UNITED STATES
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Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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12 Whatney, Irvine, CA 92618
April 22, 2024
Dear Stockholder:
You are cordially invited to attend the 2024 annual meeting of stockholders of Tilly’s, Inc., to be held on Thursday, June 13, 2024 at 9:30 a.m., local time, at our headquarters located at 12 Whatney, Irvine, California 92618. The attached notice of meeting and proxy statement describe the matters to be acted upon at the annual meeting. We urge you to read this information carefully.
Whether or not you plan to attend the annual meeting personally, and regardless of the number of shares of Tilly’s stock you own, it is important that your shares be represented at the annual meeting. We are pleased to take advantage of Securities and Exchange Commission rules that allow companies to furnish their proxy materials over the internet. As a result, we are mailing to most of our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of a paper copy of our proxy materials, which include the Notice of Annual Meeting, our 2024 Proxy Statement (the "Proxy Statement"), our Fiscal 2023 Annual Report (the "Annual Report") and a proxy card or voting instruction form. The Notice contains instructions on how to access our proxy materials on the internet, how to cast your vote and how to request a paper copy of our proxy materials. All stockholders who do not receive the Notice will receive a paper copy of the proxy materials by mail. If you receive a paper copy of our proxy materials, you can cast your vote by completing the enclosed proxy card and returning it in the postage-prepaid envelope provided.
On behalf of the Board of Directors, I thank you for your participation.
 | ||||||||
| Hezy Shaked | ||||||||
| Executive Chairman of the Board, Interim President and Chief Executive Officer | ||||||||
12 Whatney, Irvine, CA 92618
NOTICE OF ANNUAL MEETING OF TILLY’S, INC. STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 13, 2024
TO OUR STOCKHOLDERS:
The 2024 annual meeting of stockholders of Tilly’s, Inc. will be held on Thursday, June 13, 2024 at 9:30 a.m., local time, at our headquarters located at 12 Whatney, Irvine, California 92618. We will consider and act on the following items of business at the annual meeting:
1.The re-election of each of Hezy Shaked, Teresa Aragones, Erin Chin, Doug Collier, Seth Johnson, and Janet Kerr to our board of directors for a term of office expiring at the 2025 annual meeting of stockholders and until their successors are duly elected and qualified;
2.The ratification of the appointment of BDO USA, P.C. as our independent registered public accounting firm for the fiscal year ending February 1, 2025;
3.A non-binding advisory proposal to approve the compensation of our named executive officers as described in the Proxy Statement accompanying this notice (the “Proxy Statement”);
4.A non-binding advisory vote to approve the frequency of future non-binding advisory votes by stockholders on the compensation of our named executive officers; and
5.Such other business as may properly come before the annual meeting.
The Proxy Statement describes each of these items of business in more detail. Our board of directors recommends a vote “FOR” each of the six nominees for director named in this Proxy Statement, a vote “FOR” the ratification of the appointment of our independent registered public accounting firm for the fiscal year ending February 1, 2025, and a vote “FOR” the non-binding, advisory approval of the compensation of our named executive officers as described in the Proxy Statement, and a vote for “ONE YEAR” on the frequency of future advisory votes by stockholders on the compensation of our named executive officers.
If you were a holder of record of Tilly’s Class A common stock or Class B common stock at the close of business on April 22, 2024, you are entitled to notice of and to vote at the annual meeting and any adjournments or postponements of the annual meeting.
| By Order of the Board of Directors | |||||
 | |||||
| Michael L. Henry | |||||
| Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |||||
Irvine, California
April 22, 2024
TILLY’S, INC.
12 Whatney, Irvine, CA 92618
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 13, 2024
TABLE OF CONTENTS
TILLY’S, INC.
12 Whatney, Irvine, CA 92618
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 13, 2024
PROXY STATEMENT
INFORMATION CONCERNING VOTING AND SOLICITATION
Solicitation of Proxies is Made by the Tilly’s, Inc. Board of Directors
Our board of directors (the “board”) of Tilly’s, Inc. (“Tilly’s,” the “Company,” “we,” “our” or “us”) is soliciting proxies to be used at the annual meeting of stockholders, to be held on Thursday, June 13, 2024 at 9:30 a.m., local time, at our headquarters located at 12 Whatney, Irvine, California 92618, and at any continuation, adjournment or postponement thereof (the "annual meeting"). References to our website in this Proxy Statement are not intended to function as hyperlinks and the information contained on our website is not intended to be incorporated into this Proxy Statement. As permitted by the Securities and Exchange Commission (“SEC”), Tilly’s is providing most stockholders with access to our proxy materials over the internet rather than in paper form. Accordingly, beginning on or about April 29, 2024, we will mail a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access the proxy materials over the internet to most of our stockholders. We will mail printed copies of the full set of proxy materials to the rest of our stockholders. If you receive the Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you follow the instructions contained on the Notice for requesting such materials. The Notice instructs you how to access and review all of the important information contained in our Proxy Statement and our Annual Report to Stockholders over the internet.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on Thursday, June 13, 2024:
Our Proxy Statement and our Annual Report to Stockholders, which consists of a letter to stockholders and our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, are available at www.tillys.com/proxy. This website address contains the following documents: the Notice of the Annual Meeting, our Proxy Statement (including sample proxy card) and our Annual Report to Stockholders. You are encouraged to access and review all of the important information contained in the proxy materials before voting.
Who Can Vote, Outstanding Shares
Record holders of our Class A common stock and holders of our Class B common stock as of the close of business on April 22, 2024, the record date for the annual meeting, may vote at the 2024 annual meeting of stockholders. As of the record date, there were 22,750,615 shares of our Class A common stock outstanding, each entitled to one vote, and there were 7,306,108 shares of our Class B common stock outstanding, each entitled to ten votes. There were approximately 10 stockholders of record as of the record date.
How You Can Vote
Any stockholder as of the record date may vote by attending the annual meeting and voting in person.
If you received a proxy card in the mail, you may vote by completing, signing and mailing a completed proxy card to the following address: Tilly’s, Inc. c/o Continental Stock Transfer & Trust Company, 1 State Street, New York, New York 10004, using the postage-prepaid envelope provided to you.
If you received the Notice, you may follow the procedures outlined in the Notice to vote, or you may request a paper proxy card to submit your vote by mail using the procedures described above.
If you hold your shares of common stock in street name you will receive a notice from your broker, bank or other nominee that includes instructions on how to vote your shares. Your broker, bank or other nominee will allow you to deliver your voting instructions via the internet and may also permit you to submit your voting instructions by telephone. In addition, you may request paper copies of our Proxy Statement and proxy card by following the instructions on the notice provided by your broker, bank or other nominee.
YOUR VOTE IS VERY IMPORTANT. You should submit your proxy even if you plan to attend the annual meeting. If you properly give your proxy and submit it to us in time to vote, the individuals named as your proxy holders will vote your shares as you have directed.
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All shares entitled to vote and represented by properly submitted proxies received before the polls are closed at the annual meeting of stockholders, and not revoked or superseded, will be voted at the annual meeting in accordance with the instructions indicated on those proxies.
If you submit a signed proxy card or submit your proxy by telephone or internet and do not specify how you want your shares voted, the proxy holder designated by the Company will vote your shares according to the recommendation of our board, as follows:
•“FOR” the election each of the six director nominees;
•“FOR” ratification of the selection of BDO USA, P.C. (“BDO”) as our independent registered public accounting firm for the fiscal year ending February 1, 2025 (which we refer to as “fiscal 2024”);
•“FOR” the non-binding, advisory approval of the compensation of our named executive officers as described in the Proxy Statement; and
•"ONE YEAR" on the non-binding, advisory approval of the frequency of future advisory votes by stockholders.
In their discretion, the proxy holders named in the proxy are authorized to vote on any other matters that may properly come before the annual meeting and at any continuation, postponement or adjournment of the annual meeting. As of the date of this Proxy Statement, our board does not know of any other items of business that will be presented for consideration at the annual meeting other than those described in this Proxy Statement.
Voting in Person
If you plan to attend the annual meeting and wish to vote in person, you will be given a ballot at the annual meeting. Please note that if your shares are held of record by a broker, bank or other nominee, and you decide to attend and vote at the annual meeting, your vote in person at the annual meeting will not be effective unless you present a legal proxy, issued in your name from your broker, bank or other nominee. Even if you plan to attend the annual meeting, we encourage you to submit your proxy to vote your shares in advance of the annual meeting.
Stockholders who wish to attend the annual meeting will be required to present verification of ownership of our common stock, such as a bank or brokerage firm account statement, and will be required to present a valid government-issued picture identification, such as a driver’s license or passport, to gain admittance to the annual meeting.
No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the annual meeting.
How You May Revoke or Change Your Vote
As a stockholder of record, you have the power to revoke your proxy at any time before it is voted. A proxy may be revoked by a stockholder of record by:
•delivering a written notice of revocation to our Secretary at or before the annual meeting;
•presenting to our Secretary, at or before the annual meeting, a later dated proxy executed by the person who executed the prior proxy; or
•attending the annual meeting and voting in person.
Attendance at the annual meeting will not, by itself, revoke a proxy. Any written notice of revocation or delivery of a subsequent proxy by a stockholder of record may be sent to Tilly’s, Inc., Attn: Corporate Secretary, 12 Whatney, Irvine, California, 92618, or hand delivered to our Secretary at or before the voting at the annual meeting.
If you hold your shares through a broker, bank or other nominee, you may change your vote by submitting new voting instructions to your broker, bank or other nominee. If you wish to vote in person, you must obtain a legal proxy issued to you by your broker, bank or other nominee.
Quorum and Required Vote
The inspector of elections appointed for the annual meeting will tabulate votes cast by proxy or in person at the annual meeting. The inspector of elections will also determine whether or not a quorum is present.
Quorum. In order to constitute a quorum for the conduct of business at the annual meeting, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote at the annual meeting must be present in person or represented by proxy. Shares that abstain from voting on any proposal, or that are represented by broker non-votes (as discussed below), will be treated as shares that are present and entitled to vote at the annual meeting for purposes of determining whether a quorum exists.
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Broker Non-Votes. If you hold shares through a broker, bank or other nominee (that is, in “street name”), you are the beneficial stockholder of your shares and proxy materials were made available to you by the organization holding your account. As a beneficial stockholder, you have the right to instruct that organization on how to vote the shares held in your account. If your broker, bank or other nominee does not receive voting instructions from you, a “broker non-vote” results unless your nominee has discretionary authority to vote on the matter. This year, Proposal No. 1 (election of directors), Proposal No. 3 (advisory vote on executive compensation), and Proposal No.4 (advisory vote on frequency of future advisory votes on executive compensation) are non-routine and your broker or other nominee does not have discretionary authority to vote on these proposals. As a result, shares that constitute broker non-votes will not be considered entitled to vote on such proposals. The effect of broker non-votes and abstentions on each proposal is explained below.
Proposal No. 1: Election of Directors. Our Fourth Amended and Restated Bylaws (our "bylaws") provide for a plurality voting standard in the election of directors in uncontested elections, which are generally defined as elections in which the number of nominees does not exceed the number of directors to be elected at the meeting. In the election of directors, you may either vote “for”, or to “withhold”, from each director nominee. Under the plurality voting standard, the six nominees receiving the highest number of votes "for" their election will be elected as directors to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. Abstentions and broker non-votes will not count as a vote “for,” or a “withhold” vote from, a nominee’s election and thus will have no effect in determining whether a director nominee has received a plurality of the votes cast.
Proposal No. 2: Ratification of BDO USA, P.C. as our Independent Registered Public Accounting Firm for Fiscal 2024. The approval of Proposal No. 2 requires the affirmative vote of a majority in voting power of shares of stock present at the annual meeting, in person or by proxy, and entitled to vote on the proposal. Abstentions will have the same effect as a vote against this proposal. Broker non-votes are unlikely to result from and would not have any effect on the outcome of the vote on this proposal.
Proposal No. 3: Non-Binding Advisory Approval of the Compensation of our Named Executive Officers. The approval of Proposal No. 3 requires the affirmative vote of a majority in voting power of shares of stock present at the annual meeting, in person or by proxy, and entitled to vote on the proposal. Abstentions and broker non-votes will have the same effect as a vote against this proposal.
Proposal No. 4: Advisory Approval of the Frequency of Future Advisory Votes on the Compensation of our Named Executive Officers. To approve Proposal No. 4, the option of one year, two years or three years that receives a majority of all the votes cash on the proposal will be the frequency of future advisory votes on the compensation of our named executive officers that has been recommended by stockholders. Because there are three alternatives in this proposal (one year, two years or three years), it is possible that none of the three alternatives will receive a majority of the votes cast on this proposal. If no frequency receives a majority of the votes cast on this proposal, the option that receives the highest number of votes cast will be the frequency recommended by stockholders. The Compensation Committee intends to take the results of the vote on the proposal into account in its decision regarding the frequency with which the Company submits advisory resolutions on the compensation of our named executive officers in the future. Abstentions and broker non-votes would not have any effect on the outcome of the vote on this proposal.
Costs of Solicitation
The total cost of this solicitation, including preparing, printing and mailing this Proxy Statement, will be borne by us. In addition to solicitation by mail, our officers and employees may solicit proxies by telephone, by facsimile or in person. We do not expect to use a proxy solicitor to assist in the solicitation of proxies. We will reimburse brokers, nominees, fiduciaries and other custodians for reasonable expenses incurred by them in sending proxy soliciting material to the beneficial owners of our common stock.
Stockholder List
A list of stockholders entitled to vote at the annual meeting will be available for examination by any stockholder for any purpose germane to the annual meeting during ordinary business hours at our corporate headquarters offices located at 12 Whatney, Irvine, California 92618 for the ten days prior to the annual meeting, and also at the annual meeting.
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Confidentiality
It is our policy that all proxies, ballots and voting materials that identify the particular vote of a stockholder will be kept confidential, except in the following circumstances:
•to allow the inspector of elections appointed for the annual meeting to certify the results of the vote;
•as necessary to meet applicable legal requirements, including the pursuit or defense of a judicial action;
•where we conclude in good faith that a bona fide dispute exists as to the authenticity of one or more proxies, ballots or votes, or as to the accuracy of the tabulation of such proxies, ballots or votes;
•where a stockholder expressly requests disclosure or has made a written comment on a proxy card;
•where contacting stockholders by us is necessary to obtain a quorum, the names of stockholders who have or have not voted (but not how they voted) may be disclosed to us by the inspector of elections appointed for the annual meeting;
•aggregate vote totals may be disclosed to us from time to time and publicly announced at the meeting of stockholders at which they are relevant; or
•in the event of any solicitation of proxies or written consents with respect to any of our securities by a person other than us of which solicitation we have actual notice.
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Proposal No. 1
ELECTION OF DIRECTORS
Our board currently consists of six members, which is the fixed number of directors authorized by our board. The current term of office of each of our directors expires at the 2024 annual meeting. Each of the six directors listed below is being nominated for re-election for a term expiring on the date of our 2025 annual meeting of stockholders and until their successors are duly elected and qualified. Our board appoints directors to fill vacancies on our board, as they occur, as well as vacancies resulting from newly created directorships, in each instance upon the recommendation of the Nominating and Corporate Governance Committee. A director appointed to fill a vacancy shall serve a term that expires at the next annual meeting of stockholders and until his or her successor is duly elected and qualified.
Upon the recommendation of the Nominating and Corporate Governance Committee, our board has nominated each of the following six persons to be elected to serve for a one-year term expiring at the 2025 annual meeting of stockholders. Each of the nominees for election currently serves as a director and has consented to serve for a new term if elected. Each nominated director was elected by our stockholders to his or her present term of office.
| Name | Age | Position | Director Since | |||||||||||||||||
| Hezy Shaked | 69 | Co-Founder, Executive Chairman, Interim President and Chief Executive Officer, and Director | 1984 | |||||||||||||||||
| Teresa L. Aragones | 54 | Independent Director | 2021 | |||||||||||||||||
| Erin Chin | 46 | Independent Director | 2021 | |||||||||||||||||
| Doug Collier | 61 | Independent Director | 2011 | |||||||||||||||||
| Seth Johnson | 70 | Independent Director | 2011 | |||||||||||||||||
| Janet E. Kerr | 69 | Independent Director | 2011 | |||||||||||||||||
Although it is anticipated that each nominee will be able to serve as a director, should any nominee become unavailable to serve, the shares of our common stock represented by the proxies will be voted for such other person or persons as may be designated by our board, unless our board reduces the number of directors accordingly. As of the date of this Proxy Statement, our board is not aware of any nominee who is unable or will decline to serve as a director.
Information About Director Nominees
Set forth below are descriptions of the backgrounds of each nominee and their principal occupations for at least the past five years and their public-company directorships as of the record date as well as those held during the past five years. There are no family relationships between any director or executive officer.
Hezy Shaked co-founded the Tilly’s concept in 1982 and formed our company in 1984. He currently serves as our Executive Chairman of the Board of Directors, Interim President and Chief Executive Officer, and Chief Strategy Officer. He has served as Chairman of the Board of Directors since our inception, as Interim President and Chief Executive Officer since January 2024, and as our Chief Strategy Officer since February 2011. From September 2008 to February 2011, Mr. Shaked served as our President and Chief Executive Officer. From September 2006 to September 2008, Mr. Shaked served as our Co-Chief Executive Officer. From our inception to September 2006, Mr. Shaked served as our President and Chief Executive Officer. As our Co-Founder and former President and Chief Executive Officer, Mr. Shaked has an in-depth knowledge and understanding of all facets of our business and has developed extensive professional relationships during his over 30 years of experience in the retail industry. Our board concluded Mr. Shaked should serve as a director due to his experience and knowledge of our operations and the industry in which we compete.
Teresa L. Aragones has served on our Board since October 2021. She has more than two decades of brand marketing, digital branding and digital innovation experience. Throughout her career, she has worked for some of the most iconic brands and industry leaders, including Nike, Volkswagen, Apple, XBOX, Bacardi, Universal Studios, and more. She is currently the President, North America for AKQA, a leading global design and innovation agency. She previously served as Chief Marketing Officer at Discord, Inc. from September 2020 until November 2021, and Visual Supply Company (“VSCO”) from May 2018 to April 2020. Prior to that, she served in various Director-level marketing roles at Nike, Inc. (NYSE: NKE), most recently as the Senior Brand Director Global, Women’s Training. Prior to Nike, she was Managing Partner in Digital Branding and Innovation at David & Goliath. Prior to that, she served in various roles at Volkswagen Group of America, Inc., with her latest role being Director of Media and Interactive Marketing. From August 2022 to August 2023, she was a member of the board of directors and served on the Nominating and Governance Committee of Dave, Inc. (NASDAQ: DAVE), a publicly traded financial services company. Since January 2023, she has been a board member of Polaroid, a privately held photography company. She is also on the Board of Advisors for ChangeUp, Encantos and Unbias. She is also an Advisor, Adjunct Speaker
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at Stanford Community College, part of the Stanford Design School designed for and by brown and black community members. Ms. Aragones is a contributing writer for AdWeek and has been awarded Ad Age’s Top 40 Marketers Under 40, Forbes CMO, AdWeek CMO, and Business Insider CMO. Our board concluded Ms. Aragones should serve as a director based on her extensive marketing and branding experience with globally recognized brands, which allows her to contribute relevant operational, financial and strategic planning insights to our board.
Erin Chin has served on our board since October 2021. Ms. Chin is currently the Global Head of Brand Marketing for Logitech G, the gaming division of Logitech International S.A. (NASDAQ: LOGI) where she has served since November 2020. Prior to that, she served as the Senior Brand Marketing Director for the Mountain Dew brand at PepsiCo, Inc. (NASDAQ: PEP) from June 2018 to October 2020. She also served in various roles at Proximo Spirits, Inc., an American spirits importer and international distributor, from October 2014 to May 2018, most recently serving as Group Brand Director/Head of Marketing. From September 2007 to September 2014, she served in multiple roles, including as a Senior Brand Manager, at Diageo North America Inc., a premium spirits company. Ms. Chin began her career as a media and communications investment banker at The Goldman Sachs Group, Inc. She holds a Master’s Degree in Business Administration from Harvard Business School and a Bachelor of Science Degree in Finance from Hampton University. Our board concluded Ms. Chin should serve as a director based on her financial acumen and over 20 years of marketing and branding experience with millennial and Gen Z customers, which allows her to contribute relevant operational, financial and strategic planning insights to our board.
Doug Collier has served on our board since September 2011. He previously served as the Executive Vice President, Chief Financial Officer and Secretary of Volcom, Inc., a designer, marketer and distributor of premium quality young men’s and young women’s clothing, footwear, accessories and related products, from May 2008 to June 2011, and as its Chief Financial Officer and Secretary from 1994 to May 2008. He also served as the Treasurer of Volcom from April 2005 to May 2008. Mr. Collier’s role included leading Volcom’s initial public offering in 2005, until Volcom’s acquisition by PPR S.A. in June 2011. From 1991 to 1994, Mr. Collier served as the Controller at Mary Tyler Moore Studios. He was a senior analyst tax specialist at KPMG LLP from 1987 to 1990. He is a certified public accountant (inactive). Our board concluded Mr. Collier should serve as a director based on his nearly 30 years of financial and apparel experience, including significant executive experience, which allows him to contribute operational, financial and strategic planning insights to our board.
Seth Johnson has served on our board since April 2011 and as chairperson of our Audit Committee since August 2011. Prior to that, Mr. Johnson served as a member of the advisory committee to our board from July 2008 through 2011. From 2007 to 2009, Mr. Johnson was an instructor in business strategy at Chapman University’s Argyros School of Business and Economics. From 2005 to 2006, Mr. Johnson served as the Chief Executive Officer of Pacific Sunwear of California, Inc. From 1999 to 2004, Mr. Johnson was the Chief Operating Officer of Abercrombie & Fitch Co., a specialty retailer, and was its Chief Financial Officer from 1992 to 1998. During that time period, Mr. Johnson led Abercrombie & Fitch’s initial public offering and participated in business growth from sales of $85 million to over $2 billion. From July 2016 to April 2021, Mr. Johnson served as a member of the board of directors of Christopher & Banks Corporation, a publicly traded apparel retailer. From July 2014 to January 2018, Mr. Johnson served as a member of the board of directors of bebe stores, inc., a publicly traded apparel retailer. From 2010 to 2013, Mr. Johnson served as a member of the board of directors and as Lead Director of True Religion Apparel Inc., and from 2007 to 2009 as a director of DEI Holdings Inc. Both companies were previously publicly traded. Mr. Johnson is currently a director of the Pacific Symphony. Our board concluded Mr. Johnson should serve as a director based on his over 30 years of apparel retail experience, including significant executive experience, which enables him to contribute important operational, financial and strategic planning insights to our board.
Janet E. Kerr has served on our board and as chairperson of our Nominating and Corporate Governance Committee since August 2011. Prior to that, Ms. Kerr served as a member of the advisory committee to our board from July 2008 through 2011. She was Vice Chancellor of Pepperdine University from 2016 to 2023 and is currently Professor Emeritus of Law, founder and former Executive Director of the Geoffrey H. Palmer Center for Entrepreneurship and the Law at Pepperdine University School of Law in Malibu, California. Ms. Kerr is currently a member of the board of directors of La-Z-Boy, Inc. (a publicly traded furniture retailer and manufacturer), and AppFolio (a publicly traded software company), where she is also chairperson of its Nominating and Corporate Governance Committee. From 2016 to 2018, Ms. Kerr was a member of the board of directors of Fidelity National Financial (a publicly traded title insurance provider). From 2010 to 2016, Ms. Kerr was a member of the board of directors of TCW Funds and its affiliated entity, TSI, Inc., a publicly traded closed-end registered investment company. From 2004 to 2010, Ms. Kerr served as a member of the board and Chairperson of the Nominating and Corporate Governance Committee for CKE Restaurants, Inc., a quick service restaurant company that was previously public and listed on the NYSE. Ms. Kerr has served as a consultant to various companies regarding Sarbanes-Oxley Act and Dodd-Frank Act compliance and corporate governance. She has founded and/or developed and sold several technology companies, including X-Labs, a technology company co-founded with HRL Laboratories. Ms. Kerr was Chief Strategy Officer and co-founder of Exemplify, Inc., a data analytics company, and was a strategic advisor to Bloomberg BNA after it acquired Exemplify, Inc. in October 2014. Ms. Kerr is a well-known author in the areas of securities, corporate law and corporate governance, having published many articles and a book on the subjects. Ms. Kerr is licensed to practice law in California and New York and had occupied the Laure Sudreau-Rippe Endowed Chair at Pepperdine University School of Law. Ms. Kerr holds certificates in
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Cyber Security Oversight from the National Association of Corporate Directors (NACD)/Carnegie Mellon Software Engineering Institute program, Disruptive Technologies from Cambridge University and Artificial Intelligence from Massachusetts Institute of Technology. Our board concluded Ms. Kerr should serve as a director based on her over 30 years of corporate governance experience, which uniquely positions Ms. Kerr to contribute to our board significant expertise in the regulatory, governance and legal matters of public companies.
Board Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE SIX NAMED DIRECTOR NOMINEES.
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Proposal No. 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our board is responsible for the appointment, compensation, retention and oversight of the work of our independent registered public accounting firm. The Audit Committee is seeking stockholder ratification of the appointment of BDO USA, P.C. ("BDO") to audit the consolidated financial statements of the Company for the fiscal year ending February 1, 2025 ("fiscal 2024").
Representatives of BDO are expected to be present at the annual meeting with the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions from stockholders.
Stockholder ratification of the appointment of BDO as our independent registered public accounting firm is not required by our bylaws or otherwise. However, our board is submitting the appointment of BDO to the stockholders entitled to vote, on an advisory basis, at the annual meeting for ratification as a matter of good corporate governance. If the stockholders fail to ratify the appointment of BDO, the Audit Committee will reconsider whether or not to retain that firm. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interests and in the best interests of our stockholders.
Board Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF BDO AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2024.
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Proposal No. 3
NON-BINDING, ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
(“SAY-ON-PAY” PROPOSAL)
As required by Section 14A(a)(1) of the Exchange Act, the below resolution enables our stockholders to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers (“NEOs”) as disclosed in this Proxy Statement (the “Say-on-Pay Proposal”). This Say-on-Pay Proposal gives our stockholders the opportunity to express their views on our NEOs' compensation. The Say-on-Pay Proposal is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement.
As described in further detail under Proposal No. 4 of this Proxy Statement, at the 2024 annual meeting, our stockholders are being asked to indicate how frequently they believe we should seek an advisory vote on the compensation of our NEOs (the “Frequency Proposal”). Our board has recommended that our stockholders vote for a frequency of one year. We currently expect our next vote on a say-on-pay proposal (after the vote on this Proposal No. 3 at the 2024 annual meeting) will be held at our 2025 annual meeting, although our board may decide to modify this expectation, particularly in light of the results of the Frequency Proposal.
We have always believed that our executive compensation program emphasizes pay-for-performance and aligns our executives’ interests with those of our stockholders. A significant portion of our executives’ cash compensation is variable, at risk and tied to the short-term success of the Company. In addition, our long-term equity award program has been and continues to be a substantial component of our executive compensation program and motivates our executives to lead the Company to achieve long-term financial goals that are expected to result in increased stockholder value.
We believe that our executive compensation programs are designed to enable us to attract, motivate and retain executive talent, who are critical to our success. These programs are intended to link significant components of our compensation program to the achievement of corporate and individual performance objectives in order to focus our executives’ efforts on building stockholder value, thereby aligning their interests with those of our stockholders.
We encourage our stockholders to review the “Executive Compensation” section of this Proxy Statement for more information.
Even though this vote is advisory and not binding on us or our board, the views expressed by our stockholders, whether through this vote or otherwise, are important to management and our board and, accordingly, our board and the Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements. Accordingly, the following resolution will be submitted for stockholder approval at the 2024 annual meeting of stockholders:
“RESOLVED, that the stockholders of Tilly's, Inc. approve, on an advisory basis, the fiscal 2023 compensation of Tilly's, Inc.'s Named Executive Officers as described in the Compensation Discussion and Analysis and disclosed in the Summary Compensation Table and related compensation tables and narrative disclosures set forth in Tilly's Inc.'s Proxy Statement for the 2024 annual meeting of stockholders.”
Board Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS FOR THE FISCAL YEAR ENDED FEBRUARY 3, 2024, AS MORE FULLY DISCLOSED IN THIS PROXY STATEMENT.
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Proposal No. 4
NON-BINDING, ADVISORY APPROVAL OF THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
(“FREQUENCY PROPOSAL”)
As required by Section 14A(a)(1) of the Exchange Act, our stockholders may indicate how frequently they believe we should seek an advisory vote on the compensation of our NEOs. We are seeking an advisory, non-binding determination from our stockholders as to the frequency with which our stockholders have an opportunity to provide an advisory approval of the compensation of our NEOs. Stockholders are not being asked to approve or disapprove our board’s recommendation, but rather vote for a frequency of one, two or three years, or abstain from voting.
We recommend that our stockholders select a frequency of one year, or an annual vote. We believe that this frequency is appropriate because it will continue to enable our stockholders to vote, on an advisory basis, on the most recent executive compensation information that is presented in our Proxy Statement, leading to a more meaningful and coherent communication between the Company and our stockholders on the compensation of our NEOs. An annual advisory vote on executive compensation is consistent with our policy of seeking regular input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices.
Board Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE, ON A NON-BINDING ADVISORY BASIS, FOR A FREQUENCY OF “ONE YEAR” ON FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
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AUDIT MATTERS
Independent Registered Public Accounting Firm’s Fees
The aggregate fees billed to us for the fiscal years 2023 and 2022 by BDO, our independent registered public accounting firm, are as follows:
| 2023 | 2022 | ||||||||||
Audit Fees (1) | $ | 767,000 | $ | 732,000 | |||||||
| Audit-Related Fees | — | — | |||||||||
| Tax Fees | — | — | |||||||||
| All Other Fees | — | — | |||||||||
| Total | $ | 767,000 | $ | 732,000 | |||||||
Independent Registered Public Accounting Firm’s Independence
The Audit Committee considered whether the provision of the above noted services by BDO was compatible with maintaining the independent registered public accounting firm’s independence during fiscal 2023 and has determined that the provision of such services by BDO did not adversely affect the independent registered public accounting firm’s independence.
Policy on Audit Committee Pre-Approval
As part of its required duties, the Audit Committee pre-approves audit and non-audit services performed by our independent registered public accounting firm to ensure that the provision of such services does not impair the independent registered public accounting firm’s independence. Pre-approval may be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual basis. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be presented to the full Audit Committee at a subsequent meeting. All services provided by our independent registered public accounting firm in fiscal 2023 were pre-approved in accordance with the Audit Committee’s pre-approval requirements.
CORPORATE GOVERNANCE
Executive Officers
The following table sets forth certain information about our executive officers as of April 22, 2024.
| Name | Age | Position | ||||||||||||
| Hezy Shaked | 69 | Co-Founder, Executive Chairman of the Board of Directors, Interim President and Chief Executive Officer, Chief Strategy Officer | ||||||||||||
| Michael L. Henry | 53 | Executive Vice President, Chief Financial Officer | ||||||||||||
| Laura Janney | 56 | Executive Vice President, Chief Merchandising Officer | ||||||||||||
| Jonathon D. Kosoff | 47 | Chief Digital Officer | ||||||||||||
Hezy Shaked co-founded the Tilly’s concept in 1982 and formed the Company in 1984. He currently serves as Executive Chairman of the Board and Interim President and Chief Executive Officer. For Mr. Shaked’s biographical information, see “Information About Director Nominees” above.
Michael L. Henry has served as our Executive Vice President, Chief Financial Officer since September 2019, following his service as our Vice President, Chief Financial Officer since May 2015. Prior to joining us, Mr. Henry served Quiksilver, Inc. from July 2012 to May 2015, most recently as Senior Vice President, Global Controller. Prior to that, Mr. Henry served Pacific Sunwear of California, Inc. for over a decade in several roles, including most recently as Senior Vice President, Chief Financial Officer from January 2008 to April 2011. From September 1994 to September 2000, Mr. Henry served in the audit practice of Deloitte & Touche LLP. Mr. Henry holds a Bachelor of Science in Business Administration from California Polytechnic State University, San Luis Obispo and is a certified public accountant (inactive).
Laura Janney joined us as our Executive Vice President, Chief Merchandising Officer in May 2023. Prior to joining us, she served Hudson’s Bay from July 2019 to January 2023, including most recently as its Chief Merchandising Officer from August 2021 to January 2023. Prior to that, Ms. Janney served Nordstrom, Inc. for 32 years from June 1987 to March 2019 in a variety of retail store and merchandise management roles, including most recently as Vice President, Omni Channel Divisional Merchandise Manager – Innovation/Full Price Stores from March 2017 to March 2019. Ms. Janney holds a Bachelor of Arts in Marketing/Management from Western Washington University.
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Jonathon D. Kosoff has served as our Chief Digital Officer since February 2020. Prior to joining us, Mr. Kosoff served as Vice President of E-commerce and Performance Marketing at Taco Bell since January 2018. Prior to that, he served in a variety of roles at Hot Topic, Inc. from November 2012 to December 2017, most recently as its Senior Vice President of E-commerce and Customer Relationship Management. From September 2010 to October 2012, he served as Vice President of E-commerce at bebe stores, inc. In years prior to that, Mr. Kosoff served in various e-commerce and customer relationship management roles at each of The Wet Seal, Inc., Provide Commerce, Inc., and Jenny Craig International, Inc.
Composition and Governance of the Board of Directors
Corporate Governance Guidelines. Our board has adopted corporate governance guidelines that provide a framework for overall governance practices. Our corporate governance guidelines are available on our investor relations website link at https://tillys.gcs-web.com/investor-relations. In addition, these guidelines are available in print to any stockholder who requests a copy by written request to Tilly’s, Inc., Attention: Corporate Secretary, 12 Whatney, Irvine, CA 92618.
Board Size. Our bylaws provide that our board shall consist of at least one member, with the exact number of directors to be determined by resolution of our board. Our board currently consists of six members, which is the fixed number of directors authorized by our board. As further described under "Committees of the Board of Directors--Nominating and Corporate Governance Committee", our Nominating and Corporate Governance Committee is responsible for reviewing the size and composition of our board, and making recommendations with respect to such matters to our board.
Independence. We are a “controlled company” as defined in applicable NYSE rules. Under NYSE rules, a “controlled company” may elect not to comply with certain NYSE corporate governance requirements, including (1) the requirement that a majority of our board consist of independent directors, (2) the requirement that our Nominating and Corporate Governance Committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, (3) the requirement that our Compensation Committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (4) the requirement for an annual performance evaluation of the Nominating and Corporate Governance and the Compensation Committees. Currently, we do not utilize any of the aforementioned exemptions available to controlled companies, though we reserve the right to do so in the future. As discussed below, at all times during fiscal 2023, we had a board composed of a majority of independent directors. Furthermore, each member of our standing board committees (Audit, Compensation and Nominating and Corporate Governance) was and is independent under applicable NYSE and SEC rules.
Our board performs an analysis, at least annually, as to whether each member of our board is independent. We have adopted the definition of “independence” set forth in applicable NYSE rules. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, with us, our senior management and our independent registered public accounting firm, our board has determined that all but one of our directors, Mr. Shaked, are independent directors under applicable NYSE rules and such directors were independent throughout fiscal 2023.
Executive Sessions. We expect that our independent directors will hold at least two executive sessions per year. An independent director will preside over each executive session of the independent directors. The presiding director will rotate among each of the chairs of the board committees.
Board Meetings and Attendance. Our board met nine times and took action via unanimous written consent three times during fiscal 2023. No director attended fewer than 75% of the aggregate of the total number of meetings held by our board and the total number of meetings held by all committees of our board on which such director served during fiscal 2023, as applicable to each member's service. The Company strongly encourages its directors to attend its annual meetings of stockholders. All of our directors attended our 2023 annual meeting of stockholders.
Board Leadership Structure. Our board does not have a policy with respect to whether the role of the Chairman and the Chief Executive Officer should be separate and, if it is to be separate, whether the Chairman should be selected from the non-employee directors or be an employee. Mr. Shaked, our co-founder and Interim President and Chief Executive Officer, currently serves as Executive Chairman of the Board. Mr. Shaked is uniquely positioned to serve as our Executive Chairman, because he is our co-founder with significant industry experience and depth of knowledge about our operations. We do not have a formally designated “lead director.” Our board acknowledges that no single leadership model is right for all companies at all times. As such, our board periodically reviews its leadership structure and may, depending on the circumstances, choose a different leadership structure in the future.
Term of Service for Directors. Until the date all shares of our Class B common stock are converted to Class A common stock or otherwise cease to be outstanding, referred to as the Full Conversion Date, the members of our board will be elected at annual meetings of the stockholders and hold office until the next annual meeting of the stockholders. Our Amended and Restated Certificate of Incorporation provides that on the Full Conversion Date, our board will be divided into three classes to be comprised of the directors in office, with each class serving for a staggered three-year term. From the Full Conversion Date,
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Class I directors will serve an initial one-year term expiring at the first annual meeting of stockholders following the Full Conversion Date. Class II directors will serve an initial two-year term expiring at the second annual meeting of stockholders following the Full Conversion Date. Class III directors will serve an initial three-year term expiring at the third annual meeting of stockholders following the Full Conversion Date. Upon the expiration of the initial term of each class of directors, the directors in that class will be eligible to be elected for a new three-year term. Our directors will hold office until their successors have been elected and qualified or until their earlier death, resignation, disqualification or removal. Executive officers are appointed by and serve at the direction of our board.
Communication with the Board of Directors
Our annual meeting of stockholders provides an opportunity for stockholders to ask questions of, or otherwise communicate directly with, members of the board on appropriate matters. In addition, stockholders or other interested parties may communicate in writing with our Executive Chairman or to our non-management directors by sending such written communication to our Secretary at Tilly’s, 12 Whatney, Irvine, California 92618, Attn: Corporate Secretary. Copies of written communications received at such address will be provided to the board or the relevant director unless such communications are considered, in the reasonable judgment of our Corporate Secretary, to be inappropriate for submission to the intended recipient(s). Examples of stockholder or interested party communications that would be considered inappropriate for submission to the board include, without limitation, customer complaints, personal grievances, solicitations, communications that do not relate directly or indirectly to our business or communications that relate to improper or irrelevant topics. The Corporate Secretary may analyze and prepare a response to the information contained in communications received and may deliver a copy of the communication to other Company staff members or agents who are responsible for analyzing or responding to complaints or requests.
Committees of the Board of Directors
We currently have three standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The charters of our standing board committees are available on our investor relations website link at https://tillys.gcs-web.com/investor-relations.
The composition of the standing committees of our board at the end of fiscal 2023 is set forth in the table below (“C” indicates Chair and “M” indicates Member of the respective committee):
| Director | Audit | Compensation | Nominating & Corporate Governance | |||||||||||||||||
| Hezy Shaked | — | — | — | |||||||||||||||||
| Teresa Aragones | — | M | — | |||||||||||||||||
| Erin Chin | M | — | — | |||||||||||||||||
| Doug Collier | M | C | M | |||||||||||||||||
| Seth Johnson | C | — | M | |||||||||||||||||
| Janet Kerr | — | M | C | |||||||||||||||||
Audit Committee
Our Audit Committee consists of Messrs. Johnson (Chairperson), Collier and Ms. Chin. Messrs. Johnson and Collier each served as a member of the committee throughout fiscal 2023. Ms. Chin was appointed to the committee in October 2023 upon the retirement of a former board member. Our board has determined that each member of the Audit Committee meets the financial literacy and experience requirements of applicable SEC and NYSE rules. In addition, our board has determined that Messrs. Collier and Johnson each qualify as an “audit committee financial expert” under the rules and regulations of the SEC and each are independent under applicable rules of the NYSE and SEC. Our independent auditors and our internal finance personnel regularly meet privately with, and have unrestricted access to, our Audit Committee. The Audit Committee met eleven times during fiscal 2023.
Our Audit Committee charter requires that the Audit Committee oversee our corporate accounting and financial reporting processes. Our Audit Committee Charter is available on our investor relations website link at https://tillys.gcs-web.com/investor-relations. The primary duties of our Audit Committee are to, among other things:
•evaluate our independent registered public accounting firm’s qualifications, independence and performance;
•determine the engagement and compensation of our independent registered public accounting firm;
•approve the retention of our independent public registered accounting firm to perform any proposed, permissible non-audit services;
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•monitor the rotation of partners and managers of the independent registered accounting firm on our engagement team as required;
•review our consolidated financial statements;
•review our critical accounting policies and practices;
•meet periodically with our management and internal audit team to consider the adequacy of our internal controls and the objectivity of our financial reporting;
•establish procedures for the receipt, retention and treatment of complaints regarding internal accounting controls or auditing matters and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;
•review on an ongoing basis and approve related party transactions, as defined in SEC and NYSE rules;
•prepare the reports required by the rules of the SEC to be included in our annual proxy statement; and
•discuss with our management and our independent registered public accounting firm the results of our annual audit and the review of our quarterly consolidated financial statements.
Compensation Committee
Our Compensation Committee consists of Mr. Collier (Chairperson), Ms. Aragones and Ms. Kerr. Mr. Collier and Ms. Kerr each served as a member of the committee throughout fiscal 2023. Ms. Aragones was appointed to the committee upon the retirement of Bernard Zeichner in October 2023. Our board has determined that each of these directors is independent under applicable NYSE rules, and each qualifies as a "non-employee director" for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Compensation Committee met six times during fiscal 2023. Our Compensation Committee Charter is available on our investor relations website link at https://tillys.gcs-web.com/investor-relations. The primary duties of the Compensation Committee are to, among other things:
•establish overall employee compensation policies and recommend to our board major compensation programs;
•review and approve the compensation of our corporate officers and directors, including salary and bonus awards;
•administer our various employee benefit and equity incentive programs;
•review and approve any officer employment agreement and severance arrangement; and
•prepare an annual report on executive compensation for inclusion in our proxy statement.
Delegation of Authority to Grant Equity Awards
In each of March 2024 and 2023, the Compensation Committee renewed its authorization for our Chief Executive Officer and/or our Chief Financial Officer to grant to employees or new hires, in the aggregate, stock options to purchase, and RSUs covering, up to 70,000 and 30,000 shares, respectively, of our Class A common stock subject to the following limitations: (i) no individual recipient would be granted options or RSUs under this authority covering more than 15,000 and 5,000 shares, respectively; (ii) this authority expires on the date of the Compensation Committee meeting in which the applicable year's employee performance is reviewed, which typically occurs in March of the following year; and (iii) this authority would not apply to grants to employees subject to Section 16 of the Exchange Act and company officers or directors to whom the authority to grant awards has been delegated. Our former Chief Executive Officer granted stock options covering an aggregate of 32,500 shares in fiscal 2023 pursuant to the March 2023 delegation of authority.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee consists of Ms. Kerr (Chairperson), and Messrs. Collier and Johnson, each of whom served as a member of the committee throughout fiscal 2021. Our board has determined that each of these directors is independent under applicable NYSE rules. The Nominating and Corporate Governance Committee met six times and took action via unanimous written consent once during fiscal 2023. Our Nominating and Corporate Governance Committee Charter is available on our investor relations website link at https://tillys.gcs-web.com/investor-relations. The primary duties of the Nominating and Corporate Governance Committee are to, among other things:
•establish standards for service on our board and nominating guidelines and principles;
•identify individuals qualified to become members of our board and recommend director candidates for election to our board;
•consider and make recommendations to our board regarding its composition and organization;
•establish policies regarding the consideration of any director candidates recommended by our stockholders, and the procedures to be followed by the stockholders in submitting such recommendations;
•evaluate and review the performance of existing directors;
•review executive officer and director indemnification and insurance matters;
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•review the Company’s policies with respect to risk assessment and risk management;
•monitor our corporate governance principles and practices and make recommendations to our board regarding governance matters;
•oversight and monitoring of the Company's efforts with respect to environmental, social and governance (ESG matters); and
•oversight and monitoring of the Company's cyber security practices.
While the Nominating and Corporate Governance Committee does not have any specific, minimum qualifications for board nominees, in considering possible candidates for election as a director, the committee strives to compose our board with a collection of complementary skills and with directors which, as a group, will possess the appropriate skills and experience to effectively oversee the Company’s business. In evaluating a potential candidate for our board, our Nominating and Corporate Governance Committee takes into account a number of factors, including: personal and professional integrity; ethics and values; experience in corporate management, such as current or past service as an officer of a publicly held company; and a general understanding of marketing, finance, and other elements relevant to the success of a publicly traded company; experience in the Company’s industry; experience as a board member of another publicly held company; academic expertise in an area of the Company’s operations; practical and mature business judgment, and the candidate's geographic background, gender, age and ethnicity. In evaluating and making recommendations with respect to the current composition of our board, the Nominating and Corporate Governance Committee will also consider any applicable rules, laws or guidance related to the composition of the board. The Nominating and Corporate Governance Committee will review the qualifications and backgrounds of directors and nominees (without regard to whether a nominee has been recommended by a stockholder), as well as the overall composition of our board, and recommend the slate of directors to be nominated for election at the next annual meeting of stockholders. The Nominating and Corporate Governance Committee does not currently employ or pay a fee to any third party to identify or evaluate, or assist in identifying or evaluating, potential director nominees.
If our board determines to seek additional directors for nomination, the Nominating and Corporate Governance Committee will consider as potential director nominees candidates recommended by various sources, including any member of our board or senior management. The Nominating and Corporate Governance Committee may also retain a third-party search firm to identify candidates. The committee also considers recommendations for nominees that are timely submitted by stockholders if such recommendations are delivered in the manner prescribed by the advance notice provisions contained in our bylaws. In addition to satisfying the timing, ownership and other requirements specified in our bylaws, a stockholder’s notice must set forth as to each person whom the stockholder proposes to recommend all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, pursuant to Regulation 14A under the Exchange Act and our bylaws (including such person’s written consent to being named in the proxy statement as a nominee and to serve as a director if elected). Properly communicated stockholder recommendations will be considered in the same manner as recommendations received from other sources.
Risk Oversight
Our board has an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks. Management is responsible for the Company’s day-to-day risk management activities. The Company, through its internal auditor, has established an enterprise risk framework for identifying, aggregating, quantifying and evaluating risk across the enterprise. The review of risk management is a periodic agenda item for the Nominating and Corporate Governance Committee and the board. Our other board committees also consider and address risk as they perform their committee responsibilities. For example, our Compensation Committee discusses and reviews compensation arrangements for the Company’s executive officers to avoid incentives that may promote excessive risk-taking that could reasonably have a material adverse effect on the Company (see “Compensation Risk Assessment” below), and the Nominating and Corporate Governance Committee oversees risks associated with operations of our board and its governance structure. In addition, at each regular Audit Committee meeting the Company’s General Counsel or external counsel reports on significant litigation, regulatory, public policy and other legal risks that may affect the Company. Our entire board monitors risks through regular reports from each of the committee chairs and members of management, and is apprised of particular risk management matters in connection with its general oversight and approval of corporate matters, including cyber security and information technology matters at each regularly scheduled board meeting and periodic review of certain Company insurance coverage limits. We believe the division of risk management responsibilities described above is an effective approach for evaluating and addressing the risks facing the Company and that our board leadership structure supports this approach because it allows our independent directors, through the independent board committees, to exercise effective oversight of the actions of management.
Compensation Risk Assessment
In March 2024, management assessed our compensation design, policies and practices to determine whether any risks arising from our compensation design, policies and practices are reasonably likely to have a material adverse effect on us. The Compensation Committee reviewed and agreed with management’s conclusion that our compensation policies and practices do
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not create such risks. In doing so, the Compensation Committee considered various features of our compensation policies and practices that discourage excessive or unnecessary risk taking, including but not limited to the following:
•appropriate pay philosophy, peer group and other market comparability data, and market positioning to align with and support business objectives;
•effective balance in the design of our compensation programs, including: (i) cash and equity pay mix, (ii) short-and long-term performance focus, (iii) corporate, business unit, and individual performance focus and measurement, and (iv) financial and non-financial performance measurement together with top management and board discretion to manage pay appropriately; and
•independent Compensation Committee oversight of our compensation policies and practices.
Code of Ethics and Business Conduct
We have adopted a code of ethics and business conduct, which applies to all of our employees, executive officers and directors. Our code of ethics and business conduct is available on our investor relations website link at https://tillys.gcs-web.com/investor-relations. We will disclose future amendments to certain provisions of our code of ethics and business conduct, or waivers of such provisions, applicable to our directors and executive officers, at the same location on our website identified above.
Anti-Hedging and Anti-Pledging Policies
To ensure proper alignment with our stockholders, we have established policies that prohibit our directors, officers, other employees, and their family members from engaging in any transaction that might allow them to realize gains from declines in our securities. Specifically, we prohibit our directors, officers, employees, and their family members from engaging in transactions using derivative securities, short selling our securities, trading in any puts, calls or covered calls, writing purchase or call options and short sales, or otherwise participating in hedging, “stop loss,” or other speculative transactions involving our securities. In addition, margin purchases of our securities and pledging any of our securities as collateral to secure loans is prohibited.
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DIRECTOR COMPENSATION
Our non-employee directors currently receive annual cash retainers for their service on our board and our board’s standing committees, and an annual equity grant in the form of restricted shares of Class A common stock, as discussed below. In March 2024, the Compensation Committee reviewed our non-employee director compensation program and determined not to make any changes for fiscal 2024.
Our non-employee directors receive the following annual cash retainers for their service on our board:
| Annual Retainer to be Paid | |||||
| Service on board | $ | 40,000 | |||
| Chairperson of standing committee: | |||||
| Audit Committee | $ | 15,000 | |||
| Compensation Committee | $ | 12,000 | |||
| Nominating and Corporate Governance Committee | $ | 12,000 | |||
| Members of standing committee: | |||||
| Audit Committee | $ | 8,000 | |||
| Compensation Committee | $ | 5,000 | |||
| Nominating and Corporate Governance Committee | $ | 5,000 | |||
Annual service for retainer purposes relates to the approximate 12-month period between annual meetings of our stockholders and all retainers are paid in quarterly installments. A prorated annual retainer will be paid to any person who becomes a member of our board, a committee chair or a member of any committee on a date other than the date of the annual meeting of our stockholders. Additionally, we will reimburse directors for reasonable expenses incurred in connection with their duties.
In addition, each non-employee director receives an annual restricted stock award grant under our Third Amended and Restated 2012 Plan (the "2012 Plan") having a fair value at the time of grant equal to $80,000, which will vest in two equal installments on each of the succeeding two anniversaries of the grant date, subject to continued service through the applicable vesting date. Each current non-employee director received a grant of 12,214 shares of restricted stock on June 14, 2023.
Effective June 13, 2024, Ms. Chin has voluntarily waived her right to any compensation (including any annual retainers or future equity awards) for her service on our board and any committees thereof.
Directors’ Compensation Table
The following table summarizes the compensation earned during fiscal 2023 by each of our non-employee directors. Both Mr. Shaked, an executive officer, and Mr. Thomas, a former executive officer, did not receive additional compensation from us for their service on our board during fiscal 2023. Information regarding compensation earned by Mr. Shaked and Mr. Thomas for fiscal 2023 is presented below in the “Summary Compensation Table.”
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Total ($) | |||||||||||||||||
| Teresa Aragones | 41,580 | 80,000 | 121,580 | |||||||||||||||||
| Erin Chin | 42,527 | 80,000 | 122,527 | |||||||||||||||||
| Doug Collier | 61,791 | 80,000 | 141,791 | |||||||||||||||||
| Seth Johnson | 68,000 | 80,000 | 148,000 | |||||||||||||||||
| Janet Kerr | 62,000 | 80,000 | 142,000 | |||||||||||||||||
Bernard Zeichner (4) | 44,107 | 80,000 | 124,107 | |||||||||||||||||
(1)Amounts represent cash retainer fees paid with respect to fiscal 2023.
(2)Amounts represent the grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”). We provide information regarding the assumptions used to calculate the value of all equity awards made to directors in Note 12, Share-Based Compensation to our consolidated audited financial statements included in our Form 10-K filed with the SEC on April 11, 2024. Awards made in fiscal 2023 consisted of a grant of 12,214 shares of restricted stock on June 14, 2023.
(3)As of the end of fiscal 2023, each member of our board held 17,505 unvested shares of restricted stock.
(4)Mr. Zeichner retired from our board effective October 2, 2023.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information as of the record date, April 22, 2024, regarding the beneficial ownership of our Class A and Class B common stock by (i) each director and director nominee, (ii) our current named executive officers for the fiscal year ended February 3, 2024, (iii) all of our current directors and executive officers as a group, and (iv) each person, or group of affiliated persons, known to us to beneficially own more than 5% of any class of our outstanding shares of common stock. The percentages of each class of securities shown below are based on 22,750,615 shares of Class A common stock and 7,306,108 shares of Class B common stock outstanding as of April 22, 2024. Each share of our Class A common stock is entitled to one vote per share and each share of our Class B common stock is entitled to ten votes per share. Unless otherwise noted, (a) subject to community property laws where applicable, each of the directors and nominees, named executive officers and executive officers has sole voting and/or investment power with respect to such shares and (b) the address of each of the individuals named below is: c/o Tilly’s, Inc., 12 Whatney, Irvine, California, 92618.
| Shares of Class A Common Stock (1) | Rights to Acquire Class A Common Stock (2) | % of Total Class A Shares | Shares of Class B Common Stock | % of Total Class B Shares | Total % of Outstanding Vote | ||||||||||||||||||||||||||||||
| Non-Employee Directors and Nominees: | |||||||||||||||||||||||||||||||||||
| Teresa Aragones | 22,796 | — | * | — | — | * | |||||||||||||||||||||||||||||
| Erin Chin | 22,796 | — | * | — | — | * | |||||||||||||||||||||||||||||
Doug Collier (3) | 100,990 | — | * | — | — | * | |||||||||||||||||||||||||||||
| Seth Johnson | 88,424 | — | * | — | — | * | |||||||||||||||||||||||||||||
Janet Kerr (4) | 33,700 | — | * | — | — | * | |||||||||||||||||||||||||||||
| Named Executive Officers: | |||||||||||||||||||||||||||||||||||
Hezy Shaked (5) | 103,000 | 193,750 | 1.3 | % | 7,306,108 | 100.0 | % | 76.6 | % | ||||||||||||||||||||||||||
| Michael L. Henry | 40,000 | 112,812 | * | — | — | * | |||||||||||||||||||||||||||||
| Laura Janney | — | 75,000 | * | — | — | * | |||||||||||||||||||||||||||||
| Jonathon D. Kosoff | — | 58,750 | * | — | — | * | |||||||||||||||||||||||||||||
| All current directors and executive officers as a group (9 persons consisting of those named above) | 411,706 | 440,312 | 3.7 | % | 7,306,108 | 100.0 | % | 77.1 | % | ||||||||||||||||||||||||||
| > 5% Stockholders: | |||||||||||||||||||||||||||||||||||
Hezy Shaked Living Trust (5) | 103,000 | 193,750 | 1.3 | % | 6,212,073 | 85.0 | % | 65.1 | % | ||||||||||||||||||||||||||
Tilly Levine Separate Property Trust (6) | — | — | — | 1,094,035 | 15.0 | % | 11.4 | % | |||||||||||||||||||||||||||
Fund 1 Investments LLC (7) | 7,678,145 | — | 33.7 | % | — | — | 8.0 | % | |||||||||||||||||||||||||||
Shay Capital LLC (8) | 1,926,785 | — | 8.5 | % | — | — | 2.0 | % | |||||||||||||||||||||||||||
Long Focus Capital Management LLC (9) | 1,831,931 | — | 8.1 | % | — | — | 1.9 | % | |||||||||||||||||||||||||||
Divisar Capital Management LLC (10) | 1,608,704 | — | 7.1 | % | — | — | 1.7 | % | |||||||||||||||||||||||||||
BlackRock, Inc. (11) | 1,541,618 | — | 6.8 | % | — | — | 1.6 | % | |||||||||||||||||||||||||||
Dimensional Fund Advisors LP (12) | 1,427,847 | — | 6.3 | % | — | — | 1.5 | % | |||||||||||||||||||||||||||
The Vanguard Group, Inc. (13) | 1,273,920 | — | 5.6 | % | — | — | 1.3 | % | |||||||||||||||||||||||||||
*Beneficially owns less than 1% of the applicable class of our outstanding common stock.
(1)Includes unvested and vested shares of restricted Class A common stock beneficially owned by each of Doug Collier, Seth Johnson, and Janet Kerr. For each of the listed non-employee directors, 6,107 and 5,291 of these shares will vest on June 14 and 15, 2024, respectively.
(2)Represents shares of Class A common stock the person or group has a right to acquire upon the exercise of stock options that are vested as of April 22, 2024 or within sixty (60) days thereafter.
(3)Includes 83,485 shares of Class A common stock held by a trust, which Mr. Collier may be deemed to indirectly beneficially own.
(4)Includes 16,195 shares of Class A common stock held by a trust, which Ms. Kerr may be deemed to indirectly beneficially own.
(5)Includes: (a) 103,000 shares of Class A common stock purchased in open-market transactions by Mr. Shaked and transferred into the Hezy Shaked Living Trust; (b) 12,500 stock options which will become vested on June 14, 2024 from Mr. Shaked's June 2023 stock option grant of a total of 50,000 stock options with 25% vesting on each of June 14, 2024, 2025, 2026 and 2027; (c) 25,000 vested stock options from Mr. Shaked's March 2022 stock option grant of a total of 50,000 stock options with 25% vesting on each of March 23, 2023, 2024, 2025 and 2026; (d) 75,000 vested stock options from Mr. Shaked's March 2021 stock option grant of a total of 100,000 stock options with 25% vesting on each of March 24, 2022, 2023, 2024 and 2025; (e) 56,250 vested stock options from Mr. Shaked's March 2020 stock option grant of a total of 75,000 stock options with 25% vesting on each of March 31, 2021, 2022, 2023, and 2024; (f) 25,000 vested stock options from Mr. Shaked's March 2019 stock option grant of a total of 50,000 stock options with
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25% vesting on each of March 19, 2020, 2021, 2022 and 2023; (g) 6,212,073 shares of Class B common stock held by The Hezy Shaked Living Trust established May 18, 1999, under which Mr. Shaked is the trustee and beneficiary with sole voting and dispositive power; and (h) 1,094,035 shares of Class B common stock held by The Tilly Levine Separate Property Trust established March 31, 2004, under which Ms. Levine is the trustee and beneficiary (the “Levine Shares”), which are described in note 6 below.
(6)Represents the Levine Shares. Pursuant to a voting trust agreement under which Mr. Shaked serves as trustee, Ms. Levine previously granted Mr. Shaked the right to vote the Levine Shares and thus Mr. Shaked may be deemed to beneficially own the Levine Shares. Ms. Levine retains dispositive power over and full economic interest in the Levine Shares.
(7)Based solely on a Schedule 13D/A filed with the SEC on March 19, 2024, Fund 1 Investments LLC ("Fund 1"), managing member of Pleasant Lake Partners LLC, who serves as investment advisor to Pleasant Lake Onshore Feeder Fund LP and other private investment vehicles, has shared voting and dispositive power over 7,678,145 shares of Class A common stock. The address of Fund 1 is 100 Carr 115 Unit 1900, Rincon, Puerto Rico 00677.
(8)Based solely on a joint Schedule 13G/A filed with the SEC on February 14, 2024, Shay Capital LLC and its manager, Shay Capital Holdings LLC, (collectively, "Shay Capital") have sole voting and dispositive power over 1,926,785 shares of Class A common stock. The address of Shay Capital LLC is 280 Park Avenue, 5th Floor West, New York, NY 10017.
(9)Based solely on a Schedule 13G/A filed with the SEC on February 14, 2024, Long Focus Capital Management LLC and John B. Helmers have shared voting and dispositive power over 1,831,931 shares of Class A common stock. Pursuant to an investment management agreement, Long Focus Capital Management, LLC, which is controlled by John B. Helmers, maintains investment and voting power with respect to the shares of Class A common stock held by Long Focus Capital Master, Ltd. and Condague, LLC. A. Glenn Helmers controls Condagua, LLC. Of the above 1,831,931 shares, Long Focus Capital Master, Ltd. has shared voting and dispositive power over 982,996 shares of Class A common stock, and Condagua, LLC and A. Glenn Helmers have shared voting and dispositive power over 848,935 shares of Class A common stock. The address of Long Focust Capital Management, LLC is 207 Calle del Parque, A&M Tower, 8th Floor, San Juan, Puerto Rico 00912.
(10)Based solely on a Schedule 13G/A filed with the SEC on February 14, 2024, Divisar Capital Management, LLC, which serves as the general partner and
investment manager to each of Divisar Partners QP, L.P. and Divisar Partners, L.P., and Steven Baughman, who serves as the Managing Member of
Divisar Capital Management LLC with the power to exercise investment and voting discretion, have shared voting and dispositive power over 1,608,704
shares of Class A common stock. Of the above 1,608,704 shares, Divisar Partners QP, L.P. has shared voting and dispositive power over 1,497,508
shares of Class A common stock. The address of Divisar Capital Management, LLC, Steven Baughman, and Divisar Partners QP, L.P. is 275 Sacramento
Street, 8th Floor, San Francisco, CA 94111.
(11)Based solely on a Schedule 13G/A filed with the SEC on January 26, 2024, BlackRock, Inc., a parent holding company, and its subsidiaries, BlackRock Advisors, LLC, BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., and BlackRock Investment Management, LLC (collectively, “BlackRock”), has sole voting power over 1,514,732 shares and sole dispositive power over 1,541,618 shares of Class A common stock. The address of BlackRock is 50 Hudson Yards, New York, NY 10001.
(12)Based solely on a Schedule 13G/A filed with the SEC on February 9, 2024, Dimensional Fund Advisors LP (“Dimensional”) has sole voting power over 1,404,375 shares and sole dispositive power over 1,427,847 shares of Class A common stock. The address of Dimensional is 6300 Bee Cave Road, Building One, Austin, TX 78746.
(13)Based solely on a Schedule 13G/A filed with the SEC on February 13, 2024, The Vanguard Group has shared voting power over 17,329 shares, sole dispositive power over 1,248,680 shares, and shared dispositive power over 25,240 shares of Class A common stock. The address of Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes information about our Class A common stock that may be issued upon the exercise of options, warrants and rights under all of our equity compensation plans, as of February 3, 2024:
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)(1) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)(2) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)(3) | ||||||||||||||
| Equity compensation plans approved by security holders | 2,447,247 | $ | 8.34 | 1,125,613 | |||||||||||||
| Equity compensation plans not approved by security holders | — | — | — | ||||||||||||||
| Total | 2,447,247 | $ | 8.34 | 1,125,613 | |||||||||||||
(1)Represents 2,447,247 shares subject to outstanding options, but excludes 87,525 shares of unvested restricted stock.
(2)Represents the weighted-average exercise price of outstanding options.
(3)Represents the number of securities remaining available for issuance under the 2012 Plan.
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC and the NYSE. Executive officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
Based solely on our review of the copies of such forms furnished to us and the written representations from certain of the reporting persons that no other reports were required, we believe that during the fiscal year ended February 3, 2024, all executive officers, directors and greater than ten percent beneficial owners complied with the reporting requirements of Section 16(a).
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis section discusses the material elements of the compensation programs and policies in place for our fiscal 2023 NEOs, identified below:
•Hezy Shaked, our Co-Founder, Executive Chairman of the Board of Directors, and Interim President and Chief Executive Officer (1);
•Edmond Thomas, our former President and Chief Executive Officer (1);
•Michael L. Henry, our Executive Vice President, Chief Financial Officer;
•Laura Janney, our Executive Vice President, Chief Merchandising Officer (2); and
•Jonathon D. Kosoff, our Chief Digital Officer
(1) Effective January 21, 2024, Mr. Thomas retired as our President and Chief Executive Officer and the board appointed Mr. Shaked as the Company's Interim President and Chief Executive Officer.
(2) Ms. Janney joined us on May 8, 2023.
This section provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program and each compensation component that we provide. Each of the key elements of our executive compensation program is discussed in more detail below. Our compensation programs are designed to be flexible and complementary and to collectively serve the principles and objectives of our executive compensation and benefits program.
Role of our Compensation Committee and President and Chief Executive Officer in Compensation Decisions
Our Compensation Committee reviews and approves the compensation of our NEOs and oversees and administers our executive compensation programs and policies.
The Compensation Committee annually reviews and meets outside the presence of all of our executive officers, including our NEOs, to consider appropriate compensation for our President and Chief Executive Officer. Mr Thomas, our Former President and Chief Executive Officer in fiscal 2023, reviewed each of the other NEOs' 2023 performance with the Compensation Committee and recommended appropriate compensation levels, which the Compensation Committee took into account as one factor in its determination regarding fiscal 2023 executive compensation. In addition, prior to his appointment as Interim President and Chief Executive Officer in January 2024, Mr. Shaked, given his tenure with the Company and his role in shaping compensation historically, had a purely advisory role in discussions with the Compensation Committee with respect to fiscal 2023 NEO compensation (other than his own). In the context of such annual reviews and further periodic reviews as deemed necessary, and in addition to a review of other factors discussed below, the Compensation Committee assesses the proper mix of base salary, cash incentive awards and grants of long-term equity incentive awards, levels of compensation and appropriate individual and corporate performance metrics in furtherance of the objectives and principles described below.
Our Compensation Committee may consider additional factors in determining executive compensation, including comparing our executives’ compensation against that at a peer group of comparable companies from time to time. Our Compensation Committee most recently engaged Mercer, an independent executive compensation and consulting firm, in April 2022 to advise management in its efforts to construct, from publicly available data, an updated peer group of companies to be used for compensation purposes, to provide market compensation data on such peer group companies, and general market trends and developments. The peer group chosen was comprised of companies in the retail apparel industry of as nearly similar revenue size and business context as possible, including Boot Barn Holdings, Inc., The Buckle, Inc., Build-a-Bear Workshop, Inc.,The Cato Corporation, Chico's FAS, Inc., Citi Trends, Inc., Destination XL Group, Inc., Duluth Holdings, Inc., Express, Inc., J.Jill, Inc., Lulu's Fashion Holdings, Inc., Torrid Holdings, Inc., and Zumiez, Inc. Based on Mercer's assessment, we revised our peer group to remove Aeropostale, Inc., Big 5 Sporting Goods Corp., New York & Co. Inc., Shoe Carnival, Inc., Pacific Sunwear of California, Inc., Christopher & Banks Corp., bebe stores, inc., and Francesca's Holdings, Inc, and we added Build-a-Bear Workshop, Inc., Chico's FAS, Inc., Duluth Holdings, Inc., Express, Inc., J.Jill, Inc., Lulu's Fashion Holdings, Inc., and Torrid Holdings. In general, these prior peer group companies no longer fit the selection criteria, while the additions reflect companies with financial and industry characteristics more similar to our company. Management used the information previously provided by Mercer, and other resources and tools, to develop compensation recommendations presented to our Compensation Committee. The peer group information prepared by Mercer was used by the Compensation Committee for informational purposes only, and was not used for direct benchmarking given that all of the peer group comparison companies are larger than us in terms of revenue.
Compensation Philosophy and Objectives
Our Compensation Committee strives to create an executive compensation program that balances short-term versus long-term payments and awards, cash payments versus equity awards and fixed versus contingent payments and awards in ways that we believe are most appropriate to motivate our executive officers. Our philosophy is that executive compensation should be
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competitive in the marketplace in which we compete for executive talent, and structured to emphasize incentive-based compensation as determined by the achievement of both company and individual performance objectives. The retail industry is extremely competitive and in order to continue to succeed, we believe we need a highly talented and seasoned team of sales, marketing, buying, financial and other business professionals. We recognize that our ability to attract and retain these professionals, as well as to grow our organization, largely depends on how we compensate and reward our employees.
The goals of our executive compensation program are to:
•attract and retain talented and experienced executives in our industry;
•motivate and reward executives whose knowledge, skills and performance are critical to our success;
•align compensation incentives with our business and financial objectives and the long-term interests of our stockholders;
•foster a shared commitment among executives by aligning their individual goals with the goals of the executive management team and the Company; and
•ensure that our total compensation is fair, reasonable and competitive.
2023 Say-on-Pay Vote
At our 2023 annual meeting, approximately 92% of votes cast were voted in favor of our say-on-pay vote, which we believe affirms our stockholders' support of our approach to our executive compensation program.
Elements of Fiscal 2023 Compensation
During fiscal 2023, our NEOs’ total direct compensation, which was determined by our Compensation Committee, included both fixed components (base salary and other executive benefits and perquisites) and variable components (stock option grants and cash bonuses). The following describes each component of compensation, the rationale for that component and how the compensation amounts were determined.
Base Salary
Base salaries historically have been the most heavily weighted component of compensation for our executive officers as a percentage of total compensation, and this remained true in fiscal 2023. Base salary levels are designed to be competitive in order to induce talented executives to join the Company. In addition, base salaries support our retention objective by providing our executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in our corporate performance.
The base salary established for each of our NEOs is intended to reflect each individual’s professional responsibilities, the skills and experience required for the job, their individual performance, the performance of our business, labor market conditions and competitive market salary levels.
Base salary levels for our NEOs in fiscal 2023 were determined by our Compensation Committee as part of its annual review process in consideration of the factors noted above, and as of the end of fiscal 2023 were set as follows:
•Mr. Shaked: $420,000, which was unchanged from fiscal 2022 and was increased to $1,000,000 upon his appointment as Interim President and Chief Executive Officer, effective January 21, 2024;
•Mr Thomas: $1,000,000, which was unchanged from fiscal 2022
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•Ms. Janney: $540,000, which was the base salary set when she joined the Company in May 2023 as part of an arms'-length negotiation;
•Mr. Henry: $376,765, which was unchanged from fiscal 2022; and
•Mr. Kosoff: $334,544, which was unchanged from fiscal 2022.
Annual Incentive Cash Bonus
In March 2023, our Compensation Committee approved an incentive cash bonus plan for certain employees, including all of our NEOs. For fiscal 2023, the committee approved performance measures of comparable store sales growth and operating income. Comparable store sales are net sales from stores that have been open at least 12 full months. The Compensation Committee selected these performance measures because it believes they are important drivers of stockholder returns and thus serve to align the interests of our NEOs with those of our stockholders. Under the terms of the fiscal 2023 plan, no payouts would be made until audited financial results were received, reviewed and approved by the Audit Committee after our fiscal year end.
For each of the performance measures of comparable store sales growth and operating income, the Compensation Committee established minimum, target and maximum performance thresholds for the NEOs. The minimum performance threshold related to a minimum acceptable level of financial performance. Each succeeding threshold was designed to reward the NEOs based upon the improved financial performance of the business. No bonuses are earned under the incentive bonus plan unless Company operational performance exceeds minimum thresholds.
The following table shows the performance thresholds for each measure for fiscal 2023:
| Performance Threshold | |||||||||||||||||
| Minimum | Target | Maximum | |||||||||||||||
Comparable store sales growth (1) | 7.0 | % | 9.0 | % | 10.0 | % | |||||||||||
Operating income (in millions) (2) | $ | 30.5 | $ | 45.2 | $ | 53.4 | |||||||||||
(1) For a discussion of how we calculate comparable store sales growth, see "Management Discussion & Analysis - How We Assess the Performance of Our Business - Net Sales" in our Annual Report on Form 10-K filed with the SEC on April 11, 2024. Comparable store sales growth targets for fiscal 2023 were established against fiscal 2022 performance.
(2) Represents pre-bonus operating income.
The following table represents the percentage of the respective NEO’s base salary that would be earned upon achievement of the applicable performance thresholds. The incentive cash bonus amount increases in a linear manner between the minimum threshold and the target threshold and between the target threshold and the maximum threshold.
| Hezy Shaked & Edmond Thomas | Laura Janney & Michael L. Henry | Jonathon D. Kosoff | |||||||||||||||
| Minimum | 0% | 0% | 0% | ||||||||||||||
| Target | 100 | % | 75 | % | 50 | % | |||||||||||
| Maximum | 200 | % | 150 | % | 100 | % | |||||||||||
The Compensation Committee weighted operating income 75% and comparable store sales increase 25% in the structure of the cash incentive bonus.
In fiscal 2023, we did not achieve any of the minimum thresholds required to earn any portion of the performance-based bonuses and, accordingly, no performance-based bonuses were awarded to our NEOs.
Long-Term Equity-Based Compensation
We believe that long-term equity-based compensation is an important component of our executive compensation program because providing a portion of our NEOs’ total compensation package in long-term equity-based compensation aligns the incentives of our executives with the interests of our stockholders and with our long-term corporate success. All compensatory equity awards cover shares of our Class A common stock.
On June 6, 2023, we granted Ms. Janney stock options to purchase 300,000 shares of our common stock under our 2012 plan in connection with her joining the Company as our Executive Vice President, Chief Merchandising Officer in May 2023. The stock options have an exercise price of $6.29 per share, the closing price of our Class A common stock on the date of the grant.
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On June 14, 2023, we made the following grants of stock options to our other NEOs under the Plan with an exercise price of $6.55 per share, which was the closing price of the Company's Class A common stock on that date:
| Executive | 2023 Stock Option Grant | |||||||
| Hezy Shaked | 50,000 | |||||||
| Michael L. Henry | 35,000 | |||||||
| Jonathon D. Kosoff | 10,000 | |||||||
The stock option grants awarded to our NEOs were designed to further align their interests with those of our stockholders. Each stock option award will vest in equal annual installments over four years from the date of the grant, subject to the executive's continued service through the applicable vesting date.
Other Executive Benefits and Perquisites
In 2023, we provided a car allowance to each of Mr. Shaked, Mr. Thomas, and Ms. Janney. Mr. Thomas' and Ms. Janney’s car allowance was provided under the terms of their respective offer letters.
We also provide the following benefits to our NEOs on the same basis as other eligible employees:
•health insurance;
•holidays and sick days; and
•a 401(k) plan with Company matching contributions.
The vacation benefit for executive officers is determined on an individual basis. We believe these benefits are generally consistent with those offered by other companies in our industry.
Retirement Savings
We have established a 401(k) retirement savings plan for our employees, including the NEOs, who satisfy certain eligibility requirements. Under the 401(k) plan, eligible employees may elect to contribute pre-tax amounts, up to a statutorily prescribed limit, to the 401(k) plan. For 2023, the prescribed annual limit was $22,500 for employees under 50 years of age and $30,000 for employees 50 years of age and older, inclusive of the IRS' $7,500 catch-up contribution limit. In addition, the Company may make discretionary pre-tax contributions on behalf of eligible employees. We believe that providing a vehicle for tax-preferred retirement savings through our 401(k) plan adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our NEOs, in accordance with our compensation policies.
Employment Agreements and Severance Benefits
The employment of our NEOs historically has been at will. In fiscal 2023, the Company was party to an employment agreement with Mr. Thomas, and offer letters with Ms. Janney and Messrs. Henry and Kosoff, as discussed below.
Employment Agreement with Edmond Thomas
In October 2015, we entered into an offer letter agreement with Mr. Thomas related to our hiring of him as our President and Chief Executive Officer and as a member of our board, effective October 12, 2015, which included certain provisions related to his compensation, including change-in-control provisions. Mr. Thomas’ offer letter was terminated in connection with his retirement from the Company in January 2024.
Pursuant to the terms of Mr. Thomas’ offer letter that was in effect in fiscal 2023, Mr Thomas' annual base salary was $1,000,000, subject to annual review, and he was eligible to receive an annual incentive cash bonus with a target of 100% of base salary and a maximum of 200% of base salary, based on performance metrics set by the Compensation Committee. The offer letter agreement also provided for participation in our existing employee benefit programs and an annual automobile allowance of $18,000. Pursuant to the offer letter agreement, Mr. Thomas may not solicit any of our employees during the term of his employment and for three years following his date of termination.
In addition, under the terms of his offer letter agreement, if the Company terminated Mr. Thomas’ employment without “cause” in contemplation of a “change in control” (each as defined in the offer letter agreement), as determined in the sole discretion of the board, or within 90 days immediately following the consummation of a change in control, Mr. Thomas’ outstanding and unvested equity awards in the Company would have accelerated in full upon such termination.
Separation Agreement with Edmond Thomas
On February 15, 2024, the Company entered into an employment separation and release agreement (the “Separation Agreement”) with Mr. Thomas. Pursuant to the Separation Agreement, he is entitled to the following separation payments and benefits, provided he executed and did not revoke a general release of claims against the Company and its affiliates: (i)
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$667,000, payable in substantially equal monthly installments for the 12-month period following the January 21, 2024; (ii) the accelerated vesting of all Company equity awards held by Mr. Thomas that were outstanding as of January 21, 2024, with such rewards remaining exercisable in accordance with the award agreements pursuant to which such awards were granted; and (iii) Company-subsidized COBRA coverage for up to 12 months following January 21, 2024. The foregoing separation payments and benefits also are subject to Mr. Thomas’s continued compliance with the restrictive covenants set forth in the Separation Agreement.
Offer Letter with Laura Janney
We entered into an offer letter agreement with Ms. Janney related to our hiring of her as our Executive Vice President, Chief Merchandising Officer, which included certain provisions related to her compensation, effective May 8, 2023 (the "Commencement Date"),
Ms. Janney's current annual base salary is $540,000 and she is eligible to participate in the Company's annual cash bonus plan at an amount targeted at 75% of her annual base salary, with a maximum amount equal to 150% of her annual base salary (prorated for fiscal 2023). Ms. Janney’s annual cash bonus for fiscal 2023 will be based on the achievement of certain budgeted comparable net sales and pre-bonus operating income results during fiscal 2023. Subsequent annual cash bonuses will be determined based on the achievement of applicable Company performance goals yet to be determined. The agreement also provides for a car allowance equal to $10,000 per year.
In addition, pursuant to the terms of her offer letter agreement, Ms. Janney received an option to purchase 300,000 shares of the Company’s common stock, with 25% of the shares underlying the option vesting on each of the first, second, third and fourth anniversaries of the grant date, subject to her continued service through the applicable vesting date. Upon the three-year anniversary of the Commencement Date, Ms. Janney will receive an additional option to purchase 300,000 shares of the Company’s common stock with a similar vesting schedule. If Ms. Janney’s employment is terminated without cause in contemplation of a “change in control” (as defined in the agreement), or within 90 days immediately following the consummation of a change in control, her outstanding and unvested Company equity awards will accelerate in full.
The Company also reimbursed Ms. Janney for all reasonable expenses related to her relocation to Orange County, California through July 31, 2023, including temporary living expenses and up to three house hunting trips. Should Ms. Janney resign without “good reason” (as defined in the agreement) or if her employment is terminated by the Company for cause, in either case, within one year of the Commencement Date, she will be required to repay all relocation expenses received from the Company. Should Ms. Janney resign without good reason or if Ms. Janney’s employment is terminated by the Company for cause, in either case, within the period beginning on the first anniversary of the Commencement Date and ending on the third anniversary of the Commencement Date, Ms. Janney will be required to repay 1/24th of the relocation expenses received from the Company for each month or partial month remaining in such 24-month period.
Ms. Janney is eligible to participate in the Company’s customary employee benefit plans or programs generally available to all full-time employees.
If Ms. Janney’s employment is terminated within the one-year anniversary of the Commencement Date by the Company without cause, Ms. Janney would be entitled to receive: (i) continued payments of her annual base salary then in effect for a period of six months, and (ii) up to six months of continued health care premiums for her and her eligible dependents. Ms. Janney’s right to receive the severance payments and benefits described above is subject to her delivery of an effective general release of claims in favor of the Company.
Offer Letter with Michael L. Henry
In May 2015, we entered into an offer letter agreement with Mr. Henry related to our hiring of him as our Chief Financial Officer, which included certain provisions related to his compensation.
Mr. Henry’s current annual base salary is $376,765 and he is eligible to participate in the Company’s annual incentive cash bonus plan at an amount targeted at 75% of his annual base salary, with a maximum amount equal to 150% of his annual base salary. The offer letter agreement also provides for participation in our existing medical benefits program for employees. Pursuant to the offer letter agreement, Mr. Henry may not solicit any of our employees during the term of his employment and for one year following his date of termination. Mr. Henry’s employment is at-will and he is not entitled to any severance benefits.
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Offer Letter with Jonathon D. Kosoff
In February 2020, we entered into an offer letter agreement with Mr. Kosoff relating to our hiring of him as our Chief Digital Officer, which included certain provisions related to his compensation.
Mr. Kosoff's current annual base salary is $334,544 and he has the opportunity to earn an annual cash bonus targeted at an amount equal to 50% of his annual base salary, with a maximum amount equal to 100% of his annual base salary.
In addition, pursuant to the terms of his offer letter agreement, in 2020 Mr. Kosoff received a stock option grant to purchase 50,000 shares of the Company’s common stock, with 25% of the shares underlying the stock option vesting on each of the first, second, third and fourth anniversaries of the grant date, subject to his continued service through the applicable vesting date. Mr. Kosoff is eligible to participate in all customary employee benefit plans or programs of the Company generally available to the Company’s full-time employees. The letter provided for at-will employment and, pursuant to the terms of the offer letter, Mr. Kosoff is not entitled to any severance benefits.
Tax and Accounting Considerations
Section 280G of the Internal Revenue Code
Section 280G of the Code disallows a tax deduction with respect to excess parachute payments to certain executives of companies which undergo a change in control. In addition, Section 4999 of the Code imposes a 20% excise tax on the individual with respect to the excess parachute payment. Parachute payments are compensation linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G of the Code based on the executive’s prior compensation. In approving the compensation arrangements for our NEOs in the future, our Compensation Committee will consider all elements of the cost to us of providing such compensation, including the potential impact of Section 280G of the Code. However, our Compensation Committee may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G of the Code and the imposition of excise taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract and retain executive talent.
ASC Topic 718
Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC Topic 718”) requires us to recognize an expense for the fair value of equity-based compensation awards. Grants of stock-based compensation are accounted for under ASC Topic 718. The Compensation Committee regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to equity compensation awards. As accounting standards change, we may revise certain programs to appropriately align the cost of our equity awards with our overall executive compensation philosophy and objectives.
Section 409A of the Internal Revenue Code
Section 409A of the Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities, penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefits plans and arrangements for all of our employees and other service providers, including our named executive officers, so that they are either exempt from, or satisfy the requirements of, Section 409A of the Code.
Clawback Policy
We have adopted a compensation recovery policy that requires the recovery of certain erroneously paid incentive compensation received by our Section 16 officers on or after October 2, 2023, as required by new SEC rules and New York Stock Exchange Listing Rules implemented pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and which can be recovered from time-vesting or performance-vesting equity compensation (in addition to other forms of compensation).
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EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
The following table sets forth certain information with respect to compensation for fiscal years 2023, 2022, and 2021 earned by, awarded to, or paid to our NEOs.
| Name and Principal Position | Fiscal Year | Salary ($)(1) | Bonus ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||||||||||||
| Hezy Shaked | 2023 | 453,192 | — | 178,754 | — | 24,923 | 656,869 | ||||||||||||||||||||||||||||||||||
| Executive Chairman of the Board, | 2022 | 420,000 | — | 248,797 | — | 33,150 | 701,947 | ||||||||||||||||||||||||||||||||||
| Interim President and Chief Executive Officer | 2021 | 419,615 | — | 563,431 | 840,000 | 32,700 | 1,855,746 | ||||||||||||||||||||||||||||||||||
| Edmond Thomas (6) | 2023 | 1,007,692 | — | — | — | 170,067 | 1,177,759 | ||||||||||||||||||||||||||||||||||
| Former President and Chief | 2022 | 1,000,000 | — | 248,797 | — | 27,150 | 1,275,947 | ||||||||||||||||||||||||||||||||||
| Executive Officer | 2021 | 900,769 | — | 563,431 | 1,809,230 | 26,700 | 3,300,130 | ||||||||||||||||||||||||||||||||||
| Michael L. Henry | 2023 | 391,256 | — | 125,128 | — | 338 | 516,722 | ||||||||||||||||||||||||||||||||||
Executive Vice President, Chief Financial Officer | 2022 | 376,554 | — | 174,158 | — | 9,475 | 560,187 | ||||||||||||||||||||||||||||||||||
| 2021 | 365,586 | — | 281,715 | 548,687 | 8,700 | 1,204,688 | |||||||||||||||||||||||||||||||||||
| Laura Janney (7) | 2023 | 405,000 | — | 1,020,369 | — | 28,869 | 1,454,238 | ||||||||||||||||||||||||||||||||||
| Executive Vice President, Chief Merchandising Officer | |||||||||||||||||||||||||||||||||||||||||
| Jonathon D. Kosoff | 2023 | 347,411 | — | 35,751 | — | 338 | 383,500 | ||||||||||||||||||||||||||||||||||
| Chief Digital Officer | 2022 | 334,357 | — | 124,399 | — | 9,475 | 468,231 | ||||||||||||||||||||||||||||||||||
| 2021 | 324,708 | — | 140,858 | 374,800 | 8,700 | 849,066 | |||||||||||||||||||||||||||||||||||
(1)Amounts for fiscal 2023 include 53 weeks while amounts for each of fiscal 2022 and 2021 reflect 52 weeks.
(2)Amounts reflect discretionary cash bonuses for individual performance.
(3)Amounts reflect the grant date fair value of options granted to the NEOs, as computed in accordance with ASC Topic 718. We provide information regarding the assumptions used to calculate the value of all equity awards made to executive officers in Note 12, Share-Based Compensation, to our consolidated audited financial statements included in our Form 10-K filed with the SEC on April 11, 2024. There can be no assurance that awards will vest or will be exercised (if they are not exercised, no value will be realized by the individual), or that the value upon exercise will approximate the aggregate grant date fair value determined under ASC Topic 718.
(4)Amounts represent cash-based incentives earned for the fiscal year and paid in the following year pursuant to our annual cash bonus plan. For Mr. Kosoff, amounts also include an additional cash-based incentive bonus for fiscal 2021 based on the achievement of certain e-commerce performance objectives.
(5)With respect to Messrs. Shaked and Thomas and Ms. Janney, amounts include an automobile allowance of $24,923, $18,000 and $7,692, respectively. Additionally, with respect to Mr. Thomas, amounts include an accrued vacation payout of $152,067 in connection with his retirement from the Company effective January 21, 2024. For Ms. Janney, amounts also include relocation reimbursements of $20,927 and a work from home stipend of $250. For Messrs. Henry and Kosoff, amounts include work from home stipend of $338. For fiscal 2022 and 2021, amounts also include Company 401(k) matching contributions for all NEOs.
(6)Mr. Thomas retired from the Company on January 21, 2024.
(7)Ms. Janney joined the Company on May 8, 2023.
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Grants of Plan-Based Awards
The following table sets forth certain information with respect to grants of plan-based awards during fiscal year 2023 to our NEOs, as applicable.
| Equity-Based Awards | ||||||||||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh)(2) | Grant Date Fair Value of Option Awards($)(3) | |||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||||||||||||||||||||||||||||
| Hezy Shaked | N/A | — | 420,000 | 840,000 | ||||||||||||||||||||||||||||||||||||||||
| 6/14/2023 | 50,000 | 6.55 | 178,754 | |||||||||||||||||||||||||||||||||||||||||
| Edmond Thomas | N/A | — | 1,000,000 | 2,000,000 | ||||||||||||||||||||||||||||||||||||||||
| N/A | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Michael L. Henry | N/A | — | 282,574 | 565,147 | ||||||||||||||||||||||||||||||||||||||||
| 6/14/2023 | 35,000 | 6.55 | 125,128 | |||||||||||||||||||||||||||||||||||||||||
| Laura Janney | N/A | — | 303,750 | 607,500 | ||||||||||||||||||||||||||||||||||||||||
| 6/6/2023 | 300,000 | 6.29 | 1,020,369 | |||||||||||||||||||||||||||||||||||||||||
| Jonathon D. Kosoff | N/A | — | 167,272 | 334,544 | ||||||||||||||||||||||||||||||||||||||||
| 6/14/2023 | 10,000 | 6.55 | 35,751 | |||||||||||||||||||||||||||||||||||||||||
(1)Non-equity incentive plan awards consist of annual bonuses payable under our 2023 incentive cash bonus plan. Please see “Elements of 2023 Compensation—Annual Incentive Cash Bonus” above. There were no threshold payouts in the event we achieved the minimum level of performance established for the 2023 incentive cash bonus plan. For Ms. Janney, amounts are pro-rated from her start date of May 8, 2023.
(2)Exercise prices are set at the closing price of the Company's stock on the grant date.
(3)Amounts shown represent the grant date fair value of the option awards granted during 2023, computed in accordance with ASC Topic 718. We provide information regarding the assumptions used to calculate the fair value of all equity awards made to executive officers in Note 12, Share-Based Compensation, to our consolidated audited financial statements included in our Form 10-K filed with the SEC on April 11, 2024. There can be no assurance that awards will vest or will be exercised (if they are not exercised, no value will be realized by the individual), or that the value upon exercise will approximate the aggregate grant date fair value determined under ASC Topic 718.
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Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information with respect to outstanding equity awards held by our NEOs as of February 3, 2024.
| Stock Option Awards (1) | ||||||||||||||||||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Stock Options Exercisable (#) | Number of Securities Underlying Unexercised Stock Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | |||||||||||||||||||||||||||
| Hezy Shaked | 6/14/2023 | — | 50,000 | 6.55 | 6/14/2033 | |||||||||||||||||||||||||||
| 3/23/2022 | 12,500 | 37,500 | 9.45 | 3/23/2032 | ||||||||||||||||||||||||||||
| 3/24/2021 | 50,000 | 50,000 | 10.73 | 3/24/2031 | ||||||||||||||||||||||||||||
| 3/31/2020 | 37,500 | 18,750 | 4.13 | 3/31/2030 | ||||||||||||||||||||||||||||
| 3/19/2019 | 25,000 | — | 11.41 | 3/19/2029 | ||||||||||||||||||||||||||||
Edmond Thomas (2) | 3/23/2022 | 50,000 | — | 9.45 | 5/22/2024 | |||||||||||||||||||||||||||
| 3/24/2021 | 100,000 | — | 10.73 | 5/22/2024 | ||||||||||||||||||||||||||||
| 3/31/2020 | 54,066 | — | 4.13 | 5/22/2024 | ||||||||||||||||||||||||||||
| 3/19/2019 | 75,000 | — | 11.41 | 5/22/2024 | ||||||||||||||||||||||||||||
| 3/28/2018 | 75,000 | — | 11.33 | 5/22/2024 | ||||||||||||||||||||||||||||
| 3/27/2017 | 100,000 | — | 8.69 | 5/22/2024 | ||||||||||||||||||||||||||||
| 3/28/2016 | 7,850 | — | 6.74 | 5/22/2024 | ||||||||||||||||||||||||||||
| Michael L. Henry | 6/14/2023 | — | 35,000 | 6.55 | 6/14/2033 | |||||||||||||||||||||||||||
| 3/23/2022 | 8,750 | 26,250 | 9.45 | 3/23/2032 | ||||||||||||||||||||||||||||
| 3/24/2021 | 25,000 | 25,000 | 10.73 | 3/24/2031 | ||||||||||||||||||||||||||||
| 3/31/2020 | 20,000 | 10,000 | 4.13 | 3/31/2030 | ||||||||||||||||||||||||||||
| 3/19/2019 | 12,500 | — | 11.41 | 3/19/2029 | ||||||||||||||||||||||||||||
| 3/28/2018 | 6,562 | — | 11.33 | 3/28/2028 | ||||||||||||||||||||||||||||
Laura Janney (3) | 6/6/2023 | — | 300,000 | 6.29 | 6/6/2033 | |||||||||||||||||||||||||||
| Jonathon D. Kosoff | 6/14/2023 | — | 10,000 | 6.55 | 6/14/2033 | |||||||||||||||||||||||||||
| 3/23/2022 | 6,250 | 18,750 | 9.45 | 3/23/2032 | ||||||||||||||||||||||||||||
| 3/24/2021 | 12,500 | 12,500 | 10.73 | 3/24/2031 | ||||||||||||||||||||||||||||
| 3/17/2020 | 12,500 | 12,500 | 4.07 | 3/17/2030 | ||||||||||||||||||||||||||||
(1) These stock option awards vest over the course of four years with shares vesting in equal annual installments beginning on the first anniversary of their grant date, subject to continued service with us.
(2) Mr. Thomas retired from the Company effective January 21, 2024. Per the terms of his Separation Agreement, all outstanding stock options in existence at the time of his retirement from employment with the Company became fully vested and remain exercisable until May 22, 2024.
(3) Ms. Janney joined the Company on May 8, 2023 as our Executive Vice President, Chief Merchandising Officer.
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Options Exercised and Stock Vested
The following table sets forth information on stock options exercised by our NEOs during fiscal year 2023. No stock awards vested for any of our NEOs in fiscal 2023.
| Stock Option Awards | |||||||||||||||||
| Name | Number of shares acquired on exercise (#) | Value realized on exercise ($)(1) | |||||||||||||||
| Hezy Shaked | — | $ | — | ||||||||||||||
| Edmond Thomas | — | $ | — | ||||||||||||||
| Michael L. Henry | — | $ | — | ||||||||||||||
| Laura Janney | — | $ | — | ||||||||||||||
| Jonathon D. Kosoff | — | $ | — | ||||||||||||||
(1)Represents the difference between the fair market value of our Class A common stock underlying the options at exercise and the exercise price of the option.
Pension Benefits
Our NEOs did not participate in or have account balances in qualified or nonqualified defined benefit plans sponsored by us during fiscal year 2023.
Nonqualified Deferred Compensation
Our NEOs did not participate in or have account balances in nonqualified defined contribution plans or other nonqualified deferred compensation plans maintained by us during fiscal year 2023.
Potential Payments Upon Termination or Change in Control
Except as provided below, none of our NEOs are entitled to payments in connection with a termination or a change in control.
Under the terms of Mr. Thomas' and Ms. Janney's offer letter agreements, if the Company terminates the executive's employment without “cause” in contemplation of a “change in control” (each as defined in the applicable offer letter agreement), as determined in the sole discretion of the board, or within 90 days immediately following the consummation of a change in control, the executive's outstanding and unvested equity awards in the Company will accelerate in full upon such termination. In connection with Mr. Thomas' retirement from the Company in January 2024, his offer letter was terminated and we entered in the a Separation Agreement with Mr. Thomas, as described above under "Employment Agreements and Severance Benefits - Separation Agreement with Edmond Thomas."
Additionally, pursuant to Ms. Janney’s offer letter agreement, if the Company terminates her employment without “cause” prior to May 8, 2024, Ms. Janney is eligible to receive: (i) continued payments of her annual base salary then in effect for a period of six months, and (ii) up to six months of continued health care premiums for her and her eligible dependents. Ms. Janney’s right to receive the severance payments and benefits described above is subject to her delivery of an effective general release of claims in favor of the Company.
The following table summarizes the payments made to Mr. Thomas pursuant to his Separation Agreement and payments that would be made to Ms. Janney upon a termination without “cause”, including the in-the-money value of the accelerated vesting of Ms. Janney’s equity awards upon a termination without “cause” in connection with a change in control, in either case, on February 3, 2024. Amounts shown do not include (i) accrued but unpaid base salary through the date of termination, or (ii) other benefits earned or accrued by Ms. Janney during her employment that are available to all salaried employees, such as accrued vacation. The amounts shown assume the in-the-money value of the accelerated vesting of Ms. Janney’s equity awards was based on the closing price per share of the Class A common stock on February 2, 2024, the last trading day of the fiscal year, of $7.52 per share.
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| Name | Stock Options that May Vest Upon Qualifying Termination in Connection with a Change In Control (#) | Total Value of Stock Options that May Vest Upon Qualifying Termination in Connection with a Change in Control ($) | Cash Severance ($) | COBRA Benefits ($) | Stock Options that Vested Upon Termination (#) | Total Value of Stock Options that Vested Upon Termination ($) | Total ($) | |||||||||||||||||||||||||||||||||||||
| Edmond Thomas | — | — | $ | 667,000 | $ | 10,868 | 112,500 | $ | 84,750 | $ | 762,618 | |||||||||||||||||||||||||||||||||
| Laura Janney | ||||||||||||||||||||||||||||||||||||||||||||
| Termination Without cause (no Change in Control) | — | — | $ | 270,000 | — | — | — | $ | 270,000 | |||||||||||||||||||||||||||||||||||
| Termination Without Cause in Connection with a Change in Control | 300,000 | $ | 369,000 | $ | 270,000 | — | — | — | $ | 639,000 | ||||||||||||||||||||||||||||||||||
CEO Pay Ratio Disclosure
As required by Section 953(b) of the Dodd-Frank Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding the relationship of the annual total compensation of our median compensated employee to the annual total compensation of Ed Thomas and Hezy Shaked, each whom served as our CEO during fiscal year 2023. We consider the pay ratio specified below to be a reasonable estimate, calculated in a manner that is intended to be consistent with the requirements of Item 402(u) of Regulation S-K.
For fiscal year 2023, our last completed fiscal year:
•the annual total compensation of the employee who represents our median compensated employee (other than our CEO) was $5,369; and
•the annual total compensation of our CEOs, (as calculated below), was $1,216,116.
Based on this information, for fiscal year 2023, our CEOs' annual total compensation was approximately 227 times that of the median of the annual total compensation of all of our employees (other than the CEOs).
Determining the Median Employee
Employee Population
We used our employee population data as of February 3, 2024, the end of our 2023 fiscal year as the reference date for identifying our median employee. As of such date, our employee population consisted of approximately 6,000 individuals, including approximately 1,500 full-time employees and 4,500 part-time employees. Seasonal and temporary employees employed as of that date were also included.
Methodology for Determining Our Median Employee
To identify the median employee from our employee population, we selected base salary, as reflected in our payroll records as reported to the Internal Revenue Service on Form W-2 for 2023 as the most appropriate measure of compensation, which was consistently applied to all of our employees included in the calculation. In identifying the median employee, we annualized the compensation of all full-time employees who were new-hires in fiscal year 2023 and on leave of absence in fiscal year 2023.
Compensation Measure and Annual Total Compensation of Median Employee
With respect to the annual total compensation of the employee who represents our median compensated employee, we calculated the elements of such employee’s compensation for fiscal year 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $5,369.
Annual Total Compensation of CEO
Since two individuals served as our Chief Executive Officer during fiscal year 2023, we combined the annual total compensation of Mr. Thomas and the prorated annual compensation for Mr. Shaked for the portion of the fiscal year served as Interim President and Chief Executive Officer, pursuant to Instruction 10 to Item 402(u) of Regulation S-K in order to arrive at the annual total combined compensation of $1,216,116.
With respect to the annual total compensation of Mr. Thomas, we used the amount reported in the “Total” column of our 2023 Summary Compensation Table included in this Proxy Statement. Due to Mr. Thomas' retirement in January 2024, his annual total compensation includes accrued vacation payout, which we would not anticipate to be included in the annual total compensation of our CEO in future years. Mr. Shaked's prorated annual compensation for the portion of the fiscal year he
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served as Interim President and Chief Executive Officer consists of $38,356, which represents base salary paid after his appointment on January 21, 2024.
Pay Versus Performance Table
The following table sets forth information concerning compensation actually paid to our principal executive officer ("PEO") and other NEOs for each of the fiscal years ended February 3, 2024 (fiscal year 2023), January 28, 2023 (fiscal year 2022), January 29, 2022 (fiscal year 2021), and January 30, 2021 (fiscal year 2020), compared to our total shareholder return ("TSR"), our net (loss) income and operating (loss) income for each such fiscal year. It should be noted that the last four fiscal years have been perhaps the most volatile in retail industry history, starting with the COVID-19 pandemic shutdowns of fiscal 2020 which resulted in the first operating loss in our company's history, followed by a record-setting fiscal 2021 which we believe was fueled by unprecedented pent-up consumer demand as a result of the easing of pandemic-period restrictions and the impact of federal stimulus payments, followed by the highest inflationary environment of the past 40 years in fiscal 2022 and inflation remaining persistent during fiscal 2023, which we believe had a significant adverse impact on our consumers.
| Value of Initial Fixed $100 Investment Based on: | ||||||||||||||||||||||||||
| Fiscal Year | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(2) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(1) | Average Compensation Actually Paid to Non-PEO NEOs ($)(2)(3) | Total Shareholder Return ($)(4) | Peer Group Total Shareholder Return ($)(5) | Net (Loss) Income ($ in thousands) (6) | Operating (Loss) Income ($ in thousands) (7) | ||||||||||||||||||
| 2023 | ( | ( | ||||||||||||||||||||||||
| 2022 | ||||||||||||||||||||||||||
| 2021 | ||||||||||||||||||||||||||
| 2020 | ( | ( | ||||||||||||||||||||||||
(1) Our PEO was Edmond Thomas for each of the fiscal years presented above until his retirement from the Company effective January 21, 2024, at which time our PEO was Hezy Shaked , Interim President and Chief Executive Officer, for the remainder of fiscal 2023 ended February 3, 2024. Amounts in this column represent the total compensation paid to our PEO in each listed fiscal year as shown in our Summary Compensation Table or, for our NEOs other than our PEO, the average amount of the total compensation paid to our NEOs as shown in the "Total" column of our Summary Compensation Table for the applicable fiscal year.
(2) Compensation Actually Paid represents the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year, adjusted as follows:
| 2020 | 2021 | 2022 | 2023 | |||||||||||||||||||||||
| Adjustments | PEO | Average Non-PEO NEOs | PEO | Average Non-PEO NEOs | PEO | Average Non-PEO NEOs | PEO | Average Non-PEO NEOs | ||||||||||||||||||
| Deduction for Amounts Reported under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable FY | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||
| Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End | ||||||||||||||||||||||||||
| Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Vested during Applicable FY, determined as of Vesting Date | ||||||||||||||||||||||||||
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| Increase/deduction for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End, determined based on change in ASC 718 Fair Value from Prior FY End to Applicable FY End | ( | ( | ( | ( | ||||||||||||||||||||||
| Increase/deduction for Awards Granted during Prior FY that Vested During Applicable FY, determined based on change in ASC 718 Fair Value from Prior FY End to Vesting Date | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||
| Deduction of ASC 718 Fair Value of Awards Granted during Prior FY that were Forfeited during Applicable FY, determined as of Prior FY End | ( | |||||||||||||||||||||||||
| Increase based on Dividends or Other Earnings Paid during Applicable FY prior to Vesting Date | ||||||||||||||||||||||||||
| Increase based on Incremental Fair Value of Options/SARs Modified during Applicable FY | ||||||||||||||||||||||||||
| Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” Column of the Summary Compensation Table for Applicable FY | ||||||||||||||||||||||||||
| Increase for Service Cost and, if applicable, Prior Service Cost for Pension Plans | ||||||||||||||||||||||||||
| Total adjustments | ( | ( | ( | |||||||||||||||||||||||
(3) Dollar amounts represent the average of the total compensation paid to our NEOs other than our PEO as a group. For Fiscal 2023 our non-PEO NEOs reflected in the table are Michael Henry, Laura Janney, and Jon Kosoff. For fiscal 2022 and 2021, our non-PEO NEOs reflected in this table are Hezy Shaked, Michael Henry, Bobby Goodwin, and Jon Kosoff. For fiscal 2020, our non-PEO NEOs included Hezy Shaked, Tricia Smith, Michael Henry and Jon Kosoff.
(4) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company's share price at the end and beginning of the measurement period by the Company's share price at the beginning of the measurement period.
(5) For the relevant fiscal year, represents the cumulative TSR of the S&P 400 Apparel Retail Index (the “Peer Group TSR”), as used in the Company's Stock Performance Graph in our Annual Report.
(6) The dollar amounts reported represent the amount of net (loss) income reflected in the Company's audited financial statements for the applicable fiscal year.
(7) The dollar amounts reported represent the amount of operating (loss) income reflected in the Company's audited financial statements for the applicable fiscal year.
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Pay Versus Performance Descriptive Disclosure
Compensation Actually Paid Versus Company TSR and Peer Group TSR
The graph below reflects the relationship between the PEO and average Non-PEO NEOs compensation actually paid and the Company's cumulative TSR (assuming an initial fixed investment of $100 for the fiscal years ended 2020, 2021, 2022, and 2023).
TSR amounts reported in the graph assume an initial fixed investment of $100, and that all dividends, if any, were reinvested.
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Compensation Actually Paid Versus Net (Loss) Income
The graph below reflects the relationship between the PEO and average Non-PEO NEOs compensation actually paid and the Company's net (loss) income for the fiscal years ended 2020, 2021, 2022, and 2023.
Compensation Actually Paid Versus Operating (Loss) Income
The graph below reflects the relationship between the PEO and average Non-PEO NEOs compensation actually paid and the Company's operating (loss) income for the fiscal years ended 2020, 2021, 2022, and 2023.
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Pay Versus Performance Tabular List
We believe the following performance measures represent the most important financial performance measures used by us to link compensation actually paid to our NEOs for the fiscal year ended February 3, 2024:
| Most Important Financial Performance Measures | ||
For additional details regarding our most important financial performance measures, please see the section titled “Elements of Fiscal 2023 Compensation" in our Compensation Discussion and Analysis (CD&A) elsewhere in this Proxy Statement.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the review and discussions, the Compensation Committee recommended to our board that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, and in this Proxy Statement for the 2024 annual meeting of stockholders.
| COMPENSATION COMMITTEE: | |||||
| Doug Collier, Chairperson | |||||
| Teresa Aragones | |||||
| Janet Kerr | |||||
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AUDIT COMMITTEE REPORT
The primary purpose of the Audit Committee is to oversee our financial reporting processes on behalf of our board. The Audit Committee’s functions are more fully described in its charter, which is available at www.tillys.com in the Investor Relations section. Management has the primary responsibility for our financial statements and reporting processes, including our systems of internal controls.
1.The Audit Committee has reviewed and discussed the audited consolidated financial statements for the fiscal year ended February 3, 2024 with management of Tilly’s and with Tilly’s independent registered public accounting firm, BDO USA, P.C.
2.The Audit Committee has discussed with BDO USA, P.C. those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board.
3.The Audit Committee has received and reviewed the written disclosures and the letter from BDO USA, P.C. required by the Public Company Accounting Oversight Board regarding BDO USA, P.C.’s communications with the Audit Committee concerning the accountant’s independence, and has discussed with BDO USA, P.C. its independence from Tilly’s and its management.
4.Based on the review and discussions referenced in paragraphs 1 through 3 above, the Audit Committee recommended to our board that the audited consolidated financial statements for the year ended February 3, 2024 be included in the Annual Report on Form 10-K for that year for filing with the SEC.
Our Audit Committee issued the above report for inclusion in this Proxy Statement in connection with the 2024 annual meeting of stockholders.
| AUDIT COMMITTEE: | |||||
| Seth Johnson, Chairperson | |||||
| Erin Chin | |||||
| Doug Collier | |||||
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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Our board has adopted a written Related Party Transaction Policy and Procedures (the “Policy”). The purpose of the Policy is to describe the procedures used to identify, review, approve and disclose, if necessary, any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which (i) the Company was, is or will be a participant, (ii) the aggregate amount involved exceeds $100,000, and (iii) a related person has or will have a direct or indirect material interest, in each case, other than compensation arrangements that are described under the sections of this Proxy Statement captioned Director Compensation and Executive Compensation. For purposes of the Policy, a related person is (a) any person who is, or at any time since the beginning of the Company’s last fiscal year was, a director or executive officer of the Company or a nominee to become a director of the Company, (b) any person who is known to be the beneficial owner of more than 5% of the Company’s voting securities, (c) any immediate family member of any of the foregoing persons sharing the same household as such person, or (d) any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position, or in which such person has a 5% or greater beneficial ownership interest.
The Audit Committee reviews and approves, or ratifies, each related party transaction, taking into account whether the terms are comparable to those obtained in an arm’s length transaction, the extent of the related person’s interest and other factors. If advance approval of a related party transaction is not feasible, then the transaction may be preliminarily entered into by management upon prior approval by the Chair of the Audit Committee, subject to ratification by the Audit Committee at its next regularly scheduled meeting. No director may participate in approval of a related party transaction for which he or she is a related person.
The following persons and entities that participated in the transactions described in this section were related persons at the time of the transaction:
Hezy Shaked, Tilly Levine, Shaked Holdings, LLC and Amnet Holdings, LLC. Mr. Shaked is our Co-Founder, Executive Chairman of the Board of Directors, one of our executive officers and the beneficial owner of shares of our common stock representing approximately 76.4% of the voting power of the Company as of April 22, 2024, inclusive of shares held by Ms. Levine. Ms. Levine is also a Co-Founder, and she is the beneficial owner of shares of our common stock representing approximately 11.4% of the voting power of the Company as of April 22, 2024. Mr. Shaked, through the Hezy Shaked Living Trust established May 18, 1999, or the Hezy Shaked Trust, owns 63% of Shaked Holdings, LLC. Ms. Levine, through the Tilly Levine Separate Property Trust established March 31, 2004, or the Tilly Levine Trust, owns 37% of Shaked Holdings. Mr. Shaked, through the Hezy Shaked Trust, is the sole member and owner of Amnet Holdings, LLC, or Amnet Holdings.
Certain Leases
We lease our corporate headquarters and distribution center (10 and 12 Whatney, Irvine, California) from Shaked Holdings. The lease payments adjust annually based upon the Los Angeles/Anaheim/Riverside Urban Consumer Price Index (the "LAARUCPI"), not to exceed 7%. We incurred rent expense of $2.1 million in fiscal 2023 related to this lease. The lease expires on December 31, 2027.
We lease a building (17 Pasteur, Irvine, California) from Amnet Holdings, which we use as our e-commerce fulfillment center. The lease payments adjust annually based upon the greater of 5% or the annual change in the LAARUCPI. We incurred rent expense of $1.5 million in fiscal 2023 related to this lease. The lease deposit was $0.7 million as of February 3, 2024. The lease expires on October 31, 2031.
We lease office and warehouse space (11 Whatney, Irvine, California) from Amnet Holdings. Pursuant to the lease agreement, the lease payments adjust annually based upon the greater of 5% or the annual change in the LAARUCPI. We incurred rent expense of $0.6 million in fiscal 2023 related to this lease. The lease deposit was $0.2 million as of February 3, 2024. The lease expires on June 30, 2032.
Tilly’s Life Center
Tilly’s Life Center (“TLC”), is a charitable organization that was founded and is run by Ms. Levine. Our board has approved annual support for TLC of up to $200,000 per year, which was the amount we donated to TLC during fiscal 2024. We also provide a "Round Up for Charity" option in our point-of-sale terminals within our stores to give customers the choice to round up the total value of their purchase to the next dollar with the net difference passed through to TLC as a donation on behalf of our customers. In fiscal 2023, the aggregate value of round-up donations provided by our customers to TLC was $1.2 million.
We sublease a portion of our office space, approximately 5,887 square feet, in the 17 Pasteur Irvine, California facility to TLC, a related party and a charitable organization. The lease term is for five years and terminates January 31, 2027.
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ANNUAL REPORT
Our 2023 Annual Report to Stockholders, which consists of a letter to stockholders and our Annual Report on Form 10-K for the fiscal year 2023, accompanies the proxy materials being provided to all stockholders. Those documents are not a part of the proxy solicitation materials. We will provide, without charge, additional copies of our 2023 Annual Report on Form 10-K upon the receipt of a written request by any stockholder to Tilly’s, Inc., Attn: Corporate Secretary, 12 Whatney, Irvine, California 92618.
OTHER BUSINESS
Stockholder Proposals for Inclusion in 2025 Proxy Statement
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in our Proxy Statement and for consideration at our next annual meeting of stockholders. To be eligible for inclusion in our 2025 Proxy Statement, a stockholder’s proposal must be received by us no later than January 1, 2025 and must otherwise comply with Rule 14a-8 under the Exchange Act.
Stockholder Proposals for 2025 Annual Meeting
Our Amended and Restated Certificate of Incorporation contains an advance notice provision with respect to matters to be brought at an annual meeting of stockholders and not included in our Proxy Statement. Our bylaws expand upon and supplement the advance notice provisions in our Amended and Restated Certificate of Incorporation. Pursuant to our Amended and Restated Certificate of Incorporation and bylaws, only such business shall be conducted at an annual meeting of stockholders as is properly brought before the meeting. For business to be properly brought before our 2025 annual meeting of stockholders, in addition to any other applicable requirements, timely notice of the matter must be first given to our Corporate Secretary. To be timely, written notice must be received by our Corporate Secretary no later than March 15, 2025 (90 days before the one-year anniversary of our 2024 annual meeting) and no earlier than February 13, 2025 (120 days prior to the one-year anniversary of the 2024 annual meeting); provided, however, that if the date of the 2025 annual meeting is more than 30 days before or more than 60 days after such anniversary date, the notice must be received by our Corporate Secretary not later than the 90th day prior to such annual meeting or, if later, the tenth day following the day on which public disclosure of the date of such annual meeting was first made. In addition, any notice to our Corporate Secretary must include as to each matter that the stockholder proposes to bring before the meeting such information required by our bylaws.
While our board will consider proper stockholder proposals that are properly brought before the annual meeting, we reserve the right to omit from our 2025 proxy statement stockholder proposals that we are not required to include under the Exchange Act, including Rule 14a-8 thereunder.
Stockholder Nominations of Directors
Our Amended and Restated Certificate of Incorporation provides that any stockholder entitled to vote for the election of directors at a meeting of stockholders may nominate persons for election as directors only if timely written notice of such stockholder’s intent to make such nomination is timely given in proper form to Tilly’s, Inc., Attn: Corporate Secretary, 12 Whatney, Irvine, California 92618. To be timely for our 2025 annual meeting of stockholders, a stockholder’s notice must be delivered to, or mailed and received at, the address provided above no later than March 15, 2025 (90 days before the one-year anniversary of our 2024 annual meeting) and no earlier than February 13, 2025 (120 days prior to the one-year anniversary of the 2024 annual meeting); provided, however, that if the date of the 2025 annual meeting is more than 30 days before or more than 60 days after such anniversary date, the notice must be received by our Corporate Secretary not later than the 90th day prior to such annual meeting or, if later, the tenth day following the day on which public disclosure of the date of such annual meeting was first made.
A stockholder’s notice to our Corporate Secretary concerning the nomination of persons for election as directors must set forth the information required by our Amended and Restated Certificate of Incorporation and our bylaws.
In addition to satisfying the foregoing requirements under the our organizational documents, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 14, 2024 (60 days prior to the one-year anniversary of the 2024 annual meeting).
In the alternative, stockholders can at any time recommend for consideration by our Nominating and Corporate Governance Committee qualified candidates for our board that meet the qualifications described in this Proxy Statement under the heading “Corporate Governance—Nominating and Corporate Governance Committee” by submitting to us any recommendations for director candidates, along with appropriate biographical information, a brief description of such candidate’s qualifications and such candidate’s written consent to nomination, to the Nominating and Corporate Governance Committee, c/o Tilly’s, Inc., Attn: Corporate Secretary, 12 Whatney, Irvine, California 92618. Submissions satisfying the required qualifications will be
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forwarded to the chairperson of the Nominating and Corporate Governance Committee or such other member of the Nominating and Corporate Governance Committee delegated to review and consider candidates for director nominees.
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” is also permissible under the General Corporation Law of the State of Delaware and potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of banks and brokers with account holders who are our stockholders will be householding our proxy materials. A single Notice of Internet Availability of Proxy Materials or proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please notify your broker or bank. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request householding of their communications should contact their broker or bank.
Forward-Looking Statements
This Proxy Statement contains “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995). These statements are based on our current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding actions to be taken by us. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those mentioned in the risk factors in Item 1A of our Annual Report on Form 10-K for the year ended February 3, 2024 and in our periodic reports on Form 10-Q and our current reports on Form 8-K.
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INCORPORATION BY REFERENCE
Notwithstanding anything to the contrary set forth in any of our previous of future filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, that might incorporate all or portions of our filings, including this Proxy Statement, with the SEC, in whole or in part, the Audit Committee Report and the Report of the Compensation Committee contained in this Proxy Statement shall not be deemed to be incorporated by reference into any such filing or deemed filed with the SEC under the Securities Act or the Exchange Act. In addition, references to our website in this Proxy Statement are not intended to function as hyperlinks and information on our website, other than our Proxy Statement, notice and form of proxy, is not part of the proxy soliciting material and is not incorporated herein by reference.
Other Business
As of the date of this Proxy Statement, our board knows of no other business that will be presented for consideration at the 2024 annual meeting. If other proper matters are presented at the 2024 annual meeting, however, it is the intention of the proxy holders named in the Company’s form of proxy to vote the proxies held by them in accordance with their best judgment.
| By Order of the Board of Directors | |||||
| |||||
| Michael L. Henry | |||||
Executive Vice President, Chief Financial Officer, Corporate Secretary (Principal Financial Officer and Principal Accounting Officer) | |||||
Irvine, California
April 22, 2024
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YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
TILLY'S, INC.
2024 Annual Meeting of Stockholders
June 13, 2024, 9:30 A.M., Pacific Daylight Time
This Proxy is Solicited On Behalf Of The Board Of Directors
| Please Be Sure To Mark, Sign, Date and Return Your Proxy Card in the Envelope Provided | ||
s FOLD HERE DO NOT SEPARATE INSERT IN ENVELOPE PROVIDED s
| PROXY BALLOT | Please mark your votes like this | X | ||||||
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE NOMINEES IN PROPOSAL 1, “FOR”
PROPOSAL 2, “FOR” PROPOSAL 3, AND "ONE YEAR" FOR PROPOSAL 4.
1. Election of the following directors for a term expiring at the 2025 annual meeting of stockholders and until their successors are duly elected and qualified. NOMINEES: (1) Hezy Shaked (2) Teresa Aragones (3) Erin Chin (4) Doug Collier (5) Seth Johnson (6) Janet Kerr | FOR all Nominees except as marked | WITHHOLD all | 2. Ratification of the appointment of BDO USA, P.C. as our independent registered public accounting firm for the fiscal year ending February 1, 2025. | FOR | AGAINST | ABSTAIN | |||||||||||||||||
| 3. Non-binding, advisory vote to approve the compensation of our named executive officers. | FOR | AGAINST | ABSTAIN | ||||||||||||||||||||
| 4. Non-binding, advisory vote on the frequency of future advisory votes by stockholders on the compensation of our named executive officers. | ONE YEAR | TWO YEARS | THREE YEARS | ABSTAIN | |||||||||||||||||||
| (Instruction: To withhold authority to vote for any individual nominee, strike a line through that nominee’s name in the list above) | Our Board of Directors believes an advisory vote to approve executive compensation every year will lead to a more meaningful communication between the company and our stockholders on the executive compensation of our named executive officers. | ||||||||||||||||||||||
| THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS INDICATED. IF NO CONTRARY INDICATION IS MADE, THE PROXY WILL BE VOTED "FOR" THE ELECTION OF EACH OF THE SIX NOMINEES TO THE BOARD OF DIRECTORS, “FOR” PROPOSAL 2, “FOR” PROPOSAL 3, AND "ONE YEAR" FOR PROPOSAL 4, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSON NAMED AS PROXY HEREIN, ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. | ||
COMPANY ID:
PROXY NUMBER:
ACCOUNT NUMBER:
Signature Signature Date , 2024.
Note: Please sign exactly as name appears hereon. When shares are held by joint owners, both should sign. When signing as attorney, executor, administrator, trustee, guardian, or corporate officer, please give title as such.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held June 13, 2024.
The notice of annual meeting, proxy statement, form proxy card and our 2023 Annual Report to Stockholders are available at http://www.tillys.com/proxy.
s FOLD HERE DO NOT SEPARATE INSERT IN ENVELOPE PROVIDED s
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TILLY'S, INC.
Michael L. Henry and Sonya Attal, or any of them acting in the absence of the other, are hereby appointed attorneys and proxies of the undersigned, each with the power of substitution, to attend, vote and act for all shares of common stock of Tilly's, Inc. held of record by the undersigned at the close of business on April 22, 2024, at the 2024 Annual Meeting of Stockholders to be held at Tilly's, Inc. corporate headquarters, located at 12 Whatney, Irvine, California 92618 at 9:30 a.m., Pacific Daylight Time, on Thursday, June 13, 2024, and at any postponements or adjournments thereof, in connection therewith to vote all of the shares of common stock which the undersigned would be entitled to vote as directed on the reverse side, with discretionary authority as to any and all other business that may properly come before the meeting.
(Continued and to be marked, dated and signed on the other side)