Regis Corporation
Shareholder Annual Meeting in a DEF 14A on 09/13/2021   Download
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UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Regis Corporation
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LETTER FROM THE BOARD CHAIR
Dear Regis shareholders, employees, franchise owners and customers,
The pandemic ravaged few industries harder than the hair salon industry, resulting in a government-mandated shut-down of our entire business. Our revenue generating capabilities went to zero, yet our fixed expenses remained. I could go on but would rather let you know that despite all of this, your Board has never been more enthusiastic. Let me provide some context. In 2017, the Board supported the Company’s strategy to transform the business to an asset-light, data-driven franchise business enabled by our own proprietary technology platform – a platform that, at the time, was just an idea. To say the least, it is no small feat to simultaneously transform a business model and tech stack. We dreamed big. Four years later, Regis salons are now in the hands of franchise owners and are quickly moving over to being powered by our own Opensalon® Pro platform. Our big dream became a reality in the face of unimaginable and unprecedented challenges.
Our new President and CEO, Felipe Athayde, joined us last year and brings deep franchise expertise to match our transformed business model. He has assembled a stellar team with complementary skill sets across operations, development, technology, recruiting and finance. Although Regis has increased its magnitude and caliber of franchise expertise, we have not forgotten our roots. Regis operated salons for almost 100 years. Marrying legacy operational know-how with franchise expertise is an exciting combination that will unlock the full potential of this platform.
Our team knows what great looks like and draws on best practices from experience transforming well-known franchise systems. We are dedicated to building competitive brands by driving sales, fostering an aligned franchisee base, and providing strong unit-level investment cases to unlock aggressive growth. There are several key wins this year that will enable us to strive for such greatness. We collaborated with our franchisees and aligned on Regis controlling the Supercuts advertising fund centrally. Historically, much of our dollars were allocated locally by the franchisees themselves without the rigorous analytics capability our scale affords. Now, we will align our promotional dollars to drive new traffic and retain current customers as staffing levels at salons rise. We are ready to go with tactical marketing and promotions when the timing is right – our historical data suggests this should be very fruitful and we will make sure every dollar spent is impactful. We are honing our brand standards to ensure a uniform customer experience and hold our franchisees accountable. The development of the salon of the future is underway, maximizing return on investment to provide an optimized business case for franchisees to drive new unit growth both domestically and abroad. Underlying all of this is a proprietary technology platform that will not only differentiate our salons from our competitors by providing true business analytics, but may also have potential commercial value beyond Regis walls.
As we head into fiscal 2022, the world has re-opened and business is steadily returning month by month. Nominal sales continue to increase. What started as a decline in consumer traffic caused by the pandemic has shifted primarily to a shortage in labor to meet our rising customer demands. This labor shortage is not unique; however, unlike other retail businesses, salon staffing directly drives revenue generation. In our salons where staffing hours have returned to pre-pandemic levels, generally in states with lower restrictions, sales have increased more rapidly. This gives us confidence that staffing will come back and, when it does, our business will reemerge as an opportunity where you can realize the strong cash on cash returns available by owning these types of franchise units.
We have a hungry, driven, and talented management team ready to ensure we capitalize on this investment opportunity through their network of partners that want to grow with us given our team’s history of driving franchisee profitability in other systems. This platform has already attracted talent. We could not be more excited by the tremendous potential economic value that can be driven for us and our franchise partners by the talent it has attracted and will continue to attract in the years to come.
All the best,

Daniel Beltzman
Board Chair

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Regis Corporation:
The Annual Meeting of the Shareholders (the “Annual Meeting”) of Regis Corporation (referred to as “we,” “us,” “our,” “Regis” and the “Company”) will be held on October 26, 2021 commencing at 9:00 a.m. Central Time. The Annual Meeting will be conducted completely as a virtual meeting via the Internet at www.virtualshareholdermeeting.com/RGS2021. The purposes of the meeting are:

To elect the eight directors listed in the proxy statement to serve for a one-year term and until their successors are elected and qualified;
To approve, on an advisory basis, the compensation of our named executive officers (referred to as the “Say-on-Pay” proposal);
To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for fiscal 2022; and
To transact such other business, if any, as may properly come before the Annual Meeting or any adjournment or postponement thereof.
Only holders of record of our common stock at the close of business on August 30, 2021 are entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. We are providing our proxy materials, which include our Notice and Proxy Statement and Annual Report, to such holders of record of our common stock beginning on or about September 13, 2021.
 
Whether or not you plan to participate in the Annual Meeting, please submit your proxy by telephone or through the Internet in accordance with the voting instructions provided to you. If you requested a paper copy of the proxy card by mail, you may also date, sign and mail the proxy card in the postage-paid envelope that is provided with your proxy card. Should you nevertheless participate in the Annual Meeting, you may revoke your proxy and vote your shares electronically during the Annual Meeting.
 
If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions from the record holder that you must follow in order for your shares to be voted. If you plan to vote your shares during the Annual Meeting, you will need the 16-digit control number included on your proxy card or your Notice of Internet Availability of Proxy Materials. We recommend that you log in at least fifteen minutes before the meeting to ensure that you are logged in when the meeting starts.
 
By Order of the Board of Directors,

Amanda P. Rusin
Corporate Secretary
September 13, 2021

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2021 PROXY STATEMENT  |  1

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ELECTION OF DIRECTORS
What Has Kept Us Busy
In this section, we, your Board of Directors (the “Board”), provide information about who we are, how we are organized, how we operate, and what we are paid. We open with a summary of what we have been doing for you, our fellow shareholders. Although this information is not always included in proxy statements, we believe we should provide it, because you are being asked to re-elect us.
Our Board has shaped and governed, and our management team has taken, significant actions to drive our Company forward through difficult times:

Transitioned the positions of President and CEO of the Company to Felipe Athayde

Executed phase 1 of our brand-centric reorganization

Implemented a Zero-Based Organization (“ZBO”) structure and Zero-Based Budget (“ZBB”) processes

Rolled out Key Performance Indicators (“KPIs”) and Management by Objectives (“MBOs”) to all positions of directors and above and provided MBOs to managers based upon their leader’s MBOs

Appointed Lockie Andrews and Michael Mansbach to serve as members of the Board and the Technology Committee

Sold 748 Company-owned salons to franchisees, generating $8.4 million in net cash proceeds as part of our conversion to an asset-light, fully-franchised platform

Negotiated lease buy-outs amounting to $4.6 million of annualized EBIDTA savings on non-performing SmartStyle salon locations

Appointed new executive officers with franchise expertise, including our President of Supercuts, Shawn Thompson, and our Chief Strategy Officer, Matthew Doctor

Removed approximately $25.5 million of annualized general and administrative expenses during fiscal 2021

Achieved adoption of our proprietary salon management system, OpenSalon® Pro, by 1,977 franchise-owned salon locations

Launched the new Roosters Men’s Grooming mobile app and upgraded the Supercuts and SmartStyle mobile apps

Expanded and upgraded digital education for stylists and salon managers

Exited the wholesale distribution business and partnered with two national distributors to supply haircare products to our salons, which will bring value to our franchisees, preserve our private label business, and be EBITDA positive while greatly reducing the complexity of our business

Maintained the profile of women in leadership roles and was selected by “Twin Cities Business” and St. Catherine University for achieving 20 percent or more women in director and executive roles

Unveiled new Company-wide values and a new purpose statement: Unleash the beauty of potential
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ELECTION OF DIRECTORS
The Board unanimously recommends that you vote FOR the election of each of the director nominees below.
Eight directors are to be elected at the annual meeting of shareholders to be held on October 26, 2021 (the “Annual Meeting”), each to hold office for one year until the 2022 annual meeting of shareholders and until their successors are elected and qualified. The Board currently consists of nine directors; however, Ms. Virginia Gambale, a current member of our Board, is not standing for re-election at the Annual Meeting. Based upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated the eight persons named below for election as directors. Each of the Board’s nominees is standing for re-election by the shareholders at the Annual Meeting.
Ms. Lockie Andrews and Mr. Michael Mansbach are standing for election by shareholders for the first time at the Annual Meeting. Each of Ms. Andrews and Mr. Mansbach was identified as a potential candidate for the Board by one of our non-employee directors.
In determining to nominate Mr. Michael Merriman and Ms. Ann Rhoades for re-election, the Board considered that Mr. Merriman had already served 10 years at the time of re-election and Ms. Rhoades was 76 years old and, therefore, both were required under our Corporate Governance Guidelines to offer to not stand for re-election. The Board considered Mr. Merriman’s significant contributions to the Board, including his service as the Chair of the Audit Committee and his continued high level of involvement with the Board and the Company, and determined to nominate Mr. Merriman for re-election. The Board considered Ms. Rhoades’ significant contributions to the Board, including her oversight of matters relating to the culture among the Company’s workforce and her continued high level of involvement with the Board and the Company, and determined to nominate Ms. Rhoades for re-election.
Unless authority to vote is withheld, proxies submitted will be voted for the election of the Board’s nominees named herein as directors of Regis. If for any reason a nominee becomes unable to serve or for good cause will not serve if elected, the Nominating and Corporate Governance Committee may designate substitute nominees, in which event the shares represented by proxies returned to us will be voted for such substitute nominees. If the Nominating and Corporate Governance Committee designates any substitute nominees, we will file an amended proxy statement that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in the revised proxy statement and to serve if elected, and includes certain biographical and other information about such nominees required by Securities and Exchange Commission (“SEC”) rules.
2021 PROXY STATEMENT  |  3

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ELECTION OF DIRECTORS
Who We Are


Lockie
Andrews

Head of eCommerce and Digital Operations, Party
City

Independent

Director since 2021


Age: 48


Board
committees

  Technology
Career Highlights
   Head of eCommerce and Digital Operations at Party City, a vertically integrated retailer,
since May 2021

  Founder, Chief Executive Officer, and Managing Partner of Catalyst Consulting, a boutique advisory firm specializing in “all things digital” for consumer and next-generation companies,
since May 2007

   Chief Information Officer and Chief Digital Officer, UNTUCKit, an omnichannel retail brand,
from 2018 to April 2021

   Previously served as an operating partner advisor to portfolio companies of Sun Capital,
Marlin Equity, Brightwood Capital, and Shamrock Capital

  Served in various leadership roles at Nora Gardner, Tadashi, Liz Claiborne (Kate Spade), and Alvarez & Marsal’s Retail Consulting Practice
Skills / Experience
  Experience assisting companies such as Nike, Lane Bryant, and ANINE BING in areas such as strategy, innovation, technology, digital marketing, analytics, revenue enhancement, and
operational improvement

   Led digital transformation efforts, including leveraging technology to enhance marketing,
stores, ecommerce, supply chain, creative, analytics, finance, and operations

   Led engagements in strategy, innovation, and capital-raising

   Experience as an investment banker
Education
MBA, Harvard Business School
BS, Finance, Georgetown University
Also...
Lockie serves as a Board Member of the National Academy of Design and she is also the fashion sector co-lead of the Harvard Business School Alumni Angels of NYC and co-VP of Programming at the Harvard Business School Club of New York. And, given her passion for the arts, Lockie joined the Friends of Education at the Museum of Modern Art of NYC to support artists from historically under-represented communities.

Lockie founded Catalyst Cares, a nonprofit leveraging the arts to combat poverty and obesity among youth in low-income communities.
Other Public Boards
None 
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ELECTION OF DIRECTORS
      


Felipe A.
Athayde

President and Chief
Executive Officer, Regis
Corporation

Director since 2020

Age: 42



Board
committees

  Technology
Career Highlights

   President and Chief Executive Officer, Regis Corporation, since October 2020

  President, Americas, of Popeyes Louisiana Kitchen, owned by Restaurant Brands International, a multinational quick-service restaurant holding company, from March 2019 to September 2020

  Various positions with Restaurant Brands International between July 2011 and September 2020, including President, Latin America and Caribbean for Burger King and President, US for Tim Hortons
Skills / Experience

  Leadership experience with franchise businesses, including expertise in strategy and brand development, finance, operations, marketing, and sales

   Implementation of business-wide technology upgrades
Education

BBA, Fundação Getulio Vargas in Sao Paulo, Brazil
MBA, Northwestern University Kellogg School of Management
ALSO...

Before joining Burger King Corporation, Felipe worked as a Business Leader in the strategy department for Visa Inc. Latin America in Miami, FL, and as a bond trader for multiple financial institutions in the United States and Singapore.
Other Public Boards

None
VOTING SUPPORT

2020: 99.7%

2021 PROXY STATEMENT  |  5

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ELECTION OF DIRECTORS
      



Daniel G. Beltzman

General Partner,
Birch Run Capital
Advisors, LP

Independent

Director since 2012
Chair of the Board

Age: 46



Board
committees

  Compensation

 Nominating and
Corporate
Governance

  Technology
Career Highlights

   General Partner, Birch Run Capital Advisors, LP, an investment adviser, since May 2006

  Mergers and Acquisitions and Equity Research departments of Deutsche Bank Securities, Inc. and Bank of America Securities
Skills / Experience

   Financial experience and expertise
Education

BBA, Accounting/Finance, University of Michigan
MAcc, University of Michigan
ALSO...

Daniel cofounded Birch Run Capital Advisors when he was 31. Birch Run looks to invest in organizations that believe that value follows values. It looks for organizations whose people are willing to invest their time, resources, and reputations to support both.
Other Public Boards

Former
    Ditech Holding Corp. f/k/a Walter Investment Management Corp. (2015 – 2019)
VOTING SUPPORT

2020: 99.2% | 2019: 97.0% | 2018: 97.5% | 2017: 97.3% | 2016: 86.5% | 2015: 88.0% | 2014: 99.4% | 2013: 92.8% | 2012: 99.4%

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ELECTION OF DIRECTORS
      

  
David J. Grissen

Former Group President,
Americas, Marriott
International, Inc.

Independent

Director since 2013

Age: 64



Board
committees

 Audit, ACFE

 Nominating
and Corporate
Governance,
Chair


  Technology
Career Highlights

  Joined Marriott International, Inc., a global operator of hotels and related lodging facilities, in 1986 with his most recent role being Group President, Americas from 2020 until his retirement in 2021

  Various positions at Marriott including Group President; Group President, Americas; President, Americas; Executive Vice President of the Eastern Region; Senior Vice President of the Mid-Atlantic Region and Senior Vice President of Finance and Business Development
Skills / Experience

  Leadership experience with a complex organization that includes franchised, managed, and owned operations

   Building marketing platforms with multiple portfolio brands

   Acquisitions and integration
Education

BA, Michigan State University
MBA, Loyola University Chicago
Also...

David implemented the 4 Disciplines of Execution because he saw how employees understanding how their day-to-day activities relate to the company’s overall business results made them feel they were all working toward a common goal and they make a difference and have a voice.

David, a long-time runner, served as Vice Chairman of Back On My Feet, a non-profit whose mission is helping the homeless via a structured running program.
Other Public Boards

Former

   Good Times Restaurants Inc. (2005 – 2010)
VOTING SUPPORT

2020: 99.3% | 2019: 98.4% | 2018: 98.3% | 2017: 99.0% | 2016: 89.0% | 2015: 89.3% | 2014: 99.5% | 2013: 98.1%

2021 PROXY STATEMENT  |  7

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ELECTION OF DIRECTORS
      

  
Mark S.
Light

Executive Chairman,
Bedrock Manufacturing

Independent

Director since 2013

Age: 59



Board
committees

 Compensation

 Nominating
and Corporate
Governance

 Technology
Career Highlights

  In 1978, joined Signet Jewelers, the world’s largest retailer of diamond jewelry (with over 3,500 stores including Kay Jewelers, Zales, Jared The Galleria of Jewelry, H. Samuel, Ernest Jones, Peoples, and Piercing Pagoda) operating in North America and the United Kingdom

  Chief Executive Officer and Director of Signet Jewelers from November 2014 until his retirement in July 2017

  Various management positions including President and Chief Operating Officer, Executive Vice President of Operations, and Division President while at Sterling Jewelers, Signet’s main US business
Skills / Experience

   Led an international sales team to deliver a superior customer experience

  Led the development of start-up retail jewelry brand, Jared the Galleria of Jewelry to over $1 billion in annual revenue in 2017

   Led and managed many acquisitions while integrating synergies

   Led in the acquisition and integration of a large diamond-cutting factory in Botswana, Africa

  Led in the development of several exclusive international jewelry product brands such as Open Hearts by Jane Seymour, Neil Lane Bridal, and the Ever Us Two Stone collection to name a few
Education

Kent State University and Ohio University
Also...

When Mark became Head of Sterling, he oversaw a tripling of the unit’s sales.

In his time at Signet, he oversaw a successful acquisition and integration of Zales, expanded its outlet channel by acquiring Ultra, made significant progress on the company’s OmniChannel strategy, realigned the organization structure and re-engineered and stabilized its ecommerce platform.

Mark is the Chairman of the Board of Directors of Bedrock Manufacturing, which is the parent of two iconic American brands, Shinola and Filson.
Other Public Boards
Former
   Signet Jewelers Limited (2014 – 2017)
VOTING SUPPORT
2020: 99.3% | 2019: 98.5% | 2018: 98.4% | 2017: 96.7% | 2016: 87.7% | 2015: 88.2% | 2014: 99.9% | 2013: 98.1%

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ELECTION OF DIRECTORS
      


Michael
Mansbach

Founder of Granite
Stairway Advisors LLC
and co-founder and
partner of Apex
Perspectives, LLC

Independent

Director since 2021

Age: 53



Board
committees

 Technology,
Chair-Elect
Career Highlights
  Founder of Granite Stairway Advisors LLC, an executive consulting services firm, since July 2020, and co-founder and partner of Apex Perspectives, LLC, a consulting firm, since June 2020

  President, MINDBODY, Inc., a technology platform for the fitness, beauty, and wellness service industries, from June 2017 until its acquisition by Vista Equity Partners in April 2019

  President, Blue Jeans Network, Inc., a cloud-based video communications company, from November 2015 to February 2017

  President, PunchTab, Inc., an engagement and insights platform, from September 2014 until its acquisition by Walmart Labs in September 2015

  Senior management positions at Citrix, a business mobility and security software firm, from November 2004 to April 2014
Skills / Experience
  Expertise in creating global scale, building connected teams, market category leadership, and enterprise value

  Revenue growth and retention, go-to-market strategy, M&A, debt/cash/budget management, product strategy and marketing, sales strategy and process, demand generation, market positioning, international expansion, and leadership development

   Senior marketing positions at SeeBeyond and SeeCommerce
Education

MA, International Economics, European Area Studies, The Johns Hopkins University – Paul H.
Nitze School of Advanced International Studies
Also...
Mike is passionate about helping kids understand the power of giving. His family has developed an annual fundraiser partnering with the Santa Barbara Triathlon for the Foodbank of Santa Barbara County to raise awareness of hunger issues facing children. He also developed and launched the Saturday Family Day program targeting youth volunteers. To date, 1,000+ children have participated.
Other Public Boards
None 
2021 PROXY STATEMENT  |  9

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ELECTION OF DIRECTORS
      

  
Michael J. Merriman

Product Launch
Ventures, LLC
Consumer Products
Consultant

Independent

Director since 2011

Age: 65



Board
committees

  Audit, ACFE, Chair

  Compensation
Career Highlights

  Operating Advisor at Resilience Capital Partners, LLC, a private equity firm (2008 – 2017)

  Chief Executive Officer, The Lamson & Sessions Co. (November 2006 until sale November 2007)

  SVP & Chief Financial Officer, American Greetings Corporation (September 2005 – November 2006)

   President & CEO, Royal Appliance Mfg. Co. (1995 – 2004)

   Chief Financial Officer, Royal Appliance Mfg. Co. (1992 – 1995)

   Audit Partner, Arthur Andersen & Co. (1990 – 1992)
Skills / Experience

   Public company CEO leadership experience

  Consumer product sales and marketing direct to consumer, as well as to big box retailers including Walmart

   M&A experience including the sale of both public and private companies

   Public accounting experience
Education

BS, Business Administration, John Carroll University
ALSO...

Michael was named CEO of Royal Appliance Manufacturing at 39, after joining the company as CFO three years earlier.
Other Public Boards

  Nordson Corporation (since 2008), Chairman of the Board (since February 2018), Audit Committee Chair (2012 – 2018)

Former
  OMNOVA Solutions Inc. (2008 – 2020), Nominating & Corporate Governance Committee Chair

  Invacare Corporation (2014 – 2018)

  American Greetings Corporation (2006 – 2013)

  RC2 Corporation (2004 – 2011)

VOTING SUPPORT

2020: 99.5% | 2019: 99.5% | 2018: 98.9% | 2017: 98.2% | 2016: 87.7% | 2015: 88.6% | 2014: 99.4% | 2013: 92.8% | 2012: 95.0% | 2011: 94.8%

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ELECTION OF DIRECTORS
      

  
M. Ann
Rhoades

President,
People Ink, Inc.

Independent

Director since 2015

Age: 76



Board
committees

 Audit
 Compensation,
Chair
Career Highlights

   President, People Ink, Inc., a human resources consulting firm, since 1999

   Executive Vice President, People, JetBlue Airways (1999 – 2002)

  Executive Vice President, Team Services, Promus Hotel/DoubleTree Hotels Corporation (1995 – 1999)

   Vice President, People, Southwest Airlines (1989 – 1995)
Skills / Experience

   Human resources experience

   Consumer experience

EDUCATION

MBA, The University of New Mexico
ALSO...

Ann built a hiring model to get high-performance outcomes based in hiring according to values that helped create JetBlue and Southwest Airlines’ well-regarded cultures.

Author of Built on Values, Creating an Enviable Culture That Outperforms the Competition.

Flew in an F-16 at 9.1Gs.
Other Public Boards

   Nexphase Capital (since 2015)

Former
  JetBlue Airways (2001 – 2015), Compensation Committee Chair

  P.F. Chang’s China Bistro, Inc. (2003 – 2012), Compensation Committee Chair

  Restoration Hardware (1999 – 2001, 2005 – 2009)

VOTING SUPPORT

2020: 99.5% | 2019: 99.5% | 2018: 99.0% | 2017: 98.9% | 2016: 98.8% | 2015: 99.2%

2021 PROXY STATEMENT  |  11

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How We Govern the Company
How We Govern the Company
We believe that how we govern ourselves is as important as the corporate governance that sets guidance and parameters for the Company more generally. This is a summary of some of our key Board governance provisions. More information can be found on our website at www.regiscorp.com, and in the next section summarizing some of the key provisions that apply more broadly to the Company. Our compensation governance provisions can be found in the Compensation Discussion and Analysis section of this Proxy Statement.
All our directors, except our President and Chief Executive Officer, are independent. In our User’s Guide at the end of this Proxy Statement, we provide a description of our Board’s independence standards. Under these standards, the Board has determined that each director, with the exception of Mr. Athayde, our President and Chief Executive Officer, is independent. The Board has also determined that the independence of Mr. Grissen, former Group President of Marriott International, Inc., is not impaired by the fact that the Company pays Marriott for hotel services. Accordingly, a supermajority of our Board is independent.
We have an independent Chair of our Board. In connection with our Chief Executive Officer succession last year, Mr. Beltzman, an independent director who has served on the Board for the last nine years, was appointed Chair of the Board.
All our directors stand for election every year.
Special meetings. Shareholders holding 10% or more of our outstanding stock have the right to call a special meeting of shareholders.
Board and committee meeting attendance. Each of our then-serving directors attended, in person or by teleconference, at least 75% of the seven meetings of our Board and the meetings of the Board committees on which each director served during the fiscal year ended June 30, 2021.
Annual meeting attendance. Our Board does not have a formal policy relating to Board members’ attendance at annual shareholders meetings. Directors are, however, encouraged to attend these meetings and all our then-serving directors attended our virtual 2020 annual shareholders meeting.
Our Board has a majority voting standard. Incumbent directors who do not receive a majority of votes cast must tender their resignation to the Board for review. Our Corporate Governance Guidelines further provide that if the Board decides not to accept a director’s resignation in such circumstances, then it will disclose its reasons.
Director stock ownership. Our directors are required to hold all common stock they receive as part of their Board compensation until they cease to serve as directors.
Age and tenure provisions. Our Corporate Governance Guidelines contain both age and tenure provisions.
Over-boarding. Our Corporate Governance Guidelines contain provisions related to limiting its directors’ service on other boards of directors.
Director evaluations. Our Corporate Governance Guidelines contain provisions requiring annual Board evaluations.
Director orientation and education. Directors receive orientation overseen by the Board and the Nominating and Corporate Governance Committee and are supported in obtaining continuing director education.
Executive sessions. Our Board has a policy of conducting executive sessions of the independent directors in connection with each regularly scheduled Board meeting.
Communicating with the Board. Our directors value, and seek, input from a wide variety of sources to inform their work. Our directors have also made it a practice to proactively engage with shareholders to obtain their input. Our directors especially value input from shareholders who have a financial stake in the caliber of their input and who work in settings likely to provide access to interesting insights. Therefore, our directors provide several means to obtain shareholder input, including in connection with our annual shareholder meeting and through our investor relations process and our engagement activities.
The Board’s role in risk oversight. One of the key responsibilities of the Board is to develop a strategic direction for the Company and to provide management oversight for the execution of that strategy. The Board regularly reviews information regarding our financial, strategic, and operational issues, as well as the risks associated with each. The Board also oversees the Company’s Data Security Incident Response Plan, which serves as a Company-wide guide to facilitate a systematic response to security incidents and is designed to prevent or minimize disruption of critical information systems, to minimize loss or theft of
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How We Govern the Company
sensitive or critical information, and to quickly and efficiently remediate and recover from security events. While the Board has overall responsibility for risk management, each of the Board committees has supporting responsibility for risk management and makes periodic updates to the full Board. Their specific areas of responsibility are:
The Audit Committee discusses and approves policies with respect to risk assessment and risk management. The Audit Committee oversees the management of financial risks and monitors management’s responsibility to identify, assess, and manage risks.
The Compensation Committee is responsible for overseeing our executive compensation programs and reviewing risks relating to our overall compensation plans and arrangements.
The Nominating and Corporate Governance Committee manages risks associated with potential conflicts of interest pursuant to our Code of Business Conduct and Ethics (the “Code of Ethics”) and reviews governance and compliance issues with a view to managing associated risks.
The Technology Committee is responsible for reviewing risks associated with significant technology investment and/or deployment.
While each committee is responsible for regularly reviewing, evaluating, and overseeing the management of such risks, the Board is regularly informed of such risks through committee reports. In addition, the Board and the committees receive regular reports from our Chief Financial Officer, General Counsel, Executive and Senior Vice Presidents, and other Company officers and personnel with roles in managing risks. The Compensation Committee is also advised by its compensation consultant, which periodically reviews the risks relating to the Company’s compensation practices. Our leadership team meets with our General Counsel and head of Internal Audit to discuss and evaluate risks applicable to our Company.
Director nomination process. The Nominating and Corporate Governance Committee is responsible for screening and recommending for nomination director candidates to the full Board. The Nominating and Corporate Governance Committee will consider nominations received from our shareholders; provided that, proposed candidates meet the requisite director qualification standards discussed below. When appropriate, the Nominating and Corporate Governance Committee will also engage an independent third-party search firm. The Nominating and Corporate Governance Committee will then evaluate the resumes of any qualified candidates recommended by shareholders and search firms, as well as by members of the Board. Generally, to be considered for nomination, a candidate must have:
High professional and personal ethics and values;
A strong record of significant leadership and meaningful accomplishments in his or her field;
Broad experience;
The ability to think strategically;
Sufficient time to carry out the duties of Board membership; and
A commitment to enhancing shareholder value and representing the interests of all shareholders.
Candidates are evaluated based on these qualification standards and the current needs of the Board, with due consideration to the requirement of our Corporate Governance Guidelines and New York Stock Exchange (“NYSE”) and SEC regulations that at least a majority of the Board consists of independent directors. In addition, when considering nominees to the Board and in evaluating the composition of the Board as a whole, the Nominating and Corporate Governance Committee considers the value of diversity.
The Company’s policies for, and commitments to, diversity are contained within the Code of Ethics, which explicitly provides that the Company will not discriminate against anyone on the basis of race, color, gender, sexual orientation or identity, religion, age, national origin, disability, or any other classification protected by law. The Code of Ethics explicitly extends these protections to customers and provides that the Company strives to foster an environment of respect, inclusiveness, humanity, and humility.
Consistent with this commitment, the Nominating and Corporate Governance Committee, when seeking new director candidates, considers and values diversity in all the attributes covered in the Code of Ethics, as well as diverse skills and experiences, such as an understanding of the retail industry, the hair-care market, finance, accounting, marketing, technology, and international experience. The Nominating and Corporate Governance Committee expects every member of the Board and every director candidate to be able to act effectively on behalf of shareholders and stakeholders.
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How We, the Directors, Are Governed
All shareholder nominations must be accompanied by a candidate resume that addresses the extent to which the nominee meets the director qualification standards. Nominations will be considered only if we are currently seeking to fill an open director position. All nominations by shareholders should be sent to the Chair of the Nominating and Corporate Governance Committee, c/o Corporate Secretary, Regis Corporation, 3701 Wayzata Boulevard, Suite 500, Minneapolis, Minnesota 55416.
How We, the Directors, Are Governed
Our corporate governance provisions that relate to our Board are summarized in the preceding section. Our compensation governance provisions are summarized in the Compensation Discussion and Analysis section of this Proxy Statement. Our corporate governance guidelines are posted on our website at www.regiscorp.com. This information is also available in printed form free of charge to any shareholder who requests it by writing to our Corporate Secretary, Regis Corporation, 3701 Wayzata Boulevard, Suite 500, Minneapolis, Minnesota 55416.
Code of Business Conduct and Ethics. The Board has adopted the Code of Ethics, which applies to all our employees, directors, and officers, including our President and Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller, and other senior financial officers. The Code of Ethics, as applied to our principal financial officers, constitutes our “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act and is our “code of business conduct and ethics” within the meaning of the listing standards of the NYSE. The Code of Ethics is posted on our website at www.regiscorp.com. The Code of Ethics is also available in printed form free of charge to any shareholder who requests it by writing to our Corporate Secretary, Regis Corporation, 3701 Wayzata Boulevard, Suite 500, Minneapolis, Minnesota 55416. We intend to promptly disclose future amendments to certain provisions of the Code of Ethics, and any waivers of provisions of the Code of Ethics that are required to be disclosed under the rules of the SEC or under the listing standards of the NYSE, at the same location on our website.
Related Party Transactions. Our Board has adopted a Related Party Transaction Approval Policy requiring approval of all related party transactions for amounts exceeding $10,000 for the fiscal year. We did not have any related party transactions during fiscal 2021.
Complaint/hotline procedures. The Company’s Audit Committee Complaint Procedures, which are posted on our website at www.regiscorp.com, provide for the publication of a toll-free number and mailing address for complaints to be submitted to the Audit Committee.
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Our Board’s Committees

Our Board’s Committees
The Board has four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, and the Technology Committee. The composition of these committees at fiscal year-end is set forth below.
Our Board’s Committees
Director Name
Audit
Compensation
Nominating and
Corporate Governance
Technology1
Felipe A. Athayde
Daniel G. Beltzman
Virginia Gambale
CHAIR
David J. Grissen
2
CHAIR
Mark S. Light
Michael Mansbach
CHAIR-ELECT3
Michael J. Merriman
CHAIR2
M. Ann Rhoades
CHAIR
Meetings during fiscal 2021
6
4
4
4
1
Ms. Andrews joined the Technology Committee in September 2021
2
Denotes Audit Committee Financial Expert
3
The Board has appointed Mr. Mansbach as Chair of the Technology Committee effective at the Annual Meeting when Ms. Gambale’s term on the Board ends
The Board has determined that all members of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee qualify as independent directors as defined under the NYSE corporate governance rules.
The charters of the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, and the Technology Committee may be viewed on our website at www.regiscorp.com under “Corporate Governance” on the “Investor Relations” page. The charters are also available in printed form free of charge to any shareholder who requests them by writing to our Corporate Secretary, Regis Corporation, 3701 Wayzata Boulevard, Suite 500, Minneapolis, Minnesota 55416. The charters include information regarding the committees’ composition, purpose, and responsibilities.
Audit Committee
The Audit Committee assists the Board in discharging its oversight responsibility to the shareholders and investment community regarding: (i) the integrity of our financial statements and financial reporting processes; (ii) our internal accounting systems and financial and operational controls; (iii) our audit, accounting, and financial reporting processes; (iv) the engagement, qualifications, and independence of the independent auditor; (v) the performance of our internal audit activities; and (vi) compliance with our ethics programs, including the Code of Ethics, our whistle-blower policy, and legal and regulatory requirements.
In carrying out these duties, the Audit Committee maintains free and open communication among the Board, the independent auditor, and our management. The Audit Committee meets with management and the independent auditor at least quarterly, generally prior to our earnings releases to discuss the results of the independent auditor’s quarterly reviews and fiscal year-end audit.
The Board has determined that all members of the Audit Committee meet the NYSE definitions of independence and financial literacy for Audit Committee members. In addition, the Board has determined that each of Mr. Merriman and Mr. Grissen, both of whom are independent directors, is an audit committee financial expert (“ACFE”) for purposes of the SEC rules and possesses accounting or related financial management expertise required by the NYSE. Members serving on the Audit Committee do not currently serve on the audit committees of more than three public companies.
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Our Board’s Committees
Compensation Committee
The primary responsibilities of the Compensation Committee are to determine and approve, or to make recommendations to the Board with respect to, the compensation and benefits packages of the executives and to consider and to recommend incentive compensation and equity-based compensation plans. The Compensation Committee also reviews director compensation, oversees the evaluation of the Chief Executive Officer, and evaluates on an annual basis its own performance and the adequacy of its charter. Additional information about the responsibilities of the Compensation Committee is provided below in the Compensation Discussion and Analysis section of this Proxy Statement. The Board has determined that all members of the Compensation Committee also meet the NYSE definition of independence applicable to Compensation Committee members.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee discharges the Board’s responsibilities related to general corporate governance, including Board organization, membership, and evaluation. The Nominating and Corporate Governance Committee also monitors Board qualifications and orientation of new directors, manages the annual Chief Executive Officer evaluation, reviews and resolves any director conflicts of interest, and presents qualified individuals for election to the Board. In addition, the Nominating and Corporate Governance Committee annually reviews and further develops the Company’s Corporate Governance Guidelines. It also reviews and approves, if appropriate, any related party transactions in accordance with the Company’s Related Party Transaction Approval Policy. Finally, the Nominating and Corporate Governance Committee oversees the evaluation of the performance of the Board and each standing committee of the Board. For further information regarding our director nomination process, see “Director Nomination Process” above.
Technology Committee
The Technology Committee assists the Board by overseeing the Company’s technology strategy and planning, investments, prioritization, degree and pace of innovation, and related business purposes. The Technology Committee monitors the continuous flow of innovative, differentiated, leadership products in the markets currently served by the Company, and plans for the insertion of new technology into the Company’s long-range strategic plan. The Technology Committee also reviews and recommends disruptive products and technologies and reviews the costs, benefits, risks, and prioritization associated with significant technology investments and deployments. In addition, the Technology Committee reviews the Company’s cybersecurity measures and response plans and the adequacy of processes, tools, facilities, and technology leadership connected with product and technology development.
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How Our Directors Are Paid

How Our Directors Are Paid
We designed our director compensation program to address the time, effort, expertise, and accountability required of active Board membership, with consideration given to industry comparisons of directors’ compensation. Our Board believes that annual compensation for non-employee directors should consist of both cash, to compensate directors for their service on the Board and its committees, and equity, to align the interests of directors and our shareholders. By vesting over time, equity awards also create an incentive for continued service on our Board.
Compensation of our directors is reviewed and determined by the Board on an annual basis. Employee directors do not receive any cash or other compensation for their services as directors. Each of the cash compensation and the equity compensation for non-employee directors who serve during only a portion of a fiscal year is pro-rated. In October 2020, for the third year in a row, the Board reviewed our director compensation and determined to not to increase the compensation program for fiscal 2021, which is described below:
An annual cash retainer of $70,000, which is paid quarterly;
An annual cash retainer of $20,000, $15,000, $12,500 and $20,000 for the chairs of the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, and the Technology Committee, respectively;
An annual grant of restricted stock units valued at $110,000, which vest monthly over a period of one year and pay out when the director leaves the Board, generally granted on the date of the director’s election or re-election at the annual meeting of shareholders; and
An additional payment of $90,000 for our independent Chair of the Board. As described below, Mr. Beltzman receives his independent Chair compensation in the form of cash. Until his term expired at the 2020 Annual Meeting, Mr. David Williams served as independent Chair and then as our independent Lead Director. Mr. Williams received an annual grant of restricted stock units valued at $90,000 payable that vested monthly over a period of one year and paid out when he left the Board, which were granted on the date of our last annual meeting of shareholders.
In October 2015, the Compensation Committee provided that Mr. Beltzman would henceforth receive cash in lieu of a director equity grant due to his beneficial ownership of greater than 20% of our outstanding common stock. Therefore, for his term ending October 26, 2021, Mr. Beltzman was entitled to receive an additional $110,000 in cash in lieu of an annual equity grant. For the same reasons, Mr. Beltzman receives the $90,000 annual payment for serving as independent Chair of the Board in the form of cash paid quarterly. In June 2021, as the result of a pre-determined contractual termination date, Birch Run Capital Advisors, LP ceased to serve as the registered investment advisor to Walnut BRC, LP and Torch BRC, LP., and therefore, no longer has any voting or investment power over the shares of our common stock held by those entities. As a result, Mr. Beltzman no longer beneficially owns greater than 20% of our outstanding common stock and, beginning in fiscal 2022, will receive the same cash and equity compensation as our other non-employee directors described above.
The following table shows, for each of the non-employee directors who served during the fiscal year ended June 30, 2021, information concerning their annual and long-term compensation earned during such fiscal year.
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Fiscal 2021 Director Compensation Table
Fiscal 2021 Director Compensation Table
Director Name
Fees Earned or Paid
in Cash ($)
Stock Awards1
($)
Total($)
Daniel G. Beltzman
146,250
146,250
Virginia Gambale
67,500
109,998
177,496
David J. Grissen
61,875
109,998
171,871
Mark S. Light
52,500
109,998
162,496
Michael Mansbach
3,076
40,685
43,761
Michael J. Merriman
67,500
109,998
177,496
M. Ann Rhoades
52,500
109,998
162,496
David P. Williams2
67,500
199,996
267,496
1
Values expressed represent the aggregate grant date fair value of restricted stock units granted during fiscal 2021, as computed in accordance with FASB ASC Topic 718, based on the closing stock price on the grant date. See Note 13 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for a description of the assumptions used in calculating these amounts. Values end with rounding difference due to full number of shares at fair market value.
2
Mr. Williams did not stand for re-election when his term ended at the 2020 annual meeting of shareholders.
The following table shows, for each of our current non-employee directors, the aggregate number of stock and option awards outstanding as of June 30, 2021:
Director Name
Aggregate Stock Awards
Outstanding as of 06/30/21 (#)
Aggregate Option Awards
Outstanding as of 06/30/21 (#)
Daniel G. Beltzman
17,535
Virginia Gambale
32,770
David J. Grissen
60,792
Mark S. Light
60,792
Michael Mansbach
3,912
Michael J. Merriman
81,186
M. Ann Rhoades
49,296
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APPROVAL OF ADVISORY VOTE
ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
As required by SEC rules, we are providing shareholders with an annual, non-binding advisory vote to approve the executive compensation as disclosed in the Compensation Discussion and Analysis (“CD&A”) section of this Proxy Statement. At the Annual Meeting, shareholders will vote on the following advisory resolution regarding the compensation of our Named Executive Officers as described in this Proxy Statement (commonly referred to as “Say-on-Pay”):
“RESOLVED, that the shareholders of Regis Corporation approve, on an advisory basis, the compensation paid to the Company’s Named Executive Officers as disclosed in the ‘Compensation Discussion and Analysis’ section, and compensation tables and narrative discussion contained in the ‘Executive Compensation’ section in this Proxy Statement.”
Our executive compensation programs are based on our belief that attracting, retaining, and motivating talented executives is critical to the maintenance of our competitive advantage in the haircare industry and to the achievement of the business goals set by the Board. Accordingly, our executive compensation programs are designed to reward executives for achieving our financial and business goals, while also aligning our executives’ interests with those of our shareholders. In fact, our executives are highly encouraged to invest in the long-term success of our Company through our matching program, which promotes an ownership mentality amongst our leaders. We believe that we can best achieve these goals by providing our executives with a mix of compensation elements that incorporate cash and equity, as well as short-term and long-term components, and that are tied to our business goals, all as described in the following CD&A section of this Proxy Statement.
As described in the CD&A section of this Proxy Statement, we believe our fiscal 2021 results continue to yield the pay-for-performance alignment that the Compensation Committee is seeking for our shareholders. Importantly, we completed our brand-centric reorganization, we nearly finalized our conversion to an asset-light, technology-enabled, fully-franchised model with only 276 Company-owned stores remaining, we re-aligned our organizational structure and financial plans to better support our longer-term strategies and growth as an asset-light business, we focused on advancing our technological capabilities by promoting the adoption of OpenSalon® Pro by our eligible franchise-owned salons, and we implemented KPIs and MBOs, along with reporting and review processes, for positions of directors and above for fiscal 2022.
For a comprehensive description of our executive compensation program, philosophy, and objectives, including the specific elements of executive compensation that comprised the program in fiscal 2021, please refer to the CD&A section, as well as the Summary Compensation Table and other executive compensation tables (and accompanying narrative disclosures) that follow the CD&A section, in this Proxy Statement.
This advisory vote will not affect any compensation already paid or awarded to our Named Executive Officers and will not be binding on the Board or the Compensation Committee. However, the Compensation Committee will review and carefully consider the outcome of the vote. If there is a significant number of negative votes, the Compensation Committee will seek to understand the concerns that influenced the vote and consider them in making future executive compensation decisions.
Upon the recommendation of the Compensation Committee of the Board, the Board unanimously recommends a vote FOR the approval of the compensation of our Named Executive Officers.
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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Background
Our Company
At Regis, we exist to unleash the beauty of potential. We have defined four specific values and reciprocal behaviors that will drive our direction and actions:
Foster Trust. Create powerful relationships by acting with empathy and integrity.
Create Community. Connect and collaborate with all your partners. Share the challenges as much as you celebrate the wins.
Be Brave. Dream big and courageously challenge the status quo.
Own It. You are empowered. Take responsibility and own your role and your results.
These values are who we are, they’re why we are. We live by these values every single day via our employees, franchisees, stylists, brands, services, and products. Our brands, which include Supercuts, SmartStyle, Cost Cutters, Roosters, and First Choice Haircutters, are in the business of making people look and feel their best.
As of June 30, 2021, the Company franchised, owned, or held ownership interests in 5,917 salon and beauty school locations in North America and beyond. We have substantially completed our multi-year transformation to an asset-light, technology-enabled, fully-franchised business with only 276 Company-owned salons remaining.
We believe in creating a culture of striving for the best for our approximately 2,500 employees, of whom approximately 500 serve our corporate and franchisor functions and 2,000 serve as field employees or at our remaining Company-owned salons, and extending that culture to our affiliates. We enable hundreds of people to become small business owners through our franchise system. And that culture is also diverse and inclusive; approximately 86% of our U.S.-based employees are women, and 46% of our U.S.-based employees are racial and ethnic minorities.
Our Strategic Transformation
In recent years, we undertook to complete a multi-year strategic transformation to accelerate the growth of our franchise model. In fiscal 2021, we pushed forward to embrace the full potential of this undertaking by completing a brand-centric corporate reorganization and nearly finalizing our strategic transformation into an asset-light, technology-enabled, fully-franchised business. In doing so, we re-aligned our corporate structure, our goals, and our budgeting process to match our asset-light model, we advanced our technological capabilities through franchisees’ adoption of our proprietary point of sale and salon management system, Opensalon® Pro, in 1,977 franchise-owned salon locations, and we furthered our pay for performance culture through the implementation of performance metrics for positions of directors and above for fiscal 2022.
As to the corporate re-alignment process, we developed a Zero-Based Organization (“ZBO”) design to align our corporate structure to those roles and capabilities needed as a brand-centric, fully-franchised business. We engaged an external consultant to help challenge our thinking as we embarked on this process. To begin, we set out a scope of work for each role within our corporate structure, we defined the right size of each business team based on resources and priorities, and then we defined the right corporate structure to succeed as an organization. This process resulted in the current structure of our Company, which has the right people in the right places, doing the right work, and being held accountable based upon the right metrics. And, in parallel with this ZBO process, we developed a Zero-Based Budget (“ZBB”) for all non-people general and administrative (“G&A”) expenses. During this process, each business team leader was required to justify every dollar in their proposed budget submission and the external ZBB consultant team ensured consistency, set policies, and confirmed that the budgeted expenses matched the priorities to be achieved by the Company. These steps ensure that our expenses are aligned with our new asset-light business model and respective priorities. As a result, our financial structure offers better visibility into and control over our expenses and corporate and personal accountability for our budgets.
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
As to the furtherance of our pay for performance culture, we implemented a formal top-down Management by Objectives (“MBO”) process, which set performance metrics for the positions of directors and above for fiscal 2022. First, the Company developed the overall key business objectives of the organization and then cascaded down those objectives to each business team leader. Thereafter, each business team leader and its director-level and above reports developed individual Key Performance Indicators (“KPIs”), or goals used to evaluate the performance of those positions, which directly correspond to the Company’s key business objectives. And, manager-level positions within a business team assumed the same KPIs as their director-level leaders. We then tied those KPIs to future bonuses to ensure that bonuses are only paid out if the Company meets or exceeds its key business objectives for the year.
Our Leaders
As discussed above, we completed a brand-centric corporate reorganization that resulted in changes to our leadership. As part of this reorganization, we completed the transition to, and onboarding of, our President and Chief Executive Officer, Felipe Athayde, upon the retirement of Hugh Sawyer. In addition, and to accelerate our Company’s growth plans, we created a new position, Chief Strategy Officer, and appointed Matthew Doctor to this position. Finally, to solidify our brand-centric reorganization, we appointed Mr. Shawn Thompson to the position of President of Supercuts and Jim Lain to the position of President of SmartStyle and Portfolio Brands, a natural transition from his former role as Chief Operating Officer. This shift resulted in the departure of certain executive officers, including Eric Bakken. James Townsend also departed at the end of the fiscal year in connection with his family’s relocation to the United Kingdom for personal reasons.
The CD&A section of this Proxy Statement will provide you with information concerning the basic objectives, principles, decisions, material elements, processes, amounts, and rationale underlying the compensation of our Named Executive Officers (“NEOs”). For fiscal 2021, our NEOs are:
Name
Title
Period of Employment
Felipe A. Athayde
President and Chief Executive Officer
October 2020 - present
Kersten D. Zupfer
Executive Vice President and Chief Financial Officer
February 2007 - present
Chad Kapadia
Executive Vice President and Chief Technology Officer
June 2018 - present
Amanda P. Rusin
Executive Vice President, General Counsel, and Corporate Secretary
January 2018 - present
James A. Townsend
Former Executive Vice President and Chief Marketing Officer
April 2019 - June 2021
Hugh E. Sawyer
Former Chair of the Board, President and Chief Executive Officer
April 2017 - October 2020
Eric A. Bakken
Former Executive Vice President and President - Franchise
January 1994 - December 2020
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Our Executive Pay Plan
Our fiscal 2021 compensation plan includes four main components: base salary, short-term incentives, a matching share program, and long-term incentives.
The cash elements of our fiscal 2021 compensation plan include:
Element
Form
Metric
Performance Period
Objective
Base Salary
Cash
Fixed
N/A
Provide a base level of compensation for executive talent.
Annual Incentive (“AIC” or “Bonus”)
Cash (unless executive elects to purchase equity with cash payout)
Transition to Fully Franchised Model: Vendition and Salon Closures (30%)
1 year
Motivate executives to meet and exceed objectives aligned with our annual strategic plan; executives may elect to contribute up to half of their earned fiscal 2021 Bonus to purchase shares of the Company’s common stock and have such purchase matched at a rate of up to 200%, dependent on the executive’s underlying contribution under our matching share program.
Franchise Adoption of Opensalon® Pro (25%)
Transition the Organization and G&A Structure to the “Future State” Structure and Budget (25%)
Launch KPI and MBO Process to drive results and performance (20%)
The equity elements of our compensation plan include our matching share program and our long-term incentive plan. Under our matching share program, we offer to our executives the opportunity to contribute up to 50% of their annual non-equity cash incentive awards received to purchase shares of our common stock, which are matched with a grant of restricted stock units (“RSUs”) equal to a value of up to 200% of the contribution for a 50% contribution (100% for a 25% contribution). Matching RSUs granted in fiscal 2021 were subject to five-year cliff vesting.
Under our long-term incentive plan in effect for fiscal 2019 to fiscal 2021, we offered to our executives front-loaded, five-year long-term incentive awards that deliver 75% of the long-term value in the form of performance stock units (“PSUs”) tied to the achievement of three-year stock price goals with additional two-year service vesting requirements and the remaining 25% in the form of RSUs with cliff vesting after three years.
Information about changes to our matching share program and long-term incentive plans that were approved subsequent to fiscal 2021 is described below.
Our 2020 Say-on-Pay Vote Result
In 2018, we introduced a new executive compensation program, including the matching share program and the front-loaded long-term incentive plan described above. Members of our Board and Company management engaged with shareholders to understand their views on this new program. We believe that shareholders understood our ownership-based, pay for performance philosophy, which resulted in a high level of support for our say-on-pay vote for fiscal 2020, for which shareholders holding 98.7% of the shares voted on the proposal voted in favor of our executive compensation.
How We Design Executive Pay
Compensation Philosophy
Our executive compensation programs are based on our belief that attracting, retaining, and motivating talented executives is critical to the maintenance of our competitive advantage in the haircare industry and to the achievement of the business goals set by the Board. Accordingly, our executive compensation programs are designed to reward executives for achieving our financial and business goals, while also aligning our executives’ interests with those of our shareholders.
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee has adopted a compensation philosophy that centers on the following guiding principles:
Generally target total direct compensation at market rates, with the following considerations:
Achieving our desired competitive position will occur over time and will consider not only the total program value, but also the reward vehicles that are used (i.e., performance-based incentives versus fixed benefits).
Moving toward the market median will consider our size and performance relative to peers (noted below) to ensure that targeted compensation is appropriately calibrated and that realizable compensation is consistent with absolute and relative performance.
Align with shareholder interests by designing a compensation portfolio that pays for performance.
For fiscal 2021, the Compensation Committee set challenging annual incentive performance expectations related to our conversion to a fully franchised model, resetting our organizational structure and financial plans to better support our longer-term strategies and growth, promoting the adoption of Opensalon® Pro by our eligible franchise-owned salons, and implementing fiscal 2022 KPIs and MBOs, along with reporting and review processes, for positions of directors and above.
The Compensation Committee also recognizes the need to remain flexible to address particular circumstances as they arise so that we can remain competitive in retaining talent and to incentivize executives to achieve our current strategic objectives.
Review of External Market Data
The Compensation Committee considers compensation in the external market as one factor in its executive compensation decisions, examining both relevant broad retail industry data and data from a group of companies it considers its peers. At the beginning of fiscal 2021, with the assistance of its independent compensation consultant, Pay Governance LLC (“Pay Governance”), the Compensation Committee selected a new set of peer companies to be used for compensation benchmarking purposes. That peer group includes the following companies:
Biglari Holdings
e.l.f. Beauty
Nature’s Sunshine
Carriage Services
El Pollo Loco Holdings
OneSpa World
Del Taco Restaurants
Franchise Group
Ruth’s Hospitality
Denny’s Corporation
Jack in the Box
Select Interior Concepts
Dine Brands Global, Inc.
LifeVantage
StoneMor
The Compensation Committee identified these peers through a rigorous process designed to identify companies that are aligned with Regis considering dimensions including industry adjacency, business model, company market capitalization, and revenue. It selected this peer group in the belief that it represents a balanced set of comparator companies, with Regis near the peer group median on key metrics. At the time the peer group was selected, Regis was positioned near the 62nd percentile in terms of revenue and near the 51st percentile in terms of market capitalization. As of the end of fiscal 2021, Regis remained near the median of the peer group in terms of revenue, but fell within the bottom quartile in terms of market capitalization.
In fiscal 2021, we did not make routine changes to base salaries or annual cash incentive opportunities for our NEOs. Accordingly, we did not benchmark our fiscal 2021 executive compensation against our peer group or the broader market. We view peer benchmarking as a valuable tool and plan to reassess its use once our strategic transformation is complete and our peer group is similarly revised to reflect our revised business model. In fiscal 2021, the Compensation Committee approved compensation levels for our newly hired executives, including Mr. Athayde in connection with his appointment as our President and Chief Executive Officer, as described below.
Role of the Compensation Committee
The Compensation Committee is charged with developing and administering the base salary, annual and long-term incentives, and benefit programs for our executives. Our annual cash incentive program is typically referred to as our “bonus” program, and the bonus payments are generally reported as “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table of this Proxy Statement. In developing our compensation programs, a basic objective for the Compensation Committee was that the total compensation awarded to the NEOs be fair, reasonable, and competitive in relation to the median compensation for similar positions within our peer group, as identified above, as well as in the broader retail market. This objective is consistent with our executive pay philosophy.
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
The primary purpose of the Compensation Committee is to discharge the responsibilities of the Board relating to the compensation of our executives. Accordingly, the primary duties and responsibilities of the Compensation Committee are:
to determine and approve, or make recommendations to the Board with respect to, the compensation of all executives; and
to consider and recommend the structure of, and changes to, our incentive compensation, equity-based plans, and benefit programs.
Role of Executive Officers in Compensation Decisions
Our President and Chief Executive Officer furnishes his input to the Compensation Committee regarding the compensation of the Company’s executives, including the other NEOs, and he may be present during deliberations and voting on the other executives’ compensation. However, our President and Chief Executive Officer is not present during deliberations and voting regarding his own compensation or during other executive sessions of the Compensation Committee.
Role of the Independent Compensation Consultant
Since fiscal 2018, the Compensation Committee has used Pay Governance as an independent consulting firm to provide executive compensation consulting services to the Compensation Committee. The Compensation Committee assessed Pay Governance’s independence pursuant to applicable SEC rules and concluded that no conflict of interest exists that would prevent Pay Governance from independently representing the Compensation Committee.
Since fiscal 2018, Pay Governance worked with the Compensation Committee and Company management to establish incentive plan designs, supported the Compensation Committee with shareholder engagement efforts, and assisted the Compensation Committee on other activities in support of its responsibilities as set forth in its charter. The Chair of the Compensation Committee worked directly with Pay Governance to determine the scope of the work needed to assist the Compensation Committee in its decision-making processes. Pay Governance worked with management, at the direction of the Compensation Committee, to fully understand the future business direction and the historical, current, and desired future direction of our pay policies and practices, as well as to facilitate the development of our compensation strategies, including the approach to determining compensation levels.
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Elements of the Executive Compensation
Program in Fiscal 2021
Base Salary Decisions for Fiscal 2021
The Compensation Committee did not modify our NEOs’ base salaries for fiscal 2021, which were consistent with fiscal 2020 base salaries. The base salary for Mr. Athayde, our new President and Chief Executive Officer, was determined with the assistance of an external pay consultant, Pay Governance LLC, and included a review of CEO compensation levels and trends across similarly situated companies, as well as negotiations between the Company and Mr. Athayde, as described in greater detail below.
As a result, base salaries for our NEOs for fiscal 2021 were as follows:
Name
Base Salary at June 30, 2020
(Annualized)
($)
Base Salary at June 30, 2021
(or Date of Termination, if earlier)
(Annualized)
($)
Increase/(Decrease)
(%)
Felipe A. Athayde
700,000
Kersten D. Zupfer
425,000
425,000
Chad Kapadia
600,000
600,000
Amanda P. Rusin
350,000
350,000
James A. Townsend
495,000
495,000
Hugh E. Sawyer
950,000
950,000
Eric A. Bakken
495,000
495,000
Annual Incentive Decisions for Fiscal 2021
The Compensation Committee determines the annual incentive compensation (“AIC” or “bonus”) payouts each year in accordance with our Short Term Incentive Plan (“Short Term Plan”).
The Compensation Committee annually selects bonus metrics for the Short Term Plan that align executives’ incentives with our strategic objectives. The goals for our fiscal 2021 annual incentive plan were aligned with our top priorities for our business for the year: converting to a fully franchised model, aligning our organizational structure and financial plans to better support this model, promoting the adoption of Opensalon® Pro by our franchisees, and transitioning our organization to a focus on KPIs and MBOs for fiscal 2022. Further, the Compensation Committee applied a liquidity funding gate to the Short Term Plan, whereby if the Company failed to meet a specific liquidity goal, then there would be no payout of any bonus amounts.
Name
Target AIC (as a Percentage (%) of Salary)
Target AIC ($)
Felipe A. Athayde
125
656,2501
Kersten D. Zupfer
60
255,000
Chad Kapadia
60
360,000
Amanda P. Rusin
702
215,833
James A. Townsend
60
297,0003
Hugh E. Sawyer
60
570,000
Eric A. Bakken
75
371,2504
1
Mr. Athayde’s Target AIC is prorated from the commencement of his employment in October 2020 through the end of the fiscal year. The Target AIC reported above reflects the pro-rated Target AIC amount.
2
Ms. Rusin’s Target AIC Percentage was 50% until November 30, 2020 and then increased to 70% thereafter, to align with her increased level of responsibilities. The Target AIC reported above reflects this blended rate.
3
Following his resignation on the last day of our fiscal year, Mr. Townsend remained eligible to receive his annual bonus for fiscal 2021, to the extent earned, to be paid at the same time as bonus payments to the Company’s other executive officers.
4
Pursuant to the terms of his separation agreement, Mr. Bakken was entitled to a prorated payout of his Target AIC, which resulted in a payment to him equal to $185,625.
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Performance Measure
Weighting
Performance Goal1
Award Multiplier
Transition to Fully Franchised Model: Venditions and Closures
30%
Maximum
Company-Owned Salon Count = 0 by end of fiscal 2021 (which does not exclude any Company-owned SmartStyle salons)
200%
Threshold/Target
Company-Owned Salon Count = 0 by end of fiscal 2021 (which may exclude up to 150 SmartStyle salons that remain Company-owned)
100%
Franchise Adoption of Opensalon® Pro
25%
Maximum
100% of Franchise Salons
200%
Target
50% of Franchise Salons
100%
Threshold
35% of Franchise Salons
50%
Transition the Organization and G&A Structure to the “Future State” Structure and Budget
25%
Maximum
Q4 FY21 Total Company G&A = $22M
200%
Target
Q4 FY21 Total Company G&A = $26.9M
100%
Threshold
Implement Zero-Based Budgeting (“ZBB”) and Zero-Based Organization (“ZBO”) structure processes by May 2021
75%
Launch KPI/MBO Process to Drive Results and Performance
20%
Maximum
All employees will have KPIs and MBOs and reporting and review processes in place by the beginning of FY22
200%
Threshold/Target
Directors and above will have KPIs and MBOs and reporting and review processes in place by the beginning of FY22
100%
1
If the measured amount achieved is between two performance goals, the award multiplier will be determined through straight line interpolation, with the exception of the fourth goal (Launch KPI/MBO Process to Drive Results and Performance).
In setting the metrics for fiscal 2021, the Compensation Committee:
Defined achievement of the Transition to Fully Franchised Model: Venditions and Closures metric based on gross number of Company-owned salons operating at the end of fiscal 2021; and
Defined achievement of the Franchise Adoption of Opensalon® Pro metric based upon total percentage of eligible franchise-owned salons that have adopted Opensalon® Pro by the end of fiscal 2021. Adoption means (a) actual utilization of Opensalon® Pro and/or (b) signed software agreements during fiscal 2021 for the utilization/implementation of Opensalon® Pro by July 1, 2022.
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
In August 2021, the Compensation Committee evaluated performance against the metrics. As an initial matter, the Compensation Committee determined that the Company achieved $54.2 million as compared to the liquidity funding threshold of $38.7 million, which is measured as the gap between total liquidity and debt covenant requirements, such that bonus amounts would be paid in accordance with the other metrics. The Compensation Committee then considered each performance measure and determined the total target AIC payout percentages as set forth in the following table.
Performance Measure
Actual Result
Achievement Metric
Compensation Committee Comments and Discretion
Payout
Percentage
of Total
Target AIC
(%)
Transition to Fully Franchised Model: Venditions and Closures
Company-Owned Salon Count = 276
33% of threshold/target, yielding payout at 0% of total target AIC
Considered the unique challenges associated with venditioning salons in the midst of the COVID-19 pandemic and elected to recognize key accomplishments, including significant progress made in accelerating venditions of 1,352 of the 1,632 eligible salons, including negotiating lease buy-outs for SmartStyle locations, which resulted in significant EBITDA savings annualized over multiple years.

In recognition of these accomplishments, and the net economic benefit to continue operating the Company-Owned SmartStyle salons as compared to other alternatives, the Compensation Committee applied positive discretion to award a payout equal to one-third of the target for this metric, resulting in a payment equal to 9.9% of total target AIC.
9.9
Franchise Adoption of Opensalon® Pro
Opensalon® Pro adoption by 1,977 out of 5,421 (36%) eligible franchise-owned salons1
55% of target, yielding payout at 13.7% of total target AIC
13.7
Transition the Organization and G&A Structure to the “Future State” Structure and Budget
Implement ZBB and ZBO structure processes

Q4 Total Company G&A of $22.8 million
184% of target, yielding payout at 45.9% of total target AIC
45.9
Launch KPI/MBO Process to Drive Results and Performance
Directors and above have KPIs and MBOs and reporting and review processes in place
100% of threshold/target, yielding payout at 20% of total target AIC
20
1
Total number of eligible salons (5,421) is a conservative number; there are only 4,848 eligible salons because our Canadian salons cannot migrate to Opensalon® Pro.
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Each executive received a payout equal to 89.5% of his or her total target AIC. In each case, the Compensation Committee’s determinations were subject to completion of the audit of the Company’s annual financial statements. Accordingly, the resulting fiscal 2021 total AIC payouts are listed in the table to the right for the executives who were eligible for such payments under the Short Term Plan. Upon Mr. Sawyer’s retirement and Mr. Bakken’s separation, they each ceased to be eligible for a payout under the Short Term Plan; however, see the discussion below regarding payments made to Mr. Bakken in connection with his separation. The calculated portion of the AIC payout related to the achievement metrics set at the beginning of the fiscal year is reported in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column.
NEO
Calculated AIC %
Total AIC Payout ($)
Felipe A. Athayde
89.5
587,344
Kersten D. Zupfer
89.5
228,225
Chad Kapadia
89.5
322,200
Amanda P. Rusin
89.5
193,171
James A. Townsend
89.5
265,815
PSUs with 2019-2021 Performance Period
In fiscal 2019, we granted PSUs to certain of our executives as part of our executive pay plan. These PSUs had a three-year performance period with performance assessed as of July 1, 2021, which required the Company’s achievement of a three-year stock price performance goal, after which award recipients would be required to wait an additional two years (until the fifth anniversary of the grant) to achieve vesting. In August 2021, the Compensation Committee determined that the performance goal had not been achieved, and therefore, the PSUs were not earned.
SPMP and Matching RSU Grants in Fiscal 2021
In fiscal 2019, we adopted our Stock Purchase and Matching RSU Program (“SPMP”), under which our executives and other eligible employee participants are able to elect to contribute up to half of their earned annual bonus under the Short Term Plan, net of normalized tax withholding, to purchase shares of our common stock and the Company will provide a matching grant of RSUs with a value equal to up to 200% of their contribution to the plan (before deducting any related or normalized tax withholding). These RSUs are subject to a five-year cliff vesting condition and participants are also required to hold their underlying purchased shares for the same five-year period.
Beginning with fiscal 2019 earned bonuses, eligible executives could elect to contribute 25% of their earned bonus, net of normalized tax withholding, to purchase shares and receive a 100% match on their contribution (before deducting any related or normalized tax withholding); and eligible executives could elect to contribute 50% of their earned bonuses, net of normalized tax withholding, to share purchases and receive a 200% match on their contribution (before deducting any related or normalized tax withholding). Ms. Zupfer, Ms. Rusin, and Mr. Townsend participated in the SPMP during fiscal 2021, by each contributing 50% of their fiscal 2020 bonus payout to the purchase of shares and receiving a matching grant of RSUs equal to 200% of their contribution.
Name
% of Fiscal 2020 Bonus Payout Contributed
Kersten D. Zupfer
50
Amanda P. Rusin
50
James A. Townsend
50
Other Compensatory Decisions Applicable to Fiscal 2021
RSU Grant to Incentivize Ms. Zupfer and Ms. Rusin’s Retention and Leadership
On February 8, 2021, after considering each of Ms. Zupfer and Ms. Rusin’s extensive contributions to the Company during the global COVID-19 pandemic, the Compensation Committee granted to each of Ms. Zupfer and Ms. Rusin an award of 6,307 RSUs, valued at $66,665, to incentivize each of them to remain with the Company and to continue their leadership positions with the Company. The awards will cliff vest on the first anniversary of the grant date.
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Compensation Arrangement with Mr. Athayde
On September 4, 2020, we extended an offer of employment to Mr. Athayde for the position of President and CEO of the Company. Before determining the final compensation arrangement to be offered, the Compensation Committee and the Board conferred with Pay Governance, reviewed CEO compensation levels and trends across similarly situated companies using SEC filings and publicly available data from relevant published survey sources, reviewed compensation levels for first-time CEOs, considered other potential opportunities available in the market, and engaged in negotiations with Mr. Athayde. Thereafter, Compensation Committee unanimously agreed upon the compensation package to be offered to Mr. Athayde. The terms of Mr. Athayde’s compensation arrangement, including his sign-on equity awards, are described in more detail below.
Separation Arrangement with Mr. Sawyer
On September 3, 2020, in connection with our transition to a new President and CEO, we entered into a Transition Services and Release Agreement with Mr. Sawyer. Before determining the final terms of this separation arrangement, the Compensation Committee and the Board evaluated the terms of Mr. Sawyer’s employment agreement and his contributions to the Company during his tenure as President and CEO and engaged in negotiations with Mr. Sawyer related to his continued support of the Company during the transition to a new President and CEO. Thereafter, the Compensation Committee unanimously agreed upon the terms of Mr. Sawyer’s separation arrangement, including the compensation for Mr. Sawyer’s consulting services to the Company following his retirement.
Other Outstanding Awards
From time to time, the Compensation Committee may also make equity grants in other circumstances, such as recruiting new executive talent, upon the promotion of an executive, and to retain key individuals. During the past three fiscal years, we made a significant number of new hires to our executive team and granted these individuals sign-on equity awards as an inducement. The awards described below were granted prior to the most recently completed fiscal year and remained outstanding as of June 30, 2021 and are also reflected in the Outstanding Equity Awards table and Option Exercises and Stock Vested table below, as applicable.
Promotion Equity Awards to Ms. Zupfer in November 2019, that were designed to align her level of equity incentives with her new position, with such awards having the same terms as the award granted to NEOs in fiscal 2021 in connection with the first year of our new pay plan.
In addition, certain NEOs have outstanding equity awards that were granted prior to the adoption of our current executive pay plan in fiscal 2019.
PSUs with 2020-2022 Performance Period
In fiscal 2019, we granted PSUs to Ms. Zupfer and Mr. Townsend, which have a three-year performance period with performance accessed as of November 11, 2022, and April 8, 2022, respectively. The fiscal 2019 PSUs performance measure was end-of-period share price, meaning the volume-weighted average closing price of the Company’s common stock across the 50 trading days that end November 11, 2022, and April 8, 2022, respectively. For Ms. Zupfer, the end-of-period share price must equal or exceed $25.82, and for Mr. Townsend, the end-of-period share price must equal or exceed $27.57. As to Ms. Zupfer, after conclusion of the performance period, the number of PSUs earned will vest immediately upon certification by the Compensation Committee. In connection with Mr. Townsend’s resignation from the Company, he forfeited his PSUs.
Benefits
Consistent with our current compensation philosophy, we provide minimal benefits, and these benefits align with the market median and with current market practices. The benefits we provided to our NEOs in fiscal 2021 are summarized in the footnotes to the Summary Compensation Table in this Proxy Statement or are otherwise reported in the accompanying tables, including footnotes. Current benefits for our NEOs include core benefits available to all full-time employees (e.g., coverage for medical, dental, prescription drugs, basic life insurance, and long-term disability coverage).
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Key Compensatory Decisions Applicable to Fiscal 2022
Subsequent to fiscal 2021, the Compensation Committee engaged in its annual review of executive compensation for purposes of considering compensation for fiscal 2022. Key changes to the compensation program for fiscal 2022 include:
Expansion and Modification of SPMP—The Compensation Committee amended the SPMP to, among other things, expand participation in the SPMP to all director-level and above employees, with varying matching percentage opportunities based on employee levels. Commencing with matching RSUs granted for participation related to fiscal 2021 bonus payouts, matching RSUs will now vest as to 20%, 20%, and 60% of the RSUs on the first, second, and third anniversaries of the grant date, provide for pro-rata acceleration of vesting for qualifying terminations, and align the forfeiture provision for selling related shares to the revised vesting schedule. The Compensation Committee approved the expansion of the SPMP, which will replace other annual equity awards to non-executive employees, to provide the same opportunity for a broader group of Company leaders to participate in the Company’s ownership-based compensation program.
Adoption of Fiscal 2022 Long Term Incentive Plan Program—The Compensation Committee approved a new long-term equity incentive program for fiscal 2022. As discussed above, our reorganization contributed to significant changes in our leadership team following Mr. Athayde’s appointment less than one year ago. To align the reconstituted leadership team under our new CEO, the Committee determined it was appropriate to award long term equity incentive awards for the executive officers for fiscal 2022. These one-time awards were delivered half in the form of stock options and half in the form of cash-settled stock appreciation rights, compensating leaders only to the extent our shareholders benefit through stock price appreciation. The awards will vest on the first three annual anniversaries of the date of grant in increments of 20%, 20% and 60% of the shares, respectively. Consistent with past practice, the Committee expects these awards, coupled with the continuation of the SPMP, to provide the desired alignment of the leadership team with shareholders’ interests.
These changes described above will be discussed in more detail and reflected in the compensation tables in next year’s proxy statement.
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Governance Policies and Additional
Compensation-Related Items
We believe in holding ourselves to a high standard of ethics, transparency, and accountability. Accordingly, we have adopted corporate governance practices and policies that, in many cases, go beyond SEC and NYSE requirements to reflect emerging best practices.
Compensation Practice
Regis Policy
Independent Compensation
Committee
Our Compensation Committee is composed solely of directors who are independent under the standards of the SEC and the NYSE, including the higher standards applicable to Compensation Committee members.
Clawback Policy
Our “clawback” policy permits us to recover certain equity as well as cash incentive payments from executive officers whose misconduct or negligence resulted in a significant financial restatement.
Limited Severance Benefits
and Perks
We have benchmarked and implemented market severance terms (generally, base salary plus bonus, or two times base plus bonus after a change in control), while retaining our “double trigger” structure.
No Tax Gross-Ups
We do not provide tax gross-ups on perquisites or “golden parachute” payments.
Frozen Supplemental
Retirement Benefit Plan
We froze the benefits under our supplemental retirement benefit plan as of June 30, 2012, as well as certain executive life insurance benefits. Mr. Bakken is the only NEO who so qualifies, and following the termination of his employment on December 31, 2020, there are no further participants.
Stock Ownership Guidelines
We have meaningful stock ownership guidelines for our executives, discussed in more detail below.
Hedging Restrictions/
Prohibitions
Our insider trading policy prohibits our directors, officers, other employees, and designees of the foregoing from purchasing financial instruments, including prepaid variable forward contracts, equity swaps, collars and exchange funds, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our common stock, including shares held directly or indirectly (however, our policy does not prohibit general portfolio diversification transactions).
Pledging Restrictions/
Prohibitions
Our insider trading policy prohibits our employees, officers, and directors from holding our stock in a margin account or pledging it as collateral for a loan, except in the limited circumstance that an individual has demonstrated financial capacity to repay the loan without resort to the pledged securities and obtains approval from our General Counsel.
Independent Compensation
Consultant
Pay Governance has advised our independent Compensation Committee since fiscal 2018.
Risk Assessment
We consider risk in our compensation programs and periodically conduct a risk assessment, which is led by our independent compensation consultant.
Annual Say-on-Pay Vote
Every year, we offer our shareholders the opportunity to cast an advisory vote on our executive compensation.
No Repricing or Exchange of
Underwater Options/SARs
Our plan prohibits the repricing or exchange of underwater stock options and stock appreciation rights without shareholder approval.
Stock Ownership by Our Continuing Named Executive Officers
The Board believes that each of our executives who has reached the level of Senior Vice President or above should be a shareholder and should have a significant financial stake in the Company. Accordingly, the Compensation Committee adopted stock ownership requirements, which are reflected in our Corporate Governance Guidelines, requiring each executive to hold our common stock having a fair market value equal to a multiple of their base salary, as set forth below:
Chief Executive Officer—3x annual base salary
Executive Vice President—2x annual base salary
Senior Vice President—1x annual base salary
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
The current stock ownership requirements were established in April 2013. All shares beneficially owned by an executive are included in the calculation, except that shares subject to performance-based vesting conditions, shares subject to unexercised stock options, and SARs are not included. For purposes of the stock ownership calculation, shares are valued at the greater of (i) the average closing price of one share of the Company’s common stock during the most recent fiscal year and (ii) the closing price on the last day of the most recent fiscal year.
In addition, our Corporate Governance Guidelines require executives to retain at least 75% of the shares they received from equity compensation awards, net of shares withheld or tendered to satisfy withholding taxes, until the stock ownership requirement is satisfied. Accordingly, Ms. Zupfer and Mr. Kapadia remain subject to this holding requirement.
The Nominating and Corporate Governance Committee is responsible for measuring and monitoring compliance with these guidelines.
 
Stock Ownership Guideline
Current Ownership Level1
Felipe A. Athayde
3x
4.8x
Kersten D. Zupfer
2x
1.1x
Chad Kapadia
2x
1.0x
Amanda P. Rusin
2x
2.0x
1
As of the end of fiscal 2021.
Employment Agreements and Post-Employment Compensation
Three of the NEOs named in this Proxy Statement, Ms. Zupfer, Mr. Sawyer, and Mr. Bakken, are or were parties to written employment agreements with the Company. Pursuant to their employment agreements, these NEOs are entitled to certain compensation and other benefits if their employment terminates due to certain articulated reasons (including in connection with a change in control), as described below under “Summary of Executive Agreements.” Further, these employment agreements contain covenants not to compete or solicit, as well as confidentiality provisions, which the Compensation Committee considers especially valuable in the event of an executive’s termination of employment. These employment agreements also provide for post-termination payments, which are conditioned upon signing, and not rescinding, a release of claims and complying with the restrictive covenants in the employment agreement.
The Compensation Committee and the Board recognize the importance of avoiding the distraction and loss of key management personnel that may occur in connection with any rumored or actual change in control of the Company. Accordingly, the Compensation Committee and Board have structured change in control provisions to incentivize executives to remain employed by the Company while a transaction is under consideration or pending, and to not favor one transaction structure over another merely because of the impact on the executive’s compensation. These provisions are discussed below in the section captioned “Summary of Executive Agreements.”
Our NEOs who are not parties to employment agreements (including Mr. Athayde) are entitled to severance benefits under a senior executive severance policy adopted by the Compensation Committee in May 2020. Under this severance policy, Senior Vice Presidents and above who are not parties to employment agreements are entitled to receive certain severance benefits if their employment is terminated without cause. To receive severance benefits under this policy, an eligible executive must sign, and not rescind, a release of claims and must comply with one-year non-competition and non-solicitation covenants. The terms of this policy are discussed in the section captioned “Senior Executive Severance Policy.”
While not subject to an employment agreement, we entered into a letter agreement with Mr. Athayde that sets forth the terms of his employment with the Company. The terms of the letter agreement with Mr. Athayde include, among others, establishing his annual base salary and his annual target payout for his annual cash bonus. The letter agreement also sets forth certain negotiated terms related to Mr. Athayde leaving his prior employment to accept this position at the Company, including a signing bonus (which is subject to pro-rata repayment if he is terminated under certain circumstances prior to the first anniversary of the date he commenced employment) and sign-on equity awards, as well as providing for reimbursement of his relocation expenses, including temporary housing, for up to 12 months, up to an aggregate amount of $150,000. As a condition to his employment with the Company, Mr. Athayde entered into the Company’s customary restrictive covenants agreement, including non-compete, non-disclosure, non-solicitation, and non-hire covenants. The terms of the letter agreement are discussed in the section captioned “Compensatory Arrangements with Mr. Athayde.”
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EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
Deductibility of Executive Compensation
Code Section 162(m) precludes the Company from taking a federal income tax deduction for compensation paid in excess of $1 million to our “covered employees” (which as of fiscal 2021, includes the President and Chief Executive Officer, Chief Financial Officer, our three other most highly compensated executives, and certain former employees identified as a covered employee in fiscal 2018 or any subsequent year).
The Compensation Committee continues to believe that a significant portion of our executives’ compensation should be tied to the Company’s performance and that shareholder interests are best served if the Company’s discretion and flexibility in structuring and awarding compensation is not restricted, even though some compensation awards may have resulted in the past, and are expected to result in the future, in non-deductible compensation expenses to the Company. The Compensation Committee’s ability to continue to provide a competitive compensation package to attract, motivate, and retain the Company’s most senior executives is considered critical to the Company’s success and to advancing the interests of its shareholders.
Regulatory Considerations
The Compensation Committee considered (i) the accounting treatment of various types of equity-based compensation under Accounting Standards Codification (“ASC”) Topic 718 and (ii) the non-deductibility of excess parachute tax payments under Code Section 280G (and the related excise tax imposed on covered employees under Code Section 4999) in its design of executive compensation programs. In addition, the Compensation Committee considered other tax and accounting provisions in developing the compensation programs for our NEOs. These considerations included the special rules applicable to non-qualified deferred compensation arrangements under Code Section 409A, as well as the overall income tax rules applicable to various forms of compensation. While the Compensation Committee strove to compensate our NEOs in a manner that produced favorable tax and accounting treatment, its main objective was to develop fair and equitable compensation arrangements that appropriately motivate, reward, and retain those executives.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with the management of the Company. Based on its review and related discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Daniel G. Beltzman
Virginia Gambale
Mark S. Light
Michael J. Merriman
M. Ann Rhoades, Chair
Members of the Compensation Committee
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EXECUTIVE COMPENSATION TABLES
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
The following table shows each individual who served as our principal executive officer in fiscal 2021, the individual who served as our principal financial officer in fiscal 2021, the three other most highly compensated executive officers in fiscal 2021 who were still serving as such on June 30, 2021, and one additional individual who served as an executive officer during part of fiscal 2021 but who was not serving as an executive officer at the end fiscal 2021 and whose total compensation for the year would have made the individual one of the three most highly compensated executives officers for the fiscal 2021 (together, referred to as the “Named Executive Officers” or “NEOs”), information concerning compensation earned for services in all capacities during each of the fiscal years ended June 30, 2021, 2020, and 2019.
Name and
Principal Position
Fiscal
Year
Salary1
($)
Bonus2
($)
Stock
Awards3
($)
Option
Awards4
($)
Non-Equity
Incentive
Plan
Compensation5
($)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings6
($)
All Other
Compensation7
($)
Total
($)
Felipe A. Athayde
President and Chief
Executive Officer8
2021
520,064
2,500,000
2,500,000
4,218,453
587,344
169,118
10,494,979
Kersten D. Zupfer
Executive Vice President
and Chief Financial Officer9
2021
457,000
300,721
228,225
270
986,216
2020
393,097
43,750
553,484
190,312
430
1,181,073
Chad Kapadia
Executive Vice President
and Chief Technology Officer
2021
600,000
322,200
36,677
958,877
2020
558,596
69,900
599,988
304,065
18,293
1,550,842
2019
495,000
42,768
1,262,125
204,930
13,040
2,017,863
Amanda P. Rusin
Executive Vice
President, General
Counsel and Chief
Development Officer10
2021
382,000
251,680
193,171
42,163
869,014
James A. Townsend
Former Executive
Vice President and
Chief Marketing Officer11
2021
495,000
317,785
265,815
50,321
1,128,921
2020
475,279
59,400
258,390
21,728
814,797
Hugh E. Sawyer
Former President and
Chief Executive Officer12
2021
244,808
570,000
1,255,372
2,070,180
2020
861,821
28,040
889,861
2019
950,000
145,802
6,588,878
715,431
26,946
8,427,057
Eric A. Bakken
Former Executive
Vice President and
President - Franchise13
2021
263,500
106,076
445,484
815,060
2020
507,279
74,250
322,988
196,421
21,608
1,122,546
2019
527,000
66,825
1,313,472
300,713
151,934
33,812
2,393,756
1
As to only Ms. Zupfer and Ms. Rusin, this value includes amounts provided in the form of a modest perquisite allowance of approximately $32,000 per NEO, and as to Mr. Bakken, this value includes amounts provided in the form of a modest perquisite allowance of approximately $16,000, which primarily covers an automobile allowance. The entire allowance is paid to the NEOs regardless of whether they spend the entire amount on automobile expenses and, therefore, is reported as base salary; however, the allowance amount is not included as base salary for purposes of determining other compensation and benefits amounts.
2
The amounts for fiscal 2020 and 2019 represent the portion of AIC awards attributed to individual performance goals as the Committee determined that each NEO would receive a payout equal to at least 100% of his or her individual performance metric. The amount for fiscal 2021 for Mr. Athayde represents a sign-on payment in connection with the commencement of his employment.
3
Values expressed represent the aggregate grant date fair value of stock or option awards granted in each fiscal year, as computed in accordance with FASB ASC Topic 718, based on the closing stock price on the grant date for RSUs and PSUs with performance metrics other than market conditions, the Monte Carlo model for PSUs with market conditions and the Black-Scholes model for SARs. See Note 13 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for a description of the assumptions used in calculating these amounts.
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EXECUTIVE COMPENSATION TABLES
The grant date fair values for stock awards for the fiscal year ended June 30, 2021 include:
RSUs to acquire 358,680 shares that were granted to Mr. Athayde, which vest on the first anniversary of Mr. Athayde’s commencement of employment.
Matching RSUs that were granted in December 2020: Ms. Zupfer—$234,056; Ms. Rusin—$185,015; and Mr. Townsend—$317,785.
RSUs to acquire 6,307 shares that were granted in February 2021 as an incentive related to leadership retention to Ms. Zupfer and Ms. Rusin—$66,665 each.
The grant date fair values for stock awards for the fiscal year ended June 30, 2020 include:
Matching RSUs that were granted in August 2019 to Ms. Zupfer—$28,508.
RSUs to acquire 7,564 shares that were granted to Ms. Zupfer in November 2019 in connection with her promotion to CFO—$131,235; and PSUs to acquire 22,694 shares that were granted to Ms. Zupfer in November 2019 in connection with her promotion to CFO—$393,741.
RSUs to acquire 37,105 shares that were granted to Mr. Kapadia in September 2019 as an incentive related to leadership retention—$599,988.
The grant date fair values for stock awards for the fiscal year ended June 30, 2019 include:
PSUs that were granted in August 2018: Mr. Sawyer—$4,313,880; Mr. Bakken—$829,587; and Mr. Kapadia—$663,670, which PSUs were not earned based on results for the 2019-2021 performance period.
RSUs that were granted in August 2018: Mr. Sawyer—$2,274,998; Mr. Bakken—$437,490; and Mr. Kapadia—$349,983.
Matching RSUs that were granted in August 2018: Mr. Bakken—$46,395; and Mr. Kapadia—$148,489.
RSUs to acquire 5,361 shares that were granted to Mr. Kapadia in June 2019 in connection with the successful completion of a key technology initiative related to a mobile application and a new partnership—$99,983.
4
For Mr. Athayde, the value expressed represents (a) 1,100,000 options to purchase shares of the Company’s common stock, which are eligible to vest, as to the service requirement, on the fourth anniversary of the commencement of Mr. Athayde’s employment with the Company, subject to achievement, prior to the fifth anniversary of the commencement of his employment, of a volume-weighted average closing price per share of the Company equal to or in excess of 150% of the closing price per share on the trading day immediately prior to the date of the announcement of Mr. Athayde’s employment with the Company; and (b) 358,680 options to purchase shares of the Company’s common stock, which vest on the fourth anniversary of the commencement of his employment.
5
Amounts for fiscal 2021 represent amounts earned pursuant to AIC awards under the Short Term Plan as described more fully under the heading “Annual Incentive Awards for Fiscal 2021” in the CD&A section of this Proxy Statement.
6
Amounts represent the change in the present value of benefits under the pension plans. Mr. Bakken is the only NEO eligible for such plans.
7
The following table sets forth All Other Compensation amounts by type:
Name
Company Match and Profit-
Sharing Contributiona
($)
Moving / Travel Expensesb
($)
Total All Other
Compensationc
($)
Felipe A. Athayde
13,542
150,000
5,576
Kersten D. Zupfer
270
Chad Kapadia
27,273
9,404
Amanda P. Rusin
25,428
16,735
James A. Townsend
28,125
22,196
Hugh E. Sawyer
1,255,372
Eric A. Bakken
445,484
a
The Company matches the NEOs’ contributions into its retirement savings plans up to $25,000 per calendar year. Amounts greater than $25,000 are due to the difference between calendar and fiscal year compensation.
b
Amount reflects reimbursements of Mr. Athayde’s relocation expenses.
c
Total All Other Compensation includes the following perquisites, which primarily relate to medical benefits, including the reimbursement of co-pay and other out-of-pocket expenses: Mr. Athayde—$4,545; Mr. Kapadia—$7,391; Ms. Rusin—$6,556; Mr. Townsend—$20,726; Mr. Sawyer—$565; and Mr. Bakken—$2,800; PTO payout/post-employment consulting payments: Mr. Sawyer—$1,254,808; and severance payments earned in fiscal 2021: Mr. Bakken—$442,684.
8
Mr. Athayde was appointed as President and CEO on October 5, 2020.
9
Ms. Zupfer was promoted to CFO on November 11, 2019.
10
Ms. Rusin first became an NEO in fiscal 2021.
11
Mr. Townsend’s employment commenced April 8, 2019 and ended on June 30, 2021.
12
Mr. Sawyer’s employment ended on October 4, 2020.
13
Mr. Bakken’s employment ended on December 31, 2020.
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EXECUTIVE COMPENSATION TABLES
Grants of Plan-Based Awards in 2021
The following table sets forth certain information concerning plan-based awards granted to the NEOs during the fiscal year ended June 30, 2021.
 
 
 
Estimated Possible Payouts
Under Non-Equity
Incentive Plan Awards1
Estimated Possible Payouts
Under Equity
Incentive Plan Awards2
 
 
 
 
Name
Grant
Date
Approval
Date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units2
(#)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
Exercise or
Base Price
of Option
Awards
($/Sh)
Grant Date
Fair Value of
Stock &
Option
Awards3
($)
Felipe A. Athayde
437,500
656,25010
1,750,000
10/5/2020
9/4/2020
358,6805
2,500,000
10/5/2020
9/4/2020
358,6806
6.53
1,072,453
10/5/2020
9/4/2020
1,100,0007
6.53
3,146,000
Kersten D. Zupfer
127,500
255,000
510,000
12/21/20
4
25,276
234,056
2/8/21
01/26/2021
6,3078
66,665
Chad Kapadia
180,000
360,000
720,000
Amanda P. Rusin
107,917
215,833
431,667