UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
SCHEDULE 14A
(Rule 14a-101)
 
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.    )
 

 
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Definitive Proxy Statement

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Soliciting Material Pursuant to §240.14a-12
 
GNC HOLDINGS, INC.
(Name of Registrant as Specified in Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
 
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300 Sixth Avenue

Pittsburgh, Pennsylvania 15222

April 10, 2018

Dear Stockholder,

You are cordially invited to attend the Annual Meeting of Stockholders of GNC Holdings, Inc. (the “Company”) to be held on Tuesday, May 22, 2018 at 8:00 a.m. Eastern Time at the Omni William Penn Hotel, 530 William Penn Place, Pittsburgh, Pennsylvania 15219.
 
The agenda for the Annual Meeting includes:
 
The election of eight directors named in the attached proxy statement to our Board of Directors (Proposal 1);

An advisory vote to approve the compensation paid to our Named Executive Officers disclosed in the attached proxy statement (commonly known as a “say-on-pay” proposal) (Proposal 2);

The approval of adoption of our 2018 Stock and Incentive Plan (Proposal 3); and

The ratification of the appointment of PricewaterhouseCoopers LLP as independent auditors for our 2018 fiscal year (Proposal 4).

Our Board of Directors recommends that you vote FOR Proposals 1, 2, 3, and 4.
 
Your interest in the Company and your vote are very important to us. The enclosed proxy materials contain detailed information regarding the business that will be considered at the Annual Meeting. We encourage you to read the proxy materials and vote your shares as soon as possible. You may vote your proxy via the Internet or telephone or, if you received a paper copy of the proxy materials, by mail by completing and returning the proxy card.
 
On behalf of the Company, I would like to express our appreciation for your ongoing interest in the Company.
 
 
Very truly yours,
 
 
Kenneth A. Martindale
 
Chief Executive Officer
 

GNC HOLDINGS, INC.
NOTICE OF
2018 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 22, 2018

DATE AND TIME
8:00 a.m. on Tuesday, May 22, 2018
   
PLACE
Omni William Penn Hotel
530 William Penn Place
Pittsburgh, Pennsylvania 15219
   
ITEMS OF BUSINESS
(1)  To elect eight directors named in these proxy materials to hold office until our 2019 annual meeting of stockholders and until their successors are duly elected and qualified or until their earlier resignation or removal (Proposal 1).
   
 
(2)  To approve, by non-binding vote on an advisory basis, the compensation paid to our Named Executive Officers in 2017, as disclosed in these proxy materials (commonly known as a “say-on-pay” proposal) (Proposal 2).
   
 
(3)  To approve the adoption of our 2018 Stock and Incentive Plan (Proposal 3).
   
 
(4)  To ratify the appointment of PricewaterhouseCoopers LLP as independent auditors for our 2018 fiscal year (Proposal 4).
   
 
(5)  To transact such other business as may properly be brought before the Annual Meeting or any adjournment or postponement thereof.
   
RECORD DATE
You are entitled to vote only if you were a stockholder of record at the close of business on March 26, 2018.
   
PROXY VOTING
It is important that your shares be represented and voted at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we urge you to vote online at www.proxyvote.com or via telephone by calling 1-800-690-6903, or to complete and return a proxy card (no postage is required).
   
REQUIRED VOTE
The affirmative vote of a majority of the votes cast by our stockholders in person or represented by proxy at the Annual Meeting is required to approve each of the Proposals described in these proxy materials.
 
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 22, 2018:  As permitted by rules adopted by the Securities and Exchange Commission, rather than mailing a full paper set of these proxy materials, we are mailing to many of our stockholders only a notice of Internet availability of proxy materials containing instructions on how to access these proxy materials and submit their respective proxy votes online. This proxy statement, our 2017 Annual Report to stockholders and the proxy card are available at www.proxyvote.com. You will need your notice of Internet availability or proxy card to access these proxy materials.
 
April 10, 2018
 
   
 
 
Kevin G. Nowe
 
Senior Vice President, Chief Legal Officer and Secretary
 

TABLE OF CONTENTS

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300 Sixth Avenue
Pittsburgh, Pennsylvania 15222

PROXY STATEMENT
2018 ANNUAL MEETING OF STOCKHOLDERS
May 22, 2018

The Board of Directors (the “Board”) of GNC Holdings, Inc., a Delaware corporation (the “Company,” “we,” “us,” or “our”), has prepared this document to solicit your proxy to vote upon certain matters at our 2018 annual meeting of stockholders (the “Annual Meeting”).
 
These proxy materials contain information regarding the Annual Meeting, to be held on Tuesday, May 22, 2018, beginning at 8:00 a.m. Eastern Time at the Omni William Penn Hotel, 530 William Penn Place, Pittsburgh, Pennsylvania 15219, and at any adjournment or postponement thereof.  As permitted by the rules adopted by the Securities and Exchange Commission (the “SEC”), rather than mailing a full paper set of these proxy materials, we are mailing to many of our stockholders only a notice of Internet availability of proxy materials (the “Notice”) containing instructions on how to access and review these proxy materials and submit their respective proxy votes online.  If you receive the Notice and would like to receive a paper copy of these proxy materials, you should follow the instructions for requesting such materials located at www.proxyvote.com.
 
QUESTIONS ABOUT THE ANNUAL MEETING AND THESE PROXY MATERIALS
 
It is anticipated that we will begin mailing this proxy statement, the proxy card, our Annual Report to Stockholders for the year ended December 31, 2017 (the “Annual Report”) and the Notice, and that these proxy materials will first be made available online to our stockholders, on or about April 10, 2018.  The information regarding stock ownership and other matters in this proxy statement is as of March 26, 2018 (the “Record Date”), unless otherwise indicated.

What may I vote on?
 
You may vote on the following proposals:

the election of eight directors to serve until our 2019 annual meeting of stockholders (the “2019 Annual Meeting”) and their respective successors have been duly elected and qualified, or their earlier resignation or removal (Proposal 1);

the approval, by non-binding vote, on an advisory basis of the compensation paid to our Named Executive Officers in 2017, as disclosed in these proxy materials (commonly known as a “say-on-pay” proposal) (Proposal 2);

the approval of the adoption of the 2018 Stock and Incentive Plan (Proposal 3); and

the ratification of the appointment of PricewaterhouseCoopers LLP (“PwC”) as independent auditors for our 2018 fiscal year (Proposal 4).
 
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THE BOARD RECOMMENDS A VOTE (1) FOR THE ELECTION OF EACH OF OUR DIRECTORS (PROPOSAL 1), (2) FOR THE APPROVAL, BY NON-BINDING VOTE ON AN ADVISORY BASIS, OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS IN 2017 (“SAY-ON-PAY”) (PROPOSAL 2), (3) FOR THE APPROVAL OF THE 2018 STOCK AND INCENTIVE PLAN (PROPOSAL 3), AND (4) FOR THE RATIFICATION OF THE APPOINTMENT OF PWC AS INDEPENDENT AUDITORS (PROPOSAL 4).
 
Who may vote?
 
Stockholders of record of our Class A common stock, par value $0.001 per share (“Common Stock”), at the close of business on the Record Date are entitled to receive the Notice and these proxy materials and to vote their respective shares at the Annual Meeting.  Each share of Common Stock is entitled to one vote on each matter that is properly brought before the Annual Meeting.  As of the Record Date, there were 83,661,965 shares of Common Stock issued and outstanding.
 
How do I vote?
 
We encourage you to vote your shares via the Internet.  How you vote will depend on how you hold your shares of Common Stock.
 
Stockholders of Record
 
If your Common Stock is registered directly in your name with our transfer agent, American Stock, Transfer & Trust Company, LLC, you are considered a stockholder of record with respect to those shares, and a full paper set of these proxy materials is being sent directly to you.  As a stockholder of record, you have the right to vote by proxy.
 
You may vote by proxy in any of the following three ways:
 
Internet.  Go to www.proxyvote.com to use the Internet to transmit your voting instructions and for electronic delivery of information.  Have your proxy card in hand when you access the website.
 
Phone.  Call 1-800-690-6903 using any touch-tone telephone to transmit your voting instructions.  Have your proxy card in hand when you call.
 
Mail.  Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided, or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
 
Voting by any of these methods will not affect your right to attend the Annual Meeting and vote in person.  However, for those who will not be voting in person at the Annual Meeting, your final voting instructions must be received by no later than 11:59 p.m. Eastern Time on May 21, 2018.
 
Beneficial Owners
 
Most of our stockholders hold their shares through a stockbroker, bank or other nominee, rather than directly in their own names.  If you hold your shares in one of these ways, you are considered the beneficial owner of shares held in street name, and the Notice is being forwarded to you by your broker, bank or nominee who is considered, with respect to those shares, the stockholder of record.  As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote.  Your broker, bank or nominee has enclosed a voting instruction form for you to use in directing the broker, bank or
 
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nominee on how to vote your shares.  If you hold your shares through a New York Stock Exchange (“NYSE”) member brokerage firm, that member brokerage firm has the discretion to vote shares it holds on your behalf with respect to Proposal 4 (the ratification of PwC as independent auditors for our 2018 fiscal year), but not with respect to Proposal 1 (the election of directors), Proposal 2 (the “say-on-pay” proposal) or Proposal 3 (the approval of the 2018 Stock and Incentive Plan) as more fully described under “What is a broker ‘non-vote’?” below.
 
Can I change my vote?
 
Yes.  If you are the stockholder of record, you may revoke your proxy before it is exercised by doing any of the following:
 
voting again over the Internet or by telephone prior to 11:59 p.m., Eastern Time on May 21, 2018;
timely sending a letter to us stating that your proxy is revoked;
signing a new proxy and timely sending it to us; or
attending the Annual Meeting and voting by ballot.

Beneficial owners should contact their broker, bank or nominee for instructions on changing their votes.

How many votes must be present to hold the Annual Meeting?
 
A “quorum” is necessary to hold the Annual Meeting.  A quorum is a majority of the votes entitled to be cast by the stockholders entitled to vote at the Annual Meeting.  They may be present at the Annual Meeting or represented by proxy.  Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum.
 
How many votes are needed to approve the proposals?
 
At the Annual Meeting, a “FOR” vote by a majority of votes cast is required for each of the proposals described in this proxy statement: Proposal 1 (the election of directors), Proposal 2 (the “say-on-pay” proposal), Proposal 3 (the approval of the 2018 Stock and Incentive Plan) and Proposal 4 (the ratification of PwC as independent auditors for our 2018 fiscal year).
 
For Proposals 1, 2 and 4, a “FOR” vote by a “majority of votes cast” means that the number of shares voted “FOR” exceeds the number of shares voted “AGAINST.”  For Proposal 3, a “FOR” vote by a “majority of votes cast” means that the number of shares voted “FOR” exceeds the number of shares voted “AGAINST,” plus abstentions.

What is an abstention?
 
An abstention is a properly signed proxy card that is marked “ABSTAIN.”  In the case of Proposals 1, 2 and 4, abstentions do not constitute votes “FOR” or votes “AGAINST” and, therefore, will have no effect on the outcome of any of those proposals.  However, under NYSE rules abstentions will have the effect of a vote “AGAINST” Proposal 3.
 
What is a broker “non-vote?”
 
A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and has not received timely instructions from the beneficial owner.  Under current applicable rules,
 
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Proposal 4 (the ratification of PwC as independent auditors for our 2018 fiscal year) is a “discretionary” item upon which NYSE member brokerage firms that hold shares as nominee may vote on behalf of the beneficial owners if such beneficial owners have not furnished voting instructions by the tenth day before the Annual Meeting.
 
However, NYSE member brokerage firms that hold shares as a nominee may not vote on behalf of the beneficial owners on Proposal 1 (the election of directors), Proposal 2 (the “say-on-pay” proposal) or Proposal 3 (the approval of the 2018 Stock and Incentive Plan) unless you provide voting instructions.  Therefore, if a NYSE member brokerage firm holds your Common Stock as a nominee, please instruct your broker how to vote your Common Stock on each of these proposals.  This will ensure that your shares are counted with respect to each of these proposals.  Broker “non-votes” do not constitute votes “FOR” or votes “AGAINST” and therefore will have no effect on the outcome of any of the proposals.
 
Will any other matters be acted on at the Annual Meeting?
 
If any other matters are properly presented at the Annual Meeting or any adjournment or postponement thereof, the persons named in the proxy will have discretion to vote on those matters.  As of December 12, 2017, the date by which any proposal for consideration at the Annual Meeting submitted by a stockholder must have been received by us to be presented at the Annual Meeting, and as of the date of these proxy materials, we did not know of any other matters to be presented at the Annual Meeting.
 
Who pays for this proxy solicitation?
 
We will pay the expenses of soliciting proxies.  In addition to solicitation by mail, proxies may be solicited in person or by telephone or other means by our directors or associates for no additional compensation.  We will reimburse brokerage firms and other nominees, custodians and fiduciaries for costs incurred by them in mailing these proxy materials to the beneficial owners of Common Stock held of record by such persons.
 
Whom should I call with other questions?
 
If you have additional questions about these proxy materials or the Annual Meeting, please contact: GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania, 15222, Attention: Kevin G. Nowe; Telephone: (412) 288-4600.
 
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ELECTION OF DIRECTORS
(PROPOSAL 1)
 
The Board proposes that each of the eight director nominees described below (the “Nominees”), who currently are members of our Board, be re-elected for a one-year term expiring at our 2019 Annual Meeting and to serve until the due election and qualification of his or her successor, or until his or her earlier resignation or removal.
 
All of the Nominees have indicated their willingness to serve if elected.  If, at the time of the meeting, any Nominee is unable or unwilling to serve, shares represented by properly executed proxies will be voted at the discretion of the persons named therein for such other nominee as the Board may designate, or the Board may elect to decrease the size of the Board.
 
Set forth below is information concerning each Nominee, and the key experience, qualifications and skills he or she brings to the Board.
 
Recommendation
 
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES AS DIRECTORS.
 
The Nominees
 
Robert F. Moran, 67, became one of our directors in June 2013 and served as our Interim Chief Executive Officer from July 2016 through September 10, 2017.  In September 2017, he was elected as Non-Executive Chairman of the Board.  Mr. Moran most recently served as Chairman and Chief Executive Officer of PetSmart, Inc., a leading specialty provider of pet products, services and solutions (“PetSmart”), from February 2009 to June 2013.  Prior to being appointed Chairman, Mr. Moran was PetSmart’s President and Chief Executive Officer from June 2009 to January 2012 and its President and Chief Operating Officer from December 2001 to June 2009.  Before joining PetSmart in 1999, Mr. Moran was President of Toys “R” Us Canada.  Mr. Moran served on the boards of directors of Collective Brands, Inc. from March 2005 to October 2012 and of PetSmart from September 2009 to June 2013.  He currently serves on the boards of directors of Hanesbrands, Inc., for which he chairs the audit committee, and the USA Track & Field Foundation.  Mr. Moran’s more than 40 years of executive leadership experience, both domestically and internationally, and extensive retail experience and expertise led to the conclusion that he should serve as a director on the Board.
 
Kenneth A. Martindale, 58, became our Chief Executive Officer and a director on September 11, 2017. Mr. Martindale was previously CEO of Rite Aid Stores, a position held since August 3, 2015, and President of Rite Aid Corporation, a position held since June 2013. He previously served as Rite Aid’s Chief Operating Officer since June 2010. From December 2008 until June 2010, he served as Rite Aid’s Senior Vice President and Chief Merchandising, Marketing and Logistics Officer. He served as co-President and Chief Merchandising and Marketing Officer for Pathmark Stores, Inc. from January 2006 until its acquisition by the Great Atlantic & Pacific Tea Company in December 2007. Mr. Martindale serves as a director of Fairway Group Holdings Corporation.  Mr. Martindale’s years of executive leadership experience in retail operations led to the conclusion that he should serve as a director on the Board.
 
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Jeffrey P. Berger, 68, became one of our directors in March 2011.  Mr. Berger currently is a private investor.  From 2008 until April 2013, Mr. Berger served as a consultant to H. J. Heinz Company, a leading producer and marketer of healthy and convenient foods (“Heinz”).  From 2007 to 2008, Mr. Berger was the Chairman of Global Foodservice of Heinz.  From 2005 to 2007, Mr. Berger was the Executive Vice President, President and Chief Executive Officer of Heinz Foodservice.  From 1994 to 2005, Mr. Berger was President and Chief Executive Officer of Heinz North America Foodservice.  Mr. Berger currently serves on the board of directors of Big Lots, Inc., a discount retailer (“Big Lots”), for which he chairs the nominating/corporate governance committee and serves as a member of the compensation committee.  Mr. Berger’s years of experience as an executive officer at Heinz, in addition to his public company board experience, led to the conclusion that he should serve as a director on the Board.
 
Alan D. Feldman, 66, became one of our directors in June 2013.  Mr. Feldman most recently served as Chairman, President and Chief Executive Officer of Midas, Inc., a provider of retail automotive services, from May 2006 until its merger with TBC Corporation in May 2012 and as its President and Chief Executive Officer from January 2003 until May 2006.  From 1994 through 2002, Mr. Feldman held senior management posts at McDonald’s Corporation and, prior to that, with the Pizza Hut and Frito-Lay units of PepsiCo, Inc.  Mr. Feldman also currently serves on the board of directors of Foot Locker, Inc., for which he chairs the compensation and management resources committee and serves as a member of the executive committee and the finance and strategic planning committee, and of John Bean Technologies Corporation, for which he chairs the audit committee and serves as a member of the nominating and governance committee.  Mr. Feldman also serves as Chair of the University of Illinois Foundation.  Mr. Feldman’s recognized leadership skills and years of broad-based experience in independent, franchised retail operations, brand management and customer relations led to the conclusion that he should serve as a director on the Board.
 
Michael F. Hines, 62, became one of our directors in November 2009.  He served as Chairman of our Board from August 2014 to September 2017, and prior to that, served as our Lead Independent Director since July 2012.  Mr. Hines was the Executive Vice President and Chief Financial Officer of Dick’s Sporting Goods, Inc., a sporting goods retailer, from 1995 to March 2007.  From 1990 to 1995, he held management positions with Staples, Inc., most recently as Vice President, Finance.  Earlier, he spent 12 years in public accounting, the last eight years with the accounting firm Deloitte & Touche, LLP in Boston.  Mr. Hines serves on the board of directors of The TJX Companies, Inc., a retailer of apparel and home fashions (“TJX”), and is the chair of its audit committee and a member of its finance committee.  He also serves on the board of directors of Dunkin Brands Group, Inc., the parent company of Dunkin’ Donuts and Baskin-Robbins, for which he chairs the audit committee and is a member of the nominating and corporate governance committee.  Mr. Hines’s experience as a financial executive and certified public accountant, coupled with his extensive knowledge of financial reporting rules and regulations, evaluating financial results and generally overseeing the financial reporting process of large retailers, led to the conclusion that he should serve as a director on the Board.
 
Amy B. Lane, 65, became one of our directors in June 2011.  Ms. Lane was a Managing Director and Group Leader of the Global Retailing Investment Banking Group at Merrill Lynch & Co., Inc., an investment bank, from 1997 until her retirement in 2002.  Ms. Lane previously served as a Managing Director at Salomon Brothers, Inc., an investment bank, where she founded and led the retail industry investment banking unit.  Ms. Lane serves on the board of directors of TJX, and is the chair of its finance committee and a member of its audit and executive committees.  Additionally, she serves on the board of directors of Nextera Energy, Inc., an electric utility holding company, and as a member of its finance committee and on the board of directors of Urban Edge Properties, a REIT spun off from Vornado Realty Trust.  Ms. Lane’s experience as the leader of two investment banking practices covering the global retailing industry has given her substantial experience with financial services, capital markets, finance
 
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and accounting, capital structure, acquisitions and divestitures in the retail industry as well as management, leadership and strategy, which led to the conclusion that she should serve as a director on the Board.
 
Philip E. Mallott, 60, became one of our directors in July 2012.  Mr. Mallott retired as Vice President, Finance and Chief Financial Officer of Intimate Brands, Inc., a clothing retailer and former subsidiary of Limited Brands, Inc., and is currently a director of Big Lots, for which he served as non-executive chair until May 2017 and currently serves as the chair of the audit committee.  He most recently provided retail stock research as an independent consultant to Westminster Research Associates LLC and, prior to that, as an analyst for Coker & Palmer, Inc.  Mr. Mallott previously served as a director of Tween Brands, Inc. from 2000 to 2009.  Mr. Mallott’s experience as a certified public accountant, his service on the boards of other public companies and charitable organizations, and his experience in leadership roles with other retailers led to the conclusion that he should serve as a director on the Board.
 
Richard J. Wallace, 66, became one of our directors in July 2010.  Mr. Wallace served as a Senior Vice President for Research and Development at GlaxoSmithKline, a global pharmaceutical company (“GSK”), from 2004 until his retirement in 2008.  Prior to that, he served in various executive capacities for GSK and its predecessor companies and their subsidiaries from 1992 to 2004.  Mr. Wallace is also a director of ImmunoGen, Inc., for which he serves as a member of the audit and nominating and governance committees, and served as a director of Clinical Data Inc. from September 2007 to April 2011.  Mr. Wallace’s years of experience at several large pharmaceutical and consumer products companies and his significant corporate governance experience through his service on the boards of directors of other companies led to the conclusion that he should serve as a director on the Board.
 
The affirmative vote of the holders of a majority of the votes cast by our stockholders in person or represented by proxy and entitled to vote at the Annual Meeting is required to approve this Proposal 1.
 
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OTHER BOARD INFORMATION
 
Board Composition
 
The Board is currently composed of Robert F. Moran, Kenneth A. Martindale, Jeffrey P. Berger, Alan D. Feldman, Michael F. Hines, Amy B. Lane, Philip E. Mallott, and Richard J. Wallace.
 
The Board has adopted Corporate Governance Guidelines, which are available on the Corporate Governance page of the Investor Relations section of our website located at www.gnc.com and will be provided to any stockholder free of charge upon request.  The Corporate Governance Guidelines provide that in the event the Chairperson of the Board is not an independent director, the Lead Independent Director of the Board is to serve as the chairperson of any meetings of the Board in executive session.  Mr. Moran, an independent director, currently serves as Non‑Executive Chairman of the Board.
 
Board Meetings in 2017
 
The Board held 12 meetings during our fiscal year ended December 31, 2017.
 
Director Attendance
 
During our fiscal year ended December 31, 2017, each of our incumbent directors attended at least 75% of the total number of meetings of the Board and committees on which he or she served during the period in which he or she served.  We encourage, but do not require, our directors to attend our annual meetings of stockholders.  All of our current directors who were serving on the Board at the time of our 2017 Annual Meeting attended the meeting.
 
Director Independence
 
Our Common Stock is listed for trading on the NYSE under the symbol “GNC”.  The Board, upon the findings of the Nominating Committee, has determined that each of Ms. Lane and Messrs. Moran, Berger, Feldman, Hines, Mallott, and Wallace is “independent” within the meaning of Rule 303A.02 of the NYSE Listed Company Manual, and no family relationships exist among such Nominees and any of our executive officers.
 
Leadership Structure
 
The Board has adopted guidelines that provide the Board with the discretion and flexibility to decide if the roles of the Chief Executive Officer and Chairperson of the Board are to be separate or combined.  Currently, the roles are separate, with Mr. Martindale serving as Chief Executive Officer and Mr. Moran, an independent director, serving as Non‑Executive Chairman of the Board.  The Board has determined that this is currently the appropriate leadership structure due to the fact that the separation of these positions allows for better independence and accountability.
 
Risk Oversight
 
The Board plays an active role in overseeing management of our risks.  The Board regularly reviews information regarding our credit, liquidity and operations, as well as the risks associated with each.  The Audit Committee and the Finance Committee each have responsibilities related to the oversight and management of financial risks.  The Compensation and Organizational Development Committee of the Board (the “Compensation Committee”) is responsible for overseeing the management of risks relating to
 
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our executive compensation policies and arrangements.  The Nominating and Corporate Governance Committee of the Board (the “Nominating Committee”) is responsible for managing risks relating to our director compensation policies and arrangements, the independence of the Board and other corporate governance matters.  While each of the Committees is responsible for evaluating certain risks and overseeing the management of such risks, the Board as a whole is regularly informed of the conclusions of such evaluations through reports of the Committees.  The risk oversight function does not impact the structure of the Board.
 
Board Committees
 
Each of the following Committees is a standing committee of the Board.  The Board has adopted written charters for the Audit Committee, the Compensation Committee, the Finance Committee and the Nominating Committee, each of which is available on the Corporate Governance page of the Investor Relations section of our website located at www.gnc.com and will be provided to any stockholder free of charge upon request.  Further, each member of the Audit Committee, the Compensation Committee, the Finance Committee and the Nominating Committee has been determined by the Board to be independent under the NYSE’s current listed company standards.
 
Audit Committee
 
The Audit Committee, which is established in accordance with Section 3(a)(58)(A) of the Exchange Act, held nine meetings during our fiscal year ended December 31, 2017 and currently consists of Jeffrey P. Berger, Michael F. Hines, and Philip E. Mallott, who acts as its chair.  The Board has determined that each of Messrs. Berger, Hines and Mallott qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K and has the attributes set forth in such section.  The Committee consists entirely of directors who meet the independence requirements of the listing standards of the NYSE and Rule 10A-3 under the Exchange Act.
 
The principal duties and responsibilities of the Audit Committee are to:
 
approve, review, and monitor our financial reporting process and internal control system;
appoint and replace our independent registered public accounting firm from time to time, determine its compensation and other terms of engagement and oversee its work;
oversee our audit and financial statements and related disclosures;
oversee the performance of our internal audit function; and
oversee our compliance with legal, ethical and regulatory matters.

The Audit Committee has the power to investigate any matter brought to its attention within the scope of its duties.  It also has the authority to retain counsel and advisors to fulfill its responsibilities and duties.
 
Compensation and Organizational Development Committee
 
The Compensation Committee, which held six meetings during our fiscal year ended December 31, 2017, currently consists of Amy B. Lane, Philip E. Mallott, and Richard J. Wallace, who acts as its chair.
 
The principal duties and responsibilities of the Compensation Committee are to:
 
oversee the development and implementation of our executive compensation policies and objectives;
determine the structure of our executive compensation packages generally;
determine the annual compensation paid to each of our senior executives;
 
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evaluate the performance of our Chief Executive Officer and other senior executives;
determine stock ownership guidelines for the Company’s directors and executives and monitor compliance with those guidelines;
review potential risk to the Company from its compensation policies and program, including incentive compensation plans;
review and recommend to the Board for approval the frequency with which the Company will conduct stockholder advisory votes on executive compensation, taking into account the results of the most recent stockholder advisory vote;
work with the Company’s Chief Executive Officer to develop succession plans for the Company and development initiatives for our senior executives; and
review and evaluate the implementation and effectiveness of such succession plans and development initiatives.

Compensation Committee Interlocks and Insider Participation.  For our fiscal year ended December 31, 2017, (i) no member of the Compensation Committee (a) served as one of our officers or employees during or preceding their tenure on the Compensation Committee or (b) had any relationship requiring disclosure under Item 404 of Regulation S-K, and (ii) none of our executive officers served as a director or member of the compensation committee of another entity whose executive officers served on the Board or the Compensation Committee.  During our fiscal year ended December 31, 2017, our Compensation Committee included Amy B. Lane, Philip E. Mallott, and Richard J. Wallace.
 
Finance Committee
 
The Finance Committee, which held eleven meetings during our fiscal year ended December 31, 2017, currently consists of Alan D. Feldman, Michael F. Hines and Amy B. Lane, who acts as its chair.
 
The principal duties and responsibilities of the Finance Committee are to:
 
review and make recommendations to the Board with respect to the Company’s financial condition and long-range financial plans and strategies, including as they relate to the management of financial risk;
review and make recommendations to the Board with respect to the Company’s capital structure and the principal terms and conditions of significant proposed borrowings and issuances of debt or equity securities by the Company and its subsidiaries;
review and make recommendations to the Board with regard to the Company’s proposed dividend policies and the repurchase or redemption of Company securities;
review and oversee the Company’s investment and cash management policies;
review and oversee the Company’s foreign currency exchange and other hedging policies;
review and make recommendations to the Board with respect to capital investment criteria, capital expenditures and annual lease commitments for the Company;
review and make recommendations to the Board with respect to the Company’s insurance and self-insurance programs (including directors’ and officers’ liability policies);
review and make recommendations to the Board with respect to the Company’s defense profile, strategies and plans for significant mergers, acquisitions, divestitures, joint ventures and other investments and strategic plans; and
review the Company’s stock ownership profile and the performance of the Company’s Common Stock.
 
10

Nominating and Corporate Governance Committee
 
The Nominating Committee, which held four meetings during our fiscal year ended December 31, 2017, currently consists of Jeffrey P. Berger, Richard J. Wallace and Alan D. Feldman, who acts as its chair.
 
The principal duties and responsibilities of the Nominating Committee are as follows:
 
to establish criteria for board and committee membership and recommend to the Board proposed nominees for election to the Board and for membership on committees of the Board;
to oversee the evaluation of the Board and its committees;
to make recommendations to the Board regarding board governance matters and practices; and
to determine the structure and oversee the development and implementation of the Company’s compensation policies, objectives and administrative practices and all other matters relating to the compensation of the Company’s non-employee directors.

Director Qualifications; Nominating Committee Process.  The Nominating Committee’s policy is to identify potential director nominees from any properly submitted nominations, including any properly submitted nominations from our stockholders, and subsequently evaluate each potential nominee.  Stockholders may nominate director candidates for consideration by the Nominating Committee as set forth below.
 
In accordance with the Company’s amended and restated by-laws, to be timely for consideration by the Nominating Committee, notice of a proposed nomination must be delivered to or mailed and received at the Company’s principal executive offices not earlier than the opening of business on the 120th day nor later than the close of business on the 90th  day prior to the one year anniversary of the date of the preceding year’s annual meeting of its stockholders; provided, however, that if the date of the annual meeting is more than 30 days prior to or delayed by more than 70 days after the anniversary of the preceding year’s annual meeting, the nomination must be received not earlier than the opening of business on the 120th day prior to the date of such annual meeting nor later than the later of the close of business on the (i) 90th day prior to the date of such annual meeting or (ii) 10th day following the day on which public announcement of such meeting date is first made.
 
In addition to information regarding the nominating stockholder as set forth in the Company’s amended and restated by-laws, in accordance with the Company’s corporate governance guidelines, such stockholder’s notice must set forth as to each individual whom the stockholder proposes to nominate for election or reelection as a director:
 
the name, age, business address and residence address of such individual;
the class, series and number of any shares of stock of the Company that are beneficially owned by such individual;
the date such shares were acquired and the investment intent of such acquisition;
whether such stockholder believes any such individual is, or is not, “independent” as set forth in the requirements established by the NYSE or any other exchange or automated quotation service on which the Company’s securities are listed, and information regarding such individual that is sufficient, in the discretion of the Board or any committee thereof or any authorized officer of the Company, to make either such determination; and
all other information relating to such individual that is required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder.
 
11

Any such submission must be accompanied by the written consent of the individual whom the stockholder proposes to nominate to being named in the proxy statement as a nominee and to serving as a director if elected.
 
The Nominating Committee may, but is not required to, consider nominations not properly submitted in accordance with the Company’s Corporate Governance Guidelines, and the Committee may request further information and documentation from any proposed nominee or from any stockholder proposing a nominee.  All nominees properly submitted to the Company (or which the Nominating Committee otherwise elects to consider) will be evaluated and considered by members of the Nominating Committee using the same criteria as nominees identified by the Nominating Committee itself.
 
In evaluating the suitability of individual candidates (both new candidates and current Board members), in recommending candidates for election, and in approving (and, in the case of vacancies, appointing) such candidates, the Nominating Committee considers, in addition to such other factors as it shall deem relevant, the desirability of selecting directors who:
 
are of high character and possess fundamental qualities of intelligence, honesty, good judgment, integrity, fairness and responsibility;
have the ability to make independent analytical inquiries and possess a general understanding of marketing, finance, and other elements relevant to the success of a publicly traded company;
are accomplished in their respective fields, with superior credentials and recognition;
understand our business on a technical level and have relevant expertise and experience upon which to be able to offer advice and guidance to management;
have sufficient time available to devote to the affairs of our Company;
are able to work with the other members of the Board and contribute to our success;
can represent the long-term interests of our stockholders as a whole; and
are selected such that the Board represents a range of backgrounds and experience.

In addition to the considerations set forth above, the Nominating Committee considers a candidate’s background and accomplishments and candidates are reviewed in the context of the current composition of the Board and the evolving needs of our businesses.  The Nominating Committee conducts the appropriate and necessary inquiries (as determined by the Nominating Committee) with respect to the backgrounds and qualifications of any potential nominees, without regard to whether a potential nominee has been recommended by our stockholders, and, upon consideration of all relevant factors and circumstances, recommends to the Board for its approval the slate of director nominees to be nominated for election at our annual meeting of stockholders.  The Nominating Committee considers potential nominees without regard to race, color, creed, religion, national origin, age, gender, sexual orientation or disability.  The Nominating Committee has not adopted a formal policy with respect to diversity.
 
12

Director Compensation
 
The following table presents information regarding the compensation of our non-employee directors with respect to our fiscal year ended December 31, 2017 and should be read in conjunction with “Narrative to the Director Compensation Table” below.  No director who is or was at any time during 2017 an employee of the Company receives or has ever received any compensation for serving on the Board during his or her time of employment.  Compensation received by Mr. Moran, in his role as an employee of the Company is discussed under “Compensation Discussion and Analysis” and “Named Executive Officer Compensation” below.
 
Name
 
Fees Earned or
Paid in Cash
($)
   
Stock
Awards
($) (1) (2)
   
All Other
Compensation
($)
   
Total
($)
 
                         
Jeffrey Berger
   
102,500
(3)
   
110,000
     
     
212,500
 
Alan Feldman
   
112,500
(4)
   
110,000
     
     
222,500
 
Michael Hines
   
171,731
(5)
   
110,000
     
     
281,731
 
Amy Lane
   
112,500
(6)
   
110,000
     
     
222,500
 
Philip Mallott
   
120,000
(7)
   
110,000
     
     
230,000
 
Robert Moran (8)
   
57,884
(9)
   
     
     
57,884
 
Richard Wallace
   
115,000
(10)
   
110,000
     
     
225,000
 

(1)
Reflects the approximate aggregate grant date fair value of the 2017 annual restricted stock awards granted to each of the directors computed in accordance with FASB ASC Topic 718.  For the assumptions underlying the calculation of the aggregate grant date fair value, see Note 14, “Stock-Based Compensation,” to our audited consolidated financial statements included in the Annual Report.  The 2017 annual awards were granted on May 22, 2017, had an approximate aggregate grant date fair value of $110,000 for each director and the restrictions with respect to the restricted stock is scheduled to lapse on the first anniversary of the grant date, provided the director has remained in service until the vesting date.
(2)
The table below sets forth the number of stock awards and the exercisable and unexercisable stock options received for services as a director and held by the listed directors as of December 31, 2017, and does not include the stock awards and option awards granted to Mr. Moran in his capacity as Interim Chief Executive Officer, which are reflected in the Outstanding Equity Awards as of December 31, 2017 table set forth below.
 
         
Option Awards Outstanding
 
Name
 
Stock Awards
Outstanding
   
Exercisable
   
Unexercisable
 
                   
Jeffrey Berger
   
14,765
     
14,000
     
 
Alan Feldman
   
14,765
     
     
 
Michael Hines
   
14,765
     
36,920
     
 
Amy Lane
   
14,765
     
30,500
     
 
Philip Mallott
   
14,765
     
     
 
Robert Moran
   
     
     
 
Richard Wallace
   
14,765
     
35,000
     
 
 
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(3)
Reflects aggregate annual retainers paid to Mr. Berger, including $80,000 for his service as a director, $10,000 for his service as a member of the Nominating Committee and $12,500 for his service as a member of the Audit Committee.
(4)
Reflects aggregate annual retainers paid to Mr. Feldman, including $80,000 for his service as a director, $10,000 for his service as a member of the Nominating Committee, $12,500 for his service as Chairperson of the Nominating Committee and $10,000 for his service as a member of the Finance Committee.
(5)
Reflects aggregate annual retainers paid to Mr. Hines, including $80,000 for his service as a director, $12,500 for his service as a member of the Audit Committee, $10,000 for his service as a member of the Finance Committee and $69,231 for his service as Chairman of the Board until September 2017.
(6)
Reflects aggregate annual retainers paid to Ms. Lane, including $80,000 for her service as a director, $10,000 for her service as a member of the Compensation Committee, $12,500 for her service as Chairperson of the Finance Committee and $10,000 for her service as a member of the Finance Committee.
(7)
Reflects aggregate annual retainers paid to Mr. Mallott, including $80,000 for his service as a director, $12,500 for his service as a member of the Audit Committee, $17,500 for his service as Chairperson of the Audit Committee and $10,000 for his service as a member of the Compensation Committee.
(8)
Reflects amounts received by Mr. Moran in his role as a director following his service as the Interim Chief Executive Officer of the Company.  Mr. Moran did not receive any compensation in his role as a director for the period during his service as the Interim Chief Executive Officer of the Company.  The amounts received by Mr. Moran in his role as Interim Chief Executive Officer are set forth in the Compensation Discussion and Analysis section of this proxy statement and the tables that follow.
(9)
Reflects aggregate annual retainers earned by Mr. Moran, including $24,615 for his service as a director and $33,269 for his service as Chairman of the Board beginning in September 2017.
(10)
Reflects aggregate annual retainers paid to Mr. Wallace including $80,000 for his service as a director, $15,000 for his service as Chairperson of the Compensation Committee, $10,000 for his service as a member of the Compensation Committee and $10,000 for his service as a member of the Nominating Committee.

Narrative to the Director Compensation Table.  In July 2013, based in part on recommendations of Hay Group, a predecessor of Korn Ferry Hay Group, we adopted a director compensation policy (the “Director Compensation Policy”) pursuant to which each non-employee director is entitled to receive an annual cash retainer for his or her service as a member of our Board, as well as additional cash retainers for his or her service as a member and/or Chairperson of one of the various Committees of the Board and an annual equity award.  The Board believes that payments of retainer fees provide an appropriate balance of incentives for active participation and ease of administration, while the grant of annual equity awards aligns the long-term financial interests of our directors and our stockholders.  Specifically, each of our directors currently is entitled to (i) an annual cash retainer for his or her Board service of $80,000, (ii) an incremental annual cash retainer of $17,500, $15,000, $12,500 or $12,500 for service as Chairperson of the Audit Committee, Compensation Committee, Finance Committee or Nominating Committee, respectively, (iii) an incremental annual cash retainer of $12,500 to the extent he or she otherwise serves as a member of the Audit Committee, or $10,000 to the extent he or she otherwise serves as a member of the Compensation Committee, Finance Committee and/or Nominating Committee, and (iv) $110,000 in annual equity awards.  For information regarding Compensation Committee Interlocks and Insider Participation, see Other Board Information above.  In addition to compensation paid for general membership on the Board and its various committees, the Chairman of the Board is entitled to receive an annual, incremental cash retainer.  During 2017, the annual cash retainer for the Chairman of the Board was $100,000 until October 2017, at which time it was increased to $110,000.
 
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The annual cash retainers paid to our non-employee directors under the Director Compensation Policy are generally paid in four equal quarterly installments every March, June, September and December.
 
We also maintain a deferred compensation plan under which our non-employee directors may elect to defer all or a portion of their cash fees or restricted stock retainers until the earliest of separation from the Board, death, a specified future date or a change in control of the Company.  Annual stock retainers are deferred in the form of RSUs with identical vesting schedules to the shares of restricted stock.  No deferral elections were made for the 2017 grants.
 
Director Stock Ownership Guidelines.  We believe that, to align the interests of our non-employee directors with our stockholders, our directors should hold a financial stake in the Company.  The Board adopted a policy in December 2011 requiring each of our non-employee directors to own stock in the Company equal to a minimum of five times such director’s annual cash retainer for service on the Board (the “Director Stock Ownership Guidelines”).  Any newly elected directors have five years from the date of their election to comply with the Director Stock Ownership Guidelines, and should retain at least 50% of all after-tax shares owned by or underlying equity awards granted to them (other than those granted on or prior to December 11, 2012) until the ownership thresholds are met.  The Nominating Committee will evaluate whether exceptions should be made for any director on whom this requirement would impose a financial hardship or for other appropriate reasons as determined by the Nominating Committee.  For the purposes of the Director Stock Ownership Guidelines, stock includes (i) directly held shares of our Common Stock, (ii) shares of unvested restricted stock and unvested RSUs (other than unvested shares of performance-vested restricted stock or unvested performance-vested restricted stock units) and (iii) vested shares of Common Stock allocated to the account of a non-employee director who was formerly an employee of the Company under any plan qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended.
 
15

Code of Ethics
 
We have adopted a Code of Ethics applicable to our Chief Executive Officer and senior financial officers and a Code of Business Conduct and Ethics that is applicable to all employees.  Each document is available on the Corporate Governance page of the Investor Relations section of our website located at www.gnc.com and will be provided to any stockholder free of charge upon request.  Any amendments to or waivers from our Code of Ethics with respect to our Chief Executive Officer and senior financial officers will also be disclosed on our website.  Employees generally receive annual training with respect to the expectations specified in the Code of Business Conduct and Ethics, and acknowledge that they understand their responsibilities and will comply with all aspects of the Code of Business Conduct and Ethics.
 
Certain Relationships and Related Transactions
 
We recognize that transactions between the Company and related persons present a potential for actual or perceived conflicts of interest.  Our general policies with respect to such transactions are included in our Code of Business Conduct and Ethics.  All employees are required to follow the Code of Business Conduct and Ethics, and the Audit Committee of the Board, along with Corporate Compliance staff led by our Chief Legal Officer, oversee our Code of Business Conduct and Ethics, which provides that any actual or potential conflict of interest is to be disclosed.
 
Although we have not adopted formal written procedures for the review, approval or ratification of transactions with related persons, the Board reviews potential transactions with those parties we have identified as related parties prior to the consummation of the transaction, and we adhere to the general policy that such transactions should only be entered into if they are approved by the Board, in accordance with applicable law, and on terms that, on the whole, are no more or less favorable than those available from unaffiliated third parties.
 
In 2017, we did not participate in any transactions involving an amount in excess of $120,000 in which any related person (as defined in Instruction 1 to Item 404(a) of Regulation S-K) has or will have a direct or indirect material interest.  In the ordinary course of business, the Company began to sell certain products through TJX’s retail stores in 2017.  Mr. Hines and Ms. Lane serve on the board of directors of TJX.  Consistent with SEC rules, neither Mr. Hines nor Ms. Lane are considered to have an interest in these transactions.
 
Communications from Stockholders and Other Interested Parties
 
The Board welcomes communications from our stockholders and other interested parties.  Stockholders and other interested parties wishing to communicate with the Board, our non-management directors or any particular director may send such communications to the following address: GNC Holdings, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania, 15222, Attention: Secretary.  Such communications should indicate clearly the director or directors to whom the communication is being sent so that each communication may be forwarded directly to the appropriate director(s).
 
16

EXECUTIVE OFFICERS
 
Set forth below is information concerning our current executive officers.

Name
Age
Position
Kenneth A. Martindale
58
Chief Executive Officer
Tricia K. Tolivar
49
Executive Vice President, Chief Financial Officer and Interim Chief Marketing Officer
Guru Ramanathan
55
Senior Vice President and Chief Innovation Officer
Joseph C. Gorman
47
Executive Vice President, Operations
Kevin G. Nowe
65
Senior Vice President, Chief Legal Officer and Secretary
Steven Piano
52
Senior Vice President and Chief Human Resources Officer
Gene E. Burt
52
Executive Vice President, Chief Merchandising Officer and Chief Supply Chain Officer

The biography for Mr. Martindale is set forth above under “Election of Directors (Proposal 1).”
 
Tricia K. Tolivar became our Executive Vice President and Chief Financial Officer in March 2015 and our Interim Chief Marketing Officer in June 2017, having previously served in leadership positions with Ernst & Young, LLP from October 2007 to February 2015, including most recently as Americas Director of Finance, Advisory, with responsibility for the leadership of finance, accounting and operations of a $3 billion client service organization in North and South America.  Ms. Tolivar previously served as Chief Financial Officer of the Greater Memphis Arts Council from January 2006 to December 2008 and in a series of executive leadership positions with AutoZone, Inc. from 1996 to 2005.  She is a graduate of Emory University.
 
Guru Ramanathan, Ph.D. joined our Company in 1998 and became our Senior Vice President and Chief Innovation Officer in December 2009 having previously served as Senior Vice President of Product and Package Innovation since February 2008 and Senior Vice President of Scientific Affairs since April 2007.  He served as Vice President of Scientific Affairs from December 2003 to April 2007.  Prior to joining the Company, Dr. Ramanathan worked as Medical Director and Secretary for the Efamol subsidiary of Scotia Pharmaceuticals in Boston and, in his capacity as a pediatric dentist and dental surgeon, held various industry consulting and management roles, as well as clinical, research and teaching appointments in Madras, India, and Tufts University and New England Medical Center in Boston, Massachusetts.  Dr. Ramanathan earned his Ph.D. in Innovation Management from Tufts University and his MBA from Duke University’s Fuqua School of Business.
 
Joseph C. Gorman was appointed, effective as of March 5, 2017, as Executive Vice President, Operations.  Prior to his appointment, Mr. Gorman served as Senior Vice President, Store Operations from January to March 2017 and Vice President, Western Division, from December 2015 to January 2017.  Prior to joining the Company in 2015, Mr. Gorman was President of Anomaly Republic, a clothing retailer headquartered in Southern California from 2014 to 2015, with responsibility for the executive management and operational leadership of the company’s business.  Prior to that, Mr. Gorman spent approximately six years at GameStop, an omni-channel video game and electronics retailer, where he held various field leadership positions from 2009 to 2014, and approximately 16 years before that at The Home Depot, a home improvement retailer, where he held various operational roles in the field and headquarters.
 
17

Kevin G. Nowe became our Senior Vice President, Chief Legal Officer and Secretary in March 2018.  Previously he served as our Senior Vice President and Chief Legal Officer from April 2017 to October 2017 and as our Senior Vice President, Chief Legal Officer and Chief Compliance Officer from October 2017 to March 2018.  Mr. Nowe previously served in leadership positions at Kennametal, Inc., most recently as Vice President, Secretary and General Counsel from 2009 to 2016, with responsibility for management of the company’s legal and general corporate governance matters, and as Assistant Secretary and Assistant General Counsel from 1992 to 2009.   Mr. Nowe is a graduate of the University of Pittsburgh and the Case Western University School of Law.
 
Steven Piano became our Senior Vice President and Chief Human Resources Officer in January 2018.  Mr. Piano previously served in leadership positions with MoneyGram International, Inc. from 2009 to 2017, most recently as Executive Vice President, Human Resources, Real Estate and Communications with responsibility for MoneyGram International’s global human resources and facilities management.  Mr. Piano previously served in a variety of human resources leadership positions for National Grid USA, First Data Corporation and Lehman Brothers, Inc.  Mr. Piano is a graduate of Hofstra University.
 
Gene Eddie Burt II became our Executive Vice President, Chief Merchandising Officer and Chief Supply Chain Officer in January 2018.  He previously served as our Senior Vice President and Chief Supply Chain Officer from January 2017 to January 2018.  He previously served as Senior Vice President, Supply Chain for Tuesday Morning Corporation from February through September 2016, with responsibility for the oversight of the company’s product distribution network, and prior to that in a variety of executive roles with PetsMart, Inc. from 2007 to 2015, most recently as Senior Vice President, Real Estate and Development with responsibility for the company’s facilities and development initiatives.  Mr. Burt is a graduate of Morehouse College.
 
18

ADVISORY VOTE ON EXECUTIVE COMPENSATION
(PROPOSAL 2)
 
In accordance with Section 14A of the Exchange Act, we are providing our stockholders the opportunity to cast a non-binding advisory vote to approve the 2017 compensation of our Named Executive Officers (defined below) as described in the Compensation Discussion and Analysis section of this proxy statement, the compensation tables that follow and narrative discussions set forth in these proxy materials.  This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on the compensation of our Named Executive Officers.  Our Board recommended, and the stockholders approved at our 2017 annual meeting of stockholders, that such advisory vote would be conducted on an annual basis.
 
As described in the Compensation Discussion and Analysis section of this proxy statement, the primary objectives of our executive compensation program are to (i) align cash and stock-based rewards with individual performance that creates stockholder value, (ii) attract and retain high performing employees, (iii) build an ownership mentality among our key employees and (iv) provide cost effective cash and stock-based rewards that are competitive with other organizations and fair to our stockholders and employees.  The foregoing objectives are applicable to the compensation of our Named Executive Officers.
 
We believe that our executive compensation program achieves these objectives by emphasizing long-term stock-based incentive awards and performance-based compensation, is appropriate in light of our overall compensation philosophy and objectives, and will play an essential role in our future success.
 
Therefore, the Board recommends a vote in favor of the following resolution:
 
“RESOLVED, that the compensation paid to the Company’s Named Executive Officers for fiscal year ended December 31, 2017, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
 
As an advisory vote, this proposal is not binding upon us.  Notwithstanding the advisory nature of this vote, the Compensation Committee values the opinions expressed by stockholders in their vote on this proposal, and will consider the outcome of the vote when making future compensation decisions for our Named Executive Officers.  Currently, we expect to hold an advisory vote on the compensation paid to the Company’s Named Executive Officers each year and expect that the next such vote will occur at our 2019 Annual Meeting.
 
The affirmative vote of the holders of a majority of the votes cast by our stockholders in person or represented by proxy and entitled to vote is required to approve this Proposal 2.
 
Recommendation
 
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS FOR THE COMPANY’S FISCAL YEAR ENDED DECEMBER 31, 2017, AS DISCLOSED IN THESE PROXY MATERIALS.
 
19

COMPENSATION DISCUSSION AND ANALYSIS
 
This section discusses the material elements of compensation awarded to, earned by or paid to our principal executive officer, our principal financial officer, our three other most highly compensated executive officers who were serving as such on December 31, 2017, our former principal executive officer who served as such for a portion of 2017, and two individuals who would have been included in our three other most highly compensated executive officers but for the fact that the individuals were not serving as executive officers as of December 31, 2017.  These individuals are referred to collectively as the “Named Executive Officers.”
 
For 2017, the Named Executive Officers were:

Name
Title
   
Kenneth A. Martindale
Chief Executive Officer
   
Tricia K. Tolivar
Executive Vice President, Chief Financial Officer and Interim Chief Marketing Officer
   
Timothy A. Mantel
Executive Vice President and Chief Merchandising Officer
   
Guru Ramanathan
Senior Vice President and Chief Innovation Officer
   
Gene E. Burt
Executive Vice President, Chief Merchandising Officer and Chief Supply Chain Officer
   
Robert F. Moran
Former Interim Chief Executive Officer
   
Michael D. Dzura
Former Executive Vice President, Operations
   
Jeffrey R. Hennion
Former Executive Vice President, Chief Marketing and e-Commerce Officer

The Company had a change in its Named Executive Officers from 2016 to 2017.  Mr. Moran ceased to serve as our Interim Chief Executive Officer effective on September 11, 2017.  We have included information concerning Mr. Moran in the Summary Compensation Table and other related tables in accordance with SEC rules and regulations, and we discuss matters relating to his compensation in this Compensation Discussion and Analysis where relevant.  Mr. Dzura, the former Executive Vice President, Operations, resigned from employment with the Company as of March 24, 2017.  Mr. Hennion, the former Executive Vice President, Chief Marketing and e-Commerce Officer, resigned from his position with the Company, effective June 1, 2017.  In addition, Mr. Mantel, Executive Vice President and Chief Merchandising Officer, resigned from employment with the Company as of February 9, 2018.  For purposes of the stockholder advisory vote relating to 2017 compensation of our Named Executive Officers and, unless otherwise indicated, for purposes of this Compensation Discussion and Analysis, Messrs. Moran, Dzura and Hennion, together with the other officers named in the table above, are our Named Executive Officers. However, unless otherwise indicated, references to the Named Executive Officers in this Compensation Discussion and Analysis exclude (i) Mr. Martindale when the term is used in discussing periods of time prior to September 11, 2017, the date Mr. Martindale joined our Company, and (ii) Messrs. Moran, Dzura, and Hennion when the term is used in discussing periods of time after September 11, 2017, March 24, 2017, and June 1, 2017, respectively.
 
20

Executive Summary
 
Our business remains profitable, and we have continued to address the ongoing and significant challenges to our strategy and our business during 2017.  Following extensive consumer research and market/competitive analysis we developed and launched the One New GNC in December 2016 and we have now marked four consecutive quarters of growth in the number of sale transactions.  Customers responded to our simplified pricing model, enhanced loyalty programs and product innovation during 2017, as indicated by positive comparable same store transactions of 11.6% in 2017 for company-owned stores and GNC.com. Also, we achieved same store sales growth of 0.2% in 2017 for domestic company-owned stores and GNC.com.

In September 2017, the Board of Directors appointed Kenneth A. Martindale to be our Chief Executive Officer.  In addition to addressing traffic trends in our retail stores, our management team is seeking other substantial opportunities to drive profitable growth, including expansion of our business internationally, increased brand penetration, leveraging our strength in product innovation and delivering a compelling omnichannel experience.  As our key efforts take time to produce results, the Company’s operational results in 2017 were challenged, impacting our year-over-year share price, down from approximately $11 per share at the beginning of 2017 to less than $4 per share by the end of the year.

In light of this transforming and challenging business environment, the Compensation Committee made the following pay determinations in 2017 for our Named Executive Officers:

·
Our Named Executive Officers did not receive routine salary increases in 2017, with the exceptions of benchmarking adjustments for Ms. Tolivar and Messrs. Moran and Hennion.

·
No annual cash incentive compensation payments were made to our Named Executive Officers for 2017, with the exception of discretionary incentive bonus payments made to Mr. Moran for his performance as Interim Chief Executive Officer through September 11, 2017.

·
Performance share units for the performance period ending in 2017 were forfeited.

·
Mr. Martindale received long-term equity awards as an inducement in connection with the commencement of his employment in 2017 and make-whole awards as replacement equity for awards forfeited by Mr. Martindale from his prior employer.  Other Named Executive Officers received a mix of stock options, performance-vested restricted stock units (“PSUs”) and time-vested restricted stock units (“RSUs”) in 2017.

Our executive compensation program has been structured to generate and reward superior company performance by establishing compensation packages under which variable, or incentive, compensation is weighted more heavily than base salary.  We have established compensation programs to motivate our executives to focus on both our short-term and long-term performance by providing a mix of short-term and long-term incentive compensation in the form of annual cash incentive compensation and long-term equity-based incentive compensation.  We believe that our approach allocates more compensation toward non-cash equity compensation on average, and aligns the incentives of our executives with the interests of our stockholders.
 
Annual Cash Incentive Compensation.  For 2017, we approved an annual cash incentive compensation program for our executives based upon certain performance metrics. Also, Mr. Martindale became eligible to earn a bonus under the terms of his employment agreement. The applicable performance metrics for the following Named Executive Officers were earnings before interest and tax (“EBIT”) and retail and web sales comparables, and, for certain Named Executive Officers, if the retail and web sales
 
21

metric was achieved, then gross margin return on inventory (“GMROI”) was also an applicable performance metric.  GMROI is defined as gross profit excluding sublease revenue and warehousing, distribution and occupancy costs divided by the average of inventory at the beginning and ending of the period excluding obsolescence and shrinkage reserves.  The applicable performance metrics, and their weighting for the following Named Executive Officers were as follows:
 
 
Name
 
EBIT
 
Retail and Web
Sales Comparables
 
GMROI
                   
Kenneth A. Martindale
   
50
%
   
50
%
   
-
 
                         
Tricia K. Tolivar
   
50
%
   
50
%
   
-
 
                         
Timothy A. Mantel
   
40
%
   
40
%
   
20
%
                         
Guru Ramanathan
   
50
%
   
50
%
   
-
 
                         
Gene E. Burt
   
40
%
   
40
%
   
20
%
                         
Michael D. Dzura
   
50
%
   
50
%
   
-
 
                         
Jeffrey R. Hennion
   
50
%
   
50
%
   
-
 

We believed that these criteria would incentivize our Named Executive Officers to focus on multiple performance drivers throughout our business.  The Company’s performance for 2017 resulted in no payment of bonuses to the Named Executive Officers listed above under the annual cash incentive compensation program or, in the case of Mr. Martindale, under his employment agreement. In addition to the above Named Executive Officers, Mr. Moran was eligible for and received incentive bonus payments as determined by and at the discretion of the Board. For more information, see “ – Elements of Compensation – Annual Cash Incentive Compensation” below.
 
Long-term Incentive Compensation.  We maintain a long-term incentive program that principally utilizes “full-value” awards, such as restricted stock awards (“RSAs”), RSUs and PSUs, in combination with stock options.  Our program aligns with the market trend in favor of grants of PSUs and RSUs and a reduced reliance on stock options.  We believe that our long-term incentive program cultivates an ownership mentality among our executives that serves to focus management on achieving our strategic and financial objectives, thereby more closely aligning the interests of our executives with the long-term interests of our stockholders.
 
In February 2017, our executives, including certain Named Executive Officers, specifically Ms. Tolivar, Dr. Ramanathan, and Messrs. Moran, Mantel, Burt, and Hennion, received long-term incentive grants for 2017. The long-term incentive award grants in February 2017 to these Named Executive Officers were received in the form of PSUs, RSUs, and stock options.  The specific proportions of total awards granted in the forms of PSUs, RSUs and stock options are provided in detail below and ranged from 37%-40% for PSUs, 27%-30% for RSUs and 30%-36% for stock options, except for Mr. Moran who received all of his award in the form of stock options.
 
In connection with Mr. Martindale’s appointment as our Chief Executive Officer on September 11, 2017, he received make-whole and inducement grants including 519,126 stock options and 519,556 RSAs. For more information about Mr. Martindale’s grants, see “Appointment of Mr. Martindale as Chief Executive Officer and Related Grants” below.
 
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Other 2017 Compensation Highlights
 
At our 2017 annual meeting, our stockholders approved, on a non-binding, advisory basis, the “say-on-pay” proposal with respect to our 2016 executive compensation program by more than 95% of the shares voted.  We considered the results of this vote, the Company’s business results and our share price performance in determining our 2017 executive compensation program.

In February 2018, the Compensation Committee reviewed our executive compensation program with management from a risk perspective and determined that there are no risks created by our compensation policies and practices that are reasonably likely to have a material adverse effect on the Company.  In reaching this conclusion, the Compensation Committee considered various factors, including the balance between annual and long-term compensation and between fixed and variable compensation, the use of multiple types of long-term incentive awards, the use of multiple performance criteria (including both short-term and long-term criteria) for payment of incentive compensation, the use of performance measures that are intended to increase stockholder value if goals are achieved, and various compensation policies and practices that mitigate excessive risk (including substantial stock ownership requirements for key executives, the clawback feature of the Company’s equity awards, the Compensation Committee’s negative discretion to reduce the amount of incentive awards, and the prohibition on hedging or pledging of Company stock by executives).

Compensation Policies and Objectives
 
The primary objectives of our executive compensation program, and the accordant Committee responsibilities, are to:
 
review and approve the Company’s compensation philosophy, policies and objectives;
 
align cash and stock-based awards with individual and corporate performance that creates stockholder value;
 
build an ownership mentality among our key employees;
 
attract and retain high performing employees;
 
review and determine the compensation for the Company’s executive officers, including the Named Executive Officers;
 
review and approve annually the corporate goals and objectives applicable to the compensation of the Company’s executive officers, including the Named Executive Officers;
 
review the potential risk to the Company from its compensation policies and program;
 
develop succession plans and implement development initiatives for the Company’s senior management; and
 
provide cost effective cash and stock-based rewards that are competitive with other organizations and fair to our stockholders and employees.
 
23

To facilitate the objectives, the Company provides base salary and related benefit plans, annual cash incentive compensation and long-term incentive compensation.  The objectives apply to the compensation of the Named Executive Officers and to the elements of their respective executive compensation packages as follows:
 
Base Salary.  The objective in determining base salaries for the Named Executive Officers is to set base salaries at levels that are (i) sufficient to attract and retain high performing, qualified employees and (ii) considered fair to our stockholders and employees.  The Compensation Committee seeks to set base salaries at levels that are competitive with a peer group of companies and benchmarks salaries at the median of the peer group.  In addition, base salaries are influenced by the complexity and level of the applicable position.
 
Our Named Executive Officers did not receive routine salary increases in 2017, with exceptions for benchmarking adjustments.  There were benchmarking increases to the salaries of Ms. Tolivar, and Mr. Moran and Mr. Hennion.
 
Annual Cash Incentive Compensation.  We use annual cash incentive compensation to incentivize the Named Executive Officers to contribute to our growth and financial performance and to provide rewards based on achievement of predetermined goals that are intended to drive increases in stockholder value.  As additional cash compensation that is contingent on our financial performance, annual cash incentive compensation augments the base salary component while being tied to our financial performance.
 
The Company’s performance in 2017 resulted in no payment of bonuses to the Named Executive Officers except for discretionary incentive bonus payments made to Mr. Moran for his service as our Interim Chief Executive Officer.
 
Long-term Incentive Compensation.  We believe that stock-based awards are important in building an ownership mentality among our executives and aligning the long-term financial interests of our executives with those of our stockholders.  Time- and performance-vested awards provide incentives to drive performance, and have long-term horizons because value to our executives is dependent on continued employment, the achievement of pre-established performance goals (in the case of PSUs) and, ultimately, increases in the market value of our common stock.
 
Our 2017 equity awards consisted of a significant portion of PSUs as noted above, and stock options, which we believe focuses attention on building stockholder value.
 
Benefits and Perquisites.  The Named Executive Officers are entitled to participate in, and to receive benefits under, the benefit plans, arrangements and policies available to our employees or executives generally.  Other than the perquisites provided to Mr. Moran during his tenure as Interim Chief Executive Officer of the Company, certain relocation benefits provided to Messrs. Martindale, Burt and Mantel, and certain other minimal perquisite amounts identified in the Summary Compensation Table, the Company does not provide perquisites or make payment of perquisite allowances to any of its executives.
 
Executive Compensation Process
 
Role of the Compensation Committee
 
The Compensation Committee oversees the development and implementation of our executive compensation policies and objectives, determines the structure of our executive compensation packages generally, determines the actual compensation paid to each of our senior executives and evaluates the performance of our Chief Executive Officer.  In addition, the Compensation Committee has the authority
 
24

to (i) review our incentive compensation plans, recommend changes to such plans to the Board and exercise all the authority of the Board with respect to the administration of such plans, and (ii) retain, terminate and set the terms of our and the Compensation Committee’s relationship with any consultants and other outside advisors who assist the Compensation Committee in carrying out its duties.
 
Role of Management
 
The Compensation Committee considers the recommendations of management, principally our Chief Executive Officer or Interim Chief Executive Officer, as applicable, when determining the structure of our executive compensation packages generally and the actual compensation paid to each of our senior executives.  The Compensation Committee does not delegate any of its functions to others in setting compensation, no Named Executive Officer is a member of the Compensation Committee and our Chief Executive Officer or Interim Chief Executive Officer, as applicable, does not provide recommendations with respect to his own compensation.
 
Role of Outside Advisors
 
The Compensation Committee has retained Korn Ferry Hay Group as an independent consultant to provide information, advice and recommendations regarding our executive compensation policies and design.  In 2017, Korn Ferry Hay Group was engaged to review and provide information, advice and recommendations regarding our executive compensation program generally, as well as the individual compensation packages of each of our senior executives, including the Named Executive Officers.  Korn Ferry Hay Group was directed to benchmark executive salaries and other short-term and long-term compensation, including the mix of performance-based compensation.  As discussed below under “–Use of Peer Group Data,” at the direction of the Compensation Committee, Korn Ferry Hay Group worked with our Interim Chief Executive Officer and our Human Resources personnel to compare our executive compensation packages to those of a group of comparable companies.
 
Korn Ferry Hay Group provides advice and recommendations to the Compensation Committee and reports to the Compensation Committee.  Prior to its original engagement in 2011, Korn Ferry Hay Group, except for executive search services performed by Korn Ferry prior to its acquisition of Hay Group and as set forth below, had not previously worked with the Company in any capacity, nor has it served us in any capacity, other than as a consultant to the Compensation Committee.  The Compensation Committee has reviewed and considered information provided to it by Korn Ferry Hay Group, the Compensation Committee members and our executive officers, and based on its review and the factors described in the NYSE listing standards and such other factors as it deemed relevant, the Compensation Committee has concluded that Korn Ferry Hay Group is independent, that the advice it receives from Korn Ferry Hay Group is objective and that Korn Ferry Hay Group’s work has not raised any conflict of interest.  In December 2015, Korn Ferry acquired Hay Group, which became a wholly owned subsidiary of Korn Ferry. The Company has engaged Korn Ferry Hay Group to provide executive search services in the past and may do so from time to time in the future.
 
Use of Peer Group Data
 
The Compensation Committee seeks to determine how our compensation programs compare to other publicly traded companies similar to us.  The Compensation Committee seeks to set compensation for the Named Executive Officers at levels that are competitive with similar companies in our industry but consistent with our growth strategy and with an emphasis on variable compensation, rather than fixed compensation.
 
25

With the assistance of Korn Ferry Hay Group, the Compensation Committee updated its peer group in September 2016 in order to appropriately reflect companies with revenue sizes, sectors and business models similar to our own, as well as those with which we compete for talent.  The updated peer group (the “2017 Peer Group”), which was used for comparative purposes in setting the levels of the 2017 long-term equity awards and cash compensation levels for our Named Executive Officers (other than Mr. Moran and Mr. Martindale, whose 2017 compensation levels were determined in connection with their respective appointments), was comprised of the following 18 companies:
 
American Eagle Outfitters, Inc.
Lululemon Athletica, Inc.
The Finish Line, Inc.
     
Cabela’s, Inc.
Mead Johnson Nutrition Co.
Ulta Beauty, Inc.
     
Dick’s Sporting Goods, Inc.
Panera Bread Co.
Village Super Market
     
Deckers Outdoor Corporation
Pier 1 Imports, Inc.
Vitamin Shoppe, Inc.
     
Hain Celestial Group, Inc.
Sally Beauty Holdings, Inc.
Weight Watchers International, Inc.
     
Herbalife Ltd.
Sprouts Farmers Markets, Inc.
Williams Sonoma, Inc.
 
Based upon consultation with Korn Ferry Hay Group in July 2017, the Compensation Committee further updated the peer group by removing Cabela’s, Inc., Dick’s Sporting Goods, Inc., Lululemon Athletica, Inc., and Panera Bread Co. from the 2017 Peer Group, and adding Big 5 Sporting Goods Corp. and Nu Skin Enterprises, Inc. (the updated peer group, the “2018 Peer Group”).
 
In February 2018, we used the 2018 Peer Group for comparative purposes in setting our most recent long-term equity awards and 2018 cash compensation levels for our executives, including the Named Executive Officers, other than Mr. Martindale, for whom 2018 compensation levels, including long-term equity awards, were determined under his employment agreement.
 
Elements of Compensation
 
Base Salary
 
We pay base salaries to the Named Executive Officers.  With respect to 2017, the Compensation Committee established the annual base salaries of the Named Executive Officers as follows:

 
Name
 
2016 Base
Salary ($)
 
2017 Base
Salary ($)
 
Percentage
Increase (%)
                   
Kenneth A Martindale (1)
   
N/A
     
975,000
     
N/A
 
                         
Tricia K. Tolivar (2)
   
460,000
     
510,000
     
10.9
 
                         
Timothy A. Mantel (3)
   
500,000
     
500,000
     
0.0
 
                         
Guru Ramanathan
   
430,000
     
430,000
     
0.0
 
                         
Gene E. Burt (4)
   
N/A
     
385,000
     
N/A
 
                         
Robert F. Moran (5)
   
996,000
     
1,016,000
     
2.0
 
                         
Michael D. Dzura (6)
   
510,000
     
510,000
     
0.0
 
                         
Jeffrey R. Hennion (7)
   
500,000
     
510,000
     
2.0
 
 
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(1)
Mr. Martindale was appointed as the Chief Executive Officer of the Company effective on September 11, 2017 and base salary was paid commencing on his appointment. Mr. Martindale received a pro rata portion of his base salary for service as our Chief Executive Officer during 2017.

(2)
Ms. Tolivar received a $50,000 (10.9%) increase in base salary on March 26, 2017 primarily as an adjustment to attain benchmark salary levels to $510,000 (“Benchmark Salary”).  Additionally, Ms. Tolivar received a stipend of $2,500 per month beginning in June 2017 as compensation for her expanded role as the Interim Chief Marketing Officer.

(3)
Mr. Mantel resigned from employment with the Company as of February 9, 2018.

(4)
Mr. Burt was appointed as the Senior Vice President, Chief Supply Chain Officer of the Company effective on January 30, 2017.  In addition to his base salary, Mr. Burt received a stipend of $2,500 per month beginning in July 2017 as compensation for his expanded role as the Interim Chief Human Resource Officer.

(5)
Mr. Moran ceased to serve as the Interim Chief Executive Officer of the Company effective on September 11, 2017. Mr. Moran received a pro rata portion of his base salary for service as our Interim Chief Executive Officer during 2017.

(6)
On March 13, 2017, the Company announced the resignation of Mr. Dzura as Executive Vice President, Operations of the Company, effective as of March 24, 2017. Mr. Dzura received a pro rata portion of his base salary during 2017. Additional information regarding Mr. Dzura’s separation is discussed below under “- Mr. Dzura Separation Agreement.”

(7)
On June 1, 2017, the Company announced the resignation of Mr. Hennion as Chief Marketing and e-Commerce Officer, effective as of June 1, 2017. Mr. Hennion received a pro rata portion of his base salary during 2017. Additional information regarding Mr. Hennion’s separation is discussed below under “- Mr. Hennion Consulting Agreement.”

Annual Cash Incentive Compensation
 
Annual cash incentive compensation is documented in an annual plan that is adopted by the Compensation Committee under the Company’s stock and incentive plan prior to or during the first quarter of the applicable year.  The annual performance bonus for each Named Executive Officer has a threshold, target and maximum bonus amount expressed as a percentage of his or her annual base salary, which percentage is determined by the respective position and level of responsibility of such Named Executive Officer.
 
The annual cash incentive plan for 2017 performance (the “2017 Incentive Plan”) was adopted by the Compensation Committee in February 2017 and provided the following threshold, target and maximum bonus amounts, expressed as a percentage of base salary:
 
27

   
2017 Incentive Plan
Level
 
Threshold
Amount
 
Target
Amount
 
Maximum
Amount
                   
Chief Financial Officer
   
20
%
   
60
%
   
120
%
                         
Executive Vice President
   
20
%
   
60
%
   
120
%
                         
Senior Vice President
   
15
%
   
45
%
   
90
%

Mr. Moran’s annual cash incentive compensation was not established under the 2017 Incentive Plan and the incentive bonus payments that he received were determined by and at the discretion of the Board. Mr. Martindale’s annual cash incentive compensation was not established under the 2017 Incentive Plan, as he was appointed as Chief Executive Officer in September 2017, and, in connection with his appointment and employment agreement, the threshold, target, and maximum amounts were set at 50%, 150% and 300%, respectively.  In connection with his appointment to Chief Executive Officer, Mr. Martindale was entitled to an annual bonus opportunity of at least 150% of base salary, pro-rated with respect to the 2017 calendar year, which could be earned based on the Compensation Committee’s evaluation of performance objectives established for the applicable year, which were the same incentives established under the 2017 Incentive Plan.
 
The targets under the 2017 Incentive Plan for Ms. Tolivar, Dr. Ramanathan and Messrs. Hennion and Dzura, which were based on our achievement of (i) a predetermined level of EBIT, which is calculated at the end of the year including certain specified adjustments disclosed in our quarterly earnings reports and (ii) year-over-year comparables for retail and web sales. With respect to these Named Executive Officers, the targets were based on our achievement of the EBIT level and retail and web sales comparables targets set forth in the table below.  They were entitled to receive 50% of the target bonus amount if we achieved EBIT equal to or exceeding the target and 50% if we achieved retail and web sales comparables equal to or exceeding the target.
 
The following thresholds and related goals were established (i) for Ms. Tolivar, Dr. Ramanathan, and Messrs. Hennion and Dzura under the 2017 Incentive Plan and (ii) for Mr. Martindale in connection with his appointment and employment agreement:
 
Performance Measure
 
Threshold
 
Target
 
Maximum
 
Relative Weight
                 
EBIT (1)
 
$216,000,000
 
$240,000,000
 
$264,000,000
 
50%
                 
Retail and Web Sales Comparables
 
1.50%
 
4.40%
 
6.40%
 
50%
 
(1)
As this performance measure is a non-GAAP financial metric, please see Annex A for a presentation of the reconciliation between EBIT, as adjusted, and our GAAP financial metric based on the Company’s audited financial statements.
 
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The objectives under the 2017 Incentive Plan for Messrs. Mantel and Burt were based on our achievement of (i) a predetermined level of EBIT, which is calculated at the end of the year including certain specified adjustments disclosed in our quarterly earnings reports, (ii) year-over-year comparables for retail and web sales and (iii) GMROI. With respect to these Named Executive Officers, the targets were based on our achievement of the EBIT level, retail and web sales comparables targets, and GMROI set forth in the table below. They were entitled to receive 40% of the target bonus amount if we achieved EBIT equal to or exceeding the target, 40% if we achieved retail and web sales comparables equal to or exceeding the target and, if the retail and web sales metric was achieved, then 20% if we also achieved GMROI equal to or exceeding the target.
 
The thresholds and related goals for Messrs. Mantel and Burt under the 2017 Incentive Plan were as follows:
 
Performance Measure
 
Threshold
 
Target
 
Maximum
 
Relative Weight
                 
EBIT
 
$216,000,000
 
$240,000,000
 
$264,000,000
 
40%
                 
Retail and Web Sales Comparables
 
1.50%
 
4.40%
 
6.40%
 
40%
                 
GMROI (1)
 
2.18
 
2.23
 
2.30
 
20%
 
(1)
If the threshold for Retail and Web Sales was achieved, then Messrs. Mantel and Burt would have been eligible for the threshold and goal related to GMROI.
 
Results of the 2017 Incentive Plan.  The Company’s performance for 2017 resulted in no awards of bonuses during the fiscal year to the Named Executive Officers for whom threshold, target and maximum levels were established under the terms of the 2017 Incentive Plan or, in the case of Mr. Martindale, his appointment and employment agreement.  The threshold levels were not met for the EBIT, Retail and Web Sales Comparables or GMROI metrics.  Specifically, our results achieved for purposes of the 2017 Incentive Plan and the bonus eligibility under Mr. Martindale’s employment agreement were as follows:
 
Performance Measure
 
Achieved Results
     
EBIT
 
$206,423,000
     
Retail and Web Sales Comparables
 
0.2%
     
GMROI
 
2.12
 
Based on these results, under the terms of the 2017 Incentive Plan or Mr. Martindale’s employment agreement, as applicable, our Named Executive Officers did not receive cash incentive compensation payments for 2017.
 
As indicated above, Mr. Moran was not subject to the 2017 Incentive Plan and, for his performance as Interim Chief Executive Officer, received two discretionary incentive bonus payments of $498,000 and $110,967 for the periods of February 2017 through July 2017 and August 2017 through September 11, 2017, respectively, in recognition of his leadership.
 
29

Long-term Incentive Compensation
 
2017 Annual Long-Term Incentive Awards.  Substantially all of our employees, and the employees of our direct and indirect subsidiaries and other affiliates, including the Named Executive Officers, are eligible for consideration of awards of stock options, restricted stock, RSUs (including PSUs) and other stock-based awards under the terms of the 2015 Stock and Incentive Plan (the “2015 Stock Plan”), which was adopted in 2015.  The Compensation Committee is responsible for administering, selecting the individuals who are eligible to participate in and determining the types and amounts of stock-based awards granted under the 2015 Stock Plan.  The Compensation Committee has discretion to delegate all or a portion of its authority under the 2015 Stock Plan.  In 2007, we adopted the GNC Acquisition Holdings Inc. 2007 Stock Incentive Plan (the “2007 Stock Plan”) and in 2011, we adopted the GNC Holdings, Inc. 2011 Stock and Incentive Plan (the “2011 Stock Plan”), under which plans awards are outstanding.  Following the adoption of the 2015 Stock Plan, we have not granted and will not grant any additional awards under the 2007 Stock Plan or the 2011 Stock Plan.
 
Stock options granted under the various plans generally are subject to vesting in annual installments and have terms of seven to ten years.  The Compensation Committee determines the size of stock-based awards for each Named Executive Officer in accordance with the Named Executive Officer’s position versus the market benchmark, performance and level of position.  Options and other stock-based awards under the 2011 Stock Plan and the 2015 Stock Plan are subject to clawback by the Company if the participant engages in any “detrimental activity” during the participant’s service or for one year after the participant’s service ends, which is generally defined to include disclosing confidential information about the Company, engaging in activities that result (or would result if known) in the termination of the participant’s service for cause, soliciting the Company’s employees on behalf of a competing employer, or materially breaching any agreement between the participant and the Company.
 
The Compensation Committee generally considers grants of long-term incentive compensation awards on an annual basis, except for certain new hires.  The Compensation Committee grants equity-based awards to our executives on both an annual and as-desired basis.  We do not have any program, plan or practice to time annual or ad hoc grants of equity-based awards in coordination with the release of material non-public information or otherwise.
 
In February 2017, we granted long-term incentive awards to certain Named Executive Officers, Mr. Moran, Ms. Tolivar, Dr. Ramanathan, and Messrs. Mantel, Burt, and Hennion, under the 2015 Stock Plan.  Base award values for these long-term incentive grants were determined based in part on the results of Korn Ferry Hay Group’s analysis of the compensation packages of top executives at companies in the 2017 Peer Group, and were intended to be competitive compared to long-term incentive awards granted to executives with comparable titles and responsibilities within the 2017 Peer Group.  The long-term incentive award grant values to these Named Executive Officers were in the following proportions:
 
Name
 
Stock
Options
 
Time-Vested
RSUs
 
PSUs
                   
Tricia K. Tolivar
   
35
%
   
28
%
   
37
%
                         
Timothy A. Mantel
   
30
%
   
30
%
   
40
%
                         
Guru Ramanathan
   
30
%
   
30
%
   
40
%
                         
Gene E. Burt
   
36
%
   
27
%
   
37
%
                         
Robert F. Moran
   
100
%
   
-
     
-
 
                         
Jeffrey R. Hennion
   
30
%
   
30
%
   
40
%
 
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Mr. Dzura did not receive an award in 2017.
 
In addition to the long-term incentive compensation awards granted to Ms. Tolivar in February 2017, she also received 150,000 RSUs as a retention award in May 2017. For more information, see “ – Elements of Compensation – Long-Term Incentive Compensation” below. Mr. Burt’s 2017 grant values vary slightly from the program due to contractual terms that were agreed upon in connection with the commencement of his employment with the Company.
 
In all cases the stock options vest in annual installments over four years from the grant date, the RSUs vest in annual installments over three years from the grant date and the PSUs can be earned based on the achievement of the performance criteria over the period commencing on January 1, 2017 and ending on December 31, 2019 (the “Performance Period”) and subject to the grantees continuous employment with the Company during the Performance Period.
 
For the February 2017 awards, the portions of the total award value attributable to the RSUs and PSUs were determined by multiplying the number of RSUs and PSUs in the award by $7.99, which was the closing price per share of our common stock on February 22, 2017, the date of grant.  For the February 2017 awards, the performance metric for grants of the PSUs is relative total shareholder return (“TSR”).  The total number of PSUs that will be earned by a grantee is based upon the Company’s TSR relative to the TSR of other companies reported on the S&P Retail Select Industry Index (the “Index”) for the Performance Period.  At the conclusion of the Performance Period, the Compensation Committee will determine whether and the extent to which the performance criteria have been achieved for the purpose of determining the percentage of the target amount of PSUs that have vested for the Performance Period.  Any PSUs that have not vested as of the end of the Performance Period, based upon the Compensation Committee’s determination, will be forfeited.  The Compensation Committee may, in its sole discretion, reduce the amount to less than the amount that is determined to be vested in accordance with the agreements providing for the PSUs.
 
The Company’s TSR is measured, using a 31-day average stock price, as a percentile ranking in comparison with the TSR of the Index for the Performance Period.  The PSU starting stock price is based upon the average adjusted closing stock price for the month preceding the start of the Performance Period (i.e., beginning on December 1, 2016 and ending on December 31, 2016).  If the Company’s TSR for the Performance Period is less than the 30th percentile TSR of the Index for the Performance Period, no PSUs will be earned by the grantee on December 31, 2019.  If the Company’s TSR for the Performance Period is achieved between the 30th and 40th percentile TSR of the Index for the Performance Period, then 35% of the total PSUs awarded may be earned by the grantee on December 31, 2019 at the 30th percentile achievement, with an additional amount earned based on interpolation in relation to the cumulative performance condition.  If the Company’s TSR for the Performance Period is achieved between the 40th and 50th percentile TSR of the Index for the Performance Period, then 75% of the total PSUs awarded may be earned by the grantee on December 31, 2019 at the 40th percentile achievement, with an additional amount earned based on interpolation in relation to the cumulative performance condition.  If the Company’s TSR for the Performance Period is achieved between the 50th and 75th percentile TSR of the Index for the Performance Period, then 100% of the total PSUs awarded may be earned by the grantee on December 31, 2019 at the 50th percentile achievement, with an additional amount earned based on interpolation in relation to the cumulative performance condition.  If the Company’s TSR for the Performance Period is achieved at or above the 75th percentile TSR of the Index for the Performance Period, then 200% of the total PSUs awarded may be earned by the grantee on December 31, 2019.
 
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In the event that the Company’s TSR for the Performance Period is at or above the 30th percentile TSR of the Index for the Performance Period but is a negative amount, then the maximum number of awarded PSUs that may be earned for the Performance Period is limited to 100% of the total number of PSUs awarded.  In all events the grantee must remain continuously employed through December 31, 2019 in order to earn the PSUs.
 
RSUs granted to Ms. Tolivar. Ms. Tolivar was granted a special retention award of 150,000 RSUs in May 2017 with a total award value of $1,020,000.  These RSUs vest beginning on the second anniversary of the date of grant based upon the following vesting schedule: 20% in May 2019, 30% in May 2020 and 50% in May 2021.
 
Appointment of Mr. Martindale as Chief Executive Officer and Related Grants.  Effective on September 11, 2017, the Company appointed Mr. Martindale as the Chief Executive Officer.  In setting Mr. Martindale’s base compensation and making the inducement grants described below, the Company took into account a number of factors, including: a review of data for the chief executive officer position in the industry; the competitive marketplace; the Company’s current position in the market; and Mr. Martindale’s previous employment at a significantly larger US retail company (in terms of revenue, scope, and employees), overall prior experience, and his then current compensation package which reflected his leadership role at Rite Aid.  At the time of his appointment, it was evident that a continued repositioning and turnaround of the Company’s current marketplace position was required. For this reason, the Company made grants to induce Mr. Martindale to join the Company and to make him whole on the value of awards he would be forfeiting, described below. Such grant amounts were larger than the Company typically considers as a recurring equity grant for our Chief Executive Officer. Prior to approving the terms of Mr. Martindale’s compensation, the Compensation Committee had discussions with Korn Ferry Hay Group and reviewed the proposed terms with the independent directors. The Compensation Committee believes that these inducement grants, including the make-whole awards, align Mr. Martindale’s long-term interests with the interests of the Company’s stockholders and provide appropriate incentives to work toward achieving operational growth and stock price appreciation, as a significant portion of Mr. Martindale’s compensation is tied to the performance of the Company. In connection with his appointment as Chief Executive Officer, on September 11, 2017, Mr. Martindale received make-whole and inducement grants of (i) restricted stock in the amount of $600,000, which is fully vested with transfer restrictions that lapse on the earliest to occur of a change in control of the Company, the third anniversary of the date of grant or Mr. Martindale’s death, disability or other separation from service for any reason; (ii) restricted stock in the amount of $950,000, which became fully vested on the last trading day of December 2017 and was subject to acceleration to the extent necessary to cover any applicable income and payroll tax withholding resulting from the recognition of ordinary income pursuant to a Section 83(b) election; (iii) restricted stock in the amount of $1,200,000, which are unvested restricted shares scheduled to vest in three equal installments on each of the first three anniversaries of the date of grant subject to acceleration to the extent necessary to cover any applicable Section 83(b) tax liability; (iv) time-vested restricted stock in the amount of $1,900,000, which are unvested restricted shares scheduled to vest in three equal installments on each of the first three anniversaries of the date of grant; and (v) stock options in the amount of $1,900,000, which are scheduled to vest in three equal installments on each of the first three anniversaries of the date of grant.  The structure and base value for the initial long-term incentive grant to Mr. Martindale was determined in connection with his appointment as Chief Executive Officer, and the first three make-whole awards of restricted stock, comprised of the $600,000, $950,000 and $1,200,000 amounts, were awarded as replacement equity for awards forfeited by Mr. Martindale from his prior employer. As inducement awards, Mr. Martindale’s stock and option awards were not granted pursuant to the 2015 Stock Incentive Plan. Mr. Martindale did not receive any additional equity grants in 2017, although he participated in the regular 2018 equity grant process, and received a mix of awards similar to those as were granted to other Named Executive Officers in February 2018.
 
32

For 2018, our Named Executive Officers will receive base salary, an annual bonus opportunity and long-term incentive compensation consisting of time- and performance-based awards.  Performance-based awards are based upon an internal financial metric.
 
Summary of 2017 Named Executive Officer Awards.  The total award values for the 2017 awards for our Named Executive Officers, together with the corresponding number of (a) stock options, (b) RSUs or RSAs and (c) target PSUs awarded to each of our Named Executive Officers, is set forth below:
 
 
Name
 
Total Award
Value ($)
   
Number of Stock
Options (#)
   
Number of
RSUs or RSAs
 (#)(1)
   
Target Number of
PSUs (#)
 
                                 
Kenneth A. Martindale (2)
   
6,550,027
     
519,126
     
519,556
     
 
Tricia K. Tolivar
   
1,960,288
     
100,000
     
182,802
     
43,736
 
Timothy A. Mantel
   
710,438
     
64,770
     
26,670
     
35,560
 
Guru Ramanathan
   
291,448
     
26,571
     
10,941
     
14,588
 
Gene E. Burt
   
319,011
     
35,000
     
10,941
     
14,588
 
Robert F. Moran
   
2,807,998
     
753,773
     
     
 
Michael D. Dzura
   
     
     
     
 
Jeffrey R. Hennion
   
710,438
     
64,770
     
26,670
     
35,560
 

(1)
Mr. Martindale received only RSAs, all other individuals received RSUs.
 
(2)
Of Mr. Martindale’s total award value, $2,750,000 represents make-whole awards, which were awarded as replacement equity for awards forfeited by Mr. Martindale from his prior employer.
 
As described earlier, the performance metric for the PSU component of these long-term incentive awards is TSR.  The Compensation Committee established threshold, intermediate, target and maximum levels of achievement with respect to TSR.  Performance is measured as of the end of the three-year Performance Period on December 31, 2019.  At the threshold level of performance, 35% of the PSUs vest; at the intermediate level, 75% of the PSUs vest; at the target level, 100% of the PSUs vest; and at or above the maximum level, 200% of the PSUs vest, provided, in each case, that the executive has remained employed until the end of the Performance Period.  The applicable portion of the PSUs is forfeited if performance is below the threshold level.
 
The threshold, target and maximum levels of TSR performance for the February 2017 PSU grants are as follows:
 
Metric
 
Threshold
(35% payout)
 
Intermediate
(75% payout)
 
Target
(100% payout)
 
Maximum
(200% payout)
                 
Total Shareholder Return (1)
 
30th Percentile
 
40th Percentile
 
50th Percentile
 
75th Percentile

(1)
The Company’s TSR is measured, using a 31-day average stock price, as a percentile ranking in comparison with the Index TSR for the Performance Period.
 
Performance and related payments are interpolated between the various performance goals.
 
33

Benefits and Perquisites
 
The Company does not have a practice of providing perquisites or make payment of perquisite allowances to any of its executives, other than the perquisites provided to Mr. Moran during his tenure as Interim Chief Executive Officer, for whom the Company provided reasonable use of the Company’s corporate aircraft for purposes of commuting to and from Pittsburgh, Pennsylvania to conduct Company business and temporary housing benefits, certain relocation benefits provided to Messrs. Martindale, Burt and Mantel, and certain other minimal perquisite amounts each as identified in the Summary Compensation Table.

Non-qualified Deferred Compensation Plan
 
We maintain the GNC Live Well® Later Non-Qualified Deferred Compensation Plan for the benefit of a select group of our highly compensated employees.  Under this plan, certain eligible employees may elect to defer a portion of their future compensation under the deferred compensation plan by electing such deferral prior to the beginning of the calendar year during which the deferral amount would be earned.  Mr. Martindale, Ms. Tolivar and Messrs. Burt and Hennion made contributions to the deferred compensation plan in 2017.  For 2017, a dollar-for-dollar match with respect to the first three percent of a participant’s compensation deferred under the non-qualified deferred compensation plan was provided.  For more information regarding the deferred compensation plan, please see “2017 Non-Qualified Deferred Compensation Table” below.
 
Executive Severance Pay Policy
 
The Company maintains an Executive Severance Pay Policy (the “Executive Severance Policy”) for executive officers who are involuntarily terminated from employment and otherwise meet the requirements for benefits.  Upon an involuntary termination other than for Cause, as defined in the Executive Severance Policy, eligible executives are entitled to receive cash severance benefits of six months of base salary, in the case of Vice Presidents, or one year base salary, in the case of positions senior to Vice President.  The severance is increased to one year and two years for such positions, respectively, in the case of a termination of employment without Cause, or resignation for Good Reason, as defined in the Executive Severance Policy, occurring within 24 months following a Change in Control of Company, also as defined in the Executive Severance Policy.  Payments and benefits under the Executive Severance Policy are contingent upon the executive’s execution and non-revocation of a release of claims against the Company and compliance with covenants set forth in the Executive Severance Policy, which include confidentiality, non-competition and non-solicitation of the Company’s employees. In addition, if such executive obtains subsequent employment that is considered comparable to his or her previous employment with the Company, then the amount remaining to be paid to such executive, under the Executive Severance Policy, is offset by the annual gross base salary payable to such executive pursuant to such subsequent employment.
 
Dr. Ramanathan Employment Agreement
 
In February 2012, we entered into an amended and restated employment agreement with Dr. Ramanathan for an initial two-year term ending in February 2014, with automatic annual one-year renewals thereafter unless either party provided at least 30 days’ advance notice of non-renewal.  In early 2018, the Company and Dr. Ramanathan mutually agreed to not renew his employment agreement and that he would remain employed on an at-will basis; accordingly, his employment agreement expired in February 2018.
 
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The employment agreement provided that any incentive compensation payable to Dr. Ramanathan will be subject to the clawback policies adopted or implemented by us, including in respect of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and any rules promulgated thereunder.  Please see “Potential Payments Upon Termination or Change in Control” below for more information regarding such employment agreement and termination and payments made in connection with a change in control.
 
Mr. Martindale Employment Agreement
 
In connection with his appointment as Chief Executive Officer, we entered into a three-year employment agreement with Mr. Martindale in September 2017.
 
The employment agreement provides that any incentive compensation payable to Mr. Martindale will be subject to the clawback policies adopted or implemented by us, including in respect of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and any rules promulgated thereunder.  Please see “Potential Payments Upon Termination or Change in Control” below for more information regarding such employment agreement and termination and payments made in connection with a change in control.
 
Ms. Tolivar and Messrs. Mantel and Burt currently do not have employment agreements with the Company, and Messrs. Moran, Dzura and Hennion did not have employment agreements with the Company.
 
Mr. Moran’s Cessation as Interim Chief Executive Officer
 
Mr. Moran ceased to serve as Interim Chief Executive Officer and was elected as Non-Executive Chairman of the Board in September 2017. In connection with his ceasing to serve as Interim Chief Executive Officer, Mr. Moran’s equity awards will continue to vest based upon his service as a non-employee director.
 
Separation and Consulting Arrangement with Messrs. Dzura and Hennion
 
Mr. Dzura Separation Agreement. In connection with Mr. Dzura’s resignation, he received severance equal to his annual base salary of $510,000 payable in installments over the one-year period following his resignation.  In addition, the Company provided Mr. Dzura with a portion of his health benefits for March 2017, after which the Company provided a COBRA reimbursement for the severance period, which items totaled $12,572.  Mr. Dzura was also entitled to certain outplacement services through 2017, which resulted in an expense to the Company of $5,500.
 
Mr. Hennion Consulting Agreement.  In connection with Mr. Hennion’s resignation, he agreed to provide us with consulting services for a period not to exceed one year, unless extended, for an amount not to exceed his annual base salary of $510,000. In addition, the Company provided Mr. Hennion with a COBRA reimbursement of $18,743, and Mr. Hennion remained eligible for a pro-rata bonus for 2017 contingent upon the Company’s performance, which was not earned.
 
Impact of Accounting and Tax Considerations
 
As a general matter, the Compensation Committee reviews and considers the various tax and accounting implications of the compensation vehicles we utilize.
 
Prior to the enactment of the Tax Cuts and Jobs Act, Section 162(m) of the Internal Revenue Code generally disallowed public companies a tax deduction for compensation in excess of $1,000,000 paid to their chief executive officer and their three other most highly compensated executive officers (excluding the chief financial officer) unless certain performance and other requirements are met. As part of the Tax
 
35

Cuts and Jobs Act, the exemption from the deduction limitation for performance-based compensation provided by Section 162(m) has been repealed. This change will be effective for taxable years beginning after December 31, 2017. As a result, compensation paid to certain executive officers which exceeds $1,000,000 will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
 
For 2017, the Compensation Committee factored in the potential loss of deductibility during the pay setting approval process. Our intent generally is to design and administer executive compensation programs in a manner that will preserve deductibility of compensation paid to our executives, and, prior to the enactment of the Tax Cuts and Jobs Act, we believed that a substantial portion of our current executive compensation program (including the annual incentive program and the long-term incentive awards that may be granted under the 2015 Stock Plan) would satisfy the requirements for exemption from the $1,000,000 deduction limitation.  However, certain awards, such as the inducement awards granted to our Chief Executive Officer in connection with his appointment were not granted under a stockholder-approved plan as required for a deduction under Section 162(m). Also, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief for the exemption from the deduction limitation for performance based compensation provided by Section 162(m), there can be no assurance that any amounts paid under such compensation programs, even prior to the effectiveness of the legislative changes, will be deductible under Section 162(m), including, without limitation, in special circumstances related to other hirings and separations.
 
Additionally, we reserve the right to design programs and to structure other compensation arrangements that recognize a full range of performance criteria important to our success or that contain different terms, even where the compensation paid under such programs may not be deductible.  The Compensation Committee will, in the exercise of its business judgment, continue to monitor our executive compensation program as part of its primary objective of ensuring that compensation paid to our executives is reasonable, performance-based and consistent with our goals and the goals of our stockholders.
 
Executive Stock Ownership Guidelines
 
We believe that, to align the long-term financial interests of our executive officers with those of our stockholders, our executives should hold a financial stake in the Company.  The Board adopted a policy in December 2011 (revised most recently in February 2015) requiring our Chief Executive Officer and other executive officers to own stock in the Company (our “Executive Stock Ownership Guidelines”).  Specifically, our Executive Stock Ownership Guidelines specify that our (i) Chief Executive Officer should own Company stock with an aggregate value at least equal to six times his or her annual base salary, (ii) Executive Vice Presidents should own Company stock with an aggregate value at least equal to two times their base salaries and (iii) Senior Executive Officers subject to the Executive Stock Ownership Guidelines should own Company stock with an aggregate value at least equal to their annual base salaries.  The Executive Stock Ownership Guidelines provide that our newly appointed executive officers have five years from the date of their appointment to comply with the Executive Stock Ownership Guidelines, and should retain at least 50% of all after-tax shares owned by or underlying equity awards granted to them after December 11, 2012 until the ownership thresholds are met.  The Compensation Committee will evaluate whether exceptions should be made for any executive officer on whom this requirement would impose a financial hardship or for other appropriate reasons as determined by the Compensation Committee.  For the purposes of the Executive Stock Ownership Guidelines, Company stock includes (i) directly held shares of our common stock, (ii) shares of unvested restricted stock or RSUs (other than unvested shares of performance-vested restricted stock or unvested PSUs) and
 
36

(iii) vested shares of our common stock held in any plan qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended.
 
Policy on Hedging and Pledging of Company Stock
 
We have a policy applicable to our directors and all of our employees, including our Named Executive Officers, that prohibits such persons from (i) within six months after purchasing any Company securities, selling any Company securities of the same class, (ii) selling the Company’s securities short, (iii) buying or selling puts or calls or other derivative securities on the Company’s securities, (iv) holding Company securities in a margin account or pledging Company securities as collateral for a loan or (v) entering into hedging or monetization transactions or similar arrangements with respect to Company securities.
 
37

COMPENSATION COMMITTEE REPORT
 
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in these proxy materials.  Based on the Compensation Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in these proxy materials and incorporated by reference in the Annual Report for filing with the SEC.
 
The foregoing report is provided by the following directors, who constitute the Compensation Committee:
 
 
COMPENSATION AND ORGANIZATIONAL DEVELOPMENT COMMITTEE
 
Richard J. Wallace (Chairperson)
 
Amy B. Lane
 
Philip E. Mallott
 
38

NAMED EXECUTIVE OFFICER COMPENSATION
 
Summary Compensation Table
 
The following table sets forth information concerning the compensation we paid to the Named Executive Officers for services rendered in all capacities as employees to us during our last three fiscal years.  In accordance with SEC rules, the compensation described in this table does not include the value of medical or group life insurance received by the Named Executive Officers that is available generally to all of our salaried employees.  Only 2017 compensation is presented for Mr. Martindale, because 2017 was his first year as an employee of the Company.  Only 2017 and 2016 compensation is presented for Mr. Moran and Mr. Mantel, because neither was employed with the Company during 2015.  A “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column is not presented because none of our Named Executive Officers participate in a pension plan or receive above-market or preferential earnings on nonqualified deferred compensation.
 
Name and Principal Position
 
Year
 
Salary
($)
   
Bonus
($) (1)
   
Stock
Awards
($) (2)
   
Option
Awards
($) (3)
   
Non-Equity
Incentive
Plan
Compensation
($) (4)
   
All Other
Compensation
($) (5)
   
Total ($)
 
                                               
Kenneth Martindale
Chief Executive Officer
 
2017
   
262,500
     
     
4,650,026
     
1,900,001
     
     
105,625
     
6,918,152
 
                                                           
                                                             
Tricia Tolivar
Executive Vice President, Chief Financial Officer and Interim Chief Marketing Officer
 
2017
   
514,033
     
     
1,633,288
     
327,000
     
     
15,446
     
2,489,767
 
 
2016
   
450,571
     
     
802,271
     
300,000
     
     
16,436
     
1,569,278
 
 
2015
   
343,269
     
75,000
     
750,000
     
     
46,753
     
85,608
     
1,300,630
 
                                                             
Tim Mantel
Former Executive Vice President, Chief Merchandising Officer
 
2017
   
499,990
     
     
498,640
     
211,798
     
     
5,031
     
1,215,459
 
                                                           
                                                           
                                                             
Guru Ramanathan
Senior Vice President and Chief Innovation Officer
 
2017
   
429,998
     
     
204,561
     
86,887
     
     
1,002
     
722,448
 
 
2016
   
397,471
     
     
240,661
     
90,000
     
     
1,022
     
729,154
 
 
2015
   
372,618
     
     
350,000
     
     
37,806
     
11,650
     
772,074
 
                                                             
Gene Burt
Executive Vice President,
Chief Merchandising Officer and Chief Supply Chain Officer
 
2017
   
354,616
     
75,000
     
204,561
     
114,450
     
     
31,595
     
780,222
 
                                                           
                                                           
                                                           
                                                             
Robert Moran
Former Interim Chief Executive Officer (6)
 
2017
   
697,000
     
608,967
     
     
2,807,998
     
     
410,283
     
4,524,248
 
 
2016
   
415,000
     
450,000
     
1,000,000
     
     
     
290,455
     
2,155,455
 
                                                             
Michael Dzura (7)
Former Executive Vice President, Operations
 
2017
   
137,306
     
     
     
     
     
417,645
     
554,951
 
 
2016
   
507,304
     
     
561,576
     
210,000
     
     
17,223
     
1,296,103
 
 
2015
   
442,307
     
30,000
     
625,000
     
375,000
     
60,242
     
40,797
     
1,573,346
 
                                                             
Jeffrey Hennion (7)
Former Executive Vice President, Chief Marketing and e-Commerce Officer
 
2017
   
232,689
     
     
498,640
     
211,798
     
     
303,124
     
1,246,251
 
 
2016
   
495,713
     
     
681,923
     
255,000
     
     
15,843
     
1,448,479
 
 
2015
   
480,304
     
     
600,000
     
     
65,417
     
14,758
     
1,160,479
 
 
39

(1)
For 2017, reflects (i) two discretionary incentive bonus payments of $498,000 and $110,967 for the periods of February 2017 through July 2017 and August 2017 through September 11, 2017, respectively, paid to Mr. Moran for his performance as Interim Chief Executive Officer, which were not subject to the 2017 Incentive Plan, and (ii) a $75,000 sign-on bonus paid to Mr. Burt in February 2017 in order to incentivize him to accept his position with the Company. For 2016, reflects a $450,000 bonus paid in February 2017, based on the Compensation Committee’s assessment of Mr. Moran’s extraordinary efforts, contributions and leadership.  For 2015, reflects signing bonuses paid to Ms. Tolivar and Mr. Dzura.
(2)
For 2017, reflects the aggregate grant date fair value of the RSUs and PSUs granted to Ms. Tolivar, Dr. Ramanathan and Messrs. Mantel, Burt and Hennion in February 2017, which have been computed in accordance with FASB ASC Topic 718.   Additionally, this reflects RSUs granted to Ms. Tolivar in May 2017 and includes RSAs granted to Mr. Martindale in September 2017, each of which has been computed in accordance with FASB ASC Topic 718.  For 2016, reflects the aggregate grant date fair value of the PSUs and the RSUs included as part of
 
40

incentive awards granted to Ms. Tolivar, Dr. Ramanathan, and Messrs. Dzura and Hennion in February 2016 and the RSUs to Mr. Moran in connection with his appointment as Interim Chief Executive Officer, which has been computed in accordance with FASB ASC Topic 718.  For 2015, reflects (i) the aggregate grant date fair value of time-vested restricted stock and the RSUs granted, which have been computed in accordance with FASB ASC Topic 718 and (ii) the aggregate grant date fair value of PSAs granted to Messrs. Dzura and Hennion and Dr. Ramanathan in February 2015 and included as part of incentive awards granted to Ms. Tolivar in March 2015.  The grant date values for the PSAs and the PSUs have been determined assuming 100% of target performance is achieved.  If maximum share payouts were achieved for the PSUs, the aggregate grant date fair value for these units would be twice the amount disclosed in each year in the table related to the PSAs and the PSUs.  If we assume the maximum 200% of target performance would be achieved, the grant date values of (a) the PSUs granted to Ms. Tolivar, Dr. Ramanathan and Messrs. Mantel, Burt and Hennion in 2017 would be $702,400, $234,283, $571,094, $234,283, and $571,094, respectively, (b) the PSUs granted to Ms. Tolivar, Dr. Ramanathan, Mr. Dzura and Mr. Hennion in 2016 would be $1,004,541, $301,321, $703,151, $853,846, respectively, and (c) the PSAs granted to Ms. Tolivar, Dr. Ramanathan, Mr. Dzura and Mr. Hennion in 2015 would be $750,000, $350,000, $500,000 and $600,000, respectively.  For the assumptions underlying the calculation of the aggregate grant date fair value, see Note 14, “Stock-Based Compensation,” to our audited consolidated financial statements included in the Annual Report.  The amounts shown in the table may not correspond to the actual value that may be realized by such persons with respect to these awards.
(3)
Reflects the aggregate grant date fair value of options granted during each fiscal year, which has been computed in accordance with FASB ASC Topic 718.  For the assumptions underlying the calculation of the aggregate grant date fair value, see Note 14, “Stock-Based Compensation,” to our audited consolidated financial statements included in the Annual Report.  The amounts may not correspond to the actual value that may be realized by such persons with respect to these awards.
(4)
Reflects the non-discretionary component of cash incentive compensation.
(5)
The components of “All Other Compensation” for our fiscal year ended December 31, 2017 are set forth in the following table:
 
Named
Executive
Officer
 
Perquisites
($) (a)
   
Imputed
Value
for Life
Insurance
Premiums
($)
   
Company
Contributions
to Deferred
Compensation
Plan ($) (b)
   
Severance
($) (c)
   
Consulting
Fees
($) (d)
   
Total
($)
 
                                     
Kenneth Martindale
   
100,000
     
     
5,625
     
     
     
105,625
 
Tricia Tolivar
   
190
     
360
     
14,896
     
     
     
15,446
 
Tim Mantel
   
4,671
     
360
     
     
     
     
5,031
 
Guru Ramanathan
   
450
     
552
     
     
     
     
1,002
 
Gene Burt
   
22,805
     
349
     
8,441
     
     
     
31,595
 
Robert Moran
   
408,173
     
2,110
     
     
     
     
410,283
 
Michael Dzura
   
175
     
426
     
     
417,044
     
     
417,645
 
Jeffrey Hennion
   
175
     
255
     
6,981
     
     
295,713
     
303,124
 
 
41

  (a)
For Messrs. Martindale, Mantel and Burt, this column includes $100,000, $4,491 and $22,425, respectively, of relocation expenses.  For Messrs. Mantel and Burt, this amount reflects the actual cost incurred by such NEOs in relocating.  For Mr. Martindale, this amount reflects a contractually agreed relocation amount.  For the individuals other than Messrs. Martindale, Mantel, Burt and Moran, the column only includes taxable parking benefits.  For Messrs. Mantel and Burt, this column also includes $180 and $380 in taxable parking benefits, respectively.  For Mr. Moran, this column reflects: (i) $279,663 of incremental cost to the Company associated with personal use of corporate aircraft, (ii) $88,379 in temporary corporate housing and parking in Pittsburgh, and (iii) $40,131 of gross-up amounts reimbursed for the payment of taxes.  The amounts disclosed represent aggregate incremental costs, including the incremental cost of Mr. Moran’s personal use of a corporate aircraft calculated in the following manner.  Personal use of corporate aircraft is calculated by using an incremental cost method that multiplies the hours flown on a personal flight by the hourly direct operating charge for the aircraft used.  In addition, incremental costs for landing fees, crew hotels and meals, on-board catering and taxes for personal flights are also included.  Since the Company aircraft is used primarily for business travel, this calculation methodology excludes the fixed costs which do not change based on usage, such as pilots’ salaries, the lease costs of Company aircraft, and the costs of maintenance.  During 2017, Messrs. Martindale and Moran were each provided with access to a parking space to use at our corporate headquarters in Pittsburgh, which was provided as a perquisite at no incremental cost to the Company.
(b)
Reflects matching contributions by the Company with respect to compensation deferred by each executive pursuant to the Company’s Non-Qualified Deferred Compensation Plan.  For more information, see the “2017 Non-Qualified Deferred Compensation Table” below.
(c)
For Mr. Dzura, reflects severance equal to $402,115 representing base salary, $9,429 representing the COBRA continuation coverage paid during 2017, and $5,500 representing outplacement services through 2017.
(d)
For Mr. Hennion, reflects consulting fees of $286,413 and $9,300 representing the COBRA continuation coverage paid during 2017 in connection with the consulting services provided by Mr. Hennion.
(6)
Mr. Moran ceased to serve as Interim Chief Executive Officer and was elected as Non-Executive Chairman of the Board in September 2017. Fees received for his service as an outside Director beginning in September 2017 are not reflected in the table above but are disclosed under the “Director Compensation” section above.
(7)
Upon their separation from service, Messrs. Dzura’s and Hennion’s equity awards were treated in accordance with the terms of the underlying plans and award agreements, pursuant to which unvested awards were forfeited.
 
42

2017 Grants of Plan Based Awards Table
 
The following table sets forth information concerning awards under the 2015 Stock Plan and the 2017 Incentive Plan granted to each of the Named Executive Officers during our fiscal year ended December 31, 2017 and, for Mr. Martindale, equity awards granted in September 2017 as make-whole and inducement awards in connection with the commencement of his employment, which were not issued under any stockholder approved plan.  Assumptions used in the calculation of certain dollar amounts are included in Note 14 “Stock-Based Compensation,” to our audited consolidated financial statements included in the Annual Report.
 
   
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (1)
   
Estimated Future Payouts
Under Equity Incentive Plan
Awards (2)
   
All
Other
Stock
Awards:
Number
of
   
All
Other
Option
Awards:
Number
of
   
Exercise
 Price of
   
Grant
Date Fair
Value of
Stock
and
 Option
 
Name
 
Grant
Date
 
Threshold
($)
   
Target
($)
   
Maximum
($)
   
Threshold
(#)
   
Target
(#)
   
Maximum
(#)
   
Shares
(#)
   
Shares
(#)
   
Options
($)
   
Awards
($) (3)
 
                                                                 
Kenneth Martindale
 
9/11/2017
   
482,625
     
1,462,500
     
2,925,000
     
     
     
     
519,556
     
519,126
     
8.95
     
6,550,027
 
                                                                                     
Tricia Tolivar
 
2/22/2017
5/11/2017
   
100,980
     
306,000
     
612,000
     
15,308
     
43,736
     
87,472
     
32,802
150,000
     
100,000
     
7.99
     
940,288
1,020,000
 
                                                                                     
Tim Mantel
 
2/22/2017
   
99,000
     
300,000
     
600,000
     
12,446
     
35,560
     
71,120
     
26,670
     
64,770
     
7.99
     
710,438
 
                                                                                     
Guru Ramanathan
 
2/22/2017
   
63,855
     
193,500
     
387,000
     
5,106
     
14,588
     
29,176
     
10,941
     
26,571
     
7.99
     
291,448
 
                                                                                     
Gene Burt
 
2/22/2017
   
57,173
     
173,250
     
346,500
     
5,106
     
14,588
     
29,176
     
10,941
     
35,000
     
7.99
     
319,011
 
                                                                                     
                                                                                     
Robert Moran (4)
 
2/22/2017
7/28/2017
   
     
498,000
     
     
     
     
     
     
400,000
353,773
     
7.99
10.17
     
1,308,000
1,499,998
 
                                                                                     
Michael Dzura
 
2/22/2017
   
100,980
     
306,000
     
612,000
     
     
     
     
     
     
     
 
                                                                                     
Jeffrey Hennion
 
2/22/2017
   
100,980
     
306,000
     
612,000
     
12,446
     
35,560
     
71,120
     
26,670
     
64,770
     
7.99
     
710,438
 
 
43

(1)
The amounts for Mr. Martindale represent threshold, target and maximum payout amounts under the terms of his employment agreement.  The amount for Mr. Moran represents the payment amount determined by the Board.  There were no threshold or maximum amounts established for Mr. Moran.  The amounts for the other Named Executive Officers represent the threshold, target and maximum payout amounts under the 2017 Incentive Plan.  See “Compensation Discussion and Analysis – Elements of Compensation – Annual Cash Incentive Compensation” above for more information regarding the thresholds under the 2017 Incentive Plan.
(2)
The amounts represent the threshold, target and maximum number of shares of our common stock that may be earned under the PSU awards.  The PSU awards also provide for an intermediate number of shares of our common stock that may be earned, which falls between the threshold and target.  The intermediate number of shares, under the 2017 grants, is 32,802, 26,670, 10,941, 10,941 and 26,670 for Ms. Tolivar, Mr. Mantel, Dr. Ramanathan, Mr. Burt and Mr. Hennion, respectively.  The PSUs are scheduled to vest on December 31, 2019 subject to company performance and each officer’s continued employment.  See “Compensation Discussion and Analysis – Elements of Compensation – Long Term Incentive Compensation” above for more information regarding the PSUs.
(3)
For Mr. Martindale, reflects the grant date fair value of the stock options and restricted stock awarded to him on September 11, 2017, computed in accordance with FASB ASC Topic 718.  For our other Named Executive Officers, reflects the aggregate grant date fair value of the stock options, the RSUs and the target PSUs granted to them in February 2017, computed in accordance with FASB ASC Topic 718.  For Ms. Tolivar, this column also reflects the amount of the restricted stock award granted in May 2017 and, for Mr. Moran, this column also reflects the amount of the option award granted in July 2017, each computed in accordance with FASB ASC Topic 718.  For the assumptions underlying the calculation of the aggregate grant date fair value, see Note 14, “Stock-Based Compensation,” to our audited consolidated financial statements included in the Annual Report.  The amounts shown in the table may not correspond to the actual value that may be realized by such persons with respect to these awards.
(4)
Option amounts represents two option awards granted to Mr. Moran in 2017 in his capacity as Interim Chief Executive Officer of the Company.  Mr. Moran did not receive any stock awards during 2017 in his capacity as a director of the Company.
 
44

Outstanding Equity Awards as of December 31, 2017
 
The following table sets forth information regarding outstanding equity awards held by the Named Executive Officers under the 2007 Stock Plan, the 2011 Stock Plan and the 2015 Stock Plan as of December 31, 2017 and, for Mr. Martindale, equity awards granted in September 2017 as make-whole and inducement awards in connection with the commencement of his employment which were not issued under any stockholder approved plan.
 
   
Option Awards (1)
   
Stock Awards
 
Name
 
Date of
Grant
 
Exercisable
   
Unexercisable
   
Option
Exercise
Price($)
   
Option
Expiration
Date
   
Number
of
Restricted
Shares
and
RSUs
That
Have
Not Yet
Vested
(#) (2)
   
Market
Value of
Restricted
Shares
and
RSUs
That
Have
Not Yet
Vested
($) (3)
   
Equity
Incentive
Plan
Awards:
Number
of
Unearned
PSUs
(#) (4)
   
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
PSUs
($) (3)
 
                                                     
Kenneth Martindale
 
9/11/2017
   
     
519,126
     
8.95
   
9/11/2027
     
281,815
     
1,039,897
     
     
 
                                                                   
Tricia Tolivar
 
3/2/2015
   
     
     
     
     
2,571
     
9,487
     
     
 
 
 2/16/2016
   
12,437
     
37,314
     
27.30
   
2/16/2026
     
7,326
     
27,033
     
5,128
     
18,923
 
 
 2/22/2017
   
     
100,000
     
7.99
   
2/22/2027
     
32,802
     
121,039
     
15,308
     
56,487
 
 
 5/11/2017
   
     
     
     
     
150,000
     
553,500
     
     
 
                                                                     
Tim Mantel
 
2/8/2016
   
16,652
     
49,955
     
26.11
   
2/8/2026
     
9,574
     
35,328
     
     
 
 
 2/16/2016
   
     
     
     
     
     
     
3,205
     
11,826
 
 
 2/22/2017
   
     
64,770
     
7.99
   
2/22/2027
     
26,670
     
98,412
     
12,446
     
45,926
 
                                                                     
Guru Ramanathan
 
2/4/2010
   
15,000
     
     
13.18
   
2/4/2020
     
     
     
     
 
 
 2/4/2010
   
15,000
     
     
8.79
   
2/4/2020
     
     
     
     
 
 
 4/21/2011
   
30,000
     
     
18.82
   
4/21/2018
     
     
     
     
 
 
 12/12/2011
   
18,238
     
     
27.70
   
12/12/2018
     
     
     
     
 
 
 11/5/2012
   
6,679
     
     
36.16
   
11/5/2019
     
     
     
     
 
 
 2/18/2015
   
     
     
     
     
1,187
     
4,380
     
     
 
 
 2/16/2016
   
3,731
     
11,194
     
27.30
   
2/16/2026
     
2,197
     
8,107
     
1,538
     
5,676
 
 
 2/22/2017
   
     
26,571
     
7.99
   
2/22/2027
     
10,941
     
40,372
     
5,106
     
18,841
 
                                                                     
Gene Burt
 
2/22/2017
   
     
35,000
     
7.99
   
2/22/2027
     
10,941
     
40,372
     
5,106
     
18,841
 
                                                                     
Robert Moran
 
8/1/2016
   
     
     
     
     
33,383
     
123,183
     
     
 
 
 2/22/2017
   
     
400,000
     
7.99
   
2/22/2027
     
     
     
     
 
 
 7/28/2017
   
     
353,773
     
10.17
   
7/28/2027
     
     
     
     
 
                                                                     
Michael Dzura
       
     
     
     
     
     
     
     
 
                                                                     
Jeffrey Hennion
       
     
     
     
     
     
     
     
 
 
45

(1)
Time-vested stock option awards made under the 2007 Stock Plan, the 2011 Stock Plan and the 2015 Stock Plan vest in four equal annual installments commencing on the first anniversary of the date of grant, subject to continuing employment. Time-vested stock options granted to Mr. Martindale pursuant to his inducement awards vest in three equal installments commencing on the first anniversary of the date of grant, subject to continuing employment.
(2)
Includes time-vested restricted stock and RSUs awarded under the 2007 Stock Plan, the 2011 Stock Plan and the 2015 Stock Plan, which generally vest in three equal annual installments commencing on the first anniversary of the date of grant, subject to continuing employment.  Also includes RSAs awarded to Mr. Martindale as make-whole and inducement awards, not under any stockholder approved plan, a portion of which were fully vested on grant, a portion of which vested on the last trading day in 2017 and a portion of which vest in three equal annual installments commencing on the first anniversary of the date of grant.
(3)
Market value is based on the closing price of our Common Stock of $3.69 per share on December 29, 2017.
(4)
Represents the threshold number of the PSUs granted in 2017 and 2016 under the 2015 Stock Plan.  The PSAs granted in 2015, under the 2011 Stock Plan, were scheduled to vest on December 31, 2017 (threshold performance was not achieved and no portion of this award vested).  The PSUs granted in 2016 are scheduled to vest on December 31, 2018 and the PSUs granted in 2017 are scheduled to vest on December 31, 2019, in each case subject to Company performance and the Named Executive Officer’s continued employment.  The threshold award shown above represents 35% of the target award for the 2017 and 2016 awards; the actual number of PSUs that may be earned may range from 0% to 200% of the target number, as described under “Compensation Discussion and Analysis – Long-Term Incentive Compensation” above.
 
46

2017 Option Exercises and Stock Vested Table
 
The following table sets forth information regarding the vesting of RSUs and restricted stock and exercise of options by the Named Executive Officers during our fiscal year ended December 31, 2017.
 
   
Option Awards
   
Stock Awards
 
 
 
Name
 
Number of
Shares
Acquired on
Exercise (#)
   
Value Realized
on Exercise ($)
   
Number of
Shares
Acquired Upon
Vesting (#) (1)
   
Value Realized
Upon Vesting
($) (2)
 
                         
Kenneth Martindale
   
     
     
237,741
     
2,127,782
 
Tricia Tolivar
   
     
     
6,234
     
48,744
 
Tim Mantel
   
     
     
4,788
     
38,639
 
Guru Ramanathan
   
     
     
3,217
     
24,666
 
Gene Burt
   
     
     
     
 
Robert Moran
   
     
     
21,140
     
194,238
 
Michael Dzura
   
     
     
5,412
     
44,372
 
Jeffrey Hennion
   
     
     
5,149
     
39,587
 
 
(1)
For Mr. Martindale, reflects the gross number of shares acquired upon vesting of his September 2017 restricted stock award.  For Ms. Tolivar, reflects the gross number of shares acquired upon vesting of (i) the second tranche of her March 2015 restricted stock award and (ii) the first tranche of her February 2016 RSU award.  For Mr. Mantel, reflects the gross number of shares acquired upon vesting of the first tranche of his February 2016 RSU award.  For Dr. Ramanathan, reflects the gross number of shares acquired upon the vesting of (i) the third tranche of his February 2014 RSU award, (ii) the second tranche of his February 2015 restricted stock award, and (iii) the first tranche of his February 2016 RSU award.  For Mr. Moran, reflects the gross number of shares acquired upon the vesting of the first tranche of his August 2016 RSU award and the gross number of restricted shares granted to Mr. Moran, prior to his appointment as Interim Chief Executive Officer, in his capacity as a non-employee director on May 23, 2016, which vested on May 23, 2017, 4,448 shares valued at $32,159, which were deferred until separation from service.  For Mr. Dzura, reflects the gross number of shares acquired upon the vesting of (i) the second tranche of his February 2015 restricted stock award and (ii) the first tranche of his February 2016 RSU award. For Mr. Hennion, reflects the gross number of shares acquired upon the vesting of (i) the second tranche of his February 2015 restricted stock award and (ii) the first tranche of his February 2016 RSU award.
(2)
Market value is based on the average of the high and low trading prices for our Common Stock on the NYSE on the date of vesting.
 
47

2017 Non-Qualified Deferred Compensation Table
 
We maintain the GNC Live Well® Later Non-Qualified Deferred Compensation Plan for the benefit of a select group of our highly compensated executives.  Under this plan, certain eligible employees may elect to defer a portion of their future salary and bonus compensation up to a maximum of 80% of salary and 100% of bonus, or such other specified limit established by the Company, until a specified future year, or until retirement.  We may in our discretion elect to make a matching contribution to the plan for a calendar year, based on amounts deferred by participants for that year.  Participants may select the investment fund or funds in which such deferred amounts are deemed to be invested for the purpose of crediting deferrals with earnings, and investment gains and losses.  The Company’s contributions to the Non-Qualified Deferred Compensation Plan become fully vested after three years from the start of the year of deferral.  Participants receive vested distributions on elected scheduled withdrawal dates or upon separation from service.
 
Mr. Martindale, Ms. Tolivar, and Messrs. Burt and Hennion each elected to make contributions to the deferred compensation plan in 2017.  The following table identifies, for each Named Executive Officer, his or her contributions, our contributions, the aggregate earnings and withdrawals in 2017 and the aggregate balance as of December 31, 2017:
 
Name
 
Executive
Contributions
in Last Fiscal
Year
(1)
   
Registrant
Contributions
in Last Fiscal
Year
(2)
   
Aggregate
Earnings in
Last Fiscal
Year
(3)
   
Aggregate
Withdrawals/
Distributions
 
 
   
Aggregate
Balance at
Last
Fiscal Year
End
(4)
 
Kenneth Martindale
 
$
11,250
   
$
5,625
   
$
211
   
$
0
   
$
17,086
 
Tricia Tolivar
 
$
29,792
   
$
14,896
   
$
13,058
   
$
0
   
$
127,573
 
Tim Mantel
 
$
0
   
$
0
   
$
0
   
$
0
   
$
0
 
Guru Ramanathan
 
$
0
   
$
0
   
$
53,298
   
$
0
   
$
309,036
 
Gene Burt
 
$
16,881
   
$
8,441
   
$
61
   
$
0
   
$
25,383
 
Robert Moran
  $
0
   
0
   
0
   
0
   
0
 
Michael Dzura (5)
 
$
0
   
(31,532
)
 
$
8,454
   
$
63,063
   
$
0
 
Jeffrey Hennion
 
$
13,961
   
$
6,981
   
$
13,647
   
$
0
   
$
111,584
 
 
(1)
Amounts reflected are included in the “Salary” column of the Summary Compensation Table above.
(2)
Amounts reflected are included in the “All Other Compensation” column of the Summary Compensation Table above.
(3)
Amounts reflected are not included as compensation for the relevant Named Executive Officers in the Summary Compensation Table above.
(4)
For Ms. Tolivar, Mr. Dzura, and Mr. Hennion the amount reported includes $40,551, $45,657, and $44,614, respectively, previously earned, but deferred, salary and matching contributions reported in our Summary Compensation Table for 2016 and $26,154, $34,615, and $28,818, respectively, for 2015.  For Dr. Ramanathan, the amount reported includes $48,091 previously earned, but deferred, salary and matching contributions reported in our Summary Compensation Table for 2015 and $58,704 for 2014 and $58,925 for 2013.
(5)
Upon Mr. Dzura’s resignation, he forfeited $31,532 of unvested employer contributions. This amount had been previously reflected in the “All Other Compensation” column of the Summary Compensation Table in prior years, but the forfeiture of this amount is not deducted from the “All Other Compensation” column of the Summary Compensation Table above.
 
48

Potential Payments Upon Termination or a Change in Control
 
The termination and change in control arrangements for the Named Executive Officers (other than Mr. Martindale and Dr. Ramanathan who had employment agreements with the Company during 2017) are generally governed by Company policy.  As such, these arrangements generally are uniform and not highly negotiated.  The Compensation Committee does not generally consider the amounts payable in connection with termination and change in control events when establishing the compensation of the Named Executive Officers.  The Compensation Committee, together with the Board, established the termination and change of control arrangements described herein to address and conform to our: overall compensation objectives in attracting and retaining the caliber of executives that are integral to our growth; market competitiveness; maintaining management continuity, particularly through periods of uncertainty related to change in control events; providing our key personnel with the assurance of equitable treatment following a change in control and other events; and ensuring that our management is held to high standards of integrity and performance.
 
In general, such policies and arrangements are evidenced by the Company’s Executive Severance Policy, as described in the Compensation Discussion and Analysis section of this proxy statement.  Under the Executive Severance Policy, a “Change in Control” occurs if or upon: (i) any person or entity becomes the beneficial owner of securities representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities; (ii) the majority of the Board is no longer made up of continuing directors as described in the Executive Severance Policy; (iii) the consummation of certain mergers or consolidations of the Company; or (iv) stockholder approval of certain plans of complete liquidation or dissolution or the consummation of agreements for the sale or disposition of all or substantially all of the Company’s assets.
 
The following is a summary of the termination and change of control provisions in the employment agreements for each of Mr. Martindale and Dr. Ramanathan and the policies and arrangements otherwise applicable to the Named Executive Officers as of December 31, 2017.  Dr. Ramanathan continues to be employed by the Company, although his employment agreement with the Company expired as of February 2018.
 
Mr. Martindale
 
Mr. Martindale’s employment agreement provides for certain benefits upon termination of employment.  Upon Mr. Martindale’s death or disability, he (or his estate) is entitled to any unpaid salary, accrued but unpaid vacation, accrued and vested welfare and retirement benefits and all reimbursable business expenses through the date of termination (“accrued obligations”), any unpaid annual bonus for the year prior to the year of termination, and a prorated annual bonus for the year of termination, based on the actual period of employment and actual level of achievement of the performance objectives for the year of termination.  Also, in such cases, Mr. Martindale’s time-vesting equity awards would immediately vest; and any performance-vesting awards would become vested at a prorated actual amount, based on the actual period of employment and actual level of achievement of the performance objectives.
 
Upon termination of employment by us without cause, including a non-renewal of the employment term, or voluntarily by Mr. Martindale for good reason, subject to the execution of a written release, he is also entitled to:
 
two years’ base salary;
two times the average actual bonus paid in respect of each of the two fiscal years immediately preceding the date of termination, or in the case of a termination within 24 months of a Change in Control, two times the target bonus;
 
49

any unpaid annual bonus for the year prior to the year of termination, and a prorated annual bonus for the year of termination, based on the actual period of employment and actual level of achievement of the performance objectives for the year of termination; and
reimbursement for any portion of the monthly cost of COBRA coverage that exceeds the amount of monthly health insurance premium (with respect to Mr. Martindale’s coverage and any eligible dependent coverage) payable by Mr. Martindale immediately prior to such termination, such reimbursements to continue for up to 18 months.

Also, in such cases, Mr. Martindale’s “sign-on” equity awards would immediately vest; any time-vesting equity awards (other than sign-on awards) that would have vested within 24 months following the date of termination shall immediately vest; and any performance-vesting awards shall become vested at a prorated actual amount, based on the actual period of employment and actual level of achievement of the performance objectives.  The total amount payable may be subject to reduction to the extent Mr. Martindale would be subject to an excise tax as an excess parachute amount.

For purposes of Mr. Martindale’s employment agreement, “cause” generally means his:
 
failure to comply with any material obligation imposed by his employment agreement;
being convicted (including a plea of nolo contendere) to a misdemeanor that causes substantial economic harm to us, or a felony;
intentional theft or embezzlement or fraud in connection with the performance of his duties;
engaging in any activity that gives rise to a material conflict of interest with us;
intentional misappropriation of any of our material business opportunities;
willful or reckless material failure to comply with, observe or carry out our rules, regulations, policies or codes of ethics or conduct;
substance abuse or illegal use of drugs that impairs his performance or causes or is likely to cause substantial harm to us; or
intentional or reckless engagement in conduct that he knows or should know is materially injurious to us.

For purposes of Mr. Martindale’s employment agreement, “good reason” generally means, without Mr. Martindale’s prior written consent and unless we timely cure the good reason:
 
our material failure to comply with material obligations under his employment agreement;
a reduction by us of his titles, positions, status or authority or a material reduction by us of his responsibilities and duties other than due to a temporary period of incapacity;
our removal of him from the position of Chief Executive Officer, or failure to elect (or nominate) him to, or removal other than for cause, from the Company or the General Nutrition Centers, Inc. boards of directors; or
a material reduction in his base salary or target bonus.
 
For purposes of Mr. Martindale’s employment agreement, “change in control” is as defined in the Company’s 2015 Stock and Incentive Plan, which is generally the same as the definition provided in the Executive Severance Policy.
 
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Dr. Ramanathan
 
Dr. Ramanathan’s employment agreement was effective during 2017.  Dr. Ramanathan continues to be employed by the Company, although his employment agreement expired as of February 2018.  During 2017, his employment agreement provided for certain benefits upon termination of employment.  Upon Dr. Ramanathan’s death or disability, he (or his estate) would have been entitled to his then-current base salary for the remainder of the employment period, and, subject to the discretion of the Board or the Compensation Committee, a pro rata share of his current year annual bonus, based on actual employment, provided bonus targets are met.  The employment period was the two-year period from the initial effective date of the employment agreement and for one-year periods thereafter.  Upon termination of employment by us without cause or voluntarily by Dr. Ramanathan for good reason, subject to the execution of a written release, he was also entitled to:
 
salary continuation generally for one year or two years if the termination occurred upon or within six months following a change in control;
subject to the discretion of the Board or the Compensation Committee, a pro rata share of the annual bonus based on actual employment and achievement of performance objectives; and
reimbursement for any portion of the monthly cost of COBRA coverage that exceeded the amount of monthly health insurance premium (with respect to Dr. Ramanathan’s coverage and any eligible dependent coverage) payable by Dr. Ramanathan immediately prior to such termination, such reimbursements to continue through the expiration of the agreement term or the severance period, if earlier.

For purposes of Dr. Ramanathan’s employment agreement, “cause” generally meant his:
 
failure to comply with any material obligation imposed by his employment agreement;
being indicted for any felony or any misdemeanor that caused or was likely to cause harm or embarrassment to us, in the reasonable judgment of the Board;
theft, embezzlement or fraud in connection with the performance of his duties;
engaging in any activity that gave rise to a material conflict of interest with us;
misappropriation of any of our material business opportunities;
any failure to comply with, observe or carry out our or the Board’s rules, regulations, policies or codes of ethics or conduct;
substance abuse or illegal use of drugs that, in the reasonable judgment of the Board, impaired his performance or caused or was likely to cause harm or embarrassment to us; or
engagement in conduct that he knew or should have known was injurious to us.

For purposes of Dr. Ramanathan’s employment agreement, “good reason” generally means, without Dr. Ramanathan’s prior written consent and unless we timely cured the good reason:
 
our failure to comply with material obligations under his employment agreement; or
a material reduction in his base salary.

For purposes of Dr. Ramanathan’s employment agreement, “change in control” generally meant:
 
an acquisition representing 50% or more of either our Common Stock or the combined voting power of our securities entitled to vote generally in the election of the Board; or
the approval by our stockholders of (i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition (other than a merger or consolidation) of all or substantially all of our or our subsidiaries’ assets.
 
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Under all circumstances, Dr. Ramanathan’s unvested equity awards would have been forfeited as of the date of his termination unless otherwise provided in the award agreement.  The employment agreement with Dr. Ramanathan provided that if any payment or benefit was subject to or result in the imposition of the excise tax imposed by Code Section 4999, then the amount of such payment or payments would have been reduced to the highest amount that may be paid by us without subjecting such payment to the excise tax.
 
Tabular Presentation.  The following table quantifies the estimated payments and benefits that the Named Executive Officers would have received if their employment had terminated on December 31, 2017 under the circumstances shown or if we had undergone a change in control on such date.  The tables exclude (i) compensation amounts accrued through December 31, 2017 that would be paid in the normal course of continued employment, such as accrued but unpaid salary and bonus, and (ii) vested account balances under our 401(k) plan that are generally available to all of our salaried employees.
 
Where applicable, the information in the table uses a fair market value per share of $3.69 for our Common Stock, which is equal to the closing price of our Common Stock on December 29, 2017.
 
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Named Executive Officer
 
Resignation
for Good
Reason (1)
   
Retirement
   
By Company
Without Cause
   
Termination
Without
Cause or for
Good
Reason
Following a
Change of
Control
   
Death
 
                               
Kenneth A. Martindale (2)
                             
Cash Severance (3)
 
$
1,950,000
   
$
1,950,000
   
$
1,950,000
   
$
1,950,000
     
 
Pro-rated Bonus (3)
 
$
2,925,000
   
$
2,925,000
   
$
2,925,000
   
$
2,925,000
     
 
Health and Welfare Benefits (4)
 
$
23,572