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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

Filed by the Registrant ☒

 

Filed by a Party other than the Registrant ☐

 

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

 

FOOT LOCKER, INC.

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

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TABLE OF CONTENTS

 

   

 

DEFINED TERMS ii
   
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS iii
   
NOTICE OF ANNUAL MEETING 1
   
MESSAGE FROM OUR CEO 3
   
MESSAGE FROM OUR NON-EXECUTIVE CHAIR 5
   
ABOUT FOOT LOCKER, INC. 7
   
VOTING ROADMAP 8
   
PROPOSAL 1: ELECTION OF DIRECTORS 12
   
Director Nominees 12
   
Director Qualifications 12
   
Director Nominees at a Glance 13
   
Director Nominees’ Skillset Matrix 21
   
GOVERNANCE 23
   
Our Board of Directors 23
   
Our Board’s Oversight of Our Business 32
   
Shareholder Engagement 36
   
Communications with Our Board 37
   
Committees 38
   
Directors and Officers Indemnification and Insurance 40
   
DIRECTOR COMPENSATION 41
   
Key Principles of Director Compensation Program 41
   
Components of Director Compensation Program 42
   
Fiscal 2023 Director Compensation 43
   
PROPOSAL 2: ADVISORY VOTE TO APPROVE 45
NEO COMPENSATION  
   
EXECUTIVE COMPENSATION 46
   
Compensation Discussion and Analysis 46
   
HCC Committee Report 64
   
HCC Committee Interlocks and Insider Participation 64
Summary Compensation Table 65
   
Employment Agreements and Offer Letters 67
   
Grants of Plan-Based Awards in Fiscal 2023 68
   
Outstanding Equity Awards at Fiscal 2023 Year-End 71
   
Option Exercises and Stock Vested in Fiscal 2023 74
   
Pension Benefits in Fiscal 2023 74
   
Defined Benefit Retirement Plans 75
   
401(k) Plan 75
   
Non-Qualified Deferred Compensation in Fiscal 2023 76
   
Potential Payments Upon Termination or Change in Control 77
   
CEO Pay Ratio 79
   
PAY VERSUS PERFORMANCE 80
   
EQUITY COMPENSATION PLAN INFORMATION 83
   
PROPOSAL 3: RATIFICATION OF APPOINTMENT 84
OF OUR INDEPENDENT REGISTERED  
PUBLIC ACCOUNTING FIRM  
   
Audit and Non-Audit Fees 85
   
Audit Committee Preapproval Policies and Procedures 85
   
Audit Committee Report 86
   
SHAREHOLDER OWNERSHIP 87
   
Directors and Executive Officers 87
   
Principal Shareholders 88
   
ADDITIONAL INFORMATION 89
   
FREQUENTLY ASKED QUESTIONS 90
   
HELPFUL RESOURCES 92
   
APPENDIX A (GAAP TO NON-GAAP RECONCILIATION) 93

 

   

 

 

 

2024 PROXY STATEMENT
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DEFINED TERMS

 

 

 

1165(e) Plan   Foot Locker Puerto Rico 1165(e) Plan, as amended and restated
401(k) Plan   Foot Locker 401(k) Plan, as amended and restated
Annual Incentive Plan   Foot Locker Executive Incentive Cash Compensation Plan
Annual Meeting   2024 Annual Meeting of Shareholders
Annual Report   Annual Report on Form 10-K for Fiscal 2023
APAC   Asia Pacific
Board   Board of Directors
Broadridge   Broadridge Financial Solutions, Inc.
CACM   Consistently Applied Compensation Measure
CAP   Compensation Actually Paid
CD&A   Compensation Discussion and Analysis
Common Stock   Foot Locker’s Common Stock, par value $0.01 per share
Company/ Foot Locker   Foot Locker, Inc.
Corporate Headquarters   330 West 34th Street, New York, New York 10001
DSU   Deferred Stock Unit (an accounting equivalent of one share of Common Stock)
EBIT   Earnings Before Interest and Taxes
EDT   Eastern Daylight Time
EMEA   Europe, the Middle East, and Africa
ERISA   Employee Retirement Income Security Act of 1974, as amended
ERM   Enterprise Risk Management
ERP   Enterprise Resource Planning
ESG   Environmental, Social, and Governance
ESPP   Foot Locker Employee Stock Purchase Plan
Excess Cash Plan   Foot Locker Excess Cash Balance Plan
Excess Savings Plan   Foot Locker Excess Savings Plan
Exchange Act   Securities Exchange Act of 1934, as amended
FASB   Financial Accounting Standards Board
Fiscal 2023   Fiscal year ended February 3, 2024
Fiscal 2024   Fiscal year ending February 1, 2025
Fiscal 2025   Fiscal year ending January 31, 2026
Fiscal 2026   Fiscal year ending January 30, 2027
Fiscal 2027   Fiscal year ending January 29, 2028
GAAP   U.S. Generally Accepted Accounting Principles
GDPR   EU General Data Protection Regulation
GHG   Greenhouse Gas
GTS   Global Technology Solutions
HCC Committee   Human Capital and Compensation Committee
IAP   International Assignment Policy
Innisfree   Innisfree M&A Incorporated
Interest Account   A hypothetical investment account bearing interest at the rate of 120% of the applicable federal long-term rate, compounded annually, and set as of the first day of each plan year
IRC   Internal Revenue Code of 1986, as amended
IT   Information Technology
LTI   Foot Locker Long-Term Incentive Program
NACD   National Association of Corporate Directors
NCR Committee   Nominating and Corporate Responsibility Committee
NEO   Named Executive Officer
Non-Executive Chair   Non-Executive Chair of the Board
Non-Qualified Stock Option   Stock Option that is not subject to the provisions of Section 422 of the IRC
Notice   Notice of Internet Availability of Proxy Materials
NPS   Net Promoter Score
NYSE   New York Stock Exchange
PAC   Political Action Committee
PCAOB   Public Company Accounting Oversight Board
PEO   Principal Executive Officer
PSU   Performance Stock Unit
Record Date   March 25, 2024
Retirement Plan   Foot Locker Retirement Plan, as amended and restated
RILA   Retail Industry Leaders Association
ROIC   Return on Invested Capital
RSU   Restricted Stock Unit (time-based)
SASB   Sustainability Accounting Standards Board
SBTi   Science Based Targets initiative
SEC   U.S. Securities and Exchange Commission
SERP   Foot Locker Supplemental Executive Retirement Plan, as amended and restated
Stock Incentive Plan   Foot Locker 2007 Stock Incentive Plan, as amended and restated
Stripers   Store team members across all Company banners
TCFD   Task Force on Climate-related Financial Disclosures
Technology Committee   Technology and Digital Engagement Committee
TSR   Total Shareholder Return
VIF   Voting Instruction Form
 

 

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Foot Locker, Inc.

 

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Proxy Statement contains forward-looking statements within the meaning of the U.S. securities laws. Other than statements of historical facts, all statements that address activities, events, or developments that the Company anticipates will or may occur in the future, including, but not limited to, future merchandise and vendor mix, real estate opportunities, strategic partnerships, loyalty program, technology investments, capital expenditures, strategic plans, financial objectives, growth of the Company’s business and operations, and other such matters, are forward-looking statements. These forward-looking statements are based on many assumptions and factors, which are detailed in the Company’s SEC filings.

 

These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. For additional discussion on risks and uncertainties that may affect forward-looking statements, see “Risk Factors” disclosed in the Annual Report and subsequent SEC filings. Any changes in such assumptions or factors could produce significantly different results. The Company undertakes no obligation to update forward-looking statements, whether as a result of new information, future events, or otherwise. Website references throughout this Proxy Statement are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this Proxy Statement.

 

 

 

 

2024 PROXY STATEMENT
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NOTICE OF ANNUAL MEETING

 

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DATE AND TIME

May 21, 2024 at

9:00 a.m. EDT

 
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VIRTUAL

MEETING SITE

virtualshareholdermeeting.com/FL2024

 
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RECORD DATE

Shareholders of record as

of March 25, 2024 can vote

at the Annual Meeting

 

All shares that have been properly voted and not revoked will be voted at the Annual Meeting. If you sign and return a proxy card but do not give voting instructions, the shares represented by that proxy card will be voted as recommended by the Board. Your vote is very important to us. Please vote your shares.

 

ITEMS OF BUSINESS

 

Proposal      

Board’s Voting

Recommendation

 

Vote Required

to Approve

               
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Elect nine directors to the Board

to serve for one-year terms

 
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FOR

each of the

nominees

   
               
               
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Vote, on an advisory basis, to approve

the NEOs’ compensation

 
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FOR  

Majority of

Votes Cast by

Shareholders

               
               
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Ratify the appointment of KPMG LLP as

the Company’s independent registered

public accounting firm for Fiscal 2024

 
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FOR    
               

 

In addition, the Board may transact such other business as may properly come before the Annual Meeting and at any adjournment or postponement of the meeting.

 


 

 

 

 

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Foot Locker, Inc.

 

 

 

NOTIce OF ANNuAl MeeTINg

 

PROXY VOTING

 

You may vote using any of the following methods:

 


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TELEPHONE

If you are located within the United States or Canada, you may vote your shares by calling 800-690-6903 and following the recorded instructions. Telephone voting is available 24 hours per day and will be accessible until 11:59 p.m. EDT on May 20, 2024. The telephone voting system has easy to follow instructions and allows you to confirm that the system has properly recorded your vote. If you vote by telephone, you do NOT need to return a proxy card or VIF.  

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SCANNING

You may scan the QR Code provided to you to vote your shares through the internet with your mobile device. Internet voting is available 24 hours per day and will be accessible until 11:59 p.m. EDT on May 20, 2024. You will be able to confirm that the system has properly recorded your vote. If you scan your QR code to vote, you do NOT need to return a proxy card or VIF.
         
         

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AT THE

VIRTUAL

ANNUAL

MEETING

You may vote at the virtual Annual Meeting using the 16-digit control number included on your Notice, proxy card, and VIF that accompanied your proxy materials.  

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INTERNET

You may vote your shares through the internet at proxyvote.com. Internet voting is available 24 hours per day and will be accessible until 11:59 p.m. EDT on May 20, 2024. You will be able to confirm that the system has properly recorded your vote. If you vote through the internet, you do NOT need to return a proxy card or VIF.
         
         

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MAIL

If you received printed copies of the proxy materials by mail, you may vote by mail. Simply mark your proxy card or VIF, date and sign it, and return it in the postage-paid envelope that we included with your materials.  

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APP

You may vote your shares by using the ProxyVote app. Download it for free wherever you get your apps, scan or enter your control number, and vote. App voting is available 24 hours per day and will be accessible until 11:59 p.m. EDT on May 20, 2024. You will be able to confirm that the system has properly recorded your vote. If you vote using the app, you do NOT need to return a proxy card or VIF.

 

On or about April 11, 2024, we started mailing a Notice to our shareholders. Proxies are being solicited by the Board to be voted at our Annual Meeting.

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on May 21, 2024

 

The Proxy Statement and Annual Report are available at materials.proxyvote.com/344849.

 

April 11, 2024

 

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ANTHONY D. FOTI (he/him/his)

Senior Vice President, Deputy General Counsel and Corporate Secretary

 

 

 

2024 PROXY STATEMENT
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Dear Fellow Shareholders:    
       
Our vision at Foot Locker, Inc. is to be known as the “go to” destination for discovering and buying sneakers globally. Our mission is to unlock the “inner sneakerhead” in all of us. The Lace Up Plan is designed to support our vision and mission, and our plan delivers for all of our stakeholders: for customers, we will be their destination for “all things sneakers, unlocking the inner sneakerhead in all of us;” for brand partners, we will partner to build brand equity and incremental growth; for team members, we offer job and career opportunities for our young and diverse team members that leverage our Stripers’ passion for sneaker culture; for communities, we will continue to invest in economic development and education for the communities we serve; and for investors, we will provide longer-term, profitable growth and attractive returns.
     
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As we reflect on the past year, 2023 presented the Company with certain macroeconomic and consumer-related pressures in addition to Company-specific factors, including elevated inventories. In the face of those challenges, the team focused on both delivering near-term results and executing the Lace Up Plan by closing under-performing stores and building out our loyalty program and digital capabilities to drive long-term shareholder value creation.  
     
Notable achievements and progress on our Lace Up Plan in 2023 included:  
     
Expand Sneaker Culture. We are harnessing our multi-branded leadership position to expand sneaker culture by serving more sneaker occasions, providing more sneaker choices, and driving greater sneaker distinction. Despite allocation changes in 2023, we collaborated with our largest partner, Nike, Inc., on our mutual key pillars of basketball, kids, and sneaker culture, and we look forward to continuing to enhance the partnership in 2024. Further, sales of brands beyond Nike in our core banners outpaced our total Company sales, as penetration of our other brands in our business reached 35% of sales compared to 33% in 2022. Additionally, we grew our door counts with vendors, including New Balance, On Running, and Hoka.   “Looking to 2024, we are repositioning Foot Locker, Inc. for the future. Our momentum—particularly in the second half of the year—means that we are entering 2024 positioned for a recovery, and on the path to reaching 8.5%-9.0%(1) in EBIT margins by 2028.”
     
Power Up the Portfolio. We opened 69 new format stores at our Foot Locker banner, including our highly-compelling Power and Community store concepts, that now total 242 doors. We are well on our way to achieving our goal for these formats to comprise at least 20% of our square footage in North America, compared with 16% today. In 2023, we also began a meaningful store refresh program designed to create a more consistent and elevated brand experience for our Foot Locker and Kids Foot Locker banners. Initial results from our refreshed stores have been encouraging, and we intend to accelerate this refresh work to approximately two-thirds of our global Foot Locker and Kids Foot Locker doors by the end of next year. Additionally, our Off-Mall square footage increased to 39% of our footprint in North America, up from approximately 34% in 2022. Finally, we are creating more distinction among our banners and transforming our real estate footprint. In 2023, we made strides to reposition the Champs Sports banner by focusing its store base to serve the active athlete consumer.  
     
Deepen Our Relationships with Customers. In 2023, we began to reignite the Foot Locker brand by launching our new global platform “The Heart of Sneakers” and investing in brand-building marketing strategies. We will continue to make strategic investments in marketing in 2024 and beyond to drive customer engagement and evolve and elevate the brand experience across channels. To deepen customer loyalty, we piloted an enhanced FLX loyalty program in Canada. This re-imagined membership program is resonating with a broader range of our customers and driving lift. We are excited to roll out this program to the rest of North America in 2024, and globally in 2025.  
     
Be Best-in-Class Omni. We saw meaningful gains in our digital penetration in 2023, which reached 17.2% of sales, compared to 16.3% in 2022, after adjusting for the wind-down of our digital-only banner, Eastbay, in 2022. Our momentum was driven by meaningful improvements to our sites’ customer experience, including enhanced search capability, site navigation, filtering, product recommendations, and cart and checkout optimizations, among others. While we are still in the early innings of our digital transformation, we continue to target 25% digital penetration by 2026. We are confident we will further build on our progress in 2024, including with the launch of our new and refreshed mobile Foot Locker app.  

 

 

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Foot Locker, Inc.

 

 

 

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In addition to executing on our strategic imperatives, we advanced key business initiatives in 2023 to help us return to longer-term growth, including:

 

Simplifying Our Operations. We made significant progress simplifying our operations to enhance our focus on our core banners and regions. This included exiting the Sidestep banner in Europe, exiting the Macau and Hong Kong markets, and converting our owned stores in Singapore and Malaysia to a license model. We also exited atmos from the United States, with the closure of three stores and its website, to align our focus on driving the brand’s future growth in its core Japanese market. Finally, we made changes to our merchandising and finance organizations to drive greater connectivity across our banners.

 

Leaning into Our Basketball Leadership. In November, we were pleased to announce that Foot Locker and the National Basketball Association (NBA) entered into a multi-year partnership under which Foot Locker will serve as an official league marketing partner in the United States. This collaboration, which builds on a partnership dating back to 1999, will enable Foot Locker to meaningfully engage with fans throughout the NBA season, while celebrating the intersection of basketball and sneaker culture. We are also excited about the ongoing rollout of our new, multi-branded, basketball-focused experience—Home Court—in select stores to bring the excitement and passion of the sport to our customers. We are well-positioned to continue our basketball momentum into 2024 and beyond.

 

Building Our Team for the Future. Throughout 2023, we strengthened our executive leadership team through a series of talented hires, and our new executive leadership team is now fully in place. While we continue to lean into the strong institutional and category knowledge of core Foot Locker, Inc. veterans, including Frank Bracken, our Chief Commercial Officer, and Bryon Milburn, our Chief Merchandising Officer, we have also added new leaders who bring a broad range of experience and perspectives across a variety of industries. In addition to Elliott Rodgers, who joined us in 2022 as our Chief Operations Officer, in 2023 we welcomed Mike Baughn as Chief Financial Officer, Jennifer Kraft as General Counsel, Adrian Butler as Chief Technology Officer, Kim Waldmann as Chief Customer Officer, and Kristin Bauer as Chief Supply Chain Officer. In 2024, we also welcomed Cindy Carlisle as Chief Human Resources Officer. Our executive leadership team brings the ideal combination of functional expertise, enterprise thinking, and collaboration required to meet customer expectations in a rapidly-changing retail environment.

 

Looking to 2024, we are repositioning Foot Locker, Inc. for the future. Our momentum—particularly in the second half of the year—means that we are entering 2024 positioned for a recovery, and on the path to reaching 8.5%-9.0%(1) in EBIT margins by 2028.

 

I thank you —our shareholders—for your ongoing support. I also thank our Board of Directors for their expertise, guidance, and support, and our 45,000 team members for their hard work and passion for serving our customers.

 

I am excited to continue unlocking the inner sneakerhead in all of us in 2024 and beyond.

 

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MARY N. DIllON (she/her/hers)

President and Chief Executive Officer

 

 

 

 

 

 

 

(1) 

A reconciliation to GAAP is provided beginning on page 22 of our Annual Report, which is available at investors.footlocker-inc.com/ar.

 

 

2024 PROXY STATEMENT
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Dear Fellow Shareholders:    
       
Foot Locker, Inc. is an iconic company that has shaped sneaker culture for 50 years. I am incredibly honored to serve you, our shareholders, as Non-Executive Chair of the Board, and to partner with our Chief Executive Officer, Mary Dillon, and her executive leadership team as they execute the Lace Up Plan.  

“Foot Locker, Inc. is an iconic company that has shaped sneaker culture for 50 years. The Board is actively engaged in overseeing the Company’s long-term strategy to position the business for the next 50 years of growth.”

 

 

 

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Against a backdrop of macroeconomic and consumer-related challenges in 2023, as well as Company-specific factors, the executive leadership team focused on both delivering near-term results and executing the Lace Up Plan. Highlights from 2023 include the following:  
     
Long-Term Strategy Oversight. In 2023, the Board oversaw the development of the Lace Up Plan. The Board is now focused on overseeing the execution and delivery of results under the plan, reflecting the Board’s confidence in and commitment to the plan, as management undertakes to simplify the Company’s operations, invest behind longer-term growth, and build the team for the future. The Board is accountable to create shareholder value and fully aligned with management on the strategies outlined within the plan. With a focus on the four pillars of the Lace Up Plan, the Board formed the Technology Committee to provide deeper engagement on IT infrastructure and digital oversight, including progress against the GTS strategy and the return on GTS investments. The HCC Committee also undertook a comprehensive review of the executive compensation program, with changes effective in 2024 designed to further drive results under the Lace Up Plan. As the business and industry continue to evolve, the Board will remain focused on management’s execution of the Lace Up Plan, and its key objectives of expanding sneaker culture, powering up our portfolio, deepening our relationship with customers, and being best-in-class omni.  
     
Board Refreshment. Because the Board believes deeply that it must be fit for its purpose and provide strategic value to the Company, ongoing Board refreshment is critical to ensure we have the right mix of skills, diversity, and expertise to support the Company. I want to thank Alan Feldman, who will retire from the Board at the Annual Meeting, after 19 years of exemplary service and devotion to the Company and our shareholders. Alan’s extensive retail experience across multiple retail formats and his tenure as a public company CEO in the retail industry have provided an invaluable source of insights and perspectives to the Company and the Board. The Board recognizes and expresses deep gratitude to Alan for his years of service. Upon the recommendation of the NCR Committee, at this time the Board has decided to decrease the size of the Board from ten to nine directors effective upon Alan’s retirement. The Board will continue to assess the size and composition of the Board.  
     
Shareholder Engagement. Our Board serves at the pleasure of our shareholders. Therefore, as a Board, one of our highest priorities is hearing from you, our shareholders, who have entrusted us with this responsibility. For the past several years, I have led, on behalf of our Board, a structured and governance-focused shareholder engagement program designed to accomplish this by facilitating transparency and creating a platform to receive shareholder feedback that is shared with the Board. During the 2023 shareholder engagement cycle, we met individually with shareholders representing over 46% of our total shares outstanding, as well as proxy advisory firms, to discuss various topics, including the Board’s oversight of the Lace Up Plan, our Board’s assessment process, Board and management succession, executive compensation, and key supply chain risks. The feedback gathered from shareholder engagement has been considered by the Board as it reviews changes and updates to the Company’s policies, practices, and public disclosures. We look forward to continuing our dialogue with you in the future. For additional information, see Shareholder Engagement beginning on page 36.  

 

 

 

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  5          

Foot Locker, Inc.

 

 

 

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Responsible Business Stewardship. We are committed to operating the Company in a responsible manner consistent with our values. This is necessary to achieve our strategic imperatives. The Board has partnered with management to support these efforts in the execution of the Lace Up Plan. For additional information regarding our responsible business efforts and Board oversight, see our Impact Report, which is available at investors.footlocker-inc.com/impactreport.

 

The Board believes that the foundation established in 2023 will set the stage for the Company’s next 50 years, and remains committed to the strategic imperatives outlined in the Lace Up Plan. I am immensely proud of the company that Foot Locker, Inc. is today and will be in the future.

 

On behalf of the Board, I am incredibly grateful to all our shareholders for their continued commitment to supporting the Company during this period of transformation. The Board, management team, and Foot Locker, Inc.’s 45,000 team members around the world are building upon our strong foundation and helping to shape the Company’s future, one pair of sneakers at a time.

 

The Notice and this Proxy Statement each contain details of the business to be conducted at the Annual Meeting. I also encourage you to review our Annual Report, which is available at investors.footlocker-inc.com/ar. Your participation is important to us, so please exercise your right to vote your shares. We hope that we have the chance to see you unlock your “inner sneakerhead” through a visit to a Foot Locker store, our website, or our mobile app.

 

 

 

 

 

 

 

 

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DONA D. YOuNg (she/her/hers)

Non-Executive Chair

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2024 PROXY STATEMENT
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6          

 

 

 

ABOUT FOOT LOCKER, INC.

 

ALL THINGS SNEAKERS

 

Foot Locker, Inc. (NYSE: FL) is a leading footwear and apparel retailer that unlocks the “inner sneakerhead” in all of us. With approximately 2,500 retail stores in 26 countries across North America, Europe, Asia, Australia, and New Zealand, and a licensed store presence in the Middle East and Asia, Foot Locker, Inc. has a strong history of sneaker authority that sparks discovery and ignites the power of sneaker culture through its portfolio of brands, including Foot Locker, Kids Foot Locker, Champs Sports, WSS, and atmos. For more information visit footlocker-inc.com.

 

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Bring the Best of

Sneaker Culture to All

 

Recruit the

Next Generation

 

Serve the

Active Athlete

 

Celebrate the

Hispanic Community

 

Share and Celebrate

Japanese Street and

Sneaker Culture

 

 

OUR FISCAL 2023 FINANCIAL HIGHLIGHTS

 

 

While the year presented certain macroeconomic and consumer-related pressures in addition to Company-specific factors, including elevated inventories, the team focused on both delivering near-term results and executing the Lace Up Plan by closing under-performing stores and building out our loyalty program and digital capabilities to drive long-term shareholder value creation. Highlights include the following:

 
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    (1)  A reconciliation to GAAP is provided beginning on page 22 of our Annual Report, which is available at investors.footlocker-inc.com/ar.

 

LEARN MORE ABOUT OUR COMPANY

 

You can learn more about the Company by visiting footlocker.com/corp. We also encourage you to read our Annual Report, which is available at investors.footlocker-inc.com/ar.

 

 

 

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  7          

Foot Locker, Inc.

 

 

 

VOTING ROADMAP

 

 

PROPOSAL

 

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ELECTION OF DIRECTORS

 

The Board believes that the nine director nominees possess the appropriate diversity, skills, and experiences to provide quality oversight of the business, strategy, and long-term interests of shareholders.

   

 

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The Board recommends a vote FOR each of the nominees.

 

Page 12

 

 

DEMOGRAPHICS

 

Tenure

 

8 years (Median)

 

Directors with varied tenure contribute to a range of perspectives and ensure we transition knowledge and experience from longer-serving members to those newer to our Board. We have a balanced mix of new and longer-tenured directors.

 

Age

 

62 years (Median)

 

Diversity

 

Our director nominees represent a diverse range of backgrounds—in terms of gender, age, ethnicity, skills, and business and board experience—with an equally diverse range of perspectives. What we share is a common desire to support, and provide effective oversight of, management in executing our Lace Up Plan.

 

89% of the director nominees are women or persons of color.

 

80% of our committees are chaired by women or persons of color.

 

Our NCR Committee is focused on ensuring continued diversity on the Board during refreshment activities by requiring that candidate pools include diverse individuals meeting the relevant recruitment criteria.

 

SKILLS AND EXPERIENCES

 

We believe that our slate of director nominees possesses the appropriate mix of diversity in terms of skills, business and Board experience, and viewpoints.

 

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2024 PROXY STATEMENT
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8          

 

 

 

VOTINg ROADMAP

 

 

PROPOSAL

 

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ADVISORY VOTE TO APPROVE NEO COMPENSATION

 

The Company seeks a non-binding advisory vote to approve the compensation of its NEOs, as described in the CD&A beginning on page 46 and the Summary Compensation Table and related tables beginning on page 65.

   

 

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The Board recommends a vote FOR this proposal.

 

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PAY-FOR-PERFORMANCE

 

The centerpiece of our compensation program is our pay-for-performance philosophy that aligns compensation payouts with the achievement of our annual operating plan and long-term strategy, and consequently shareholder value. This is showcased at senior levels of the Company—particularly the CEO—for whom most compensation is tied to the achievement of metrics driving the Company’s operating and stock performance, as described below.

 

Factor Description
   
Performance-Based 89% of the CEO’s annual target compensation mix is performance based.
   
Challenging Goals Recent Annual Incentive Plan and PSU payouts underscore our pay-for-performance culture and the rigor of the financial goals approved by the HCC Committee. For example, only three times in the past five years has the Annual Incentive Plan paid out above target and two of the past five PSU awards were not earned and paid out at 0%.
   
Formulaic Our Annual Incentive Plan and PSU payouts are formulaically determined based on performance against challenging financial and operating goals.
   
Peer Benchmarked We utilize an objective set of criteria to determine peer companies and evaluate CEO and NEO pay against the peer group median, while factoring in individual contribution and experience.
   
Responsive to Say-on-Pay Vote Our Say-on-Pay support has been strong in recent years. The HCC Committee considered the results of the 2023 Say-on-Pay vote and our shareholders’ historically strong support of our executive compensation program in reviewing the program for 2024. Additionally, we had discussions with many of our shareholders regarding executive compensation as part of our 2023 shareholder engagement cycle and took into account the views of shareholders regarding the design and effectiveness of our executive compensation program. See Shareholder Engagement on page 36 for more details on our shareholder engagement program. In light of this feedback received during our shareholder engagement, the HCC Committee decided to make certain adjustments to the program design. See 2024 Compensation Program Design Changes on page 63 for a discussion of the 2024 compensation program design changes. The HCC Committee will continue to assess the executive compensation program against changing business conditions and shareholder feedback.
   
Compensation Mix For LTI awards granted in 2021 through 2023, we utilized a consistent mix of PSU awards (60%), stock option awards (20%), and RSU awards (20%).
   

 

See Pay Versus Performance beginning on page 80 for further information.

 

 

 

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  9          

Foot Locker, Inc.

 

 

 

VOTING ROADMAP

 

COMPENSATION MIX

 

The HCC Committee seeks to align the compensation program with both our business strategy and our shareholders’ interests. Our executive compensation program includes both a mix of annual and long-term, as well as cash and equity, compensation. As shown in the charts below, for 2023, 89% of the CEO’s annual target compensation mix, and 75%, on average, of the remaining NEOs’ annual target compensation mix, was variable based on performance.

 

2023 TARGET COMPENSATION

 

CEO   Average of Remaining NEOs
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2023 PERFORMANCE-BASED COMPENSATION METRICS

 

Annual Incentive Plan   PSUs
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PROPOSAL

 

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RATIFICATION OF APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Board believes that the retention of KPMG LLP to serve as the Independent Auditors for Fiscal 2024 is in the best interests of the Company and its shareholders. As a matter of good corporate governance, shareholders are being asked to ratify the Audit Committee’s selection of the Independent Auditors.

   

 

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The Board recommends a vote FOR this proposal.

 

Page 84

 

 

 

2024 PROXY STATEMENT
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10          

 

 

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PROPOSAL

 

ELECTION OF DIRECTORS

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  https://cdn.kscope.io/400edc2a0bcca0c79c1726ad8d380b30-a25.jpg  The Board recommends a vote FOR each of the nominees.
       

 

There are currently ten directors on our Board. Mr. Feldman will be retiring when his term expires at the conclusion of the 2024 Annual Meeting. Upon the recommendation of our NCR Committee, the Board has decided to decrease the size of the Board from ten to nine directors, effective upon Mr. Feldman’s retirement from the Board. All current directors, other than Mr. Feldman, are standing for election for a one-year term at the Annual Meeting.

 

We have refreshed our Board over the past five years, as three highly-qualified independent directors were added to the Board, and with Mr. Feldman’s upcoming retirement, four independent directors will have retired. We believe that the Board possesses the appropriate mix of diversity in terms of gender, age, ethnicity, skills, business and Board experience, and viewpoints.

 

DIRECTOR NOMINEES

 

Messrs. Marmol, Oakland, Payne, and Walker, and Mses. Dillon, Drosos, Nicosia, Underhill, and Young will be considered for election as directors to serve for one-year terms expiring at the 2025 Annual Meeting. Each nominee has been nominated by the Board for election and has agreed to serve. If, prior to the Annual Meeting, any nominee is unable to serve, then the persons designated as proxies for this meeting (Michael A. Baughn and Jennifer L. Kraft) will have full discretion to vote for another person to serve as a director in place of that nominee, or the Board may reduce its size.

 

DIRECTOR QUALIFICATIONS

 

The NCR Committee reviewed and evaluated the skills, experience, and qualifications catalogued under the Director Nominees’ Skillset Matrix on pages 21 through 22, and demonstrated by the director nominees, in light of the Company’s long-term strategic plan.

 

The Board, acting through the NCR Committee, considers its members, including those directors being nominated for reelection to the Board at the Annual Meeting, to be highly qualified for service on the Board due to a variety of factors reflected in each director’s education, areas of expertise, and experience serving on other organizations’ boards during the past five years. Generally, the Board seeks individuals with broad-based experience and the background, judgment, independence, and integrity to represent the shareholders in overseeing the Company’s management in their operation of the business. Within this framework, specific items relevant to the Board’s determination for each director are listed in each director’s biographical information beginning on page 15. The ages shown are as of April 11, 2024. There are no family relationships among our directors or executive officers.

 

 

 

2024 PROXY STATEMENT
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12          

 

 

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PROPOSAL 1

 

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MARY N. DILLON

(she/her/hers)

 

President and Chief Executive Officer

Age: 62

Director since: 2022

   

 

PROFESSIONAL EXPERIENCE
   
Foot Locker, Inc.
   
President and Chief Executive Officer, since September 2022
   
Ulta Beauty, Inc. (beauty retailer)
   
Executive Chair, June 2021 to June 2022
   
Chief Executive Officer and Director, July 2013 to June 2021
   
OTHER BOARD SERVICE
   
Director, and member of the Risk and Conflicts committees, KKR & Co., since September 2018
   
Director, RILA
   
Ex-Officio Member of the Executive Committee, The Economic Club of Chicago
   
Member of the Executive Committee, The Business Council
   
Member, The Civic Committee
   
Director, Chair of the Compensation and Management Development Committee, and member of the Corporate Governance Committee, Starbucks Corporation, January 2016 to September 2022
   
REASONS FOR NOMINATION
   
Ms. Dillon has over 35 years of experience leading consumer-driven businesses in a diverse range of industries, including consumer-packaged goods, restaurants, telecom, and retail. She brings deep consumer marketing and digital transformation expertise, strong operational experience, and a proven track record of shareholder value creation. Before Foot Locker, Inc., she served as Executive Chair of Ulta Beauty, after having served as CEO for eight years, and was responsible for guiding the company as it became the leading beauty destination in the United States and a successful omni-channel retailer with a best-in-class loyalty program. Ms. Dillon also has extensive public company board experience.

 

COMMITTEE RELEVANT SKILLS
E
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DONA D. YOUNG

(she/her/hers)

 

Non-Executive Chair

Age: 70

Director since: 2001

   

 

PROFESSIONAL EXPERIENCE
   
Independent executive and board consultant
   
The Phoenix Companies, Inc. (insurance and asset management company)
   
Chair, President and Chief Executive Officer, April 2003 to April 2009
   
OTHER BOARD SERVICE
   
Director, Chair of Compensation and Human Resource Committee, member of Nomination and Governance Committee, and member of Risk Committee, Aegon Ltd. (insurance, pension, and asset management company)
   
Director, Vice Chair of Audit Committee, and member of the Nominating and Governance Committee and Compensation and Workforce Committee, USAA (United Services Automobile Association)
   
Director and member of Executive Committee, Spahn & Rose Lumber Co.
   
Director, Chair of the Compensation Committee, and member of the Nominating and Governance Committee, NACD
   
Director and member of the Audit and Governance committees, Save the Children Association and Save the Children International (non-profit organizations), 2016 to 2023
   
Director and member of the Audit Committee, Save the Children U.S. (non-profit organization), 2012 to 2023
   
Trustee, Saint James School in Saint James, Maryland
   
REASONS FOR NOMINATION
   
Ms. Young has significant governance, corporate development, risk management, leadership development, and financial experience given her prior service as a General Counsel, and later as a public company CEO, which are relevant in her role as Non-Executive Chair, as well as a member of the Audit Committee and NCR Committee. The experience Ms. Young has acquired through her board service at Save the Children is useful in her oversight of the Company’s human rights efforts. Ms. Young has received numerous awards and distinctions throughout her career, including being named one of four individuals identified by the Financial Times’s Outstanding Directors Exchange as a member of its Outstanding Directors Class of 2021 and the NACD Directorship 100 for 2015. She has served as an NACD Board Leadership Fellow since 2013, and was a 2012 Advanced Leadership Fellow at Harvard University. She obtained the CERT Certificate in Cybersecurity Oversight through the Software Engineering Institute at Carnegie Mellon University and NACD. She also received the NACD Director Certified designation.

 

COMMITTEES RELEVANT SKILLS
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  15          

Foot Locker, Inc.

 

 

 

PROPOSAL 1

 

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VIRGINIA C. DROSOS

(she/her/hers)

 

Independent Director

Age: 61

Director since: 2022

   

 

PROFESSIONAL EXPERIENCE
   
Signet Jewelers Limited (specialty jewelry retailer)
   
Chief Executive Officer, since August 2017
   
OTHER BOARD SERVICE
   
Director, Signet Jewelers Limited, since 2012
   
Executive Committee Member, United States Golf Association, since February 2024
   
Director, Akron Children’s Hospital, since April 2019
   
Director, American Financial Group, Inc., 2013 to 2021
   
REASONS FOR NOMINATION
   
Ms. Drosos brings valuable skills and insights to the Board, including proven expertise in retail, strategy, branding, marketing, digital commerce, and global operations. Ms. Drosos is the sitting CEO of a specialty retailer, she is a visionary and transformational leader with an entrepreneurial mindset, and she has a proven track record of growing and scaling global businesses through deep consumer understanding, product and experience innovation, and heightened employee engagement. Further, Ms. Drosos is actively involved in financial planning, risk management, and technology issues as the CEO of a public company, providing her with relevant expertise as a member of the Audit Committee and Technology Committee, respectively.

 

COMMITTEES RELEVANT SKILLS
A T
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GUILLERMO G. MARMOL

(he/him/his)

 

Independent Director

Age: 71

Director since: 2011

   

 

PROFESSIONAL EXPERIENCE
   
Porosome Therapeutics, Inc. (formerly known as Viron Therapeutics Holdings, Inc.) (medicine and therapeutics company)
   
President and Chief Executive Officer, since 2021
   
Marmol & Associates (consulting firm that provides advisory services and investment capital to early-stage technology companies)
   
President, since March 2007 and October 2000 to May 2003
   
OTHER BOARD SERVICE
   
Chair of the Board of Trustees, Center for a Free Cuba
   
Director and Audit Committee member, Morae Global Corporation, until August 2021
   
Director, Vitamin Shoppe, Inc., February 2016 to December 2019
   
REASONS FOR NOMINATION
   
Mr. Marmol has a significant technology background, which is critical to the Company as it invests in technology and systems to build more powerful digital engagement with customers. Mr. Marmol also has extensive financial, strategy, and management resources experience as a management consultant at Marmol & Associates and McKinsey & Company and a former senior executive officer of Luminant Worldwide Corporation, Electronic Data Systems Corporation, and Perot Systems Corporation, providing him with relevant expertise as Audit Committee Chair and a member of the HCC Committee.

 

COMMITTEES RELEVANT SKILLS
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2024 PROXY STATEMENT
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16          

 

 

 

PROPOSAL 1

 

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DARLENE NICOSIA

(she/her/hers)

 

Independent Director

Age: 56

Director since: 2020

   

 

PROFESSIONAL EXPERIENCE
   
Hearthside Food Solutions LLC (manufacturer of packaged foods)
   
Chief Executive Officer, since August 2022
   
The Coca-Cola Company (beverage company)
   
President, Canada and Northeast U.S., North America Operating Unit, January 2021 to August 2022
   
President of the Canada Business Unit, January 2019 to January 2021
   
Vice President, Commercial Product Supply, May 2016 to January 2019
   
OTHER BOARD SERVICE
   
Advisory Board Member, Georgia Institute of Technology, Scheller College of Business
   
Member, American Bakers Association
   
REASONS FOR NOMINATION
   
Ms. Nicosia brings to our Board a broad-based global business background, particularly brand-building and global supply chain management, gained through her experience in the consumer- packaged goods industry. Throughout her career, Ms. Nicosia has navigated complex regulatory environments and shifting consumer preferences. Her extensive understanding of supply chain, risk management, and management resources is an asset to our Board, particularly the Audit Committee and HCC Committee. In addition, Ms. Nicosia qualifies as an “Audit Committee Financial Expert,” as defined by the rules under the Exchange Act, through her relevant experience as a sitting CEO, and her prior experience as president of an operating unit of a large multinational corporation where she supervised the finance and accounting professionals responsible for, and personally analyzed and evaluated, financial statements, as well as internal controls over financial reporting.

 

COMMITTEES RELEVANT SKILLS
A H
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STEVEN OAKLAND

(he/him/his)

 

Independent Director

Age: 63

Director since: 2014

   

 

PROFESSIONAL EXPERIENCE
   
TreeHouse Foods, Inc. (manufacturer of packaged foods and beverages)
   
Chairman, since April 2023
   
Chief Executive Officer and President, since March 2018
   
OTHER BOARD SERVICE
   
Director, The Green Coffee Co.
   
Director, Food Industry Association
   
Director, MTD Products, Inc., until December 2021
   
REASONS FOR NOMINATION
   
Mr. Oakland brings to our Board a broad-based business background and extensive experience in domestic and international consumer-packaged goods, with particular strengths around corporate development, risk management, strategic planning, customer engagement, marketing, and brand building. Mr. Oakland is actively involved in technology and governance matters as the sitting CEO of a public company, providing him with relevant expertise as Technology Committee Chair and a member of the NCR Committee.

 

COMMITTEES RELEVANT SKILLS
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  17          

Foot Locker, Inc.

 

 

 

PROPOSAL 1

 

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ULICE PAYNE, JR.

(he/him/his)

 

Independent Director

Age: 68

Director since: 2016

   

 

PROFESSIONAL EXPERIENCE
   
Cyber-Athletix, LLC (esports healthcare company)
   
President, since March 2021
   
Addison-Clifton, LLC (global trade compliance advisory services provider)
   
President and Managing Member, since May 2004
   
OTHER BOARD SERVICE
   
Director and member of the Audit and Governance and Sustainability committees, ManpowerGroup, Inc.
   
Director, Chair of the Compensation Committee, and member of the Finance Committee, WEC Energy Group, Inc.
   
Director, Wisconsin Conservatory of Music
   
REASONS FOR NOMINATION
   
Mr. Payne brings to our Board significant governance, operational, financial, public service, trade compliance, and international experience as a result of the many senior positions he has held, including as President and Managing Member of Addison-Clifton, LLC, President and Chief Executive Officer of the Milwaukee Brewers Baseball Club, Managing Partner of Foley & Lardner, LLP, and the Wisconsin Commissioner of Securities. Mr. Payne’s extensive experience provides him with relevant expertise as NCR Committee Chair and a member of the Audit Committee.

 

COMMITTEES RELEVANT SKILLS
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KIMBERLY UNDERHILL

(she/her/hers)

 

Independent Director

Age: 59

Director since: 2016

   

 

PROFESSIONAL EXPERIENCE
   
Boston Consulting Group (management consulting firm)
   
Senior Advisor, since November 2021
   
Kimberly-Clark Corporation (manufacturer of branded personal care, consumer tissue, and professional healthcare products)
   
President, North America Consumer, May 2018 to September 2021
   
OTHER BOARD SERVICE
   
Director and member of the Audit, Development, and Remuneration committees, Glanbia PLC, since August 2022
   
Director and member of the Audit and Compensation committees, Menasha Corporation, since May 2022
   
Advisory Board Member, Rawhide Youth Services
   
Director, Board of Trustees, ThedaCare
   
Co-Chair and Leadership Giving Chair, United Way Fox Cities Campaign
   
Director and Compensation Committee Chair, Network of Executive Women, until 2021
   
Director, Food Industry Association, until 2021
   
REASONS FOR NOMINATION
   
Ms. Underhill brings to our Board extensive consumer-packaged goods experience with particular strengths in marketing, brand building, strategic planning, and corporate development. She is NACD Directorship CertifiedTM. Ms. Underhill’s management resources experience from her prior service as a senior executive of a public company is relevant to both our HCC Committee, of which she is Chair, and NCR Committee, of which she is a member.

 

COMMITTEES RELEVANT SKILLS
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2024 PROXY STATEMENT
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18          

 

 

 

PROPOSAL 1

 

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TRISTAN WALKER

(he/him/his)

 

Independent Director

Age: 39

Director since: 2020

   

 

PROFESSIONAL EXPERIENCE
   
Heirloom Management Company, LLC (micro venture capital fund)
   
Managing Member, since March 2022
   
Walker & Company Brands Inc. (manufacturer of health and beauty products for persons of color), a subsidiary of the Procter & Gamble Company
   
Founder and Chief Executive Officer, April 2013 to 2023
   
OTHER BOARD SERVICE
   
Director and member of the Nominating and Corporate Governance Committee, Shake Shack, Inc.
   
Trustee, Children’s Healthcare of Atlanta
   
Chairman, CODE2040 (non-profit organization that matches high-performing Black and Latino software engineering students and graduates with technology firms and start-ups), until January 2020
   
REASONS FOR NOMINATION
   
Mr. Walker’s brand marketing and technology experience are deeply connected to the mission of designing solutions for consumers. Mr. Walker understands how to utilize innovation and technology to drive change and deliver growth. His experience at the intersection of technology and consumer insights benefits our Technology Committee, and his experience as a former CEO provides him with relevant expertise as a member of the NCR Committee.

 

COMMITTEES RELEVANT SKILLS
N T
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  19          

Foot Locker, Inc.

 

 

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PROPOSAL 1

 

DIRECTOR NOMINEES’ SKILLSET MATRIX

 

We believe that the director nominees possess the appropriate mix of diversity in terms of gender, age, ethnicity, skills, business and Board experience, and viewpoints. We have refreshed our Board over the past five years, as three highly-qualified independent directors were added to the Board, and with Mr. Feldman’s upcoming retirement, four independent directors will have retired.

 

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  21          

Foot Locker, Inc.

 

 

 

PROPOSAL 1

 

Each director is individually qualified to make unique and substantial contributions. Collectively, our directors’ diverse viewpoints and independent-mindedness enhance the quality and effectiveness of Board deliberations and decision making. This blend of qualifications, attributes, and tenure results in highly-effective oversight.

 

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2024 PROXY STATEMENT
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22          

 

 

 

GOVERNANCE

 

OUR BOARD OF DIRECTORS

 

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Our Board consists of individuals from a diverse range of backgrounds—in terms of gender, age, ethnicity, skills, and business and Board experience—with an equally diverse range of perspectives. What our Board shares is a common desire to support and oversee management in executing our Lace Up Plan.

 

Our Bylaws provide for a Board consisting of between seven and thirteen directors. The exact number of directors is determined from time to time by the Board. There are currently ten directors on our Board. Mr. Feldman, who has reached the retirement age under our Corporate Governance Guidelines, will not stand for re-election and will retire when his term expires at the conclusion of the 2024 Annual Meeting. Upon the recommendation of our NCR Committee, the Board has decided to decrease the size of the Board from ten to nine directors at this time, effective upon Mr. Feldman’s retirement from the Board.

 

The Board has delegated certain duties to its committees, which assist the Board in carrying out its responsibilities. There are five standing committees of the Board. Each independent director serves on at least two committees.

 

The Board has adopted charters for each of the Audit Committee (investors.footlocker-inc.com/audit), HCC Committee (investors.footlocker-inc.com/comp), NCR Committee (investors.footlocker-inc.com/gov), and Technology Committee (investors.footlocker-inc.com/tech).

 

As a general principle, the Board believes that the periodic rotation of committee and committee chair assignments on a staggered basis provides opportunities to foster diverse perspectives, develops further the depth and breadth of knowledge within the Board, and prepares the Board for future director succession.

 

CORPORATE GOVERNANCE GUIDELINES

 

The Corporate Governance Guidelines assist the Board in the exercise of its governance responsibilities and serve as a framework within which the Board may conduct its business, including the following duties:

 

           
Director Responsibilities Human Capital Management and CEO and Board Evaluations
      Succession Planning Oversight    
Board Leadership and Committees     Director Qualifications
    Director Independence    
Change in Director’s Principal     Director Refreshment Policy
  Employment Director Resignation Policy    
        Board Meeting Agendas
Media and Stakeholder Board Access to Management and    
  Engagement   Independent Advisors Director Compensation
           
Stock Ownership Guidelines Director On-Boarding Director Continuing Education
           
        Outside Directorships Policy
           

 

The Board periodically reviews the guidelines and revises them, as appropriate. The Corporate Governance Guidelines are available at investors.footlocker-inc.com/cgg.

 

 

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  23          

Foot Locker, Inc.

 

 

 

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DIRECTORS’ INDEPENDENCE

 

A director is not considered independent under NYSE rules if they have a material relationship with the Company that would impair their independence. In addition to the independence criteria established by the NYSE, the Board has adopted categorical standards to assist it in making its independence determinations regarding individual directors. These categorical standards are contained in the Corporate Governance Guidelines, which are available at investors.footlocker-inc.com/cgg.

 

The Board has determined that the following categories of relationships are immaterial for purposes of determining whether a director is independent under the NYSE listing standards:

 

Categorical Relationship   Description
     
Investment Relationships with the Company   A director and any family member may own equities or other securities of the Company.
     
     
Relationships with Other Business Entities   A director and any family member may be a director, employee (other than an executive officer), or beneficial owner of less than 10% of the shares of a business entity with which the Company does business, provided that the aggregate amount involved in a fiscal year does not exceed the greater of $1 million or 2% of either that entity or the Company’s annual consolidated gross revenue.
     
     
Relationships with Not-for-Profit Entities   A director and any family member may be a director or employee (other than an executive officer or the equivalent) of a not-for-profit organization to which the Company (including the Foot Locker Foundation) makes contributions, provided that the aggregate amount of the Company’s contributions in any fiscal year do not exceed the greater of $1 million or 2% of the not-for-profit entity’s total annual receipts.
     

 

We individually inquire of each of our directors and executive officers about any transactions in which the Company and any of these related persons or their immediate family members are participants. We also make inquiries within the Company’s records for information on any of these kinds of transactions. Once we gather the information, we then review all relationships and transactions of which we are aware in which the Company and any of our directors, executive officers, their immediate family members, or 5% shareholders are participants to determine, based on the facts and circumstances, whether the related persons have a direct or indirect material interest. Our General Counsel’s office coordinates the related person transaction review process, and the NCR Committee reviews any potential related person transactions reported to, and referred by, our General Counsel’s office involving directors and their immediate family members in making its recommendation to the Board concerning the independence of the directors. In approving, ratifying, or rejecting a related person transaction, the NCR Committee considers such information as it deems important to determine whether the transaction is on reasonable and competitive terms and is fair to the Company. There were no related person transactions in 2023. See the Corporate Governance Guidelines and the Code of Business Conduct for further information.

 

 

2024 PROXY STATEMENT
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24          

 

 

 

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The Board, upon the recommendation of the NCR Committee, has determined that the following directors are independent under the NYSE rules because they have no material relationship with the Company that would impair their independence:

 

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In making its independence determination, the Board reviewed recommendations of the NCR Committee and considered Ms. Young’s relationship as a director of a company with which we do business. The Board determined that this relationship meets the categorical standard for Relationships with Other Business Entities and is immaterial with respect to determining independence.

 

The Board has determined that all members of the Audit Committee, HCC Committee, NCR Committee, and Technology Committee are independent as defined under the NYSE listing standards and the director independence standards adopted by the Board.

 

 

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  25          

Foot Locker, Inc.

 

 

 

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BOARD LEADERSHIP STRUCTURE

 

Our Board evaluates, from time to time as appropriate, whether the same person should serve as Chairman and CEO, or whether the positions should be held by different persons, in light of all relevant facts and circumstances and what it considers to be in the best interests of the Company and our shareholders. The positions of Chair and CEO are currently separated with Ms. Young serving as Non-Executive Chair and Ms. Dillon serving as CEO. The Board believes its current leadership structure best serves the Board’s oversight of management, the Board’s carrying out of its responsibilities on the shareholders’ behalf, and the Company’s overall corporate governance at this time. The Board also believes the separation of the roles allows the CEO to focus her efforts on operating and managing the Company.

 

MAJORITY VOTING IN THE ELECTION OF DIRECTORS

 

Directors must be elected by a majority of the votes cast in uncontested elections, and a plurality of the votes cast in contested elections. Our Corporate Governance Guidelines provide that any incumbent director who does not receive a majority of the votes cast in an uncontested election is required to tender their resignation for consideration by the NCR Committee. The NCR Committee will make a recommendation to the Board whether to accept or reject the resignation, or take other action based upon the best interests of the Company and its shareholders. In determining its recommendation to the Board, the NCR Committee shall consider all factors that it deems relevant. The director who tenders their resignation will not participate in the NCR Committee or Board’s decision. Following such determination, the Company will promptly publicly disclose the Board’s decision, including, if applicable, the reasons for rejecting the tendered resignation.

 

PROXY ACCESS

 

Under our proxy access bylaw, a shareholder, or a group of up to 20 shareholders, owning at least 3% of the Common Stock continuously for at least three years as of the date of the notice of nomination, may nominate and include in the Company’s proxy materials director nominees constituting up to two individuals or 20% of the Board, whichever is greater (subject to certain limitations set forth in the Bylaws), provided that the shareholder(s) and nominee(s) satisfy the requirements specified in the Bylaws.

 

DIRECTOR REFRESHMENT POLICY, BOARD TENURE, AND TERM LIMITS

 

The Company is focused on having a well-constructed and high-performing Board, and recognizes the importance of Board refreshment. To that end, the Company has a healthy director refreshment policy that combines a retirement age (age 72) and a periodic individual assessment process with the annual election of directors. Over the past five years, we have added three highly-qualified independent directors to the Board, and with Mr. Feldman’s upcoming retirement, four independent directors will have retired over that same time period. The Board’s median tenure is currently eight years, consistent with other leading companies. This reflects the balance the Board brings to refreshment while maintaining the benefits of experience.

 

The NCR Committee selects director nominees who think and act independently and can clearly and effectively communicate their convictions. The Board does not believe long tenure alone presumptively renders a director to not be independent. Conversely, the Board has determined that its longer-tenured directors have important experience, bring diverse perspectives, and provide tangible value to the Board and the Company. The Board has also determined that their length of tenure has allowed these directors to accumulate valuable knowledge and experience based upon their history with the Company and their breadth of experience in leadership roles across a range of industries outside the Company. This knowledge and experience improves the ability of the Board to provide constructive guidance and informed oversight to management.

 

The NCR Committee has specifically considered the feedback of some shareholders as well as the discussions of some commentators that suggest lengthy Board tenure should be balanced with new perspectives. Specific to the Company, the NCR Committee has structured the Board such that there is an appropriate mix of directors of varying tenures, with new directors and perspectives joining the Board over time while retaining the institutional knowledge and broader business experience of longer-tenured directors. This balance enhances the Board’s oversight capabilities. The Board believes it is important to balance refreshment with the need to retain directors who have developed, over time, significant insight into the Company and its operations and who continue to make valuable contributions to the Company that benefit our shareholders. The Board does not believe that long tenure impairs a director’s ability to act independently of management.

 

MANDATORY RESIGNATION OR RETIREMENT

 

The Board has established a policy whereby a non-employee director is required to advise the NCR Committee Chair of any change to their principal employment. If requested by the NCR Committee Chair, after consultation with the other members of the NCR Committee, the director is required to submit a letter of resignation to the NCR Committee Chair, for the NCR Committee to consider.

 

 

2024 PROXY STATEMENT
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26          

 

 

 

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DIRECTOR ON-BOARDING

 

We have a two-phase on-boarding program for new directors that is intended to educate new directors about the Company and the Board’s practices:

 

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  27          

Foot Locker, Inc.

 

 

 

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DIRECTOR CONTINUING EDUCATION

 

Director education is an ongoing process, which begins when a director joins our Board. We host quarterly Board and committee presentations to keep directors appropriately apprised of key developments concerning the following topics so they can effectively carry out their oversight responsibilities:

 

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We also encourage all directors to attend external continuing education programs to maintain their expertise and share takeaways with the other directors concerning these programs. We reimburse directors for reasonable expenses incurred in attending continuing education programs. Our directors have attended a variety of continuing education programs, conferences, and events hosted by universities, trade groups, law firms, accounting firms, and other advisory service firms on a variety of topics, including the following:

 

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Our directors also regularly visit our stores to engage with our Stripers, enhance their understanding of our business, witness strategy execution firsthand, and further contribute to their oversight of the Lace Up Plan.

 

BOARD ATTENDANCE

 

The Board held 9 meetings during 2023. Each individual director attended at least 85% of the aggregate of all Board and committee meetings for the committees on which they served during 2023.

 

The Board holds regularly-scheduled executive sessions of independent directors in conjunction with each Board meeting. Ms. Young, as Non-Executive Chair, presides at these executive sessions, as well as at Board meetings.

 

Directors are expected to attend annual meetings. The annual meeting is typically scheduled on the same day as a quarterly Board meeting. In 2023, all of the directors attended the annual meeting.

 

 

2024 PROXY STATEMENT
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28          

 

 

 

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STOCK OWNERSHIP GUIDELINES

 

The Stock Ownership Guidelines align the interests of non-employee directors and executive officers with the interests of shareholders, and promote the Company’s sound corporate governance. The non-employee directors and executive officers are expected to achieve and maintain beneficial ownership of Common Stock having a value equal to at least the multiple indicated in the table below of the remuneration payable to them from time to time. The individual guidelines established for each participant are as follows:

 

Non-Employee Director and Executive Officer Position   Multiple        
Non-Employee Director   4x  
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  Annual Retainer Fee (both Cash and Equity)
Chief Executive Officer   6x  
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  Annual Base Salary Rate
Executive Vice President   3x  
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  Annual Base Salary Rate
Senior Vice President   2x  
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  Annual Base Salary Rate

 

The following table illustrates which equity holdings count toward the stock ownership guidelines:

 

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Executives and non-employee directors are required to achieve compliance within five years of their hire or promotion effective date that caused them to be covered by the guidelines, and their election to the Board, respectively. In the event of any increase in the required ownership level, either as a result of an increase in the remuneration paid or the multiple, the target date for compliance with such increase is five years after the effective date.

 

The Company measures compliance at the end of each fiscal year, with the compliance determination at that point in time applying for the entire ensuing fiscal year, regardless of fluctuations in the Company’s stock price.

 

In the event any person subject to these guidelines fails to comply by the applicable date, they are required to hold the net shares obtained through all future stock option exercises and RSU vestings, after withholding for the payment of applicable taxes, until such person is in compliance; provided, however, that in order to take into consideration fluctuations in the Company’s stock price, any person who has been in compliance as of the end of at least one of the two preceding fiscal years and who has not subsequently sold shares will not be subject to the holding requirements.

 

The NCR Committee will consider a non-employee director’s failure to comply with these guidelines when considering that director for re-election to the Board.

 
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of directors, the CEO, and other executive officers were in compliance as of the end of Fiscal 2023 (or within the initial five-year period to achieve compliance)

 

 

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  29          

Foot Locker, Inc.

 

 

 

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RETENTION OF OUTSIDE ADVISORS

 

The Board and all of its committees have authority to retain outside advisors and consultants that they consider necessary or appropriate in carrying out their respective responsibilities. The independent accountants are retained by, and report directly to, the Audit Committee. In addition, the Audit Committee is responsible for overseeing the qualifications, performance, and compensation of the internal auditors, which the Company has partially outsourced to an independent public accounting firm. Similarly, the consultant retained by the HCC Committee to assist in evaluating executive compensation reports directly to that committee.

 

BOARD EVALUATIONS

 

The Board and its committees engage in a robust Board and committee assessment process every year, and a 360-degree peer and self-assessment facilitated by an independent third party approximately every three years, both of which are designed to elicit candid feedback regarding the areas in which the Board and its committees could improve, as described in the table below. The Board last conducted a 360-degree peer and self-assessment in 2021, and plans to conduct another in 2024.

 

Action Item

Board and Committee Assessment

 

360-Degree Peer and Self-Assessment

Cadence

 

Annual

 

Triennial

Assessments

Each director completes a separate detailed assessment to evaluate the Board and each committee on which they serve.

 

Topics covered include, among others: 

 

►   Board and committee structure, size, composition, skills, diversity, and succession planning.

 

►   The effectiveness of the Board, committees, and committee chairs.

 

►   Board strategy and operational oversight.

 

►   Board culture and dynamics, including the effectiveness of discussion and debate at Board and committee meetings.

 

►   The quality of Board and committee agendas, meeting length, and presentations.

 

►   The appropriateness of Board and committee priorities.

 

►   Board interactions with management, including the quality of meeting materials and the information provided to the Board and committees.

 

 

Each independent director completes a detailed peer and self-assessment.

 

Topics covered include, among others, whether each director:

 

►   Demonstrates dedication to the Company’s core values.

 

►   Participates actively and constructively in, and is well-prepared for, Board and committee meetings.

 

►   Exercises independent judgment when considering issues before the Board and committees.

 

►   Seeks opportunities to proactively strengthen their understanding of their role as a director and are open to ongoing training and constructive feedback.

 

►   Brings functional expertise to the Board to augment management’s thinking and development.

 

►   Seeks opportunities to better understand the Company’s business and issues that are important to shareholders and offers innovative solutions to these challenges.

Reporting

The results of the assessments are processed as follows:

 

►   The General Counsel reviews and summarizes the responses from each director’s assessment for the Non-Executive Chair and each of the committee chairs.

 

►   Each director participates in a confidential, open-ended, one-on-one interview facilitated by the Non-Executive Chair to discuss the results of the assessments regarding Board and committee performance, and solicit input on the performance and effectiveness of the Board and committees (except the Non-Executive Chair, who meets with the NCR Committee Chair).

 

►   Each committee chair meets separately with each of its members to discuss the results of that committee’s assessment.

 

The results of the peer and self-evaluations are processed as follows:

 

►   An independent third party tabulates the results of the evaluation and prepares individual, confidential reports reflecting the directors’ peer and self-evaluation findings and recommendations.

 

►   The reports are provided to the Non-Executive Chair, except the report on the Non-Executive Chair, which is provided to the NCR Committee Chair.

 

►   The Non-Executive Chair briefs the CEO on the results.

 

►   Confidential, open-ended, one-on-one interviews are facilitated by the Non-Executive Chair and, for the Non-Executive Chair, by the NCR Committee Chair.

 

 

 

2024 PROXY STATEMENT
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Action Item

Board and Committee Assessment

 

360-Degree Peer and Self-Assessment

Action
Planning

These evaluations have consistently found that the Board and its committees are operating effectively.

 

This evaluation process has led to various refinements designed to increase Board effectiveness over the past few years, including:

 

►   Enhancing Board evaluation process with a 360-degree peer and self-assessment facilitated by an independent third party.

 

►   Ensuring that Board and committee agendas are appropriately focused on strategic priorities.

 

►   Increasing focus on continuous Board succession planning and refreshment.

 

►   Adding additional responsibilities for the NCR Committee, including overseeing ESG.

 

►   Establishing the Technology Committee, given the Board’s increased focus on the Company’s technology and digital engagement oversight responsibilities, including the significant GTS investments included in the Lace Up Plan.

 

►   Rotating committee and committee chair assignments periodically on a staggered basis to provide opportunities to foster diverse perspectives, develop further the depth and breadth of knowledge within the Board, and prepare the Board for future director succession.

 

►   Recommending specific topics for directors to attend external continuing education programs to maintain their expertise and share takeaways with the other directors concerning these programs.

 

 

These evaluations have consistently identified development opportunities for each director. They have also found that each director:

 

►   Seeks opportunities to proactively strengthen their understanding of their role as a director and is open to ongoing training and constructive feedback.

 

►   Participates actively and constructively in, and is well-prepared for, Board and committee meetings.

 

►   Exercises independent judgment when considering issues before the Board and committees.

 

►   Brings functional expertise to the Board to augment management’s thinking and development.

 

►   Seeks opportunities to better understand the Company’s business and issues that are important to shareholders and offers innovative solutions to these challenges.

 

POLITICAL CONTRIBUTIONS AND PUBLIC ADVOCACY

 

Our Code of Business Conduct prohibits making contributions on behalf of the Company to political parties, PACs, political candidates, or holders of public office.

 

The Company is a member of certain trade associations, which support their member companies by offering educational fora, public policy advocacy, networking, and advancement of issues important to the retail and footwear industries, as well as the business community generally. Given the diversity of interests, viewpoints, and broad membership represented by these trade associations, their positions may not always reflect the Company’s values.

 

The Company is a member of, and has paid membership fees to, RILA and The Business Council, which, as part of their overall activities, may engage in advocacy activities concerning issues important to the retail or footwear industries or the business community generally, as applicable.

 

For additional information regarding our Board’s political and public advocacy oversight, see Political and Public advocacy Oversight on page 35.

  We periodically review our membership in trade associations, and the positions they support, to evaluate whether they align with our values. If we identify a significant inconsistency on a material policy issue, we discuss and review our options with respect to such organization, including the benefits and challenges associated with our continued membership. We may take certain actions to address material misalignment, including engagement with the trade association or termination of our membership.

 

 

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  31          

Foot Locker, Inc.

 

 

 

gOvERNaNCE

 

OUR BOARD’S OVERSIGHT OF OUR BUSINESS

 

The Board believes deeply that it must be fit for its purpose and provide strategic value to the Company. Oversight of the Company’s business strategy is a key responsibility of the Board, including work embedded in the Board committees. The Board believes that overseeing and monitoring strategy is a continuous process and takes a multilayered approach in exercising its duties. The Board’s oversight, and management’s execution of business strategy, are viewed with a long-term mindset and a focus on assessing both opportunities for, and potential risks to, the Company.

 

While the Board and its committees oversee strategic planning, management is charged with developing and executing the business strategy. Management is completely transparent with the Board. To monitor the performance of the Company’s strategic goals, the Board maintains an open dialogue with, has regular access to, and receives ongoing updates from, management. For example, our Non-Executive Chair engages in regular cadence of communication and engagement with management, including ongoing dialogue with the CEO and monthly calls with members of the executive leadership team, and each of the committee chairs regularly engages with their respective management liaisons. These discussions are enhanced with regular visits to our stores to engage with our Stripers, understand the business, see strategy execution firsthand, and ultimately contribute to the oversight of our Lace Up Plan.

 

HUMAN CAPITAL MANAGEMENT AND SUCCESSION PLANNING OVERSIGHT

 

The Board believes that the strength of the Company’s workforce is one of the significant contributors to our success as a global company that leads with purpose. One of the primary responsibilities of the Board is to ensure that the Company has a high-performing CEO and management team. To meet that goal, the Board, the HCC Committee, the NCR Committee, and management share responsibility for management development and succession planning, guided by a very intentional process:

 

Responsible Party

 

Oversight Area

Board

 

Oversight of these topics as part of its overall oversight role, including regular reviews of management development and succession planning to maximize the pool of emerging diverse talent who can assume top management positions without undue interruption. The Board is committed to actively seeking highly-qualified diverse individuals from a range of backgrounds—in terms of gender, ethnicity, and perspectives—to include in the pool of potential candidates.

 

In assessing possible CEO and other senior leadership candidates, our independent directors identify the skills, experiences, and attributes they believe are required to be an effective leader in light of the Company’s global business strategies, opportunities, and challenges. This process is designed to prepare the Company for both expected successions, such as those arising from anticipated retirements, as well as those occurring when executives leave unexpectedly, including due to death, disability, or other unforeseen events. Each director has complete and open access to any member of management. Members of management, including those several levels below senior management, are invited regularly to make presentations at Board and committee meetings and meet with directors in informal settings to allow the directors to form a more complete understanding of the executives’ skills and character. We maintain updated emergency succession plans for the CEO. Succession reviews for key executive roles consist of an assessment of internal candidates and external talent identified by executive search firms, as well as professional and leadership development plans for internal candidates. Executive search firms are expected to include in their initial lists of candidates qualified candidates who reflect diverse backgrounds, including, but not limited to, diversity of race, ethnicity, national origin, gender, and sexual orientation.

     
     

HCC Committee

 

As described in its charter, primary responsibility for organizational talent and development and management succession planning, including regular reviews of executive performance, potential, and succession planning with a deeper focus than the full Board review, emphasizing career development of promising management talent. The Board made human capital management a priority through its HCC Committee, which oversees the Company’s strategies and initiatives on diversity and inclusion, employee well-being, compensation and benefits, and engagement.

     
     

NCR Committee

 

As described in its charter, primary responsibility for reviewing and making recommendations regarding the governance and process around CEO succession planning.

     
     

Management

 

Collaboration of the Chief Human Resources Officer and senior Human Resources leaders with functional leaders across the Company in developing and implementing programs to attract, assess, and develop management-level talent for possible future senior leadership positions.

 

 

For additional information on the Company’s human capital management strategies and initiatives, see our Annual Report, which is available at investors.footlocker-inc.com/ar.

 

2024 PROXY STATEMENT
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RISK OVERSIGHT

 

The Board has oversight responsibilities regarding risks that could impact the Company. Oversight for some of these risks is assigned to the committees—largely the Audit Committee and Technology Committee—based on the individual risk.

 

The Audit Committee has established procedures for reviewing the Company’s risks, including climate-related and supply chain-related risks. These procedures include regular risk monitoring by management to update current risks and identify potential new and emerging risks, quarterly risk reviews by management with the Audit Committee, and an annual risk report to the Board. In addition, the Audit Committee receives regular briefings from our Chief Financial Officer, Chief Accounting Officer, General Counsel, and Vice President of Internal Audit. During these meetings, the Audit Committee and management discuss these risks, risk management activities and efforts, best practices, lessons learned from incidents at other companies, the effectiveness of our controls, and other related matters. The Audit Committee Chair reports on the committee’s meetings, considerations, and actions to the Board at the next Board meeting following each Audit Committee meeting.

 

The HCC Committee considers risk in relation to the Company’s compensation policies and practices. The HCC Committee’s independent compensation consultant provides an annual report to the committee on risk relative to the Company’s compensation programs.

 

The Technology Committee has established procedures for reviewing the Company’s GTS risks. These procedures include regular risk monitoring by management to update current risks and identify potential new and emerging risks. In addition, the Technology Committee receives regular briefings from our Chief Operations Officer, Chief Technology Officer, Chief Information Security Officer, Chief Privacy Officer, and outside experts on cybersecurity risks and cyber risk oversight. During these meetings, the Technology Committee and management discuss these risks, risk management activities and efforts, best practices, lessons learned from incidents at other companies, the effectiveness of our security measures, and other related matters. The Technology Committee Chair reports on the committee’s meetings, considerations, and actions to the Board at the next Board meeting following each Technology Committee meeting.

 

The Company believes that this risk oversight process is appropriate in light of the Company’s business, size, and active senior management participation, including by the CEO, in managing risk and holding regular discussions on risk with the Audit Committee, the HCC Committee, the Technology Committee, and the Board.

 

Cybersecurity

 

We are subject to technology risks, including failures, security breaches, and cybersecurity risks, that could harm our business. Our cybersecurity program includes the following elements:

 

Element

 

Strategy

Technology

 

We employ a layered “defense, detect, and respond” strategy.

     
     

Benchmarking and External Engagement

 

We benchmark our security practices against other organizations, and are active in the information security community.

     
     

Third-Party Assessments

 

We engage a range of outside experts to regularly assess our organizational security programs, processes, and capabilities.

     
     

Internal Assessments

 

We regularly test and improve our information systems through security risk and compliance review, tabletop exercises, user access campaigns, and other strategies.

 

 

 

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Foot Locker, Inc.

 

 

 

gOvERNaNCE

 

Privacy

 

Our privacy policies and privacy statements govern our treatment of customer data. These policies describe the types of customer personal information we collect, how we use and share the information, and measures we take in order to help protect the security of the information. Our policies provide multiple points of contact through which our customers may initiate inquiries, make requests, and raise concerns to us regarding our collection, sharing, and use of their personal data. Our privacy policies and practices in the European Union were updated in response to the GDPR requirements, and are subject to further updates from time to time in response to EU developments. Similarly, our privacy statements and practices in the United States and other countries are periodically reviewed and updated in response to local privacy laws and developments.

 

Code of Business Conduct

 

The Company has adopted a Code of Business Conduct applicable to all directors, executive officers, corporate officers, and other team members, and requires them to each sign annually to certify they have reviewed and understand the Code of Business Conduct. We refer to all our employees as “team members,” including throughout this Proxy Statement, to reflect the significant role they play in our success. The Company periodically reviews the Code of Business Conduct and revises it, as appropriate. Any waivers of the Code of Business Conduct for directors and officers must be approved by the Audit Committee. The Code of Business Conduct is available at investors.footlocker-inc.com/cobc.

 

Global Sourcing Guidelines

 

Without a sound adherence to human rights and implementation through due diligence, jobs can be precarious, compensation can be below a living wage, and individuals can be subjected to modern day slavery, among a range of other potential impacts. Therefore, we have policies, processes, and practices in place to systematize our human rights approach and how we respond to serious allegations. Operating responsibly is in the long-term interest of our shareholders.

 

Our Global Sourcing Guidelines require all of our suppliers to respect certain employment standards that we believe should be universal, notwithstanding more relaxed standards (if any) imposed by law. In the selection of our suppliers, we work hard to choose reputable business partners who are committed to our ethical standards and business practices. The Global Sourcing Guidelines are distributed annually to each of our suppliers and each supplier agrees that, by accepting orders from us, it will abide by and implement its terms and require the same from each of its subcontractors. Each of our suppliers acknowledges that its failure to honor these guidelines will compel us to reevaluate, and possibly terminate, our business relationship with them. The Global Sourcing Guidelines are an integral part of our purchase agreements with suppliers, and to assure conformity with the Global Sourcing Guidelines, we reserve the right to make periodic, unannounced inspections of their facilities, and suppliers agree to maintain and provide upon request all documentation necessary to demonstrate compliance.

 

The Company continuously reviews the Global Sourcing Guidelines and revises them, as appropriate, consistent with best practices. The Global Sourcing Guidelines are available at investors.footlocker-inc.com/gsg.

 

RESPONSIBLE BUSINESS OVERSIGHT

 

We are very intentional about our mission. Management and the Board understand that how we achieve our purpose is just as important as the results. Stakeholders understandably want to know that the companies they are buying from, investing in, working for, or doing business with, are acting responsibly by valuing their team members, giving back to the communities they serve, and actively addressing the environmental impact of their operations. For these reasons, among others, we manage our business responsibly.

 

The Board is actively engaged in the oversight of the Company’s global responsible business strategy. In exercising its authority, the Board recognizes that the long-term interests of our shareholders are best advanced when considering other stakeholders and interested parties, including customers, team members, business partners, and the communities we serve. The NCR Committee oversees our global responsible business strategy and associated risks and opportunities, including climate-related and supply chain-related risks and opportunities. The Board receives updates from the NCR Committee Chair throughout the year. In addition, each of the Audit Committee, HCC Committee, and Technology Committee have certain responsible business oversight responsibilities relevant to their respective committees.

 

 

2024 PROXY STATEMENT
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34          

 

 

 

gOvERNaNCE

 

               
 
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Inspired by engagement with our stakeholders, the Company publishes an annual Impact Report. The Impact Report provides details on our global responsible business strategy, consistent with the SASB reporting standards and TCFD reporting framework. Our global responsible business strategy is focused on four pillars:

 
             
   

Leveraging

the Power of

Our People and

Communities

Strengthening

the

Sustainability

of Our Supply

Chain

Managing and

Reducing Our

Environmental

Impacts

Operating

Ethically and

Transparently

 
               
  We recognize, however, that this is a journey. We view public reporting as an ongoing process and expect our disclosures to continue to evolve over time. This process will be more evolutionary than revolutionary, but our goal is to make progress each year. We are fully committed to building on our progress over time and strengthening our vision for a more sustainable world.  
               
  For additional information regarding our global ESG program and Board oversight, see our Impact Report, which is available at investors.footlocker-inc.com/impactreport.  
               

 

The Company has adopted the following policies related to its global responsible business strategy:

 

Policy

 

Purpose

Global Environmental and Climate Change Policy

 

Sets out certain sustainability and environmental priorities, including reducing GHG emissions that have an adverse effect on climate change, and certain responsibilities of its suppliers. This policy is available at investors.footlocker-inc.com/climate.

     
     

Global Human Rights Policy

 

Sets out certain priorities, including maintaining a work environment that respects and supports the provision of basic human rights to all of its team members around the world, regardless of the country in which they work, to the full extent permitted by law, and certain responsibilities of its suppliers. This policy is available at investors.footlocker-inc.com/humanrights.

     
     

Global Occupational Health and Safety Policy

 

Sets out certain priorities, including operating in a safe and responsible manner to protect the health and safety of its team members, partners, and customers, and certain responsibilities of its suppliers. This policy is available at investors.footlocker-inc.com/safety.

     
     

Global Water Stewardship Policy

 

Sets out certain priorities, including operating in a safe and responsible manner to protect against water risks and seeking to promote the human right to water and sanitation, and certain responsibilities of its suppliers. This policy is available at investors.footlocker-inc.com/water.

 

POLITICAL AND PUBLIC ADVOCACY OVERSIGHT

 

Our Board has political and public advocacy oversight responsibility, including ensuring that management’s political and lobbying expenditures are aligned with the Company’s strategy. The Board has adopted policies and procedures to oversee political and lobbying expenditures. The NCR Committee reviews annually the Board’s policies and procedures regarding politics and public advocacy and that the Company’s publicly-stated positions are aligned with its related activities and spending. For additional information regarding our policies concerning political contributions and public advocacy, see Political Contributions and Public Advocacy on page 31.

 

 

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  35          

Foot Locker, Inc.

 

 

 

gOvERNaNCE

SHAREHOLDER ENGAGEMENT

 

WHY WE ENGAGE

 

The Board’s relationship with shareholders is an important part of the Company’s success. The Board believes it is important to foster long-term relationships with shareholders and understand their perspectives. The Board has a long tradition of engaging with shareholders. The Board values an open dialogue with shareholders, and the Board believes that regular communication is a critical part of the Company’s long-term success. Through these activities, the Board discusses the Company’s corporate governance, executive compensation programs, responsible business practices, and other topics of interest to shareholders. We also closely monitor policy statements and focus areas for shareholders. These engagement efforts allow the Board to better understand shareholders’ priorities and perspectives and provide the Board with useful input concerning the Company’s compensation, corporate governance, and responsible business practices.

 

The Board is committed to:

 

   Accountability. Drive and support leading corporate governance and board practices.

 

   Transparency. Maintain high levels of transparency on a range of financial, governance, and responsible business issues to build trust.

 

   Engagement. Proactively engage with shareholders and proxy advisory firms on a range of topics to sustain two-way dialogue and identify emerging trends and issues to inform the Board’s thinking and approach.

 

This shareholder engagement program complements the ongoing dialogue throughout the year among shareholders and our Chief Executive Officer, Chief Financial Officer, Chief Commercial Officer, and Investor Relations team on our financial and strategic performance.

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WHO WE ENGAGE

 

During the 2023 shareholder engagement cycle, our Non-Executive Chair, General Counsel, and Deputy General Counsel and Corporate Secretary met individually with shareholders representing over 46% of our total shares outstanding, as well as proxy advisory firms.

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ENGAGEMENT TOPICS

 

   Board Oversight of Lace Up Plan

 

   Board Assessment Process

 

   Board and Management Succession

   Executive Compensation

 

   ESG

 

   Supply Chain Risks

 
 
We had discussions regarding executive compensation and our 2023 Say-on-Pay vote as part of our 2023 shareholder engagement cycle, and took into account the views of shareholders regarding the design and effectiveness of our executive compensation program. In light of this feedback received during our shareholder engagement, the HCC Committee decided to make certain enhancements to the program design, which include linking the Lace Up Plan scorecard to the Annual Incentive Plan and implementing a three-year performance period for the PSU awards granted in March 2024. See 2024 Compensation Program Design Changes on page 63 for a discussion of the 2024 compensation program design changes. The HCC Committee will continue to assess the executive compensation program against changing business conditions and shareholder feedback.

 

2024 PROXY STATEMENT
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36          

 

 

 

gOvERNaNCE

 

HOW WE HAVE BEEN RESPONSIVE TO ENGAGEMENT

 

The Non-Executive Chair shares the feedback gained from our shareholder engagement meetings with the NCR Committee and the Board, as well as compensation-specific feedback with the HCC Committee. In recent years, we have taken a number of actions based on shareholder feedback to strengthen our governance practices, global responsible business strategy, and disclosure. For example, the Board separated the Chair and CEO roles, adopted proxy access, amended our Bylaws to implement a majority voting standard in uncontested director elections, and added a Director Nominees’ Skillset Matrix to our Proxy Statements to describe each director’s qualifications. The Company also enhanced its responsible business disclosure by publishing an Impact Report, which is presented consistent with the SASB reporting standards and TCFD reporting framework and is available at investors.footlocker-inc.com/impactreport. These examples evidence our continued dedication to remain responsive on a variety of shareholder concerns. Please continue to share your thoughts or concerns at any time. The Board has established a process to facilitate shareholder communications with the Board, as described below.

 

COMMUNICATIONS WITH OUR BOARD

 

Shareholders and other interested parties who wish to communicate directly with the independent directors of the Board should send a letter to the Board. The Procedures for Communications with the Board are available at investors.footlocker-inc.com/boardcomms. Our Corporate Secretary will promptly send a copy of the communication to the Non-Executive Chair, who may direct our Corporate Secretary to send a copy of the communication to the other independent directors and may determine whether a meeting of the independent directors should be called to review the communication.

 

 

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Foot Locker, Inc.

 

 

 

goveRnAnCe

 

COMMITTEES

 

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AUDIT

 

GUILLERMO G.

MARMOL Chair

Other Members:

Drosos, Nicosia (Audit Committee

Financial Expert), Payne, and Young

2023 Meetings: 13

 

 

 

KEY OVERSIGHT RESPONSIBILITIES

 

   appoints the independent auditors

 

   approves the independent auditors’ compensation

 

   assists the Board in fulfilling its oversight responsibilities in the following areas:

 

   accounting policies and practices

 

   financial statements

 

   legal and regulatory compliance

 

   ERM

 

   independent auditors’ qualifications, independence, and performance

   internal auditors’ qualifications, performance, and compensation

 

   Code of Business Conduct compliance

 

   establishes procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting and audit controls, and auditing matters

 

   reviews insurance and self-insurance reserves

 

   reviews derivatives policy and use of derivatives

 

   reviews and discusses risk assessments from management with respect to responsible business-related risks

 

This committee consists of five independent directors, as independence is defined under the SEC and NYSE rules applicable to audit committee members. All of the members meet the expertise requirements under the NYSE rules. The Board has determined that Ms. Nicosia qualifies as an “Audit Committee Financial Expert,” as defined by the rules under the Exchange Act, through her relevant experience as a sitting Chief Executive Officer, and her prior experience as president of an operating unit of a large multinational corporation where she supervised the finance and accounting professionals responsible for, and personally analyzed and evaluated, financial statements, as well as internal controls over financial reporting. The Audit Committee Report appears on page 86.

 

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EXECUTIVE

 

DONA D.

YOUNG Chair

Other Members:

Dillon, Marmol, Oakland,

Payne, and Underhill

No Meetings in 2023

 

 

 

KEY OVERSIGHT RESPONSIBILITY

 

shares all of the powers of the Board during intervals between Board meetings, with all directors invited to participate, and used only in extraordinary circumstances

 

 

 

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HCC

 

KIMBERLY

UNDERHILL Chair

Other Members:

Feldman, Marmol, Nicosia and

Young (Ex Officio Member)

2023 Meetings: 6

 

 

 

KEY OVERSIGHT RESPONSIBILITIES

 

   determines the CEO’s compensation

 

   reviews and approves compensation for executive officers, corporate officers, and other highly-compensated executives

 

   approves all equity compensation (except by delegation of authority for participants other than the CEO, other executive officers and corporate officers, and other highly-compensated executives)

 

   assesses risk in relation to the Company’s compensation policies and practices

 

 

 

   administers the Company’s compensation plans reviews

 

   reviews and makes recommendations to the Board concerning human capital matters, including executive development and succession

 

   reviews non-employee directors’ compensation and makes recommendations to the Board concerning the form and amount of non-employee directors’ compensation

 

   reviews relevant responsible business factors in its oversight of compensation, benefits, and employment arrangements

 

This committee consists of four independent directors, and an Ex Officio Member, as independence is defined under the NYSE rules applicable to compensation committee members. See CD&A beginning on page 46 for a discussion of the HCC Committee’s procedures for determining compensation, and the HCC Committee Report on page 64.

 

2024 PROXY STATEMENT
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goveRnAnCe

 

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NCR

 

ULICE

PAYNE, JR. Chair

Other Members:

Oakland, Underhill,

Walker, and Young

2023 Meetings: 4

 

 

 

KEY OVERSIGHT RESPONSIBILITIES

 

   oversees corporate governance matters affecting the Company, including developing and recommending criteria and policies relating to director service and tenure

 

   establishes criteria for Board candidates

 

   retains a third-party search firm from time to time to identify potential director candidates

 

   selects new director nominees to recommend to the Board

 

   considers the re-nomination of existing directors after it conducts an annual review of each director’s qualifications, experience, and independence

 

   reviews membership on the Board committees and, after consultation with the CEO and Non-Executive Chair, makes recommendations to the Board annually regarding committee, and committee chair, assignments

 

   reviews trends and governance with regard to non-employee directors’ compensation

 

   oversees the Company’s responsible business strategy and reviews and considers related public reporting, including the Company’s annual Impact Report

 

Shareholders who wish to recommend candidates for Board membership may contact the NCR Committee in the manner described under Communications with Our Board on page 37. Shareholder nominations must be made according to the procedures required under, and within the timeframe described in, the Bylaws and under Deadlines and Procedures for Nominations and Shareholder Proposals for the 2025 Annual Meeting on page 89. Shareholder-recommended candidates will be evaluated by the NCR Committee in the same manner as the Company’s nominees.

 

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TECHNOLOGY

 

STEVEN

OAKLAND Chair

Other Members:

Drosos, Feldman, Walker,

and Young (Ex Officio Member)

2023 Meetings: 4

 

 

 

KEY OVERSIGHT RESPONSIBILITIES

 

   reviews GTS strategy, risks, controls, processes, and progress

 

   considers the staffing adequacy, skills, and allocation of GTS resources

 

   assesses and provides feedback on technology trends

 

   oversees, in conjunction with the Audit Committee, the GTS ERM framework

 

   reviews significant technology acquisition processes, including ERP

 

   reviews data and analytics capabilities and information governance framework

 

   reviews digital engagement strategy, development, and operations, as well as customer satisfaction performance results

 

   reviews, in connection with its oversight of the Company’s utilization of technology and digital engagement, relevant responsible business factors

 

 

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Foot Locker, Inc.

 

 

 

goveRnAnCe

 

DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE

 

The Company has entered into indemnification agreements with its directors and officers, as approved by shareholders at the 1987 annual meeting.

 

We have purchased directors and officers liability and corporation reimbursement insurance from the following group of insurers:

 

           

ACE American Insurance Co.

Beazley Insurance Co.

Palomar Insurance Co.

Ambridge Insurance Co.

Berkley Insurance Co.

Sompo International Insurance Co.

American International Group

Chubb Bermuda Insurance Ltd.

Starstone Insurance Co.

Amtrust Financial Services Insurance Co.

CNA Insurance Co.

Swiss Re Insurance Co.

ANV Insurance Co.

Hartford Accident & Indemnity Co.

Zurich American Insurance Company

Argonaut Insurance Co.

Old Republic Insurance Co.

   

Ascot Insurance Co.

Orion Insurance Co.

   
           

 

These policies insure all of the directors and officers of the Company and its covered subsidiaries. The policies were each written for a 12-month term, expiring October 12, 2024. The aggregate annual premium for these policies, including fees and taxes, is $1,333,396.

 

Directors and officers of the Company, as well as all other team members with fiduciary responsibilities under ERISA, are insured under policies issued by the following group of insurers:

 

           

ACE American Insurance Co.

Euclid Insurance Co.

Zurich American Insurance Company

CNA Insurance Co.

Sompo International Insurance Co.

   
           

 

The policies were each written for a 12-month term, expiring October 12, 2024. The aggregate annual premium for these policies, including fees and taxes, is $250,498.

 

 

2024 PROXY STATEMENT
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DIRECTOR COMPENSATION

 

This discussion relates to the compensation we pay to non-employee directors. We do not pay additional compensation to any director for service on the Board or any committee who is also a Company employee.

 

KEY PRINCIPLES OF DIRECTOR COMPENSATION PROGRAM

 

The Company compensates its non-employee directors for their service according to the following principles:

 

Category

 

Description

Pay Position

 

The targeted pay position for our non-employee directors’ compensation program is the median of the retail and general industry market reference points.

     
     

Peer Groups

 

When establishing reference points for market comparisons of our non-employee directors’ compensation program, we consider the retail peer group used for our executive compensation purposes and general industry data for similarly-sized companies. See Peer Group Approach beginning on page 59 for more information on our peer group.

     
     

Pay Evaluation
Perspective

 

When assessing the competitive position of our non-employee directors’ compensation program, the primary focus is the total targeted compensation opportunity.

     
     

Pay Mix

 

Our non-employee directors’ compensation program consists of a mix of cash and equity, with an emphasis on equity. See Components of Director Compensation Program on page 42 for further information.

     
     

Differentiation

 

Non-employee directors receive additional compensation for leadership positions on the Board, including the Non-Executive Chair and committee chair roles. See Components of Director Compensation Program on page 42 for further information.

     
     

Stock Ownership

 

Our Stock Ownership Guidelines further align our directors with our shareholders’ interests, with compliance measured annually, as described further in Stock Ownership Guidelines on page 29.

     
     

Deferral
Opportunities

 

Non-employee directors may elect to receive all or a portion of the cash component of their annual retainer fee, including committee chair retainers, in the form of DSUs or to have these amounts placed in an Interest Account. Directors may also elect to receive all or a portion of the stock component of their annual retainer fee or their RSU awards in the form of DSUs. Beginning in 2023, the Non-Executive Chair may also elect to receive all or a portion of her Non-Executive Chair retainer in the form of DSUs.

     
     

Total Compensation
Limits

 

Meaningful limits on non-employee directors’ compensation have been established to ensure consistency with sound governance practices. See Components of Director Compensation Program on page 42 for further information.

     
     

Regular Review

 

The NCR Committee conducts regular reviews of governance practices and trends in directors’ compensation to ensure our program’s consistency with sound governance practices and reports out to the Board. The HCC Committee conducts regular reviews of our non-employee directors’ compensation program and makes recommendations to the Board regarding the amount and form of directors’ compensation each year.

 

 

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Foot Locker, Inc.

 

 

 

DiReCtoR CoMPenSAtion

 

COMPONENTS OF DIRECTOR COMPENSATION PROGRAM

 

The Company’s non-employee directors were paid the following fees in 2023:

 

  Amount

 

 

Fee

($)

 

Form of Payment

Annual Retainer

150,000

 

 

Committee Chair Retainer

     

Audit Committee

25,000

 

50% Cash(1) and

HCC Committee

25,000

 

50% Common Stock(2)

NCR Committee

15,000

 

 

Technology Committee

15,000

 

 

Lead Independent Director Retainer(3)

50,000

 

 

Non-Executive Chair Retainer(3)

250,000

 

Cash

Meeting Fee(4)

2,000

 per Board and committee meeting attended

 

Annual RSU Award

80,003

 

RSUs(5)

 

(1) 

Directors may defer all or a portion of the fee in the form of DSUs or have these amounts placed in an Interest Account.

(2) 

Directors may defer all or a portion of the fee in the form of DSUs.

(3) 

The Lead Independent Director or Non-Executive Chair, as applicable, may also elect to receive all or a portion of the fee in the form of DSUs.

(4) 

The Company reimburses reasonable expenses incurred in attending Board and committee meetings, other meetings with management, and continuing education programs, including transportation, hotel accommodations, and meals.

(5) 

Directors may defer all or a portion of the RSU awards in the form of DSUs.

 

Each non-employee director’s annual compensation, including cash and equity but excluding dividend equivalents paid on DSUs for previously-deferred compensation and credited in the form of additional DSUs, is capped at $600,000 per fiscal year. Directors are eligible to receive the same discount on purchases of merchandise from our stores and websites that is available to team members.

 

For all compensation periods through and including Fiscal 2023, six of our current directors have previously elected to defer all or a portion of one or more of their annual retainers, committee chair retainers, or annual RSU award into DSUs, and none of the current directors have elected to place any amount of their annual retainer fees into an Interest Account.

 

GOVERNANCE

 

The HCC Committee and NCR Committee jointly oversee our non-employee director compensation program, conduct annual reviews, and make recommendations for adjustments, as appropriate, to the Board. The NCR Committee reviews trends and governance with regard to non-employee directors’ compensation. Following consultation with the NCR Committee, the HCC Committee reviews nonemployee directors’ compensation and makes recommendations to the Board concerning the form and amount of non-employee directors’ compensation.

 

In connection with the review conducted in Fiscal 2023, the HCC Committee’s independent compensation consultant assessed the compensation paid to our non-employee directors against non-employee director compensation trends and data from our peer group, including overall trends and governance principles, market competitiveness of our program, and the mix of cash and equity provided under our program. Following this review, no changes were made to directors’ compensation. The annual retainer, committee chair annual retainers, and mix of cash and equity, were found to be aligned with industry norms and best practices.

 

 

2024 PROXY STATEMENT
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42          

 

 

 

DiReCtoR CoMPenSAtion

 

FISCAL 2023 DIRECTOR COMPENSATION

 

The amounts paid to each non-employee director for Fiscal 2023, including amounts deferred under the Stock Incentive Plan, and the RSUs granted to each non-employee director are reported in the tables below:

 

(a)

(b)

(c)

(d)

 

Fees Earned

   
 

or Paid in

Stock

 
 

Cash

Awards

Total

Name

($)

($)(1)

($)

Drosos

121,014

154,989

276,003

Feldman

115,014

194,009

309,023

Marmol

147,516

167,487

315,003

Nicosia

133,000

165,844

298,844

Oakland

120,500

178,517

299,017

Payne

138,504

170,109

308,613

Underhill

129,516

167,487

297,003

Walker

113,000

164,372

277,372

Young

381,000

259,090

640,090

 

(1) 

Column (c) reflects the following three items:

 

 

(A) 

the grant date fair value determined in accordance with FASB ASC 718 for the portion of a director’s annual retainer fees (including committee chair retainer fees) for Fiscal 2023 paid in shares of Common Stock (including any portions deferred in the form of DSUs under the Stock Incentive Plan) ($27.11 per share, representing the closing price of a share of Common Stock on June 30, 2023). Such shares of Common Stock are fully vested on grant, regardless of whether deferred into DSUs.

 

 

(B) 

the grant date fair value determined in accordance with FASB ASC 718 for RSUs granted in Fiscal 2023 ($41.56 per share, representing the closing price of a share of Common Stock on the grant date of May 17, 2023). In May 2023, each director received an award of 1,925 RSUs. The number of RSUs granted was calculated by dividing $80,000 by the closing price of a share of Common Stock on the grant date, rounded to the nearest full share ($80,003). The RSUs will vest in May 2024, provided the director continues to serve on the Board through the vesting date. Each RSU represents the right to receive one share of Common Stock on the vesting date. No dividends are paid or accrued on the RSU awards. The amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

 

 

(C) 

the grant date fair value, determined in accordance with FASB ASC 718, for dividend equivalents paid on DSUs and credited in the form of additional DSUs, made to Messrs. Feldman, Oakland, Payne, and Walker, and Mses. Nicosia and Young ($41.99 per share for DSUs granted on April 28, 2023, $26.27 per share for DSUs granted on July 28, 2023, and $19.60 per share for DSUs granted on October 27, 2023, representing the closing price of a share of Common Stock on the quarterly payment date). Such additional DSUs are fully vested on grant.

 

 

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  43          

Foot Locker, Inc.

 

 

 

DiReCtoR CoMPenSAtion

 

The following table sets forth the grant date fair value of the above stock awards granted to our non-employee directors in Fiscal 2023:

 

Name

Retainer Paid
in Common
Stock
($)(1)

RSUs
($)(2)

DSUs
($)(3)

Total
($)

Drosos

74,986

80,003

154,989

Feldman

74,986

80,003

39,020

194,009

Marmol

87,484

80,003

167,487

Nicosia

75,000

80,003

10,841

165,844

Oakland

82,500

80,003

16,014

178,517

Payne

82,496

80,003

7,610

170,109

Underhill

87,484

80,003

167,487

Walker

75,000

80,003

9,369

164,372

Young

75,000

80,003

104,087

259,090

 

(1) 

Messrs. Oakland and Walker, and Mses. Nicosia and Young elected to receive 100% of their stock portion of their annual retainer for Fiscal 2023 in DSUs.

(2) 

Messrs. Oakland and Walker, and Mses. Nicosia and Young elected to receive 100% of their RSU awards granted in Fiscal 2023 in DSUs.

(3) 

Represents dividend equivalents paid on DSUs and credited in the form of additional DSUs made to Messrs. Feldman, Oakland, Payne, and Walker, and Mses. Nicosia and Young ($41.99 per share for DSUs granted on April 28, 2023, $26.27 per share for DSUs granted on July 28, 2023, and $19.60 per share for DSUs granted on October 27, 2023, representing the closing price of a share of Common Stock on the quarterly payment date).

 

For additional information on the valuation assumptions, refer to Note 21 to the Company’s financial statements in our Annual Report, which is available at investors.footlocker-inc.com/ar.

 

As of the end of Fiscal 2023, the number of RSUs and DSUs held by our non-employee directors were as follows:

 

Name

RSUs
(#)

DSUs
(#)

Drosos, Marmol, and Underhill

1,925

Feldman

1,925

33,621

Nicosia

11,059

Oakland

15,610

Payne

1,925

7,330

Walker

9,790

Young

91,402

 

 

2024 PROXY STATEMENT
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44          

 

 

       

PROPOSAL

 

ADVISORY VOTE TO APPROVE NEO COMPENSATION

https://cdn.kscope.io/400edc2a0bcca0c79c1726ad8d380b30-a72.jpg
  https://cdn.kscope.io/400edc2a0bcca0c79c1726ad8d380b30-a25.jpg  The Board recommends a vote FOR this proposal.
       

 

In accordance with the requirements of Section 14A of the Exchange Act and the related SEC rules, our shareholders have the opportunity to cast a non-binding, advisory vote to approve the compensation of our NEOs, as disclosed beginning on page 48 (a “Say-on-Pay” vote). We currently hold our “Say-on-Pay” vote every year, consistent with the preference previously expressed by a majority of our shareholders.

 

As described in detail in the CD&A beginning on page 46, our compensation program is designed to attract, motivate, and retain talented executives responsible for leading our strategic priorities and, in turn, deliver value to our shareholders. Our executive compensation program ties compensation closely to the Company’s performance. A significant portion of the compensation provided to the NEOs is based upon the Company’s performance or the performance of our share price, and we believe this compensation structure closely aligns the interests of our executives with the interests of our shareholders. The higher an executive’s position, the greater percentage of their compensation is tied to performance.

 

At our 2023 annual meeting, nearly 97% of shares voted on the Say-on-Pay proposal supported our executive compensation program. The HCC Committee considered the results of the 2023 Say-on-Pay vote in reviewing the program for 2024. Additionally, as part of our 2023 shareholder engagement cycle, we had individual discussions with shareholders representing over 46% of our total shares outstanding, as well as proxy advisory firms, regarding executive compensation, and took into account the views of shareholders regarding the design and effectiveness of our executive compensation program for 2024. See Shareholder Engagement beginning on page 36 for more details on our shareholder engagement program. In light of this support and feedback received during our shareholder engagement, the HCC Committee decided to retain the general program design with certain enhancements to further align the program with the Lace Up Plan. See 2024 Compensation Program Design Changes on page 63 for more details. The HCC Committee will continue to assess the executive compensation program against changing business conditions and shareholder feedback. We believe shareholders should read the CD&A, beginning on page 46, and the compensation tables beginning on page 65, in determining whether to vote in favor of this proposal.

 

Shareholders are being asked to approve the following resolution at the Annual Meeting:

 

“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of our NEOs, as disclosed in the Company’s Proxy Statement for the Annual Meeting pursuant to the SEC’s compensation disclosure rules, including the CD&A, the Summary Compensation Table, and the other related tables and disclosures.”

 

As an advisory vote, this proposal is not binding on the Company, the HCC Committee, or the Board. However, the HCC Committee and the Board value the opinions expressed by shareholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding our NEOs.

 

 

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  45          

Foot Locker, Inc.

 

 

 

EXECUTIVE COMPENSATION

 

COMPENSATION DISCUSSION AND ANALYSIS

 

This CD&A provides information on our executive compensation program, including our global compensation philosophy, which focuses on rewarding team members for their roles in executing our performance against the goals that were established for the Annual Incentive Plan and LTI. While the principles underlying this philosophy extend within the organization, this CD&A primarily covers the compensation of our NEOs. For Fiscal 2023, our NEOs are the current executive officers, former executive officers, and former interim executive officer named below.

 

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https://cdn.kscope.io/400edc2a0bcca0c79c1726ad8d380b30-a74.jpg
 
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https://cdn.kscope.io/400edc2a0bcca0c79c1726ad8d380b30-a77.jpg

MARY N.
DILLON

 

MICHAEL A.

BAUGHN(1)

 

FRANKLIN R.

BRACKEN

 

ELLIOTT D.

RODGERS

 

ROSALIND

REEVES(2)

(she/her/hers)

 

(he/him/his)

 

(he/him/his)

 

(he/him/his)

 

(she/her/hers)

President and

Chief Executive

Officer

 

Executive

Vice President

and Chief

Financial

Officer

 

Executive

Vice President

and Chief

Commercial

Officer

 

Executive

Vice President

and Chief

Operations

Officer

 

Former

Executive

Vice President

and Chief Human

Resources

Officer

 

 

ANDREW E.
PAGE(3)

 

ROBERT F.
HIGGINBOTHAM(3)

 
 

(he/him/his)

 

(he/him/his)

 
 

Former Executive

Vice President and

Chief Financial Officer

 

Former Interim

Chief Financial Officer

 

 

(1) 

Mr. Baughn joined the Company and was appointed Executive Vice President and Chief Financial Officer, effective June 12, 2023.

 

(2) 

Ms. Reeves served as Executive Vice President and Chief Human Resources Officer through March 11, 2024, and is currently serving as an Advisor. She expects to depart the Company, effective July 31, 2024.

 

(3) 

Mr. Page served as Executive Vice President and Chief Financial Officer through February 28, 2023. The Company named Mr. Higginbotham as interim Chief Financial Officer while it conducted a comprehensive search, with the assistance of a leading executive recruiting firm, to identify Mr. Page’s successor, Mr. Baughn. Mr. Higginbotham ceased to serve as interim Chief Financial Officer, effective June 11, 2023. Mr. Higginbotham was appointed Senior Vice President, Investor Relations, Corporate Finance, and Treasurer, effective August 9, 2023.

     
 

TABLE OF CONTENTS

 
 

47

Fiscal 2023 Highlights

 
 

47

Financial Performance

 
 

47

Performance-Based Compensation Outcomes

 
 

47

CFO Appointment

 
 

48

Say-on-Pay Shareholder Vote

 
 

48

Compensation Program Design and Structure

 
 

48

Pay-for-Performance

 
 

50

Components of Executive Compensation Program

 
 

50

Base Salary

 
 

51

Annual Incentive Plan

 
 

54

LTI Awards

 
 

58

Retirement Plan and Excess Cash Plan

 
 

58

401(k) Plan and Excess Savings Plan

 
 

58

Perquisites

 
 

58

Employment Agreements and Offer Letters

 
 

59

Procedures for Determining Compensation

 
 

59

Setting Compensation, Establishing Goals, and Evaluating Performance

 
 

59

Peer Group Approach

 
 

60

Use of Compensation Consultant

 
 

60

Management Involvement in Developing the Compensation Program

 
 

61

Additional Information

 
 

61

Key Compensation Governance Policies

 
 

62

Compensation Program and Risk

 
 

62

Accounting and Tax Considerations

 
 

63

2024 Compensation Program Design Changes

 
       
2024 PROXY STATEMENT
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46          

 

 

 

ExECuTIvE COmPEnSATIOn

 

FISCAL 2023 HIGHLIGHTS

 

Financial Performance

 

While the year presented certain macroeconomic and consumer- related pressures in addition to Company-specific factors, including elevated inventories, the team focused on both delivering near-term results and executing the Lace Up Plan by closing under-performing stores and building out our loyalty program and digital capabilities to drive long-term shareholder value creation. Highlights include the following:  
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    (1)   A reconciliation to GAAP is provided beginning on page 22 of our Annual Report, which is available at investors.footlocker-inc.com/ar.

 

Our 2023 compensation program, as outlined in detail on the following pages, was tied to our key objectives, demonstrating our strong connection between pay and performance.

 

Performance-Based Compensation Outcomes

 

The 2023 performance-based compensation paid to our NEOs reflects our performance in a challenging macroeconomic environment, including the highlights noted above. Notable performance-based compensation outcomes for 2023 include the following that are discussed in greater detail in this CD&A:

 

2023 ANNUAL INCENTIVE PLAN AWARDS

 

The Adjusted Operating Income goal was weighted 80%, and the NPS goal was weighted 20%.

 

The threshold Adjusted Operating Income goal was not achieved, but the Company did achieve the threshold NPS performance required for a partial payout under the Annual Incentive Plan.

 

The HCC Committee exercised negative discretion upon management’s recommendation to reduce the payout to 0% for all participants levels Vice President and above, including the NEOs, with respect to NPS.

 

As a result, the NEOs did not earn any Annual Incentive Plan payouts for 2023 performance.

 

PSU AWARDS (2022-24)

 

The Two-Year Average After-Tax Income goal was weighted 70%, and the ROIC goal was weighted 30%.

 

Neither goal was achieved, and no payouts were earned for the 2022-24 performance period.

 

See Annual Incentive Plan and LTI Awards beginning on page 51 and page 54, respectively, for further information.

 

CFO Appointment

 

In June 2023, we recruited Mr. Baughn from outside the Company to serve as Executive Vice President and Chief Financial Officer, succeeding Mr. Page, who departed from the Company in February 2023.

 

In connection with Mr. Baughn’s employment, the HCC Committee and the full Board approved a compensation package designed to deliver market-competitive compensation commensurate with Mr. Baughn’s capabilities and experience, particularly in retail companies, and provide a powerful incentive to execute the Lace Up Plan. His annual base salary was set at $650,000. For 2023, Mr. Baughn was eligible to receive a prorated Annual Incentive Plan award guaranteed at least at target of 85% of his base salary. On March 27, 2024, the HCC Committee approved an amendment to Mr. Baughn’s offer letter to reduce his guaranteed prorated Annual Incentive Plan award by an amount equal to the negative discretion exercised by the HCC Committee for all participants at the levels of Vice President and above, including the NEOs, with respect to NPS (20%). Mr. Baughn also received an annual LTI award of 200% of his base salary (20% delivered in RSUs that vest three years from the date of grant, 60% delivered in PSUs for the 2023-25 performance period (prorated for the 2023-25 performance period), and 20% in Non-Qualified Stock Options that vest in equal installments over three years, in each case subject to

 

 

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  47          

Foot Locker, Inc.

 

 

 

ExECuTIvE COmPEnSATIOn

 

continued employment through the vesting dates). Mr. Baughn was also granted certain sign-on awards, which were intended to replace stock-based awards and other compensation Mr. Baughn forfeited from his prior employment in connection with his recruitment to the Company, as follows: (1) a sign-on RSU award with a grant date value of $600,000, which will vest over two years from the grant date subject to his continued employment through each vesting date, and (2) a sign-on cash payment in the amount of $600,000, $300,000 of which was paid within 90 days after his start date, and the remaining $300,000 of which is payable within 90 days after the one-year anniversary of his start date. The sign-on RSU awards’ vesting, and sign-on cash payment, schedules were designed to align with the vesting and payment schedules, as applicable, of the stock-based awards and other compensation Mr. Baughn forfeited from his prior employment in connection with his recruitment to the Company.

 

Say-on-Pay Shareholder Vote

 

At our 2023 annual meeting, nearly 97% of shares voted on the Say-on-Pay proposal supported the executive compensation program. The HCC Committee considered the results of the 2023 Say-on-Pay vote and our shareholders’ historically strong support of our executive compensation program in reviewing the program for 2024. Additionally, we had discussions with many of our shareholders regarding executive compensation as part of our 2023 shareholder engagement cycle and took into account the views of shareholders regarding the design and effectiveness of our executive compensation program. See Shareholder Engagement beginning on page 36 for more details on our shareholder engagement program. In light of this feedback received during our shareholder engagement, the HCC Committee decided to make certain adjustments to the program design. See 2024 Compensation Program Design Changes on page 63 for a discussion of the 2024 compensation program design changes. The HCC Committee will continue to assess the executive compensation program against changing business conditions and shareholder feedback. Our Say-on-Pay vote is currently held every year, consistent with the preference expressed by a majority of our shareholders.  
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COMPENSATION PROGRAM DESIGN AND STRUCTURE

 

Pay-for-Performance

 

The centerpiece of our compensation program is our pay-for-performance philosophy that aligns compensation payouts with the achievement of our annual operating plan and long-term strategy, and consequently shareholder value. This is showcased at senior levels of the Company—particularly the CEO—for whom most compensation is tied to the achievement of metrics driving the Company’s operating and stock performance, as described below.

 

Factor

 

Description

Performance-Based

 

89% of the CEO’s annual target compensation mix is performance based.

     
     

Challenging Goals

 

Recent Annual Incentive Plan and PSU payouts underscore our pay-for-performance culture and the rigor of the financial goals approved by the HCC Committee. For example, only three times in the past five years has the Annual Incentive Plan paid out above target and two of the past five PSU awards were not earned and paid out at 0%.

     
     

Formulaic

 

Our Annual Incentive Plan and PSU payouts are formulaically determined based on performance against challenging financial and operating goals.

     
     

Peer Benchmarked

 

We utilize an objective set of criteria to determine peer companies and evaluate CEO and other NEO compensation against the peer group median, while factoring in individual contribution and experience.

     
     

Responsive to Say-on-Pay Vote

 

We have received historically strong Say-on-Pay support. For example, at our 2023 annual meeting, nearly 97% of shares cast on the Say-on-Pay proposal supported the executive compensation program.

     
     

Compensation Mix

 

For LTI awards granted in 2021 through 2023, we utilized a consistent mix of PSU awards (60%), stock option awards (20%), and RSU awards (20%).

 

See Pay versus Performance beginning on page 80 for further information.

 

 

2024 PROXY STATEMENT
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48          

 

 

 

ExECuTIvE COmPEnSATIOn

 

COMPENSATION MIX

 

The HCC Committee seeks to align the compensation program with both our business strategy and our shareholders’ interests. Our executive compensation program includes both a mix of annual and long-term, as well as cash and equity, compensation. As shown in the charts below, for 2023, 89% of the CEO’s annual target compensation mix (excluding the Transformation PSU award), and 75%, on average, of the remaining NEOs who are current executive officers’ annual target compensation mix, was variable based on performance.

 

2023 TARGET COMPENSATION    
CEO   Average of Remaining NEOs
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2023 PERFORMANCE-BASED COMPENSATION METRICS    
Annual Incentive Plan   PSUs
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  49          

Foot Locker, Inc.

 

 

 

ExECuTIvE COmPEnSATIOn

 

Components of Executive Compensation Program

 

The key components of our executive compensation program are described in the following table:

 

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Base Salary

 

All team members, including the NEOs, are measured against several Company and individual performance measures depending on the role to be eligible for an annual base salary rate increase. As part of its annual review of compensation, the HCC Committee approved an annual base salary rate increase, effective May 1, 2023, for Mr. Bracken, as shown below, based on his performance and a position- oriented analysis of market salaries. The HCC Committee also approved a base salary rate increase, effective October 16, 2023, for Mr. Higginbotham to reflect the additional responsibilities he took on as Treasurer. The annual base salary rates for the NEOs, other than Mr. Bracken and Mr. Higginbotham, were not increased during Fiscal 2023.

 

 

Year-End 2022

Year-End 2023

Base Salary

 

Base Salary Rate

Base Salary Rate

Rate Increase

Name

($)

($)

(%)

Bracken

825,000

872,400

5.75

Higginbotham

400,000(1)

430,000

7.5

 

(1) 

Mr. Higginbotham was paid a base salary rate of $650,000 while he served as interim Chief Financial Officer from March 1, 2023 through June 11, 2023.

 

 

2024 PROXY STATEMENT
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50          

 

 

 

 

 

 

 

ExECuTIvE COmPEnSATIOn

 

Annual Incentive Plan

 

     
 

We have a history of setting challenging performance goals. Incentive payouts are earned only when we achieve or exceed our goals, and awards are subject to negative discretion when appropriate to align management’s payouts with shareholders’ expectations regarding financial performance.

 
     

 

Consistent with our pay-for-performance culture, the HCC Committee established rigorous financial performance and NPS targets for 2023. The targets the HCC Committee established were based on the Company achieving Adjusted Operating Income of $507.5 million (which accounts for 80% of the payout), and a certain NPS payout (which accounts for 20% of the payout), each as illustrated below. Although the Company did achieve the threshold NPS performance required for a payout, permitting an objective goal payout percentage of 134.6%, it did not achieve the threshold Adjusted Operating Income required for payment, so the HCC Committee exercised negative discretion, upon the recommendation of management, to reduce the NPS payout to 0% for all participants at the levels of Vice President and above, including the NEOs, notwithstanding the Company’s actual NPS performance. The HCC Committee exercised negative discretion to align management’s payouts with shareholders’ expectations regarding financial performance. As a result, the NEOs did not earn any Annual Incentive Plan payouts for this performance period. Under the terms of his offer letter, however, Mr. Baughn was eligible to receive a prorated Annual Incentive Plan award guaranteed at least at target of 85% of his base salary for 2023. On March 27, 2024, the HCC Committee approved an amendment to Mr. Baughn’s offer letter to reduce such guaranteed prorated Annual Incentive Plan award by an amount equal to the negative discretion exercised by the HCC Committee for all participants levels Vice President and above, including the NEOs, with respect to NPS (20%), resulting in a payout to Mr. Baughn of 68% of his base salary for 2023.

 

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(1) 

Although the Company did achieve the threshold NPS performance required for a payout, permitting an objective goal payout percentage of 134.6%, it did not achieve the threshold Adjusted Operating Income, so the HCC Committee exercised negative discretion, upon the recommendation of management, to reduce the NPS payout to 0% for all participants levels Vice President and above, including the NEOs, notwithstanding the Company’s actual NPS performance. The HCC Committee exercised negative discretion to align management’s payouts with shareholders’ expectations regarding financial performance.

 

The Annual Incentive Plan payouts provide for the exclusion of certain items from such performance targets that the HCC Committee considers to be unusual or non-recurring. These items, if they occur, are excluded when calculating the Annual Incentive Plan payouts, however, such unusual or non-recurring items may not be material for purposes of the non-GAAP measures presented in the Annual Report. In addition, certain items may not be adjusted for purposes of the Annual Incentive Plan payouts, as they do not exceed a pre-established adjustment threshold, although they are adjusted for financial reporting purposes in the Annual Report consistent with past practices. See Appendix A for a reconciliation of our non-GAAP to GAAP financial results.

 

Additionally, while the HCC Committee increased the maximum payouts for 2023 to 200% of target from 150% in the prior year for participants under the Annual Incentive Plan, the HCC Committee also increased the performance goal for a maximum payout from 110% to 115% of target performance to further stretch the organization to achieve a maximum performance payout. The HCC Committee made these changes to ensure industry alignment between management’s payouts and shareholders’ expectations if the target goals are exceeded. The HCC Committee believed that the introduction of Adjusted Operating Income as a performance metric is appropriate because of management’s direct ability to impact the results. An increase in the maximum payouts under the Annual Incentive Plan is appropriate to deliver market-competitive compensation, which is necessary in attracting and retaining talented executives, particularly given the Company’s transformation initiatives, and balanced by increasing the maximum performance goals relative to the target performance goals for the Annual Incentive Plan.

 

 

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  51          

Foot Locker, Inc.

 

 

 

ExECuTIvE COmPEnSATIOn

 

ADJUSTED OPERATING INCOME

 

The HCC Committee established the 2023 Adjusted Operating Income target of $507.5 million based upon the business plan and budget approved by the Board. Our objective is to set challenging performance goals throughout the Company. We believe that achieving these challenging performance goals is demanding. While the year presented certain macroeconomic and consumer-related pressures in addition to Company-specific factors, including changes in our vendor allocations, the team focused on delivering near-term results and building upon the momentum from our strategic initiatives to drive long-term shareholder value creation.

 

NPS

 

The HCC Committee established NPS targets for the NEOs. NPS is a metric used to measure customer experience and predict future business growth. NPS is calculated using the answers to questions posed to customers scored on a 0-10 scale. Respondents are grouped as follows:

 

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Subtracting the percentage of Detractors from the percentage of Promoters yields the NPS, which can range from a low of -100% (if every customer is a Detractor) to a high of 100% (if every customer is a Promoter). The HCC Committee established three touchpoints for measuring NPS by each geographic region, each of which is assessed as a stand-alone performance measure to allow for balanced focus on each area of opportunity to improve an “omni-” customer experience: Store Post-Purchase, Digital Post-Purchase, and Post-Fulfillment. The survey responses are aggregated by region (North America, EMEA, and Asia Pacific) and are scored individually by touchpoint. Each customer touchpoint has its own threshold, target, and maximum, but they ultimately roll up into one payout percentage. The evaluation of full-year NPS utilizes the Company’s global performance management rating scale, in which performance can range from 0% to 200% based on the relative achievement of the metrics.

 

The Company leverages NPS results to implement change across the organization and better serve customers and drive future performance. The HCC Committee established rigorous NPS targets for 2023. Based on our ability to listen to our customer, the Company was able to remove friction points along the customer OMNI journey, such as improving the digital checkout experience, especially during the holiday season. Comparing holiday performance for 2022 and 2023, we saw a 22% decrease in payment errors, a 29% decrease in overall checkout issues, a 47% reduction in account login errors, a 26% decrease in promo code errors, and a 42% increase in product display accuracy. With these enhancements, the Company saw record Digital NPS numbers in North America and EMEA, as well as above target NPS performance globally for our brick-and-mortar sites and online order fulfillment.

 

 

2024 PROXY STATEMENT
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52          

 

 

 

ExECuTIvE COmPEnSATIOn

 

In addition, NPS also measures the effectiveness of our responsible business practices because customer satisfaction and brand perception depend on these factors, as described in the following table:

 

Feature

 

Description

Linked to Responsible

Business Practices

 

Our responsible business practices focus on ensuring that our customers enjoy world-class engagement and an environment that encourages the pursuit of excellence every day.

Reputational

 

NPS measures customer satisfaction and brand perception, which are influenced by customers’ sentiments concerning the Company’s responsible business practices.

Long Term

 

NPS measures loyal enthusiasts who will keep buying and refer others, fueling long-term and sustainable future growth. Strong responsible business principles and performance are necessary for the Company’s success over the long term, including attracting and retaining customers.

Measurable

 

NPS is calculated using a 0-10 scale used to measure customer experience and predict future business growth.

 

To learn more about our global responsible business practices, see our Impact Report, which is presented consistent with SASB and TCFD reporting standards and is available at investors.footlocker-inc.com/impactreport.

 

ADDITIONAL INFORMATION

 

The Annual Incentive Plan for the NEOs makes incentive payments based upon the Company’s results, without individual performance adjustments. However, executives who receive a “not meeting expectations” rating in their annual performance review are ineligible to receive an annual incentive payment. All annual incentive targets and calculations are based on the results of continuing operations through the end of Fiscal 2023. None of our NEOs received a “not meeting expectations” rating in their annual performance review.

 

Annual Incentive Plan awards are calculated based on a percentage of the executive’s base salary rate during the year. For 2023, the maximum payout under this plan was 200% of target, with a maximum payout in any year for any participant capped at $6 million.

 

Annual incentive payouts are calculated on the basis of a straight-line interpolation between the threshold (90% of target), and maximum (115% of target).

 

 

Target as a

 

Actual 2023 Payout

     
 

Percentage of

 

as a Percentage of

 

Actual

 
 

Base Salary Rate

 

Target

 

2023 Payout

 

Name

(%)

 

(%)

 

($)

 

Dillon

200

 

 

 

Baughn(1)

85

 

(1)

(1)

Bracken

110

 

 

 

Rodgers

100

 

 

 

Reeves

75

 

 

 

Higginbotham

50

(2)

 

 

 

(1) 

Mr. Baughn joined the Company during 2023, so his target Annual Incentive Award was prorated for the 2023 performance period. Under the terms of his offer letter, Mr. Baughn was eligible to receive a prorated Annual Incentive Plan award guaranteed at least at target of 85% of his base salary for 2023. On March 27, 2024, the HCC Committee approved an amendment to Mr. Baughn’s offer letter to reduce such guaranteed prorated Annual Incentive Plan award by an amount equal to the negative discretion exercised by the HCC Committee for all participants levels Vice President and above, including the NEOs, with respect to NPS (20%).

 

(2) 

Mr. Higginbotham’s target Annual Incentive Award was increased to 75% while he served as interim Chief Financial Officer from March 1, 2023 through June 11, 2023.

 

Mr. Page’s employment with the Company terminated prior to the Annual Incentive Plan 2023 award; he was, therefore, ineligible to receive an annual incentive award.

 

 

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  53          

Foot Locker, Inc.

 

 

 

ExECuTIvE COmPEnSATIOn

 

LTI Awards

 

     
 

We have a history of setting challenging performance goals. Incentive payouts are earned only when we achieve or exceed our goals.

 
     

 

Our LTI awards included a combination of PSU awards and other long-term equity awards granted annually under the Stock Incentive Plan in the form of stock options and RSUs. Our LTI awards were awarded as 60% PSUs, 20% stock options, and 20% RSUs.

 

PSU AWARDS

 

The PSU awards are designed to reward executives for achieving multi-year performance targets. The PSU awards are formula-driven, with targets established by the HCC Committee based upon financial targets included in the business plan approved each year by our Board. The actual number of PSUs awarded will be based upon the Company’s performance results, without individual performance adjustments. Key design features of the PSU awards are:

 

Feature

Description

 

2022-24 Performance Period

2023-25 Performance Period

Maximum Payout as

Percent of Target

187.5% (including the impact of the TSR modifier)

200% (including the impact of the TSR modifier)

100% Equity

100% of earned payouts are made in equity payable under the Stock Incentive Plan for all of the NEOs.

Two-Year Average

After-Tax Income

and ROIC Targets

The preliminary performance targets are based on the Two-Year Average After-Tax Income (70%) and ROIC (30%) that are contained in the business and financial plan approved by the Board for the performance period.

 

For additional detail on these performance targets, see PSU Awards (2022-24) below and PSU Awards (2023-25) beginning on page 55.

 

Settlement at End

of Three-Year Period

The preliminary PSU payouts calculated following the end of two-year performance period are adjusted by a TSR modifier to represent the Company’s TSR percent rank over a three-year performance period relative to the companies in the S&P 1500 Specialty Retail Index, such that it is multiplied by between 75% for TSR below the 30th percentile to 125% for TSR above the 80th percentile. The TSR modifier is designed to enhance the alignment of internal incentive plan payouts with changes in external shareholder value.

Aligned with
Shareholder Return

A decrease in the Company’s stock price results in a decrease in the value of previously-awarded PSUs. When our stock price increases and generates positive returns for our shareholders, the increase impacts an executive’s realized pay.

 

PSU AWARDS (2022-24)

 

Consistent with our pay-for-performance culture, the HCC Committee established Two-Year Average After-Tax Income and ROIC targets in 2022 for the 2022-24 performance period that were rigorous and appropriate in light of the Company’s prior performance, and set a “performance floor” for each performance measure. The targets the HCC Committee established were based on the Company achieving Two-Year Average After-Tax Income of $410.9 million (which accounts for 70% of the payout) and ROIC of 8.0% (which accounts for 30% of the payout). The Company achieved Two-Year Average After-Tax Income of $304.9 million and ROIC of 6.6% for this performance period, which were below the threshold performance. As a result, no payouts were earned for this performance period. The targets, along with the adjusted actual performance for the period and the calculation of ROIC, are shown in the table below.

 

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2024 PROXY STATEMENT
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54          

 

 

 

ExECuTIvE COmPEnSATIOn

 

The HCC Committee establishes certain performance targets in connection with determining the Company’s PSU payouts. The PSU payouts provide for the exclusion of certain items from such performance targets that the HCC Committee considers to be unusual or non-recurring. These items, if they occur, are excluded when calculating the PSU payouts, however, such unusual or non-recurring items may not be material for purposes of the non-GAAP measures presented in the Annual Report. In addition, certain items may not be adjusted for purposes of the PSU payouts, as they do not exceed a pre-established adjustment threshold, although they are adjusted for financial reporting purposes in the Annual Report consistent with past practices. See Appendix A for a reconciliation of our non-GAAP to GAAP financial results.

 

The PSU payouts are formula-driven based upon Company performance, and calculated on the basis of a straight-line interpolation between the threshold (85% of target) and maximum (120% of target). Our program does not provide for discretionary adjustments based upon individual performance. The HCC Committee did not exercise discretion in the amounts payable to the NEOs or any other executive officers or corporate officers under this incentive program.

 

The target PSU values for the NEOs for the 2022-24 performance period are listed in the following table:

 

Name

PSU Values at Target
($)

Dillon(1)

3,487,350

Bracken

1,113,776

Rodgers(2)

618,886

Page(3)

780,004

 

(1) 

Ms. Dillon joined the Company in August 2022, and was appointed President and Chief Executive Officer, effective September 2022. Her target PSU award was prorated for the 2022-24 performance period.

 

(2) 

Mr. Rodgers joined the Company in December 2022. His target PSU award was prorated for the 2022-24 performance period.

 

(3) 

Mr. Page forfeited these PSUs in connection with the termination of his employment.

 

Mr. Baughn joined the Company in June 2023, and Ms. Reeves and Mr. Higginbotham became eligible for PSU awards in December 2022, so they were not granted PSU awards for the 2022-24 performance period.

 

PSU AWARDS (2023-25)

 

In March 2023, the HCC Committee established that (1) preliminary PSU performance goals for the 2023-25 performance period will be based (a) 70% on the Company’s Two-Year Average After-Tax Income, and (b) 30% on the Company’s Two-Year Average ROIC; and (2) the preliminary PSU payout will be adjusted by a TSR modifier to represent the Company’s TSR percent rank over a three-year performance period commencing at the beginning of Fiscal 2023 relative to the companies in the S&P 1500 Specialty Index, such that it is multiplied by between 75% for TSR below the 30th percentile to 125% for TSR above the 80th percentile. Additionally, the HCC Committee increased the maximum payouts to 200% of target from 187.5% in the prior year, including the impact of the TSR modifier for participants under the PSU awards to deliver market-competitive compensation, which is necessary in attracting and retaining talented executives, particularly given the Company’s transformation initiatives, when shareholders’ expectations of the target goals are exceeded. For competitive reasons, since this performance period is still ongoing, we have not disclosed the targets established for the period. The HCC Committee will determine whether preliminary payouts have been earned following the end of the Company’s 2024 fiscal year, which will be adjusted by a TSR modifier following the end of Fiscal 2025. We will provide specific information on the targets and results after the completion of the performance period. For any awards earned for the 2023-25 performance period, payment will be made to participating executives in 2026.

 

 

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  55          

Foot Locker, Inc.

 

 

 

ExECuTIvE COmPEnSATIOn

 

The target PSU values for the NEOs for the 2023-25 performance period if the performance goals are achieved are listed in the following table:

 

Name

PSU Values at Target
($)

Dillon

4,800,000

Baughn(1)

637,796

Bracken

1,177,740

Rodgers

1,080,000

Reeves(2)

324,000

Higginbotham

240,000

 

(1) 

Mr. Baughn joined the Company in June 2023. His target PSU award was prorated for the 2023-25 performance period.

 

(2) 

Ms. Reeves will forfeit these PSUs in connection with the termination of her employment.

 

Mr. Page’s employment with the Company terminated prior to the PSU award for the 2023-25 performance period; he was, therefore, ineligible to receive a PSU award.

 

Transformation PSU Award

 

The HCC Committee considered the significant transformation initiatives occurring in the Company’s business and the strategic work that would be necessary by the CEO to achieve its long-term goals. In light of this, as previously-disclosed in the 2023 Proxy Statement, in connection with Ms. Dillon’s employment, the HCC Committee granted her an additional sign-on employment inducement award of PSUs focused on the Company’s transformation initiatives. While this inducement award was granted in connection with Ms. Dillon’s hiring in August of 2022, because the performance conditions of the transformation PSU award were set in 2023, accounting principles require that this award be reflected in 2023 reporting, including the Summary Compensation Table. This transformation PSU award is designed to encourage and reward superior performance of stretch performance goals aligned with the Lace Up Plan. The HCC Committee views the financial targets under the Lace Up Plan as challenging but attainable. After the Company granted the transformation PSU award, the Company updated the timing during its fourth quarter 2023 earnings call of when it expects to achieve the financial targets under the Lace Up Plan that were communicated at the Company’s March 2023 Investor Day. This delay has no impact on the goals under the transformation PSU award.

 

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https://cdn.kscope.io/400edc2a0bcca0c79c1726ad8d380b30-a89.jpg
  These shares will be earned based on a three-year performance period (2023-25) subject to the achievement of stretch performance goals aligned with the Lace Up Plan above: (1) revenue (which accounts for 40% of the payout), (2) EBIT margin (which accounts for 40% of the payout), and (3) a scorecard that measures the quality of the revenue and EBIT margin outcomes equally against the Company’s four strategic imperatives embedded in the Lace Up Plan (which accounts for 20% of the payout):

 

 

 

2024 PROXY STATEMENT
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56          

 

 

 

ExECuTIvE COmPEnSATIOn

 

Strategic Imperative

Performance Metric
(% to Total)

Weighting
(%)

Expand Sneaker Culture

Sales from Strategic Vendors

25

Power Up Our Portfolio

Off-Mall Square Footage

25

Deepen Our Relationship with Customers

Sales from Loyalty

25

Be Best-in-Class Omni

Sales from eCommerce

25

 

Each of the performance metrics included in the scorecard is objective, quantifiable, measurable, and critical to executing the Company’s transformation.

 

This award was converted into 137,024 shares based on the closing stock price on August 24, 2022 of $36.49 per share with an initial value of $5,000,000. Under GAAP accounting rules, a grant date value for accounting purposes is not established until the performance targets and any other conditions are approved and communicated. Since this occurred in March 2023, the grant date value of the transformation PSU award is reported in the Summary Compensation Table and other supporting compensation tables and reflects the Company’s stock price on the date on which the HCC Committee approved the performance goals.

 

As Ms. Dillon had previously left her prior employment at the time of her recruitment to the Company, this award was not intended to replace stock-based awards or other compensation that she forfeited from prior employment. Instead, in designing Ms. Dillon’s compensation package, the HCC Committee sought to deliver market-competitive compensation for talented chief executive officers commensurate with Ms. Dillon’s capabilities and experience, particularly given the value of her leadership to the Company’s transformation initiatives.

 

In determining to grant this award and the behavior to be incentivized by it, the HCC Committee first considered the existing executive incentive programs, including the Annual Incentive Plan, which is based (a) 80% on Adjusted Operating Income and (b) 20% on NPS, and the PSU awards, which is based preliminarily (a) 70% on Two-Year Average After-Tax Income and (b) 30% on Two-Year Average ROIC, and then adjusted by a TSR modifier. Given the desire to accelerate the pace by which the Company drives its transformation initiatives, the HCC Committee believed that it was important to provide additional incentive directly focused on revenue, EBIT margin, and the quality of these financial outcomes across the Company’s strategic imperatives.

 

The percentage of achievement of the performance goals at the end of the three-year performance period will be applied to the target number of PSUs granted to Ms. Dillon to determine the actual number of PSUs that may be earned. The percentage of the target number of PSUs that may be earned at threshold is 44% and at maximum is 100%. If the threshold performance goals are not met, no PSUs will be earned or paid out to Ms. Dillon.

 

As the performance period is on-going, we have not disclosed the actual targets because we believe it would be competitively harmful to do so. At the end of the performance period—in 2026—the HCC Committee will determine whether the performance goals have been achieved, and we will provide specific disclosure regarding the targets, performance results relative to those targets, and the earned payouts, if any, for the completed performance period.

 

Stock Option and RSU Awards

 

The HCC Committee granted stock options and RSUs to the NEOs in 2023. In deciding to grant these awards and determining the value of the awards, the HCC Committee considered each executive’s performance, position, and career potential and the competitive market for equivalent talent. See Grants of Plan-Based Awards in Fiscal 2023 beginning on page 68 for additional information on awards granted in Fiscal 2023.

 

The values shown in Grants of Plan-Based Awards in Fiscal 2023 for the stock option awards in 2023 are based on the applicable Black-Scholes value on the grant date. The amounts shown in the table do not necessarily reflect the actual value that may be realized by the NEOs. The stock option exercise price is equal to the closing price of the Common Stock on the grant date. Stock options typically vest at the rate of one-third of the total award per year over the first three years of the ten-year option term, subject to continuous service through each vesting date and accelerated vesting in certain limited circumstances. RSUs generally cliff vest after a period of three years based on continued employment. The HCC Committee does not typically consider an executive’s gains from prior stock awards in granting new awards as compensation in the current year. The HCC Committee determines the number of options granted based on a fixed value, using the Black-Scholes value on the grant date.

 

 

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  57          

Foot Locker, Inc.

 

 

 

ExECuTIvE COmPEnSATIOn

 

ADDITIONAL RSU AWARDS

 

The HCC Committee granted RSU awards in 2023 to (1) Mr. Baughn upon hire, as discussed above in order to replace compensation he forfeited when he was recruited by us, and (2) Mr. Higginbotham, on March 1, 2023, to reflect the additional responsibilities he assumed as Interim Chief Financial Officer while continuing to perform his other duties, and, again on October 16, 2023, to reflect the additional responsibilities he assumed as Treasurer as well as for retention purposes. The sign-on RSU awards’ vesting, and sign-on cash payment, schedules were designed to align with the vesting and payment schedules, as applicable, of the stock-based awards and other compensation Mr. Baughn forfeited from his prior employment in connection with his recruitment to the Company. In deciding to grant these awards and determining the values of the awards, the HCC Committee considered each executive’s position, the Company’s recruiting needs, and, with respect to Mr. Higginbotham, his expanded scope and responsibilities. The HCC Committee determined that Messrs. Baughn and Higginbotham’s additional RSU awards were in the best interests of the Company and its shareholders. The additional RSU awards will vest over two years from the grant dates, subject to continued employment through the vesting dates. All of these values, and corresponding grant dates, are shown in the table below:

 

Name

   

RSUs
03/01/23
(#)

   

RSUs
06/12/23
(#)

   

RSUs
10/16/23
(#)

     

Grant Date Fair Value

($) 

 

Baughn

     

     

22,440

     

     

600,046

 

Higginbotham

     

4,055

     

     

     

175,014

 
       

     

     

9,175

     

200,015

 

 

Retirement Plan and Excess Cash Plan

 

The Company maintains a Retirement Plan and the Excess Cash Plan for participants, including the NEOs who met the eligibility requirements prior to the plan being frozen for new participants (including rehires) after December 31, 2019. Of the NEOs, only Mr. Bracken participated in the Retirement Plan and Excess Cash Plan during 2023. These plans, as well as the method of calculating benefits payable under these plans, are described on page 75.

 

401(k) Plan and Excess Savings Plan

 

Of the NEOs, Mses. Dillon and Reeves, and Messrs. Bracken, Higginbotham, and Page participated in the 401(k) Plan and the Excess Savings Plan during 2023. These plans, as well as the method of calculating contributions under these plans, are described beginning on page 75.

 

Perquisites

 

We provide the NEOs with certain perquisites, which the HCC Committee believes are reasonable and consistent with its overall objective of attracting and retaining talented executives in a competitive labor market. The Company provides each of the NEOs with an automobile reimbursement (other than Ms. Dillon), medical expense reimbursement, supplemental long-term disability insurance, and financial planning. In addition, the Company reimburses Ms. Dillon for reasonable car service expenses for transportation in the New York metropolitan area while in New York on Company business for increased personal security and efficiency. We do not provide a gross-up to executives for the income tax liability they incur due to their receipt of these perquisites.

 

Employment Arrangements and Offer Letters

 

Ms. Dillon has an employment agreement, and each of the other current executive officers has an employment agreement or an offer letter with substantially the same benefits, and subject to substantially the same provisions, as other current executive officers with employment agreements, as described on page 67. All of our NEOs are employed at-will.

 

 

2024 PROXY STATEMENT
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ExECuTIvE COmPEnSATIOn

 

PROCEDURES FOR DETERMINING COMPENSATION

 

Setting Compensation, Establishing Goals, and Evaluating Performance

 

As reflected in the following timeline, the HCC Committee oversees a rigorous and comprehensive compensation approval, goal setting, and performance review process:

 

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The HCC Committee reviews any feedback from shareholder engagement meetings regarding the compensation program.

 

 

At its February meeting, the HCC Committee discusses further refined planning and preliminary recommendations for the compensation program.

 

 

At its March meeting, final recommendations are presented, and the HCC Committee approves the executive compensation design, components, and equity awards for each executive. The HCC Committee meets privately with its independent compensation consultant to review and approve the CEO’s compensation. The HCC Committee also establishes the Annual Incentive Plan and PSU goals.

 

https://cdn.kscope.io/400edc2a0bcca0c79c1726ad8d380b30-a91.jpg

 

 

During its meetings over this period, the HCC Committee has preliminary discussions with management and the HCC Committee’s independent compensation consultant regarding the compensation program design for the following year, including reviewing compensation trends, peer group composition, a competitive analysis of each executive’s compensation relative to market, preliminary pay recommendations and performance evaluations, and the current incentive payout forecast. The HCC Committee provides feedback and direction regarding the program design for the next fiscal year.

 

 

The HCC Committee meets privately with its independent compensation consultant regarding the CEO’s compensation.

       
  Year-Round  
       
  The HCC Committee meets at other times throughout the year with management and privately with its independent compensation consultant to review performance against the established performance goals, discuss developments and emerging trends, and review specific executive compensation and management resources issues. The HCC Committee is also responsible each year for reviewing the compensation paid to non-employee directors and making recommendations to the Board regarding the directors’ compensation program.  
   

 

 

 

 

 
   

 

Peer Group Approach

 

We have established targets for compensation, including cash and equity, for each NEO. These targets are reviewed annually and are based upon compensation for comparable positions in a peer group consisting of (1) companies having revenues of approximately 0.5 to 2 times the Company’s revenue and market capitalization of approximately 0.25 to 4 times the Company’s market capitalization; and (2) select sub-industries within the consumer discretionary sector most comparable to the Company’s business, including apparel retail; apparel, accessories, and luxury goods; footwear; home furnishing retail; internet and direct marketing retail; and specialty stores. We also use the peer group data to assess the competitiveness of total direct compensation awarded to our senior executives and as a data point in designing compensation plans, benefits, and perquisites.

 

 

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  59          

Foot Locker, Inc.

 

 

 

ExECuTIvE COmPEnSATIOn

 

The HCC Committee determined that the following companies, which comprised the peer group for 2023 compensation decisions, were appropriate for executive compensation purposes based upon the nature of their businesses, revenues, and the talent pool from which they recruit their executives.

 

PEER GROUP
FOR 2023
COMPENSATION
DECISIONS

   Academy Sports and Outdoors, Inc.

   American Eagle Outfitters, Inc.

   Bath & Body Works, Inc.

   Burlington Stores, Inc.

   Capri Holdings Limited

   Dicks Sporting Goods, Inc.

   The Gap, Inc.

   Hanesbrands Inc.

   Levi Strauss & Co.

   The ODP Corporation

   Petco Health and Wellness Company, Inc.

   PVH Corp.

   Qurate Retail, Inc.

   Ralph Lauren Corporation

   Sally Beauty Holdings, Inc.

   Signet Jewelers Limited

   Skechers U.S.A., Inc.

   Tapestry, Inc.

   Tractor Supply Company

   Ulta Beauty, Inc.

   Under Armour, Inc.

   Urban Outfitters, Inc.

   Victorias Secret & Co.

   Williams-Sonoma, Inc.

 

One goal of the HCC Committee is to provide competitive total compensation opportunities for the NEOs that vary with Company performance. The HCC Committee uses the peer group target information as a reference point in evaluating executive compensation, assessing the competitiveness of total direct compensation awarded to our senior executives, and designing compensation plans, benefits, and perquisites. The HCC Committee does not, however, attempt to match the compensation of each executive position in the Company precisely with that of an equivalent position in the peer group. In general, the HCC Committee looks to position an executive’s total compensation at the median of comparable positions at peer companies, consistent with the Company’s revenue in relation to peer companies. The HCC Committee also considers other factors, including performance, responsibility, experience, tenure, internal equity, and market positioning, when determining compensation.

 

During 2023, the HCC Committee reviewed the peer group and determined that (other than the removal of Bed Bath & Beyond Inc. due to its bankruptcy) no changes to the peer group were appropriate for 2024 compensation decisions.

 

Use of Compensation Consultant

 

The HCC Committee has retained a nationally-recognized compensation consultant, that is independent and performs no work for management, as its advisor. The compensation consultant reports directly to the HCC Committee, meets with the HCC Committee privately without management present, and regularly communicates privately with the Committee Chair. The compensation consultant also meets with the NCR Committee regarding non-employee directors’ compensation and reports on related governance and trends. The HCC Committee has assessed the compensation consultant’s independence based on standards promulgated by the SEC and concluded that no conflict of interest exists that would prevent it from serving as an independent compensation consultant to the HCC Committee. Each year, the compensation consultant reviews a report on risk in relation to the Company’s compensation policies and practices, provides a pay-for-performance analysis of our executive compensation program, and reviews the CEO’s compensation. In addition, each year the compensation consultant reviews and makes recommendations regarding the compensation program for non-employee directors, and the HCC Committee considers the compensation consultant’s report on the program.

 

Management Involvement in Developing the Compensation Program

 

Management is involved in various aspects of developing the executive compensation program. Our Chief Human Resources Officer, Vice President—Total Rewards, and other Human Resources staff work with our CEO to develop compensation recommendations for all executive officers, corporate officers, and other employees with base salaries of $500,000 or greater, other than the CEO. The CEO or the Chief Human Resources Officer reviews these proposals with the Committee Chair, and may make changes to the recommendations based upon her input, before the recommendations are presented to the HCC Committee for review. As part of her responsibilities, the Non-Executive Chair of the Board also attends all HCC Committee meetings and advises the HCC Committee Chair in fulfilling her designated role and responsibilities. Our General Counsel, and Deputy General Counsel and Corporate Secretary, also attend meetings of the HCC Committee and participate in some of these discussions and preparations.

 

 

2024 PROXY STATEMENT
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ExECuTIvE COmPEnSATIOn

 

ADDITIONAL INFORMATION

 

Key Compensation Governance Policies

 

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Clawback Policy

 

The Company has adopted a policy concerning the recoupment of incentive compensation, or “clawback” policy, which applies to each executive officer, corporate officer, certain other senior executives, and any other executive who reports directly to the CEO or CFO, that provides for the recovery of incentive compensation paid in cash or equity if the HCC Committee determines that the participant (1) engaged in fraud or gross misconduct which results in an accounting adjustment, whether or not the adjustment results in a restatement of our financial statements, or (2) committed a significant legal or compliance violation of the Code of Business Conduct or other policies.

 

Additionally, in compliance with the SEC rules implementing the incentive-based compensation recovery provisions of the Dodd-Frank Act, and the NYSE listing standards consistent with the SEC rules, the Company has adopted a supplemental clawback policy, which applies to our executive officers, within the meaning of the Exchange Act, who were employed by the Company during the applicable recovery period. Under the policy, in the event that the financial results upon which incentive-based compensation was predicated become the subject of a financial restatement that is required because of material non-compliance with financial reporting requirements, the HCC Committee will conduct a review of awards covered by the policy and recoup any erroneously awarded incentive-based compensation to ensure that the ultimate payout gives retroactive effect to the financial results as restated. The policy covers any incentive-based compensation award that was received by an executive officer during the last completed three fiscal years immediately preceding the date on which the Company is required to prepare the accounting restatement (and following October 2, 2023, the effective date specified in the NYSE listing standards).

 

Stock Ownership Guidelines

 

We have meaningful stock ownership guidelines for our non-employee directors and executive officers. At the end of 2023, all of the NEOs met or exceeded their applicable requirements (or were within the initial five-year period to achieve compliance). These guidelines are described on page 29.

 

Policy Prohibiting Hedging or Pledging of the Company’s Stock

 

Directors, executive officers, corporate officers, and certain other team members are prohibited from (1) engaging in transactions involving publicly-traded options that relate to the Company’s securities, or (2) purchasing financial instruments (e.g., prepaid variable forward contracts, equity swaps, collars, and exchange funds) that are designed to hedge or offset a decrease in the market value of securities either granted to, or otherwise held, directly or indirectly, by, the director, executive officer, corporate officer, or certain other team member. No team member may engage in these types of transactions while aware of material nonpublic information about the Company. For additional information regarding the Company’s policy prohibiting hedging or pledging of the Company’s stock, see our Policy Prohibiting Insider Trading available at investors.footlocker-inc.com/trading.

 

 

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ExECuTIvE COmPEnSATIOn

 

Compensation Program and Risk

 

We believe that our compensation program encourages our NEOs to take action to improve the Company’s performance without encouraging them to take undue risk. The Annual Incentive Plan and PSU awards are paid based upon performance as compared to the Company’s annual and two-year financial plans, respectively, which are prepared each year by management and approved by the Board. No incentive awards are earned or paid unless the applicable performance goals are achieved. We believe that the plans are rigorous, but reasonably achievable, under normal business conditions. This encourages our executives to manage the business well without pressuring them to take undue risks in order to obtain a payout.

 

Our LTI awards for the NEOs are designed with a similar goal in mind. We believe that our LTI awards are reasonable in relation to overall compensation. Stock options typically vest ratably over a three-year period and have a 10-year term, and RSUs generally cliff vest after a period of three years, thereby each reducing the risk that an executive will take short-term action to inflate the price of the Company’s stock for a brief period. PSU payouts are first calculated at the conclusion of an initial two-year performance period, and then adjusted by a TSR modifier at the end of a third year. In addition to serving as a retention vehicle, this also requires that the executive continues to have the value of their award at risk and dependent on fluctuations in stock price, for an additional year. It also allows a year to pass in which any issues concerning the Company’s operating or financial performance may come to light before payments are made.

 

In addition, there are certain other factors related to our compensation programs for the NEOs that we believe help reduce the likelihood that our compensation programs will encourage our executives to take undue risk, as described below:

 

Factor

 

Description

     

ROIC as PSU Award Measurement

 

As a retail company, we believe that one of the potential risks we have is that management will attempt to achieve profit targets without taking into account the capital used, particularly working capital invested in inventory and operating leases. We have, therefore, designed our PSU awards for senior management, including the NEOs, to take into account ROIC as well as Two-Year Average After-Tax Income in determining whether a PSU award payout will be paid.

     
     

No Bonus Payments to Executives with Poor Performance Ratings

 

We have designed our plans so that executives who receive a “Not Meeting Performance” rating under the Company’s annual performance appraisal process are not eligible to receive an annual incentive payout. This helps prevent an individual executive from taking any action inconsistent with the business plan or otherwise exposing the Company to undue risk.

     
     

Incentive Targets

 

Annual Incentive Plan targets are based on the financial plan that is approved by the Board.

     
     

Annual Incentive Payout Caps

 

Annual incentive payouts to executives are capped and do not include excessive leverage.

     
     

Mix of Components

 

We use a mix of annual and long-term incentive components, as well as a mix between the use of cash and equity.

     

 

Accounting and Tax Considerations

 

While we review both the accounting and tax effects of various components of compensation, these effects are not a significant factor in the HCC Committee’s allocation of compensation among the different components. The HCC Committee believes that in certain instances it is in the best interests of the Company and our shareholders to have the flexibility to pay compensation that is not tax deductible so that we may provide compensation consistent with our program and objectives.

 

 

2024 PROXY STATEMENT
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2024 COMPENSATION PROGRAM DESIGN CHANGES

 

As part of the comprehensive compensation approval, goal setting, and performance review process conducted by the HCC Committee for 2023-24, the HCC Committee considered shareholders’ feedback received as part of our 2023 shareholder engagement cycle concerning the design and effectiveness of the Company’s executive compensation program. See Shareholder Engagement beginning on page 36 for a discussion of the 2023 shareholder engagement cycle. The HCC Committee also considered the significant transformation initiatives occurring in the Company’s business and the strategic work that would be necessary by management to achieve its long-term goals. In light of this, the HCC Committee aligned the Company’s Annual Incentive Plan and LTI with the Lace Up Plan. This redesign is meant to encourage and reward performance aligned with the Lace Up Plan. The HCC Committee will continue to assess the executive compensation program against changing business conditions and shareholder feedback.

 

Compensation

Program

     

2023

 

2024

 

 

Performance Goals

 

80% Adjusted Operating Income, and 20% NPS (assessed at the corporate and division levels, as applicable)

 

80% Adjusted Operating Income, and 20% Lace Up Plan scorecard (assessed at the corporate level only, and not by division)

Annual

Incentive

Plan

 

Performance Gate

 

Not applicable for NEOs (75% for participants with individual objectives)

 

75% of Corporate Adjusted Operating Income for Lace Up Plan scorecard, and 75% of Corporate/Division Adjusted Operating Income for participants with individual objectives, as applicable

   

Performance Goals

for Threshold and

Maximum Payouts

 

90% and 115% of target financial performance

 

80% and 120% of target financial performance

LTI Awards

 

Vehicle Mix

 

PSU awards (60%), stock option awards (20%), and RSU awards (20%)

 

PSU awards (60%) and RSU awards (40%) for the CEO, and PSU awards (50%) and RSU awards (50%) for other NEOs

PSU Awards

 

Performance Goals

 

The preliminary performance targets are based 70% on Two-Year Average After-Tax Income, and 30% on Two-Year Average ROIC. The preliminary PSU payouts calculated following the end of two-year performance period are adjusted by a TSR modifier to represent the Company’s TSR percent rank over a three-year performance period relative to the companies in the S&P 1500 Specialty Retail Index, such that it is multiplied by between 75% for TSR below the 30th percentile to 125% for TSR above the 80th percentile.

 

50% on Three-Year Cumulative Adjusted After-Tax Income, 25% on Three-Year Cumulative Revenue, and 25% on TSR to represent the Company’s TSR percent rank over a three-year performance period relative to the companies in the S&P 1500 Specialty Retail Index

   

Performance Period

 

2 years with 3-year TSR modifier

 

3 years

   

Performance Goals

for Threshold and

Maximum Payouts

 

85% and 120% of target Average After- Tax Income performance

 

89% and 116% of target Average ROIC performance

 

80% and 120% of target Cumulative Adjusted After-Tax Income performance

 

93% and 107% of target Cumulative Revenue performance

 

30% relative TSR rank equates to a 25% payout, 55% relative TSR rank equates to a 100% payout, and 80% relative TSR rank equates to a 200% payout

RSU Awards

 

Vesting

 

Three-Year Cliff

 

Three-Year Ratable

 

 

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