DEF 14A 1 d729878ddef14a.htm DEF 14A DEF 14A
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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

Filed by the Registrant                             Filed by a Party other than the Registrant

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

 

 

RALPH LAUREN CORPORATION

 

(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):

 

No fee required.

 

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 the transaction applies:

 

 

  

 

  (2)

Aggregate number of securities to which the transaction applies:

 

 

  

 

  (3)

Per unit price or other underlying value of the 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 the transaction:

 

 

  

 

  (5)

Total fee paid:

 

 

  

 

 

Fee paid previously with preliminary materials.

 

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)

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Table of Contents

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Table of Contents

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Table of Contents

 

   LEADERSHIP LETTER

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

A MESSAGE FROM OUR EXECUTIVE CHAIRMAN AND CHIEF CREATIVE OFFICER AND OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER

 

 

 

DEAR STOCKHOLDER:

You are cordially invited to join our 2019 Annual Meeting of Stockholders to be held on Thursday, August 1, 2019 at 9:30 a.m., Eastern Time. Our Annual Meeting will be a “virtual meeting” of stockholders, which will be conducted exclusively online via live webcast. By hosting our meeting virtually, we are able to expand participant access, improve communication with our stockholders, and reduce costs. This approach also enables participation from our global community and aligns with our strategic corporate goal to lead with digital and our broader sustainability goals.

Your vote is very important. Whether you plan to participate in the Annual Meeting or not, please be sure to vote. Information concerning the matters to be considered and voted upon at the 2019 Annual Meeting is set out in the attached Notice of 2019 Annual Meeting and Proxy Statement.

Reflecting on the first year of delivering against our Next Great Chapter strategy, we are encouraged by the momentum we are building. We outperformed our commitments across core metrics, including revenue, quality of sales, operating income, and earnings per share. We returned to revenue growth one year ahead of plan, average unit retail was better than we expected across all regions and channels, and we saw particular strength across our international regions and core product categories as we invested in product, marketing, and distribution. What drove these results was consistent focus and strong execution across each of our five strategic priorities:

 

  Win over a new generation of consumers

 

  Energize our core products and build high value, under-developed categories

 

  Drive targeted expansion in our regions and channels

 

  Lead with digital across all we do

 

  Operate with discipline to fuel growth

Looking ahead, we remain focused on delivering long-term, sustainable growth and value creation by consistently placing the consumer at the center of our business, elevating and energizing our brands, and balancing growth and productivity across each of these areas.

Our Purpose is to inspire the dream of a better life through authenticity and timeless style. Everything we do – from the products we deliver to the experiences we create at our fashion shows, stores, and restaurants around the world – is an expression of this Purpose that has driven our brand for more than 50 years and will continue to inspire our everyday.

Thank you for your ongoing support and continued interest in our Company. We look forward to engaging at our 2019 Annual Meeting.

 

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Ralph Lauren   Patrice Louvet

Executive Chairman and

Chief Creative Officer

 

President and

Chief Executive Officer

New York, New York

June 21, 2019

 

 

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   NOTICE OF ANNUAL MEETING

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

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NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS

 

 

 

PURPOSE OF THE MEETING

The 2019 Annual Meeting of Stockholders of Ralph Lauren Corporation, a Delaware corporation, will be held virtually via live webcast on Thursday, August 1, 2019, at 9:30 a.m., Eastern Time, at www.virtualshareholdermeeting.com/RL2019, or at any postponement or adjournment of the meeting, for the following purposes:

 

1.

To elect 14 directors to serve until the 2020 Annual Meeting of Stockholders;

 

2.

To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending March 28, 2020;

 

3.

To approve, on an advisory basis, the compensation of our named executive officers and our compensation philosophy, policies, and practices as described herein;

 

4.

To adopt the Company’s 2019 Long-Term Stock Incentive Plan; and

 

5.

To transact such other business as may properly come before the meeting and any adjournments or postponements thereof.

The foregoing items of business are described more fully in the accompanying Proxy Statement. Only holders of record of the Company’s Class A and Class B Common Stock at the close of business on June 3, 2019 are entitled to notice of, and to vote at, the 2019 Annual Meeting of Stockholders and any adjournments or postponements thereof.

NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

We will be using the Securities and Exchange Commission’s Notice and Access model, which allows us to make the proxy materials available on the Internet, as the primary means of furnishing proxy materials to stockholders. On or about June 21, 2019, we will mail to all stockholders a Notice of Internet Availability of Proxy Materials, which contains instructions for accessing our proxy materials on the Internet and voting by telephone or on the Internet. The Notice of Internet Availability of Proxy Materials also contains instructions for requesting a printed set of proxy materials. The Proxy Statement, Annual Report on Form 10-K for the fiscal year ended March 30, 2019, and Notice of Annual Meeting are available at: http://investor.ralphlauren.com.

YOUR VOTE IS IMPORTANT

Please vote promptly by signing, dating, and returning the enclosed proxy card or voting by telephone or on the Internet by following the instructions on your Notice of Internet Availability of Proxy Materials. In the event that a stockholder decides to participate in the online meeting, such stockholder may, if so desired, revoke the proxy by voting those shares when joining the meeting.

By Order of the Board of Directors,

 

 

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AVERY S. FISCHER

Executive Vice President, General Counsel, and Secretary

New York, New York

June 21, 2019

 

 

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Table of Contents

 

    SPECIAL NOTE

 

   

 

   RALPH LAUREN CORPORATION

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This document contains, and oral statements made at the 2019 Annual Meeting of Stockholders and elsewhere from time to time by our representatives may contain, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include the statements regarding, among other things, our current expectations about the Company’s future results and financial condition, revenues, store openings and closings, employee reductions, margins, expenses, earnings, and citizenship and sustainability goals and are indicated by words or phrases such as “anticipate,” “estimate,” “expect,” “project,” “we believe,” “can,” “will,” and similar words or phrases. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from the future results, performance or achievements expressed in or implied by such forward-looking statements. Forward-looking statements are based largely on the Company’s expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. The factors that could cause actual results to materially differ include, among others: the loss of key personnel, including Mr. Ralph Lauren, or other changes in our executive and senior management team or to our operating structure, and our ability to effectively transfer knowledge during periods of transition; our ability to successfully implement our long-term growth strategy; our ability to continue to expand and grow our business internationally and the impact of related changes in our customer, channel, and geographic sales mix as a result, as well as our ability to accelerate growth in certain product categories; our ability to open new retail stores and concession shops, as well as enhance and expand our digital footprint and capabilities, all in an effort to expand our direct-to-consumer presence; our ability to respond to constantly changing fashion and retail trends and consumer demands in a timely manner, develop products that resonate with our existing customers and attract new customers, and execute marketing and advertising programs that appeal to consumers; our ability to effectively manage inventory levels and the increasing pressure on our margins in a highly promotional retail environment; our ability to continue to maintain our brand image and reputation and protect our trademarks; our ability to competitively price our products and create an acceptable value proposition for consumers; the impact to our business resulting from changes in consumers’ ability, willingness, or preferences to purchase discretionary items and luxury retail products, which tends to decline during recessionary periods, and our ability to accurately forecast consumer demand, the failure of which could result in either a build-up or shortage of inventory; our ability to achieve anticipated operating enhancements and cost reductions from our restructuring plans, as well as the impact to our business resulting from restructuring-related charges, which may be dilutive to our earnings in the short term; the impact to our business resulting from potential costs and obligations related to the early closure of our stores or termination of our long-term, non-cancellable leases; a variety of legal, regulatory, tax, political, and economic risks, including risks related to the importation and exportation of products which our operations are currently subject to, or may become subject to as a result of potential changes in legislation, and other risks associated with our international operations, such as compliance with the Foreign Corrupt Practices Act or violations of other anti-bribery and corruption laws prohibiting improper payments, and the burdens of complying with a variety of foreign laws and regulations, including tax laws, trade and labor restrictions, and related laws that may reduce the flexibility of our business; the potential impact to our business resulting from the imposition of additional duties, tariffs, taxes, and other charges or barriers to trade, including those resulting from current trade developments with China and the related impact to global stock markets, as well as our ability to implement mitigating sourcing strategies; the impact to our business resulting from the United Kingdom’s decision to exit the European Union and the uncertainty surrounding the terms and conditions of such a withdrawal, as well as the related impact to global stock markets and currency exchange rates; the impact to our business resulting from increases in the costs of raw materials, transportation, and labor, including wages, healthcare, and other benefit-related costs; our ability to secure our facilities and systems and those of our third-party service providers from, among other things, cybersecurity breaches, acts of vandalism, computer viruses, or similar Internet or email events; our efforts to successfully enhance, upgrade, and/or transition our global information technology systems and digital commerce platforms; changes in our tax obligations and effective tax rate due to a variety of other factors, including potential additional changes in U.S. or foreign tax laws and regulations, accounting rules, or the mix and level of earnings by jurisdiction in future periods that are not currently known or anticipated;

our exposure to currency exchange rate fluctuations from both a transactional and translational perspective; the potential impact to our business resulting from the financial difficulties of certain of our large wholesale customers, which may result in consolidations, liquidations, restructurings, and other ownership changes in the retail industry, as well as other changes in the competitive marketplace, including the introduction of new products or pricing changes by our competitors; the impact of economic, political, and other conditions on us, our customers, suppliers, vendors, and lenders; the potential impact to our business if any of our distribution centers were to become inoperable or inaccessible; the potential impact on our operations and on our suppliers and customers resulting from natural or man-made disasters; the impact to our business of events of unrest and instability that are currently taking place in certain parts of the world, as well as from any terrorist action, retaliation, and the threat of further action or retaliation; our ability to access sources of liquidity to provide for our cash needs, including our debt obligations, tax obligations, payment of dividends, capital expenditures, and potential repurchases of our Class A common stock, as well as the ability of our customers, suppliers, vendors, and lenders to access sources of liquidity to provide for their own cash needs; the potential impact to the trading prices of our securities if our Class A common stock share repurchase activity and/or cash dividend payments differ from investors’ expectations; our ability to maintain our credit profile and ratings within the financial community; our intention to introduce new products or brands, or enter into or renew alliances; changes in the business of, and our relationships with, major department store customers and licensing partners; our ability to make certain strategic acquisitions and successfully integrate the acquired businesses into our existing operations; our ability to achieve our goals regarding environmental, social, and governance practices; and other risk factors identified in the Company’s Annual Report on Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

RALPH LAUREN CORPORATION REFERENCES

In this document, we refer to Ralph Lauren Corporation as the “Company,” “we”, “us” or “our.” Our fiscal year ends on the Saturday closest to March 31. All references to “Fiscal 2022” represent the fiscal year ending April 2, 2022. All references to “Fiscal 2021” represent the fiscal year ending March 27, 2021. All references to “Fiscal 2020” represent the fiscal year ending March 28, 2020. All references to “Fiscal 2019” represent the fiscal year ended March 30, 2019. All references to “Fiscal 2018” represent the fiscal year ended March 31, 2018. All references to “Fiscal 2017” represent the fiscal year ended April 1, 2017. All references to “Fiscal 2016” represent the fiscal year ended April 2, 2016. All references to “Fiscal 2015” represent the fiscal year ended March 28, 2015. All references to “Fiscal 2014” represent the fiscal year ended March 29, 2014.

NON-U.S. GAAP FINANCIAL MEASURES

The Company uses non-U.S. generally accepted accounting principles (“U.S.-GAAP”) financial measures, among other things, to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. In addition, as discussed in the “Executive Compensation Matters” section of the Proxy Statement, the Compensation & Organizational Development Committee uses non-U.S. GAAP measures to set and certify the achievement of certain performance-based compensation goals. The Company believes that excluding items that are not comparable from period to period helps investors and others compare operating performance between two periods. While the Company considers the non-U.S. GAAP measures useful in analyzing its results, they are not intended to replace, nor act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP and may be different from non-U.S. GAAP measures reported by other companies. See Appendix B to the Proxy Statement for reconciliation between the non-U.S. GAAP financial measures and the most directly comparable U.S. GAAP measures.

 

 

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Table of Contents

    

CONTENTS

 

 

 

LEADERSHIP LETTER      1  
NOTICE OF ANNUAL MEETING      2  
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS      3  
PROXY SUMMARY      6  
PROXY STATEMENT FOR THE ANNUAL MEETING      14  
(PROPOSAL 1) ELECTION OF DIRECTORS      15  

Class A Director Nominees For Election

     16  

Class B Director Nominees For Election

     18  
CORPORATE GOVERNANCE      23  

Overview of Corporate Governance

     23  

Company Leadership Structure

     25  

Director Independence and Non-Management Director Meetings

     25  

Meetings and Director Attendance

     26  

Independent Committees of the Board of Directors

     26  

Board of Directors Effectiveness

     28  

Board of Directors Oversight of Risk

     30  

Overview of Environmental, Social and Governance Risk Oversight

     30  

Analysis of Risks Arising from Compensation Policies and Programs

     31  

Diversity and Director Nominating Procedures

     32  

Global Citizenship and Sustainability

     34  

Director Communications

     36  

Audit Committee Communications

     37  

 

AUDIT COMMITTEE REPORT      38  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      39  
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE      41  
DIRECTOR COMPENSATION      42  

Stock Ownership Guidelines

     42  

Director Compensation Table

     43  

Director Equity Table

     44  
COMPENSATION DISCUSSION AND ANALYSIS      45  

Named Executive Officers

     45  

Executive Summary

     45  

Stockholder Feedback and Compensation Committee Response

     50  

Executive Compensation Governance

     52  

Key Components of Executive Compensation

     56  

All Other Compensation

     64  

Executive Stock Ownership Guidelines

     64  

Related Considerations

     65  
COMPENSATION COMMITTEE REPORT      66  
 

 

 

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Table of Contents

    

 

EXECUTIVE COMPENSATION MATTERS

     67  

Summary Compensation Table

     67  

Grants of Plan-Based Awards Table

     69  

Executive Employment Agreements and Compensatory Arrangements

     70  

Outstanding Equity Awards Fiscal Year-End Table

     73  

Option Exercises and Stock Vested Table

     74  

Non-Qualified Deferred Compensation Table

     75  

Potential Payments Upon Termination or Change in  Control

     76  

Potential Payments Upon Termination or Change in  Control Tables

     83  

Pay Ratio Disclosure

     86  

CERTAIN RELATIONSHIPS AND TRANSACTIONS

     87  

Written Related Party Transactions Policy

     87  

Registration Rights Agreements

     87  

Other Agreements, Transactions and Relationships

     88  
(PROPOSAL 2) RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      89  
 

 

 

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Table of Contents

 

   PROXY SUMMARY

 

   

 

   RALPH LAUREN CORPORATION

 

 

PROXY SUMMARY

 

 

This summary highlights information contained elsewhere in this proxy statement. For more complete information about these topics, please review our Annual Report on Form 10-K for Fiscal Year 2019 and this entire Proxy Statement. We are mailing the Notice of 2019 Annual Meeting of Stockholders and instructions on how to access this Proxy Statement (or, for those who request it, a hard copy of this Proxy Statement and the enclosed form of proxy) to our stockholders on or about June 21, 2019.

ABOUT RALPH LAUREN

Ralph Lauren Corporation (NYSE:RL) is a global leader in the design, marketing, and distribution of premium lifestyle products in the following categories: apparel, footwear, accessories, home, fragrances, and hospitality. For more than 50 years, Ralph Lauren’s reputation and distinctive image have been consistently developed across an expanding number of products, brands, and international markets. The Company’s brand names, which include Ralph Lauren, Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo Ralph Lauren Children, Chaps, and Club Monaco, among others, constitute one of the world’s most widely recognized families of consumer brands. For more information, go to http://investor.ralphlauren.com.

SOLICITATION

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of the Company, for use in connection with the Annual Meeting of the Company’s Stockholders to be held on August 1, 2019 (the “2019 Annual Meeting”). This Proxy Statement, the accompanying Notice of Annual Meeting, proxy card, and the Company’s 2019 Annual Report on Form 10-K, or alternatively a Notice of Internet Availability of Proxy Materials (the “Internet Notice”), will be mailed to stockholders on or about June 21, 2019. The Board is soliciting your proxy in an effort to give all stockholders of record the opportunity to vote on matters that will be presented at the 2019 Annual Meeting. This Proxy Statement provides you with information on these matters to assist you in voting your shares.

VIRTUAL STOCKHOLDER MEETING

The 2019 Annual Meeting will be conducted exclusively online via live webcast, allowing all of our stockholders the option to participate in the live, online meeting from any location convenient to them, providing stockholder access to our Board and management, and enhancing participation. Stockholders at the close of business on June 3, 2019 will be allowed to communicate with us and ask questions in our virtual stockholder meeting forum before and during the meeting. All directors and key executive officers are expected to be available to answer questions, and we are committed to acknowledging each question we receive. We believe a virtual meeting is fundamental to our strategic priority to “Lead with Digital,” as well as to our sustainability and citizenship goals. For further information on the virtual meeting, please see the “Questions and Answers About the Annual Meeting and Voting” section on page 103.

 

 

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Table of Contents

 

   PROXY SUMMARY

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

2019 ANNUAL MEETING OF STOCKHOLDERS

 

Thursday, August 1, 2019

9:30 a.m. Eastern Time

   Held virtually online via live webcast at www.virtualshareholdermeeting.com/RL2019

 

       

  Record

  Date:

 

 

• Close of business on June 3, 2019, (the “Record Date”).

   
       

  Participating

  in the Annual   Meeting:

 

 

• This year we invite you to join our efforts to “Lead with Digital” by participating in the 2019 Annual Meeting of Stockholders (the “2019 Annual Meeting” or “Meeting”) online via live webcast. There will not be a physical meeting in New York City. You will be able to participate in the virtual Meeting online, vote your shares electronically, and submit your questions during the Meeting by visiting: www.virtualshareholdermeeting.com/RL2019 (the “Annual Meeting Website”). Prior to the meeting, you may vote your shares and submit pre-meeting questions online by visiting www.proxyvote.com and following the instructions on your proxy card.

 

     

• Please note that stockholders will need their unique control number which appears on their Internet Notice, the proxy card (printed in the box and marked by the arrow), and the instructions that accompanied the proxy materials in order to access these sites. Beneficial stockholders who do not have a control number may gain access to the meeting by logging into their broker, brokerage firm, bank, or other nominee’s website and selecting the shareholder communications mailbox to link through to the Meeting. Instructions should also be provided on the voting instruction card provided by your broker, bank, or other nominee.

 

  Virtual Meeting   Highlights:  

• For the first time, all of our stockholders will be able to hear directly from Mr. Ralph Lauren, our Founder and Executive Chairman, Mr. Patrice Louvet, our President and CEO, and the rest of our Board of Directors, regardless of location.

     

• To ensure access, all validated stockholders may submit questions in advance, beginning on June 21, 2019, by visiting www.proxyvote.com and may submit questions during the Meeting by visiting the Annual Meeting Website at www.virtualshareholdermeeting.com/RL2019. All relevant questions received in accordance with the Meeting’s Rules of Conduct (available on the Annual Meeting Website) during the course of the Meeting or solicited in advance and the Company’s responses will be posted on
http://investor.ralphlauren.com soon after the 2019 Annual Meeting.

 

   

• Stockholders will be able to review the Rules of Conduct and other Meeting materials on the 2019 Annual Meeting Website.

     

• An audio replay of the 2019 Annual Meeting will be available on
http://investor.ralphlauren.com until the 2020 Annual Meeting of Stockholders.

 

  Voting:  

• Only holders of record of the Company’s Class A and Class B Common Stock at the close of business on June 3, 2019 are entitled to notice of, and to vote at, the 2019 Annual Meeting, or at any adjournments or postponements thereof.

     

• Please authorize a proxy to vote your shares as soon as possible. If you are a beneficial owner of shares of our common stock, your broker will NOT be able to vote your shares with respect to any of the matters presented at the Meeting other than the ratification of the selection of our independent registered public accounting firm, unless you give your broker specific voting instructions.

 

   

• You do not need to participate in the 2019 Annual Meeting webcast to vote if you submitted your proxy in advance of the 2019 Annual Meeting.

     

• See the “Questions and Answers About the Annual Meeting and Voting” section on page 103 of this proxy statement for more information.

 

 

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Table of Contents

 

   PROXY SUMMARY

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

MATTERS TO BE VOTED ON

 

     
  Item for Business   Board Recommendation   Further Details
     

  1.Election of 14 Directors

 

  FOR ALL

 

  Page 15

 

     

   2.Ratification of appointment of independent
  registered public accounting firm

 

  FOR

 

  Page 89

 

     

  3.Advisory vote on executive compensation

 

  FOR

 

  Page 91

 

     

   4.Approval of 2019 Long-Term Stock Incentive Plan

 

  FOR

 

  Page 92

 

DIRECTOR NOMINEES

 

             
 Name   Occupation   Age     Director
Since
    Independent   Other Current
Public
Company
Directorships
  Committees1  
  A     C     NG     F  
 Class A Directors                  

Frank A. Bennack,

Jr.

 

Executive Vice Chairman and

Chairman of the Executive Committee

The Hearst Corporation

 

    86       1998     LOGO   0  

 

 

 

LOGO

 

 

    LOGO       LOGO    

Joel L. Fleishman

 

Professor of Law and Public Policy

Duke University

 

    85       1999     LOGO   0            

 

LOGO

 

 

 

   

 

LOGO

 

 

 

       

Michael A. George

 

President and Chief Executive Officer

Qurate Retail, Inc.

 

    57       2018     LOGO     22    

 

LOGO

 

 

 

   

 

LOGO

 

 

 

               

Hubert Joly

 

Executive Chairman of the Board of Directors

Best Buy Co., Inc.

 

    59       2009     LOGO   1            

 

LOGO

 

 

 

           

 

LOGO

 

 

 

 Class B Directors                                                

Ralph Lauren

 

Executive Chairman and Chief

Creative Officer

 

    79       1997       0        

Patrice Louvet

 

President and Chief Executive Officer

 

    54       2017         0                                

David Lauren

 

Chief Innovation Officer, Vice

Chairman of the Board and Strategic

Advisor to the CEO

 

    47       2013         0                                

Angela Ahrendts

 

Formerly Senior Vice President, Retail

Apple, Inc.

 

    59       2018     LOGO   0                                

John R. Alchin

 

Retired Executive Vice President and

Co-Chief Financial Officer

Comcast Corporation

 

    71       2007     LOGO   1     LOGO                       LOGO  

Arnold H. Aronson

 

Business Partner, Retail Strategies

Kurt Salmon

 

    84       2001     LOGO   0                            

 

LOGO

 

 

 

Dr. Joyce F. Brown  

 

President

Fashion Institute of Technology

 

    72       2001     LOGO   0    

 

LOGO

 

 

 

           

 

LOGO

 

 

 

       

Linda Findley

Kozlowski

 

President and Chief Executive Officer

Blue Apron Holdings, Inc.

 

    46       2018     LOGO   1    

 

LOGO

 

 

 

                   

 

LOGO

 

 

 

Judith A. McHale

 

President and Chief Executive Officer

Cane Investments, LLC

    72      

 

2001-
2009,
2011

 

 
 
 

 

  LOGO   2                     LOGO       LOGO  

Robert C. Wright

 

Senior Advisor

Lee Equity Partners, LLC

 

    76       2007     LOGO   1                    

 

LOGO

 

 

 

       

 

1.

“A” refers to the Audit Committee of the Board (the “Audit Committee”), “C” refers to the Compensation & Organizational Development Committee of the Board (the “Compensation Committee”), “NG” refers to the Nominating, Governance, Citizenship & Sustainability Committee of the Board (the “Nominating Committee”), and F refers to the Finance Committee of the Board (the “Finance Committee”).

2.

Mr. George’s strong performance as Chair of the Compensation Committee, and his attendance and active participation at all Board, Compensation, and Audit Committee meetings of the Company in Fiscal 2019, as well as at additional special meetings and strategy visits to our stores and distribution centers, demonstrate that his commitments to other outside Boards (one of which is for the Company where he serves as CEO) do not impede effective service on our Board and only underscore his digital and retail expertise that has proven valuable to our Company.

 

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   PROXY SUMMARY

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

2019 BUSINESS HIGHLIGHTS

Delivered on our Strategic Plan

During Fiscal 2019, under the leadership of our new President and CEO, Patrice Louvet, we continued to execute on our multi-year plan intended to build a foundation to strengthen our brand and drive sustainable, profitable sales growth (the “Strategic Plan”).

We successfully delivered on our Strategic Plan across the following key initiatives in Fiscal 2019:

 

  Win Over a New Generation of Consumers

 

 

Increased marketing investments by 13% to last year, driven by unique and highly impactful brand building campaigns and fashion shows, including our 50th Anniversary Fashion Show and Ralph’s Café immersive fashion experience at our Madison Avenue flagship.

 

 

Elevated our brand and connected with new consumers through our collaboration with UK-based skate brand Palace, Limited Edition launches throughout the year, and new distribution in key specialty retail doors.

 

 

Continued to leverage celebrities, social influencers, sports, and cultural events that resonate with different segments of the Ralph Lauren consumer base.

 

  Energize Core Products and Accelerate Under-Developed Categories

 

 

Average unit retail across our direct-to-consumer network was up 8% driven by our ongoing initiatives to elevate the product assortment and improve quality of sales.

 

 

Renewed our core styles and focused on our icons which continue to be key drivers of improving sales trends.

 

 

Continued to build our high-potential, under-developed categories, with denim and outerwear sell-out trends accelerating in the Fall/Holiday season, driven by an improved product, merchandising, and marketing focus.

  Drive Targeted Expansion in Our Regions and Channels

 

 

Momentum in Asia continued with 13% revenue growth and 5% retail comparable store sales growth in constant currency, led by over 30% growth in Mainland China.

 

 

Europe outperformed our expectations with 6% revenue growth in constant currency, driven by 10% growth in wholesale and positive retail comparable store sales in the second half of the year.

 

 

Continued to expand our global distribution with 135 new retail stores, including over 90 stores in Asia, and partnered with over 20 new digital pure play retailers globally.

 

  Lead with Digital

 

 

Global digital revenue grew 11% to last year in constant currency with strength across every region.

 

 

Our directly-operated digital flagships in North America and Europe returned to positive growth during the year, supported by improvements in functionality, an enhanced consumer experience, and our quality of sales initiatives.

 

 

Expanded our partnerships with key digital wholesale players across regions.

 

  Operate with Discipline to Fuel Growth

 

 

Gross margin was up 90 basis points in Fiscal 2019 driven by our quality of sales initiatives and channel, geographic, and product mix shifts.

 

 

Selling, general, and administrative (“SG&A”) expenses, excluding our marketing investment, were below revenue growth in Fiscal 2019.

 

 

Launched our direct-to-consumer shared inventory initiative in North America at the end of Fiscal 2019, driving increased efficiency in our distribution network and a reduced warehouse footprint.

 

 

Increased geographic diversification across our sourcing network and delivered strong progress on global lead time reductions.

 

 

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   PROXY SUMMARY

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

Delivered Strong TSR Results

During Fiscal 2019, we delivered better than expected financial results as we furthered our work to strike the right balance between driving productivity and growth. Our total shareholder return (“TSR”) for recent periods, relative to our compensation comparator group and the S&P 500, is set forth below. For Fiscal 2019, we generated a TSR of 18.4% compared to the -7.8% and 7.3% gains for our compensation comparator group and the S&P 500, respectively.

 

     

 

1-Year TSR (%)

Fiscal 2019

 

    

3-Year TSR (%)

Fiscal 2017 – 2019

 

    

5-year TSR (%)

Fiscal 2015 – 2019

 

 

Ralph Lauren Corporation

 

    

 

18.4%

 

 

 

    

 

42.2%

 

 

 

    

 

-10.0%

 

 

 

Compensation Comparator Group

 

    

 

-7.8%

 

 

 

    

 

-6.3%

 

 

 

    

 

-15.2%

 

 

 

S&P 500 Index

 

    

 

7.3%

 

 

 

    

 

36.7%

 

 

 

    

 

52.6%

 

 

 

 

COMPENSATION OBJECTIVES, PRINCIPLES, AND PRACTICES

The key components of our executive compensation program for our Named Executive Officers (“NEOs”) consist of base salary, annual cash incentive, and long-term equity-based incentive opportunities. Our compensation plans are designed to link pay and performance, reward sustained business growth and results, and drive stockholder value. A majority of each NEO’s compensation is at-risk in the form of annual cash incentive and long-term equity-based awards, which pay out only if we achieve key Company financial goals focused on strengthening and elevating our brand and positioning the Company for long-term sustainable growth.

The charts on the next page show the balance of the at-risk elements that comprised the target total direct compensation for our NEOs.

 

Key takeaways impacting executive compensation for Fiscal 2019 are:

 

  Total shareholder return of 18.4% demonstrates aligning the intent of executives with creating value and our strong return to shareholders.

 

  We delivered better than expected financial results, resulting in an above target cash incentive bonus payout.

 

  Performance share units (“PSUs”) paid out above target based on achievement of cumulative three-year earnings per share goal set at the beginning of the Fiscal 2017 – 2019 performance period.

 

  Performance restricted stock units (“PRSUs”) paid out at 100% based on achievement of Fiscal 2019 threshold return on invested capital (“ROIC”) results.

 

 

 

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   PROXY SUMMARY

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

LOGO

 

 

 

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   PROXY SUMMARY

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

GOVERNANCE HIGHLIGHTS

Our Board and management are committed to sound corporate governance. We have in place a comprehensive governance framework which incorporates the corporate governance requirements of the Sarbanes-Oxley Act of 2002, the U.S. Securities and Exchange Commission (the “SEC”), and the New York Stock Exchange (“NYSE”). While we meet the eligibility requirements, we do not rely on the exceptions from certain of the NYSE’s corporate governance listing requirements available to majority controlled companies. In keeping with good corporate governance practices, we maintain a majority of independent directors and our Board Committees are comprised solely of independent directors.

 

  Independence – Independent Lead Director & over 75% independent Board

 

  Board Leadership – Separate Chairman and CEO roles

 

  Annual Elections – All directors are elected annually

 

  Stock Ownership – Director and executive stock ownership/holding requirements

 

  Stockholder Engagement – Stockholder outreach is conducted on an annual basis

 

  Succession Planning and Board Refreshment – Implemented a formal annual review of all non-management directors to encourage refreshment, diversity, and an appropriate mix of skill sets for our Board

 

  Citizenship and Sustainability – Delegated environmental, social and governance oversight to the newly renamed Nominating, Governance, Citizenship & Sustainability Committee (the “Nominating Committee”) and expanded its responsibilities regarding these matters

 

  Strategy Engagement – Prioritized independent director access to management and focus on strategy and engagement with additional special meetings and interactive site visits

 

  Education – Enhanced our Board education program by creating an internal online learning portal

STOCKHOLDER ENGAGEMENT

Throughout Fiscal 2019, we have continued our ongoing stockholder outreach efforts as we believe the input of our stockholders is an important driver in establishing our corporate governance and compensation practices.

In Fiscal 2019, we connected meaningfully and regularly with our stockholders through our June 7, 2018 Investor Day in New York City, our outreach on compensation and corporate governance practices ahead of the 2018 Annual Meeting of Stockholders, and various investor conferences, non-deal roadshows, and other special events for investors throughout the year.

Through this ongoing outreach, we have received and considered valuable feedback regarding a variety of stockholder-related matters and we are pleased to highlight our recent achievements:

 

  Committee chairmanships and composition were refreshed in August 2018.

 

  The Nominating & Governance Committee has been renamed the Nominating, Governance, Citizenship & Sustainability Committee and its duties expanded to oversee and provide guidance with respect to the Company’s environmental, social and governance framework.

 

  We enhanced our 2019 Global Citizenship and Sustainability Report to provide additional disclosure and goal-setting regarding environmental, social, and governance practices.

 

  The Compensation Committee implemented several key changes to our short-term and long-term incentive programs in Fiscal 2019.

GLOBAL CITIZENSHIP AND SUSTAINABILITY

Global citizenship and sustainability at Ralph Lauren Corporation is rooted in the heritage of our brand and our purpose to inspire the dream of a better life through authenticity and timeless style. We believe that delivering the next 50 years for Ralph Lauren means rethinking our impact on the environment and society. Recognizing this, we appointed a Chief Sustainability Officer in 2018 to formalize our sustainability program and steer us to a leadership position, and we expanded the duties of the Nominating Committee to oversee and provide guidance with respect to the Company’s environmental, social, and governance framework. Within the year, we undertook a detailed materiality analysis, refreshed our strategy, set goals, and developed a road map for improvement.

 

 

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   PROXY SUMMARY

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

Although we are at the beginning of this journey, the values and purpose that have defined our business for half a century underline the authenticity of our commitment for our next 50 years. We call our plan Design the Change, and it has three pillars: Create. Protect. Champion.

 

Create Timeless Style

 

•  Sustainable Product Design

 

•  Sourcing & Traceability

 

•  Chemical Management

 

Protect the Environment

 

•  Carbon and Energy

 

•  Waste Management

 

•  Water Stewardship

 

Champion Better Lives

 

•  Diversity and Inclusion

 

•  Health, Safety & Working Conditions

 

•  Community Engagement & Philanthropy

  LOGO

 

Please see page 34 for more information. Our most recently published Global Citizenship and Sustainability Report covering Fiscal 2019 and significant events prior to publication in Fiscal 2020 may be found on our corporate website at https://www.corporate.ralphlauren.com.

 

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   PROXY STATEMENT

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

 

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PROXY STATEMENT FOR THE ANNUAL MEETING

OF STOCKHOLDERS

 

 

 

GENERAL INFORMATION REGARDING THE ANNUAL MEETING OF STOCKHOLDERS AND PROXY MATERIALS

This Proxy Statement is furnished to the stockholders of Ralph Lauren Corporation, a Delaware corporation, in connection with the solicitation by its Board of Directors of proxies for its 2019 Annual Meeting to be held exclusively online via live webcast at www.virtualshareholdermeeting.com/RL2019 on Thursday, August 1, 2019, at 9:30 a.m., Eastern Time, or at any adjournments or postponements thereof. A proxy delivered pursuant to this solicitation may be revoked by the person executing the proxy at any time

before it is voted by giving written notice to our Secretary, by delivering a later dated proxy, or by voting online during the 2019 Annual Meeting. The address of our principal executive offices is 650 Madison Avenue, New York, New York 10022.

This Proxy Statement, the Annual Report on Form 10-K for the fiscal year ended March 30, 2019, and the Notice of Annual Meeting will be made available to our stockholders on our website, http://investor.ralphlauren.com, on or about June 21, 2019, and a full printed set of the proxy materials will be made available on request.

 

 

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   PROPOSAL 1

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

(PROPOSAL 1)

ELECTION OF DIRECTORS

 

 

 

Our Board is presently divided into two classes, with all directors being elected annually. Pursuant to our Amended and Restated Certificate of Incorporation, four Class A Directors will be elected by the holders of Class A Common Stock and 10 Class B Directors will be elected by the holders of Class B Common Stock, each to serve until the 2020 Annual Meeting of Stockholders and until his or her successor is elected and qualified.

In 2018, the Board expanded its size to 14 directors from 11 directors, increasing the diversity of skills and experiences of the Board to benefit the Company. The same 14 directors have been nominated for re-election at the 2019 Annual Meeting. Frank A. Bennack, Jr., Joel L. Fleishman, Michael A. George, and Hubert Joly have been nominated for election as Class A Directors. Ralph Lauren, Patrice Louvet, David Lauren, Angela Ahrendts, John R. Alchin, Arnold H. Aronson, Dr. Joyce F. Brown, Linda Findley Kozlowski, Judith A. McHale, and Robert C. Wright have been nominated for election as Class B

Directors. For more information on the directors, please see “Director Nominees” on page 8 in the Proxy Summary section, “Board Diversity” on page 33, and “Board Effectiveness” on page 28.

We know of no reason why any nominee would be unable or unwilling to serve. If any nominee becomes unable or unwilling to serve for any reason, our Board, based on the recommendation of the Nominating Committee, may either reduce the number of directors or designate a substitute nominee. If a substitute nominee is designated, the persons named in the enclosed proxy will vote all proxies that would otherwise be voted for the named nominee or nominees for the election of such substitute nominee or nominees.

 

 

OUR BOARD RECOMMENDS A VOTE FOR EACH NOMINEE AS A DIRECTOR TO HOLD OFFICE UNTIL THE 2020 ANNUAL MEETING OF STOCKHOLDERS AND UNTIL HIS OR HER SUCCESSOR IS ELECTED AND QUALIFIED.

 

 

 

 

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   PROPOSAL 1

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

CLASS A DIRECTOR NOMINEES FOR ELECTION

 

   

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Frank A. Bennack, Jr.

 

Age 86

 

Mr. Bennack has been a director of the Company since January 1998 and has served as Lead Independent Director of our Board since Fiscal 2017. He is Executive Vice Chairman of The Hearst Corporation (“Hearst”) and served as Hearst’s Chief Executive Officer from 1979 to 2002 and then again from June 2008 to June 2013. Mr. Bennack has been the Chairman of the executive committee and Executive Vice Chairman of the board of directors of Hearst since 2002. He serves on the board and is Chairman Emeritus of Lincoln Center for the Performing Arts, Chairman Emeritus of the New York-Presbyterian Hospital, Chairman of The Paley Center for Media, and a Managing Director of the Metropolitan Opera. He has previously served on the boards of Hearst-Argyle Television, Inc., Wyeth Corporation, and JPMorgan Chase & Co. The Board has determined that Mr. Bennack is an audit committee financial expert.

 

Experience, Qualifications, Attributes and Skills

 

Mr. Bennack brings to our Board a distinguished career and extensive business experience as Executive Vice Chairman of Hearst, one of the nation’s largest private companies engaged in a broad range of publishing, broadcasting, cable networking, and diversified communications activities. His current position as Hearst’s Executive Vice Chairman and previous position as Chief Executive Officer gives him critical insights into the operational issues facing a large corporation and provides our Board with valuable experience in the areas of finance, financial reporting, and strategic planning. As a result of his current and past service as a member of the boards of other various public companies and non-profit organizations, he provides our Board with perspective with respect to governance and other important matters that come before our Board. Mr. Bennack has been a member of our Board since 1998, and therefore, his extensive knowledge of our business is a valuable aspect of his service on our Board.

 

 

LOGO

 

 

Joel L. Fleishman

 

Age 85

 

Mr. Fleishman, a director of the Company since January 1999, has been Professor of Law and Public Policy at the Sanford School of Public Policy at Duke University since 1971 and the Director of the Samuel and Ronnie Heyman Center for Ethics, Public Policy, and the Professions at Duke University since 1991. He is also the Director of the Center for Strategic Philanthropy and Civil Society. He is a founding member of the board of trustees of the Partnership for Public Service, on which he continues to serve, and also serves on the board of The Hunt Institute. Mr. Fleishman also previously served on the boards of Boston Scientific Corporation and the Urban Institute, including serving as Chairman of the Urban Institute’s board of trustees from 2004 to 2014. He continues to serve as a Life Trustee of the Urban Institute.

 

Experience, Qualifications, Attributes and Skills

 

Mr. Fleishman brings strong leadership and extensive public policy and legal experience to our Board. He also brings a unique perspective to the Board from his long tenure in the academic world. Mr. Fleishman’s long-standing scholarly work, public service, and extensive experience as a professor of law and public policy provides our Board with valuable insight into a variety of legal and ethical issues relevant to us. He also previously served as a board member of Boston Scientific Corporation, and, as a result of this service, he has a broad understanding of the operational, financial, and strategic issues facing a public company. He has been a member of our Board since 1999 and accordingly, his knowledge of our business is an important aspect of his service on our Board.

 

 

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   PROPOSAL 1

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

   
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Michael A. George

 

Age 57

 

Mr. George joined our Board in May 2018. He has served as the President of QVC, Inc. (“QVC”) since November 2005 and as its Chief Executive Officer since April 2006. In 2018, he was named CEO of QVC’s parent, Liberty Interactive, which was subsequently renamed Qurate Retail, Inc. Mr. George previously held various positions with Dell, Inc. (“Dell”) from March 2001 to November 2005, most notably as the Chief Marketing Officer and Vice President and General Manager of Dell’s U.S. consumer business. Prior to that, Mr. George was a senior partner at McKinsey & Company and led the firm’s North American Retail Industry Group. Mr. George serves on the board of directors of Brinker International and Qurate Retail, Inc., and also serves on the board of directors of the National Retail Federation and several not-for-profit organizations.

 

Experience, Qualifications, Attributes and Skills

 

Mr. George brings to our Board his skills, knowledge and extensive business experience as Chief Marketing Officer of Dell, a large consumer products company, and Chief Executive Officer of a large publicly-traded digital consumer products company, Qurate Retail, Inc. He provides our Board with extensive experience in brand strategy, digital marketing, and retail, with unique insights into brand engagement with consumers. His distinguished career provides him with critical perspective on operational and strategic issues facing the retail industry, particularly digital commerce. As a result of his service as a member of the boards of other public companies, industry groups and not-for-profit organizations, he also provides our Board with valuable insights regarding governance and other significant matters that come before our Board.

 

 

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Hubert Joly

 

Age 59

 

Mr. Joly has been a director of the Company since June 2009. He has served as the Executive Chairman of Best Buy Co, Inc. (“Best Buy”) since June 2019, previously also served as President and Chief Executive Officer of Best Buy from September 2012 to June 2019, and served as Chairman of the Board of Directors from June 2015 to June 2019. Previously, he served as President and Chief Executive Officer of Carlson from 2008 to 2012, after serving as President and Chief Executive Officer of Carlson Wagonlit Travel from 2004 to 2008. He also previously served as Executive Vice President, American Assets at Vivendi Universal from 2002 to 2004 and in various other positions at Vivendi Universal since 1999. Mr. Joly is currently Vice Chairman of the Business Council, a member of the executive committee of the Minnesota Business Partnership and of the Retail Industry Leaders Association, and a member of the board of trustees of the Minneapolis Institute of Art and the Minnesota Orchestra. He previously served on the boards of Carlson, The Rezidor Hotel Group, Carlson Wagonlit Travel and the World Travel and Tourism Council.

 

Experience, Qualifications, Attributes and Skills

 

Mr. Joly brings to our Board extensive management and leadership experience obtained through his roles at Best Buy currently as Executive Chairman and, until recently, as Chairman and Chief Executive Officer, and formerly as President and Chief Executive Officer of Carlson. His positions at Best Buy give him critical insights into the issues facing a large international corporation, as well as unique perspective on issues and opportunities facing a large multi-channel retailer. In his current position at Best Buy and as a former executive at Carlson, Vivendi Universal and Electronic Data Systems, Mr. Joly possesses a deep understanding of international issues affecting us and he provides our Board with valuable insight in the areas of finance, financial reporting and strategic planning.

 

 

 

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   PROPOSAL 1

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

CLASS B DIRECTOR NOMINEES FOR ELECTION

 

   
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Ralph Lauren

 

Age 79

 

Mr. R. Lauren founded our business in 1967 and, for five decades, has cultivated the iconography of America into a global lifestyle brand. He is currently our Executive Chairman and Chief Creative Officer and has been a director of the Company since prior to our initial public offering in 1997. He had previously been our Chairman and Chief Executive Officer since prior to our initial public offering in 1997 until November 2015. In addition, he was previously a member of our Advisory Board or the Board of Directors of our predecessors since their organization.

 

Experience, Qualifications, Attributes and Skills

 

Mr. R. Lauren is an internationally recognized fashion designer. His unique role as our Founder and Chief Creative Officer, as well as his experience as our previous Chief Executive Officer, provides our Board with valuable leadership, including in the areas of design, brand management, and marketing. Mr. R. Lauren’s contributions to us since the founding of our business have been instrumental in defining our image and direction. As one of the world’s most innovative design leaders and a fashion icon, his career has spanned five decades that have resulted in numerous unique tributes for his role within the fashion industry. He is uniquely qualified to bring strategic insight, experience, and in-depth knowledge of our business and the fashion industry to the Board.

 

 

 

LOGO

 

 

Patrice Louvet

 

Age 54

 

Mr. Louvet has served as our President and Chief Executive Officer since July 2017. Prior to joining the Company, he served as the Group President, Global Beauty, of Procter & Gamble Co. (“P&G”) since February 2015. Prior to that role, Mr. Louvet held successively senior leadership positions at P&G, including the roles of Group President, Global Grooming (Gillette), and President of P&G’s Global Prestige Business. Before he joined P&G, he served as a Naval Officer, Admiral Aide de Camp in the French Navy from 1987 to 1989. Mr. Louvet graduated from École Supérieure de Commerce de Paris and received his M.B.A. from the University of Illinois. He has served as a member of the board of directors of Bacardi Limited since July 2012.

 

Experience, Qualifications, Attributes and Skills

 

Mr. Louvet brings significant leadership and business experience to the Board. His more than 25 years building category-leading brands, with oversight of multiple major global business units, have provided him with a deep understanding of consumers and growing international businesses. Mr. Louvet’s extensive background in managing internationally renowned brands, along with his substantial experience in driving business transformation and innovation, enable him to share with our Board critical strategic insights, opportunities and issues facing the Company.

 

 

 

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   PROPOSAL 1

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

   
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David Lauren

 

Age 47

 

Mr. D. Lauren is our Chief Innovation Officer, Strategic Advisor to the CEO and Vice Chairman of the Board. From November 2010 to October 2016, he served as our Executive Vice President of Global Advertising, Marketing, and Communications. Prior to that, he served in numerous leadership roles at the Company with responsibility for advertising, marketing, and communications. He has been a director of the Company since August 2013. Mr. D. Lauren oversees the Company’s innovation strategy, processes, and capabilities to drive its brand strength and financial performance across all channels. He has been instrumental in growing the Company’s global digital commerce business and pioneering our technology initiatives. He serves on the board of trustees of the Ralph Lauren Center for Cancer Care and the board of directors of The National Museum of American History. Mr. D. Lauren is also the Head of The Polo Ralph Lauren Foundation. Before joining the Company in 2000, he was Editor-In-Chief and President of Swing, a general interest publication for Generation X. Mr. D. Lauren is the son of Mr. R. Lauren.

 

Experience, Qualifications, Attributes and Skills

 

Mr. D. Lauren brings strong leadership and business experience to our Board. He has been instrumental in the development of the Company’s digital commerce business and the use of innovative marketing to build the Company’s global fashion image as it has expanded internationally. Mr. D. Lauren has been recognized as a leader on the use of new technologies in retail marketing and on using digital platforms to market luxury brands. His in-depth knowledge of these areas and his current position as our Chief Innovation Officer and Vice Chairman of the Board provides our Board with valuable insight and perspective into our global digital, digital commerce and technology initiatives.

 

 

 

LOGO

 

 

Angela Ahrendts

 

Age 59

 

Ms. Ahrendts has been a Director of the Company since August 2018. Ms. Ahrendts most recently served as the Senior Vice President, Retail of Apple Inc. (“Apple”) from May 2014 through April 2019. Prior to Apple, Ms. Ahrendts joined Burberry Group plc in January 2006 where she served as a director and Chief Executive Officer beginning in July 2006. Ms. Ahrendts also previously served as Executive Vice President at Liz Claiborne, Inc., and as President of Donna Karan International, Inc. Ms. Ahrendts was also a member of the United Kingdom’s Prime Minister’s Business Advisory Council. Ms. Ahrendts also serves on the board of directors of Airbnb, Inc.

 

Experience, Qualifications, Attributes and Skills

 

Ms. Ahrendts brings to our Board substantial business and leadership experience. Her most recent position as Apple’s Senior Vice President, Retail and Online Stores, and her prior positions at multiple major fashion and apparel companies, such as Burberry, a luxury fashion company, Liz Claiborne and Donna Karan, give her extensive experience with strategy, real estate and development, operations of physical stores, online stores and contact centers, as well as profound insights into the challenges and opportunities facing our industry. Her extensive background in guiding the retail strategy of renowned international brands, as well as her proven track record in driving successful brand and business transformations, enable her to provide our Board with critical perspective and insight on business, operational and strategic issues facing the Company.

 

 

 

 

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   PROPOSAL 1

 

   

 

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John R. Alchin

 

Age 71

 

Mr. Alchin has been a director of the Company since February 2007. He served as Executive Vice President and Co-Chief Financial Officer and Treasurer of Comcast Corporation, a broadband cable provider offering a variety of consumer entertainment and communication products and services, from November 2002 to December 2007. Prior to that, he served as Executive Vice President and Treasurer of Comcast Corporation from January 2000 to November 2002. Mr. Alchin joined Comcast Corporation in 1990 as Senior Vice President and Treasurer. He is currently a member of the board of trustees of BNY Mellon Funds Trust, the board of trustees of the Philadelphia Museum of Art (“PMA”), the board of directors of Xplornet Communications Inc. (“Xplornet”), and the advisory group of Catalyst Investors. Mr. Alchin also serves on the audit committee of BNY Mellon Funds Trust, as Chairman of the PMA finance committee, and Chairman of the audit and finance committee of Xplornet. Prior to serving on the board of trustees of BNY Mellon Funds Trust, he served as a member of the board of directors and on the audit committee of BNY Hamilton Funds, Inc. The Board has determined that Mr. Alchin is an audit committee financial expert.

 

Experience, Qualifications, Attributes and Skills

 

Mr. Alchin brings to the Board substantial business and financial experience. His experience as a Co-Chief Financial Officer and Treasurer of Comcast Corporation, a major broadband cable operator and content and programming supplier, provides our Board with valuable insight in the areas of corporate finance and capital formation, financial reporting, investor relations, and treasury functions. Mr. Alchin’s financial expertise offers our Board a deep understanding of accounting and audit-related matters. In addition, his service as a member of the boards of various financial institutions provides our Board with perspective in the areas of corporate finance and governance matters.

 

 

 

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Arnold H. Aronson

 

Age 84

 

Mr. Aronson has been a director of the Company since November 2001. Since January 2019, he has been a Business Partner, Retail Strategies at Kurt Salmon, a part of Accenture plc’s retail industry consulting practice, specializing in providing consulting services to retail and consumer products companies. Prior to that, he had served as Principal Director, Retail Strategies since November 2016, and Managing Director, Retail Strategies at Kurt Salmon from 1997 to November 2016. In his career, Mr. Aronson served as Chairman and Chief Executive Officer of Saks Fifth Avenue, Inc., The Batus Retail Group (the then parent entity of, among others, Saks Fifth Avenue, Marshall Fields and Kohl’s) and subsequently, Woodward & Lothrop/John Wanamaker. Mr. Aronson currently serves as a member of the board of trustees, and its executive committee, of The New School University and is a member of the board of governors and former Chairman of its Parsons School of Design.

 

Experience, Qualifications, Attributes and Skills

 

Mr. Aronson has substantial business and retail industry experience. His experiences as a consultant in a global management consulting firm specializing in retail and consumer products companies, and as a chief executive officer of major retail companies, provide our Board with valuable insight into operational and strategic issues related to the retail industry. As a former chief executive officer of several major retail entities, including Saks Fifth Avenue, Inc., Mr. Aronson has intimate knowledge in the areas of marketing, financial reporting, and merchandising. In addition, his service on the boards of academic institutions provides our Board with valuable understanding of governance matters.

 

 

 

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   PROPOSAL 1

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

   
LOGO  

Dr. Joyce F. Brown

 

Age 72

 

Dr. Brown has been a director of the Company since May 2001. She has been the President of the Fashion Institute of Technology (“FIT”) and Chief Executive Officer of the FIT Foundation since 1998. From 1983 to 1992, Dr. Brown served as Vice Chancellor, as well as the University Dean of the City University of New York and Acting President of Baruch College. From 1993 to 1994, she served as the Deputy Mayor of Public and Community Affairs for the City of New York. From 1994 to 1998, she was a Professor of Clinical Psychology at the Graduate School and University Center of the City University of New York, where she is now Professor Emerita. Dr. Brown has previously served on the boards of USEC Inc., PAXAR Corporation, and Linens ‘n Things, Inc.

 

Experience, Qualifications, Attributes and Skills

 

Dr. Brown brings to our Board extensive leadership and insight into the fashion industry through her roles as President of FIT, a complex, multi-faceted college that focuses on educating and preparing the next generation of leaders in the fashion industry, and Chief Executive Officer of the FIT Foundation. Dr. Brown’s professional training as a former psychologist enables her to examine complex interpersonal behaviors that impact the business environment. In addition, Dr. Brown’s prior government service provides our Board with unique perspectives into regulatory issues and processes. She also possesses public company experience as demonstrated by her past service on the boards of USEC Inc., PAXAR Corporation, and Linens ‘n Things, Inc.

 

 

 

LOGO

 

 

Linda Findley Kozlowski

 

Age 46

 

Ms. Kozlowski has been a director of the Company since August 2018. Ms. Kozlowski has been the President and Chief Executive Officer of Blue Apron Holdings, Inc. since April 2019, and also serves as a member of Blue Apron’s board of directors. Prior to Blue Apron, she served as the Chief Operating Officer (“COO”) of Etsy, Inc. from May 2016 through December 2018. Previously, Ms. Kozlowski was COO of Evernote, where she oversaw worldwide operations and led cross-functional teams in offices across 10 countries from May 2015 to December 2015. Prior to that, she served in various operations, marketing, and market development positions at Evernote from October 2012 to May 2015. Before joining Evernote, Ms. Kozlowski was based out of Hong Kong and led global marketing, business development, and customer service for Alibaba.com in her role as the Director of Global Marketing and Customer Experience at Alibaba.com from June 2011 to October 2012, and the Director of International Corporate Affairs from July 2009 to June 2011. She has also held leadership positions in communications firms including Fleishman-Hillard, Text 100, and Schwartz Communications.

 

Experience, Qualifications, Attributes and Skills

 

Ms. Kozlowski brings to our Board strong business and management experience with her more than 25 years of experience in operations, international marketing, business development, public relations, and customer service. As COO of Evernote, she oversaw worldwide operations that drove revenue and global growth and led cross-functional teams in offices across 10 countries. With a strong emphasis on global growth, Ms. Kozlowski’s work at Etsy included growth across North America, Asia, Europe, Africa, Latin America, and Russia. Her background on driving user-growth and monetization strategies, as well as on scalable customer service experience management to maintain brand and positive user engagement, gives her critical insight into operational and strategic issues facing the Company.

 

 

 

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Table of Contents

 

   PROPOSAL 1

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

   
LOGO  

Judith A. McHale

 

Age 72

 

Ms. McHale was appointed a director of the Company in November 2011 and also served as a director of the Company from 2001 to 2009. She has served as the President and Chief Executive Officer of Cane Investments, LLC since 2011. Ms. McHale previously served as the Under Secretary of State for Public Diplomacy and Public Affairs for the U.S. Department of State from 2009 to 2011. In 2006, Ms. McHale worked in partnership with the Global Environment Fund, a private equity firm, to launch the GEF/Africa Growth Fund, an investment vehicle intending to focus on supplying expansion capital to small and medium-sized enterprises that provide consumer goods and services in emerging African markets. From June 2004 to December 2006, Ms. McHale served as the President and Chief Executive Officer of Discovery Communications, Inc., the parent company of Discovery Channel, and served as its President and Chief Operating Officer from 1995 to 2004. She currently serves on the boards of Hilton Worldwide Holdings Inc. and Viacom Inc. She has previously served on the boards of directors of Host Hotel & Resorts, Inc., DigitalGlobe Inc., John Hancock Financial Services, Inc., Potomac Electric Power Company, Yellow Pages Group, and SeaWorld Entertainment, Inc.

 

Experience, Qualifications, Attributes and Skills

 

Ms. McHale brings to the Board extensive business and management experience. Through her prior roles as President and Chief Executive Officer and as Chief Operating Officer of Discovery Communications, Inc., Ms. McHale had broad-based responsibilities with respect to financial reporting, marketing, sales, and the creation of product development for a public company which provides the Board with valuable insight into operational and strategic issues facing us. She also possesses public company experience as demonstrated by her current experience on the boards of Hilton Worldwide Holdings Inc. and Viacom Inc. as well as her prior experience on the boards of SeaWorld Entertainment, Inc., Host Hotel & Resorts, Inc., DigitalGlobe Inc., John Hancock Financial Services, Inc., Potomac Electric Power Company and Yellow Pages Group. In addition, Ms. McHale’s prior government service provides the Board with unique perspectives on governmental matters and regulatory issues and processes.

 

 

 

LOGO

 

 

Robert C. Wright

 

Age 76

 

Mr. Wright has been a director of the Company since May 2007. He is a Co-Founder of Autism Speaks and has been a Senior Advisor at Lee Equity Partners, LLC, an investment firm, since May 2008 and Chief Executive Officer of the Palm Beach Civic Association since April 2010. He served as the Vice Chairman of the board of directors of General Electric Company (“GE”) and as an Executive Officer and a member of the Corporate Executive Office of GE from 2000 to May 2008. Mr. Wright joined NBC as President and Chief Executive Officer in 1986, and was made Chairman and Chief Executive Officer of the network in 2001. He then served as Chairman and Chief Executive Officer of NBC Universal from 2004 to 2007. Prior to his association with NBC and NBC Universal, Mr. Wright served as President of General Electric Financial Services and, before that, as President of Cox Cable Communications. Mr. Wright serves on the board of directors of AMC Networks Inc. and the board of trustees of the New York-Presbyterian Hospital. He has previously served on the board of directors of GE, NBC Universal and EMI Group Global Inc. and the board of trustees for RAND Corporation.

 

Experience, Qualifications, Attributes and Skills

 

Mr. Wright brings to the Board extensive business leadership and management experience. Mr. Wright’s former roles as Vice Chairman of GE’s board of directors and President and Chief Executive Officer of NBC Universal give him knowledge and insight into the complex issues facing us, in particular on the operational, financial, strategic planning and corporate governance fronts. These experiences provide him with a thorough understanding of, and appreciation for, the role of the Board. He also possesses public company experience as demonstrated by his experience on the board of AMC Networks Inc. In addition, Mr. Wright’s service as a member of the boards of non-profit organizations provides our Board with an added perspective in the area of social and corporate responsibility.

 

 

 

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Table of Contents

 

   CORPORATE GOVERNANCE

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

CORPORATE GOVERNANCE

 

 

OVERVIEW OF CORPORATE GOVERNANCE

After the 2019 Annual Meeting, our Board of Directors will be comprised of the following members:

 

  Our Executive Chairman;

 

  our Vice Chairman;

 

  our President and Chief Executive Officer;

 

  our Lead Independent Director; and

 

  10 other directors, all of whom are independent.

Mr. Ralph Lauren is the controlling stockholder of the Company with a majority ownership of the Company’s Class B Common Stock. Mr. R. Lauren founded Ralph Lauren Corporation in 1967, and has led our vision, strategy, and development over the years into the robust and growing company we are today following our 50th anniversary. The Board of Directors believes it is appropriate for Mr. R. Lauren to be Chairman of the Board, in an executive capacity, as he continues, with Mr. Louvet, to drive the strategic vision of our Company and to actively participate in setting our financial objectives and investment priorities. The Board also appointed Mr. R. Lauren’s son, David Lauren, as Vice Chairman of the Board to increase his involvement with our Company in a boardroom capacity. Mr. Louvet has been a member of our Board since 2017 when he joined the Company as President and Chief Executive Officer.

In Fiscal 2017, we also appointed a formal Lead Independent Director, Frank A. Bennack, Jr. to provide strong, independent leadership for the Board and serve as a liaison between our Board and management. Mr. Bennack serves on three of the four committees of the Board and takes an active role in all governance matters.

Our Board and management are committed to sound corporate governance. We have in place a comprehensive corporate governance framework which incorporates the corporate governance requirements of the Sarbanes-Oxley Act of 2002, the SEC, and the NYSE. While we meet the eligibility requirements, we do not rely on the exceptions from certain of the NYSE’s corporate governance listing requirements available to majority controlled companies. In keeping with good corporate governance practices, we maintain a majority of independent directors and our Board Committees are comprised solely of independent directors.

In addition, pursuant to the Company’s governing documents, each share of Class B Common Stock currently owned by Mr. R. Lauren will be automatically converted into one share of Class A Common Stock upon transfer to a person who is not Mr. R. Lauren, a member of his family, or an entity that is not owned by, or established for the benefit of, Mr. R. Lauren or members of his family. Following such conversion of all Class B Common Stock, the rights of holders of all outstanding common stock will be identical. Once converted into Class A Common Stock, the Class B Common Stock will never be reissued.

 

 

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Table of Contents

 

   CORPORATE GOVERNANCE

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

Our corporate governance practices include:

 

   

Board Composition, Policies and Practices

 

  

• Separate Chairman and Chief Executive Officer roles

 

  

• Appointed Lead Independent Director

 

  

• Over 75% of Board is independent

 

    

• Board refreshment efforts to align with corporate strategy, including addition of three directors with digital commerce expertise

 

Board Engagement

 

  

• Regular executive sessions of independent directors

 

  

• Annual Board and Committee self-evaluations and evaluation of each Director prior to Annual Meeting

 

  

• Over 75% Board and Committee meeting attendance

 

    

• Enhanced engagement in strategy, including substantive store and operations visits and increased access to various levels of management

 

Board Committees

 

  

• Board Committees are entirely independent

 

  

• Majority of Audit Committee consists of financial experts

 

  

• Committee chairmanships and composition refreshed in August 2018

 

    

• Newly renamed and enhanced Nominating, Governance, Citizenship & Sustainability Committee will also oversee corporate citizenship, sustainability, and social and environmental issues and impacts

 

Stockholder Engagement

 

  

• All directors are elected annually

 

  

• Stockholder advisory vote on executive compensation held annually

 

  

• Stockholder outreach is conducted on an ongoing basis

 

    

• Committee refreshment, enhanced focus on sustainability, and a more robust 2019 Global Citizenship and Sustainability Report were driven in part by results of stockholder engagement, among other initiatives

 

 

 

In addition, the key components of our corporate governance framework are set forth in the following documents:

 

  our Amended and Restated Certificate of Incorporation;

 

  our Fourth Amended and Restated By-Laws;

 

  our Corporate Governance Policies;

 

  our Audit Committee Charter;

 

  our Nominating, Governance, Citizenship & Sustainability Committee Charter;

 

  our Compensation & Organizational Development Committee Charter;

 

  our Finance Committee Charter;
  our Code of Business Conduct and Ethics; and

 

  our Code of Ethics for Principal Executive Officers and Senior Financial Officers.

Each of the above documents is available on our investor relations website at http://investor.ralphlauren.com by clicking on “Corporate Governance.” Copies of these documents are available to stockholders without charge upon written request to our Investor Relations Department, 650 Madison Avenue, New York, New York 10022. Only the Board or a committee of the Board with specific delegated authority, as appropriate, may grant a waiver under our codes of ethics to any director or executive officer, and any such waiver, or any amendments to our codes of ethics, will be promptly posted on our website.

 

 

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Table of Contents

 

   CORPORATE GOVERNANCE

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

COMPANY LEADERSHIP STRUCTURE

Separate Chairman and CEO Roles

The Board believes that the Company’s current leadership structure, in which the roles of the Chairman and the CEO are separate, is appropriate for the Company at this time, taking into consideration the Company’s evolving needs, corporate strategy, and operating environment. The separation of the Chairman and CEO roles enables the CEO to focus on the business, operations, and strategy of the Company, and allows the Company to leverage the Chairman’s experience, perspective, and vision to serve the best interests of our stockholders.

Lead Independent Director

At the end of Fiscal 2017, the Board appointed a Lead Independent Director to provide strong, independent leadership for the Board. Under our Corporate Governance Policies, key responsibilities of the Lead Independent Director include, among other duties:

 

  presiding at all meetings of the Board at which the Chairman or the Vice Chairman is not present and, when appropriate, at executive sessions of the independent directors;

 

  consulting the Chairman on establishing the agenda for Board meetings;

 

  serving as liaison between the Chairman and the independent directors, as appropriate;

 

  having the authority to call meetings of the independent directors, as appropriate;

 

  if requested by key stockholders, serving as a point of contact for stockholders wishing to engage directly with the Board, other than through the Chairman; and

 

  leading executive sessions of the Board.

DIRECTOR INDEPENDENCE AND NON-MANAGEMENT DIRECTOR MEETINGS

Our Board believes that a majority of our directors should be independent, and has determined that all

non-management director nominees are independent: Angela Ahrendts, John R. Alchin, Arnold Aronson, Frank A. Bennack, Jr., Dr. Joyce F. Brown, Joel L. Fleishman, Michael A. George, Hubert Joly, Linda Findley Kozlowski, Judith A. McHale, and Robert C. Wright. Each of the current members of our Audit Committee, Compensation Committee, Nominating Committee, and Finance Committee detailed below are independent.

In considering the independence of our independent directors, we considered, among other factors, charitable contributions to entities affiliated with our independent directors and commercial transactions conducted, from time to time, in the ordinary course of business between us and certain entities affiliated with these directors. In the case of each of our independent directors, any such transactions have substantially the same terms as are prevailing at the time for comparable businesses and the indirect interest of the independent director in the charitable contribution or transaction, if applicable, was found to be immaterial and in amounts that do not impair the independence of the relevant director under our Corporate Governance Policies and the NYSE’s corporate governance listing standards. Our guidelines for determining directors’ independence are set forth as Appendix A to this Proxy Statement.

At each of our regularly scheduled Board and committee meetings, the non-management, independent directors participate in an executive session without any members of the Company’s management present. In Fiscal 2019, our independent directors met together as a Board, without any management representatives present, at least once per quarter. During these executive sessions of independent directors, our Lead Independent Director or the Chairs of each of the Audit Committee, the Compensation Committee, the Nominating Committee, and the Finance Committee presided on a rotating basis based on the topics to be discussed. In addition, our independent directors also met together in executive session without any management representatives present after regularly scheduled meetings of the Audit Committee, the Compensation Committee, the Nominating Committee, and the Finance Committee.

 

 

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Table of Contents

 

   CORPORATE GOVERNANCE

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

MEETINGS AND DIRECTOR ATTENDANCE

 

   
Type of Meeting    Number of Meetings and Director Attendance
   
2018 Annual Meeting of Stockholders    Our directors are expected to attend each Annual Meeting of Stockholders. All of our current directors attended the 2018 Annual Meeting of Stockholders.
   
Meetings of:    In Fiscal 2019:

• the Board;

  

• our Board met five times;

• the Audit Committee;

  

• our Audit Committee met seven times;

• the Nominating Committee;

  

• our Nominating Committee met four times;

• the Compensation Committee; and

  

• our Compensation Committee met four times; and

• the Finance Committee.

  

• our Finance Committee met six times.

   All of the members of our Board attended at least 75% of the required meetings held by the Board and the committees of the Board on which he or she served. The Board and its committees also act from time to time by unanimous written consent in lieu of meetings.

INDEPENDENT COMMITTEES OF THE BOARD OF DIRECTORS

All four of our Board committees consist solely of independent directors — the Audit Committee, the Compensation Committee, the Nominating Committee, and the Finance Committee. The table below indicates the current membership of our committees.

 

         
Director   

Audit

Committee

  

Compensation

Committee

   Nominating
Committee
  

Finance

Committee

         

 

John R. Alchin

  

LOGO

 

        

LOGO

 

         

 

Arnold H. Aronson

           

LOGO

 

         

 

Frank A. Bennack, Jr.

  

LOGO

 

  

LOGO

 

  

LOGO

 

  
         

 

Dr. Joyce F. Brown

  

LOGO

 

     

LOGO

 

  
         

 

Joel L. Fleishman

     

LOGO

 

  

LOGO

 

  
         

 

Michael A. George

  

LOGO

 

  

LOGO

 

     
         

 

Hubert Joly

     

LOGO

 

     

LOGO

 

         

 

Linda Findley Kozlowski

  

LOGO

 

        

LOGO

 

         

 

Judith A. McHale

        

LOGO

 

  

LOGO

 

         

 

Robert C. Wright

            

LOGO

 

 

    

LOGO  Chair      LOGO  Member

 

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   CORPORATE GOVERNANCE

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

 

Audit Committee

 

  Role of the Audit Committee. The Audit Committee appoints our independent registered public accounting firm, and approves in advance all audit and permitted non-audit services performed by them and the scope and cost of their annual audits. The Audit Committee reviews, among other things: (i) the results of the independent registered public accounting firm’s annual audits and quarterly reviews; (ii) management’s compliance with our major accounting and financial reporting policies; (iii) the adequacy of our financial organization and management’s procedures and policies relating to our internal control over financial reporting; and (iv) our compliance with applicable laws relating to accounting practice. The Audit Committee has adopted a formal policy for the approval of the performance of all audit and non-audit services of the independent registered public accounting firm. This policy is described under “(PROPOSAL 2) RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.”

 

  Audit Committee Financial Experts. The Board has determined that each member of the Audit Committee is financially literate and that three of the five members of the Audit Committee are audit committee financial experts, as defined by the SEC: its Chair, Mr. Alchin, Mr. Bennack, and Mr. George.

Compensation Committee

 

  Role of the Compensation Committee. The Compensation Committee reviews and approves the compensation of executive officers and certain key members of our senior management and compensation plans and arrangements with respect to such executive officers and members of senior management. The Compensation Committee also administers the compensation plans in which certain employees may participate, including our Amended and Restated 2010 Long-Term Stock Incentive Plan (the “2010 Stock Incentive Plan”), which replaced our 1997 Long-Term Stock Incentive Plan (the “1997 Stock Incentive Plan”), our current Executive Officer Annual Incentive Plan (“EOAIP”) and our Executive Incentive Plan. The Compensation Committee will also administer the proposed 2019 Long-Term Stock Incentive Plan. For more information see
   

“(PROPOSAL 4) PROPOSAL TO ADOPT THE 2019 LONG-TERM STOCK INCENTIVE PLAN.”

In addition, the Compensation Committee maintains oversight in the development of succession plans for certain key executive positions within our senior management, including the Chief Executive Officer and Executive Chairman, regularly meeting in executive session to evaluate internal and external candidates, presenting them to the full Board, and performing succession modeling. The Compensation Committee may review and provide guidance on certain of our programs relating to our diversity, talent review, and leadership development. The Compensation Committee may form and delegate its authority to subcommittees when appropriate.

 

  Compensation Committee Interlocks and Insider Participation. The Compensation Committee is composed entirely of directors who are not our current or former employees, each of whom meets the applicable definition of “independent” under the listing standards of the NYSE and SEC rules and regulations. None of the members of the Compensation Committee during Fiscal 2019 (i) had any relationships requiring disclosure by us under the SEC’s rules requiring disclosure of related party transactions or (ii) was an executive officer of a company of which any one of our executive officers is a director. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers who serve on our Board or Compensation Committee. There are no Compensation Committee interlocks.

Nominating Committee

 

 

Role of the Nominating Committee. The Nominating Committee identifies individuals qualified to become directors, recommends director nominees to the Board, develops and recommends corporate governance policies to the Board, recommends non-employee director compensation to the Board, reviews related party transactions, exercises oversight of the evaluation of the members of the Board and committees, recommends to the Board policies and principles for Chief Executive Officer succession, selection and performance reviews, and reviews the Company’s

 

 

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   CORPORATE GOVERNANCE

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

   

programs, policies, and practices relating to corporate citizenship, sustainability, and social and environmental issues and impacts.

Finance Committee

 

  Role of the Finance Committee. The Finance Committee was established by the Company in Fiscal 2019 to oversee the Company’s financial condition, policies, practices, and activities in support of the Company’s long-range plan. The Finance Committee provides oversight to management regarding: (i) the establishment of strategic growth pillars for the Company; (ii) the alignment of the Company’s financial resources with its strategic objectives; and (iii) the development and execution of the Company’s growth strategy.

BOARD OF DIRECTORS EFFECTIVENESS

Independent Board Assessment

In Fiscal 2018, the Nominating Committee engaged an independent third-party consultant to conduct individual interviews with each director, including management members of the Board, and to perform an objective analysis of the Board’s governance structure, evaluation process, and overall effectiveness.

Since receiving the results of the Fiscal 2018 independent third-party assessment, the Nominating Committee has conducted a quarterly Board Effectiveness Review to ensure implementation of certain recommendations from the assessment, such as:

 

  August 2018 refreshment of committee assignments and chairmanships, which revitalized the skill sets represented on each committee;

 

  Implementation of a formal annual evaluation to ensure each director has the appropriate mix of characteristics, experience, and skills to serve the Company and its stockholders effectively before the Board nominates any director for re-election at the Annual Meeting;

 

  Expansion of the Board education program and creation of an online Director Education Portal for internal Ralph Lauren classes on the Company and our business;
  Director Orientation program conducted throughout Fiscal 2019 for new directors, consisting of one-on-one meetings with senior management and extensive written materials to familiarize the new directors with the Company’s business, financial performance, strategic plans, compensation programs, and corporate governance policies and practices; and

 

  Additional training provided to directors who assumed new leadership positions, e.g., committee chairmanships, in connection with the August 2018 committee composition refreshment.

Notably, the Fiscal 2018 independent assessment has led to a focus on Board exposure to management and deeper engagement with business strategy, which the Board intends to continue to emphasize. In Fiscal 2019, this effort has included, among other actions:

 

  Opportunities for Board discussions with members of the executive leadership team and the creative design management team;

 

  Regular presentations by senior executives on our Next Great Chapter Strategic Plan pillars at the quarterly Board and committee meetings; and

 

  Visits to Company stores and distribution centers to provide the opportunity to see live the Company’s operations, to assess firsthand the execution and impact of the Company’s Strategic Plan, and to engage with senior leaders throughout the Company to deepen the Board’s understanding of our business.

Board Effectiveness is a continuing focus, and the Nominating Committee anticipates utilizing this approach periodically to obtain independent assessments of its performance. When the Nominating Committee engages a third party to assist it, the Committee approves the fees that we pay for these services.

Focus on Strategy and Succession Planning

Our Board is actively engaged with the Company’s strategy. Our entire Board acts as a strategy committee as it reviews and oversees progress on the Company’s Strategic Plan quarterly, including during executive sessions without Company management present.

 

 

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   CORPORATE GOVERNANCE

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

Annually, the Board conducts an in-depth review of the Company’s long-term strategic plan, performance, and capital structure. The Finance Committee additionally takes a more in-depth and active role in strategy as it receives a bi-annual update on strategy KPIs and periodically reviews the alignment between our risk management program and our strategic priorities. These discussions are also enhanced with experiences scheduled outside the regular meetings at our headquarters, such as market or store visits, which provide the directors with an opportunity to see live the Company’s operations, to assess firsthand the execution and impact of the Company’s strategy, and to engage with senior leaders throughout the Company to deepen their understanding of our business. Furthermore, a full-day strategy meeting is scheduled for the Finance Committee annually, and all members of the Board are invited to attend.

Strategy remains at the forefront of our robust succession planning process. With a focus on evolving the Board with respect to the Company’s strategy, the Nominating Committee regularly reviews the skills and experience of the Board in consideration of the Board’s needs for the upcoming year regarding strategy, the appropriate size and the current composition of the Board in light of independence, diversity, age, availability of service, and tenure of its members, among other attributes.

The Board is actively engaged in succession planning with regard to senior management, including the Executive Chairman and the President and Chief Executive Officer. The Compensation Committee regularly reviews and considers such succession plans, and reports on such plans and potential candidates during executive session of the full Board. The Compensation Committee members and members of senior management regularly meet to evaluate internal and external candidates, acquaint such candidates with members of the Board, and perform succession modeling.

Board and Committee Evaluations

Pursuant to the Company’s Corporate Governance Guidelines and the Charters of each of the Board’s Committees, the Board and each of its Committees conducts an evaluation at least annually.

Our processes enable directors to provide anonymous and confidential feedback on topics including:

 

  Board/Committee information and materials;

 

  Board/Committee meeting mechanics;

 

  Board/Committee composition and structure (including diversity and mix of skills, qualifications, viewpoints and experience);

 

  Board/Committee responsibilities and accountability (including with respect to strategy, risk management, operating performance, CEO and management succession planning, corporate governance, sustainability, and corporate culture);

 

  Board meeting conduct and culture; and

 

  Overall performance of Board members.

To promote effectiveness of the Board, the results of the Board evaluation are reviewed and addressed by the Nominating Committee in executive session and then by the full Board in an executive session led by the Chair of the Nominating Committee and the Lead Independent Director. The results of each Committee’s evaluation are discussed at an executive session of the applicable Committee and further discussed by the full Board as appropriate. Before the Board nominates any director for re-election at the Annual Meeting, the Nominating Committee conducts a formal annual evaluation to ensure each director has the appropriate mix of characteristics, experience, and skills to serve the Company and its stockholders effectively.

These evaluations, as well as the Fiscal 2018 independent third-party assessment described above, had a meaningful impact on Board refreshment and succession planning. As a testament to the effectiveness of these assessments, in Fiscal 2019, the Board added three new independent directors, two of whom are female, prioritized Board engagement with Company strategy, refreshed the composition of the committees of the Board, and enhanced director education. These refreshment efforts demonstrate the Board’s focus on ensuring that each member of the Board brings the necessary skills and areas of expertise to contribute to discussions on the Company’s strategic initiatives and to oversee the risks that face our business and as they evolve.

 

 

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   CORPORATE GOVERNANCE

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

BOARD OF DIRECTORS OVERSIGHT OF RISK

Our management is responsible for understanding and managing the risks that we face in our business, and the Board is responsible for overseeing management’s overall approach to risk management. The involvement of the full Board in reviewing our strategic objectives and business plans is a significant element of the Board’s assessment of management’s approach and tolerance for risk. In addition, the committees of the Board report to the full Board at regularly scheduled Board meetings on any identified material risks within that committee’s area of responsibilities. The Audit Committee has responsibility for oversight of the Company’s financial statements and financial reporting related risks, including those related to our accounting, auditing and financial reporting practices, as well as cybersecurity risks. The Finance Committee has responsibility for oversight of the Company’s financial condition and the assessment of financial strategic risks, including the adequacy of any policies, procedures, and controls designed by management to assess and manage these risks. The Compensation Committee has responsibility for the oversight of our compensation policies and practices, including conducting annual risk assessments, and evaluating and approving our executive compensation and benefit plans and programs. The newly enhanced Nominating Committee has responsibility for the oversight of the Company’s governance structure, including succession planning, and has been enhanced to oversee environmental, social, and governance risks applicable to the Company, including citizenship and sustainability issues, and will report regularly to the full Board on these risks and opportunities. The Board also receives regular reports from our CEO, CFO, General Counsel, and other key members of senior management regarding various enterprise risk management issues, including operational, strategic, legal, and regulatory, cybersecurity and global information systems, internal audit, financial and reputational risks. Certain risks that are under the purview of a particular Committee are monitored by that Committee, which then reports to the full Board as appropriate.

The Company believes that the Board’s leadership structure, discussed in detail under “Company Leadership Structure” on pages 25 of this Proxy Statement, supports the risk oversight function of the Board by providing for a separate role for the chairman

of the Board and the CEO, and open communication between management and the Board facilitated by a Lead Independent Director. In addition, seasoned independent directors chair each of the Board’s four Committees, which provide in-depth focus on certain categories of risks.

OVERVIEW OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE RISK OVERSIGHT

We believe that delivering the next 50 years for our Company means carefully managing our impact on the environment and society, and further believe our performance is inextricably linked to the sustainability of the world in which we operate. As a result, the full Board considers sustainability to be a vital element of the Company’s business strategy and its oversight thereof. Recently, we have made strides in ensuring this oversight is as robust as possible, with the following enhancements in our programs, policies, and practices:

 

  Nominating Committee. In May 2019, the former Nominating Committee was renamed the “Nominating, Governance, Citizenship & Sustainability Committee,” and the enhanced committee will now oversee, and receive regular quarterly reports on, environmental, social, and governance issues and liaise directly with members of management on such risks and opportunities.

 

  Chief Supply Chain and Citizenship Officer. In Fiscal 2019, the Company created a new role and appointed its first Chief Supply Chain and Citizenship Officer to lead the Company’s sustainability strategy.

 

  Sustainability KPIs. The Nominating Committee will receive regular updates on the sustainability metrics and goals presented in our 2019 Global Citizenship and Sustainability Report and will report to the Board on such progress. The Board will also receive an annual sustainability KPI update as well as a copy of any Company sustainability reports.

 

  Audit Committee and Finance Committee. As part of the larger oversight of enterprise risk management, both the Audit Committee and the Finance Committee will provide high-level monitoring of any sustainability risks, as applicable, and the Finance Committee will continue to have direct engagement on strategy initiatives, including those impacting sustainability and corporate citizenship.
 

 

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  Compensation Committee. In addition to overseeing the compensation of our executive officers and certain key members of our senior management, the Compensation Committee regularly reviews the Company’s people and development strategy, including with regard to our employee diversity and inclusion initiatives.

For more information, please see the map of the Company’s sustainability risks in our most recently published Global Citizenship and Sustainability Report covering Fiscal 2019 and significant events prior to publication in Fiscal 2020 available on our corporate website at https://www.corporate.ralphlauren.com.

ANALYSIS OF RISKS ARISING FROM COMPENSATION POLICIES AND PROGRAMS

The Compensation Committee has reviewed an assessment by management of our compensation programs and practices for our employees, including our executive and non-executive programs and practices. This assessment focused on program design features and controls to evaluate whether such programs encourage unnecessary or excessive risk taking, and how policies and programs are structured to mitigate any such risks.

Selected key elements of our compensation programs that were reviewed include the following:

 

  Pay Mix and Structure. Our executive compensation programs appropriately balance both short-term and long-term performance through our annual cash incentive bonus program and long-term equity awards. Equity awards deliver value to employees through both stock price appreciation and company performance. A significant portion of variable pay is delivered through equity awards with vesting schedules and performance periods covering multiple years, thus emphasizing long-term company performance.

 

  Incentive Caps. Our executive annual cash incentive bonus plan as well as our non-executive bonus plans do not allow for unlimited payouts. We believe that the range of payouts should be capped to avoid encouraging decisions that maximize short-term gain at the expense of long-term viability. In addition to caps on all cash incentive bonus awards, performance-based restricted stock
   

units (“PRSUs”) cannot exceed target levels and performance share units (“PSUs”) cannot exceed a fixed percentage above target levels.

 

  Performance. To strengthen the relationship between pay and performance, our executive annual cash incentive bonus plan, our non-executive commission and bonus plans and performance-based equity awards are subject to the achievement of pre-established performance targets, which are established independently of plan participants. We believe that for Fiscal 2019 our incentive plan metrics were appropriately balanced between short-term incentives such as net income before taxes (“NIBT”), corporate revenue, Company-wide SG&A expenses (excluding marketing and advertising), and global digital revenue for the executive annual cash incentive bonus plan and return on invested capital (“ROIC”) for PRSUs and long-term metrics such as cumulative three-year ROIC and relative total shareholder return for our PSUs. These financial metrics were adopted in response to stockholder feedback and in order to align with the Company’s Strategic Plan.

 

  Change in Control Policy. The change in control arrangements for our NEOs provide for cash payments only upon actual termination of employment. All unvested equity awards are subject to “double-trigger” vesting so that acceleration of vesting does not occur unless the executive’s employment is actually terminated under certain limited circumstances following a change in control. Our employment agreements do not provide for any excise tax gross-up provisions.

 

  Ownership Guidelines. We have stock ownership guidelines for our directors, the NEOs, and select other members of our senior management group that are intended to align the interests of these individuals with our stockholders. As a result, such individuals may be less likely to take short-term risk if a meaningful portion of their personal financial investment is linked to our long-term holdings. In Fiscal 2019, the ownership requirement for certain executive officers increased from two times base salary to three times base salary.

 

 

Clawback Policy. We have adopted a clawback policy applicable to our NEOs. Under our clawback policy, the Compensation Committee may, in its reasonable discretion, require a NEO to reimburse

 

 

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   RALPH LAUREN CORPORATION

 

 

 

   

us for the amount of any payment previously received by such officer under our cash incentive bonus plan as well as our long-term equity plan if, as a result of such officer’s intentional misconduct or gross negligence, we are required to restate our financial statements.

 

  Anti-Hedging and Anti-Pledging Policies. Our NEOs as well as Board members are prohibited from pledging Company securities as collateral for a loan or from holding Company securities in a margin account. In addition, all employees and Board members are prohibited from hedging Company securities, including by way of forward contracts, equity swaps, collars, exchange funds, or otherwise.

As a result of this review, the Compensation Committee determined that any risks that may result from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on our Company.

DIVERSITY AND DIRECTOR NOMINATING PROCEDURES

Our Board is comprised of individuals with diverse business experiences, including financial expertise, active leadership, CEO experience in a variety of industries, international experience, product experience, and most recently strong retail and digital commerce experience. Our Board members also have extensive experience on the boards of other companies and organizations, which provides an understanding of different business strategies and challenges. In seeking new Board members, we focus on adding new skills and experiences necessary to oversee the Company’s business strategy and fulfill the Board’s risk oversight obligations. At the 2018 Annual Meeting, we were pleased to elect three new outstanding individuals to our Board, Angela Ahrendts, Michael A. George, and Linda Findley Kozlowski, each of whom brings extensive experience in retail and the digital space. These

additions are aligned with the strategic initiatives of our Chairman and our CEO and have been complementary to the depth of knowledge and experience currently on our Board.

The Nominating Committee identifies and evaluates candidates for nomination as directors and submits its recommendations to the full Board for its consideration. The Nominating Committee, guided by the membership criteria established by the Board in our Corporate Governance Policies, seeks highly qualified candidates who combine a broad spectrum of experience and expertise with a reputation for integrity. We maintain a majority of independent directors, and the Board considers a number of factors in selecting director candidates. Although we do not have a formal policy concerning diversity considerations, the Nominating Committee seeks nominees with a broad range of experience from a variety of industries and professional disciplines, such as finance, professional services, retail, digital commerce, and technology, along with a diversity of gender, ethnicity, age, and geographic location in determining the appropriate composition of the Board and identifying director nominees. When the Nominating Committee identifies an area in which the Board may benefit from greater representation, it may focus its candidate search on particular experience, background, or diversity characteristics, including gender, ethnic, and geographical attributes.

In addition, the Board considers the contributions the individual can make to the Board and management as we strive for a body of directors reflecting different genders, ethnic backgrounds, and professional experiences and expertise necessary for the Board to fulfill its responsibilities and leading to a more effective oversight and decision-making process. In the Board’s annual self-evaluation, one of the factors that the Board expressly considers is whether the membership of the Board provides an adequate mix of characteristics, experience, and skills to serve the Company and its stockholders effectively.

 

 

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   RALPH LAUREN CORPORATION

 

 

 

Board Diversity

 

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Role of Nominating Committee in Director Nomination

The Nominating Committee solicits and receives suggestions for, as well as comments upon, director candidates from other directors, including the Executive Chairman of the Board and the Lead Independent Director, and usually engages third parties either to assist in the search for director candidates or to assist in gathering information regarding director candidates’ background, experience, and skills.

The Nominating Committee will consider candidates recommended by our directors, members of management and stockholders, and will evaluate candidates properly recommended by stockholders on the same basis as other candidates. Candidates should have experience in positions with a high degree of responsibility and be leaders in the companies or institutions with which they are affiliated. Upon receiving a stockholder recommendation, the Nominating Committee will initially determine the need for additional or replacement members of the Board and then evaluate the candidate based on the information it receives with the stockholder recommendation or that it may otherwise acquire, and may, in its discretion, consult with the Executive Chairman, the Lead Independent Director and other members of our Board. If the Nominating Committee determines that a more comprehensive evaluation is warranted, it may obtain additional information about the director candidate’s background and experience, including by means of interviews with the candidate.

Our stockholders may recommend candidates at any time, but the Nominating Committee requires recommendations for election at an annual meeting of stockholders to be submitted to the Nominating Committee no later than 120 days before the first anniversary of the date of the proxy statement sent to stockholders in connection with the previous year’s Annual Meeting of Stockholders in order to be considered for nomination by the Nominating Committee. The Nominating Committee believes this deadline is appropriate and in our best interests and those of our stockholders because it ensures that it has sufficient time to evaluate properly all proposed candidates. Therefore, to submit a candidate for consideration for nomination at the 2020 Annual

Meeting of Stockholders, a stockholder must submit the recommendation, in writing, by February 20, 2020. The written notice must include:

 

  all information relating to each potential candidate whom the stockholder is recommending that would be required to be disclosed in a solicitation of proxies for the election of such person as a director pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (“Exchange Act”), including such person’s written consent to being named in the proxy statement as a nominee and to serve as a director if elected;

 

  the name and address of the stockholder giving the notice, as they appear on the Company’s books, and of the beneficial owner of those shares; and

 

  the class and number of shares which are owned beneficially or of record by the stockholder and the beneficial owner.

Recommendations must be sent to the Nominating, Governance, Citizenship & Sustainability Committee, Office of the Secretary/Legal Department, Ralph Lauren Corporation, 650 Madison Avenue, New York, New York 10022.

Our stockholders may directly nominate an individual for election as a director at an annual meeting of stockholders by complying with the nominating procedures set forth in our Fourth Amended and Restated By-laws, which are described below under the caption “Additional Matters — Stockholder Proposals for the 2020 Annual Meeting of Stockholders.”

GLOBAL CITIZENSHIP AND SUSTAINABILITY

Although we are at the beginning of this journey, the values and purpose that have defined our business for half a century underline the authenticity of our commitment. In Fiscal 2019, we undertook a detailed materiality analysis, refreshed our strategy, set goals, and developed a road map for improvement. Our strategy, Design the Change, is both a commitment and a journey to accelerate our work across citizenship and sustainability at Ralph Lauren. It is based on our belief that, together with our industry, we can deliver the change required to create a positive impact in society and a more sustainable future.

 

 

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Design the Change is focused on three areas where we can make the greatest contributions: Creating Timeless Style, Protecting the Environment, and Championing Better Lives and introduces 16 new citizenship and sustainability goals to keep us moving forward and make meaningful progress in every part of our business.

 

LOGO

In addition to sharing more about our renewed strategy and goals, below are some highlights and achievements from Fiscal 2019.

Create Timeless Style

Ralph Lauren products are designed with a sense of timelessness. We create iconic garments that our consumers treasure for a lifetime by matching longevity of style with quality of manufacture. We aspire to use responsibly sourced and sustainable materials that prolong product life while requiring less from our planet. One of the key ways we aim to deliver on this is through our approach to design. By 2020, all of our design, product development, and merchant teams will receive annual training on sustainable, circular, inclusive, and culturally aware design.

One example of our commitment to sustainable product is the Earth Polo, a shirt crafted from an innovative fabric produced entirely from plastic bottles and is part of our commitment to recycle 170 million plastic bottles in our products and packaging by 2025. Each Polo is made from approximately 12 plastic bottles — which may have otherwise ended up in oceans or landfills — and uses a completely waterless dyeing process.

 

Knowing where our materials come from, and how they are made, is key to creating our products sustainably. Our responsible sourcing program guides our commitment to sustainable materials and traceability and focuses on our priority raw materials and eliminating waste across the production process. This year, we added a new step to our design process that encourages our designers to review excess fabrics from previous seasons when fabricating new lines.

We also began developing a sustainable fiber road map, including new policies, partnerships, and goals. For example, by 2025 all of our cotton will be sustainably sourced, which includes Better Cotton Initiative (BCI), organic, recycled, transitional, and U.S. grown.

Protect the Environment

We work to mitigate our impact on the environment by driving positive change through collaboration and innovation. Our aim is to create the highest quality products with minimal harm to the environment. This starts with our suppliers and extends to our distribution, packaging, stores, and offices. We are committed to addressing the most pressing environmental issues facing our industry and society, including climate, water and waste.

By 2020, we will set science-based greenhouse gas reduction targets for our operations and supply chain. In Fiscal 2019, we continued to offset 10 percent of domestic electricity emissions by purchasing renewable energy certificates through the U.S. Environmental Protection Agency Green Power Partnership. By 2020, we intend to set a renewable energy goal and join RE100, strengthening our global renewable energy sourcing strategy.

We are committed to reduce water consumption across our value chain, and to safeguard and preserve water resources in the communities where we operate. To minimize water used during manufacturing, we are partnering with our suppliers and leading innovators who will set our business and the industry on a course for significant water reductions and water quality improvements. Last year, we also partnered with GiveMeTap to help fund the construction of water pump systems in Ghana, sharing with our employees the powerful impact that access to clean water can have on a community. By 2025, we will achieve at least a 20 percent reduction in total water use across our operations and value chain.

 

 

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To address the waste generated by our industry and our business, from production through to packaging, we are working to eliminate waste at our owned facilities, including distribution centers and stores, as well as across our product lifecycle. By 2023, we will achieve zero waste to landfill across our distribution centers. Our packaging reduction efforts are also underway. In Fiscal 2019, we launched an eco-friendly packaging option for all orders made through RalphLauren.com. We also made global progress to improve retail packaging; as of Fiscal 2019, our global branded retail packaging was made from 79 percent recycled content. In Fiscal 2019, we began eliminating hangers from flat-packed items being shipped from global factories to our distribution centers, and we reduced the number of hangers in our North American deliveries. By 2025, 100 percent of our packaging material will be recyclable or sustainably sourced.

Champion Better Lives

We celebrate individuality and champion people to achieve the life they want to have. This dream shapes the work experience we create for our employees and the standards we demand of our suppliers, and is the driving force behind our community investments.

We commit to meaningfully engaging our communities through our work across cancer care as well as our global employee volunteerism program. In Fiscal 2019, our employees donated more than 14,000 hours of time and talent to non-profit organizations through Ralph Lauren Gives Back. By 2025, we will increase our volunteer hours by 25 percent compared to a Fiscal 2018 baseline.

Additionally, in Fiscal 2020, we sold our corporate jet and donated the proceeds, approximately $21 million, to the Polo Ralph Lauren Foundation (the “Foundation”). The Foundation will use this funding over time to drive support of its key areas of focus and to contribute to creating positive and meaningful impacts in society.

We also strive to increase opportunities for women in our workforce globally, and also for female factory workers in our supply chain. In Fiscal 2019, our global

workforce was 64 percent female, with women holding 53 percent of Senior Director and above positions. We are implementing strategic recruiting practices to increase the diversity of our leadership. In line with our Parity.org pledge, all interviews for open VP and above positions will include female candidates. Beginning in Fiscal 2020, we will extend this commitment to include interviewing diverse candidates for every open VP and above position.

In Fiscal 2019, we continued to work closely with Better Work, an international organization focused on improving working conditions in the garment industry, to advance gender equality and promote women’s economic empowerment with our suppliers.

Our most recently published Global Citizenship and Sustainability Report covering Fiscal 2019 and significant events prior to publication in Fiscal 2020 may be found on our corporate website at https://www.corporate.ralphlauren.com.

DIRECTOR COMMUNICATIONS

Stockholders and interested parties may contact any of our directors, including the Executive Chairman of the Board, the Lead Independent Director, the Chairs of the Board’s independent committees, any committee of the Board, the Board’s non-management directors as a group or the entire Board, by writing to them as follows: Name(s)/Title(s), c/o Legal Department and Office of the Corporate Secretary, Ralph Lauren Corporation, 650 Madison Avenue, New York, New York 10022. Communications received in this manner will be handled in accordance with the procedures approved by our non-management directors, who have also requested that certain items that are unrelated to the duties and responsibilities of the Board should be excluded, such as spam, junk mail and mass mailings, product complaints, product inquiries, new product suggestions, resumés and other forms of job inquiries, surveys and business solicitations or advertisements. In addition, material that is threatening, illegal, or similarly unsuitable will be excluded, with the provision that any communication that is filtered out will be available to any non-management director upon request.

 

 

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AUDIT COMMITTEE COMMUNICATIONS

Complaints and concerns relating to accounting, internal control over financial reporting or auditing matters may be communicated to the Audit Committee, which consists solely of independent non-employee directors, through the Office of the Secretary/Legal Department as described above under “Director Communications.” Any such communication may be anonymous. All complaints and concerns will be reviewed by the Audit Committee or a designated member of the Audit Committee. If the Audit Committee or its member designee determines that a reasonable basis exists for conducting a formal investigation, the Audit Committee will direct and supervise the investigation, and may retain independent

legal counsel, accountants, and other advisors as it deems necessary. Confidentiality will be maintained to the fullest extent consistent with the need to conduct an adequate review. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee.

We will not discharge, demote, suspend, threaten, harass or in any manner discriminate or retaliate against any employee in the terms and conditions of his or her employment or otherwise to the extent prohibited by law based upon any lawful actions of such employee with respect to good faith reporting of complaints regarding accounting, internal controls or auditing matters.

 

 

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   AUDIT COMMITTEE REPORT

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

AUDIT COMMITTEE REPORT

 

 

 

The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to the Company’s consolidated financial statements, the Company’s compliance with legal and regulatory requirements, the Company’s system of internal control over financial reporting, and the qualifications, independence, and performance of the Company’s internal and independent registered public accounting firm. The Audit Committee has the sole authority and responsibility to select, evaluate, and, when appropriate, replace the Company’s independent registered public accounting firm. The Audit Committee currently is composed of five independent directors and operates under a written charter adopted by the Audit Committee and ratified by the Board.

Management is responsible for the Company’s financial reporting process, including the Company’s internal control over financial reporting, and for the preparation of the Company’s consolidated financial statements in accordance with U.S. GAAP. Ernst & Young, as the Company’s independent registered public accounting firm for Fiscal 2019, was responsible for auditing those financial statements and expressing its opinion as to the fairness of the financial statement presentation in accordance with U.S. GAAP, and the effectiveness of the Company’s internal control over financial reporting. The Audit Committee’s responsibility is to oversee and review these processes. The Audit Committee is not, however, professionally engaged in the practice of accounting or auditing and does not provide any expert or other special assurance as to such financial statements concerning compliance with laws, regulations, or U.S. GAAP or as to auditor independence. The Audit Committee relies, without independent verification, on the information provided to us and on the representations made by management and the independent registered public accounting firm.

In this context, the Audit Committee has met and held discussions with management and Ernst & Young, the Company’s independent registered public accounting firm for Fiscal 2019. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with U.S. GAAP, and the Audit Committee has reviewed and discussed with management, the Company’s internal auditors, and Ernst & Young the Company’s consolidated financial statements for Fiscal 2019 and

the Company’s internal control over financial reporting. The Audit Committee also discussed with Ernst & Young the matters required to be discussed by Auditing Standard No. 1301 (formerly known as Statement on Auditing Standards No. 61), as amended (Communications with Audit Committees). Ernst & Young provided to the Audit Committee the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communication with the Audit Committee concerning independence, and the Audit Committee discussed their independence with them. In determining Ernst & Young’s independence, the Audit Committee considered whether their provision of non-audit services to the Company was compatible with maintaining independence. The Audit Committee received regular updates on Ernst & Young’s fees and the scope of audit and non-audit services it provided. All such services were provided consistent with applicable rules and the Company’s pre-approval policies and procedures.

Based on our discussions with management, the Company’s internal auditors, and Ernst & Young, and our review of the audited financial statements, including the representations of management and Ernst & Young with respect thereto, and subject in all cases to the limitations on our role and responsibilities referred to above and set forth in the Audit Committee Charter, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements for Fiscal 2019 be included in the Company’s Annual Report on Form 10-K.

The Audit Committee also approved, subject to stockholder ratification, the selection of Ernst & Young as the Company’s independent registered public accounting firm for Fiscal 2020.

Members of the Audit Committee

John R. Alchin (Committee Chair)

Frank A. Bennack, Jr.

Dr. Joyce F. Brown

Michael A. George

Linda Findley Kozlowski

 

 

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   SECURITY OWNERSHIP

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

AND MANAGEMENT

 

 

The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of the Record Date by: (i) each of our NEOs, (ii) each director and director nominee, (iii) each stockholder who is known by us to beneficially own in excess of five percent of any class of our voting securities and (iv) all directors and executive officers as a group. Except as otherwise indicated, each stockholder listed below has sole voting and investment power with respect to the shares beneficially owned by such person. The rules of the SEC consider a person to be the “beneficial owner” of any securities over which the person has or shares voting power or investment power. In addition, a person is deemed to be the beneficial owner of securities if that person has the right to acquire beneficial ownership of such securities within 60 days, including through conversion or exercise of an option or other right. Unless otherwise indicated below, the address of each stockholder is 650 Madison Avenue, New York, New York 10022. As of the Record Date, there were 693 holders of record of our Class A Common Stock.

 

      Class A
Common Stock
     Class B
Common Stock 1
    

 

Voting

Power
of Total
Common
Stock %

 

 
     

Number

 

    

%

 

    

Number

 

    

%

 

    

%

 

 

Ralph Lauren

  

 

823,8512 

 

  

 

1.58%

 

  

 

25,381,2803

 

  

 

100%

 

  

 

83.23%

 

Patrice Louvet

  

 

22,5904 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

Jane Nielsen

  

 

32,4545 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

Valérie Hermann

  

 

49,2356 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

David Lauren

 

  

 

 

31,7907,8 

 

 

 

  

 

 

*

 

 

 

  

 

 

 8

 

 

 

  

 

 

 

 

 

  

 

 

*

 

 

 

Angela Ahrendts

  

 

09 

 

  

 

 

  

 

—  

 

  

 

 

  

 

 

John R. Alchin

  

 

19,74510 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

Arnold H. Aronson

  

 

12,17711 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

Frank A. Bennack, Jr.

  

 

23,50412 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

Dr. Joyce F. Brown

  

 

7,82013 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

Joel L. Fleishman

  

 

11,76814 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

Michael A. George

  

 

1,81515 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

Hubert Joly

  

 

13,51516 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

Linda Findley Kozlowski

  

 

017 

 

  

 

 

  

 

—  

 

  

 

 

  

 

 

Judith A. McHale

  

 

7,69718 

 

  

 

*

 

  

 

—  

 

  

 

 

  

 

*

 

Robert C. Wright

 

  

 

 

24,13819 

 

 

 

  

 

 

*

 

 

 

  

 

 

—  

 

 

 

  

 

 

 

 

 

  

 

 

*

 

 

 

The Vanguard Group

  

 

6,801,79120 

 

  

 

13.11%

 

  

 

—  

 

  

 

 

  

 

2.22%

 

BlackRock, Inc.

  

 

4,137,37721 

 

  

 

7.97%

 

  

 

—  

 

  

 

 

  

 

1.35%

 

Renaissance Technologies LLC

 

  

 

 

3,586,20022 

 

 

 

  

 

 

6.91%

 

 

 

  

 

 

—  

 

 

 

  

 

 

 

 

 

  

 

 

1.17%

 

 

 

All directors and executive officers as a group (17 persons23)

 

     1,094,91224         2.10%        25,381,2803        100%        84.94%  

* Less than 1.0

1.

Each share of Class B Common Stock is convertible at the option of the holder into one share of Class A Common Stock. Each share of Class B Common Stock will be automatically converted into one share of Class A Common Stock upon transfer to a person who is not Mr. R. Lauren or a member of his family, or an entity that is not owned by, or established for the benefit of, Mr. R. Lauren, or members of his family.

2.

For Mr. R. Lauren, includes 237,552 options vested as of the Record Date or within 60 days thereafter representing the right to purchase shares of Class A Common Stock, and 428,568 shares of Class A Common Stock held by the Lauren Family, L.L.C., a limited liability company of which Mr. R. Lauren has the power to remove and replace the managers, provided that any such replacement manager is not related to or subordinate to Mr. R. Lauren and Mr. R.

 

 

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   SECURITY OWNERSHIP

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

  Lauren may not serve as manager. The 428,568 shares of Class A Common Stock were received by the Lauren Family, L.L.C in May 2019 upon conversion of an equal number of shares of Class B Common Stock in connection with planned sales under a Rule 10b5-1 plan entered into in connection with a long-term strategy for estate planning and investment diversification. The current managers of the Lauren Family, L.L.C. are Andrew Lauren, Mr. D. Lauren, and Dylan Lauren, all children of Mr. R. Lauren and Mrs. R. Lauren. Actions by the Lauren Family, L.L.C. require the consent of a majority of the managers. Also includes 35,854 shares of Class A Common Stock held by a revocable trust of which Mr. R. Lauren is the sole trustee and sole beneficiary.

 

  

Does not include (i) unvested performance-based stock awards with respect to 229,951.31 shares of our Class A Common Stock, which are subject to upward or downward adjustment, and (ii) 460,884.54 vested time-based restricted share units (“RSUs”) (the underlying shares of our Class A Common Stock for these RSUs will not be delivered until Mr. R. Lauren’s separation of service from the Company or, if earlier, upon a change in control (as defined in Mr. R. Lauren’s employment agreement)).

3.

Includes (i) 11,499,906 shares of Class B Common Stock held by a revocable trust of which Mr. R. Lauren is the sole trustee and sole beneficiary, (ii) 879,044 shares of Class B Common Stock held by a revocable trust of which Mr. R. Lauren’s spouse, Mrs. Ricky Lauren, is the sole trustee and sole beneficiary, (iii) an aggregate of 4,289,028 shares of Class B Common Stock held by trusts established for the benefit of Mr. R. Lauren’s descendants and of which Mrs. R. Lauren is a trustee and of which Mr. R. Lauren has the power to remove and replace the trustees, provided that Mr. R. Lauren may not serve as the replacement trustee and the replacement trustee is not related or subordinate to Mr. R. Lauren, (iv) 2,370,956 shares of Class B Common Stock held by a trust established for the benefit of Mrs. R. Lauren’s descendants and of which Mr. R. Lauren has the power to remove and replace the trustees, provided that Mr. R. Lauren and Mrs. R. Lauren may not serve as the replacement trustees, and (v) 6,342,346 shares of Class B Common Stock held by the Lauren Family, L.L.C., described in footnote (2) above.

4.

For Mr. Louvet, does not include (i) unvested performance-based stock awards with respect to 202,478 shares of Class A Common Stock, a portion of which are subject to upward or downward adjustment, and (ii) 34,913 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on July 3, 2022).

5.

For Ms. Nielsen, does not include (i) unvested performance-based stock awards with respect to 37,355 shares of Class A Common Stock, which are subject to upward or downward adjustment, and (ii) 23,127 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered in three equal annual installments beginning on March 31, 2021).

6.

For Ms. Hermann, includes options vested as of the Record Date or within 60 days thereafter representing the right to purchase 9,129 shares of Class A Common Stock. Does not include unvested performance-based stock awards with respect to 37,355 shares of Class A Common Stock, a portion of which are subject to upward or downward adjustment.

7.

For Mr. D. Lauren, includes options vested as of the Record Date or within 60 days thereafter representing the right to purchase 13,011 shares of Class A Common Stock. Does not include unvested performance-based stock awards with respect to 8,220 shares of Class A Common Stock, a portion of which are subject to upward or downward adjustment.

8.

An aggregate amount of 428,568 shares of Class A Common Stock and 6,342,346 shares of Class B Common Stock are held by Lauren Family, L.L.C., a limited liability company of which Mr. D. Lauren is one of the three current managers. The other two current managers of the Lauren Family, L.L.C. are Mr. R. Lauren’s other children, Andrew Lauren and Dylan Lauren. Actions by the Lauren Family, L.L.C. require the consent of a majority of the managers. Mr. R. Lauren has the power to remove and replace the managers, provided that any such replacement manager is not related to or

  subordinate to Mr. R. Lauren and Mr. R. Lauren may not serve as manager.
9.

For Ms. Ahrendts, does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

10.

For Mr. Alchin, includes 448 restricted shares of Class A Common Stock and vested options representing the right to purchase 1,635 shares of Class A Common Stock. Does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

11.

For Mr. Aronson, includes 2,650 shares owned by Mr. Aronson’s spouse, 448 restricted shares of Class A Common Stock, and vested options representing the right to purchase 1,635 shares of Class A Common Stock. Does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

12.

For Mr. Bennack, includes 448 restricted shares of Class A Common Stock and vested options representing the right to purchase 1,635 shares of Class A Common Stock. Does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

13.

For Dr. Brown, includes 448 restricted shares of Class A Common Stock and vested options representing the right to purchase 1,635 shares of Class A Common Stock. Does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

14.

For Mr. Fleishman, includes 448 restricted shares of Class A Common Stock and vested options representing the right to purchase 1,635 shares of Class A Common Stock. Does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

15.

For Mr. George, does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

16.

For Mr. Joly includes 448 restricted shares of Class A Common Stock and vested options representing the right to purchase 1,635 shares of Class A Common Stock. Does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

17.

For Ms. Kozlowski, does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

18.

For Ms. McHale, includes 448 restricted shares of Class A Common Stock and vested options representing the right to purchase 1,635 shares of Class A Common Stock. Does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

19.

For Mr. Wright, includes 448 restricted shares of Class A Common Stock and vested options representing the right to purchase 1,635 shares of Class A Common Stock. Does not include 1099.31 unvested RSUs (the underlying shares of our Class A Common Stock for these RSUs will be delivered on August 2, 2019).

20.

According to a Schedule 13G/A filed on February 12, 2019, The Vanguard Group (“Vanguard”), may be deemed the beneficial owner of 6,801,791 shares of Class A Common Stock with the sole power to vote or direct the vote over 65,086 shares of Class A Common Stock and shared power to vote or direct the vote over 10,354 shares of Class A Common Stock, sole dispositive power over 6,726,833 shares of Class A Common Stock and shared dispositive power over 74,958 shares of Class A Common Stock. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 47,498 shares of Class A Common Stock as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 44,453 shares of Class A Common Stock as a result of its serving as investment manager of Australian investment offerings. The address for Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.

21.

According to a Schedule 13G/A filed on February 6, 2019, BlackRock, Inc. (“BlackRock”) may be deemed the beneficial owner of 4,137,377 shares of Class A Common Stock beneficially owned

 

 

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Table of Contents

 

   SECTION 16(A)

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

  by its subsidiaries, BlackRock (Luxembourg) S.A., BlackRock (Netherlands) B.V., BlackRock (Singapore) Limited, BlackRock Advisors (UK) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, Blackrock Asset Management North Asia Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Fund Managers Ltd., BlackRock Institutional Trust Company, N. A., BlackRock International Limited, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Ltd., BlackRock Investment Management, LLC, BlackRock Japan Co., Ltd., and BlackRock Life Limited, with the sole power to vote or direct the vote over 3,555,885 shares of Class A Common Stock and sole dispositive power over 4,137,377 shares of Class A Common Stock. BlackRock’s address is 55 East 52nd Street, New York, New York 10055.
22.

According to a Schedule 13G filed on February 12, 2019, Renaissance Technologies LLC (“Renaissance”) may be deemed the beneficial owner of 3,586,200 shares of Class A Common Stock, including shares beneficially owned by its subsidiary, Renaissance Technologies Holdings Corporation, with sole power to vote or direct the vote of 2,957,669 shares of Class A Common Stock, sole dispositive power over 3,093,249 shares of Class A Common Stock and shared dispositive power over 492,951 shares of Class A Common Stock. Renaissance’s address is 800 Third Avenue, New York, NY 10022.

23.

Includes Andrew Howard Smith, who was appointed as an executive officer, Chief Commercial Officer, effective as of March 31, 2019.

24.

Includes (i) options vested, as of the Record Date or within 60 days thereafter, granted under our 2010 Stock Incentive Plan, representing the right to purchase 279,797 shares of Class A Common Stock and (ii) 3,584 unvested restricted shares of Class A Common Stock granted under our 2010 Stock Incentive Plan. Does not include (i) 535,699.31 unvested performance-based stock

  awards, a portion of which are subject to upward or downward adjustment, (ii) 122,543.41 unvested RSUs, and (iii) 460,884.54 vested RSUs (the underlying shares of our Class A Common Stock for these RSUs will not be delivered to Mr. R. Lauren until his separation of service from the Company or if earlier, upon a change in control), granted under the 1997 Stock Incentive Plan.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

 

Section 16(a) of the Exchange Act requires our directors and executive officers to file initial reports of ownership and reports of changes in ownership of our Class A Common Stock with the SEC and to provide copies of these reports to us. These filing requirements also apply to certain beneficial owners of more than 10 percent of our Class A Common Stock. To our knowledge, based solely on our review of the copies of Section 16(a) reports furnished to us during and with respect to Fiscal 2019 and on written representations from certain reporting persons, all reportable transactions during Fiscal 2019 were reported on a timely basis.

 

 

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Table of Contents

 

   DIRECTOR COMPENSATION

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

DIRECTOR COMPENSATION

 

 

For Fiscal 2019, the compensation for non-employee directors was as follows:

 

   

 

Type of Compensation

 

  

 

Compensation Amount

 

 

Annual retainer for each non-employee director

 

  

 

$80,000

 

 

Additional annual retainer for Lead Independent Director

 

  

 

$50,000

 

 

Additional annual retainer for the Chair of each Board Committee1

  

 

•  Chair of the Audit Committee: $30,000

•  Chair of the Compensation Committee: $30,000

•  Chair of the Nominating Committee: $20,000

•  Chair of the Finance Committee: $20,000

 

 

Annual retainer for member of each Board Committee1

  

 

•  Audit Committee Member: $15,000

•  Compensation Committee Member: $15,000

•  Nominating Committee Member: $10,000

•  Finance Committee Member: $10,000

 

 

Annual equity award2

 

  

 

Target equity value of $140,000, which is delivered in the form of restricted stock units of Class A Common Stock. These restricted stock units vest on the one year anniversary of the grant.

 

 

 

  1.

The annual retainers are paid to the non-employee directors in quarterly installments in arrears.

  2.

The annual equity award to non-employee directors is awarded on the date of the Annual Meeting of Stockholders each year to those non-employee directors who have served as directors for at least half of the preceding fiscal year.

 

 

 

STOCK OWNERSHIP GUIDELINES

Our Board and Compensation Committee believe it is important for our NEOs, key members of our senior management team, and our non-employee directors to build and maintain a long-term ownership position in the Company, to further align their financial interests with those of our stockholders, and to encourage the creation of long-term value. The Compensation Committee has established stock ownership guidelines for our non-employee directors, our NEOs, and select other members of our senior management group. Further details on the guidelines for NEOs and certain members of our senior management group are provided in “Compensation Discussion and Analysis—Executive Stock Ownership Guidelines.”

The current stock ownership guidelines for the non-employee directors are as follows:

 

  Ownership requirement is defined as a multiple of annual cash retainer. The target for directors is set at five times the annual cash retainer.
  There is a hold-and-retain requirement of 50% of net equity proceeds acquired through the vesting of restricted shares and RSUs and the exercise of stock options until the stock ownership target is attained.

 

  In addition to counting shares owned outright by the director or his or her family members, unvested restricted shares and RSUs count toward the achievement of ownership targets.

 

  As of the Record Date, all non-employee directors who served during Fiscal 2019 exceeded their Fiscal 2019 stock ownership target.

We reimburse our non-employee directors for reasonable travel and other related expenses to attend Board and committee meetings and for director education courses. Non-employee directors are also provided with a merchandise discount on most of our products.

 

 

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Table of Contents

 

   DIRECTOR COMPENSATION

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

DIRECTOR COMPENSATION TABLE

The following table provides information concerning the compensation of those individuals who served as our non-employee directors during Fiscal 2019. Directors who are our employees receive no compensation for their services as directors and do not serve on any committees of the Board.

 

               

Name

  

Fees

Earned

or Paid

in Cash 1

($)

    

Stock

Awards 2

($)

    

Option

Awards

($)

    

Non-Equity

Incentive Plan

Compensation

($)

    

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings ($)

    

All Other

Compensation 3

($)

     Total ($)  

 

Angela Ahrendts

 

  

 

 

 

 

60,000

 

 

 

 

  

 

 

 

 

140,000

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

200,000

 

 

 

 

 

John R. Alchin

 

  

 

 

 

 

120,000

 

 

 

 

  

 

 

 

 

186,661

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

4,289

 

 

 

 

  

 

 

 

 

310,950

 

 

 

 

 

Arnold H. Aronson

 

  

 

 

 

 

85,000

 

 

 

 

  

 

 

 

 

186,661

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

4,289

 

 

 

 

  

 

 

 

 

275,950

 

 

 

 

 

Frank A. Bennack, Jr

 

  

 

 

 

 

180,000

 

 

 

 

  

 

 

 

 

186,661

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

4,289

 

 

 

 

  

 

 

 

 

370,950

 

 

 

 

 

Dr. Joyce F. Brown

 

  

 

 

 

 

115,000

 

 

 

 

  

 

 

 

 

186,661

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

4,289

 

 

 

 

  

 

 

 

 

305,950

 

 

 

 

 

Joel L. Fleishman

 

  

 

 

 

 

120,000

 

 

 

 

  

 

 

 

 

186,661

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

4,289

 

 

 

 

  

 

 

 

 

310,950

 

 

 

 

 

Michael George

 

  

 

 

 

 

110,000

 

 

 

 

  

 

 

 

 

140,000

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

250,000

 

 

 

 

 

Hubert Joly

 

  

 

 

 

 

125,000

 

 

 

 

  

 

 

 

 

186,661

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

4,289

 

 

 

 

  

 

 

 

 

315,950

 

 

 

 

 

Linda Findley Kozlowski

 

  

 

 

 

 

72,500

 

 

 

 

  

 

 

 

 

140,000

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

212,500

 

 

 

 

 

Judith A. McHale

 

  

 

 

 

 

110,000

 

 

 

 

  

 

 

 

 

186,661

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

4,289

 

 

 

 

  

 

 

 

 

300,950

 

 

 

 

 

Robert C. Wright

 

  

 

 

 

 

90,000

 

 

 

 

  

 

 

 

 

186,661

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

4,289

 

 

 

 

  

 

 

 

 

280,950

 

 

 

 

 

1.

Reflects the pro-rata amount of fees paid in arrears for Fiscal 2019 per the retainers set forth in the table above based on timing of appointments to the Board or Committees, as applicable.

2.

Beginning in Fiscal 2019, the annual stock-based awards for the non-employee directors transitioned to be granted on the same day as the annual stockholders meeting which was August 2, 2018 in the amount of $140,000, representing the aggregate grant date fair value of the annual grant, made on August 2, 2018, of 1,082 restricted stock units of the Company’s Class A Common Stock, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification topic 718. Prior to Fiscal 2019, the annual date of the grant of the stock-based awards for the non-employee directors was April 1 of each year. For Fiscal 2019 only, the non-employee directors who were active on April 1, 2018 also received a pro-rata equity grant to cover the period from April 1, 2018 to August 2, 2018 in the amount of $46,661 of 418 restricted stock units of the Company’s Class A Common Stock, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification topic 718.

3.

This amount represents deferred cash dividends paid during Fiscal 2019 in connection with the vesting of restricted shares of our Class A Common Stock.

 

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Table of Contents

 

   DIRECTOR COMPENSATION

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

DIRECTOR EQUITY TABLE

At the end of Fiscal 2019, each individual who served as a non-employee director during Fiscal 2019 held options to purchase shares of our Class A Common Stock, restricted shares, and/or restricted stock units of our Class A Common Stock as follows:

 

       
      Options 1      Restricted Stock 2      Restricted Stock Units  3  

 

Angela Ahrendts

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

1,093.96

 

 

 

 

 

John R. Alchin

 

  

 

 

 

 

2,358

 

 

 

 

  

 

 

 

 

1,278

 

 

 

 

  

 

 

 

 

1,518.64

 

 

 

 

 

Arnold H. Aronson

 

  

 

 

 

 

2,358

 

 

 

 

  

 

 

 

 

1,278

 

 

 

 

  

 

 

 

 

1,518.64

 

 

 

 

 

Frank A. Bennack, Jr.

 

  

 

 

 

 

2,358

 

 

 

 

  

 

 

 

 

1,278

 

 

 

 

  

 

 

 

 

1,518.64

 

 

 

 

 

Dr. Joyce F. Brown

 

  

 

 

 

 

2,358

 

 

 

 

  

 

 

 

 

1,278

 

 

 

 

  

 

 

 

 

1,518.64

 

 

 

 

 

Joel L. Fleishman

 

  

 

 

 

 

2,358

 

 

 

 

  

 

 

 

 

1,278

 

 

 

 

  

 

 

 

 

1,518.64

 

 

 

 

 

Michael George

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

1,093.96

 

 

 

 

 

Hubert Joly

 

  

 

 

 

 

2,358

 

 

 

 

  

 

 

 

 

1,278

 

 

 

 

  

 

 

 

 

1,518.64

 

 

 

 

 

Linda Findley Kozlowski

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

1,093.96

 

 

 

 

 

Judith A. McHale

 

  

 

 

 

 

1,635

 

 

 

 

  

 

 

 

 

1,278

 

 

 

 

  

 

 

 

 

1,518.64

 

 

 

 

 

Robert C. Wright

 

  

 

 

 

 

2,358

 

 

 

 

  

 

 

 

 

1,278

 

 

 

 

  

 

 

 

 

1,518.64

 

 

 

 

 

1.

Represents outstanding options granted to non-employee directors on April in each of 2012, 2013, and 2014, each of which vested ratably over a three-year period on the anniversary date of the grant with a seven year life from date of grant. We have not granted options to non-employee directors since April 1, 2014.

2.

Represents unvested Restricted Stock granted to non-employee directors on April 1 in each of 2016 and 2017, each of which vested ratably over a three-year period on the anniversary date of the grant. We have not granted Restricted Stock to non-employee directors since April 1, 2017.

3.

Includes Dividend Equivalent Units (DEUs) that are subject to the same vesting provisions as the underlying restricted stock units and are accrued in the form of additional restricted stock units each quarter and credited to each non-employee director’s holdings.

 

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Table of Contents

 

   COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

COMPENSATION DISCUSSION & ANALYSIS

 

 

NAMED EXECUTIVE OFFICERS

This Compensation Discussion and Analysis (“CD&A”) explains our executive compensation programs as they pertain to the following individuals, all of whom were deemed to be NEOs during Fiscal 2019.

 

     

 

  Name

 

        

 

Title

 

 

  Ralph Lauren

 

       

 

Executive Chairman and Chief Creative Officer

 

 

  Patrice Louvet

 

       

 

President and Chief Executive Officer (“CEO”)

 

 

  Jane Nielsen

 

       

 

Executive Vice President, Chief Operating Officer and Chief Financial Officer (“COO and CFO”)1

 

 

  Valérie Hermann

 

       

 

Brand Group President

 

 

  David Lauren

 

       

 

Chief Innovation Officer, Vice Chairman of the Board, Strategic Advisor to the CEO and Head of the Polo Ralph Lauren Foundation

 

 

1

Effective March 31, 2019, Ms. Nielsen was promoted from Executive Vice President, Chief Financial Officer to Executive Vice President, Chief Operating Officer & Chief Financial Officer.

 

EXECUTIVE SUMMARY

Overview of Performance-based Compensation Programs

The Compensation Committee strongly believes that our compensation practices accomplish the goal of pay-for-performance by rewarding our executives for the achievement of both short-term and long-term financial and strategic performance goals. To align our executives’ compensation with stockholders’ interests, the Compensation Committee has concluded that a majority of our executives’ compensation should be at-risk—in the form of annual cash incentive and long-term equity-based awards.

Compensation Program Philosophy & Objectives

We maintain competitive executive compensation programs designed to reward sustained business growth and results. These programs are intended to drive stockholder value through the following principles:

 

  Attract, motivate, and retain highly qualified and talented employees.

 

  Establish challenging goals balanced between short-term and long-term objectives.
  Directly link pay to achievement of performance goals designed to promote sustained business growth and value creation.

 

  Award a meaningful portion of compensation in variable rather than fixed pay, with a significant portion of variable compensation in the form of long-term equity awards.

 

  Establish short-term and long-term compensation programs that align the compensation of our executives with financial metrics and stockholders’ interests.

 

  Promote collaborative leadership behavior designed to support the achievement of goals in a complex global organization.

 

  Avoid unnecessary or excessive risk-taking that could reward employees at the expense of stockholders.

Pay for Performance: Key Takeaways for Fiscal 2019

In response to stockholder feedback and in order to align with our strategic plan and drive value creation for our stockholders, we changed the performance measures in the Short-Term and Long-Term Incentive Plans.

 

 

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   RALPH LAUREN CORPORATION

 

 

 

Our Fiscal 2019 financial metrics in our short-term bonus plan included:

 

  Corporate Net Income Before Taxes (“NIBT”) —continues to be a key performance measure and is again included in our bonus plan

 

  Corporate Revenue — added as a performance measure to further align with our strategy to elevate and grow our business

 

  Company-Wide Selling, General, and Administrative (“SG&A”) Expenses (Excluding Marketing and Advertising) — added as a performance measure to emphasize the importance of expense management as we strive to work in new ways to drive productivity and agility

 

  Global Digital Revenue — added as our new strategic goal adjustment as motivation to accelerate our sales growth and market share expansion in our digital business

Our Fiscal 2019 financial metrics in our long-term equity plan included:

 

  Three-year Cumulative Return on Invested Capital (“ROIC”) — added as a performance measure to drive efficiencies in our operations; ROIC is defined as Net Income divided by (Inventories + Property & Equipment, Net)

 

  Three-year Relative Total Shareholder Return (“TSR”) — added as a performance measure to support alignment with the long-term interests of our stockholders

We delivered better than expected financial results in Fiscal 2019, resulting in above-target payouts in both our Short-Term and Long-Term Incentive Plans with the following Fiscal 2019 financial results:

 

  NIBT totaled $751.3 million, or 106% of target and $92.8 million greater than last year’s results of $658.5 million

 

  Corporate revenue was $6,313.0 million, or 103% of target and $130.7 million greater than last year’s results of $6,182.3 million

 

  SG&A expenses (excluding marketing and advertising) as a percent of revenue, a new performance metric in Fiscal 2019, was 45.8% which was better than target of 46.2%
  Global digital revenue, a new strategic goal in Fiscal 2019, was $787.7 million, or 106% of target

Company Achievements: Key Takeaways for Fiscal 2019

 

  We successfully delivered on the key objectives in our Next Great Chapter Strategic Plan, including improving average unit retail results, driving brand awareness and appeal and growing global digital revenue, with better than expected financial results

 

  We delivered strong TSR performance of 18.4%

 

  We returned capital to stockholders by increasing the dividend and through share buybacks

Delivered On Our Next Great Chapter Strategic Plan in Fiscal 2019

On June 7, 2018, as part of our Investor Day, we announced our Next Great Chapter Strategic Plan. The Strategic Plan is our multi-year plan intended to position the Company to deliver long-term sustainable growth and value creation. For Fiscal 2019, we delivered on our commitments in the first year of our Strategic Plan with a return to positive revenue growth, a year ahead of our plan, and better than expected operating margin expansion, all while continuing to raise average unit retail and improve quality of sales overall. Results included:

 

  Winning Over a New Generation of Consumers

 

 

Increased marketing investments by 13% to last year, driven by unique and highly impactful brand building campaigns and fashion shows, including our 50th Anniversary Fashion Show, Ralph’s Café immersive fashion experience at Madison Avenue flagship store and ‘Family is Who You Love’ campaign which launched in the fourth quarter

 

 

Elevated our brand and connected with new consumers through our collaboration with UK-based skate brand Palace, Limited Edition launches throughout the year, and new distribution in key specialty retail doors

 

 

Continued to leverage celebrity, social influencers, and cultural events that resonate with different segments of the Ralph Lauren consumer base, including our Ralph Lauren

 

 

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  Romance fragrance campaign featuring Taylor Hill and custom designs for the wedding of Priyanka Chopra and Nick Jonas

 

  Energizing Core Products and Accelerating Under-Developed Categories

 

 

Average unit retail across our direct-to-consumer network was up 8% in Fiscal 2019 driven by our ongoing initiatives to elevate the product assortment and improve quality of sales

 

 

Renewed our core styles and focused on our icons which continue to be key drivers of improving sales trends and leveraging our multi-generational reach

 

 

Continued to build our high-potential under-developed categories, with denim and outerwear sell-out trends accelerating in the Fall/Holiday season, driven by an improved product, merchandising and marketing focus

 

  Driving Targeted Expansion in Our Regions and Channels

 

 

Momentum in Asia continued with 13% revenue growth and 5% increase in retail comparable store sales compared to last year in constant currency in Fiscal 2019, led by over 30% growth in Mainland China

 

 

Europe outperformed our expectations with 6% revenue growth in constant currency, driven by 10% growth in wholesale and improved retail comparable store sales

 

 

Continued to expand our global distribution with 135 new retail stores including over 90

  stores in Asia, and partnered with over 20 new digital pure play retailers globally

 

  Leading with Digital

 

 

Global digital revenue grew 11% compared to last year in constant currency, driven by strength across every region

 

 

Our directly-operated digital flagships in North America and Europe returned to positive growth during the year, supported by improvements in functionality, an enhanced consumer experience, and our quality of sales initiatives

 

 

Expanded our partnerships with key digital wholesale partners across regions

 

  Operating with Discipline to Fuel Growth

 

 

Gross margin was up 90 basis points compared to last year driven by quality of sales

 

 

SG&A expenses, excluding our marketing investment, were below revenue growth in Fiscal 2019

 

 

Launched our shared inventory initiative in North America in the fourth quarter, driving increased efficiency in our direct-to-consumer distribution network and a reduced warehouse footprint

 

 

Delivered strong progress on our long-term strategy to diversify our supply chain across geographies and reduce lead times to six months or less on at least 50% of our product

 

 

Delivered Strong TSR in Fiscal 2019

Our TSR for recent periods, relative to our compensation comparator group detailed on page 51 of the CD&A and the S&P 500, is set forth below. For Fiscal 2019, we generated a strong TSR of 18.4% compared to the -7.8% loss for our compensation comparator group and the 7.3% gain for the S&P 500.

 

       
     

 

1-Year TSR (%)

Fiscal 2019

 

    

 

3-Year TSR (%)

Fiscal 2017 – 2019

 

    

 

5-year TSR (%)

Fiscal 2015 – 2019

 

 

 

Ralph Lauren Corporation

 

  

 

 

 

 

18.4%

 

 

 

 

  

 

 

 

 

42.2%

 

 

 

 

  

 

 

 

 

-10.0%

 

 

 

 

 

Compensation Comparator Group

 

  

 

 

 

 

-7.8%

 

 

 

 

  

 

 

 

 

-6.3%

 

 

 

 

  

 

 

 

 

-15.2%

 

 

 

 

 

S&P 500 Index

 

  

 

 

 

 

7.3%

 

 

 

 

  

 

 

 

 

36.7%

 

 

 

 

  

 

 

 

 

52.6%

 

 

 

 

 

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   COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

Returned Cash to Stockholders

In June 2018, we announced an increase to our quarterly dividend payments from $0.50 per share to $0.625 per share resulting in a new annual dividend of $2.50 per share.

On the same day, we announced that the Company’s Board of Directors authorized an additional $1.0 billion stock repurchase program permitting the Company to purchase shares of Class A Common Stock. During Fiscal 2019, we repurchased approximately 3.8 million shares of our Class A Common Stock utilizing approximately $470 million of our aggregate stock repurchase authorizations of $1.1 billion.

We returned approximately $660 million in cash to stockholders in Fiscal 2019 through dividends and repurchases.

In May 2019, we again increased our quarterly dividend to $0.6875 per share resulting in a new annual dividend of $2.75 per share. We also received authorization from the Board of Directors for an additional $600 million in stock repurchases and we plan to repurchase approximately $600 million of stock in Fiscal 2020.

 

 

How We Connected Pay to Performance for Fiscal 2019

In Fiscal 2019, we delivered better than expected financial results, resulting in above-target payouts in both our Short-Term and Long-Term Incentive Plans as detailed below:

 

 

 

Annual Cash Incentive Bonus:

 

   

 

Performance Measure

 

 

 

Weighting

 

 

 

Performance Results1 as a % of Target

 

 

 

Amount Paid as
a % of Target

 

 

Executive Officer Annual Incentive Plan (EOAIP)

 

 

 

NIBT

 

 

 

60%

 

 

 

106%

 

 

 

153% for Mr. R. Lauren

 

139% for Mr. Louvet2

 

168% for other NEOs2

 

 

Corporate Revenue

 

 

 

20%

 

 

 

103%

 

 

 

Company-wide SG&A as a % of Revenue

 

 

 

20%

 

 

 

101%

 

 

(1)  Includes impact of adjustments, in accordance with adjustment language approved by the Compensation Committee, including restructuring and other charges pursuant to the Strategic Plan. See Appendix B for non-GAAP reconciliations.

(2) Includes impact, if any, of the strategic objective, which can adjust bonus payment by -10% to +10%. For Fiscal 2019, there was a plus 10% adjustment for the strategic goal of global digital revenue as the performance expectation exceeded target level. Any adjustment in annual bonus attributable to the strategic goal is not applicable to Mr. R. Lauren. With the exception of Mr. Louvet, maximum payout for all NEOs is 200% of target. For Mr. Louvet, maximum payout is 150% of target.

 

 

 

Long-term Equity-Based Incentives:

 

   

 

Performance Measure

 

 

 

Performance Period

 

 

 

Performance Results1
as a % of Target

 

 

 

Amount Paid as a % of Target

 

 

Performance Share Units (PSUs)

(applicable to Mr. R. Lauren, Ms. Nielsen, Ms. Hermann, and Mr. D. Lauren)

 

 

 

Cumulative EPS

 

 

 

Fiscal 2017 – Fiscal 2019

 

 

 

108%

 

 

 

138%2

 

 

Additional PSUs (applicable to Ms. Hermann only)

 

 

 

Cumulative EPS

 

 

 

Q3 and Q4 Fiscal 2017–Fiscal 2019

 

 

 

107%

 

 

 

136%3

 

 

 

Performance-based Restricted Stock Units (PRSUs)

(applicable to Mr. Louvet, Ms. Nielsen, Ms. Hermann, and Mr. D. Lauren)

 

 

 

 

ROIC

 

 

 

 

Fiscal 2019

 

 

Exceeded threshold level

 

 

 

100%4

 

 

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(1)

Includes impact of adjustments, in accordance with adjustment language approved by the Compensation Committee, including restructuring and other charges pursuant to the Strategic Plan. See Appendix B for non-GAAP reconciliations.

(2)

Award based on achievement of cumulative three-year EPS goal set at the beginning of the performance period. Target shares were granted in the first year of the three-year performance period.

(3)

Award based on achievement of cumulative two-and-a-half-year EPS goal set at the beginning of the performance period. Target shares were granted in the first year of the performance period.

(4)

Award was payable upon achievement of Fiscal 2019 threshold ROIC results. Actual achievement for this goal was 30.9%, which was above the threshold level. Shares vest on a pro-rata basis over a three-year period, beginning in Fiscal 2019, contingent on continuous service.

Summary of Executive Compensation Governance Practices

We seek to maintain high standards with respect to the governance of our executive compensation programs. Key features of our compensation policies and practices that aim to drive performance and align with stockholder interests are highlighted below:

 

 

 

  Our Compensation Practices (What we do)

 

 

 

 

 

   LOGO

  

 

At-Risk Compensation: Our incentive-based compensation represents a significant portion of our executives’ compensation (90% or more for both our Executive Chairman and Chief Creative Officer and our President and CEO).

 

  

 

 

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Annual Review: We conduct an annual review of our executive compensation program to ensure it rewards executives for performance against clear metrics that align with our strategic plan and stockholder interests, retains top talent, and discourages unnecessary risk taking by our executives.

 

 

 

 

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Stock Ownership Guidelines: We require our NEOs and other select members of our senior management to own a meaningful amount of our Common Stock, worth one to six times their base salary, depending on their positions. Effective Fiscal 2019, the ownership requirement for our NEOs (other than our Executive Chairman and Chief Creative Officer and our President and CEO) increased from two times base salary to three times base salary.

 

  

 

 

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Regular Review of Programs with Top Institutional Investors: We regularly, and at least annually, review our compensation programs with our top institutional investors for their feedback and consideration.

 

 

 

 

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Double Trigger Vesting: We provide for double-trigger vesting following a change-of-control for equity awards for all equity participants.

 

  

 

 

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Regular Review of Share Utilization: We regularly evaluate share utilization levels and review the dilutive impact of stock compensation.

 

 

 

 

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Clawback Policy: Our NEOs are subject to a robust recoupment policy in the event the Company is required to restate its financial statements, providing the right to recoup granted, earned, and vested awards with a look-back period.

 

  

 

 

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Independent Consultant: We work with an independent compensation consultant retained by the Compensation Committee, in its sole discretion, who performs no consulting or other services for the Company’s management.

 

 

 

 

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Incentive Targets: We set targets for performance metrics linked to our financial goals and financial guidance under the Strategic Plan communicated to stockholders. Our executives only receive target payouts when we deliver our financial goals.

 

  

 

 

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Independent Compensation Committee: Our Compensation Committee is composed solely of independent directors

 

        
 

 

  Our Prohibited Compensation Practices (What we don’t do)

 

 

 

 

 

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No Guaranteed Increases: We do not guarantee salary increases or annual incentives for our NEOs.

 

  

 

 

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No Repricing Without Stockholder Approval: We do not reprice or exchange for cash underwater stock options without stockholder approval.

 

 

 

 

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No Hedging or Pledging: We prohibit the hedging or pledging of the Company’s stock by directors, officers, or employees of the Company.

 

  

 

 

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No Discount Grants: We do not provide for grants of any equity below fair market value.

 

 

 

 

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No Resetting of Incentive Targets: We do not reset internal targets used to determine performance-based award payouts once established by the Compensation Committee at the beginning of the performance period.

 

         

 

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   COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

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STOCKHOLDER FEEDBACK AND COMPENSATION COMMITTEE RESPONSE

We are committed to our ongoing stockholder outreach efforts and the input of our stockholders is an important driver of our corporate governance and compensation practices. We actively seek to engage with our stockholders to ensure that we are responsive to their views and priorities in shaping our compensation plan designs and adopting best practices. Periodically, the Compensation Committee receives a report on engagement with our stockholders and the Board receives regular investor feedback from our various analyst meetings.

In Fiscal 2019, we connected meaningfully with our stockholders:

 

  Through our Investor Day held on June 7, 2018 in New York City where we shared our long-term growth and value creation strategy and financial outlook. Afterwards, we continued to engage with stockholders in additional one-on-one and group meetings to provide a forum for them to share their feedback.

 

  Prior to the 2018 Annual Meeting of Stockholders, we contacted our 8 largest stockholders, representing over 40% of our outstanding shares of Class A Common Stock, offering to discuss our compensation and governance practices. The focus of the outreach was to review our compensation programs for Fiscal 2019, discuss the change in our Board of Directors, review our Say-on-Pay vote, and solicit feedback on a variety of corporate governance topics, including executive compensation practices, leadership development, diversity and inclusion, and environmental, social and governance (“ESG”) issues.

 

  During 2018, our management team met with a significant number of stockholders and prospective stockholders globally to discuss our near- and long-term strategy, financial and operating performance, and capital allocation, among other topics. Members of our leadership team also conducted outreach with key stockholders and other stakeholders to discuss our sustainability strategy and initiatives, corporate governance and executive compensation practices and to solicit feedback on these topics.

Through this ongoing outreach, we have received and considered valuable feedback regarding a variety of stockholder-related matters and have adopted a number of significant changes to our compensation program and corporate governance practices. For example:

 

  We enhanced our Nominating & Governance Committee into our Nominating, Governance,
 

Citizenship & Sustainability Committee with an oversight role with respect to corporate citizenship, sustainability and ESG matters which may have an impact on us, as described in more detail on page 30 hereof. Our amended Committee Charter is available on our public Investor Relations website.

 

  We refreshed our Board of Directors by rotating the Chairs of our Committees including the appointment of Michael George as the new Chair of the Compensation Committee. We believe that his experience as an active CEO and Board member of Qurate Retail, Inc., Board member of Brinker International, and Board member of the National Retail Federation has proven valuable to the Company and the Board in his Committee Chair role.

 

  We enhanced our Global Citizenship Report, published in June 2019, to announce our goals and strategies related to our sustainability program.

 

  As discussed below, considering the feedback from our stockholders during our outreach, the Compensation Committee also implemented several key changes to our short-term and long-term incentive programs in Fiscal 2019.

In making executive compensation decisions during Fiscal 2019, the Compensation Committee considered the results of the non-binding, advisory proposal on our executive compensation philosophy, policies, and practices (“Say-on-Pay”) as set forth in our 2018 Proxy Statement. At our 2018 Annual Meeting of Stockholders, we received 90% stockholder support for our executive compensation program. During Fiscal 2019, we have continued to strengthen the alignment of compensation with our strategic priorities and stockholder interests and are committed to adhering to our pay-for-performance philosophy. After considering our Say-on-Pay voting results, investor feedback, alignment of our compensation programs with the long-term interests of our stockholders, and advice from its Compensation Consultant, the Compensation Committee made changes to the short- and long-term executive compensation programs effective Fiscal 2019 as described below. In considering the performance measures, we focused on connecting our compensation metrics to our current business strategy which is focused on long-term, sustainable growth and value creation to ensure our executives are focusing on results that support this strategy. For our long-term awards, we strove for a healthy balance between rewarding our executives for the return provided to the Company while also ensuring a critical link to stockholder returns.

 

 

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   COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

 

 

Changes in Short-Term Incentive Plan Design for Fiscal 2019

 

 

To align with our strategy to return to sustained revenue and earnings growth and to promote sustainable long-term stockholder value, our Fiscal 2019 financial metrics included corporate NIBT, corporate revenue, and company-wide SG&A expenses (excluding marketing and advertising).

 

 

Corporate revenue was added as a performance measure to further align the compensation of our NEOs with the strategy to elevate and grow the brand through evolving our product and marketing and expanding our international and digital presence.

 

 

SG&A expenses (excluding marketing and advertising) was added as a performance measure to re-emphasize the importance of expense management as we strive to work in new ways to drive productivity and agility.

Global digital revenue was also added as our new strategic goal as we continued to drive sales growth and market share in our digital business. Expanding our digital presence globally is one of our key initiatives. As in the past, the strategic goal was applicable to all NEOs excluding Mr. R. Lauren. Performance relative to our strategic goal results in the adjustment of bonuses upwards or downwards by 10% for Fiscal 2019.

 

 

Changes in Long-Term Incentive Plan Design for Fiscal 2019

 

 

Performance Share Units (“PSUs”) are a key component of our long-term equity plan design linking pay with performance and aligning management’s interests with stockholders.

 

 

In order to further align with our long-term business strategy, the performance measures in the Fiscal 2019—Fiscal 2021 PSUs were changed to three-year cumulative ROIC and three–year relative TSR. These metrics do not overlap with those in our Short-Term Incentive Plan and support alignment with the long-term interests of our stockholders.

The comparator group which was used for relative TSR is shown below.

 

Dillard’s, Inc.

  

Capri Holdings Limited (Formerly Michael Kors Holdings Limited)

 

   RH (Restoration Hardware, Inc.)    Under Armour, Inc.

The Gap, Inc.

   Nike, Inc.   

Tapestry, Inc. (Coach/

Kate Spade)

 

   Urban Outfitters, Inc.

L Brands, Inc.

 

  

Nordstrom, Inc.

 

  

The TJX Companies, Inc.

 

  

V.F. Corporation

 

Macy’s, Inc.

 

  

PVH Corp.

 

  

Tiffany & Co.

 

  

Williams-Sonoma, Inc.

 

 

 

Looking Forward to Fiscal 2020

 

 

As we enter the second year of our Strategic Plan, the Fiscal 2020 compensation plan design remains aligned with our strategy to return to high quality, sustainable revenue, and earnings growth, evolve our product and marketing, and expand our digital and international presence. Based on the positive stockholder feedback we received on our Fiscal 2019 plan design changes, the Compensation Committee has determined that the performance measures and plan design for our short-term and long-term incentive plans for Fiscal 2020 will remain consistent with Fiscal 2019 as summarized below.

 

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The Fiscal 2020 financial metrics for our short-term incentive plan will include corporate NIBT corporate revenue, and company-wide SG&A expenses (excluding marketing and advertising). Global digital revenue will continue to be the strategic goal. Performance relative to our strategic goal results in the adjustment of bonuses upwards or downwards by 10% for Fiscal 2020.

The performance measures in the Fiscal 2020—Fiscal 2022 PSUs will be three-year cumulative ROIC and three–year relative TSR. These metrics do not overlap with those in our Short-Term Incentive Plan and support alignment with the long-term interests of our stockholders.

The comparator group which will be used for relative TSR includes retail peers, certain department stores, and other well branded companies and is the same comparator group as for Fiscal 2019.

Effective March 31, 2019, Ms. Nielsen was promoted from Executive Vice President, Chief Financial Officer to Executive Vice President, Chief Operating Officer and Chief Financial Officer. This appointment was made in support of Ms. Nielsen’s role in our Strategic Plan to drive sustainable, long-term growth and value creation. We entered into a new employment agreement with Ms. Nielsen effective March 31, 2019 with an increased compensation arrangement commensurate with her new appointment. See “Executive Employment Agreements and Compensatory Arrangements,” below for a more detailed description of the payments and benefits provided under Ms. Nielsen’s new employment agreement.

 

EXECUTIVE COMPENSATION GOVERNANCE

Compensation Goalsetting

We are a high performing organization and our practice is to set challenging goals for our annual and long-term incentive compensation. The financial goals set for our Fiscal 2019 executive compensation plans align with and support our Strategic Plan as we continue to focus on winning over a new generation of customers, energizing core products and accelerating under-developed categories, driving targeted expansion in our regions and channels, leading with digital, and operating with discipline to fuel growth. Senior management establishes overall parameters for growth and profitability after assessing our business opportunities and risks given the global consumer and retail landscape. The Strategic Plan is further refined to reflect input from our business units. Our Board of Directors oversees the strategic planning process and approves the final plan, ensuring that the assumptions are thoroughly reviewed. The Strategic Plan is subject to further review and approval by the Audit Committee of the Board.

Our incentive plan targets are set at levels that align with the approved Strategic Plan and the financial guidance we provide to investors. At the time the financial goals are established, the Compensation

Committee, in consultation with its independent compensation consultant, considers a variety of qualitative and quantitative factors, including the financial impact of incentive payouts above and below target before establishing minimum and maximum financial goals and the corresponding payout levels for incentives.

Determination of Compensation for Executives

 

  Market Data. We organize our business into the following three reportable segments: North America, Europe, and Asia. Our primary products include apparel for men, women and children, footwear, accessories, home furnishings and fragrance. As a result, we believe our product breadth, multichannel distribution, and global reach are unique among luxury and apparel companies.

Accordingly, while the Compensation Committee considers, among other things, competitive market compensation paid by other companies in our industry in establishing compensation programs, the Compensation Committee does not set executive compensation at, or near, any particular target percentile within a peer group. Instead, the Committee uses compensation market data across multiple comparator groups as a consideration in setting our executive compensation levels.

 

 

 

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  Other Considerations. In addition to market data, the Compensation Committee considers several other factors in determining executive compensation levels, including internal pay equity, nature and scope of responsibility, an employee’s current performance and expected future contributions, succession planning considerations relative to development and retention, and our performance, financial plans and budget. In order to succeed in the execution of our Strategic Plan, we will require the ability to attract and retain high level executive talent.

Role of the Compensation Committee

In addition to its responsibilities to, among other things, review and administer our compensation plans and to maintain oversight of the development of succession plans for certain key executive positions within our senior management, the Compensation Committee is responsible for reviewing and approving the employment agreements, as applicable, for each of our NEOs, which include their salary, bonus and certain other compensation components. In determining the long-term incentive component of the compensation for each of our NEOs pursuant to each of their employment agreements, as applicable, the Compensation Committee considered, among such other factors as it deemed relevant, our performance, long-term stockholder returns, the value of similar incentive awards to executive officers at comparable companies and the awards given to each of our NEOs

in past years. As noted above under “Executive Compensation Governance—Determination of Compensation for Executives—Market Data,” while the Compensation Committee considers market information, the Compensation Committee believes that considerations unique to our Company have a greater impact in setting executive compensation. On an annual basis, the Compensation Committee also reviews and approves the corporate performance goals and objectives relevant to the compensation payable to our NEOs. Subject to previously approved applicable obligations in an employment agreement, the Compensation Committee also reviews and approves, on an annual basis, the compensation of key members of our senior management, and reviews and approves the corporate performance goals and objectives relevant to the compensation payable to each of them. In addition, the Compensation Committee regularly reviews the design and structure of our executive compensation programs to ensure that management’s interests are closely aligned with stockholders’ interests and that the compensation programs are designed to further our strategic priorities, including our fair treatment and diversity and inclusion efforts.

The Compensation Committee is also responsible for gathering and reviewing data, and making recommendations to the Nominating Committee, regarding the appropriate level of non-employee director compensation. The Nominating Committee then recommends non-employee director compensation to the Board.

 

 

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   COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

Determining Compensation for Mr. R. Lauren, our Executive Chairman and Chief Creative Officer. The Compensation Committee, in consultation with its independent compensation consultant and independent outside counsel, determined the compensation structure under Mr. R. Lauren’s employment agreement, effective as of the beginning of Fiscal 2018. Mr. R. Lauren serves as both Chief Creative Officer and Executive Chairman. These factors were taken into account with respect to setting Mr. R. Lauren’s compensation opportunity during Fiscal 2018, which did not change in Fiscal 2019, and the terms set forth in his employment agreement.

This role is unique, and Mr. R. Lauren’s compensation package is based on several factors including:

 

       

 

 

Celebrated Achievements

 

  

 

 

Strategic Vision

 

  

 

 

Chief Creative Officer

 

  

 

 

Executive Chairman

 

Mr. R. Lauren’s unique, critical role as Chief Creative Officer brings to us his extraordinary and rare talent that is unrivaled by others in our industry. His career has resulted in numerous tributes for his contributions to the fashion industry, including the Council of Fashion Designers of America’s four highest honors:

   The Lifetime Achievement Award;

   the Womenswear Designer of the Year Award;

   the Menswear Designer of the Year Award; and

   the Retailer of the Year Award.

 

In Fiscal 2019, we celebrated our Company’s 50th anniversary with an iconic runway show and tributes to Mr. R. Lauren to mark this monumental occasion in fashion history. We believe these events generated significant volume of total media impressions and advertising costs equivalent media value for the Ralph Lauren brand.

 

   Mr. R. Lauren not only drives the vision and strategy of a unique, complex, global organization with distribution channels in multiple product categories and countries, but he is also the founder, creator and name behind our brands for over 50 years and the value of the impact of his leadership to the creative talent of the organization is very significant.    As the chief designer, Mr. R. Lauren’s compensation package is also based on the Company’s review of the compensation of other Chief Creative Officers. The Compensation Committee believes that Mr. R. Lauren’s leadership, aesthetic vision, direction and the public’s association of his name and likeness with our branded products are unparalleled and integral components of our success, and that his contributions to our longstanding, consistent achievement over five decades have been, and continue to be, instrumental in creating long-term stockholder value.    As Executive Chairman of the Board, Mr. R. Lauren works with the President and Chief Executive Officer to set overall vision, strategy, financial objectives, and investment priorities for the business. Mr. R. Lauren also continues to mentor our design team and provide guidance in areas that are important to the Company, including growth in new business categories, creative talent, advertising, and marketing.

 

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   COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

   RALPH LAUREN CORPORATION

 

 

 

 

Determining Compensation for Mr. Louvet, our President and Chief Executive Officer. In Fiscal 2018, the Company entered into an employment agreement with Mr. Louvet, who joined the Company as President and CEO in July 2017. In determining the compensation for Mr. Louvet, the Compensation Committee, in consultation with its independent compensation consultant and independent outside counsel, also considered, among other things, Mr. Louvet’s strong global brand leadership experience, prior compensation, achievements at his former employer, the Company’s internal pay equity and his expected future contributions in his role with us.

Determining Compensation for our Other NEOs. In determining the compensation of our other NEOs, the Compensation Committee considered the impact, scope of responsibility and leadership structure required to support the ongoing global transformation and long-term growth of our business in an increasingly complex global environment.

Role of the Compensation Consultants

We engage our compensation consultants to assist in reviewing our overall compensation strategy and total compensation package and to provide input on the competitive market for executive talent, evolving executive and director compensation market practices, program design and regulatory compliance. The Compensation Committee retains an independent compensation consulting firm, Steven Hall & Partners (“SHP”), to provide guidance in connection with the development and evaluation of compensation philosophy, policies and practices and significant executive compensation decisions. The Compensation Committee has the sole authority to retain and terminate the independent compensation consulting firm and approve the firm’s fees and other retention terms. SHP does not provide other services to the Company or the Company’s management.

In Fiscal 2019, the Compensation Committee engaged SHP to provide such independent advisory services, which is discussed in the “Executive Employment Agreements and Compensatory Arrangements” section. The Compensation Committee meets with SHP regularly and as needed, in the Compensation

Committee’s sole discretion and the consultant assists the Committee by:

 

  attending Committee meetings;

 

  meeting with the Committee without management present;

 

  providing third-party data, advice and expertise on proposed executive compensation and awards and plan designs;

 

  reviewing briefing materials prepared by management and outside advisers and advising the Committee on the matters included in these materials, including the consistency of proposals with the Committee’s compensation philosophy and comparisons to programs at other companies; and

 

  preparing its own analysis of compensation matters, including positioning of programs in the competitive market and the design of plans consistent with the Committee’s compensation philosophy.

In addition to the above, SHP consults with the Compensation Committee on the non-employee director compensation programs.

Separate from the Compensation Committee’s consultant, during Fiscal 2019, our Company’s management continued to retain the services of Compensation Advisory Partners, LLC (“CAP”), as its compensation consultant. CAP’s role is to assist management in the development and analysis of executive compensation matters.

Employment Agreements

In general, we have a longstanding practice of entering into employment agreements with our executive officers and select members of senior management. We believe that employment agreements provide greater assurance of continuity and retention of critical creative and operating talent in a highly competitive industry. All of our NEOs have employment agreements other than Mr. D. Lauren. Employment agreements for our NEOs were reviewed and approved by the Compensation Committee, and in consultation with its independent compensation consultant and the Committee’s independently retained legal advisors

 

 

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whenever requested, and reviewed and approved with Mr. R. Lauren and Mr. Louvet or his predecessor with respect to our other NEOs. The terms of Mr. D. Lauren’s compensation arrangement were determined based on his role in the organization and were also reviewed and approved by the Compensation Committee.

The guidelines for salary, bonus, and certain other compensation components for each NEO with an employment agreement are set forth in his or her respective employment agreement. The agreements also provide for certain benefits, including those in the event of various termination or change in control situations. We believe that providing for certain benefits in change in control situations enhances the value of the business by preserving the continuity of management during these potential situations and by focusing our senior executives on our long-term

priorities. Effective March 31, 2019, Ms. Nielsen was promoted from Executive Vice President, Chief Financial Officer to Executive Vice President, Chief Operating Officer and Chief Financial Officer. This appointment was made in support of Ms. Nielsen’s role in our Strategic Plan to drive sustainable, long-term growth and value creation. We entered into a new employment agreement with Ms. Nielsen effective March 31, 2019 with an increased compensation arrangement commensurate with her new appointment.

See “Executive Employment Agreements and Compensatory Arrangements,” “Summary Compensation Table” and “Potential Payments Upon Termination or Change in Control” below for a more detailed description of the payments and benefits provided under each NEO’s employment agreement and other compensatory arrangements.

 

 

 

KEY COMPONENTS OF EXECUTIVE COMPENSATION

The principal elements of our senior executive compensation programs are summarized in the following table and described in more detail below.

 

     

Compensation Element

 

  

Performance-Based  

 

  

Objective

 

Base Salary        

Provide a competitive, fixed level of cash compensation to attract and retain talented and skilled employees.

 

Annual Cash Incentive Awards   

 

R

  

Motivate and reward employees to achieve or exceed our current-year financial goals with variable cash compensation earned based on achieving pre-established annual goals.

 

Long-Term Equity-Based

Incentive Awards

  

 

R

  

Align an employee’s interest with that of our stockholders and encourage executive decision-making that maximizes value creation over the long-term with variable equity compensation earned based on achieving pre-established long-term goals and retention of key talent.

 

 

 

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Overview of Performance-based Compensation Programs

The charts below show the components and allocation of the at-risk elements that comprised the target total direct compensation for our NEOs in Fiscal 2019.

 

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Compensation Element: Base Salary

We pay base salaries to attract and retain talented executives and to provide a fixed base of cash compensation. Base salaries for each of our NEOs are determined and approved by the Compensation Committee. In general, base salaries may be reviewed periodically by the Compensation Committee and are provided in each NEO’s employment agreement, other than for Mr. D. Lauren, who does not have an employment agreement.

Fiscal 2019: Base Salary

As of the end of Fiscal 2019, the annual base salaries for our NEOs remain unchanged from Fiscal 2018 and were as follows:

 

       

Name / Title

  

Fiscal 2018

Base Salary ($)

    

Fiscal 2019

Base Salary ($)

    

% Increase

 

Ralph Lauren

Executive Chairman and Chief Creative Officer

 

     1,750,000        1,750,000        0%  

Patrice Louvet

President and CEO

 

     1,250,000        1,250,000        0%  

Jane Nielsen

COO and CFO

 

     990,000        990,000        0%  

Valérie Hermann

Brand Group President

 

     1,050,000        1,050,000        0%  

David Lauren

Chief Innovation Officer, Vice Chairman of the Board, Strategic

Advisor to the CEO and Head of the Polo Ralph Lauren Foundation

 

     850,000        850,000        0%  

Compensation Element: Annual Cash Incentive Awards

In Fiscal 2019, all of our NEOs participated in the EOAIP, a stockholder-approved, short-term cash incentive bonus plan, in which the Compensation Committee determines the eligible EOAIP participants from among our executive officers. The EOAIP is designed to promote strong executive decision-making and achievement that supports the realization of significant overall Company financial goals. Key features of the EOAIP are as follows:

 

   
Payouts  

Payouts are based on different levels of achievement, which include threshold, target, stretch and maximum levels, established by the Compensation Committee each year.

 

 

In Fiscal 2019, the Compensation Committee determined that the following performance levels were applicable to EOAIP participants:

 

 

 

Threshold  

  

 

The minimum level of performance that is required before the bonus plan pays out at 50% of the target level for each performance measure.

 

 

 

Target

 

  

 

100% achievement of financial goals.

 

 

 

Stretch

  

 

Achievement of above target financial goals. Stretch payout is 150% of target bonus levels set for all NEOs with the exception of Mr. Louvet whose stretch payout is set at 125% of his target bonus.

 

    Maximum   

Achievement at a superior level of performance. Maximum payout is 200% of target bonus levels set for all NEOs with the exception of Mr. Louvet whose maximum payout is set at 150% of his target bonus.

 

 

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Compensation Committee Process and
Authority
 

Process: Each year, we engage in an extensive and deliberate process to establish our financial budget, performance measures and performance targets which are subject to Compensation Committee approval, in consultation with its independent consultant. At the end of the fiscal year, the following approval process takes place:

 

•  After our independent auditors issue their audit opinion for the completed fiscal year, the Compensation Committee determines the extent to which, if at all, financial performance has been achieved against pre-established targets;

 

•  Based upon the degree of achievement, the Compensation Committee approves the annual cash incentive bonuses payable to each NEO under the EOAIP, as applicable; and

 

•  The Compensation Committee believes that the performance of each of our NEOs is represented by the Company’s financial results and thus, discretionary individual performance is not considered in determining their bonuses.

 

Authority: The Compensation Committee has the authority to:

 

•  Determine the eligible EOAIP participants from among our executive officers;

 

•  Establish the financial performance goals at the beginning of the fiscal year (from the list of performance measures previously approved by stockholders) and payout schedules, including any adjustments;

 

•  Omit, among other things, the effect of unbudgeted items that are unusual in nature or infrequently occurring, any gain or loss on the disposal of a business segment, other unusual items or infrequently occurring events and transactions and cumulative effects of changes in accounting principles;

 

•  Establish the required achievement levels against pre-determined performance goals under the EOAIP; and

 

•  Exercise discretion to reduce or eliminate, but not increase, the bonus amounts payable under the EOAIP.

 

Annual Cash Incentive Awards – Fiscal 2019

Fiscal 2019 Corporate Performance Measures. For Fiscal 2019, under the EOAIP, the corporate performance measures selected were NIBT, corporate revenue, and SG&A expenses (excluding marketing and advertising). The Compensation Committee believes that these measures are aligned with stockholders’ interests, promote sustainable long-term stockholder value, and are aligned to the objectives of our Strategic Plan. The Fiscal 2019 financial targets were set at a level that would require a challenging level of performance and were aligned to support the financial guidance set forth in the Fiscal 2019 Strategic Plan communicated to stockholders. As part of our rigorous goalsetting process, in order to achieve target bonus payout for NIBT component, the Fiscal 2019 NIBT target was set higher than the Fiscal 2018 target and Fiscal 2018 actual results.

Once set by the Compensation Committee at the beginning of each fiscal year, the financial targets cannot be reset.

Global Digital Revenue as Additional Strategic Financial Goal with Potential 10% Adjustment upwards or downwards to Bonus. Each of the NEOs, except for

Mr. R. Lauren, may have their respective bonuses adjusted (upwards or downwards by 10%) based upon the degree of achievement of a previously established additional strategic financial goal. For Fiscal 2019, global digital revenue was selected by the Compensation Committee as the strategic financial goal to emphasize the importance of driving sales growth and market share in our digital business. The Fiscal 2019 target for global digital revenue was $744.6 million. Our results were above our target and also above a pre-established threshold which resulted in a plus 10% adjustment for the strategic goal. The bonus payment for Mr. R. Lauren is based solely on actual financial performance against the Company’s overall performance measures, as selected by the Compensation Committee for the applicable fiscal year and is not adjusted based on performance against any additional strategic financial goal.

Bonus Payouts for Fiscal 2019. Each of our NEOs was eligible for a bonus in Fiscal 2019 when we reached threshold performance of the full year performance measures targets. The Company progressed well against its Strategic Plan initiatives and goals and delivered better than expected financial results which were above the pre-established targets and resulted in payment of bonuses greater than target to our NEOs.

 

 

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The following table outlines our Fiscal 2019 EOAIP target goals compared to Fiscal 2018, and actual performance as measured against those goals.

 

             

Performance
Period

 

  

Performance Measure

 

       

Target Goal
($ millions except 
SG&A)