UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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The Children's Place, Inc.
(Name of Registrant as Specified In Its Charter)
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May 6, 2024
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 2024 Annual Meeting of Shareholders (the "Annual Meeting") of The Children's Place, Inc. (referred to in this Proxy Statement as "we", "The Children's Place" or the "Company") will be held at 500 Plaza Drive, Secaucus, New Jersey on Wednesday, May 22, 2024, at 8:30 a.m. (Eastern), for the following purposes:
- To elect six members (the "Directors") of the Board of Directors (the "Board"), each to serve for a one-year term;
- To ratify the selection of Ernst & Young LLP ("EY") as the Company's independent registered public accounting firm for fiscal 2024; and
- To conduct an advisory vote to approve the compensation ("Say-on-Pay") of the Company's named executive officers (the "NEOs"). Shareholders of record at the close of business on April 10, 2024 (the "Record Date") are entitled to vote at the Annual Meeting.
Your vote is important. We encourage you to vote by proxy, even if you plan to attend the Annual Meeting. You may vote your proxy via the internet or by telephone by following the instructions included on your proxy card. You may also vote by mail by signing, dating and returning your proxy card in the envelope provided. Voting now will not limit your right to change your vote and/or to attend the Annual Meeting.
By order of the Board of Directors,
Jared E. Shure
Senior Vice President, General Counsel and Corporate Secretary
The Children's Place, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
If you have any questions or require any assistance with voting your shares, please contact:
MACKENZIE PARTNERS, INC.
1407 Broadway, 27th Floor
New York, New York 10018
- 929-5500(Call Collect) or
Call Toll-Free (800) 322-2885
Email: proxy@mackenziepartners.com
TABLE OF CONTENTS
PROXY SUMMARY | 1 |
CORPORATE GOVERNANCE AT THE CHILDREN'S PLACE | 6 |
Our Corporate Governance Framework | 6 |
Corporate Governance Policies and Practices | 6 |
Board of Directors and Board Committees | 11 |
Board Nominees for Directors | 21 |
EXECUTIVE OFFICERS | 23 |
EXECUTIVE AND DIRECTOR COMPENSATION | 24 |
Compensation Discussion & Analysis | 24 |
Summary Compensation Table | 35 |
Grants of Plan-Based Awards | 37 |
Outstanding Equity Awards at Fiscal Year-End | 39 |
Stock Vested | 42 |
Deferred Compensation Plan | 43 |
CEO Employment Agreement | 43 |
Other Arrangements | 45 |
Change in Control Agreements | 45 |
Severance Guidelines and Offer Letters | 46 |
Potential Payments upon Termination or Change in Control | 47 |
CEO Pay Ratio | 48 |
Pay Versus Performance | 48 |
Compensation of Directors | 51 |
STOCK OWNERSHIP | 53 |
Stock Ownership of Directors and Executive Officers | 53 |
Stock Ownership of Certain Beneficial Owners | 54 |
Section 16(a) Beneficial Ownership Reporting Compliance | 55 |
Certain Relationships and Related Transactions | 55 |
STOCK PRICE PERFORMANCE GRAPH | 56 |
PROPOSALS REQUIRING YOUR VOTE | 57 |
Proposal 1: Election of Six Members of the Board of Directors | 57 |
Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm | 58 |
Proposal 3: Advisory Vote on Named Executive Officer Compensation | 60 |
OTHER INFORMATION | 61 |
Admission | 61 |
Voting Information | 61 |
Required Vote | 63 |
Future Shareholder Proposals | 64 |
Nominations for Director | 64 |
Cost and Methods of Soliciting Proxies | 64 |
Available Information | 65 |
Other Business | 65 |
RECONCILIATION OF NON-GAAP (ADJUSTED) TO GAAP FINANCIAL INFORMATION | A-1 |
2024 PROXY STATEMENT | I |
PROXY SUMMARY
The Children's Place is sending you this Proxy Statement in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting. The below summary highlights key information contained in this Proxy Statement. As it is only a summary, please review the entire Proxy Statement and the accompanying Annual Report before you vote.
Summary of Shareholder Voting Matters
At our Annual Meeting at 500 Plaza Drive, Secaucus, New Jersey on Wednesday, May 22, 2024, at 8:30 a.m. (Eastern), shareholders are being asked to vote on the following matters:
Proposal | Board Vote | Page | |
Recommendation | Reference | ||
1. | Election of Six Members of the Board of Directors | FOR each Nominee | 57 |
2. | Ratification of Selection of Independent Registered Public Accounting Firm | FOR | 58 |
3. | Say-on-Pay - Advisory Vote on NEO Compensation | FOR | 60 |
Fiscal 2023 Overview
During fiscal 2023, the Company realized continued benefits from its structural transformation to a digital first retailer. Despite persisting challenges in the macro-economic environment, the Company's focus, diligence, consumer-centric marketing and digital investments enabled it to accelerate its digital transformation and fleet optimization strategies, resulting in expanded digital penetration and customer acquisition. The Company's accelerated digital transformation and fleet optimization strategies have positioned the Company to operate with less resources, including less stores, less inventory, less people, and less expense. These strategies allow us to better service customers online, where they prefer to shop, which we believe will drive more consistent and sustainable results over time.
Fiscal 2023 Highlights:
- Made progress driving digital sales and traffic, despite the difficult consumer environment, resulting in digital sales representing an industry leading 54% of net retail sales in fiscal 2023.
- Continued to execute a complementary multi-brand marketing strategy, with each brand (The Children's Place, Gymboree, Sugar & Jade and PJ Place) strategically positioned to target an underdeveloped or untapped market share opportunity.
- Expanded wholesale channel strategy, centered around the Company's strong and growing relationship with Amazon.
- Accelerated inventory reduction and liquidation efforts, ending the year with lower levels of inventory.
- Closed 90 under-performing stores in fiscal 2023.
- Published a comprehensive Environment, Social & Governance ("ESG") Report which details the Company's strategic approach to ESG.
Fiscal 2024 Key Events
Following the end of fiscal 2023, the Company made several public disclosures, including the announcement of the following key events:
- On February 9, 2024, the Company announced that it had been working to improve its liquidity position and strengthen its balance sheet to best position the Company for the future. The Company also announced that it was working with its advisors (including Centerview Partners), lenders and potential lenders to obtain new financing necessary to support ongoing operations, and considering strategic alternatives in the event that the Company was unable to consummate new financing.
2024 PROXY STATEMENT 1
PROXY SUMMARY
- On February 14, 2024, the Company received correspondence from Mithaq Capital SPC ("Mithaq") notifying the Company that it acquired approximately 54% of the Company's outstanding shares of common stock, par value $0.10 per share (the "Common Stock") and the Company stated that it would accept Mithaq's request to enter into discussions regarding the provision of financing to assist with the Company's liquidity needs.
- On February 16, 2024, the Company announced its entry into a non-binding term sheet, dated February 15, 2024, with 1903P Loan Agent, LLC ("Gordon Brothers"), as Lender, Administrative Agent and Collateral Agent, (the "Term Sheet"), for a $130 million term loan (the "Proposed Term Loan").
- On February 29, 2024, the Company entered into an interest-free unsecured promissory note with Mithaq, providing for up to $78.6 million in term loans, consisting of (a) an initial term loan in an aggregate principal amount of $30.0 million (the "Initial Term Loan") and (b) a delayed draw term loan commitment of $48.6 million (the "Delayed Draw Term Loan;" and together with the Initial Term Loan, collectively, the "Mithaq Term Loans"). On February 29, 2024, the Company received the proceeds of the Initial Term Loan, that were used to, among other things, support the Company's operations, including payments to vendors and service providers to address overdue accounts payable
- On February 29, 2024, the Company and Mithaq also entered into a letter agreement (the "Letter Agreement") for purposes of, among other things, ensuring an orderly transition of the governance of the Company following Mithaq's acquisition of over 50% of the outstanding shares of Common Stock of the Company, including the continued presence of certain non-Mithaq nominated members on the Board during a transitional period. The Letter Agreement also required the Company to use reasonable best efforts to commence and complete a registered rights offering of up to approximately $90 million by distributing transferrable subscription rights to the stockholders of the Company at the applicable record date to purchase shares of common stock of the Company.
- On February 29, 2024, the Company announced that four persons nominated by Mithaq - Turki Saleh A. AlRajhi, Muhammad Asif Seemab, Muhammad Umair and Hussan Arshad - had been appointed to the Board effective February 29, 2024, in accordance with the Letter Agreement. The Company also announced that, concurrently with the execution of the Letter Agreement, Elizabeth Boland, Alicia Enciso, Katherine Kountze and Wesley S. McDonald resigned from the Board effective February 29, 2024.
- On March 11, 2024, the Company announced that Mithaq provided the Delayed Draw Term Loan to the Company on March 8, 2024. The net proceeds from the Delayed Draw Term Loan were used to, among other things, support the Company's operations, including payments to vendors and service providers to address overdue accounts payable. With the funding of the Delayed Draw Term Loan, the resignations from the Board of Norman Matthews, John E. Bachman, Debby Reiner and Michael Shaffer became effective and the size of the Board was reduced to six. In addition, Mr. John A. Frascotti elected to resign from the Board on March 8, 2024 simultaneously with the resignations of the aforementioned resigning directors. Jane Elfers, President, CEO and current director of the Company, continues to serve on the Board, as well as in her roles as President and CEO of the Company. In addition, the Board appointed Douglas R. Edwards to serve on the reconstituted Board as an independent director, which appointment became effective March 14, 2024.
- As a result of the Board composition changes described above, Norman Matthews ceased to be the Chairman of the Board, and Turki Saleh A. AlRajhi was appointed the new Chairman of the Board. Muhammad Asif Seemab was also appointed to the newly-created position of Vice-Chairman of the Board.
- On April 17, 2024, the Company announced the closing of an additional $90 million term loan with Mithaq (the "New Mithaq Term Loan"). Given that the New Mithaq Term Loan will further strengthen the Company's liquidity position on better overall terms in the aggregate than the Proposed Term Loan, the Company will not pursue the Proposed Term Loan any further.
For additional details regarding the above events, please review the Company's public filings and visit the Company's investor relations homepage found at https://investor.childrensplace.com/
2 2024 PROXY STATEMENT
PROXY SUMMARY
Election of Six Members of the Board of Directors
The Board has nominated six persons for election at the Annual Meeting. The Board recommends that shareholders vote "FOR" each of the nominees named below.
Other Public | ||
Name, Tenure, Committees | Age | Company |
Boards | ||
Turki Saleh A. AlRajhi | ||
Director since 2024 | 31 | - |
Chairman of the Board | ||
Human Capital & Compensation Committee | ||
Muhammad Asif Seemab | ||
Director since 2024 | ||
Vice Chairman of the Board | 41 | - |
Human Capital & Compensation Committee (Chair), Corporate Responsibility, Sustainability & Governance | ||
Committee (Chair) | ||
Hussan Arshad | ||
Independent Director since 2024 | 40 | - |
Audit Committee (Chair), Corporate Responsibility, Sustainability & Governance Committee | ||
Douglas Edwards | ||
Independent Director since 2024 | 66 | - |
Audit Committee, Corporate Responsibility, Sustainability & Governance Committee | ||
Jane Elfers | ||
Director since 2010 | 63 | - |
CEO and President | ||
Muhammad Umair | ||
Independent Director since 2024 | 38 | - |
Audit Committee, Human Capital & Compensation Committee | ||
Board Diversity Matrix | |||||||||
Total Number of Directors | 6 | ||||||||
Part I: Gender Identity | Female | Male | Non-Binary | Did Not | |||||
Disclose Gender | |||||||||
Directors | 1 | 5 | - | - | |||||
Part II: Demographic Background | |||||||||
African American or Black | - | - | - | - | |||||
Alaskan Native or American Indian | - | - | - | - | |||||
Asian | - | 2 | - | - | |||||
Hispanic or Latinx | - | - | - | - | |||||
Native Hawaiian or Pacific Islander | - | - | - | - | |||||
White | 1 | 1 | - | - | |||||
Two or More Races or Ethnicities | - | - | - | - | |||||
LGBTQ+ | - | ||||||||
Did not Disclose Demographic Background | 2 | ||||||||
2024 PROXY STATEMENT | 3 | ||||||||
PROXY SUMMARY
2023 Shareholder Engagement
2023 Shareholder Engagement
Shareholders Contacted
Director Participation
Over 66% of our outstanding shares
at the time of invitation
Two independent Directors,
together with members of senior management, participated in all engagement conversations
Primary Topics Discussed
- ESG Initiatives, Goals and Enhanced Disclosure
- Human Capital Management, including diversity, equity and inclusion ("DE&I")
- Board Refreshment
- Fiscal 2023 CEO Compensation Overview
Shareholder Engagement
Our Board and senior management team have a long and continuous history of engaging with shareholders and responding to their feedback. 2023 marked the 12th consecutive year that members of the Board -- the Chair of the Corporate Responsibility, Sustainability & Governance Committee and the Chair of the Human Capital & Compensation Committee -- together with members of senior management, engaged in conversations with our shareholders to exchange ideas and share perspectives.
In 2023, we reached out to shareholders holding over 66% of our outstanding shares of Common Stock, and two independent directors and members of our senior management spoke with shareholders who accepted our invitation to engage. Those who declined our invitation indicated either that they did not have any questions or a need to engage, and a few did not respond. We provided all invited shareholders with a presentation that outlined the important topics on which we wished to obtain their feedback. Shareholders who declined to engage did not indicate that they had any concerns with the matters set forth in the presentation. We held a call with proxy advisory firm Glass Lewis to discuss our outreach process and the shareholder feedback we received. We had also invited proxy advisory firm Institutional Shareholder Services ("ISS") who declined to engage this year.
4 2024 PROXY STATEMENT
PROXY SUMMARY
Corporate Governance and Executive and Director Compensation Best Practices
The Board has proactively, with regular input from shareholders, enhanced the Company's governance and executive compensation frameworks to support our business and align with market best practices.
Corporate Governance Best Practices
Robust annual shareholder engagement activities
Separate Chairman and CEO roles
Declassified Board, with annual elections for all Directors
Majority voting for all Directors
Explicit disclosure regarding Board's decision-making processes
Sound practices on Director refreshment, succession planning and diversity
Annual mapping of Director skill sets and experience to business strategy
Annual Board, Committee and individual independent Director self-assessments
Limit on Director participation on outside public company boards
Special meeting rights for shareholders (25% ownership threshold)
Proxy access
Updated advance notice provisions to lengthen notice window for the submission of stockholder proposals
No supermajority voting requirements
Robust risk management activities
Publication of a comprehensive annual ESG report aligned to SASB guidelines and GRI standards
Expanded oversight of ESG topics across Board Committees
Executive and Director Compensation Best Practices
Value driving performance metrics in the annual bonus plan and long term incentive plan ("LTIP") that measure progress on our financial results, strategic growth initiatives and include both a sustainability and a diversity core metric in LTIP awards
Robust stock ownership guidelines and holding requirements for our CEO, other senior executives (including our NEOs) and independent Directors
No tax gross-ups (excluding those in connection with standard relocation expenses)
All equity awards subject to "double trigger" vesting upon a change in control
Cap on the aggregate fair market value of equity awards made to each independent Director in any calendar year
Annual compensation risk assessment by management and an independent compensation consultant
Annual peer group review by an independent compensation consultant
Incentive compensation clawback policy (in place prior to new SEC regulation) in the case of financial restatements and other activity that is in conflict with or adverse to the interests of the Company, applicable to both the annual bonus plan and LTIP
No hedging and pledging activities in Company stock by our Directors, executives (including our NEOs) and associates
Bonus and performance share caps
Annual benchmarking of independent Director compensation by an independent compensation consultant
2024 PROXY STATEMENT 5
CORPORATE GOVERNANCE AT THE CHILDREN'S PLACE
Our Corporate Governance Framework
The Board strongly believes that good corporate governance accompanies and aids our long-term business success.
Corporate Governance Policies and Practices
Board and Committee Independence
-
Director Independence Standards. The Board makes an annual independence determination concerning its Directors using guidelines established to assist the Board in making these determinations. These guidelines are contained in our Corporate Governance Guidelines and in our Related Person Transactions Policy and cover, among other things, employment, family, compensatory and business relationships, and relationships with our independent registered public accounting firm.
Our Board also makes an annual determination that: (i) all of the members of the Audit Committee are "independent" within the meaning of applicable provisions of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Securities and Exchange Commission ("SEC") rules and regulations and NASDAQ listing standards, as well as the ISS' independence guidelines for purposes of overseeing the Company's information security risk management, and meet the "financial sophistication" requirement of NASDAQ rules; and (ii) all of the members of the Human Capital & Compensation Committee are "non-employee directors" within the meaning of Rule 16b-3 of the Exchange Act. - Executive Sessions of Directors. Executive sessions of Directors are an important governance practice because they enable our Directors to discuss matters such as strategy, succession planning, risk, senior executive performance and compensation, future agenda items, and Board and Committee priorities and effectiveness, all without management present. Led by the Chairman of the Board and Committee Chairs, during fiscal 2023, the Directors of the Board and each Committee met in executive session, without our CEO or other members of Company management present, at every regularly scheduled Board and Committee meeting.
Board Composition and Continuous Evaluation
- Board Skill Set and Experience. An important function of our Corporate Responsibility, Sustainability & Governance Committee is to evaluate whether the members of our Board, as a whole, possess a mix of the diverse skills, backgrounds and experience that are necessary to further the Company's strategy and address the risks we face in the rapidly changing business environment in which we operate.
- Board, Committee and Director Evaluation Process. The Corporate Responsibility, Sustainability & Governance Committee in fiscal 2023 engaged in an important process to evaluate the relevance and the breadth of our Directors' skills, backgrounds and experience. The Committee conducted a formal evaluation of how well the Board functions and performs, the membership, leadership, roles and performance of each of the Board's Committees, and the skill sets and contribution of individual independent Directors. During Fiscal 2023, the Committee engaged an independent third-party advisor to assist the Company in conducting its annual independent director self-assessment process. Following a brief written questionnaire, the centerpiece of this process were individual interviews conducted by the third party advisor with each independent director and selected members of the senior management team. The interviews solicited anonymous feedback on topics that are believed to be the most important to successfully accomplishing the goals of the Board and its Committees. TRB Partners then prepared a final report for the Committee that developed a focused list of priority topics and created an effective action plan for the Committee.
Board as a Whole and Individual Committees. The self-assessment process is designed to elicit a critical evaluation by the independent Directors of the performance of the Board and its Committees, including assessing agendas, informational needs, composition, processes, dynamics and effectiveness. The Corporate Responsibility, Sustainability & Governance Committee shared its findings and recommendations with the Board. The Board then considers the results of the evaluation and recommendations and, as necessary, identifies and authorizes steps to be taken to enhance Board and Board Committee performance.
6 2024 PROXY STATEMENT
CORPORATE GOVERNANCE AT THE CHILDREN'S PLACE
Individual Independent Directors. The self-assessment process is also designed to elicit a critical evaluation by the independent Directors of their peers, including discussion of skill sets against a list of skill sets, experience and attributes important to the Company. Independent Directors evaluate their peers on the basis of effectiveness and various attribute criteria. The Corporate Responsibility, Sustainability & Governance Committee utilizes the feedback to inform its succession planning. The Committee also utilizes the skill set inventory to identify any gaps in relevant knowledge and experience not covered by existing independent Directors. This process results in a discussion on how our Board is constituted currently and how our Board could be constituted in the future to align with our strategic objectives.
- Board and Committee Refreshment and Succession Planning. By identifying and mapping individual skill sets, backgrounds and experience, and engaging in a Board, Committee and independent Director self-assessment and evaluation process, the Board prioritizes refreshment and succession planning for the Board, as a whole, as well as each of the Board's Committees.
Board Engagement
- Limit the Number of Public Company Boards. Our Corporate Governance Guidelines limit the number of public company boards of directors (including our Company) on which our Directors may serve to four, for our independent Directors, and two (including our Company), for our CEO. No Director nominee serves on any other public company board.
Board and Committee Oversight
- Oversight Role of Board. The Board plays a fundamental role in overseeing the Company's strategy, succession planning and risk management activities. In addition, the Board has charged each of our standing Committees with the responsibility for the oversight of the management of certain risks.
Strategy. The Board reviews and evaluates the Company's execution of its strategic initiatives, engages in reviews with senior management, conducts separate independent Director sessions without our CEO or other members of the Company management present during which the Company's strategy is evaluated and discussed, and receives presentations throughout the year on important aspects of the implementation of these initiatives. These periodic presentations include a review of the progress on initiatives, and reports from specific departments such as finance, information technology, supply chain, real estate, human resources and legal.
Succession Planning and Emergency Plans. CEO succession planning is a topic reviewed annually by our Board. On an annual basis, the Board engages in an in-depth review of the succession planning for the senior leaders of the Company's management team. In addition, the Board reviews and evaluates of the skills and competencies needed to be possessed by potential CEO successors and has established a CEO emergency succession plan to prepare for unanticipated circumstances. The Board has a similar plan in place for the Chairman of the Board.
Risk Management. Our Board and its three standing Committees review and evaluate management's activities concerning the identification, ranking, mitigation and monitoring of the major strategic, operational, financial, compliance and reputational risks we face in the course of our domestic and international business operations.
- Corporate Responsibility, Sustainability & Governance Committee. Our Corporate Responsibility, Sustainability & Governance Committee ("CRS&G Committee") has the oversight responsibility for ESG and governance risks. With respect to ESG matters, the Corporate Responsibility, Sustainability & Governance Committee receives reports on a regular basis from executives in charge of the Company's various environmental and social initiatives and goals. The CRS&G Committee dedicates two meetings each year to an in-depthdiscussion of ESG topics, including matters related to the Company's environmental and social initiatives, progress toward public goals and the Company's overall ESG roadmap. Regarding governance matters, the Committee regularly reviews the composition, skill sets and
2024 PROXY STATEMENT 7
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The Children's Place Inc. published this content on 06 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 May 2024 18:33:13 UTC.