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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

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Definitive Proxy Statement
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Soliciting Material Pursuant to §240.14a-12
OLLIE’S BARGAIN OUTLET HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)

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OLLIE’S BARGAIN OUTLET HOLDINGS, INC.
6295 Allentown Boulevard, Suite 1
Harrisburg, Pennsylvania 17112

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 13, 2018

To our stockholders,

Notice is hereby given that the 2018 Annual Meeting of stockholders of Ollie’s Bargain Outlet Holdings, Inc. will be held on June 13, 2018, at 9:00 a.m. local time, at the Colonial Country Club, located at 4901 Linglestown Road, Harrisburg, PA, 17112 to:

1. Elect the two nominees named herein as Class III directors;
2. Approve a non-binding proposal regarding the compensation of the company’s named executive officers;
3. Approve a non-binding proposal regarding the frequency of the vote on the compensation of the company’s named executive officers; and
4. Ratify the selection of KPMG LLP as our independent registered public accounting firm for the fiscal year ending February 2, 2019.

We will also consider any other matters that may properly come before the meeting or any adjournments or postponements of the meeting.

Our Board of Directors has fixed the close of business on April 27, 2018 as the record date for the determination of stockholders entitled to notice of and to vote at our Annual Meeting and any adjournments or postponements thereof. We are again making our proxy materials available to you electronically. We hope that this continues to offer you convenience while allowing us to reduce the number of copies that we print.

To be admitted to the Annual Meeting, you must present proof of stock ownership as of the record date and a valid photo identification. Please follow the admission procedures described on page 1 of the proxy statement.

Your vote is important. We encourage you to vote by proxy in advance of the Annual Meeting, whether or not you plan to attend.

BY ORDER OF THE BOARD OF DIRECTORS


Robert Bertram
Vice President, General Counsel

May 3, 2018

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OLLIE’S BARGAIN OUTLET HOLDINGS, INC.
Proxy Statement - Table of Contents

 
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OLLIE’S BARGAIN OUTLET HOLDINGS, INC.
6295 Allentown Boulevard, Suite 1
Harrisburg, Pennsylvania 17112

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
June 13, 2018

GENERAL INFORMATION

INFORMATION CONCERNING THE ANNUAL MEETING AND VOTING

The Board of Directors (the “Board”) of Ollie’s Bargain Outlet Holdings, Inc. (“Ollie’s,” “we,” “us,” “our,” or the “Company,”) is soliciting your proxy to be voted at the 2018 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on June 13, 2018, at 9:00 a.m. local time, at the Colonial Country Club, located at 4901 Linglestown Road, Harrisburg, Pennsylvania 17112, and any postponement or adjournment thereof.

Matters Considered at the Annual Meeting

At the meeting, stockholders will be asked to vote to elect the two nominees named herein as Class III directors and to ratify the selection of the independent registered public accounting firm. See “PROPOSAL 1— ELECTION OF CLASS III DIRECTORS”, “PROPOSAL 2—NON-BINDING ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION,” “PROPOSAL 3—NON-BINDING PROPOSAL ON THE FREQUENCY OF ADVISORY VOTES ON EXECUTIVE COMPENSATION,” and “PROPOSAL 4— RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.” The Board does not know of any matters to be brought before the meeting other than as set forth in the notice of meeting. If any other matters properly come before the meeting, the persons named in the enclosed form of proxy or their substitutes will vote in accordance with their best judgment on such matters.

Record Date; Stock Outstanding and Entitled to Vote

Holders of common stock as of the record date are entitled to notice of, and to vote at, the Annual Meeting. As of the record date, there were 62,348,159 shares of common stock outstanding and entitled to vote at the Annual Meeting, with each share entitled to one vote.

Important Notice of Internet Availability Proxy Materials

Under rules adopted by the Securities and Exchange Commission (the “SEC”), we are furnishing Proxy Materials to most of our stockholders on the Internet, rather than mailing printed copies. By doing so, we save costs and reduce our impact on the environment. If you received a Notice of Availability by mail, you will not receive printed copies of the Proxy Materials unless you request them. Instead, the Notice of Availability will instruct you how to access and review the Proxy Materials on the Internet. If you would like printed copies of the Proxy Materials, please follow the instructions on the Notice of Availability. The Notice of Internet Availability was first mailed on or before May 4, 2018 to all stockholders of record as of the record date for the Annual Meeting, which was the close of business on April 27, 2018.

Participating in the Annual Meeting; Admission

If you are a stockholder of record, you will need to present the Notice of Internet Availability or proxy card that you received, together with a form of personal photo identification, in order to be admitted into the meeting. If you are the beneficial owner of shares held in “street name,” you will need to provide proof of ownership, such as a recent account statement or letter from your bank, broker or other nominee as of the close of business on April 27, 2018, along with a form of personal photo identification. Alternatively, you may contact the broker, bank or other nominee in whose name your shares of common stock are registered and obtain a legal proxy to bring to the meeting.

We will decide in our sole discretion whether the documentation presented for admission meets the requirements described above.

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Proxy Materials

Our Proxy Materials include:

This Proxy Statement;
A Notice of our Annual Meeting (which is attached to this Proxy Statement); and
Our 2017 Annual Report to Stockholders

If you received printed versions of these materials by mail (rather than through electronic delivery), these materials also include a Proxy Card or voting instruction form. If you received or accessed these materials through the Internet, your Proxy Card or voting instruction form are available to be filled out and executed electronically. You should review the entire Proxy Statement and the 2017 Annual Report to Stockholders before you vote.

Quorum; Shares Held by Brokers

The presence at the Annual Meeting, in person or by proxy, of the holders of at least a majority of the number of shares of common stock issued and outstanding and entitled to vote as of the record date, is required to constitute a quorum to transact business at the Annual Meeting.

Abstentions are counted as present and entitled to vote for purposes of determining a quorum. Shares represented by broker non-votes (as defined below) also are counted as present and entitled to vote for purposes of determining a quorum.

If you are the beneficial owner of shares held for you by a broker, your broker must vote those shares in accordance with your instructions. If you do not give voting instructions to your broker, your broker may vote your shares for you on any discretionary items of business to be voted upon at the Annual Meeting. If you do not provide voting instructions on a non-discretionary item, including the election of the nominees named herein as directors, the shares will be treated as “broker non-votes.” The election of two nominees named herein as Class III directors (Proposal 1), and both the advisory votes on executive compensation (Proposal 2), and the frequency of stockholder votes on executive compensation (Proposal 3) are non-routine matters on which brokers will not be permitted to vote any uninstructed shares. The ratification of the appointment of KPMG LLP (“KPMG”) (Proposal 4) is a routine matter on which brokers will be permitted to vote any uninstructed shares in their discretion.

Required Votes on Proposals

Election of Nominees named herein as Directors. Proposal 1. The affirmative vote of the holders of a plurality of shares of common stock voting on this matter at the Annual Meeting is required to elect each nominee named herein as a director. Abstentions and broker non-votes will have no effect on this proposal.

Non-Binding Advisory Vote to Approve Named Executive Officer Compensation. Proposal 2. The affirmative vote of a majority of the holders of the common stock voting on this matter at the Annual Meeting is required to approve this item. Abstentions and broker non-votes will have no effect on this proposal.

Non-Binding Advisory Vote Regarding the Frequency of Advisory Votes to Approve Named Executive Officer Compensation. Proposal 3. The affirmative vote of a majority of the holders of the common stock voting on this matter at the Annual Meeting is required to approve this item. Abstentions and broker non-votes will have no effect on this proposal. The Board expects to be guided by the voting option that receives the greatest number of votes, even if that alternative does not receive a majority.

Ratification of the selection of KPMG as our independent registered public accounting firm. Proposal 4, relating to the ratification of the selection of KPMG as our independent registered public accounting firm for the fiscal year ending February 2, 2019 will be approved if it receives the affirmative vote of the holders of a majority of the shares of common stock represented at the Annual Meeting and entitled to vote and voting on the subject matter. Abstentions will have no effect on this proposal.

Other Matters. If any other matters are properly presented at the Annual Meeting for action, including a question of adjourning or postponing the meeting from time to time, the persons named in the proxies and acting thereunder will have discretion to vote on such matters in accordance with their best judgment.

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Although the advisory votes in Proposals 2 and 3 are non-binding, as provided by law, our Board will review the results of the votes and will take them into account in making a determination concerning our Named Executive Officer compensation and frequency of future advisory votes to approve Named Executive Officer compensation.

How to Vote; Revocation of Proxies

Stockholders of record are requested to vote by proxy in one of four ways:

By telephone—Use the toll-free telephone number shown on the Notice of Internet Availability or any proxy card you receive;
By Internet—Visit the Internet website indicated on the Notice of Internet Availability or any proxy card you receive and follow the on-screen instructions;
By mail—If you request a paper proxy card by telephone or Internet, you may elect to vote by mail. If you elect to do so, you should date, sign and promptly return your proxy card by mail in the postage prepaid envelope which accompanied that proxy card; or
In person—You can deliver a completed proxy card at the meeting or vote in person.

Voting instructions (including instructions for both telephonic and Internet proxies) are provided on the Notice of Internet Availability and on any proxy card you receive. The Internet and telephone proxy procedures are designed to authenticate stockholder identities, to allow stockholders to give voting instructions and to confirm that stockholder instructions have been recorded properly. A control number, located on the Notice of Internet Availability or proxy card, will identify stockholders and allow them to submit their proxies and confirm that their voting instructions have been properly recorded. Costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, must be borne by the stockholder. If you submit your proxy by Internet or telephone, it will not be necessary to return a proxy card for your vote to be counted.

If a stockholder does not submit a proxy by the Internet or by telephone or return a signed proxy card, and does not attend the meeting and vote in person, his or her shares will not be voted. Shares of our common stock represented by properly executed proxies received by us or proxies submitted by telephone or via the Internet, which are not revoked, will be voted at the meeting in accordance with the instructions contained therein.

If instructions are not given and you do not indicate how your shares should be voted on a proposal, the shares represented by a properly completed proxy will be voted as the Board recommends. In addition, we reserve the right to exercise discretionary authority to vote proxies, in the manner determined by the Company in its sole discretion, on any matters brought before the Annual Meeting for which we did not receive adequate notice under the proxy rules promulgated by the SEC.

Any proxy signed and returned by a stockholder or submitted by telephone or via the Internet may be revoked at any time before it is exercised by giving written notice of revocation to the Company’s Secretary at our address set forth herein, by executing and delivering a later-dated proxy (either in writing, by telephone or via the Internet) or by voting in person at the meeting. Attendance at the meeting will not, in and of itself, constitute revocation of a proxy.

If your shares are held in the name of a bank, broker, fiduciary or custodian, follow the voting instructions on the form you receive from your record holder. The availability of Internet and telephone proxies for these stockholders will depend on their voting procedures.

Householding

Some banks, brokers and other holders of record may be participating in the practice of “householding” proxy statements, annual reports or notices. This means that only one copy of our Proxy Materials or Notice of Availability, as applicable, may have been sent to multiple stockholders in your household. If you want to receive separate copies of our Proxy Materials or Notice of Availability, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other holder of record, or you may contact Robert Bertram, Vice President, General Counsel at Ollie’s Bargain Outlet Holdings, Inc., 6295 Allentown Boulevard, Suite 1, Harrisburg, Pennsylvania 17112 or (717) 657-2300 ext. 2177.

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If you own our common stock in more than one account, such as individually and also jointly with your spouse, you may receive more than one Notice of Internet Availability relating to these proxy materials or copy of these materials themselves. To assist us in saving money and to serve you more efficiently, we encourage you to have all your accounts registered in the same name and address by contacting our transfer agent: American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, NY 11219, Telephone: 800-937-5449, or (718) 921-8124.

Proxy Solicitation

The Company is paying the costs of the solicitation of proxies. Members of our Board and officers and employees may solicit proxies by mail, telephone, fax, email or in person. We will not pay directors, officers or employees any extra amounts for soliciting proxies. We may, upon request, reimburse brokerage firms, banks or similar entities representing street name holders for their expenses in forwarding Proxy Materials to their customers who are street name holders and obtaining their voting instructions.

No arrangements or contracts have been made or entered into with any solicitors as of the date of this Proxy Statement, although we reserve the right to engage solicitors if we deem them necessary. If done, such solicitations may be made by mail, telephone, facsimile, e-mail or personal interviews.

Annual Report and Company Information

Our Annual Report to Stockholders, which contains consolidated financial statements for the fiscal year ended February 3, 2018 (“fiscal year 2017”), is being furnished to stockholders concurrently herewith. You also may obtain a copy of our Annual Report on Form 10-K for fiscal year 2017 that was filed with the SEC, without charge, by writing to Ollie’s Bargain Outlet Holdings, Inc., Attn: Investor Relations and General Counsel, 6295 Allentown Boulevard, Suite 1, Harrisburg, Pennsylvania 17112. These materials will also be available without charge at “Investor Relations” on our website at www.ollies.us.

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PROPOSAL 1—ELECTION OF CLASS III DIRECTORS

Our Board currently consists of six (6) directors, divided into three classes, with each class serving a consecutive three-year term. The current composition of our Board is as follows: Class I consists of Stanley Fleishman and Stephen White; Class II consists of Robert Fisch and Richard Zannino; and Class III consists of Mark Butler and Thomas Hendrickson. The term of each of our current Class III Directors will expire on the date of the Annual Meeting, subject to the election and qualification of their respective successors.

In selecting director candidates, the independent directors of our Board consider whether the candidates possess the required skill sets and fulfill the qualification requirements of directors approved by the Board, including independence, sound judgment, business specialization, technical skills, diversity and other desired qualities. The following biographies describe the business experience of each director and nominee.

The nominees for election as Class III Directors at the Annual Meeting are described below. The Board, upon the recommendation of the independent directors of the Board, has nominated each of the candidates for election. The Board expects that each of the nominees will be available for election as a director. However, if by reason of an unexpected occurrence, one or more of the nominees is not available for election, the persons named in the form of proxy have advised that they will vote for such substitute nominees as the Board may nominate.

Your Board unanimously recommends a vote “FOR” the nominees for Class III Directors.

Nominees for Election

Class III Directors, if elected
(term expires at 2021 annual meeting)

Mark Butler, 59, is one of the founders of Ollie’s, having been with Ollie’s since its inception in 1982. He has been our President and Chief Executive Officer since 2003, a member of the Board since 1996, and has been Chairman of our Board since February 2005. Prior to holding this role, Mr. Butler was our Treasurer and Secretary. Mr. Butler also serves as Chairman of the Board of Directors of the Cal Ripken, Sr. Foundation, a national nonprofit organization focused on providing opportunities for at-risk youth. Mr. Butler brings to the Board more than three decades of institutional knowledge of our Company, as well as extensive knowledge of the retail industry, all of which we believe qualify him to serve as one of our directors.

Thomas Hendrickson, 63, has served as a director since March 2015. Mr. Hendrickson was most recently the Executive Vice President, Chief Financial Officer, Chief Administrative Officer and Treasurer for Sports Authority Inc., a sporting goods retailer, from August 2003 until his retirement in February 2014. Prior to joining Sports Authority Inc., Mr. Hendrickson was the Executive Vice President, Chief Financial Officer and Chief Administrative Officer for Gart Sports Company from January 1998 until the time of its merger with Sports Authority Inc. in August 2003. Mr. Hendrickson is currently a director and a member of the audit committee of the Board of Directors of O’Reilly Automotive, Inc. (Nasdaq: ORLY). We believe that Mr. Hendrickson’s financial, accounting, acquisition and business experience qualify him to serve as one of our directors.

Class I Directors
(term expires at 2019 annual meeting)

Stanley Fleishman, 66, has served as a director since March 2013. Mr. Fleishman has been the Chief Executive Officer of Jetro/Restaurant Depot Group, a nationwide wholesale cash and carry food distributor, since October 1992, prior to which he held the position of Chief Financial Officer. Prior to joining Jetro/Restaurant Depot group, Mr. Fleishman was the Chief Executive Officer of Dion Stores, a South African retail chain, from 1982-1985. He holds an M.B.A. from the Wharton School of the University of Pennsylvania. We believe that Mr. Fleishman’s broad management expertise and his knowledge of the wholesale retail industry qualify him to serve as one of our directors.

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Stephen White, 63, has served as a director since July 2016. Mr. White was most recently the Chief Logistics Officer at Dollar Tree, Inc. from April 2003 until his retirement in May 2016. Mr. White first joined Dollar Tree in 1994, and was responsible for building the logistics division during his tenure at the company. Prior to joining Dollar Tree, Mr. White served as Director of Transportation and Administration and held various other distribution and transportation positions at Ames Department Stores from 1986 to 1994. Prior to Ames, Mr. White held several transportation and supply chain positions with a number of companies, including LyphoMed Pharmaceuticals, Eastern Airlines, Incom International, and Shell Oil Company. Mr. White holds a Bachelor’s of Science in Business Administration with dual majors in Transportation and Distribution Management, and Finance and Insurance from Northeastern University. Mr. White’s extensive experience in logistics and financial matters qualify him to serve as one of our directors.

Class II Directors
(term will expire at 2020 annual meeting)

Robert Fisch, 68, has served as a Director since September 2015. He currently is President of RNF Group, a consulting company focused on the assessment and evaluation of retail and other business enterprises, as well as providing mentoring services to existing management of these companies, a position he has held since January 2017. He served as the President, Chief Executive Officer and Chairman of the Board of rue21, inc., a large specialty apparel retailer, from June 2001 until October 2016. Mr. Fisch served as a member of the Board of Directors of the Children’s Place Retail Stores, Inc. from June 2004 until March 2013. From February 1987 to December 1999 he served as the President of Casual Corner Group, Inc. Mr. Fisch was selected to serve on our Board due to his strategic business acumen and experience as a corporate director of publicly-traded retail companies.

Richard Zannino, 59, has served as a director since September 2012. Mr. Zannino is a Managing Director of CCMP and a member of the firm’s Investment Committee. Prior to joining CCMP in 2009, Mr. Zannino was Chief Executive Officer and a member of the Board of Directors of Dow Jones & Company. Mr. Zannino joined Dow Jones as Executive Vice President and Chief Financial Officer in February 2001 and was promoted to Chief Operating Officer in July 2002 and to Chief Executive Officer and Director in February 2006. Prior to joining Dow Jones, Mr. Zannino was Executive Vice President in charge of strategy, finance, M&A, technology, and a number of operating units at Liz Claiborne. He originally joined Liz Claiborne in 1998 as Chief Financial Officer. Mr. Zannino currently serves on the Boards of Directors of Pure Gym Ltd., Jamieson Laboratories, The Hillman Group, Inc., Badger Sportswear and Shoes for Crews, LLC, which are all privately held companies, and is a trustee of Pace University. Mr. Zannino also serves on the Boards of Directors of Estee Lauder Companies Inc. (NYSE: EL) and IAC/InterActiveCorp. (Nasdaq: IAC). Mr. Zannino was selected to serve on our Board due to his past leadership experience, strong finance and management background in the retail industry and his wide-ranging experience investing in and serving as a director for a diverse group of private and public companies.

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EXECUTIVE OFFICERS

Set forth below are biographical summaries of our executive officers as of the date of this proxy statement. See “Proposal 1—Election of Class III Directors” above for information about Mr. Butler, who serves as our Chairman, President and Chief Executive Officer.

Name
Age
Position(s)
John Swygert
49
Executive Vice President, Chief Operating Officer and Secretary
Jay Stasz
51
Senior Vice President and Chief Financial Officer
Omar Segura
56
Senior Vice President, Store Operations
Kevin McLain
53
Senior Vice President, General Merchandise Manager
Robert Bertram
49
Vice President, General Counsel

John Swygert has been our Executive Vice President and Chief Operating Officer since January 2018. Mr. Swygert joined Ollie’s in March 2004 as the Chief Financial Officer and was later promoted to Executive Vice President and Chief Financial Officer in 2011. Mr. Swygert has worked in discount retail as a finance professional for over 25 years. Prior to joining Ollie’s, Mr. Swygert was Executive Vice President and Chief Financial Officer at Factory 2-U Stores, Inc. He held several positons while at Factory 2-U Stores, Inc. from 1992, ranging from Staff Accountant, Assistant Controller, Controller, Director of Financial Planning and Analysis, Vice President of Finance and Planning and Executive Vice President & Chief Financial Officer. Mr. Swygert also previously worked for PETCO Animal Supplies, Inc. in Business Development and Financial Analysis.

Jay Stasz has been our Senior Vice President and Chief Financial Officer since January 2018. Mr. Stasz joined Ollie’s in November 2015 as Senior Vice President of Finance and Chief Accounting Officer. Mr. Stasz most recently served as Senior Vice President, Finance & Accounting for Sports Authority, a sporting goods retailer, a position he held since October 2013. Mr. Stasz has held numerous leadership roles at Sports Authority, including: Senior Vice President and Chief Information Officer, Senior Vice President and Controller, and Vice President Controller since 1998. Prior to joining Sports Authority, Mr. Stasz worked as a Senior Accountant in the audit department with Deloitte.

Omar Segura has been our Senior Vice President, Store Operations since January 2014. From April 2010 to January 2014, Mr. Segura was a Regional Vice President with Sears Holdings Corporation, where he oversaw store operations in the South Central region. Prior to his position with Sears, Mr. Segura held various positions with Kohl’s Department Stores during the period from June 2000 to April 2010, where his responsibilities included managing and leading store operations.

Kevin McLain has been our Senior Vice President, General Merchandise Manager since May 2014. From May 2011 to May 2014, Mr. McLain was a Senior Vice President with Variety Wholesalers, where he was responsible for merchandising matters. From January 1997 to May 2011, Mr. McLain held the position of Vice President, Merchandise Manager with Anna’s Linens, a textile and home goods retailer based in Costa Mesa, California. Prior to his position with Anna’s Linens, Mr. McLain served in various managerial roles for the Target Corporation.

Robert Bertram has been our Vice President and General Counsel since April 2014. Prior to joining Ollie’s, Mr. Bertram was a practicing attorney at McNees Wallace & Nurick LLC from June 2010 to April 2014, where he began serving as our Assistant Secretary in September 2012. From March 2001 to June 2010, he was a practicing corporate attorney at the law firm of Stevens & Lee.

Each of our executive officers serve at the discretion of our Board without specified terms of office.

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CORPORATE GOVERNANCE MATTERS

Director Independence

Pursuant to our Corporate Governance Guidelines and Principles, the Board is required to affirmatively determine whether our directors are independent under the Nasdaq corporate governance listing standards, the principal exchange on which our common stock is traded.

During its review of director independence, the Board considers all information it deems relevant, including without limitation, any transactions and relationships between each director or any member of his immediate family and the Company and its subsidiaries and affiliates. As a result of this review, the Board affirmatively determined that Messrs. Fisch, Fleishman, Hendrickson, White, and Zannino are independent directors under the applicable rules of Nasdaq.

Committees of the Board

Our Board has two standing committees: an Audit Committee and a Compensation Committee. Our Board has adopted charters for each of its standing committees. Copies of our committee charters are posted on our website at www.ollies.us.

Audit Committee

The current members of the Audit Committee are Messrs. Hendrickson, Fleishman and White. The Board has determined that Mr. Hendrickson is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K, and the Board is satisfied that all members of our Audit Committee have sufficient expertise and business and financial experience necessary to effectively perform their duties as members of the Audit Committee. Messrs. Hendrickson, Fleishman and White meet the definition of “independent director” for purposes of serving on our Audit Committee under applicable SEC and Nasdaq rules.

The Audit Committee, among other things (i) monitors and oversees our accounting and financial reporting processes, and the integrity of the corporate accounting and financial reporting processes and financial information, including financial statements; (ii) reviews our compliance with legal and regulatory requirements; (iii) oversees our processes relating to risk management; (iv) oversees our conduct and systems of internal control over financial reporting and disclosure controls and procedures; (e) oversees the annual audit of the Company’s financial statements; (v) evaluates the independent auditor’s qualifications, engagement, compensation and independence; and (vi) monitors the performance of the Company’s independent auditors as well as any other public accounting firm engaged to perform other audit, review, or attest services.

The Audit Committee met four (4) times during fiscal year 2017. The Audit Committee meets with our independent registered public accounting firm without management present on a regular basis.

Compensation Committee

The current members of the Compensation Committee are Messrs. Zannino and Fisch. All members of the Compensation Committee meet all applicable independence standards under Nasdaq corporate governance standards.

The Compensation Committee (i) reviews and approves appropriate compensation of our Chief Executive Officer and our other executive officers, (ii) oversees management succession planning, (iii) reviews and approves employment arrangements with our executive officers, (iv) administers equity and non-equity compensation plans and programs, (v) evaluates and recommends to the Board appropriate forms and amounts of director compensation, and (vi) prepares the annual report of the Compensation Committee. When required by applicable SEC rules, it will also recommend to the Board the frequency of the say-on-pay vote. The Compensation Committee also reviews and recommends to the Board the target annual incentive pool, the annual performance objectives for participants, and actual payouts to participants, including the executive officers. The Compensation Committee has sole decision-making authority with respect to all compensation recommendations for our executive officers, subject to further action of the Board as the Board shall determine.

To assist it in performing its duties, the Compensation Committee has the authority to engage outside consulting firms. Our Compensation Committee engaged Pearl Meyer & Partners LLC (“Pearl Meyer”), a consulting firm to advise on director or executive officer compensation in fiscal year 2017.

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The Compensation Committee met four (4) times in fiscal year 2017. Decisions regarding executive compensation were approved by our Board after taking into account the recommendations of the Compensation Committee and its members.

Director Nominations

As permitted by the Nasdaq rules, our director nominees are selected, or recommended to our Board for election by our independent directors. The directors who participate in the consideration and recommendation of director nominees are Messrs. Fisch, Fleishman, Hendrickson, White and Zannino. Our Board believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee. As there is no standing nominating committee, we do not have a nominating committee charter in place.

Our Board will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders). In general, in identifying and evaluating nominees for director, our Board considers whether the candidates possess the required skill sets and fulfill the qualification requirements of directors approved by the Board, including independence, sound judgment, business specialization, technical skills, diversity and other desired qualities.

Board Role in Risk Oversight

Our Board and management continually monitor the material risks facing our Company, including, but not limited to financial risk, strategic risk, operational risk, and legal and compliance risk. Management regularly reports to the Board on its activities in monitoring and mitigating such risks. Overall responsibility for risk oversight rests with our Board. In addition, the Board may delegate risk oversight responsibility to a particular committee in situations in which the risk falls within the committee’s area of focus or expertise. Our Board believes that for certain areas of risk, our Company is better served by having the initial risk evaluation and risk monitoring undertaken by a subset of the entire Board that is more focused on the issues pertaining to the particular risk. For instance, our Compensation Committee assists the Board in evaluating risks relating to our compensation policies and procedures. Also, our Audit Committee assists the Board in fulfilling the Board’s oversight responsibility relating to the evaluation of financial, regulatory and other enterprise level risks confronting the Company. As it deems necessary, the respective committee to which oversight and monitoring of a particular risk has been assigned reports on risk exposures and mitigation strategies with respect to such risk to the entire Board.

Compensation Risk Analysis

The Compensation Committee is aware that compensation arrangements, if not properly structured, may encourage inappropriate risk-taking and has conducted a formal review, in conjunction with Pearl Meyer, of all of its incentive programs for executives and employees. After conducting this review, the Committee has concluded that our compensation programs are not reasonably likely to incentivize employee behavior that would result in any material adverse effect on the Company.

Board Leadership Structure

Our Board understands there is no single, generally accepted approach to providing Board leadership and that given the dynamic and competitive environment in which we operate, the appropriate leadership may vary as circumstances warrant. Mr. Butler serves as our Chief Executive Officer and as the Chairman of our Board. Our Board believes it is in the Company’s best interests to have Mr. Butler serve as Chairman of our Board and as Chief Executive Officer. Our Board believes combining these roles promotes effective leadership and provides the clear focus needed to execute our business strategies and objectives.

Attendance at Meetings

It is our policy that each director must be prepared to devote the time required to prepare for and attend Board meetings, and fulfill their responsibilities effectively.

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In fiscal year 2017, the Board held four (4) meetings (including regularly scheduled and special meetings) and took action by unanimous written consent from time to time. All incumbent directors attended at least 75% of (i) the total number of meetings of the Board (held during the period for which he has been a director); and (ii) the total number of meetings held by all committees on which he served (during the periods that he served).

Executive Sessions

Executive sessions of our independent directors are held regularly.

Stockholder and Other Interested Party Communications with the Board

Stockholders and other parties interested in communicating directly with the Board as a group may do so by writing to the Board, c/o Ollie’s Bargain Outlet Holdings, Inc., 6295 Allentown Boulevard, Suite 1, Harrisburg, Pennsylvania 17112. The General Counsel will review all correspondence and regularly forward to the Board all such correspondence that, in the opinion of the General Counsel, deals with the functions of the Board or committees thereof or that the General Counsel otherwise determines requires Board attention. Concerns relating to accounting, internal controls or auditing matters will immediately be brought to the attention of the Chairman of the Audit Committee. We have adopted a Whistleblower Policy, which establishes procedures for submitting these types of concerns, either personally or anonymously through the submission of a written statement to the General Counsel or the Audit Committee.

Stockholders and other parties interested in communicating directly with Mr. Hendrickson, as Chairman of the Audit Committee, may do so by writing to Mr. Thomas Hendrickson, Chairman, Audit Committee, c/o Ollie’s Bargain Outlet Holdings, Inc., 6295 Allentown Boulevard, Suite 1, Harrisburg, Pennsylvania 17112.

Corporate Governance Guidelines and Principles

We have adopted Corporate Governance Guidelines and Principles. These guidelines outline the role of our Board, the composition and operating principles of our Board and its committees and our Board’s working process. Our Corporate Governance Guidelines and Principles are posted on our website at www.ollies.us.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than ten percent of the common stock of the Company, to file with the SEC reports of ownership of Company securities and changes in reported ownership. Officers, directors, and greater than ten percent stockholders, are required by SEC rules to furnish the Company with copies of all Section 16(a) reports they file. Based solely on a review of the copies of such forms furnished to the Company, or written representations from the reporting persons that no Form 5 was required, the Company believes that during fiscal year 2017 all Section 16(a) filing requirements applicable to its officers, directors, and greater than ten percent beneficial owners were complied with.

Compensation Committee Interlocks and Insider Participation

No member of our Compensation Committee is a current or former officer or employee of the Company or any of its subsidiaries. None of our executive officers serves as a member of the board of directors or compensation committee of any company that has one or more of its executive officers serving as a member of our Board or Compensation Committee.

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Equity Compensation Plan Information

The following table sets forth, as of February 3, 2018, certain information related to our equity compensation plans under which our common stock may be issued.

Plan Category
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding
options, warrants
and rights ($)
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
 
(a)
(b)
(c)
Equity compensation plans approved by security holders
 
4,665,733
(1) 
$
11.65
(2) 
 
3,785,897
(3) 
Equity compensation plans not approved by security holders
 
 
 
 
 
 
Total
 
4,665,733
 
$
11.65
 
 
3,785,897
 
(1) Includes 3,172,192 outstanding options granted pursuant to our 2012 Equity Incentive Plan (the “2012 Plan”) and 1,493,541 outstanding options and 207,346 non-vested RSUs granted pursuant to our 2015 Equity Incentive Plan (the “2015 Plan” and together with the 2012 Plan, the “Equity Plans”). See Note 8 to our audited financial statements for fiscal year 2017 included in our Annual Report on Form 10-K for additional information regarding our Equity Plans.
(2) Represents the weighted average price of outstanding stock options and does not take into account RSUs granted under the 2015 Plan.
(3) All shares of common stock reserved for future issuance are reserved for issuance under the 2015 Plan.

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COMPENSATION OF DIRECTORS

During fiscal year 2017, following a review of a compensation study performed by Pearl Meyer, the Compensation Committee recommended, and the Board approved, an increase to the annual compensation for Board, and Committee members. The increases, once effective, place the Board and Committee members’ compensation at the median level for the peer group identified by Pearl Meyer (additional information on the peer group identified by Pearl Meyer is set out below). At the August 2017 Board meeting, the annual cash retainers for Board members increased by $10,000 per year from $50,000 to $60,000, and the value of the annual equity award increased by $10,000 from $75,000 to $85,000, provided that no additional equity grant was made at that time. The equity award increase became effective during fiscal year 2018. Committee Chair and Committee member retainers also were increased: the Audit Committee Chair received a $10,000 increase to $20,000 per year, and the Compensation Committee Chair increased $5,000 to $15,000 per year. Committee member retainers, previously zero, were established at $10,000 per year for Audit Committee members and $7,500 per year for Compensation Committee members. Cash compensation is paid in quarterly installments to those eligible to receive it. We also reimburse each of our directors for direct travel expenses incurred in connection with attendance at meetings of the Board and its committees.

During fiscal year 2017, each non-employee and non-CCMP investment professional also was awarded the equivalent of $75,000 on an annual basis in equity compensation under the terms of our 2015 Plan. As described above, the award will increase to $85,000 per year, effective with grant made in March 2018.

The Chair of the Compensation Committee, Mr. Zannino, is a CCMP investment professional, and as such did not receive director fees, Committee member retainer fees, or equity during fiscal year 2017 for his services to the Board.

With the assistance of Pearl Meyer, our non-employee director compensation, after the changes described above, was benchmarked against the National Association of Corporate Directors Survey, which revealed that both the level and form of non-employee director compensation was reasonable and at the median of general industry companies with revenues of between $650 million to $1.3 billion..

Director Compensation for Fiscal Year 2017

The following table sets forth the information concerning all compensation paid by the Company during fiscal year 2017 to our non-employee directors.

Name
Fees earned
or paid in
cash
Stock
awards(2)
Total
Richard Zannino(1)
$
 
$
 
$
 
Robert Fisch
 
58,750
 
 
75,000
 
 
133,750
 
Stanley Fleishman
 
42,500
 
 
75,000
 
 
117,500
 
Thomas Hendrickson
 
70,000
 
 
75,000
 
 
145,000
 
Stephen White
 
60,000
 
 
75,000
 
 
135,000
 
(1) Mr. Zannino is a full-time investment professionals of CCMP and did not receive any compensation for his services as members of our Board in fiscal year 2017.
(2) Represents the aggregate grant date fair value for stock awards granted in 2017, determined in accordance with ASC 718.

As of February 3, 2018, Mr. Fisch held 6,250 options and 4,798 RSUs, Messrs. Fleishman and Hendrickson each held 40,750 options and 4,798 RSUs and Mr. White held 3,888 RSUs granted in connection with their Board services.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mark L. Butler our President and Chief Executive Officer (the “CEO”).

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We determined that of all our employees who were employed as of February 2, 2018, the 2017 annual total compensation of the median compensated employee, other than our CEO, Mark L. Butler, was $12,821; Mr. Butler’s 2017 annual total compensation was $3,779,102; and the ratio of these amounts was 295-to-1.

To identify the median compensated employee, we used total cash compensation, including base salary (and overtime and allowances as applicable) for fiscal year 2017, with salaries annualized for those permanent employees who did not work for the full year. Reasonable estimates of cash compensation were made for those employees who were hired during 2017 using current base salary and any overtime or allowances paid during 2017.

This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above.

The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

PROPOSAL 2—NON-BINDING ADVISORY VOTE TO
APPROVE NAMED EXECUTIVE OFFCIER COMPENSATION

Ollie’s seeks a non-binding advisory vote from its shareowners to approve the compensation of its Named Executive Officers (the “Named Executive Officers” or “NEOs”) as described in the Compensation Discussion and Analysis section beginning below. This vote is commonly known as “Say-on-Pay,” and the Compensation Committee of the Board has adopted a policy of providing for an annual Say-on-Pay vote.

We encourage you to read the Compensation Discussion and Analysis and Compensation Table sections to learn more about our executive compensation programs and policies. The Board believes that its 2017 compensation decisions and our executive compensation programs align the interests of the shareowners and executives while emphasizing variable, at-risk compensation largely tied to company performance goals and balancing both long and near term objectives.

This vote is not intended to address a specific item of compensation, but rather our overall compensation policies and procedures related to the Named Executive Officers. While this “Say-on-Pay” vote is advisory in nature, it will not be binding on Ollie’s or the Board. However, our Board will carefully consider the outcome of this vote and the discussions with investors when making future executive compensation arrangements. We will disclose how many stockholders voted “For” or “Against” the following resolution and how many stockholders abstained from voting.

The Board recommends that shareholders vote in favor of the following resolution:

Resolved, that Ollie’s stockholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in Ollie’s proxy statement for the 2018 Annual Meeting of Stockholders pursuant to the executive compensation disclosure rules of the United States Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2017 Summary Compensation Table and the other related tables and disclosure.”

Your Board unanimously recommends a vote “FOR” this proposal.

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COMPENSATION DISCUSSION AND ANALYSIS

Introduction

The Compensation Committee is committed to providing a compensation program for our executives that is aligned with the strategic direction of our business and rewards executives for creating value for our shareholders. This compensation discussion and analysis (“CD&A”) provides an overview of our executive compensation program and how the compensation provided to our NEOs, who are our Chief Executive Officer, our Chief Financial Officer, and our three other most highly compensated executive officers was determined in 2017.

Our NEOs for fiscal year 2017 are as follows:

Name
Position
Mark Butler
President and Chief Executive Officer
Jay Stasz
Senior Vice President and Chief Financial Officer
John Swygert
Executive Vice President, Chief Operating Officer and Secretary
Omar Segura
Senior Vice President, Store Operations
Kevin McLain
Senior Vice President, General Merchandise Manager

Executive Summary

In fiscal year 2017, we compensated our NEOs through a combination of base salary and annual cash bonuses as well as grants of stock options and RSUs pursuant to our Equity Plans. Our executive officers are also eligible to receive certain benefits, which include a 401(k) plan with matching contributions, life insurance, automobile allowances, group term life insurance and group health insurance, including medical, dental and vision insurance.

Fiscal Year 2017 Performance Highlights

We reported a 21.0% increase in net sales and a 3.3% increase in comparable store sales (on a 52-week basis);
We grew our store base 14.5% and ended the year with 268 stores in 20 states; and
Net income increased 113.5% to $127.6 million and net income per diluted share increased 104.2% to $1.96.

Fiscal Year 2017 Compensation Highlights

Our compensation program for the NEOs is driven by the need to recruit, develop, motivate and retain top talent both in the short- and long-term and align the interests of NEOs and shareholders.

Base Salaries: Our NEOs, Messrs. Butler, Stasz, Swygert, Segura and McLain, received base salary increases in fiscal year 2017. Mr. Butler received an 8.3% increase ($600,000 to $650,000) in March 2017 and another increase of 9.7% ($650,000 to $713,000) in December 2017. Mr. Stasz received a 4.0% increase ($250,000 to $260,000) in March 2017 and another increase of 15.4% in January 2018 ($260,000 to $300,000) in conjunction with his promotion to Chief Financial Officer. Mr. Swygert received a 7.5% increase in March 2017 ($400,000 to $430,000) and another increase of 16.0% ($430,000 to $500,000) in conjunction with his promotion to Chief Operating Officer in January 2018. In March 2017, Mr. Segura received a 3.5% increase ($290,000 to $300,000) and Mr. McLain received a 2.4% increase ($234,500 to $240,000).

Annual Incentive

For participants in the annual incentive bonus plan (the “Incentive Bonus Plan”), the bonus is based on the salary of the individual, and a sliding scale that is consistent with their position with the Company, or set out in their Employment Agreement. Our Incentive Bonus Plan is based on the level of Company performance against a target that is approved by the Board on an annual basis, and which is based on Adjusted EBITDA (the “Target Adjusted EBITDA”). In the event that the Company does not exceed a threshold of 85% of the Target Adjusted EBITDA, no bonus will be paid. The maximum bonus is payable upon achievement of at least 115% of Target Adjusted EBITDA. Between 85% and 115% of target, payouts are calculated based on linear interpolation

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between such amounts. For fiscal year 2017, Adjusted EBITDA of $155.4 million was approximately 8% above the Target Adjusted EBITDA of $144.2 million. For a discussion of how the Company calculates Target Adjusted EBITDA for the fiscal year 2017 Incentive Bonus Plan, see “Elements of Our Executive Compensation and Benefits Programs–Annual Incentive Compensation,” below.

Long-Term Incentive

Beginning in fiscal year 2016, long-term equity awards were made in the form of both stock options and RSUs. We continued this practice in 2017. Under the 2015 Plan, the stock options vest ratably over four years. Vesting of RSUs differs by individual based on their length of service with the Company. Employees with less than 10 years of service were awarded RSUs that cliff vest after four years (“Non-Tenured Employee RSU Vesting”). Employees with 10 years or more years of service were awarded RSUs that vest ratably over four years (“Tenured Employee RSU Vesting”). As an employee gains tenure, they will become eligible for the Tenured Employee RSU Vesting.

Compensation Practices

Despite having only been public since July 2015, we immediately sought to adhere to key governance practices that reflect our compensation philosophy and support long-term company success while helping to mitigate compensation risks.

What we do
What we don’t do
Majority of compensation incentive-based and at risk tied to company performance
X
No guaranteed incentive payments
Engage independent compensation consultants
X
No 280G excise tax gross-ups
Engage in peer group benchmarking
X
No pension or retirement plans
Due diligence in setting compensation targets and goals
X
No option repricing
Periodically assess the compensation programs to ensure that they are not reasonably likely to incentivize employee behavior that would result in any material adverse risks to the company
X
Perquisites are not a substantial portion of our NEO pay packages
Provide reasonable severance protection in our employment agreements with double trigger protections upon a change in control
X
No hedging or pledging of company stock
Clawbacks of equity compensation in the event of a restatement
X
No single trigger change in control arrangement
Stock ownership guidelines implemented in 2017
 
 

Role of the Compensation Committee, Management and Consultant

Compensation Committee

Our Board has delegated administration of our executive compensation program to the Compensation Committee, which among other things reviews the performance of our NEOs and makes determinations and decisions on their compensation programs, including the components, mix and targeted amounts. As described in more detail under “Compensation Committee,” the compensation committee operates under a written charter, which lays out its roles and responsibilities regarding executive compensation. Since the date of our IPO, all members of the Compensation Committee have met all applicable independence standards under Nasdaq corporate governance standards.

Management

The CEO provides input as to the other NEOs’ performance and recommends compensation adjustments for executives other than himself. Ultimately, all decisions with respect to NEO compensation are made by the Compensation Committee.

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Compensation Consultant

To assist it in performing its duties, the Compensation Committee has the authority to engage outside consulting firms. Our Compensation Committee has engaged Pearl Meyer, a consulting firm, to advise on director or executive officer compensation since we began preparing for our IPO in early 2015. In fiscal year 2017, Pearl Meyer provided assistance to the Compensation Committee with respect to director and executive compensation matters.

The Compensation Committee has examined the independence of Pearl Meyer under factors contained in the Nasdaq listing standards and determined that Pearl Meyer is independent and concluded that its work for us does not raise any conflict of interest.

Compensation Philosophy

Our executive compensation programs are designed to accomplish the following principles:

align with and support the strategic direction of our business;
to link pay with overall company performance and reward executives for behaviors which drive shareholder value creation; and
to be financially efficient and affordable.

We have reviewed the competitiveness of compensation provided to our NEOs, and do not target a specific market level for the competitiveness of any individual element of compensation or for the program as a whole. However, we consider target compensation at levels that are competitive with other retail comparators.

Pay Mix

Our pay mix is driven by our compensation philosophy as well as each NEO’s role and strategic value to the organization. A significant amount of each NEO’s compensation is at risk, with particular focus on long-term equity incentives (options and RSUs) that align the interests of our executives with those of our shareholders.

Peer Group

Pearl Meyer completed a study in 2017 to evaluate the current peer group against the company’s current revenue and market cap to determine if any changes were needed to the peer group. The Compensation Committee, in conjunction with Pearl Meyer, determined a new peer group of 17 companies that more closely match the revenue and market cap of the company. The peer group appropriately reflects Ollie’s unique market cap to revenue size ratio, high growth profile and business characteristics.

Aaron’s
Lumber Liquidators Holdings, Inc.
At Home Group, Inc.
The Michaels Companies, Inc.
Big Lots, Inc.
Oxford Industries, Inc.
Boot Barn Holdings, Inc.
Party City Holdco Inc.
Conn’s, Inc.
Perry Ellis International Inc.
Five Below, Inc.
RH
Floor & Décor Holdings, Inc.
Sleep Number Corporation
Fred’s, Inc.
Tuesday Morning Corporation
Kirkland’s Inc.
 

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Elements of Our Executive Compensation and Benefits Programs

Base Salary

The Compensation Committee considers what salaries must be paid in order to attract and retain high-quality executives. We annually review our executives’ base salaries and make adjustments only when necessary based on individual and Company performance.

We provide a minimum, fixed level of cash compensation to reflect the level of accountability of talented executives who can continue to improve the Company’s overall performance. In addition, salary is based on experience, industry knowledge, duties and scope of responsibility as well as the competitive market for talent.

Mr. Butler received an 8.3% base salary increase in March 2017 and another increase of 9.7% in December 2017. Mr. Stasz received a 4.0% increase in March 2017 and another increase of 15.4% in January 2018. Mr. Swygert received a 7.5% increase in March 2017, and another increase of 16.0% January 2018. During 2017, base salaries were increased by roughly 2.4% for Mr. Segura and 3.5% for Mr. McLain.

Annual Incentive Compensation

In March 2017, the Compensation Committee approved the performance targets and potential bonus payouts for our NEOs for the 2017 fiscal year under our Incentive Bonus Plan. The Committee determined that, consistent with prior years, a main business objective was to continue increasing our Adjusted EBITDA, which was used as the basis for the Incentive Bonus Plan for our NEOs.

To calculate payouts under the Incentive Bonus Plan, the Company’s Adjusted EBITDA is assessed relative to the relevant performance targets (see targets for the 2017 fiscal year provided below). Bonus payouts range from 0% of the NEO’s base salary if threshold performance (85% of the Adjusted EBITDA) is not achieved to 200% of the NEO’s base salary if maximum performance (115% of the Adjusted EBITDA) is achieved. Additionally, the level of performance required to achieve maximum payout under the Incentive Bonus Plan was determined by the Compensation Committee to be reflective of truly outstanding performance.

We define EBITDA as net income before net interest expense, loss on extinguishment of debt, depreciation and amortization expenses and income taxes. Adjusted EBITDA represents EBITDA as further adjusted for non-cash stock based compensation expense, non-cash purchase accounting items, transaction related expenses and debt financing expenses, which we do not consider representative of our ongoing operating performance. EBITDA and Adjusted EBITDA are non-GAAP measures and may not be comparable to similar measures reported by other companies. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – EBITDA and Adjusted EBITDA” on page 30 of our Annual Report on Form 10-K, filed with the SEC on April 4, 2018.

The Adjusted EBITDA targets and potential payouts under the Incentive Bonus Plan for the 2017 fiscal year for each NEO, as well as performance achieved, were as follows based on $155.4 million or approximately 108% of the Target Adjusted EBITDA ($144.2million)):

Executive
Target
Payout
(% of Base)
Maximum
Payout
(% of Base)
Resulting
Payout
Mark Butler
 
100
%
 
200
%
$
989,354
 
Jay Stasz
 
50
%
 
80
%(1)
$
170,331
 
John Swygert
 
75
%
 
150
%
$
487,865
 
Omar Segura
 
50
%
 
80
%
$
196,731
 
Kevin McLain
 
50
%
 
80
%
$
157,702
 
(1) Mr. Stasz’s maximum payout was increased to 100% of his base annual salary under the terms of the 2018 Stasz Amendment, but is not effective until fiscal year 2018. For more information on the 2018 Stasz Amendment, see Employment Agreements – Jay Stasz, later in this Proxy Statement.

Long-Term Equity Incentive Compensation

Equity awards under the Company’s 2015 Plan, are a vital piece of our total compensation package. They are intended to compensate NEOs for sustained long-term performance, align the interests of our NEOs and shareholders and encourage retention through multi-year vesting schedules. Long-term equity incentive awards

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may take a variety of forms, including the RSUs and stock option grants made in fiscal year 2017. Levels, mix and frequency of awards are determined by the Committee, and are designed to reflect each recipient’s level of responsibility and performance.

Fiscal Year 2017 Grants

Our long-term equity incentive program for fiscal year 2017 was designed to generally deliver 50% of long-term equity value in RSUs and 50% in stock options for our NEOs. We believe awarding a significant percentage of pay in the form of long-term equity fosters strong alignment between executive and shareholder interests.

Grant values were determined in accordance with our philosophy of providing competitive total compensation level, with a heavier emphasis on variable long-term pay.

Restricted Stock Units

RSUs directly align NEOs’ and shareholders’ interests over a longer-term period and are a very important retention component of our compensation program. RSUs vest over four years, or cliff vest on the fourth anniversary of date of grant for those employees with fewer than ten years of service. See also “Fiscal Year 2017 Compensation Highlights, Long Term Incentive,” above.

Stock Options

Stock options have traditionally been granted as a component of our long-term incentive program and continue to be a valuable vehicle designed to align NEOs’ and shareholders’ interests over a longer-term period. Stock options are granted at no less than fair market value and only have value to the extent of that our stock price increases. Stock options vest ratably over a four year period.

Retirement, Health and Welfare Benefits and Other Perquisites

The majority of our compensation is in the form of base salary, Incentive Bonus Plan and long-term incentives with minimal perquisites provided. Our NEOs are entitled to participate in all of our employee benefit plans, including medical, dental, vision, group life and disability insurance, and our 401(k) Retirement Savings Plan. We provide vacation and paid holidays to our NEOs. Generally, our NEOs participate in these plans and programs on the same or similar basis as are offered to our other senior employees. As part of a legacy agreement, the Company previously agreed to gross-up Mr. Butler’s life insurance policy. This provision was discontinued in December 2017. It was never applied to any other NEOs.

Recoupment Policy

Pursuant to our 2015 Plan, any cash or equity based awards based on financial statements that are subsequently required to be restated may be recouped to the extent that the restated incentive payments would be decreased. This policy is intended to comply with any compensation recovery, “clawback” or similar policy made applicable by law including the provisions of Section 945 of the Dodd-Frank Act as applicable.

Hedging and Pledging Policy

Our Policy on Insider Trading contains explicit prohibitions for all employees on hedging or pledging of any of our company stock.

Stock Holding Requirements

Beginning in March 2017, our Board has adopted ownership guidelines, which were amended in March 2018:

Executive Level
Multiple of Salary Requirement
CEO
5x Salary
COO(1)
3x Salary
CFO
2x Salary
Other Executives
2x Salary
(1) March 2018 Amendment.

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For purposes of meeting this policy, ownership includes:

Actual stock owned;
Vested in-the-money stock options net of an assumed 40% tax rate;
Vested Restricted Stock;
Outside purchases or holdings of Company stock; and
Shares beneficially owned by the family members of Covered Executive

Executives covered by the policy have five (5) years to meet the guidelines established by it. However, during the period that a person covered by the policy has not met the standards set by the policy covered executes are encouraged to hold 50% of the shares unrealized from vesting or exercise of shares or stock options on a post-tax, net share basis In addition to the established guidelines, other guidelines regarding the length of time an Executive has to attain the guideline along with the respective holding requirements are established within the Policy.

The Compensation Committee will assess progress toward meeting ownership expectations on an annual basis, measured on the last day of the fiscal year. Management will communicate with the Committee the covered person’s progress toward increasing their ownership position. As of the date of the initial measurement, which occurred on February 3, 2018, each covered executive had either met the requirement, or was deemed to be on track to meet the requirements of the policy.

Impact of Accounting and Tax Matters

As a general matter, the Compensation Committee reviews and considers the various tax and accounting implications of compensation vehicles that we utilize. With respect to accounting matters, the Committee examines the accounting cost associated with equity compensation in light of ASC Topic 718.

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SUMMARY COMPENSATION TABLE

The following table sets forth certain information for fiscal years 2017, 2016 and 2015 concerning the total compensation awarded to, earned by or paid to our NEOs.

Name and principal position
Year
Salary
Non-equity
incentive plan
compensation(1)
Stock
awards(2)
Option
awards(2)
All other
compensation(3)
Total
Mark Butler
 
2017
 
$
645,231
 
$
989,354
 
$
1,032,493
 
$
1,032,504
 
$
79,520
 
$
3,779,102
 
President and Chief Executive Officer
 
2016
 
$
600,000
 
$
1,030,000
 
$
952,504
 
$
952,502
 
$
78,045
 
$
3,613,051
 
 
 
2015
 
$
570,952
 
$
951,586
 
$
 
$
896,938
 
$
85,587
 
$
2,505,063
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jay Stasz
 
2017
 
$
259,615
 
$
170,331
 
$
154,976
 
$
155,003
 
$
14,752
 
$
754,677
 
Senior Vice President, Chief Financial Officer
 
2016
 
$
250,000
 
$
178,750
 
$
137,505
 
$
137,500
 
$
13,738
 
$
717,493
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
John Swygert
 
2017
 
$
426,923
 
$
487,865
 
$
428,759
 
$
428,743
 
$
14,594
 
$
1,786,884
 
Executive Vice President, Chief Operating Officer and Secretary
 
2016
 
$
400,000
 
$
515,000
 
$
352,504
 
$
352,500
 
$
14,617
 
$
1,634,621
 
 
2015
 
$
387,740
 
$
484,676
 
$
 
$
1,380,738
 
$
18,555
 
$
2,271,709
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Omar Segura
 
2017
 
$
298,077
 
$
196,731
 
$
149,988
 
$
150,005
 
$
5,856
 
$
800,656
 
Senior Vice President of Store Operations
 
2016
 
$
289,038
 
$
206,663
 
$
150,005
 
$
150,000
 
$
4,593
 
$
800,299
 
 
 
2015
 
$
283,462
 
$
198,423
 
$
 
$
403,450
 
$
3,807
 
$
889,142
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kevin McLain
 
2017
 
$
238,942
 
$
157,702
 
$
120,009
 
$
120,004
 
$
12,461
 
$
649,118
 
Senior Vice President of Merchandising
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represents amounts paid pursuant to the achievement of Adjusted EBITDA at 108% of the fiscal year 2017 Target Adjusted EBITDA. See “Annual Incentive Compensation,” above.
(2) Represents the aggregate grant date fair value of the RSUs, and option awards, computed in accordance with FASB ASC Topic 718. These values have been determined based on the assumptions set forth in Note 8 to our audited consolidated financial statements for the year ended February 3, 2018 included in our Annual Report on Form 10-K for the year ended February 3, 2018. The actual value, if any that may be realized will depend on the excess of the stock price over the exercise price on the date any such options are exercised.
(3) All other compensation consists of automobile allowances, group term life insurance, 401(k) matching and contributions, relocation and related travel expenses, and medical, vision and dental insurance as set forth in the table below:
 
Year
Automobile
allowance
Group term
life
insurance
Life
insurance
gross-up
401(k)
matching and
contributions
Relocation
and related
travel
expenses
Medical,
dental and
vision
insurance
Total
Mark Butler
 
2017
 
$
13,343
 
$
1,880
 
$
63,178
 
$
1,119
 
$
 
$
 
$
79,520
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jay Stasz
 
2017
 
$
12,000
 
$
966
 
$
 
$
1,786
 
$
 
$
 
$
14,752
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
John Swygert
 
2017
 
$
12,000
 
$
630
 
$
 
$
1,964
 
$
 
$
 
$
14,594
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Omar Segura
 
2017
 
$
781
 
$
1,806
 
$
 
$
3,269
 
$
 
$
 
$
5,856
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kevin McLain
 
2017
 
$
10,000
 
$
966
 
$
 
$
1,495
 
$
 
$
 
$
12,461
 

20

TABLE OF CONTENTS

Fiscal Year 2017 Grants of Plan Based Awards

During fiscal year 2017 our NEOs were awarded the following under the 2015 Plan:

 
 
Estimated future payouts under
non-equity incentive plans(1)
All other
stock
awards:
Number of
shares of
stock or
units(2)
All other
option
awards:
Number of
securities
underlying
options(3)
Exercise or
base price of
option
awards
Grant date
fair value of
stock and
option
awards(4)
Name
Grant date
Threshold
Target
Maximum
Mark Butler
 
3/22/2017
 
$
 
$
713,000
 
$
1,426,000
 
 
32,065
 
 
97,775
 
$
32.20
 
$
2,064,997
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jay Stasz
 
3/22/2017
 
$
 
$
150,000
 
$
240,000
 
 
4,037
 
 
12,311
 
$
32.20
 
$
259,996
 
 
 
1/5/2018
 
 
 
 
 
 
 
 
 
 
 
467
 
 
1,516
 
$
53.50
 
$
49,983
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
John Swygert
 
3/22/2017
 
$
 
$
375,000
 
$
750,000
 
 
11,762
 
 
35,866
 
$
32.20
 
$
757,481
 
 
 
1/5/2018
 
 
 
 
 
 
 
 
 
 
 
935
 
 
3,032
 
$
53.50
 
$
100,020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Omar Segura
 
3/22/2017
 
$
 
$
150,000
 
$
240,000
 
 
4,658
 
 
14,205
 
$
32.20
 
$
299,992
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kevin McLain
 
3/22/2017
 
$
 
$
120,000
 
$
192,000
 
 
3,727
 
 
11,364
 
$
32.20
 
$
240,013
 
(1) The amounts reflect the threshold, target and maximum under the 2017 Incentive Bonus Plan. See “Annual Incentive Compensation” above. The actual amount paid under the 2017 Incentive Bonus Plan is reflected in the Summary Compensation Table under “Non-Equity Incentive plan Compensation.”
(2) Represents RSUs granted to our NEOs in 2017. Messrs. Butler, Swygert, and Friedman qualify for Tenured Employee RSU Vesting. Messrs. Segura and Stasz qualify for Non-Tenured Employee RSU Vesting.
(3) Represents stock options granted to our NEOs in 2017. These options will vest ratably at a rate of twenty-five percent (25%) per year on each annual anniversary date of the grant until fully vested. Any unvested options are forfeited upon any termination of employment or death.
(4) Amounts represent the fair value of the awards calculated on the grant date in accordance with ASC 718.

21

TABLE OF CONTENTS

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information about outstanding equity awards held by our NEOs as of February 3, 2018.

 
Option Awards
Stock Awards
Name
Option
grant
date
Number of
Securities
underlying
unexercised
options
(Exercisable)
Number of
securities
underlying
unexercised
options
(Unexercisable)
Option
exercise
price
Option
expiration
date
Number of
Shares or
Units of
Stock that
have not
vested
Market
value of
shares or
units of
stock that
have not
vested
Mark Butler
 
9/28/2012(1
)
 
1,533,450
 
 
 
$
6.48
(3) 
 
9/28/2022
 
 
 
 
 
 
 
 
7/15/2015(2
)
 
79,375
 
 
79,375
 
$
16.00
 
 
7/15/2025
 
 
 
 
 
 
 
 
3/7/2016(2
)
 
36,976
 
 
110,928
 
$
20.26
 
 
3/7/2026
 
 
35,261(5
)
$
1,895,279(7
)
 
3/22/2017(2
)
 
 
 
97,775
 
$
32.20
 
 
3/22/2027
 
 
32,065(5
)
$
1,723,494(7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jay Stasz
 
11/18/2015(2
)
 
 
 
25,000
 
$
17.26
 
 
11/18/2025
 
 
 
 
 
 
 
 
3/7/2016(2
)
 
5,337
 
 
16,014
 
$
20.26
 
 
3/7/2026
 
 
6,787(6
)
$
364,801(7
)
 
3/22/2017(2
)
 
 
 
12,311
 
$
32.20
 
 
3/22/2027
 
 
4,037(6
)
$
216,989(7
)
 
1/5/2018(2
)
 
 
 
1,516
 
$
53.50
 
 
1/5/2028
 
 
467(6
)
$
25,101(7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
John Swygert
 
9/28/2012(1
)
 
78,000
 
 
 
$
6.48
(3) 
 
9/28/2022
 
 
 
 
 
 
 
 
3/11/2014(1
)
 
 
 
46,000
 
$
6.48
(3) 
 
3/11/2024
 
 
 
 
 
 
 
 
3/10/2015(1
)
 
2,000
 
 
138,000
 
$
11.54
(4) 
 
3/10/2025
 
 
 
 
 
 
 
 
7/15/2015(2
)
 
29,375
 
 
29,375
 
$
16.00
 
 
7/15/2025
 
 
 
 
 
 
 
 
3/7/2016(2
)
 
13,684
 
 
41,052
 
$
20.26
 
 
3/7/2026
 
 
13,050(5
)
$
701,438(7
)
 
3/22/2017(2
)
 
 
 
35,866
 
$
32.20
 
 
3/22/2027
 
 
11,762(5
)
$
632,208(7
)
 
1/5/2018(2
)
 
 
 
3,032
 
$
53.50
 
 
1/5/2028
 
 
935(5
)
$
50,256(7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Omar Segura
 
3/11/2014(1
)
 
20,000
 
 
92,000
 
$
6.48
(3) 
 
3/11/2024
 
 
 
 
 
 
 
 
3/10/2015(1
)
 
 
 
34,500
 
$
11.54
(4) 
 
3/10/2025
 
 
 
 
 
 
 
 
7/15/2015(2
)
 
6,677
 
 
12,500
 
$
16.00
 
 
7/15/2025
 
 
 
 
 
 
 
 
3/7/2016(2
)
 
5,823
 
 
17,469
 
$
20.26
 
 
3/7/2026
 
 
7,404(6
)
$
397,965(7
)
 
3/22/2017(2
)
 
 
 
14,205
 
$
32.20
 
 
3/22/2027
 
 
4,658(6
)
$
250,368(7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kevin McLain
 
6/10/2014(1
)
 
68,000
 
 
92,000
 
$
8.03
(8) 
 
6/10/2024
 
 
 
 
 
 
 
 
3/10/2015(1
)
 
11,500
 
 
17,250
 
$
11.54
(4) 
 
3/10/2025
 
 
 
 
 
 
 
 
7/15/2015(2
)
 
8,750
 
 
8,750
 
$
16.00
 
 
7/15/2025
 
 
 
 
 
 
 
 
3/7/2016(2
)
 
4,076
 
 
12,228
 
$
20.26
 
 
3/7/2026
 
 
5,183(5
)
$
278,586(7
)
 
3/22/2017(2
)
 
 
 
11,364
 
$
32.20
 
 
3/22/2027
 
 
3,727(5
)
$
200,326(7
)
(1) Options awarded under the 2012 Plan which vest ratably over five years from the grant date and which immediately vest in full upon the occurrence of a change of control.
(2) Options awarded under the 2015 Plan which vest ratably over four years from the grant date. Unvested options will fully vest and become exercisable upon a termination of employment without cause or a resignation for good reason upon or within twelve months following the occurrence of a change of control.
(3) Represents the per share exercise price underlying the option grant, as reduced from the original grant date exercise price of $8.70 per share in connection with our payment of a cash dividend to our shareholders in April 2014 and in May 2015.
(4) Represents the per share exercise price underlying the option grant, as reduced from the original grant date exercise price of $12.56 per share in connection with our payment of a cash dividend to our shareholders in May 2015.
(5) RSUs awarded under the 2015 Plan vest and become exercisable in 25% installments on each anniversary date of the grant and subject to continued service through each applicable vesting date.
(6) RSUs awarded under the 2015 Plan vest in their entirety four years from the date of grant and subject to continued service through the vesting date.
(7) Calculated based on $53.75, the closing price of the Company’s common stock on the last day of our fiscal year.

22

TABLE OF CONTENTS

Options Exercised and Stock Vested

The following table sets forth all option exercises and restricted stock units vested for each of our NEOs during fiscal year 2017.

 
Option Awards
Stock Awards
Name
Number of
shares
acquired on
exercise
Value
realized
upon
exercise
Number of
shares
acquired on
vesting
Value
realized on
vesting
Mark Butler
 
 
$
 
 
11,753
 
$
364,931
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jay Stasz(1)
 
22,500
 
$
702,151
 
 
 
$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
John Swygert
 
176,000
 
$
5,966,361
 
 
4,349
 
$
135,036
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Omar Segura
 
43,323