DEF 14A 1 jwn2020-def14a.htm DEF 14A Document


UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
SCHEDULE 14A
 
Proxy Statement Pursuant to Section 14(a) of the Securities
 
Exchange Act of 1934 (Amendment No.__)
 
 
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Filed by the Registrant
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Filed by a Party other than the Registrant
 
Check the appropriate box:
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Preliminary Proxy Statement
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CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
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Definitive Proxy Statement
¨
Definitive Additional Materials
¨
Soliciting Material Pursuant to §.240.14a-12
 
NORDSTROM, INC.
 
nordstrom2019blackrgba01.jpg
 
(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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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(set forth the amount on which the filing fee is calculated and state how it was determined):
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1617 Sixth Avenue, Seattle, Washington 98101
April 7, 2020

Dear Shareholder,
You are invited to join us May 20, 2020, at 3:00 p.m. Pacific Daylight Time for the 2020 Annual Meeting of Shareholders via webcast. This year, in response to concerns about the potential spread of the novel coronavirus (COVID-19), we have adopted a virtual format for our Annual Meeting to provide a consistent experience to all shareholders regardless of location. We will provide a live webcast of the Annual Meeting at virtualshareholdermeeting.com/JWN2020. A replay of the entire Annual Meeting will be available on the Nordstrom Investor Relations website after the meeting. For further information on how to participate in the meeting, please see Frequently Asked Questions and Answers About the Annual Meeting, beginning on page 72 of this Proxy Statement.
We recognize the retail environment is rapidly evolving. Because of this, we have for some time been making investments in our business model, which enables us to serve customers across multiple touchpoints through our two brands, Nordstrom and Nordstrom Rack, in stores and online all of which increases engagement and spend.
That said, we recognize that we are facing unprecedented times. The impacts of COVID-19 are being felt across many industries. We ended 2019 with a solid financial position and healthy balance sheet, which will help us navigate through this challenging time. We are making decisions to best position Nordstrom for our employees, customers and shareholders. This includes proactive steps to strengthen our financial position for the long term. We announced that we are suspending quarterly cash dividends and share repurchases. As a company, we are targeting further reductions of more than $500 million in operating expenses, capital expenditures and working capital. 
We believe the current crisis will accelerate the changes occurring in retailing. Because we can engage with customers digitally and in stores, through our Nordstrom brand and our Nordstrom Rack brand, there is tremendous synergy to this model. The decisions we are making during this current crisis are not only the right steps for the immediate term, but also are made with the view of what will serve us well throughout the year and for the longer term when the crisis ends.
We take very seriously the responsibilities we have with our people, customers and shareholders. We are confident these steps will help ensure the health of our company. We are living in incredibly difficult times where there are many unknowns. What we do know is that we have been around for 119 years. Our Company has survived wars, a depression, several recessions and natural disasters. The strength of our culture and the loyalty of our customers are what have sustained us through tough times. We can’t predict what’s next, but you have our commitment that we will do everything we can to ensure the long-term success of our Company. 
As a shareholder, one of your rights is to vote, which can be done online, by telephone or by using a printed proxy card as outlined in this document. In addition to this Proxy Statement, we encourage you to read our 2019 Annual Report. There you will find a more complete picture of our performance and how we are working to increase shareholder value by improving the customer experience.
Thank you on behalf of all of us at Nordstrom for your continued support.
Sincerely,
bradsmithsignaturea01.jpg
 
Brad D. Smith
 
Chairman of the Board
 
 
 
 signature3a01.jpg
eriksignaturea06.jpg
Peter E. Nordstrom
Erik B. Nordstrom
President, Nordstrom Inc. and
Chief Executive Officer
Chief Brand Officer
 


NORDSTROM, INC. - 2020 Proxy Statement 1



Table of Contents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2 NORDSTROM, INC. - 2020 Proxy Statement


 
 
 
 
 
 
 
APPROVAL OF AN AMENDMENT TO THE NORDSTROM, INC. 2019 EQUITY INCENTIVE PLAN
 
 
APPROVAL OF THE NORDSTROM, INC. AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


NORDSTROM, INC. - 2020 Proxy Statement 3


























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nordstrom2019blackrgba01.jpg
1617 Sixth Avenue, Seattle, Washington 98101
Notice of Annual Meeting
of Shareholders
Wednesday, May 20, 2020 
3:00 p.m. Pacific Daylight Time
NOTICE IS HEREBY GIVEN that the 2020 Annual Meeting of Shareholders (the “Annual Meeting”) of Nordstrom, Inc. (the “Company”) will be held virtually, via remote communication at virtualshareholdermeeting.com/JWN2020 on Wednesday, May 20, 2020 at 3:00 p.m. Pacific Daylight Time for the following purposes:
1.
To elect 11 Director nominees named in this Proxy Statement to the Board to serve until the 2021 Annual Meeting of Shareholders;
2.
To ratify the appointment of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm to serve for the 2021 fiscal year;
3.
To conduct an advisory vote regarding the compensation of our Named Executive Officers;
4.
To approve an amendment to the Nordstrom, Inc. 2019 Equity Incentive Plan;
5.
To approve the Nordstrom, Inc. Amended and Restated Employee Stock Purchase Plan; and
6.
To transact any other business that may properly come before the Annual Meeting and any adjournment or postponement thereof.
You are eligible to vote before the Annual Meeting, during the live webcast of the Annual Meeting, and any adjournment or postponement thereof, if you were a shareholder of record at the close of business on March 11, 2020 (the “Record Date”). There were 156,346,167 shares of the Company’s Common Stock issued and outstanding as of March 11, 2020. For further information on how to participate in the meeting, please see Frequently Asked Questions and Answers About the Annual Meeting beginning on page 72 in the Proxy Statement accompanying this Notice.
YOUR VOTE IS VERY IMPORTANT. Whether or not you intend to participate virtually in the Annual Meeting via remote communication, you are encouraged to vote.
Seattle, Washington
April 7, 2020
By order of the Board of Directors,
amssig.jpg
Ann Munson Steines
Corporate Secretary



IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2020 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 2020
 
The accompanying Proxy Statement and the 2019 Annual Report on Form 10-K are available at investor.nordstrom.com.


NORDSTROM, INC. - 2020 Proxy Statement 5



PROXY SUMMARY
This summary highlights information described in more detail elsewhere in this Proxy Statement. It does not contain all of the information you should consider and you should read the entire Proxy Statement carefully before voting. Page references are provided to help you find further information.
2020 Annual Meeting of Shareholders
Date and Time:    
May 20, 2020 at 3:00 p.m. Pacific Daylight Time
Virtual Meeting Access:    
virtualshareholdermeeting.com/JWN2020
This Proxy Statement was first mailed to shareholders on or about April 7, 2020. It is furnished in connection with the solicitation of proxies by the Board of Directors of Nordstrom, Inc. to be voted during the Annual Meeting for the purposes set forth in the accompanying Notice of Annual Meeting.
Shareholders who execute proxies retain the right to revoke them at any time before the shares are voted by proxy during the meeting. A shareholder may revoke a proxy by delivering a signed statement to our Corporate Secretary prior to or during the Annual Meeting or by timely executing and delivering, by internet, telephone, or mail, another proxy dated as of a later date.
Eligibility to Vote
You are eligible to vote if you were a shareholder of record at the close of business on March 11, 2020.
How to Cast Your Vote (page 73)
You can vote by any of the following methods:
 
 
Vote in Advance of the Meeting
 
 
 
 
Vote Online During the Meeting
 
 
 
 
 
 
 
 
 
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Vote your shares at proxyvote.com, until 11:59 p.m. Eastern Daylight Time on May 19, 2020.
 
 
 
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See page 72 - Frequently Asked Questions and Answers About the Annual Meeting for details on voting your shares during the meeting through:
 
 
 
Have available your Notice of Internet Availability or proxy card for the 16-digit Control Number needed to vote.
 
 
 
virtualshareholdermeeting.com/JWN2020
 
 
 
 
 
 
 
 
 
 
 
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Call the toll-free number listed on your proxy card until 11:59 p.m. Eastern Daylight Time on May 19, 2020.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*
Sign, date and return the enclosed proxy card or voting instruction form.
 
 
 
 
 
 
Voting Matters (page 72)
 
 
Board Vote
Recommendation
 
Page Reference 
(for more detail)
1.
Election of Directors
FOR each Director Nominee
 
2.
Ratification of the Appointment of Independent Registered Public Accounting Firm
FOR
 
3.
Advisory Vote Regarding Executive Compensation
FOR
 
4.
Approval of an Amendment to the Nordstrom, Inc. 2019 Equity Incentive Plan
FOR
 
5.
Approval of the Nordstrom, Inc. Amended and Restated Employee Stock Purchase Plan
FOR
 


6 NORDSTROM, INC. - 2020 Proxy Statement


Board of Directors Nominees (page 21)
Name
 
Age
 
Director
Since
 
Occupation
 
Committee Memberships**
 
Other Public
Company Boards
Shellye L. Archambeau*
 
57
 
2015
 
Former Chief Executive Officer of MetricStream, Inc.
 
Corporate Governance and Nominating, Technology
 
Verizon, Inc., Okta, Roper Technologies, Inc.
Stacy Brown-Philpot*
 
44
 
2017
 
Chief Executive Officer of TaskRabbit, Inc.
 
Audit and Finance, Technology
 
HP, Inc.
Tanya L. Domier*
 
54
 
2015
 
Chief Executive Officer of Advantage Solutions
 
Audit and Finance, Compensation, People and Culture (Chair)
 
YUM! Brands, Inc.
James L. Donald*
 
66
 
2020
 
Former Chief Executive Officer of Albertsons Companies, Inc.
 
N/A***
 
Albertsons Companies, Inc.
Kirsten A. Green*
 
48
 
2019
 
Founder and Managing Partner of Forerunner Ventures
 
Audit and Finance, Technology
 
 
Glenda G. McNeal*
 
59
 
2019
 
President Enterprise Strategic Partnerships of American Express
 
Compensation, People and Culture, Corporate Governance and Nominating
 
RLJ Lodging Trust
Erik B. Nordstrom
 
56
 
2006
 
Chief Executive Officer
 
N/A
 
 
Peter E. Nordstrom
 
58
 
2006
 
President and Chief Brand Officer
 
N/A
 
 
Brad D. Smith*
 
56
 
2013
 
Executive Chairman and former Chief Executive Officer of Intuit, Inc.
 
Compensation, People and Culture, Corporate Governance and Nominating
 
Intuit, Inc., SurveyMonkey
Bradley D. Tilden*
 
59
 
2016
 
Chairman and Chief Executive Officer of Alaska Air Group, Inc.
 
Audit and Finance (Chair)
 
Alaska Air Group, Inc.
Mark J. Tritton*
 
56
 
2020
 
President and Chief Executive Officer of Bed Bath & Beyond
 
N/A***
 
Bed Bath & Beyond
*
Independent Director
** Mr. Gordon Smith and Mr. Turner, Directors not standing for re-election, were the Chairs of the Corporate Governance and Nominating Committee and the Technology Committee, respectively. The Board will determine new committee chairs after the Annual Meeting.
*** Mr. Donald and Mr. Tritton joined the Board on March 30, 2020. If re-elected by the shareholders at the Annual Meeting, the Board will consider their committee appointments at that time.
Governance of the Company (page 11)
Nine of eleven Director nominees are independent.
Independent Directors meet regularly in executive session.
The roles of Chief Executive Officer and Chairman of the Board are separate.
Only independent Directors are Committee members.
Director elections have a majority voting standard and all Directors are elected annually.

 
The Board has stock ownership guidelines for Directors and Executive Officers.
Board, Committee and Director performance evaluations are conducted annually.
The Board and its Committees are responsible for risk oversight.
Management succession planning is one of the Board’s highest priorities.
Business Highlights
In fiscal year 2019, net earnings were $496 million, or $3.18 per diluted share. This included $0.19 per diluted share of charges primarily related to the integration of Trunk Club as part of our market strategy in addition to debt refinancing costs. We achieved net sales of $15.1 billion compared with $15.5 billion in 2018, and saw a meaningful improvement in top-line trends in the second half of the year relative to the first half.


NORDSTROM, INC. - 2020 Proxy Statement 7



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Achieved $15.1 billion in sales, reflecting a 400 basis-point improvement in the second half of the year relative to the first half of the year.
 
Generated earnings of $496 million, reflecting softer sales, partially offset by $225 million in expense savings, merchandise margin expansion and increased inventory turns.
Our business model is a key point of difference in serving customers in multiple ways through our two brands, Nordstrom and Nordstrom Rack, in stores and online with meaningful synergies across Nordstrom. We are focused on leveraging our digital and physical assets to provide customers with a best-in-class experience. In 2019, we made tremendous progress executing our market strategy, accelerating our sales trends and maintaining our inventory and expense discipline, including the following:
Customer Satisfaction We meaningfully improved customer satisfaction scores in many areas of our business and during our two key events Anniversary Sale and Holiday.
Market Strategy We accelerated the rollout of our market strategy to five of our top markets and significantly expanded our presence in the New York market with our NYC flagship opening.
Top-Line Trends We successfully executed plans to drive our top line as evidenced by a 400 basis-point improvement in the second half of the year.
 
Operating Discipline We realized $225 million in savings, exceeding our plans by 10%, which allowed us to reinvest in the customer experience. Sales grew faster than inventory for four consecutive quarters and we generated annual operating cash flow of more than one billion dollars for the 11th consecutive year.
As we continue into 2020, we remain focused on connecting with customers and serving them on their terms, to position us for long-term success.
Executive Compensation Highlights — Paying For Performance
In accordance with our pay-for-performance philosophy, the compensation program for our Named Executive Officers is straightforward in design and includes four primary elements: base salary, performance-based bonus, long-term incentives (“LTI”) and benefits. Within these pay elements, we emphasize variable pay over fixed pay, with at least 70% of each Named Executive Officer’s target compensation linked to our financial or
 
market results. The program also balances the importance of these executives achieving both critical short-term objectives and strategic long-term priorities. The following graphics represent target compensation for the Chief Executive Officer and the President and Chief Brand Officer and for the other Named Executive Officers, as shown on page 28.
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8 NORDSTROM, INC. - 2020 Proxy Statement


Our Variable Pay Reflects Company Performance
Our pay-for-performance design includes rigorous performance goals and high performance standards. Further, with a substantial portion of pay in the form of Nordstrom stock, pay outcomes align with our shareholders’ interests. This is evidenced by our Named Executive Officers’ recent incentive compensation payouts and grant realizable values as of our 2019 fiscal year end, as shown below.
 
 
2015

 
2016

 
2017

 
2018

 
2019

FINANCIAL RESULTS
 
 
 
 
 
 
 
 
 
 
Net Earnings
 

$600
M
 

$354
M
 

$437
M
 

$564
M
 

$496
M
Earnings Before Interest and Income Tax Expense
 

$1,101
M
 

$805
M
 

$926
M
 

$837
M
 

$784
M
Return on Assets
 
6.6
%
 
4.5
%
 
5.4
%
 
6.8
%
 
5.1
%
 
 
 
 
 
 
 
 
 
 
 
INCENTIVE COMPENSATION PAYOUTS
 
 
 
 
 
 
 
 
 
 
Incentive Adjusted Earnings Before Interest and Income Tax Expense (“Incentive Adjusted EBIT”)
 

$1,246
M
 

$1,076
M
 

$952
M
 

$909
M
 

$808
M
Incentive Adjusted Return on Invested Capital
(“Incentive Adjusted ROIC”)
 
11.0
%
 
12.4
%
 
10.0
%
 
12.8
%
 
11.2
%
Annual bonus
(payout as a % of Target on Incentive Adjusted EBIT measure*)
 
0
%
 
80
%
 
96
%
 
89
%
 
44
%
3-year Total Shareholder Return (“TSR”) percentile ranking within comparator group
 
53%ile

 
16%ile

 
10%ile

 
24%ile

 
20%ile

Performance Share Unit (“PSU”) vesting
(payout as a % of Target)
 
75
%
 
0
%
 
0
%
 
0
%
 
0
%
PSU comparator group
 
Retail

 
S&P 500

 
S&P 500

 
S&P 500

 
S&P 500 / Internal Measures**

*
For the Chief Executive Officer and the President and Chief Brand Officer, actual bonus payouts as a percent of Target for fiscal years 2017, 2018 and 2019 were 94%, 63% and 47%, respectively. See pages 33 through 35 for more information.
** 2019 PSU grant results are based on internal measures. PSU vesting reflects the performance period ended February 1, 2020.
Incentive Adjusted EBIT and Incentive Adjusted ROIC are not measures of financial performance under U.S. Generally Accepted Accounting Principles (“GAAP”) and should be considered in addition to, and not a substitute for, return on assets, net earnings, total assets or other financial measures prepared in accordance with GAAP. See Appendix A for a reconciliation of GAAP and non-GAAP financial measures.
PSU vesting as shown in the table above corresponds to the performance periods ending in fiscal years 2015 through 2019. Three-year TSR percentile ranking is based on our relative TSR performance over three-year rolling periods between fiscal years 2013 and 2019 versus the comparator group. Beginning with the 2014 – 2016 performance period, we changed our comparator group from our retail peer group to the Standard & Poor’s 500. For the 2019 PSU grant, we changed our performance measure from relative TSR to internal measures, structured with two performance periods. Given the change in measures from relative TSR to internal measures related to the strategy that was
 
communicated to our shareholders in July 2018, the Committee decided to split the 2019 PSU grant into two tranches: two-thirds of which have a three-year performance period and one-third of which has a one-year performance period. The one-year performance period was intended only for the 2019 PSU grant. One-third of the PSUs were to be earned on the last day of the one-year performance cycle, February 1, 2020, if performance criteria had been met, and two-thirds of the PSUs will be earned on the last day of the three-year performance cycle, January 29, 2022, if performance criteria are met. Both tranches of the 2019 PSUs vest when the results have been certified by the Compensation, People and Culture Committee at the end of the three-year performance cycle, January 29, 2022. For the one-year performance cycle ended on February 1, 2020, the performance payout threshold was not achieved, so one-third of the grant will not pay out. The remaining two-thirds of this grant has time remaining in its three-year performance cycle. See pages 35 and 36 to learn more about long-term incentive pay.
GRANT REALIZABLE VALUES
 
2015

 
2016

 
2017

 
2018

 
2019

PSUs (realizable value as a % of grant value)
 
0
%
 
0
%
 
0
%
 
N/A

 
0
%
RSUs (realizable value as a % of grant value)
 
67
%
 
99
%
 
101
%
 
77
%
 
108
%
Stock options (realizable value as a % of grant value)
 
0
%
 
0
%
 
5
%
 
N/A

 
0
%
Realizable values shown above are based on the actual value at time of vest, current unvested values using our 2019 fiscal year end stock price of $36.86 and current performance for the outstanding PSUs granted in 2019 (which were tracking at 0% payout as of the end of the fiscal year), shown as a percent of grant value. PSUs, restricted stock units (“RSUs”) and stock options are shown in the column matching the year of grant.


NORDSTROM, INC. - 2020 Proxy Statement 9



The Compensation, People and Culture Committee reviews these results and other analyses with the goal of ensuring that the Named Executive Officers’ aggregate compensation aligns with shareholder interests. Based on these and other outcomes, the Committee believes that total direct compensation for our Named Executive Officers reflects our pay-for-performance philosophy and is well aligned with shareholder interests.
For more information on executive compensation, please see the Compensation Discussion and Analysis starting on page 28.


10 NORDSTROM, INC. - 2020 Proxy Statement


CORPORATE GOVERNANCE
Our Corporate Governance Framework
Since its founding, our Company’s leaders and employees have always sought to maintain the highest ethical standards in every aspect of our business. Our corporate governance framework is designed to support this tradition of integrity, trust and unyielding commitment to do the right thing, which has served our customers and shareholders well over the years. Our corporate governance framework, more fully discussed on the following pages, includes the following highlights:

governanceframeworka03.jpg

Board Responsibilities, Leadership Structure and Role in Risk Oversight
The Board of Directors (“Board”) oversees, counsels and directs management in promoting the long-term interests of the Company and our shareholders. The Board’s responsibilities include:
determining the appropriate structure for the senior leadership of the Company;
selecting and evaluating the performance of the Chief Executive Officer;
planning for succession with respect to the position of the Chief Executive Officer and monitoring management’s succession planning for other senior executives;
reviewing and approving our major financial objectives, our strategic and operational plans and other significant actions;
monitoring the conduct of our business and the assessment of our business risks to promote the proper management of the business;
overseeing the management of cybersecurity, including oversight of appropriate risk mitigation strategies, systems, processes and controls; and
 
overseeing the processes for maintaining integrity with regard to our financial statements and other public disclosures, and compliance with laws and our Code of Business Conduct and Ethics.
At this time, the Board believes different people should hold the positions of Chairman of the Board and Chief Executive Officer, as this may strengthen corporate governance and aid in the Board’s oversight of management. Currently, Brad D. Smith serves as Chairman of the Board and Erik B. Nordstrom serves as the Chief Executive Officer. The Chief Executive Officer is responsible for day-to-day leadership and performance of the Company, while the Chairman of the Board provides guidance to the Chief Executive Officer and presides over the full Board. The duties of our Chairman of the Board are more fully described in the Chairman of the Board and Presiding Director section on the following page. The Board believes this leadership structure also aids in the Board’s oversight and management of risk.


NORDSTROM, INC. - 2020 Proxy Statement 11



The full Board has primary responsibility for oversight of risk management and has assigned to the Board’s standing Committees the task of focusing on the specific risks inherent in their respective areas of oversight. The full Board:
considers and determines the Company’s risk appetite, which is the amount of risk the organization is willing to accept;
oversees management’s implementation of an appropriate system to manage risks (i.e., to identify, assess, mitigate, monitor and communicate these risks) and monitors the effectiveness of this process as the business environment changes;
provides risk oversight through the Board’s committee structure and processes; and
manages directly certain risks, in particular, the risks associated with the Company’s strategic direction, which are reviewed at an annual strategy planning meeting and periodically throughout the year.
The Company has a comprehensive, structured approach to managing risks, which are identified, assessed, prioritized and managed at all levels within the Company through an enterprise risk management process which is aligned with the Company’s strategy. Within this framework, management is responsible for assessing and managing the Company’s exposure to risks.
 
Management regularly reports on risks to the relevant Committee or the Board. The Board and its Committees discuss the various risks confronting the Company throughout the year, particularly when reviewing operating and strategic plans and when considering specific actions for approval. The risks are classified into four major categories: Strategic, Compliance, Operational and Financial, and mapped for the appropriate management and Board (and Committee) oversight.
Through the risk oversight process, the Board: (i) obtains an understanding of the risks inherent in the Company’s strategy and management’s execution of the strategy within the agreed risk appetite; (ii) accesses useful information from internal and external sources about the critical assumptions underlying the strategy; (iii) is alert for possible dysfunctional behavior within the organization which might lead to excessive risk taking; (iv) provides input to executive management regarding critical risk issues on a timely basis; and (v) encourages open communication and appropriate escalation of reporting of risk throughout the enterprise, striving to ensure that risk management is part of the corporate culture. The Board’s leadership structure and the collective knowledge and experience of its members promotes a broad perspective, open dialogue and useful insights regarding risk, thereby increasing the effectiveness of the Board’s role in risk oversight.
Director Independence
A Director is considered independent when our Board affirmatively determines that he or she has no material relationship with the Company, other than as a Director. Our Board makes this determination in accordance with the standards set forth in our Corporate Governance Guidelines, which are consistent with the listing standards of the New York Stock Exchange (“NYSE”) and Securities and Exchange Commission (“SEC”) rules. In making this determination, the Board considers existing relationships between the Company and the Director, whether directly or as a partner, shareholder or officer of an organization that has a relationship with
 
the Company. The Board has affirmatively determined the following Director nominees are independent within the meaning of the listing standards of the NYSE, SEC rules and the Company’s Corporate Governance Guidelines, and none of these Director nominees have a material relationship with the Company other than as a Director:
Shellye L. Archambeau
James L. Donald
Brad D. Smith
Stacy Brown-Philpot
Kirsten A. Green
Bradley D. Tilden
Tanya L. Domier
Glenda G. McNeal
Mark J. Tritton
Chairman of the Board and Presiding Director
The Company has a Chairman of the Board who is also an independent Director and who serves as the Presiding Director within the meaning of the listing standards of the NYSE. Currently, Brad D. Smith serves as the Company’s Chairman of the Board.
The Chairman of the Board is appointed annually by the Board. As described in the Company’s Bylaws, Corporate Governance Guidelines and Charter of the Corporate Governance and Nominating Committee, the Chairman of the Board:
presides at meetings of the Board;
assists in establishing the agenda for each Board and Board Committee meeting;
 
serves as the Presiding Director to lead regular executive sessions of the Board in which only independent Directors participate;
calls special meetings of the Board and/or the shareholders;
provides input and support to the Chair of the Corporate Governance and Nominating Committee on nominees to fill vacant Board seats and the selection of Committee Chairs and membership on Board Committees;
advises the Chief Executive Officer and other members of the Executive Team on such matters as strategic direction, corporate governance and overall risk assessment; and
performs such other duties as the Board may from time to time delegate to assist the Board in the fulfillment of its responsibilities.


12 NORDSTROM, INC. - 2020 Proxy Statement


Director Elections
The Company’s Bylaws provide that, in an uncontested election, a Director nominee will be elected if the number of votes cast for the nominee’s election exceeds the number of votes cast against the nominee’s election. An incumbent Director nominee who fails to receive the requisite votes for election will continue to serve as a Director until the earlier of: (i) 90 days from the date on which the voting results of the election are determined; or (ii) the date
 
on which an individual is selected by the Board to fill the position held by such Director. In any election which is a contested election (meaning that the number of director nominees exceeds the number of directors to be elected), the standard for election of directors is a plurality of the votes cast by holders of shares entitled to vote in the election at a meeting.
Management Succession Planning
The Board and management believe that one of their primary responsibilities is to ensure the Company has the appropriate leadership capability to effectively deliver upon its business commitments. The Company’s management is actively engaged and involved in leadership development, having regular discussions of the leadership capabilities of the organization and the attraction, development and retention of critical talent to promote future success. In addition to the Company’s regular review of leadership capabilities, the Board annually conducts a detailed review of the talent strategies for the entire organization and reviews succession plans for senior leadership positions, including that of the Chief Executive Officer. The Board reviews high-potential employees, evaluates plans to develop their management and leadership capabilities and sanctions the strategies used to deploy these individuals most effectively. In addition to the annual review, succession is regularly discussed in executive sessions of the Board and in Board Committee meetings, as applicable.

 
Directors become familiar with potential successors for key leadership positions through various means, including the comprehensive annual talent and succession review, Board meeting presentations and less formal interactions throughout the course of the year.
Our entire Board, with the oversight of our Corporate Governance and Nominating Committee, is responsible for implementing succession procedures for the Chief Executive Officer. We believe the Board, led by our Chairman, should collaborate with the Chief Executive Officer on the critical aspects of the succession planning process, including establishing selection criteria, identifying and evaluating candidates and making management succession decisions. The Board has procedures in place to respond to an unexpected vacancy in the Chief Executive Officer position, including a detailed review of the succession plan annually by the Board. It is the Board’s practice to be prepared for a planned or unplanned change in leadership in order to ensure the stability of the Company.
Communications with Directors
Shareholders and other interested parties may communicate with Directors by contacting the Corporate Secretary’s Office at:
phonea03.jpg
Telephone:
206-373-4381
 
 
 
7
E-mail:
board@nordstrom.com
 
 
 
*
Mail:
Nordstrom, Inc.
1700 Seventh Avenue, Suite 1500
Seattle, Washington 98101-4407
Attn: Corporate Secretary
The Corporate Secretary will relay the question or message to the specific Director with whom the shareholder or interested party wishes to communicate.
If no specific Director is requested, the Corporate Secretary will relay the question or message to the Chairman of the Board. Certain items that are unrelated to the duties and responsibilities of the Board, such as business solicitations, advertisements, junk mail and other mass mailings, will not be relayed to Directors.
 
The Audit and Finance Committee has established procedures to respond to possible concerns about ethics and accounting-related practices. To report your concerns, you may use the Company’s confidential Whistleblower Hotline at:
phonea03.jpg
Telephone:
1-888-832-8358
 
 
 
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Internet:
ethicspoint.com
Your concerns will be investigated and communicated to the Audit and Finance Committee, as necessary.


NORDSTROM, INC. - 2020 Proxy Statement 13



Board Committees and Charters 
The Board has a standing Audit and Finance Committee, Compensation, People and Culture Committee, Corporate Governance and Nominating Committee, and Technology Committee. Each Committee has a Board-approved Charter which is reviewed annually by the respective Committee. Recommended changes to the charter, if any, are submitted to the Corporate Governance and Nominating Committee and the Board for approval. The Board makes Committee and Committee Chair assignments annually at its meeting immediately following the Annual Meeting, although further changes to Committee
 
assignments may be made from time to time as deemed appropriate by the Board. The Board has determined that the Chairs and all Committee members are independent under the applicable NYSE rules. Committee Charters and current Committee membership are posted on our website at investor.nordstrom.com and may be viewed by selecting the Corporate Governance item in the Investor Relations drop-down menu. The Chairs and members of the Committees as of the date of this Proxy Statement are identified in the following table.
Director
Audit and Finance Committee
 
Compensation, People and Culture Committee
 
Corporate Governance and Nominating Committee
 
Technology Committee
Shellye L. Archambeau
 
 
 
 
 ü
 
ü
Stacy Brown-Philpot
 ü
 
 
 
 
 
ü
Tanya L. Domier
ü
 
chairicona01.gif
 
 
 
 
James L. Donald*
 
 
 
 
 
 
 
Kirsten A. Green
ü
 
 
 
 
 
ü
Glenda G. McNeal
 
 
ü
 
ü
 
 
Brad D. Smith
 
 
ü
 
 ü
 
 
Gordon A. Smith**
 
 
ü
 
chairicona01.gif
 
 
Bradley D. Tilden
chairicona01.gif
 
 
 
 
 
 
Mark J. Tritton*
 
 
 
 
 
 
 
B. Kevin Turner**
 
 
 
 
ü
 
chairicona01.gif
chairicona01.gif
Chair
*
Mr. Donald and Mr. Tritton were appointed to the Board of Directors on March 30, 2020, and therefore did not hold Committee positions as of the date of this Proxy Statement. If re-elected to the Board by the shareholders at the Annual Meeting the Board will consider appropriate committee assignments at that time.
** Mr. Gordon Smith and Mr. Turner are not seeking re-election and will be retiring from the Board at the end of their current term in May 2020.
Audit and Finance Committee
As more fully described in its Charter, the primary responsibility of the Audit and Finance Committee is to assist the Board in fulfilling its oversight responsibility by reviewing and discussing:
the integrity of the Company’s financial statements;
the accounting, auditing and financial reporting processes of the Company;
the management of business and financial risk and the internal controls environment;
the Company’s compliance with legal and regulatory requirements and ethics programs as established by management and the Board, in conjunction with any recommendations by the Corporate Governance and Nominating Committee with respect to corporate governance standards;
the reports resulting from the performance of audits by the independent auditor and the internal audit team;
the qualifications, independence and performance of the Company’s independent auditors; and
the performance of the Company’s internal audit team.
 
In addition, the Audit and Finance Committee provides financial oversight, including:
assisting the Board in fulfilling its oversight responsibilities with respect to the Company’s capital structure, financial policies, capital investments, business and financial planning and related matters;
reviewing and discussing the Company’s tax strategies and the implications of actual or proposed tax law changes;
reviewing and discussing the Company’s dividend payment and share repurchase strategies, banking relationships, borrowing facilities and cash management; and
monitoring the ratings assigned by rating agencies to the Company’s long-term debt.
The Audit and Finance Committee regularly reviews accounting, auditing and financial reporting processes, enterprise risk management, and compliance with laws and regulations. The Audit and Finance Committee also meets privately and separately with the independent registered public accounting firm, the Chief Financial Officer and the Vice President, Internal Audit.


14 NORDSTROM, INC. - 2020 Proxy Statement


In addition to meeting the independence requirement for audit committee members, each current member of the Audit and Finance Committee also meets the financial literacy and experience requirements contained in the corporate governance listing standards of the NYSE. The Board has determined that all Audit and Finance Committee members qualify as “audit committee financial experts” under the regulations of the SEC. Although all members of the Audit and Finance Committee meet the current
 
regulatory requirements for accounting or related financial management expertise and the Board has determined that each of them qualifies as an “audit committee financial expert,” members of the Audit and Finance Committee are not professionally engaged in the practice of auditing or accounting and are not technical experts in auditing or accounting.
Compensation, People and Culture Committee
As more fully described in its Charter, the primary responsibilities of the Compensation, People and Culture Committee are:
approving an overall compensation philosophy for the Company’s Executive Officers in light of the Company’s goals and objectives. The Executive Officers are referenced on pages 26 and 27 and include the Named Executive Officers shown in the Compensation Discussion and Analysis on page 28 and other business unit presidents and Company executives with responsibility for major organizational functions who report to the Chief Executive Officer or other senior executives;
selecting performance measures aligned with the Company’s business strategy;
reviewing and approving the Company’s cash and equity-based compensation plans for executives;
recommending to the Board the form and amount of Director compensation;
reviewing and approving any benefit plans, retirement and deferred compensation or other perquisites offered to the Executive Officers and other eligible employees;
reviewing the Company’s compensation practices so that they do not encourage imprudent risk taking; and
periodically receiving updates and providing feedback on the Company’s programs related to key talent focuses and initiatives such as diversity, inclusion and belonging.
The Committee has the sole authority to retain such consultants and advisors as it may deem appropriate and to approve related fees and other retention terms. The Committee has retained Semler Brossy Consulting Group, LLC (“Semler Brossy”), an independent
 
compensation consulting firm, to advise the Committee on executive compensation and benefit matters. Semler Brossy provides services only as directed by the Committee. During fiscal year 2019, Semler Brossy’s services included a review of executive and director pay programs, a review of the compensation peer group, a review of pay and performance, and other pay-related matters specific to the Committee’s Charter. The Committee has assessed the independence of Semler Brossy pursuant to NYSE rules and determined that Semler Brossy is independent and that its work for the Compensation Committee does not raise any conflict of interest.

A consultant from Semler Brossy attends Committee meetings in person or by phone and supports the Committee by providing independent expertise on market practices and trends in executive compensation within the general industry and the peer group defined for such purposes. Additionally, the consultant provides advice regarding the composition of the Company’s peer group and analysis of peer group practices for base salary, performance-based bonus, long-term incentives and other compensation elements, and advice on management’s proposed levels of executive compensation. Semler Brossy also advises the Committee on compensation program design, including incentive structure, stock ownership guidelines, regulatory requirements related to executive compensation, plans submitted to shareholders for approval, governance responsibilities, and such other matters as assigned by the Committee from time to time as necessary to carry out its responsibilities under its Charter.
Corporate Governance and Nominating Committee
As more fully described in its Charter, the primary responsibilities of the Corporate Governance and Nominating Committee are:
reviewing and recommending individuals to the Board for nomination as members of the Board and its Committees;
reviewing possible conflicts of interest of Board members and the Company’s Executive Officers;
developing and reviewing the Company’s Corporate Governance Guidelines;
reviewing and considering revisions to the corporate governance standards contained in the Company’s Codes of Business Conduct and Ethics;
 
reviewing and recommending approval of the policies and practices of the Company in the area of corporate governance;
producing and providing to the Board an annual performance evaluation of the Board, the Directors and each Committee of the Board;
establishing succession procedures in the case of an emergency or the retirement of the Chief Executive Officer; and
reviewing the overall performance of the Chief Executive Officer on an annual basis.


NORDSTROM, INC. - 2020 Proxy Statement 15



Technology Committee
As more fully described in its Charter, the primary responsibilities of the Technology Committee are:
assisting the Board in its oversight with respect to the Company’s technology strategy;
reviewing and discussing the Company’s technology acquisition and development process to assure ongoing business growth;
 
reviewing and discussing the Company’s data management and automation processes, and measurement and tracking systems;
reviewing and discussing the Company’s policies and safeguards for information technology and data security; and
making recommendations to the Board with respect to investments in technology.
Board Meetings and Attendance
The Board held five meetings during fiscal year 2019, one of which was devoted principally to Company strategy. During the past fiscal year, the Audit and Finance Committee held five meetings, the Compensation, People and Culture Committee held four meetings, the Corporate Governance and Nominating Committee held four meetings, and the Technology Committee held four meetings. Each
 
Director attended at least 75% of the aggregate of all meetings of the Board and the Committees on which he or she served during the year, and overall attendance at the meetings, on a combined basis, was 92%. Independent members of the Board met at each regular meeting of the Board in executive session without management present.
Director Compensation
The Company’s pay-for-performance philosophy for Director compensation reflects the Board’s belief that payment of a majority of the Director fees in the form of Nordstrom common stock (“Common Stock”) aligns the interests of Directors with the interests of the Company’s shareholders and enhances Director compensation when the Company performs well. The Board believes that the Director fees paid by the Company should be competitive with other companies having similar characteristics.
Employee Directors of the Company are not paid any fees for serving as members of the Board. Nonemployee Director compensation consists of the following elements:
Annual Compensation Elements for 2019
Amount ($)*

Director Retainer
85,000

Audit and Finance Committee Chair Retainer
30,000

Compensation, People and Culture Committee Chair Retainer
20,000

Corporate Governance and Nominating Committee Chair Retainer
15,000

Technology Committee Chair Retainer
15,000

Director Equity Grant of Common Stock having a grant date value of
140,000

Chairman of the Board Equity Grant of Common Stock having a grant date value of
200,000

*
Directors may elect to take some or all of their cash retainer fees in Common Stock.
Under the Director Stock Ownership Guidelines, Directors are currently required to own Common Stock having a value of at least $425,000 by their fifth anniversary of joining the Board. As of March 11, 2020, each nominee for election at the Annual Meeting had either satisfied this obligation or had time remaining to do so.
Changes for 2020
At the February Board meeting, after consideration of recommendations made by the Compensations, People and Culture Committee’s compensation consultant, the following pay component changes were made to Director Compensation beginning in fiscal year 2020 to better align pay with that of our peer companies, as shown on page 32:
increased the annual cash Director Retainer from $85,000 to $95,000;
increased the annual Director Equity Grant of Common Stock from a grant date fair value of $140,000 to a grant date fair value of $150,000;
increased the annual Compensation, People and Culture Committee Chair Retainer from $20,000 to $25,000; and
increased the annual Corporate Governance and Nominating Committee Chair Retainer from $15,000 to $20,000.
 
In addition to the changes to the Director Compensation components, the Board increased the Director Stock Ownership Guidelines to require Directors to own Common Stock having a value of at least $450,000 by their fifth anniversary of joining the Board. This was an increase from the current requirement of $425,000.
Subsequent to the meeting, based on the uncertainty surrounding the impact of the coronavirus (COVID-19) on business operations and to enhance the Company’s liquidity, the Directors agreed to rescind their action with respect to an increase in fees. In addition, the Directors agreed to reduce the amount of their cash retainers by fifty percent (50%) and defer payment of their remaining cash retainers for the six months immediately following the Annual Meeting.


16 NORDSTROM, INC. - 2020 Proxy Statement


Director Summary Compensation Table
During the fiscal year ended February 1, 2020, nonemployee Directors of the Company received the following compensation for their services:
Name
Fees Earned
or Paid in Cash
($)(a)(b)

Stock
Awards
($)(b)(c)

All Other
Compensation
($)(d)

Total
($)

Shellye L. Archambeau
85,000
139,990
5,127
230,117
Stacy Brown-Philpot
85,000
139,990
8,752
233,742
Tanya L. Domier
105,000
139,990
20,795
265,785
James L. Donald*




Kirsten A. Green
106,250
174,984
9,576
290,810
Glenda G. McNeal
106,250
174,984

281,234
Brad D. Smith
85,000
339,989
7,072
432,061
Gordon A. Smith
100,000
139,990
7,563
247,553
Bradley D. Tilden
115,000
139,990
6,928
261,918
Mark J. Tritton*




B. Kevin Turner
100,000
139,990
35,044
275,034
*
Mr. Donald and Mr. Tritton were appointed to the Board of Directors on March 30, 2020, and therefore did not receive any compensation during the fiscal year ended February 1, 2020.
(a) Fees Earned or Paid in Cash
The amounts reported reflect the cash fees paid to each nonemployee Director, whether or not such fees were deferred or taken as Common Stock. Ms. Domier received $20,000 in cash for service as Chair of the Compensation, People and Culture Committee. Ms. Green and Ms. McNeal each received $21,250 in cash as a prorated retainer for their mid-year appointments on February 27, 2019. Mr. Gordon Smith received $15,000 in cash for service as Chair of the Corporate Governance and Nominating Committee. Mr. Tilden received $30,000 in cash for service as Chair of the Audit and Finance Committee. Mr. Turner received $15,000 in cash for service as Chair of the Technology Committee and elected to receive his retainer and the $15,000 as Chair of the Technology Committee in Common Stock.
(b) Deferred Compensation Program
Nonemployee Directors may elect to defer all or a part of their cash retainers and stock awards under the Nordstrom Directors Deferred Compensation Plan (“Directors Plan”). Directors are required to make advance elections to defer the receipt of fees or stock awards, and all deferral elections generally are irrevocable. Directors are also required to make advance elections about the form and timing of distribution of their deferred cash fees or stock awards.
In 2019, cash deferrals could be directed among 18 deemed investment alternatives and gains and losses for cash deferrals were posted to the Director’s account daily based on their investment elections. In addition, plan participants were offered a fixed rate option of 4.5% in 2019, which was not subsidized by the Company, but rather was a rate based on guaranteed contractual returns from a third-party insurance company provider. Deferred stock awards are credited to the Director’s account as units. Each unit in the Directors Plan is equal in value to the price of one share of Common Stock. Each deferred unit is credited with dividends, in the form of additional units, to the same extent as a share of Common Stock.
 
During the fiscal year which ended February 1, 2020, Ms. Brown-Philpot deferred 100% of her stock award into the Directors Plan.
(c) Stock Awards
The amounts reported reflect the grant date fair value associated with each Director’s stock awards. Fractional shares are not awarded or paid in cash. Ms. Green and Ms. McNeal each received a prorated stock award having a value of $34,995 for their mid-year appointments on February 27, 2019. In recognition of the significant time and attention in performing the duties required of the position, our Chairman of the Board is annually awarded, on the date of the Company’s Annual Meeting, an additional stock award having a grant date fair value of $200,000.
(d) All Other Compensation
All Directors, their spouses and eligible children may participate in the Company’s employee merchandise discount program. The program provides discounts ranging from 20% for eligible non-management employees up to 33% for eligible management and high-performing non-management employees and Directors. A 40% discount is available at certain times of the year on specified merchandise. These discounts vary somewhat by source and type of merchandise or service. During the fiscal year ended February 1, 2020, All Other Compensation consisted only of merchandise discounts for all Directors.


NORDSTROM, INC. - 2020 Proxy Statement 17



Compensation Committee Interlocks and Insider Participation
During the fiscal year ended February 1, 2020, no member of the Compensation, People and Culture Committee was an employee or officer of the Company or any of its subsidiaries, was formerly a Company officer, or had any relationship otherwise requiring disclosure.
Codes of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, including our Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and persons performing similar functions. We have also adopted a Directors’ Code of Business Conduct and Ethics that applies to all
 
of our Directors. A grant of a waiver from a provision of the codes requiring disclosure under applicable SEC rules, if any, will be disclosed on our website at investor.nordstrom.com and may be viewed by selecting the Corporate Governance item in the Investor Relations drop-down menu.
Hedging and Pledging Policies
Our policies prohibit Directors and Executive Officers (as well as other key insiders and their immediate family members) from engaging in hedging or short sale transactions with respect to the Company’s Common Stock. We also have a policy with respect to pledging of Common Stock, which subjects Directors and Executive Officers to a preclearance requirement and restrictions, including that pledged shares may not be counted toward the Company’s stock ownership guidelines. Employees who are not Executive
 
Officers or certain other key insiders are not covered by these policies and are generally permitted by the Company to engage in hedging and pledging transactions with respect to our Common Stock, subject to compliance with applicable law. Our Executive Officers, in the aggregate, have less than 0.5% of the Company’s outstanding shares pledged to third parties and are in compliance with our policy.
Corporate Social Responsibility
Our goal is to operate our business with the utmost integrity and serve our customers, employees and shareholders in a way that is deserving of their support and trust. Social responsibility is one way we strive to follow through with this commitment. We actively pursue solutions to reduce our environmental impact, contribute to the communities we serve, and support the rights of workers who create our products. We believe that both transparency and collaboration are key to progress in all of these areas, and we disclose our efforts in an annual Corporate Social Responsibility Report. More information can be found at nordstrom.com under Nordstrom Cares and in Corporate Responsibility section of Item 1: Business in the
 
Company’s Annual Report on Form 10-K filed with the SEC for the fiscal year ended February 1, 2020 (“2019 Annual Report”). We also continue to work with and learn from interested parties. The Company does not use corporate funds to make contributions to support or oppose federal, state or local political parties, candidates, campaigns and/or ballot measures. Our statement on Political Activity may be accessed through our website at investor.nordstrom.com and may be viewed by selecting the Corporate Governance item in the Investor Relations drop-down menu.
Website Access to Corporate Governance Documents
The Charters for each of the standing Committees of the Board, the Company’s Corporate Governance Guidelines, the Employee Code of Business Conduct and Ethics, and the Director Code of Business Conduct and Ethics, as well as all Company filings made with the SEC, may be accessed through our website at investor.nordstrom.com, and may be viewed by selecting the Corporate Governance item in the Investor Relations drop-down menu and SEC Filings.


18 NORDSTROM, INC. - 2020 Proxy Statement


PROPOSAL 1
ELECTION OF DIRECTORS
The Board recommends a vote FOR each nominee.
Eleven nominees, recommended by the Company’s Board, will be elected at the Annual Meeting, each to hold office until the 2021 Annual Meeting of Shareholders and until their successors have been duly elected and qualified. All of the nominees listed in this Proposal 1 are currently Directors of the Company.
Director Qualifications and Experience
The Board, acting through the Corporate Governance and Nominating Committee, seeks a Board that, as a whole, possesses the experience, skills, backgrounds and qualifications appropriate to function effectively in light of the Company’s current and evolving business circumstances. The Committee reviews the size of the Board, the tenure of our Directors and their skills, backgrounds and experiences in determining the slate of nominees and whether to seek one or more new candidates. The Committee seeks directors with established records of significant accomplishments in
 
businesses and areas relevant to our strategies. With respect to the nomination of continuing Directors for re-election, the individual’s prior contributions to the Board are also considered.
All of our Directors bring to our Board a wealth of executive leadership experience derived from their service as senior executives of complex corporations. As a group, they also bring extensive board experience. The process undertaken by the Committee in recommending qualified director candidates is described in the Director Nominating Process below.
Director Nominating Process
The Corporate Governance and Nominating Committee is responsible for identifying and recommending to the Board the nominees to stand for election as directors at each Annual Meeting of Shareholders or, if applicable, at a special meeting of shareholders.
In nominating director candidates, the Committee considers such factors as it deems appropriate, including whether there are any evolving needs of the Board with respect to a particular field, skill or experience. These factors may include judgment, skill, experience with businesses and other organizations, the candidate’s experience and skill set relative to those of other members of the Board and the extent to which the candidate would be a desirable addition to the Board and any Committees of the Board. In addition to these factors, the Committee may also consider a director candidate’s diversity of background during the evaluation and selection process of director candidates. In this context, diversity is broadly construed to mean varied skills, backgrounds and experiences, which include gender and ethnicity, as well as other differentiating characteristics, all in the context of the requirements and needs of the Board at that point in
 
time. The Committee, however, does not have a formal policy regarding how diversity of background should be applied in identifying or evaluating director candidates, and, depending on the current needs of the Board, the Committee may weigh certain factors more or less heavily. The goal of the Committee is to assist the Board in attracting competent individuals with the requisite management, financial and other expertise who will act as directors in the best interests of the Company and its shareholders.
The Committee will consider the qualifications of director candidates recommended by shareholders, and evaluate each of them using the same criteria the Committee uses for incumbent candidates. Shareholders who wish to submit nominees for election as directors should follow the procedures described on page 71.
The table on the following page summarizes key qualifications, skills or attributes most relevant to the decision to nominate an individual to serve on the Board. A mark indicates an area of focus or expertise on which the Board relies. The lack of a mark, however, does not mean the Director does not possess that qualification or skill.


NORDSTROM, INC. - 2020 Proxy Statement 19




 
 
Shellye L. Archambeau
Stacy Brown-Philpot
Tanya L. Domier
James L. Donald
Kirsten A. Green
Glenda G. McNeal
Erik B. Nordstrom
Peter E. Nordstrom
Brad D. Smith
Bradley D. Tilden
Mark J. Tritton
 
 
CEO Experience
ü
ü
ü
ü
 
 
ü
 
ü
ü
ü
 
Financial Literacy
 
 
ü
ü
ü
 
ü
 
ü
ü
ü
 
Risk Management
ü
 
ü
ü
 
 
ü
 
ü
ü
ü
 
Strategic Planning
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
 
Retail Industry
 
 
ü
ü
ü
ü
ü
ü
ü
 
ü
 
Current/Former Public Board Member
ü
ü
ü
ü
 
ü
ü
ü
ü
ü
ü
 
Online Scale/Growth
 
ü
ü
ü
ü
 
ü
ü
ü
ü
ü
 
Supply Chain
 
 
 
ü
 
 
 
 
ü
 
ü
 
Business Transformation
ü
ü
ü
ü
 
ü
ü
ü
ü
ü
ü
 
Technology (inclusive of Digital, AI, and Cybersecurity)
ü
ü
ü
 
ü
 
ü
 
ü
 
ü
 
Marketing/Customer Experience
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
No director candidates were recommended by our shareholders for election at the Annual Meeting.


20 NORDSTROM, INC. - 2020 Proxy Statement


Our Director Nominees
Information related to the Director nominees is set forth below, including age, and the particular experience, qualifications, attributes or skills that led the Board to conclude that the person should serve as a Director for the Company.
shelleyarchambeau.jpg
Shellye L. Archambeau
Director since 2015
Age 57
Former Chief Executive Officer of MetricStream, Inc., a global provider of governance, risk, compliance and quality management solutions to corporations across diverse industries, from 2002 to January 2018. Prior to joining MetricStream, Ms. Archambeau was Chief Marketing Officer and Executive Vice President of Sales for Loudcloud, Inc., a provider of internet infrastructure services, from 2001 to 2002; Chief Marketing Officer of NorthPoint Communications from 2000 to 2001; and President of Blockbuster, Inc.’s ecommerce division from 1999 to 2000. Before joining Blockbuster, Ms. Archambeau held domestic and international executive positions during a 15-year career at IBM. Ms. Archambeau has been a director of Verizon, Inc. since December 2013, a director at Roper Technologies, Inc. since April 2018, and a director at Okta since December 2018. She served as a director of Arbitron, Inc. from 2005 to 2013.
Ms. Archambeau brings to the Board, among other skills and qualifications, leadership experience in technology, ecommerce, digital media and communications. Her technology and international experience position her to advise the Board and senior management on global operations and on technology innovations to elevate the customer experience.
staceyphillipbrown.jpg
Stacy Brown-Philpot
Director since 2017
Age 44
Chief Executive Officer of TaskRabbit, Inc., a digital home services labor platform company, since April 2016. Previously, Ms. Brown-Philpot served as the company’s Chief Operating Officer from January 2013 to April 2016. From May 2012 to December 2012, Ms. Brown-Philpot was an Entrepreneur-in-Residence at Google Ventures, the venture capital investment arm of Alphabet, Inc. Prior to that, she spent nearly a decade, from 2003 to 2012, in various directorial positions at Google, including two years as the company’s Senior Director of Global Consumer Operations. Ms. Brown-Philpot also has a background in finance where she served as a senior analyst at Goldman Sachs and senior associate at PricewaterhouseCoopers. She has been a director of HP, Inc. since 2015.
Ms. Brown-Philpot brings to the Board innovation, operational and entrepreneurial experience, digital, branding and marketing expertise, as well as financial and accounting skills. She provides unique insights to elevate the consumer experience in a global digital economy. Her service on the board of HP, Inc. provides her with experience in corporate governance matters and key skills in working with directors, understanding board processes and functions, assessing risk and overseeing management.
tanyadomieira.jpg
Tanya L. Domier
Director since 2015
Age 54
Chief Executive Officer of Advantage Solutions, a global business solutions services firm, since 2013 and has served on Advantage Solutions’ board of directors since 2008. Ms. Domier was President and Chief Operating Officer from 2010 to 2012 and President of Marketing Services Division and Integrated Marketing Services from 2000 to 2010. Before joining Advantage Solutions (formerly known as Advantage Sales & Marketing) in 1990, Ms. Domier held management positions with the J.M. Smucker Company. She has been a director of Yum! Brands, Inc. since January 2018.
Ms. Domier brings to the Board extensive experience in global sales and marketing focused on the customer, successful strategic planning expertise and senior leadership skills. Further, Ms. Domier possesses financial and accounting skills, and knowledge of and experience with executive compensation programs.
jimdonald.jpg
James L. Donald
Director since 2020
Age 66
Co-Chairman of the Board for Albertsons Companies, one of the largest food and drug retailers in the United States, since 2019. In 2019, Mr. Donald served as Chief Executive Officer of Albertsons, and in 2018 he served as its President and Chief Operating Officer. From 2013 through 2015, Mr. Donald served as Chief Executive Officer of Extended Stay America, Inc., the largest integrated hotel owner/operator in the United States. Previously, Mr. Donald served as Chief Executive Officer of the Haggen, Inc. grocery chain and as Chief Executive Officer of Starbucks Corporation. Mr. Donald has over 45 years of experience in leadership roles at consumer-facing businesses and brings to the Board a wealth of knowledge and expertise in navigating the type of fast-paced and dynamic environment facing the Company today.


NORDSTROM, INC. - 2020 Proxy Statement 21



kirstengreen.jpg
Kirsten A. Green
Director since 2019
Age 48
Founder and Managing Partner of Forerunner Ventures, a venture capital firm, since 2010. Prior to founding Forerunner, Ms. Green was an equity research analyst and investor at Banc of America Securities, formerly Montgomery Securities. Ms. Green began her career at Deloitte & Touche LLP where she earned her CPA license. Ms. Green has served as a member of the board of directors of numerous private companies since 2013.
Ms. Green brings to the Board extensive experience in consumer and commerce-focused businesses and provides unique insights with respect to the challenges and opportunities of today’s rapidly evolving digital commerce landscape. Ms. Green has deep domain expertise and an understanding of consumer behaviors, brand building and products.
glendamcneal.jpg
Glenda G. McNeal
Director since 2019
Age 59
President Enterprise Strategic Partnerships of American Express, since 2017. Prior to that role, from 2011 to March 2017, Ms. McNeal served as Executive Vice President and General Manager of the Global Client Group of American Express. Ms. McNeal has held positions of increasing responsibility at American Express since 1989 when she first joined the company. Before joining American Express, Ms. McNeal worked with the accounting firm of Arthur Andersen, LLP and with the investment banking firm of Salomon Brothers, Inc. Ms. McNeal has been a director of RLJ Lodging Trust since 2011. Ms. McNeal served on the board of directors of United States Steel Corporation from 2007 to 2018.
Ms. McNeal brings to the Board extensive experience in business development, innovation and customer relationship management, as well as financial, accounting and senior leadership skills. Ms. McNeal provides unique insights on strategic planning, risk oversight and operational matters. Ms. McNeal’s service on public company boards provides her with experience with corporate governance matters and key skills in working with directors, understanding board processes and functions, and assessing risk and overseeing management.
eriknordstrom.jpg
Erik B. Nordstrom
Director since 2006*
Age 56
Chief Executive Officer of Nordstrom, Inc. since February 2020. Mr. Nordstrom served as Co-President of Nordstrom, Inc. from May 2015 to February 2020. From May 2014 to May 2015 Mr. Nordstrom was Executive Vice President and President, Nordstrom.com. From February 2006 to May 2014, Mr. Nordstrom was Executive Vice President and President, Stores for the Company. From August 2000 to February 2006, he served as Executive Vice President, Full-Line Stores. Mr. Nordstrom previously served as Executive Vice President and Northwest General Manager from February 2000 to August 2000, and as Co-President of the Company from 1995 to February 2000. He has held various other management and sales positions of increasing responsibility since joining the Company in 1979.
Mr. Nordstrom’s positions of increasing responsibility with the Company over more than 35 years, including executive and operational roles, give him a customer-centric perspective in retailing and supporting the business of the Company.
petenordstroma02.jpg
Peter E. Nordstrom
Director since 2006*
Age 58
President and Chief Brand Officer of Nordstrom, Inc. since February 2020. Mr. Nordstrom served as Co-President of Nordstrom, Inc. from May 2015 to February 2020. From February 2006 to May 2015, Mr. Nordstrom was Executive Vice President and President, Merchandising for the Company. From September 2000 to February 2006, he served as Executive Vice President and President, Full-Line Stores. Mr. Nordstrom previously served as Executive Vice President and Director of Full-Line Store Merchandise Strategy from February 2000 to September 2000, and as Co-President of the Company from 1995 to February 2000. He has held various other management and sales positions of increasing responsibility since joining the Company in 1978.
Mr. Nordstrom’s positions of increasing responsibility with the Company over more than 35 years, including executive and operational roles, give him a customer-centric perspective in retailing and supporting the business of the Company.
*
Erik Nordstrom and Peter Nordstrom are brothers, great-grandsons of the Company’s founder and the second cousins of James F. Nordstrom, Jr., President, Stores for the Company.


22 NORDSTROM, INC. - 2020 Proxy Statement


bradsmitha02.jpg
Brad D. Smith
Director since 2013
Age 56
Executive Chairman and former Chief Executive Officer of Intuit, Inc., a global provider of business and financial management solutions, since 2016 and President and Chief Executive Officer from 2008 to 2019. Mr. Smith has served on Intuit’s board of directors since 2008. Mr. Smith joined Intuit in 2003 and served as Senior Vice President and General Manager, Small Business division from 2006 to 2007, Senior Vice President and General Manager, QuickBooks from 2005 to 2006, Senior Vice President and General Manager, Consumer Tax Group from 2004 to 2005 and as Vice President and General Manager of Intuit’s Accountant Central and Developer Network from 2003 to 2004. Before joining Intuit, Mr. Smith was Senior Vice President of Marketing and Business Development of ADP, where he held several executive positions from 1996 to 2003. Mr. Smith has served on the board of directors of SurveyMonkey since 2017, and served on the board of directors of Yahoo! Inc. from 2010 until 2013.
Mr. Smith brings to the Board digital expertise, brand marketing, innovation and entrepreneurial experience, as well as financial and accounting skills, from his position at Intuit. He provides unique insights related to technology innovation and marketing of products and services to broad audiences throughout the world. Mr. Smith’s service on the boards of Yahoo!, SurveyMonkey, and Intuit provides him with experience in corporate governance matters and key skills in working with directors, understanding board processes and functions, assessing risk and overseeing management.
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Bradley D. Tilden
Director since 2016
Age 59
Chairman and Chief Executive Officer of Alaska Air Group, Inc., an airline holding company, since January 2014. In May 2012, Mr. Tilden was named President and Chief Executive Officer of Alaska Air Group. He served as Executive Vice President of Finance and Planning from 2002 to 2008 and as Chief Financial Officer from 2000 to 2008 for Alaska Air Group, and prior to 2000, was Vice President of Finance at Alaska Air Group. Before joining Alaska Airlines, Mr. Tilden worked for the accounting firm Price Waterhouse. He serves on the board of Alaska Air Group.
Mr. Tilden brings to the Board executive, operational, strategic planning and financial experience, as well as insights with respect to customer rewards programs in the consumer services industry. Mr. Tilden’s service on a public company board provides him with experience with corporate governance matters and key skills in working with directors, understanding board processes and functions, assessing risk and overseeing management.
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Mark J. Tritton
Director since 2020
Age 56
President and Chief Executive Officer of Bed Bath & Beyond, an omnichannel retailer selling a wide assortment of domestic merchandise and home furnishings online and through several brand retail storefronts, since 2019. Previously, from 2016 through 2019, Mr. Tritton served as Executive Vice President and Chief Merchandising Officer of Target Corporation and, from 2009 through 2016, as Executive Vice President and Division President of the Nordstrom Product Group. Mr. Tritton has over 30 years of experience in retail and apparel businesses, providing him deep insights into consumer behavior, brand building and operational matters which are key to the Company’s business.


NORDSTROM, INC. - 2020 Proxy Statement 23



AUDIT AND FINANCE COMMITTEE REPORT
The following Report of the Company’s Audit and Finance Committee of the Board (the “Audit and Finance Committee”) does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this Report by reference.
The Audit and Finance Committee operates under a written Charter adopted by the Board. The Charter contains a detailed description of the scope of the Audit and Finance Committee’s responsibilities and how they will be carried out. The Audit and Finance Committee’s Charter is available on our website at investor.nordstrom.com, and may be viewed by selecting the Corporate Governance item in the Investor Relations drop-down menu.
The Board determined that each member of the Audit and Finance Committee is independent from the Company as such term is defined in Sections 303.01(B)(2)(a) and (3) of the NYSE’s listing standards at all times during the fiscal year and that each member was an “audit committee financial expert” within the meaning of Item 407 of Regulation S-K under the Securities Exchange Act of 1934.
The Audit and Finance Committee serves in an oversight capacity and is not part of the Company’s managerial or operational decision-making process. As part of its responsibilities for oversight of the Company’s Enterprise Risk Management process, the Audit and Finance Committee reviews and discusses Company policies and processes with respect to risk assessment and risk management, including discussions of individual risk areas. Management is responsible for the Company’s internal controls and the financial reporting process. Deloitte, the Company’s independent registered public accounting firm, reports to the Company’s Audit and Finance Committee, and is responsible for performing an integrated audit of the Company’s consolidated financial statements and internal control over financial reporting in accordance with auditing standards generally accepted in the United States of America.
Deloitte and the Company’s internal auditors have full access to the Audit and Finance Committee. The auditors meet with the Audit and Finance Committee at each of the Audit and Finance Committee’s regularly scheduled meetings, with and without management being present, to discuss appropriate matters. The Audit and Finance Committee has the sole authority to engage, evaluate and terminate the Company’s independent auditors. The Audit and Finance Committee also pre-approves all auditing services, internal control-related services and permitted nonaudit services to be performed by the Company’s independent auditors, and periodically reviews whether to request proposals for the engagement of the independent audit firm.
 
The Audit and Finance Committee recommended to the Board that the audited consolidated financial statements for the fiscal year ended February 1, 2020 be included in the Company’s 2019 Annual Report for such fiscal year, based on the following actions by the Committee:
review of the Company’s audited consolidated financial statements with management;
review of the unaudited interim financial statements and Forms 10-Q prepared each quarter by the Company;
review of the Company’s Disclosure Committee practices and the certifications prepared each quarter in accordance with Sections 302 and 906 of the Sarbanes-Oxley Act of 2002;
review with management regarding the critical accounting estimates on which the financial statements are based, as well as its evaluation of alternative accounting treatments;
receipt of management representations that the Company’s financial statements were prepared in accordance with accounting principles generally accepted in the United States of America;
review with management, the internal auditors and Deloitte regarding management’s assessment of the effectiveness of the Company’s internal control over financial reporting and Deloitte’s evaluation of the Company’s internal control over financial reporting;
review with legal counsel and management regarding contingent liabilities;
receipt of the written disclosures and letter from Deloitte required by the Public Company Accounting Oversight Board Ethics and Independence Rule 3526, Communication with Audit and Finance Committees Concerning Independence; and
review with Deloitte regarding their independence, the audited consolidated financial statements, the matters required to be discussed by Auditing Standard No. 16 Communications with Audit and Finance Committees, as amended, and other matters, including Rule 2-07 of SEC Regulation S-X.
Audit and Finance Committee
Bradley D. Tilden, Chair
Stacy Brown-Philpot
Tanya L. Domier
Kirsten A. Green


24 NORDSTROM, INC. - 2020 Proxy Statement


PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board recommends a vote FOR this proposal.
The Audit and Finance Committee, consistent with NYSE and SEC rules, has appointed Deloitte to be the Company’s independent registered public accounting firm for the fiscal year ending January 30, 2021. Deloitte and its predecessors have served as the Company’s independent registered public accounting firm for over 45 years, including the fiscal year ended February 1, 2020.
 
As a matter of good corporate practice to provide shareholders an avenue to express their views on this matter, the Board has determined to seek shareholder ratification of Deloitte’s appointment at this time. If the shareholders do not ratify the appointment of Deloitte, the Board will reconsider the appointment. A representative of Deloitte will be present at the Annual Meeting to respond to questions and to make a statement if he or she so desires.
Audit Fees
The following table summarizes fees billed or expected to be billed to the Company by Deloitte in connection with services for the fiscal years ended February 1, 2020 and February 2, 2019:
 
 
Fiscal Year Ended
February 1, 2020
 
Fiscal Year Ended
February 2, 2019
Type of Fee
 
($)

 
(%)

 
($)

 
(%)

Audit Fees(a)
 
3,281,000

 
87

 
3,657,000

 
83

Audit-Related Fees(b)
 
426,000

 
11

 
581,000

 
13

Other Fees(c)
 
68,000

 
2

 
152,000

 
4

TOTAL
 
3,775,000

 
100

 
4,390,000

 
100

(a) Audit Fees
Audit Fees primarily relate to fees for services for: (i) auditing the consolidated financial statements of the Company; (ii) reviewing the interim financial information of the Company included in its Form 10-Qs; and (iii) auditing the Company’s internal control over financial reporting. Substantially all of Deloitte’s work on these audits was performed by full-time, regular employees and partners of Deloitte and its affiliates.
(b) Audit-Related Fees
Audit-Related Fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and internal control over financial reporting, services related to the issuance of the Company’s securities and accounting research tool subscription fees. This amount does not reflect additional amounts of $312,000 for fiscal year ended February 1, 2020 and $274,000 for fiscal year ended February 2, 2019 which were reimbursed to the Company by its banking partner in connection with the System and Organization Controls report of the Company’s credit division.
(c) Other Fees
Other Fees for the fiscal year ended February 1, 2020 related primarily to human resources benchmarking services and for the fiscal year ended February 2, 2019 related primarily to advice and recommendations on supply chain strategy.
Pre-Approval Policy
Consistent with SEC policies regarding auditor independence, the services performed by Deloitte for the fiscal years ended February 1, 2020 and February 2, 2019 were pre-approved in accordance with the policies and procedures adopted by the Audit and Finance Committee. The pre-approval policy is periodically reviewed and updated. It describes the permitted audit, audit-related, tax and other services that Deloitte may perform.
 
Normally, pre-approval is provided at regularly scheduled Audit and Finance Committee meetings. However, the authority to grant specific pre-approval between meetings, as necessary, has been assigned to the Chair of the Audit and Finance Committee. The Chair is responsible for updating the Audit and Finance Committee at the next regularly scheduled meeting of any services that were pre-approved between meetings.


NORDSTROM, INC. - 2020 Proxy Statement 25



The Audit and Finance Committee approves proposed services, which incorporates appropriate oversight and control of the Deloitte relationship, while permitting the Company to receive immediate assistance from Deloitte when time is of the essence.
The Committee also reviews on a regular basis:
a listing of approved services since its last review;
a report summarizing the year-to-date services provided by Deloitte, including fees paid for those services; and
a projection for the current fiscal year of estimated fees.
 
The policy prohibits the Company from engaging the independent registered public accountants for services billed on a contingent fee basis and from hiring current or former employees of the independent auditor who have not satisfied the statutory cooling-off period for certain positions.
EXECUTIVE OFFICERS
The Executive Officers of the Company are appointed annually by the Board following each year’s annual meeting and serve at the discretion of the Board. In addition to Erik Nordstrom and Peter Nordstrom, whose biographical information is provided under Election of Directors on page 22, the following are the other Executive Officers of the Company on the date of filing of this Proxy Statement.
 
teribariquit.jpg
Teri J. Bariquit
 
Employee since 1986
 
Age 54
 
Chief Merchandising Officer, since August 2019. From 2004 to 2019, Ms. Bariquit served as Vice President and then Executive Vice President, Nordstrom Merchandising Group, where she was responsible for Inventory, Planning, Solutions and Business Integration. In her prior role, she led inventory planning, merchandising strategy, brand programs and business transformation initiatives for both Full-Price and Off-Price. Prior to 2004, she held various management roles in Merchandising, including Business Integration Director, Business Information & Technology Director and Inventory Audit Manager.
 
 
 
 
annebramman.jpg
Anne L. Bramman
 
Employee since 2017
 
Age 52
 
Chief Financial Officer, since June 2017, when she joined the Company. From March 2015 to March 2017, Ms. Bramman served as Senior Vice President and Chief Financial Officer of Avery Dennison Corporation. She previously served as Chief Financial Officer of Carnival Cruise Line from December 2010 to March 2015. She was employed by L Brands in various finance leadership positions from July 2004 to December 2010, including Senior Vice President, Chief Financial Officer of Henri Bendel from 2008 to 2010.
 
 
 
 
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Christine F. Deputy
 
Employee since 2015
 
Age 54
 
Chief Human Resources Officer, since June 2015, when she joined the Company. Ms. Deputy previously served as Group Human Resources Director at Aviva plc from March 2013 to June 2015. From February 2012 to March 2013, she was Human Resources Director — Global Retail Banking for Barclays Bank. From July 2009 to February 2012, she was Chief Human Resource Officer at Dunkin’ Brands. She was employed at Starbucks Corporation from March 1998 to June 2009, serving as Vice President, Human Resources Asia Pacific from November 2007 to June 2009, Vice President, Global Staffing from September 2005 to January 2008, as well as other executive positions from 1998 to 2005.
 
 
 
 
michaelmaher.jpg
Michael W. Maher
 
Employee since 2009
 
Age 46
 
Senior Vice President, Chief Accounting Officer, since January 2020. Mr. Maher previously served as Senior Vice President, Finance since May 2017. From October 2011 to April 2017, he held various leadership finance roles for the Company’s Full-Line stores and Full-Price business. He previously served as the Company’s Controller from November 2009, when he joined the Company, until September 2011. Prior to joining Nordstrom, Mr. Maher served as the Vice President, Retail Division Controller for Longs Drug Stores Corporation, the Assistant Corporate Controller at 24 Hour Fitness, and as a Manager of Assurance and Advisory Services and a Certified Public Accountant with Deloitte & Touche LLP.
 
 
 
 


26 NORDSTROM, INC. - 2020 Proxy Statement


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Scott A. Meden
Employee since 1985
Age 57
Chief Marketing Officer, since August 2016. From February 2010 to August 2016, Mr. Meden served as Executive Vice President and General Merchandise Manager, Shoe Division. He previously served as Executive Vice President and President, Nordstrom Rack from February 2006 to February 2010, as Divisional Merchandise Manager from September 2002 to January 2006, as Director of Business Planning and Analysis from 2001 to September 2002, and as Financial Manager, Shoes from 1999 to 2001.
 
 
edmondmesrobiana.jpg
Edmond Mesrobian
Employee since 2018
Age 59
Chief Technology Officer, since August 2018, when he joined the Company. Previously he was Chief Technology Officer for multi-national grocery retailer Tesco PLC from 2015 to July 2018. From 2011 to 2014, he served as Chief Technology Officer for global travel company Expedia Group, Inc., which includes online travel brands Expedia.com, Hotels.com and Hotwire.com. Prior to joining Expedia, he held the role of Chief Technology Officer at RealNetworks, Inc. from 2003 to 2010, where he led development across multiple digital media services and software.
 
 
jamienordstrom.jpg
James F. Nordstrom, Jr.
Employee since 1986
Age 47
President, Stores, since May 2014. From 2005 to 2014, Mr. Nordstrom served as Executive Vice President and President, Nordstrom.com. He previously served as Corporate Merchandise Manager, Children’s Shoes, from May 2002 to February 2005, and as a project manager for the design and implementation of the Company’s inventory management system from 1999 to May 2002. Mr. Nordstrom is a great-grandson of the Company’s founder.
 
 
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Ann Munson Steines
Employee since 2019
Age 54
General Counsel and Corporate Secretary, since July 2019, when she joined the Company. Previously, she was Senior Vice President, Deputy General Counsel for Macy’s, Inc. for approximately ten years. Ms. Steines joined Macy’s, Inc. in 1998 as Assistant Counsel, Employment Law, and rose through positions of increasing responsibility until her appointment as Deputy General Counsel and Assistant Secretary. Prior to Macy’s, Ms. Steines was a Senior Attorney with the Overnite Transportation Company, a subsidiary of Union Pacific Corporation. Ms. Steines began her legal career with Dinsmore & Shohl in Cincinnati, Ohio in 1990 and then practiced law with the law firm of Michael Best & Friedrich in Milwaukee, Wisconsin.
 
 
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Geevy S.K. Thomas
Employee since 1983
Age 55
President, Nordstrom Rack, since January 2018. Mr. Thomas previously served as Chief Innovation Officer from January 2017 to January 2018. From 2010 to 2017, he served as Executive Vice President and President, Nordstrom Rack. He previously served as Executive Vice President and South Regional Manager from November 2001 to February 2010, as Executive Vice President and General Merchandise Manager, Full-Line Stores from February 2001 to November 2001, and as Executive Vice President, Full-Line Stores and Director of Merchandising Strategy from February 2000 to February 2001. Prior to February 2000, he held various merchandise strategy, store and regional management positions with the Company.
 
 
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Kenneth J. Worzel
Employee since 2010
Age 55
Chief Operating Officer, since September 2019. From 2018 to August 2019, Mr. Worzel served as Chief Digital Officer, from 2016 to 2019 as President of Nordstrom.com, and from 2010 to 2016, he served as Executive Vice President, Strategy and Development. Prior to joining the Company, he was a partner with McKinsey & Company, a global management consulting firm, from 2009 to 2010. While at McKinsey, he provided the Company and other clients with management strategy and organizational services. Prior to joining McKinsey, he was a managing partner at Marakon Associates, an international strategy consulting firm, from 1992 to 2008. As a partner at Marakon Associates, he provided consulting services to the Company from 1997 to 2008.


NORDSTROM, INC. - 2020 Proxy Statement 27



COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
This section describes our executive compensation program and the compensation decisions made for our fiscal year 2019 Named Executive Officers.
Erik B. Nordstrom
 
Chief Executive Officer
Anne L. Bramman
 
Chief Financial Officer
Peter E. Nordstrom
 
President and Chief Brand Officer
Kenneth J. Worzel
 
Chief Operating Officer
Edmond Mesrobian
 
Chief Technology Officer
2019 Snapshot
Accelerated Sales Trends Through 2019 While Maintaining Operating Discipline
In fiscal year 2019, net earnings were $496 million, or $3.18 per diluted share. This included $0.19 per diluted share of charges primarily related to the integration of Trunk Club as part of our market strategy in addition to debt refinancing costs. We achieved net sales of $15.1 billion compared with $15.5 billion in 2018, and saw a meaningful improvement in top-line trends in the second half of the year relative to the first half.
chart-fcee196322ff5aedac2a02.jpg chart-44da11b716db5e0d858a02.jpg
Achieved $15.1 billion in sales, reflecting a 400 basis-point improvement in the second half of the year relative to the first half of the year.
 
Generated earnings of $496 million, reflecting softer sales, partially offset by $225 million in expense savings, merchandise margin expansion and increased inventory turns.
Our business model is a key point of difference in serving customers in multiple ways through our two brands, Nordstrom and Nordstrom Rack, in stores and online with meaningful synergies across Nordstrom. We are focused on leveraging our digital and physical assets to provide customers with a best-in-class experience. In 2019, we made tremendous progress executing our market strategy, accelerating our sales trends and maintaining our inventory and expense discipline, including the following:
Customer Satisfaction We meaningfully improved customer satisfaction scores in many areas of our business and during our two key events Anniversary Sale and Holiday.
 
Market Strategy We accelerated the rollout of our market strategy to five of our top markets and significantly expanded our presence in the New York market with our NYC flagship opening.
Top-Line Trends We successfully executed plans to drive our top line as evidenced by a 400 basis-point improvement in the second half of the year.
Operating Discipline We realized $225 million in savings, exceeding our plans by 10%, which allowed us to reinvest in the customer experience. Sales grew faster than inventory for four consecutive quarters and we generated annual operating cash flow of more than one billion dollars for the 11th consecutive year.
As we continue into 2020, we remain focused on connecting with customers and serving them on their terms, to position us for long-term success.


28 NORDSTROM, INC. - 2020 Proxy Statement


Shareholders Support our Compensation Program
Our shareholders approved our Board’s recommendation to hold executive compensation advisory votes on an annual basis so that they may frequently and openly express their views about the compensation of our Named Executive Officers. Each year since 2011, more than 90% of the votes cast have been supportive of our compensation programs. Based on the majority of shareholders voting in favor of our executive compensation program last year, we continued to implement similar compensation policies and programs in fiscal year 2019, with the exception of a return to a mix of performance and time-based vesting of equity incentive awards for fiscal year 2019, as discussed on page 36, and continued to apply the following pay and benefits philosophy.
Our Pay and Benefits Philosophy:
We believe that if our customers win, our employees and shareholders win – our interests are aligned.
We pay for performance by investing in talent that delivers results and demonstrates the behaviors that drive our success, while not encouraging excessive risk taking.
We deliver competitive pay and benefits for all jobs and differentiate pay for critical jobs that directly impact our ability to deliver on our strategy.
 
We use objective market data to design flexible pay and benefits programs to help attract, retain, motivate and reward our employees and meet the needs of specific talent groups.
We provide equal pay and promotion opportunities for all employees and give them the information they need to clearly understand their pay and effectively manage their careers.
We Emphasize Variable Pay and Balance Short- and Long-Term Incentives as Well as Incentive Values
In accordance with our pay-for-performance philosophy, the compensation program for our Named Executive Officers is straightforward in design and includes four primary elements: base salary, performance-based bonus, long-term incentives (“LTI”) and benefits. Within these pay elements, we emphasize variable pay over fixed pay, with at least 70% of each Named Executive Officer’s target compensation linked to our financial or market results. The program also balances the importance of these executives achieving both critical short-term objectives and strategic long-term priorities. The following graphics represent target compensation for the Chief Executive Officer and the President and Chief Brand Officer and for the other Named Executive Officers.
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Our Variable Pay Reflects Company Performance
Our pay-for-performance design includes rigorous performance goals and high performance standards. Further, with a substantial portion of pay in the form of Nordstrom stock, pay outcomes align with our shareholders’ interests. This is evidenced by our Named Executive Officers’ recent incentive compensation payouts and grant realizable values as of our 2019 fiscal year end, as shown in the table on the following page.


NORDSTROM, INC. - 2020 Proxy Statement 29



 
 
2015

 
2016

 
2017

 
2018

 
2019

FINANCIAL RESULTS
 
 
 
 
 
 
 
 
 
 
Net Earnings
 

$600
M
 

$354
M
 

$437
M
 

$564
M
 

$496
M
Earnings Before Interest and Income Tax Expense
 

$1,101
M
 

$805
M
 

$926
M
 

$837
M
 

$784
M
Return on Assets
 
6.6
%
 
4.5
%
 
5.4
%
 
6.8
%
 
5.1
%
 
 
 
 
 
 
 
 
 
 
 
INCENTIVE COMPENSATION PAYOUTS
 
 
 
 
 
 
 
 
 
 
Incentive Adjusted Earnings Before Interest and Income Tax Expense (“Incentive Adjusted EBIT”)
 

$1,246
M
 

$1,076
M
 

$952
M
 

$909
M
 

$808
M
Incentive Adjusted Return on Invested Capital
(“Incentive Adjusted ROIC”)
 
11.0
%
 
12.4
%
 
10.0
%
 
12.8
%
 
11.2
%
Annual bonus
(payout as a % of Target on Incentive Adjusted EBIT measure*)
 
0
%
 
80
%
 
96
%
 
89
%
 
44
%
3-year Total Shareholder Return (“TSR”) percentile ranking within comparator group
 
53%ile

 
16%ile

 
10%ile

 
24%ile

 
20%ile

Performance Share Unit (“PSU”) vesting
(payout as a % of Target)
 
75
%
 
0
%
 
0
%
 
0
%
 
0
%
PSU comparator group
 
Retail

 
S&P 500

 
S&P 500

 
S&P 500

 
S&P 500 / Internal Measures**

*
For the Chief Executive Officer and the President and Chief Brand Officer, actual bonus payouts as a percent of Target for fiscal years 2017, 2018 and 2019 were 94%, 63% and 47%, respectively. See pages 33 through 35 for more information.
** 2019 PSU grant results are based on internal measures. PSU vesting reflects the performance period ended February 1, 2020.
Incentive Adjusted EBIT and Incentive Adjusted ROIC are not measures of financial performance under U.S. Generally Accepted Accounting Principles (“GAAP”) and should be considered in addition to, and not a substitute for, return on assets, net earnings, total assets or other financial measures prepared in accordance with GAAP. See Appendix A for a reconciliation of GAAP and non-GAAP financial measures.
PSU vesting as shown in the table above corresponds to the performance periods ending in fiscal years 2015 through 2019. Three-year TSR percentile ranking is based on our relative TSR performance over three-year rolling periods between fiscal years 2013 and 2019 versus the comparator group. Beginning with the 2014 – 2016 performance period, we changed our comparator group from our retail peer group to the Standard & Poor’s 500. For the 2019 PSU grant, we changed our performance measure from relative TSR to internal measures, structured with two performance periods. Given the change in measures from relative TSR to internal measures related to the strategy that was communicated to our
 
shareholders in July 2018, the Committee decided to split the 2019 PSU grant into two tranches: two-thirds of which has a three-year performance period and one-third of which has a one-year performance period. The one-year performance period was intended only for the 2019 PSU grant. One-third of the PSUs were to be earned on the last day of the one-year performance cycle, February 1, 2020, if performance criteria had been met, and two-thirds of the PSUs will be earned on the last day of the three-year performance cycle, January 29, 2022, if performance criteria are met. Both tranches of the 2019 PSUs vest when the results have been certified by the Compensation, People and Culture Committee at the end of the three-year performance cycle, January 29, 2022. For the one-year performance cycle ended on February 1, 2020, the performance payout threshold was not achieved, so one-third of the grant will not pay out. The remaining two-thirds of this grant has time remaining in its three-year performance cycle. See pages 35 and 36 to learn more about long-term incentive pay.
GRANT REALIZABLE VALUES
 
2015

 
2016

 
2017

 
2018

 
2019

PSUs (realizable value as a % of grant value)
 
0
%
 
0
%
 
0
%
 
N/A

 
0
%
RSUs (realizable value as a % of grant value)
 
67
%
 
99
%
 
101
%
 
77
%
 
108
%
Stock options (realizable value as a % of grant value)
 
0
%
 
0
%
 
5
%
 
N/A

 
0
%
Realizable values shown above are based on the actual value at time of vest, current unvested values using our 2019 fiscal year end stock price of $36.86 and current performance for the outstanding PSUs granted in 2019 (which were tracking at 0% payout as of the end of the fiscal year), shown as a percent of grant value. PSUs, restricted stock units (“RSUs”) and stock options are shown in the column matching the year of grant.
The Compensation, People and Culture Committee reviews these results and other analyses with the goal of ensuring that the Named Executive Officers’ aggregate compensation aligns with shareholder interests. Based on these and other outcomes, the Committee believes that total direct compensation for our Named Executive Officers reflects our pay-for-performance philosophy and is well aligned with shareholder interests.


30 NORDSTROM, INC. - 2020 Proxy Statement


Effective Corporate Governance Reinforces Our Compensation Program
Our compensation philosophy for our executive team, including our Named Executive Officers, is reflected in governance practices that support the needs of our business, drive performance and align with our shareholders’ long-term interests. Below is a summary of what we do and don’t do in that regard.
WHAT WE DO
 
WHAT WE DON’T DO
þ
Pay for performance: Our compensation program for Named Executive Officers emphasizes variable pay over fixed pay, with at least 70% of each Named Executive Officer’s target compensation linked to our financial or market results.
 
Ø
Provide employment agreements.
þ
Retain meaningful stock ownership guidelines: Our expectations for ownership align executives’ interests with those of our shareholders, and all Named Executive Officers have exceeded their targets.
 
Ø
Offer separation benefits to Named Executive Officers who are Nordstrom family members.
þ
Mitigate undue risk: We have caps on potential performance-based bonus payments, a clawback policy on performance-based compensation and active and engaged oversight and risk management systems, including those related to compensation-related risk.
 
Ø
Offer special perquisites to our Named Executive Officers.
 
Ø
Maintain separate change in control agreements.
þ
Engage an independent compensation consulting firm: The Committee’s consultant does not provide any other services to the Company.
 
Ø
Gross up taxes, except in the case of selected relocation expenses.
þ
Apply conservative post-employment and change in control provisions.
 
Ø
Reprice underwater stock options.
þ
Limit accelerated vesting: Our equity plan provides for accelerated vesting of equity awards after a change in control only if an executive is involuntarily terminated by the Company or resigns for good reason, a provision referred to as a “double trigger.”
 
Ø
Issue grants below 100% fair market value.
 
Ø
Pay dividends on any unearned or unvested equity awards.
þ
Restrict pledging activity: All Executive Officers are subject to pre-clearance requirements and restrictions.
 
Ø
Permit hedging or short-sale transactions.
þ
Receive strong shareholder support: Each year since 2011, more than 90% of the votes cast on the matter have been in favor of our compensation programs.
 
Ø
Count pledged shares toward stock ownership targets.
Context for Understanding Our Compensation Program and Decisions
This section provides background on the roles involved in determining compensation for our Named Executive Officers, our use of market data and the companies selected for our peer group.
Our Roles in Determining Compensation Are Well Defined
Compensation, People and Culture Committee
Our Compensation, People and Culture Committee (“Committee”) oversees the development and delivery of our pay and benefits philosophy and compensation plans for the Named Executive Officers and other executives as described in the Committee Charter on our website at investor.nordstrom.com.
As part of that oversight, the Committee ensures the Named Executive Officers’ aggregate compensation aligns with shareholder interests by reviewing analyses that include:
Cash alignment to evaluate the short-term incentive payouts relative to our financial performance.
Relative pay and performance to compare the percentile rankings of our total direct compensation (base salary + performance-based bonus + long-term incentives) with financial performance metrics of our peer group.
 
Committee Consultant
The Committee has retained Semler Brossy Consulting Group, LLC (“Semler Brossy”). A consultant from the firm attends the Committee meetings in person or by phone, and in support of the Committee’s role, provides independent expertise on market practices, compensation program design and related subjects as described on page 15. Semler Brossy provides services only as directed by the Committee. During fiscal year 2019, Semler Brossy’s services included a review of executive and director pay programs, a review of the compensation peer group, a review of pay and performance, and other pay-related matters specific to the Committee’s Charter.


NORDSTROM, INC. - 2020 Proxy Statement 31



Management
Our Chief Executive Officer and the President and Chief Brand Officer provide input to the Committee on the level and design of compensation elements for the Named Executive Officers and other Executive Officers, excluding themselves. Our Chief Human Resources Officer joins them in Committee meetings to provide
 

perspective and expertise relevant to the agenda. Management supports the Committee’s activity by providing analyses and recommendations developed internally or occasionally with the assistance of external consulting firms other than the Committee’s independent consultant.
Market Data Provides a Reference Point for Compensation
The Committee believes that knowledge of market practices, particularly those of our peers listed below, is helpful in assessing the design and targeted level of our executive compensation package. In reviewing peer group information, the Committee uses survey data provided by external consultants, monitors general market movement for executive pay and references proxy statements for specific roles.
When the Committee reviews market data, they consider the 50th percentile (median) of our peer group as a reference point, rather than a policy, for positioning target total direct compensation. Target opportunities for individual pay elements vary by executive role based on scope of responsibilities and expected contributions.
 
Target total direct compensation for 2019 for Erik Nordstrom and Peter Nordstrom was below our peer group median, as it has been in previous years. Based on the Committee’s review of relevant market data and internal pay equity, the Committee believes the target total direct compensation for Anne Bramman, Kenneth Worzel, and Edmond Mesrobian was within a competitive range of the peer group median. Actual pay for the Named Executive Officers can exceed our established targets or peer group actual pay through the variable compensation elements when pre-determined performance milestones are achieved. Actual or realizable pay for the past few years has been below target, as shown on page 30.
Peer Group Companies Represent Our Business
Each year, the Committee reviews the appropriateness of our peer group for comparison on pay and related practices. Collectively, the peer group companies represent our primary business areas, including our Full-Price, Off-Price, in-store, and online business and private label products. The peer group companies generally meet the following selection criteria:
fall within the Consumer Discretionary and Staples sectors;
fall within a reasonable range of our size, defined as one-fourth to four times our revenue and one-fifth to five times our market capitalization;
share similar talent, operational and/or business characteristics, including a retail-focused business model;
 
similar or related product focus and place a high value on customer experience;
are part of our industry group as defined by institutional shareholders and shareholder service organizations; and
are a public company subject to similar market pressures.
 Our peer group used for evaluating compensation for fiscal year 2019 was comprised of the following retail companies:
Bed Bath & Beyond, Inc.
J. C. Penney Company, Inc.
Tapestry, Inc.
Capri Holdings Limited
Kohl’s Corporation
Tiffany & Co.
Dillard’s, Inc.
L Brands, Inc.
The TJX Companies, Inc.
Estée Lauder Companies, Inc.
Macy’s, Inc.
Urban Outfitters, Inc.
Foot Locker, Inc.
Neiman Marcus Group LTD LLC
VF Corporation
Gap, Inc.
Ralph Lauren Corporation
Williams-Sonoma, Inc.
Hudson’s Bay Company
Ross Stores, Inc.
 
During 2019, as part of its annual review of peer companies to be used for compensation comparison purposes, the Committee determined that no changes to the peer group would be made for fiscal year 2020.
Each Element of Compensation Has its Own Purpose
Our compensation program for Named Executive Officers is made up of four primary elements outlined on the following page. Each element has its own purpose based on our fundamental premise of pay for performance and our pay and benefits philosophy, described on page 29. Additional information is provided on the following page in the “About Our Compensation Elements: What We Paid in 2019 and Why” section.


32 NORDSTROM, INC. - 2020 Proxy Statement


Compensation Element
 
Purpose
Base Salary
(See below)
 
Reflect scope of the role and individual performance through base-line cash compensation.
Performance-Based Annual
Cash Bonus
(Pages 33 through 35)
 
Motivate and reward contributions to annual operating performance and long-term business strategy with cash that varies based on results.
Long-Term Incentives
(Pages 35 through 37)
 
Promote alignment of executive decisions with Company goals and shareholder interests through stock options, performance share units and restricted stock units where value varies with Company stock performance.
Benefits
(Page 37)
 
Provide meaningful and competitive broad-based, leadership and retirement benefits that support healthy lifestyles and contribute to financial security.
Pay Changes for 2019
On an annual basis, the Committee reviews base salary, performance-based bonus target opportunity and long-term incentive target grant value for each of the Named Executive Officers in consideration of the upcoming fiscal year. Committee decisions for fiscal year 2019 are summarized below and shown as a year over year comparison. The Committee believes these elements and the overall compensation program are meeting the expectations for our pay-for-performance and pay and benefits philosophies.
 
 
Base Salary
($)
 
Performance-Based
Annual Cash Bonus
(Target Opportunity
as a % of Base Salary)
 
Long-Term Incentives
Annual Grant
(Target Grant Value
as a % of Base Salary)*
Name
 
FYE 2018

 
FYE 2019

 
FYE 2018

 
FYE 2019
 
FYE 2018

 
FYE 2019
Erik B. Nordstrom
 
758,500

 
same

 
200

 
same
 
350

 
same
Anne L. Bramman
 
775,000

 
800,000

 
90

 
100
 
175

 
200
Peter E. Nordstrom
 
758,500

 
same

 
200

 
same
 
350

 
same
Kenneth J. Worzel
 
800,000

 
875,000

 
125

 
same
 
250

 
same
Edmond Mesrobian
 
725,000

 
775,000

 
80

 
same
 
150

 
same
* Long-term incentives annual grant targets exclude any one-time equity awards. See page 36 for detail on one-time equity awards.
In February 2019, the Committee approved an increase in Anne Bramman’s base salary of approximately 3%, effective April 1, 2019, to acknowledge performance and maintain relative market competitiveness for the Chief Financial Officer role. At the same time, to maintain relative market competitiveness for the Chief Financial Officer role, the Committee approved an increase in Anne Bramman’s target bonus opportunity from 90% to 100% of base salary, and an increase in her target equity grant value from 175% to 200% of base salary, effective at the beginning of fiscal year 2019.
 
On September 16, 2019, Kenneth Worzel was named Chief Operating Officer. He has served in various executive and leadership roles since 2010, most recently as Chief Digital Officer and President of Nordstrom.com. In connection with this appointment, his base salary was increased to $875,000, effective September 16, 2019. Edmond Mesrobian’s base salary was increased to $775,000, effective September 4, 2019, to recognize his increased responsibility over data science and product management.
About Our Compensation Elements: What We Paid in 2019 and Why
Base Salary
The Committee begins its annual review of base salary for the Named Executive Officers through discussion with the Chief Executive Officer and the President and Chief Brand Officer on the expectations and achievements of each executive during the previous year, as well as their pay history and pay equity with other internal roles. The Committee then references our pay levels
 
to similar roles in peer companies to ensure they are within a competitive range of the peer group median. Named Executive Officers do not necessarily receive increases in base salary every year. When they do, the changes are effective on or about April 1st following their annual performance review, which includes a discussion about individual results against defined expectations.
Performance-Based Annual Cash Bonus
The opportunity for annual performance-based cash awards under our shareholder-approved Nordstrom, Inc. Executive Management Bonus Plan (“Executive Management Bonus Plan”) is designed to focus the Named Executive Officers on the alignment between annual operating performance and long-term business strategy. The Committee establishes the following criteria in developing the annual bonus arrangements:


NORDSTROM, INC. - 2020 Proxy Statement 33



Target bonus opportunity: In determining the target percentage of base salary, the Committee takes into account the mix of pay elements, market pay information for similar roles within our peer group and the internal relationship between roles within the Company.
In support of our pay-for-performance philosophy, the maximum bonus payout, which is associated with superior performance, is 2.5 times an executive’s target bonus opportunity. This maximum is higher than is common among our retail peers because we believe it is important to continue encouraging and paying rewards when we achieve truly superior results. Under our approach, truly superior results are rarely achieved. In the past 10 years, we have not paid out bonuses in excess of 150% of target except for fiscal year 2010, when the payout was 200% of target.
Performance measures: The Committee establishes the performance measures to focus executives on the most important annual and long-term strategic goals. For fiscal year 2019, the Named Executive Officers had the following measures:
 
Incentive Adjusted ROIC to ensure our overall performance aligns directly with shareholder returns over the long term. The measure is expressed as a threshold that must be met before any payout can be made on Incentive Adjusted EBIT results to ensure our executives are rewarded only after earnings generate meaningful returns for our shareholders.
Incentive Adjusted EBIT to emphasize the importance of earnings and its role in driving shareholder value. Erik Nordstrom and Peter Nordstrom each had this performance measure weighed at 100%, subject to the achievement of the Incentive Adjusted ROIC threshold. Anne Bramman, Kenneth Worzel and Edmond Mesrobian each had this performance measure weighed at 67%, again subject to the achievement of the Incentive Adjusted ROIC threshold.
Individual Measure to enable differentiation in bonus payout opportunity based on individual contributions and execution against goals for Anne Bramman, Kenneth Worzel and Edmond Mesrobian. The individual bonus measure accounted for 33% of the total bonus opportunity for these Named Executive Officers.
The following charts show the mix of financial and individual components of the bonus opportunity for the Chief Executive Officer and the President and Chief Brand Officer and for the other Named Executive Officers for fiscal year 2019.
chart-5c64e7d4e37753dabdaa01.jpg chart-70301099ae4958d19cca01.jpg
* Incentive Adjusted EBIT measure is subject to the Incentive Adjusted ROIC threshold.
Performance measure milestones: The Committee defines financial milestones for Incentive Adjusted ROIC (as a threshold) and Incentive Adjusted EBIT (as a range) that relate to varying percentages of bonus payout. The difficulty level in achieving the milestones reflects the Committee’s belief that there should be a balance between executive pay opportunity, reinvestment in the Company and return to shareholders. Quantitative and qualitative goals were established for the individual bonus measures.
In accordance with our bonus plan, Incentive Adjusted EBIT and Incentive Adjusted ROIC achievement used to determine bonus payout may differ from EBIT and ROIC, as reported in our 2019 Annual Report, due to the exclusion of certain one-time gains or losses. This is the case for 2019 where achievements reflect non-operating related adjustments not included in the financial plan. Incentive Adjusted EBIT and Incentive Adjusted ROIC are not measures of financial performance under GAAP and should be considered in addition to, and not a substitute for, return on assets, net earnings, total
 
assets or other financial measures prepared in accordance with GAAP. See Appendix A for a reconciliation of GAAP and non-GAAP financial measures.
Our Incentive Adjusted EBIT achievement fell below our target goal of $977 million, warranting a payout level of less than 100%. As shown in the table on the following page, the Incentive Adjusted EBIT achievement for the Chief Executive Officer and the President and Chief Brand Officer was 47%, and was 44% for the other Named Executive Officers. This result reflects adjustments that the Committee approved to: (1) remove the impact of charges related to the integration of Trunk Club and work surrounding the Company’s ownership structure and, (2) exclude the recovery during fiscal year 2019 of certain expenses that were excluded from incentive measures during fiscal year 2018. The Committee did not apply the second of the two adjustments above for the Chief Executive Officer and the President and Chief Brand Officer as they did not receive the benefit of the exclusion of those expenses from Incentive Adjusted EBIT for fiscal year 2018.


34 NORDSTROM, INC. - 2020 Proxy Statement


Our Incentive Adjusted ROIC for our Named Executive Officers was 11.2% for fiscal 2019, exceeding our threshold goal of 10.1%. This result reflects the adjustments the Committee approved as described on the previous page for Incentive Adjusted EBIT.
Achievement results on the individual bonus measures varied. Performance against the quantitative and qualitative goals, which were established at the beginning of the year, was evaluated by the Chief Executive Officer and the President and Chief Brand Officer and the payout results were approved by the Committee.
After reviewing the Company’s Credit EBIT Margin, total expense, free cash flow and inventory integrity results for the fiscal year, the Committee determined that Anne Bramman achieved 125% of her target performance with respect to the aggregate individual performance measures.
 
After reviewing the Company’s Full-Price sales, total sales, supply chain spend, market share growth, and scaled events results, as well as implementation of a supply chain strategy, the Committee determined that Kenneth Worzel achieved 100% of his target performance with respect to the aggregate individual performance measures.
After reviewing the Company’s technology expense, supply chain spend, and inventory integrity results, as well as implementation of a supply chain strategy, the Committee determined that Edmond Mesrobian achieved 125% of his target performance with respect to the aggregate individual performance measures.
The performance-based annual cash bonus results are summarized in the following table.
2019 Bonus Measures, Incentive Adjusted EBIT Milestones, Individual Measure Achievement and Total Bonus Payout
 
 
 
Milestones
 
Total Bonus Payout
(as a % of Target)

Named Executive Officer
Bonus Measures
Weight

Threshold (25%)

Target (100%)

Superior (250%)
Result /
Payout %

Erik B. Nordstrom and
Peter E. Nordstrom
Incentive Adjusted EBIT
100
%

$752
M

$977
M
≥$1,202M
$817M/
47%*

47
%
Subject to Incentive Adjusted ROIC threshold
 
10.1
%
 
 
11.2
%
Anne L. Bramman
Incentive Adjusted EBIT
67
%

$752
M

$977
M
≥$1,202M
$808M/
44%

71
%
Subject to Incentive Adjusted ROIC threshold
 
10.1
%
 
 
11.2
%
Individual Measure
33
%
 
 
 
125
%
Kenneth J. Worzel
Incentive Adjusted EBIT
67
%

$752
M

$977
M
≥$1,202M
$808M/
44%

62
%
Subject to Incentive Adjusted ROIC threshold
 
10.1
%
 
 
11.2
%
Individual Measure
33
%
 
 
 
100
%
Edmond Mesrobian
Incentive Adjusted EBIT
67
%

$752
M

$977
M
≥$1,202M
$808M/
44%

71
%
Subject to Incentive Adjusted ROIC threshold
 
10.1
%
 
 
11.2
%
Individual Measure
33
%
 
 
 
125
%
*
The Incentive Adjusted EBIT achievement for the Chief Executive Officer and the President and Chief Brand Officer was greater than that for the other Named Executive Officers. As described on the previous page, the Committee did not approve the adjustment related to the recovery during fiscal year 2019 of certain expenses that were excluded from incentive measures during fiscal year 2018 since the Chief Executive Officer and the President and Chief Brand Officer did not benefit from the exclusion of the expenses in fiscal year 2018.
Long-Term Incentives
Annual grants of equity under our shareholder-approved equity incentive plan are intended to provide the Named Executive Officers with additional incentive to create shareholder value and receive financial rewards. The long-term incentive value that determines the size of the annual grant to Named Executive Officers is expressed as a percentage of base salary as shown on page 33. In establishing the long-term incentive value at grant for each Named Executive Officer, the Committee considers the mix of pay elements, market pay information for similar roles within our peer
 
group, our annual share usage and dilution, performance and internal equity of grant size by role. The Committee typically approves annual grants of equity awards during the February Committee meeting, which is scheduled at least a year in advance. The February meeting occurs after performance results for the prior year are known, which allows the Committee to align compensation elements with our performance and business goals.


NORDSTROM, INC. - 2020 Proxy Statement 35



For fiscal year 2019, the grant for all of the Company’s Executive Officers, including the Named Executive Officers, was changed back from 100% restricted stock units for the 2018 grant to a mix of performance and service-based long-term incentives. The long-term incentive mix for 2019 is composed of performance-based equity (60% of the grant value) and stock options (40% of the grant value) for the Chief Executive Officer and the President and Chief Brand Officer and performance-based equity (60% of the grant value) and restricted stock units (40% of the grant value) for the other Named Executive Officers. This mix provides a balance of the key retention and performance objectives of the long-term incentive plan.
Performance-based equity was reintroduced into the annual grant mix for fiscal year 2019 to support the Company’s communicated forward-looking strategy. Performance share units have a three-year performance cycle, from February 3, 2019 through January 29, 2022, and will result in payout if certain criteria are met. The core measures for the performance share units in this performance cycle, equally weighted, are growth in free cash flow and EBIT margin percentage, with the Company’s market share serving as a payout modifier for the award. Each executive’s award provides for the results for two-thirds of the award to be judged over the full three years of the performance cycle, with the remaining one-third to be judged over the first year of the same period. The Committee believes that the metrics for these awards appropriately reflect the Company’s key areas of focus over the next three years and the structure of these awards appropriately balances the need for long-term performance against the necessity of focusing on shorter-term results in the context of current industry trends.
Restricted stock units granted as part of the annual equity grant vest in four equal installments and complement our objectives for balancing award value through both absolute and relative stock performance.
Stock options granted as part of the annual grant vest and become exercisable in four equal annual installments and have a 10-year term. Our equity plan does not permit repricing, grant prices below 100% of the fair market value of Common Stock on the date of grant or cash dividend payments on options.
One-Time Equity Awards
In February 2019, the Committee approved a one-time stock option award to key leadership to recognize the critical and important role that the executives will play in executing the Company’s communicated forward-looking strategy and delivering results to shareholders over the next few years. Anne Bramman, Kenneth Worzel and Edmond Mesrobian received this award, representing options to purchase 123,554, 159,425 and 86,687 shares, respectively. The stock option award was granted on March 5, 2019, the first business day of the open trading window following the Committee’s approval of the grant, with a grant price of $45.33, the closing price of Common Stock on the grant date. The stock options will vest over four years, with 50% vesting at the end of year three and 50% vesting at the end of year four.
 
In August 2019, the Committee determined to award Edmond Mesrobian a restricted stock unit grant to mitigate retention risk. The grant of 38,520 restricted stock units was made on August 26, 2019, the first day of the open trading window following Committee approval, and vests 33% after each of years one and two and 34% after year three.
2017 Performance Share Units Did Not Pay Out
Performance share units for the 20172019 fiscal year performance cycle were granted based on the vesting schedule below. At the end of the performance cycle, our TSR did not meet the minimum threshold of greater than the 40th percentile of the Standard & Poor’s 500, which is required for payout. As a result, none of these performance share units vested.
Required Percentile Rank for Vesting
Percentage of Units that will Vest

>85th
175
%
>75th
150
%
>65th
125
%
>55th
100
%
>40th
50
%
≤40th

One-Third of 2019 Performance Share Units Will Not Pay Out and Two-Thirds are Still in Process
As previously described, one-third of the performance share unit grant for 2019 has a one-year performance period and two-thirds of the performance share unit grant has a three-year performance period. The core measures for both performance periods are free cash flow growth and EBIT margin percent. At the end of the three-year performance period, market share results could adjust the number of shares that vest and are paid out up or down by up to 20%. At the end of the one-year performance period ended February 1, 2020, the thresholds for the core measures of free cash flow growth and EBIT margin percent, as shown below, were not achieved, so one-third of the performance share unit grant for fiscal year 2019 will not pay out.
Free Cash Flow Growth for Performance Cycle:
February 3, 2019 - February 1, 2020

Percentage of Units that will Vest
≥-16.4% (≥$537M)
200%
-20.1% ($513M)
100%
-23.8% ($490M)
50%
<-23.8% (<$490M)
0%

EBIT Margin % for
Performance Cycle:
February 3, 2019 - February 1, 2020

Percentage of Units that will Vest
≥6.4%
200%
6.2%
100%
6.0%
50%
<6.0%
0%


36 NORDSTROM, INC. - 2020 Proxy Statement


Stock Ownership Guidelines Align Executives and Shareholders
Ownership of Common Stock by our Named Executive Officers and other Executive Officers is encouraged by management and the Board and our stock ownership guidelines were formally established in 2004. Ownership shares are made up of all forms of Common Stock, as well as vested performance share units that are deferred and unvested restricted stock units. Ownership shares do not include unvested or vested stock options, unvested performance share units or pledged shares.
The Named Executive Officers and other Executive Officers have an annual share target defined as base salary on each April 1st multiplied by their ownership multiple of base salary divided by a 52-week average closing stock price. The ownership multiples of base salary depend on the executive’s role in the Company and are as shown in the following table for the Named Executive Officers. The Committee has assigned these particular multiples to match or exceed market practice, and to represent a significant portion of the overall compensation package to reinforce the alignment of management’s decision-making with shareholder interests. Executives new to the Company have five years to achieve their ownership target. In May 2019, the Committee approved a change to our guidelines such that once the ownership target has been met, executives will remain in compliance as long as their shareholdings do not decline below the number of shares acquired at the time the target was met. However, a new target will be determined at the time an executive receives a promotion

 

that results in an increased multiple of base salary or in the case of a one-time base salary increase greater than 20%. Executives would have five years to achieve the new target.
Position
Multiple of Base Salary Used to Establish Ownership Target
Chief Executive Officer
10x
Chief Financial Officer
4x
President and Chief Brand Officer
10x
Chief Operating Officer
4x
Chief Technology Officer
3x
Under our guidelines, Named Executive Officers and other Executive Officers are required to conduct any open market transactions in Common Stock only in accordance with an SEC Rule 10b5-1 trading plan. These plans predetermine the timing, number of shares and price at which an Executive Officer may buy or sell Company shares. The Executive Officers must also achieve and retain a minimum holding of 100% of their ownership targets before they may sell Company shares in the market.
The Committee regularly reviews stock ownership status for the Named Executive Officers. All of the Named Executive Officers have exceeded their ownership targets.
Benefits
The Company offers the Named Executive Officers a comprehensive program of broad-based, leadership and retirement benefits. Their purpose varies by benefit, but in general they enhance total compensation with meaningful and competitive offerings that support healthy lifestyles and contribute to financial security. These benefits are regularly reviewed for consistency with our pay and benefits philosophy, organizational culture and market practices. Additional information on 2019 benefits is provided as noted below.
 
 
Benefit
 
Where to Learn More
Broad-Based
●  
Company contribution to medical, dental and vision coverage; short- and long-term disability; life insurance; adoption assistance; and employee referral assistance. Employee access to accident insurance; health savings account and flexible spending accounts. Employee Stock Purchase Plan. Merchandise discount. Paid time off.
●  
For merchandise discount, see All Other Compensation in Fiscal Year 2019, footnote (a) on page 43.
Leadership
Salary continuance; long-term disability coverage; life insurance
 
For long-term disability and life insurance, see All Other Compensation in Fiscal Year 2019, footnote (c) on page 43.
 
Deferred Compensation Plan; Company match and discretionary profit-based match for eligible participants
See Nonqualified Deferred Compensation beginning on page 51.
 
Executive Severance Plan
See Potential Payments Upon Termination or Change in Control at Fiscal Year-End 2019, footnote (e) on page 57.
Retirement

401(k) match and discretionary profit-based match
See All Other Compensation in Fiscal Year 2019, footnote (b) on page 43.
Retiree health care (closed to new entrants in 2013; Erik Nordstrom, Peter Nordstrom and Kenneth Worzel are participants as they were eligible prior to the closure to new entrants)
See Potential Payments Upon Termination or Change in Control at Fiscal Year-End 2019, footnote (d) on page 57.
Supplemental Executive Retirement Plan (annual benefit capped for current participants; closed to new entrants in 2012; Erik Nordstrom, Peter Nordstrom and Kenneth Worzel are participants as they were eligible prior to the closure to new entrants)
See Pension Benefits beginning on page 50.


NORDSTROM, INC. - 2020 Proxy Statement 37



Changes for 2020
Each year, the Committee reviews the design of our total compensation elements and makes changes as needed to improve alignment with our pay and benefits philosophy. At the February meeting, after consideration of recommendations made by the Committee’s compensation consultant, the Committee determined that base salaries and bonus opportunities for the Named Executive Officers would remain unchanged for fiscal year 2020.
At the Committee’s February meeting, the following changes were made to the long-term incentives for fiscal year 2020:
the Committee used its discretion to increase the long-term incentive grant value, as a percentage of base salary, above the target long-term incentive grant values for certain Named Executive Officers for fiscal year 2020 to recognize their increased responsibilities and/or acknowledge their strong leadership in their functional areas. Anne Bramman, Kenneth Worzel and Edmond Mesrobian each received an increase in their long-term incentive grant values as a percentage of their respective base salaries. Anne Bramman’s long-term incentive percent increased from her target of 200% to 250% to recognize her role in delivering expense savings well in excess of our expense targets. Kenneth Worzel’s long-term incentive percent increased from his target of 250% to 300% to recognize his
 
increased responsibilities in our newly established Chief Operating Officer role and his leadership as we have progressed our growing local market strategy. Edmond Mesrobian’s long-term incentive percent increased from his target of 150% to 200% to recognize his progress in building a strong team to deliver leading-edge systems capabilities; and
the Committee determined to change one of the performance measures for the 2020 performance share unit grant from the average growth in Free Cash Flow over the three-year performance period to the average absolute Free Cash Flow over the three-year performance period. The change was made to lessen the distortion and volatility that can arise based on the timing of cash payments and receipts.
Subsequent to the Committee meeting, based on the uncertainty surrounding the impact of the coronavirus (COVID-19) on business operations and to enhance the Company’s liquidity:
Erik Nordstrom and Peter Nordstrom have agreed to receive no base salary for at least the next six months, beginning March 29, 2020; and
the other Named Executive Officers have agreed to reduce their base salaries by 25%, and all other executives of the Company have agreed to reduce their base salaries by 10% – 25%, depending on their roles, for at least the next six months, beginning March 29, 2020.
Additional Information
Compensation Risk Assessment Supports Integrity of the Pay Program
The Committee oversees an extensive review of the Company’s pay-for-performance philosophy, the composition and balance of elements in the compensation package and the alignment of plans with shareholder interests to ensure these practices do not pose a material adverse risk to the organization. The review is conducted every other year as underlying programs and practices are generally consistent over time. The last review, for fiscal year 2018, concluded with the following perspectives:
The goals of the Company’s compensation programs are to attract and retain the best talent and to motivate and reward our people in ways that are aligned with the long-term interests of our shareholders. This has been a long-standing objective of our pay-for-performance philosophy. We believe that the strong alignment of our employee compensation plans with performance has served our stakeholders, and in particular, our shareholders, well. The strength of this alignment is regularly reviewed and monitored by the Committee.
As a leading fashion retailer, the Company’s compensation-related risks are generally more straightforward than some other business sectors. We have systems in place to identify, monitor and control risks, making it difficult for a single individual or a group of individuals to expose the Company to material compensation risk.
 

Our compensation program rewards both short- and long-term performance. Performance measures are predominantly team-oriented rather than individually focused and tied to measurable factors that are both transparent to shareholders and drivers of their shareholder return.
The compensation program balances the importance of achieving critical short-term objectives with a focus on realizing strategic long-term priorities. Strong stock ownership guidelines are in place for Company leaders, and mechanisms, such as an executive clawback policy, exist to address inappropriate rewards.
The Committee is actively engaged in establishing compensation plans, monitoring these plans during the year and using discretion in making rewards, as necessary.
The Company has active and engaged oversight systems in place. The Audit and Finance Committee and the full Board closely monitor and certify the performance that drives employee rewards through detailed and transparent financial reporting, which is in place to provide strong, timely insight into the performance of the Company.
Based on this review, the Committee believes that the Company’s compensation plans do not encourage risk taking that is reasonably likely to have a material adverse effect on the Company.


38 NORDSTROM, INC. - 2020 Proxy Statement


Executive Compensation Clawback Policy Applies to Performance-Based Pay
In February 2008, the Board adopted a formal executive compensation clawback policy that applies to any performance-based bonus, equity, equity equivalent or other incentive compensation awarded to an Executive Officer, beginning in that fiscal year. Under that policy, in the event of a material restatement of the Company’s financial results, the Board will review the circumstances that caused the restatement and consider
 
accountability to determine whether an Executive Officer was negligent or engaged in misconduct. If so, and if the amount or vesting of an award would have been less had the financial statements been correct, the Board will seek to recover compensation from the Executive Officer as it deems appropriate. This policy is in addition to any requirements which might be imposed pursuant to applicable law.
Termination and Change in Control Provisions are Committee-Directed
Under our Nordstrom, Inc. Executive Severance Plan, eligible Executive Officers, including certain Named Executive Officers, are entitled to receive severance benefits upon involuntary termination of employment by the Company to assist in the transition from active employment. To be eligible to participate in the Plan upon involuntary termination, the Named Executive Officer must have signed a non-competition and non-solicitation agreement. Erik Nordstrom and Peter Nordstrom are not currently eligible for separation benefits under the Plan and Anne Bramman has elected not to participate in the Plan. Separation benefits are described in the Potential Payments Upon Termination or Change in Control section on page 57.
 
As described in the same section, the Named Executive Officers are generally not entitled to any payment or accelerated benefit in connection with a change in control of the Company. However, the Named Executive Officers are entitled to accelerated vesting of equity if they experience a qualifying termination (termination by the Company without cause or termination by the executive for good reason) within 12 months following a change in control, unless the Committee acts to prevent such acceleration.
Tax and Accounting Considerations Underlie the Compensation Elements
The Committee recognizes the tax and regulatory factors that can influence the structure of executive compensation programs, including:
Section 162(m) of the Internal Revenue Code (“IRC”), which generally disallows a tax deduction to public companies for annual compensation over $1 million paid to their Named Executive Officers. Prior to the enactment of corporate tax reform in 2017 (the “Tax Act”), the IRC generally excluded from the calculation of the $1 million limit compensation that was based on the attainment of pre-established, objective performance goals established under a shareholder-approved plan. The exclusion for performance-based compensation was repealed by the Tax Act, effective for taxable years beginning after December 31, 2017, such that compensation paid to our Named Executive Officers in excess of $1 million is not deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. The Tax Act also expanded the category of covered officers for purposes
 
of the limitations of Section 162(m). Following passage of the Tax Act, the Committee anticipates that compensation paid to the Company’s Named Executive Officers in excess of $1 million will not be deductible by the Company.
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 718, Stock Compensation (“ASC 718”), where stock options, performance share units and restricted stock units are accounted for based on their grant date fair value (see the notes to the financial statements contained within the Company’s 2019 Annual Report). The Committee regularly considers the accounting implications of our equity-based awards.
Section 409A of the IRC, the limitations of which primarily relate to the deferral and payment of benefits under the Nordstrom Deferred Compensation Plan and Supplemental Executive Retirement Plan. The Committee continues to consider the impact of Section 409A and in general, the evolving tax and regulatory landscape in which its compensation decisions are made.


NORDSTROM, INC. - 2020 Proxy Statement 39



Compensation, People and Culture Committee Report
The Compensation, People and Culture Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. The Committee believes the Compensation Discussion and Analysis represents the intent and actions of the Committee with regard to executive compensation and has recommended to the Board that it be included in this Proxy Statement for filing with the SEC.
Compensation, People and Culture Committee
Tanya L. Domier, Chair
Glenda G. McNeal
Brad D. Smith
Gordon A. Smith


40 NORDSTROM, INC. - 2020 Proxy Statement


Summary Compensation Table
The following table summarizes the total compensation paid or accrued by the Company for services provided by the Named Executive Officers for fiscal years ended February 1, 2020, February 2, 2019 and February 3, 2018.
Name and Principal Position
Fiscal Year
Salary
($)(a)

Bonus
($)(b)

Stock Awards
($)(c)

Option Awards
($)(d)

Non-Equity Incentive Plan Compensation
($)(e)

Change in Pension Value and Nonqualified Deferred Compensation Earnings
($)(f)

All Other Compensation
($)(g)

Total
($)

Erik B. Nordstrom
2019
756,393


1,592,836

1,061,897

708,591

2,700,516

52,070

6,872,303

Chief Executive Officer
2018
756,393


2,654,705


963,144


77,504

4,451,746

 
2017
771,142


1,760,169

616,272

1,431,290

988,659

50,395

5,617,927

Anne L. Bramman
2019
793,750


1,549,974

1,859,994

564,500


39,912

4,808,130

Chief Financial Officer
2018
768,889

150,000

3,562,483


645,066


38,716

5,165,154

2017
504,173


749,965


430,384


316,516

2,001,038

Peter E. Nordstrom
2019
756,393


1,592,836

1,061,897

708,591

2,782,378

77,355

6,979,450

President and Chief Brand Officer
2018
756,393


2,654,705


963,144


59,386

4,433,628

2017
771,142


1,760,169

616,272

1,431,290

1,030,787

40,774

5,650,434

Kenneth J. Worzel
2019
826,111


1,999,970

2,400,000

645,433

1,589,618

37,080

7,498,212

Chief Operating Officer
2018
786,875


3,562,483


835,167

754,441

45,813

5,984,779

2017
762,500


749,703

262,497

574,620

725,676

32,380

3,107,376

Edmond Mesrobian
2019
743,542


2,087,450

1,304,995

420,971


10,225

4,567,183

Chief Technology Officer
2018








2017








(a)
Salary
The amounts shown represent base salary earned during the fiscal year. The numbers shown for all fiscal years vary somewhat from annual base salaries due to the fact that our fiscal year ends on the Saturday nearest to January 31st and salary increases are effective on or about April 1st of each year. Also, as a result of our 4-5-4 retail reporting calendar, fiscal year 2017 included an extra week (the “53rd week”). The 2019 base salaries were $758,500 each for Erik Nordstrom and Peter Nordstrom. Anne Bramman’s salary increased from $775,000 to $800,000 to acknowledge performance and maintain relative market competitiveness. Kenneth Worzel’s salary increased from $800,000 to $875,000 in connection with his appointment as Chief Operating Officer. Edmond Mesrobian’s salary increased from $725,000 to $775,000 to recognize his increased responsibility over data science and product management. Edmond Mesrobian was not a Named Executive Officer in fiscal years 2017 or 2018, so no amounts are shown for those years.
Anne Bramman and Edmond Mesrobian elected to defer 8% and $41,000, respectively, of their base salaries earned during each of the calendar years 2019 and 2020 into the Nordstrom Deferred Compensation Plan (NDCP). Due to the timing of our fiscal year ends, $63,565 and $41,000 were attributed to fiscal year 2019 deferrals for Anne Bramman and Edmond Mesrobian, respectively, as reported in the Fiscal Year 2019 Nonqualified Deferred Compensation Table on page 52.
 

Kenneth Worzel elected to defer $50,000 of his base salary earned during calendar year 2020 into the NDCP. He also elected to defer $50,000 of his annual performance-based cash award for fiscal year 2019, as described on page 42 in footnote (e), “Non-Equity Incentive Plan Compensation”, into the NDCP. Due to the timing of our fiscal year ends, $52,174 was attributed to fiscal year 2019 deferrals as reported in the Fiscal Year 2019 Nonqualified Deferred Compensation Table on page 52.
Each of the Named Executive Officers contributed a portion of their base salary earned during fiscal year 2019 to the 401(k) Plan.
(b) Bonus
The amount reported for fiscal year 2018 reflects a discretionary one-time cash payment, approved by the Compensation, People and Culture Committee in March 2018, to Anne Bramman in recognition of her service since joining the Company in June 2017 as Chief Financial Officer.


NORDSTROM, INC. - 2020 Proxy Statement 41



(c) Stock Awards
The amounts reported reflect the grant date fair value of restricted stock units and performance share units granted during the fiscal year under the 2010 and 2019 Equity Incentive Plans. The amounts reported are not the value actually received.
The value the Named Executive Officers will ultimately receive from their performance share units will depend on whether the performance requirements are met and the market price of Common Stock at the end of the performance cycle. The amounts reported were calculated in accordance with FASB Accounting Standards Codification 718, Stock Compensation (“ASC 718”) and reflect the probable outcome with respect to satisfaction of performance conditions at the date of grant. The payout could be as low as zero depending on performance over the relevant period, and the value of any payout will depend on stock price at the time of payout. See column (c) of the Grants of Plan-Based Awards in Fiscal Year 2019 table on page 44 for the number of performance share units granted in fiscal year 2019. No amounts are reported for fiscal year 2018 as the Company did not award performance share units during that fiscal year.
The value the Named Executive Officers may receive from their restricted stock units will depend on whether the time-based vesting requirement is met and the market price of Common Stock on the vesting date. The amounts reported were calculated in accordance with ASC 718. See column (d) of the Grants of Plan-Based Awards in Fiscal Year 2019 table beginning on page 44 for the number of restricted stock units granted in fiscal year 2019.
(d) Option Awards
The amounts reported reflect the grant date fair value of stock options granted during the fiscal year under the 2010 Equity Incentive Plan. This is not the value received. The Named Executive Officers will only realize value from stock options if the market price of Common Stock is higher than the exercise price of the options at the time of exercise. The amounts reported were calculated in accordance with ASC 718. See column (e) of the Grants of Plan-Based Awards in Fiscal Year 2019 table beginning on page 44 for the number of stock options granted in fiscal year 2019. No amounts are reported for fiscal year 2018 as the Company did not grant stock options during that fiscal year.
Assumptions used in the calculation of these amounts are included in the notes to the financial statements contained within the Company’s 2019 Annual Report.
(e) Non-Equity Incentive Plan Compensation
The amounts reported reflect the annual performance-based cash awards under the Executive Management Bonus Plan, as described beginning on page 33. The amounts of the cash awards for fiscal year 2019, approved by the Compensation, People and Culture Committee on February 26, 2020, were paid in March 2020.
 
Kenneth Worzel elected to defer $50,000 of his cash award for fiscal year 2019 into the NDCP. He also elected to defer $50,000 of his base salary earned during calendar year 2020 into the NDCP. Due to the timing of our fiscal year ends, $52,174 was attributed to fiscal year 2019 deferrals as reported in the Fiscal Year 2019 Nonqualified Deferred Compensation Table on page 52.
(f) Change in Pension Value and Nonqualified Deferred Compensation Earnings
The amounts reported are the changes in actuarial present value from fiscal year-end 2018 to fiscal year-end 2019 for each of the eligible Named Executive Officer’s benefit under the Supplemental Executive Retirement Plan (“SERP”). The present value of the benefit is affected by current earnings, credited years of service, the executive’s age and time until normal retirement eligibility, the age of the executive’s spouse or life partner as the potential beneficiary and economic assumptions (discount rate and mortality table used to determine the present value of the benefit).
The present value of Erik Nordstrom’s and Peter Nordstrom’s benefits increased from last year by $2,700,516 and $2,782,378, respectively. The increases were primarily the result of a decrease in the discount rate used to determine the present value of the benefit. The interest rate used is the same as the discount rate used for financial reporting purposes for the SERP which changed from 4.27% to 2.97%. The present value of Kenneth Worzel’s benefit increased by $1,589,618, primarily due to the change in discount rate mentioned above along with increases for final average pay and service. Amounts are not reported for Anne Bramman and Edmond Mesrobian because the SERP was closed to new entrants prior to when they joined the Company. See the Pension Benefits section beginning on page 50 for more information about the SERP.
The amounts were calculated using the same discount rate and mortality table assumptions as those used in the Company’s financial statements to calculate the Company’s obligations under the SERP. Assumptions used in the calculation of these amounts are included in the notes to the financial statements contained within the Company’s 2019 Annual Report.
Anne Bramman, Kenneth Worzel and Edmond Mesrobian had account balances in the Company’s nonqualified deferred compensation plan in fiscal year 2019, as shown on page 52. They did not receive above-market-rate or preferential earnings on their deferred compensation, so no amounts for these types of earnings are included in the table.
(g) All Other Compensation
Each component of all other compensation paid to the Named Executive Officers is shown in the table on the following page.


42 NORDSTROM, INC. - 2020 Proxy Statement


All Other Compensation in Fiscal Year 2019
The table below shows each component of “All Other Compensation” for fiscal year 2019, reported in column (g) of the Summary Compensation Table on page 41, calculated at the aggregate incremental cost to the Company.
 
Broad-Based Benefit
 
Broad-Based Retirement Benefit
 
 
 
Other
 
Name
Merchandise Discount
($)(a)

 
401(k) Plan Company Match
($)(b)

 
Premium on Insurance
($)(c)

 
Personal Use of Company Aircraft
($)(d)

Expenses in Connection with Relocation ($)(e)

Tax Reim-bursement in Connection with Relocation ($)(f)

Total
($)

Erik B. Nordstrom
36,358

 
13,664

 
2,048

 



52,070

Anne L. Bramman
24,110

 
13,664

 
2,138

 



39,912

Peter E. Nordstrom
56,811

 
13,664

 
2,048

 
4,832



77,355

Kenneth J. Worzel
21,183

 
13,664

 
2,233

 



37,080

Edmond Mesrobian
7,158

 

 
2,025

 

795

247

10,225

(a)
Merchandise Discount
The Company provides a merchandise discount for its employees. The Named Executive Officers were provided a discount of 33% for purchases at Nordstrom full-line stores and Nordstrom.com and 20% for purchases at Nordstrom Rack stores, Nordstromrack.com/HauteLook and our restaurants. A 40% discount is available at certain times of the year on specific merchandise. The merchandise discount provided to the Named Executive Officers is the same as for all other eligible management and high-performing non-management employees of the Company. The amounts reported are the total discount the Named Executive Officers received on their Nordstrom purchases during the fiscal year. The Company provides the same merchandise discount program for its Board of Directors, as described on page 17.
(b)
401(k) Plan Company Match
The Company offers a matching contribution on employee 401(k) contributions under the 401(k) Plan to all eligible employees, including the Named Executive Officers. The Named Executive Officers may defer up to 16% of their eligible pay (i.e., base salary, performance-based bonus and other taxable wages) into the Plan, subject to IRC limits.
Although the matching contribution is discretionary and subject to change, for calendar year 2019, the Company matched employee contributions for the Plan year, dollar for dollar, up to 4% of eligible pay. The 2019 calendar year compensation limit for eligible pay was $280,000, as set by the IRS. In 2019, the maximum Company matching contribution for the eligible Named Executive Officers was $11,200 (4% of $280,000).
The Company also offers a discretionary match up to an additional 2% of eligible pay, based on Company performance. Based on the Company’s performance in 2019, the Board approved a discretionary match of $0.22 per dollar contributed by the employee, up to 4% of eligible pay. The maximum Company discretionary match for the eligible Named Executive Officers was $2,464 (22%
 
of 4% of $280,000) for the 2019 Plan Year. The total Company contribution each of the eligible Named Executive Officers received in March 2020, for calendar year 2019, was $13,664 as reported above, with the exception of Edmond Mesrobian who was not eligible for the Company matching contributions based on his annual base salary and hire date.
Contributions under the Plan may be directed to any of 12 custom target retirement date funds or to any of 9 individual investment alternatives, including Common Stock. The Plan also offers a self-directed brokerage option.
(c)
Premium on Insurance
The Company provides life insurance to the Named Executive Officers in an amount equal to approximately 1.25 times their base salary and additional disability insurance. The amounts reported are the annual Company-paid premiums.
(d)
Personal Use of Company Aircraft
The Company owns two aircraft which it uses for business purposes. On rare occasions, a Named Executive Officer may have a guest accompany the executive on a business trip on the Company’s aircraft as an additional passenger. Only the direct variable costs (i.e., costs the Company incurs solely as a result of the passenger being on the aircraft) are included in determining the aggregate incremental cost to the Company. When travel does not meet the IRS standard for business travel, the cost of the travel is imputed as income to the executive, which is the Company’s practice to fully disclose. The Company does not reimburse the Named Executive Officers for taxes incurred as a result of the imputed income.
In fiscal year 2019, Peter Nordstrom was accompanied by a family member on one business trip. The costs reported are the total direct variable costs associated with the family member’s travel, which include the tax deduction the Company was not able to take as a result of the nondeductible portion of the aircraft operating costs.


NORDSTROM, INC. - 2020 Proxy Statement 43



(e) Expenses in Connection with Relocation
The Company provides relocation assistance to eligible employees who have changed their place of residence to accept a position with Nordstrom. The type and amount of assistance varies by management level. Edmond Mesrobian received the standard relocation benefits under our guidelines for an executive at his level when he relocated to the Company’s headquarters in Seattle. The amount reported is the cost incurred by the Company in fiscal year 2019 related to rental car expense.
 
(f) Tax Reimbursement in Connection with Relocation
The Company provides reimbursement of all taxes incurred on taxable moving expenses to employees who have changed their place of residence to accept a position with Nordstrom. The amount reported is the tax reimbursement received by Edmond Mesrobian in fiscal year 2019.
Grants of Plan-Based Awards in Fiscal Year 2019
The following table discloses the potential range of payouts for:
non-equity incentive plan awards granted in fiscal year 2019. These awards are performance-based cash bonuses granted under the Executive Management Bonus Plan, as described beginning on page 33; and
equity incentive plan awards granted in fiscal year 2019. These awards are performance share units granted under the 2010 Equity Incentive Plan, as described on page 36.
 
The table also discloses:
the grant date fair value of performance share units granted under the 2010 Equity Incentive Plan in fiscal year 2019, as described on page 36;
the number, price and grant date fair value of stock options granted under the 2010 Equity Incentive Plan in fiscal year 2019, as described on page 36; and
the number and grant date fair value of restricted stock units granted under the 2010 and 2019 Equity Incentive Plans in fiscal year 2019, as described on page 36.
 
 
 
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
(b)
 
Estimated Future Payouts Under Equity Incentive
Plan Awards
(c)
All Other
Stock
Awards:
Number of Shares
of Stock or Units (#)(d)
All Other
Option
Awards:
Number of Securities
Underlying Options
(#)(e)
Exercise
or Base Price of
Option Awards
($/Sh)(f)
Grant
Date Fair
Value of
Stock and Option Awards ($)(g)
Name and Award
Grant Date
(a)
Approval Date
Threshold ($)

Target
($)

Maximum ($)

 
Threshold (#)
Target (#)
Maximum (#)
Erik B. Nordstrom
 
 
 

 

 

 
 
 
 
 
 
 
 
Executive
Management Bonus
 
 
379,250

1,517,001

3,792,502

 
 
 
 
 
 
 
 
Performance Share Unit Award
3/5/2019
2/26/2019
 
 
 
 
18,814
37,629
90,309
 
 
 
1,592,836
Stock Option Award
3/5/2019
2/26/2019
 
 
 
 
 
 
 
 
73,069
45.33
1,061,897
Anne L. Bramman
 
 
 

 

 

 
 
 
 
 
 
 
 
Executive Management
Bonus
 
 
200,000

800,000

2,000,000

 
 
 
 
 
 
 
 
Performance Share Unit Award
3/5/2019
2/26/2019
 
 
 
 
10,985<