Eagle Outfitters, Inc.
Corporate Governance Guidelines
Strong corporate governance practices are critically important, and help ensure our commitment to excellence, integrity and accountability across our Company. We have established Corporate Governance Guidelines, which provide a framework for our governing principles. These guidelines are subject to future refinement or changes as the Board may find necessary or advisable.
Role of the Board
The primary responsibilities of the Board of Directors are oversight, counseling and direction to the management of the Corporation in the interest and for the benefit of the Corporation's stockholders. The Board’s responsibilities, which may be delegated to appropriate committees, include:
(a) Selecting, regularly evaluating the performance of, and approving the compensation of the Chief Executive Officer and, other senior executives;
(b) Planning for succession with respect to the position of Chief Executive Officer and monitoring management's succession planning for other senior executives;
(c) Reviewing and, where appropriate, approving the Corporation's major financial objectives, strategic and operating plans and actions;
(d) Overseeing the Corporation’s risk management program; and
(e) In general, evaluating whether the Corporation’s business is being properly managed.
The Board of Directors has delegated to the Chief Executive Officer, working with the other executive officers of the Corporation, the authority and responsibility for managing the business of the Corporation in a manner consistent with the established policies of the Corporation, and in accordance with any specific plans, instructions or directions of the Board. The Chief Executive Officer and Management are responsible to seek the advice and, in appropriate situations, the approval of the Board with respect to extraordinary actions to be undertaken by the Corporation.
Composition and Qualifications of the Board of Directors
(a) Size of the Board. Under the Corporation's Certificate of Incorporation, the size of the Board is fixed from time to time by action of the Board at not less than 3 members and not more than 15 members. The Nominating and Corporate Governance Committee periodically reviews the appropriate size of the Board and makes recommendations to the Board. The Board currently has eight members.
(b) Mix of Management and Independent Directors. In accordance with Section 303A, The Corporate Governance Listing Standards, of the NYSE Listed Company Manual (the “NYSE Rules”), there will be at least a majority of independent Directors on the Board. The Board currently has seven Independent Directors. The Board utilizes the definition of an "independent" director as specified in Section 303A.02 of the NYSE Rules. The Board also believes that it is useful and appropriate to have the Chief Executive Officer and select senior management serve on the Board (“Management Directors”).
(c) Separation of the Positions of Chairperson and CEO. The Board’s general policy is that the positions of Chairperson of the Board and Chief Executive Officer should be held by separate persons.
(d) Board Membership Criteria and Diversity. The Nominating and Corporate Governance Committee is responsible for reviewing from time to time the appropriate skills and characteristics required of Board members in the context of the background of existing members and in light of the perceived needs for the future development of the Company’s business. This assessment includes issues of diversity and experience in different substantive areas such as retail operations, marketing, technology, distribution, real estate and finance. The Board seeks the best director candidates based on the skills and characteristics required without regard to race, color, national origin, religion, disability, marital status, age, sexual orientation, gender, gender identity and expression, or any other basis protected by federal, state or local law. Board diversity is valued and provides many benefits, including creativity, variety in approaches to problem solving, and the ability to work effectively in our various markets.
Board members are expected to prepare for, attend, and participate in all Board and applicable Committee meetings. Each Board member is expected to ensure that other existing and planned future commitments do not materially interfere with the member’s service as an outstanding director. These other commitments will be considered by the Nominating and Corporate Governance Committee when reviewing Board candidates and in connection with the Board’s annual self-assessment process.
(e) Selection of New Director Candidates. The Board is responsible for overseeing the director nomination process. The Board delegates the screening process to the Nominating and Corporate Governance Committee for recommendation to the full Board in accordance with the Nominating and Corporate Governance Committee Charter.
(f) Majority Voting. Pursuant to Section 11 of the Corporation’s Bylaws, Board members in an uncontested election are elected by a majority of the votes cast as set forth in the procedures established in Section 11 of the Bylaws.
Education and Evaluation of the Board of Directors
(a) New Director Orientation. The Chief Executive Officer in conjunction with Management is responsible for new-Director orientation programs. The orientation programs are designed to familiarize new Directors with the Company's businesses, strategies and challenges.
(b) Continuing Education. The Board encourages all Directors to participate in third party continuing education programs to assist in developing and maintaining skills necessary or appropriate for the performance of their responsibilities.
(c) Formal Evaluation of the Board. The Nominating and Corporate Governance Committee manages the Board’s process for annual Director self-assessment and evaluation of the performance of the full Board.
(a) Limits on Outside Board Memberships. Board members who are full-time employees of other companies should not serve on more than three public company boards at one time and Board members who are retired from full-time employment should not serve on more than four public company boards. If a Director desires to serve on the board of another public company, the additional position must first be approved by the Chairperson of the Nominating and Corporate Governance Committee. The Chief Executive Officer should not serve on more than one other public company board and must consult with the Chairperson of the Nominating and Corporate Governance Committee before accepting an appointment to an outside board. In the event that the Chairperson of the Nominating and Corporate Governance Committee determines that the additional directorship constitutes a conflict of interest or interferes with such Director’s ability to carry out his or her responsibilities as a Director of the Company, such Director shall either offer his or her resignation or not accept the other directorship. Service on private company, charitable or educational boards does not count towards this limit. The Nominating and Corporate Governance Committee is responsible for oversight of these limits and has discretion to make individual exceptions as deemed appropriate.
(b) Directors Who Change Their Present Job Responsibility. Any Director who retires or changes employment or other position from those held when first elected to the Board shall submit an offer letter of resignation for consideration by the Nominating and Corporate Governance Committee and the full Board. The Nominating and Corporate Governance Committee will consider the Director’s offer of resignation and will recommend to the full Board the action to be taken. Directors who are also employees of the Company are expected to offer their resignation from the Board at the same time they leave active employment with the Company, which shall be subject to acceptance by the Board.
(c) Term Limits. The Board has no term limits, because they arbitrarily force the loss of contributions from Directors who have developed significant experience and insight into the Corporation and its operations and, therefore, provide a valuable and increasing contribution to the Board.
(d) Director Retirement Policy. Any Director over age 72 shall not be eligible for re-election.
(e) Stock Ownership. Each Director shall, within three years of joining the Board, hold stock of the Company worth at least five times the annual base retainer then in effect. The following forms of equity interests in the Company count towards the stock ownership requirement:
Unexercised stock options and unvested restricted stock do not count towards the stock ownership requirement.
Any interested party may communicate with the Board by sending an email to firstname.lastname@example.org or writing to the following address: American Eagle Outfitters, Inc., 77 Hot Metal Street, Pittsburgh, PA 15203. The Chairman of the Board or Lead Independent Director, if requested by major shareholders, are available for consultation and direct communication, if appropriate. Non-Management Board members should not communicate with the media or analysts regarding the Company unless requested or approved in advance by the Company’s Chief Executive Officer or the Board of Directors.
Compensation of the Board of Directors
As a general policy, Board compensation is a mix of cash and equity-based compensation. The Compensation Committee, in consultation with the Nominating and Corporate Governance Committee, reviews and recommends to the full Board the level and mix of compensation for Directors, based upon the advice of compensation consultants retained by the Committee. Directors who are employees of the Corporation are not paid for Board service beyond their regular employee compensation. Directors who are not employees of the Company are compensated as follows:
(a) an annual retainer for serving on the Board of $55,000, payable quarterly;
(b) an annual retainer for serving on a standing committee of the Board of $20,000, payable quarterly;
(c) an annual retainer for serving as the Chairman of the Audit Committee of $25,000, payable quarterly;
(d) an annual retainer for serving as the Chairman of the Compensation Committee of $15,000, payable quarterly;
(e) an annual retainer for serving as the Chairman of the Nominating and Corporate Governance Committee of $12,000, payable quarterly;
(f) an annual retainer for serving as Lead Independent Director of $20,000, payable quarterly;
(g) an annual stock grant of a number of shares equal in value to $135,000, payable quarterly, based on the value of the Company's stock on the first day of each calendar quarter, to be issued under the Company's 2005 Stock Award and Incentive Plan, as amended;
(h) a per meeting fee of $1,500 for an in-person meeting or $1,000 for a telephonic meeting for serving on a special committee of the Board; and
(i) a per meeting fee of $1,500 for an in-person meeting or $1,000 for a telephonic meeting for serving as the Chairman of a special committee of the Board.
(a) Number of Committees. The Board has three standing Committees. The Committees are Audit, Compensation, and Nominating and Corporate Governance.
(b) Audit Committee. The primary function of the Audit Committee is to assist the Board in monitoring (1) the integrity of the financial statements of the Company, (2) the qualifications, performance and independence of the independent registered public accounting firm, (3) the performance of the internal auditors, and (4) the Company’s compliance with regulatory and legal requirements. The Audit Committee also reviews and approves the terms of any new related party agreements.
(c) Compensation Committee. The function of the Compensation Committee is to aid the Board in meeting its responsibilities with regard to oversight and determination of executive compensation.
(d) Nominating and Corporate Governance Committee. The function of the Nominating and Corporate Governance Committee is to aid the Board in meeting its responsibilities with regard to the organization and operation of the Board, selection of nominees for election to the Board and other corporate governance matters.
Each Committee is composed entirely of independent Directors.
Each Committee has a written charter, approved by the Board, which describes the Committee’s general authority and responsibilities. Each Committee reviews its charter annually, and works with the Nominating and Corporate Governance Committee and the Board to make appropriate revisions.
Each Committee has the authority to engage outside experts, advisors and counsel to the extent it considers appropriate to assist the Committee in its work.
Each Committee regularly reports to the Board concerning the Committee’s activities.
(e) Assignment and Term of Service of Committee Members. The Board is responsible for the appointment of Committee members and the Committee members appoint the Chairperson. Committee assignments and Chairpersonships are reviewed and determined annually.
(f) Frequency and Length of Committee Meetings and Committee Agenda. The Committee Chairperson determines the frequency and length of the Committee meetings and develops the Committee's agenda with the input of the other Committee members. The Committee meeting minutes are shared with the full Board, and other Board members are welcome to attend Committee meetings.
Meetings and Materials
(a) Scheduling and Selection of Agenda Items for Board Meetings. Board meetings are scheduled in advance for each quarter. In addition to regularly scheduled meetings, additional Board meetings may be called upon appropriate notice at any time to address specific needs of the Corporation. The Board may also take action from time to time by unanimous written consent.
The Chief Executive Officer and the Corporate Secretary, in consultation with the other members of the Board, draft the agenda for each meeting and distribute it in advance to the Board. Each Director may at any time propose agenda items, request the presence of or a report by any member of the Corporation's management, or at any Board meeting raise subjects that are not on the agenda for that meeting.
(b) Board Material Distributed in Advance. Information that is important to the Board's understanding of the business or matters set forth on the agenda is distributed to the Board in writing and in advance of the meeting, except in those circumstances when it is not practical to do so. Supplemental written materials are provided to the Board on a periodic basis and at any time upon a Director’s request.
As a general rule, materials on specific subjects are sent to the Board members sufficiently in advance of meetings so that, at the meeting, Directors may focus on questions and discussions regarding the issues raised by the materials. Sensitive subject matters may be discussed at the meeting with or without written materials being distributed in advance or at the meeting.
(c) Access to Employees and Board Presentations. The Board has complete access to contact and meet with any employee of the Corporation. The Board encourages the Chief Executive Officer to schedule select employees to make presentations at Board Meetings to provide information, insights and opinions regarding agenda items being discussed, or to simply update and educate the Board regarding developments in the Corporation’s business.
(d) Meetings of Independent Directors. The Board's policy is to have the Independent Directors meet separately in executive session in connection with each regularly scheduled board meeting (at least four times annually). During each meeting of the Independent Directors, the Lead Independent Director will lead the discussion.
(a) Lead Independent Director. The Lead Independent Director is appointed by the Independent Directors annually. The Lead Independent Director is responsible for:
(b) Formal Evaluation of Chief Executive Officer. The independent Directors perform the annual performance evaluation of the Chief Executive Officer as a part of the Corporation’s annual performance review process for all full time employees.
(c) Succession Planning and Management Development. The Nominating and Corporate Governance Committee reviews succession planning for the Chief Executive Officer, and the Chief Executive Officer reviews succession planning for senior management, with the Board on an annual basis.
Integrity and Conduct
Members of the Board of Directors shall act at all times in accordance with the requirements of the Corporation's Corporate Code of Ethics, which applies to all employees and each Director in connection with activities relating to the Corporation. This obligation includes, without limitation, adherence to the Corporation's policies with respect to conflicts of interest, confidentiality, protection of the Corporation's assets, ethical conduct in business dealings and respect for and compliance with applicable law. Any waiver of the requirements of the Corporate Code of Ethics with respect to any individual Director or executive officer must be reported to, and be subject to the approval of, the Board of Directors and will be disclosed as required by law.
The Nominating and Corporate Governance Committee reviews these Corporate Governance Guidelines on an annual basis and reports to the Board with any recommendations for amendment or revision for approval by the full Board.
Adopted March 10, 2004, amended
November 15, 2005, February 28, 2006, August 15, 2006,
March 7, 2007, August 21, 2007, March 3, 2009, March 2, 2010, June 21, 2011 and September 11, 2012.