For fiscal 2025, the salaries of the NEOs were increased by 3.5%-4% to $1,300,000 for the CEO, $672,750 for Ms. DeMarsilis, $621,000 for Mr. Soltani, $465,750 for Mr. Sussis and $465,750 for Ms. Kennedy.
Performance-Based Annual Incentive Compensation – Structure
The Company’s annual performance-based incentive compensation program is governed by the Annual Incentive Compensation Plan, in which all bonus-eligible employees (including the NEOs) participate. This plan is designed to tie a significant portion of participants’ annual cash compensation to the Company’s annual financial performance and performance against strategic initiatives.
For fiscal 2025, the Committee set the target annual incentive payments for the CEO at 150% of his base salary; for Ms. DeMarsilis at 75% of her base salary; for Mr. Soltani at 75% of his base salary; for Mr. Sussis at 50% of his base salary; and for Ms. Kennedy at 50% of her base salary. These percentages were unchanged from fiscal 2024. The Committee determines the target bonus for each NEO by exercising its judgment of what an appropriate percentage is, informed by a consideration of such person’s total compensation compared to target bonus levels and total compensation payable to other executive officers in other positions within the Company and relative to similar executive positions in the competitive marketplace.
In determining the annual cash incentive to be paid to each NEO, the Committee assesses the extent of achievement of the financial performance target(s) and strategic goals and each NEO’s individual performance. For the fiscal 2025 AICP, the Committee established a bonus program based 37.5% on revenue performance, 37.5% on adjusted operating income performance, and 25% on strategic objectives. The revenue target was net sales (based on budgeted foreign exchange rates) of $710 million, with a minimum 25% payout at the threshold level of $675 million and a maximum 150% payout at or above $750 million. The adjusted operating income target was $35 million, with a minimum 50% payout at the threshold level of $30 million and a maximum 130% payout at or above $47 million. The strategic objectives related to Movado brand sales, European regional sales, penetration of watches with automatic movements, inventory utilization, and jewelry penetration.
In addition to corporate performance, the Committee also considers individual performance in determining the amount of each NEO’s bonus payment under the Annual Incentive Compensation Plan. There is no specific relative weight given by the Committee to the corporate performance of the Company as compared to the individual performance of any NEO. The Committee determines the amount of each NEO’s annual incentive payment regardless of the extent to which any of the performance criteria (individual or corporate) are met. However, the Committee does, in practice, take into account these criteria, including individual performance. In considering individual performance, the Committee is briefed by, and relies on a general summary assessment and recommendation provided by, the Company’s CEO and/or Chief Human Resources Officer relative to the performance of the NEOs (other than the CEO). That summary assessment and recommendation addresses the individual performance goals of the NEO as well as his or her overall performance. When it considers the individual performance of the CEO in determining the annual incentive payment to be made to him, the Committee considers the CEO’s individual performance goals, the performance of the business viewed holistically and the economic context relevant to the performance.
Performance-Based Annual Incentive Compensation – Fiscal 2025 Payouts
In determining the AICP payouts for fiscal 2025, the Committee noted that revenue and adjusted operating income performance fell short of the threshold performance levels established for the plan. At management’s recommendation, and in light of the material weakness in internal control over financial reporting announced in April 2025 that led to a restatement of prior-period financial results, the Committee agreed that no payments would be made under the fiscal 2025 AICP.
Equity Incentive Compensation
Stock ownership is a key element of the Company’s compensation program for the NEOs and senior management generally, as well as mid-level managers throughout the Company. Under the Stock Plan, the Committee may grant participants shares of the Company’s Common Stock, restricted stock, share units, stock options, stock appreciation rights, performance units and/or performance bonuses. In granting these awards, the Committee may establish any conditions or restrictions it deems appropriate.
All grants made by the Committee under the Stock Plan since its inception have been in the form of stock options, time-vesting restricted stock unit awards (pursuant to which unrestricted shares of Common Stock are issued to the grantee when the award vests) or performance-based stock unit awards (under which vesting occurs only if one or more predetermined financial goals are achieved within the relevant performance period). The Committee believes that all of these equity awards align the interests of executives with the creation of long-term value for our shareholders and that each of these equity awards has particular attributes that align compensation outcomes with Company performance. The Committee views these equity awards as useful retention tools