UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

 

Filed by the Registrant  ☒

 

Filed by a Party other than the Registrant  ☐

 

Check the appropriate box:

 

 

 

 

Christopher & Banks Corporation

2400 Xenium Lane North

Plymouth, Minnesota 55441

 

To Our Stockholders:

 

Christopher & Banks Corporation is holding its Annual Meeting of Stockholders (“Annual Meeting”) on Thursday, June 30, 2016 at 9:00 a.m. Central Time. You may attend the Annual Meeting in person and vote and submit a question during the Annual Meeting.

 

The following pages include a formal notice of the Annual Meeting and the proxy statement. The proxy statement describes and provides information on the matters to be acted on at the Annual Meeting. It is important that your shares be represented at the meeting, regardless of whether you plan to attend the meeting. Please vote your shares as soon as possible through the voting options available to you as described in the proxy statement.

 

On behalf of management and our Board of Directors, we thank you for your continued support of Christopher & Banks Corporation, and I encourage you to join us at the Annual Meeting.

 

 

 

Christopher & Banks Corporation

2400 Xenium Lane North

Plymouth, Minnesota 55441

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

 

For shares held through a broker, bank or other nominee, you may vote by submitting voting instructions to your broker, bank or nominee.

 

Regardless of whether you expect to attend the meeting, please vote your shares in one of the ways outlined above.

 

As we have for the past several years, we are furnishing proxy materials to certain stockholders over the Internet. On or about May 18, 2016, we began mailing to our stockholders a Notice of Internet Availability of Proxy Materials (“Notice of Availability”) containing instructions on how to access our 2016 proxy statement and Fiscal 2015 annual report and to vote online or via telephone. If you received the Notice of Availability and would like to receive a copy of the printed proxy materials, the Notice of Availability contains instructions on how you can request copies of these documents. Please vote your shares promptly to ensure that they are represented at the meeting.

 

 

PROXY STATEMENT SUMMARY

 

2016 ANNUAL MEETING OF STOCKHOLDERS

 

ATTENDING THE REGULAR MEETING OF STOCKHOLDERS

 

 

 

 

 

 

 

MEETING AGENDA AND BOARD RECOMMENDATIONS

 

CORPORATE GOVERNANCE

 

Christopher & Banks understands that corporate governance practices change and evolve over time. We seek to adopt and use practices that we believe will be of value to our stockholders and will positively aid in the governance of the Company. Some of our current governance practices include the following:

 

 

BACKGROUND ON DIRECTOR NOMINEES

 

Our Board of Directors has nominated seven directors for election at the Annual Meeting. Please see “Item 1 - Election of Directors” beginning on page 6 of this proxy statement for additional information about each nominee.

 

 

 

 

 

 

TABLE OF CONTENTS

 

(i)

 

(ii)

(iii)

 

 

 

PROXY STATEMENT

FOR THE

2016 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JUNE 30, 2016

 

The Board of Directors (the “Board”) of Christopher & Banks Corporation (the “Company”, “we”, “us” and “Christopher & Banks”) is soliciting proxies for use at the Christopher & Banks 2016 Annual Meeting of Stockholders (“Annual Meeting”) to be held at 9:00 a.m. Central Time on Thursday, June 30, 2016, at Dorsey & Whitney LLP’s offices at 50 South Sixth Street, 15th Floor, Minneapolis, Minnesota and at any adjournment or postponement of the meeting. On or about May 18, 2016, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) containing instructions on how to access our proxy statement for our Annual Meeting and our annual report to stockholders. Our proxy statement and 2015 annual report to stockholders are available at https://materials.proxyvote.com/171046.

 

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

 

What proposals will be voted on at the Annual Meeting?

 

There are four proposals to be voted on at the Annual Meeting:

 

 

 

 

 

 

How does the Board of Directors recommend that I vote?

 

Our Board of Directors recommends that you vote “FOR” each of the nominees to the Board of Directors and “FOR” each of the other three proposals.

 

Will any other business be considered at the meeting?

 

Our Board does not intend to present any other matters for a vote at the Annual Meeting. Our by-laws provide that a stockholder may present a proposal at the Annual Meeting that is not included in this proxy statement only if proper written notice was received by us. No stockholder has given the timely notice required by our by-laws in order to present a proposal at the Annual Meeting. If any other business properly comes before the meeting, however, the persons named as proxies for stockholders will vote on those matters in a manner they consider appropriate.

 

Who may attend and vote at the Annual Meeting?

 

All stockholders who own shares of Christopher & Banks common stock, par value $0.01 per share (the “Common Stock”) at the close of business on May 5, 2016 (the “Record Date”), or their duly appointed proxies, may attend the Annual Meeting or any adjournments or postponements thereof.  Holders of our Common Stock at the close of business on the Record Date are entitled to vote at our Annual Meeting.  As of May 5, 2016, 37,084,323 shares of our Common Stock were outstanding and entitled to vote.

 

How many votes do I have?

 

For each matter, you have one vote for each share of our Common Stock that you owned on the Record Date.

 

How do I vote my shares?

 

Stockholders of Record. If you are a stockholder of record, you may vote in the following ways:

 

 

 

 

 

Beneficial Owners. If you are a beneficial owner, you may vote by submitting voting instructions to your broker or other nominee holding your shares. You should follow the instructions in the Notice of Availability or voting instructions provided by your broker or nominee in order to instruct your broker or nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the broker or nominee. Shares held beneficially may be voted in person or via the Internet at the Annual Meeting only if you obtain a legal proxy from the broker or nominee giving you the right to vote the shares.

 

Your vote is important, and we encourage you to vote promptly.

 

What constitutes a quorum for holding the Annual Meeting?

 

In accordance with our by-laws, shares equal to a majority of the outstanding shares of our Common Stock entitled to vote as of the Record Date must be present at the Annual Meeting in order to hold the meeting and conduct business. This is called a quorum. Your shares are counted as present at the Annual Meeting if:

 

 

 

 

 

If a quorum is not present or represented at the Annual Meeting, the stockholders and proxies entitled to vote will have the power to adjourn the Annual Meeting, without notice other than an announcement of adjournment at that time, until a quorum is present or represented.

 

What is the effect of giving a proxy?

 

It is your designation of another person to vote stock you own. That other person is called a proxy. Our Board is soliciting your proxy to be used at the Annual Meeting. When you sign the proxy card, you appoint LuAnn Via, our President, Chief Executive Officer and a director; Pete Michielutti, our Executive Vice President, Chief Operating Officer and Chief Financial Officer; and Luke Komarek, our Senior Vice President, General Counsel and Corporate Secretary, as your representatives at the Annual Meeting. One or all of these individuals, or a substitute if necessary, will vote your shares at the Annual Meeting as you have instructed them on the proxy card. If you timely sign and deliver your proxy card, but you do not provide voting instructions, your proxy representative will vote in favor of the seven nominees for director and, subject to applicable rules and regulations, in favor of the other three proposals, and with respect to any other matter that may be properly presented at the Annual Meeting, in the discretion of the proxy representative. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, we recommend that you complete, sign and return your proxy card in advance of the Annual Meeting.

 

What is the difference between a “stockholder of record” and a “street name” holder?

 

If your shares are registered directly in your name, you are considered the “stockholder of record” with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the stockholder of record with respect to those shares, while you are considered the beneficial owner of those shares. In that case, your shares are said to be held in “street name”. Street name holders generally cannot vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares, using the method described above under “How do I vote my shares?”.

 

Why did I receive a notice regarding the availability of proxy materials on the Internet instead of a full set of proxy materials?

 

In accordance with the rules of the Securities and Exchange Commission (“SEC”), we have elected to furnish our proxy materials, including this proxy statement and our annual report to our stockholders, primarily via the Internet. On or about May 18, 2016, we mailed to our stockholders the Notice of Availability that contains instructions on how to access our proxy materials on the Internet, how to vote at the Annual Meeting, and how to request printed copies of the proxy materials and annual report.  Stockholders may request to receive all future proxy materials in printed form by mail or electronically by e-mail by following the instructions contained in the Notice. We encourage stockholders to take advantage of the availability for the proxy materials on the Internet.

 

What does it mean if I receive more than one Notice of Availability or proxy card?

 

If you receive more than one Notice of Availability, proxy card or voting instruction form, it means that you hold shares registered in more than one account. To ensure that all of your shares are voted, you will need to be sure to vote once for each account.

 

 

What if I do not specify how I want my shares voted?

 

If you submit a signed proxy card or submit your proxy by Internet and do not specify how you want to vote your shares, we will vote your shares:

 

 

 

 

 

When voting by telephone, stockholders can choose to submit their vote on each proposal or to vote per the Board’s recommendation.

 

Note: If you are a street name holder and fail to instruct your broker, bank, trust or other nominee how you want to vote your shares on a particular matter, those shares are considered to be “uninstructed”. New York Stock Exchange (the “NYSE”) rules determine the circumstances under which member brokers of the NYSE may exercise discretion to vote “uninstructed” shares held by them on behalf of their clients who are street name holders. The applicable NYSE rules permit brokers to exercise discretion to vote uninstructed shares with respect to the proposal to ratify the selection of KPMG LLP as our independent registered public accounting firm. The rules do not permit member brokers to exercise discretion with respect to: (i) the proposal to elect directors, (ii) the Say-on-Pay Proposal or (iii) the proposed amendments to the Directors’ Plan. If the broker, bank, trust or other nominee is not permitted to exercise discretion, the uninstructed shares will be referred to as “broker non-votes”. For more information regarding the effect of broker non-votes on the outcome of the vote, see below under “How are votes counted?”.

 

Your vote is very important. We urge you to vote, or to instruct your broker, bank, trust or other nominee how to vote, on all matters to be considered at the Annual Meeting.

 

Can I revoke my proxy and change my vote?

 

Yes, you may revoke your proxy and change your vote at any time before your proxy is voted at the Annual Meeting. You may revoke your proxy and change your vote by:

 

 

 

 

If you voted through the Internet or by telephone, you may vote again over the Internet or by telephone up until 11:59 p.m. Eastern Time on Wednesday, June 29, 2016.

 

 

What vote is required to approve each item of business? 

 

To be elected in an uncontested election, a director must receive a majority of the votes cast by holders of the outstanding shares of our Common Stock, present, in person or by proxy, at the Annual Meeting and who are entitled to vote on the election of directors. A majority of the votes cast for this purpose, means that the number of shares voted “For” a director exceeds the number of shares voted “Against” that director. If an incumbent director receives less than a majority of the votes cast; then as described on page 6, that director must tender her or his resignation to the Board and the Board will determine whether to accept or reject such resignation. In a contested election (an election in which the number of nominees for director is greater than the number of directors to be elected), the vote standard will be a plurality of votes cast.

With respect to the Say-on-Pay Proposal, the amendments to the Directors’ Plan, and the ratification of the appointment of KPMG LLP as our independent registered public accounting firm, the affirmative vote of the holders of a majority of the votes cast by the holders of the outstanding shares of our Common Stock present, in person or by proxy, and entitled to vote at the 2016 Annual Meeting is required for the approval of each of these proposals.

 

How are votes counted?

 

You may vote “FOR”, “AGAINST” or “ABSTAIN” for each nominee for the Board and on each of the other proposals.

If you submit your proxy but abstain from voting on one or more matters, your shares will be counted as present at the meeting for the purpose of determining a quorum. If you abstain from voting for one or more of the directors, this will have no effect on the election of those directors. If you abstain from voting on the Say-on-Pay Proposal, the amendments to the Directors’ Plan or on the ratification of the appointment of KPMG LLP as our independent registered public accounting firm, this will also have no effect on those proposals.

Broker “non-votes” on any matter will be considered as not being present and not entitled to vote for purposes of calculating the vote on such matter.

 

Where can I find the voting results of the meeting?

 

We plan to announce preliminary voting results at the Annual Meeting. We plan to publish the final voting results in a Current Report on Form 8-K (“Form 8-K”) filed within four business days of the Annual Meeting.

 

Who will count the votes?

 

Broadridge Financial Solutions will count the votes and act as the inspector of election.

 

How can I attend the Annual Meeting?

 

All of our stockholders are invited to attend the Annual Meeting. We will not require tickets for admission to the Annual Meeting. However, you may be asked to present valid photo identification, such as a driver’s license or passport, before being admitted to the Annual Meeting. If you hold your shares in street name, you also may be asked to present proof of ownership to be admitted to the Annual Meeting. A brokerage statement or letter from your broker, bank, trust or other nominee are examples of proof of ownership. No cameras, cellular phones, pagers or personal computing devices will be allowed to be used during the meeting, and all attendees are expected to comply with the rules of conduct for the Annual Meeting, which will be made available to those attending the meeting.

 

 

Are members of the Board required to attend the Annual Meeting?

 

Directors are encouraged, but not required, to attend the Annual Meeting. All nine of our then-current Board members attended the 2015 Annual Meeting.

 

Who pays for the cost of proxy preparation and solicitation?

 

We pay for the cost of proxy preparation and solicitation, including the charges and expenses of brokerage firms or other nominees for forwarding proxy materials to beneficial owners of shares held in street name. We have retained The Proxy Advisory Group, LLC to assist in the solicitation of proxies for a fee of approximately $17,500 plus associated costs and expenses. We will also reimburse banks, brokerage houses and other custodians, nominees and certain fiduciaries for their reasonable expenses incurred in mailing proxy materials to their principals. Proxies may also be solicited by our employees, acting without any additional compensation.

 

ITEM 1 — ELECTION OF DIRECTORS

 

Our Board currently has nine members. All of the current directors’ terms expire as of the Annual Meeting.  The Board is proposing that the seven nominees described below be elected or re-elected for a term expiring at the 2017 Annual Meeting of Stockholders, or when their successors are duly elected and qualified.

 

Each of the nominees has agreed to serve as a director if elected. If, for any reason, any nominee becomes unable to serve before the election, the persons named as proxies will vote your shares for a substitute nominee if one is selected by the Board, subject, as applicable, to the terms of the Support Agreement described below.  Alternatively, the Board, at its option, may reduce the number of directors that are nominated for election.

 

The Company’s by-laws require directors to be elected by a majority of votes cast with respect to such director in uncontested elections (meaning, the number of shares voted “For” a director must exceed the number of votes cast “Against” that director). In a contested election (an election in which the number of nominees exceeds the number of directors to be elected), the standard for election of directors will be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors.

 

In accordance with the Company’s Corporate Governance Guidelines, if an incumbent director is not elected by a majority vote in an uncontested election, the director must promptly tender her or his resignation to the Board of Directors. The Governance and Nominating Committee will make a recommendation to the Board of Directors as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board of Directors will act on the resignation, taking into account the Governance and Nominating Committee’s recommendation, and publicly disclose (by a press release, a filing with the SEC or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within 90 days following certification of the election results. If such incumbent director’s resignation is not accepted by the Board of Directors, such director will continue to serve until the next annual meeting and until her or his successor is duly elected or her or his earlier resignation or removal.

 

2016 Director Nomination Process; Support Agreement

 

On March 10, 2016, after discussions with Macellum Retail Opportunity Fund, LP and certain of its affiliates (collectively, “Macellum”), whose Chief Executive Officer is Jonathan Duskin, one of our nominees for director, and certain other institutional stockholders regarding potential changes to the composition of our Board, we entered into a support agreement with Macellum (the “Support Agreement”) which provided that, effective as of the Annual Meeting, the size of the Board would be reduced to seven members and the slate of directors nominated by the Board would include:

 

 

 

 

Additionally, in connection with the Support Agreement, Mark Cohn, Edwin Holman, Anne Jones, David Levin, Paul Snyder and Patricia Stensrud agreed not to stand for re-election at the 2016 Annual Meeting, thus reducing the size of the Board to seven members as of the Annual Meeting.

 

The Support Agreement also provides that at least one Macellum Designee who meets all independence or other requirements under applicable law and the rules and regulations of the NYSE for service on such committee will be appointed to each committee of the Board.  Additionally, during the term of the Support Agreement, in the event either of the Macellum Designees ceases to serve subsequent to his election, only Macellum may fill the vacancy of a Macellum Designee, provided that, should Macellum cease to beneficially own an aggregate net long position (as such term is defined in Rule 14e-4 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of at least the lesser of (i) 1,853,974 shares of Common Stock (subject to adjustment for stock splits, reclassifications, combinations and similar adjustments), and (ii) 5% of the outstanding shares of Common Stock as of the date of such vacancy, then each of the Macellum Designees will be deemed to have resigned from the Board and any committee of the Board on which such designee then sits and Macellum will no longer be able to appoint a replacement.  The Support Agreement will terminate upon mutual agreement of the Company and Macellum or on the date and time that all Macellum Designees no longer serve on the Board.

 

Pursuant to the terms of the Support Agreement, Jonathan Duskin, Seth Johnson, Kent Kleeberger, William Sharpe, III, LuAnn Via, Lisa Wardell and Laura Weil have been nominated by the Board for election to the Board to serve until the 2017 Annual Meeting of Stockholders or until their successors are duly elected and qualified.

 

Board Recommendation

 

The Board recommends a vote FOR the election of each of Jonathan Duskin, Seth Johnson, Kent Kleeberger, William Sharpe, III, LuAnn Via, Lisa Wardell and Laura Weil. Proxies will be voted FOR the election of each of the seven nominees, unless otherwise specified.

 

Below is biographical information for each of the director nominees.

 

Director Nominees

 

Jonathan Duskin, 48, has served as Chief Executive Officer of Macellum Capital Management LLC, a Delaware limited liability company which operates a New York-based pooled investment fund, since July 2009. From January 2005 to February 2008, Mr. Duskin served as a Managing Director and Partner at Prentice Capital Management, LP, an investment management firm. From March 2002 to January 2005, Mr. Duskin was a Managing Director at S.A.C. Capital Associates LLC, a New York-based hedge fund. From January 1998 to January 2002, Mr. Duskin was a Managing Director at Lehman Brothers Inc., an investment bank, and served as Head of Product Management and Chairman of the Investment Policy Committee within the Research Department.

 

Mr. Duskin brings considerable business, financial services and retail investment expertise, having provided financial and investment banking services to a variety of public and private companies.  His prior service on the boards and committees of public companies and his familiarity with the retail industry are expected to make him a valuable addition to our Board.

 

Seth R. Johnson, 62, has served on the board of directors of Tilly’s, Inc. (“Tilly’s”), a specialty retailer of West Coast inspired casual apparel, footwear and accessories since April 2011.  Prior to that, Mr. Johnson served as a member of the advisory committee to the Tilly’s board from July 2008 through 2011.  Since July 2014, Mr. Johnson has served as a member of the board of directors of bebe stores, inc., a specialty retailer of women’s clothing and accessories and was a member of the board of directors and lead director of True Religion Apparel, Inc., a premium fashion apparel retailer, from 2010 to 2013.  From 2007 to 2009, Mr. Johnson was an instructor in business strategy at Chapman University’s

Argyros School of Business and Economics.  From 2005 to 2006, Mr. Johnson served as the Chief Executive Officer of Pacific Sunwear of California, Inc.  From 1999 to 2004, Mr. Johnson was the Chief Operating Officer of Abercrombie & Fitch Co., a specialty retailer, and was its Chief Financial Officer from 1992 to 1998.

 

Mr. Johnson has over 30 years of apparel retail experience, including significant experience as both a retail executive and board member. Mr. Johnson’s strong retail background and service on the boards and committees of public companies are expected to enable him to contribute important operational, financial and strategic planning insights to our Board.

 

Kent A. Kleeberger, 64, has been engaged as an independent consultant to certain private equity firms since April 2015. From February 2011 to March 2015, he was Executive Vice President, Chief Operating Officer of Chico’s FAS, Inc. (“Chico’s”) a specialty apparel retailer.  Mr. Kleeberger joined Chico’s in November 2007 as the Executive Vice President, Chief Financial Officer & Treasurer. He was promoted to Chief Operating Officer in February 2011. Prior to joining Chico’s, Mr. Kleeberger was the Senior Vice President, Chief Financial Officer for Dollar Tree Stores, Inc. from July 2004 through October 2007. From 1998 to 2004, he served in numerous capacities, culminating as Chief Operating Officer, for Too Inc., now known as Justice (part of Ascena Retail Group, Inc.). Prior to that, Mr. Kleeberger served in various financial positions with The Limited, Inc., including Corporate Controller.  Before joining The Limited, Inc., Mr. Kleeberger was a Certified Public Accountant with KPMG for 13 years.  Mr. Kleeberger also serves on the board of directors of Shoe Carnival, Inc. and was a member of the board of directors of Aeropostale, Inc. from August 2015 to February 2016.

 

Mr. Kleeberger brings retail, operational and management experience together with a strong background in the areas of tax, financial reporting, accounting and audits, and risk management.  His service on the boards and committees of public companies, together with his retail and business background, are expected to make him a valuable addition to our Board.

 

William F. Sharpe, III, 53, has served as one of our directors since May 2012.  Mr. Sharpe is currently a Partner with Pathfinder Companies, LLC.  From September 2009 to December 2015, Mr. Sharpe served as a Partner and Managing Director of Quetico Partners, LLC, a boutique investment banking firm. From July 2007 to August 2009, he was Chief Operating Officer and a Managing Director of Lazard Middle Market, a subsidiary of Lazard, Ltd. which provides advice on mergers and acquisitions, restructuring, and public and private capital raising to the middle market, following the acquisition by Lazard, Freres & Company of Goldsmith Agio Helms & Lynner, LLC (“Goldsmith-Agio”). He was with Goldsmith-Agio, a private investment banking firm, from February 1998 to July 2007, most recently serving as Chief Operating Officer and Managing Director from 2002 to July 2007.

 

Mr. Sharpe brings considerable business, investment banking and corporate experience to our Board, given his more than 15 years as an investment banker. Mr. Sharpe’s experience as a board and committee member at both private and non-profit companies, together with his broad investment banking, corporate and financial background, positions him well to serve as a member of our Board.

 

LuAnn Via, 62, has served as our President and Chief Executive Officer (“CEO”) and a director since November 2012. Ms. Via has over 30 years of retail and wholesale experience in a variety of channels, including extensive executive, merchandise, product development, sourcing and manufacturing responsibilities. From July 2008 until October 2012, Ms. Via served as President and Chief Executive Officer of Payless ShoeSource, Inc., a subsidiary of Collective Brands, Inc. Ms. Via also has specialty retail women’s experience, having served at Charming Shoppes, Inc. as a Group Divisional President for both the Lane Bryant and Cacique brands from June 2007 to July 2008 and as President of Catherines Stores, Inc., a Charming Shoppes subsidiary, from January 2006 to June 2007. Prior to this, and for more than 20 years, Ms. Via held several leadership positions with a number of top retailers. Ms. Via currently serves on the board of directors of STRATA Skin Sciences, Inc.

 

As President and CEO, Ms. Via is able to provide our Board with valuable insight regarding the Company’s operations, its management team and associates, as a result of her day-to-day involvement with the Company. She plays a critical role in Board discussions regarding strategic planning and development for the Company, as well as operational issues in all aspects of the Company’s business. Ms. Via’s retail, wholesale and both domestic and international manufacturing background, together with her public company board experience, make her uniquely well-qualified to serve on our Board.

 

Lisa W. Wardell, 46, has served as one of our directors since June 2011 and has served as the Non-Executive Chair of our Board since November 2015.  Ms. Wardell also served as Chair of the Board’s Audit Committee from January 2012 to November 2015.  Ms. Wardell has been the Executive Vice President and Chief Operating Officer of The RLJ Companies (“RLJ”), a diversified holding company with portfolio companies in the financial services, asset management, real estate, hospitality, professional sports, film production and gaming industries, since 2004. In her role at RLJ, Ms. Wardell has closed $80 million in automotive dealership acquisitions, served as the primary RLJ fundraiser for a $610 million money management fund and managed a hotel development project in West Africa. From February 2010 to October 2012, Ms. Wardell served as Chief Financial Officer of RLJ Acquisition, Inc., a special purpose acquisition company, which raised $140 million and completed the business combination of Image Entertainment, Inc. and Acorn Media Group to become RLJ Entertainment, Inc. Prior to joining RLJ, Ms. Wardell was a Principal at Katalyst Venture Partners, a private equity firm that invested in start-up technology companies in the media and communications industries, from 1999 to 2003. From 1998 to 1999, Ms. Wardell worked as a senior consultant for Accenture, a global management consulting, technology services and outsourcing company. From 1994 to 1996, Ms. Wardell was an attorney with the Federal Communications Commission. Ms. Wardell is a member of the bar in the District of Columbia and Georgia. Ms. Wardell currently serves on the board of directors of DeVry Education Group and was a director of RLJ Entertainment, Inc. from 2012 to 2015.

 

Ms. Wardell brings extensive experience to the Board as a senior business executive in private equity, operations and strategy, and financial analysis, including mergers and acquisitions. Her previous experience in a legal capacity with a federal regulatory agency gives her valuable perspective on the issues that come before the Board, including business, legal, financial and regulatory matters. In addition, her business background and experience as a board and committee member at both public and private companies provides her with valuable insight on a number of issues facing the Company and positions her well to serve as a member of our Board and as Non-Executive Chair. 

 

Laura A. Weil, 59, founded Village Lane Advisory LLC, which specializes in providing executive and strategic consulting services to retailers as well as private equity firms.  She was the Executive Vice President and Chief Operating Officer of New York & Company, Inc., a woman’s apparel and accessories retailer, from June 2012 to August 2014, having served it as an Executive Consultant since February 2012. Ms. Weil was the Chief Executive Officer of Ashley Stewart LLC, a privately held retailer, from 2010 to 2011. Ms. Weil was the Chief Executive Officer of Urban Brands, Inc., a privately held apparel retailer, from 2009 to 2010.  Urban Brands, Inc. filed for Chapter 11 bankruptcy protection in September 2010.  Ashley Stewart LLC, the retail chain operated by Urban Brands, Inc., emerged from bankruptcy in October 2010. Ms. Weil was the Chief Operating Officer and Senior Executive Vice President of Ann Taylor Stores Corporation, a women’s apparel company, from 2005 to 2006. From 1995 to 2005, she was the Chief Financial Officer and Executive Vice President of American Eagle Outfitters, Inc., a clothing retailer.  Ms. Weil currently serves on the board of directors of Carnival Corporation.

 

Ms. Weil has extensive financial, information technology and operating skills developed over many years as an investment banker and senior financial and operating executive.  Ms. Weil also brings significant experience in global eCommerce and consumer strategies from her leadership experience with a large retail company as well as her public company board and committee experience, which are expected to make her a valuable addition to our Board.

 

INFORMATION REGARDING THE BOARD AND CORPORATE GOVERNANCE

 

The Board conducts its business through meetings and written consents of the Board and the following standing committees: Audit, Compensation, and Governance and Nominating. Each of the standing committees has adopted and operates under a written charter, all of which are available on our website at www.christopherandbanks.com—select the “For Investors” link and then the “Corporate Governance” link. Other corporate governance documents available on our website include our Corporate Governance Guidelines and Code of Conduct.

 

Code of Conduct

 

We have adopted a Code of Conduct applicable to all of our employees, directors and officers, including our principal executive officer, principal financial officer, principal accounting officer, controller and other employees performing similar functions.

 

Director Independence

 

Our Corporate Governance Guidelines provide that a majority of our directors shall meet the independence requirements of the NYSE. Under the NYSE rules, no director qualifies as independent unless the Board affirmatively determines that the director has no material relationship with us (directly, or as a partner, stockholder or officer of an organization that has a relationship with us).

 

In assessing the independence of our directors, the Board considers all of the business relationships between the Company and our directors and their respective affiliated companies. This review is based primarily on the Company’s review of its own records and on responses of the directors to a questionnaire regarding employment, business, familial, compensation and other relationships with the Company and our management. Where relationships exist, the Board determines whether the relationship between the Company and the director or the director’s affiliated companies impairs the director’s independence.

 

After consideration of the directors’ relationships with the Company, the Board has affirmatively determined, in accordance with the standards set forth in the Corporate Governance Guidelines, that none of the individuals serving as non-employee directors during Fiscal 2015 had a material relationship with us and that each of such non-employee directors (Mark Cohn, Edwin Holman, Anne Jones, David Levin, William Sharpe, III, Paul Snyder, Patricia Stensrud and Lisa Wardell) is independent. Additionally, the Board has affirmatively determined, in accordance with the standards set forth in the Corporate Governance Guidelines, that none of the nominees for director, other than LuAnn Via, has a material relationship with us, and that, other than Ms. Via, each such nominee for director is independent. Ms. Via was not considered an independent director during Fiscal 2015 because of her employment as our President and CEO.

 

Board Leadership Structure

 

The Board believes it is important to maintain flexibility in its board leadership structure and, therefore, has not mandated either the combination or separation of the positions of Chair of the Board and CEO. In 2005, we separated the two positions after the departure of our then CEO and Chair. Since that time, we have had a non-employee, independent director serve as Chair of the Board, other than from October 19, 2010 to January 10, 2011 when our Chair was also the Interim CEO. Given the demanding nature of both the Chair and CEO positions, the Board believed, and continues to believe, that it is appropriate to have two different persons occupying each role. Our independent director Chair has the typical responsibilities of a Board Chair, including responsibility for setting Board agendas, chairing Board and stockholder meetings, liaising between the other members of the Board, and the CEO and other members of senior management, as well as presiding over the sessions of Board meetings at which only the independent directors are present. Lisa Wardell, one of our independent directors, has served as Chair of our Board since November 2015.

 

If in the future the two roles were to be combined, the Board believes it would likely appoint a lead independent director, given its view of the importance of strong independent leadership at the Board level.

 

Meetings of the Independent Directors

 

At both the Board and committee levels, our non-employee directors meet regularly in executive sessions in which our CEO and other members of management do not participate. Our Board Chair serves as the presiding director of executive sessions of the Board, and the Chair of each committee serves as the presiding director at executive sessions of that committee. During Fiscal 2015, our non-employee directors met in executive sessions of the Board without management on nine occasions. Each of the Board’s committees also held sessions without management present in Fiscal 2015.

 

Stock Ownership Guidelines

 

To provide a direct link between director and stockholders’ interests, the Board has established stock ownership guidelines for non-employee directors. Each director is expected to achieve and maintain stock ownership of stock having a value of two times the annual cash retainer (currently $96,000) by the third anniversary of the date he or she joined our Board. Mr. Sharpe and Ms. Wardell, the two non-employee directors nominated for re-election, both meet this guideline.

 

Term/Age Limits

 

The Board does not believe it is advisable to establish arbitrary term limits on a director’s service. The Board has a mandatory retirement age under which a director must complete her or his term before age 76. The Board has the authority to renominate a director who has reached her or his 76th birthday for another term, due to special or extraordinary circumstances as determined by the Board. As part of its responsibilities, the Governance and Nominating Committee evaluates each incumbent director’s qualifications, performance and ability to continue to contribute productively before recommending the nomination of that director for an additional term.

 

Limitations on Board Service

 

Limitations on All Non-Employee Directors. Our Corporate Governance Guidelines provide that no member of the Board shall simultaneously serve on the boards of directors of more than three public companies in addition to ours.

 

Limitations on Non-Employee Directors who are Chief Executive Officers of a Public Company. Our Corporate Governance Guidelines also provide that an independent director who is a chief executive officer of a public company shall not sit on the boards of directors of more than three public companies as follows: (i) the Company; (ii) the company at which he or she serves as chief executive officer; and (iii) one other public company.

 

Limitations on the Company’s Officers. Our Corporate Governance Guidelines further provide that an officer of the Company may not serve on the board of directors of another public company unless the Company’s Board has reviewed and consented to, in advance, the officer serving on such board of directors.

 

A Company director is to notify the Chair of the Board prior to becoming a director of another public company, in order to avoid potential conflicts of interest and to address whether the aggregate number of directorships held by such director would interfere with his or her ability to carry out his or her responsibilities as one of our directors. In the event that the Board determines that the additional directorship constitutes a conflict of interest or interferes with such director’s ability to carry out his or her responsibilities as one of our directors, such director, upon the request of the Board, shall either offer his or her resignation or not accept the other directorship.

 

As of the date of this proxy statement, all of the Company’s director nominees were in compliance with the Corporate Governance Guidelines’ limitations on board service.

 

Board Involvement in Risk Oversight

 

The Company’s management is responsible for defining the various risks facing the Company, formulating risk management policies and procedures, and managing the Company’s risk exposures on a day-to-day basis. The Board’s responsibility is to monitor the Company’s risk management processes concerning the Company’s material risks and evaluating whether management has processes in place to address these material risks; the Board is not responsible, however, for defining or managing the Company’s various risks.

 

While the Board periodically reviews and discusses the overall risks the Company faces, as well as risk management and mitigation in the context of specific plans or projects being proposed or implemented, the Board also exercises its overall responsibility for risk oversight through its committees. The Audit Committee of the Board is primarily responsible for overseeing management’s processes for managing financial and operational risk at the Company. The Audit Committee also has primary responsibility at the Board level with respect to overseeing the management of risks

relating to the reliability of our financial reporting processes and system of internal control. In connection with that responsibility, the Audit Committee has sole authority to retain and terminate the independent public accounting firm and is directly responsible for the overall compensation and oversight of the work of the independent public accounting firm. The Audit Committee meets with management and the independent public accounting firm to review and discuss the annual audited and quarterly unaudited financial statements and reviews the integrity of our accounting and financial reporting processes and audits of our financial statements.

 

 

Similarly, the Compensation Committee of the Board oversees risks associated with its areas of responsibility, including the risks associated with our compensation programs, policies and practices with respect to both executive compensation and compensation generally. The Compensation Committee has sole authority to retain and terminate its compensation consultants and is responsible for approving the overall compensation and oversight of the work of the compensation consultants.

 

The Governance and Nominating Committee of the Board oversees risks associated with its areas of responsibility, including the risks associated with non-employee director compensation. In addition, the Governance and Nominating Committee periodically analyzes corporate governance practices in order to assist the Board in its risk oversight activities.

 

To keep the Board informed regarding the Company’s risk management efforts, management periodically reports to the Audit Committee, as well as to the Board, on risk management and mitigation activities. In addition, at each regular Board meeting, the Chair of each Board committee typically reports to the full Board regarding the matters discussed at any committee meetings held since that committee’s prior report to the Board.

 

We believe that the Board’s role in risk oversight of the Company is consistent with the Company’s leadership structure, with the CEO and other members of management having responsibility for assessing and managing the Company’s risk exposure, and the Board, through the leadership of our independent Chair, and its committees providing oversight in connection with those efforts.

 

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

 

All of our directors and director nominees are encouraged to attend the annual meetings of our stockholders. All nine of our then-current directors attended the 2015 Annual Meeting of Stockholders.

 

The Board of Directors held 18 meetings during Fiscal 2015. Each of the directors serving on the Board during Fiscal 2015 attended at least 86% or more of the aggregate number of the meetings of the Board (held during the period he or she served as a director) and meetings of the committees on which he or she served (held during the period he or she served as a committee member). The attendance record for six of our nine directors was 100%.

 

Our Board has three committees: Audit, Compensation, and Governance and Nominating. As of May 5, 2016, the members and Chairs of those committees were:

 

 

The Audit Committee

 

All Audit Committee members are “independent” under applicable NYSE listing standards and SEC rules and regulations. Our Board of Directors has determined that three members of the Audit Committee, Mr. Sharpe, Mr. Snyder and Ms. Wardell, meet the definition of an “audit committee financial expert” as established by the SEC, and that Ms. Stensrud, the fourth member of the Committee, meets the definition of “financially literate” as established by the SEC. The Audit Committee provides assistance to the Board in fulfilling its oversight responsibilities relating to the quality and integrity of the financial reports of the Company. The Audit Committee has the sole authority to appoint, review and discharge our independent public accountants, and has established procedures for the receipt, retention, response to and treatment of complaints regarding accounting, internal controls and audit matters. In addition, the Audit Committee is responsible for:

 

 

 

 

 

 

The responsibilities of the Audit Committee are more fully described in the Audit Committee’s charter.

 

The Audit Committee held eight meetings during Fiscal 2015. The Audit Committee has engaged KPMG LLP as our independent registered public accountants for the fiscal year ending January 28, 2017 and is recommending that our stockholders ratify this selection at the Annual Meeting. The report of the Audit Committee is found on pages 50-51 of this proxy statement.

 

The Compensation Committee

 

All Compensation Committee members are “independent” under applicable NYSE listing standards. The Compensation Committee assists the Board in fulfilling its oversight responsibilities relating to executive compensation, employee compensation and benefit programs and plans, and leadership development and succession planning for senior management. In addition, the Compensation Committee is responsible for:

 

 

 

 

 

The Compensation Committee has delegated authority to the CEO and the Senior Vice President, Chief Human Resources Officer to make awards to newly hired or promoted employees with respect to participation in the current fiscal year’s equity incentive program pursuant to guidelines approved by the Compensation Committee with respect to both the amount and type of awards such newly hired or promoted employees may be eligible to receive. This delegation expressly excludes the ability to make awards to the CEO and any of her direct management reports. It is also subject to an overall aggregate limit of 200,000 shares and a limit on the number of stock options and restricted stock that may be awarded to an individual in a calendar year.

 

The Compensation Committee reviews and discusses with management the disclosures regarding executive compensation to be included in our annual proxy statement, and recommends to the Board inclusion of the “Compensation Discussion and Analysis” in our annual proxy statement. The responsibilities of the Compensation Committee are more fully described in the Compensation Committee’s charter. For more information regarding the Compensation Committee’s process in setting compensation and the role played by our CEO in compensation decisions, please see “Compensation Discussion and Analysis” below.

 

The Compensation Committee held six meetings during Fiscal 2015. The “Compensation Committee Report” is found on page 35 of this proxy statement.

 

Compensation Committee Interlocks and Insider Participation

 

Mr. Cohn, Mr. Holman, Ms. Jones, Mr. Levin and Mr. Sharpe served on the Compensation Committee for all or a portion of Fiscal 2015. None of the members of the Compensation Committee was or is an officer or employee of the Company. During Fiscal 2015, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the Board or the Compensation Committee. Based on our review of the annual questionnaires completed by our directors and publicly available information, we know of no relationship involving these individuals or our other directors which requires disclosure in this proxy statement as a “compensation committee interlock”.

 

The Governance and Nominating Committee

 

All members of the Governance and Nominating Committee are “independent” under applicable NYSE listing standards. The Governance and Nominating Committee serves in an advisory capacity to the Board on matters of organization and the conduct of Board activities. The Governance and Nominating Committee is responsible for:

 

 

 

 

 

 

 

 

 

The responsibilities of the Governance and Nominating Committee are more fully described in the Committee’s charter.

The Governance and Nominating Committee will consider Board nominees recommended by stockholders that are submitted in accordance with the process described below under the caption “Procedures for Recommending, Nominating and Evaluating Director Candidates”.

 

The Governance and Nominating Committee held six meetings during Fiscal 2015.

 

Stockholder Engagement Policy - Procedures for Contacting the Board

 

Because the Board values the input and insights of the Company’s stockholders and believes that effective Board-stockholder engagement and communication strengthens the Board’s role as an active, informed and engaged body, it has adopted a Stockholder Engagement Policy. The Chair of the Board and the Company’s Chief Executive Officer oversee this policy and the Board’s stockholder engagement and communications. The goal of this policy is to promote and develop improved and more-in-depth two-way communications between the Company’s stockholders and the Board, and to establish and communicate an appropriate structure for such communications.

 

The Board has designated the Corporate Secretary as its agent to receive and review written communications and meeting requests addressed to the Board, any Board Committee or any individual Director. Such communications should be sent by U.S. mail addressed to:

 

Christopher & Banks Corporation Board of Directors
c/o Christopher & Banks Corporation
Attention: Corporate Secretary
2400 Xenium Lane North
Plymouth, MN 55441

 

The Corporate Secretary will review all such communications and if appropriate, will promptly forward the communications so received to the full Board, the Board Committee, the non-management directors or the individual Board member(s) specifically addressed in the communication comments.

 

Procedures for Recommending, Nominating and Evaluating Director Candidates

 

Recommending Director Candidates for Nomination by the Board

 

The Governance and Nominating Committee will consider director candidates recommended by stockholders. A stockholder who wishes to recommend a director candidate for nomination by the Board at an annual meeting of stockholders or for vacancies of the Board that arise between annual meetings must provide the Governance and Nominating Committee with sufficient written documentation to permit a determination by the Board as to whether such candidate meets the required and desired director selection criteria set forth in our by-laws and our Corporate Governance Guidelines described below. Such documentation and the name of the director candidate should be sent by U.S. mail to:

 

Christopher & Banks Corporation Board of Directors
c/o Christopher & Banks Corporation
Attention: Corporate Secretary
2400 Xenium Lane North
Plymouth, MN 55441

 

Nominating Director Candidates

 

Under our by-laws, only persons nominated in accordance with the procedures set forth in the by-laws will be eligible to serve as directors. In order to nominate a candidate for service as a director, you must be a stockholder at the time you give the Board notice of your nomination, and you must be entitled to vote for the election of directors at the annual meeting at which your nominee will be considered. In accordance with our by-laws, director nominations by stockholders must be made pursuant to notice delivered to or mailed and received at our principal executive offices at the address above, not later than the 90th day, nor earlier than the 120th day, prior to the first anniversary of the prior year’s annual meeting of stockholders; provided, however, that, in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 30 days from such anniversary date, notice by the stockholder must be

delivered not earlier than the close of business on the 120th day prior to such annual meeting date and not later than the close of business on the later of the 90th day prior to such annual meeting date or the 10th day following the day on which public announcement of the date of the annual meeting is first made. Your notice must set forth, in addition to the requirements contained in our by-laws, all information relating to the nominee that is required to be disclosed in solicitations of proxies for the election of directors, or as otherwise required, pursuant to Regulation 14A under the Exchange Act (including the nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected). The notice also must contain (1) the name and address of the stockholder giving notice and the beneficial owner, if any, on whose behalf the nomination is made and (2) the class and number of shares owned by the stockholder and such beneficial owner.

 

Evaluating Director Candidates

 

Our Corporate Governance Guidelines require the Governance and Nominating Committee to consider several factors when evaluating the appropriate characteristics of candidates for service as a director. The Governance and Nominating Committee initially evaluates a prospective nominee based on her or his resume and other background information that has been provided to the Governance and Nominating Committee. At a minimum, director candidates must demonstrate high standards of ethics, integrity, independence, sound judgment, strength of character, and meaningful experience and skills in business or other appropriate endeavors. In addition to these minimum qualifications, the Governance and Nominating Committee considers other factors it deems appropriate based on the current needs and desires of the Board, including specific business and professional experience that is relevant to the Board’s needs, including, but not limited to, Board diversity. A member of the Governance and Nominating Committee will contact, for further review, those candidates who the Governance and Nominating Committee believes are qualified, who may fulfill a specific Board need and who would otherwise best make a contribution to the Board. The Governance and Nominating Committee is responsible for conducting, with the assistance of the Corporate Secretary, and subject to applicable law, any inquiries into the background and qualifications of the candidate. Based on the information the Governance and Nominating Committee learns during this process, it determines which nominee(s) to recommend to the Board to submit for election. The Governance and Nominating Committee uses a comparable process for evaluating all director candidates, regardless of the source of the recommendation.

 

The Governance and Nominating Committee is authorized to use, as it deems appropriate or necessary, an outside consultant to identify and screen potential director candidates. The Governance and Nominating Committee will reassess the qualifications of a current director, including the director’s attendance and contributions at Board and committee meetings, prior to recommending a director for re-election.

 

Compensation Program for Non-Employee Directors

 

The Governance and Nominating Committee is responsible for reviewing director compensation and making recommendations to the Board. The recommendations of the Governance and Nominating Committee are based on industry and peer group data, independent third party comparisons of director compensation and the Company’s past practices. Based on the Governance and Nominating Committee’s recommendations, our Board determines the compensation of our directors on an annual basis. Directors who are our employees do not receive compensation for their service as directors.

 

For Fiscal 2015, non-employee directors received an annual cash retainer of $48,000 for service on our Board. The Chair of the Board, received an additional annual cash retainer of $65,000. The Chairs of the Audit, Compensation, and Governance and Nominating Committees each received a retainer for Fiscal 2015 of $15,000, $10,000 and $8,375, respectively. For Fiscal 2015, the other members of the Audit Committee received an additional retainer of $9,000, the other members of the Compensation Committee received an additional retainer of $6,000, and the other members of the Governance and Nominating Committee received an additional retainer of $4,792. The cash retainer fees are paid quarterly in arrears and are pro-rated if the non-employee director did not serve for the entire period.

 

In 2013, the Company’s stockholders approved the Directors’ Plan. The Directors’ Plan is administered by the Governance and Nominating Committee and the Board. They have broad powers to: (i) establish rules for the administration of the Directors’ Plan; (ii) select the participants in the Directors’ Plan; (iii) determine the types of awards to be granted and the number of shares covered by such awards; and (iv) set the terms and conditions of such awards.

 

In October 2008, the Board adopted the Christopher & Banks Corporation Non-Employee Director Deferred Stock Plan (as amended, the “Deferred Stock Plan”), which provides an opportunity for non-employee members of the Board to voluntarily defer receipt of shares of our Common Stock granted by the Company in connection with the performance of their services as a director in return for the right to receive such shares at a later date (such right considered a “stock unit”). When a director elects to defer shares and receives a stock unit reflecting such deferral and a cash dividend is subsequently paid on our shares of Common Stock, a cash payment that would have been payable on the number of shares equal to the number of stock units credited to that director’s account is paid to such director on or about the dividend payment date. The Company last paid a dividend in October 2011.

 

In addition to the cash retainer, we also grant equity awards to our non-employee directors in order to further align their interests with those of our stockholders. Effective June 25, 2015, each non-employee director received shares of restricted stock issued under the Directors’ Plan approximating $70,000 in value based on the closing price of our stock on the NYSE on that date. The shares of restricted stock vest on the earlier of June 25, 2016 or the date of the 2016 Annual Meeting of Stockholders, and holders of restricted stock have all voting and dividend rights of stockholders. No stock options were granted to non-employee directors in or for Fiscal 2015.

 

Non-Employee Director Compensation for Fiscal 2015

 

The following table sets forth the cash and non-cash compensation awarded to or earned by each person who served as a non-employee director during Fiscal 2015.

 

 

______________

 

 

 

 

 

Director Education and Expense Reimbursement

 

The Company’s director education policy encourages all members of the Board to attend director education programs appropriate to their individual backgrounds to stay abreast of developments in corporate governance and best practices relevant to the Board, as well as their specific committee assignments. The director education policy provides for a fixed amount that the Company will pay or reimburse directors for the costs associated with attending director education programs every two fiscal years. We also provide an in-house orientation program for our new directors and periodically provide updates on relevant topics of interest to our Board and committees. We also pay for or reimburse directors for travel expenses related to attending Board and committee meetings and director education programs.

 

EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

In this Compensation Discussion and Analysis we describe the executive compensation philosophy and related programs regarding our Named Executive Officers (“NEOs”) that we have implemented to help achieve the Company’s performance objectives and serve the long-term interests of our stockholders. We also discuss the compensation decisions made by the Compensation Committee (the “Committee”), and the factors considered in making those decisions with respect to our NEOs for Fiscal 2015 who were:

 

 

The Compensation Discussion and Analysis should be read together with the executive compensation tables and related footnotes found later in this proxy statement.

 

 

 

 

 

 

 

 

 

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Fiscal Year 2015 Financial Results

 

In Fiscal 2015, we operated in a challenging environment for retail, particularly specialty women’s apparel. Our key financial results for the year, compared to the prior four fiscal years, included:

 

 

_______________

 

_______________

 

 

 

 

Other key financial results for Fiscal 2015 include:

 

 

 

 

 

 

 

 

A more detailed description of the Company’s Fiscal 2015 performance can be found in the 10-K Report as filed with the SEC.

 

Fiscal 2015 Compensation Highlights

 

 

 

 

 

 

 

Results of Advisory Vote to Approve Named Executive Officer Compensation

 

At our recent annual stockholder meetings, our stockholders have had the opportunity to cast an advisory vote to approve our NEOs’ compensation. At our 2015 Annual Meeting of Stockholders, held on June 25, 2015, our stockholders cast approximately 86.9% of the votes in favor of our Say-on-Pay Proposal.  The Committee believes that the outcome of our 2015 say-on-pay vote reflects stockholders’ support of our compensation approach. Our Board and the Committee value the opinions of our stockholders and consider the outcome of say-on-pay votes when making

compensation decisions for our NEOs. Notwithstanding this support, during Fiscal 2015, the Committee continued its practice of reviewing the principal elements of our current compensation program to ensure that the overall design continues to support the Company’s financial and strategic objectives.

 

The Committee will continue to consider the outcome of the Company’s Say-on-Pay Proposals when making future compensation decisions. The Committee also expects to continue to refine the Company’s executive compensation program in response to emerging best practices in executive compensation, as well as the Company’s evolving business strategies and operating goals.

 

Executive Compensation Philosophy

 

Our executive compensation decisions are influenced by a variety of factors, with the primary goals being to align management’s and stockholders’ interests and to link executive pay with performance. As a retail company, we operate in a highly competitive and challenging industry. Our executive compensation program has a substantial emphasis placed on incentive compensation (both annual and multi-year), which aligns the compensation of our executives to the achievement of our financial objectives, including our long-term plans.  We believe this emphasis creates the necessary incentives to attract and retain top quality executive talent now and in the future. We tie a significant portion of our NEOs’ compensation to the Company’s actual performance, including through the form of long-term equity-based compensation.

 

The Committee is guided by the following key objectives and reward philosophies in the design and implementation of our executive compensation program:

 

 

 

 

Our compensation program is dynamic and a reflection of the changing marketplace in which we compete. We believe it appropriately balances the factors described above. The Committee will continue to focus on performance factors when evaluating our executive compensation program, in order to ensure that the relationship among Company performance, our stockholders’ interests and our executives’ compensation remains strong.

 

 

 

 

 

 

 

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Executive Compensation Practices

 

The table below highlights certain of our current compensation practices that the Committee believes reflect a number of best practices.  It also highlights the practices we have not implemented because the Committee believes they would not serve our stockholders’ long-term interests.

 

 

 

 

Elements of Executive Compensation Program

 

Overview

 

This section describes the major elements of our compensation program for the NEOs and discusses the objectives, processes and decisions underlying the compensation of the NEOs.

 

The principal elements of our executive compensation program for Fiscal 2015 are described below. Each element fulfills one or more of our objectives of paying for performance; aligning our executives’ interests with those of our stockholders; and attracting, motivating, rewarding and retaining a high-performing executive team:

 

 

 

 

While we also provide benefits to our NEOs, they are consistent with those provided to other eligible full-time employees and our NEOs receive only nominal perquisites of limited economic value.

 

 

 

 

 

 

 

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The charts below reflect the components of our CEO’s and the other NEOs’ Fiscal 2015 total target compensation.

 

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(1)Reflects one-third of the grant date fair value of the multi-year employee inducement award of 1.5 million stock options granted to Ms. Via in November 2012 in connection with her employment agreement, the last third of which vested in Fiscal 2015.

 

(2)The chart does not include Ms. Derry’s compensation as she was not employed for all of Fiscal 2015.

 

Base Salary

 

The Committee establishes base salaries at levels designed to enable us to attract and retain talented executives. The Committee determines executive base salaries based on the executive’s role, experience and individual performance, and also considers market data for similar positions within our compensation peer group and the retail industry generally. Annual merit increases are not automatic or guaranteed. Rather, merit increases for NEOs, other than the CEO, are based on annual evaluations of the individual NEOs and of the Company’s performance by the Committee, with input and recommendations from our CEO.  Any merit increase for our CEO is determined by our Board, based on the recommendation of the Committee following its evaluation of the CEO’s performance.

 

In February 2015, the Committee approved the following merit increases for our NEOs, based on their individual performance and their overall contributions to the strategic direction of the Company, as well as market data for comparable positions provided to the Committee by its compensation consultant:

 

_______________

 

Annual Incentive Program (“AIP”) Compensation

 

Overview. AIP compensation is performance-based, at-risk compensation intended to motivate and reward executives for the attainment of goals that are measured over annual time horizons. In Fiscal 2014, the Committee adopted, and our stockholders approved, the Christopher & Banks Corporation 2014 Annual Incentive Plan for our employees (the “Annual Incentive Plan”). The primary objective of our Annual Incentive Plan is to provide annual cash incentives for our key employees to achieve our strategic goals. This is consistent with our pay-for-performance philosophy. Historically, under our annual incentive programs, the Committee annually sets one or more financial goals or metrics against which actual results for the fiscal year are measured to determine whether, and in what amounts, cash bonuses would be paid.

 

FY15 AIP Design. The design of the Company’s FY15 AIP was focused on rewarding continued improvement in our financial performance. The design reflected that (i) the Company’s annual operating plan was estimated to generate an increase in operating income in Fiscal 2015 as compared to the prior year; and (ii) the Committee’s belief that (x) given the Company’s continued focus on sales and income growth, the awards at “Target” performance should be aligned with market-based levels; (y) a challenging FY15 AIP would be both a significant motivation tool for our NEOs, as well as other members of management; and (z) there was an appropriate allocation of earnings between stockholders (through reinvestment in the Company) and employees based on the FY15 AIP’s metrics and the potential amount of the incentive awards. All of the NEOs were participants in the FY15 AIP.

 

FY15 AIP Performance Metrics and Results. In approving the FY15 AIP, the Committee selected the following two performance metrics, which were identified as being key components underlying the achievement of the Company’s operating plan for Fiscal 2015, as well as representing metrics that are important to the Company’s stockholders:

 

 

 

In order to establish an appropriate relationship between actual Company performance and the NEOs’ realized AIP compensation, a Threshold (entry point) and Target for each metric was established. In addition, a Maximum performance objective was established for the Operating Income metric; the Net Sales metric was capped at Target.

 

The Target performance level for each metric represented achievement of the Company’s Fiscal 2015 annual operating plan as approved by the Board. The Threshold performance level or entry point for Operating Income represented nearly one and one-half times the amount of Operating Income the Company achieved in Fiscal 2014 and approximately 80% of the Operating Income Target under the FY15 AIP. The Threshold for the Net Sales performance metric was above the Company’s Fiscal 2014 net sales and represented 97% of the Target performance level.

 

The Committee desired to place a significant portion of a participating NEO’s annual target compensation at risk, thereby aligning the NEO’s compensation both with the Company’s performance, and with our stockholders’ interests. Under the FY15 AIP design, payouts could have ranged from zero to 200% of an eligible participant’s salary for the fiscal year.

 

 

 

 

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The table below shows the annual cash incentive amount, as a percent of salary earned in Fiscal 2015, that the NEOs would earn at Threshold, Target and Maximum. This represents their realizable pay under the FY15 AIP.

 

 

Actual Performance versus FY15 AIP Metrics 

 

The following table reflects the Company’s performance in Fiscal 2015 as compared to the metrics under the FY15 AIP.

 

As reflected by the above charts, the Company did not meet either of the Threshold performance measures under the FY15 AIP. Therefore, none of the NEOs received any incentive compensation under the FY15 AIP.

 

Long-Term Equity Incentive Compensation

 

Program Design for Long-Term Equity Incentives. The primary objectives of our long-term equity incentive program are to:

 

 

 

 

In general, the Committee reviews whether to grant long-term equity incentive awards to our executive officers shortly following each fiscal year-end. To the extent it approves such awards, the Committee typically grants them as of an effective date that follows the issuance of our financial results for the prior fiscal year.

Pursuant to the terms of her employment agreement, Ms. Via was not eligible to receive a long-term equity incentive award in Fiscal 2015.

 

Fiscal 2015 Long-Term Incentive Program.    The equity awards in Fiscal 2015 to NEOs, other than our CEO, under the FY15 LTIP consisted primarily of performance-based restricted stock units, intended to reinforce the Committee’s pay-for-performance philosophy and to encourage these NEOs to focus on the Company’s long-term financial goals.

 

There were two types of equity awards. The first award, which represented 25% of the total award value, was a time-based restricted stock award which vests in one-third increments on the first three anniversaries of the grant date.  The second award, which represented 75% of the total award value, was a grant of performance-based restricted stock units with a two-year performance period.  The performance based award has two performance metrics:

 

 

 

For each metric, a Threshold, Target and Maximum was established, with a 50% payout at Threshold, a 100% payout at Target and a 200% payout at Maximum. The number of units earned for performance between Threshold, Target and Maximum levels are to be linearly interpolated. Following completion of the performance periods, and the Fiscal 2016 audit by the Company’s independent registered public accounting firm and a determination by the Committee that all or a portion of the units shall vest, a corresponding number of shares of Common Stock shall be issued to the award recipient, with one-half issued following such determination by the Committee and one-half on the third anniversary of the date of grant. Holders of the time-based restricted stock do not have the right to receive dividends until the shares vest, while dividend equivalents will be paid to the holder of the restricted stock units upon distribution of the underlying Common Stock, if any dividends have been declared. The Company does not currently pay a dividend.

 

The Committee’s practice for determining equity awards for our executive officers is to determine the value of compensation that it desires to provide in the form of equity, both as part of the total target compensation for that NEO and, in the aggregate, to all NEOs. As part of this process, our CEO, with input from the Committee’s independent compensation consultant and the Senior Vice President, Chief Human Resources Officer, recommends to the Committee, for executives other than the CEO, the award level and types of equity awards. The Committee then reviews the CEO’s recommendations and considers the value of such awards to each of the NEOs, as well as the criteria described below under “Analysis”.

 

Analysis. Our Committee believes that the use of long-term equity incentives as a significant component of total compensation is consistent with our philosophy of aligning the interests of our executive officers with those of our stockholders and our pay-for-performance philosophy. The determination of the targeted value of equity awards at the time of grant includes consideration by the Committee of the executive officer’s level of responsibility, competitive market data, the costs and potential dilution to stockholders of the program, recent and projected financial performance, targeted total compensation and incentive and retention objectives.

 

For Fiscal 2015, all of the equity awards granted to the NEOs were part of the annual equity awards granted in March 2015. The specific number of performance-based restricted stock units and time-based restricted stock that were awarded to each of the NEOs in Fiscal 2015 is set forth in the “Grants of Plan-Based Awards for Fiscal 2015” table at page 37 of this proxy statement.

 

The equity awards under the Fiscal 2015 long-term equity incentive program to NEOs approximated, both individually and in the aggregate, the 50th percentile for such awards for comparable retail positions based on competitive market data supplied by our independent compensation consultant.

 

2014 Restricted Stock Unit Awards with Performance-Based Vesting.    In February 2014, the Committee approved the grant of performance-based restricted stock units to the NEOs, other than the CEO.  The grants were contingent upon the achievement of Threshold or higher for one or more of three performance metrics.  The three, pre-established performance goals were at Threshold (the award entry point) (i) a Fiscal 2015 operating margin as a percent of net sales of 5% (weighted at 50%); (ii) a two-year compounded net sales annual growth rate of 5% (weighted at 30%); and (iii) a two-year total shareholder return at the 25th percentile as compared to eight other companies (weighted at 20%). 

 

In March 2015, the Committee reviewed the Company’s performance with respect to the three performance criteria and the supporting calculations, and determined that the Company had not achieved Threshold for the first two criteria but had achieved Threshold with respect to total shareholder return.  As a result of the Committee’s determination, each of the NEOs, other than the CEO, was awarded 20% of the performance-based restricted stock units granted at Threshold and these units were issued in the form of shares of Common Stock of the Company, which shares vested immediately.  The number of shares awarded to the NEOs was as follows:  Mr. Michielutti, 2,626; Ms. Dahl, 1,230; Mr. Komarek, 1,230; and Ms. Rice, 923.

 

Total Fiscal 2015 Pay Mix at Target Financial Performance

 

The Committee does not have a specific policy for allocating between annual and long-term compensation or between cash and equity compensation. In Fiscal 2015, annual incentive compensation was in the form of cash, and all long-term compensation was in the form of equity. The charts which follow illustrate for the CEO and for the other NEOs in the aggregate (other than Ms. Derry who was not employed at fiscal year-end), the manner in which: (i) the overall pay mix at Target was allocated between performance and non-performance-based elements; (ii) performance-based compensation was allocated between annual and long-term elements at Target; and (iii) total direct compensation was allocated between cash and equity.

 

Fiscal 2015

Total Direct Compensation Mix at Target (1)

 

 

 

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Benefits and Perquisites

 

Primary Benefits. The NEOs are eligible to participate in the same employee benefit plans in which all other eligible full-time employees are eligible to participate. These plans include medical, dental, life insurance, disability and a qualified retirement savings plan to which the Company made a discretionary matching contribution of up to 2.5% of eligible earnings for calendar 2015 on behalf of participating employees, which included each of the NEOs. The Company does not maintain any benefit programs which are exclusive to executives (other than nominal perquisites for two NEOs and severance agreements as discussed below).

 

Perquisites. Perquisites represent a nominal component of our overall executive compensation program. The Committee does not view perquisites to be an important element of the executive compensation program. Pursuant to the terms of her employment agreement, Ms. Via received a monthly auto allowance totaling $12,000 for Fiscal 2015. Ms. Rice received the benefit of a Company-leased vehicle for Fiscal 2015 valued at $3,788. Detailed information regarding the personal benefits and perquisites paid to the NEOs in Fiscal 2015 is provided in footnote 5 to the “Summary Compensation Table” at page 36 of this proxy statement.

 

Compensation Methodology

 

Committee Independence

 

The Committee is composed entirely of independent directors, as determined under the applicable SEC and NYSE rules and Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The Committee oversees our executive compensation and benefits policies and oversees and sets the compensation for the NEOs, except that the compensation of the CEO is recommended by the Committee and approved by the non-executive members of the Board. The Committee annually reviews the components of compensation for our CEO and other executive officers. In making its compensation decisions, the Committee takes into account the recommendations of the CEO as to compensation, including salary adjustments, annual cash incentive opportunities and equity award levels, to be awarded to the other NEOs. Other than providing such recommendations, our CEO does not participate in the Committee’s decisions regarding executive compensation. All such decisions are made by the Committee.

 

Use of Independent Consultants

 

The Committee has typically retained an external, independent compensation consultant for objective advice and assistance on executive compensation matters. Korn Ferry Hay Group (“Hay”) has served as the Committee’s compensation consultant since mid-2014. Hay reports directly to the Committee and the Committee may replace Hay or hire additional consultants at any time. Hay advises the Committee on issues pertaining to executive compensation, including the assessment of market-based compensation levels, the members of our peer group, our pay positioning relative to the market, the mix of pay, incentive plan design and other executive employment matters. Hay provides its advice based, in part, on prevailing and emerging market practices and its own proprietary retail survey data, as well as our specific business context. The Committee retains sole authority to hire Hay, approve its compensation and the appropriate funding by the Company for such compensation, determine the nature and scope of Hay’s services, evaluate Hay’s performance and terminate Hay’s engagement. Hay did not perform any other services for the Company in Fiscal 2015.

 

The Committee annually assesses the independence of its external compensation consultant(s), taking into account the following factors:

 

 

 

 

 

 

 

Hay has provided the Committee with appropriate assurances and confirmation of their independent status. The Committee believes that Hay has been independent throughout their service to the Committee and that there is no conflict of interest between Hay and the Committee.

 

Peer Group

 

The Fiscal 2015 peer group used by the Committee in establishing Fiscal 2015 compensation at the beginning of the fiscal year consisted of the following 14 companies:

 

The Committee, with the assistance of Hay, periodically reviews the peer group that it uses to benchmark our NEOs’ compensation and revises the peer group as circumstances warrant. In connection with that review, the following changes were made in July 2015 in response to recommendations made by Hay:

 

 

 

 

 

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Executive Evaluation Process

 

CEO.    The Committee and the Board review our CEO’s performance against pre-established financial, operational, strategic and individual objectives for the prior fiscal year. Our CEO is responsible for sharing with the Board and the Committee her accomplishments with respect to the objectives for the fiscal year just completed, as well as proposed objectives for the upcoming year. The Committee reviews the CEO’s accomplishments, objectives and overall performance, and reviews and discusses its observations with the Board. Our CEO does not play a role in determining her own compensation, other than discussing her annual performance review with the Chair of the Board and the Chair of the Committee and, subsequently, with the entire Committee and/or the Board. With respect to the CEO’s performance in Fiscal 2014, the Committee reported its findings to the Board and made recommendations to the Board regarding the CEO’s compensation. The independent members of the Board of Directors, following a review by both the Board and the Committee of Ms. Via’s performance in Fiscal 2014, including with respect to her Fiscal 2014 goals, and upon the recommendation of the Committee, approved a salary increase of $25,000 for Fiscal 2015.  Given the Company’s financial performance in Fiscal 2014 and in particular that it did not achieve any of the operating metrics under the Company’s annual incentive program for Fiscal 2014, Ms. Via declined the proposed salary increase. The independent members of the Board unanimously agreed to accept Ms. Via’s declining the proposed salary increase.

 

Other NEOs.    The Committee consults with the CEO concerning the performance of the Company’s other executive officers, including each of the other NEOs. The Committee approves the compensation of such officers, taking into account the recommendations of the CEO and input from the Board and the Committee’s independent compensation consultant. Our CEO and Senior Vice President, Chief Human Resources Officer assist the Committee in reaching compensation decisions regarding executives other than themselves. Executive officers do not play a role in determining their own compensation, other than discussing their annual performance reviews with the CEO and making recommendations for the Committee’s approval regarding performance goals under our AIP and LTIP programs. The Committee reviews the recommendations and approves the AIP and LTIP programs in such forms as it determines, in its sole discretion, to be in the best interests of our stockholders.

 

Compensation Recovery “Clawback” Policy

 

In November 2015, the Board adopted the Christopher & Banks Corporation Recoupment Policy (the “Clawback Policy”).  The Clawback Policy applies to “Incentive Compensation”, as defined in the Clawback Policy, paid or provided to current or former executive officers and to current or former officers of the Company with the title of Vice President or above (“Covered Executives”).

 

In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with the federal securities laws as a result of fraud or misconduct, the Company will, unless impracticable, require reimbursement or forfeiture from a Covered Executive of any excess Incentive Compensation for the three fiscal years immediately preceding the date on which the Company is required to prepare such an accounting restatement.

 

In addition, since Fiscal 2011, all of the equity awards granted to NEOs expressly provide that the equity grant and delivery of any Common Stock pursuant to the equity agreement are subject to any clawback policies the Company may adopt in compliance with the Dodd-Frank Act.

 

Prohibition on Derivatives Trading and Hedging and Pledging of Our Securities

 

Our Stock Trading Policy prohibits all directors and officers, including the NEOs, from trading in any puts, calls, covered calls or other derivative products involving any Company securities. Additionally, our policy prohibits these individuals from engaging in any hedging transactions with respect to any Company securities, which includes the purchase of certain instruments (including “cashless collars”, forward sales contracts, equity swaps or any other similar instruments) designed to hedge, monetize or offset any decrease in the market value of such securities. The policy also prohibits our officers and directors from pledging, or using as collateral, Company securities in order to secure personal loans or obligations, which includes holding shares of Company stock in a margin account.

 

Stock Ownership Guidelines

 

We believe that our executive officers should have a meaningful equity stake in the Company to ensure that their interests are aligned with those of our stockholders. To that end, our Board has adopted stock ownership guidelines that define stock ownership expectations for our executive officers. Under these guidelines, executive officers are expected to own shares of our Common Stock at certain levels within five years of becoming an executive officer.

 

By the fifth year of service as an executive officer, these guidelines call for:

 

 

 

 

The Committee intends to continue its practice of periodically reviewing the stock ownership guidelines in conjunction with future equity incentive programs and its overall compensation strategy as well as monitoring each executive’s progress toward meeting these guidelines.

 

The Board has also established stock ownership guidelines for non-employee directors, which are discussed on page 10 of this proxy statement.

 

Section 162(m) Policy

 

Under Section 162(m) of the Code, we must meet specified requirements related to our performance and must obtain stockholder approval of certain compensation arrangements in order for us to deduct fully, for federal income tax purposes, compensation in excess of $1,000,000 paid to certain NEOs. In 2014 the Company’s stockholders approved the Annual Incentive Plan. That Plan includes specific performance criteria. Therefore, incentive awards granted under that Plan meet the requirements of Section 162(m). As a result, the Committee believes that any compensation paid, pursuant to grants made, in accordance with the terms of the Annual Incentive Plan will be deductible for federal income tax purposes.

 

The stockholders also approved the Stock Incentive Plan at the 2014 Annual Meeting of Stockholders. Therefore, the Committee believes that compensation attributable to stock options, stock appreciation rights and other performance awards made in accordance with the terms of the Stock Incentive Plan will be deductible for federal income tax purposes.

 

The compensation paid in Fiscal 2015 subject to the Section 162(m) regulations did not exceed $1,000,000 for any of the NEOs. Therefore, all such compensation should be deductible for federal income tax purposes.

 

The Committee intends to continue its practice of paying competitive compensation consistent with our philosophy to attract, retain and motivate executive officers to manage our business in the best interests of the Company and our stockholders. The Committee, therefore, may choose to provide compensation to our executive officers that is not fully deductible under Section 162(m), if it deems such compensation to be in the best interests of the Company and our stockholders.

 

Employment and Severance Agreements with Named Executive Officers

 

We have entered into an employment agreement with Ms. Via and a severance agreement with each of the other NEOs, which provide for severance benefits in the event their employment is terminated by the Company without “cause” (as defined in the applicable agreement) or in connection with a “change-in-control” (as defined in the applicable agreement).  The type and amount of payments vary for the NEOs and also by the nature of the termination.

 

The Company provides these involuntary termination severance benefits to protect the NEO from events outside their control and to offer compensation packages similar to those provided in the retail market for comparable executive talent.  In addition, the Company provides these benefits to protect the Company against disruption in the event of a change-in-control as these severance benefits allow the NEOs to assess takeover bids objectively without regard to the potential impact on their job security.  The Committee believes that these severance agreements serve as an important retention element of the compensation package provided to the NEOs but does not consider severance benefits to be a significant factor in determining annual total compensation.  The potential severance benefits payable to our NEOs are described in “Potential Payments upon Termination or a Change-in-Control” on pages 40 to 42 of this proxy statement and the terms of Ms. Via’s Employment Agreement are described below. 

 

Employment Agreement with LuAnn Via 

 

In connection with the Company’s successful search for a new President and Chief Executive Officer, the Company entered into, as of October 29, 2012, an employment agreement with Ms. Via (the “Via Agreement”). The Company and Ms. Via amended the Via Agreement effective May 2, 2013, June 26, 2014 and February 24, 2016.  The principal terms of the Via Agreement, as amended, are as follows:

 

 

 

 

 

 

 

 

 

 

Compensation Risk Analysis

 

The Committee continues to actively engage in reviewing and modifying aspects of the Company’s executive compensation program in light of the current business environment and the Company’s recent and projected financial performance. As part of that analysis, the Committee has considered and discussed potential risks that could arise from the Company’s compensation policies and practices and the extent to which any of those risks could reasonably likely have a material adverse effect on the Company. Based on that review and analysis, the Committee believes that the Company’s compensation program reflects an appropriate mix of compensation elements that balances current and long-term performance objectives, cash and equity compensation, and risks and rewards associated with executives’ roles. The following items illustrate this point:

 

 

 

 

 

 

 

 

 

 

 

 

Based on the above combination of items, the Committee believes that (i) our executives are encouraged to manage the Company prudently, and (ii) our incentive programs are designed in a manner to encourage our senior business leaders not to take risks that are inconsistent with the Company’s best interests or that are reasonably likely to have a material adverse effect on the Company.

 

Compensation Committee Report

 

The Committee has reviewed and discussed the “Compensation Discussion and Analysis” section set forth above with our management. Based on this review and discussion with management, the Committee recommended to our Board that the “Compensation Discussion and Analysis” be included in this proxy statement and in our Report on Form 10-K for the period ended January 30, 2016.

 

 

Compensation Tables

 

Summary Compensation Table

 

The following table shows the cash and non-cash compensation for Fiscal 2015 and the previous two fiscal years that was awarded to or earned by individuals who served as our CEO or Chief Financial Officer during Fiscal 2015, each of our three other most highly compensated executive officers who were serving as executive officers at the end of Fiscal 2015, and one additional individual for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer at the end of Fiscal 2015 (collectively the “NEOs”).

 

 

 

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