Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.   )

Filed by the Registrant ☒

Filed by a party other than the Registrant  ☐

Check the appropriate box:

 

 

Wolverine World Wide, Inc.

9341 Courtland Drive, NE

Rockford, Michigan 49351

March 23, 2022

Dear Fellow Shareholders,

Thank you for your investment in Wolverine Worldwide. We made significant progress in 2021 on our strategic and financial objectives, despite supply chain challenges and the continued impacts of the COVID-19 pandemic. Some highlights are listed below:

In addition to implementing the Company's growth pillars and other key initiatives during 2021, we concentrated on other matters critical to our long-term success. These included Board and management succession, highlighted by my appointment at the end of the year as the Company’s President and Chief Executive Officer. Other areas of focus included digital and direct to consumer expansion, supply chain management, cybersecurity protection, and brand development, which we will describe in greater detail in this proxy statement.

During 2022, our team remains focused on global growth opportunities for our portfolio of leading performance and lifestyle brands, especially in direct-to-consumer, digital, and key international channels. We will pursue a focused approach to executing against these growth pillars, capitalizing on favorable market conditions in key product categories and unlocking the potential across our powerful brand portfolio. Consistent with this, we will further invest in a variety of initiatives to drive revenue growth and earnings leverage.

We hope to receive your support at this year’s annual meeting on May 4, 2022, and encourage you to vote either online, by phone, or by mail.

Sincerely,

 

Brendan Hoffman

President and Chief Executive Officer

 

Wolverine World Wide, Inc.

9341 Courtland Drive, NE

Rockford, MI 49351

March 23, 2022

To Our Shareholders:

We invite you to attend the 2022 Annual Meeting of Shareholders (the “Annual Meeting”) of Wolverine World Wide, Inc. (the “Company,” “Wolverine Worldwide” or “Wolverine”). The meeting will be held on May 4, 2022, at 10:00 a.m. EDT in a virtual format designed to provide shareholders the same rights and opportunities to participate that they would have at an in-person meeting. At the Annual Meeting, shareholders will vote on the following items:

Shareholders of record as of the close of business on March 7, 2022, the record date, are entitled to participate in and vote at the Annual Meeting. To participate in the Annual Meeting, including to vote, ask questions, and view the list of registered shareholders as of the record date during the meeting, shareholders of record should go to the meeting website at www.virtualshareholdermeeting.com/WWW2022, enter the 16-digit control number found on your proxy card or Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”), and follow the instructions on the website. If your shares are held in street name and your voting instruction form or Notice of Internet Availability indicates that you may vote those shares through the http://www.proxyvote.com website, then you may access, participate in, and vote at the annual meeting with the 16-digit access code indicated on that voting instruction form or Notice of Internet Availability. Otherwise, shareholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least 5 days before the annual meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at the annual meeting.

Whether or not you plan to attend the Annual Meeting, you can ensure that your shares are represented at the meeting by promptly voting and submitting your proxy by telephone or through the internet, or by completing, signing, dating and returning your proxy card in the enclosed envelope.

Rules for the conduct of the Annual Meeting will be available on the meeting website. For information about how to view the rules and the list of shareholders entitled to vote at the Annual Meeting during the ten days preceding the Annual Meeting, please visit our 2022 Annual Meeting website at www.wolverineworldwide.com/2022annualmeeting. If you encounter any difficulties accessing the virtual meeting during check-in or during the meeting, please call the technical support number that will be posted on the virtual shareholder meeting login page.

This Notice of 2022 Annual Meeting of Shareholders, Proxy Statement, proxy or voting instruction card and Annual Report for our fiscal year ended January 1, 2022 are being mailed or made available to shareholders starting on or about March 23, 2022.

By Order of the Board of Directors,

 

Kyle L. Hanson

Secretary

This summary highlights key information that can be found in greater detail elsewhere in this Proxy Statement. This summary does not contain all of the information that shareholders should consider, and shareholders should read the entire Proxy Statement before voting.

Wolverine Worldwide organized its portfolio of brands into two key operating groups together with an “Other” category for fiscal 2021 as illustrated below:

 

2021 was another successful year for the Company, with further progress on our three primary growth pillars identified below. These pillars represent our roadmap for global growth, and focused efforts and investments behind them helped build momentum and allowed us to deliver excellent growth and results as we worked to fulfill our vision to “Build a family of the most admired performance and lifestyle brands on earth.”

Looking ahead, we remain committed to investing in these three key pillars to build on the progress made in 2021 and increasing our momentum.

Shareholders are being asked to vote on the following matters at the 2022 Annual Meeting of Shareholders:

The Company's Board consists of 10 directors. The Company's By-Laws establish three classes of directors with each class serving three-year terms.

The Board has nominated four directors for election at the Annual Meeting, as outlined in the table below. Each director nominee has been nominated to serve for a three-year term expiring at the annual meeting of shareholders to be held in 2025. The Board recommends that shareholders vote “FOR” each of the nominees named below.

The following charts illustrate key characteristics of the Company's Board:

 

The following chart lists the important experiences and attributes that the Company's Directors possess:

 

As part of its ongoing shareholder engagement efforts, the Company reached out in early 2022 to shareholders representing holders of approximately 58% of its outstanding shares and has held or expects to hold telephonic meetings with all shareholders who accepted the Company's invitation (representing holders of approximately 12% of the Company's outstanding shares). Discussions to date focused on Company strategy, financial performance, governance and compensation programs.

Wolverine Worldwide is committed to a governance structure that provides strong shareholder rights and meaningful accountability.

The Company's Annual Meeting is scheduled to take place virtually, as set forth in the notice, on May 4, 2022, at 10:00 a.m. EDT. As always, the Company encourages you to vote your shares before the Annual Meeting.

Wolverine Worldwide is committed to the highest level of corporate governance, and the Board has adopted Corporate Governance Guidelines to strengthen management accountability and promote long-term shareholder interests.

The shareholders elect directors to serve on the Company's Board of Directors (the “Board of Directors” or “Board”). The Board oversees the management of the business by the Chief Executive Officer (“CEO”) and senior management. In addition to its general oversight function, the Board's responsibilities include, but are not limited to, the following:

The Board prides itself on its ability to recruit and retain directors who have high personal and professional integrity and have demonstrated exceptional ability and judgment to effectively serve shareholders' long-term interests. These skills and attributes will help the Company accomplish its most important strategic objectives, such as eCommerce and digital growth, brand building, operational excellence and supply chain management, and international growth. The Board also values diversity and considers this an important factor in determining nominees for appointment and election, as evidenced by the current makeup of the Board, which includes three female directors, two of whom are also racial/ethnic minorities. The Board believes that its directors, including the nominees for election as directors at the Annual Meeting, have characteristics and valuable skills that provide the Company with the variety and depth of knowledge, judgment and strategic vision necessary to provide effective oversight of the Company.

To help achieve the right mix of experience and expertise, and to assist in succession planning, the Board, at the recommendation of the Governance Committee, has identified specified skills and attributes it desires its members to possess. The below graphic lists these skills and attributes and indicates which of the directors possess each. As shown, these skills and attributes are well represented within the Board.

The Governance Committee reviews with the Board on an annual basis the skills, experience and characteristics desired of Board members in the context of the current makeup of the Board. The Board, with the assistance of the Governance Committee, annually assesses the current composition of the Board across many dimensions. As set forth in the Company's Corporate Governance Guidelines, which are posted on its website, this assessment addresses the skills and attributes set forth in the table above and the individual performance, experience, age and skills of each director.

The Board's Governance Committee serves as its nominating committee. The Governance Committee, in anticipation of upcoming director elections and other potential or expected Board vacancies, evaluates qualified individuals and recommends candidates to the Board. As part of the search process for each new director, the Governance Committee actively seeks out women and minority candidates to include in the pool from which Board nominees are chosen. The Governance Committee may retain a search firm or other external parties to assist it in identifying candidates, and the Governance Committee has the sole authority to select such a firm, approve the search firm's fees and retention terms, and to terminate the firm if necessary.

The Governance Committee considers candidates suggested by directors, senior management or shareholders. Shareholders may recommend individuals as potential director candidates by communicating with the Governance Committee through one of the Board communication mechanisms described under the heading “Shareholder Communications Policy.” Shareholders that wish to nominate a director candidate must comply with the procedures set forth in the Company's By-Laws, which are posted on its website. Ultimately, upon the recommendation of the Governance Committee, the Board selects the director nominees for election at each annual meeting. In selecting director nominees, the Board considers each candidate's performance as a director (which is assessed through an anonymous written peer evaluation); personal and professional integrity; ability and judgment; and likelihood to be effective, working with the other nominees and directors, in serving the long-term interests of the shareholders. The Governance Committee also considers candidates' relative skills, experience, attributes, background and characteristics as well as independence under applicable New York Stock Exchange (“NYSE”) listing standards and the Company's Director Independence Standards, potential to contribute to the composition and culture of the Board, and ability and willingness to actively participate in the Board and committee meetings and to otherwise devote sufficient time to Board duties.

As part of an annual self-assessment, each director evaluates, over a number of dimensions, the performance of the Board and any committee on which he or she serves. Dr. Kollat, the Lead Independent Director, works with the Governance Committee to review the Board self-assessment with directors following the end of each fiscal year and to conduct individual director interviews at the end of each year. Committee Chairpersons review the committee self-assessments with their respective committee members and discuss them with the Board.

In addition, the Governance Committee, working with the Lead Independent Director, develops and implements guidelines for evaluating all directors standing for nomination and election and oversees the evaluation of such nominees.

The Board oversees the Company's process for assessing and managing risk and mitigation activities with a focus on the most significant risks facing the Company, including strategic, operational and supply chain, financial, environmental, cybersecurity, human capital, and legal compliance risks. This oversight is conducted through presentations by and discussions with the CEO, President, Chief Financial Officer (“CFO”), Director of Internal Audit, General Counsel or Associate General Counsel, Chief Information Officer, Chief Information Security Officer, brand and department leaders and other members of management. The Associate General Counsel, Senior Risk Manager, and Director of Internal Audit coordinate management's day-to-day risk management and mitigation efforts, and the Director of Internal Audit reports directly to the Audit Committee.

The Associate General Counsel and Director of Internal Audit review with the Audit Committee regularly, and with the full Board periodically, management's risk assessment and mitigation strategies. In addition to the above processes, the Board has delegated risk management and mitigation oversight responsibilities to its standing committees, which meet regularly to review and discuss specific risk topics that align with their core responsibilities.

The Company reviewed its compensation policies and practices to assess whether they are reasonably likely to have a material adverse effect on the Company. As part of this review, the Company compiled information about the Company's incentive plans, including reviewing the Company's compensation philosophy, evaluating key incentive plan design features and reviewing historic payout levels and pay mix. With assistance from Company management and its independent compensation consultant, the Compensation Committee reviewed the executive compensation program, and managers from the Company's human resources and legal departments reviewed the non-executive compensation programs.

Our corporate culture welcomes people from all backgrounds who share our values of teamwork, open communications, integrity, respect, and accountability. These are the things that bind us together, making Wolverine Worldwide a great company and a great place to grow. As an expanding global company, diversity is much more than simply a goal — it’s a part of our DNA. For that reason, the thousands of Wolverine Worldwide employees around the world reflect a diverse range of cultures, religions, ethnicities, and nationalities, as well as varied professional and educational backgrounds. Because we believe in cultivating a well-rounded, diverse workforce, we continuously seek out individuals who reflect and support our goal of maintaining a diverse corporation.

We aim to foster a diverse, equitable, and inclusive culture through a wide variety of initiatives, including targeted employee resource groups. Recently, we expanded our efforts by retaining an expert consultant focused on diversity and accelerating our efforts in this critical area.

These groups will use employee survey results and focus group feedback to prioritize and expand a framework to support a more inclusive, more diverse, and stronger organization.

Wolverine Worldwide has historically engaged with and served the communities in which we live and work, as well as our internal community at the Company. As champions for positive change, it is our responsibility to enrich our global communities by giving our time and resources to make the world a better place.

The Board has adopted a Code of Business Conduct for the Company's directors, officers and employees. The Board also has adopted an Accounting and Finance Code of Ethics (“Accounting and Finance Code”) that focuses on the financial reporting process and applies to the Company's CEO, CFO and Corporate Controller.

Shareholders and other interested parties may send correspondence to the Board, the non-employee directors as a group, a specific Board committee or an individual director (including the Lead Director) in the manner described below.

The General Counsel or Associate General Counsel will provide a summary and copies of all correspondence (other than solicitations for services, products or publications) as applicable at each regularly scheduled Board meeting.

The General Counsel or Associate General Counsel will alert individual directors if an item warrants a prompt response from the individual director prior to the next regularly scheduled meeting. Items warranting a prompt response, but not addressed to a specific director, will be routed to the applicable committee Chairperson.

The Company's Board consists of ten directors. The Company's By-Laws establish three classes of directors with each class serving three-year terms. At each annual meeting, the term of one class expires. The Board has nominated four directors for election at the Annual Meeting: Jeffery M. Boromisa, Gina R. Boswell, Brendan L. Hoffman, and David T. Kollat. Each director has been nominated to serve for a three-year term expiring at the annual meeting of shareholders to be held in 2025 or until his/her successor, if any, has been elected and is qualified.

All director nominees other than Mr. Hoffman are independent directors, as determined by the Board under the applicable NYSE listing standards and the Company's Director Independence Standards. Each director nominee currently serves on the Board. The shareholders most recently elected Messrs. Boromisa and Kollat and Ms. Boswell at the Company's 2019 Annual Meeting. Mr. Hoffman was appointed to the Board in 2020 on the recommendation of the Company’s Governance Committee after being hired as the President of the Company.

The Company is not aware of any nominee who will be unable or unwilling to serve as a director. However, if a nominee is unable to serve or is otherwise unavailable for election, the incumbent directors may or may not select a substitute nominee. If the directors select a substitute nominee, the proxy holder will vote the shares represented by all valid proxies for the substitute nominee (unless other instructions are given).

The biographies of the four nominees and the other directors of the Company are below, along with a discussion of the experience and skills of each director.

The Company's Corporate Governance Guidelines give the Board the flexibility to determine the best leadership structure for the Company based upon the Company's evolving needs and opportunities. The Governance Committee periodically reviews the Board's leadership structure, including whether to separate the roles of Chairman and CEO, based upon the Board and Company's then-current circumstances, and recommends changes to the Board as appropriate. Currently, the Company's former CEO also serves as the Executive Chairman of the Board. In addition, since 1993, the independent directors have annually elected a Lead Independent Director who performs a role in many ways similar to an independent Chairman. The Board believes that this leadership structure is in the best interests of the Company and its shareholders at this time because it provides the Board with effective independent oversight of management. Specifically, the Lead Independent Director has the following enumerated responsibilities:

The Board annually assesses the independence of all directors. To qualify as “independent,” the Board must affirmatively determine that the director is independent under the Company's Director Independence Standards, which are modeled after the listing standards of the NYSE. Under NYSE listing standards and the Company's Director Independence Standards, the Board has determined that 8 of the Company's 10 directors are independent. Only Messrs. Krueger and Hoffman are not independent. In addition, the Board determined that Roxane Divol and Michael A. Volkema, who served as directors until May 27, 2021 and May 3, 2021, respectively, were independent during the time they served as directors. All of the Board's committees are comprised entirely of independent directors. The independent directors generally meet in executive session at each regularly-scheduled meeting.

The Company's Director Independence Standards define an “Independent Director” as a director who the Board determines otherwise has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company), and who:

The Board has three standing committees: Audit, Compensation and Governance. Each committee meets periodically throughout the year and reports its recommendations to the Board. The Company expects directors to attend every meeting of the Board and the committees on which they serve and to attend the annual meeting of shareholders. In 2021, all directors then serving on the Board attended the 2021 Annual Meeting of Shareholders, and all directors attended at least 75% of the meetings of the Board (9 meetings in 2021) and the committees on which they served held during the period for which he or she served. All directors are typically invited to and attend all committee meetings.

Each committee annually evaluates its performance to determine its effectiveness. The Board has determined that all committee members are “independent” as defined by NYSE listing standards. Furthermore, each Audit Committee member satisfies the NYSE “financial literacy” requirement. In addition, the Board has determined that Mr. Boromisa and Mr. Gerber are “audit committee financial experts” under Securities and Exchange Commission (“SEC”) rules. Each committee's charter, with a complete list of the duties and responsibilities, is available on the Company's website at www.wolverineworldwide.com/investor-relations/corporate-governance/.

The Company's non-employee director compensation philosophy is to pay compensation that is competitive with the compensation paid by companies of similar size, in similar industries and with whom Wolverine Worldwide competes for director candidates. The Governance Committee, with input from management and from the Compensation Committee's independent compensation consultant, reviewed director compensation and compared it to market data, including a comparison to director compensation for the Company's Peer Group, as defined on page 53, and broader industry market surveys (FW Cook 2019 Director Compensation Report and NACD 2019-2020 Director Compensation Report). No adjustments were made to 2021 director compensation based on this review. The Company removed temporary reductions to director cash fees that were implemented in 2020 as part of the Company’s overall response to the COVID-19 pandemic.

The following table provides information regarding the compensation of the Company's non-employee directors for fiscal year 2021. In 2021, Messrs. Krueger and Hoffman received compensation for their services as the Company's CEO and President, respectively, but did not receive any additional compensation for service as chairman or as a director.

The following table shows the non-employee director compensation program for fiscal year 2021:

Director Deferred Compensation Plan. The Company's Amended and Restated Outside Directors' Deferred Compensation Plan (the “Director Deferred Compensation Plan”) is a supplemental nonqualified deferred compensation plan for non-employee directors. A separate non-employee director deferred compensation plan applies to benefits accrued under that plan before January 1, 2005. The Director Deferred Compensation Plan permits all non-employee directors to voluntarily defer, at their option, 25%, 50%, 75% or 100% of their director cash fees. The Company establishes a book account for each non-employee director and credits the director's account with a number of stock units equal to the amounts voluntarily deferred, divided by the closing market price of common stock on the payment/deferral date. The Company also credits director accounts with dividend equivalents on amounts previously deferred in the form of additional stock units. The amounts credited to director accounts are treated as if invested in Wolverine Worldwide common stock. The number of stock units held in director accounts is set forth under the “Stock Ownership By Management and Others” table below.

Upon a director's termination of service, or such later date as a director selects, the Company will distribute the stock units in the director's book account in shares of Wolverine Worldwide common stock in either a single, lump sum distribution or annual installment distributions over a period of up to 20 years (10 years under the plan for benefits accrued before January 1, 2005) based on the director's election. The Company converts each stock unit to one share of Wolverine Worldwide common stock.

Upon a “change in control,” the Company will distribute to the director, in a single, lump sum distribution, Wolverine Worldwide common stock in a number of shares equal to the stock units credited to a director's book account. The Deferred Compensation Plan defines “change in control” as any of the following:

Deferred Compensation Plan For a description of the non-qualified Deferred Compensation Plan under which directors may also defer cash fees, please see the “Non-Qualified Deferred Compensation” section on page 66.

Each non-employee director must attain (and maintain) a minimum stock ownership level equal to six times the non-employee director annual cash retainer prior to being able to gift or sell any Company stock. The equity that qualifies for determining the non-employee directors’ minimum stock ownership level includes owned shares and unvested restricted stock units that vest based on time (up to a maximum value of 50% of the applicable ownership requirement), but excludes unearned performance shares and units and unexercised options (or any portion thereof, such as the current “in the money” value). During 2021, all non-employee directors were in compliance with these guidelines.

The following table sets forth information about those holders known by Wolverine Worldwide to be the beneficial owners of more than five percent of Wolverine Worldwide's outstanding shares of common stock as of March 7, 2022:

The following table sets forth the number of shares of common stock beneficially owned as of March 7, 2022, by each of the Company's directors and named executive officers and all of the Company's directors and executive officers as a group:

The Company's compensation philosophy is to provide executives with a competitive compensation package that is heavily weighted towards performance-based (performance units and annual bonus opportunity) and variable (restricted stock units) compensation in order to encourage superior business and financial performance over the short and longer term and, by linking compensation with stock price performance, to closely align the interests of the Company's NEOs with those of its shareholders without encouraging excessive risk-taking. The Compensation Committee (the “Committee”) oversees the Company's executive compensation program.

The executive compensation program has four primary objectives:

2021 was a successful year for the Company, as it executed its key growth pillars to fuel strong performance and consumer demand in the face of supply chain challenges and the continued impacts of the COVID-19 pandemic. Key financial highlights for the Company during fiscal 2021 included the following:

The Company's executive compensation program consists of base salary, annual bonus opportunity, long-term incentive compensation and benefits. A breakdown of base salary, annual performance bonus, and long-term incentive compensation is illustrated below:

Under the Company's compensation program, a significant portion of the compensation awarded to the NEOs generally, and to the CEO in particular, is at risk (contingent upon the attainment of various pre-established short and long-term financial goals) and variable (contingent on the performance of the Company's stock price). NEO compensation that is significantly at risk and variable incentivizes superior business and financial performance and, by linking compensation with stock price performance, aligns the interests of executives with those of shareholders.

The following graphic illustrates the percentage of 2021 NEO target compensation that is at risk, reflecting the grant values and salary information from the February 2021 Compensation Committee actions. Ms. Soriano was promoted and became an executive officer midway through 2021 and is therefore not included in the NEO 2021 Target Total Compensation graphic.

Here and throughout this Proxy Statement, unless explicitly stated, references to CEO compensation refer to Mr. Krueger’s compensation since he held that role in fiscal 2021. As noted above, effective January 2, 2022, Mr. Krueger transitioned to the role of Executive Chairman and Mr. Hoffman assumed the CEO position.

 

The long-term incentive program is heavily weighted to at-risk compensation, with a mix for February 2021 grants of 50% performance stock units and 50% time vested restricted stock units for the NEOs (other than Ms. Soriano who was not an executive officer in February 2021 and thus received 40% performance stock units and 60% time vested restricted stock units).

In February 2022, the Committee approved LTI grants featuring performance stock units and time-vested restricted stock units with similar design features as described above, but more heavily weighted to performance stock units (70% of total LTI for Mr. Hoffman, our CEO, and 60% for the other NEOs), with the remaining amount allocated to time-vested restricted stock units. The Committee made this change to be more consistent with the Company’s historic practice and better aligned with shareholder expectations.

Each February, the Committee recommends (and the independent directors approve) target compensation for the CEO for the upcoming year after considering the latest available information, including the Company's total shareholder return (“TSR”) and other business and financial performance, information provided by the Committee's compensation consultant regarding executive compensation trends and compensation paid to other chief executive officers of companies in the compensation peer group (described below), and information provided by management on recent Company performance and the Company's future business and financial outlook. The Committee's goal is to set the CEO's compensation in line with the anticipated market median compensation for that year.

Given the significant weight the Company's executive compensation program places on at risk and variable compensation, the compensation realized by the CEO and NEOs can be significantly affected, both positively and negatively, by performance against the various operational and financial performance metrics pre-established by the Committee and by the performance of the Company's stock. The Board and Committee believe such a compensation program aligns the interests of the CEO and other NEOs with the interests of the shareholders.

The Company's executive compensation program consists of four primary elements: base salary, annual bonus opportunity, long-term incentive compensation and benefits. These elements are described in greater detail below.

As part of approving an NEO's base salary, the Committee considers a variety of factors including individual responsibilities, experience, skills, and potential to affect Wolverine Worldwide's overall performance, as well as market surveys and peer group information. The Committee considers these compensation factors subjectively, and no single factor or combination of factors was determinative in setting base salaries for any NEO for fiscal year 2021.

Based on the above factors, the Committee approved the 2021 base salaries for the NEOs as noted in the following table. The Committee held CEO salary flat in 2021 for the seventh year in a row. The base salary increases for the other NEOs were based on their performance evaluations as well as consideration of peer group and broad-based industry compensation data, as described in detail below. Mr. Hoffman's 2020 base salary listed below is an annualized figure, and the actual amount received in 2020 (from his September 2020 start date with the Company through year-end) is included in the Summary Compensation Table on page 56. Ms. Soriano first became an executive officer midway through 2021 in connection with her promotion from Managing Director of EMEA to President of International Group. In connection with the increased responsibilities of her new role, her base salary was increased from $456,570 to $502,341 effective May 31, 2021. She also received a minor increase in March 2021 in connection with the Company’s annual performance evaluation process. The cash compensation for Ms. Soriano is paid in Pounds Sterling and was converted into U.S. dollars using the fiscal year-end rate of 1.33 here and throughout the CD&A.

In 2021, each NEO had the opportunity to earn annual cash incentive compensation (“annual bonus”), consisting of a performance bonus and an individual performance bonus, and further subject to a modifier:

A percentage of each NEO's 2021 base salary, as determined in February 2021, was set as the annual bonus target percentage (the “Target Bonus Percentage”). The Target Bonus Percentage represents the percentage of each NEO's base salary that could be earned as annual incentive compensation at a “target” performance level (100% payout) for each of the performance bonus and individual performance bonus. Generally, the Committee sets higher Target Bonus Percentages for individuals with greater influence on business strategy, profit or sales. This puts a larger percentage of an NEO's total potential cash compensation at risk, in line with the NEO's ability to influence these factors. For 2021, the NEOs had the following Target Bonus Percentages: Mr. Krueger 150%, Mr. Hoffman 85%, Ms. Soriano 40%, pro-rated for the portion of the year prior to her appointment as an executive officer, and 50%, pro-rated for the portion of the year following her appointment as an executive officer, Mr. Stornant 65%, and Mr. Zwiers 55%. The less than ten percent increase in annual bonus opportunity for each of Messrs. Krueger and Stornant was based on their performance evaluations as well as consideration of peer group and broad-based industry compensation data.

The Committee selected fiscal year 2021 revenue and adjusted pretax earnings as metrics for the performance bonus because it believes a strong correlation exists between performance on these financial measures and increases in shareholder value. The Committee also included an eCommerce revenue growth multiplier for 2021 to more directly align with the Company's focus on go-forward revenue growth. The Committee adjusted the percentage of the performance bonus determined by revenue from 45% in 2020 to 50% in 2021 (with the remaining 50% determined by pre-tax profit) due to the Company’s focus on driving revenue growth. The Company changed the modifier from a backlog modifier in 2020 to eCommerce revenue in 2021 to incentivize revenue growth in what the Company views as the most important and profitable revenue channel. The top end of the eCommerce revenue modifier was set at an aspirational level above Company plan and so only included a potential increase and not a penalty for failure to meet the modifier level. The Company did not meet the eCommerce revenue goals and so no performance bonus adjustment was made based on the modifier.

Messrs. Krueger, Stornant, and Hoffman had significant influence on the Company's overall business performance and, accordingly, their respective performance bonus opportunity (85% of their total annual bonus opportunity) is based on the Company performance criteria only. Mr. Zwiers and Ms. Soriano were directly responsible for specific business units and exerted a significant influence on those business units in particular, in addition to influencing Company performance. Accordingly, a large percentage of their overall annual bonus opportunity was based on business unit performance, as reflected in the table on page 46.

As shown in the table below, the Committee also set four performance levels for each criterion: threshold (25% payout for pretax; 50% for revenue), target (100% payout), goal (150% payout) and stretch (200% payout). The Committee set the revenue and pretax earnings goals for these performance levels following a review of the Company's operating plan, historical performance, and industry and macroeconomic conditions. The performance targets were set aggressively, including setting the revenue performance target required for 100% payout at revenue growth of nearly 22% versus the prior fiscal year. The performance targets required for 100% payout on pretax goals were also set above the Company’s actual 2020 pretax results. 2021 performance targets were set based on planned performance in 2021 and as compared to actual 2020 results (rather than results adjusted for the COVID-19 pandemic) due to the continued uncertainty of the retail markets and expected continued effects of the pandemic.

For each business unit, the Committee sets the revenue and adjusted pretax earnings goals at substantially similar levels of difficulty as the goals for the Company and with a similar degree of difficulty as in prior years. The below table shows historical weighted performance levels achieved by the business units included as part of an NEO performance bonus in 2021.