DEF 14A 1 hanes3339501-def14a.htm DEFINITIVE PROXY STATEMENT

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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 (Amendment No. )

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 Under Rule 14a-12

Hanesbrands Inc.

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
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Table of Contents

Notice of the 2018 Annual Meeting
of Stockholders and Proxy Statement


                                                                                                            
          




Tuesday, April 24, 2018 – 2:15pm EDT

Hanesbrands Inc.
1000 East Hanes Mill Road
Winston-Salem, NC 27105



Table of Contents

 
 Message From Our Chairman and
 Our Chief Executive Officer

Dear Fellow Stockholders:

In 2017, Hanesbrands achieved net sales growth of seven percent and record operating cash flow of $656 million. Our strong balance sheet and cash flow continue to support our value-creating business model of innovation, supply chain leverage and strategic acquisitions. Over the past three years, we have generated nearly $1.5 billion in operating cash flow, invested in our brands, made numerous acquisitions and returned nearly $1.7 billion to our stockholders through dividends and share repurchases. We remain in a solid position to create further value for our stockholders in 2018 and beyond.

At Hanesbrands, we strive to work hard and compete aggressively, but always do the right thing. We are protective of our strong reputation for corporate citizenship and social responsibility, and proud of our significant achievements in the areas of environmental stewardship, workplace quality and community building around the world. We call our corporate social responsibility program Hanes for Good – that’s because adhering to responsible and sustainable business practices is good for our company, good for our employees, good for our communities and good for our stockholders. We invite you to learn more about our Hanes for Good corporate responsibility initiatives at www.HanesforGood.com.

We also take pride in our commitment to responsible corporate governance. Our Board is composed of a group of industry leading experts with diverse ethnicities, genders, experiences and backgrounds who work with management to drive long-term, sustainable performance and create value for our stockholders. Our directors engage in the Company’s strategic planning and provide independent guidance and oversight on the economic, operational and legal risks that we face.

Our 2018 Annual Meeting of Stockholders will be held on Tuesday, April 24, 2018, at 2:15 p.m., at the Company’s headquarters, located at 1000 East Hanes Mill Road, Winston-Salem, NC 27105. This proxy statement will serve as your guide to the business to be conducted at the annual meeting. We invite you to attend, and ask you to please vote at your earliest convenience whether or not you plan to attend. Your vote is important.

We appreciate your confidence and continued support of Hanesbrands.

Sincerely yours,

RICHARD A. NOLL
Chairman of the Board of Directors

GERALD W. EVANS, JR.
Chief Executive Officer


HANESBRANDS INC.     1


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Proxy Summary

Item 1.  
                       

Election of Directors

✓ The Board of Directors recommends a vote FOR the ten director nominees named below

>> See page 10 for further information about our director nominees

Director Nominees

Hanesbrands
Committees
Name       Occupation       Age       Director
since
      Independent       Other current directorships       A       C       G&N
Gerald W. Evans, Jr. Chief Executive Officer of Hanesbrands Inc. 58 2016 NO
Bobby J. Griffin Former President, International Operations of Ryder System, Inc. 69 2006 YES
United Rentals, Inc.
WESCO International, Inc.
Atlas Air Worldwide Holdings, Inc.
M M
James C. Johnson Former General Counsel of Loop Capital Markets LLC 65 2006 YES
Ameren Corporation
Energizer Holdings, Inc.
Edgewell Personal Care Company
M C
Jessica T. Mathews Distinguished Fellow, Carnegie Endowment for International Peace 71 2006 YES
SomaLogic, Inc.
M
Franck J. Moison Vice Chairman of the Colgate-Palmolive Company 64 2015 YES
United Parcel Service, Inc.
M
Robert F. Moran Chairman of the Board of Directors of GNC Holdings, Inc. 67 2013 YES
GNC Holdings, Inc.
C
Ronald L. Nelson* Executive Chairman of Avis Budget Group, Inc. 65 2008 YES
Avis Budget Group, Inc.
Convergys Corporation
Viacom Inc.
M M
Richard A. Noll Chairman of the Board of Directors and former Chief Executive Officer of Hanesbrands Inc. 60 2005 NO
David V. Singer Former Chief Executive Officer of Snyder’s-Lance, Inc. 62 2014 YES
Brunswick Corporation
Flowers Foods, Inc.
SPX FLOW, Inc.
M
Ann E. Ziegler Former Chief Financial Officer of CDW Corporation 59 2008 YES
Groupon, Inc.
Wolters Kluwer N.V.
US Foods Holding Corp.
C M

A: Audit *: Lead Director
C: Compensation C: Chair
G&N: Governance & Nominating M: Member

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Proxy Summary
Director Nominee Age Director Nominee Tenure

Director Nominee Skills and Qualifications

Chief Executive Officer Experience
Corporate Governance Experience
Corporate Management Experience
Financial Literacy
Industry Experience
International Business Experience
Chief Financial Officer Experience
Extensive Knowledge of the Company’s Business

Corporate Governance Highlights

The majority of director nominees are independent (8 of 10)

Annual election of directors

Majority voting for directors

Strong Lead Director

Board oversight of risk management

Succession planning for CEO and key members of senior management

Annual, robust Board and committee self-evaluation process

Executive and director stock ownership guidelines

Mandatory one-year holding period of stock following vesting of equity awards for executives

Hedging and pledging of company stock is prohibited


Item 2.

To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm

✓ The Board of Directors recommends a vote FOR this item

We are asking you to ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as our independent auditor for our 2018 financial year.

>> See page 26 for further information about our independent auditors


HANESBRANDS INC.     3


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Proxy Summary

Item 3.

To approve, on an advisory basis, executive compensation as disclosed in the proxy statement for our 2018 Annual Meeting

✓ The Board of Directors recommends a vote FOR this item

Hanesbrands’ stockholders have the opportunity to cast a non-binding, advisory “say on pay” vote on our named executive officer compensation, as disclosed in this proxy statement. We ask for your approval of the compensation of our named executive officers. Before considering this proposal, please read our Compensation Discussion and Analysis, which explains our executive compensation programs and the Compensation Committee’s compensation decisions.

>> See page 29 for further information about our executive compensation program


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Proxy Summary

COMPENSATION HIGHLIGHTS

Business Strategies and Priorities
Hanesbrands is a socially responsible leading marketer of everyday basic innerwear and activewear apparel in the Americas, Europe, Australia and Asia-Pacific under some of the world’s strongest apparel brands, including Hanes, Champion, Bonds, Maidenform, DIM, Bali, Playtex, JMS/Just My Size, Nur Die/Nur Der, L’eggs, Lovable, Wonderbra, Berlei, Gear for Sports and Alternative. We have a long history of innovation, product excellence and brand recognition, and we take great pride in our reputation for ethical business practices and the success of our Hanes for Good corporate responsibility program for community and environmental improvement.

Over the past decade, we have refined and strengthened our multi-faceted business model by implementing various strategies based on the underlying premise of Sell More, Spend Less and Generate Cash. These strategies include the globalization of our supply chain, our revenue and margin-enhancing Innovate-to-Elevate strategy and the implementation of a disciplined acquisition and capital allocation strategy.

These strategies have been extremely successful in driving solid financial results and setting the stage for future growth. Our strong cash flow will allow us to continue to pursue strategic acquisitions and investment that we believe will drive long-term stockholder returns. Our disciplined acquisition strategy is delivering incremental benefits to our stockholders not only through cost-saving synergies, but also through revenue diversification and organic growth opportunities. We are preparing for future growth through a number of strategic initiatives, including: (1) increased investment in our global portfolio of leading brands, including brand building and marketing support; (2) accelerated development of our global omnichannel capabilities, including online in the U.S. as well as online and retail in our international markets; (3) continued focus on strategic acquisitions that complement our current brands and provide revenue diversification both by channel and internationally; (4) further leveraging of our supply chain capabilities; and (5) expansion of our Champion brand globally.

2017 Performance Highlights
During 2017, we continued to deliver on our key strategic priorities in a challenging and highly competitive global environment. Key financial and strategic highlights included:

Record net sales of $6.47 billion, with sales in the global online channel increasing by 22 percent;
Greater geographic diversity with record International segment sales of $2.1 billion, or 32 percent of total sales;
The acquisition of Alternative Apparel and its Alternative lifestyle brand known for its social responsibility and better basic T-shirts and fleece; and
Expansion across brands and geographies of our FreshIQ, X-Temp and ComfortFlex Fit innovation platforms.

Executive Compensation Philosophy and Framework
At Hanesbrands, we emphasize a “pay-for-performance” culture, linking a substantial percentage of an executive’s compensation to our performance and stockholders’ value growth. Specifically:

To motivate our executive officers and align their interests with those of our stockholders, we provide annual incentives designed to reward our executive officers for the attainment of short-term goals and long-term incentives designed to reward them for increasing stockholder value over time.
Performance-based and at-risk compensation represents nearly 75% of our named executive officers’ total target direct compensation.
In keeping with our pay for performance philosophy, we expect our executive officers to deliver overall results that exceed the target level of performance in order to receive above median market compensation. Performance below the target level of performance may result in below median market compensation.
Our compensation program is designed to reward exceptional and sustained performance. By combining a three-year vesting period for equity awards with a mandatory one-year holding period following vesting (and policies prohibiting hedging or pledging of such shares), a substantial portion of the value of our executives’ compensation package is tied to changes in our stock price, and therefore at-risk, for a significant period of time. The Compensation Committee believes this design provides an effective way to link executive compensation to long-term stockholder returns.

HANESBRANDS INC.  |  5


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Proxy Summary

Elements of 2017 Compensation
Our named executive officers’ compensation for 2017 consisted principally of the following elements:

Base Salary
Fixed compensation component
Reflects the individual responsibilities, performance and experience of each named executive officer
Provides a fixed base of cash compensation for fulfillment of fundamental job responsibilities
Annual Incentive Plan
(“AIP”) Awards
Performance-based cash compensation
Payout determined based on Company performance against pre-established metrics
Motivates performance by linking compensation to the achievement of key objectives that contribute to accomplishing consistent and strategic annual results
Long-Term
Incentive
Program
(“LTIP”) Awards
Performance-based and at-risk, time-vested compensation
Performance Share Awards (“PSAs”) (50% of LTIP opportunity)
Vesting on third anniversary of grant date
Number of shares received will range from 0% to 200% of the number of units granted based on 2017 Company performance against pre-established metrics
Restricted Stock Unit Awards (“RSUs”) (50% of LTIP opportunity)
Ratable vesting over a three-year service period
Mandatory one-year holding period following vesting for all LTIP awards
Encourages behavior that enhances the long-term growth, profitability and financial success of the Company, aligns executives’ interests with our stockholders and supports retention objectives

Executive Compensation Mix
Our emphasis on performance-based and at-risk pay is reflected in the following chart, which illustrates the 2017 total target direct compensation mix for our Chief Executive Officer and our other named executive officers (“NEOs”).

2017 Total Target Direct Compensation  
  
Performance-Based and At-Risk Performance-Based and At-Risk
Compensation: 87.00% Compensation: 74.90%

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  Proxy Summary

2017 Performance Criteria
The Compensation Committee chose to use net sales growth, diluted earnings per share from continuing operations, excluding actions (“EPS-XA”) growth, and cash flow from operations as performance criteria for our named executive officers’ 2017 performance-based pay opportunities, as follows:

2017 Executive Compensation
Summary of Compensation
The following table sets forth a summary of compensation earned by or paid to our named executive officers for our 2017, 2016 and 2015 fiscal years.

Name and Principal Position Year Salary
($)
Bonus
($)
Stock
Awards
($)
 Non-Equity
Incentive Plan
Compensation
($)
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
Total
Compensation
($)
Gerald W. Evans, Jr.
Chief Executive Officer
2017 $1,100,000 $— $6,250,014 $1,889,250 $164,848 $177,874 $9,581,985
2016 912,500 6,543,769 1,394,190 132,718 206,366 9,189,543
2015 750,000 2,450,002 900,000 8,612 190,895 4,299,509
Barry A. Hytinen
Chief Financial Officer
2017 127,693 250,000 2,200,017 124,277 42,824 2,744,812
Richard D. Moss
Former Chief Financial
Officer
2017 625,000 715,625 92,305 1,432,930
2016 575,000 1,600,018 763,485 323,735 3,262,238
2015 575,000 1,450,008 690,000 157,830 2,872,838
W. Howard Upchurch
Group President,
Innerwear Americas
2017 570,000 1,302,001 489,488 51,457 65,043 2,477,988
2016 525,000 1,201,980 592,531 29,398 103,155 2,452,064
2015 525,000 924,972 535,500 111,184 2,096,656
Joia M. Johnson
Chief Administrative
Officer, General Counsel
and Corporate Secretary
2017 550,000 1,181,999 535,288 67,358 2,334,644
2016 515,000 1,082,012 581,245 278,966 2,457,223
2015 515,000 960,007 525,300 120,248 2,120,556
Michael E. Faircloth
President, Chief Global
Supply Chain and
Information Technology
Officer
2017 540,000 1,205,002 463,725 22,927 60,987 2,292,641
2016

510,000 1,105,012 507,884 13,083 85,673 2,221,651
               

>> Please see page 47 for further explanation and detail


HANESBRANDS INC.     7


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Table of Contents

PROXY SUMMARY 2
NOTICE OF THE 2018 ANNUAL MEETING OF STOCKHOLDERS 9
CORPORATE GOVERNANCE AT HANESBRANDS 10
PROPOSAL 1 — ELECTION OF DIRECTORS 10
Nominees for Election as Directors for a One-Year Term Expiring in 2019 12
How We Select our Directors 17
The Board’s Role and Responsibilities 18
Board Structure and Processes 19
Director Compensation 23
Other Governance Information 25
AUDIT INFORMATION 26
PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
26
Audit Committee Report 27
Relationship with Independent Registered Public Accounting Firm 28
PROPOSAL 3 — ADVISORY VOTE TO APPROVE EXECUTIVE
COMPENSATION
29
COMPENSATION DISCUSSION AND ANALYSIS 30
Compensation Highlights 30
Compensation Committee Report 34
Overview 35
Executive Compensation 47
CEO PAY RATIO 57
OWNERSHIP OF OUR STOCK 58
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
AND VOTING
60
OTHER INFORMATION 63
Other Information About Hanesbrands 63
Matters Raised at the Annual Meeting not Included in this Proxy Statement 63
Solicitation Costs 63
Householding 63
Stockholder Proposals and Director Nominations for Next Annual Meeting 64
APPENDIX A 65

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Notice of the 2018 Annual Meeting of Stockholders

 

WHEN:
Tuesday, April 24, 2018
2:15 p.m., Eastern time

 
 

WHERE:
Hanesbrands Inc.
1000 East Hanes Mill Road
Winston-Salem, NC 27105

 

PURPOSE:

   
     1.   to elect ten directors to serve on the Hanesbrands Board of Directors until Hanesbrands’ next annual meeting of stockholders and until their successors are duly elected and qualify;   
 
2. to vote on a proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our 2018 fiscal year;
 
3. to vote on a proposal to approve, on an advisory basis, executive compensation as disclosed in the proxy statement for our 2018 Annual Meeting; and
 
  4. to transact such other business as may properly come before the meeting or any adjournment or postponement thereof.  
 

RECORD DATE:
Stockholders of record at the close of business on February 20, 2018 are entitled to notice of, and to vote at, the Annual Meeting.

 
 

The Board of Directors is not aware of any matter that will be presented at the Annual Meeting that is not described above. If any other matter is properly presented at the Annual Meeting, the persons named as proxies on the proxy card will, in the absence of stockholder instructions to the contrary, vote the shares for which such persons have voting authority in accordance with their discretion on any such matter.

 

By Order of the Board of Directors

JOIA M. JOHNSON
Chief Administrative Officer, General Counsel and
Corporate Secretary

 

March 12, 2018
Winston-Salem, North Carolina

 
HOW TO VOTE:
Whether or not you plan to attend the meeting, we urge you to authorize a proxy to vote your shares via the toll-free telephone number or over the Internet, as described in the enclosed materials. If you requested and received a copy of the proxy card by mail, you may sign, date and mail the proxy card in the envelope provided.

    

BY TELEPHONE
In the U.S. or Canada, you can authorize a proxy to vote your shares toll-free by calling 1-800-690-6903.

 

BY INTERNET
You can authorize a proxy to vote your shares online at www.proxyvote.com.

 

BY MAIL
You can authorize a proxy to vote by mail by marking, dating, and signing your proxy card or voting instruction form and returning it in the postage-paid envelope.

ATTENDING THE MEETING
An admission ticket (or other proof of stock ownership) and some form of government-issued photo identification (such as a valid driver’s license or passport) will be required for admission to the Annual Meeting. Only stockholders who owned shares of Hanesbrands common stock as of the close of business on February 20, 2018 will be entitled to attend the Annual Meeting.

Important Notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 24, 2018.

The Annual Report and Proxy Statement are available at www.proxyvote.com.

The Notice of Internet Availability of Proxy Materials, or this Notice of the 2018 Annual Meeting of Stockholders, this Proxy Statement and our 2017 annual report on Form 10-K are first being mailed to stockholders on or about March 12, 2018.




HANESBRANDS INC.     9


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Corporate Governance at Hanesbrands
 
Proposal 1—Election of Directors
 
Our Board of Directors currently has ten members. Each of our directors is elected to serve until the next annual meeting of stockholders and until his or her successor is duly elected and qualified. If a nominee is unavailable for election, proxy holders may vote for another nominee proposed by the Board or, as an alternative, the Board may reduce the number of directors to be elected at the Annual Meeting. Each nominee has agreed to serve on the Board if elected. Following is information regarding each of the nominees for election, which has been confirmed by the applicable nominee for inclusion in this proxy statement.

The ten nominees for election at the Annual Meeting possess experience and qualifications that our Governance and Nominating Committee believes will allow them to make substantial contributions to the Board. In selecting nominees to the Board, we seek to ensure that our Board collectively has a balance of experience and expertise, including chief executive officer experience, chief financial officer experience, international expertise, deep experience in the consumer products industry, corporate governance expertise and expertise in other functional areas that are relevant to our business. For more information about the process by which the Governance and Nominating Committee identifies candidates for election to the Board, please see “Process for Nominating Potential Director Candidates” on page 17. Following, please find a more detailed discussion of the business experience of each of the nominees to the Board.

 
       

Our Board of Directors unanimously recommends a vote FOR election of these ten nominees.

 

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Corporate Governance at Hanesbrands

Director Nominee Skills and Qualifications

Director Nominee Age

Director Nominee Tenure

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Corporate Governance at Hanesbrands

Nominees for Election as Directors for a One-Year Term Expiring in 2019

    Gerald W. Evans, Jr.      
 
  
Chief Executive Officer of Hanesbrands Inc.

Age: 58
Director Since: 2016
Committee Membership: None
 
 

Mr. Evans has served as our Chief Executive Officer since 2016. From 2013 to 2016, he served as Chief Operating Officer of the Company, and from 2011 until 2013, he served as Co-Chief Operating Officer of the Company. Prior to his appointment as Co-Chief Operating Officer, Mr. Evans served as the Company’s Co-Operating Officer, President International, from 2010 until 2011. From 2009 until 2010, he was President of the Company’s International Business and Global Supply Chain. From 2008 until 2009, he served as President of the Company’s Global Supply Chain and Asia Business Development. From 2006 until 2008, he served as Executive Vice President, Chief Supply Chain Officer. From 2005 until 2006, Mr. Evans served as a Vice President of Sara Lee Corporation, our former parent company, and as Chief Supply Chain Officer of Sara Lee Branded Apparel. Mr. Evans served as President and Chief Executive Officer of Sara Lee Sportswear and Underwear from 2003 until 2005 and as President and Chief Executive Officer of Sara Lee Sportswear from 1999 to 2003. Mr. Evans is also a member of the Business Roundtable.

       

Specific Experience and Qualifications:

       

Corporate
Management
Experience and
Financial Literacy

Served in senior leadership positions with large organizations and has experience with corporate management issues, including preparing or overseeing the preparation of financial statements

       

Chief Executive
Officer Experience

Has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company

       

International
Business Experience

Served in senior leadership positions with companies engaged in international business

       

Industry Experience

Served in senior leadership positions with companies in the consumer products industry

       

Extensive
Knowledge of the
Company’s Business

Has extensive knowledge of Hanesbrands’ business and the apparel industry

       
 
    Bobby J. Griffin      
 
  
Former President, International
Operations of Ryder System, Inc.

Age: 69
Director Since: 2006
Committee Membership: Compensation, Governance and Nominating

Other Current Directorships:
United Rentals, Inc.
WESCO International, Inc.
Atlas Air Worldwide Holdings, Inc.
 
Former Directorships Within the Past Five Years:
Horizon Lines, Inc.
 
 

Mr. Griffin served as President, International Operations of Ryder System, Inc. (“Ryder System”), a global leader in transportation and supply chain management solutions, from 2005 to 2007. Beginning in 1986, Mr. Griffin served in various other management positions with Ryder System, including as Executive Vice President, International Operations from 2003 to 2005 and Executive Vice President, Global Supply Chain Operations from 2001 to 2003.

       

Specific Experience and Qualifications:

       

Corporate
Management
Experience and
Financial Literacy

Served in senior leadership positions with a large organization and has experience with corporate management issues, including preparing or overseeing the preparation of financial statements

       

International
Business Experience

Served in senior leadership positions with a company engaged in international business

       

Practical Expertise

Gained substantial experience in mergers and acquisitions, procurement and distribution, strategic planning, and transportation and security through service in senior leadership positions with a large international company

       

Corporate
Governance
Experience

Gained experience in corporate governance through service as a director of other public companies

       
 


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Corporate Governance at Hanesbrands

    James C. Johnson      
 
  
Former General Counsel of
Loop Capital Markets LLC

Age: 65
Director Since: 2006
Committee Membership: Compensation, Governance and Nominating (Chair)

Other Current Directorships:
Ameren Corporation
Energizer Holdings, Inc.
Edgewell Personal Care Company
 
   

Mr. Johnson served as General Counsel of Loop Capital Markets LLC, a provider of a broad range of integrated capital solutions for corporate, governmental and institutional entities, from 2010 until 2013. Mr. Johnson previously served as Vice President and Assistant General Counsel of the Boeing Commercial Airplanes division of The Boeing Company, one of the world’s major aerospace firms, from 2007 until 2009. From 1998 until 2007, Mr. Johnson served as Vice President, Corporate Secretary and Assistant General Counsel of The Boeing Company. He currently serves as a trustee of the University of Pennsylvania and a Member of the Board of Overseers of the College of Arts and Sciences.

       

Specific Experience and Qualifications:

       

Corporate
Management
Experience and
Financial Literacy

Served in senior leadership positions in a large organization and has experience with corporate management issues; reporting to the General Counsel, had responsibility for the staff and legal affairs for Boeing Commercial Airplanes, a business with annual revenue in excess of $20 billion

       

Practical Expertise

Served as Vice President, Corporate Secretary and Assistant General Counsel of The Boeing Company, where he gained practical expertise in the area of corporate governance and significant business and financial issues

       

Corporate
Governance
Experience

Gained substantial experience in the oversight and administration of governance policies and programs through service as a director of other public companies, as well as through his position as Corporate Secretary of The Boeing Company; gained additional experience in executive compensation as a member of the compensation committee and as the chair of the compensation committee for two other public companies

       
 
    Jessica T. Mathews      
 
  
Distinguished Fellow,
Carnegie Endowment for International Peace

Age: 71
Director Since: 2006
Committee Membership: Audit

Other Current Directorships:
SomaLogic, Inc.
 
   

Ms. Mathews has served as a Distinguished Fellow at the Carnegie Endowment for International Peace, a foreign policy think tank dedicated to advancing cooperation between nations and promoting active international engagement by the United States, since 2015. From 1997 to 2015, Ms. Mathews served as President of the Carnegie Endowment for International Peace. She also served as Deputy to the Undersecretary of State for Global Affairs in the Department of State in 1993 and in other senior governmental and non-governmental positions earlier in her career. Ms. Mathews was Director of the Washington Office of the Council on Foreign Relations from 1994 to 1997. She serves as a trustee of Harvard University and several other nonprofit organizations.

       

Specific Experience and Qualifications:

       

Corporate
Management
Experience and
Financial Literacy

Served in senior leadership positions with large organizations and has experience with corporate management issues, including preparing or overseeing the preparation of financial statements; also serves on the Finance Committee at Harvard University overseeing a $35 billion endowment and $4.5 billion budget

       

Practical Expertise

Serves in a policy-making role that is relevant to Hanesbrands’ international activities; also has practical expertise in the areas of environmental policy, labor and human rights advocacy and non-governmental organization relationships

       

Corporate
Governance
Experience

Gained experience in corporate governance through service as a director of a privately held protein biomarker discovery and clinical diagnostics company

       
 


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Corporate Governance at Hanesbrands

    Franck J. Moison      
 
  
Vice Chairman of the
Colgate-Palmolive Company

Age: 64
Director Since: 2015
Committee Membership: Audit

Other Current Directorships:
United Parcel Service, Inc.

Former Directorships Within the Past
Five Years:
H.J. Heinz Company
 
   

Mr. Moison has served as Vice Chairman of the Colgate-Palmolive Company (“Colgate-Palmolive”), a leading consumer products company, since 2016. He served as Chief Operating Officer of Emerging Markets & Business Development for Colgate-Palmolive from 2010 to 2016. Beginning in 1978, Mr. Moison served in various management positions with Colgate-Palmolive, including as President, Global Marketing, Supply Chain & R&D from 2007 to 2010, and President, Western Europe, Central Europe and South Pacific from 2005 to 2007. He serves as a member of the board of directors of the French American Chamber of Commerce, as Chairman of the International Advisory Board of the EDHEC Business School (Paris, London, Singapore) and as a member of the International Board of the McDonough School of Business at Georgetown University.

       

Specific Experience and Qualifications:

       

Corporate
Management
Experience and
Financial Literacy

Served in senior leadership positions with large organizations and has experience with corporate management issues, including preparing or overseeing the preparation of financial statements

       

International
Business Experience

Served in senior leadership positions with companies engaged in international business

       

Industry
Experience

Served in senior leadership positions with companies in the consumer products industry

       

Corporate
Governance
Experience

Gained experience in corporate governance through service as a director of other public companies

       
 

    Robert F. Moran      
 
  
Chairman of the Board of
GNC Holdings, Inc.

Age: 67
Director Since: 2013
Committee Membership: Audit (Chair)

Other Current Directorships:
GNC Holdings, Inc.
 
Former Directorships Within the Past
Five Years:
PetSmart, Inc.
 
 

Mr. Moran has served as Chairman of the Board of GNC Holdings, Inc. (“GNC”), a leading global specialty retailer of health and wellness products, since 2017. From 2016 to 2017, Mr. Moran also served as Interim Chief Executive Officer of GNC. He served as Chairman of the Board of PetSmart, Inc. (“PetSmart”), a leading specialty provider of pet care products and services, from 2012 to 2013 and as Chief Executive Officer of PetSmart from 2009 to 2013. He joined PetSmart as President of North American Stores in 1999, and in 2001 he was appointed President and Chief Operating Officer. From 1998 to 1999, Mr. Moran was President of Toys “R” Us (Canada) Ltd., a subsidiary of specialty toy retailer Toys “R” Us, Inc. Prior to 1991 and from 1993 to 1998, for a total of 20 years, Mr. Moran was employed by retailer Sears, Roebuck and Company in a variety of financial and merchandising positions, including as President and Chief Executive Officer of Sears de Mexico. He was also Chief Financial Officer and Executive Vice President of Galerias Preciados of Madrid, Spain, a leading department store, from 1991 to 1993. Mr. Moran also serves as a director of the USA Track and Field Foundation.

       

Specific Experience and Qualifications:

       

Corporate
Management
Experience and
Financial Literacy

Served in senior leadership positions with large organizations and has experience with corporate management issues, including preparing or overseeing the preparation of financial statements

       

Chief Executive
Officer Experience

Has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company

       

Chief Financial
Officer Experience

Possesses financial acumen and an understanding of financial matters and the preparation and analysis of financial statements

       

International
Business Experience

Served in senior leadership positions with companies engaged in international business

       

Industry
Experience

Served in senior leadership positions with companies in the consumer products industry

       

Corporate
Governance
Experience

Gained experience in corporate governance through service as a director of other public companies

       
 



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    Ronald L. Nelson      
 
  
Executive Chairman of
Avis Budget Group, Inc.

Age: 65
Director Since: 2008
Committee Membership: Compensation, Governance and Nominating
 
Lead Director

Other Current Directorships:
Avis Budget Group, Inc.
Convergys Corporation
Viacom Inc.
 
   

Mr. Nelson has served as Executive Chairman of Avis Budget Group, Inc. (“Avis Budget Group”), which operates two major brands in the global vehicle rental industry through Avis and Budget, since 2016. From 2006 to 2015, Mr. Nelson served as Chairman and Chief Executive Officer of Avis Budget Group. Mr. Nelson was a director of Cendant Corporation (the predecessor of Avis Budget Group) from 2003 to 2006, Chief Financial Officer from 2003 until 2006 and President from 2004 to 2006. Mr. Nelson was also Chairman and Chief Executive Officer of Cendant Corporation’s Vehicle Rental business from January 2006 to August 2006. From 2005 to 2006, Mr. Nelson was interim Chief Executive Officer of Cendant Corporation’s former Travel Distribution Division.

       

Specific Experience and Qualifications:

       

Corporate
Management
Experience and
Financial Literacy

Served in senior leadership positions with large organizations and has experience with corporate management issues, including preparing or overseeing the preparation of financial statements

       

Chief Executive
Officer Experience

Has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company

       

Chief Financial
Officer Experience

Possesses financial acumen and an understanding of financial matters and the preparation and analysis of financial statements

       

International
Business Experience

Served in senior leadership positions with companies engaged in international business

       

Industry
Experience

Served in senior leadership positions with companies in the consumer products industry

       

Corporate
Governance
Experience

Gained experience in corporate governance through service as a director of other public companies

       
 
    Richard A. Noll      
 
  
Chairman of the Board of Directors of
Hanesbrands Inc.

Age: 60
Director Since: 2005
Committee Membership: None

 
   

Mr. Noll has served as Chairman of the Board of Directors of Hanesbrands Inc. since 2009, as Executive Chairman from 2016 to 2017, and Chief Executive Officer from 2006 to 2016. Previously in his career, Mr. Noll led the turnarounds of several Sara Lee Corporation bakery and apparel businesses, consulted for Strategic Planning Associates and began his career as a systems programmer.

       

Specific Experience and Qualifications:

       

Corporate
Management
Experience and
Financial Literacy

Served in senior leadership positions with large organizations and has experience with corporate management issues, including preparing or overseeing the preparation of financial statements

       

Chief Executive
Officer Experience

Has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company

       

International
Business Experience

Served in senior leadership positions with companies engaged in international business

       

Industry
Experience

Served in senior leadership positions with companies in the consumer products industry

       

Extensive
Knowledge of the
Company’s
Business

Has extensive knowledge of Hanesbrands’ business and the apparel industry

       

Corporate
Governance
Experience

Gained experience in corporate governance through service as a director of another public company

       
 


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    David V. Singer      
 
  
Former Chief Executive Officer of Snyder’s-Lance, Inc.

Age: 62
Director Since: 2014
Committee Membership: Audit

Other Current Directorships:
Brunswick Corporation
Flowers Foods, Inc.
SPX FLOW, Inc.
 
Former Directorships Within the Past Five Years:
Synder’s-Lance, Inc.
 
 

From 2010 to 2013, Mr. Singer served as Chief Executive Officer of Snyder’s-Lance, Inc., a manufacturer and marketer of snack foods throughout the United States and internationally. He also served as the President and Chief Executive Officer of Lance, Inc. from 2005 until its merger with Snyder’s of Hanover, Inc. in 2010. From 1987 to 2005, Mr. Singer served as Chief Financial Officer of Coca-Cola Bottling Co. Consolidated, a beverage manufacturer and distributor. Prior to 1987, Mr. Singer was Vice President of Mellon Bank, N.A.

       

Specific Experience and Qualifications:

       

Corporate
Management
Experience and
Financial Literacy

Served in senior leadership positions with large organizations and has experience with corporate management issues, including preparing or overseeing the preparation of financial statements

       

Chief Executive
Officer Experience

Has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company

       

Chief Financial
Officer Experience

Possesses financial acumen and an understanding of financial matters and the preparation and analysis of financial statements

       

International
Business
Experience

Served in senior leadership positions with companies engaged in international business

       

Industry
Experience

Served in senior leadership positions with companies in the consumer products industry

       

Corporate
Governance
Experience

Gained experience in corporate governance through service as a director of other public companies

       
 
    Ann E. Ziegler      
 
  
Former Chief Financial Officer of CDW Corporation

Age: 59
Director Since: 2008
Committee Membership: Compensation (Chair), Governance and Nominating

Other Current Directorships:
Groupon, Inc.
Wolters Kluwer N.V.
US Foods Holding Corp.
 
 

Ms. Ziegler served as Senior Vice President and Chief Financial Officer and a member of the executive committee of CDW Corporation, a leading provider of technology solutions for business, government, healthcare and education, from 2008 until 2017. From 2005 until 2008, Ms. Ziegler served as Senior Vice President, Administration and Chief Financial Officer of Sara Lee Food and Beverage, a division of Sara Lee Corporation (“Sara Lee”). From 2003 until 2005, she served as Chief Financial Officer of Sara Lee Bakery Group. From 2000 until 2003, she served as Senior Vice President, Corporate Development of Sara Lee.

       

Specific Experience and Qualifications:

       

Corporate
Management
Experience and
Financial Literacy

Served in senior leadership positions with large organizations and has experience with corporate management issues, including preparing or overseeing the preparation of financial statements

       

Chief Financial
Officer Experience

Possesses financial acumen and an understanding of financial matters and the preparation and analysis of financial statements

       

Industry
Experience

Served in senior leadership positions with companies in the consumer products industry

       

Corporate
Governance
Experience

Gained experience in corporate governance through service as a director of other public companies

       
 



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How We Select our Directors

Process for Nominating Potential Director Candidates
The Governance and Nominating Committee is responsible for screening potential director candidates and recommending qualified candidates to the full Board of Directors for nomination. The Governance and Nominating Committee will consider director candidates proposed by the Chief Executive Officer, by any director or by any stockholder. From time to time, the Governance and Nominating Committee also retains search firms to assist it in identifying and evaluating director nominees. In evaluating potential director candidates, the Governance and Nominating Committee seeks to present candidates to the Board of Directors who have distinguished records of leadership and success in their arena of activity and who will make substantial contributions to the Board of Directors. The Governance and Nominating Committee considers the qualifications listed in our Corporate Governance Guidelines, which include:

personal and professional ethics and integrity;

diversity among the existing Board members, including racial and ethnic background and gender;

specific business experience and competence, including whether the candidate has experience in, and possesses an understanding of, business issues applicable to the success of a large publicly-traded company and whether the candidate has served in policy-making roles in business, government, education or other areas that are relevant to our global activities;

financial acumen, including whether the candidate, through education or experience, has an understanding of financial matters and the preparation and analysis of financial statements;

the ability to represent our stockholders as a whole;

professional and personal accomplishments, including involvement in civic and charitable activities;

experience with enterprise level risk management;

educational background; and

whether the candidate has expressed a willingness to devote sufficient time to carrying out his or her duties and responsibilities effectively and is committed to service on the Board of Directors.

Any recommendation submitted by a stockholder to the Governance and Nominating Committee should include information relating to each of the qualifications outlined above concerning the potential candidate along with the other information required by our bylaws for stockholder nominations. The Governance and Nominating Committee applies the same standards in evaluating candidates submitted by stockholders as it does in evaluating candidates submitted by other sources. Suggestions regarding potential director candidates, together with the required information described above, should be submitted in writing to Hanesbrands Inc., 1000 East Hanes Mill Road, Winston-Salem, North Carolina 27105, Attention: Corporate Secretary. Stockholders who want to directly nominate a director for consideration at next year’s Annual Meeting should refer to the procedures described under “Stockholder Proposals and Director Nominations for Next Annual Meeting” on page 64.

Although we do not have a standalone policy regarding diversity in the nomination process, as noted above, diversity is one of the criteria that our Corporate Governance Guidelines require that our Governance and Nominating Committee consider in identifying and evaluating director nominees. In applying this criteria, the Governance and Nominating Committee and the Board consider diversity to also include differences of viewpoint, professional experience, education, skill and other individual qualities and attributes that contribute to an active, effective Board. The Governance and Nominating Committee evaluates the effectiveness of its activities under this policy through its annual review of Board composition, which considers whether the current composition of the Board adequately reflects the balance of qualifications discussed above, including diversity, prior to recommending nominees for election. In this regard, the Board believes that its efforts have been effective based on the current composition of the Board.

Our Corporate Governance Guidelines provide that no director may stand for re-election to the Board of Directors after he or she has reached the age of 72. However, our Governance and Nominating Committee has the authority to extend the retirement age of an individual director for up to two periods of one year each.

Director Independence
In order to assist our Board of Directors in making the independence determinations required by New York Stock Exchange (“NYSE”) listing standards, the Board of Directors has adopted categorical standards of independence. These standards, which are contained in our Corporate Governance Guidelines, are available on our corporate website, www.Hanes.com/investors (in the “Investors” section). Eight of the ten current members of our Board of Directors, Mr. Griffin, Mr. Johnson, Ms. Mathews, Mr. Moison, Mr. Moran, Mr. Nelson, Mr. Singer and Ms. Ziegler, are independent under NYSE listing standards and under our Corporate Governance Guidelines. In determining director independence, the Board of Directors did not discuss, and was not aware of, any related person transactions, relationships or arrangements that existed with respect to any of these directors.

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Our Audit Committee’s charter requires that all of the members of the Audit Committee be independent under NYSE listing standards and the rules of the Securities Exchange Commission (“SEC”). The Board has determined that each of the members of our Audit Committee is an independent director under NYSE listing standards and meets the standards of independence applicable to audit committee members under applicable SEC rules. The Board has also determined that each of Messrs. Moran and Singer qualifies as an “audit committee financial expert” under applicable SEC rules.

Our Compensation Committee’s charter requires that all of the members of the Compensation Committee be independent under NYSE listing standards, including the enhanced independence requirements applicable to Compensation Committee members, “non-employee directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code and the regulations thereunder. The Board has determined that each of the members of our Compensation Committee is an independent director under NYSE listing standards, a non-employee director within the meaning of Rule 16b-3 under the Exchange Act and an outside director within the meaning of Section 162(m) of the Internal Revenue Code.

Our Governance and Nominating Committee’s charter requires that all of the members of the Governance and Nominating Committee be independent under NYSE listing standards. The Board has determined that each of the members of our Governance and Nominating Committee is an independent director under NYSE listing standards.

The Board’s Role and Responsibilities

Overview
The Board of Directors is elected by our stockholders to oversee their interests in the long-term health and the overall success of the Company’s business. The Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with our stockholders. The Board oversees the business of the Company, as conducted by the members of Hanesbrands’ senior management. In carrying out its responsibilities, the Board reviews and assesses Hanesbrands’ long-term strategy and its strategic, competitive and financial performance.

In 2017, our Board of Directors met six times and also held regularly scheduled executive sessions without management, presided over by our Lead Director. In addition, during 2017 our Audit Committee met five times, our Compensation Committee met four times and our Governance and Nominating Committee met four times. Directors are expected to make every effort to attend the Annual Meeting, all Board meetings and the meetings of the Committees on which they serve. All of our directors at the time of our 2017 Annual Meeting of Stockholders attended that Annual Meeting. In 2017, each director also attended over 75% of the meetings of the Board and the Committees of which he or she was a member.

Risk Oversight

The Board as a whole is ultimately responsible for the oversight of our risk management function. The Board uses its committees to assist in its risk oversight function as follows:

 
 

The Board has delegated primary responsibility for the oversight of Hanesbrands’ risk management function to the Audit Committee.

   

The Audit Committee discusses policies with respect to risk assessment and risk management, including significant financial risk exposures and the steps our management has taken to monitor, control and report such exposures. Management of Hanesbrands undertakes, and the Audit Committee reviews and discusses, an annual assessment of Hanesbrands’ risks on an enterprise-wide basis.

The Compensation Committee is responsible for the oversight of risk associated with our compensation practices and policies.

The Governance and Nominating Committee is responsible for the oversight of Board processes and corporate governance related risks.

 

Our Board of Directors maintains overall responsibility for oversight regarding the work of its various committees by receiving regular reports from the committee Chairs of the work performed by their respective committees. In addition, discussions with the Board about the Company’s strategic plan, consolidated business results, capital structure, acquisition-related activities and other business include consideration of the risks associated with the particular item under consideration.


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Talent Management and Succession Planning
On an annual basis, our Board plans for succession to the position of Chief Executive Officer, as well as to certain other senior management positions. To assist the Board, our Chief Executive Officer annually provides the Board with an assessment of executives holding those senior management positions and of their potential to succeed him. Our Chief Executive Officer also provides the Board with an assessment of persons considered potential successors to those senior managers. The Board considers that information and their own impressions of senior management performance in planning for succession in key positions.

Communicating with our Board of Directors
Any stockholders or interested parties who wish to communicate directly with our Board, with our non-management directors as a group or with our Lead Director, may do so by writing to Hanesbrands Inc., 1000 East Hanes Mill Road, Winston-Salem, North Carolina 27105, Attention: Corporate Secretary. Stockholders and other interested parties also may communicate with members of the Board by sending an e-mail to our Corporate Secretary at corporate.secretary@hanes.com. To ensure proper handling, any mailing envelope or e-mail containing the communication intended for the Board must contain a clear notation indicating that the communication is a “Stockholder/Board Communication” or an “Interested Party/Board Communication.”

The Governance and Nominating Committee has approved a process for handling letters received by the Company and addressed to the Board, the Lead Director or to independent members of the Board. Under that process, our Corporate Secretary reviews all such correspondence and regularly forwards to the Board copies of all correspondence that, in her opinion, deals with the functions of the Board or its Committees or that she otherwise determines requires their attention. Advertisements, solicitations for business, requests for employment, requests for contributions, matters that may be better addressed by management or other inappropriate material will not be forwarded to our directors.

Board Structure and Processes

Board Leadership Structure
Our current Board leadership structure consists of:

Chairman of the Board: Richard A. Noll;

Chief Executive Officer: Gerald W. Evans, Jr.;

Lead Independent Director: Ronald L. Nelson; and

Fully independent Audit, Compensation and Governance and Nominating Committees.

Our Corporate Governance Guidelines provide that the Governance and Nominating Committee will from time to time consider whether the positions of Chairman of the Board and Chief Executive Officer should be held by the same person or by different persons. The Board determined to split the roles of Chief Executive Officer and Chairman when Mr. Noll stepped down from the role of Chief Executive Officer in October 2016. However, the Board does not currently have a requirement that the roles of Chief Executive Officer and Chairman of the Board be separated, because the Board believes it is in the best interests of our Company to make this determination based on the position and direction of our Company and the constitution of the Board and management team from time to time.

The Board believes that the 2016 implementation of a carefully considered executive leadership succession plan demonstrates that the Board takes seriously its responsibility to determine who should serve as Chairman at any point in time in light of the specific circumstances facing our Company. After careful consideration, the Board determined that having Mr. Noll serve as Chairman is in the best interest of the Company and its stockholders at this time. Mr. Noll, who served as the Company’s Chairman and Chief Executive Officer until October 1, 2016, served as our Executive Chairman from 2016 to 2017 and transitioned to non-executive Chairman effective January 1, 2018. Mr. Noll’s knowledge of our Company’s operations and strategy provide a valuable resource to both the Board and Mr. Evans. In addition, Mr. Noll has significant knowledge of the people, information and resources necessary to facilitate effective communication between management and the Board, which contributes to an efficient and effective Board.

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Mr. Nelson has served as our Lead Director since 2015. The Lead Director and other independent directors actively oversee Mr. Evans’ management of our operations and execution of strategies set by the Board. They also take an active role in overseeing Hanesbrands’ management and key issues related to strategy, risk, integrity, compensation and governance. For example, only independent directors serve on the Audit Committee, Compensation Committee and Governance and Nominating Committee. Non-management and independent directors regularly hold executive sessions outside the presence of our Chief Executive Officer and other Hanesbrands employees. Finally, as detailed in the following summary, the Lead Director has many important duties and responsibilities that enhance the independent oversight of management.

The Lead Director chairs all meetings of the non-management and independent directors in executive session and also has other authority and responsibilities, including:

presiding at all meetings of the Board of Directors in the absence of, or upon the request of, the Chairman of the Board;
advising the Chairman of the Board and/or the Corporate Secretary regarding the agendas for meetings of the Board of Directors;
calling meetings of the non-management and/or independent directors, with appropriate notice;
advising the Governance and Nominating Committee and the Chairman of the Board on the membership of the various Board committees and the selection of committee chairs;
advising the Chairman of the Board on the retention of advisors and consultants who report directly to the Board of Directors;
advising the Chairman of the Board and Chief Executive Officer, as appropriate, on issues discussed at executive sessions of non-management and/or independent directors;
with the Chairman of the Compensation Committee, reviewing with the Chief Executive Officer the non-management directors’ annual evaluation of his performance;
serving as principal liaison between the non-management and/or independent directors, as a group, and the Chairman of the Board, as necessary;
serving as principal liaison between the Board of Directors and Hanesbrands’ stockholders, as appropriate, after consultation with the Chief Executive Officer; and
selecting an interim lead independent director to preside over meetings at which he cannot be present.

We believe our Board’s current leadership structure is best suited to the needs of the Company at this time.

Board and Committee Evaluation Process
The Board has established a robust self-evaluation process for the Board and its committees. Our Corporate Governance Guidelines require the Board to annually evaluate its own performance. In addition, the charters of each of the Audit Committee, Compensation Committee and Governance and Nominating Committee require the committee to conduct an annual performance evaluation. The Governance and Nominating Committee oversees the annual self-assessment process on behalf of the Board and the implementation of the annual self-assessments by the committees.

Each year, all Board members and all members of the Audit, Compensation and Governance and Nominating Committees complete a detailed confidential questionnaire. The questionnaire provides for quantitative ratings in key areas and also seeks comments from the directors. The Chair of the Governance and Nominating Committee reviews the responses with the chairs of the Audit and Compensation Committees. The Chair of the Governance and Nominating Committee also discusses the Board self-evaluation with the full Board. Matters requiring follow-up are addressed by the Chair of the Governance and Nominating Committee or the chairs of the Audit or Compensation Committee, as appropriate.

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Committees of the Board of Directors
Our Board of Directors has three standing committees: the Audit Committee, the Compensation Committee and the Governance and Nominating Committee. The following is a list of current committee memberships, which is accompanied by a description of each committee. The directors who are nominated for election as directors at the Annual Meeting will, if re-elected, retain the committee memberships described in the following list immediately following the Annual Meeting, and the chairs of the Audit Committee, the Compensation Committee and the Governance and Nominating Committee will also remain the same.

Committee Membership  
Audit Committee   Compensation Committee Governance and Nominating Committee
Jessica T. Mathews Bobby J. Griffin Bobby J. Griffin
Franck J. Moison James C. Johnson   James C. Johnson*
Robert F. Moran* Ronald L. Nelson Ronald L. Nelson
David V. Singer Ann E. Ziegler* Ann E. Ziegler

* Chair of the committee

AUDIT COMMITTEE
  
Members:         Mr. Moran, Chair
Ms. Mathews
Mr. Moison
Mr. Singer
 

The Audit Committee is responsible for assisting the Board of Directors in fulfilling its oversight of:

the integrity of our financial statements, financial reporting process and systems of internal accounting and financial controls;
our compliance with legal and regulatory requirements;
the independent auditors’ qualifications and independence; and
the performance of our internal audit function and independent auditor.  

The Audit Committee is also responsible for discussing policies with respect to risk assessment and risk management, including significant financial risk exposures and the steps our management has taken to monitor, control and report such exposures.

 

Under SEC rules and the Audit Committee’s charter, the Audit Committee must prepare a report that is to be included in our proxy statement relating to the annual meeting of stockholders or annual report on Form 10-K. This report is provided under “Audit Committee Report” on page 27. In addition, the Audit Committee must review and discuss our annual audited financial statements and quarterly financial statements with management and the independent auditor and recommend, based on its review, that the Board of Directors include the annual financial statements in our annual report on Form 10-K.

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COMPENSATION COMMITTEE
  
Members:         Ms. Ziegler, Chair
Mr. Griffin
Mr. Johnson
Mr. Nelson
 

The Compensation Committee is responsible for assisting the Board of Directors in discharging its responsibilities relating to the compensation of our executive officers and the Chief Executive Officer performance evaluation process and for preparing a report on executive compensation that is to be included in our proxy statement relating to our annual meeting of stockholders. This report is provided under “Compensation Committee Report” on page 34.

The Compensation Committee is also responsible for:

reviewing and approving the total compensation philosophy covering our executive officers and other key executives and periodically reviewing an analysis of the competitiveness of our total compensation practices in relation to those of our peer group;
with respect to our executive officers other than the Chief Executive Officer, reviewing and approving the base salaries, salary ranges and the salary increase program pursuant to our executive salary administration program, the applicable standards of performance to be used in incentive compensation plans and the grant of equity incentives;
recommending changes in non-employee director compensation to the Board of Directors;
reviewing proposed stock incentive plans, other long-term incentive plans, stock purchase plans and other similar plans, and all proposed changes to such plans;
reviewing the results of any stockholder advisory votes regarding our executive compensation and recommending to the Board how to respond to such votes; and
recommending to the Board whether to have an annual, biannual or triennial advisory stockholder vote regarding executive compensation.

The Chief Executive Officer’s compensation is approved by the independent members of the Board of Directors, upon the Compensation Committee’s recommendation.

 

Compensation Committee Interlocks and Insider Participation. All members of the Compensation Committee during our 2017 fiscal year were independent directors, and no member was an employee or former employee of Hanesbrands. During our 2017 fiscal year, no member of the Compensation Committee had a relationship that must be described under SEC rules relating to disclosure of related party transactions and no interlocking relationship existed between our Board of Directors or Compensation Committee and the board of directors or compensation committee of any other company.

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GOVERNANCE AND NOMINATING COMMITTEE
 
Members:         Mr. Johnson, Chair
Mr. Griffin
Mr. Nelson
Ms. Ziegler
 

The Governance and Nominating Committee is responsible for:

identifying individuals qualified to serve on the Board of Directors, consistent with criteria approved by the Board of Directors;
recommending that the Board of Directors select a slate of director nominees for election by our stockholders at our annual meeting of stockholders, in accordance with our charter and bylaws and with Maryland law;
recommending candidates to the Board of Directors to fill vacancies on the Board or on any committee of the Board in accordance with our charter and bylaws and with Maryland law;
evaluating and recommending to the Board of Directors a set of corporate governance policies and guidelines to be applicable to the Company;
re-evaluating periodically such policies and guidelines for the purpose of suggesting amendments to them as appropriate; and
overseeing annual Board and committee self-evaluations in accordance with NYSE listing standards.
 

Director Compensation

Annual Compensation
We compensated each non-employee director for service on our Board of Directors during 2017 as follows:

an annual cash retainer of $95,000, paid in quarterly installments;
an additional annual cash retainer of $20,000 for the chair of the Audit Committee (Mr. Moran), $20,000 for the chair of the Compensation Committee (Ms. Ziegler) and $20,000 for the chair of the Governance and Nominating Committee (Mr. Johnson);
an additional annual cash retainer of $5,000 for each member of the Audit Committee other than the chair (Ms. Mathews, Mr. Moison and Mr. Singer);
an additional annual cash retainer of $25,000 for the Lead Director (Mr. Nelson);
an annual grant of restricted stock units with a grant date fair value of approximately $130,000 that vest on the one-year anniversary of the grant date and are payable upon vesting in shares of Hanesbrands common stock; and
reimbursement of customary expenses for attending Board, committee and stockholder meetings.

Mr. Noll, who served as Executive Chairman during 2017, was paid a base salary of $1,200,000 and received an annual grant of restricted stock units with a grant date fair value of approximately $2,500,000 that vest 33%, 33% and 34% on the first anniversary, second anniversary and third anniversary, respectively, of the date of grant and are payable upon vesting in shares of Hanesbrands common stock. In his capacity as Executive Chairman, Mr. Noll was also eligible to participate in our other employee benefit plans and arrangements on the same terms as our named executive officers. See “Post Employment Compensation” on page 42 and “Benefit Plans and Arrangements” on page 43 for a discussion of these programs.

Mr. Evans, our Chief Executive Officer, receives no additional compensation for serving as a director.

In December 2017, after reviewing information about the compensation paid to non-employee directors at our peer group companies (our peer group companies are discussed in “How the Compensation Committee uses Peer Groups” on page 36), the Compensation Committee recommended, and the Board of Directors approved: (i) an increase in the annual cash retainer from $95,000 to $100,000; (ii) an increase in the grant date fair value of the annual grant of restricted stock units from $130,000 to $140,000; (iii) an increase in the additional cash retainer for the Lead Director from $25,000 to $30,000; (iv) an increase in the additional cash retainer for the chair of the Audit Committee from $20,000 to $25,000; and (v) an additional annual cash retainer of $200,000 for the non-executive Chairman of the Board. The annual grant of restricted stock units for 2018 was made on December 12, 2017 and is reflected in the non-employee directors’ compensation for 2017.

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The following table summarizes the compensation paid to Mr. Noll and our non-employee directors during the fiscal year ended December 30, 2017.

Director Compensation — 2017

Name       Fees Earned or
Paid in Cash
($) (1)
      Stock Awards
($) (2) (3) (4)
      Change in
Pension Value
and Nonqualified
Deferred
Compensation

Earnings ($)(5)
      All Other
Compensation
($)
      Total
($)
Richard A. Noll      $ 1,200,000       $ 140,009             $ 67,638        $ 218,260 $ 1,625,907
Ronald L. Nelson 120,000 140,009 260,009
James C. Johnson 115,000 140,009 255,009
Robert F. Moran 115,000 140,009 255,009
Ann E. Ziegler 108,333 140,009 248,342
Jessica T. Mathews 100,000 140,009 240,009
Franck J. Moison 100,000 140,009 240,009
David V. Singer 100,000 140,009 240,009
Bobby J. Griffin 97,917 140,009 237,926
Andrew J. Schindler (6) 38,333 38,333

(1) Amounts shown include deferrals to the Hanesbrands Inc. Non-Employee Director Deferred Compensation Plan.
(2) The dollar values shown reflect the aggregate grant date fair value of awards during 2017, computed in accordance with Topic 718 of the FASB Accounting Standards Codification. The assumptions we used in valuing these awards are described in Note 6, “Stock-Based Compensation,” to our consolidated financial statements included in our annual report on Form 10-K for the fiscal year ended December 30, 2017.
(3) Amounts shown represent the grant date fair value of the annual grant of restricted stock units which was made on December 12, 2017 to Mr. Noll and each non-employee director serving on that date in consideration of his or her service on the Board of Directors in 2018. Equity awards are approved as a dollar amount, which on the grant date is converted into a specific whole number of restricted stock units. The restricted stock units vest on the one-year anniversary of the grant date and are payable immediately upon vesting in shares of our common stock on a one-for-one basis. As of December 30, 2017, Mr. Noll held 124,552 restricted stock units and 175,896 performance stock units. The number of restricted stock units held by each then-current non-employee director as of December 30, 2017 was 6,683. Mr. Schindler did not hold any restricted stock units as of December 30, 2017.
(4) As of December 30, 2017, (i) Mr. Noll held stock options to purchase 276,276 shares of common stock and (ii) Ms. Ziegler held stock options to purchase 22,572 shares of common stock. No other non-employee director holds stock options.
(5) In his capacity as Executive Chairman, Mr. Noll was eligible to participate in our employee benefit plans and arrangements on the same terms as our named executive officers. See “Post Employment Compensation” on page 42 and “Benefit Plans and Arrangements” on page 43 for a discussion of these programs. Increases in pension values are determined for the periods presented; because the defined benefit arrangements are frozen, the amounts shown in this column represent solely the increase in the actuarial value of pension benefits previously accrued as of December 31, 2005.
(6) Andrew J. Schindler reached the mandatory retirement age under our Corporate Governance Guidelines and did not stand for re-election at the 2017 Annual Meeting of Stockholders. Consequently, Mr. Schindler ceased serving as a director on April 25, 2017.

Director Deferred Compensation Plan
Under the Hanesbrands Inc. Non-Employee Director Deferred Compensation Plan (the “Director Deferred Compensation Plan”), a nonqualified, unfunded deferred compensation plan, our non-employee directors may defer receipt of all (but not less than all) of their cash retainers and/or awards of restricted stock units. None of the investment options available in the Director Deferred Compensation Plan provide for “above-market” or preferential earnings as defined in applicable SEC rules. The amount payable to a participant will be payable either on the distribution date elected by the participant or upon the occurrence of certain events as provided under the Director Deferred Compensation Plan.

Director Stock Ownership and Retention Guidelines
We believe that all of our directors should have a significant ownership position in Hanesbrands. To this end, our non-employee directors receive a substantial portion of their compensation in the form of restricted stock units. In addition, to promote equity ownership and further align the interests of these directors with our stockholders, we have adopted stock ownership and retention guidelines for our non-employee directors. A non-employee director may not dispose of any shares of our common stock until such director holds shares of common stock with a value equal to at least five times the current annual equity retainer, and may then only

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Corporate Governance at Hanesbrands

dispose of shares in excess of those with that value. In addition to vested shares directly held by a non-employee director, shares held for such director in the Director Deferred Compensation Plan (including hypothetical share equivalents held in that plan) will be counted for purposes of determining whether the ownership requirements are met. All of our directors are in compliance with these stock ownership and retention guidelines.

Other Governance Information

Related Person Transactions
Our Board of Directors has adopted a written policy setting forth procedures to be followed in connection with the review, approval or ratification of “related person transactions.” For purposes of this policy, the phrase “related person transaction” refers to any financial transaction, arrangement or relationship where: (i) Hanesbrands or any of its subsidiaries is a participant; (ii) any greater than five percent stockholder, director, nominee for director or executive officer, or any of their immediate family members or affiliated entities, has a direct or indirect material interest; (iii) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year; and (iv) disclosure would be required under Item 404 of Regulation S-K and related SEC rules.

Each director, director nominee and executive officer must promptly notify our Chief Executive Officer and our Corporate Secretary in writing of any material interest that such person or an immediate family member or affiliated entity of such person had, has or will have in a related person transaction. The Governance and Nominating Committee is responsible for the review and approval or ratification of all related person transactions involving a director, director nominee or executive officer. At the discretion of the Governance and Nominating Committee, the consideration of a related person transaction may be delegated to the full Board of Directors, another standing committee or to an ad hoc committee of the Board of Directors comprised of at least three members, none of whom has an interest in the transaction.

The Governance and Nominating Committee, or other governing body to which approval or ratification is delegated, may approve or ratify a transaction if it determines, in its business judgment, based on its review of the available information, that the transaction is fair and reasonable to us and consistent with our best interests. Factors to be taken into account in making a determination of fairness and reasonableness may include:

the business purpose of the transaction;

whether the transaction is entered into on an arm’s-length basis on terms fair to us; and

whether such a transaction would violate any provisions of our Global Code of Conduct.

If the Governance and Nominating Committee decides not to approve or ratify a transaction, the transaction may be referred to legal counsel for review and consultation regarding possible further action, including, but not limited to, termination of the transaction on a prospective basis, rescission of such transaction or modification of the transaction in a manner that would permit it to be ratified and approved by the Governance and Nominating Committee.

During 2017, there were no related person transactions requiring reporting under SEC rules.

Code of Ethics
Our Global Code of Conduct, which serves as our code of ethics, applies to all directors and officers and other employees of the Company and its subsidiaries. Any waiver of applicable requirements in the Global Code of Conduct that is granted to any of our directors, to our principal executive officer, to any of our senior financial officers (including our principal financial officer, principal accounting officer or controller) or to any other person who is an executive officer of Hanesbrands requires the approval of the Audit Committee. Any such waiver of or amendment to the Global Code of Conduct will be disclosed on our corporate website, www.Hanes.com/investors (in the “Investors” section) or in a current report on Form 8-K.

Corporate Governance Documents
Copies of the written charters for the Audit Committee, Compensation Committee and Governance and Nominating Committee, as well as our Corporate Governance Guidelines, Global Code of Conduct and other corporate governance information are available on our corporate website, www.Hanes.com/investors (in the “Investors” section).

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Audit Information


         
              
           Proposal 2 —  Ratification of Appointment
of Independent Registered
Public Accounting Firm
       

The Audit Committee is directly responsible for the appointment (subject to ratification by the Company’s stockholders), retention, compensation, evaluation, oversight and termination the Company’s independent auditor. The Audit Committee has appointed PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as our independent registered public accounting firm for our 2018 fiscal year. While not required by law, the Board of Directors is asking our stockholders to ratify the selection of PricewaterhouseCoopers as a matter of good corporate practice.

If the appointment of PricewaterhouseCoopers as our independent registered public accounting firm for our 2018 fiscal year is not ratified by our stockholders, the adverse vote will be considered a direction to the Audit Committee to consider another independent registered public accounting firm for next year. However, because of the difficulty in making any substitution of our independent registered public accounting firm so long after the beginning of the current year, the appointment for our 2018 fiscal year will stand, unless the Audit Committee finds other good reason for making a change.

PricewaterhouseCoopers has served as the Company’s independent registered public accounting firm since July 1, 2006. In order to ensure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of our independent registered public accounting firm. In addition, in conjunction with the mandated rotation of PricewaterhouseCoopers’ lead engagement partner, the Audit Committee oversees and confirms the selection of PricewaterhouseCoopers’ new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of PricewaterhouseCoopers as the Company’s independent registered public accounting firm is in the best interests of the Company and its stockholders.

Representatives of PricewaterhouseCoopers are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions. For additional information regarding our relationship with PricewaterhouseCoopers, please refer to “Relationship with Independent Registered Public Accounting Firm” on page 28.

Our Board of Directors unanimously recommends a vote FOR ratification of the appointment of PricewaterhouseCoopers as our independent registered public accounting firm for our 2018 fiscal year.

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Audit Information

Audit Committee Report
Hanesbrands’ Audit Committee is composed solely of independent directors meeting the requirements of applicable SEC and NYSE rules. Each of the members of the Audit Committee is independent and financially literate as required under applicable SEC rules and NYSE listing standards. In addition, the Board of Directors has determined that Mr. Moran and Mr. Singer possess the experience and qualifications required of an “audit committee financial expert” as defined by the rules of the SEC. No member of the Audit Committee serves on the audit committees of more than three public companies.

The key responsibilities of the Audit Committee are set forth in its charter, a copy of which is available on our corporate website, www.Hanes.com/investors (in the “Investors” section). The purpose of the Audit Committee is to assist the Board of Directors in fulfilling its oversight of:

the integrity of the Company’s financial statements, financial reporting process and systems of internal accounting and financial controls;

the Company’s compliance with legal and regulatory requirements;

the independent auditor’s qualifications and independence; and

the performance of the Company’s internal audit function and independent auditor.

Management is primarily responsible for establishing and maintaining adequate internal financial controls, for preparing the financial statements and for the public reporting process. PricewaterhouseCoopers, the Audit Committee-appointed independent registered public accounting firm for the fiscal year ended December 30, 2017, is responsible for expressing an opinion on the conformity of Hanesbrands’ audited financial statements with accounting principles generally accepted in the United States of America. In addition, PricewaterhouseCoopers expresses its opinion on the effectiveness of Hanesbrands’ internal control over financial reporting.

In this context, the Audit Committee:

Reviewed and discussed with management and PricewaterhouseCoopers the audited financial statements for the fiscal year ended December 30, 2017 (the “2017 Financial Statements”) and audit of internal control over financial reporting;

Discussed with PricewaterhouseCoopers the matters required to be discussed by the Statement of Auditing Standards No. 61 (Communication with Audit Committees), as amended by the AICPA professional standards, vol. 1 AU section 380, as adopted by the Public Company Oversight Board in Rule 3200T, which include, among other items, matters related to the conduct of the audit of the 2017 Financial Statements; and

Received the written disclosures and the letter from PricewaterhouseCoopers required by applicable requirements of the Public Company Accounting Oversight Board regarding their communications with the Audit Committee concerning independence and discussed with PricewaterhouseCoopers their independence from Hanesbrands.

Based on the foregoing review and discussions, the Audit Committee recommended to the Board of Directors that the 2017 Financial Statements as audited by PricewaterhouseCoopers be included in Hanesbrands’ Annual Report on Form 10-K for the fiscal year ended December 30, 2017.

By the members of the
Audit Committee, consisting of:

Robert F. Moran, Chair Jessica T. Mathews Franck J. Moison David V. Singer

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Audit Information

Relationship with Independent Registered Public Accounting Firm
The following table sets forth the fees billed to us by PricewaterhouseCoopers for services in the fiscal years ended December 30, 2017 and December 31, 2016:

      Fiscal Year Ended
December 30, 2017
      Fiscal Year Ended
December 31, 2016
Audit fees $5,677,162 $5,929,140
Audit-related fees 115,278 91,800
Tax fees 333,595 704,095
All other fees
Total fees $6,126,035 $6,725,035

In the above table, in accordance with applicable SEC rules, “Audit fees” include fees billed for professional services for the audit of our consolidated financial statements included in our annual report on Form 10-K and review of our financial statements included in our quarterly reports on Form 10-Q, fees billed for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements, fees related to services rendered in connection with securities offerings and fees for the audit of our internal control over financial reporting and consultations concerning financial accounting and reporting standards.

“Audit-related fees” are fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under the caption “Audit fees.” For the fiscal years ended December 30, 2017 and December 31, 2016, these fees primarily relate to attestation services rendered in connection with regulatory filings in certain foreign jurisdictions and various other services.

“Tax fees” for the fiscal years ended December 30, 2017 and December 31, 2016 include consultation, preparation and compliance services for domestic and certain foreign jurisdictions and consulting related to research and development credits.

Our Audit Committee pre-approves all services, including both audit and non-audit services, provided by our independent registered public accounting firm. For audit services (including statutory audit engagements as required under local country laws), the independent registered public accounting firm provides the Audit Committee with an engagement letter outlining the scope of the audit services proposed to be performed during the year. The independent registered public accounting firm also submits an audit services fee proposal, which is approved by the Audit Committee before the audit commences. The Audit Committee may delegate the authority to pre-approve audit and non-audit engagements and the related fees and terms with the independent auditors to one or more designated members of the Audit Committee, as long as any decision made pursuant to such delegation is presented to the Audit Committee at its next regularly scheduled meeting. All audit and permissible non-audit services provided by PricewaterhouseCoopers to us during the fiscal years ended December 30, 2017 and December 31, 2016 were pre-approved by the Audit Committee.

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           Proposal 3 —  Advisory Vote to Approve
Executive Compensation
       

Hanesbrands’ stockholders have the opportunity to cast a non-binding, advisory “say on pay” vote on our named executive officer compensation, as disclosed in this proxy statement. Based on the results of the stockholder advisory vote on the frequency of say on pay votes, which was held at the 2017 Annual Meeting of Stockholders, and based on the Board of Directors’ recommendation, Hanesbrands currently intends to hold such votes on an annual basis.

At our 2017 Annual Meeting of Stockholders, our stockholders overwhelmingly approved the compensation of Hanesbrands’ named executive officers with over 93% support. Our Board of Directors, and the Compensation Committee in particular, considered several factors in determining that the fundamental characteristics of Hanesbrands’ executive compensation program should continue this year, including the strong support of our stockholders, the executive compensation programs of our peer group companies, our past operating performance and planned strategic initiatives.

We believe that our executive compensation philosophy, practices and policies have three essential characteristics. They are:

   
focused on aligning senior management and stockholder interests in a simple, quantifiable and unifying manner;

necessary to attract, retain and motivate the executive team to support the attainment of our business strategy and operating imperatives; and

reasonable in comparison to our peer group companies.

   

Stockholders are encouraged to review the “Compensation Discussion and Analysis” section beginning on page 30 for more information on our executive compensation program.

This advisory vote is not intended to address any specific element of compensation; rather, it relates to the overall compensation of our named executive officers, as well as the compensation philosophy, practices and policies described in this proxy statement. We are asking stockholders to approve the following advisory resolution:

“RESOLVED, that the stockholders approve the compensation of Hanesbrands’ named executive officers as disclosed in the proxy statement for Hanesbrands’ 2018 Annual Meeting of Stockholders, including the Compensation Discussion and Analysis and the executive compensation tables and related footnotes and narrative.”

Because this vote is advisory, it will not be binding on us or our Board of Directors, overrule any decision made by the Board of Directors or the Compensation Committee or create or imply any additional duty for the Board. We recognize, nonetheless, that our stockholders have a fundamental interest in Hanesbrands’ executive compensation practices. Thus, the Compensation Committee may take into account the outcome of the vote when considering future executive compensation arrangements.


Our Board of Directors unanimously recommends a vote FOR approval, on an advisory basis, of the compensation of Hanesbrands’ named executive officers.


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Compensation Discussion and Analysis

Compensation Highlights

Business Strategies and Priorities
Hanesbrands is a socially responsible leading marketer of everyday basic innerwear and activewear apparel in the Americas, Europe, Australia and Asia-Pacific under some of the world’s strongest apparel brands, including Hanes, Champion, Bonds, Maidenform, DIM, Bali, Playtex, JMS/Just My Size, Nur Die/Nur Der, L’eggs, Lovable, Wonderbra, Berlei, Gear for Sports and Alternative. We have a long history of innovation, product excellence and brand recognition, and we take great pride in our reputation for ethical business practices and the success of our Hanes for Good corporate responsibility program for community and environmental improvement.

Over the past decade, we have refined and strengthened our multi-faceted business model by implementing various strategies based on the underlying premise of Sell More, Spend Less and Generate Cash. These strategies include the globalization of our supply chain, our revenue and margin-enhancing Innovate-to-Elevate strategy and the implementation of a disciplined acquisition and capital allocation strategy.

These strategies have been extremely successful in driving solid financial results and setting the stage for future growth. Our strong cash flow will allow us to continue to pursue strategic acquisitions and investment that we believe will drive long-term stockholder returns. Our disciplined acquisition strategy is delivering incremental benefits to our stockholders not only through cost-saving synergies, but also through revenue diversification and organic growth opportunities. We are preparing for future growth through a number of strategic initiatives, including: (1) increased investment in our global portfolio of leading brands, including brand building and marketing support; (2) accelerated development of our global omnichannel capabilities, including online in the U.S. as well as online and retail in our international markets; (3) continued focus on strategic acquisitions that complement our current brands and provide revenue diversification both by channel and internationally; (4) further leveraging of our supply chain capabilities; and (5) expansion of our Champion brand globally.

2017 Performance Highlights
During 2017, we continued to deliver on our key strategic priorities in a challenging and highly competitive global environment. Key financial and strategic highlights included:

Record net sales of $6.47 billion, with sales in the global online channel increasing 22 percent;

Greater geographic diversity with record International segment sales of $2.1 billion, or 32 percent of total sales;

The acquisition of Alternative Apparel and its Alternative lifestyle brand known for its social responsibility and better basic T-shirts and fleece; and

Expansion across brands and geographies of our FreshIQ, X-Temp and ComfortFlex Fit innovation platforms.

Executive Compensation Philosophy and Framework
At Hanesbrands, we emphasize a “pay-for-performance” culture, linking a substantial percentage of an executive’s compensation to our performance and stockholders’ value growth. Specifically:

To motivate our executive officers and align their interests with those of our stockholders, we provide annual incentives designed to reward our executive officers for the attainment of short-term goals and long-term incentives designed to reward them for increasing stockholder value over time.

Performance-based and at-risk compensation represents nearly 75% of our named executive officers’ total target direct compensation.

In keeping with our pay for performance philosophy, we expect our executive officers to deliver overall results that exceed the target level of performance in order to receive above median market compensation. Performance below the target level of performance may result in below median market compensation.

Our compensation program is designed to reward exceptional and sustained performance. By combining a three-year vesting period for equity awards with a mandatory one-year holding period following vesting (and policies prohibiting hedging or pledging of such shares), a substantial portion of the value of our executives’ compensation package is tied to changes in our stock price, and therefore at-risk, for a significant period of time. The Compensation Committee believes this design provides an effective way to link executive compensation to long-term stockholder returns.


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Compensation Discussion and Analysis

Elements of 2017 Compensation
Our named executive officers’ compensation for 2017 consisted principally of the following elements:

      Base Salary

     

Fixed compensation component
 
Reflects the individual responsibilities, performance and experience of each named executive officer
     
Provides a fixed base of cash compensation for fulfillment of fundamental job responsibilities
     

Annual Incentive
Plan (“AIP”)
Awards

Performance-based cash compensation
 
Payout determined based on Company performance against pre-established metrics
Motivates performance by linking compensation to the achievement of key objectives that contribute to accomplishing consistent and strategic annual results

Long-Term
Incentive
Program
(“LTIP”) Awards

Performance-based and at-risk, time-vested compensation
 
Performance Share Awards (“PSAs”) (50% of LTIP opportunity)
 
Vesting on third anniversary of grant date
 
Number of shares received will range from 0% to 200% of the number of units granted based on 2017 Company performance against pre-established metrics
 
Restricted Stock Unit Awards (“RSUs”) (50% of LTIP opportunity)
 
Ratable vesting over a three-year service period
 
Mandatory one-year holding period following vesting for all LTIP awards
Encourages behavior that enhances the long-term growth, profitability and financial success of the Company, aligns executives’ interests with our stockholders and supports retention objectives

In addition, we provide health, welfare and retirement plans that promote employee health and support employees in attaining financial security. We also provide severance benefits under limited circumstances. These severance benefits, which provide our named executive officers with income protection in the event employment is terminated without cause or following a change in control, support our executive retention goals and encourage our named executive officers’ independence and objectivity in considering potential change in control transactions. See “Post-Employment Compensation” on page 42 for additional details.

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Compensation Discussion and Analysis

2017 Compensation Mix
The mix of compensation elements that we offer is intended to further our goals of:
 

achieving consistent and strategic annual results and long-term business objectives;

using an appropriate mix of cash and equity;

emphasizing a “pay-for-performance” culture;

effectively managing the cost of pay programs; and

providing a balanced total compensation program to ensure senior management is not encouraged to take unnecessary and excessive risks that may harm the Company.

Our emphasis on performance-based and at-risk pay is reflected in the following chart, which illustrates the average 2017 total target direct compensation mix for our Chief Executive Officer and our other named executive officers (“NEOs”).

2017 Total Target Direct Compensation  
  
Performance-Based and At-Risk Performance-Based and At-Risk
Compensation: 87.00% Compensation: 74.90%

The percentage of our Chief Executive Officer’s performance-based and at-risk compensation is the highest of our named executive officers, reflecting the position’s highest level of responsibility and accountability for results. Performance-based and at-risk compensation comprises nearly 75% of all of our named executive officers’ total target direct compensation. Because the value of such compensation depends on Hanesbrands’ achievement of key annual results and strategic long-term business objectives and/or is tied to changes in our stock price, our named executive officers’ actual compensation could be significantly less—or more—than the targeted levels.

CEO Potential Compensation Scenarios (Percentage of Total Compensation)  
      


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Compensation Discussion and Analysis

2017 Performance Criteria
The Compensation Committee chose to use net sales growth, diluted earnings per share from continuing operations, excluding actions (“EPS-XA”) growth, and cash flow from operations as performance criteria for our named executive officers’ 2017 performance-based pay opportunities, as follows:

2017 Results
(Dollars in Thousands, except EPS-XA)

Fiscal Year Ended
        December 30, 2017         December 31, 2016         % Change
Net Sales $6,471,410 $6,028,199 7.4%
EPS-XA* $1.93 $1.85 4.3%
Cash flow from Operations $655,718 $605,607 8.3%

* As in prior years and consistent with the terms of our Omnibus Incentive Plan, in measuring the attainment of EPS-XA growth for 2017, the Compensation Committee excluded the impact of charges for acquisition, integration and other actions, and the cumulative effects of tax or accounting charges, each as identified in our financial statements or other SEC filings. EPS-XA is a non-GAAP financial measure which is used as a performance measure in our executive compensation programs. EPS-XA is defined as diluted earnings per share from continuing operations (“EPS”), excluding actions and the tax effect on actions. On a GAAP basis, EPS was $0.17 in 2017 and $1.40 in 2016. We have chosen to provide this non-GAAP financial measure to investors to enable additional analyses of past, present and future performance and as a supplemental means of evaluating company operations absent the effect of tax reform, acquisition-related expenses and other actions. For a reconciliation to GAAP EPS, see Appendix A.

As a result of our 2017 performance, each of our named executive officers earned, in the aggregate, 114.5% of the target amounts for their performance-based pay opportunities.

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Compensation Discussion and Analysis

Best Practices in Executive Compensation
Hanesbrands’ executive compensation practices include a number of features we believe reflect responsible compensation and governance practices and promote the interests of stockholders.

 

Our practices include:

Performance-based pay - Approximately half of our named executive officers’ total target direct compensation is performance-based and must be earned every year based on objective, challenging performance criteria and metrics.
Challenging performance metrics - The Compensation Committee sets growth performance metrics that require consistent year over year improvement in performance rather than performance based on negotiated targets relative to the Company’s annual operating plan or public guidance.
Significant vesting periods - Equity awards made to our executive officers fully vest over a period of not less than three years.
Holding requirement - We require all Hanesbrands employees, including our named executive officers, to retain 100% of the net after-tax shares of Hanesbrands stock received through the exercise of options or the vesting of restricted stock units or other equity awards granted after December 1, 2010 for at least one year from the date of exercise or vesting.
Robust stock ownership guidelines - Our Chief Executive Officer’s stock ownership guideline is six times his base salary, and the ownership guideline for our other named executive officers is three times his or her base salary. Until the guideline is met, an executive is required to retain 50% of any shares received (on a net after-tax basis) under our stock-based compensation plans.
Clawback policy - We have adopted a clawback policy that allows us to recover cash and equity-based incentive compensation in the event we are required to prepare an accounting restatement due to material noncompliance with any financial requirement under the securities laws.
Prohibition on hedging and pledging - Our insider trading policy prohibits all of our directors, officers and employees from pledging our securities or engaging in “short sales” or “sales against the box” or trading in puts, calls, warrants or other derivative instruments on our securities.
Engagement of an independent compensation consultant - Our Compensation Committee engages an independent compensation consultant, who provides no other services to us, to advise on executive and non-employee director compensation matters. The independent compensation consultant reports to the Compensation Committee, who has the exclusive authority to retain or terminate the consultant.
     

Our practices exclude:

Repricing or replacing of underwater stock options or stock appreciation rights without stockholder approval
Providing excessive perquisites to executives
Employment agreements for our named executive officers
Single trigger change in control severance payments
Gross up payments to cover personal income taxes (other than due on relocation reimbursements as provided under a broad-based program) or excise taxes that pertain to executive or severance benefits (other than pursuant to change in control agreements entered into prior to December 1, 2010)

Compensation Committee Report

The Compensation Committee reviews and approves Company compensation programs on behalf of the Board. In fulfilling its oversight responsibilities, the committee reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on that review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and Hanesbrands’ Annual Report on Form 10-K.

By the members of the
Compensation Committee, consisting of:

Ann E. Ziegler, Chair Bobby J. Griffin James C. Johnson Ronald L. Nelson

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Compensation Discussion and Analysis

Overview

This compensation discussion and analysis provides information about our compensation objectives and principles for our named executive officers, who for our 2017 fiscal year were:

Gerald W. Evans, Jr.        Chief Executive Officer
Barry A. Hytinen Chief Financial Officer effective October 16, 2017
Richard D. Moss Chief Financial Officer prior to October 16, 2017
W. Howard Upchurch Group President, Innerwear Americas
Joia M. Johnson Chief Administrative Officer, General Counsel and Corporate Secretary
Michael E. Faircloth Group President, Global Supply Chain, Information Technology and E-Commerce

Our compensation discussion and analysis also contains details about how and why significant compensation decisions were made and places in context the information contained in the tables that follow this discussion.

Listed below are several terms that we frequently use in discussing our executive compensation program:

Frequently Used Terms              
AIP Annual Incentive Plan
EPS-XA Diluted earnings per share from continuing operations, excluding actions
LTIP Long-Term Incentive Program
PSA Performance Share Award
RSU Restricted Stock Unit
SERP Supplemental Employee Retirement Plan

How We Make Executive Compensation Decisions
The Compensation Committee, advised by its independent compensation consultant, is responsible for overseeing and approving the executive compensation program for the Company’s executive officers, including our named executive officers.

Frederic W. Cook & Co., or “FW Cook,” serves as the Compensation Committee’s executive compensation consultant. FW Cook reports directly to the Compensation Committee, and the committee has the sole authority to terminate or replace FW Cook at any time. FW Cook assists in the development of compensation programs for our executive officers and our non-employee directors by providing information about compensation by our peer group companies (which are described in “How the Compensation Committee uses Peer Groups” on page 36), relevant market trend data, information on current issues in the regulatory environment, recommendations for program design and best practices and corporate governance guidance.

The Compensation Committee realizes that it is essential to receive objective advice from its compensation advisors. Prior to the retention of a compensation consultant or any other external advisor, and from time to time as the Committee deems appropriate, the Compensation Committee assesses the independence of the advisor from management, taking into consideration all factors relevant to the advisor’s independence, including the factors specified in NYSE listing standards. The Compensation Committee has assessed the independence of FW Cook based on these criteria and concluded that FW Cook’s work for the committee does not raise any conflict of interest.

At the direction of the Compensation Committee, our management has worked with FW Cook to prepare information about the compensation competitiveness of our executive officers. Our Chief Executive Officer uses this information to make recommendations to the Compensation Committee regarding compensation of these officers, other than himself, and FW Cook provides guidance to the Compensation Committee about those recommendations. FW Cook also makes independent recommendations to the Compensation Committee regarding the compensation of our Chief Executive Officer without the foreknowledge of management. The Compensation Committee uses this information and considers these recommendations in making decisions about executive compensation for all of our executive officers. All decisions regarding compensation of executive officers (other than our Chief Executive Officer) are made solely by the Compensation Committee. The Chief Executive Officer’s compensation is approved by the independent members of the Board of Directors, after reviewing the Compensation Committee’s recommendation.

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Compensation Discussion and Analysis  

The Compensation Committee does not generally make regular annual adjustments in pay. Instead, the Compensation Committee uses judgment when making compensation decisions and reviews executive pay from a holistic perspective, including reference to compensation peer group pay practices and norms, general industry pay levels as gathered from publicly-available survey sources, individual performance, experience, strategic importance of the position to Hanesbrands and internal equity considerations.

In making compensation decisions, the Compensation Committee:

     
     

Determines the competitive market for total target direct compensation for each named executive officer

Evaluates the allocation among the various elements of compensation, including base salary, AIP and LTIP compensation

Determines the appropriate balance of at-risk, time-based and performance-based equity compensation within each named executive officer’s LTIP opportunity

How the Compensation Committee uses Peer Groups
To determine what constitutes a “competitive” compensation package, the Compensation Committee generally considers total target direct compensation, as well as the allocation among those elements of compensation, at our peer group companies. Because of significant differences in the pay practices of our peer group companies, the Compensation Committee does not view this market data as a prescriptive determinant of individual compensation. Rather, it is used by the Compensation Committee as a general guide in its decisions on the amount and mix of total target direct compensation. Ultimately, named executive officer compensation is based on the Compensation Committee’s judgment, taking into account factors further described in this Compensation Discussion and Analysis that are particular to Hanesbrands and our named executive officers, including, most importantly, actual performance.

The Compensation Committee, with assistance from FW Cook, establishes the Company’s peer group that is used for market comparison purposes.

We seek to identify peer group companies:
  that have comparable business models and strategy;

  with whom we compete for talent, capital and customers; and

  that are of a similar size and complexity.
In selecting new peer companies and evaluating the continued inclusion of current peers, the Compensation Committee also considers companies:
 
 
 
 
 

In apparel and/or other general consumer product (non-durable goods) industries

With multiple distribution channels, such as wholesale, retail and e-commerce

Of a similar revenue size, market capitalization and margins

That consider us to be a peer for compensation purposes, plus the peer companies identified by our apparel peer companies

Used by us for financial comparison purposes

Used in the most recent Institutional Shareholder Services (“ISS”) peer group for purposes of the chief executive officer pay-for-performance test


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In light of these parameters, the Compensation Committee determined to modify the peer group previously used for purposes of determining 2016 compensation by removing Edgewell Personal Care Company (formerly known as Energizer Holdings, Inc.) and Kate Spade & Company. The Committee felt that Edgewell’s relatively small size in terms of revenue and Kate Spade’s relatively small size in terms of revenue and market capitalization no longer made them appropriate peers. The Compensation Committee chose to add Foot Locker, Inc., Ralph Lauren Corporation and The Gap, Inc. to the 2017 peer group because of their good overall alignment with the Committee’s peer group selection criteria. Jarden Corporation was removed from the peer group due to its merger with Newell Brands Inc., which continues to be in the peer group. The peer group used by the Compensation Committee for purposes of determining 2017 compensation consisted of the following 17 companies:

 

2017 Peer Group

     
Apparel Companies       Consumer Products Companies
American Eagle Outfitters, Inc.

The Clorox Company

Carter’s Inc.

Fortune Brands Home & Security, Inc.

Coach Inc.

Hasbro, Inc.

Foot Locker, Inc.

The Hershey Company

   Gildan Activewear, Inc.

Mattel, Inc.

L Brands, Inc.

Newell Brands Inc.

  
PVH Corp.

Stanley Black & Decker, Inc.

 
Ralph Lauren Corporation

 

The Gap, Inc.

 

V.F. Corporation

Elements of 2017 Executive Compensation

Total Target Direct Compensation
The following supplemental table shows base salary, AIP and LTIP compensation at the target level for each of our named executive officers for 2018, 2017 and 2016 as approved by our Compensation Committee. This table presents information that is supplemental to, and should not be considered a substitute for, the information contained in the Summary Compensation Table that appears under “Summary Compensation Table” on page 47. This supplemental table is not required by SEC rules. However, we have chosen to include it to help investors better understand the total target direct compensation levels of our named executive officers for the two most recent years reflected in our Summary Compensation Table and for the current year. No information is provided for Mr. Hytinen for 2016 because he first became a named executive officer in the fourth quarter of 2017. No information is provided for Mr. Moss for 2018 because he ceased being a named executive officer in the fourth quarter of 2017.

In December 2016, using the methodology discussed under “How We Make Executive Compensation Decisions” on page 35, the Compensation Committee determined the total target direct compensation levels of our named executive officers for 2017, as well as the relative mix of base salary, AIP opportunity and LTIP opportunity for those executives.

When setting Mr. Evans’ total target direct compensation level for 2017, the Compensation Committee considered the total compensation opportunity for chief executive officers at our peer group companies, as well as the October 2016 increase to Mr. Evans’ total target direct compensation as result of his election as Chief Executive Officer. Based on those factors, the Compensation Committee determined not to recommend any changes to Mr. Evans’ total target direct compensation for 2017.

Following a market review of pay practices at our peer group companies and considering changes to the scope of certain officers’ individual responsibilities, the Compensation Committee approved the following increases to the 2017 total target direct compensation levels for our other named executive officers:

Mr. Moss’ total target direct compensation for 2017 was increased by approximately 10%. His base salary and target AIP opportunity were each increased from $575,000 to $625,000 and his target LTIP opportunity was increased from $1,450,000 to $1,600,000.
Mr. Upchurch’s total target direct compensation for 2017 was increased by approximately 16%. His base salary was increased from $525,000 to $570,000, his target AIP opportunity was decreased from $446,250 to $427,500 and his target LTIP opportunity was increased from $925,000 to $1,202,000.

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Ms. Johnson’s total target direct compensation for 2017 was increased by approximately 10%. Her base salary was increased from $515,000 to $550,000, her target AIP opportunity was increased from $437,750 to $467,500 and her target LTIP opportunity was increased from $960,000 to $1,082,000.
Mr. Faircloth’s total target direct compensation for 2017 was increased by approximately 15%. His base salary was increased from $510,000 to $540,000, his target AIP opportunity was increased from $382,500 to $405,000 and his target LTIP opportunity was increased from $895,000 to $1,105,000.

In October 2017, in connection with Mr. Hytinen’s appointment as Chief Financial Officer, the Compensation Committee considered the total target direct compensation opportunity for chief financial officers at our peer group companies, as well as Mr. Hytinen’s breadth of experience and skillset. Based on those factors, the Compensation Committee determined to set Mr. Hytinen’s base salary at $600,000, set his target AIP opportunity at $510,000 and set his target LTIP opportunity at $1,200,000. In addition, the Compensation Committee approved the payment to Mr. Hytinen of: (i) a transition equity award consisting of restricted stock units having an aggregate value as of the grant date of approximately $1,000,000, which will vest 33%, 33% and 34%, respectively, on the first, second and third anniversaries of the grant date; and (ii) a transition cash bonus of $250,000 that must be repaid in the event Mr. Hytinen voluntarily terminates his employment with Hanesbrands prior to the second anniversary of his employment start date.

Our Compensation Committee typically approves, at its December meeting, LTIP awards that are intended to serve as equity incentive compensation for the following fiscal year. On December 12, 2017, the Compensation Committee approved the 2018 LTIP awards. The PSAs and RSUs that comprise the 2018 LTIP awards were granted to the named executive officers on that date. The supplemental table below includes the target value of the 2018 LTIP awards in the row for fiscal year 2018, as this corresponds to the analysis undertaken by the Compensation Committee in determining total target direct compensation. Under SEC rules, however, we are required to include the grant date fair value of equity awards in the fiscal year in which the award is granted. Therefore, in the Summary Compensation Table on page 47, the grant date fair value for the 2018 LTIP awards is included in the stock awards column for fiscal year 2017.

For a discussion of 2018 compensation information reflected in the supplemental table below, see “2018 Compensation Decisions” on page 43.

Annual Compensation at Target Long-Term
Compensation
at Target
Name        Year        Base Salary/% of
Value of Total
Target Direct
Compensation
Value at
Target of AIP
Compensation/%
of Value of Total
Target Direct
Compensation
Value at
Target of LTIP
Compensation/%
of Value of Total
Target Direct
Compensation
Value of Total
Target Direct
Compensation
Gerald W. Evans, Jr. 2018 $1,100,000        12.2 %        $1,650,000        18.3 %        $6,250,000        69.4 %        $9,000,000
2017 1,100,000 13.0 1,650,000 19.5 5,725,000 67.6 8,475,000
2016 850,000 20.5 850,000 20.5 2,450,000 59.0 4,150,000
Barry A. Hytinen 2018 600,000 26.0 510,000 22.1 1,200,000 51.9 2,310,000
2017 600,000 26.0 510,000 22.1 1,200,000 51.9 2,310,000
2016
Richard D. Moss 2018
2017 625,000 21.9 625,000 21.9 1,600,000 56.1 2,850,000
2016 575,000 22.1 575,000 22.1 1,450,000 55.8 2,600,000
W. Howard Upchurch 2018 570,000 24.8 427,500 18.6 1,302,000 56.6 2,299,500
2017 570,000 25.9 427,500 19.4 1,202,000 54.6 2,199,500
2016 525,000 27.7 446,250 23.5 925,000 48.8 1,896,250
Joia M. Johnson 2018 550,000 25.0 467,500 21.3 1,182,000 53.7 2,199,500
2017 550,000 26.2 467,500 22.3 1,082,000 51.5 2,099,500
2016 515,000 26.9 437,750 22.9 960,000 50.2 1,912,750
Michael E. Faircloth 2018 560,000 25.6 420,000 19.2 1,205,000 55.1 2,185,000
2017 540,000 26.3 405,000 19.8 1,105,000 53.9 2,050,000
2016 510,000 28.5 382,500 21.4 895,000 50.1 1,787,500

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Criteria and Metrics for our Compensation Program
A significant portion of the compensation that our named executive officers may earn is subject to the achievement of Company-wide performance metrics. We believe that the performance of our executive officers is best viewed through their contributions to long-term stockholder value as reflected by achievement of annual performance metrics that our Compensation Committee believes to be drivers of our strategic business plans and stockholder returns. We use quantifiable performance criteria that are easily calculated and easily understood and that reinforce teamwork and internal alignment.

For 2017, the elements of our executive compensation program subject to the achievement of performance metrics consisted of:

the AIP; and

the PSA portion of LTIP compensation.


Percentage Payout of Target Incentive Compensation

Executive officers can earn incentive compensation equal to 10% of their targeted amount for performance at the threshold level, 100% of their targeted amount for performance at the target level and 200% of their targeted amount for performance at or above the maximum level. No incentive compensation is payable if performance is below the threshold level, and incentive compensation is capped at 200% of the target amount. Incentive compensation is payable on a straight line basis for performance between the threshold level and the target level, as well as between the target level and the maximum level.

In keeping with our pay for performance philosophy, we expect our executive officers to deliver overall results that exceed the target level of performance in order to receive above median market compensation. Performance below the target level of performance may result in below median market compensation.

CEO Potential Compensation Scenarios
(Comparison to Peer Group)


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The amounts earned by our named executive officers under the performance-based elements of our compensation program are based solely on our performance against pre-established criteria and metrics. The Compensation Committee selects criteria and metrics that have generally remained constant from year to year and that it considers to be key performance drivers that are important to our stockholders and aligned with our long-term business strategy, supplementing those criteria and metrics from time to time as the Compensation Committee deems necessary.

The Compensation Committee sets growth performance metrics that require consistent year over year improvement in performance rather than performance based on negotiated targets relative to the Company’s annual operating plan or public guidance. The Committee believes that this approach to establishing performance metrics has been a significant factor in Hanesbrands’ success over the past decade. De-linking performance metrics from public guidance reduces incentive-related risk by focusing our executives on long-term value creation rather than on short-term compensation maximization.

The performance criteria and metrics approved by the Compensation Committee for 2017 were as follows:

2017 Performance Criteria and Metrics
Criteria         Weighting         Threshold         Target         Maximum         FY2017 Results
Net Sales (growth compared to prior year) 20% 0% 3% 6% 7.4%
EPS-XA(growth compared to prior year)* 40% 0% 8% 16% 4.3%
Cash Flow from Operations 40% $400 million $600 million $800 million $655.7 million

*

As in prior years and consistent with the terms of our Omnibus Incentive Plan, in measuring the attainment of EPS-XA growth for 2017, the Compensation Committee excluded the impact of charges for acquisition, integration and other actions, and the cumulative effects of tax or accounting charges, each as identified in our financial statements or other SEC filings. EPS-XA is a non-GAAP financial measure which is used as a performance measure in our executive compensation programs. EPS-XA is defined as EPS excluding actions and the tax effect on actions. On a GAAP basis, EPS was $0.17 in 2017 and $1.40 in 2016. We have chosen to provide this non-GAAP financial measure to investors to enable additional analyses of past, present and future performance and as a supplemental means of evaluating company operations absent the effect of acquisition-related expenses and other actions. For a reconciliation to GAAP EPS, see Appendix A.

As a result of our 2017 performance, each of our named executive officers earned, in the aggregate, 114.5% of the target amounts for their performance-based pay opportunities.

Base Salary
We pay base salary to attract talented executives and to provide a fixed base of cash compensation for fulfillment of fundamental job responsibilities. The base salaries for our named executive officers are determined based on their experience and the scope of their responsibilities, both on an individual basis and in relation to the experience and scope of responsibilities of other executives. The Compensation Committee also considers the practices of the companies in our peer group. These factors result in different compensation levels among the named executive officers. Base salaries are adjusted periodically (but generally not every year) as part of the Compensation Committee’s annual review of total target direct compensation to reflect individual responsibilities, performance and experience, as well as market compensation levels.

Annual Incentive Plan (AIP)
The AIP is designed to motivate performance by linking a portion of our named executive officers’ compensation to the achievement of key annual results.

As discussed in “Criteria and Metrics for our Compensation Program” on page 39 the performance criteria for the AIP for 2017 were net sales growth, EPS-XA growth and cash flow from operations. As a result of our 2017 performance, each of our named executive officers earned AIP payments at 114.5% of their target amounts.

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Long-Term Incentive Program (LTIP)
The Compensation Committee currently uses equity grants as the primary means of providing long-term incentives to our named executive officers. These LTIP awards are designed to encourage behaviors that drive the long-term growth, profitability and financial success of the Company, align executives’ interests with our stockholders and support retention objectives. As discussed in “Criteria and Metrics for our Compensation Program” on page 39, the performance criteria for the PSAs included in the LTIP awards for 2017 were net sales growth, EPS-XA growth and cash flow from operations.

For 2017, two types of LTIP grants were awarded to our named executive officers:

PSAs; and
time-vested RSUs.

For 2017, 50% of the value of the LTIP opportunity consisted of PSAs and 50% of the value consisted of RSUs.* The terms of these awards are described below:


*

The actual value realized by our named executive officers as result of their 2017 PSA and RSU grants will depend on our stock price on the respective vesting date of each award.


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Our Compensation Committee typically approves, at its December meeting, LTIP awards that are intended to serve as equity incentive compensation for the following fiscal year. On December 13, 2016, the Compensation Committee approved the 2017 LTIP awards, and the PSAs and RSUs that comprise the 2017 LTIP awards were granted to the named executive officers on such date. Pursuant to SEC rules we are required to include the grant date fair value of equity awards in the fiscal year in which the award is granted. Therefore, in the Summary Compensation Table on page 47, the grant date fair value for the 2017 LTIP awards is included in the stock awards column for fiscal year 2016.

The Compensation Committee believes that setting performance criteria and metrics annually for performance-based equity awards, with a three-year vesting period, is the most effective approach for our LTIP. As a large multinational apparel company, Hanesbrands’ operating results can be significantly impacted by changing macroeconomic and regional economic factors. These economic factors, as well as the rapidly evolving retail industry, make it difficult to forecast operating plans accurately over an extended period of time. By combining a three-year vesting period for LTIP awards with a mandatory one-year holding period following vesting (and policies prohibiting hedging or pledging of such shares), the value of our executives’ LTIP awards are tied to changes in our stock price, and therefore at-risk, for a significant period of time. The Compensation Committee believes this design provides an effective way to link executive compensation to long-term stockholder returns.

Post-Employment Compensation
Our named executive officers are eligible to receive post-employment compensation pursuant to the Hanesbrands Inc. Pension Plan (the “Pension Plan”) and our defined contribution retirement program, which consists of the Hanesbrands Inc. Retirement Savings Plan (the “401(k) Plan”) and the Hanesbrands Inc. Supplemental Employee Retirement Plan (the “SERP”), and pursuant to Severance/Change in Control Agreements, or “Severance Agreements.” Each of these arrangements is discussed below.

Pension Plan
The Pension Plan is a defined benefit pension plan under which benefits have been frozen since December 31, 2005, intended to be qualified under Section 401(a) of the Internal Revenue Code, that provides the benefits that had accrued for any of our employees, including our named executive officers, as of December 31, 2005 under a plan maintained by our former parent company prior to our becoming an independent public company. Because the Pension Plan is frozen, no additional employees became participants in the Pension Plan after December 31, 2005, and existing participants in the Pension Plan do not accrue any additional benefits after December 31, 2005.

Defined Contribution Retirement Program
Our defined contribution retirement program consists of the 401(k) Plan and the SERP.

Under the 401(k) Plan, our named executive officers and generally all full-time domestic exempt and non-exempt salaried employees may contribute a portion of their compensation to the plan on a pre-tax basis and receive a matching employer contribution of up to a possible maximum of 4% of their eligible compensation not in excess of certain dollar limits mandated by the Internal Revenue Code. In addition, we may make a discretionary employer contribution to exempt and non-exempt salaried employees of up to an additional 4% of their eligible compensation.

The SERP is a nonqualified supplemental retirement plan that provides two types of benefits:

First, the “Defined Contribution Component” of the SERP provides for employer matching and discretionary contributions to employees whose compensation exceeds a threshold set by the Internal Revenue Code. Although, as described above, the 401(k) Plan provides for employer contributions to our named executive officers at the same percentage of their eligible compensation as provided for all employees who participate in the 401(k) Plan, compensation and benefit limitations imposed on the 401(k) Plan by the Internal Revenue Code generally prevent us from making the entire amount of the employer matching and discretionary contributions contemplated by the 401(k) Plan with respect to any employee whose compensation exceeds a threshold set by Internal Revenue Code provisions, which was $270,000 for 2017. The SERP provides to those employees whose compensation exceeds this threshold, including our named executive officers, benefits that would be earned under the 401(k) Plan but for these limitations.
Second, the “Defined Benefit Component” of the SERP provides benefits consisting of those supplemental retirement benefits that had been accrued as of December 31, 2005 under a plan maintained by our former parent company prior to our becoming an independent public company.

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Severance Agreements
We have entered into Severance Agreements with all of our named executive officers. Severance Agreements help us attract and retain key talent and also provide important protections to us by discouraging our key executives from competing with us or soliciting our customers or employees for a specified period of time following termination. The Severance Agreements provide our named executive officers with benefits upon the involuntary termination of their employment other than for wrongful behavior or misconduct. The Severance Agreements also contain change in control benefits for these officers to help keep them focused on their work responsibilities during the uncertainty that accompanies a potential change in control and provide benefits for a period of time after a change in control transaction. We believe the levels of benefits offered by the Severance Agreements are appropriate and competitive. Compensation that could potentially be paid to our named executive officers pursuant to the Severance Agreements is described under “Potential Payments upon Termination or Change in Control” on page 55. Each agreement continues in effect unless we give at least 18 months’ prior written notice that the agreement will not be renewed. In addition, if a change in control occurs during the term of the agreement, the agreement will automatically continue for two years after the end of the month in which the change in control occurs.

Benefit Plans and Arrangements
Our named executive officers are eligible to participate in certain of our other employee benefits plans and arrangements. These consist of the Hanesbrands Inc. Executive Deferred Compensation Plan (the “Executive Deferred Compensation Plan”), the Hanesbrands Inc. Executive Life Insurance Plan (the “Life Insurance Plan”), and the Hanesbrands Inc. Executive Disability Plan (the “Disability Plan”). In general, these benefits are designed to provide a safety net of protection against the financial catastrophes that can result from illness, disability or death and to enable executives to save for future financial needs in a tax efficient manner.

Under the Executive Deferred Compensation Plan, a group of approximately 235 U.S.-based employees, generally at the director level and above, including our named executive officers, may defer receipt of cash and equity compensation. This benefit offers tax advantages to eligible employees, permitting them to defer payment of their compensation and defer taxation on that compensation until a future date.

The Life Insurance Plan provides life insurance benefits to a group of approximately 75 U.S.-based employees, generally at the level of vice president or above, including our named executive officers, who contribute materially to our continued growth, development and future business success. The Life Insurance Plan, which includes both a death benefit and a cash value, provides life insurance coverage during active employment in an amount equal to three times annual base salary, and, depending on the performance of investments in the plan, may offer continuing coverage following retirement. The Life Insurance Plan also provides executives with the opportunity to make voluntary, after-tax contributions that may be allocated by the executive into a range of investment options.

The Disability Plan provides long-term disability benefits for a group of approximately 75 U.S.-based employees, generally at the level of vice president and above, including our named executive officers. If an eligible employee becomes totally disabled, the program will provide a monthly disability benefit equal to 1/12 of the sum of (i) 75% of the employee’s annual base salary up to an amount not in excess of $500,000 and (ii) 50% of the three-year average of the employee’s annual short-term incentive payments up to an amount not in excess of $250,000. The maximum monthly disability benefit is $41,667 and is reduced by any disability benefits that an employee is entitled to receive under Social Security, workers’ compensation, a state compulsory disability law or another plan of Hanesbrands providing benefits for disability.

2018 Compensation Decisions
In December 2017, using the methodology discussed under “How We Make Executive Compensation Decisions” on page 35, the Compensation Committee determined the total target direct compensation levels of our executive officers for 2018, as well as the relative mix of base salary, AIP opportunity and LTIP opportunity for those executives.

In selecting the performance criteria and metrics for 2018, the Committee decided to (i) add organic sales growth as a new performance metric and (ii) increase the threshold, target and maximum levels for the Company’s cash flow from operations metric.


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When setting Mr. Evans’ total target direct compensation level for 2018, the Compensation Committee considered the total compensation opportunity for chief executive officers at our peer group companies, as well as our operating performance and returns to stockholders. Based on those factors, the Compensation Committee determined to increase Mr. Evans’ total target direct compensation for 2018 by approximately 6%. No changes were made to his base salary or target AIP opportunity, but his target LTIP opportunity was increased from $5,725,000 to $6,250,000.

Following a market review of pay practices at our peer group companies and considering changes to the scope of certain officers’ individual responsibilities, the Compensation Committee approved the following increases to the total target direct compensation levels for our other named executive officers:

Mr. Upchurch’s total target direct compensation for 2018 was increased by approximately 5%. No changes were made to his base salary or target AIP opportunity, but his target LTIP opportunity was increased from $1,202,000 to $1,302,000.

Ms. Johnson’s total target direct compensation for 2018 was increased by approximately 5%. No changes were made to her base salary or target AIP opportunity, but her target LTIP opportunity was increased from $1,082,000 to $1,182,000.

Mr. Faircloth’s total target direct compensation for 2018 was increased by approximately 7%. His base salary was increased from $540,000 to $560,000, his target AIP opportunity was increased from $405,000 to $420,000 and his target LTIP opportunity was increased from $1,105,000 to $1,205,000.

No changes were made to Mr. Hytinen’s total target direct compensation for 2018.

With respect to the named executive officers’ 2018 LTIP opportunity, the Compensation Committee again determined that 50% of the LTIP opportunity will consist of PSAs and 50% of the LTIP opportunity will consist of RSUs.


The Compensation Committee determined to continue the overall structure of the AIP and LTIP for 2018. The PSAs and RSUs for 2018 were granted on December 12, 2017. As a result, these awards are reflected in the Grants of Plan-Based Awards table on page 49 and the full grant date value of these awards is included for 2017 in the Summary Compensation Table on page 47, even though the Compensation Committee views these as the 2018 LTIP award.

The Compensation Committee also approved performance criteria and metrics for 2018 that will be used to determine the amounts earned by our named executive officers under their performance-based pay opportunities. Our named executive officers can earn performance-based compensation equal to 10% of their targeted amount for performance at the threshold level, 100% of their targeted amount for performance at the target level and 200% of their targeted amount for performance at or above the maximum level. No performance-based compensation is payable if performance is below the threshold level, and incentive compensation is capped at 200% of the target amount. Performance-based compensation is payable on a straight-line basis for performance between the threshold level and the target level, as well as between the target level and the maximum level.

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The Compensation Committee again selected performance criteria and metrics that are key drivers of the Company’s long-term business strategy and that require consistent year over year improvement in Company performance rather than performance based on negotiated targets relative to the Company’s annual operating plan or public guidance. The performance criteria and metrics for 2018 are as follows:

Criteria       Weighting       Threshold       Target       Maximum
Net Sales (growth compared to prior year) 10% 0% 3% 6%
Organic sales (growth compared to prior year)* 10% 0% 1% 2%
EPS-XA (growth compared to prior year) 40% 0% 8% 16%
Cash flow from operations 40% $500 million $700 million $900 million

* Organic sales is defined as net sales excluding contributions from acquisitions.

In selecting the performance criteria and metrics for 2018, the Committee decided to (i) add organic sales growth as a new performance metric and (ii) increase the threshold, target and maximum levels for the Company’s cash flow from the operations metric. The Compensation Committee decided to retain net sales growth and EPS-XA growth as performance metrics for 2018 because the Committee believes that these measures remain effective tools for increasing stockholder value by incorporating aspects of growth, profitability and capital efficiency.

Additional Information

Consideration of Prior Stockholder Advisory Vote on Executive Compensation
At our 2017 Annual Meeting of Stockholders, our stockholders had the opportunity to cast an advisory “say on pay” vote on our executive compensation. Our stockholders overwhelmingly approved the compensation of our named executive officers as disclosed in the proxy statement for that meeting with over 93% support. Our Board of Directors, and the Compensation Committee in particular, considered this strong level of support, as well as the executive compensation programs of our peer group of companies, our past operating performance and planned strategic initiatives, in making the determination that the fundamental characteristics of our executive compensation program should continue this year.

No Tax Gross-Ups
We do not increase payments to any executive officer to cover non business-related personal income taxes, other than the personal income taxes due on relocation reimbursements, which is provided under a broad-based program. Beginning December 1, 2010, we eliminated excise tax gross-ups with respect to new or amended severance or change-in-control agreements.

Clawbacks and Recoupment
The Compensation Committee has adopted a clawback policy in order to further align the interests of employees with the interests of our stockholders and strengthen the link between total compensation and the Company’s performance. Under this policy, in the event we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws, we may, in the discretion of the Compensation Committee (as it applies to current or former executive officers) or the Chief Executive Officer (as it applies to any other employee), seek to recover, from any employee who received cash-based or equity-based incentive compensation during the three-year period preceding the date on which we are required to prepare an accounting restatement, the amount by which such person’s cash-based or equity-based incentive compensation for the relevant period exceeded the lower payment that would have been made based on the restated financial results.

Stock Ownership and Retention Guidelines
We believe that our executives should have a significant ownership position in Hanesbrands. To promote such equity ownership and further align the economic interests of our executives with our stockholders, we have adopted stock ownership guidelines for our key executives, including our named executive officers.

Our Chief Executive Officer is required to own Hanesbrands stock valued at six times his annual base salary; all other named executive officers are required to own Hanesbrands stock valued at three times his or her base salary. Until the requirements of the stock ownership guidelines are met, an executive is required to retain 50% of any shares received (on a net after-tax basis) under our stock-based compensation plans. Our named executive officers and other key executives have a substantial portion of their incentive

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compensation paid in the form of our common stock. In addition to shares directly held by a key executive, shares held for such executive in the 401(k) Plan, the Executive Deferred Compensation Plan and the SERP, including hypothetical share equivalents held in the latter two plans, are counted for purposes of determining whether the ownership requirements are met. All of our named executive officers are in compliance with these stock ownership and retention guidelines.

The Compensation Committee has also implemented a policy that requires all Hanesbrands employees, including our named executive officers, to hold any net shares of Hanesbrands stock that they receive through the exercise of stock options (in the case of options granted after December 1, 2010) or the vesting or lapse of restrictions on restricted stock units or other equity awards for at least one year from the date of exercising, vesting or lapse, as applicable; provided, however, that this requirement does not apply to any employee of the Company whose employment terminates or who becomes totally disabled. For purposes of this policy, “net shares” means the number of shares obtained by the executive less any shares sold by the executive to cover the exercise price and brokerage costs of exercising an option or withheld by the Company to cover applicable income tax and employment tax withholding requirements.

Prohibitions on Pledging, Hedging and Other Derivative Transactions
Under our insider trading policy, directors and executive officers, including our named executive officers, are required to clear in advance all transactions in our securities with Hanesbrands’ law department. Further, no director, executive officer or other employee is permitted to (i) pledge or margin our securities as collateral for a loan obligation, (ii) engage in “short sales” or “sales against the box” or trade in puts, calls or other options on our securities or (iii) purchase any financial instrument or contract that is designed to hedge or offset any risk of decrease in the market value of our securities. These provisions are part of our overall program to prevent any of our directors, officers or employees from trading on material non-public information.

Compensation Risk Assessment
The Compensation Committee, in consultation with FW Cook, annually reviews our current compensation policies and practices and believes that, in light of their overall structure, the risks arising from such compensation policies and practices are not reasonably likely to have a material adverse effect on us.

Some of the key factors supporting the Compensation Committee’s conclusion include: (i) a reasonable degree of balance with respect to the mix of cash and equity compensation and short- and longer-term performance focus; (ii) the use of multiple performance criteria in our AIP and LTIP awards; (iii) multiple year vesting for equity awards; (iv) robust executive and non-employee director stock ownership guidelines; (v) an insider trading policy that includes prohibitions on hedging and pledging of our stock; (vi) holding period requirements on earned equity awards; and (vii) an incentive compensation clawback policy.

Tax Treatment of Certain Compensation
Previously, Section 162(m) of the Internal Revenue Code limited the tax deductibility of certain compensation paid to our Chief Executive Officer and our three other named executive officers, other than our Chief Financial Officer, with the highest total compensation. That provision disallowed the deductibility of certain compensation in excess of $1 million per year unless it was considered performance-based compensation under the Internal Revenue Code. As a result, we historically adopted policies and practices that were intended to qualify our AIP payments and PSAs as performance-based compensation under Section 162(m) and ensure the maximum possible tax deduction.

However, on December 22, 2017, the U.S. federal government enacted the Tax Cuts and Jobs Act, which substantially modifies the Internal Revenue Code and, among other things, does away with the performance-based compensation exception under Section 162(m). As a result, we expect that, in 2018 and beyond, we will no longer be able to deduct any compensation amounts over $1 million paid to any of our current or former named executive officers unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.

In making decisions about executive compensation, we continue to consider the impact of other regulatory provisions, including the provisions of Section 409A regarding non-qualified deferred compensation and the “golden parachute” provisions of Section 280G of the Internal Revenue Code. For example, we have attempted to structure the Severance Agreements so that they will not result in adverse tax consequences under Section 409A. We also consider how various elements of compensation will impact our financial results. In this regard, we consider the impact of applicable stock compensation accounting rules, which determine how we recognize the cost of employee services received in exchange for awards of equity instruments.

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Compensation Discussion and Analysis

Executive Compensation

Summary of Compensation
The following table sets forth a summary of compensation earned by or paid to our named executive officers for our 2017, 2016 and 2015 fiscal years.

Summary Compensation Table

Name and Principal Position       Year       Salary
($) (1)
      Bonus
($) (2)
      Stock
Awards
($) (3)
      Non-Equity
Incentive Plan
Compensation
($) (1) (4)
      Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($) (5)
      All Other
Compensation
($) (6)
      Total
Compensation
($)
Gerald W. Evans, Jr.
Chief Executive Officer
2017 $ 1,100,000 $ 6,250,014      $ 1,889,250          $ 164,848        $ 177,874     $ 9,581,985
2016 912,500 6,543,769 1,394,190 132,718 206,366 9,189,543
2015 750,000 2,450,002 900,000 8,612 190,895 4,299,509
Barry A. Hytinen
Chief Financial Officer
2017 127,693 250,000 2,200,017 124,277 42,824 2,744,812
 
Richard D. Moss
Former Chief Financial Officer
2017 625,000 715,625 92,305 1,432,930
2016 575,000 1,600,018 763,485 323,735 3,262,238
2015 575,000 1,450,008 690,000 157,830 2,872,838
W. Howard Upchurch
Group President,
Innerwear Americas
2017 570,000 1,302,001 489,488 51,457 65,043 2,477,988
2016 525,000 1,201,980 592,531 29,398 103,155 2,452,064
2015 525,000 924,972 535,500 111,184 2,096,656
Joia M. Johnson
Chief Administrative Officer,
General Counsel and
Corporate Secretary
2017 550,000 1,181,999 535,288 67,358 2,334,644
2016 515,000 1,082,012 581,245 278,966 2,457,223
2015 515,000 960,007 525,300 120,248 2,120,556
Michael E. Faircloth
Group President,
Global Supply Chain, Information
Technology and E-Commerce
2017 540,000 1,205,002 463,725 22,927 60,987 2,292,641
2016 510,000 1,105,012 507,884 13,083 85,673 2,221,651
 

(1) The amounts shown include deferrals to the 401(k) Plan and the Executive Deferred Compensation Plan.
(2) In connection with his appointment as Chief Financial Officer, Mr. Hytinen received a transition cash bonus of $250,000 that must be repaid in the event Mr. Hytinen voluntarily terminates his employment with Hanesbrands prior to the second anniversary of his employment start date.

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Compensation Discussion and Analysis

(3)

The amounts shown reflect the aggregate grant date fair value of awards during the year shown, computed in accordance with Topic 718 of the FASB Accounting Standards Codification. The assumptions we used in valuing these awards are described in Note 6, “Stock-Based Compensation,” to our consolidated financial statements included in our annual report on Form 10-K for the fiscal year ended December 30, 2017. These amounts do not correspond to the actual value that may be recognized by the officer. Additional information regarding outstanding awards, including exercise prices and expiration dates, can be found in the “Outstanding Equity Awards” table on page 50. The amounts shown under “Stock Awards” include: (i) grants of restricted stock units (“RSUs”) and (ii) performance share awards (“PSAs”), as shown below:


          Year       Grant Date Fair
Value of PSAs
      Grant Date Fair
Value of RSUs
      Total Grant Date
Fair Value of
Stock Awards
Gerald W. Evans, Jr. 2017 $3,125,007 $3,125,007 $6,250,014
2016 2,862,511 3,681,258 6,543,769
2015 1,225,001 1,225,001 2,450,002
Barry A. Hytinen 2017 600,008 1,600,009 2,200,017
Richard D. Moss 2017
2016 800,009 800,009 1,600,018
2015 725,004 725,004 1,450,008
W. Howard Upchurch 2017 651,000 651,000 1,302,001
2016 600,990 600,990 1,201,980
2015 462,486 462,486 924,972
Joia M. Johnson 2017 591,000 591,000 1,181,999
2016 541,006 541,006 1,082,012
2015 480,004 480,004 960,007
Michael E. Faircloth 2017 602,501 602,501 1,205,002
2016 552,506 552,506 1,105,012

The amounts shown above for PSAs represent the grant date value based on the probable outcome of the performance conditions. The value of such awards at the grant date assuming that the maximum level of performance conditions was achieved was as follows: for Mr. Evans: $2,450,002 in 2015, $5,725,022 in 2016 and $6,250,014 in 2017; for Mr. Hytinen: $1,200,016 in 2017; for Mr. Moss: $1,450,008 in 2015 and $1,600,018 in 2016; for Mr. Upchurch: $924,972 in 2015, $1,201,980 in 2016 and $1,302,001 in 2017; for Ms. Johnson: $960,007 in 2015, $1,082,012 in 2016 and $1,181,999 in 2017; and for Mr. Faircloth: $1,105,012 in 2016 and $1,205,002 in 2017.

(4)

The amount shown reflects the amount earned for such year under the AIP, which amount was paid after the end of such year.

(5)

Neither the Executive Deferred Compensation Plan nor the SERP provide for “above-market” or preferential earnings as defined in applicable SEC rules. Increases in pension values are determined for the periods presented; because the defined benefit arrangements are frozen, the amounts shown in this column represent solely the increase in the actuarial value of pension benefits previously accrued as of December 31, 2005.

(6)

For the fiscal year ended December 30, 2017, the amounts shown in the “All Other Compensation” column include the following: (i) premiums for an insurance policy on the life of each of the officers ($49,386 for Mr. Evans, $13,424 for Mr. Hytinen, $24,116 for Mr. Moss, $7,937 for Mr. Upchurch, $11,705 for Ms. Johnson and $10,321 for Mr. Faircloth); (ii) premiums for long-term disability insurance for each of the officers ($10,505 for Mr. Evans, $1,219 for Mr. Hytinen, $5,969 for Mr. Moss, $5,444 for Mr. Upchurch, $5,253 for Ms. Johnson and $5,157 for Mr. Faircloth); (iii) our contributions pursuant to the defined contribution retirement program, which consists of the qualified 401(k) Plan ($13,450 for each of the officers, other than Mr. Hytinen) and the nonqualified SERP ($104,443 for Mr. Evans, $4,308 for Mr. Hytinen, $54,739 for Mr. Moss, $43,656 for Mr. Upchurch, $42,203 for Ms. Johnson and $37,216 for Mr. Faircloth); (iv) relocation expenses ($16,832 for Mr. Hytinen); and (v) reimbursement of taxes owed with respect to relocation benefits ($8,260 for Mr. Hytinen). As discussed under “Defined Contribution Retirement Program” on page 42, we may make an employer contribution to exempt and non-exempt salaried employees, including our executive officers, of up to 4% of their eligible compensation. Because this contribution is discretionary and may not be made for any particular fiscal year, we have determined that it is most appropriate to reflect the contribution in the Summary Compensation Table in the year in which it is actually made. As a result, the amounts shown in the “All Other Compensation” column for the fiscal year ended December 30, 2017 include the following discretionary contributions with respect to the fiscal year ended December 31, 2016: $18,125 for Mr. Evans, $12,650 for Mr. Moss, $10,605 for Mr. Upchurch, $10,403 for Ms. Johnson and $8,750 for Mr. Faircloth.


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Compensation Discussion and Analysis

 

Grants of Plan-Based Awards
The following table sets forth a summary of grants of plan-based awards to our named executive officers during our 2017 fiscal year.

Grants of Plan-Based Awards in 2017




Estimated Future Payouts Under
Non-Equity Incentive Plan Awards


Estimated Future Payouts Under
Equity Incentive Plan Awards
   

All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
 (#)

    All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)




   


Exercise
or Base
Price of
Option
Awards
($/Sh)


   

Grant Date Fair
Value of Stock
and Option
Awards ($) (1)
Name     Grant
Date
    Threshold
($)
    Target
($)
    Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
Gerald W.
Evans, Jr.
1/24/2017 (2) $165,000 $1,650,000 $3,300,000 $— $—
12/12/2017 (3) 14,917 149,165 298,330 3,125,007 (4)
12/12/2017 (5) 149,165 3,125,007
Barry A.
Hytinen
10/16/2017 (2) 10,854 108,539 217,079
10/24/2017 (6) 43,337 1,000,001
12/12/2017 (3) 2,864 28,640 57,280 600,008 (4)
12/12/2017 (5) 28,640 600,008
Richard D.
Moss
1/24/2017 (2) 62,500 625,000 1,250,000
    
W. Howard
Upchurch
1/24/2017 (2) 42,750 427,500 855,000
12/12/2017 (3) 3,107 31,074 62,148 651,000 (4)
12/12/2017 (5) 31,074 651,000
Joia M.
Johnson
1/24/2017 (2) 46,750 467,500 935,000
12/12/2017 (3) 2,821 28,210 56,420 591,000 (4)
12/12/2017 (5) 28,210 591,000
Michael E.
Faircloth
1/24/2017 (2) 40,500 405,000 810,000
12/12/2017 (3) 2,876 28,759 57,518 602,501 (4)
12/12/2017 (5) 28,759 602,501

(1)

The amounts shown in the “Grant Date Fair Value” column reflect the aggregate grant date fair value of the awards, computed in accordance with Topic 718 of the FASB Accounting Standards Codification.

(2)

This award is the AIP award for the 2017 fiscal year. See “Annual Incentive Plan (AIP)” on page 40 for a discussion of the amounts paid under the AIP for the 2017 fiscal year.

(3)

This award is the portion of the LTIP award for 2018 that consists of the PSA. This award will vest on the third anniversary of the grant date, and the number of shares of common stock that will vest will range from 0% to 200% of the number of shares granted based on our achievement of pre-established performance metrics for our 2018 fiscal year. Once vested, this award will be paid in shares of our common stock distributed to participants following the vesting date. See “Long-Term Incentive Program (LTIP)” on page 41 for a discussion of these awards.

(4)

Represents the grant date fair value of the portion of the LTIP award for 2018 that consists of the PSA, assuming achievement at the target level.

(5)

This award represents the portion of the LTIP award for 2018 that consists of restricted stock units. The restricted stock units vest 33%, 33% and 34% on the first anniversary, the second anniversary and the third anniversary, respectively, of the date of grant. See “Long-Term Incentive Program (LTIP)” on page 41 for a discussion of these awards.

(6)

This award represents a transition equity award in the form of restricted stock units granted in connection with Mr. Hytinen’s election as Chief Financial Officer effective October 16, 2017. The restricted stock units vest 33%, 33% and 34% on the first anniversary, the second anniversary and the third anniversary, respectively, of the date of grant.


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Compensation Discussion and Analysis

Outstanding Equity Awards
The following table sets forth certain information with respect to outstanding equity awards at the end of our 2017 fiscal year for each of our named executive officers.

Outstanding Equity Awards at Fiscal 2017 Year-End

Option Awards Stock Awards
Name       Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
   Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
   Option
Exercise
Price
($) (1)
   Option
Expiration
Date
   Number of
Shares or Units
of Stock That
Have Not
Vested
(#)
   Market Value of
Shares or Units of
Stock That Have
Not Vested
($) (2)
   Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
   Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other Rights
That Have Not
Vested
($) (2)
Gerald W. Evans, Jr. (3) $ — $ —       149,165 (4)   $3,119,040 (5)
(6) 149,165 3,119,140
(7) 142,503 2,979,738
(8) 83,387 1,743,622
(9) 20,423 427,045
(10) 52,554 1,098,904
(11) 13,458 281,407
(12) 78,800 6.79 12/6/2020
(13) 162,712 6.09 12/8/2019
(14) 436,364 3.57 12/9/2018
Barry A. Hytinen (3) 28,640 (4) 598,862 (5)
(6) 28,640 598,862
(15) 43,337 906,177
Richard D. Moss (7) 39,827 832,783
(8) 23,305 487,308
(10) 31,104 650,385
(11) 7,965 166,548
W. Howard
Upchurch
(3) 31,074 (4) 649,757 (5)
(6) 31,074 649,757
(7) 29,919 625,606
(8) 17,508 366,092
(10) 19,841 414,875
(11) 5,081 106,244
(12) 36,036 6.79 12/6/2020
(13) 69,152 6.09 12/8/2019
(14) 105,456 3.57 12/9/2018
Joia M. Johnson (3) 28,210 (4) 589,871 (5)
(6) 28,210 589,871
(7) 26,933 563,169
(8) 15,760 329,542
(10) 20,593 430,600
(11) 5,275 110,300

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Compensation Discussion and Analysis

Option Awards Stock Awards
Name       Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
   Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
   Option
Exercise
Price
($) (1)
   Option
Expiration
Date
   Number of
Shares or Units
of Stock That
Have Not
Vested
(#)
   Market Value of
Shares or Units of
Stock That Have
Not Vested
($) (2)
   Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
   Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other Rights
That Have Not
Vested
($) (2)
Michael E. Faircloth (3) $ — $ —      28,759 (4)     $ 601,351 (5)
(6) 28,759 601,351
(7) 27,505 575,130
(8) 16,095 336,546
(10) 19,199 401,451
(11) 4,917 102,814
(12) 6,132 6.79 12/6/2020

(1) The exercise price of the stock options is 100% of the fair market value of our common stock on the date of grant, as adjusted to reflect our four-for-one stock split on March 3, 2015.
(2) Calculated by multiplying $20.91, the closing market price of our common stock on December 29, 2017, by the number of restricted stock units or performance shares which have not vested.
(3) This award was granted on December 12, 2017 and is the portion of the 2018 LTIP award that consists of performance shares. This award will vest on the third anniversary of the grant date, and the number of shares of common stock that will vest will range from 0% to 200% of the number of units granted based on the Company’s achievement of certain performance targets for its 2018 fiscal year discussed on pages 43-45.
(4) Represents the number of shares of our common stock that can be issued on the vesting date, based on the Company’s achievement of certain performance metrics for its 2018 fiscal year discussed on pages 43- 45, assuming achievement of the target level of performance. The ranges of shares that can be issued at the vesting date, based on actual performance is from 0 shares to 298,330 shares for Mr. Evans, 57,280 shares for Mr. Hytinen, 62,148 shares for Mr. Upchurch, 56,420 shares for Ms. Johnson and 57,518 shares for Mr. Faircloth.
(5) Calculated by multiplying $20.91, the closing market price of our common stock on December 29, 2017, by the number of performance shares granted, assuming achievement at the target level of performance. The market value of the shares of our common stock that can be issued on the vesting date, based on the Company’s achievement of certain performance targets for its 2018 fiscal year discussed on pages 43- 45, ranges from $0 (if the minimum number of shares, 0 shares, were to be received) to $6,250,014 for Mr. Evans, $1,200,016 for Mr. Hytinen, $1,302,001 for Mr. Upchurch, $1,181,999 for Ms. Johnson and $1,205,002 for Mr. Faircloth (if the maximum number of shares were to be received).
(6) This award was granted on December 12, 2017 and is the portion of the 2018 LTIP award that consists of restricted stock units. The restricted stock units vest 33%, 33% and 34% on the first anniversary, the second anniversary and the third anniversary, respectively, of the date of grant.
(7) This award was granted on December 13, 2016 and is the portion of the 2017 LTIP award that consists of performance shares. This award will vest on the third anniversary of the grant date.
(8) This award was granted on December 13, 2016 and is the portion of the 2017 LTIP award that consists of restricted stock units. The restricted stock units vest 33%, 33% and 34% on the first anniversary, the second anniversary and the third anniversary, respectively, of the date of grant.
(9) This award was granted on June 10, 2016. The restricted stock units vest 33%, 33% and 34% on the first anniversary, the second anniversary and the third anniversary, respectively, of the date of grant.
(10) This award was granted on December 8, 2015 and is the portion of the 2016 LTIP award that consists of performance shares. This award will vest on the third anniversary of the grant date.
(11) This award was granted on December 8, 2015 and is the portion of the 2016 LTIP award that consists of restricted stock units. The restricted stock units vest 33%, 33% and 34% on the first anniversary, the second anniversary and the third anniversary, respectively, of the date of grant.
(12) These stock options were granted on December 6, 2010. The stock options vested 33%, 33% and 34% on the first anniversary, the second anniversary and the third anniversary, respectively, of the date of grant and expire on the tenth anniversary of the date of grant.
(13) These stock options were granted on December 8, 2009. The stock options vested 33%, 33% and 34% on the first anniversary, the second anniversary and the third anniversary, respectively, of the date of grant and expire on the tenth anniversary of the date of grant.
(14) These stock options were granted on December 9, 2008. The stock options vested 33%, 33% and 34% on the first anniversary, the second anniversary and the third anniversary, respectively, of the date of grant and expire on the tenth anniversary of the date of grant.
(15) This award was granted on October 24, 2017. The restricted stock units vest 33%, 33% and 34% on the first anniversary, the second anniversary and the third anniversary, respectively, of the date of grant.

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Compensation Discussion and Analysis

Option Exercises and Stock Vested
The following table sets forth certain information with respect to options exercised and stock awards vested during our 2017 fiscal year with respect to the named executive officers.

Option Exercises and Stock Vested in 2017

Option Awards Stock Awards
Name         Number of Shares
Acquired on
Exercise
(#)
        Value Realized
Upon Exercise
($)
        Number of Shares
Acquired on
Vesting
(#)
        Value Realized
on Vesting
($)
Gerald W. Evans, Jr. 340,424      $  5,220,968 123,206       $  2,589,927
Barry A. Hytinen
Richard D. Moss 54,346 1,133,304
W. Howard Upchurch 140,424 2,333,847 39,553 824,950
Joia M. Johnson 47,442 988,225
Michael E. Faircloth 41,496 864,926

Pension Benefits
Certain of our executive officers participate in the Pension Plan and the SERP. The Pension Plan is a frozen, defined benefit pension plan, intended to be qualified under Section 401(a) of the Internal Revenue Code, that provides the benefits that had accrued for our employees, including certain of our named executive officers, as of December 31, 2005 under a plan maintained by our former parent company prior to our becoming an independent public company. A participant’s total benefit payable pursuant to the Pension Plan consists of two parts: a pension benefit and a retirement benefit. Different optional forms of payment are available for each benefit. The Defined Benefit Component of the SERP is an unfunded deferred compensation plan that, in part, will provide the nonqualified supplemental pension benefits that had accrued for certain of our employees, including certain of our named executive officers, under a plan maintained by our former parent company.

Normal retirement age is age 65 for purposes of both the Pension Plan and the Defined Benefit Component of the SERP. The normal form of benefits under the Pension Plan is a life annuity for single participants and a qualified joint and survivor annuity for married participants. The normal form of benefits under the SERP is a lump sum. Other than Mr. Evans, none of our named executive officers is currently eligible for early retirement under the Pension Plan or the SERP. With respect to the Defined Benefit Component of the SERP and the pension benefit under the Pension Plan, participants who have attained at least age 55 and completed at least 10 years of service are eligible for unreduced benefits at age 62, or benefits reduced by 5/12 of one percent thereof for each month by which the date of commencement of such benefit precedes the first day of the month coincident with or immediately following the day on which the participant attains age 62. With respect to the retirement benefit under the Pension Plan, participants who have attained at least age 55 and completed at least 10 years of service are eligible for unreduced benefits at age 65, or benefits reduced by 6% per year from age 65 and 4% per year from age 60. The only named executive officers to have any portion of their Pension Plan benefit determined under the retirement benefit are Mr. Evans and Mr. Upchurch.

At the end of 2008, we provided all active participants in the SERP with an election to receive the accrued Defined Benefit Component of their SERP benefit in the form of a lump sum payment in 2009 or 2010. We offered this election as part of the required changes mandated by Section 409A, and eligible participants could make this election in addition to or instead of any election with respect to the Defined Contribution Component of the SERP. The value of the lump sum payment with respect to the Defined Benefit Component of the SERP was calculated based on the participant’s age 65 SERP Defined Benefit Component benefit and an interest rate of 5.25%. The lump sum amounts do not include the value of any early retirement subsidies and accordingly may be significantly less valuable than the amount the participant could have received if the participant had been eligible for early retirement (at least age 55 with 10 years of service) when the participant’s employment with us terminates. Any SERP participant who elected to receive this lump sum payment will not be entitled to any additional payments with respect to the Defined Benefit Component of the SERP. Mr. Upchurch and Mr. Faircloth elected to receive a lump sum payment in 2009; none of the other executive officers elected to receive a lump sum payment from the Defined Benefit Component of the SERP.

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Pension Benefits
The following table sets forth certain information with respect to the value of pension benefits accumulated by our named executive officers at the end of 2017.

Pension Benefits — 2017

Name         Plan Name         Number of Years
Credited Service
(#)
        Present Value of
Accumulated
Benefit
($) (1)
        Payments
During Last
Fiscal Year
($)
Gerald W. Evans, Jr. Pension Plan 22.50 $ 664,887 $ —
SERP 22.50 1,274,667
Barry A. Hytinen (2)
Richard D. Moss (2)
W. Howard Upchurch Pension Plan 18.33 366,754
Joia M. Johnson (2)
Michael E. Faircloth Pension Plan 8.58 159,790

(1)

Present values for the Pension Plan are computed as of December 30, 2017, using a discount rate of 3.73% and healthy mortality table (the RP-2014 Employee and Healthy Annuitant Table Projected Generationally with Scale MP-2017). For the pension benefit, we assume 40% of males elect a single life annuity and 60% select a 50% joint and survivor annuity, and that 65% of females elect a single life annuity and 35% select a 50% joint and survivor annuity. For the retirement benefit, we assume that 60% of males elect a six-year certain only annuity, 16% select a single life annuity and 24% select a 50% joint and survivor annuity, and that 60% of females elect a six-year certain only annuity, 26% select a single life annuity and 14% select a 50% joint and survivor annuity. When calculating the six-year certain only annuity, a 2.8% interest rate and the mortality prescribed under Revenue Ruling 2001-62 is assumed for converting the single life annuity benefit to an actuarial equivalent six-year certain only annuity. If a participant has both a pension benefit and a retirement benefit, the payment form assumption is applied to each benefit amount separately, in all cases assuming the participant commences each portion of the benefit at the earliest unreduced age. Benefits under the Defined Benefit Component of the SERP are payable as a lump sum, which lump sum has been computed using the SERP’s interest rate of 3.25% (120% of the November 30-year Treasury rate for each year, rounded to the nearest 1/4%) and the mortality prescribed under Revenue Ruling 2001-62. Present values as of December 30, 2017 of the SERP lump sum are determined using a discount rate of 3.59%. For both the Pension Plan and the SERP, we also used the following assumptions: (i) the portion of the benefit that is payable as an unreduced benefit at age 62, the earliest unreduced commencement age under the Pension Plan for the pension benefit and the SERP, was valued at age 62 assuming the officer continues to work until that age in order to become eligible for unreduced benefits, (ii) the portion of the benefit that is payable as an unreduced benefit at age 65, the earliest unreduced commencement age under the Pension Plan for the retirement benefit, was valued at age 65 assuming the officer survives until that age in order to become eligible to receive the retirement benefit unreduced and (iii) the values of the benefits have been discounted assuming the officer continues to live until the assumed benefit commencement age (no mortality discount has been applied). All of the foregoing assumptions, except for the assumption that the officer lives and works until retirement, which we have used in light of SEC rules, are the same as those we use for financial reporting purposes under generally accepted accounting principles.

(2)

Mr. Hytinen, Mr. Moss and Ms. Johnson do not have any pension benefits because they were not eligible to accrue benefits prior to December 31, 2005.


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Nonqualified Deferred Compensation
Under the Executive Deferred Compensation Plan, a group of approximately 235 U.S. employees, generally at the director level and above, including our named executive officers, may defer receipt of cash and equity compensation. The amount of compensation that may be deferred is determined in accordance with the Executive Deferred Compensation Plan based on elections by each participant. Amounts deferred under the Executive Deferred Compensation Plan may, at the election of the executive, (i) earn a fixed rate of interest, which was 2.36% for 2017; (ii) be deemed to be invested in a stock equivalent account (the “HBI Stock Fund”) and earn a return based on the total shareholder return of Hanesbrands’ stock; or (iii) be deemed to be invested in one of a number of other investment funds designated by us from time to time. The amount payable to participants will be payable either on the withdrawal date elected by the participant or upon the occurrence of certain events as provided under the Executive Deferred Compensation Plan. A participant may designate one or more beneficiaries to receive any portion of the obligations payable in the event of death; however, neither participants nor their beneficiaries may transfer any right or interest in the Executive Deferred Compensation Plan.

The following table sets forth certain information with respect to contributions to and withdrawals from the Executive Deferred Compensation Plan by our named executive officers during our 2017 fiscal year, and the aggregate balance at fiscal year-end.

Nonqualified Deferred Compensation — 2017

Name         Plan         Executive
Contributions
in Last FY
($)
        Registrant
Contributions
in Last FY
($)
        Aggregate
Earnings
in Last FY
($) (1)
        Aggregate
Withdrawals/
Distributions
($)
        Aggregate
Balance at
Last FYE
($)
Gerald W. Evans, Jr. Executive Deferred $ — $ — $ — $ — $ —
Compensation Plan
SERP
Barry A. Hytinen Executive Deferred
Compensation Plan
SERP 4,308 4,308
Richard D. Moss Executive Deferred 38,008 (2,349,890 ) 583,479
Compensation Plan
SERP
W. Howard Upchurch Executive Deferred
Compensation Plan
SERP
Joia M. Johnson Executive Deferred
Compensation Plan
SERP
Michael E. Faircloth Executive Deferred (1,503 ) (444,578 )
Compensation Plan
SERP

(1) No portion of these earnings were included in the Summary Compensation Table because the Executive Deferred Compensation Plan does not provide for “above-market” or preferential earnings as defined in applicable SEC rules.

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Table of Contents

Compensation Discussion and Analysis

Potential Payments upon Termination or Change in Control
The termination benefits provided to our named executive officers, upon their voluntary termination of employment, or termination due to death or total and permanent disability, do not discriminate in scope, terms or operation in favor of these officers compared to the benefits offered to all salaried employees. The following describes the potential payments to these officers upon an involuntary severance or a termination of employment in connection with a change in control. The information presented in this section is computed assuming that the triggering event took place on December 29, 2017, the last business day of our 2017 fiscal year, and that the value of a share of our common stock is $20.91, the closing price per share of our common stock on December 29, 2017.

Termination or Change-in-Control Payments

Voluntary Termination Involuntary Termination
            Resignation (1)       Retirement (1)       For Cause (1)       Not For Cause       Change in Control
Gerald W. Evans, Jr. Severance $ — $ — $ —      $ 2,200,000 (2)           $ 8,250,000 (3)
LTIP 12,768,796 (4)
Benefits and perquisites 109,879 (5) 546,590 (6)
Tax gross-up/reduction (7)
Total 2,309,879 21,565,386
Barry A. Hytinen Severance 600,000 (2) 2,220,000 (3)
LTIP 2,103,901 (4)
Benefits and perquisites 21,074 (5) 81,482 (6)
Tax gross-up/reduction (7)
Total 621,074 4,405,383
Richard D. Moss Severance 1,145,833 (2) 2,915,123 (3)
LTIP 2,137,023 (4)
Benefits and perquisites 31,766 (5) 235,885 (6)
Tax gross-up/reduction (7)
Total 1,177,599 5,288,032
W. Howard Upchurch Severance 1,140,000 (2) 2,421,990 (3)
LTIP 2,812,332 (4)
Benefits and perquisites 24,080 (5) 137,191 (6)
Tax gross-up/reduction (7)
Total 1,164,080 5,371,514
Joia M. Johnson Severance 916,667 (2) 2,367,666 (3)
LTIP 2,613,353 (4)
Benefits and perquisites 19,355 (5) 144,770 (6)
Tax gross-up/reduction (7)
Total 936,022 5,125,788
Michael E. Faircloth Severance 1,080,000 (2) 2,030,234 (3)
LTIP 2,618,643 (4)
Benefits and perquisites