We cordially invite you to attend our 2022 Annual Meeting of Stockholders on
Wednesday, June 8, 2022, at 8:30 a.m. (Eastern Time), to be held by virtual meeting format at
www.virtualshareholdermeeting.com/PRTY2022. We hope that you will be able to join us.
Details regarding how to access the virtual meeting are described in the Notice
of Internet Availability of Proxy Materials you received in the mail and in this proxy statement. We have also made available a copy of
our fiscal year 2021 Annual Report with this proxy statement, which we urge you
to read. It includes our audited financial statements and provides information about our business and products. Your vote is very important.
Whether or not you plan to attend the meeting, your shares should be represented and voted.
Fiscal 2021 marked an important year in advancing our transformation process focused
on market expansion. Despite the continued challenging and volatile backdrop, we are proud of how our business performed as the consumer
returned to social gatherings, celebrations and parties, while we continued to implement significant operational and capital structure
improvements.
We delivered a strong year of financial and operational results as we remained
deeply committed to our purpose of creating joy by making it easy to create unforgettable memories.
Operationally, in 2021, we progressed the fundamental building blocks of our transformation
strategy across product innovation, in-store experience, being celebration occasion-obsessed, and focusing on our North American vertical
model. This has yielded important benefits, and we plan on furthering this progress with ongoing enhancements in customer engagement,
as well as investments in digital platforms, information technology, and supply chain.
Additionally, we are very proud of the work we have initiated with respect to environmental,
social and governance (“ESG”) matters. For our Board of Directors (the “Board”), in 2021 we changed the name of
the Nominating and Governance Committee to the “Nominating and ESG Committee” and updated its charter to establish the Nominating
and ESG Committee’s oversight of our ESG programs, policies and practices. The Nominating and ESG Committee’s duties include
monitoring and evaluating Party City’s programs, policies and practices relating to ESG issues and making recommendations to the
Board regarding Party City’s overall ESG strategy. So far in 2022, we continued to advance our ESG strategy by launching a management-level
ESG Steering Committee, which is comprised of senior leaders and cross-functional members from major business functions, and whose purpose
is to (i) establish programs, policies and practices relating to ESG matters and (ii) assist the Nominating and ESG Committee in fulfilling
its oversight responsibilities with respect to ESG matters. In 2021, we also made significant strides with our diversity and inclusion
work focused on listening to the organization with empathy, and we evolved our strategy around three core components: raising awareness,
creating a learning culture and developing our infrastructure to embed diversity, equity, inclusion and belonging into our people practices
and behaviors. We feel proud of the progress made over the course of the pandemic, which we believe has increased our relevancy, improved
our brand and reinforced our ability to positively impact our customers’ lives.
In closing, we would like to thank our entire team for their dedication to our
mission and strategy and their extraordinary execution in a challenging operating environment. We are so proud of all they have accomplished
in 2021 across our manufacturing operations, our stores, e-commerce and supply chain, while continuing to better leverage our unique North
American vertical model.
Thank you for your continued support.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 2022
Date and Time
Wednesday, June 8, 2022,
8:30 a.m. Eastern Time |
Virtual Meeting
www.virtualshareholdermeeting.com/
PRTY2022. |
Record Date
Stockholders or their proxies as of the close of business on April 11, 2022 |
The 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of Party
City Holdco Inc. (the “Company” or “Party City”) will be held by virtual meeting format at www.virtualshareholdermeeting.com/PRTY2022
on Wednesday, June 8, 2022, at 8:30 a.m. (Eastern Time), for the following purposes as further described in the proxy statement accompanying
this notice:
ITEMS OF BUSINESS
PROPOSAL |
|
BOARD VOTING RECOMMENDATION |
PAGE REFERENCE
(FOR MORE DETAIL) |
Management Proposals |
|
|
|
To elect ten directors named in this proxy statement, each to hold office until the Company’s annual meeting of stockholders in 2023, and until his or her successor has been duly elected and qualified or until such director’s earlier resignation, retirement or other termination of service; |
|
FOR each director
nominee |
21 |
To approve, on an advisory basis, the compensation we pay to our named executive officers (the “say-on-pay proposal”); |
|
FOR |
57 |
To approve, on an advisory basis, the frequency of the say-on-pay proposal; |
|
FOR |
58 |
To
ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2022; and |
|
FOR |
64 |
Stockholders will also consider any other business properly brought before the Annual
Meeting or any adjournment or postponement of the Annual Meeting.
VOTING
Stockholders of record as of the close of business on April 11, 2022 are
entitled to notice of, and entitled to vote at, the Annual Meeting and any adjournments or postponements thereof. A list of
stockholders eligible to vote at the meeting will be available for review during our regular business hours at our principal
executive offices at 80 Grasslands Road, Elmsford, New York 10523 for the ten days prior to the meeting for any purpose related to
the meeting and will be available during the entire time of the virtual meeting.
By Internet
You can vote over the Internet at www.proxyvote.com |
By Telephone
You can vote your proxy over the telephone by calling 1-800-690-6903 |
By Mail
If you requested a printed copy of the proxy materials, you can vote by mail by signing,
dating and mailing the enclosed proxy card in the postage-paid envelope provided |
The shares voted electronically or represented by the proxy cards received, properly
marked, dated, signed and not revoked will be voted at the Annual Meeting. Internet voting facilities for stockholders of record will
be available 24 hours a day beginning immediately and will close at 11:59 p.m., Eastern Time, on June 7, 2022. Voting limitations for
beneficial owners will be set forth in the voting instruction form, or you may contact your broker, bank or other nominee.
2 | 2022
Proxy Statement | Party City Holdco Inc.
ATTENDANCE
To attend the Annual Meeting, you must demonstrate that you were a Party City stockholder
as of the close of business on April 11, 2022, or hold a valid proxy for the Annual Meeting from any such stockholder. Due to the ongoing
concerns regarding the COVID-19 pandemic and to support the health and well-being of our directors, employees and stockholders, the Annual
Meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. The Board also believes that holding
the annual meeting of stockholders in a virtual format will provide the opportunity for participation by a broader group of stockholders,
and reduce the costs associated with planning, holding and arranging logistics for in-person meeting proceedings.
We are committed to ensuring, to the extent possible, that stockholders will be
given the same participation rights that they would be given if they attended an in-person meeting. You will be able to attend the Annual
Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/PRTY2022. You will also be able
to vote your shares electronically at the Annual Meeting. Additional information regarding the virtual meeting is provided in the accompanying
proxy statement.
By Order of the Board of Directors
Reginald M. Rasch
Chief Legal Officer and Corporate Secretary
Elmsford, NY
April 26, 2022
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting to Be Held on June 8, 2022. This proxy statement and our fiscal year 2022 Annual Report to stockholders are available
at www.proxyvote.com as well as on the Investor Relations section of our website at investor.partycity.com.
Party City Holdco Inc. | 2022
Proxy Statement | 3
About
Party City
|
|
Helping others create unforgettable moments is what Party City lives for. That’s
why our team of party experts create innovative products, brainstorm wild party ideas, and meticulously track trends to celebrate everything
from “Taco Tuesday” to Grandma’s 100th birthday; we believe that every celebration deserves to be extraordinary.
We are a leading party goods company by revenue in North America and, we believe,
the largest vertically integrated supplier of decorated party goods globally by revenue. With hundreds of retail stores filled with thousands
of products across the United States, we make it easy for our customers to find the perfect party supplies, balloons, and costumes for
their celebration.
Our retail operations include approximately 830 specialty retail party supply stores
(including franchise stores) throughout North America operating under the names Party City and Halloween City, and e-commerce websites,
which offer rapid, contactless, and same day shipping options (including delivery, in store and curbside pick-up), principally through
the domain name PartyCity.com.
In addition to our retail operations, we are also one of the largest global designers,
manufacturers and distributors of decorated consumer party products, with items found in retail outlets worldwide, including independent
party supply stores, mass merchants, grocery retailers, e-commerce merchandisers and dollar stores.
We combine state-of-the-art manufacturing and sourcing operations, sophisticated
wholesale operations and multi-channel retail and e-commerce retail operations to design, manufacture, source and distribute party goods
throughout the world, including paper and plastic tableware, metallic and latex balloons, Halloween and other costumes, accessories, novelties,
gifts and stationery throughout the world.
Our products are available or licensed in over 100 countries with the United Kingdom,
Canada, Germany, Mexico and Australia among the largest end markets for our products outside of the United States.
|
|
Key Financial and
Operational Highlights
of 2021
• Total revenues for 2021 were $2.2 Billion, an increase of $320 million, or 17% higher than 2020.
• People matter at Party City. In 2021, we employed approximately 6,400 full time and approximately 10,100 part-time team members |
4 | 2022
Proxy Statement | Party City Holdco Inc.
Corporate
Governance
We are committed to excellence in corporate governance standards and practices, with
the goal to create long-term value for our stockholders. Our corporate governance highlights, including those listed in the below chart,
show our commitment to this principle.
Corporate Governance Highlights |
§ Independent Board Chair
§ 9 of 11 current Directors are independent
§ All Board committees consist entirely of independent Directors
§ Executive sessions of non-management Directors are generally held at each Board and committee meeting
§ 64% of Directors have joined our Board since 2018
§ Annual Board, Director and committee assessments prepared by an independent third-party
§ Policy of no Director or Executive hedging or pledging of Company stock
§ Stockholder outreach and engagement program |
|
§ Access to independent advisors
§ Annual election of Directors, with no staggered Board
§ Robust stock ownership guidelines for non-employee Directors and executive
officers
§ Regular risk assessments by the full Board and by each Board committee
§ ESG oversight by the Nominating and ESG Committee established in 2021
§ Code of Business Conduct and Ethics applied to all Directors, officers and employees
§ Director nominees selected based on personal and professional ethics, integrity and values, business acumen and interest in the
Company |
Leadership of the Board and Its Committees
The Board is responsible for the oversight of our overall strategy and operations.
The Board is committed to objective oversight of the Company’s management, especially through its independent leadership and committee
membership.
We do not have a fixed policy regarding the separation of the offices of Chair
of the Board and Chief Executive Officer and believe that we should maintain the flexibility to select the Chair of the Board and its
Board leadership structure, from time to time, based on the criteria that we deem to be in the best interests of the Company and its stockholders
at such time.
Currently, the roles of Chief Executive Officer and Chair of the Board are separate,
and our Board Chair is an independent
director, as the Board believes that such leadership structure effectively
allocates authority, responsibility, and oversight between management and the independent members of our board and supports the independence
of our non-management directors.
In addition, independent directors are the sole members of the Audit, Compensation,
and Nominating and ESG Committees, which oversee critical matters of the Company, including the integrity of the Company’s financial
statements, the compensation of executive management, the appointment and nomination of directors, the development of the Company’s
corporate governance policies and the Company’s ESG strategy.
Duties and Responsibilities
Chair of the Board |
|
Chief Executive Officer |
l Calling
and presiding over all meetings of the Board and all executive sessions of the independent directors.
l Presiding over all meetings of the Company’s stockholders.
l Providing advice and counsel to the CEO and other officers regarding the Company’s business and operations.
l Leading the annual CEO Assessment.
l Direct consultation and communication with stockholders. |
|
l General management, oversight, leadership, supervision and control of the day-to-day business and affairs of the Company.
l Ensure that all directions of the Board are carried into effect.
l Together with the Board Chair, determine the frequency and length of Board meetings.
l Together with the Board Chair, establish the agenda for each Board meeting. |
Party City Holdco Inc. | 2022
Proxy Statement | 5
Corporate Governance
Board Independence
Our Corporate Governance Guidelines provide that our Board will be comprised of
a majority of directors who are independent. Under our Corporate Governance Guidelines, an “independent” director is one who
meets the qualification requirements for being independent as defined by the New York Stock Exchange (“NYSE”) rules.
Our Board reviews any transactions and relationships between each non-management
director or any member of his or her immediate family and the Company. The purpose of this review is to determine whether there are any
such relationships or transactions and, if so, whether they were inconsistent with a determination that the director was independent.
Our Board then makes an affirmative determination as to whether each director or nominee is independent.
As a result of our review process described above, our Board unanimously determined
that Messrs. Alsfine, Collins, Conroy, Creekmuir, Frascotti and Matthews and Mses. Dodds-Brown, Fleiss, and Millstone-Shroff are independent
under the governance and listing standards of the NYSE.
After considering all of the relevant facts and circumstances, the Board also has
determined that each member of the Audit Committee, the Compensation Committee, and the Nominating and ESG Committee qualifies as independent
in accordance with the rules established by the SEC and the NYSE for such committees, including the additional independence considerations
for members of the Audit Committee and Compensation Committee.
Independent Directors |
|
9 of 11 Directors are Independent |
Audit
Committee Chair |
Independent |
|
Compensation Committee Chair |
Independent |
|
Nominating and ESG Committee Chair |
Independent |
|
6 | 2022
Proxy Statement | Party City Holdco Inc.
Corporate Governance
Risk Oversight
Under our Corporate Governance Guidelines, the Board has ultimate responsibility
for oversight of the Company’s risk management activities. The Board’s committees assist the Board in overseeing management’s
risk assessment and risk management activities within the areas delegated to such committees. A summary of the topics covered by the Board
and committee is included below.
Full Board |
The full Board regularly receives reports from our committees to aid our understanding of the Company’s risk identification, risk management and risk mitigation strategies. Additionally, the Board is responsible for addressing risks related to our business plan and budget, strategy, liquidity, and crisis management, including our response to the COVID-19 pandemic. |
|
|
|
Audit Committee |
The Audit Committee regularly reviews – at least annually – our risk management efforts, including receiving reports from members of senior management on areas of material risk, including financial, legal, regulatory, and cyber security risks. Additional risk assessment and management topics include a review of our internal controls, financial reporting, credit risk, and compliance. |
|
|
|
Compensation Committee |
|
Nominating and ESG Committee |
The Compensation Committee is responsible for reviewing and managing potential risks from CEO and executive officer compensation, Company-wide compensation programs and policies, and significant human resources practices, policies and procedures. |
|
The Nominating and ESG Committee is responsible for monitoring and evaluating our ESG risks as well as our public policy and regulatory risks. |
|
|
|
|
Cybersecurity Risk Oversight
Our information systems are integral in supporting our long-term strategies, are
key capabilities necessary to help support all levers of growth, and help us implement informed, data-driven decision making throughout
our organization. We are continually working on enhancing our digital technology platforms and elevating our e-commerce capabilities through
new functionalities to our retail and wholesale channels. In 2021, we successfully completed key security enhancements, which will
serve as the backbone of our ongoing IT roadmap and commenced cloud-based technology infrastructure projects to be completed in 2022.
We maintain entity-wide information security and privacy compliance programs, comprised
of risk management policies and procedures surrounding our information systems, cybersecurity practices and protection of consumer and
employee personal data and confidential information. Our Board has ultimate oversight of our risk management policies and procedures and
has delegated primary responsibility for monitoring the risks and programs in this area to the Audit Committee, which receives regular
updates on information security, privacy risk, and compliance from management. The Board also receives regular updates on these topics
through management presentations and the Audit Chair report. As part of our compliance programs, all global employees are required to
take annual training on information security, including cybersecurity, global data privacy requirements, and compliance measures. We also
conduct periodic internal and third-party
assessments to test our cybersecurity controls, perform cyber simulations, and continually evaluate
our privacy notices, policies and procedures surrounding our handling and control of personal data and the systems we have in place to
help protect us from cybersecurity or personal data breaches. Additionally, we maintain network security and cyber liability insurance
in order to provide a level of financial protection in the event of certain covered cyber losses and data breaches.
COVID-19 Pandemic Risk Oversight
In response to the ongoing COVID-19 pandemic, Party City has been following a risk-based
and phased approach by aligning with government guidelines and mandates for our operations. Throughout the ongoing COVID-19 pandemic,
the Board has overseen our crisis management and policies, and supervised our cross-functional responses to ensure that we continue to
identify and respond to emerging risks and provide meaningful updates to our stakeholders.
In particular, our Board has actively overseen the impact of the COVID-19 pandemic on our employees,
business operations, and our financial position and results of operations through regular updates and communications with management.
The Board evaluates the nature and adequacy of management’s responses to the pandemic, including health safeguards, business continuity,
internal communications, and infrastructure, and reviews stakeholder communications plans with management, ensuring effective and transparent
communications.
Party City Holdco Inc. | 2022
Proxy Statement | 7
Corporate Governance
Board Annual Performance Reviews
Our Corporate Governance Guidelines provide that the Nominating and ESG Committee
is responsible for periodically, and at least annually, conducting a self-evaluation of the Board as a whole. The Nominating and ESG Committee
recommends criteria for assessment of the performance of the Board as a whole, for each Board committee, and for individual directors.
In addition, the written charters of the Audit Committee, Nominating and ESG Committee, and the Compensation Committee provide that each
such committee will evaluate its performance on an annual basis using criteria that it has developed and will report to the Board on its
findings. Such evaluations were conducted in 2022 by the Board and each of the committees.
The evaluation topics for 2021 included (i) the composition and independence of the
Board, (ii) access to and review of information from management, (iii) responsiveness of the Board to stockholder concerns and (iv) maintenance
and implementation of the Company’s Corporate Governance Guidelines.
Our Board and Committee evaluation process for 2021 included the following steps:
Board
Evaluation |
Each
of our Directors responded to tailored questionnaires, meant to enhance the Board’s overall effectiveness by identifying the
best practices of a highly effective board and suggested ways to implement these best practices, and evaluating the performance of
other Directors. |
|
|
Committee
Evaluations |
The
Directors also responded to a tailored set of questions for each of their committee assignments and identified committee strengths
and accomplishments in 2021 together with recommended changes in committee practices for 2022. |
|
|
Independent
Third-Party Report |
To protect anonymity and the integrity of our Board and Committee evaluation process, an independent third party compiled responses to Board and Committee evaluations into a report for our Nominating and ESG Committee Chair. |
|
|
Discussion
of Results |
The results of the Board and Committee evaluations process were presented to the Chair of the Nominating and ESG Committee. Each Committee discussed its respective evaluations and determined if any follow-up actions were appropriate. |
8 | 2022
Proxy Statement | Party City Holdco Inc.
Corporate Governance
Board Nominations and Board Refreshment
Our Nominating and ESG Committee is responsible for recommending to the Board candidates
to stand for election to the Board at the Company’s annual meeting of stockholders and for recommending candidates to fill vacancies
on the Board that may occur between annual meetings of stockholders.
The Nominating and ESG Committee will consider recommendations of director nominees
by stockholders so long as such recommendations are sent on a timely basis as set
forth in our amended and restated bylaws and as summarized
under “Other Information—Annual Meeting Advance Notice Requirements.” We did not receive any director nominations by
stockholders for the 2022 Annual Meeting.
Our Nominating and ESG Committee and Board believe that the institutional knowledge
of our long-serving Directors should be balanced with fresh perspectives. 64% of our Directors have joined the Board since 2018.
The Board believes that the following Director attributes are key
to ensuring strong corporate governance and Board oversight: |
Personal and Professional
Ethics, Integrity, and Values |
Business
Savvy |
Genuine Interest
in our Company |
Commitment to Represent the
Long-Term Interests of our Stockholders |
Mature and
Practical Judgment |
Diversity in Thought, Experience,
Backgrounds, Skills and Viewpoints2 |
Director Recruitment Process
We gather candidate recommendations from Directors, management, and stockholders |
|
Our Nominating and ESG Committee reviews candidates based on established criteria |
|
The Board evaluates candidates and selects nominees for the Annual Meeting |
|
Stockholders vote on nominees at the Annual Meeting |
|
Seven new Directors have been nominated and elected to our Board in the last five years |
In September 2020, we entered into a board nomination agreement (the “Board Nomination
Agreement”) with certain nominating parties (the “Nominating Parties”) in connection with refinancing transactions in
2020. Pursuant to the terms of the Board Nomination Agreement, the Nominating Parties have the right to jointly designate one individual
to be nominated to serve on the Board. We have an ongoing obligation to appoint the Nominating Parties’ nominee, subject to the
nominee meeting the requirements specified in Section 1(f) of the Board Nomination Agreement and being reasonably acceptable to the Nominating
and ESG Committee of the Company, until the earlier of (i) August 15, 2025, (ii) the 15.00% senior secured notes due 2025 (the
“Notes”) are accelerated or otherwise become due prior to August 15, 2025, or (iii) the Board Nomination Agreement
terminates because (x) the Nominating Parties in aggregate hold less than $40 million in Notes or (y) all Nominating Parties
cease to be a Nominating Party by virtue of each Nominating Party no longer holding at least 50% of the Notes as of the date of the Board
Nomination Agreement.
2 see
“Skills, Qualifications, and Experience” below for more information
Party City Holdco Inc. | 2022
Proxy Statement | 9
Corporate Governance
Stockholder Engagement
Our Board values the input of our stockholders, and we are committed to maintaining
stockholder outreach programs that provide a constructive dialogue. In 2022, we increased the scope of our existing stockholder engagement
program, with participation by management, and oversight by our Nominating and ESG Committee. Our engagement program is intended to provide
stockholders with honest, candid information on relevant issues, including on our corporate strategy, Board oversight of key risk areas,
and executive compensation. We also gather stockholder views and feedback, including on the engagement program itself. In chart below,
we detail the features of our inaugural stockholder engagement program, which is ongoing.
Before the Annual Meeting |
|
Annual Stockholder Meeting |
· Discuss stockholder proposals (if any).
· Publish our Annual Report and Proxy Statement.
· The Nominating and ESG Committee receives a report on the engagement program. |
|
· Conduct virtual engagements with stockholders (as necessary).
· Receive voting results for Board and stockholder proposals. |
|
|
|
After the Annual Meeting |
|
Off-Season Engagement |
· Discuss voting results from the Annual Meeting.
· Review corporate governance trends, recent regulatory developments, and the company’s own corporate governance documents,
policies and procedures.
· Consider topics for discussions during off-season stockholder engagements. |
|
· One-on-One meetings between stockholders, our Directors (if appropriate or requested) and members of management.
· Attend and participate in investor and corporate governance-related events.
· Evaluate potential changes to the Board, corporate governance, and other relevant matters given stockholder feedback. |
10 | 2022
Proxy Statement | Party City Holdco Inc.
Corporate Governance
Board Experience and Diversity
We seek to have a Board that represents diversity as to experience, gender and ethnicity/race,
though we do not have a formal policy with respect to Board diversity. We also seek a Board that reflects a range of talents, ages, skills,
viewpoints, professional experience, educational background and expertise to provide sound and prudent guidance with respect to our operations
and interests.
Corporate Governance Guidelines
and Code of Business Conduct and Ethics
The Board has adopted Corporate Governance Guidelines setting forth guidelines
and standards with respect to the role and composition of the Board, the functioning of the Board and its committees, the compensation
of directors, succession planning and management development, the Board’s and its committees’ access to independent advisers
and other matters. The Nominating and ESG Committee of the Board reviews and assesses corporate governance developments and recommends
to the Board modifications to the Corporate Governance Guidelines as warranted. The Company has also adopted a Corporate Code of Business
Conduct and Ethics for its directors, officers, and employees.
The Corporate Governance Guidelines and Corporate Code of Business Conduct and
Ethics are posted on the Company’s website at investor.partycity.com under the Corporate Governance section. If we make any substantive
amendment to the Corporate Code of Business Conduct and Ethics or grant any waiver, including any implicit waiver, from a provision of
the Corporate Code of Business Conduct and Ethics to certain executive officers, we are obligated to disclose the nature of such amendment
or waiver, the name of the person to whom any waiver was granted, and the date of waiver on our website or in a report on Form 8-K.
Succession Planning and Management Development
CEO & Management Succession Planning |
|
Management Development |
The Board and the Nominating and ESG Committee are required to review senior management succession planning together with the CEO on an annual basis. This succession planning includes the development of policies and principles for selection of a CEO, including succession in the event of an emergency or the retirement of the CEO. |
|
The Board, the Compensation Committee, and the Nominating and ESG Committee review management development together with the CEO on an annual basis. This management development process includes an annual evaluation of the CEO led by the Chair of the Compensation Committee. |
Party City Holdco Inc. | 2022
Proxy Statement | 11
Corporate Governance
Overboarding Policy
We expect that each of our directors will be able to dedicate the time and resources
sufficient to ensure the diligent performance of his or her duties on our behalf, including attending Board and applicable committee meetings.
Accordingly, the Corporate Governance Guidelines provide that Board members should not serve on more than a total of four public company
boards of directors. In addition, Board members who hold the position of executive officer of a public company should not serve on more
than a total of two public company boards (including the board of his or her own company). Further, no member of the Audit Committee may
sit on more than three separate audit committees, unless the Board determines that sitting on a fourth audit committee would not impair the ability of such member to effectively serve on the Audit Committee.
Joel Alsfine currently serves on the audit committee of four public companies,
including the Company. The Board has considered whether such simultaneous service would impair his ability to effectively serve on the
Audit Committee. In its analysis, the Board considered the Committee’s demanding roles and responsibilities and the time commitment
required by such service. The Board also considered the skills and experience of Mr. Alsfine, and his various commitments. After careful
consideration, the Board concluded that Mr. Alsfine’s other audit committee service does not impair his ability to effectively
fulfill his responsibilities as a member of the Audit Committee.
Director Orientation and Continuing Education
All new Directors participate in an orientation program within three months from
their election or appointment. The orientation program includes presentations by senior management on the following aspects: to familiarize
new Directors with the Company’s strategic plans. Additionally, Directors are
encouraged to attend continuing educational programs
offered by the Company or other organizations related to discharging their duties as Board or Committee members. In 2021, we offered the
following resources and supported Director attendance at the following educational programs:
Director Orientation Program |
§ Review of our strategic plan and outlook
§ Presentation on material financial, accounting and risk management issues
§ Review of compliance programs, conflict policies, code of ethics and other controls
§ Introduction to our principal officers, and internal and independent auditors |
Continuing Education |
§ New member orientation
§ Membership with the National Association of Corporate Directors
§ Presentations made by third party advisors, including ESG experts
|
12 | 2022
Proxy Statement | Party City Holdco Inc.
Corporate Governance
Communications with Directors
We are committed to ensuring that the views of stockholders and other interested parties
are heard by the Board or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely
manner. Stockholders and other interested parties may communicate with
the Board or individual directors, as applicable, by sending a letter to the director,
c/o Secretary, Party City Holdco Inc., 80 Grasslands Road, Elmsford, New York 10523. All such letters will be promptly forwarded to the
Board or individual directors, as applicable, by the Secretary.
Board Meetings and Annual Meeting Attendance
During the year ended December 31, 2021, the Board held five (5) meetings. Each
of the current directors attended at least 75% of the total of (i) the meetings of the Board held during the period for which he
or she has been a director and (ii) the meetings of the committee(s) on which that director served during such period.
We do not have a formal policy regarding director attendance at our annual meeting
of stockholders. Each director who is up for election at the Annual Meeting is expected to attend the Annual Meeting online. All eleven
directors then in office attended the 2021 annual meeting of stockholders.
2021 Average Board Attendance |
100% |
In addition to regular meetings of the full Board, the Company’s independent
directors regularly meet in executive sessions without management participation. Currently, Norman S. Matthews, Chair, presides over such
executive sessions.
Board Mission
The core responsibility of the directors is to exercise their business judgment to act
in the best interests of the Company and its stockholders, and in making this determination, directors may take into consideration the
interests of other stakeholders.
Directors must fulfil their responsibilities consistent with their fiduciary duties to the Company and
its stockholders, in compliance with all applicable laws and regulations.
Party City Holdco Inc. | 2022
Proxy Statement | 13
Corporate Governance
Environmental, Social and Governance Matters
|
ESG Oversight |
At the board level, our Nominating and ESG Committee oversees our ESG programs, policies
and practices. The Nominating and ESG Committee’s duties include monitoring and evaluating the Company’s programs, policies
and practices relating to ESG issues and making recommendations to the Board regarding the Company’s overall ESG strategy.
In 2021, we continued to advance our ESG strategy by establishing a management-level
ESG Steering Committee, which is comprised of senior leaders and cross-functional members from major business functions. The purpose of
the ESG Steering Committee is to (i) establish programs,
policies and practices relating to ESG matters and (ii) assist the Nominating
and ESG Committee in fulfilling its oversight responsibilities with respect to ESG matters.
We have conducted an ESG Priority Assessment to identify the ESG topics that are
most relevant for our business and stockholders, and intend to use the results of this assessment to guide our efforts as we further develop
and advance our ESG strategy in an effort to enhance our long-term value. We believe our approach to ESG management helps to enable us
to create long-term value for our stockholders by advancing the interests of our other stakeholders.
|
Human Capital Management |
Our purpose is to inspire and make it easy for our customers to create unforgettable
memories. We seek to embed this purpose and the principles that guide us in how we work every day – Customer First, People Matter,
It Can Be Done, and Celebrate – into the culture through enterprise-wide change initiatives, grounded in the retention and engagement
of our team members.
Attracting and Engaging Employees
We endeavor to make it easy to be a successful employee at Party City. We offer comprehensive
on-boarding programs as well as a variety of leadership, technical and compliance training that enables our employees to contribute to
the company’s most important initiatives. Our leaders also participate in training focused specifically on leading in a hybrid environment.
We have advanced engagement by fostering two-way dialogues
via employee surveys and communication forums as well as enhanced and simplified
technology-enabled people operations support and access to employee information. We have an “open door” policy for employees
to report concerns and we also provide an anonymous reporting hotline available in multiple languages and managed by an independent third
party.
Total Rewards
Our total rewards and benefits programs have been harmonized across the enterprise
to maximize effectiveness and to accelerate eligibility for participation. We offer comprehensive benefits including medical, dental and
vision, as well as a healthcare concierge that partners with employees to more effectively and efficiently navigate the healthcare system.
We have implemented and expanded reward programs tied to short and long-term priorities and performance. We believe
that offering our
team members access to comprehensive total rewards programs are important steps to drive employee retention and positive employee relations.
We have also improved market competitiveness by making significant investments in compensation to attract, retain and engage our talent
in our retail stores and throughout our manufacturing plants and in our distribution centers.
Talent Attraction
We have redesigned our talent attraction and succession management approach from
the top down, which we believe will improve our implementation of key strategies to address
localized market conditions. We believe these
targeted efforts meet immediate and long-term staffing needs and build capability to deliver our overall business strategy.
14 | 2022
Proxy Statement | Party City Holdco Inc.
Corporate Governance
|
Diversity, Equity, Inclusion, and Belonging |
We designed our diversity, equity, inclusion, and belonging (“D, E, I & B”)
strategy in 2020, and, in 2021, we furthered our strategy by focusing on three core components: raising awareness, creating a learning
culture, and developing our infrastructure to embed diversity, equity, inclusion and belonging into our people practices and behaviors.
We also implemented an Enterprise Belonging Council and a Diversity Review Committee, both fueled by employee participation and leadership
commitment. We endeavor to weave the key tenants
of our D, E, I & B strategy into the fabric of our transformation and people programs
and processes.
Party City is also committed to working and partnering with small businesses across
the nation and in particular minority and women owned businesses. As an example, over a third of the businesses we employ for the repair
and maintenance of our retail stores are minority and women owned. We are proud of this accomplishment and plan to continue to seek new
opportunities for our small business partners.
|
Safety |
Safety is a priority and we have invested in training and awareness campaigns to promote
safe operating practices in our manufacturing plants and distribution centers, stores and corporate offices.
We maintained a rigorous focus on protocols and safety practices including masking, social distancing, temperature checks and sanitizing
and we continue to invest in resources to track and manage COVID-19 cases.
|
Environmental Sustainability |
The following summarizes some of the initiatives that we have undertaken to support
environmentally sustainable practices in our own operations and in the operations of suppliers and customers:
| § | Using energy, land, air, and water resources more efficiently in facilities and processes; |
| § | Implementing environmental and energy conservation programs; |
| § | Increasing use of recycled and recyclable materials in product and packaging; |
| § | Using responsibly sourced timber products, including FSC-certified material; |
| § | Reducing packaging materials, especially resin-based items; |
| § | Expanding the breadth of our consumer products offerings to include renewably sourced
items (such as sugar cane, corn, or bamboo) and items that extend beyond single use (such as ceramics); |
| § | Reducing waste and energy consumption at company-owned facilities; |
| § | Identifying products and packaging that can be replaced or redesigned to lessen environmental impact; and |
| § | Communicating with consumers about proper use, re-use, and disposal of our branded products. |
In addition, as part of its oversight responsibilities, Party City’s ESG
Steering Committee plans to continue to examine and assess (i) strategies regarding the use of sustainable materials and packaging for
our products and (ii) various potential environmental sustainability measures and initiatives, including greenhouse gas emission measurement
and reduction. To address these strategies and potential measures and initiatives effectively and efficiently, Party City’s ESG
Steering Committee has formed a number of ESG working groups, including ESG working groups focusing on product development, merchandising,
manufacturing, balloons,
logistics and transportation, and facilities and energy. Each ESG working group is comprised of Party City personnel with
operational expertise that is relevant to the working group’s area of focus. These ESG working groups will assist the ESG Steering
Committee with respect to its responsibility to establish programs, policies and practices relating to ESG matters by examining and assessing
various potential ESG measures and initiatives, including potential environmental sustainability measures and initiatives, with strategic
direction and oversight provided by the ESG Steering Committee.
Party City Holdco Inc. | 2022
Proxy Statement | 15
Corporate Governance
|
Our ESG Governance Structure |
|
Board of Directors |
|
|
The Board reviews ESG priorities, sets
the strategic agenda and “from the top,”
and establishes key oversight features.
|
The Board receives updates on the Company’s
ESG program and progress from the Nominating and ESG Committee.
|
|
|
Nominating and ESG Committee |
|
|
The Nominating and ESG Committee monitors and evaluates our programs, policies and practices relating to ESG issues and makes recommendations to the Board regarding our overall ESG strategy. |
|
|
The Nominating and ESG Committee engages with the
management level ESG Steering Committee to ensure alignment on the Board’s ESG priorities.
|
The Nominating and ESG Committee receives reports
on progress against ESG Steering Committee priority workstreams.
|
|
|
ESG Steering Committee |
|
|
Our management level ESG Steering Committee establishes our ESG programs, policies and practices, and assists the Nominating and ESG Committee in fulfilling its oversight responsibilities with respect to ESG matters. |
|
|
The ESG Steering Committee
delegates to the ESG Working Groups and
promotes buy-in from across the business.
|
The ESG Working Groups identify priority workstreams
as seen “from the ground floor” and provide updates on progress to the ESG Steering Committee.
|
|
|
ESG Working Groups |
|
|
The ESG working groups are comprised of Party City personnel with relevant operational expertise, and they assist the ESG Steering Committee in establishing programs, policies and practices relating to ESG matters. |
|
|
|
|
|
Product |
|
Manufacturing |
|
Balloons |
|
Merchandising |
|
|
|
|
|
|
|
Facilities
& Energy |
|
Human
Resources |
|
Legal /
Compliance |
|
Logistics &
Transportation |
16 | 2022
Proxy Statement | Party City Holdco Inc.
Corporate Governance
Committees of the Board
Our Board has established an Audit Committee, a Compensation Committee and a Nominating
and ESG Committee. Each committee operates pursuant to a charter that has been approved by the Board. The charters for each of our Board
committees are available on our website at investor.partycity.com under the Corporate Governance section. References to any website addresses
are not intended to function as hyperlinks and, except as specified herein, the information contained on or accessible through such websites
is not part of this Proxy Statement.
The current composition of each committee is as follows:
(1) |
Joel Alsfine was appointed to the Audit Committee in September 2020. |
(2) |
Steven J. Collins was appointed Chair of the Compensation Committee in July 2020. |
(3) |
James G. Conroy was appointed Chair of the Nominating and ESG Committee in January 2020. |
(4) |
Sarah Dodds-Brown was appointed to the Audit Committee in October 2020. |
(5) |
John A. Frascotti was appointed to the Audit Committee in January 2020. |
(6) |
Michelle Millstone-Shroff was appointed to the Compensation Committee in January 2020. Prior to January 2020, she served as a member of the Audit Committee. |
|
|
|
|
Committee Chair |
Committee Member |
Party City Holdco Inc. | 2022
Proxy Statement | 17
Corporate Governance
Audit Committee
Members |
Primary Duties and Responsibilities |
William S. Creekmuir (Chair)
Joel Alsfine
Sarah Dodds-Brown
John A. Frascotti
Our Board has determined that each director appointed to the Audit Committee is
“financially literate” as described in the NYSE listing standards, and that each of Messrs. Alsfine and Creekmuir are
each an “audit committee financial expert” within the meaning of the SEC regulations and has accounting or related financial
management expertise.
Our Board has adopted a written charter pursuant to which the Audit Committee operates,
which is reviewed periodically and at least annually.
Meetings
The Audit Committee met five times during 2021.
Attendance
The average attendance of director nominees at Audit Committee meetings in 2021
was 100%. |
§ Appoint, compensate, retain and oversee the work of any registered public accounting firm engaged
for the purpose of preparing or issuing an audit report or performing other audit, review or attest services and review and appraise the
audit efforts of our independent accountants;
§ Review our reports filed with or furnished to the SEC that include financial statements, results or
guidance, and produce an Audit Committee report for inclusion in our annual proxy statement or annual report;
§ Establish procedures for the receipt, retention and treatment of complaints regarding accounting,
internal accounting controls or auditing matters;
§ Engage independent counsel and other advisers, as necessary;
§ Determine funding of various services provided by accountants or advisers retained by the Committee;
§ Serve as an independent and objective party to oversee our internal controls and procedures system;
§ Oversee compliance with legal and regulatory requirements, including any violations of the Code of
Business Conduct and Ethics;
§ Review policies with respect to risk assessment and risk management, including appropriate guidelines
and policies to govern the process;
§ Oversee our charitable activities along with our business continuity and disaster preparedness planning;
§ Review our public disclosures with respect to any sustainability accounting standards;
§ Oversee the scope of work and performance of the internal audit function; and
§ Provide an open avenue of communication among the independent accountants, financial and senior management
and the Board of Directors.
|
18 | 2022
Proxy Statement | Party City Holdco Inc.
Corporate Governance
Compensation Committee
Members |
Primary Duties and Responsibilities |
Steven J. Collins (Chair)
Norman S. Matthews
Michelle Millstone-Shroff
Our Board has adopted a written charter under which the Compensation Committee
operates, and the charter is reviewed annually.
Meetings
The Compensation Committee met six times during 2021.
Attendance
The average attendance of director nominees at Compensation Committee meetings
in 2021 was 100%. |
§ Review and approve corporate and individual goals and objectives relevant to executive officer compensation
and evaluation of the performance of executive officers in light of the goals and objectives;
§ Review and approve executive officer compensation;
§ Oversee the annual evaluation of the performance, and compensation, of the Company’s Chief Executive
Officer;
§ Evaluate appropriate peer group benchmarking in connection with evaluation of executive officer and
director compensation;
§ Recommend to the Board regarding the adoption of new incentive compensation and equity-based plans,
and administration of our existing incentive compensation and equity-based plans;
§ Recommend to the Board regarding compensation of the members of the Board and its committees;
§ Review and collaborate with management the compensation discussion and analysis to be included in
our filings with the SEC and preparation of an annual Compensation Committee report for inclusion in our annual proxy statement or annual
report;
§ Review and approve any significant non-executive compensation and benefits plans;
§ Analyze risk as part of the review of our compensation policies and practices for all employees;
§ Appoint, compensate, retain, and oversee the work of any compensation consultant; and
§ Review significant policies, practices, and procedures concerning human resource-related matters.
|
Party City Holdco Inc. | 2022
Proxy Statement | 19
Corporate Governance
Nominating and ESG Committee
Members |
Primary Duties and Responsibilities |
James G. Conroy (Chair)
Steven J. Collins
Norman S. Matthews
Our Board has adopted a written charter pursuant to which the Nominating and ESG
Committee operates, which is reviewed periodically.
Meetings
The Nominating and ESG Committee met four times during 2021.
Attendance
The average attendance of director nominees at Nominating and ESG Committee meetings
in 2021 was 100%. |
§ Recruit and retain qualified persons to serve on our Board;
§ Propose such individuals to the Board for nomination for election as directors and to fill any vacancies
on the Board;
§ Evaluate the size and composition of our Board and committees;
§ Review the practices and policies with respect to directors, including stock ownership guidelines;
§ Oversee the annual evaluation of the performance of the Board;
§ Oversee ESG programs, policies and practices;
§ Review policies with respect to significant issues of corporate public responsibility, and monitor
key public policy trends, issues, regulatory matters and other concerns that may affect our business, strategies, operations, performance, or reputation;
§ Establish and oversee program with regard to Board education; and
§ Periodically assess the Company’s Corporate Governance Guidelines. |
20 | 2022
Proxy Statement | Party City Holdco Inc.
Upon the recommendation of the Nominating and ESG Committee, the Board has nominated
Messrs. Alsfine, Collins, Conroy, Creekmuir, Frascotti, Matthews and Weston and Mses. Dodds-Brown, Fleiss and Millstone-Shroff to serve
as directors. Each nominee has consented to be named in this proxy statement and agreed to continue to serve as a director if elected
by the stockholders. If any of them should become unavailable, the Board may designate a substitute nominee. In that case, the Company
will provide additional disclosures to stockholders, and the proxy holders named as proxies in the accompanying proxy card will vote for
the Board’s substitute nominee. Alternatively, the Board may leave the position vacant or reduce the size of the Board.
James M. Harrison, who has served as a director of the Company since 2012, will complete his tenure as a Board member at the Annual Meeting.
The Board thanks Mr. Harrison for his years of dedicated service to the Board and his significant contributions to the Company.
Director Nominees
General Information
Below is a summary of the Nominees for election as Director at the Annual Meeting,
their ages as of April 11, 2022 and the year they were each first elected to the Board.
Name |
|
|
Age |
|
|
Position |
|
|
Director Since |
|
Norman S. Matthews |
|
|
89 |
|
|
Non-Executive Chair and Director |
|
|
2013 |
|
Joel Alsfine |
|
|
52 |
|
|
Director |
|
|
2020 |
|
Steven J. Collins |
|
|
53 |
|
|
Director |
|
|
2012 |
|
James G. Conroy |
|
|
52 |
|
|
Director |
|
|
2019 |
|
William S. Creekmuir |
|
|
66 |
|
|
Director |
|
|
2016 |
|
Sarah Dodds-Brown |
|
|
49 |
|
|
Director |
|
|
2020 |
|
Jennifer Fleiss |
|
|
38 |
|
|
Director |
|
|
2020 |
|
John A. Frascotti |
|
|
61 |
|
|
Director |
|
|
2019 |
|
Michelle Millstone-Shroff |
|
|
47 |
|
|
Director |
|
|
2019 |
|
Bradley M. Weston |
|
|
57 |
|
|
Chief Executive Officer and Director |
|
|
2020 |
|
We seek nominees who possess strong personal and professional ethics, integrity
and values, are business savvy and genuinely interested in the Company, and are committed to representing the long-term interests of the
stockholders. The Board believes that diversity in thought, experience, backgrounds, skills and viewpoints contributes to and enhances
the Board’s capabilities. In identifying and recommending nominees to the Board, the Nominating Committee will consider a number
of factors, including the skills, qualifications and experience described below.
We believe that all of our nominees possess the professional and personal qualifications
necessary for board service.
Party City Holdco Inc. | 2022
Proxy Statement | 21
Proposal 1
Skills, Qualifications, and Experience
Our nominees contribute to our Board the individual experiences, qualifications,
attributes, skills and self-identified diversity traits as shown in the following matrix. The skills identified in the matrix are intended
as a high-level summary and not an exhaustive list:
|
MATTHEWS |
ALSFINE |
COLLINS |
CONROY |
CREEKMUIR |
DODDS-BROWN |
FLEISS |
FRASCOTTI |
MILLSTONE-SHROFF |
WESTON |
Brand Marketing Experience |
|
|
|
|
|
|
|
|
|
|
Corporate Social Responsibility Experience |
|
|
|
|
|
|
|
|
|
|
Environmental & Sustainability Experience |
|
|
|
|
|
|
|
|
|
|
Executive Leadership Experience |
|
|
|
|
|
|
|
|
|
|
Financial/Capital Allocation Experience |
|
|
|
|
|
|
|
|
|
|
Governmental & Public Policy Experience |
|
|
|
|
|
|
|
|
|
|
Human Capital Management Experience |
|
|
|
|
|
|
|
|
|
|
Industry Experience |
|
|
|
|
|
|
|
|
|
|
International Operations & Distribution Experience |
|
|
|
|
|
|
|
|
|
|
Public Company Board Experience |
|
|
|
|
|
|
|
|
|
|
Technology Experience |
|
|
|
|
|
|
|
|
|
|
Race/Ethnicity |
|
|
|
|
|
|
|
|
|
|
African American or Black |
|
|
|
|
|
|
|
|
|
|
White or Caucasian |
|
|
|
|
|
|
|
|
|
|
Gender |
|
|
|
|
|
|
|
|
|
|
Female |
|
|
|
|
|
|
|
|
|
|
Male |
|
|
|
|
|
|
|
|
|
|
22 | 2022
Proxy Statement | Party City Holdco Inc.
Proposal 1
Director Nominee Skills
The experiences, qualifications, attributes, and skills of our nominees were assessed
using the following definitions:
Brand Marketing Experience |
We believe it is important for our directors to have brand marketing experience because of the importance of image and reputation in our business and our objective to maintain our standing as one of the most recognized and respected party good supplier brands in the world. |
Corporate Social Responsibility Experience |
Experience in advocating for gender and racial equality, human rights and effective corporate citizenship ensures that the Company remains at the forefront of advancing social justice, diversity and inclusivity. |
Environmental & Sustainability Experience |
Experience in environmental and sustainability topics strengthens the Board’s oversight and assures that strategic business imperatives and long-term value creation for shareholders are achieved within a responsible and sustainable business model. |
Executive Leadership Experience |
We believe that it is important for our directors to have served in executive leadership roles at other organizations (for example, as a Chief Executive Officer or President), which demonstrates strong abilities to motivate and manage others, to identify and develop leadership qualities in others and to manage organizations. Our global scale and complexity require aligning multiple areas of operations, including, but not limited to, marketing, merchandising, supply chain, human resources, real estate and technology. Directors with executive leadership experience are uniquely positioned to contribute practical insight into business strategy and operations and support the achievement of strategic priorities and objectives. |
Financial/Capital Allocation Experience |
We are committed to strong financial discipline, effective allocation of capital, an appropriate capital structure, risk management, legal and regulatory compliance and accurate disclosure practices. We believe that directors who have senior financial leadership experience at large global organizations and/or financial institutions and directors who are experienced allocators of capital are instrumental to our success. |
Governmental & Public Policy
Experience |
We believe that it is important for our directors to have experience in public policy to help us address significant public policy issues, adapt to different business and regulatory environments and facilitate our work with various governmental entities both domestically and around the world. |
Human Capital Management Experience |
It is important that our directors have experience managing and developing values and culture in a global work force because our people are one of our most valuable assets. |
Industry Experience |
We seek directors who have experience in a broad cross section of industries, including consumer products, retail and technology, and other experiences useful in understanding our operations. |
International Operations & Distribution Experience |
The Company has operations around the globe. Accordingly, international operations experience is important for our directors to have, especially as we continue to expand globally and develop new channels of distribution. |
Public Company Board Experience |
Directors who have served on other public company boards can offer advice and perspective with respect to board dynamics and operations, relations between the board and our management and other matters, including corporate governance, executive compensation, risk management and oversight of strategic, operational, compliance-related matters and relations with shareholders. |
Technology Experience |
Our business has become increasingly complex as we have enhanced our offerings, expanded our global footprint and increased online customer ordering capabilities. This increased complexity requires a sophisticated level of technology resources and infrastructure as well as technological expertise, including with respect to responsible innovation. And, as a consumer retail company, it is important for our directors to have digital and social media experience, which can provide insight and perspective with respect to our various business functions. |
Party City Holdco Inc. | 2022
Proxy Statement | 23
Proposal 1
Director Nominee Biographies
Norman S. Matthews
Non-Executive Chair and Director
Director Since |
Age |
Committees |
May 2013
Independent |
89 |
Compensation
Nominating and ESG |
Norman S. Matthews
has been a member of our Board since May 2013 and has served as non-executive Chair of the Board since June 2018.
Director Qualifications
§ Mr. Matthews’ is qualified to serve on our Board due to his extensive experience in strategic
marketing and sales, his over 30 years of experience as a senior business leader in marketing and merchandising at large public companies
and his valuable expertise in compensation programs and strategy. |
Professional Experience and Biography
§ Mr. Matthews has worked as an independent consultant and venture capitalist since 1989.
§ From 1978 to 1988, Mr. Matthews served in various senior management positions for Federated Department Stores, Inc., including
President from 1987 to 1988.
§ In 2005, Mr. Matthews was named as one of eight outstanding directors by the Outstanding Directors Exchange (an annual award
voted on by peer directors and awarded to an outstanding director for the key role he played during a crisis, business transformation
or turnaround).
§ Mr. Matthews is a Princeton University graduate, and earned his MBA from Harvard Business School. |
Current Public Company Directorships
§ The Children’s Place, Inc. (NASDAQ: PLCE) (Chair)
§ Grocery Outlet (NASDAQ: GO)
§ ThredUp (NASDAQ: TDUP).
Other Experience
§ Director emeritus of The Progressive Corporation, Sunoco, Inc., Toys ‘R’ Us, Inc., Federated Department Stores, Inc.,
and Henry Schein, Inc. and trustee emeritus at the American Museum of Natural History.
|
Joel Alsfine
Senior Advisor, MSD Capital
Director Since |
Age |
Committees |
September 2020
Independent |
52 |
Audit |
Joel Alsfine
has been a member of our Board since September 2020.
Director Qualifications
§ Mr. Alsfine is qualified to serve on our Board due to his extensive capital markets, investment, financial and risk management
experience from his executive and consulting roles, as well as his public company directorships and experience serving as an analyst focusing
on public company equity. Mr. Alsfine was nominated to the Board by the Nominating Parties pursuant to the Board Nomination Agreement. |
Professional Experience and Biography
§ Mr. Alsfine is an independent consultant. He primarily provides advice to family offices and other family-backed investment organizations.
He is also a Senior Advisor to MSD Capital, an investment firm formed to manage the capital of Michael Dell and his family. Mr. Alsfine
has held this role since July 2020.
§ Until July 2020, Mr. Alsfine was a Partner and the head of the Tactical Investments Group at MSD Capital. Mr. Alsfine joined MSD
Capital in 2002 as an analyst focusing on investing in public equity securities and subsequently became the portfolio manager of a large,
concentrated public equity portfolio. Mr. Alsfine became a Partner of MSD in February 2014.
§ Prior to joining MSD, Mr. Alsfine worked at TG Capital Corp, a single-family investment office investing across all asset
classes, McKinsey & Company, and accounting firm Fisher Hoffman Stride.
§ Mr. Alsfine earned an MBA from Stanford Graduate School of Business and a Bachelor of Commerce (Honors) in Accounting from the
University of the Witwatersrand in South Africa. |
Current Public Company Directorships
§ Asbury Automotive Group Inc. (NYSE: ABG)
§ Life Time Group Holdings, Inc. (NYSE: LTH)
§ CC Neuberger Principal Holdings II (NYSE: PRPB), a special purpose acquisition company.
|
24 | 2022
Proxy Statement | Party City Holdco Inc.
Proposal 1
Director Nominee Biographies
Steven J. Collins
Managing Director, Exeter Capital
Director Since |
Age |
Committees |
July 2012
Independent |
53 |
Compensation (Chair)
Nominating and ESG |
Steven J.
Collins has been a member of our Board since July 2012.
Director Qualifications
§ Mr. Collins is qualified to serve on our board of directors due to his experience serving as a director of various public and private companies and significant knowledge of the retail and consumer sectors. |
Professional Experience and Biography
§ Mr. Collins founded Exeter Capital, a private equity firm, in 2019 and serves as a Managing Director.
§ Prior to joining Exeter Capital, Mr. Collins was a Managing Director at Advent International, a global private equity firm,
from 2007 to 2017. Mr. Collins joined Advent in 1995 and re-joined after graduate school in 2000.
§ He earned a B.A. and B.S. from the University of Pennsylvania’s Wharton School and an MBA from Harvard Business School. |
Current Public Company Directorships
§ Kirkland’s Inc. (NASDAQ: KIRK)
Prior Public Company Directorships in Last 5 Years
§ Bojangles (NASDAQ: BOJA), a chain of fast-food restaurants from 2011 to 2019.
Other Experience
§ Serves on the boards of several privately-held businesses. |
James G. Conroy
President, CEO and Director, Boot Barn
Director Since |
Age |
Committees |
September 2019
Independent |
52 |
Nominating and ESG (Chair) |
James G. Conroy
has been a member of our Board since September 2019.
Director Qualifications
§ Mr. Conroy is qualified to serve on our board of directors due to his expertise in the strategic
and operational aspects of the retail industry, which he has gained over 30 years of experience. |
Professional Experience and Biography
§ Mr. Conroy has been a director and the President and Chief Executive Officer of Boot Barn (NYSE: BOOT) since 2012.
§ Prior to joining Boot Barn, Mr. Conroy served in various roles at Claire’s Stores, including Chief Operating Officer
and Interim Co-Chief Executive Officer during 2012, President from 2009 to 2012 and Executive Vice President from 2007 to 2009.
§ Previously, he held roles at Viacom Entertainment in their Retail Group from 1996 to 1998, Kurt Salmon Associates from 2003 to
2005 and Deloitte Consulting.
§ Mr. Conroy earned a bachelor’s degree in business management and marketing, and an MBA from Cornell University. |
Current Public Company Directorships
§ Boot Barn (NYSE: BOOT)
Other Experience
§ Currently serves on the boards of Children’s Hospital of Orange County and Orange County School of the Arts (OCSA). |
Party City Holdco Inc. | 2022
Proxy Statement | 25
Proposal 1
Director Nominee Biographies
William S. Creekmuir
President, Pinnacle Search Partners
Director Since |
Age |
Committees |
March 2016
Independent |
66 |
Audit (Chair) |
William S.
Creekmuir has been a member of our Board since March 2016.
Director Qualifications
§ Mr. Creekmuir is qualified to serve on our Board of Directors due to his extensive experience
in financial executive roles and deep knowledge of finance. |
Professional Experience and Biography
§ Mr. Creekmuir is President of Pinnacle Search Partners, LLC (“Pinnacle”), a global executive search firm, and has served
in that capacity since December 2015. Originally hired as a consultant to Pinnacle in 2014, he quickly assumed roles of continuing responsibility
and became owner of the company in December 2015.
§ From October 2011 through January 2015, Mr. Creekmuir served as an independent consultant, including consulting for Pinnacle
and acting as the Interim Chief Financial Officer of Sleep Innovations, Inc.
§ Mr. Creekmuir served as Executive Vice President and Chief Financial Officer of Simmons Bedding Company from 2000 to 2011.
§ Mr. Creekmuir served as the Executive Vice President and Chief Financial Officer of LADD Furniture, Inc. from 1992 to 2000.
§ His earlier years were spent with Big 4 global accounting firm KPMG where he was ultimately named Partner and held responsibilities
in the United States and Ireland.
§ Mr. Creekmuir earned a BS in Business Administration from the University
of North Carolina at Chapel Hill. |
Current Public Company Directorships
§ Flexsteel Industries, Inc. (NASDAQ: FLXS)
Other Experience
§ Is a member of the President’s Advisory Council at Elon University, is on the American Home Furnishings Alliance Solution
Partners board, and is Chair of the Statistics Committee of the International Sleep Products Association. |
Sarah Dodds-Brown
EVP & Managing Counsel, American Express
Director Since |
Age |
Committees |
October 2020
Independent |
49 |
Audit |
Sarah Dodds-Brown
has been a member of our Board since October 2020.
Director Qualifications
§ Ms. Dodds-Brown is qualified to serve on our Board of Directors due to her extensive
expertise in regulatory, legal, privacy, consumer and merchant matters, as well as her significant experience activating cultural engagement
and promoting diversity and inclusion across global organizations. |
Professional Experience and Biography
§ Since 2005, Ms. Dodds-Brown has served in a variety of leadership positions in the General Counsel’s Organization at American
Express (NYSE: AXP), including currently as Executive Vice President and Managing Counsel leading the Global Enterprise Services &
U.S. Market. Her team provides legal expertise and advice across a range of global subject matter and regulatory areas, including digital
transactions, technology, intellectual property, antitrust, bank regulatory, advertising and marketing and privacy and data law. Prior
to that, Ms. Dodds-Brown led the U.S. Business Legal Group providing legal and regulatory support across the company’s U.S. consumer,
commercial and global merchant and network services businesses.
§ Ms. Dodds-Brown currently serves as an Adviser on an American Law Institute project focused on developing principles for a
data economy.
§ Previously, Ms. Dodds-Brown worked at Paul, Weiss, Rifkind, Wharton & Garrison LLP in the firm’s M&A and private
equity practices.
§ Ms. Dodds-Brown earned a JD from Columbia University School of Law and a B.A. from Duke University. |
Other Experience
§ Is active with educational and civic organizations, including the Board of Trustees for The WNET Group and Rye Country Day School
and the Board of Directors for DirectWomen. |
26 | 2022
Proxy Statement | Party City Holdco Inc.
Proposal 1
Director Nominee Biographies
Jennifer Fleiss
Venture Partner, Volition Capital
Co-Founder & Director, Rent the Runway
Director Since |
Age |
|
September 2020
Independent |
38 |
|
Jennifer Fleiss
has been a member of our Board since September 2020.
Director Qualifications
§ Ms. Fleiss is qualified to serve on our board of directors due to her significant executive experience, digital expertise, and record of building unique marketplace platforms that disrupt the traditional shopping experience and enable leading retail businesses. |
Professional Experience and Biography
§ Ms. Fleiss is a Venture Partner at Volition Capital, a growth equity firm, since February 2021.
§ In November 2008, Ms. Fleiss co-founded Rent the Runway, Inc. (“Rent the Runway”), an online service that provides
designer dress and accessory rentals.
§ In March 2017, Ms. Fleiss co-founded Walmart’s text-based shopping service (previously named Jetblack).
§ Additionally, Ms. Fleiss currently serves as an adviser to and investor in consumer start-ups and venture funds.
§ Ms. Fleiss earned an undergraduate degree from Yale University and an MBA from Harvard Business School. |
Current Public Company Directorships
§ Rent the Runway Inc (NASDAQ:RENT)
§ Apollo Strategic Growth Capital (NYSE: APSG), a special purpose acquisition company within Apollo Global Management, Inc.
Other Experience
§ Board member at Shutterfly, Inc., a photography products and image sharing company.
|
John A. Frascotti
Special Advisor & Director, Hasbro
Director Since |
Age |
Committees |
September 2019
Independent |
61 |
Audit |
John A. Frascotti
has been a member of our Board since September 2019.
Director Qualifications
§ Mr. Frascotti is qualified to serve on our board of directors due to his experience as a senior executive, and his extensive experience in the strategic and operational aspects of the consumer products, gaming, and entertainment industries. |
Professional Experience and Biography
§ Mr. Frascotti served as the President and Chief Operating Officer of Hasbro, Inc. (NASDAQ:HAS) from 2018 until his retirement on
March 31, 2021, and served as a Special Advisor to Hasbro from April 1, 2021 until March 31, 2022. Mr. Frascotti joined Hasbro
in 2008 as Executive Vice President and Chief Marketing Officer, became President of Hasbro Brands in 2014, and became President of Hasbro
in 2017. In 2018, he was also named Chief Operating Officer. Mr. Frascotti served as a member of Hasbro’s Board of Directors from
2018 to 2021.
§ Before joining Hasbro, Mr. Frascotti served in several senior executive positions at Reebok International Ltd. and myteam.com
and the law firms of Mitchell, Silberberg & Knupp in Los Angeles and Palmer & Dodge in Boston.
§ Mr. Frascotti earned his B.A. in Economics from Yale University, where he graduated Phi Beta Kappa and summa cum laude,
and his JD, cum laude, from Harvard Law School. |
Current Public Company Directorships
§ The Children's Place, Inc. (NASDAQ: PLCE), a specialty retailer of children’s apparel and accessories.
Other Experience
§ Was a member of the Board of the SeriousFun Children's Network.
§ Was a member of the Board of Directors of Corus Entertainment, Inc. in Toronto, Canada, the Toy Association, the Discovery Family
Channel, and the Hasbro Children’s Fund. |
Party City Holdco Inc. | 2022
Proxy Statement | 27
Proposal 1
Director Nominee Biographies
Michelle Millstone-Shroff
Former President and COO, Buy Buy Baby, Inc.
Director Since |
Age |
Committees |
February 2019
Independent |
47 |
Compensation |
Michelle Millstone-Shroff
has been a member of our Board since February 2019.
Director Qualifications
§ Ms. Millstone-Shroff’s significant strategic and operating experience at omni-channel consumer-facing
businesses, including experience scaling a specialty retailer from less than $100 million in revenue to over $1 billion, led to the conclusion
she should serve as a Director. |
Professional Experience and Biography
§ Ms. Millstone-Shroff serves as an independent advisor to various businesses, including as a Senior Advisor to McKinsey &
Company, a global management consulting firm, since April 2019.
§ From 2007 to 2018, Ms. Millstone-Shroff was the President and Chief Operating Officer of buybuy Baby (NYSE: BBBY), the nation’s
leading retailer of items for infants and toddlers.
§ Concurrent with her role at buybuy Baby, Ms. Millstone-Shroff was the Chief Customer Experience Officer of Bed Bath & Beyond,
Inc from 2015 to 2018.
§ During her fifteen years at Bed Bath & Beyond, Inc. (NYSE: BBBY), Ms. Millstone-Shroff also served in senior roles in
strategy and business development.
§ Earlier in her career, she worked at McKinsey & Company, with a focus on retail- and consumer-oriented companies.
§ Ms. Millstone-Shroff is a graduate of Harvard Business School, where she earned an MBA with distinction, and the University
of Pennsylvania, where she earned a dual B.S. summa cum laude in strategic management from The Wharton School and a B.A. in psychology
summa cum laude from The College of Arts & Sciences. |
Current Public Company Directorships
§ Public Storage (NYSE: PSA), a self-storage REIT
§ Neiman Marcus Group Inc. (NYSE: NMG.A), a chain of luxury department stores
Other Experience
§ Ms. Millstone-Shroff serves as a director of Athletico Physical Therapy clinics, a chain of physical therapy clinics and Nanit,
a private technology start-up that develops smart baby monitor devices. |
Bradley M. Weston
President, CEO & Director, Party City Holdco Inc.
Director Since |
Age |
|
April 2020
|
57 |
|
Bradley M.
Weston became the Company’s President & Chief Executive Officer effective April 1, 2020 and has been a member of the Board
since April 2020.
Director Qualifications
§ Mr. Weston’s extensive experience in the retail industry and his roles as Chief Executive
Officer here and at Petco led to the conclusion that he should serve as a director of our Company. |
Professional Experience and Biography
§ In July 2019, Mr. Weston joined Party City Party City Holdco Inc. as President and also was appointed Chief Executive Officer of
Party City Retail Group.
§ Prior to joining the Company, Mr. Weston served as Chief Executive Officer at Petco (NASDAQ: WOOF) from January 2017 to June
2018.
§ From October 2011 to December 2016, Mr. Weston served as the President and Chief Merchandising Officer of Petco.
§ Before joining Petco, Mr. Weston held several senior executive positions at Dick’s Sporting Goods (NASDAQ: DKS)
from 2006 to 2011, including Chief Merchandising Officer.
§ Mr. Weston earned a B.S. in business administration from the University of California, Berkeley. |
Current Public Company Directorships
§ Boot Barn (NYSE: BOOT), a retailer of western and work-related footwear, apparel and accessories.
Other Experience
§ Was a member of the Board of Directors of National Retail Federation, the world’s largest retail trade association.
§ Was a member of the Board of Directors of Petco.
|
28 | 2022
Proxy Statement | Party City Holdco Inc.
Proposal 1
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR”
EACH OF THE NOMINEES SET FORTH ABOVE.
Director Compensation for Fiscal Year 2021
| § | Fees for committee service and service on the Board and committees of subsidiary bank to differentiate individual pay based on workload |
| § | Emphasis on equity in the overall compensation mix |
| § | Full-value equity grants under a fixed-value annual grant policy with time-based vesting |
| § | No performance-based equity awards |
| § | A robust stock ownership guideline set at five times the annual cash retainer to support stockholder alignment |
| § | Stockholder approved governance limit of $500,000 on the total value of equity compensation that may be granted to a non-employee
director each fiscal year |
| § | Policies prohibiting hedging and pledging by our directors |
Annual Compensation
Directors who are also our employees receive no additional compensation for serving
on our Board during such time they are an employee.
Our current non-employee director compensation was developed taking into
account the recommendations developed from a 2017 analysis of similar programs of our peer companies, which was performed
by the Compensation Committee’s independent compensation consultant for 2021, Semler Brossy Consulting Group, LLC. None of these
retainer amounts changed in fiscal year 2021.
Under the program, each non-employee director is eligible to receive a cash retainer as follows:
|
|
|
|
($) |
|
|
Annual cash retainer for Board service: |
|
|
|
|
|
Chair of the Board |
|
|
135,000 |
|
|
Other non-employee directors |
|
|
75,000 |
|
|
Annual cash retainers for Committee service: |
|
|
|
|
|
Nominating and ESG Committee: |
|
|
|
|
|
Chair |
|
|
12,500 |
|
|
Member |
|
|
7,500 |
|
|
Audit Committee |
|
|
|
|
|
Chair |
|
|
20,000 |
|
|
Member |
|
|
12,500 |
|
|
Compensation Committee |
|
|
|
|
|
Chair |
|
|
15,000 |
|
|
Member |
|
|
10,000 |
|
All retainers are paid quarterly in arrears. Our non-employee directors have the
option to receive all or any portion of such compensation in the form of either cash or fully vested shares of our common stock.
Each participating non-employee director is also eligible to receive an annual
equity retainer of restricted stock units (RSUs) equal to $125,000 (based on the aggregate value of the underlying shares on the grant
date) as of our annual meeting of stockholders, and in the first year of director service, he or she receives a sign-on, pro rata grant
of RSUs.
Party City Holdco Inc. | 2022
Proxy Statement | 29
Proposal 1
The annual grants and sign-on grants of RSUs will vest in full on the first anniversary
of the grant date or the date of the annual meeting of stockholders following the grant date, respectively, or the earlier termination
of the director’s service due to his or her death, or a change in control, subject, in each case, to the director’s continued
service as a member of the Board through the vesting date.
The following table sets forth the compensation paid to the non-employee directors
during the year ended December 31, 2021:
|
Name |
|
|
Fees Earned or
Paid in Cash
($) |
|
|
Stock
Awards(2)
($)
|
|
|
All
Other
Compensation(3)
($) |
|
Total
($) |
|
|
Joel Alsfine |
|
|
87,500 |
|
|
298,500 |
|
|
0 |
|
386,000 |
|
|
Steven J. Collins |
|
|
107,500 |
|
|
278,400 |
|
|
0 |
|
385,900 |
|
|
James G. Conroy |
|
|
95,000 |
|
|
278,400 |
|
|
0 |
|
373,400 |
|
|
William S. Creekmuir |
|
|
107,500 |
|
|
278,400 |
|
|
0 |
|
385,900 |
|
|
Sarah Dodds-Brown |
|
|
87,500 |
|
|
298,500 |
|
|
0 |
|
386,000 |
|
|
Jennifer Fleiss |
|
|
75,000 |
|
|
298,500 |
|
|
0 |
|
373,500 |
|
|
John A. Frascotti |
|
|
87,500 |
|
|
278,400 |
|
|
0 |
|
365,900 |
|
|
James M. Harrison |
|
|
0 |
|
|
0 |
|
|
845,740 |
|
845,740 |
|
|
Norman S. Matthews(1) |
|
|
0 |
|
|
457,055 |
|
|
0 |
|
457,055 |
|
|
Michelle Millstone-Shroff |
|
|
85,000 |
|
|
278,400 |
|
|
0 |
|
363,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Mr. Matthews elected to receive equity in lieu of a cash retainer for 2021. |
(2) |
The dollar values shown reflect the
aggregate grant date fair value of the RSUs granted during fiscal year 2021 in accordance with FASB Accounting Standards
Codification Topic 718 for stock-based compensation, disregarding the effect of estimated forfeitures. These amounts do not
represent the actual value that will be received from the awards. The assumptions used in determining the fair values of RSU awards
granted in 2021 are disclosed in Notes 2 and 16 to our audited consolidated financial statements that appear in our Annual Report on
Form 10-K for the year ended December 31, 2021. |
(3) |
While he was employed as Vice Chairman of
the Company during fiscal year 2021, Mr. Harrison earned $750,000 in base salary, and received a $8,100 car allowance, $11,240 in
401(k) matching contributions and $3,500 in profit sharing amounts. Mr. Harrison’s employment terminated on December 31,
2021. |
As of December 31, 2021, Messrs. Alsfine, Collins, Conroy, Creekmuir, Frascotti,
and Matthews, and Mses. Dodds-Brown, Fleiss and Millstone-Shroff each held 12,562 RSUs.
As of December 31, 2021, Messrs. Collins, Creekmuir, Matthews, and Harrison
also held stock options with respect to 2,080 shares, 11,778 shares, 18,680 shares, and 200,000 shares of our common stock, respectively.
Non-Employee Director Stock Ownership Guidelines
Our Corporate Governance Guidelines provide that each non-employee director will,
within three years of his or her appointment to the Board, hold stock of the Company equal to at least five times such director’s
annual cash retainer (which, for the avoidance of doubt, excludes any annual cash retainer for serving as a committee chair or for committee
service). As of April 11, 2022 (the “Record Date”), all non-employee directors in service were either in compliance with the
guidelines or within the compliance period and making appropriate progress.
Prohibition on Derivatives
Trading, Hedging and Pledging
We maintain policies prohibiting our directors from engaging in hedging or pledging
our securities or trading in derivatives involving our securities. Please see “Derivatives Trading, Hedging and Pledging Policies”
below for more information.
Non-Employee Director Equity Compensation Limit
Our stockholders approved the Amended And Restated 2012 Omnibus Equity Incentive
Plan, which provides that the maximum grant-date fair value of awards granted or paid to any non-employee director with respect to any
fiscal year, including awards granted under the Incentive Plan and cash fees or other compensation paid by us, in each case, for service
as a director, may not exceed $500,000, computed in accordance with FASB ASC Topic 718 (or any successor provision) to the extent applicable
and assuming maximum pay-out levels (if applicable). This limit does not apply to any compensation paid by the Company or any of its subsidiaries
to any director for services performed or to be performed as an employee, consultant or in any capacity other than as a director.
30 | 2022
Proxy Statement | Party City Holdco Inc.
Executive
Officers
Set forth below are the names, ages and positions with the Company of the persons
who served as executive officers of the Company (the “Named Executive Officers”) as of April 11, 2022.
|
Name |
|
|
Age |
|
|
Title |
|
|
Bradley M. Weston |
|
|
57 |
|
|
Chief Executive Officer and Director |
|
|
Todd E. Vogensen |
|
|
53 |
|
|
Chief Financial Officer |
|
|
Sean C. Thompson |
|
|
47 |
|
|
Chief Commercial Officer |
|
|
Denise M. Kulikowsky |
|
|
54 |
|
|
Chief Human Resources Officer |
|
|
Reginald M. Rasch |
|
|
51 |
|
|
Chief Legal Officer(1) |
|
(1) In May 2021 Mr. Reginald Rasch joined the company as Chief Legal
Officer.
Named Executive Officers
• |
The background of Mr. Weston is described above under “Director Nominee Biographies.” |
• |
Todd E. Vogensen became our Executive Vice President and
Chief Financial Officer in February 2020. Previously, Mr. Vogensen served as Executive Vice President—Chief
Financial Officer at Chico’s FAS, Inc. (NYSE: CHS) from June 2015 through January 2020. He joined Chico’s FAS in
October 2009, and served in roles of increasing responsibility, including Senior Vice President – Finance, and Vice President
– Investor Relations. Previously, Mr. Vogensen served in executive finance roles at Michaels Stores, Inc.
(NASDAQ: MIK), Gap, Inc. (NASDAQ: GPS), Hewlett Packard Company and PricewaterhouseCoopers LLP. Mr. Vogensen
graduated from Arizona State University and holds a B.S. in Accountancy. |
• |
Denise M. Kulikowsky became our Chief Human Resources Officer in
November 2018. Prior to joining the Company, Ms. Kulikowsky served as the Vice President, Global Human Resources for The Estee
Lauder Companies, Inc. (NYSE: EL) from 2015 to 2018. Before joining The Estee Lauder Companies Inc, Ms. Kulikowsky held
several senior human resources positions of increasing responsibility at Gap Inc. (NYSE: GPS). Ms. Kulikowsky holds a B.A. in Psychology |
|
from Fordham University and a master’s degree in Counseling from
the University of Pennsylvania. |
• |
Sean C. Thompson became Chief Merchandising Officer in November 2019 and Chief
Commercial Officer in September of 2020. Prior to joining the Company, Mr. Thompson served at 7-Eleven, Inc. from 2012 to 2019,
where he held several leadership positions of increasing responsibility, including SVP of Merchandising, SVP and Chief Customer
Officer, and Vice President, Acquisition Integration. Previously, he served in merchandising and consulting roles with Target
Corporation (NYSE: TGT) and The Farnsworth Group. Mr. Thompson holds a B.A. in Psychology and an MBA from Indiana
University. |
• |
Reginald M. Rasch became our Chief Legal Officer and Corporate
Secretary in May 2021. Mr. Rasch served at Rakuten (TSE: 4755) from 2005 to 2021, where he held positions of
increasing responsibilities in Rakuten Americas including Head of Legal and Secretary. Prior to joining Rakuten, Mr.
Rasch served in senior legal roles at LinkShare Corporation and in associate positions in several law firms. Mr. Rasch
holds a B.S in Business Administration from the State University of New York the College at New Paltz and a Juris Doctor from St.
John’s School of Law. |
Party City Holdco Inc. | 2022
Proxy Statement | 31
Compensation Discussion and Analysis
This compensation discussion and analysis section provides context for the
information contained in the tables following this discussion and is intended to provide information about our fiscal year 2021
compensation objectives, programs and policies for our Named Executive Officers.
Executive Summary
Fiscal Year 2021 Overview and Executive
Compensation Highlights
2021 was an important year of transformation as we advanced the fundamental building
blocks of our strategy across product innovation, in-store experience, being celebration occasion obsessed, and focusing on our North
American vertical model. Despite the continued challenging and volatile economic backdrop, the business performed well as the consumer
returned to social gatherings, celebrations and parties, while we continued to implement significant operational and capital structure
improvements. We delivered a strong year of financial and operational results with total sales up 17% year over year.
Throughout the year, we continued to remodel or open NXTGEN stores and enhance
the in-store experience for our customers with an increased focus on product quality and innovation. With our transformation initiatives
increasing brand relevancy with our consumers, same-store sales growth led to gross margin improvement. We also finalized the sale of
our international wholesale operations, which allows us to increase our focus on our North American vertical model. Lastly, we strengthened
our financial position and liquidity by refinancing our term loan at the beginning of the year.
Our 2021 financial and business highlights included the following:
• |
Revenues of $2.2 billion, an increase of 17.3%; |
• |
Total Retail sales were $1.8 billion, an increase of 28.0% compared to prior year, with a brand comparable sales increase of 34.2%; |
• |
Reported GAAP net loss was $6.5 million, or loss of $0.06 per share, compared
to GAAP net loss of $528.5 million, or $5.24 per share in the prior year; |
• |
Adjusted EBITDA grew over 178% to $266 million and adjusted net income (loss)
earnings per common share |
|
increased to $0.68 per share compared to a loss in the prior year; |
• |
The sale of a substantial portion of our Amscan International business, which closed on January 30, 2021, reflecting a continued rationalization of the business to narrow our focus on our core North American vertical model; |
• |
The accelerated roll out of NXTGEN stores by opening or remodeling 73 stores in 2021, which had encouraging store economics and returns, ending the year with a total of 95 NXTGEN stores; |
• |
Net cash provided by operating activities in 2021 was $51.9 million,
compared to $77.2 million in 2020, with the decline driven in part by the payment of deferred rents; and |
• |
Free cash flow1 was $187.1 million, an increase of $142.7
million versus prior-year period. |
Operationally, we also made important progress on our strategic priorities by delivering
strong results in our core categories at retail, demonstrating traction of our overall strategy as well as enhancing the in-store experience
for our customers with an increased focus on product quality and innovation, including five major category resets. Lasty, we also operated
with strong execution by the entire PCHI team securing merchandise, managing through the significant supply chain disruptions impacting
the industry and staffing the stores to meet the considerable demand we experienced in 2021.
Since Mr. Weston’s appointment as CEO, our share price has appreciated
from $0.40 on April 1, 2020 to $5.57 as of December 31, 2021, the last day of fiscal year 2021.
1 |
See APPENDIX A for a reconciliation of non-GAAP financial measures to our results as reported under GAAP. |
32 | 2022
Proxy Statement | Party City Holdco Inc.
Compensation Discussion and Analysis
2021 Executive Compensation Actions
No CEO Equity Grant in 2021: Following our Chief Executive Officer’s
2020 PSU grant, the Committee considered how to best incentivize his performance while maximizing shareholder value relative to any potential
grants for 2021. Following input from our independent compensation consultant (“Compensation Consultant”) and after taking
into account the number of shares subject to such 2020 PSU grant, which were based on a stock price of $1.50, the subsequent significant
increase in our stock price, the fact that three of the four target price goals of the 2020 PSU grant had been achieved by the end of
2021, and the retentive value of his unvested PSUs, including those PSUs for which the target price goals were met but remained subject
to time-based vesting, the Committee elected to not make any equity grants to Mr. Weston in 2021.
Retention-Focused Equity Grants for Other NEOs With 3-Year Cliff Vest: Mindful
of the Company’s retention objectives for senior management and the fact that the equity award grants made to our Named Executive
Officers who served in 2020 (“Continuing NEOs”) were 100% performance-based and the value of their unvested equity awards,
following input from our Compensation Consultant the Committee elected to make long-term incentive (LTI) equity grants to our Continuing
NEOs, other than Mr. Weston, which 100% cliff vest following a three year vesting period to reinforce their commitment and intent to stay
through our transformation period and beyond. Such awards were generally awarded at 50% - 83% of the Continuing NEO’s LTI target
(except as otherwise contractually required).
Limited Salary Increases: Certain of our continuing NEOs received
limited salary increases to reflect market practice and fairly compensate them for their individual performance.
Annual Incentive Plan with Two Performance Periods: In light of the
economic uncertainty caused by the pandemic, we established two six-month performance periods with profitability and net sales metrics
for each period. Our aggregate target payout percentage based on our performance as measured against both performance periods was 123.9%.
Return to Standard LTI Program and Annual Incentive Plan in 2022: In
March 2022, the Committee granted 50% of each NEO’s LTI target value in the form of PSUs with free cash flow and earnings per share
performance goals measured over a three-year performance period and 50% in the form of time-based RSUs, which vest in three equal annual
instalments, to balance the need to reward performance while also enabling retention. In addition, the Committee approved a 2022 annual
cash incentive plan with adjusted EBITDA and net sales performance goals measured over a traditional one-year performance period.
Stock Ownership Guidelines for Executive Officers: In July 2021, following input from our Compensation Consultant, to further
align the interests of our executive officers with those of our stockholders, the Committee approved stock ownership guidelines for our
NEOs and other key employees as set forth in the table below.
Covered Person |
Ownership Requirement |
Chief Executive Officer |
Six-Times Annual Salary |
Chief Financial Officer |
Three-Times Annual Salary |
Chief Commercial Officer |
Three-Times Annual Salary |
Chief Human Resources Officer |
Two-Times Annual Salary |
Chief Legal Officer |
Two-Times Annual Salary |
Shares and 50% of unvested RSUs count towards a covered employee’s ownership
requirements, while unvested PSUs and unexercised options do not count for this purpose. All covered employees must hold 75% of the shares
that they receive from the settlement of their stock awards (after taking into account any net settlement or share withholding to cover
taxes) until they have met this requirement.
1 |
See APPENDIX A for a reconciliation of non-GAAP financial measures to our results as reported under GAAP. |
Party City Holdco Inc. | 2022
Proxy Statement | 33
Executive Compensation Program Overview
Compensation Philosophy
Our executive compensation program has been designed to:
• |
Attract, retain and motivate executives who will contribute to our future success; |
• |
Be competitive with the pay practices of other companies of comparable size, scope and industry; and |
• |
Create a strong linkage between pay and performance through the use of variable performance-based compensation. |
The Compensation Committee believes that it has designed and implemented an executive
compensation program in 2021 that appropriately balanced these considerations.
Compensation Governance Policies
Our executive compensation program is overseen by the Compensation Committee with
the advice and support of the Compensation Committee’s independent compensation consultant as well as our management team.
The following are key characteristics of our executive compensation program, which
we believe promote good governance and best serve the interests of our stockholders:
|
|
|
|
What We Do |
|
|
|
|
|
What We Don’t Do |
|
|
✔ |
|
|
Commit to oversight, evaluation and continuous improvement of our executive pay design and administration by an independent Compensation Committee consisting entirely of independent directors. |
|
|
✗ |
|
|
Pay dividends or dividend equivalents on unearned performance shares. |
|
|
✔ |
|
|
Engage an independent compensation consultant to advise on appropriate pay practices for our executives and independent directors. |
|
|
✗ |
|
|
Re-price and cash out of stock options without stockholder approval. |
|
|
✔ |
|
|
Use a peer group to measure executive compensation levels and targets against other companies with similar industry relevance, business fit, valuation, and profitability. |
|
|
✗ |
|
|
Allow hedging or pledging of Company stock. |
|
|
✔ |
|
|
Employ a robust goal-setting process to align goals with Company strategy. |
|
|
✗ |
|
|
Provide excessive perks to executive officers. |
|
|
✔ |
|
|
Target executive compensation mix to favor performance-based compensation tied to business and share price performance. |
|
|
✗ |
|
|
Provide for excise tax gross-ups to executives. |
|
|
✔ |
|
|
Maintain a “double trigger” requirement for vesting of outstanding equity awards upon a change of control. |
|
|
✗ |
|
|
Employ compensation practices which incentivize excessive risk taking. |
|
|
✔ |
|
|
Maintain a clawback policy which applies to any cash or equity-based bonus, award, or other incentive compensation received by current or former officers. |
|
|
✗ |
|
|
Provide for SERPs or executive pension plans. |
|
|
✔ |
|
|
Maintain share ownership requirements for our Board of Directors and senior executives. |
|
|
✗ |
|
|
Provide for problematic or excessive severance and/or change in control provisions. |
|
34 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
2021 Compensation Program Elements
The Company’s executive compensation program consists of base salary, annual
incentive opportunity, long-term incentive compensation, and benefits. A breakdown of base salary, annual bonus, and long-term incentives
is illustrated below:
|
Element |
|
|
Fixed/Variable |
|
|
Metrics |
|
|
What the Pay Element Rewards |
|
|
Base Salary |
|
|
Fixed |
|
|
Fixed amount based on responsibilities, experience and market data |
|
|
Scope of responsibilities and the impact on the Company’s overall performance and operating results |
|
|
Annual Incentive Plan |
|
|
Variable |
|
|
50% Net Sales and 50% Adjusted EBITDA based; 35% first half results and 65% second half results |
|
|
Achievement of key profitability and net sales metric which are critical metrics for a retail company like ours and are tracked closely by our stockholders |
|
|
Long-term Incentive Plan |
|
|
Variable |
|
|
RSUs, which 100% cliff vest upon the achievement of a 3 year service period |
|
|
Shareholder value creation as the value of RSUs is tied to the Company’s stock price; and three-year cliff vesting incentivizes long-term retention |
|
Under the Company’s compensation program, a significant portion of the compensation
awarded to the CEO and other Named Executive Officers is generally subject to the achievement of pre-established short-term financial
performance goals or is tied to the Company’s stock price.
The Compensation Committee believes that executive compensation that is variable
and tied to Company performance incentivizes superior business and financial performance and, by linking compensation with stock performance,
aligns the interests of executives with those of our stockholders.
Target Pay Mix
For Mr. Weston, 55% of his target total compensation for fiscal year 2021
was performance-based and/or at risk.
For the other Named Executive Officers, an average of 62% of target total compensation
was performance-based and/or at risk.
Party City Holdco Inc. | 2022
Proxy Statement | 35
Executive Compensation Program Overview
Fiscal Year 2021 Compensation
Base Salary
We pay our Named Executive Officers an annual base salary to provide them with a fixed,
base level of compensation to help attract and retain them. In 2021, the Compensation Committee did not approve a salary increase for
Mr. Weston, our Chief Executive Officer. The Compensation Committee did approve salary increases for certain Continuing NEOs based on
their role, individual performance, retention considerations and
market data. Further, our Compensation Committee approved a base salary
for Mr. Reginald Rasch, who joined the company as Chief Legal Officer in May 2021. His base salary was set based on his role and responsibilities
and prior experience and after considering market data and the recommendations of the independent compensation consultant.
|
Executive Officer |
|
|
2021 Annual
Base Salary |
|
|
2020 Annual
Base Salary |
|
|
% Change |
|
|
Salary Effective Date |
|
|
Bradley M. Weston |
|
|
$1,050,000 |
|
|
$1,050,000 |
|
|
n/a |
|
|
April 1, 2020 |
|
|
Todd E. Vogensen |
|
|
$650,000 |
|
|
$625,000 |
|
|
4.0% |
|
|
April, 26, 2021 |
|
|
Sean C. Thompson |
|
|
$650,000 |
|
|
$625,000 |
|
|
4.0% |
|
|
January 1, 2021 |
|
|
Denise M. Kulikowsky |
|
|
$450,000 |
|
|
$425,000 |
|
|
5.9% |
|
|
April 26, 2021 |
|
|
Reginal M. Rasch(1) |
|
|
$450,000 |
|
|
n/a |
|
|
n/a |
|
|
May 7, 2021 |
|
(1) In May 2021 Mr. Reginald Rasch joined the company
as Chief Legal Officer.
Annual Incentive Plan
Our Named Executive Officers are eligible to earn annual cash incentive awards
under our Annual Incentive Plan (“AIP”), which is designed to incentivize annual financial performance. The Compensation Committee
sets the target annual cash bonus for each executive as a percentage of the executive’s annual base salary. Award opportunities
are established at threshold, target and maximum levels. For 2021, the Compensation Committee determined that the overall potential amount
which may be earned by each Named Executive Officer would be capped at 150% of his or her target bonus amount and the threshold payout
amount would be 40% of his or her target bonus amount limit. The final amount of the cash-incentive award was determined based on the
level of achievement of the performance criteria and the Named Executive Officer’s eligible base salary for the applicable performance
period. For 2021, each Named Executive Officer’s base salary was used to determine his or her respective eligible base earnings
for purposes of the AIP. For 2021, as described below, there were two performance criteria and two performance periods used under the
AIP.
2021 Target Bonus Amount
In early 2021, the target bonus percentage of each Named Executive Officer,
other than Mr. Rasch, was increased as set forth in the table below. In determining to increase each Continuing NEO’s target bonus
percentage, the Compensation Committee considered the Company’s significant year over year improvement in financial and operational
performance from 2020, his or her bonus opportunities relative to the Company’s peer group, and the desire to further incentivize
him or her to drive 2021 financial performance, as the Company continued to transform. Mr. Rasch’s target bonus percentage was determined
based on the same considerations that were applied in determining his initial base salary amount, and his target bonus amount for 2021
was prorated for 2021 based on his start date.
|
Executive Officer |
|
|
2021 Year
Target AIP % |
|
|
2020 Year
Target AIP % |
|
|
Increase |
|
|
|
|
Bradley M. Weston |
|
|
120% |
|
|
100% |
|
|
20% |
|
|
|
|
Todd E. Vogensen |
|
|
75% |
|
|
70% |
|
|
5% |
|
|
|
|
Sean C. Thompson |
|
|
80% |
|
|
70% |
|
|
10% |
|
|
|
|
Denise M. Kulikowsky |
|
|
60% |
|
|
50% |
|
|
10% |
|
|
|
|
Reginal M. Rasch(1) |
|
|
50% |
|
|
n/a |
|
|
n/a |
|
|
|
36 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
2021 Goals and Target Setting
In light of the economic uncertainty caused by the pandemic we established two six-month
performance periods in 2021. The performance period covering January 1st to June 30th, 2021 (“H1”) was weighted at 35% and
the performance period covering July 1st to December 31st (“H2”) was weighted at 65%. Each performance period was mutually
exclusive of the other. The performance criteria for each performance period were Net Sales and Adjusted EBITDA, which were weighted equally
for each performance period.3
For this purpose, Adjusted EBITDA was defined to mean net income (loss) before interest
expense, net, income taxes, depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not
consider indicative of our core operating performance, which for 2021 is detailed in Appendix A.
The following table shows the full year performance criteria under the AIP and our actual results:
Performance
Period |
|
Period
Weight |
|
Performance
Metric |
|
Performance
Metric
Weight |
Threshold1 |
|
Target1 |
|
Max1 |
|
Actual1 |
|
% of
Target |
|
Weighted
Payout %2 |
H13 |
|
35% |
|
Net Sales |
|
50% |
$768.8 |
|
$817.9 |
|
$867.0 |
|
$958.8 |
|
117% |
|
52.5% |
|
|
Adjusted EBITDA |
|
50% |
$52.8 |
|
$61.2 |
|
$76.4 |
|
$118.3 |
|
193% |
|
H24 |
|
65% |
|
Net Sales |
|
50% |
$1,036.1 |
|
$1,102.2 |
|
$1,168.3 |
|
$1,205.5 |
|
109% |
|
71.4% |
|
|
Adjusted EBITDA |
|
50% |
$137.2 |
|
$159.0 |
|
$195.6 |
|
$148.0 |
|
93% |
|
Payout (as a % target annual bonus opportunity) |
|
|
40% |
|
100% |
|
150% |
|
|
|
|
|
123.9% |
(1) |
Amounts set forth in millions |
(2) |
All numbers are rounded for purposes of the amounts set forth in this column. |
(3) |
January 1, 2021 to June 30, 2021 |
(4) |
July 1, 2021 to December 31, 2021 |
2021 Results and Payouts
The following table illustrates the target AIP and actual amounts earned for our
Named Executive Officers:
|
|
Actual 2021 AIP Earned |
|
|
Executive
Officer |
|
2021
Salary(1) |
|
|
Full Year
Target AIP
% |
|
H1 Target Bonus
Amount $(2) |
|
H2 Target Bonus
Amount $(2) |
|
Total Target Bonus
Amount $(2) |
|
Final Payout
$(2) |
|
|
Bradley M. Weston |
|
$1,050,000 |
|
|
120% |
|
$441,000 |
|
$819,000 |
|
$1,260,000 |
|
$1,561,368 |
|
|
Todd E. Vogensen |
|
$650,000 |
|
75% |
|
$167,362(3) |
|
$316,875 |
|
$484,237 |
|
599,206 |
|
|
Sean C. Thompson |
|
$650,000 |
|
|
80% |
|
$182,000 |
|
$338,000 |
|
$520,000 |
|
644,374 |
|
|
Denise M. Kulikowsky |
|
$450,000 |
|
60% |
|
$91,890(3) |
|
$175,500 |
|
$267,390 |
|
330,663 |
|
|
Reginald M. Rasch |
|
$450,000 |
|
50% |
|
$23,930(3) |
|
$146,250 |
|
$170,180 |
|
196,585 |
|
(1) |
Reflects annual base salary rate as of December 31, 2021. Base salary has been prorated in the calculation of certain bonus amounts to reflect base salary increases or partial years of service during 2021, as further described in the footnotes to this table. |
(2) |
All numbers are rounded for purposes of the amounts set forth in this column. |
(3) |
Mr. Vogensen’s base salary increased from $625,000 to $650,000 and Ms. Kulikowsky’s base salary increased from $425,000 to $450,000, in each case, effective April 26, 2021. As a result, the H1 target bonus amounts for Mr. Vogensen and Ms. Kulikowsky were based on his or her prorated annual base salary. Mr. Rasch’s H1 target bonus amount was prorated based on his start date. |
3 See
APPENDIX A for a reconciliation of non-GAAP financial measures to our results as reported under GAAP.
Party City Holdco Inc. | 2022
Proxy Statement | 37
Executive Compensation Program Overview
Long-term Incentive Program
The Compensation Committee typically provides for annual grants of long-term, stock-based
incentives. We believe that these long-term incentives help retain key employees, align their financial interests with the interests of
our stockholders, and reward the achievement of our long-term strategic goals. Our long-term incentive program is intended to emphasize
our pay-for-performance philosophy, while incorporating an additional time-based component that provides added retentive value.
Achievement of 2020 PSU Award Targets
In 2020, as a result of the financial and operational
challenges we faced due to the COVID-19 pandemic, the Compensation Committee delayed the grant of awards under our long-term incentive
program until July 2020 and decided to modify our 2020 long-term incentive program for our senior executives to better reflect the then
prevailing economic conditions, which
had historically included a mix of performance-based
and time-based awards. Given the desire to focus our executive officers on taking actions that would serve the long-term interests
of the Company and our stockholders by driving stock price appreciation, the Compensation Committee decided that the annual 2020
long-term incentive awards for our Named Executive Officers would be awarded 100% in the form of PSUs based on the achievement of
the volume weighted average fair market value per share of Company common stock (“VWAP”) over a period of not less than
ninety (90) consecutive calendar days during the three year performance period beginning on the date of grant.
The design of the 2020 PSU awards emphasized shareholder
value creation while also incorporating a meaningful retentive component to ensure the continuity of our senior executive team during
our turnaround. The performance component of the PSUs was contingent upon the Company achieving a VWAP at the following levels:
|
Tranche |
|
|
% of Total Grant |
|
|
Performance Conditions |
|
|
Percentage |
|
Target Price |
Increase from Stock |
(90-Day VWAP)* |
price on Grant Date |
|
1 |
|
|
25% |
|
|
$2.50 |
|
|
198% |
|
|
2 |
|
|
25% |
|
|
$5.00 |
|
|
397% |
|
|
3 |
|
|
25% |
|
|
$7.50 |
|
|
595% |
|
|
4 |
|
|
25% |
|
|
$10.00 |
|
|
794% |
|
* |
Volume weighted average fair market value per share of Company common stock |
Under the 2020 PSU awards, once a stock price hurdle is achieved, the respective
PSU tranche would be earned and then vest ratably based on continued employment and be settled every six months over the following two
years (i.e., four vesting dates). No PSUs were capable of vesting prior to one year from the grant date. The following timeline illustrates
the structure of the PSUs:
38 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
Any PSUs not earned after three years from the grant date will be forfeited for
no consideration. Despite the rigorous price targets that were set when such PSUs were first granted in 2020, the Committee certified
that the price targets for tranches 1, 2 and 3 were achieved, and such tranches remain subject to service-based vesting as set forth below.
Tranche |
Target Price
Achievement Date |
Vesting
Date 1(1) |
Vesting
Date 2(1) |
Vesting
Date 3 |
Vesting
Date 4 |
Tranche 1 - $2.50 |
11/2/2020 |
7/18/2021 |
11/2/2021 |
5/2/2022 |
11/2/2022 |
Tranche 2 - $5.00 |
1/27/2021 |
7/27/2021 / 10/15/2021(2) |
1/27/2022 |
7/27/2022 |
1/27/2023 |
Tranche 3 - $7.50 |
July 27, 2021 |
12/9/2021 |
6/9/2022 |
12/9/2022 |
6/9/2023 |
Tranche 4 - $10.00 |
Not achieved |
N/A |
N/A |
N/A |
N/A |
(1) |
Cells shaded in grey indicate vesting dates that have already occurred as of the date hereof. |
(2) |
On October 15, 2020, Mr. Thompson received a supplemental grant upon his promotion to Chief Commercial Officer, which consisted of the $5.00, $7.50, and $10.00 tranches. The first vesting date following the achievement of the $5.00 tranche occurred on October 15, 2021, the one-year anniversary of the grant date. |
For more information regarding each of our Named Executive Officer’s
PSU holdings, including his or her unvested PSUs, as of December 31, 2021, please see the Outstanding Equity Awards at Fiscal Year End
2021 table below.
No CEO Equity Grant for 2021
Following our Chief Executive Officer’s 2020 PSU grant, the Committee considered
how to best incentivize his performance while maximizing stockholder value relative to any potential grants for 2021. Following input
from our Compensation Consultant and when taking into account the number of shares subject to such grant, which were based on a stock
price of $1.50, the subsequent significant increase in our stock price, the fact that three of the four target price goals of 2020 PSU
grant had been achieved in 2021, and the retentive value of his unvested PSUs, the Committee elected to not make any equity grants to
Mr. Weston in 2021.
Retention-Focused Equity Grants for Other
Named Executive Officers with 3-Year Cliff Vest
Mindful of the Company’s retention objectives for senior management and the
fact that the equity award grants made to our Continuing NEOs were 100% performance-based and the value of their unvested equity awards,
following input from our Compensation Consultant the Committee elected to make long-term incentive (LTI) equity grants to our Continuing
NEOs, other than Mr. Weston, which 100% cliff vest following a three year vesting period to reinforce their commitment and intent to stay
through our transformation period and beyond. Such awards were awarded at 50% - 83% of the Continuing NEO’s LTI target (except as
otherwise contractually required).
Party City Holdco Inc. | 2022
Proxy Statement | 39
Executive Compensation Program Overview
2021 Target LTI Awards for Continuing NEOs
For fiscal year 2021, the Compensation Committee approved a fixed dollar target amount
for each long-term incentive award for our Continuing NEOs other than our CEO. Award levels for each Named Executive Officer were generally
set at lower levels from 2021 (except as otherwise contractually required) to reflect the number of shares which were awarded with respect
to their 2020 PSU awards, which were granted based on a stock price
of $1.50, and the fact that three of the four target price goals of
such grant were achieved in the first year of performance. The Compensation Committee also considered each Named Executive Officer’s
respective role and responsibilities as well as overall performance. The table below shows information regarding the target values awarded
to each Named Executive Officer.
|
Executive |
|
|
|
Reduction In |
|
|
|
Actual Grant Date |
|
Target |
Target Award |
|
Number of |
Value of PSUs |
Award Value |
Value From 2020 |
|
PSUs Granted |
Granted(1) |
|
Bradley M. Weston |
|
$0 |
|
n/a |
|
0 |
|
$0 |
|
|
Todd E. Vogensen |
|
$520,000 |
|
50% |
|
78,313 |
|
$520,000 |
|
|
Sean C. Thompson(2) |
|
$1,105,000 |
|
n/a |
|
166,415 |
|
$1,105,000 |
|
|
Denise M. Kulikowsky |
|
$225,000 |
|
17% |
|
33,885 |
|
$225,000 |
|
(1) |
The number of RSUs for each NEO was determined and approved by the Compensation Committee on August 9, 2021, using a $6.64 share price. The actual share price on the date of grant was $6.64. |
(2) |
Mr. Thompson’s award value reflects the dollar target amount that was set forth under the terms of his employment agreement, which was amended in September 2020, to reflect his appointment as Executive Officer and Chief Commercial Officer, and was intended to apply to any annual grants that he received in 2021. |
In addition to the annual grants made to the Named Executive Officers under the
Company’s long-term incentive plan, on May 7, 2021, Reginal Rasch received an award of 33,919 RSUs upon his appointment as Chief
Legal Officer, when the share price was $7.96. The RSUs vest in three (3) equal instalments upon each anniversary of Mr. Rasch’s
commencement of employment with the Company on May 7, 2021. In considering the value of Mr. Rasch’s RSU grant, the Committee reviewed
the recommendations of the Company's independent compensation consultant and considered the responsibilities associated with the role
as well as market data.
Return to Standard LTI Program
and Annual Incentive Plan in 2022
In March 2022, the Compensation Committee granted 50% of each NEO’s LTI target
value in the form of PSUs with free cash flow and earnings per share performance goals measured over a three-year performance period and
50% in the form of time-based RSUs, which vest in three equal annual installments, to balance the need to reward performance while
also enabling retention. In addition, the Committee approved a 2022 annual
cash incentive plan with adjusted EBITDA and net sales performance goals measured over a traditional one-year performance period.
The Compensation Committee believed that it was appropriate to return to a more traditional and consistent incentive plan design as
the Company was more than one year removed from the worst of the COVID-19 pandemic’s impact on our financial results and
operations.
PSUs with Completed Performance Periods
(applied to Ms. Kulikowsky)
In early 2022, the Compensation Committee certified that the results for the PSU
awards made on January 1, 2019 for the three-year performance period beginning 2019 through 2021 were below the threshold level of
performance required to earn a pay-out under these awards. The metrics used for these PSU awards were Cumulative Earnings per Share (EPS)
and Cumulative Free Cash Flow (FCF). The following table displays the metrics and results for the awards:
|
|
|
|
Performance Requirements |
|
|
|
|
|
Performance Metric |
|
|
Weight |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Final Result(1) |
|
|
% of Target |
|
Achieved |
|
3-year Cumulative EPS |
|
|
50% |
|
|
$5.16 |
|
|
$5.36 |
|
|
$5.57 |
|
|
$0.24 |
|
|
0% |
|
|
3-year Cumulative FCF
(in $000’s) |
|
|
50% |
|
|
$1,038,000 |
|
|
$1,080,000 |
|
|
$1,144,000 |
|
|
$519,962 |
|
|
0% |
|
|
Weighted average pay-out as a % of Target |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0% |
|
(1) |
Actual pay-out is 0% if performance is below threshold, 37.5% of target for threshold performance, 100% of target for target performance, and 200% of target for maximum performance, with linear interpolation for performance levels between the amounts above. |
40 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
Employment Agreements
As described above under “Components of Compensation – Annual
Base Salary”, each of our Named Executive Officers had an employment agreement that was effective during fiscal year 2021. The
terms of these agreements, including any amendments thereto, are further described in “Narrative Disclosure to Summary
Compensation Table and Grant of Plan-Based Awards Table” below. These agreements are intended to provide our Named Executive
Officers with security regarding the terms and conditions of their employment or other services with us and are intended to secure
restrictive covenants and, under certain circumstances, releases of claims that provide protection for the Company. In addition, for
new hires like Mr. Rasch, such agreements also provide for sign-on bonuses with clawback provisions, which are intended to make up
for compensation that was forfeited with respect to their prior employment and induce such persons to commence employment with the
Company. Pursuant to his employment agreement, Mr. Rasch received a sign-on bonus of $200,000 that will be forfeited in its entirety
if he is terminated for cause within 24 months of his start date.
Severance and Change in Control Arrangements
We provide severance protection to our Named Executive Officers in their employment
agreements and, in certain cases, through their stock option agreements. The severance terms that apply to our Named Executive Officers
are described below under “Potential Payments upon Termination or Change in Control.” Our severance protections are designed
to retain the services of our Named Executive Officers and generally resulted from prior negotiations regarding their employment arrangements.
We believe the level of severance payments we provide is appropriate and within the range of competitive practice.
Additionally, as also described below under “Potential Payments Upon Termination
or Change in Control”, a change of control and/or an accompanying qualifying termination may result in acceleration of certain long-term
incentive awards that we have granted.
Other Benefits and Perquisites
Each Named Executive Officer was eligible to participate in our broad-based
employee benefit plans for U.S.-based employees in 2021, such as medical, dental, group life, disability and accidental death and
dismemberment insurance. Under our consolidated 401(k) plan, our Named Executive Officers and generally all domestic exempt and
non-exempt employees who meet certain length-of-service, hours worked, and age requirements, as defined in such plans, were eligible
to contribute a portion of their compensation to the plan on a pre and/or post-tax basis in 2021 with contributions ranging from 0
to 100% and receive an employer matching contribution ranging from 0 to 5% of the employee’s annual salary. In addition,
participants in our 401(k) plan were also entitled to profit-sharing contributions from the Company in 2021, pursuant to the
Company’s profit-sharing program, which was discontinued at the end of 2021. Eligible compensation for the profit-sharing
program was 2% of up to $43,750 in earnings per quarter. The annual value of the
Company contributions to our tax-qualified defined contribution plans for each Named Executive Officer is reflected in the All
Other Compensation and Summary Compensation tables below.
Each Named Executive Officer except for Mr. Thompson and Rasch also had the option
to enroll in a supplemental disability plan which was discontinued in August 2021. These benefits were made available to a select group
of employees earning above a specified salary threshold. The premium amounts were paid by the Company for these benefits and are included
in the All Other Compensation and Summary Compensation tables below.
All of our NEOs, with the exception of Mr. Rasch are eligible for an annual auto
allowance. The annual values of the auto allowance are reported as taxable income to the executive and are reflected in the All Other
Compensation and Summary Compensation tables below. The Compensation Committee believes that it is important to compensate our executive
officers for all expenses incurred while traveling for work to allow our NEOs to concentrate on their responsibilities and our future
success, and the cost of providing these automobile-related benefits is reasonable relative to its value to our Named Executive Officers.
Mr. Weston was also eligible for reimbursement of relocation expenses, plus reimbursements
for the payment of associated income taxes, pursuant to the Company’s relocation policy and his employment agreement, the amounts
of which is included in the All Other Compensation column of the Summary Compensation table below.
Compensation Decision Making Process
Compensation Committee and Compensation Consultants
The Compensation Committee is responsible for setting and administering our executive
compensation policies and programs and determining the compensation of our executive officers, including our Named Executive Officers.
The Compensation Committee also administers the Amended and Restated 2012 Omnibus Equity Incentive Plan. All decisions regarding compensation of our executive officers
during 2021 were made solely by the Compensation Committee, in certain cases, after consultation with our Chief Executive Officer
(other than with respect to his own compensation).
The Compensation Committee meets at least quarterly, and at least annually evaluates
the performance of our Named Executive Officers, to approve their annual base salaries, subject to the contractual commitments we have
made with our Named Executive Officers (as described below), and to determine their annual cash incentive awards for the prior year’s
performance and stock-based incentive compensation to be effective for the current year. In addition to its regularly scheduled meetings,
the Compensation Committee may meet at interim dates during the year to review the compensation of a Named Executive Officer or other
officer in the event of unforeseen organizational or responsibility changes, including new hires, which occur during the year.
Party City Holdco Inc. | 2022
Proxy Statement | 41
Executive Compensation Program Overview
In determining compensation components and levels for our Named Executive Officers, the
Compensation Committee considers the scope and responsibility of the officer’s position, our overall financial and operating performance,
and the officer’s overall performance and future potential. The Compensation Committee members apply their considerable experiences
in serving as directors of other companies to devise compensation packages that they believe will attract, retain and provide incentives
to the executive talent necessary to manage the Company. When we last held a say-on-pay stockholder vote in 2019, our stockholders expressed
broad support for our program, and our Compensation Committee has continued to take that as support for the philosophy underlying our
executive compensation practices, which continues to guide its decision making.
Additionally, the Compensation Committee is responsible for reviewing and assessing
potential risk arising from the Company’s compensation policies and practices. The Compensation Committee is responsible for overseeing
that there were not risks arising from the Company’s compensation policies and practices for the Company’s employees that
are reasonably likely to have a material adverse effect on the Company.
The Compensation Committee has the sole authority
to retain, at the Company’s expense, outside executive compensation consultants to assist it in the evaluation of executive officer
compensation. This authority encompasses the ability to
terminate any such consultant and the authority to approve such consultant’s fees and other retention terms.
Compensation Consultant
Since December 2016, the Compensation Committee has engaged Semler Brossy as its
independent compensation consultant. Semler Brossy has assisted the Compensation Committee in identifying an appropriate compensation
peer group, conducting pay benchmarking, and reviewing our short-and long-term incentive programs and recommending design changes for
our executive compensation program. After consideration of the independence assessment factors set forth under the listing rules of the
NYSE, the Compensation Committee determined that Semler Brossy is independent and that the engagement does not raise any conflicts of
interest.
Peer Group
The Compensation Committee identified the companies below as members of its peer group
based on comparability to assist the Committee in making decisions affecting 2021 compensation. Specifically, the Compensation Committee
looked at industry relevance, business fit favoring vertical integration, and scale, valuation, and profitability comparability through
financial measures such as revenue and enterprise value.
|
Company |
|
|
Primary Industry |
|
|
Revenue(1) |
|
|
Market
Capitalization(1) |
|
|
Enterprise
Value(1)(2) |
|
|
Williams-Sonoma, Inc. |
|
|
Specialty Retail |
|
|
$8,038 |
|
|
$12,339 |
|
|
$12,996 |
|
|
Big Lots, Inc. |
|
|
Multiline Retail |
|
|
$6,156 |
|
|
$1,376 |
|
|
$3,120 |
|
|
Mattel, Inc. |
|
|
Leisure Products |
|
|
$5,458 |
|
|
$7,553 |
|
|
$10,460 |
|
|
Tempur Sealy International, Inc. |
|
|
Household Durables |
|
|
$4,931 |
|
|
$9,054 |
|
|
$11,409 |
|
|
Urban Outfitters, Inc. |
|
|
Specialty Retail |
|
|
$4,305 |
|
|
$2,874 |
|
|
$3,418 |
|
|
Sally Beauty Holdings, Inc. |
|
|
Specialty Retail |
|
|
$3,919 |
|
|
$2,080 |
|
|
$3,622 |
|
|
Carter's, Inc. |
|
|
Textiles, Apparel and Luxury Goods |
|
|
$3,414 |
|
|
$4,278 |
|
|
$4,927 |
|
|
Deckers Outdoor Corporation |
|
|
Textiles, Apparel and Luxury Goods |
|
|
$2,976 |
|
|
$10,055 |
|
|
$9,539 |
|
|
Vista Outdoor Inc. |
|
|
Leisure Products |
|
|
$2,833 |
|
|
$2,640 |
|
|
$2,960 |
|
|
Genesco Inc. |
|
|
Specialty Retail |
|
|
$2,331 |
|
|
$937 |
|
|
$1,306 |
|
|
Wolverine World Wide, Inc. |
|
|
Textiles, Apparel and Luxury Goods |
|
|
$2,289 |
|
|
$2,373 |
|
|
$3,381 |
|
|
Sleep Number Corporation |
|
|
Specialty Retail |
|
|
$2,261 |
|
|
$1,735 |
|
|
$2,489 |
|
|
The Children's Place, Inc. |
|
|
Specialty Retail |
|
|
$1,880 |
|
|
$1,139 |
|
|
$1,572 |
|
|
Steven Madden, Ltd. |
|
|
Textiles, Apparel and Luxury Goods |
|
|
$1,866 |
|
|
$3,782 |
|
|
$3,648 |
|
|
Fossil Group, Inc. |
|
|
Textiles, Apparel and Luxury Goods |
|
|
$1,794 |
|
|
$537 |
|
|
$737 |
|
|
Party City Holdings Inc. |
|
|
Specialty Retail |
|
|
$2,171 |
|
|
$625 |
|
|
$2,584 |
|
(1) |
Revenue figures are sourced from Capital IQ as of the latest fiscal year and market capitalization and enterprise value are as of December 31, 2021. |
(2) |
Enterprise value is defined as Market capitalization + Net Debt + Minority Interest. |
42 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
In December 2021, we removed Tailored Brands, Michaels, and GNC Holdings from our
peer group as they are no longer publicly traded companies. No companies were added to our peer group. This revised peer group was used
by the Committee to assist it in making decisions affecting 2022 compensation.
Recoupment Policy (“Clawback”)
We adopted a recoupment (“clawback”) policy which provides that, in
the event that we are required to prepare an accounting restatement, we may recover from current and former officers any cash- or equity-based
bonus, award or other incentive compensation erroneously paid or awarded (as well as reducing or cancelling such bonuses, awards or other
compensation and compelling payment for any gains or other accessions to wealth realized in respect of equity or equity-based awards)
in excess of what would have been paid under the accounting restatement. This policy covers the three-year period preceding the date on
which we are required to prepare the accounting restatement.
Derivatives Trading, Hedging and Pledging Policies
We maintain an insider trading policy that applies to all of our employees worldwide,
including our Named Executive Officers,
and members the Board, as well as their designees. The policy prohibits such employees and directors
from (i) engaging (directly or indirectly) in hedging transactions or otherwise engaging in transactions that hedge or offset, or
are designed to hedge or offset, any decrease in the market value of the Company’s securities or (ii) holding Company securities
in a margin account or pledging Company securities as collateral for a loan. An exception may be granted where an employee wishes to pledge
Company securities as collateral for a loan (not including margin debt) and clearly demonstrates the financial capacity to repay the loan
without resort to the pledged securities.
Tax Considerations
Section 162(m) of the Internal Revenue Code of 1986, as amended limits the deductibility of compensation paid to certain current and former executive officers to $1.0 million per year. The Compensation
Committee retains flexibility to approve compensation arrangements that promote the objectives of our compensation program, but which
may not qualify for full or partial tax deductibility. In designing our compensation and benefits programs, the Compensation Committee
may consider the accounting implications of its decisions, including the accounting treatment of amounts awarded or paid to our executives.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the compensation discussion
and analysis set forth above with management. Based on these reviews and discussions, the Compensation Committee recommended to the Board
that the compensation discussion and analysis be included in this Proxy Statement and incorporated by reference in our Annual Report on
Form 10-K filed with the SEC for the fiscal year ended December 31, 2021.
Compensation Committee
Steven J. Collins, Chair
Norman S. Matthews
Michelle Millstone-Shroff
Party City Holdco Inc. | 2022
Proxy Statement | 43
Executive Compensation Program Overview
Summary Compensation Table
The following table sets forth information concerning the compensation granted
to or earned by our Named Executive Officers for fiscal years 2021, 2020 and 2019 (or such shorter period as the individual was a Named
Executive Officer of the Company):
Name and Principal
Position |
|
Year |
|
Salary(1)
($) |
|
Bonus(2)
($) |
|
Stock
Awards(3)
($) |
|
Option
Awards
($) |
|
Non-Equity
Incentive Plan
Compensation(4) ($)
|
|
All Other
Compensation(5) ($)
|
|
Total
($) |
Bradley M. Weston
President and Chief Executive Officer |
|
2021 |
|
1,050,000 |
|
0 |
|
0 |
|
0 |
|
1,561,368 |
|
|
46,966 |
|
|
2,658,334 |
|
2020 |
|
952,290 |
|
0 |
|
2,988,500 |
|
0 |
|
1,012,867 |
|
|
210,805 |
|
|
5,164,462 |
|
2019 |
|
450,000 |
|
0 |
|
0 |
|
624,000 |
|
0 |
|
|
89,184 |
|
|
1,163,184 |
Todd E. Vogensen
Chief Financial Officer |
|
2021 |
|
641,346 |
|
0 |
|
519,998 |
|
0 |
|
599,206 |
|
|
21,219 |
|
|
1,781,769 |
|
2020 |
|
531,250 |
|
420,000 |
|
695,000 |
|
0 |
|
387,019 |
|
|
410,638 |
|
|
2,443,907 |
Sean C. Thompson
Chief Commercial Officer |
|
2021 |
|
649,038 |
|
0 |
|
1,104,996 |
|
0 |
|
644,374 |
|
|
18,882 |
|
|
2,417,290 |
|
2020 |
|
578,731 |
|
0 |
|
705,139 |
|
0 |
|
414,481 |
|
|
147,821 |
|
|
1,846,172 |
|
2019 |
|
89,231 |
|
300,000 |
|
0 |
|
0 |
|
0 |
|
|
33,893 |
|
|
423,124 |
Denise M. Kulikowsky
Chief Human Resources Officer |
|
2021 |
|
441,346 |
|
0 |
|
224,996 |
|
0 |
|
330,663 |
|
|
23,776 |
|
|
1,020,781 |
|
2020 |
|
407,981 |
|
0 |
|
260,625 |
|
0 |
|
212,500 |
|
|
20,069 |
|
|
901,175 |
Reginald M. Rasch
Chief Legal Officer |
|
2021 |
|
278,654 |
|
200,000 |
|
269,995 |
|
0 |
|
196,585 |
|
|
2,235 |
|
|
947,469 |
(1) |
Salary amounts reflect the actual base salary payments earned by the Named Executive Officer. |
(2) |
Mr. Rasch received a cash sign on bonus in 2021, pursuant to the terms of his employment agreement, which will be forfeited in its entirety if he is terminated for cause within 24 months of the start of his employment. |
(3) |
Reflects the aggregate grant date fair value of all PSU and RSU awards granted in the applicable fiscal year, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 718 for stock-based compensation, disregarding the effect of estimated forfeitures. These amounts do not represent the actual value that will be received by each individual from the awards. The assumptions used in determining the fair values of PSUs and RSUs granted in 2021 are disclosed in Notes 2 and 16 to our audited consolidated financial statements that appear in our Annual Report on Form 10-K for the year ended December 31, 2021. |
(4) |
Amounts represent annual bonuses earned under our annual cash incentive plan for such years. No annual cash bonuses were earned in 2019. |
(5) |
“All Other Compensation” includes the following amounts for 2021 shown: |
44 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
Name and Principal
Position |
|
Year |
|
Transportation Benefit ($) |
|
Company Contribution to Qualified Defined Contribution Plans(a) ($) |
|
Long-Term Disability Insurance Premiums ($) |
|
Other(b) ($) |
|
Bradley M. Weston
President and Chief Executive Officer |
|
2021 |
|
9,000 |
|
|
3,500 |
|
|
1,660 |
|
|
32,806 |
|
|
Todd E. Vogensen
Chief Financial Officer |
|
2021 |
|
9,346 |
|
|
10,679 |
|
|
1,194 |
|
|
0 |
|
|
Sean C. Thompson
Chief Commercial Officer |
|
2021 |
|
9,346 |
|
|
9,536 |
|
|
0 |
|
|
0 |
|
|
Denise M. Kulikowsky
Chief Human Resources Officer |
|
2021 |
|
8,308 |
|
|
14,144 |
|
|
1,324 |
|
|
0 |
|
|
Reginald M. Rasch
Chief Legal Officer |
|
2021 |
|
0 |
|
|
875 |
|
|
1,360 |
|
|
0 |
|
|
(a) Represents 401(k) matching contributions paid to Messrs. Vogensen, Thompson, and Rasch and Ms. Kulikowsky
equal to $7,179, $9,536, $875, and $10,644, respectively, and $3,500 in profit sharing amounts paid to each
of Messrs. Weston and Vogensen and Ms. Kulikowsky.
(b) Represents relocation expenses consisting of $16,600 in rent reimbursements and $16,206 in reimbursements for the payment of associated
income taxes, pursuant to the Company’s relocation policy and his employment agreement. |
Party City Holdco Inc. | 2022
Proxy Statement | 45
Executive Compensation Program Overview
Grants of Plan-Based Awards
The table below provides information on cash and equity-based performance awards
granted to each of the Company’s Named Executive Officers during the fiscal year 2021.
|
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive
Plan Awards(2) |
|
|
Estimated
Future Payouts
Under
Equity
Incentive
Plan Awards |
|
|
All
Other
Stock
Awards:
Number
of
Shares
or
Units
(#) |
|
|
Exercise
Price
of
Option
Awards
($/Share) |
|
|
Grant
Date Fair
Value
of Stock
and
Option
Awards
($)(5) |
|
|
Name
and Principal
Position |
|
|
Award
Type(1) |
|
|
Grant
Date |
|
|
Threshold
($) |
|
|
Target
($) |
|
|
Maximum
($) |
|
|
Threshold
(#) |
|
|
Target
(#) |
|
|
Maximum
(#) |
|
|
|
|
|
|
|
|
Bradley
M. Weston
President and Chief Executive Officer |
|
|
Cash |
|
|
|
|
|
504,000 |
|
|
1,260,000 |
|
|
1,890,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd
E. Vogensen
Chief
Financial Officer |
|
|
Cash |
|
|
|
|
|
161,064 |
|
|
402,659 |
|
|
603,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs |
|
|
8/9/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,313(3) |
|
|
|
|
|
519,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sean
C. Thompson
Chief Commercial Officer |
|
|
Cash |
|
|
|
|
|
208,000 |
|
|
520,000 |
|
|
780,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs |
|
|
8/9/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,415(3) |
|
|
|
|
|
1,104,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise
M. Kulikowsky
Chief Human Resources Officer |
|
|
Cash |
|
|
|
|
|
89,204 |
|
|
223,011 |
|
|
334,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs |
|
|
8/9/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,885(3) |
|
|
|
|
|
224,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reginald
M. Rasch
Chief Legal Officer |
|
|
Cash |
|
|
|
|
|
68,072 |
|
|
170,180 |
|
|
255,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs |
|
|
5/7/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,919(4) |
|
|
|
|
|
269,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
“RSUs” indicates that the award is a time-based restricted stock unit award. |
(2) |
Represents annual bonus opportunities
granted under our annual cash incentive plan. Mr. Vogensen’s base salary increased from $625,000 to $650,000 and Ms.
Kulikowsky’s base salary increased from $425,000 to $450,000, in each case, effective April 26, 2021. As a result,
amounts set forth below for Mr. Vogensen and Ms. Kulikowsky are based on his or her prorated annual base salary. In
addition, Mr. Rasch’s target bonus amount was prorated for 2021 based on his start date and, as a result, amounts set forth
below for Mr. Rasch are based on his prorated annual base salary. See “Annual Cash Incentive Plan” under
“Compensation Discussion and Analysis” above for a description of our annual cash incentive plan and each Named
Executive Officer’s bonus opportunity for fiscal 2021. |
(3) |
Time-based RSU awards were granted on August 9, 2021. This award 100% cliff vests on the three-year anniversary of the grant date, subject to continued employment through the applicable vesting dates. |
(4) |
Time-based RSU award was granted to Mr. Rasch on May 7, 2021 upon his appointment as Chief Legal Officer. This award vests in three equal instalments, on each of the first three anniversaries of the grant, subject to his continued employment through the applicable vesting dates. |
(5) |
Amounts shown in this column reflect the fair value of the equity awards on the date of grant determined in accordance with ASC Topic 718. |
46 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
Narrative Disclosure to Summary Compensation Table and Grant of Plan-Based Awards Table
Employment Agreements and Change in Control Severance Agreements
Employment Agreement with Bradley M. Weston.
Commencing April 1, 2020, Mr. Weston has been party to an amended and restated employment agreement with the Company pursuant to
which he serves as our President and Chief Executive Officer. In 2021, Mr. Weston’s annual base salary was $1,050,000, and
he was eligible for an annual cash incentive bonus with a target of 120% of annual base salary. Mr. Weston’s employment agreement
also provided for other customary benefits, including savings and retirement plans, paid vacation, health care, life insurance plans and
expense reimbursement.
Employment Agreement with Todd E. Vogensen.
Commencing January 6, 2020, Mr. Vogensen has been party to an employment agreement with the Company, pursuant to which
he serves as our Executive Vice President and Chief Financial Officer. In 2021, Mr. Vogensen’s annual base salary was $650,000,
and he was eligible for an annual cash incentive bonus with a target of 75% of annual base salary. Mr. Vogensen’s employment
agreement also provides for other customary benefits, including savings and retirement plans, paid vacation, health and welfare benefit
plans, and expense reimbursement.
Employment Agreement with Sean C. Thompson.
Commencing September 14, 2020, Mr. Thompson has been party to an amended and restated employment agreement with the Company, pursuant
to which he serves as our Executive Vice President and Chief Commercial Officer. In 2021, Mr. Thompson’s annual base salary
was $650,000 and he was eligible for an annual cash incentive bonus with a target of 80% of annual base salary. Mr. Thompson’s
employment agreement also provides for other customary benefits, including savings and retirement plans, paid vacation, health and welfare
plans, and expense reimbursement.
Employment Agreement and Change in Control Severance Agreement with Denise M. Kulikowsky. Commencing April 5, 2020 Ms. Kulikowsky has been party to an amended and restated employment agreement with the Company, pursuant
to which she serves as our Executive Vice President and Chief Human Resources Officer. In 2021, Ms. Kulikowsky’s annual base
salary was $450,000, and she was eligible for an annual cash incentive bonus with a target of 60% of annual base salary. Her employment
agreement also provides for other customary benefits, including savings and retirement plans, paid vacation, health and welfare plans,
and expense reimbursement.
Commencing December 24, 2019, Ms. Kulikowsky has been a party to a change in control
severance agreement with the Company, pursuant to which Ms. Kulikowsky is entitled to receive severance payments and benefits upon certain
terminations of employment in connection with a change in control.
Employment Agreement with Reginald M. Rasch.
Commencing March 29, 2021, Mr. Rasch has been party to an employment agreement with the Company, pursuant to which he serves as our
Executive Vice President, Chief Legal Officer, and Corporate Secretary. In 2021, Mr. Rasch’s annual base salary was $450,000, and
he was eligible for an annual cash incentive bonus with a target of 50% of annual base salary (prorated for 2021 based on his start date).
He received a $200,000 cash sign-on bonus and a sign-on equity grant of $270,000 in the form of RSUs. Mr. Rasch’s employment
agreement also provides for other customary benefits, including savings and retirement plans, paid vacation, health and welfare plans,
and expense reimbursement.
For a description of the payments and benefits our Named Executive Officers may
be entitled to in connection with a termination of employment or a change in control, and for a description of the restrictive covenants
in our favor by which our Named Executive Officers are bound, see “—Potential Payments upon Termination or Change in Control.”
Party City Holdco Inc. | 2022
Proxy Statement | 47
Executive Compensation Program Overview
Outstanding Equity Awards at Fiscal Year End 2021
The following table sets forth certain information with respect to outstanding stock
options and restricted stock units held by our Named Executive Officers on December 31, 2021.
Name and
Principal
Position |
|
Option
Grant
Date |
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable(1) |
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable(1) |
|
|
Option
Exercise
Price
($/share) |
|
Option
Expiration
Date |
|
Restricted
Stock Unit
Grant Date |
|
Number
of Shares
or Units
of Stock
that
Have Not
Vested
(#) |
|
Market
Value of
Shares
or Units
of Stock
that
Have Not
Vested
($)(2) |
|
Equity
Incentive
Plan
Awards: Number of Unearned Shares,
Units,
or Other Rights that Have Not Vested (#)(3) |
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units,
or Other
Rights that
Have Not
Vested ($)(2) |
Bradley M. Weston
President and Chief Executive Officer
|
|
7/25/2019 |
|
200,000 |
|
100,000 |
|
|
6.21 |
|
7/25/2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
358,334(4) |
|
1,995,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
537,501(5) |
|
2,993,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
537,501(6) |
|
2,993,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
|
|
|
|
716,666(7) |
|
3,991,830 |
Todd E. Vogensen
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
83,334(4) |
|
464,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
125,001(5) |
|
696,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
125,001(6) |
|
696,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
|
|
|
|
166,666(7) |
|
928,330 |
|
|
|
|
|
|
|
|
|
|
|
|
8/9/2021 |
|
78,313(8) |
|
436,203 |
|
|
|
|
Sean C. Thompson
Chief Commercial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
79,174(4) |
|
440,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
118,759(5) |
|
661,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
118,759(6) |
|
661,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
|
|
|
|
158,345(7) |
|
881,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10/15/2020 |
|
12,501(5) |
|
69,631 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/15/2020 |
|
12,501(6) |
|
69,631 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/15/2020 |
|
|
|
|
|
16,666(7) |
|
92,830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
8/9/2021 |
|
166,415(8) |
|
926,932 |
|
|
|
|
48 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
Name and
Principal
Position |
|
Option
Expiration
Date |
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable(1) |
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable(1) |
|
Option
Grant Date |
|
Option
Exercise
Price
($/share) |
|
Restricted
Stock Unit
Grant Date |
|
Number of
Shares or
Units
of Stock that
Have Not
Vested (#) |
|
Market
Value of
Shares or
Units of
Stock that
Have Not
Vested ($)(2) |
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested (#)(3) |
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that Have Not Vested
($)(2) |
|
Denise M. Kulikowsky
Chief Human Resources Officer |
|
11/14/2018 |
|
12,000 |
|
8,000 |
|
11/13/2028 |
|
11.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/1/2019 |
|
1,604(9) |
|
8,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
31,250(4) |
|
174,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
46,875(5) |
|
261,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
46,875(6) |
|
261,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/18/2020 |
|
|
|
|
|
62,500(7) |
|
348,125 |
|
|
|
|
|
|
|
|
|
|
|
|
8/9/2021 |
|
33,885(8) |
|
188,739 |
|
|
|
|
|
Reginald M. Rasch
Chief Legal Officer |
|
|
|
|
|
|
|
|
|
|
|
5/7/2021 |
|
33,919(10) |
|
188,929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Mr. Weston’s time-based options vest in three equal annual installments from the grant date, generally subject to Mr. Weston’s continued employment or other service through the applicable vesting date. Ms. Kulikowsky’s time-based options vest in five equal annual installments commencing on November 14, 2019, generally subject to Ms. Kulikowsky’s continued employment or service through the applicable vesting date. |
(2) |
Calculated using the 2021 year-end closing market price of $5.57 per share. |
(3) |
This column displays the number of shares that may be earned subject to certain performance criteria at the end of the relevant performance period. Please see the “Long-Term Incentive Program” section within the Compensation Discussion & Analysis section of the proxy statement. |
(4) |
PSU award that was earned based on achievement of a VWAP of $2.50 over a period of not less than ninety (90) consecutive calendar days during the three-year performance period beginning on the date of grant. On November 2, 2020, this performance condition was achieved and 25% of the earned PSUs vested on July 18, 2021, another 25% vested on November 2, 2021, and the remaining earned PSUs will vest in equal installments on May 2, 2022 and November 2, 2022, subject to continued employment through the applicable vesting date. |
(5) |
PSU award that was earned based on achievement of a VWAP of $5.00 over a period of not less than ninety (90) consecutive calendar days during the three-year performance period beginning on the date of grant. On January 27, 2021, this performance condition was achieved and 25% of the earned PSUs vested on July 27, 2021 (October 15, 2021, in the case of Mr. Thompson’s supplemental PSU grant), and the remaining earned PSUs will vest in equal installments on January 27, 2022, July 27, 2022, and January 27, 2023, subject to continued employment through the applicable vesting date. |
(6) |
PSU award that was earned based on achievement of a VWAP of $7.50 over a period of not less than ninety (90) consecutive calendar days during the three-year performance period beginning on the date of grant. On June 9, 2021, this performance condition was achieved and 25% of the earned PSUs vested on December 9, 2021, and the remaining earned PSUs will vest in equal installments on June 9, 2022, December 9, 2022, and June 9, 2023, subject to continued employment through the applicable vesting date. |
(7) |
PSU award that may be earned subject to achievement of a VWAP of $10.00 over a period of not less than ninety (90) consecutive calendar days during the three-year performance period beginning on the date of grant, subject to continued employment through the applicable vesting date. As of December 31, 2021, the performance conditions were not achieved. |
(8) |
Time-based RSU award, which 100% cliff vests on August 9, 2024, subject to continued employment through the applicable vesting date. |
(9) |
New hire RSU grant, which vests in three equal instalments on January 1, 2020, January 1, 2021, and January 1, 2022, subject to continued employment through the applicable vesting date. |
(10) |
New hire RSU grant, which vests in three equal instalments on May 7, 2022, May 7, 2023, and May 7, 2024, subject to continued employment through the applicable vesting date. |
Party City Holdco Inc. | 2022
Proxy Statement | 49
Executive Compensation Program Overview
Option Exercises and Stock Vested in 2021
|
|
|
Option Awards |
|
Stock Awards |
|
|
Name and Principal Position |
|
Number
of Shares Acquired
on Exercise(1) |
|
Value
Realized on
Exercise ($) |
|
Number of
Shares
Acquired on
Vesting |
|
Value
Realized on
Vesting(2) ($) |
|
|
Bradley M. Weston
President and Chief Executive Officer |
|
|
|
|
|
716,666 |
|
5,650,904 |
|
|
Todd E. Vogensen
Chief Financial Officer |
|
|
|
|
|
166,666 |
|
1,314,154 |
|
|
Sean C. Thompson
Chief Commercial Officer |
|
|
|
|
|
202,263 |
|
1,616,043 |
|
|
Denise M. Kulikowsky
Chief Human Resources Officer |
|
|
|
|
|
65,706 |
|
512,915 |
|
|
|
(1) |
None of our Named Executive Officers exercised options during 2021. |
(2) |
Represents the product of the number of PSUs and RSUs that vested and the market value of Party City Holdco Inc. common stock on the vesting date. |
Potential Payments upon Termination or
Change in Control for 2021
During 2021, the employment agreements of each Named Executive Officer provided for severance
benefits upon a termination of employment under certain circumstances (including, in certain cases, in connection with a change in control).
For a discussion regarding the benefits see “—Employment Agreement with Mr. Weston”, “—Employment Agreement
with Mr. Vogensen”, “—Employment Agreement with Mr. Thompson”, and “—Employment Agreement
with
Ms. Kulikowsky” below. Furthermore, a change in control (in some cases,
only if accompanied by a qualifying termination of the Named Executive Officer’s employment) or a termination of employment
would also, in certain cases, result in the accelerated vesting of our restricted stock units, and time-based options and would have
certain effects on our performance-based options. See “—Effect of Change of Control and Qualifying Termination on Equity
Awards” below.
50 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
Potential Post Employment Severance and Bonus Payments
The following table presents the potential post-employment severance and bonus payments
payable to each of our Named Executive Officers, and the potential effect of a change in control on stock–based awards held by our
Named Executive Officers, in each case, as of December 31, 2021, the last business day of our fiscal year. The table also assumes
that the triggering event took place on December 31, 2021. Amounts shown in
the table do not include (i) accrued but unpaid
salary, (ii) vested benefits, including the value of time-based restricted stock units that vested by their terms on December 31,
2021, or (iii) other benefits earned or accrued by the Named Executive Officer during his or her employment that are available to
all salaried employees and that do not discriminate in scope, terms or operations in favor of executive officers.
|
Name |
|
Benefit |
|
|
Death
or
Disability(1)
($) |
Termination of
Employment
Without Cause or
for Good Reason
($)
|
|
Termination of
Employment
without Cause
or for Good
Reason within
six months prior
to or 24 months
following a
Change in Control
($)
|
|
|
Bradley M. Weston |
|
Severance |
|
|
1,561,368 |
3,661,368 |
(2) |
|
6,181,368 |
(3) |
|
|
|
|
COBRA Premiums(4) |
|
|
0 |
0 |
|
|
17,972 |
|
|
|
|
|
Vesting of Time-Based Options(5) |
|
|
0 |
0 |
|
|
0 |
|
|
|
|
|
Vesting of Time-Based RSUs(6) |
|
|
0 |
0 |
|
|
7,983,682 |
|
|
|
|
|
Vesting of Performance-Based RSUs(7) |
|
|
0 |
0 |
|
|
1,935,764 |
|
|
|
|
|
TOTAL |
|
|
1,561,368 |
3,661,368 |
|
|
16,118,786 |
|
|
|
Todd E. Vogensen |
|
Severance |
|
|
599,206 |
1,249,206 |
(2) |
|
2,874,206 |
(3) |
|
|
|
|
COBRA Premiums(4) |
|
|
0 |
0 |
|
|
34,308 |
|
|
|
|
|
Vesting of Time-Based RSUs(6) |
|
|
0 |
1,392,511 |
|
|
2,292,885 |
|
|
|
|
|
Vesting of Performance-Based RSUs(7) |
|
|
0 |
758,772 |
|
|
450,176 |
|
|
|
|
|
TOTAL |
|
|
599,206 |
3,400,489 |
|
|
5,651,575 |
|
|
|
Sean C. Thompson |
|
Severance |
|
|
644,374 |
650,000 |
(2) |
|
2,984,374 |
(3) |
|
|
|
|
COBRA Premiums(4) |
|
|
0 |
0 |
|
|
26,501 |
|
|
|
|
|
Vesting of Time-Based RSUs(6) |
|
|
0 |
1,415,823 |
|
|
2,830,167 |
|
|
|
|
|
Vesting of Performance-Based RSUs(7) |
|
|
0 |
0 |
|
|
465,172 |
|
|
|
|
|
TOTAL |
|
|
644,374 |
2,065,823 |
|
|
6,306,214 |
|
|
Party City Holdco Inc. | 2022
Proxy Statement | 51
Executive Compensation Program Overview
|
Name |
|
Benefit |
|
|
Death
or
Disability(1)
($) |
Termination of
Employment
Without Cause or
for Good Reason
($) |
|
|
Termination of Employment without Cause or for Good Reason within six months prior to or 24 months following a Change in Control ($)
|
|
|
Denise M. Kulikowsky |
|
Severance |
|
|
330,663 |
780,663(2) |
|
|
1,410,663 |
(3) |
|
|
|
|
COBRA Premiums(4) |
|
|
0 |
0 |
|
|
17,972 |
|
|
|
|
|
Vesting of Time-Based Options(5) |
|
|
0 |
0 |
|
|
0 |
|
|
|
|
|
Vesting of Time-Based RSUs(6) |
|
|
0 |
0 |
|
|
821,759 |
|
|
|
|
|
Vesting of Performance-Based RSUs(7) |
|
|
0 |
0 |
|
|
348,125 |
|
|
|
|
|
TOTAL |
|
|
330,663 |
780,663 |
|
|
2,598,519 |
|
|
|
Reginald M. Rasch(8) |
|
Severance |
|
|
196,585 |
646,585(2) |
|
|
1,436,945 |
(3) |
|
|
|
|
COBRA Premiums(4) |
|
|
0 |
0 |
|
|
26,501 |
|
|
|
|
|
Vesting of Time-Based RSUs(6) |
|
|
0 |
62,976 |
|
|
188,929 |
|
|
|
|
|
TOTAL |
|
|
196,585 |
709,561 |
|
|
1,652,375 |
|
|
(1) |
Under
the terms of each Named Executive Officer’s employment agreement as in effect on December 31, 2021, each Named Executive Officer
is entitled to receive a prorated bonus for the year of termination in the event of a termination of employment due to death or disability. |
(2) |
Under
the terms of each Named Executive Officer’s employment agreement as in effect on December 31, 2021, each Named Executive Officer
is entitled to the following cash severance payments in the event of a termination of employment without cause or resignation for good
reason as follows: (i) Mr. Weston would be entitled to receive a pro rata annual bonus for the year of termination, payable based on
actual performance in the year of termination, and severance pay equal to two times his annual base salary, payable as salary continuation;
(ii) Messrs. Vogensen and Rasch and Ms. Kulikowsky would be entitled to receive a pro rata annual bonus for the year of termination,
payable based on actual performance in the year of termination, and severance pay equal to one times his or her annual base salary, payable
as salary continuation; (iii) Mr. Thompson would be entitled to receive severance pay equal to one times his annual base salary, payable
as salary continuation. |
(3) |
Under
the terms of each Named Executive Officer’s employment agreement or change in control severance agreement, as applicable, as in
effect on December 31, 2021, each Named Executive Officer is entitled to the following cash severance payments in the event of a Qualifying
Termination consisting of: (i) a pro rata annual bonus for the year of termination, payable based on actual performance in the year of
termination, and (ii) severance pay equal to two times (or one-and-a-half times for Ms. Kulikowsky) the sum of his or her then-current
annual base salary and then-current target annual bonus, payable as a lump sum. |
(4) |
Under
the terms of each Named Executive Officer’s employment agreement or change in control severance agreement, as applicable, as in
effect on December 31, 2021, each Named Executive Officer would be entitled to the Company portion of COBRA premiums for 24 months (or
12 months for Ms. Kulikowsky) following the date of a Qualifying Termination. |
(5) |
Under the terms
of his employment agreement as in effect on December 31, 2021, if Mr. Weston’s employment had been terminated without cause
or he resigned for good reason, his sign-on options would have accelerated by 24 months and, in connection with a Qualifying Termination,
all of his sign-on options would have accelerated in full. However, no value is shown related to Mr. Weston’s sign-on options,
as the exercise price exceeded the Company’s closing stock price on December 31, 2021 of $5.57. Similarly, under
the terms of her employment agreement as in effect on December 31, 2021, if Ms. Kulikowsky’s employment had experienced a Qualifying
Termination, her outstanding stock options would have accelerated in full. However, no value is shown related to Ms. Kulikowsky’s
options, as the exercise price exceeded the Company’s closing stock price on December 31, 2021 of $5.57. |
(6) |
Under the terms of their employment agreements as in effect on December 31, 2021, if Messrs. Vogensen, Thompson, or Rasch had been terminated without cause or resigned for good reason, their unvested time-based RSUs would have accelerated by 12 months. Further, under the terms of each Named Executive Officer’s employment agreement or change in control severance agreement, as applicable, as in effect on December 31, 2021, all unvested time-based RSUs held by each NEO as of December 31, 2021 would vest in full upon a Qualifying Termination. Amounts shown are based on the Company’s closing stock price on December 31, 2021 of $5.57. |
(7) |
Under the terms of their employment agreements as in effect on December 31, 2021, in connection with a Qualifying Termination, all performance-based RSUs held by Messrs. Weston, Vogensen and Thompson as of December 31, 2021 for which the performance period had not ended would be treated as earned at target levels and would pro rata vest based on the elapsed portion of the performance period as of the date of the Qualifying Termination. Under the terms of her change in control severance agreement as in effect as of December 31, 2020, in connection with a Qualifying Termination, all of Ms. Kulikowsky’s outstanding and unearned performance-based RSUs as of December 31, 2020 would be treated as earned at target levels and accelerate and vest in full as of the date of termination. In all cases, 2020, values are based on the closing price of the Company’s stock on December 31, 2021 of $5.57. |
(8) |
Mr. Rasch is entitled to retain his $200,000 sign-on bonus if he terminated for any reason other than for cause within 24 months of his start date. |
52 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
Amended & Restated Employment Agreement with Mr. Weston. Under
Mr. Weston’s amended and restated employment agreement as in effect on December 31, 2021, if we had terminated Mr. Weston’s
employment other than for cause (as defined in Mr. Weston’s employment agreement), or if Mr. Weston had terminated his
employment for good reason (as defined in Mr. Weston’s employment agreement), we would have been obligated to pay Mr. Weston
the following cash payments: (1) accrued unpaid salary, earned but unpaid annual bonus for any prior year and accrued but unpaid vacation
pay (collectively, the “Accrued Obligations”); (2) a pro rata annual bonus for the year of termination, payable based on actual
performance in the year of termination; (3) severance pay equal to two times his annual base salary, payable as salary continuation; and
(4) with respect to the stock options he received as a sign-on award, accelerated vesting of the portion of the stock options that would
have vested in the 24 month period immediately following his termination of employment had he remained employed with the Company.
If such a termination had occurred within six months prior to, or 24 months following,
a change in control (a “Qualifying Termination”), the severance payment described above would have instead been equal
to an amount equal to two times the sum of Mr. Weston’s then-current annual base salary and then-current target annual bonus,
payable as a lump sum. Additionally, assuming Mr. Weston’s timely election to continue his “COBRA” coverage under
the Company’s group health plan, for a period of 24 months following termination, he would have received a monthly amount equal
to the Company’s portion of the monthly health premiums for such coverage as paid prior to termination.
In addition, the stock options he received as a sign-on award would accelerate
and vest in full and, Mr. Weston’s remaining incentive equity awards (other than the stock options received as a sign-on award)
that vest solely based on his continued service with the Company would have fully vested immediately upon the occurrence of a Qualifying
Termination. Any such awards that are subject to performance-based vesting would have been earned and vested as follows: (i) if the
full performance period has elapsed as of the date of the Qualifying Termination, based on actual achievement of the applicable performance
goals without proration and (ii) otherwise, based on assumed achievement of the applicable performance goals at 100% of the performance
target, prorated based on the number of days of Mr. Weston’s actual employment with the Company prior to the Qualifying Termination
during the full performance period.
Upon termination of Mr. Weston’s employment by the Company for cause, or
by Mr. Weston without good reason, Mr. Weston would have only been entitled to the Accrued Obligations, and upon his termination of employment
due to death or disability, Mr. Weston would have been entitled to the Accrued Obligations and a pro rata annual bonus for the year of
termination.
Payment of the severance payments and benefits described above would be subject
to Mr. Weston’s (or, in the case of his death, his beneficiary’s or estate’s) signing of a release of claims, except
such a release would not be required with respect to the Accrued Obligations and, in the case of a Qualifying Termination, the accelerated
vesting of equity awards other than the stock options he received as a sign-on award.
Mr. Weston’s employment agreement as in effect on December 31, 2021
also provided that during the term of the agreement and the Restriction Period (as defined below), Mr. Weston would be subject to
certain non-competition and non-solicitation provisions, as described in the employment agreement. The Restriction Period is defined as
the 24-month period immediately following a termination of employment other than a termination at the expiration of the employment period.
Employment Agreement with Mr. Vogensen.
Under Mr. Vogensen’s employment agreement as in effect on December 31, 2021, if we had terminated Mr. Vogensen’s employment
other than for cause (as defined in Mr. Vogensen’s employment agreement), or if Mr. Vogensen had terminated his employment
for good reason (as defined in Mr. Vogensen’s employment agreement), we would have been obligated to pay Mr. Vogensen the following
cash payments: (1) the Accrued Obligations; (2) a pro rata annual bonus for the year of termination, payable based on actual performance
in the year of termination; and (3) severance pay equal to one times his annual base salary, payable as salary continuation. In addition,
with respect to Mr. Vogensen’s incentive equity awards that vest solely based on his continued service with the Company, the portion
of such awards that would have vested had he remained employed for the 364 days following the date of his termination of employment would
accelerate and fully vest. Any of his outstanding awards that are subject to performance-based vesting would have been earned and vested
as follows: (i) if the full performance period has elapsed as of the date of termination, based on actual achievement of the applicable
performance goals without proration and (ii) otherwise, based on assumed achievement of the applicable performance goals at 100%
of the performance target, prorated based on the date which is 364 days following the date of termination during the full performance period.
Upon a Qualifying Termination, the severance payment would have instead been equal
to an amount equal to two times the sum of Mr. Vogensen’s then-current annual base salary and then-current target annual bonus,
payable as a lump sum. Additionally, assuming Mr. Vogensen’s timely election to continue his “COBRA” coverage under
the Company’s group health plan, for a period of 24 months following termination, he would have received a monthly amount equal
to the Company’s portion of the monthly health premiums for such coverage as paid prior to termination. Further, Mr. Vogensen’s
incentive equity awards that vest solely based on his continued service with the Company would accelerate and fully vest while such awards
that vest upon the occurrence of specified performance metrics would have been earned and vested as follows: (i) if the full performance
period has elapsed as of the date of the Qualifying Termination, based on actual achievement of the applicable performance goals without
proration and (ii) otherwise, based on assumed achievement of the applicable performance goals at 100% of the performance target,
prorated based on the number of days of Mr. Vogensen’s actual employment with the Company prior to the Qualifying Termination during
the full performance period.
Upon termination of Mr. Vogensen’s employment by the Company for cause,
or by Mr. Vogensen without good reason, Mr. Vogensen would have only been entitled to the Accrued
Party City Holdco Inc. | 2022
Proxy Statement | 53
Executive Compensation Program Overview
Obligations, and upon his
termination of employment due to death or disability, Mr. Vogensen would have been entitled to the Accrued Obligations and a pro
rata annual bonus for the year of termination.
Payment of the severance payments and benefits described above would be subject
to Mr. Vogensen’s (or, in the case of his death, his beneficiary’s or estate’s) signing of a release of claims,
except such a release would not be required with respect to the Accrued Obligations.
Mr. Vogensen’s employment agreement as in effect on December 31,
2021 also provided that during the term of the agreement and the Restriction Period (as defined below), Mr. Vogensen would be subject
to certain non-competition and non-solicitation provisions, as described in the employment agreement. The Restriction Period is defined
as the 12 month period immediately following a termination of employment (or the 24 month period following a Qualifying Termination) other
than a termination at the expiration of the employment period.
Amended & Restated Employment Agreement with Mr. Thompson.
Under Mr. Thompson’s employment agreement in effect on December 31, 2021, if we had terminated Mr. Thompson’s employment
other than for cause (as defined in Mr. Thompson’s employment agreement), or if Mr. Thompson had terminated his employment for good
reason (as defined in Mr. Thompson’s employment agreement), we would have been obligated to pay Mr. Thompson the following cash
payments: (1) the Accrued Obligations, and (2) severance pay equal to one times his annual base salary, payable as salary continuation.
In addition, with respect to his sign-on incentive equity award, the portion of the RSUs that would have vested had he remained employed
for the 12 months following the date of his termination would accelerate and fully vest, and his sign-on performance-based RSUs would
remain outstanding and eligible to vest for 12 months following the date of his termination.
Upon a Qualifying Termination, the severance payment would have instead been equal
to an amount equal to two times the sum of Mr. Thompson’s then-current annual base salary and then-current target annual bonus,
payable as a lump sum, and Mr. Thompson would also be entitled to receive a pro rata annual bonus for the year of termination, payable
based on actual performance in the year of termination. Additionally, assuming Mr. Thompson’s timely election to continue his
“COBRA” coverage under the Company’s group health plan, for a period of 24 months following termination, he would have
received a monthly amount equal to the Company’s portion of the monthly health premiums for such coverage as paid prior to termination.
With respect to Mr. Thompson’s sign-on incentive equity award, his RSUs would accelerate and fully vest as of the date of termination,
and his performance-based RSUs would have been earned and vested based on assumed achievement of the applicable performance goals at 100%
of the performance target, prorated based on the number of days of Mr. Thompson’s actual employment with the Company prior to the
Qualifying Termination during the full performance period. With respect to Mr. Thompson’s remaining incentive equity awards, such
awards that vest solely based on his continued service with the Company would accelerate and fully vest. Any of his remaining outstanding
awards that are subject to performance-based vesting would have been earned and vested as follows: (i) if
the full performance period
has elapsed as of the date of the Qualifying Termination, based on actual achievement of the applicable performance goals without proration
and (ii) otherwise, based on assumed achievement of the applicable performance goals at 100% of the performance target, prorated
based on the number of days of Mr. Thompson’s actual employment with the Company prior to the Qualifying Termination during the
full performance period.
Upon termination of Mr. Thompson’s employment by the Company for cause,
or by Mr. Thompson without good reason, Mr. Thompson would have been entitled to the Accrued Obligations, and upon his termination
of employment due to death or disability, Mr. Thompson would have been entitled to the Accrued Obligations and a pro rata annual bonus
for the year of termination.
Payment of the severance payments and benefits described above would be subject
to Mr. Thompson’s (or, in the case of his death, his beneficiary’s or estate’s) signing of a release of claims, except
such a release would not be required with respect to the Accrued Obligations and, in the case of a Qualifying Termination, the accelerated
vesting of equity awards other than the stock options he received as a sign-on award.
Mr. Thompson’s employment agreement as in effect on December 31, 2021 also
provided that during the term of the agreement and the 12 month period immediately following a termination of employment (or the 24 month
period following a Qualifying Termination) other than a termination at the expiration of the employment period, Mr. Thompson would be
subject to certain non-competition and non-solicitation provisions, as described in the employment agreement.
Amended & Restated Employment Agreement and Change in Control Severance
Agreement with Ms. Kulikowsky. Under Ms. Kulikowsky’s employment agreement in effect on December 31, 2021,
if we had terminated Ms. Kulikowsky’s employment other than for cause (as defined in Ms. Kulikowsky’s employment agreement),
or if Ms. Kulikowsky had terminated her employment for good reason (as defined in Ms. Kulikowsky’s employment agreement), we would
have been obligated to pay Ms. Kulikowsky the following cash payments: (1) the Accrued Obligations; (2) a pro rata annual bonus for the
year of termination, payable based on actual performance in the year of termination; and (3) severance pay equal to one times her
annual base salary, payable as salary continuation.
Under Ms. Kulikowsky’s and her Change in Control Severance Agreement in effect
on December 31, 2021, upon a Qualifying Termination, the severance payment would have instead been equal to an amount equal to one-and-a-half
times the sum of Ms. Kulikowsky’s then-current annual base salary and then-current target annual bonus, payable as a lump sum.
Additionally, assuming Ms. Kulikowsky’s timely election to continue her “COBRA” coverage under the Company’s
group health plan, for a period of 12 months following termination, she would have received a monthly amount equal to the Company’s
portion of the monthly health premiums for such coverage as paid prior to termination. With respect to any stock options, restricted stock,
restricted stock units, performance stock units or similar equity awards, such awards that vest solely based on her continued service
with the Company would accelerate and fully
54 | 2022
Proxy Statement | Party City Holdco Inc.
Executive Compensation Program Overview
vest. Any of her remaining outstanding awards that are subject to performance-based vesting
would have been earned and vested as follows: (i) if the full performance period has elapsed as of the date of the Qualifying Termination,
based on actual achievement of the applicable performance goals without proration and (ii) otherwise, based on assumed achievement
of the applicable performance goals at 100% of the performance target, without proration.
Upon termination of Ms. Kulikowsky employment by the Company for cause, or
by Ms. Kulikowsky without good reason, Ms. Kulikowsky would have only been entitled to the Accrued Obligations, and upon her termination
of employment due to death or disability, Ms. Kulikowsky would have been entitled to the Accrued Obligations and a pro rata annual
bonus for the year of termination under her employment agreement.
Payment of the severance payments and benefits described above would be subject
to Ms. Kulikowsky (or, in the case of her death, her beneficiary’s or estate’s) signing of a release of claims, except
such a release would not be required with respect to the Accrued Obligations.
Ms. Kulikowsky’s employment agreement as in effect on December 31,
2021 also provided that during the term of the agreement and the 12 month period immediately following a termination of employment (other
than a termination at the expiration of the employment period), Ms. Kulikowsky would be subject to certain non-competition and non-solicitation
provisions, as described in the employment agreement.
Employment Agreement with Mr. Reginald M. Rasch.
Under Mr. Rasch’s employment agreement in effect on December 31, 2021, if we had terminated Mr. Rasch’s employment other than
for cause (as defined in Mr. Rasch’s employment agreement), or if Mr. Rasch had terminated his employment for good reason (as defined
in Mr. Rasch’s employment agreement), we would have been obligated to pay Mr. Rasch the following cash payments: (1) the Accrued
Obligations; (2) a pro rata annual bonus for the year of termination, payable based on actual performance in the year of termination;
and (3) severance pay equal to one times his annual base salary, payable as salary continuation. In addition, with respect to his sign-on
incentive award, the portion of the RSUs and the portion of restricted cash awards that would have vested had he remained employed for
the 364-day period following the date of his termination would accelerate and fully vest. Any of his outstanding awards that are subject
to performance-based vesting would have been earned and vested as follows: (i) if the full performance period has elapsed as of the Date
of Termination, based on actual achievement of the applicable performance goals without proration and (ii) otherwise, based on assumed
achievement of the applicable performance goals at 100% of the performance target, prorated based on the number of days of Mr. Rasch’s
actual employment with the date that is 364 days following the date of termination during the full performance period.
Upon a Qualifying Termination, the severance payment would have instead been equal to an amount equal to two times the sum of Mr. Rasch’s
then-current annual base salary and then-current target annual bonus, payable as a lump sum. Additionally, assuming Mr. Rasch’s
timely election to continue
his “COBRA” coverage under the Company’s group health plan, for a period of 24 months following termination, he would
have received a monthly amount equal to the Company’s portion of the monthly health premiums for such coverage as paid prior to
termination. Further, Mr. Rasch’s incentive equity awards that vest solely based on his continued service with the Company would
accelerate and fully vest, while such awards that vest upon the occurrence of specified performance metrics would have been earned and
vested as follows: (i) if the full performance period has elapsed as of the date of the Qualifying Termination, based on actual achievement
of the applicable performance goals without proration and (ii) otherwise, based on assumed achievement of the applicable performance goals
at 100% of the performance target, prorated based on the number of days of Mr. Rasch’s actual employment with the Company prior
to the Qualifying Termination during the full performance period.
Upon termination of Mr. Rasch employment by the Company for cause, or by Mr. Rasch without good reason, Mr. Rasch would have only been
entitled to the Accrued Obligations, and upon his termination of employment due to death or disability, Mr. Rasch would have been entitled
to the Accrued Obligations and a pro rata annual bonus for the year of termination.
Payment of the severance payments and benefits described above would be subject
to Mr. Rasch (or, in the case of his death, his beneficiary’s or estate’s) signing of a release of claims.
Mr. Rasch’s employment agreement as in effect on December 31, 2021 also
provided that during the term of the agreement and the 12 month period immediately following a termination of employment (other than a
termination at the expiration of the employment period), Mr. Rasch would be subject to certain non-competition and non-solicitation provisions,
as described in the employment agreement.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was at any time during 2021 or at any other
time an officer or employee of the Company, and no member of this committee had any relationship with the Company requiring disclosure
under Item 404 of Regulation S-K under the Exchange Act. No executive officer of the Company has served on the board of directors or compensation
committee of any other entity that has or has had one or more executive officers who served as a member of the Compensation Committee
during 2021.
Chief Executive Officer Pay Ratio
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the
following information explains the relationship of the annual total compensation of our median employee to the annual total compensation
on an annualized basis of Mr. Weston, our CEO as of the determination date for our median employee.
For 2021, our last completed fiscal year:
• |
Our median employee was a part time sales associate working in one of our retail stores in the United States; |
Party City Holdco Inc. | 2022
Proxy Statement | 55
Executive Compensation Program Overview
• |
The total annual compensation of our median employee was $10,176; |
• |
The total annual compensation of Mr. Weston, on an annualized basis, was $2,659,398; and |
• |
The ratio of the median employee’s pay to that of Mr. Weston was approximately 261 to 1. |
The SEC rules allow us to identify our median employee once every three years unless
there has been a change in our employee population or employee compensation arrangements that we reasonably believe would result in a
significant change in our pay ratio disclosure. Since December 31, 2020, there has been no change in our employee population or employee
compensation arrangements that we believe would significantly
impact the pay ratio disclosure. We therefore used the same median employee
to calculate our 2021 pay ratio as was used for purposes of our 2020 pay ratio.
In calculating the CEO pay ratio, the SEC rules allow companies to adopt a variety of
methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations. Therefore,
our reported CEO pay ratio may not be comparable to CEO pay ratios reported by other companies due to differences in industries and geographical
dispersion, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their CEO pay
ratios.
56 | 2022
Proxy Statement | Party City Holdco Inc.
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
In accordance with the requirements of Section 14A of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) and the related rules of the SEC, our stockholders have the opportunity to cast an advisory
vote to approve the compensation of our named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules,
which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany
the compensation tables (a “say-on-pay” vote).
Our executive compensation program is designed to motivate and reward outstanding
performance in a straightforward and effective way and retain strong leadership. We encourage stockholders to read the section entitled
“Compensation Discussion and Analysis,” beginning on page 32, which describes
the details of our executive compensation program and the decisions made by the Compensation Committee in 2021.
At our 2019 annual meeting of stockholders, 99.8% of votes cast (for or
against) supported our executive compensation program. In 2021, we had discussions with a number of our stockholders regarding
various topics, including company performance and strategy, corporate governance, executive compensation, and ESG topics. The
Compensation Committee will continue to
consider stockholder feedback and the results of say-on-pay votes when making future compensation decisions.
Stockholders are being asked to approve the following resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the named executive
officers, as disclosed in this Proxy Statement pursuant to the SEC’s executive compensation disclosure rules, which disclosure includes
the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables,
is hereby approved.
As an advisory vote, this proposal is not binding on Party City, the Board, or
the Compensation Committee. However, the Compensation Committee and the Board value the opinions expressed by stockholders in their votes
on this proposal and will consider the outcome of the vote when making future compensation decisions regarding named executive officers.
It is expected that the next say-on-pay vote will occur at the 2023 annual meeting of stockholders, subject to the Board’s consideration
of the outcome of the vote on Proposal 3 described in this proxy statement.
The Board unanimously recommends a vote FOR Proposal 2, the advisory vote to approve
our executive compensation.
Party City Holdco Inc. | 2022
Proxy Statement | 57
ADVISORY VOTE TO SET THE FREQUENCY OF FUTURE EXECUTIVE COMPENSATION VOTES
In accordance with the requirements of Section 14A of the Exchange Act and the related
rules of the SEC, our stockholders have the opportunity to cast an advisory vote on how often the Company should hold a say-on-pay vote.
Under this proposal, stockholders may vote to have the say-on-pay vote every year, two years, or three years, or may abstain from voting
on this proposal. Stockholders will have an opportunity to cast an advisory vote on the frequency of the say-on-pay vote at least every
six years.
The Board recommends that future say-on-pay votes occur every year.
The Board’s recommendation of an annual vote is a change from the triannual say-on-pay
vote that the Company has held since 2016. In light of the Company’s desire to receive timely, direct input from stockholders on
the Company’s executive compensation policies and evolving best practices, the Board of Directors has determined that it is in the
best interests of
stockholders to conduct a say-on-pay vote annually and, in connection therewith, is recommending that stockholders approve
a change in the frequency of say-on-pay votes from three years to one year. The Board believes that allowing our stockholders to provide
us with their input on our executive compensation philosophy, policies and practices every year is a good corporate governance practice
that is consistent with holding the board of directors accountable to our stockholders and is in the best interests of our stockholders.
Although the vote is non-binding, the Board will consider the vote results in determining
the frequency of future say-on-pay votes. In the future, the Board may change the vote frequency based on the nature of the Company’s
compensation programs, input from our stockholders, and the Board’s views on the best way to obtain meaningful stockholder input.
It is expected that the next vote on a say-on-pay frequency proposal will occur at the
2028 annual meeting of stockholders.
The Board unanimously recommends a vote of “ONE YEAR” on Proposal 3, the
advisory vote to set the frequency of future “say-on-pay” votes to approve executive compensation.
58 | 2022
Proxy Statement | Party City Holdco Inc.
Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information with respect to the beneficial
ownership of our common stock as of April 11, 2022 for:
• |
each person whom we know beneficially owns more than five percent of our common stock; |
• |
each of our directors; |
• |
each of our Named Executive Officers; and |
• |
all of our directors and executive officers as a group. |
The number of shares beneficially owned by each stockholder is determined under
rules issued by the SEC and includes voting or investment power with respect to securities. Under these rules, beneficial ownership includes
any shares as to which the individual or entity has sole or shared voting power
or investment power. Each of the stockholders listed has sole voting and investment power with
respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable.
Shares of common stock that may be acquired within 60 days following April 11,
2022, pursuant to the exercise of options are deemed to be outstanding for the purpose of computing the percentage ownership of such holder
but are not deemed to be outstanding for computing the percentage ownership of any other person shown in the table.
Unless otherwise indicated, the address for each of the stockholders in the table
below is c/o Party City Holdco Inc., 80 Grasslands Road, Elmsford, New York 10523.
|
Name of Beneficial Owner |
|
|
Number of Shares
of Common Stock
Beneficially
Owned |
|
|
Percentage
of Common
Stock
Beneficially
Owned |
|
|
5% or greater stockholders: |
|
|
|
|
|
|
|
|
Funds affiliated with CAS Investment Partners, LLC(1) |
|
|
19,214,123 |
|
|
17.09% |
|
|
BlackRock, Inc.(2) |
|
|
7,342,740 |
|
|
6.53% |
|
|
The Vanguard Group(3) |
|
|
5,957,551 |
|
|
5.30% |
|
|
Directors and named executive officers: |
|
|
|
|
|
|
|
|
Joel Alsfine(4) |
|
|
50,975 |
|
|
* |
|
|
Steven J. Collins(5) |
|
|
92,673 |
|
|
* |
|
|
James G. Conroy(4) |
|
|
73,553 |
|
|
* |
|
|
William S. Creekmuir(6) |
|
|
185,701 |
|
|
* |
|
|
Sarah Dodds-Brown(4) |
|
|
42,562 |
|
|
* |
|
|
Jennifer Carter Fleiss(4) |
|
|
49,773 |
|
|
* |
|
|
John A. Frascotti(4) |
|
|
56,871 |
|
|
* |
|
|
James M. Harrison(7) |
|
|
1,101,621 |
|
|
* |
|
|
Denise M. Kulikowsky(8) |
|
|
94,583 |
|
|
* |
|
|
Norman S. Matthews(9) |
|
|
1,070,841 |
|
|
* |
|
|
Michelle Millstone-Shroff(4) |
|
|
62,229 |
|
|
* |
|
|
Reginald M. Rasch(10) |
|
|
11,307 |
|
|
* |
|
|
Sean C. Thompson(11) |
|
|
227,627 |
|
|
* |
|
|
Todd E. Vogensen(12) |
|
|
199,831 |
|
|
* |
|
|
Bradley M. Weston(13) |
|
|
1,065,164 |
|
|
* |
|
|
All directors and executive officers as a group (15 persons)(12) |
|
|
36,797,725 |
|
|
3.81% |
|
* |
Represents beneficial ownership of less than 1%. |
(1) |
Based on a Form 4 filed with the SEC by Sosin Clifford c/o CAS Investment Partners, LLC on April 11, 2022 14,045,655 of these shares are owned directly by Sosin Master, L.P., and Reporting Person is the Managing Member of CAS Investment Partners, LLC, which is investment manager to Sosin Master, L.P. The remaining 5,485,968 shares are owned directly by CSWR Partners, L.P., and Reporting Person is the Managing Member of CAS Investment Partners, LLC, which is investment manager to CSWR Partners, L.P. The address for CAS Investment Partners, LLC is 135 E 57th Street, New York, New York 10022. |
Party City Holdco Inc. | 2022
Proxy Statement | 59
Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters
(2) | Based on a Schedule 13G filed with the SEC on February 4, 2022 by
BlackRock, Inc. The Schedule also reported sole voting power of 7,215,053 shares and sole dispositive power of 7,342,740 for a total
aggregate amount of 7,342,740 of shares beneficially owned by each reporting person. The address for BlackRock, Inc. is 55 East 52nd
Street, New York, NY 10022. |
(3) | Based on a Schedule 13G filed with the SEC on February 9, 2022 by Vanguard Group Inc that reported sole dispositive power. The
Schedule also reported shared voting power of 226,785 shares and shared dispositive power of 313,038 for a total aggregate amount of 5,957,551
of shares beneficially owned by each reporting person. The address for the Vanguard Group is 100 Vanguard Blvd. Malvern, PA 19355. |
(4) | Includes 12,562 shares, which could be acquired by within 60 days of April 11, 2022 upon vesting of RSUs. |
(5) | Includes 12,562 shares, which could be acquired upon vesting of RSUs and 2,080 shares, which could be acquired upon exercise of options
within 60 days of April 11, 2022. |
(6) | Includes 12,562 shares, which could be acquired upon vesting of RSUs and 11,778 shares, which could be acquired upon exercise of options
within 60 days of April 11, 2022. |
(7) | Includes 841,200 shares, which could be acquired within 60 days of April 11, 2022 upon exercise of options. |
(8) | Includes 31,250 shares, which could be acquired upon vesting of RSUs and 12,000 shares, which could be acquired upon exercise of options
within 60 days of April 11, 2022. |
(9) | Includes 12,562 shares, which could be acquired upon vesting of RSUs and 18,680 shares, which could be acquired upon exercise of options
within 60 days of April 11, 2022. |
(10) | Includes 11,307 shares, which could be acquired by within 60 days of April 11, 2022 upon vesting of RSUs. Includes 11,307 shares,
which could be acquired by within 60 days of April 11, 2022 upon vesting of RSUs. |
(11) | Includes 83,340 shares, which could be acquired by within 60 days of April 11, 2022 upon vesting of RSUs. |
(12) | Includes 83,334 shares, which could be acquired by within 60 days of April 11, 2022 upon vesting of RSUs. |
(13) | Includes 358,334 shares, which could be acquired upon vesting of RSUs and 200,000 shares, which could be acquired upon exercise of options
within 60 days of April 11, 2022. |
60 | 2022
Proxy Statement | Party City Holdco Inc.
Certain
Relationships and Related Person Transactions
Related Person Transactions Policy
In accordance with the charter of our Audit Committee and our policy with respect
to related person transactions, our Audit Committee is responsible for reviewing and approving related person transactions.
The policy with respect to related person transactions applies to transactions,
arrangements and relationships (or any series of similar transactions, arrangements or relationships) where the aggregate amount involved
will or may be expected to exceed $120,000 in any calendar year, and where we (or our subsidiaries) are a participant and in which a related
person has or will have a direct or indirect material interest. A related person is:
• |
Any person who is, or at any time since the beginning of our fiscal year was, a director or executive officer of the Company, or a nominee for director or executive officer of the Company; |
• |
Any person who is known to be the beneficial owner of more than 5% of any class of our voting securities; |
• |
Any immediate family member of the foregoing persons; and, |
• |
Any firm, corporation or other entity in which any of the foregoing persons has a position or relationship, or in which such person, together with his or her immediate family members, has a 10% or greater beneficial ownership. |
In the course of its review and approval of related person transactions, our Audit
Committee considers the relevant facts and circumstances to decide whether to approve such transactions. In particular, our policy with
respect to related person transactions requires our Audit Committee to consider, among other factors it deems appropriate:
• |
the benefits to the Company; |
• |
the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director has a position or relationship; |
• |
the availability of other sources for comparable products or services; |
• |
the terms of the transaction; and |
• |
the terms available to unrelated third parties or to employees generally. |
The Audit Committee may only approve those transactions that are in, or are not
inconsistent with, our best interests and those of our stockholders, as the Audit Committee determines in good faith.
In addition, the Audit Committee has considered and adopted standing pre-approvals
under the policy for limited transactions with related persons. Pre-approved transactions include:
• |
Employment as an executive officer, if the related compensation is approved (or recommended to the Board of Directors for approval) by the Compensation Committee; |
• |
Any compensation paid to a director if the compensation is consistent with our director compensation policies and is required to be reported in our proxy statement under applicable compensation disclosure requirements; |
• |
Any transaction with another company at which a related person’s only relationship is as an employee (other than an executive officer) or director or beneficial owner of less than 10% of that company’s equity, if the aggregate amount involved does not exceed the greater of $1,000,000 or 2% of that company’s total annual revenue; |
• |
Any charitable contribution, grant or endowment by us or a charitable foundation created by us to a charitable organization, foundation or university at which a related person’s only relationship is as an employee (other than an executive officer) or director, if the aggregate amount involved does not exceed the lesser of $1,000,000 or 2% of such charitable organization’s total annual receipts; |
• |
Any transaction where the related person’s interest arises solely from the ownership of our common stock and all holders of our common stock received the same benefit on a pro rata basis, such as dividends; |
• |
Any transaction involving a related person where the rates or charges involved are determined by competitive bids; and |
• |
Any service provided to any related person by us, provided that such service is in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable services provided to non-related persons. |
Related Person Transactions
Michael Harrison, the son of James M. Harrison, our former Chief Executive
Officer and a current director, was employed as our Senior Vice President and General Manager of the North American Consumer
Products Group through March 2021. His total compensation during fiscal year 2021 was $464,017, consisting of $133,269.22 in
base salary, $323,653.80 in severance, a $1,938 car allowance, $3,998 in 401(k) matching contributions, $875 in profit sharing
amounts, and $283 in long-term disability insurance premiums. He did not receive any equity compensation in fiscal year 2021.
Party City Holdco Inc. | 2022
Proxy Statement | 61
Audit Committee Matters
Audit and Other Fees
The aggregate fees that we paid for professional services rendered by EY for
the fiscal years ended December 31, 2021 and 2020 were (amounts in millions):
|
|
|
|
2021 |
|
|
|
2020 |
|
|
|
Audit Fees(1) |
|
|
$3.3 |
|
|
|
$3.9 |
|
|
|
Audit Related Fees(2) |
|
|
$0.1 |
|
|
|
$0.1 |
|
|
|
Tax Fees(3) |
|
|
$0.1 |
|
|
|
$0.4 |
|
|
|
All Other Fees |
|
|
— |
|
|
|
— |
|
|
|
Total |
|
|
$3.5 |
|
|
|
$4.4 |
|
|
(1) |
Audit fees in both fiscal years
2021 and 2020 include professional services rendered for the audits of our consolidated financial statements (including reviews of
all associated quarterly financial statements), assistance with documents filed with the SEC, audit fees related to financing
transactions and audits of statutory financial statements incremental to the audit of the consolidated financial statements. |
(2) |
Audit related fees principally include the audits of our employee benefit plans, due diligence services and attestation services related to financial reporting that are not required by statute or regulation. |
(3) |
Tax fees were for services related to tax compliance, tax advice and tax planning. |
The Audit Committee pre-approves all audit services and all permitted non-audit
services by EY, including engagement fees and terms.
The Audit Committee’s policies prohibit us from engaging EY to provide
any services relating to bookkeeping or other services related to accounting records or financial statements, financial information system
design and implementation, appraisal or valuation services, fairness opinions or contribution-in-kind
reports, actuarial
services, internal audit outsourcing, any management function, legal services or expert services not related to the audit, broker-dealer,
investment adviser or investment banking services or human resource consulting. In addition, the Audit Committee evaluates whether our
use of EY for permitted non-audit services is compatible with maintaining EY’s independence. The Audit Committee concluded
that EY’s provision of non-audit services, all of which the Audit Committee approved in advance, was compatible with its independence.
Audit Committee Pre-Approval Policy
The Audit Committee approves all engagements of the independent registered public
accounting firm in advance including approval of the related fees. The Audit Committee approves an annual budget (and may from time
to time approve amendments), which specifies projects and the approved levels of fees for each. All audit and non-audit services,
other than non-audit services subject to the de minimis exception set forth in Section 10A of the Exchange Act, provided by the
independent registered public accounting firm must be approved by the Audit Committee, through its Chair. All of the audit, audit-related
and tax services provided by EY in fiscal year 2021 and related fees were approved in accordance with the Audit Committee’s
pre-approval policy.
62 | 2022
Proxy Statement | Party City Holdco Inc.
Audit Committee Matters
Audit Committee Report
The Audit Committee operates under a written charter adopted by our Board. In accordance
with this charter, the Audit Committee assists the Board in fulfilling its oversight responsibility relating to the integrity of our financial
statements and internal control system. The Board has determined in its business judgment that all members of the Audit Committee are
“independent”, as is required by the listing standards of NYSE and under SEC rules.
Management has the primary responsibility for the preparation, presentation and
integrity of our financial statements, accounting and financial reporting principles, internal controls and compliance with applicable
laws and regulations. EY, the Company’s independent registered public accounting firm, is responsible for performing an independent
audit of our consolidated financial statements and the effectiveness of our internal control over financial reporting in accordance with
the standards of the Public Company Accounting Oversight Board (U.S.) (“PCAOB”) and for expressing its opinions thereon. The
Audit Committee is responsible for the oversight of management and the independent auditors in connection with these processes. In addition,
the Audit Committee is responsible for monitoring the independence of and risk assessment procedures used by the independent auditors,
selecting and retaining the independent auditors and overseeing compliance with various laws and regulations.
In discharging its oversight responsibilities in 2021, the Audit Committee:
• |
reviewed and discussed with management and EY the unaudited quarterly financial statements included in each Quarterly Report on Form 10-Q filed with the SEC; |
• |
periodically reviewed and discussed our earnings press releases and earnings guidance with management and EY; |
• |
received updates on management’s process to assess the adequacy of our system of internal control over financial reporting, the framework used to make the assessment and management’s conclusions on the effectiveness thereof; |
• |
discussed our internal control assessment process, management’s assessment with respect thereto and EY’s evaluation of the Company’s system of internal control over financial reporting with EY; |
• |
considered our critical accounting policies, procedures, significant judgments and estimates, and changes in our accounting practices, principles, controls or methodologies, or in our financial statements, and discussed any critical audit matters arising from the current period audit with EY; |
• |
reviewed significant risks and exposures identified by management and the overall adequacy and effectiveness of our legal, regulatory and ethical compliance programs with management and EY; |
• |
reviewed and discussed our audited financial statements with management and EY; |
• |
discussed all other communications required by the PCAOB and SEC with EY, including EY’s perspective on the quality (not merely the acceptability) of our accounting principles, the reasonableness of significant estimates and judgments made by management, and the disclosures in the audited consolidated financial statements, including the disclosures relating to critical accounting policies and estimates; |
• |
received the written disclosures and letter from EY required by the PCAOB regarding EY’s communications with the Audit Committee concerning independence and has discussed EY’s independence with them; and |
• |
reviewed the audited consolidated financial statements of Party City as
of December 31, 2021 and for fiscal year 2021 with management and EY included in the Annual Report on Form 10-K filed with
the SEC. |
Based on these reviews and discussions with management and EY, the Audit
Committee recommended to the Board that our audited financial statements be included in the Annual Report on Form 10-K for fiscal
year 2021 for filing with the SEC. The Audit Committee also appointed EY to serve as our independent registered public
accounting firm for fiscal year 2022.
Audit Committee
William S. Creekmuir, Chair
Joel Alsfine
Sarah Dodds-Brown
John A. Frascotti
Party City Holdco Inc. | 2022
Proxy Statement | 63
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR FISCAL YEAR 2022
The Audit Committee of our Board has appointed EY as our independent registered
public accounting firm for the fiscal year ending December 31, 2022. We are asking stockholders to ratify this appointment. EY
has served as the Company’s independent registered public accounting firm since 1998.
In determining that retaining EY for 2022 was in the best interests of the
Company and its stockholders, our Audit Committee reviewed:
• |
EY’s performance on the Company’s audit and non-audit work for 2021 and recent prior years, and management’s assessment of such performance; |
• |
EY’s qualifications, independence, capabilities, and expertise, evident through its audit planning and reports, industry knowledge, resources and staffing, objectivity and professional skepticism; |
• |
results of recent PCAOB reports on EY and peer firms and improvements made from period to period; |
• |
The terms of the audit engagement, including the reasonableness of audit and non-audit fees charged taking into account the breadth and complexity of services provided, as well as the efficiency achieved in performing such services; |
• |
the quality of EY’s communications to and interactions with our Audit Committee at meetings and our Audit Committee Chair between meetings; and |
• |
the benefits of having a long-tenured auditor and the institutional knowledge gained from prior years of engagement. |
Although stockholder ratification of the appointment is not required by law and
is not binding on the Company, the Audit Committee will take the appointment of EY under advisement if such appointment is not ratified.
The Audit Committee may retain another independent registered public accounting firm at any time during the year if it concludes that
such change would be in the best interest of the Company’s stockholders, even if the stockholders approve this proposal.
Representatives of EY will attend the Annual Meeting online, where they will
have the opportunity to make a statement if they wish to do so and will be available to answer questions from the stockholders.
The ratification of the appointment of EY as the independent registered public
accounting firm of the Company for fiscal year 2022 requires the affirmative vote of a majority of the votes cast.
The Board of Directors unanimously recommends a vote FOR Proposal 4, Ratification
of Appointment of Independent Registered Public Accounting Firm for fiscal year 2022.
64 | 2022
Proxy Statement | Party City Holdco Inc.
Other Information
Stockholder Proposals for 2023 Annual Meeting
Proposals by stockholders pursuant to Rule 14a-8 of the Exchange Act for inclusion in
our proxy statement and form of proxy for the Annual Meeting of Stockholders to be held in 2023 should be addressed to the Corporate Secretary,
Party City Holdco Inc., 80 Grasslands Road, Elmsford, New York 10523, and must be received at this address no later than December 27,
2022.
Upon receipt of a proposal, we will determine whether or not to include the proposal
in the proxy statement and form of proxy in
accordance with applicable law. It is suggested that proposals be forwarded by certified mail,
return receipt requested.
Pursuant to Rule 14a-8 of the Exchange Act, if the date of the 2023 Annual Meeting
changes by more than 30 days from the anniversary of this year’s Annual Meeting, to be included in our Proxy Statement, stockholder
proposals must be received by us within a reasonable time before our solicitation is made.
Annual Meeting Advance Notice Requirements
Our amended and restated bylaws establish advance notice procedures with respect to stockholder
proposals (excluding Rule 14a-8 proposals) and the nomination of candidates for election as directors, other than nominations made by
or at the direction of the Board of Directors. In order for any matter to be “properly brought” before a meeting, a stockholder
will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder’s
notice must be received at our principal executive offices not earlier than the opening of business 120 days prior, and not later than
the close of business 90 days before, the first anniversary date of the immediately preceding the Annual Meeting of Stockholders. Stockholders
who wish to nominate persons for election to our Board of Directors or propose other matters to be considered at our 2023 Annual
Meeting of Stockholders must provide us advance notice no earlier than February 8, 2023 and no later than March 10, 2023. Our amended
and restated
bylaws also specify requirements as to the form and content of a stockholder’s notice. Under our amended and restated
bylaws, the Board of Directors may adopt by resolution the rules and regulations for the conduct of meetings. Except to the extent inconsistent
with such rules and regulations adopted by the Board of Directors, the Chair of the meeting of stockholders will have the right to adopt
rules and regulations for the conduct of meetings, which may have the effect of precluding the conduct of certain business at a meeting
if the rules and regulations are not followed.
In addition to satisfying the foregoing requirements under our bylaws, to comply
with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than
our nominees must provide us notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April
9, 2023.
Householding
Some banks, brokers and other nominee record holders may be participating in
the practice of “householding” proxy statements and annual reports. This means that only one copy of the Notice of
Internet Availability of Proxy Materials or this Proxy Statement and the fiscal year 2021 Annual Report on Form 10-K may have been
sent to multiple stockholders in your household. We will promptly deliver a separate copy of our Proxy Statement and fiscal year
2021 Annual Report on Form 10-K to you if you write or call us at the following address or telephone number:
Party City Holdco Inc., 80 Grasslands Road, Elmsford, New York 10523, Attention: Party City Holdco
Inc., 80 Grasslands Road, Elmsford, New York 10523, Attention: ICR, 203-682-8200, InvestorRelations@partycity.com. If you would like to
receive separate copies of these materials in the future, or if you are receiving multiple copies and would like to receive only one copy
for your household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address and
telephone number.
Party City Holdco Inc. | 2022
Proxy Statement | 65
Proxy Statement
PARTY CITY HOLDCO INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 2022
General Information
This Proxy Statement is being furnished in connection with the solicitation by
the Board of Directors (the “Board of Directors” or the “Board”) of Party City Holdco Inc. (the “Company”
or “Party City”) of proxies to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”). The Annual
Meeting will be held at 8:30 a.m. (Eastern Time) on Wednesday, June 8, 2022. The Annual Meeting
will be held in a virtual meeting format at www.virtualshareholdermeeting.com/PRTY2022.
Important Notice Regarding the Internet Availability of Proxy
Materials. We save significant mailing and printing costs and reduce the environmental impact of the annual meeting by providing
proxy materials to you over the Internet in accordance with Securities and Exchange Commission (“SEC”) rules. On or
about April 26, 2022, we will mail to our stockholders a Notice of Internet Availability of Proxy Materials containing instructions
on how to access this Proxy Statement and our fiscal year 2021 Annual Report on Form 10-K online. The Notice of Internet
Availability of Proxy Materials, which cannot itself be used to vote your shares, also provides instructions on how to vote by
Internet and how to request a paper copy of the proxy materials, if you so desire. The Notice of Internet Availability of Proxy
Materials includes a control number that must be entered at the website in order to view the proxy materials. Whether you received
the Notice of Internet Availability of Proxy Materials or paper copies of our proxy materials, the Proxy Statement and fiscal year
2021 Annual Report on Form 10-K are available to you at www.proxyvote.com.
Why a Virtual Meeting?
Due to the ongoing concerns regarding the COVID-19 pandemic and to support
the health and well-being of our directors, employees and stockholders, we are relying on the latest technology to host a virtual
Annual Meeting. The Board also believes that holding the annual meeting of stockholders in a virtual format will provide the
opportunity for participation by a broader group of stockholders, and reduce the costs associated with planning, holding and
arranging logistics for in-person meeting proceedings. We are committed to ensuring, to the extent possible, that stockholders will
be afforded the ability to participate at the virtual meeting similarly to how they would participate at an in-person meeting.
Stockholders will be able to attend the Annual Meeting online and submit questions by visiting
www.virtualshareholdermeeting.com/PRTY2022. Stockholders will also be able to vote their shares electronically during the Annual
Meeting.
Who May Vote
The Board has set April 11, 2022 as the record date (the “Record Date”).
As of the Record Date, 112,451,912 shares of common stock, $0.01 par value per share, of the Company were issued and outstanding. Stockholders
are entitled to one vote per share of common stock outstanding on the Record Date on any matter presented at the Annual Meeting.
How to Vote
By Internet. You can vote over the Internet at www.proxyvote.com
by following the instructions on the Notice or proxy card. If you are the beneficial owner (i.e., hold your shares in street name), you
may be able to vote by Internet by following the instructions on your voting instruction form.
By Telephone. You can vote your proxy over the telephone by calling
1-800-690-6903. You must have your Notice or proxy card available when you call. If you are the beneficial owner (i.e., hold your shares
in street name), you may be able to vote by telephone by following the instructions on your voting instruction form.
By Mail. If you requested a printed copy of the proxy materials,
you can vote by mail by signing, dating and mailing the enclosed proxy card in the postage-paid envelope provided. If the envelope is
missing, please mail your completed proxy card or voting instruction form to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood,
New York 11717. If you requested a printed copy of the proxy materials and are the beneficial owner (i.e. hold your shares in street name),
you can vote by mail by signing, dating and mailing the enclosing voting instruction form in the envelope provided; you must contact your
broker, bank or other nominee to obtain any missing proxy materials, including the voting instruction form. Please allow sufficient time
for delivery if you decide to vote by mail. Further, please do not mail in the Notice, as it is not intended to serve as a voting instrument.
At the Annual Meeting. The Annual Meeting will be held entirely online.
See “Attending the Annual Meeting” on how to attend and vote at the Annual Meeting.
66 | 2022
Proxy Statement | Party City Holdco Inc.
Proxy Statement
The shares voted electronically or represented by the proxy cards received, properly
marked, dated, signed and not revoked will be voted at the Annual Meeting. Internet voting facilities for stockholders of record will
be available 24 hours a day beginning immediately and will close at 11:59 p.m., Eastern Time, on June 7, 2022. Voting limitations
for beneficial owners will be set forth in the voting instruction form, or you may contact your broker, bank or other nominee.
How Proxies Work
The Board of Directors is asking for your proxy. This means you authorize Bradley
M. Weston and Reginald M. Rasch (members of Party City’s management) as proxyholders to vote your shares at the Annual Meeting in
the manner you direct. All shares represented by valid proxies received and not revoked before the Annual Meeting will be voted in accordance
with the stockholder’s specific voting instructions. If you do not specify how you wish the proxyholders to vote your shares, then
they will vote your shares in the manner recommended by the Board on all matters presented in this Proxy Statement and as the proxyholders
may determine in their discretion for any other matters properly presented for a vote at the meeting.
Many of our stockholders hold their shares in “street name” through
a broker, bank or other nominee rather than directly in their own names. If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial owner of shares, and the applicable proxy materials are being forwarded to you
by your broker, bank or nominee who is considered the stockholder of record with respect to those shares. As the beneficial owner, you
have the right to direct your broker, bank or nominee on how to vote and are also invited to attend the Annual Meeting if you obtain a
legal proxy. Your broker, bank or nominee has enclosed a voting instruction form for you to use in directing the broker, bank or nominee
on how to vote your shares.
You may receive more than one set of proxy materials and voting instrument depending
on how you hold your shares. For example, if you are a stockholder of record and your shares are registered in more than one name, you
may receive more than one Notice of Internet Availability of Proxy Materials, more than one e-mail or more than one proxy card. If you
hold your shares in more than one brokerage account, you may receive a separate Notice of Internet Availability of Proxy Materials, a
separate e-mail or a separate voting instruction form for each brokerage account in which you hold your shares. To vote all of your shares,
you must vote separately as described above under “How to Vote” for each Notice of Internet Availability of Proxy Materials,
e-mail notification or proxy card and/or voting instruction form that you receive.
Quorum
Transaction of business at the Annual Meeting may occur only if a quorum is present.
The presence, online or by proxy, of the holders of a majority of the total votes entitled to be cast by the holders of all of our outstanding
common stock, present in person or by proxy, will constitute a quorum. If a quorum is not reached, the Annual Meeting will be adjourned
until a later time.
Revoking Your Proxy or Changing Your
Vote
If you are a stockholder of record, you may revoke your proxy or change your vote
at any time prior to the taking of the vote at the Annual Meeting by (i) submitting a written notice of revocation to the Company
for receipt by our Secretary at or before the Annual Meeting, to Party City, 80 Grasslands Road, Elmsford, NY 10523, (ii) delivering
a proxy bearing a later date using any of the voting methods described above under “How to Vote,” including by telephone or
via the Internet, and until the applicable deadline for each method specified in the accompanying Notice, proxy card or voting instruction
form, or (iii) attending the virtual Annual Meeting and voting online. Attendance at the Annual Meeting will not cause your previously
granted proxy to be revoked unless you specifically make that request or vote online at the meeting. For all methods of voting, the last
vote cast will supersede all previous votes.
If you hold your shares through an account with a bank, broker or other nominee,
you may change or revoke your voting instructions by following the specific directions provided to you by the holder of record, or, if
you have obtained a legal proxy from your bank, broker or other nominee, by attending the Annual Meeting, and revoking your prior vote
and/or voting online.
Votes Needed
The following are the voting requirements for each proposal:
Proposal 1: Election of Directors. The election of directors will
be determined by a plurality of the votes cast, meaning that the nominees with the greatest number of votes cast for election, even if
less than a majority, will be elected.
Proposal 2: Advisory Vote to Approve Executive Compensation. The
advisory approval of our Named Executive Officer compensation requires the affirmative vote of a majority of the votes cast on the proposal
at the Annual Meeting.
Proposal 3: Advisory Vote on Frequency of Future Votes to Approve Executive
Compensation. The option receiving the highest number of votes cast on the proposal at the Annual Meeting (every one, two or three
years) will be considered the frequency approved by our stockholders.
Party City Holdco Inc. | 2022
Proxy Statement | 67
Proxy Statement
Proposal 4: Ratification of the Appointment of Independent Registered
Public Accounting Firm. The ratification of the appointment of Ernst & Young LLP (“EY”) as the
independent registered public accounting firm of the Company for fiscal year 2022 requires the affirmative vote of a majority of the
votes cast on the proposal at the Annual Meeting.
Other Items. For any other matters, the affirmative vote of a majority
of the votes cast on the item at the Annual Meeting online or by proxy will be required for approval.
Withhold Votes, Abstentions and Broker Non-Votes
Abstentions and broker non-votes are counted as present or represented for purposes
of determining a quorum for the Annual Meeting. A broker non-vote is a proxy from a bank, broker or other nominee indicating that such
person has not received instructions from the beneficial owner on a particular matter with respect to which the bank, broker or other
nominee does not have discretionary voting power. Shares held by a bank, broker or other nominee that are not voted on any matter at the
meeting are not included in determining whether a quorum is present.
Banks, brokers and other nominees who hold shares for the accounts of their clients
have discretionary authority to vote shares if specific instructions are not given with respect to routine matters. The proposal on ratification
of the appointment of our independent registered public accounting firm (Proposal 4) is a routine matter and the other proposals (Proposals
1, 2, and 3) are non-routine matters. Accordingly, if your shares are held by a bank, broker or other nominee on your behalf and you
do not instruct the bank, broker or other nominee as to how to vote your shares, your bank, broker or other nominee will be entitled to
exercise discretion to vote your shares only on the proposal to ratify the appointment of our independent registered public accounting
firm, but your bank, broker or other nominee may not exercise discretion to vote on the other proposals.
With respect to Proposal 1, the election of directors, only “for” and
“withhold” votes may be cast, and broker non-votes will have no effect on the outcome of this proposal.
With respect to Proposals 2 and 4, the advisory vote to approve executive
compensation and the ratification of the appointment of EY as the Company’s independent registered public accounting firm for
fiscal year 2022, only “for,” “against” and “abstain” votes may be cast. For Proposal 3, the advisory
vote to approve the frequency of subsequent advisory votes to approve executive compensation, “one year,” “two years,”
“three years,” and “abstain” votes may be cast.
For Proposals 2, 3 and 4, abstentions and broker non-votes will not be
counted as votes cast and have no effect on the outcome of these proposals, and for Proposal 4, we expect that there
will be no broker non-votes on this proposal due to the discretionary authority described above.
Board’s Voting Recommendations
The Board recommends that you vote your shares:
• |
“FOR ALL” to elect all of the director nominees named in this Proxy Statement to the Board; |
• |
“FOR” the advisory vote to approve executive compensation as described in this Proxy Statement; and |
• |
“ONE YEAR” on the advisory vote to determine the frequency of which future advisory votes on executive compensation should be held; and |
• |
“FOR” the ratification of the appointment of EY as the Company’s independent registered public accounting firm for fiscal 2022. |
Advisory Votes on the Frequency of Say-On-Pay Proposal
In an advisory vote on the frequency of the say-on-pay proposal held at our 2016
Annual Meeting of Stockholders, stockholders voted in favor of holding a say-on-pay vote every three years. However, the Board believes
that giving stockholders the right to cast an advisory vote every year on their approval of the compensation arrangements of our Named
Executive Officers is a good corporate governance practice and is in the best interests of our stockholders. As a result, the Board recommends
that the advisory vote to approve Named Executive Officer Compensation should be voted on every year. The Company will hold its next frequency
of the say-on-pay vote at the 2028 Annual Meeting of Stockholders.
Solicitation of Proxies
This solicitation is being made by our Board. We will bear all costs of this proxy
solicitation, including the cost of preparing, printing and delivering materials, the cost of the proxy solicitation and the expenses
of brokers, fiduciaries and other nominees who forward proxy materials to stockholders. This cost also includes support for the hosting
of the virtual Annual Meeting.
Stockholder List
For ten days prior to the Annual Meeting, a complete list of stockholders will
be available during regular business hours at our principal executive office, 80 Grasslands Road, Elmsford, New York 10523. A stockholder
may examine the list for any legally valid purpose related to the Annual Meeting. The stockholder list also will be available to view
by stockholders attending the Annual Meeting that log in to the meeting with their 16-digit control number.
68 | 2022
Proxy Statement | Party City Holdco Inc.
Proxy Statement
Voting Results
We will announce preliminary voting results at the Annual Meeting and publish final
voting results in a Current Report on Form 8-K, which we will file with the SEC within four business days of the completion of the Annual
Meeting.
Attending the Annual Meeting
Only stockholders of record as of the close of business on April 11, 2022,
their properly designated proxies and guests of the Company may attend the Annual Meeting. To participate in the Annual Meeting, you will
need the 16-digit control number included in your Notice of Internet Availability of Proxy Material or on the instructions that accompanied
your proxy materials. The meeting webcast will begin promptly at 8:30 a.m. (Eastern Time). We encourage you to access the meeting prior
to the start time. Online check-in will begin at 8:20 a.m. (Eastern Time), and you should allow ample time for the check-in procedures.
If your shares are held in street name and you did not receive a 16-digit control number, you may gain access to and vote at the Annual
Meeting by logging into your bank or brokerage firm’s website and selecting the stockholder communications mailbox to access the
meeting. The control number will automatically populate. Instructions should also be provided on the voting instruction form provided
by your bank or brokerage firm. If you lose your 16-digit
control number, you may join the Annual Meeting as a “Guest,” but you
will not be able to vote, ask questions or access the list of stockholders as of the Record Date.
What if I have Technical Difficulties or Trouble Accessing the Virtual
Meeting Website?
We will have technicians ready to assist you with any technical difficulties you
may have accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting website during the check-in
or meeting time, please call the technical support number that will be posted on the Annual Meeting log-in page.
Conduct of the Meeting
Rules of conduct for the Annual Meeting will be posted online at the Annual Meeting
website. Pursuant to our Amended and Restated Bylaws, the Chair of the Board will act as Chair and preside over the Annual Meeting. The
Chair has broad authority to conduct the meeting in an orderly and timely manner. This authority includes making all rulings on matters
of procedure at the Annual Meeting, including recognizing stockholders or proxies who wish to speak, determining the extent of discussion
on each item of business and managing disruptions or disorderly conduct.
Party City Holdco Inc. | 2022
Proxy Statement | 69
APPENDIX A
Reconciliation of GAAP and Non-GAAP Financial Measures
This proxy statement includes the following non-GAAP measures: adjusted EBITDA and adjusted net income (loss) per share.
We define adjusted EBITDA as net income (loss) before interest expense, net, income
taxes, depreciation and amortization. We define adjusted EBITDA as EBITDA, as further adjusted to eliminate the impact of certain items
that we do not consider indicative of our core operating performance. We caution investors that amounts presented in accordance with our
definition of adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers calculate
adjusted EBITDA in the same manner. We believe that adjusted EBITDA is an appropriate measure of operating performance in addition to
EBITDA because we believe it assists investors in comparing our performance across reporting periods on a consistent basis by eliminating
the impact of items that we do not believe are indicative of our core operating performance. In addition, we use adjusted EBITDA: (i)
as a factor in determining incentive compensation, (ii) to evaluate the effectiveness of our business strategies, and (iii) because the
credit facilities use adjusted EBITDA to measure compliance with certain covenants.
Adjusted net income (loss) per share represents
adjusted net income (loss) divided by the Company’s diluted weighted average common shares outstanding. We present the metric because
we believe it assists investors in comparing our per share performance across reporting periods on a consistent basis by eliminating the
impact of items that we do not believe are indicative of our core operating performance.
In evaluating these non-GAAP financial measures, investors should be
aware that in the future the Company may incur expenses or be involved in transactions that are the same as or similar to some of the
adjustments in this presentation. The Company's presentation of non-GAAP financial measures should not be construed to imply that its
future results will be unaffected by any such adjustments. The Company has provided this information as a means to evaluate the results
of its core operations. Other companies in the Company's industry may calculate these items differently than it does. Each of these measures
is not a measure of performance under GAAP and should not be considered as a substitute for the most directly comparable financial measures
prepared in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider
them in isolation or as a substitute for analysis of the Company's results as reported under GAAP.
We have reconciled adjusted EBITDA with the most directly comparable GAAP financial
measure in the table below.
|
|
|
|
Fiscal Year Ended 2021
($ in thousands) |
|
|
Revenues: |
|
|
|
|
|
Net sales |
|
|
$ 2,171,060 |
|
|
Net (loss) income |
|
|
(6,582 |
) |
|
Interest expense, net |
|
|
87,226 |
|
|
Income taxes |
|
|
5,708 |
|
|
Depreciation and amortization |
|
|
65,611 |
|
|
EBITDA |
|
|
151,963 |
|
|
Inventory restructuring and early lease terminations |
|
|
7,157 |
|
|
Goodwill, intangibles, long-lived assets impairment |
|
|
11,974 |
|
|
Other restructuring, retention and severance |
|
|
2,346 |
|
|
Deferred rent |
|
|
3,325 |
|
|
Foreign currency losses (gains) |
|
|
(1,090 |
) |
|
Closed store expense |
|
|
4,743 |
|
|
Stock option expense |
|
|
397 |
|
|
Restricted stock units expense—time based |
|
|
2,557 |
|
|
Restricted stock units expense—performance based |
|
|
3,773 |
|
|
Undistributed loss (income) in equity method investments |
|
|
(220) |
|
|
(Gain) on debt repayment/refinancing |
|
|
(1,106 |
) |
|
Loss on sale of business |
|
|
3,211 |
|
|
Inventory disposal reserve |
|
|
68,707 |
|
|
COVID - 19 |
|
|
1,270 |
|
|
Other |
|
|
4,502 |
|
|
Adjusted EBITDA |
|
|
$266,294 |
|
70 | 2022
Proxy Statement | Party City Holdco Inc.
APPENDIX A
We have reconciled adjusted net income (loss) per common share with the most directly comparable GAAP financial measure in the table below.
|
|
|
Fiscal
Year Ended 2021 |
|
|
|
|
($ in thousands) |
|
|
(Loss) income before
income taxes |
|
$(874 |
) |
|
Intangible asset amortization |
|
9,075 |
|
|
Amortization of deferred
financing costs and original issuance discounts |
|
4,516 |
|
|
Goodwill and intangibles
impairment |
|
11,974 |
|
|
Stock option expense |
|
397 |
|
|
Restricted stock units
expense—performance based |
|
3,773 |
|
|
Other restructuring charges |
|
1,967 |
|
|
Loss on sale of assets |
|
2,642 |
|
|
Inventory disposal reserve |
|
69,632 |
|
|
Loss on sale of business |
|
3,211 |
|
|
COVID - 19 |
|
1,270 |
|
|
Adjusted income (loss)
before income taxes |
|
$ 107,583 |
|
|
Adjusted income tax (benefit)
expense |
|
29,332 |
|
|
Adjusted net income
(loss) |
|
78,251 |
|
|
|
|
|
|
|
Weighted-average number
of common shares-diluted |
|
115,205,939 |
|
|
Adjusted
net income (loss) per common share |
|
$0.68 |
|
Party City Holdco Inc. | 2022
Proxy Statement | 71
Party City Holdco (NYSE:PRTY)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Party City Holdco (NYSE:PRTY)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024