results, seeking reimbursement of any portion of performance-based or incentive compensation paid or awarded to the Named Executive Officer that is greater than would have been paid or awarded if calculated based on the restated financial results. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.
Recoupment (Clawback) Policy
We have adopted a recoupment policy applicable to our executive officers, including our Named Executive Officers, which provides that if we restate all or a portion of our financial statements within two years of filing the financial statements with the SEC, the Board or the Compensation Committee will, to the extent permitted by law, as it deems appropriate in its sole discretion, require reimbursement of all or a portion of any bonus or incentive compensation paid or granted after May 28, 2009 to any executive officer or other officer covered by this policy. The Board, or the Compensation Committee, also has the right in the event of such a restatement to cause the cancellation of equity-based incentive or bonus awards that had been granted to these individuals and to, in certain circumstances, seek reimbursement of any gains realized on the exercise of stock options or sales of shares of stock or payments received on account of restricted stock units or other awards payable in cash, in either case attributable to any awards that formed all or a portion of such bonus or incentive award. Section 304 of the Sarbanes-Oxley Act of 2002 requires the recovery of incentive awards from our Chief Executive Officer and Chief Financial Officer if we are required to restate our financials due to material noncompliance with any financial reporting requirements as a result of misconduct. In addition, the SEC is required under Section 954 of the Dodd-Frank Act to adopt rules that will require every exchange-listed company to adopt a “clawback” policy for the recovery of certain incentive-based compensation from its executive officers in the event the company is required to restate its financials as a result of material noncompliance with reporting requirements. When final rules under the Dodd-Frank Act are adopted, we expect to revise our existing clawback policy as necessary to comply with these final SEC rules.
Policy on Gross Up Payments in Connection with a Change in Control
We have adopted a policy under which we may not enter into new or amended agreements which provide for "gross ups" for excise tax obligations payable by our executives upon termination of employment following a change in control. We also

32



entered into amendments to the change in control agreement with each of Messrs. Spinner, Traficanti and Shamber to eliminate such "gross up" payments related to change in control. As a result, none of our executives is a party to an agreement providing for "gross up" payments for excise taxes imposed upon termination following a change in control.
Stock Ownership Guidelines
The Compensation Committee believes stock ownership guidelines are a key vehicle for aligning the interests of management and our stockholders. A meaningful ownership stake by our Named Executive Officers demonstrates to our stockholders a strong commitment to our success. Accordingly, the Compensation Committee maintains a policy consistent with our corporate governance principles that requires our Named Executive Officers and other senior officers to hold shares of common stock equal to 50% of the estimated stock option equivalent received by each executive officer for the most recent full year of service as an executive officer. For instance, a stock option equivalent of 10,000 would require stock ownership of 5,000 shares. The policy recommends that executive officers attain this level of stock ownership within four years following their appointment as an executive officer. Once attained, each executive officer is required to maintain this level of stock ownership for as long as they are employed by us and serving as an executive officer. All our executive officers with more than one full year of service own our stock.
Hedging and Insider Trading Policy
Our insider trading policy prohibits our executive officers from holding shares of our common stock in a margin account or from pledging shares of our common stock unless, in the case of pledging of the shares as collateral for a loan (not including margin debt), approved in advance by our General Counsel upon demonstration the individual clearly has the financial capacity to repay the loan without resort to the pledged securities. In addition, our insider trading policy permits only limited types of hedging transactions that are structured to avoid the risks of short selling, options trading or margin trading and which must be made pursuant to a Rule 10b5-1 trading plan that is pre-cleared by our General Counsel and for which any securities involved in such transaction must be in excess of our minimum stock ownership guidelines. Currently, none of the members of the Board or our executive officers are engaged in any hedging or pledging transactions involving shares of our common stock.
Employment Agreements
We are not a party to any currently effective employment agreement with any of our Named Executive Officers. We believe that, generally, employment agreements are not currently necessary to attract and retain talented personnel. However, due to the ever-changing marketplace in which we compete for talent, this practice is regularly reviewed by the Compensation Committee to help ensure that we remain competitive in our industry. We have, however, entered into an offer letter with Steven L. Spinner, our current President and Chief Executive Officer and Michael Zechmeister, our current Chief Financial Officer, that sets forth certain terms of Mr. Spinner's and Mr. Zechmeister's employment with us, and the Compensation Committee and the Board has approved our entering into severance agreements and change in control agreements with our executive officers. We may enter into employment agreements and offer letters with executive officers in the future if the Compensation Committee determines that such arrangements are in our best interest at that time.
Severance Agreements and Change in Control Agreements
We are currently a party to a severance agreement and change in control agreement with each of our Named Executive Officers. Given the fact that we do not have employment agreements with our Named Executive Officers, the Compensation Committee believes that the protections afforded in the severance agreements and change in control agreements are reasonable and are an important element in retaining our executive officers.
Each of the severance agreements includes confidentiality, non-competition and intellectual property assignment provisions. Outside the context of a Change in Control, if we terminate any of our Named Executive Officers for any reason other than Cause, death, or disability or such executive resigns for Good Reason, we would be required to pay to the executive (i) his base salary, as in effect as of the termination date of his employment, and (ii) provide certain medical benefits in each case for a period of one year following such termination. If we terminate Mr. Spinner without Cause, his agreement also requires us to pay (i) a pro rata portion of the bonus to which he would have been entitled for the year in which he was terminated, and (ii) an amount equal to the pro rata portion of his unvested balance in the ESOP, which would vest on the first anniversary of the date of Mr. Spinner's termination. If we terminate Mr. Spinner without Cause, a pro rata portion of the stock options awarded to Mr. Spinner and not vested and exercisable on or prior to the date of Mr. Spinner's termination that would otherwise become vested and exercisable on or prior to the first anniversary of the date of Mr. Spinner's termination, and any shares of restricted stock or restricted stock units granted to Mr. Spinner that would have had any restrictions thereon removed or vested on or prior to the first anniversary of the date of Mr. Spinner's termination, will, in either case, have any restrictions thereon removed or become vested, as the case may be. All such payments and vesting will be prorated based on the number of full calendar months that Mr. Spinner was employed as our President and Chief Executive Officer during the fiscal year in which he resigned or was terminated.
Any benefits to be paid upon a change in control under the severance agreements or change in control agreements are "double trigger," which requires both a Change in Control and a termination of a Named Executive Officer by us for a reason

33



other than Cause, death or disability or a resignation by the executive for Good Reason within one year of the date of the Change in Control. In the event of either a termination of the executive for a reason other than Cause, death or disability or his resignation for Good Reason within one year of the date of a Change in Control, the executive would be entitled to receive a lump sum payment equal to (i) a multiple of his base salary (multiple of 3, 2.99, 2.99, 1.5 and 1.5 for Messrs. Spinner, Shamber, Traficanti, Griffin and McIntyre, respectively), as in effect at that time of his termination of employment, (ii) the average annual bonus paid to the executive for the three fiscal years prior to the date of his termination or resignation (or the average of the bonuses he has received if he will not have been employed by us for three years as of such date, or, if he has not yet been awarded an annual bonus for the previously completed year as of such termination date, then his target bonus for such year shall be included in the average), (iii) the pro rata portion of the target bonus for the fiscal year in which such termination or resignation occurred, and (iv) an amount equal to his unvested account balance in the ESOP. In addition, all of the executive's then outstanding but unvested equity awards, including performance shares and performance units, will vest and, if applicable, become exercisable as of the date of termination or resignation. We will also be required to continue to provide each executive with medical benefits in effect as of the date of such termination or resignation for a period of three years following the termination or resignation. The provision of all such benefits will be subject to any restrictions under applicable law, including under Section 409A of the Code. In establishing the multiples of base salary and bonus that a terminated executive would be entitled to receive following his termination without Cause or for Good Reason, either before or within one year following a Change in Control, the Compensation Committee considered the need to be able to competitively recruit and retain talented executive officers who often-times seek protection against the possibility that they might be terminated without cause or be forced to resign for Good Reason following a Change in Control.
For purposes of the severance agreements and change in control agreements described above, the terms "Cause", "Good Reason" and "Change in Control" have the meanings set forth below.
"Cause" means (1) conviction of the executive under applicable law of any felony or any misdemeanor involving moral turpitude, (2) unauthorized acts intended to result in the executive's personal enrichment at the material expense of the Company or its reputation, or (3) any violation of the executive's duties or responsibilities to the Company which constitutes willful misconduct or dereliction of duty, or material breach of the confidentiality and non-competition restrictions contained in the severance agreements and change in control agreements.
"Good Reason" means, without the executive's express written consent, the occurrence of any one or more of the following: (1) the assignment of the executive to duties materially adversely inconsistent with his current duties, and failure to rescind such assignment within thirty (30) days of receipt of notice from the executive; (2) a material reduction in the executive's title, executive authority or reporting status; (3) a relocation more than 50 miles from the Company's offices in Providence, Rhode Island; (4) a reduction by the Company in the executive's base salary, or the failure of the Company to pay or cause to be paid any compensation or benefits under the severance or change in control agreement when due or under the terms of any plan established by the Company, and failure to restore such base salary or make such payments within five days of receipt of notice from the executive; (5) failure to include the Named Executive Officer in any new employee benefit plans proposed by the Company or a material reduction in the executive's level of participation in any existing plans of any type; provided that a Company-wide reduction or elimination of such plans shall not give rise to a "Good Reason" termination; or (6) the failure of the Company to obtain a satisfactory agreement from any successor to the Company with respect to the ownership of substantially all the stock or assets of the Company to assume and agree to perform the severance agreement or change in control agreement, as the case may be.
"Change in Control" means the happening of any of the following:
any "person", including a "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding the Company, any of its affiliates, or any employee benefit plan of the Company or any of its affiliates) is or becomes the "beneficial owner" (as defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities of the Company representing the greater of 30% or more of the combined voting power of the Company's then outstanding securities;
approval by the stockholders of the Company of a definitive agreement (1) for the merger or other business combination of the Company with or into another corporation if (A) a majority of the directors of the surviving corporation were not directors of the Company immediately prior to the effective date of such merger or (B) the stockholders of the Company immediately prior to the effective date of such merger own less than 60% of the combined voting power in the then outstanding securities in such surviving corporation or (2) for the sale or other disposition of all or substantially all of the assets of the Company; or
the purchase of 30% or more of the Company's stock pursuant to any tender or exchange offer made by any "person", including a "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company, any of its affiliates, or any employee benefit plan of the Company or any of its affiliates.

34



Tax Deductibility of Compensation
When it reviews compensation matters, the Compensation Committee considers, among other matters, the anticipated tax and accounting treatment of payments and benefits with respect to us and, when relevant, to the executive. Section 162(m) of the Code limits to $1 million the annual tax dedication for compensation paid to each of the chief executive officer and the three other highest paid executive officers employed at the end of the year (other than the chief financial officer). However, compensation that does not exceed $1 million during any fiscal year or that qualifies as "performance-based compensation" (as defined in Section 162(m)) is deductible. The Compensation Committee considers these requirements and attempts to ensure that both cash and equity components of the Named Executive Officers' total compensation are tax deductible by us, to the maximum extent possible, by the use of stockholder-approved plans that are intended to comply, to the extent practicable, with Section 162(m). The Compensation Committee reserves the right to make non-deductible awards (e.g. service vested restricted stock units). Our performance-based cash incentive plan is intended to be a subplan of our 2012 Equity Plan, which was approved by our stockholders. Accordingly, assuming that awards otherwise comply with the technical requirements of Section 162(m) these awards should qualify as “performance-based compensation” and as a result be deductible if paid out in accordance with the terms of the plan and performance metrics approved by the Compensation Committee. The Compensation Committee will continue to review and evaluate, as necessary, the impact of Section 162(m) on our executive compensation programs, but the Compensation Committee has approved in the past and may approve in the future, compensation that is not considered performance-based under Section 162(m) or that is outside the deductibility limitations of Section 162(m).

35



COMPENSATION COMMITTEE REPORT
We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and our Annual Report on Form 10-K for the fiscal year ended August 1, 2015.

 
 
James P. Heffernan, Chair
 
 
Ann Torre Bates
 
 
Gail A. Graham
    
The foregoing Report of the Compensation Committee shall not be deemed "filed" for any purpose, including for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The Report of the Compensation Committee does not contain soliciting material and shall not be deemed to be incorporated by reference into any filing under the Securities Act or under the Exchange Act, regardless of any general incorporation language in such filing.

36



EXECUTIVE COMPENSATION TABLES
Summary Compensation Table—Fiscal Years 2013-2015
The following table sets forth for each of the Named Executive Officers: (i) the dollar value of base salary and non-equity incentive compensation earned during the fiscal year indicated; (ii) the aggregate grant date fair value related to all equity-based awards made to the Named Executive Officer for the fiscal year; (iii) the change in pension value and non-qualified deferred compensation earnings during the fiscal year; (iv) all other compensation for the year; and (v) the dollar value of total compensation for the fiscal year.

SUMMARY COMPENSATION TABLE
Name and Principal Position
Year
Salary
Bonus
Stock
Awards(1)
Option
Awards(2)
Non-Equity
Incentive Plan
Compensation
Nonqualified
Deferred
Compensation
Earnings(3)
All Other
Compensation
 
Total
Steven L. Spinner
2015
$
872,300

$

$
2,758,034

$
218,840

$

$
20,745

$
88,249

(4)
$
3,958,168

President and Chief Executive Officer
2014
872,300


2,669,457

216,377

964,682

46,080

80,325

 
4,849,221

 
2013
846,866


2,726,107

283,124

807,161

75,197

80,374

 
4,818,829

Mark E. Shamber (5)
2015
393,950


565,899

98,382


8,931

9,549

(6)
1,076,711

Senior Vice President, Chief Financial Officer and Treasurer
2014
393,950


482,524

89,320

429,556

22,945

11,528

 
1,429,823

 
2013
382,454


496,303

121,147

249,787

21,571

11,348


1,282,610

Sean F. Griffin
2015
440,300


544,154

94,529


18,411

10,464

(7)
1,107,858

Chief Operating Officer
2014
440,300


581,015

107,612

259,086

15,941

20,144

 
1,424,098

 
2013
427,450


588,579

143,640

384,526

18,819

21,174

 
1,584,188

Joseph J. Traficanti
2015
367,150


484,325

84,158


8,485

45,677

(8)
989,795

Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary
2014
367,150


441,733

81,739

292,694

28,391

56,261

 
1,267,968

2013
356,462


444,434

108,555

213,778

37,038

15,845

 
1,176,112

Donald P. McIntyre
2015
366,100


440,897

76,601



5,095

(9)
888,693

Senior Vice President, National Supply Chain and Strategy
 
 
 
 
 
 
 
 
 


(1)
Amounts shown represent the grant date fair value of awards of restricted stock units, and, with respect to Mr. Spinner in fiscal 2013 through fiscal 2014, performance shares and performance units at the target level and in fiscal 2015, performance units at the target level, and, with respect to Messrs. Shamber, Griffin, Traficanti and McIntyre, fiscal 2013 through fiscal 2015, performance units at the target level, as computed under ASC 718 granted during the fiscal year indicated. For performance shares and performance units, grant date fair value is calculated based on the probable outcome of the performance result (i.e., target level of performance) for each of the performance periods, excluding the effect of estimated forfeitures. These amounts do not necessarily reflect the actual amounts that were paid to, or may be realized by, the Named Executive Officer for any of the fiscal years reflected. Refer to footnote 3 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended August 1, 2015 for a discussion of the relevant assumptions used to determine the grant date fair value of these awards. The grant date fair value of awards of performance shares and performance units to Mr. Spinner in fiscal 2015, fiscal 2014 and fiscal 2013, assuming stretch, or maximum, performance, were $3,943,630, $3,877,298 and $4,123,918, respectively. The grant date fair value of awards of performance units to Messrs. Shamber, Griffin, Traficanti, and McIntyre in fiscal 2015, assuming stretch performance, were $424,329, $407,951, $363,171, and $330,537, respectively. The grant date fair value of awards of performance units to Messrs. Shamber, Griffin, and Traficanti in fiscal 2014, assuming stretch, or maximum level, performance, were $361,777 and $435,945, and $331,480, respectively. The grant date fair value of awards of performance units to Messrs.

37



Shamber, Griffin, and Traficanti, in fiscal 2013, assuming stretch performance, were $424,162, $502,914, and $379,861, respectively.
The amounts shown in the column for fiscal 2013 also include $123,891, $53,020, $62,865, and $47,483 for each of Messrs. Spinner, Shamber, Griffin, and Traficanti, respectively, representing the dollar value of the discretionary award of 2,054, 879, 1,042, and 787 shares of common stock to Messrs. Spinner, Shamber, Griffin, and Traficanti, respectively, on September 10, 2013, related to the two-year performance period ended August 3, 2013. Such amounts represent the number of shares multiplied by $60.31, the closing price per share of our common stock on the NASDAQ Global Select Market on August 2, 2013, the last business day of the fiscal year. 
(2)
Amounts shown represent the grant date fair value of awards of stock options, as computed under ASC 718, granted to the Named Executive Officers during the fiscal year indicated. These amounts do not reflect the actual amounts that were paid to, or may be realized by, the Named Executive Officer for any of the fiscal years reflected. Refer to footnote 3 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended August 1, 2015 for a discussion of the relevant assumptions used to determine the grant date fair value of these awards.
(3)
Amounts reported in this column represent earnings on deferred compensation that exceed 120% of the federal applicable long-term rate, which was 2.74%. These amounts as well as all other earnings on deferred compensation of the Named Executive Officers in fiscal 2015 are included in the table included under Nonqualified Deferred Compensation—Fiscal 2015 under the column "Aggregate Earnings in Last Fiscal Year."
(4)
Represents an automobile allowance ($6,314), an allowance for living expenses while in the area of our Corporate Headquarters in Providence, Rhode Island ($48,931), an amount received to "gross up" the two preceding benefits to offset the related tax obligations ($20,534), an allocation of shares under the ESOP ($800), our contributions to a 401(k) account ($8,723) and the provision of air and rail travel from Mr. Spinner's homes in New York and Pennsylvania to our Corporate Headquarters ($2,947).
(5)
On September 15, 2015, we announced an executive team transition plan whereby Mr. Michael Zechmeister succeeded Mr. Shamber as Senior Vice President, Chief Financial Officer, and Treasurer effective October 16, 2015. Mr. Shamber will continue to assist the Company with business strategy and development through December 31, 2015. Mr. Zechmeister's base salary for 2016 is $450,000.
(6)
Represents an allocation of shares under the ESOP ($800) and our contributions to a 401(k) account ($8,749).
(7)
Represents an allocation of shares under the ESOP ($800), our contributions to a 401(k) account ($6,774) and the payment of premiums for life insurance ($2,890).
(8)
Represents a scheduled distribution from the nonqualified deferred compensation plan ($34,988), an allocation of shares under the ESOP ($800), our contributions to a 401(k) account ($7,305), and the provision of air travel from Mr. Traficanti's home in Virginia to our Corporate Headquarters in Providence, Rhode Island ($2,584).
(9)
Represents an allocation of shares under the ESOP ($800) and our contributions to a 401(k) account ($4,295).

38



GRANTS OF PLAN-BASED AWARDS IN FISCAL 2015
 
 
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)

 
Estimated Future Payouts
Under Equity Incentive Plan
Awards(2)

 
 
 
 
Name
Grant Date
Threshold ($)
Target
($)
Maximum
($)
 
Threshold
($)
Target
($)
Maximum
($)
All
Other
Stock
Awards
(#)(4)
All
Other
Option
Awards
(#)(5)
Exercise
Price of
Option
Awards
($/sh)(6)
Grant Date Fair Value of Stock and Option Awards ($)(7)
Steven L. Spinner
9/19/2014



 




14,770

64.55

218,840

 
9/19/2014



 



12,180



786,219

 
9/19/2014



 

1,500,000 (3)

3,000,000 (3)




1,500,000

 
9/19/2014



 
117,968

471,815

943,630




471,815

 
N/A
305,305

654,225

1,308,450

 







Mark E. Shamber
9/19/2014



 




6,640

64.55

98,382

 
9/19/2014



 



5,480



353,734

 
9/19/2014



 
53,042

212,165

424,329




212,165

 
N/A
137,883

295,463

590,925

 







Sean F. Griffin
9/19/2014



 




6,380

64.55

94,529

 
9/19/2014



 



5,270



340,179

 
9/19/2014



 
50,994

203,975

407,951




203,975

 
N/A
154,105

330,225

660,450

 







Joseph J. Traficanti
9/19/2014



 




5,680

64.55

84,158

 
9/19/2014



 



4,690



302,740

 
9/19/2014



 
45,393

181,585

363,171




181,585

 
N/A
91,788

183,575

367,150

 







Donald P. McIntyre
9/19/2014



 




5,170

64.55

76,601

 
9/19/2014



 



4,270



275,629

 
9/19/2014



 
41,296

165,268

330,537




165,268

 
N/A
91,525

183,050

366,100

 







(1)
This column shows separately the possible payouts to the Named Executive Officers under our 2015 Senior Management Cash Incentive Plan for the fiscal year ended August 1, 2015 for "threshold", "target" and "stretch" performance. No amounts were paid under this plan for fiscal 2015 as the threshold level of performance required for payouts under Summary Compensation Table—Fiscal Years 2013-2015 under the plan was not achieved.
(2)
For each of the Named Executive Officers, including Mr. Spinner, with an award granted on September 19, 2014, this column shows the total dollar value of a performance-based restricted stock unit award made on the grant date in fiscal 2015 (other than with respect to Mr. Spinner's performance units with a one-year performance period which are described in footnote 3), which at target levels of performance is equal to 30% of the sum of 125% of the Named Executive Officer’s base salary for fiscal 2014 and 50% of the amount of the performance-based annual cash incentive award earned by the Named Executive Officer based on fiscal 2014 performance and paid in fiscal 2015. At the conclusion of the two-year performance period, the performance units may vest based on our ROIC and Relative TSR. The performance units earned by the Named Executive Officer will be settled in a number of shares resulting from dividing the dollar value of the award earned by the closing price of our common stock on the last trading day prior to the last day of the performance period. The performance units and their related performance-based vesting are described in more detail in EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Components of Our Executive Compensation Program-Long-term, Equity-Based Incentive Program—Performance-Based Vesting Restricted Stock Units.
(3)
This column shows the dollar value of performance units at target and maximum levels of performance granted to Mr. Spinner in fiscal 2015. Vesting of these performance units was linked to our attaining certain levels of operating income and return on invested capital for fiscal 2015, with the number of shares to be issued to Mr. Spinner equal to the result of dividing the dollar value of the award earned by the closing price of our common stock on the last trading day prior to the last day of the performance period. At the conclusion of the performance period, and based on our actual results measured against the performance measures, all of the performance shares were forfeited.

39



(4)
This column shows the number of time-based vesting restricted stock units granted in fiscal 2015 to the Named Executive Officers.  All of the time-based vesting restricted stock units vest in four equal annual installments beginning on the first anniversary of the date of grant. 
(5)
This column shows the number of stock options granted in fiscal 2015 to the Named Executive Officers. These stock options vest and become exercisable on a one-for-one basis for our common stock in four equal annual installments beginning on the first anniversary of the date of grant and expire ten years from the date of grant.
(6)
This column shows the exercise price of stock option awards, which was the closing price of our common stock on the date of grant.
(7)
For grants during fiscal 2015, the amount shown with respect to each award represents the grant date fair value of the award calculated using the assumptions described in footnotes (1) and (2) of the table included under Summary Compensation Table—Fiscal Years 2013-2015. The grant date fair value of performance units was calculated based on the probable outcome of the performance result (i.e., target level of performance) for each of the performance periods, excluding the effect of estimated forfeitures.
Outstanding Equity Awards at Fiscal 2015 Year-End
The following table summarizes information with respect to holdings of stock options and stock awards by the Named Executive Officers as of August 1, 2015. This table includes unexercised and unvested stock options, unvested time-based vesting restricted stock units and unvested performance-based vesting restricted stock units. Each equity grant is shown separately for each Named Executive Officer, except that incentive stock options and non-qualified stock options granted on the same date with the same material terms, including exercise price, vesting period and expiration date, are combined.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
 
 
Option Awards
Stock Awards
Name
Grant Date (1)
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Option Exercise Price ($)
Option Expiration Date
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(2)
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4)
Steven L. Spinner
9/16/2008
7,500


24.54

9/16/2018





 
9/11/2009
12,311


24.30

9/11/2019





 
9/10/2010
17,760


33.90

9/10/2020





 
9/12/2011




5,715

260,204



 
9/12/2011
12,863

4,287

37.82

9/12/2021





 
9/13/2012




4,580

208,527



 
9/13/2012
11,580

11,580

58.98

9/13/2022





 
9/16/2013




8,122

369,795



 
9/16/2013
3,283

9,847

67.48

9/16/2023





 
9/19/2014




12,180

554,555

2,591

117,968

 
9/19/2014

14,770

64.55

9/19/2024





Mark E. Shamber
12/8/2005
3,000


25.37

12/8/2015





 
1/27/2006
3,000


31.67

1/27/2016





 
12/7/2006
6,000


36.60

12/7/2016





 
12/6/2007
6,000


28.32

12/6/2017





 
9/16/2008
9,000


24.54

9/16/2018





 
9/11/2009
9,378


24.30

9/11/2019





 
9/10/2010
8,030


33.90

9/10/2020





 
9/12/2011




2,500

113,825



 
9/12/2011
5,625

1,875

37.82

9/12/2021





 
9/13/2012




1,960

89,239



 
9/13/2012
4,955

4,955

58.98

9/13/2022





 
9/16/2013




3,352

152,617




40



 
9/16/2013
1,355

4,065

67.48

9/16/2023





 
9/19/2014




5,480

249,504

1,165

53,042

 
9/19/2014

6,640

64.55

9/19/2024





Sean F. Griffin
9/12/2011




2,345

106,768



 
9/12/2011

1,760

37.82

9/12/2021





 
9/13/2012




2,325

105,857



 
9/13/2012
5,875

5,875

58.98

9/13/2022

 
 


 
9/16/2013




4,035

183,714



 
9/16/2013
1,633

4,897

67.48

9/16/2023





 
9/19/2014




5,270

239,943

1,120

50,994

 
9/19/2014

6,380

64.55

9/19/2014





Joseph J. Traficanti
6/19/2009
4,875


25.45

6/19/2019





 
9/12/2011




2,290

104,264



 
9/12/2011

1,717

37.82

9/12/2021





 
9/13/2012




1,755

79,905



 
9/13/2012

4,440

58.98

9/13/2022





 
9/16/2013




3,067

139,641



 
9/16/2013

3,720

67.48

9/16/2023





 
9/19/2014




4,690

213,536

997

45,393

 
9/19/2014

5,680

64.55

9/19/2024





Donald P. McIntyre
7/9/2012




1,367

62,240



 
9/16/2013




2,542

115,737



 
9/16/2013
1,028

3,082

67.48

9/16/2023





 
9/19/2014




4,270

194,413

907

41,296

 
9/19/2014

5,170

64.55

9/19/2024





(1)
All awards included in the table above vested or will vest in four equal annual installments beginning on the first anniversary of the date of grant.
(2)
Market value reflects the number of unvested restricted stock units multiplied by $45.53 per share, the closing price of our common stock on the NASDAQ Global Select Market on July 31, 2015, the last business day of fiscal 2015.
(3)
Represents the number of shares that may be issued pursuant to performance units at the threshold level of performance utilizing the closing price of our common stock on the NASDAQ Global Select Market on July 31, 2015, the last business day of fiscal 2015. The performance units have performance criteria tied to our performance in fiscal 2015 and fiscal 2016, denominated in dollars at grant, and the number of performance units shown is based on the amounts of the Named Executive Officer's fiscal 2014 base salary and performance-based annual cash incentive award earned in fiscal 2014, which is described in more detail in EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Components of Our Executive Compensation Program—Long-term Equity-Based Incentive Program—Performance-Based Vesting Restricted Stock Units.
(4)
Market value reflects the number of shares that may be issued pursuant to performance units at the threshold level of performance, multiplied by $45.53 per share, the closing price of our common stock on the NASDAQ Global Select Market on July 31, 2015, the last business day of fiscal 2015.
Option Exercises and Stock Vested—Fiscal 2015
The following table summarizes information for the Named Executive Officers concerning exercise of stock options and vesting of restricted stock units, and performance units during the fiscal year ended August 1, 2015, including (i) the number of shares of stock underlying options exercised in fiscal 2015; (ii) the aggregate dollar value realized upon such exercises of stock options utilizing the actual sales price for same-day sale transactions and the closing price for any exercise and hold transactions; (iii) the number of shares of stock received from the vesting of restricted stock units, performance shares and performance units during fiscal 2015; and (iv) the aggregate dollar value realized upon the vesting of such restricted stock units, performance shares and performance units. None of the performance-based restricted stock units awarded to the Named Executive Officers on September 16, 2013 with performance criteria tied to our fiscal year ended August 2, 2014 were earned by the Named Executive Officers. None of the performance based restricted shares awarded to our Chief Executive Officer on September 19, 2014 with performance criteria tied to our fiscal year ended August 1, 2015 were earned by our Chief Executive Officer. For additional information see EXECUTIVE COMPENSATIONCompensation Discussion and Analysis<