NKE - 2015 - DEF14A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders of NIKE, Inc. to be held at the Tiger Woods Conference Center, One Bowerman Drive, Beaverton, Oregon 97005-6453, on Thursday, September 17, 2015, at 10:00 A.M. Pacific Time. Registration will begin at 9:00 A.M.
The meeting will consist of a brief presentation followed by the business items listed on the attached notice.
Whether or not you plan to attend, the prompt execution and return of your proxy card will both assure that your shares are represented at the meeting and minimize the cost of proxy solicitation.
Sincerely,
 
Philip H. Knight
Chairman of the Board
July 27, 2015
 




 
 
 
Notice of Annual Meeting
of Shareholders
 
 
 
September 17, 2015
 
To the Shareholders of NIKE, Inc.
 
The annual meeting of shareholders of NIKE, Inc., an Oregon corporation, will be held on Thursday, September 17, 2015, at 10:00 A.M., at the Tiger Woods Conference Center, One Bowerman Drive, Beaverton, Oregon 97005-6453, for the following purposes:
 
1.     To elect a Board of Directors for the ensuing year.

2.     To approve executive compensation by an advisory vote.

3.     To amend the Articles of Incorporation to increase the number of authorized shares of common stock.

4.     To re-approve the Executive Performance Sharing Plan as amended.

5.     To approve the amended and restated Stock Incentive Plan.

6.     To consider a shareholder proposal as described in the accompanying proxy statement, if properly presented at the meeting.

7.     To ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm.

8.     To transact such other business as may properly come before the meeting.
 
All shareholders are invited to attend the meeting. Shareholders of record at the close of business on July 20, 2015, the record date fixed by the Board of Directors, are entitled to notice of and to vote at the meeting. You must present your proxy, voter instruction card, or meeting notice for admission.
 
By Order of the Board of Directors,
 
 
 
 
 
John F. Coburn III
 
Vice President and Corporate Secretary
 
 
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders To Be Held on September 17, 2015. The proxy statement and NIKE, Inc.'s 2015 Annual Report to Shareholders is available electronically at www.investorvote.com or www.proxyvote.com, for registered and beneficial owners, respectively.
 

Whether or not you intend to be present at the meeting, please sign and date the enclosed proxy and return it in the enclosed envelope, or vote by telephone or online following the instructions on the proxy.

CORPORATE GOVERNANCE
Proxy Statement

Proxy Statement
 
We are furnishing proxy materials to our shareholders primarily via the Internet, instead of mailing printed copies of those materials to each shareholder. The Company expects to first provide notice and electronic delivery of this proxy statement and the enclosed proxy to shareholders on or about August 6, 2015. If you would prefer to receive a paper copy of our proxy materials, please follow the instructions included in the notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive access to these materials electronically unless you elect otherwise.

The enclosed proxy is solicited by the Board of Directors of NIKE, Inc. (“NIKE” or the “Company”) for use at the annual meeting of shareholders to be held on September 17, 2015, and at any adjournment thereof (the “Annual Meeting”). Shareholders may submit a proxy via the Internet to vote at the Annual Meeting by following the instructions on the notice.

The Company will bear the cost of soliciting proxies. In addition to soliciting proxies by mail, certain officers and employees of the Company, without extra compensation, may also solicit proxies personally or by telephone. Copies of proxy solicitation materials will be furnished to fiduciaries, custodians and brokerage houses for forwarding to the beneficial owners of shares held in their names.

All valid proxies properly executed and received by the Company prior to the Annual Meeting will be voted in accordance with the instructions specified in such proxies. Where no instructions are given, shares will be voted “FOR” the election of each of the named nominees for director (Proposal No. 1), “FOR” the proposal regarding an advisory vote to approve executive compensation (Proposal No. 2), "FOR" the amendment of the Articles of Incorporation to increase the number of authorized shares of common stock (Proposal No. 3), "FOR" the re-approval of the Executive Performance Sharing Plan as amended (Proposal No. 4), "FOR" the approval of the amended and restated Stock Incentive Plan (Proposal No. 5), "AGAINST" the shareholder proposal regarding political contributions disclosure (Proposal No. 6), and “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm (Proposal No. 7).

A shareholder giving the enclosed proxy has the power to revoke it at any time before it is exercised by affirmatively electing to vote in person at the meeting or by delivering to John F. Coburn III, Vice President and Corporate Secretary of NIKE, either an instrument of revocation or an executed proxy bearing a later date.

Voting Securities and Vote Required
 
Holders of record of NIKE’s Class A Common Stock (“Class A Stock”) and holders of record of NIKE’s Class B Common Stock (“Class B Stock”) at the close of business on July 20, 2015 will be entitled to vote at the Annual Meeting. On that date, 177,457,876 shares of Class A Stock and 677,926,177 shares of Class B Stock were issued and outstanding. Neither class of Common Stock has cumulative voting rights.
Each share of Class A Stock and each share of Class B Stock is entitled to one vote on every matter submitted to the shareholders at the Annual Meeting.
A majority of the votes entitled to be cast on Proposal No. 1, the election of directors, by each of Class A Stock and Class B Stock separately constitutes a quorum of Class A Stock and Class B Stock, respectively, for action on Proposal No. 1. The holders of Class A Stock and the holders of Class B Stock will vote separately on Proposal No. 1. Holders of Class B Stock are currently entitled to elect 25 percent of the total Board, rounded up to the next whole number. Holders of Class A Stock are currently entitled to elect the remaining directors. Under this formula, holders of Class B Stock, voting separately, will elect four directors, and holders of Class A Stock, voting separately, will elect nine directors. Under Oregon law, if a quorum of each class of common stock is present at the meeting, the four director nominees who receive the greatest number of votes cast by holders of Class B Stock and the nine director nominees who receive the greatest number of votes cast by holders of Class A Stock will be elected directors.
A majority of the votes entitled to be cast on Proposal Nos. 2, 4, 5, 6, and 7, by both Class A Stock and Class B Stock together constitutes a quorum for action on those proposals. Holders of Class A Stock and holders of Class B Stock will vote together as one class on Proposal Nos. 2, 4, 5, 6, and 7. A majority of the votes entitled to be cast on Proposal 3 of each of the Class A Stock and Class B Stock separately will constitute a quorum for Proposal No. 3. Holders of Class A Stock and holders of Class B Stock will vote separately on Proposal No. 3. If a quorum is present at the meeting, Proposal Nos. 2, 3, 4, 5, 6, and 7 will be approved if the votes cast in favor of the proposal exceeds the votes cast against the proposal.
Abstentions and broker non-votes are counted for purposes of determining whether a quorum exists. Abstentions and broker non-votes are not included as votes cast and will not affect the outcome of any of the proposals.

CORPORATE GOVERNANCE
Board of Directors
 
The Board of Directors is currently composed of eleven independent directors and four directors who are not independent under the New York Stock Exchange (the "NYSE") listing rules. There were five meetings of the Board of Directors during fiscal 2015. During fiscal 2015, all but one director attended at least 75 percent of the total number of meetings of the Board of Directors and committees on which he or she served. John R. Thompson, Jr. attended 60 percent of the meetings of the Board of Directors and committee (Corporate Responsibility and Sustainability) on which he served. Mr. Thompson was excused from two meetings due to illness and two meetings to attend the private funeral of legendary University of North Carolina at Chapel Hill basketball coach, Dean Smith, a dear friend of Mr. Thompson and endorser of NIKE. The Company encourages all directors to attend each annual meeting of shareholders, and all directors serving at the time of the 2014 Annual Meeting attended the 2014 Annual Meeting.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 1

CORPORATE GOVERNANCE
Board of Directors


Board Committees

The Board’s current standing committees are an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, a Finance Committee, a Corporate Responsibility and Sustainability Committee, and an Executive Committee. The Board may also appoint other committees from time to time. Each standing committee has a written charter; all such charters, as well as the Company’s corporate governance guidelines, are available at the Company’s corporate website (http://investors.nike.com) and will be provided in print to any shareholder who submits a request in writing to NIKE Investor Relations, One Bowerman Drive, Beaverton, Oregon 97005-6453.
The Executive Committee is authorized to act on behalf of the Board on all corporate actions for which applicable law does not require participation by the full Board. In practice, the Executive Committee acts in place of the full Board only when emergency issues or scheduling conflicts make it difficult or impracticable to assemble the full Board. All actions taken by the Executive Committee must be reported at the next Board meeting. The Executive Committee held no formal meetings during fiscal 2015, but took action pursuant to written consent resolutions.
The Audit Committee is responsible for the engagement or discharge of the independent registered public accountants, reviews and approves services provided by the independent registered public accountants, and reviews with the independent registered public accountants the scope and results of their annual audit of the Company’s consolidated financial statements and any recommendations they may have. The Audit Committee also reviews the Company’s procedures with respect to maintaining books and records, the adequacy and implementation of internal auditing, accounting, disclosure, and financial controls, the Company’s policies concerning financial reporting and business practices, and the Company's information security and data protection procedures. The Board has determined that each member of the Audit Committee meets all applicable independence and financial literacy requirements under the NYSE listing standards and applicable regulations adopted by the U.S. Securities and Exchange Commission (the “SEC”). The Board has also determined that Mr. Graf is an “audit committee financial expert” as defined in regulations adopted by the SEC.
The Nominating and Corporate Governance Committee identifies individuals qualified to become Board members, recommends director nominees for election at each annual shareholder meeting, and develops and recommends corporate governance guidelines and standards for business conduct and ethics. The Committee also oversees the annual self-evaluations of the Board and its committees and makes recommendations to the Board concerning the structure and membership of the other Board committees. The Board has determined that each member of the Nominating and Corporate Governance Committee meets all applicable independence requirements under the NYSE listing standards.
The Finance Committee reviews the Company's annual operating budget and recommends approval to the Board, considers long-term financing options, long-range tax, financial regulatory and foreign currency issues facing the Company, and management recommendations concerning capital deployment strategy, major capital expenditures and material acquisitions or divestitures.
The Corporate Responsibility and Sustainability Committee reviews significant strategies, activities and policies regarding sustainability (including labor practices), community impact and charitable activities, and makes recommendations to the Board of Directors.
The Compensation Committee evaluates the performance of the Chief Executive Officer ("CEO"), oversees the performance evaluations of our other Named Executive Officers, and recommends their compensation for approval by the independent members of the Board of Directors (other than the incentive compensation approved solely by the Compensation Committee as described below). The Compensation Committee also grants equity incentive awards under the NIKE, Inc. Stock Incentive Plan, and determines targets and awards under the NIKE, Inc. Executive Performance Sharing Plan and the NIKE, Inc. Long-Term Incentive Plan. The Committee also makes recommendations to the Board regarding other executive incentive compensation arrangements and profit sharing plan contributions. The Board has determined that each member of the Compensation Committee meets all applicable independence requirements under the NYSE listing standards.

The table below provides information regarding the current membership of each standing Board committee and meetings held during fiscal 2015:
 

NIKE, INC.Ÿ2015 Notice of Annual Meeting 2

CORPORATE GOVERNANCE
Board of Directors

Director Name
 
Audit

 
Compensation
 
Nominating and
Corporate Governance

 
Corporate
Responsibility
 
Finance

 
Executive
Elizabeth J. Comstock
 
 
 
ü
 
 
 
 
 
ü

 
 
John G. Connors
 
ü

 
 
 
 
 
 
 
ü

 
 
Timothy D. Cook
 
 
 
Chair
 
ü

 
 
 
 
 
 
John J. Donahoe
 
 
 
 
 
ü

 
 
 
ü

 
 
Alan B. Graf, Jr.
 
Chair

 
 
 
Chair

 
 
 
 
 
 
Douglas G. Houser*
 
 
 
 
 
ü

 
ü
 
 
 
ü
Philip H. Knight
 
 
 
 
 
 
 
 
 
 
 
Chair
Travis A. Knight**
 
 
 
 
 
 
 
 
 
 
 
 
John C. Lechleiter
 
 
 
ü
 
 
 
ü
 
 
 
 
Mark G. Parker
 
 
 
 
 
 
 
 
 
 
 
ü
Michelle A. Peluso
 
ü

 
 
 
 
 
ü
 
 
 
 
Johnathan A. Rodgers
 
 
 
ü
 
 
 
ü
 
 
 
 
Orin C. Smith*
 
ü

 
 
 
 
 
 
 
Chair

 
 
John R. Thompson, Jr.
 
 
 
 
 
 
 
ü
 
 
 
 
Phyllis M. Wise
 
 
 
 
 
ü

 
Chair
 
 
 
 
Meetings in Fiscal 2015
 
13

 
5
 
5

 
5
 
5

 
-
* Messrs. Houser and Smith will retire from the Board of Directors effective September 17, 2015.
** Mr. Travis Knight was elected to the Board of Directors effective June 30, 2015.

Director Independence
 
Pursuant to NYSE rules, in order for a director to qualify as “independent,” the Board of Directors must affirmatively determine that the director has no material relationship with the Company that would impair the director’s independence. The Board affirmatively determined that commercial or charitable relationships below the following thresholds will not be considered material relationships that impair a director’s independence: (i) if a NIKE director or immediate family member is an executive officer of another company that does business with NIKE and the annual sales to, or purchases from, NIKE are less than one percent of the annual revenues of the other company; and (ii) if a NIKE director or immediate family member serves as an officer, director or trustee of a charitable organization, and NIKE’s contributions to the organization are less than one percent of that organization’s total annual charitable receipts. After applying this categorical standard, the Board of Directors has determined that all directors have no material relationship with the Company and, therefore, are independent, except for Messrs. Philip Knight, Travis Knight, Parker, and Thompson. Mr. Philip Knight and Mr. Parker are executive officers of the Company. Mr. Travis Knight, appointed to the Board on June 30, 2015, is not independent pursuant to NYSE rules as he is Mr. Philip Knight's son. Mr. Thompson is not independent pursuant to NYSE rules, because the Company has a contract with his son, who is the head basketball coach at Georgetown University, to provide endorsement and consulting services to the Company, under which the Company paid him more than $120,000 during fiscal 2015.
 
Director Nominations
 
The Nominating and Corporate Governance Committee identifies potential director candidates through a variety of means, including recommendations from members of the Committee or the Board, suggestions from Company management, and shareholder recommendations. The Committee also may, in its discretion, engage director search firms to identify candidates. Travis Knight was appointed to the Board of Directors on June 30, 2015. Travis Knight was identified for appointment to the Board in connection with the succession planning for our Board of Directors. Shareholders may recommend director candidates for consideration by the Nominating and Corporate Governance Committee by submitting a written recommendation to the Committee, c/o John F. Coburn III, Vice President and Corporate Secretary, NIKE, Inc., One Bowerman Drive, Beaverton, Oregon 97005-6453. The recommendation should include the candidate’s name, age, qualifications (including principal occupation and employment history), and written consent to be named as a nominee in the Company’s proxy statement and to serve as a director, if elected.
The Board of Directors has adopted qualification standards for the selection of non-management nominees for director, which can be found at our corporate website: http://investors.nike.com. As provided in these standards and the Company’s Corporate Governance Guidelines, nominees for director are selected on the basis of, among other things, distinguished business experience or other non-business achievements; education; significant knowledge of international business, finance, marketing, technology, law, or other fields which are complementary to, and balance the knowledge of, other Board members; a desire to represent the interests of all shareholders; independence; character; ethics; good judgment; diversity; and ability to devote substantial time to discharge Board responsibilities.
The Nominating and Corporate Governance Committee identifies qualified potential candidates without regard to their age, gender, race, national origin, sexual orientation, or religion. While the Board has no policy regarding Board member diversity, the Nominating and Corporate Governance Committee considers and discusses diversity in selecting director nominees and in the re-nomination of an incumbent director. The Committee views diversity broadly, including gender, ethnicity, differences of viewpoint, geographic location, skills, education, and professional and industry experience, among others. The Board believes that a variety and balance of perspectives on the Board can result in more thoughtful deliberations.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 3

CORPORATE GOVERNANCE
Board of Directors

In considering the re-nomination of an incumbent director, the Nominating and Corporate Governance Committee reviews the director’s overall service to the Company during his or her term, including the number of meetings attended, level of participation and quality of performance, as well as any special skills, experience or diversity that such director brings to the Board. All potential new director candidates, whether recommended by shareholders or identified by other means, are initially screened by the Chair of the Nominating and Corporate Governance Committee, who may seek additional information about the background and qualifications of the candidate, and who may determine that a candidate does not have qualifications that merit further consideration by the full Committee. With respect to new director candidates who pass the initial screening, the Nominating and Corporate Governance Committee meets to discuss and consider each candidate’s qualifications and potential contributions to the Board, and determines by majority vote whether to recommend such candidates to the Board of Directors. The final decision to either appoint a candidate to fill a vacancy between Annual Meetings or include a candidate on the slate of nominees proposed at an Annual Meeting is made by the Board.
It is the general policy of the Board that directors first elected after the fiscal year ended May 31, 1993 will not stand for re-election after reaching the age of 72. Messrs. Houser and Smith, who have served on the Board since 1970 and 2004, respectively, have announced their retirement and will not stand for re-election to the Board at the Annual Meeting.
 
Shareholder Communications with Directors
 
Shareholders or interested parties desiring to communicate directly with the Board of Directors, with the non-management directors or with any individual director may do so in writing addressed to the intended recipient or recipients, c/o John F. Coburn III, Vice President and Corporate Secretary, NIKE, Inc., One Bowerman Drive, Beaverton, Oregon 97005-6453. All such communications will be reviewed, compiled as necessary, and then forwarded to the designated recipient or recipients in a timely manner.



Board Leadership Structure
 
NIKE’s governance documents provide the Board with flexibility to select the appropriate leadership structure of the Company. In determining the leadership structure, the Board considers many factors, including the specific needs of the business, fulfilling the duties of the Board, and the best interests of the Company’s shareholders. In 2004, the Board of Directors chose to separate the position of Chairman of the Board from the position of President and CEO, although this is not a permanent policy of the Board. The Chairman, Mr. Philip Knight, presides over meetings of the Board of Directors and shareholders. The President and CEO, Mr. Parker, is in charge of the general supervision, direction, and control of the business and affairs of the Company, subject to the overall direction and supervision of the Board of Directors and its committees.
Given the particular experience and tenure of Mr. Philip Knight and Mr. Parker, the Board believes this leadership structure is appropriate for the Company because it separates the leadership of the Board from the duties of day-to-day leadership of the Company. This structure permits Mr. Parker to primarily focus his time and attention to the business, while Mr. Philip Knight directs his attention to the broad strategic issues considered by the Board of Directors. Further, with his significant Company experience and ownership of Common Stock, Mr. Philip Knight is particularly well-suited as Chairman, helping to align the Board with the interests of shareholders. This structure works particularly well given the talent, experience and professional relationship of Messrs. Parker and Knight, but is not a permanent policy of the Board. Given the succession planning for the Board in general, and NIKE's co-founder and Chairman in particular, the Board may choose to re-evaluate this structure in the future.
The chairs of Board committees play an active role in the leadership structure of the Board. The Nominating and Corporate Governance Committee and the Board endeavor to select independent committee chairs who will provide strong leadership to guide the important work of the Board committees. Committee chairs work with the Company's senior executives to ensure the committees are discussing the key strategic risks and opportunities for the Company.
The Nominating and Corporate Governance Committee has determined that given the current separation of the positions of Chairman and CEO, and the strong leadership of experienced chairs of each of the Board committees, a lead director would not improve the effectiveness of the Board at this time. A presiding director is appointed to chair executive sessions of non-management directors (consisting of all directors other than Messrs. Philip Knight and Parker). The position of presiding director is rotated among the chairs of the various Board committees, other than the Executive Committee. The current presiding director at the executive sessions is Mr. Cook. Executive sessions are regularly scheduled and held at least once each year. For all of these reasons, the Board believes this leadership structure is optimal and has worked well for many years.
  
The Board’s Role in Risk Oversight
 
While the Company’s management is responsible for day-to-day management of the various risks facing the Company, the Board of Directors takes an active role in the oversight of the management of critical business risks. The Board does not view risk in isolation. Risks are considered in virtually every business decision and as part of NIKE’s business strategy. The Board recognizes it is neither possible nor prudent to eliminate all risk. Purposeful and appropriate risk-taking is essential for the Company to be competitive on a global basis and to achieve its strategic objectives.
The Board implements its risk oversight function both as a whole and through committees, which play a significant role in carrying out risk oversight. While the Audit Committee is responsible for oversight of management’s risk management policies, oversight responsibility for particular areas of risk is allocated among the Board committees according to the committee’s area of responsibility as reflected in the committee charters. In particular:


NIKE, INC.Ÿ2015 Notice of Annual Meeting 4

CORPORATE GOVERNANCE
Board of Directors

The Audit Committee oversees risks related to the Company’s financial statements, the financial reporting process, accounting, legal matters, information security, and data protection. The Committee oversees the internal audit function, reviews a risk-based plan of internal audits, and reviews a risk-based integrated audit of internal controls over financial reporting. The Committee meets separately with each of the Vice President of Corporate Audit, representatives of the independent registered public accountants, and senior management.
The Compensation Committee oversees risks and rewards associated with the Company’s compensation philosophy and programs, management succession plans, and executive development.
The Finance Committee oversees financial matters and risks relating to budgeting, investments, access to capital, capital deployment, acquisitions and divestitures, currency risk and hedging programs, and significant capital projects.
The Corporate Responsibility and Sustainability Committee oversees issues that involve reputational risk to the Company, including community engagement, and sustainability innovation relating to the Company's products, its supply chain, including labor practices, and the environment.
The Nominating and Corporate Governance Committee oversees risks associated with company governance, including NIKE’s code of business conduct and ethics, compliance programs, and the structure and performance of the Board and its committees.

Each committee chair works with the senior executive assigned to assist the committee to develop agendas for the year and for each meeting, paying particular attention to areas of business risk identified by management, Board members, internal and external auditors, and in their committee charter, and to schedule agenda topics, presentations, and discussions periodically regarding business risks within their area of responsibility. At meetings, the committees discuss areas of business risk, the potential impact, and management’s initiatives to manage business risk, often within the context of important business decisions. Through this process key business risk areas are reviewed at appropriate times, with some topics reviewed on several occasions throughout the year. At every Board meeting each committee chair provides a report to the full Board outlining its discussions and actions, including those affecting the oversight of various risks.
The Company believes its leadership structure, discussed in detail above, supports the risk oversight function of the Board. Strong directors chair the various committees involved in risk oversight, there is open communication between management and directors, and all directors are involved in the risk oversight function.
  
Code of Business Conduct and Ethics
 
The NIKE Code of Ethics (“Code”) is available at the Company’s corporate website (http://investors.nike.com) and will be provided in print without charge to any shareholder who submits a request in writing to NIKE Investor Relations, One Bowerman Drive, Beaverton, Oregon 97005-6453. The Code applies to all of the Company’s employees and directors, including our chief executive officer, senior financial officers, and all other officers. The Code provides that any waiver of the Code may be made only by the Board. Any such waiver in favor of a director or executive officer will be publicly disclosed. The Company plans to disclose amendments to, and waivers from, the Code on the Company’s corporate website: http://investors.nike.com.

Proposal 1
Election of Directors
 
A Board of 13 directors will be elected at the Annual Meeting. All of the nominees other than Mr. Travis Knight were elected at the 2014 annual meeting of shareholders. Directors will hold office until the next annual meeting of shareholders or until their successors are elected and qualified.
Mr. Alan B. Graf, Jr., Dr. John C. Lechleiter, Ms. Michelle A. Peluso, and Dr. Phyllis M. Wise are nominated by the Board of Directors for election by the holders of Class B Stock. The other nine nominees are nominated by the Board of Directors for election by the holders of Class A Stock.
Under Oregon law, if a quorum of each class of shareholders is present at the Annual Meeting, the nine director nominees who receive the greatest number of votes cast by holders of Class A Stock and the four director nominees who receive the greatest number of votes cast by holders of Class B Stock will be elected directors. Abstentions and broker non-votes will have no effect on the results of the vote. Unless otherwise instructed, proxy holders will vote the proxies they receive for the nominees listed below. If any nominee becomes unable to serve, the holders of the proxies may, in their discretion, vote the shares for a substitute nominee or nominees designated by the Board of Directors.
The Bylaws and the Corporate Governance Guidelines of the Company provide that any nominee for director in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee. The Committee will recommend to the Board the action to be taken with respect to the resignation. The Board will publicly disclose its decision within 90 days of the certification of the election results.
Background information on the nominees as of July 20, 2015, including some of the attributes that led to their selection, appears below. The Nominating and Corporate Governance Committee has determined that each director meets the qualification standards described in the section entitled “Director Nominations” above. In addition, the Board firmly believes that the experience, attributes, and skills of any single director should not be viewed in isolation, but rather in the context of the experience, attributes, and skills that all director nominees bring to the Board as a whole, each of which contributes to the function of an effective Board.
Nominees for Election by Class A Shareholders


NIKE, INC.Ÿ2015 Notice of Annual Meeting 5

CORPORATE GOVERNANCE
PROPOSAL 1

Elizabeth J. Comstock
 
Ms. Comstock, 54, a director since 2011, is CEO of the GE Business Innovation division and Chief Marketing Officer of General Electric Company (“GE”). Ms. Comstock oversees GE Lighting, GE Ventures, & Licensing and the sales marketing functions. At GE, she was appointed Vice President, Communications, NBC News Communications in 1994, Senior Vice President, NBC Corporate Communications in 1996, Vice President of Corporate Communications in 1998, Corporate Vice President and Chief Marketing Officer in 2003, President, NBC Universal Integrated Media in 2006, and Senior Vice President and Chief Marketing Officer in 2008. Prior to joining GE in 1994, Ms. Comstock held a succession of positions at NBC, CBS, and Turner Broadcasting. Ms. Comstock is a trustee of the Smithsonian’s Cooper-Hewitt National Design Museum. Ms. Comstock was selected to serve on the Board because her broad experience in, and understanding of, media, marketing and innovation aligns well with the Company’s business model, which involves a great deal of each.

John G. Connors
 
Mr. Connors, 56, a director since 2005, is a partner in Ignition Partners LLC, a Seattle-area venture capital firm. Mr. Connors served as Senior Vice President and Chief Financial Officer of Microsoft Corporation from December 1999 to May 2005. He joined Microsoft in 1989 and held various management positions, including Corporate Controller from 1994 to 1996, Vice President, Worldwide Enterprise Group in 1999, and Chief Information Officer from 1996 to 1999. Mr. Connors is currently a member of the board of directors of Splunk, Inc. and privately held companies Chef, Inc., Motif Investing, Inc., FiREapps, Inc., Xamarin, Inc., DataSphere Technologies, Inc., the Washington Policy Center, and the University of Washington Tyee Club. Mr. Connors was selected to serve on the Board because his experience and skills in accounting, financial leadership, venture capital, technology, and international operations enable him to make valuable contributions to NIKE’s Audit Committee and Finance Committee.

Timothy D. Cook
 
Mr. Cook, 54, a director since 2005, is the Chief Executive Officer of Apple, Inc. Mr. Cook joined Apple in March 1998 as Senior Vice President of Worldwide Operations and also served as its Executive Vice President, Worldwide Sales and Operations and Chief Operating Officer. Mr. Cook was Vice President, Corporate Materials for Compaq Computer Corporation from 1997 to 1998. Previous to his work at Compaq, Mr. Cook served in the positions of Senior Vice President Fulfillment and Chief Operating Officer of the Reseller Division at Intelligent Electronics from 1994 to 1997. Mr. Cook also worked for International Business Machines Corporation from 1983 to 1994, most recently as Director of North American Fulfillment. Mr. Cook is currently a member of the Board of Directors of the National Football Foundation and Apple, Inc. Mr. Cook was selected to serve on the Board because his operational executive experience and his knowledge of technology, marketing, and international business allow him to provide the Board with valuable perspectives and insights.


NIKE, INC.Ÿ2015 Notice of Annual Meeting 6

CORPORATE GOVERNANCE


John J. Donahoe II

Mr. Donahoe, 55, a director since June 2014, is Chairman of PayPal Holdings, Inc. From 2008 through 2015, Mr. Donahoe served as President and Chief Executive Officer of eBay, Inc. ("eBay"), provider of the global eBay.com online marketplace and PayPal digital payments platform. Mr. Donahoe joined eBay in 2005 as President of eBay Marketplaces, responsible for eBay's global e-Commerce businesses, and was appointed President and Chief Executive Officer in 2008. He has also served on eBay's Board of Directors since 2008. Prior to joining eBay, Mr. Donahoe was the CEO and Worldwide Managing Director of Bain & Company from 1999 to 2005, and a Managing Director from 1992 to 1999. Mr. Donahoe also serves on the Board of Directors of Intel Corporation and is a member of the President's Export Council. Mr. Donahoe was selected to serve on the Board because of his experience in executive and financial management, strategic planning, branding, technology, and digital commerce, which allow him to provide valued perspectives on each of these areas of the Company's business.

Philip H. Knight
 
Mr. Knight, 77, a director since 1968, is Chairman of the Board of Directors of NIKE. Mr. Knight is a co-founder of the Company and, except for the period from June 1983 through September 1984, served as its President from 1968 to 1990, and from June 2000 to December 2004. Prior to 1968, Mr. Knight was a certified public accountant with Price Waterhouse and Coopers & Lybrand and was an Assistant Professor of Business Administration at Portland State University. Mr. Knight led NIKE from a small partnership founded on a handshake to the world’s largest athletic footwear, apparel, and equipment company. He has extensive knowledge of and experience in Company operations, sports marketing, manufacturing, management, accounting, and financial matters, which make him uniquely qualified to serve as Chairman of the Board.


Travis A. Knight
Mr. Knight, 41, a director since June 2015, is the President and Chief Executive Officer of the animation studio, LAIKA, LLC, which specializes in feature-length films. He has been involved in all principal creative and business decisions at LAIKA since its founding in 2003, serving in successive management positions as Lead Animator, Vice President of Animation, and then as President and CEO in 2009. Mr, Knight has served as Producer and Lead Animator on Academy Award-nominated feature-length films The Boxtrolls (2014) and ParaNorman (2012, for which he won an Annie Award for Outstanding Achievement in Character Animation), and Lead Animator for Coraline (2009). Prior to his work at LAIKA, Mr. Knight held various animation positions at Will Vinton Studios from 1998 to 2002, as a stop-motion animator for television series, commercials, and network promotions. He has been recognized for his work on the Emmy Award-winning stop-motion animated television series The PJs. Mr. Knight serves on the Board of Directors of LAIKA, LLC. He is the son of NIKE Board Chairman Philip Knight.


NIKE, INC.Ÿ2015 Notice of Annual Meeting 7

CORPORATE GOVERNANCE
PROPOSAL 1

Mark G. Parker
 
Mr. Parker, 59, has been President and Chief Executive Officer and a director since 2006. He has been employed by NIKE since 1979 with primary responsibilities in product research, design and development, marketing, and brand management. Mr. Parker was appointed divisional Vice President in charge of product development in 1987, corporate Vice President in 1989, General Manager in 1993, Vice President of Global Footwear in 1998, and President of the NIKE Brand in 2001. He has extensive knowledge and experience regarding Company operations, sports marketing, manufacturing, research, design, development, and management, and is an effective leader of NIKE. His position as Chief Executive Officer makes his participation on the Board critical.

Johnathan A. Rodgers
 
Mr. Rodgers, 69, a director since 2006, is a retired broadcast and cable television executive. Mr. Rodgers retired as the founding President and Chief Executive Officer of TV One, LLC in July 2011. Prior to joining TV One, LLC in March 2003, Mr. Rodgers was President of the Discovery Networks from 1996 to 2003. Prior to his work at Discovery Communications, Mr. Rodgers had a 20-year career at CBS, Inc. where he held a variety of executive positions, including President, CBS Television Stations Division and CBS News Executive Producer. Mr. Rodgers is currently a member of the Board of Directors of Comcast Corporation. Mr. Rodgers previously served as a director of Procter & Gamble. Mr. Rodgers has been inducted into both the Advertising Hall of Fame and the Broadcasting and Cable Hall of Fame. Mr. Rodgers was selected to serve on the Board because his experience and knowledge in media, broadcasting, and telecommunications, his skills in executive leadership, and his knowledge of multicultural media allows him to provide valuable insights to the Board regarding corporate responsibility, diversity, compensation, and marketing.


John R. Thompson, Jr.
 
Mr. Thompson, 73, a director since 1991, was head coach of the Georgetown University men’s basketball team from 1972 until 1998. Mr. Thompson was head coach of the 1988 United States Olympic basketball team. He hosted a sports radio talk show in Washington, D.C. for 13 years, and he is a nationally broadcast sports analyst for Turner Network Television (TNT) and Dial Global, Inc. He serves as Assistant to the President of Georgetown University for Urban Affairs, and he is a past President of the National Association of Basketball Coaches and presently serves on its Board of Governors. Mr. Thompson has honorary doctorate degrees from Wheeling Jesuit University, Georgetown University, University of the District of Columbia, and St. Peter's College. Mr. Thompson was selected to serve on the Board because his extensive experience and knowledge of education, college and professional sports, media, broadcasting, and knowledge of urban issues allow him to provide valuable insights to the Board regarding sports marketing, corporate responsibility and diversity.  
  
Board Recommendation
 
The Board of Directors recommends that the Class A Shareholders vote FOR the election of nominees above to the Board of Directors.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 8

CORPORATE GOVERNANCE


Nominees for Election by Class B Shareholders
 
Alan B. Graf, Jr.
 
Mr. Graf, 61, a director since 2002, is the Executive Vice President and Chief Financial Officer of FedEx Corporation, a position he has held since 1998, and is a member of FedEx Corporation’s Executive Committee. Mr. Graf joined FedEx Corporation in 1980 and was Senior Vice President and Chief Financial Officer for FedEx Express, FedEx’s predecessor, from 1991 to 1998. He previously served on the boards of directors of Kimball International Inc., Storage USA, Inc. and Arkwright Mutual Insurance Co., and he is currently a director of Mid-America Apartment Communities, Inc., Methodist Le Bonheur Healthcare, and the Indiana University Foundation. Mr. Graf was selected to serve on the Board because his experience and skills in auditing, accounting, financial management, executive leadership, and international operations enable him to effectively lead NIKE’s Audit Committee, serving as its Chair and financial expert, and the Nominating and Corporate Governance Committee.

John C. Lechleiter
 
Dr. Lechleiter, 61, a director since 2009, is Chairman of the Board, President, and Chief Executive Officer of Eli Lilly and Company (“Lilly”). He has served as President and Chief Executive Officer since April 1, 2008. He has been a member of Lilly’s Board of Directors since 2005 and was named Chairman on January 1, 2009. Dr. Lechleiter began work at Lilly as a senior organic chemist in Lilly’s process research and development division in 1979. He is a member of the American Chemical Society and Business Roundtable. He serves on the board of Pharmaceutical Research and Manufacturers of America. He also serves as Chairman of the U.S. Japan Business Council and of United Way Worldwide, and on the boards of the Life Sciences Foundation, the Central Indiana Corporate Partnership, and Ford Motor Company. Dr. Lechleiter was selected to serve on NIKE’s Board because his operational executive experience and his knowledge of science, marketing, management, and international business allow him to provide the Board with significant contributions in those strategic areas.

Michelle A. Peluso

Ms. Peluso, 43, a director since April 2014, is Chief Executive Officer of online shopping destination Gilt. Prior to joining Gilt in 2013, she served as Global Consumer Chief Marketing and Internet Officer of Citigroup Inc. from 2009 to 2013, and from 2002 to 2009, Ms. Peluso held senior management positions at Travelocity.com LP, being appointed Chief Operating Officer in 2003, and President and Chief Executive Officer in December 2003. Prior to joining Travelocity, in 1999 she founded Site59, an online travel site, serving as its Chief Executive Officer until its acquisition by Travelocity in 2002. Ms. Peluso has been a director of Gilt since 2009, and was also a director of OpenTable, Inc. from 2008 to 2012. Ms. Peluso was selected to serve on the Board because of her extensive experience in, and understanding of, online retail, marketing, branding, and digital connections with consumers, which are integral components of the Company's growth strategy.


NIKE, INC.Ÿ2015 Notice of Annual Meeting 9

CORPORATE GOVERNANCE
PROPOSAL 1

Phyllis M. Wise
 
Dr. Wise, 70, a director since 2009, is Chancellor of the University of Illinois, at Urbana-Champaign. She joined the University of Maryland School of Medicine as an assistant professor in 1976, was appointed associate professor in 1982, and professor in 1987. Dr. Wise was appointed a professor and chair of the department of physiology at the University of Kentucky in 1993, and was appointed dean of the division of biological sciences and distinguished professor of neurobiology at the University of California-Davis in 2002. In 2005, she was appointed Provost and Vice President for Academic Affairs at the University of Washington, and served as Provost and Executive Vice President from 2007 to 2010, and interim President until July 2011, where she was also professor of physiology and biophysics, biology, and obstetrics and gynecology. During her tenure, she led the establishment of the College of the Environment, the mission of which is to provide solutions to developing a sustainable healthy environment through research and teaching. Dr. Wise has a doctorate in zoology from the University of Michigan and an honorary doctorate from Swarthmore College, and she is an elected member of the Institute of Medicine and the American Academy of Arts and Sciences. Dr. Wise is currently a member of the Board of Directors of RAND Health and the Robert Wood Johnson Foundation Board of Directors, as well as the Busey Bank Board of Directors. Dr. Wise was selected to serve on the Board because her extensive experience in medical science, health, higher education, and societal issues allow her to provide valuable contributions to the Board’s deliberations of strategic importance.

Board Recommendation
 
The Board of Directors recommends that the Class B Shareholders vote FOR the election of nominees above to the Board of Directors.

Director Compensation for Fiscal 2015
Name
 
Fees Earned or Paid in Cash ($)

 
Stock Award (1) ($)

 
Option Awards (2)($)

 
Change in Pension Value and 
Nonqualified Deferred Compensation 
Earnings (3)($)

 
All Other
Compensation (4)
($)

 
Total
($)

Elizabeth J. Comstock
 
85,000

 
160,005

 

 

 
1,093

 
246,098

John G. Connors
 
90,000

 
160,005

 

 

 
21,093

 
271,098

Timothy D. Cook
 
95,000

 
160,005

 

 

 
21,093

 
276,098

John J. Donahoe II (5)
 
80,842

 
320,060

 

 
 
 
17,786

 
418,688

Alan B. Graf, Jr.
 
115,000

 
160,005

 

 

 
1,093

 
276,098

Douglas G. Houser
 
85,000

 
160,005

 
16,430

 
5,760

 
21,093

 
288,288

John C. Lechleiter
 
85,000

 
160,005

 

 

 
21,093

 
266,098

Michelle A. Peluso
 
90,000

 
160,005

 

 

 
21,262

 
271,267

Johnathan A. Rodgers
 
85,000

 
160,005

 

 

 
16,093

 
261,098

Orin C. Smith
 
100,000

 
160,005

 

 

 
21,093

 
281,098

John R. Thompson, Jr.
 
67,000

 
160,005

 

 

 
44,234

 
271,239

Phyllis M. Wise
 
95,000

 
160,005

 

 

 
21,093

 
276,098

(1)
Represents the grant date fair value of restricted stock awards granted in fiscal 2015 computed in accordance with accounting guidance applicable to stock-based compensation. The grant date fair value is based on the closing market price of our Class B Stock on the grant date. As of May 31, 2015, non-employee directors held the following numbers of shares of unvested restricted stock: Ms. Comstock, 1,952; Mr. Connors, 1,952; Mr. Cook, 1,952; Mr. Donahoe, 4,068; Mr. Graf, 1,952; Mr. Houser, 1,952; Dr. Lechleiter, 1,952; Ms. Peluso, 1,952; Mr. Rodgers, 1,952; Mr. Smith, 1,952; Mr. Thompson, 1,952; and Dr. Wise, 1,952.
(2)
Represents the grant date fair value of annual director options granted in fiscal 2015 computed in accordance with accounting guidance applicable to stock-based compensation. The grant date fair value of the options was estimated using the Black-Scholes option pricing model. On September 18, 2014, Mr. Houser was granted an option for 1,000 shares with an exercise price of $81.97 per share. The assumptions made in determining the grant date fair values of options under applicable accounting guidance are disclosed in Note 11 of Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended May 31, 2015. As of May 31, 2015, non-employee directors held outstanding options for the following numbers of shares of our Class B Stock: Ms. Comstock, 45,000; Mr. Connors, 45,000; Mr. Cook, 85,000; Mr. Graf, 33,000; Mr. Houser, 53,000; Dr. Lechleiter, 63,000; Mr. Rodgers, 89,000; Mr. Smith, 45,000; Mr. Thompson, 21,000; and Dr. Wise, 55,000.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 10

CORPORATE GOVERNANCE


(3)
Represents above-market earnings credited during fiscal 2015 to the account of Mr. Houser under our prior Executive Deferred Compensation Plan adopted in 1983 (the “1983 DCP”). While deferrals under the 1983 DCP were discontinued in 1990, earnings have continued to accrue on the 1983 DCP account balances. Under the terms of the 1983 DCP, Mr. Houser received a guaranteed return equal to the current monthly rate of Moody’s seasoned corporate bonds index, plus 4%, which paid an average interest rate of 8.18% in fiscal 2015.
(4)
Includes medical and life insurance premiums paid by us of $23,141 for Mr. Thompson. Also includes matched contributions to charities in the following amounts: Messrs Connors, Cook, Houser, Smith, Thompson, and Dr. Lechleiter, $20,000; Mr. Donahoe, $15,000; Ms. Peluso, $17,920; Mr. Rodgers, $15,000; and Dr. Wise, $20,000. Also includes dividends paid on restricted stock in the following amounts: $1,093 for Ms. Comstock, Messrs. Connors, Cook, Graf, Houser, Rodgers, Smith, and Thompson, and Drs. Lechleiter and Wise; $2,786 for Mr. Donahoe; and $3,342 for Ms. Peluso.
(5)
Mr. Donahoe was appointed to the Board of Directors on June 19, 2014. In addition to the items described above, his compensation includes an initial restricted stock award valued at $160,054 and a pro-rated retainer fee of $80,842 for Board service in fiscal 2015.
 
Director Fees and Arrangements
 
Effective for fiscal 2015, we changed the annual equity award included in our standard director compensation program by replacing the option to purchase 7,000 shares of our Class B Stock with a restricted stock award valued at $160,000 on the date of grant. We made the changes to our director equity awards to maintain the competitiveness of NIKE’s director compensation program and to reinforce our directors’ ability to meet our stock ownership guidelines described below. All other components of our standard director compensation program remained unchanged.
Commencing with fiscal 2015, non-employee directors annually receive:

An annual retainer of $85,000 per year.
A restricted stock award valued at $160,000 on the date of grant, generally, the date of each annual meeting of shareholders. The restricted stock award is subject to forfeiture in the event that service as a director terminates prior to the next annual meeting.
For chairs of board committees (other than the Executive Committee), an annual retainer of $10,000 for each committee chaired ($15,000 for the chair of the Audit Committee).
For Audit Committee members, an additional annual retainer of $5,000 per year.
Payment or reimbursement of travel and other expenses incurred in attending board meetings.
Matching charitable contributions under the NIKE Matching Gift Program, under which directors are eligible to contribute to qualified charitable organizations and we provide a matching contribution to the charities in an equal amount, up to $20,000 in the aggregate for each director annually.
If a director does not attend 75% of the total fiscal year board and committee meetings, the fourth quarter payment of the annual retainers is forfeited.

Mses. Comstock and Peluso, Messrs. Connors, Cook, Donahoe, Graf, Travis Knight, Rodgers and Smith, and Drs. Lechleiter and Wise participate in our standard director compensation program.

Mr. Houser also participates in our standard program, except that, in exchange for electing in fiscal 2000 to participate in the standard program when it was first instituted, he receives an annual option to purchase 1,000 shares of our Class B Stock, in addition to his restricted stock award.
Mr. Thompson does not participate in our standard director compensation program. Pursuant to his election made in fiscal 2000, Mr. Thompson receives an annual retainer of $67,000 per year (instead of the $85,000 annual retainer fee paid under our standard program). Pursuant to his election, Mr. Thompson also receives medical insurance and $500,000 of life insurance coverage paid for by the Company. Additionally, on the date of each annual meeting of shareholders, Mr. Thompson receives an annual restricted stock award valued at $160,000 on the date of grant on the same terms as apply to the restricted stock awards granted pursuant to our standard program. Although Mr. Thompson attended less than 75% of the total meetings in fiscal 2015, the Board elected to waive the forfeiture of the fourth quarter retainer as his absences were excused due to reasons described earlier on page 1.
Mr. Philip Knight, as the Chairman of our Board of Directors, is one of our executive officers, but is not a Named Executive Officer. Mr. Philip Knight does not receive any additional compensation for services provided as a director.

Effective April 17, 2014, we also changed the initial equity award included in our standard director compensation program. Upon election to the Board, a newly appointed non-employee director is now granted a restricted stock award valued at $160,000 on the date of grant. The restricted stock award is subject to forfeiture in the event that service as a director terminates prior to the first anniversary of the grant. Prior to April 17, 2014, newly appointed non-employee directors received initial awards of stock options to purchase 7,000 shares of our Class B Stock.

Mr. Travis Knight was appointed to our Board of Directors on June 30, 2015. In connection with his appointment and consistent with the standard director compensation program described above, Mr. Travis Knight was granted an initial equity award of restricted stock valued at $160,000 on June 30, 2015. Mr. Travis Knight will participate in the standard director compensation program.

Stock Ownership Guidelines for Directors
On June 20, 2013, the Board of Directors adopted stock ownership guidelines for all non-management directors. Under these guidelines, directors are required to hold NIKE stock valued at five times their annual cash retainer. Directors elected prior to June 20, 2013 are required to attain these ownership levels by June 20, 2018 and new directors within five years of their election to the Board.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 11

CORPORATE GOVERNANCE
PROPOSAL 1

Director Participation in Deferred Compensation Plan
 
Under our Deferred Compensation Plan, non-employee directors may elect in advance to defer up to 100 percent of the director fees paid by us. For a description of the plan, see “Non-Qualified Deferred Compensation in Fiscal 2015” below. In addition, in fiscal 2000, Messrs. Houser and Thompson received credits to a fully vested NIKE stock account under the Deferred Compensation Plan in exchange for their waiver of rights to future payments under a former non-employee director retirement program. The Class B Stock credited to these directors’ accounts is distributed to them upon their retirement from the Board, and the accounts are credited with quarterly dividends until distributed.

Stock Holdings of Certain Owners and Management
 
The following table sets forth the number of shares of each class of NIKE securities beneficially owned, as of June 30, 2015, by (i) each person known to the Company to be the beneficial owner of more than 5 percent of any class of the Company’s securities, (ii) each of the directors and nominees for director, (iii) each executive officer listed in the Summary Compensation Table (“Named Executive Officers”), and (iv) all nominees, Named Executive Officers, and other executive officers as a group. Because Class A Stock is convertible into Class B Stock on a share-for-share basis, each beneficial owner of Class A Stock is deemed by the SEC to be a beneficial owner of the same number of shares of Class B Stock. Therefore, in indicating a person’s beneficial ownership of shares of Class B Stock in the table, it has been assumed that such person has converted into Class B Stock all shares of Class A Stock of which such person is a beneficial owner. For these reasons the table contains substantial duplications in the numbers of shares and percentages of Class A and Class B Stock shown for Mr. Philip Knight and for all directors and officers as a group. In addition, unless otherwise indicated, all persons named below can be reached at c/o John F. Coburn III, Vice President and Corporate Secretary, NIKE, Inc., One Bowerman Drive, Beaverton, Oregon 97005.
 
 
 
Title of Class
 
Shares Beneficially  Owned (1)

 
 
Percent of Class (2)
Elizabeth J. Comstock
 
Class B
 
46,952

(3) 
 

John G. Connors
 
Class B
 
59,872

(3) 
 

Timothy D. Cook
 
Class B
 
86,952

(3) 
 

John J. Donahoe II
 
Class B
 
4,068

 
 

Alan B. Graf, Jr
 
Class B
 
121,767

(3) 
 

Douglas G. Houser
 
Class B
 
385,467

(3)(4) 
 

Philip H. Knight
 
Class A
 
17,369,030

(5) 
 
9.8
%
One Bowerman Drive, Beaverton, Oregon 97005
 
Class B
 
17,384,510

(5) 
 
2.5
%
Travis A. Knight
 
Class B
 
4,682

 
 
 
John C. Lechleiter
 
Class B
 
72,452

(3) 
 

Mark G. Parker (6)
 
Class B
 
2,820,898

(3)(7) 
 
0.4
%
Michelle A. Peluso
 
Class B
 
4,114

 
 

Johnathan A. Rodgers
 
Class B
 
90,952

(3) 
 

Orin C. Smith
 
Class B
 
52,352

(3) 
 

John R. Thompson, Jr
 
Class B
 
54,965

(3)(4) 
 

Phyllis M. Wise
 
Class B
 
56,952

(3) 
 

Donald W. Blair (6)
 
Class B
 
600,199

(3)(7) 
 
0.1
%
Trevor A. Edwards (6)
 
Class B
 
1,042,570

(3)(7) 
 
0.2
%
Eric D. Sprunk (6)
 
Class B
 
569,211

(3)(7) 
 
0.1
%
Jeanne P. Jackson (6)
 
Class B
 
369,931

(3)(7) 
 

Sojitz Corporation of America
 
 
 
 
 
 
 
1211 S.W. 5th Ave, Pacwest Center, Ste. 2220, Portland, OR 97204
 
Preferred (8)
 
300,000

  
 
100.0
%
Swoosh, LLC
 
Class A
 
128,500,000

(9) 
 
72.4
%
One Bowerman Drive, Beaverton, OR 97005
 
Class B
 
128,500,000

 
 
16.0
%
The Vanguard Group
 
 
 
 
 
 
 
100 Vanguard Blvd., Malvern, PA 19355
 
Class B
 
40,786,952

(10) 
 
6.1
%
BlackRock, Inc.
 
 
 
 
 
 
 
40 East 57th Street, New York, NY 10022
 
Class B
 
36,645,620

(11) 
 
5.4
%
All directors and executive officers as a group (22 persons)
 
Class A
 
17,369,030

  
 
9.8
%
 
 
Class B
 
25,016,410

(3) 
 
3.7
%
(1)
A person is considered to beneficially own any shares: (a) over which the person exercises sole or shared voting or investment power, or (b) of which the person has the right to acquire beneficial ownership at any time within 60 days (such as through conversion of securities or exercise of stock options). Unless otherwise indicated, voting and investment power relating to the above shares is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.
(2)
Omitted if less than 0.1 percent.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 12

CORPORATE GOVERNANCE


(3)
These amounts include the right to acquire, pursuant to the exercise of stock options, within 60 days after June 30, 2015, the following numbers of shares: 45,000 shares for Ms. Comstock, 45,000 shares for Mr. Connors, 85,000 shares for Mr. Cook, 33,000 shares for Mr. Graf, 52,000 shares for Mr. Houser, 63,000 shares for Dr. Lechleiter, 2,371,250 shares for Mr. Parker, 89,000 shares for Mr. Rodgers, 45,000 shares for Mr. Smith, 21,000 shares for Mr. Thompson, 55,000 shares for Dr. Wise, 446,250 shares for Mr. Blair, 876,845 shares for Mr. Edwards, 540,684 shares for Mr. Sprunk, 346,250 shares for Ms. Jackson, and 6,200,154 shares for the executive officer and director group.
(4)
Includes shares credited to accounts under the NIKE, Inc. Deferred Compensation Plan in the following amounts: 20,767 for Mr. Houser, and 16,013 for Mr. Thompson.
(5)
Does not include: (a) 260,896 shares of Class A Stock that are owned by Mr. Philip Knight’s spouse, (b) 15,978,151 shares of Class A Stock held by four grantor annuity trusts for the benefit of Mr. Philip Knight’s children, (c) 1,880,290 shares of Class B Stock held by the Knight Foundation, a charitable foundation in which Mr. Philip Knight and his spouse are directors, (d) 1,237,928 shares of Class B Stock held by Jasper Ridge Strategic Partners, L.P., a limited partnership in which a company owned by Mr. Philip Knight is a limited partner. Mr. Philip Knight has disclaimed ownership of all such shares, and (e) 128,500,000 shares of Class A Stock that are owned by Swoosh, LLC, a limited liability company in which Mr. Philip Knight is a director.
(6)
Named executive officer listed in the Summary Compensation Table.
(7)
Includes shares held in accounts under the NIKE, Inc. 401(k) and Profit Sharing Plan for Messrs. Parker, Blair, Edwards, Sprunk, and Ms. Jackson in the amounts of 17,266, 5,833, 9,127, 563 and 843 shares, respectively.
(8)
Preferred Stock does not have general voting rights except as provided by law, and under certain circumstances as provided in the Company’s Restated Articles of Incorporation, as amended.
(9)
Information provided as of June 30, 2015 in Schedule 13D filed by the shareholder.
(10)
Information provided as of February 9, 2015 in Schedule 13G filed by the shareholder.
(11)
Information provided as of February 9, 2015 in Schedule 13G filed by the shareholder.

 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, and persons who own more than 10 percent of a registered class of the Company’s equity securities, to file with the SEC and the NYSE initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than 10 percent shareholders are required by the regulations of the SEC to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during fiscal 2015 all Section 16(a) filing requirements applicable to its officers, directors and greater than 10 percent beneficial owners were complied with.

Transactions with Related Persons
 
Mr. Howard S. Slusher, the father of John Slusher, Executive Vice President of Sports Marketing, and the Company are parties to a Consulting Agreement pursuant to which Howard Slusher manages the planning, design, and construction of new buildings at, and improvements to, NIKE's World Headquarters. Howard Slusher was selected due to his deep history and experience with the Company, as he has managed several significant construction projects for the Company, including the original World Headquarters construction and later expansions. In addition, Howard Slusher's previous engagement with the Company garnered the trust of management and makes him uniquely qualified to oversee the project. During fiscal 2015, the Company paid Howard Slusher $2,825,000 for these services.
Pursuant to the terms of a past consulting agreement with the Company, the Company agreed to pay for health and life insurance policies for Howard Slusher following expiration of the agreement. During fiscal 2015, the Company paid $129,160 for health and life insurance premiums.
Three of Mr. Parker’s siblings, each with over 25 years of service to the Company, were employed by the Company in non-executive roles in fiscal 2015. Ann Parker was an Executive Talent Scout, Bob Parker was a Marketplace Director, and Stephen Parker held Vice President roles with Converse. During fiscal 2015, the Company paid aggregate compensation to each of Ann Parker, Bob Parker and Stephen Parker in the amounts of $313,398, $387,434, and $540,582, respectively, comprising salary, bonuses, the grant date fair value of stock options granted during the fiscal year estimated using the Black-Scholes pricing model, profit sharing and matching contributions to Company-sponsored retirement plans. The compensation and benefits received by each of Mr. Parker's siblings were consistent with compensation paid to other employees holding similar positions.
Mr. Thompson’s son, John Thompson III, head basketball coach at Georgetown University, and the Company are parties to a contract pursuant to which Mr. Thompson III provides certain endorsement and consulting services to the Company. The terms of this agreement, effective August 2014 through August 2019, provide for annual base compensation of $200,000, and up to $112,000 per year of product and merchandise, for use by him, the basketball staff and team. In addition, there are annual incentive payments based upon his team's performance of up to $100,000.
The Company’s written policy requires the Nominating and Corporate Governance Committee to review any transaction or proposed transaction with a related person that would be required to be reported under Item 404(a) of Regulation S-K, and to determine whether to ratify or approve the transaction, with ratification or approval to occur only if the Committee determines that the transaction is fair to the Company or that approval or ratification of the transaction is in the interest of the Company.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 13

CORPORATE GOVERNANCE
PROPOSAL 1

 
Compensation Committee Interlocks and Insider Participation
 
The members of the Compensation Committee of the Board of Directors during fiscal 2015 were Timothy D. Cook, Elizabeth J. Comstock, John C. Lechleiter, and Johnathan A. Rodgers. The Committee is composed solely of independent, non-employee directors. No member of the Compensation Committee has been an executive officer of the Company, and no member of the Compensation Committee had any relationships requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related-party transactions. None of the Company’s executive officers served as a director or member of a compensation committee (or other committee serving an equivalent function) of any other entity, the executive officers of which served as a director or member of the Compensation Committee of the Company during fiscal 2015.




NIKE, INC.Ÿ2015 Notice of Annual Meeting 14

COMPENSATION DISCUSSION AND ANALYSIS


COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
This Compensation Discussion and Analysis explains our compensation philosophy, summarizes our compensation programs and reviews compensation decisions for the executives identified as Named Executive Officers in the Summary Compensation Table on page 26. The Named Executive Officers for fiscal 2015 were:
Mark G. Parker, President and Chief Executive Officer
Donald W. Blair, Executive Vice President and Chief Financial Officer
Trevor A. Edwards, President, NIKE Brand
Eric D. Sprunk, Chief Operating Officer
Jeanne P. Jackson, President, Product and Merchandising

On February 12, 2015, the Company announced Mr. Blair will retire in October 2015. As part of a planned transition, Mr. Blair will remain Executive Vice President and Chief Financial Officer through July 31, 2015, and will remain with the company through October 31, 2015 in support of the transition.  Effective August 1, 2015, Mr. Blair will be succeeded by Andrew Campion, currently our Senior Vice President, Finance, Strategy and Investor Relations.
The Compensation Committee of the Board of Directors (the “Committee”) is comprised of Timothy D. Cook (Chairman), Elizabeth J. Comstock, John C. Lechleiter, and Johnathan A. Rodgers, each of whom is an independent director under applicable NYSE listing standards.
Our executive compensation program, similar to our non-executive compensation programs, is aligned with our business strategy and culture to attract and retain top talent, reward business results and individual performance, and most importantly, maximize shareholder value. Our total compensation program for the Named Executive Officers is highly incentive-based and competitive in the marketplace, with Company performance determining a significant portion of total compensation.

Executive Compensation Governance Practices
To achieve the objectives of our executive compensation program and emphasize pay-for-performance principles, the Compensation Committee has continued to employ strong governance practices, including:
We Do
We Don't Do
ü Base a majority of total compensation on performance and retention incentives
ü Set annual and long-term incentive targets based on clearly disclosed, objective performance measures
ü Mitigate undue risk associated with compensation by using multiple performance targets, caps on potential incentive payments and a clawback policy
ü Require executive officers and non-employee directors to hold NIKE stock through published stock ownership guidelines
ü Vest equity awards over time to promote retention
ü Provide double-trigger change-in-control equity acceleration
ü Require executive officers and directors to obtain pre-approval to pledge NIKE stock
ü Conduct annual “say-on-pay” advisory votes
û Retirement acceleration for restricted stock or restricted stock units (RSUs)
û Dividends or dividend equivalents on unearned RSUs
û Repricing of options without shareholder approval
û Hedging transactions or short sales by executive officers or directors
û Significant perquisites
û Tax gross-ups for perquisites
û Pension or supplemental executive retirement plan (SERP)
û Employment contracts 
û Cash-based change-in-control benefits
û Excise tax gross-ups upon change of control







Consideration of Say-on-Pay Vote Results

NIKE, INC.Ÿ2015 Notice of Annual Meeting 15

COMPENSATION DISCUSSION AND ANALYSIS

The non-binding advisory proposal regarding compensation of the Named Executive Officers submitted to shareholders at our 2014 Annual Meeting was approved by over 98% of the votes cast. The Committee believes this favorable outcome conveyed our shareholders' support of our executive compensation program and the Committee's decisions. After considering the shareholder vote and other factors in its annual review of our total executive compensation programs, the Committee made no material changes in the structure of our compensation programs. The Committee will continue to consider the outcome of the Company's say-on-pay votes when conducting its regular practice of evaluating the program and making future compensation decisions for the Named Executive Officers.

Financial Highlights under Incentive Plans
NIKE delivered strong performance in fiscal 2015. The charts below set forth certain key financial results that were used in determining payouts under our incentive compensation plans for fiscal 2015. The measures below are based on NIKE's comparable publicly reported financial results, but may differ based on plan terms, including adjustments to account for the divestitures of the Cole Haan and Umbro businesses in fiscal 2013, as described in the footnotes to the charts below and in “Elements of our Compensation Program.”
 
1 Revenues and EPS exclude all Cole Haan and Umbro revenues and expenses, all divestiture-related charges and gains, and any amounts associated with the transfer of Umbro sports marketing sponsorships to NIKE. The Cole Haan and Umbro businesses were divested February 1, 2013 and November 30, 2012, respectively.
2 Pre-tax income excludes all Cole Haan and Umbro revenues and expenses, all divestiture-related charges and gains, and any amounts associated with the transfer of Umbro sports marketing sponsorships to NIKE.

Executive Compensation Highlights
The total compensation for each of the Named Executive Officers is shown in the Summary Compensation Table on page 26. While we describe executive compensation in greater detail throughout this Compensation Discussion and Analysis, actions the Committee took in fiscal 2015 are highlighted below:
Base Salary. Based on the recommendation by the Committee, which was approved by the independent members of the Board, base salaries remained the same as it was determined that they were appropriately aligned with the market.
Performance-Based Annual Incentive Plan. Target awards remained the same, except in the case of Mr. Parker, who received a target increase from 170% to 180% of base salary. The Committee established an increased target award for Mr. Parker to align with market. Based on financial performance goals set by the Committee in June 2014 and actual performance results, each executive officer's bonus for fiscal 2015 was paid out at 145.03% of target.
Performance-Based Long-Term Incentive Plan. The target awards for the fiscal 2015-2017 performance period remained the same. Based on long-term financial performance goals set by the Committee in June 2012 and actual performance results, each executive officer received a payout for the fiscal 2013-2015 performance period of 120.16% of target.
Stock Options. Annual awards remained the same, except in the case of Messrs. Edwards and Sprunk, who each received 80,000 shares compared to 75,000 shares in the prior year. Each award vests equally over four years.
Restricted Stock. Annual awards remained the same. Each award vests equally over three years.
Peer Group. For purposes of setting executive compensation in fiscal 2015, eBay Inc., Kohl's Corp., and Mondelez International, Inc. were added to our peer group, and General Mills Inc. and J.C. Penney Company Inc. were removed.


Fiscal 2016 CEO Performance-Based Retention Award


NIKE, INC.Ÿ2015 Notice of Annual Meeting 16

COMPENSATION DISCUSSION AND ANALYSIS

In view of the Company’s strong performance under Mr. Parker’s leadership and to provide an incentive for Mr. Parker to stay for at least the next five years, on June 30, 2015, the Committee granted to Mr. Parker the opportunity to earn a restricted stock unit (“RSU”) award with a target value of $30,000,000, representing 277,727 shares of our Class B Stock based on the closing price on the grant date. 60% of the award’s maximum value is based on the Company’s performance, and also will not be earned unless Mr. Parker remains employed with the Company through a five-year vesting period ending on June 30, 2020. 40% of the award is subject only to time vesting and will be earned if Mr. Parker remains employed with the Company through June 30, 2020. The Committee views the award as a long-term retention incentive for compensation over the five-year vesting and performance periods and not solely as compensation for fiscal 2016. The terms of Mr. Parker’s award are further described in “Restricted Stock Unit (RSU) Retention Awards.”

Operation of the Compensation Committee

The Compensation Committee of the Board of Directors (the “Committee”) evaluates the performance of the CEO against goals and objectives set by the Committee. Based on the evaluation, the Committee Chair discusses the CEO's performance and recommended compensation with the independent members of the Board of Directors. The CEO's base salary and the base salaries of the other Named Executive Officers are approved by the independent members of the Board of Directors based on the Committee's recommendation. The Committee has sole responsibility for all other elements of Named Executive Officer compensation. The Committee also oversees the performance evaluation of those officers and the administration of our executive compensation programs. The Committee receives recommendations from the CEO as to compensation of other Named Executive Officers, and the CEO participates in Committee discussions regarding the compensation of those officers. The Committee meets in executive session without the CEO to determine his compensation. The Committee is comprised of Timothy D. Cook (Chairman), Elizabeth J. Comstock, John C. Lechleiter, and Johnathan A. Rodgers, each of whom is an independent director under applicable NYSE listing standards. The Committee operates pursuant to a written charter that is available on our website at: http://investors.nike.com.
Each year, the Committee reviews our executive total compensation program to ensure it continues to reflect the Committee's commitment to align the objectives and rewards of our executive officers with the creation of value for our shareholders. Similar to our non-executive compensation programs, the program has been designed to reinforce our pay-for-performance philosophy by delivering total compensation that motivates and rewards short-and long-term financial performance to maximize shareholder value, and to be externally competitive to attract and retain outstanding and diverse executive talent. This is done much in the same way our human resources staff designs our non-executive compensation programs, to ensure they are market competitive, offer performance-based financial incentives, and provide opportunities to share in total Company success through competitive benefits, stock purchase discount programs, and broad-based profit sharing. In conducting its annual review, the Committee considers information provided by our human resources staff. Our human resources staff retains independent compensation consulting firms to provide surveys and reports containing competitive market data. These consultants do not formulate executive compensation strategies for NIKE or recommend individual executive compensation. The human resources staff uses the surveys and reports to make recommendations to the Committee concerning executive compensation. The Committee relies on its collective experience and judgment along with the recommendations prepared by our human resources staff to set executive compensation. The Committee has the authority, in its sole discretion, to retain compensation consultants to assist the Committee in evaluating the compensation of executive officers, but chose to not retain any such consultants in fiscal 2015, with the exception as described below.
In June 2015, the Committee retained Mercer (a wholly owned subsidiary of Marsh & McLennan Companies, Inc.), a well-recognized employee benefits and compensation consulting firm, as its independent compensation consultant for the purpose of providing an objective analysis of, and counsel on, a retention award for Mr. Parker that would include specific performance criteria. Mercer evaluated management’s analysis and proposal for the award, including reasonableness of the business case, size of the award, performance metrics, performance period, terms and conditions, and governance considerations, and reviewed their findings with the Committee.
In connection with its engagement of Mercer, the Committee considered various factors bearing upon Mercer’s independence, including the factors specified in Section 303A.05(c) of the NYSE Listed Company Manual, and determined that Mercer was independent and that its engagement did not present any conflicts of interest. Mercer also determined that it was independent from management and confirmed this in a written statement delivered to the Committee. The fees for Mercer’s engagement by the Committee were $44,423. In addition, Mercer provided certain services to the Company during fiscal 2015 at the request of management consisting of information regarding our Stock Incentive Plan and employee benefits consulting services, inclusive of compensation and benefits surveys. The fees for such additional services were approximately $83,920 and $2,744,403, respectively.
  
Use of Market Survey Data
 
To help establish competitive ranges of base salary, incentive compensation opportunities, and target total compensation for the purpose of making recommendations to the Committee, our human resources staff uses competitive market data from surveys and reports prepared by Aon Hewitt Associates and Towers Watson. We consider market survey data from a peer group of companies which have similar revenue size, have similar products or markets, or reflect the companies with which we compete for executive talent. In addition, we consider market data across many industries, focusing on companies with revenues of $10 billion or more.
In November 2013, we conducted our regular periodic review of our peer group. In reviewing the factors described above, we determined that for purposes of setting executive compensation for fiscal 2015, the peer group should be refined to include eBay Inc., Kohl's Corp., and Mondelez International, Inc. and to remove General Mills Inc. and J.C. Penney Company Inc. The fiscal 2015 peer group was:


NIKE, INC.Ÿ2015 Notice of Annual Meeting 17

COMPENSATION DISCUSSION AND ANALYSIS

Company
Reported
Fiscal Year
Revenue
(in millions)

The Coca-Cola Company
12/14
$45,998.0
Colgate-Palmolive Company
12/14
17,277.0

eBay, Inc.
12/14
17,902.0

FedEx Corp.
05/15
47,453.0

Gap Inc.
01/15
16,435.0

Google Inc.
12/14
66,001.0

Kellogg Co.
12/14
14,580.0

Kimberly-Clark Corporation
12/14
19,724.0

Kohl's Corp.
01/15
19,023.0

Limited Brands Inc.
01/15
11,454.1

Macy’s, Inc.
01/15
28,105.0

McDonald’s Corporation
12/14
27,441.3

Mondelez International, Inc.
12/14
34,244.0

PepsiCo, Inc.
12/14
66,683.0

Starbucks Corp.
09/14
16,447.8

Time Warner Inc.
12/14
27,359.0

The Walt Disney Company
09/14
48,813.0


The surveys that our human resources staff reviews show percentile compensation levels for various executive positions with comparable job responsibilities. The staff also analyzes market data regarding compensation mix among base salary, annual incentive and long-term incentives such as performance-based cash awards, stock options, restricted stock and restricted stock unit awards. The Committee reviews this mix analysis when evaluating the separate compensation elements for each executive. The Committee does not endeavor to set executive compensation at or near any particular percentile, and it considers target total compensation to be competitive if it is generally within a reasonable range of the market median. Market data is one of many factors that the Committee considers in the determination of executive compensation levels. Other factors include internal pay equity, level of responsibility, the individual's performance, expectations regarding the individual's future potential contributions, succession planning and retention strategies, budget considerations, and the Company's performance.


Objectives and Elements of Our Compensation Program

As noted in the Executive Summary, our executive compensation program is aligned with our business strategy and culture to attract and retain top talent, reward business results and individual performance, and most importantly, maximize shareholder value. Our total compensation program for the Named Executive Officers is highly incentive-based and competitive in the marketplace, with Company performance determining a significant portion of total compensation. Our program consists of the following elements:
Base salary that reflects the executive’s accountabilities, skills, experience, performance, and future potential
Annual performance-based incentive cash bonus based on Company financial results under our Executive Performance Sharing Plan
A portfolio approach to long-term incentive compensation to provide a balanced mix of performance-based cash incentives and equity, including:
Performance-based long-term incentive cash awards based on Company financial results to encourage attainment of long-term Company financial objectives
Stock options to align the interests of executives with those of shareholders
Restricted stock awards and restricted stock unit retention awards to provide incentives consistent with driving shareholder value, and to provide strong retention incentives
Benefits
Profit sharing contributions to defined contribution retirement plans
Post-termination payments under non-competition agreements
Executives are generally eligible for the same competitive benefits as other employees in the United States, including medical, dental, and vision insurance, paid time off, 401(k) plan, and Company-provided life and disability insurance. Employees outside of the United States are offered locally competitive benefits.
Employee Stock Purchase Plan

NIKE, INC.Ÿ2015 Notice of Annual Meeting 18

COMPENSATION DISCUSSION AND ANALYSIS

In determining the award levels for each of the elements in our total compensation program, our philosophy is to "pay for performance." As a result, we place relatively greater emphasis on the incentive components of compensation (annual incentive award, performance-based long-term cash incentive award, and stock options) to align the interests of our executives with shareholders, and motivate them to maximize shareholder value. This is balanced with retention incentives provided by base salary, restricted stock awards, and restricted stock unit awards.
We look to the experience and judgment of the Committee to determine what it believes to be the appropriate target compensation mix for each Named Executive Officer. We do not apply fixed ratios or formulas, or rely solely on market data or quantitative measures. In allocating compensation among the various elements, the Committee considers market data, Company performance and budget, the impact of the executive's position in the Company, individual past performance, expectations for future performance, experience in the position, any recent or anticipated changes in the individual's responsibilities, internal pay equity for comparable positions, and retention incentives for succession planning. As shown in the charts below, incentive components accounted for 90% of the CEO's target compensation and approximately 81% of the other Named Executive Officers' target compensation in fiscal 2015.

Elements of Our Compensation Program

Base Salary
 
When making recommendations to the Committee concerning base salary levels for our Named Executive Officers, our human resources staff follows a similar process to how they evaluate non-executive base salary levels. We consider the individual's performance in the prior year, expectations regarding the individual's future performance, experience in the position, any recent or anticipated changes in the individual's responsibilities, internal pay equity for comparable positions, succession planning strategies, our annual salary budget, other elements of the individual's compensation, and the market data described in “Use of Market Survey Data.” The Committee reviews these factors each year and adjusts base salary levels to ensure that we are appropriately rewarding performance.
The Committee generally reviews base salaries of the Named Executive Officers annually based on a review of individual performance at a meeting in June, with salary adjustments becoming effective for the first pay period ending in August. During the salary review in June 2014, the Committee recommended, and the independent members of the Board approved, maintaining the base salaries for Messrs. Parker, Blair, Edwards, and Sprunk and Ms. Jackson at $1,550,000, $850,000, $935,000, $935,000, and $885,000, respectively, based on the determination that the base salaries were appropriately aligned with comparable positions in the market.
In setting a Named Executive Officer's overall compensation package, the Committee places a relatively greater emphasis on the incentive components of compensation described below.

Performance-Based Annual Incentive Bonus
 
Annual awards are paid to the Named Executive Officers under our Executive Performance Sharing Plan (“PSP”). Our “pay for performance” philosophy for awards is simple and applies to all global employees who are eligible to share in the Company's success through incentive bonuses: if we exceed our financial objectives, we will pay more; if we fail to reach them, we will pay less or nothing at all. The PSP for all executives is based 100% on overall corporate performance each year against a target based on the Company's annual financial objective, as measured by income before income taxes (“PTI”), excluding the effect of any acquisitions, divestitures or accounting changes. The Committee selected PTI as the performance measure as it aligns with the Company's operational financial targets for the individual fiscal year. By focusing

NIKE, INC.Ÿ2015 Notice of Annual Meeting 19

COMPENSATION DISCUSSION AND ANALYSIS

on driving strong operational performance each year, the plan supports our goal of delivering sustainable, profitable growth. The Committee retains the discretion to reduce or eliminate PSP award payouts based on individual or Company performance. Basing our annual incentive award program for all executives on overall corporate performance is intended to foster teamwork and send the message to each executive that his or her role is to help ensure overall organizational success and maximize shareholder value.
Each year the Committee establishes a PSP target award for each Named Executive Officer based on its judgment of the impact of the position in the Company and what it believes to be competitive against market data as described in “Use of Market Survey Data,” while considering internal pay equity for comparable positions. The fiscal 2015 target awards were:
Named Executive Officer
Fiscal 2015 PSP Target Award
(% of base salary)
Mr. Parker
180%
Mr. Edwards
100%
Mr. Blair
90%
Mr. Sprunk
90%
Ms. Jackson
90%
For fiscal 2015, the Committee increased Mr. Parker's target from 170% to 180% to align with market. The targets for Messrs. Edwards, Blair and Sprunk and Ms. Jackson remained unchanged.
In June 2014, the Committee established performance goals for the fiscal 2015 PSP based on its evaluation of our business plan and prospects for the year. The table below summarizes the fiscal 2015 PSP performance goals established by the Committee. For fiscal 2015, NIKE achieved a PTI of $4,205 million, an 18.7% increase over fiscal 2014 continuing operations PTI of $3,544 million. This achievement was above the target performance goal established by the Committee. As a result, each executive officer's award was paid out at 145.03% of the target award.
(Dollars in millions)
Fiscal 2015 PSP Performance Goal
Threshold Performance
Threshold % Payout
Target Performance
Target % Payout
Maximum Performance
Maximum % Payout
Actual Performance
Actual % Payout
PTI
$3,6091
50%
$3,9232
100%
$4,2373
150%
$4,205
 145.03%4

1 Threshold performance represents 1.8% increase above fiscal 2014 continuing operations PTI.    
2 Target performance represents 10.7% increase above fiscal 2014 continuing operations PTI.
3 Maximum performance represents 19.6% increase above fiscal 2014 continuing operations PTI.
4 Prorated for performance between payout levels.

Performance-Based Long-Term Incentive Plan
 
The first component in our long-term portfolio mix is performance-based awards payable in cash under our Long-Term Incentive Plan (“LTIP”). As with the performance-based annual incentive, the LTIP follows our “pay for performance” philosophy. If we exceed our targets, we will pay more; if we fall short, we will pay less or nothing at all. This program focuses executives on overall, long-term financial performance, and is intended to reward them for delivering revenue growth and diluted earnings per share (“EPS”) growth over a three-year performance period. At the beginning of each fiscal year, the Committee establishes performance goals and potential cash payouts for the next three fiscal years for all executives under the LTIP. LTIP measures for all executives are based 50% on cumulative revenues for the three-year performance period and 50% on cumulative EPS for the period, in each case excluding generally the effect of acquisitions, divestitures and accounting changes. The Committee selected revenue and EPS as LTIP performance measures to encourage executives to focus on delivering profitable, sustainable growth. Strong revenue growth is the foundation of the Company’s financial strategy, requiring investments in key business drivers to sustain growth. EPS growth is essential to delivering value for our shareholders, requiring investments be targeted to those areas with the highest potential for return. By balancing revenue growth and EPS growth, the plan supports the Company’s objective of delivering long-term shareholder value. The Committee retains the discretion to reduce or eliminate LTIP award payouts based on individual or Company performance.
During the compensation review in June 2014, the Committee approved LTIP target awards for all Named Executive Officers for the fiscal 2015-2017 performance period. The Committee set these targets based on its judgment of what it believes to be a desirable mix of long-term compensation, the impact of the position in the Company, and what it finds to be competitive against market data as described in “Use of Market Survey Data,” while maintaining internal pay equity for comparable positions. For the fiscal 2015-2017 performance period, the Committee maintained the targets for all Named Executive Officers as follows:
Named Executive Officer
Fiscal 2015-2017 LTIP Award Target ($)
Mr. Parker
$3,500,000
Mr. Edwards
900,000
Mr. Sprunk
750,000
Ms. Jackson
750,000
Mr. Blair
500,000

NIKE, INC.Ÿ2015 Notice of Annual Meeting 20

COMPENSATION DISCUSSION AND ANALYSIS

In June 2014, the Committee established performance goals for the fiscal 2015-2017 LTIP. The Committee considered our long-term financial goals of high single-digit revenue growth and mid-teens EPS growth in setting performance goals for the target award payout level. The total payout percentage will be the average of the payout percentages determined for cumulative revenues and cumulative EPS, respectively. Payout below the threshold payout level may occur if either the revenue or EPS related percentage achievement is less than 50%. If both revenue and EPS fall below the threshold level, there is no payment. The table below summarizes the fiscal 2015-2017 LTIP performance goals.
(Dollars in millions, except per share data)
Fiscal 2015-2017 Performance Goals
Threshold Performance1
Threshold % Payout
Target Performance2
Target % Payout
Maximum Performance3
Maximum % Payout
Revenue
$95,627
50%
$99,329
100%
$107,021
200%
EPS
$10.61
50%
$11.43
100%
$13.20
200%
__________________________________________________________ 
1 Threshold payout for revenue requires cumulative revenues corresponding to a 7% compound annual growth rate (“CAGR”) from fiscal 2014 continuing operations revenue of $27,799 million. Threshold payout for EPS requires cumulative EPS corresponding to a 9% CAGR from fiscal 2014 continuing operations EPS of $2.97.
2 Target revenue payout requires a 9% CAGR and target EPS payout requires a 13% CAGR.
3 Maximum revenue payout requires a 13% CAGR and maximum EPS payout requires a 21% CAGR.

For fiscal 2015, executive officers were eligible to receive LTIP award payouts based on performance targets set in June 2012 covering the fiscal 2013-15 performance period. As a result of the divestiture of the Cole Haan and Umbro businesses on February 1, 2013 and November 30, 2012, respectively, fiscal 2013-2015 award terms exclude all Cole Haan and Umbro revenues and expenses, all divestiture-related charges and gains, and any amounts associated with the transfer of Umbro sports marketing sponsorships to NIKE. In June 2015, the Committee determined a payout of 120.16% under these awards was earned based on the average of the payout percentages for cumulative adjusted revenues and cumulative adjusted EPS for the performance period shown in the table below:
(Dollars in millions, except per share data)
Fiscal 2013-2015 Performance Goals
Threshold Performance
Threshold % Payout
Target Performance
Target % Payout
Maximum Performance
Maximum % Payout
Actual Performance
Actual % Payout
Revenue1,2
$78,733
50%
$81,801
100%
$88,176
200%
$83,570
128.10%
EPS2,3
$8.58
50%
$9.24
100%
$10.67
200%
$9.41
112.22%
 
 
 
 
 
 
 
Total Payout
120.16%
1 Cumulative revenues for fiscal 2013, fiscal 2014 and fiscal 2015.
2 Revenues and EPS exclude all Cole Haan and Umbro revenues and expenses, all divestiture-related charges and gains, and any amounts associated with the transfer of Umbro sports marketing sponsorships to NIKE. The Cole Haan and Umbro businesses were divested February 1, 2013 and November 30, 2012, respectively.
3 Cumulative EPS for fiscal 2013, fiscal 2014 and fiscal 2015.

Stock Options
 
The second component in our long-term portfolio mix is stock options. Stock options are designed to align the interests of the Company's executives with those of shareholders by encouraging executives to enhance the value of the Company and, hence, the price of the Class B Stock. This is true “pay for performance”: executives are rewarded only if the market price of our stock rises, and they get nothing if the price does not rise or goes down. When determining the grants, the Committee generally focuses on the number of shares, while considering the value for accounting purposes. Our approach is based on our desire to carefully control annual share usage and avoid fluctuations in grant levels due to share price changes. The Committee awards stock options to each executive based on its judgment. The Committee considers a number of factors including the individual's performance, management succession, competitive market data as described in “Use of Market Survey Data,” internal pay equity for comparable positions, and a desirable mix of long-term incentives. Our human resources staff periodically tests the reasonableness of our stock option grants against competitive market data and may make recommendations to the Committee. Options are generally granted annually to selected employees, including the Named Executive Officers, in July of each year under our shareholder-approved Stock Incentive Plan. Stock options for fiscal 2015 were granted by the Committee on July 18, 2014 with an exercise price equal to the closing market price of our stock on that date.
In July 2014, the Committee granted options to Mr. Parker for 165,000 shares, the same number of stock options granted to him in July 2013. Messrs. Edwards, and Sprunk each received 80,000 shares, an increase of 5,000 shares to each of them from July 2013. Mr. Blair and Ms. Jackson each received 75,000 shares, the same number of stock options granted to them in July 2013. The Committee, in its judgment, set these award levels based on the factors described above.
Options granted by the Company generally vest over a four-year period. To promote executive retention, unvested options generally are forfeited if the employee leaves before vesting occurs and must be exercised within three months after termination of employment. All options granted after July 2010 provide for a limited retirement provision designed to encourage employees to delay retirement, thus enhancing retention. Only those employees with a minimum of five years of service who are age 55 and above at the time of termination of employment are eligible for the provision.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 21

COMPENSATION DISCUSSION AND ANALYSIS

Under the provision, only unvested stock options that have been granted for at least one full year to employees between the ages of 55 to 59 at the time of termination of employment will continue to vest, and may be exercised for up to four years after termination. If an employee is age 60 or older and has at least five years of service at termination, unvested stock options that have been granted for at least one full year will receive accelerated vesting and may be exercised for up to four years after termination. The features related to accelerated vesting are described in “Potential Payments upon Termination or Change-in-Control.” Based on their ages and years of service, as of May 31, 2015, Messrs. Parker and Blair could terminate employment at any time and receive continued vesting of their options granted in July 2011, 2012, and 2013. As of May 31, 2015, Ms. Jackson could terminate employment at any time and receive accelerated vesting of her options granted in July 2011, 2012, and 2013.

Restricted Stock Awards

The third component in our long-term portfolio mix is restricted stock awards. Stock ownership and stock-based incentive awards align the interests of our Named Executive Officers with the interests of our shareholders, as the value of this incentive rises and falls with the stock price. Restricted stock awards are generally granted annually to selected employees, including the Named Executive Officers, in July at the same meeting at which stock options are granted under our shareholder-approved Stock Incentive Plan. Awards generally vest in three equal installments on each of the first three anniversaries of the grant date. The awards promote executive retention, as unvested shares held at the time the executive's employment is terminated are forfeited. Award recipients receive dividends on the full number of restricted shares awarded at the same time dividends are paid to other shareholders.
The Committee, in its judgment, sets restricted stock award levels based on several factors, including what the Committee believes to be a desirable mix of long-term compensation, their determination of an appropriate weighting of potential future contribution to the Company, retention incentives, and competitive grants based on competitive market data. In July 2014, the Committee granted a restricted stock award to Mr. Parker valued at $3,500,000, representing 45,150 shares of our Class B Stock, based on the closing price on the grant date. This was the same value of restricted stock granted to Mr. Parker in July 2013. Mr. Edwards received an award valued at $750,000, representing 9,675 shares of our Class B Stock based on the closing price on the grant date. This was the same value of restricted stock granted to Mr. Edwards in July 2013. Messrs. Blair and Sprunk and Ms. Jackson each received an award valued at $625,000, representing 8,063 shares of our Class B Stock based on the closing price on the grant date. This was the same value granted to Messrs. Blair and Sprunk and Ms. Jackson in July 2013.
Restricted Stock Unit (RSU) Retention Awards

From time to time, the Committee also grants restricted stock units (“RSUs”) that vest based on continued service through a future service date with the Company, for the specific purpose of further promoting retention. These RSU awards accumulate dividend equivalents that are only paid in cash upon full vesting. The awards have no value to the executive unless the executive remains employed with the Company for the full vesting period, and will be canceled if the executive terminates or retires within the vesting period. None of our Named Executive Officers received RSUs in fiscal 2015.

In view of the Company’s strong performance under Mr. Parker’s leadership and to provide an incentive for Mr. Parker to stay for at least the next five years, on June 30, 2015, the Committee granted to Mr. Parker the opportunity to earn an RSU award with a target value of $30,000,000, representing 277,727 shares of our Class B Stock based on the closing price on the grant date.

60% of the award, or a target number of 166,636 shares, is subject to performance vesting based on cumulative revenue growth and cumulative EPS growth over a five-year performance period of fiscal 2016 through fiscal 2020 (the “Performance-Based RSUs”). The performance goals are equally weighted, and both measures exclude the effect of any acquisitions, divestitures or accounting changes. For Mr. Parker to earn the maximum payout for the Performance-Based RSUs (100% of the target number of shares), the Company must achieve a 9% compound CAGR from fiscal 2015 for cumulative revenues over the five-year performance period, and a 13% CAGR from fiscal 2015 for cumulative EPS. For Mr. Parker to earn a threshold payout of 50% of the target number of shares, the Company must achieve cumulative revenues corresponding to a 7% CAGR, and for EPS, cumulative EPS corresponding to a 9% CAGR. These are the same CAGRs established by the Committee for target and threshold payouts under the LTIP for the fiscal 2015-2017 performance period. Payout may occur at 25% of the target number of shares if either the revenue or EPS related percentage achievement is less than threshold. Additional shares will be earned for the Performance-Based RSUs pro rata for performance between the threshold and maximum levels. If performance does not achieve the threshold level for either target, no shares will be earned for the Performance-Based RSUs. The Performance-Based RSUs are also subject to time vesting and will not be earned unless Mr. Parker remains employed with the Company through June 30, 2020. 40% of the award, or 111,091 shares, is subject only to time vesting and will be earned if Mr. Parker remains employed with the Company through June 30, 2020 (“Time-Based RSUs”). The vesting of Mr. Parker’s Performance-Based RSUs will accelerate fully in the event of a “double trigger” change in control, but will vest at the threshold levels in the event of his death or disability. The vesting of Mr. Parker’s Time-Based RSUs will accelerate fully in the event of his death, disability or a "double trigger” change in control.

Based on the Committee’s business judgment and experience, the Committee’s assessment of Mr. Parker’s strong performance, the importance of retaining Mr. Parker, a review of Mr. Parker’s accumulated vested and unvested awards, and consultation with Mercer as its independent compensation consultant, the Committee determined the RSU award amount and terms. The Committee believes the balancing of revenue growth and EPS growth supports the Company’s objective of delivering long-term shareholder value. The Committee views the award as a long-term retention incentive for compensation over the five-year vesting and performance periods and not solely as compensation for fiscal 2016. The RSU award has no value to Mr. Parker unless he remains employed with the Company for the full five-year vesting and performance periods, and 60% of its value requires achievement of the specified performance goals.




NIKE, INC.Ÿ2015 Notice of Annual Meeting 22

COMPENSATION DISCUSSION AND ANALYSIS

Profit Sharing and Retirement Plans
Our 401(k) Savings and Profit Sharing Plan is a U.S. tax qualified retirement savings plan pursuant to which all eligible U.S. employees, including the Named Executive Officers, are able to make pre-tax contributions and after-tax contributions from their cash compensation. We make matching contributions for all participants each year equal to 100% of their pre-tax contributions up to 5% of their total eligible compensation. We also make annual profit sharing contributions to the accounts of eligible U.S. employees under the 401(k) Savings and Profit Sharing Plan. The contributions are allocated among eligible employees based on a percentage of their total salary and annual incentive award for the year. The total profit sharing contribution and the percentage of salary and annual incentive award contributed for each employee is determined each year by the Board of Directors. For fiscal 2015, the Board of Directors approved a profit sharing contribution for each eligible employee equal to 4.13% of the employee's total eligible salary and annual incentive award.
The Internal Revenue Code limits the amount of compensation that can be deferred under our 401(k) Savings and Profit Sharing Plan, and also limits the amount of salary and annual incentive award ($260,000 for fiscal 2015) that may be taken into account when determining contributions under that plan. Accordingly, we provide our Named Executive Officers and other highly compensated employees with the opportunity to defer their compensation, including amounts in excess of the tax law limit, under our nonqualified Deferred Compensation Plan. We also make profit sharing contributions under the Deferred Compensation Plan with respect to salary and annual incentive award of any eligible employee that exceeds the tax law limit, and for fiscal 2015 these contributions were equal to 4.13% of the total salary and annual incentive award of each Named Executive Officer in excess of $260,000. These contributions under the Deferred Compensation Plan allow our Named Executive Officers and other highly compensated employees to receive profit sharing contributions in the same percentage as our other employees. We do not match deferrals to the Deferred Compensation Plan. Balances in the Deferred Compensation Plan, including the balances of the Named Executive Officers, are unsecured and at-risk, meaning the balances may be forfeited in the event of the Company's financial distress such as bankruptcy. Our matching and profit sharing contributions for fiscal 2015 to the accounts of the Named Executive Officers under the qualified and nonqualified plans are included in the All Other Compensation column in the Summary Compensation Table on page 26.

Employee Stock Purchase Plan

Our Employee Stock Purchase Plan allows all employees who work at least 20 hours per week in the United States and in many countries outside of the United States to purchase NIKE Class B Stock, through payroll deductions, at a 15% discount to the market price on the first or last trading day of the six-month purchase period, depending on which day the stock price was lower. No plan participant is allowed to purchase more than $25,000 in market value of our stock under the plan in any calendar year. In fiscal 2015, all Named Executive Officers participated in our Employee Stock Purchase Plan, with the exception of Mr. Parker.

Post-termination Payments under Non-competition Agreements

In exchange for non-competition agreements from all of our Named Executive Officers, we have agreed to provide, during the non-competition period, the monthly payments described in “Potential Payments upon Termination or Change-in-Control,” some of which are at the election of the Company. We believe that it is appropriate to compensate individuals to refrain from working with competitors following termination, and that compensation enhances the enforceability of such agreements.

Stock Ownership Guidelines
On June 20, 2013, the Board of Directors adopted stock ownership guidelines for executive officers. These guidelines are designed to further align the long-term interests of our executive officers with those of our shareholders. Under the guidelines, the CEO and other executive officers are required to hold NIKE stock valued at the following multiple of their annual base salary:
Position
Ownership Level
Chief Executive Officer
6X Base Salary
Named Executive Officers
3X Base Salary
Other Executive Officers
2X Base Salary
Executive officers appointed prior to June 20, 2013 are required to attain these ownership levels by June 20, 2018 and new officers within five years of their appointment.


Hedging and Pledging

The Company's black-out and pre-clearance policy (which supplements our insider trading policy) prohibits directors, executive officers and other designated insiders from engaging in transactions involving hedging, monetization or short sales of NIKE stock, including zero-cost collars and forward sale contracts. The policy also requires directors, executive officers and designated insiders to obtain pre-approval from the Company's Corporate Secretary before pledging NIKE stock. Before granting approval of any pledge, the Corporate Secretary considers the size of the pledge relative to the individual's other holdings, both direct and indirect, and NIKE's shares outstanding; the risk of foreclosure given the nature of the associated transaction; protections against the appearance of insider trading, including prohibitions on sales during trading black-outs; and the ability to timely report sales on Form 4.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 23

COMPENSATION DISCUSSION AND ANALYSIS




Change-in-Control Provisions

All unvested stock option, restricted stock, and restricted stock unit awards are subject to accelerated change-in-control vesting only when two events (a “double trigger”) occur. Vesting of grants is generally accelerated only if there is a change in control of the Company and either the acquiring entity fails to assume the awards or the employee's employment is terminated by the acquirer without cause or by the employee for good reason within two years following a change in control. This double trigger was adopted to encourage executive retention through a period of uncertainty and a subsequent integration with an acquirer. The Committee believes that this approach will enhance shareholder value in the context of an acquisition, and align executives with the interests of investors. The effects of change-in-control transactions on stock option, restricted stock, and restricted stock unit awards are described further in “Potential Payments Upon Termination or Change-in-Control.”

Clawback Policy

Since June 2010 the company has had a policy for recoupment of incentive compensation (the “clawback policy”), and in June 2015, the Committee and Board of Directors approved amendments to our incentive compensation plans to cover additional circumstances in which the Company may clawback awards. Under the clawback policy, an executive officer who is involved in wrongful conduct that results in a restatement of the Company's financial statements must repay to the Company up to the full amount of any incentive compensation based on the financial statements that were subsequently restated. The clawback policy covers the annual PSP award, LTIP payout, profit sharing contributions to the Deferred Compensation Plan, and excess proceeds from sales of stock acquired under stock option, restricted stock, and restricted stock unit awards that occurred prior to the restatement. The recent amendments to our Executive Performance Sharing Plan, Long-Term Incentive Plan and Stock Incentive Plan clarify that for all participants in those plans the Committee may apply additional clawback policies to awards, or add clawback terms to award agreements or notices, and that any clawback requirements of applicable law and regulation will apply to the plans.


Risk Assessment

At the Committee's request, in fiscal 2015 management prepared and discussed with the Committee an assessment of potential risk associated with the Company's compensation programs, including any risk that would be reasonably likely to have a material adverse effect on the Company. This included an assessment of risks associated with each element of employee compensation. The assessment considered certain design features of the compensation programs that reduce the likelihood of excessive risk taking, such as reasonable performance targets, capped payouts of incentive compensation, a balance of short- and long-term incentives, a balance of cash and equity incentives, vesting of awards over time, and the potential for clawback of incentive compensation. In addition, for equity compensation, in recent years the Committee and the Board have adopted stock ownership guidelines, limited accelerated vesting of stock options upon termination of employment, and implemented double-trigger accelerated vesting for all equity awards upon change in control (each as described above).

Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for annual compensation over $1 million paid to their chief executive officer and the next three most highly compensated executive officers (other than the principal financial officer). The Internal Revenue Code generally excludes from the calculation of the $1 million cap compensation that is based on the attainment of pre-established, objective performance goals established under a shareholder-approved plan. The Committee considers, among other things, the impact of this exclusion for performance-based compensation when developing and implementing our executive compensation programs. Annual awards under our Executive Performance Sharing Plan, long-term incentive awards under our Long-Term Incentive Plan and stock options under our Stock Incentive Plan generally are designed in a manner that is intended to meet the requirements under the exclusion. However, due to the complex nature of the requirements that must be met, we cannot guarantee that such awards will qualify as performance-based compensation under Section 162(m).

While the Committee seeks to preserve tax deductibility in developing and implementing our compensation program, the Committee also believes that it is important to maintain flexibility in administering compensation programs in a manner designed to promote varying corporate goals. Accordingly, we have not adopted a policy that all compensation must qualify as deductible for tax purposes. Therefore, amounts paid under any of our executive compensation programs may not qualify as performance-based compensation that is excluded from the Section 162(m) limitation on deductibility.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 24

COMPENSATION COMMITTEE REPORT

COMPENSATION COMMITTEE REPORT
 
The Compensation Committee of the Board of Directors (the “Committee”) has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on the review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Members of the Compensation Committee:
Timothy D. Cook, Chairman
Elizabeth J. Comstock
John C. Lechleiter
Johnathan A. Rodgers


NIKE, INC.Ÿ2015 Notice of Annual Meeting 25

EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

Summary Compensation Table
The following table sets forth information concerning compensation for fiscal 2013-2015 paid to or earned by our Chief Executive Officer, our Chief Financial Officer and our next three most highly compensated executive officers who were serving as executive officers on May 31, 2015. These individuals are referred to throughout this proxy statement as the “Named Executive Officers.”
 
Name and Principal 
Position
 
Year
 
Salary (1)
($)

 
Stock
Awards (2)
($)

 
Option
Awards (3)
($)

 
Non-Equity
Incentive Plan
Compensation (4)
($)

 
All Other
Compensation (5)
($)

 
Total
($)

Mark G. Parker
 
2015
 
1,550,000

 
3,500,028

 
2,791,800

 
8,251,937

 
725,965

 
16,819,730

President and Chief
 
2014
 
1,550,000

 
3,500,024

 
2,451,174

 
6,538,177

 
638,974

 
14,678,349

Executive Officer
 
2013
 
1,609,615

 
3,500,087

 
4,199,250

 
5,522,466

 
594,190

 
15,425,608

Donald W. Blair
 
2015
 
850,000

 
625,044

 
1,269,000

 
1,710,280

 
180,238

 
4,634,562

Executive Vice President
 
2014
 
850,000

 
625,011

 
1,114,170

 
1,399,303

 
158,219

 
4,146,703

and Chief Financial Officer
 
2013
 
882,692

 
3,625,093

 
1,527,000

 
1,584,715

 
138,932

 
7,758,432

Trevor A. Edwards
 
2015
 
935,000

 
750,006

 
1,353,600

 
1,956,831

 
236,637

 
5,232,074

President, NIKE Brand
 
2014
 
935,000

 
750,001

 
1,114,170

 
1,560,837

 
204,920

 
4,564,928

 
 
2013
 
961,346

 
5,625,103

 
1,527,000

 
1,660,430

 
169,552

 
9,943,431

Eric D. Sprunk
 
2015
 
935,000

 
625,044

 
1,353,600

 
1,821,228

 
217,309

 
4,952,181

Chief Operating Officer
 
2014
 
935,000

 
625,011

 
1,114,170

 
1,471,993

 
203,559

 
4,349,733

 
 
2013
 
961,346

 
5,625,103

 
1,527,000

 
1,660,430

 
170,055

 
9,943,934

Jeanne P. Jackson
 
2015
 
885,000

 
625,044

 
1,269,000

 
1,755,964

 
168,378

 
4,703,386

President, Product and
 
2014
 
885,000

 
625,011

 
1,114,170

 
1,429,234

 
159,979

 
4,213,394

Merchandising
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Reflects 26 pay periods during fiscal 2015 and 2014 and 27 pay periods during fiscal 2013.
(2)
Represents the grant date fair value of restricted stock and restricted stock unit awards granted in the applicable year computed in accordance with accounting guidance applicable to stock-based compensation. The grant date fair value is based on the closing market price of our Class B Stock on the grant date.
(3)
Represents the grant date fair value of options granted in the applicable year computed in accordance with accounting guidance applicable to stock-based compensation. The grant date fair value of the options was estimated using the Black-Scholes option pricing model. The assumptions made in determining the grant date fair values of options under applicable accounting guidance are disclosed in Note 11 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended May 31, 2015.
(4)
Non-Equity Incentive Plan Compensation consists of the following:
Name
 
Fiscal Year

 
Annual Incentive
Compensation
($)

 
Long-Term Incentive
Compensation
($)

 
Total
($)

Mark G. Parker
 
2015

 
4,046,337

 
4,205,600

 
8,251,937

 
 
2014

 
2,503,777

 
4,034,400

 
6,538,177

 
 
2013

 
2,582,466

 
2,940,000

 
5,522,466

Donald W. Blair
 
2015

 
1,109,480

 
600,800

 
1,710,280

 
 
2014

 
726,903

 
672,400

 
1,399,303

 
 
2013

 
849,715

 
735,000

 
1,584,715

Trevor A. Edwards
 
2015

 
1,356,031

 
600,800

 
1,956,831

 
 
2014

 
888,437

 
672,400

 
1,560,837

 
 
2013

 
925,430

 
735,000

 
1,660,430

Eric D.Sprunk
 
2,015

 
1,220,428


600,800

 
1,821,228

 
 
2014

 
799,593

 
672,400

 
1,471,993

 
 
2013

 
925,430

 
735,000

 
1,660,430

Jeanne P. Jackson
 
2015

 
1,155,164

 
600,800

 
1,755,964

 
 
2014

 
756,834

 
672,400

 
1,429,234


NIKE, INC.Ÿ2015 Notice of Annual Meeting 26

EXECUTIVE COMPENSATION

Amounts shown in the Annual Incentive Compensation column were earned for performance in the applicable fiscal year under our Executive Performance Sharing Plan. Amounts shown in the Long-Term Incentive Compensation column were earned for performance during the three -year period ending with the applicable fiscal year under our Long-Term Incentive Plan.

(5)
For fiscal 2015 for each of the Named Executive Officers, this includes profit-sharing contributions by us to the 401(k) Savings and Profit Sharing Plan in the amount of $10,750 and matching contributions by us to the 401(k) Savings and Profit Sharing Plan in the amount of $13,000 for Messrs. Parker, Blair, Edwards and Sprunk, and Ms. Jackson. Also includes profit-sharing contributions by us to the Deferred Compensation Plan in the following amounts: $156,860 for Mr. Parker, $54,449 for Mr. Blair, $64,643 for Mr. Edwards, $60,969 for Mr. Sprunk, and $57,134 for Ms. Jackson. Includes dividends paid on restricted stock and dividend equivalents credited (but not paid) on unvested restricted stock units in the following amounts: $511,578 for Mr. Parker, $87,809 for Mr. Blair, $135,405 for Mr. Edwards, $132,590 for Mr. Sprunk, and $87,494 for Ms. Jackson. Also includes the cost of daily residential security patrols at primary residences provided by the Company in the following amounts: $13,321 for Mr. Parker, and $8,210 for Messrs. Blair, Edwards and Sprunk. Includes a $10,000 35th anniversary service award for Mr. Parker and a $10,387 tax gross-up on the award. Under our Valued Service Award program, all employees receive $10,000 cash awards, grossed up for taxes, in recognition of their 30th anniversary of employment with the Company, and on each 5-year anniversary thereafter. Includes NIKE product and gifts for Messrs. Parker and Edwards.


NIKE, INC.Ÿ2015 Notice of Annual Meeting 27

EXECUTIVE COMPENSATION

Grants of Plan-Based Awards in Fiscal 2015
The following table sets forth information concerning the long-term incentive bonus opportunities, annual incentive bonus opportunities, restricted stock and restricted stock unit awards and stock options granted to the Named Executive Officers in fiscal 2015.
 
 
 
 
 
Estimated Possible Payouts Under 
Non-Equity Incentive Plan Awards
 
 
 
 
 
 
 
 
 
 
 
 
Threshold
 
Target
 
Maximum
 
All Other Stock Awards:
Number of Shares of
Stock (3)

 
All Other
Option Awards:
Number of
Shares
Underlying
Options (4)

 
Exercise
or Base Price
of Option
Awards

 
Grant Date
Fair Value
of Stock
and Option
Awards (5)

Name
 
Grant Date
 
($)
 
($)
 
($)
 
(#)

 
(#)

 
($/Sh)

 
($)

Mark
 
6/18/2014
 
1,395,000 (1)
 
2,790,000 (1)
 
4,185,000 (1)
 
 
 
 
 
 
 
 
G. Parker
 
6/18/2014
 
1,750,000 (2)
 
3,500,000 (2)
 
7,000,000 (2)
 
 
 
 
 
 
 
 
 
 
7/18/2014
 
 
 
 
 
 
 
45,150

 
 
 
 
 
3,500,028

 
 
7/18/2014
 
 
 
 
 
 
 
 
 
165,000

 
77.52

 
2,791,800

Donald
 
6/18/2014
 
382,500 (1)
 
765,000 (1)
 
1,147,500 (1)
 
 
 
 
 
 
 
 
W. Blair
 
6/18/2014
 
250,000 (2)
 
500,000 (2)
 
1,000,000 (2)
 
 
 
 
 
 
 
 
 
 
7/18/2014
 
 
 
 
 
 
 
8,063

 
 
 
 
 
625,044

 
 
7/18/2014
 
 
 
 
 
 
 
 
 
75,000

 
77.52

 
1,269,000

Trevor
 
6/18/2014
 
467,500 (1)
 
935,000 (1)
 
1,402,500 (1)
 
 
 
 
 
 
 
 
A. Edwards
 
6/18/2014
 
450,000 (2)
 
900,000 (2)
 
1,800,000 (2)
 
 
 
 
 
 
 
 
 
 
7/18/2014
 
 
 
 
 
 
 
9,675

 
 
 
 
 
750,006

 
 
7/18/2014
 
 
 
 
 
 
 
 
 
80,000

 
77.52

 
1,353,600

Eric
 
6/18/2014
 
420,750 (1)
 
841,500 (1)
 
1,262,250 (1)
 
 
 
 
 
 
 
 
D. Sprunk
 
6/18/2014
 
375,000 (2)
 
750,000 (2)
 
1,500,000 (2)
 
 
 
 
 
 
 
 
 
 
7/18/2014
 
 
 
 
 
 
 
8,063

 
 
 
 
 
625,044

 
 
7/18/2014
 
 
 
 
 
 
 
 

 
80,000

 
77.52

 
1,353,600

Jeanne
 
6/18/2014
 
398,250 (1)
 
796,500 (1)
 
1,194,750 (1)
 
 
 
 
 
 
 
 
P. Jackson
 
6/18/2014
 
375,000 (2)
 
750,000 (2)
 
1,500,000 (2)
 
 
 
 
 
 
 
 
 
 
7/18/2014
 
 
 
 
 
 
 
8,063

 
 
 
 
 
625,044

 
 
7/18/2014
 
 
 
 
 
 
 
 
 
75,000

 
77.52

 
1,269,000

(1)
These amounts represent the potential bonuses payable for performance during fiscal 2015 under our Executive Performance Sharing Plan. Under this plan, the Compensation Committee approved target awards for fiscal 2015 based on a percentage of the executive’s base salary paid during fiscal 2015 as follows: Mr. Parker, 180%; Mr. Blair, 90%; Mr. Edwards, 100%; Mr. Sprunk, 90%; and Ms. Jackson, 90%. The Committee also established a series of performance targets based on our income before income taxes (“PTI”) for fiscal 2015 (excluding the effect of acquisitions, divestitures and accounting changes) corresponding to award payouts ranging from 50% to 150% of the target awards. The PTI for fiscal 2015 required to earn the target award payout was $3,923 million. The PTI for fiscal 2015 required to earn the 150% maximum payout was $4,237 million. The PTI for fiscal 2015 required to earn the 50% threshold payout was $3,609 million. Participants receive a payout at the percentage level at which the performance target is met, subject to the Committee’s discretion to reduce or eliminate any award based on Company or individual performance. Actual award payouts earned in fiscal 2015 and paid in fiscal 2016 are shown in footnote 4 to the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table.
(2)
These amounts represent the potential long-term incentive awards payable for performance during the three-year period consisting of fiscal 2015-2017 under our Long-Term Incentive Plan. Under this plan, the Compensation Committee approved target awards for the performance period and also established a series of performance targets based on our cumulative revenues and cumulative diluted earnings per common share (“EPS”) for the performance period (excluding the effect of acquisitions, divestitures and accounting changes not reflected in our business plan at the time of approval of the target awards) corresponding to award payouts ranging from 50% to 200% of the target awards. Participants will receive a payout at the average of the percentage levels at which the two performance targets are met, subject to the Committee’s discretion to reduce or eliminate any award based on Company or individual performance. For cumulative revenues over the performance period, the target payout requires revenues of $99,329 million, the 50% threshold payout requires revenues of $95,627 million, and the 200% maximum payout requires revenues of $107,021 million. For cumulative EPS over the performance period, the target payout requires EPS of $11.43, the 50% threshold payout requires EPS of $10.61, and the 200% maximum payout requires EPS of $13.20. Under the terms of the awards, on the first payroll period ending in August 2017 we will issue the award payout to each participant, provided that the participant is employed by us on the last day of the performance period.
(3)
All amounts reported in this column represent grants of restricted stock under our Stock Incentive Plan. Restricted stock generally vests in three equal installments on the first three anniversaries of the grant date. Vesting will be accelerated in certain circumstances as described below under “Potential Payments Upon Termination or Change-in-Control.” Dividends are payable on restricted stock at the same rate paid on all other outstanding shares of our Class B Stock.
(4)
All amounts reported in this column represent options granted under our Stock Incentive Plan. Options generally become exercisable for option shares in four equal installments on the first four anniversaries of the grant date. Options will become fully exercisable in certain circumstances as described below under “Potential Payments Upon Termination or Change-in-Control.” Each option has a maximum term of 10 years, subject to earlier termination in the event of the optionee’s termination of employment.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 28

EXECUTIVE COMPENSATION

(5)
For stock awards, represents the value of restricted shares granted based on the closing market price of our Class B Stock on the grant date. For option awards, represents the grant date fair value of options granted based on a value of $16.92 per share calculated using the Black-Scholes option pricing model. These are the same values for these equity awards used under accounting guidance applicable to stock-based compensation. The assumptions made in determining option values are disclosed in Note 11 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended May 31, 2015.


NIKE, INC.Ÿ2015 Notice of Annual Meeting 29

EXECUTIVE COMPENSATION

Outstanding Equity Awards at May 31, 2015
The following table sets forth information concerning outstanding stock options and unvested restricted stock and restricted stock units held by the Named Executive Officers at May 31, 2015.
 
 
  
Option Awards
 
Stock Awards
 
Name
  
Number of Securities Underlying Unexercised Options Exercisable (#)

 
Number of
 Securities
 Underlying
 Unexercised
Options (#) (1)

 
Option Exercise Price ($)

 
Option Expiration Date
 
Number of Shares That Have Not Vested (#)
 
Market Value of Shares That Have Not Vested ($)

 
 
 
 
 
 
Mark G. Parker
  
500,000

  

   
21.0700

  
2/16/2016
  
 
 
 
 
 
  
270,000

  

   
29.2600

  
7/20/2017
  
 
 
 
 
 
  
270,000

  

 
29.1000

  
7/18/2018
  
 
 
 
 
 
  
300,000

  
— 

 
26.2200

  
7/17/2019
  
 
 
 
 
 
  
330,000

  
— 

 
34.4800

  
7/16/2020
  
 
 
 
 
 
  
247,500

  
82,500

(2)
45.8500

  
7/15/2021
  
 
 
 
 
 
  
165,000

  
165,000

(3)
46.5400

  
7/20/2022
  
 
 
 
 
 
 
41,250

 
123,750

(4)
63.3500

 
7/19/2023
 
 
 
 
 
 
 

 
165,000

(5)
77.5200

 
7/18/2024
 
486,414 (6)
 
49,453,711

 
Donald W. Blair
  
100,000

  

  
29.1000

  
7/18/2018
  
 
 
 
 
 
  
100,000

  

 
34.4800

  
7/16/2020
  
 
 
 
 
 
  
75,000

  
25,000

(2)
45.8500

  
7/15/2021
  
 
 
 
 
 
  
60,000

  
60,000

(3)
46.5400

  
7/20/2022
  
 
 
 
 
 
  
18,750

  
56,250

(4)
63.3500

  
7/19/2023
  
 
 
 
 
 
 
 
 
75,000

(5)
77.5200

 
7/18/2024
 
83,578 (7)
 
8,497,375

 
Trevor A. Edwards
  
97,345

  

   
21.9000

  
7/15/2015
  
 
 
 
 
 
  
132,000

  

   
19.6900

  
7/14/2016
  
 
 
 
 
 
  
100,000

  

  
29.2600

  
7/20/2017
  
 
 
 
 
 
  
100,000

  

 
29.1000

  
7/18/2018
  
 
 
 
 
 
  
100,000

  

 
26.2200

  
7/17/2019
  
 
 
 
 
 
  
100,000

  

 
34.4800

  
7/16/2020
  
 
 
 
 
 
  
75,000

  
25,000

(2)
45.8500

  
7/15/2021
  
 
 
 
 
 
  
60,000

  
60,000

(3)
46.5400

  
7/20/2022
  
 
 
 
 
 
 
18,750

 
56,250

(4)
63.3500

 
7/19/2023
 
 
 
 
 
 
 

 
80,000

(5)
77.5200

 
7/18/2024
 
129,479 (8)
 
13,164,130

 
Eric D. Sprunk
  
46,000

  

  
19.6900

  
7/14/2016
  
 
 
 
 
 
  
34,136

  

 
29.2600

  
7/20/2017
  
 
 
 
 
 
  
57,146

  

 
29.1000

  
7/18/2018
 
 
 
 
 
 
  
67,882

  

 
26.2200

  
7/17/2019
 
 
 
 
 
 
  
88,020

  

 
34.4800

  
7/16/2020
 
 
 
 
 
 
  
75,000

 
25,000

(2)
45.8500

  
7/15/2021
 
 
 
 
 
 
 
60,000

 
60,000

(3)
46.5400

 
7/20/2022
 
 
 
 
 
 
 
18,750

 
56,250

(4)
63.3500

 
7/19/2023
 
 
 
 
 
 
 

 
80,000

(5)
77.5200

 
7/18/2024
 
126,552 (9)
 
12,866,542

 
Jeanne P. Jackson
 
16,000

 

 
26.2200

  
7/17/2019
 
 
 
 
 
 
 
100,000

 

 
34.4800

 
7/16/2020
 
 
 
 
 
 
 
75,000

 
25,000

(2)
45.8500

 
7/15/2021
 
 
 
 
 
 
 
60,000

 
60,000

(3)
46.5400

 
7/20/2022
 
 
 
 
 
 
 
18,750

 
56,250

(4)
63.3500

 
7/19/2023
 
 
 
 
 
 
 

 
75,000

(5)
77.5200

 
7/18/2024
 
83,400 (10)
 
8,479,278

(1)
Stock options generally become exercisable for option shares in four equal installments on each of the first four anniversaries of the grant date.
(2)
100% of these shares vested on July 15, 2015.
(3)
50% of these shares vested on July 20, 2015 and 50% will vest on July 20, 2016.
(4)
33.3% of these shares vested on July 19, 2015, 33.3% will vest on July 19, 2016, and 33.3% will vest on July 19, 2017.
(5)
25% of these shares vested on July 18, 2015, 25% will vest on July 18, 2016, 25% will vest on July 18, 2017, and 25% will vest on July 18, 2018.

NIKE, INC.Ÿ2015 Notice of Annual Meeting 30

EXECUTIVE COMPENSATION

(6)
15,050 of these shares vested on July 18, 2015, 15,050 of these shares will vest on July 18, 2016, and 15,050 of these shares will vest on July 18, 2017. 18,416 of these shares vested on July 19, 2015, and 18,416 of these shares will vest on July 19, 2016. 25,068 of these shares vested on July 20, 2015. 379,364 of these shares will vest on May 18, 2017.
(7)
2,688 of these shares vested on July 18, 2015, 2,688 of these shares will vest on July 18, 2016, and 2,687 of these shares will vest on July 18, 2017. 3,289 of these shares vested on July 19, 2015, and 3,288 of these shares will vest on July 19, 2016. 4,476 of these shares vested on July 20, 2015. 64,462 of these shares vested on July 20, 2015.
(8)
3,225 of these shares vested on July 18, 2015, 3,225 of these shares will vest on July 18, 2016 and July 18, 2017. 3,946 of these shares vested on July 19, 2015, and 3,946 of these shares will vest on July 19, 2016. 4,476 of these shares vested on July 20, 2015. 107,436 of these shares will vest on July 20, 2017.
(9)
2,688 of these shares vested on July 18, 2015, 2,688 of these shares will vest on July 18, 2016, and 2,687 of these shares will vest on July 18, 2017. 3,289 of these shares vested on July 19, 2015, and 3,288 of these shares will vest on July 19, 2016. 4,476 of these shares vested on July 20, 2015. 107,436 of these shares will vest on July 20, 2017.
(10)
2,688 of these shares vested on July 18, 2015, 2,688 of these shares will vest on July 18, 2016, and 2,687 of these shares will vest on July 18, 2017. 3,289 of these shares vested on July 19, 2015, and 3,288 of these shares will vest on July 19, 2016. 4,298 of these shares vested on July 20, 2015. 64,462 of these shares will vest on July 20, 2017.

Option Exercises and Stock Vested During Fiscal 2015
The following table sets forth information concerning stock option exercises and vesting of restricted stock during fiscal 2015 for each of the Named Executive Officers on an aggregated basis.
 
 
 
Option Awards
 
Stock Awards
Name
 
Number of Shares
Acquired on Exercise
(#)

 
Value Realized
on Exercise
($)

 
Number of Shares
Acquired on Vesting
(#)

 
Value Realized
on Vesting
($)

Mark G. Parker
 
280,000

 
20,132,969

 
68,931

 
5,356,508

Donald W. Blair
 
332,000

 
21,586,081

 
11,764

 
913,984

Trevor A. Edwards
 
166,655

 
10,616,245

 
12,786

 
993,395

Eric D. Sprunk
 
276,816

 
19,325,237

 
12,128

 
942,387

Jeanne P. Jackson
 
100,000

 
7,266,691

 
11,222

 
871,783


Non-Qualified Deferred Compensation in Fiscal 2015

Name
 
Plan
Name
 
Executive
Contributions
in Fiscal 2015 (1)
 
NIKE Contributions
in Fiscal 2015 (1)
 
Aggregate Earnings
in Fiscal 2015
 
Aggregate 
Withdrawals/
Distributions in 
Fiscal 2015
 
Aggregate 
Balance
at 5/31/2015 (1)
Mark G. Parker
 
DCP
 
$1,291,696
 
$151,006
 
$151,388
 
 
$10,865,465
Donald W. Blair
 
DCP
 
1,901,979
 
56,264
 
119,968
 
 
13,153,113
Trevor A. Edwards
 
DCP
 
1,344,498
 
62,523
 
989,892
 
 
13,586,480
Eric D. Sprunk
 
DCP
 
399,797
 
62,523
 
533,299
 
 
6,813,002
Jeanne Jackson
 
DCP
 
 
58,989
 
106,580
 
 
1,234,384
(1)
All amounts reported in the Executive Contributions column are also included in amounts reported in the Summary Compensation Table. The amounts reported in the NIKE Contributions column represent profit sharing contributions made by us in early fiscal 2015 based on fiscal 2014 results; these amounts are also included in amounts reported for fiscal 2014 in the All Other Compensation column of the Summary Compensation Table. Of the amounts reported in the Aggregate Balance column, the following amounts have been reported in the Summary Compensation Tables in this proxy statement or in prior year proxy statements: Mr. Parker, $9,900,256; Mr. Blair, $9,325,737; Mr. Edwards, $6,365,538; Mr. Sprunk, $2,016,484; and Ms. Jackson, $116,038.
Non-Qualified Deferred Compensation Plans
 
The Named Executive Officers are eligible to participate in our Deferred Compensation Plan (the “DCP”). Participants in the DCP may elect in advance to defer up to 100 percent of their annual base salary, bonus and long-term incentive payments.
Each year, we share profits with our employees in the form of profit sharing contributions to defined contribution retirement plans. The contributions are allocated among eligible employees based on a percentage of their total salary and bonus for the year. To the fullest extent permitted under Internal Revenue Code limitations, these contributions are made to employees’ accounts under our qualified 401(k) Savings and

NIKE, INC.Ÿ2015 Notice of Annual Meeting 31

EXECUTIVE COMPENSATION

Profit Sharing Plan. Contributions based on salary and bonus in excess of the tax law limit ($260,000 for fiscal 2015) are made as NIKE contributions under the DCP.
Amounts deferred under the DCP are credited to a participant’s account under the DCP. Each participant may allocate his or her account among any combination of the investment funds available under the DCP. Participants’ accounts are adjusted to reflect the investment performance of the funds selected by the participants. Participants can change the allocation of their account balances daily. The funds available under the DCP consist of 16 mutual funds with a variety of investment objectives. The investment funds had annual returns in fiscal 2015 ranging from -8.51% to 16.25%. Amounts credited to participants’ accounts are invested by us in actual investments matching the investment options selected by the participants to ensure that we do not bear any investment risk related to participants’ investment choices.
 
The portion of a participant’s account attributable to elective deferrals, including investment returns, is fully vested at all times. The portion of a participant’s account attributable to NIKE contributions, including investment returns, is fully vested after the participant has been employed by us for five years. All of the Named Executive Officers are fully vested in their NIKE contributions.
Each time they elect to defer compensation, participants make an election regarding distribution of the compensation deferred under the election (as adjusted to reflect investment performance). A participant may elect for distribution to be made in a lump sum at the beginning of a predetermined year while the participant is still employed or in service (but no sooner than the fourth year after the year in which the distribution election is submitted). Alternatively, a participant may elect for distribution to be made in a lump sum or in quarterly installments over five, ten or fifteen years after termination of employment or service. Participants have limited rights to change their distribution elections. Participants may make a hardship withdrawal under certain circumstances. Subject to certain limitations, a participant may also at any time request to withdraw amounts from his or her account balance that were vested as of December 31, 2004 (and any subsequent investment returns on such amount). If such request is approved, the participant may withdraw 90% of the amount requested, and the remaining 10% will be permanently forfeited.


Potential Payments Upon Termination or Change-in-Control

Change-in-Control Compensation — Acceleration of Equity Awards
All unvested stock option, restricted stock, and restricted stock unit ("RSU") awards are subject to accelerated vesting upon the occurrence of two events (a “double trigger”): there is a “change in control” and the Named Executive Officer’s employment is terminated by us without “cause” or by the Named Executive Officer for “good reason,” in each case on or before the second anniversary of the change in control. In addition, for stock options granted since July 2010, the standard period for exercising options following termination of employment is extended from three months to four years, but not beyond each option’s original 10-year term. A double trigger with respect to vesting of stock options and RSUs will also occur if we are acquired and the acquiring company does not assume the outstanding options or RSUs. In our agreements, “change in control” is generally defined to include:
the acquisition by any person of 50% or more of our outstanding Class A Stock or, if the Class A Stock no longer elects a majority of directors, the acquisition by any person of 30% or more of our total outstanding Common Stock,
the nomination (and subsequent election) in a two-year period of a majority of our directors by persons other than the incumbent directors, and a sale of all or substantially all of our assets, or an acquisition of NIKE through a merger, consolidation or share exchange.
In our agreements, “cause” generally includes willful and continued failure to substantially perform assigned duties and willful engagement in illegal conduct materially injurious to us. In our agreements, “good reason” generally includes a material diminution in position or duties, a salary reduction or material reduction in other benefits, and a home office relocation of over 50 miles.

The following table shows the estimated benefits that would have been received by the Named Executive Officers if a double trigger had occurred on May 31, 2015, when the most recent closing price of our Class B Stock was $101.67 per share.
Name
 
Stock Award
Acceleration (1)

 
Stock Option
Acceleration (2)

 
Total

Mark G. Parker
 
$
49,453,711.00

 
$
23,194,769

 
$
72,648,480

Donald W. Blair
 
8,497,375

 
9,018,377

 
17,515,752

Trevor A. Edwards
 
13,164,130

 
9,160,388

 
22,324,518

Eric D. Sprunk
 
12,866,542

 
9,160,388

 
22,026,930

Jeanne P. Jackson
 
8,479,278

 
9,018,377

 
17,497,655

(1)
Information regarding unvested restricted stock and restricted stock units held by each Named Executive Officer is set forth in the Outstanding Equity Awards table above. The award agreements provide that all shares will immediately vest upon the occurrence of a double trigger. The amounts in the table above represent the number of unvested restricted shares multiplied by the closing price of our Class B Stock as of May 31, 2015.
(2)
Information regarding outstanding unexercisable options held by each Named Executive Officer is set forth in the Outstanding Equity Awards table above. The agreements governing unvested stock options provide that upon the occurrence of a double trigger all unexercisable options will immediately become fully exercisable and the standard three-month period for exercising options following termination of employment will be extended to four years, but not beyond each option’s original 10-year term. Amounts in the table above represent the sum of (i) for each Named Executive Officer’s outstanding unexercisable options, the aggregate value as of May 31, 2015 of those options assuming a four-year remaining term and otherwise calculated using the Black-Scholes option pricing model with assumptions consistent with those used by us for valuing our options under accounting guidance applicable to stock-based compensation, plus (ii) for each Named Executive Officer’s outstanding exercisable options granted since July 2010, the increase in value of those options resulting from the extension of the post-termination exercise period from three months to four years, with the option values for three-month and four-year remaining terms calculated using the Black-Scholes option pricing model with assumptions consistent with those used for valuing our options under accounting guidance applicable to stock-based compensation.

Benefits Triggered on Certain Employment Terminations
Stock Option Acceleration and Extension
As of May 31, 2015, each Named Executive Officer held options to purchase Class B Stock as listed in the Outstanding Equity Awards table above. Under the terms of the stock options granted to each Named Executive Officer before July 2010, upon the death or disability of the officer, the standard three-month period for exercising options following termination of employment is extended to 12 months, but not beyond each option’s original 10-year term. Under the terms of the stock options granted to each Named Executive Officer since July 2010, upon the death or disability of the officer, all unexercisable options become fully exercisable and the standard three-month period for exercising options following termination of employment is extended to four years, but not beyond each option’s original 10-year term. If death or disability of a Named Executive Officer had occurred on May 31, 2015, the sum of (i) for outstanding unexercisable options that would have become exercisable, the aggregate value as of May 31, 2015 of those options assuming a four-year remaining term, in the case of options granted since July 2010, and otherwise calculated using the Black-Scholes option pricing model with assumptions consistent with those used by us for valuing our options under accounting guidance applicable to stock-based compensation, plus (ii) for outstanding exercisable options, the increase in value, if any, of those options resulting from the extension of the post-termination exercise period from three months to 12 months, in the case of options granted before July 2010, and from three months to four years, in the case of options granted since July 2010, with the option values as of May 31, 2015 for three-month, 12-month and four-year remaining terms calculated using the Black-Scholes option pricing model with assumptions consistent with those used by us for valuing our options under accounting guidance applicable to stock-based compensation, is $23,194,769 for Mr. Parker, $9,160,388 for Messrs. Edwards and Sprunk and $9,018,377 for Mr. Blair and Ms. Jackson.

Under the terms of the unvested stock options granted to Named Executive Officers since July 2010, vesting of options that have been outstanding for at least one year will be accelerated if the holder retires after reaching age 60 with at least 5 years of service, and vesting of options that have been outstanding for at least one year will continue notwithstanding termination of employment if the holder retires after reaching age 55 with at least 5 years of service. In addition, for any holder who retires after reaching age 55 with at least 5 years of service, the standard three-month period for exercising these options following termination of employment will be extended to four years, but not beyond the option’s original 10-year term. If termination of employment of a Named Executive Officer (other than due to death or disability) had occurred on May 31, 2015, the sum of (i) for outstanding unexercisable options that would have become exercisable, the aggregate value as of May 31, 2015 of those options assuming a four-year remaining term and otherwise calculated using the Black-Scholes option pricing model with assumptions consistent with those used by us for valuing our options under accounting guidance applicable to stock-based compensation, plus (ii) for outstanding exercisable options granted since July 2010, the increase in value, if any, of those options resulting from the extension of the post-termination exercise period from three months to four years, with the option values as of May 31, 2015 for three-month and four-year remaining terms calculated using the Black-Scholes option pricing model with assumptions consistent with those used by us for valuing our options under accounting guidance applicable to stock-based compensation, is $18,508,395 for Mr. Parker and $6,888,207 for Mr. Blair and Ms. Jackson. The value for Messrs. Sprunk and Edwards is zero because neither has reached age 55.
Stock Award Acceleration
As of May 31, 2015, each Named Executive Officer held unvested restricted stock and restricted stock units as set forth in the Outstanding Equity Awards table above. Under the terms of their award agreements, all unvested restricted shares and restricted stock units will immediately vest upon the death or disability of the officer. The value of the unvested restricted shares and restricted stock units held by each Named Executive Officer as of May 31, 2015 that would have become vested if death or disability had occurred on that date is as set forth in the “Stock Award Acceleration” column of the Change-in-Control Compensation — Acceleration of Equity Awards table above.
Payments Under Noncompetition Agreements
We have an agreement with Mr. Parker that contains a covenant not to compete that extends for two years following the termination of his employment with us. The agreement provides that if Mr. Parker's employment is terminated by us, we will make monthly payments to him during the two-year noncompetition period in an amount equal to one-twelfth of his then current annual salary and target Performance Sharing Plan bonus (“Annual NIKE Income”). The agreement provides further that if Mr. Parker voluntarily resigns, we will make monthly payments to him during the two-year noncompetition period in an amount equal to one-twenty-fourth of his then current Annual NIKE Income. However, commencement of the above-described monthly payments will be delayed until after the six-month period following Mr. Parker's separation from service, and all payments that he would otherwise have received during that period will be paid in a lump sum promptly following the end of the period, together with interest at the prime rate. If employment is terminated without cause, the parties may mutually agree to waive the covenant not to compete, and if employment is terminated for cause, we may unilaterally waive the covenant. If the covenant is waived, we will not be required to make the payments described above for the months as to which the waiver applies. If the employment of Mr. Parker had been terminated by us on May 31, 2015 and assuming the covenant is not waived, we would have been required to pay Mr. Parker $361,667 per month for the 24-month period ending May 31, 2017. If Mr. Parker had voluntarily resigned on May 31, 2015 and assuming the covenant is not waived, we would have been required to pay Mr. Parker $180,833 per month for the 24-month period ending May 31, 2017.
We have noncompetition agreements with Messrs. Blair, Sprunk and Edwards, and Ms. Jackson on the same terms, except that the noncompetition period is one year instead of two years, the six-month delay for commencement of payments does not apply and we may unilaterally waive the covenant in all cases including termination without cause. In addition, for Messrs. Blair, Sprunk and Edwards, and Ms. Jackson, the monthly payments are one-twelfth or one-twenty-fourth of their current annual salaries, instead of their Annual NIKE Income. If the employment of these officers had been terminated by us on May 31, 2015 and assuming the covenant is not waived, we would have been required to pay Mr. Blair $70,833 per month, Messrs. Sprunk and Edwards $77,917 per month, and Ms. Jackson $73,750 for the 12-month

NIKE, INC.Ÿ2015 Notice of Annual Meeting 32

EXECUTIVE COMPENSATION

period ending May 31, 2016. If these officers had voluntarily resigned on May 31, 2015 and assuming the covenant is not waived, we would have been required to pay Mr. Blair $35,417 per month, Messrs. Sprunk and Edwards $38,959 per month, and Ms. Jackson $36,875 for the 12-month period ending May 31, 2016.





Proposal 2
Shareholder Advisory Vote to Approve
Executive Compensation

We are submitting to shareholders our annual "say-on-pay proposal," an advisory vote to approve the compensation of our Named Executive Officers as described in this proxy statement.
At the Company’s 2014 annual meeting of shareholders, 98% of the votes cast on the say-on-pay proposal were voted in favor of the proposal. The Compensation Committee believes this affirms shareholders’ support of the Company’s approach to executive compensation.
As discussed in the Compensation Discussion and Analysis, our compensation philosophy is designed to attract and retain highly talented individuals, provide rewards for strong business results and individual performance, and motivate executives to maximize long-term shareholder value. The program is competitive in the marketplace, highly incentive-based to align interests of executives with those of shareholders, and balanced across incentives to appropriately mitigate risk.
To achieve the objectives of our executive compensation program and emphasize pay-for-performance principles, the Compensation Committee has continued to employ the strong governance practices described in “Executive Compensation Governance Practices” on page 15, including:
basing a majority of total compensation on performance and retention incentives;
setting annual and long-term incentive targets based on clearly disclosed, objective performance measures and the Company's performance goals;
mitigating undue risk associated with compensation by using multiple performance targets, caps on potential incentive payments and a clawback policy; and
requiring executive officers and non-employee directors to hold NIKE stock through published stock ownership guidelines.
Because your vote is advisory, it will not be binding on the Board. However, the Board values shareholder opinions, and the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
  
Board Recommendation
 
The Board of Directors recommends that shareholders vote FOR approval of the compensation paid to the Named Executive Officers as disclosed pursuant to the SEC's compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables).


NIKE, INC.Ÿ2015 Notice of Annual Meeting 33

PROPOSAL 3

Proposal 3
Amend the Articles of Incorporation to increase the number of authorized shares of common stock

The Board of Directors recommends that shareholders of the Company approve an amendment to Article IV of the Company’s Restated Articles of Incorporation, as amended, to increase the Company’s authorized Class A Stock from 200,000,000 to 400,000,000 shares and the authorized Class B Stock from 1,200,000,000 shares to 2,400,000,000 shares. As of June 30, 2015, (a) a total of 177,457,876 shares of Class A Stock and 677,081,822 shares of Class B Stock were outstanding, (b) 177,457,876 shares of Class B Stock were reserved for issuance upon conversion of outstanding shares of Class A Stock, (c) 58,985,218 shares of Class B Stock were reserved for issuance upon exercise of outstanding stock options and stock appreciation rights and upon vesting of outstanding restricted stock unit awards, and (d) a total of 34,622,773 shares of Class B Stock were reserved for future option grants and other issuances under the Company’s amended and restated Stock Incentive Plan and Employee Stock Purchase Plans. Accordingly, as of July 20, 2015, the Company had 22,542,124 unreserved Class A shares and 251,825,459 unreserved Class B shares available for issuance for other purposes. As of our record date, July 20, 2015, the Company had 68,369,322 shares of Class B Stock reserved for issuance upon exercise of outstanding stock options and stock appreciation rights and upon vesting of outstanding restricted stock unit awards, and a total of 24,421,166 shares of Class B Stock reserved for future option grants and other issuances under the Company’s 1990 Stock Incentive Plan and Employee Stock Purchase Plans.
The reason for this amendment is to permit the Company to effect one or more stock splits by means of stock dividends. The Board of Directors has not approved such a split, but believes it to be desirable to have that flexibility in the future if the Board determines at such time that such action would be in the best interests of the Company.
While the proposed amendment is intended to facilitate future stock splits or stock dividends, the shares could also be used for other purposes such as financings, compensation plans, business acquisitions and other general corporate purposes. The shares could be issued from time to time for such purposes as the Board may approve and, unless required by applicable law or stock exchange rules, no further vote of the shareholders will be required. The Board has no present plans, proposals or arrangements to issue any of the additional shares to be authorized under this Proposal 3 for any of those purposes.
The authorization of additional shares of Common Stock could have an anti-takeover effect, although that is not the intention of this proposal. For example, without further shareholder approval, the Board of Directors could sell Common Stock in a private transaction to purchasers who would oppose a takeover, thereby potentially preventing a transaction favored by a majority of independent shareholders under which shareholders would have received a premium for their shares over then current market prices. Other existing provisions applicable to the Company that might have a material anti-takeover effect include (a) the right of holders of the Class A Stock (over 72% of which is held by Swoosh, LLC) to elect a majority of the Company’s directors, which right continues to apply as long as the Class A Stock represents at least 12.5% of the total outstanding Common Stock; (b) the Oregon Control Share Act, which under certain circumstances would operate to deprive a person or group that acquires more than 20% of the outstanding Common Stock of voting rights with respect to those shares; (c) the Oregon Business Combination statute, which places restrictions on business combination transactions with persons or groups that own 15% or more of the outstanding Common Stock, unless the transaction is approved by the Board of Directors; and (d) provisions of outstanding employee and director options and stock awards that accelerate vesting of options upon the occurrence of a change of control of the Company. The Board has no knowledge of any present efforts to accumulate shares of the Company’s Common Stock in the market or to gain control of the Company, and has no present intention to adopt any other provisions or enter into any other arrangements that would have a material anti-takeover effect.
The additional shares of Common Stock for which authorization is sought would be identical to the shares of Common Stock the Company now has authorized. Holders of Common Stock do not have preemptive rights to subscribe to additional securities which may be issued by the Company.
The Board of Directors considers this amendment advisable to provide flexibility for future stock splits, stock dividends and capital requirements. Approval of this amendment by the shareholders at the Annual Meeting may avoid the expensive procedure of calling and holding a special meeting of shareholders for such a purpose at a later date.
Board Recommendation

The Board of Directors recommends voting FOR the amendment to the Articles of Incorporation to increase the authorized Common Stock of the Company.


NIKE, INC.Ÿ2015 Notice of Annual Meeting 34

PROPOSAL 4


Proposal 4
Re-approve the Executive Performance Sharing Plan as amended

Summary of Proposal
The Board of Directors and our shareholders originally approved the Company’s Executive Performance Sharing Plan (the “PSP”) in 1995, and shareholders subsequently re-approved the PSP as amended from time to time, most recently at the 2010 annual meeting. Our Board of Directors is now seeking shareholder re-approval of the PSP as amended for purposes of Section 162(m) of the Internal Revenue Code (the “Code”).
Section 162(m) of the Code prevents a publicly held corporation from claiming federal income tax deductions for compensation in excess of $1 million per year paid to any of its chief executive officer or three other most highly compensated executive officers (other than the chief financial officer). However, if certain conditions are met, compensation that qualifies as “performance-based” is excluded for purposes of calculating the amount of compensation subject to the $1 million limit. In general, one of the requirements that must be satisfied to qualify as performance-based compensation under Section 162(m) of the Code is that the material terms of the performance goals under which the compensation may be paid must be disclosed to and re-approved by our shareholders every five years. Thus, shareholders are being asked to approve this proposal to ensure that the Compensation Committee of the Board of Directors (the “Compensation Committee”) has the flexibility to grant awards under the PSP that are intended to qualify as performance-based compensation under Section 162(m) of the Code.
The PSP will terminate at the first shareholder meeting that occurs in the fifth fiscal year after the Company’s shareholders last approved the PSP, or September 17, 2015. Accordingly, if our shareholders do not approve this proposal, the PSP will terminate at the Annual Meeting, and the Compensation Committee will make a determination in its business judgment as to the appropriate compensation for eligible participants under the PSP taking into account considerations important to the Company’s success and the benefits and costs to the Company, including the additional costs arising from the Company’s inability to deduct all or a portion of the compensation paid to covered employees. If our shareholders re-approve the PSP as amended, the PSP will be extended for an additional five years, until the 2020 annual meeting. In addition, on June 18, 2015 the Board of Directors approved amendments to the PSP, subject to shareholder approval, to (a) change the class of eligible participants under the PSP to executive officers as defined by the general periodic reporting requirements of the Securities Exchange Act of 1934, instead of all corporate officers and (b) to increase the maximum cash bonus opportunity for an eligible participant in any year from $5 million to $10 million. The Board of Directors believes that the increased limit recognizes changes in executive compensation practices and provides flexibility to offer higher rewards for higher levels of performance.
Description of the Executive Performance Sharing Plan

The following is a summary of the material provisions of the PSP as proposed to be amended (including the material terms of the performance goals) and is qualified in its entirety by reference to the terms of the PSP, a copy of which is attached to this Proxy Statement as Exhibit A and incorporated by reference into this Proxy Statement in its entirety.
Eligible Participants. All officers of the Company who are “executive officers” for purposes of Rule 3b-7 promulgated under the Securities Exchange Act of 1934 are eligible to receive awards under the PSP. These officers currently comprise a total of 9 persons.
Administration. Grants of awards under the PSP and all other decisions regarding the administration of the PSP are made by the Compensation Committee.
Target Award; Maximum Bonus Opportunity. Within 90 days of the beginning of each fiscal year of the Company, the Committee establishes for each participant the performance target or targets and related target cash awards payable upon achievement of the performance targets for the year. The maximum cash bonus opportunity for an eligible participant in any year is $10 million.
Performance Targets. Performance targets must be expressed as an objectively determinable level of performance of the Company or any subsidiary, division or other unit of the Company, based on one or more of the following: net income, net income before taxes, operating income, earnings before interest and taxes, revenues, return on sales, return on equity, earnings per share, total shareholder return, or any of the foregoing before the effect of acquisitions, divestitures, accounting changes, restructuring, or other special charges, as determined by the Committee at the time of establishing the performance target.
Determination of Award Payouts. At the conclusion of each fiscal year and prior to the payment of any award under the PSP, the Committee certifies the attainment of the performance targets established for that fiscal year and the calculation of the payouts of awards under the PSP. No award shall be paid if the related performance target is not met. The Committee may, in its discretion, reduce or eliminate a participant’s calculated award based on circumstances relating to the performance of the Company or the participant.
Clawback Policy. All awards under the PSP will be subject to the Company’s Policy for Recoupment of Incentive Compensation (the “Policy”). The Policy generally requires executive officers who are involved in wrongful conduct that results in a restatement of the Company’s financial statements to repay to the Company up to the full amount of the bonus received for any year that was restated, as determined by the Board of Directors. All awards under the PSP will also be subject to such other policy regarding clawback or recoupment of incentive compensation as may be subsequently approved by the Committee from time to time or set forth in any agreement or notice evidencing an award, as well as the requirements of applicable law and regulation regarding clawback or recoupment of incentive compensation. By acceptance of any payment under the PSP a participant expressly agrees to repay to the Company any amount that may be required to be repaid under these provisions.

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PROPOSAL 4


Amendment and Termination. The PSP may be amended by the Committee, with the approval of the Board of Directors, at any time except to the extent that shareholder approval would be required under Section 162(m) of the Code. Unless again re-approved by our shareholders, the PSP will terminate at the 2020 annual meeting. However, no amendment or termination shall affect the payment of awards previously established by the Compensation Committee.
Fiscal 2016 Target Awards. In June 2015, the Committee established performance targets and target awards under the PSP for participants for fiscal 2016. The actual amounts to be paid under those awards cannot be determined at this time, as such amounts are dependent upon the Company’s performance for the current fiscal year. However, the actual bonus compensation received by the Named Executive Officers under the PSP in fiscal 2015 is shown in the Summary Compensation Table on page 26. All participants as a group, including the Named Executive Officers, received bonus compensation under the PSP for fiscal 2015 of $11,585,442.

Board Recommendation

The Board of Directors recommends that shareholders vote FOR re-approval of the PSP as amended.


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PROPOSAL 5


Proposal 5
Approval of amended and restated Stock Incentive Plan

The Board of Directors is asking our shareholders to approve an amendment and restatement of the Company’s 1990 Stock Incentive Plan, renamed the Stock Incentive Plan (the “Plan”). The Board and our shareholders initially approved the Plan in 1990, and shareholders subsequently re-approved the Plan as amended from time to time, most recently at the 2010 annual meeting. On June 18, 2015, the Compensation Committee recommended to the Board and the Board adopted the Plan as amended and restated, subject to shareholder approval at the Annual Meeting.
The amendments to the Plan that are subject to approval by our shareholders will:
increase the number of shares of Class B Stock authorized for issuance under the Plan by 33,000,000 shares;
increase individual award limits for purposes of Section 162(m) of the Code;
limit the amount of equity awards that may be granted to any non-employee director in any fiscal year; and
extend the term of the Plan to September 17, 2025.
The Plan as amended and restated also (a) imposes minimum one-year vesting requirements with certain limitations, (b) extends the prohibition on repricing stock options without shareholder approval to include SARs, (c) expands the types of events for which adjustments will be made in the event of changes in capital structure, (d) expands the scope of the Company’s clawback policy, and (e) contains certain clarifying, administrative and technical changes.
As discussed under the heading “Section 162(m) Re-Approval” beginning on page 39, approval of the Plan as amended and restated is also intended to constitute re-approval of the material terms of the performance goals under the Plan for purposes of Section 162(m) of the Code.
If our shareholders do not approve the Plan as amended and restated, new awards may be granted to eligible participants (other than covered employees under the Plan) only up to the number of shares currently authorized and available for issuance under the Plan, and the Compensation Committee will make a determination in its business judgment as to the appropriate compensation for covered employees, taking into account considerations important to the Company’s success and the benefits and costs to the Company, including the additional costs arising from the Company’s inability to deduct all or a portion of the compensation paid to covered employees.
Purpose of the Plan

As discussed in the Compensation Discussion and Analysis beginning on page 15, the availability of stock options, restricted stock and other stock-based incentives under the Plan is an important part of the Company’s overall incentive compensation program, which consists of annual performance-based cash incentive awards under the shareholder-approved Executive Performance Sharing Plan, long-term performance-based cash incentive awards under the shareholder-approved Long-Term Incentive Plan, and long-term equity awards under the Plan that are tied to the performance of the Class B Stock. The Board of Directors believes that equity awards granted under the Plan are essential to the Company’s ability to attract and retain experienced officers, directors, employees and other service providers and to provide an incentive for them to exert their best efforts on behalf of the Company.
Key Features of the Plan

The Plan includes several features that are consistent with the interests of our shareholders and sound corporate governance practices, including the following:
Fungible share pool. Shares issued in connection with restricted stock and other “full-value” stock awards will count against the number of shares authorized for issuance under the Plan at a higher rate than shares issued upon exercise of stock options and SARs after a threshold for full-value awards is exceeded.
No automatic share replenishment or “evergreen” provision. There is no evergreen feature pursuant to which the shares authorized for issuance under the Plan can be automatically replenished.
No discounted options or SARs. Stock options and stock appreciation rights (SARs) may not be granted with an exercise or grant price lower than the fair market value of the underlying shares on the date of grant.
No repricing of options or SARs without shareholder approval. The Plan prohibits the direct or indirect repricing of stock options or SARs without prior shareholder approval.
No liberal share counting or “recycling” of shares from exercised stock options or SARs. Shares withheld by or delivered to the Company to satisfy the exercise or grant price of stock options and SARs or tax withholding obligations upon such exercise will not be available for future grants.
No liberal change-in-control definition. Change in control benefits are triggered only by the occurrence, rather than shareholder approval, of a merger or other change in control event.
Double-trigger change-in-control vesting. If awards are assumed by a successor company in connection with a change in control, such awards will not automatically vest and pay out solely as a result of the change in control.

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PROPOSAL 5


Minimum vesting requirements. Awards are required to meet minimum vesting requirements of at least one year with limited exceptions. Historically it has been the Company’s practice to grant stock options that generally vest over a four-year period and stock awards that generally vest over a three-year period.
Limit on non-employee director awards. The Plan establishes a maximum amount of shares that may be granted to a non-employee director in any fiscal year.
No dividends on unearned performance-based awards. Dividends or dividend equivalents may not be paid on unearned performance-based awards.
Awards subject to clawback policy. Awards granted under the Plan are subject to the Company’s clawback policy.
No excise tax gross-ups on change in control. The Plan does not provide for any excise tax gross-ups.
No transferability. Awards generally may not be transferred, except by will or the laws of descent and distribution, unless the transfer is approved by the Compensation Committee and is for no consideration.
Background for Requested Share Authorization

The Board of Directors is asking shareholders to approve the amendment and restatement of the Plan to authorize an additional 33,000,000 shares of Class B Stock for the Plan, thereby increasing the total number of shares reserved for issuance under the Plan from 326,000,000 (post-December 2012 stock split) to 359,000,000 shares.
In setting the proposed increase in the number of shares authorized for issuance under the Plan, the Compensation Committee and the Board of Directors considered a number of factors, which are discussed further below, including:
The shares available and total outstanding equity awards under the Plan and how long the shares available are expected to last.
Historical equity award granting practices, including the Company’s three-year average share usage rate, or burn rate.
The expected value transfer and dilution.

Shares Available and Outstanding Equity Awards under the Plan. In setting the number of shares authorized for issuance under the Plan, we considered the shares available and total outstanding equity awards under the Plan and how long the shares available are expected to last. Under the heading “Equity Compensation Plan Information” beginning on page 43, as required by SEC rules, we provide information about shares of Class B Stock that may be issued under our equity compensation plans as of May 31, 2015, the end of fiscal 2015. To facilitate the approval of the Plan, set forth below is certain additional information as of the record date, July 20, 2015.
As of July 20, 2015, we had 855,384,053 shares of Class A Stock and Class B Stock issued and outstanding. The closing price of the Class B Stock as reported on the New York Stock Exchange on July 20, 2015 was $113.13.
As described in more detail in the table below, under the Plan (and without giving effect to approval of the proposed share increase), as of July 20, 2015:
Out of the total of 326,000,000 shares of Class B Stock authorized for issuance under the Plan, only 20,122,341 shares remained available for grant as of July 20, 2015. The Board of Directors believes additional shares will be needed under the Plan to provide appropriate incentives to key employees and other service providers.
66,315,194 stock options (vested and unvested) were outstanding with a weighted-average exercise price of $57.48 per share and a weighted-average remaining term of 6.56 years.
2,054,128 shares underlying full-value awards (such as restricted stock and restricted stock units) were outstanding.

Total shares underlying outstanding options
 
66,315,194
Weighted-average exercise price of outstanding options
 
$57.48
Weighted-average remaining contractual life of outstanding options
 
6.56 years
Total shares underly