Edgar Filing: Destination Maternity Corp

DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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Securities Exchange Act of 1934

(Amendment No. )

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DESTINATION MATERNITY CORPORATION

(Name of Registrant as Specified In Its Charter)

NOT APPLICABLE

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LOGO

232 Strawbridge Drive

Moorestown, New Jersey 08057

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 19, 2016

To the Stockholders of Destination Maternity Corporation:

The Annual Meeting of Stockholders of Destination Maternity Corporation, a Delaware corporation (the “Company”), will be held at 9:15 a.m. Eastern Standard Time, on Thursday, May 19, 2016, at the corporate headquarters of the Company at 232 Strawbridge Drive, Moorestown, NJ 08057, for the following purposes:

To elect seven directors of the Company;

To ratify the action of the Audit Committee of the Board of Directors in appointing KPMG LLP (“KPMG”) as independent registered public accountants to audit the consolidated financial statements of the Company and its subsidiaries for the fiscal year ending January 28, 2017 and the Company’s internal control over financial reporting as of January 28, 2017;

To hold an advisory vote on executive compensation; and

To transact such other business as may properly come before the meeting or any adjournments thereof.

Only holders of the Company’s common stock at the close of business on April 4, 2016 are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. Such stockholders may vote in person or by proxy. The stock transfer books of the Company will not be closed. The accompanying form of proxy is solicited by the Board of Directors of the Company.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON THURSDAY, MAY 19, 2016:

The Notice of Annual Meeting, Proxy Statement and Annual Report are available at

http://investor.destinationmaternity.com.

By Order of the Board of Directors

LOGO

Anthony M. Romano

Chief Executive Officer

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE SELF-ADDRESSED ENVELOPE, ENCLOSED FOR YOUR CONVENIENCE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY ALSO VOTE YOUR SHARES BY TELEPHONE OR THROUGH THE INTERNET BY FOLLOWING THE INSTRUCTIONS SET FORTH ON THE PROXY CARD. IF YOU DECIDE TO ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOU MAY REVOKE YOUR PROXY BY WRITTEN NOTICE AT THAT TIME.

April 19, 2016

PROXY STATEMENT

Table of Contents


Topic	Page
*Voting*		1

*Corporate Governance*		3
Board of Directors Leadership Structure		3
Corporate Governance Principles		3
Code of Business Conduct and Ethics		3
Board of Directors Independence		3
The Board of Directors and Committee Meetings		4
Board of Directors Role in Risk Oversight		5
Compensation of Directors		6
Stockholder Communications		8
Certain Relationships and Related Party Transactions		8

*Security Ownership of Certain Beneficial Owners and Management*		9
Section 16(a) Beneficial Ownership Reporting Compliance		11

*Compensation Discussion and Analysis*		12
Overview		12
Composition of the Committee		12
Significant Corporate and Personnel Developments		12
Consideration of Most Recent Stockholder Advisory Vote on Executive Compensation		12
Significant Actions Taken		12
Total Compensation and Allocation Between Compensation Elements		13
Benchmarking		14
Participation of Management in the Compensation Process		14
Effect of Historical Contractual Arrangements		14
Elements of Compensation		15
Additional Compensation Information		20

*Reports of Committees of the Board of Directors*		21
Report of the Compensation Committee		21
Report of the Audit Committee		21

*Executive Compensation*		22
Summary Compensation Table		22
Grants of Plan-Based Awards		23
Outstanding Equity Awards		24
Option Exercises and Stock Vested		26
Potential Payments upon Termination or Change in Control		26

*Proposals for Consideration by the Stockholders*		35
Proposal 1—Election of Directors		35
Proposal 2—Ratification of Appointment of Independent Registered Public Accountants		38
Proposal 3—Advisory Vote Related to Executive Compensation		39

*Additional Information*		40
Householding of Proxy Materials		40
Other Business		40
Annual Report		40
Stockholder Proposals		40

LOGO

232 Strawbridge Drive

Moorestown, New Jersey 08057

PROXY STATEMENT

FOR

ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON

May 19, 2016

This proxy statement, which is first being mailed to stockholders on approximately April 19, 2016, is furnished in connection with the solicitation by the Board of Directors of Destination Maternity Corporation (the “Company”) of proxies to be used at the 2016 Annual Meeting of Stockholders of the Company (the “Annual Meeting”), to be held at 9:15 a.m., Eastern Standard Time, on Thursday, May 19, 2016, at 232 Strawbridge Drive, Moorestown, NJ 08057, and at any adjournments or postponements thereof. If proxies in the accompanying form are properly executed and returned prior to voting at the meeting, the shares of the Company’s common stock (“Common Stock”) represented thereby will be voted as instructed on the proxy. If no instructions are given on a properly executed and returned proxy, the shares of the Common Stock represented thereby will be voted for the election of the nominees for director named below, for the ratification of the appointment of KPMG LLP as independent registered public accountants, and in support of management on such other business as may properly come before the Annual Meeting or any adjournments thereof. Any proxy may be revoked by a stockholder prior to its exercise upon written notice to the Secretary of the Company, by delivering a duly executed proxy bearing a later date, or by the vote of a stockholder cast in person at the Annual Meeting. The Company has historically operated on a fiscal year ending September 30 of each year. On December 4, 2014, the Company announced a change in its fiscal year to a 52/53 week retail calendar ending on the Saturday nearest January 31 of each year. The change was effective with the Company’s fiscal year 2015, which began February 1, 2015 and ended January 30, 2016. In each succeeding year, the fiscal year will end on the Saturday closest to January 31st. The foregoing change resulted in a four-month transition period from October 1, 2014 through January 31, 2015 (the “Transition Period” or “TP”). All references herein to the Company’s fiscal year 2015 and subsequent years refer to the fiscal years ending on the Saturday nearest January 31st of the following year. All references herein to the Company’s fiscal year 2014 and preceding years refer to the fiscal year ending on September 30 of each such year.

VOTING

Holders of record of Common Stock on Monday, April 4, 2016 will be entitled to vote at the Annual Meeting or any adjournments or postponements thereof. As of that date, there were 13,982,288 shares of Common Stock outstanding and entitled to vote. The presence, in person or by proxy, of holders of Common Stock entitled to cast at least a majority of the votes which all holders of the Common Stock are entitled to cast will constitute a quorum for purposes of the transaction of business. Each share of Common Stock entitles the holder thereof to one vote on the election of each of the nominees for director and on any other matter that may properly come before the Annual Meeting. Stockholders are not entitled to cumulative voting in the election of directors.

In February 2015, the Board approved amendments to the Company’s By-laws to authorize majority voting in uncontested director elections. These actions reflect the Company’s dedication to maintaining the highest quality corporate governance practices. Because the number of nominees properly nominated for the Annual Meeting is the same as the number of directors to be elected at the Annual Meeting, the election of directors is an uncontested election. As a result, in order to be elected, a nominee must receive a majority of the votes cast with respect to his or her election (or re-election, in the case of any nominee who is an incumbent director), which means the number of votes “for” a nominee must exceed the number of votes “against” that nominee. Abstentions are not counted as votes cast. Incumbent nominees have tendered a contingent resignation which would become effective if (i) the nominee does not receive a majority of the votes cast with respect to his or her election at the Annual Meeting and (ii) the Board of Directors accepts such resignation. Adoption of Proposals 2 and 3 require the affirmative vote of the majority of shares of Common Stock present in person or represented by proxy and entitled to vote at the meeting.

Abstentions and broker non-votes (described below) are counted in determining whether a quorum is present. Abstentions with respect to any proposal other than the election of directors (Proposal 1) will have the same effect as votes against the proposal, because, in the case of all other proposals approval requires a vote in favor of the proposal by a majority of the shares entitled to vote present at the Annual Meeting in person or represented by proxy. A “broker non-vote” occurs when a broker submits a proxy that does not indicate a vote for some of the proposals because the beneficial owners have not instructed the broker on how to vote on such proposals and the broker does not have discretionary authority to vote in the absence of instructions. Brokers are entitled to vote uninstructed shares with respect to the ratification of the selection of independent registered public accountants, but brokers are not entitled to vote uninstructed shares with respect to other matters. Broker non-votes are not considered to be shares “entitled to vote” (other than for quorum purposes), and will therefore have no effect on the outcome of any of the matters to be voted upon at the Annual Meeting.

The cost of solicitation of proxies by the Board of Directors will be borne by the Company. Proxies may be solicited by mail, personal interview, telephone or facsimile and, in addition, directors, officers and regular employees of the Company may solicit proxies by such methods without additional remuneration. Banks, brokerage houses and other institutions, nominees or fiduciaries will be requested to forward the proxy materials to beneficial owners in order to solicit authorizations for the execution of proxies. The Company will, upon request, reimburse such banks, brokerage houses and other institutions, nominees and fiduciaries for their expenses in forwarding such proxy materials to the beneficial owners of the Common Stock.

CORPORATE GOVERNANCE

Board of Directors Leadership Structure

The Board of Directors’ policy is that the roles of the Non-Executive Chair of the Board of Directors and the Chief Executive Officer should be separate and should not be held simultaneously by the same individual, thus enabling the Board of Directors to benefit from independent leadership. Mr. Arnaud Ajdler, an independent director, has served as the Non-Executive Chair of the Board of Directors since the Annual Meeting held in February 2011. If reelected it is expected that Mr. Ajdler will continue to serve as the Company’s Non-Executive Chair of the Board of Directors.

Inasmuch as the Non-Executive Chair of the Board of Directors is independent, the Board of Directors does not believe that a lead independent director is currently necessary. However, the Board of Directors in executive session would establish a lead independent director in the event of the need for emergency succession actions with respect to either or both the Non-Executive Chair and the Chief Executive Officer or for other purposes as the Board of Directors may determine. The independent directors who chair the Company’s Audit, Compensation, and Nominating and Corporate Governance Committees also provide leadership to the Board of Directors in their assigned areas of responsibility. The Board of Directors believes its current structure and operation as described here properly safeguard the independence of the Board of Directors.

Corporate Governance Principles

We maintain Corporate Governance Principles that provide a structure within which directors and management can effectively pursue the Company’s objectives for the benefit of its stockholders. Our Corporate Governance Principles are available on the Company’s investor website at http://investor.destinationmaternity.com or are available to our stockholders by writing to our Secretary at the following address: Destination Maternity Corporation, Attention: Secretary, 232 Strawbridge Drive, Moorestown, New Jersey 08057.

Code of Business Conduct and Ethics

Our Code of Business Conduct and Ethics is designed to promote the highest standards of business conduct in our relationships with each other and with our customers, suppliers and others. The Code of Business Conduct and Ethics contains basic principles to guide directors, officers and employees of our Company. Our Code of Business Conduct and Ethics is available on the Company’s investor website at http://investor.destinationmaternity.com or is available to our stockholders by writing to our Secretary at the following address: Destination Maternity Corporation, Attention: Secretary, 232 Strawbridge Drive, Moorestown, New Jersey 08057.

Board of Directors Independence

The Company’s Corporate Governance Principles require that a majority of the Company’s directors be independent. The Nasdaq Stock Market listing standards require that a majority of the Company’s directors be independent and that the Audit, Compensation, and Nominating and Corporate Governance Committees be comprised entirely of independent directors. The Board of Directors has adopted standards to assist it in making the annual determination of each director’s independence status. These director independence standards, which are set forth in our Corporate Governance Principles, are consistent with the Nasdaq listing standards. A director will be considered “independent” if he or she meets the requirements of our director independence standards and the independence criteria in the Nasdaq listing standards.

The Board of Directors has affirmatively determined that all of the Company’s current and nominee directors, except Mr. Anthony M. Romano, have no direct or indirect material relationship with the Company and satisfy the requirements to be considered independent.

The Board of Directors has determined that each of the Company’s current Audit, Compensation, and Nominating and Corporate Governance Committees is composed solely of independent directors. Independence for Audit Committee purposes requires compliance with applicable independence rules of the Securities and Exchange Commission (the “SEC”) in addition to the Nasdaq listing standards. In making the independence determinations for the Board of Directors and its committees, the Board of Directors reviewed all of the directors’ relationships with the Company. This review is based primarily on a review of the responses of the directors to questions regarding employment, business, family, compensation and other relationships with the Company and its management.

Compensation Committee Interlocks and

Insider Participation

None of the members of the Compensation Committee is currently or has been an officer or employee of the Company. No interlocking relationship exists between any member of the Company’s Board of Directors and the compensation committee of any other company.

The Board of Directors and

Committee Meetings

During fiscal year 2015 and the Transition Period, the Board of Directors held eight meetings that were called and held in person and nine meetings that were called and held telephonically. Each incumbent director attended at least 75% of the aggregate of the total number of meetings of the Board of Directors and committees of the Board of Directors on which he or she served.

We expect all of our directors to attend the annual meetings of stockholders. All of our then-current directors attended last year’s annual meeting of stockholders.

The Board of Directors has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee.

Audit Committee. During fiscal year 2015 and the Transition Period, the Audit Committee, which currently consists of Mr. Barry Erdos, Chair, Mr. Michael J. Blitzer, Mr. J. Daniel Plants, and Mr. William A. Schwartz, Jr., held four meetings that were called and held in person and four meetings that were called and held telephonically. Mr. Erdos is designated as the “audit committee financial expert.” Mr. Erdos has no direct or indirect material relationship with the Company and satisfies the independence criteria in the Nasdaq listing standards. The function of the Audit Committee is to assist the Board of Directors in preserving the integrity of the financial information published by the Company through the review of financial and accounting controls and policies, financial reporting requirements, alternative accounting principles that could be applied and the quality and effectiveness of the independent registered public accountants. The Audit Committee’s charter is posted on the Company’s investor website at http://investor.destinationmaternity.com.

Compensation Committee. During fiscal year 2015 and the Transition Period, the Compensation Committee, which currently consists of Mr. B. Allen Weinstein, Chair, Mr. Ajdler, and Mr. Erdos, held four meetings that were called and held in person and nine meetings that were called and held telephonically. The Compensation Committee considers recommendations of the Company’s management regarding compensation, bonuses and fringe benefits of the executive officers of the Company, and determines whether the recommendations of management are consistent with general policies, practices, and compensation scales established by the Board of

Directors. In addition, the Compensation Committee administers the Company’s equity-based compensation plans. The Compensation Committee also reviews, and discusses with management, the Compensation Discussion and Analysis (“CD&A”) to be included in the Company’s annual proxy statement or annual report, as applicable, and determines whether to recommend to the Board of Directors that the CD&A be included in the proxy statement or annual report. The Compensation Committee’s charter is posted on the Company’s investor website at http://investor.destinationmaternity.com.

Nominating and Corporate Governance Committee. During fiscal year 2015 and the Transition Period, the Nominating and Corporate Governance Committee, which currently consists of Ms. Melissa Payner-Gregor, Chair, Mr. Ajdler, and Mr. Plants, held four meetings that were called and held telephonically. The Nominating and Corporate Governance Committee functions include establishing the criteria for selecting candidates for nomination to the Board of Directors, actively seeking candidates who meet those criteria, and making recommendations to the Board of Directors of nominees to fill vacancies on, or as additions to, the Board of Directors.

The Nominating and Corporate Governance Committee will consider director candidates who have relevant business experience, are accomplished in their respective fields, and who possess the skills and expertise to make a significant contribution to the Board of Directors, the Company and its stockholders. It is the Nominating and Corporate Governance Committee’s policy to consider Director nominees in a manner that seeks to produce the best candidates with a diversity of qualities, backgrounds and complementary skills. Director nominees should have high-leadership business experience, knowledge about issues affecting the Company and the ability and willingness to apply sound and independent business judgment. The Nominating and Corporate Governance Committee applies the same criteria to nominees recommended by stockholders. Such recommendations should be submitted in writing to the attention of the Nominating and Corporate Governance Committee, c/o Destination Maternity Corporation, 232 Strawbridge Drive, Moorestown, New Jersey 08057, and should not include self-nominations. The Nominating and Corporate Governance Committee’s charter is posted on the Company’s investor website at http://investor.destinationmaternity.com.

Board of Directors Role in Risk Oversight

The Board of Directors takes an active role in risk oversight. The Board of Directors oversees the Company’s strategic planning and the risks inherent in the operation of its business. The Board of Directors administers its risk oversight function through the full Board of Directors and each of its committees. Management of the Company, which is responsible for day-to-day risk management, identifies and assesses the Company’s risks on a regular basis, and develops steps to mitigate and manage risks. The Board of Directors exercises its risk oversight function by making inquiries of management with respect to areas of particular interest. Each of the committees of the Board of Directors is responsible for oversight of risk management practices for categories of top risks relevant to their functions, as summarized below.

The Audit Committee assists the Board of Directors with its risk oversight in a variety of areas, including financial reporting, internal controls, and legal and regulatory compliance. The Audit Committee has oversight of the Company’s internal audit function and the Company’s Code of Business Conduct and Ethics. The Audit Committee also appoints the independent registered public accounting firm and approves the services it provides to the Company. The Compensation Committee oversees risk in connection with compensation programs, including incentive compensation plans and equity-based plans. The Nominating and Corporate Governance Committee oversees risk in connection with corporate governance practices. All of these committees make regular reports of their activities to the full Board of Directors.

Compensation of Directors

Pursuant to our Non-Employee Director Compensation Policy, during fiscal 2015 and the Transition Period each of our non-employee directors was paid a retainer of $12,500 per quarter and, in addition each non-employee director who is a member of a committee was paid an additional quarterly retainer as follows:


	Additional Quarterly Retainer ($)
Audit Committee Chair		3,750
Audit Committee Member		1,875

Compensation Committee Chair		3,750
Compensation Committee Member		1,250

Nominating and Corporate Governance Committee Chair		2,500
Nominating and Corporate Governance Committee Member		1,250

Our Non-Executive Chair receives an additional retainer of $6,250 per quarter. Non-employee directors do not receive any additional compensation for participation in either board or committee meetings. However, members of our Board of Directors are reimbursed for their reasonable travel expenses incurred to attend meetings of our Board of Directors or Committees of the Board of Directors on which they serve.

Historically, upon conclusion of each Annual Meeting of Stockholders, the Company would grant each non-employee director 4,000 shares of restricted stock that would vest on the earlier of: (1) one year from the date of grant, or (2) one day before the Company’s next Annual Meeting of Stockholders, subject to acceleration in the event of the non-employee director’s death or disability or upon a change in control of the Company. Further, our Non-Executive Chair would also receive an additional 2,000 shares of restricted stock granted upon election or reelection of the Non-Executive Chair to that position by the Board of Directors following the Annual Meeting of Stockholders each year, which would vest on the earlier of: (1) one year from the date of grant, or (2) one day before the Company’s next Annual Meeting of Stockholders, subject to acceleration in the event of the Non-Executive Chair’s death or disability or upon a change in control of the Company.

In February 2015, the Compensation Committee approved an additional equity grant to each non-employee member of the Board of Directors to compensate each such director for the additional service that was required to be performed due to the change in the Company’s fiscal year. Because of the change in the fiscal year, the Annual Meeting of Stockholders, which had historically been held in the month of January, will now typically be held in or around the month of May. Because the Company’s policy is to make equity grants to its non-employee directors after the Annual Meeting of Stockholders, each non-employee director serving during the transition in the Company’s fiscal year would be required to serve approximately an additional 4 months to receive the annual equity grant. As a result, the Compensation Committee awarded each non-employee director a 40% one-time increase in the number of shares, such that each non-employee director (other than the Chairman) was awarded an additional 1,600 shares of restricted stock (for a total of 5,600 shares of restricted stock in the 2015 annual grant). For the same reason, the Chairman, Mr. Ajdler, received an additional 2,400 shares of restricted stock in his 2015 annual grant.

In April 2016, the Compensation Committee approved an amendment to the Company’s Non-Employee Director Compensation Policy to allow directors to elect to receive their quarterly cash retainer for Board service (but not for Committee service) and their annual equity compensation for the following calendar year in the form of deferred stock units in lieu of restricted stock. These deferred stock units will vest on the same terms as the restricted stock, but they will not result in the delivery of shares of common stock to the director until the director eventually leaves the Board (whether by virtue of expiration of such director’s term, removal, resignation or other reason), subject to acceleration in the event of the non-employee director’s death or disability or upon a change in control of the Company. The full text of the revised Non-Employee Director Compensation Policy is posted on our investor website at http://investor.destinationmaternity.com.

The Company’s equity ownership guidelines applicable to named executive officers and non-employee directors require each non-employee director to own shares of the Company’s common stock having an aggregate fair market value equal to or greater than four times the annual cash retainer then payable to such non-employee director, measured as of the date of each Annual Meeting of Stockholders. Any non-employee director elected for the first time following the adoption of these guidelines will have three years from the date of such initial election to satisfy the guidelines.

Currently all of our non-employee directors for whom the equity ownership guidelines are currently effective, except Mr. Blitzer, Ms. Payner-Gregor and Mr. Weinstein, hold Company equity in excess of the guidelines’ requirement. The Compensation Committee notes that this non-compliance was due to fluctuations in the market value of our Common Stock during the past year. The Compensation Committee further notes that none of these directors have sold equity during their time as directors.

Mr. Blitzer joined the Board in January 2013. In order to expedite Mr. Blitzer’s compliance with these guidelines, Mr. Blitzer and the Compensation Committee agreed that in lieu of receiving his fiscal year 2015 non-employee director cash retainer of $50,000, Mr. Blitzer was issued an incremental restricted stock grant for 2,922 shares which had a grant date fair value of $47,658. This restricted stock grant vests on the same terms as, and was in addition to, the annual grant to all non-employee directors.

According to the Company’s equity ownership guidelines, any non-employee director who is not in compliance with the Company’s equity ownership guidelines will be expected to exercise any available election to receive his or her quarterly retainer for Board service (but not for Committee service) in the form of deferred stock units in lieu of cash. Any such director will be issued deferred stock units in lieu of cash for his or her quarterly retainer for Board service during the balance of calendar year 2016 following the Annual Meeting.

In fiscal year 2015 and the Transition Period, our current non-employee directors received the following compensation:


Name	Fees earned or paid in cash ($)		Stock awards ($) (1)		Total ($)
Arnaud Ajdler		113,334		137,004		250,338
Michael J. Blitzer		26,667		138,994		165,661
Barry Erdos		103,334		91,336		194,670
J. Daniel Plants (2)		74,187		91,336		165,523
Melissa Payner-Gregor		86,667		91,336		178,003
William A. Schwartz, Jr.		76,667		91,336		168,003
B. Allen Weinstein		93,334		91,336		184,670

(1)

Upon conclusion of the Annual Meeting of Stockholders on February 19, 2015, in accordance with the Company’s Non-Employee Director Compensation Policy (including the additional grant made to each director reflecting the additional service required by the change in the Company’s fiscal year as described above), the Company granted each non-employee director who was serving on the Board of Directors at that time 5,600 shares of restricted stock, and granted an additional 2,400 shares to Mr. Ajdler for his service as Non-Executive Chairman. The amounts in the column titled “Stock Awards” reflect the grant date fair values of awards made during fiscal year 2015, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”). Also on February 19, 2015, Mr. Blitzer was issued an incremental restricted stock grant for 2,922 shares which had a grant date fair value of $47,658.

(2)	Mr. Plants became a director of the Company on November 24, 2014.

In December 2015, our Board of Directors formed a Special Committee consisting of independent directors in connection with the evaluation of a transaction with Orchestra-Premaman involving an unsolicited and non-binding preliminary merger proposal pursuant to which holders of Common Stock would receive an unspecified

number of shares of common stock of Orchestra-Premaman and a limited amount of cash. Because of the additional service, each non-employee director who serves on this Special Committee received a grant of restricted stock in addition to the annual grants pursuant to our Non-Employee Director Compensation Policy. Accordingly, on March 30, 2016, the Company granted each of Messrs. Erdos (Chair), Ajdler and Plants 5,547, 4,160 and 4,160 shares of restricted stock, respectively, for their service as members of the Special Committee.

Stockholder Communications

Pursuant to the policy of the Board of Directors, all communications directed to the Board of Directors will be delivered to the Board of Directors. Stockholders may contact the Board of Directors by writing to them c/o Destination Maternity Corporation, 232 Strawbridge Drive, Moorestown, New Jersey 08057.

Certain Relationships and Related Party Transactions

Our Board of Directors recognizes that related party transactions present a heightened risk of conflicts of interest and/or improper valuation (or the perception thereof). Pursuant to the Company’s Code of Business Conduct and Ethics, information about transactions involving related parties is reviewed by the Audit Committee. It is the Company’s policy that all business decisions will reflect independent judgment and discretion, uninfluenced by considerations other than those honestly believed to be in the best interests of the Company and its stockholders. Any direct or indirect conflict of interest between the Company and any director, officer or employee is prohibited unless otherwise consented to by the General Counsel or the Audit Committee in accordance with the Code of Business Conduct and Ethics. Related parties include Company directors, nominees for director, and executive officers, as well as their immediate family members. Related party transactions include transactions, arrangements or relationships pursuant to which the judgment and discretion of a director, officer or employee is or may be influenced by considerations of personal gain or benefit, or gain or benefit to a third party, whether or not affiliated with the director, officer or employee.

When reviewing a related party transaction, the Audit Committee will use any process and review any information that it determines is appropriate. The Audit Committee takes into consideration all of the relevant facts and circumstances available to it, including (if applicable), but not limited to: (i) the material terms and conditions of the transaction or transactions; (ii) the related party’s relationship to the Company; (iii) the related party’s interest in the transaction, including their position or relationship with, or ownership of, any entity that is a party to or has an interest in the transaction; (iv) the approximate dollar value of the transaction; (v) the availability from other sources of comparable products or services; and (vi) an assessment of whether the transaction is on terms that are comparable to the terms available to us from an unrelated third party. All related party transactions will be disclosed in accordance with SEC rules.

In the event the Company becomes aware of a related party transaction that was not previously approved or ratified by the Audit Committee or management, the Company shall evaluate all options available, including ratification, revision or termination of the transaction.

To the Company’s knowledge, since October 1, 2014 (the beginning of the Transition Period), no related party has had a material interest in any of our business transactions or relationships.

SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of April 4, 2016, except as otherwise noted, with respect to the beneficial ownership of shares of Common Stock by each person who is known to us to be the beneficial owner of more than five percent of the outstanding shares of Common Stock, by each director or nominee for director, by each of the Company’s named executive officers, and by all directors and executive officers as a group. Unless otherwise indicated, each person has sole voting power and sole investment power.


	Common Stock
Name and Address of Beneficial Owner (a)	Amount and Nature of Beneficial Ownership (#)			Percent of Class (%)
Anthony M. Romano		115,249	(b)		*
Judd P. Tirnauer		103,530	(c)		*
Ronald J. Masciantonio		82,172	(d)		*
Arnaud Ajdler		57,036	(e)		*
Michael J. Blitzer		20,522	(f)		*
Barry Erdos		54,147	(g)		*
Melissa Payner-Gregor		31,376	(h)		*
J. Daniel Plants.		13,760	(i)		*
William A. Schwartz, Jr.		45,013			*
B. Allen Weinstein		29,600	(j)		*
Orchestra-Premaman S.A.		1,843,931	(k)		13.19	%
200, avenue des Tamaris
Saint-Aunès Languedoc-Roussillon 34130
Royce and Associates, LLC		1,066,204	(l)		7.63	%
745 Fifth Avenue
New York, NY 10151
Brown Advisory Incorporated.		1,016,585	(m)		7.27	%
901 South Bond Street, Ste. 400
Boston, MD 21231
Renaissance Technologies LLC		981,000	(n)		7.02	%
800 Third Avenue
New York, NY 10022
Wellington Management Group LLP		973,257	(o)		6.96	%
280 Congress Street
Boston, MA 02210
RBC Global Asset Management (U.S.) Inc.		737,787	(p)		5.28	%
50 South Sixth Street, Suite 2350
Minneapolis, MN 55402
All current directors and officers as a group (10 persons)		552,405	(q)		3.95	%

*	Less than 1% of the outstanding Common Stock or less than 1% of the voting power.

(a)	Except as otherwise indicated, the address of each person named in the table is: c/o Destination Maternity Corporation, 232 Strawbridge Drive, Moorestown, New Jersey 08057.

(b)

Includes 7,833 shares of unvested restricted stock from the August 11, 2014 grant of 10,443 shares, which shares vest in four annual installments beginning on August 11, 2015 as follows: 2,610 shares vest on August 11, 2015, and 2,611 shares vest on each of August 11, 2016, August 11, 2017, and August 11, 2018, 14,388 shares of unvested restricted stock from the December 5, 2014 grant of 19,183 shares, which shares vest in four annual installments beginning on December 5, 2015 as follows: 4,795 shares vest on December 5, 2015, and 4,796 shares vest on each of December 5, 2016, December 5, 2017, and December 5, 2018, and 27,537 shares of unvested restricted stock granted to Mr. Romano on March 30, 2016, which shares vest in four (4) annual installments beginning on March 30, 2017 as follows: 6,884

shares vest on each of March 30, 2017, March 30, 2018 and March 30, 2019, and 6,885 shares vest on March 30, 2020. For additional information regarding the equity held by Mr. Romano at the end of fiscal year 2015, please see the “Outstanding Equity Awards” table.

(c)

Includes 1,153 shares of unvested restricted stock from the November 16, 2012 grant of 4,609 shares, which shares vest in four annual installments beginning on November 16, 2013 as follows: 1,152 shares vest on each of November 16, 2013, November 16, 2014, and November 16, 2015, and 1,153 shares vest on November 16, 2016, 1,776 shares of unvested restricted stock from the December 4, 2013 grant of 3,552 shares, which shares vest in four equal annual installments beginning on December 4, 2014, and 6,104 shares of unvested restricted stock from the December 5, 2014 grant of 8,138 shares, which shares vest in four annual installments beginning on December 5, 2015 as follows: 2,034 shares vest on each of December 5, 2015 and December 5, 2017, and 2,035 shares vest on each of December 5, 2016 and December 5, 2018. For additional information regarding the equity held by Mr. Tirnauer at the end of fiscal year 2015, please see the “Outstanding Equity Awards” table.

(d)

Includes 1,048 shares of unvested restricted stock from the November 16, 2012 grant of 4,190 shares, which shares vest in four annual installments beginning on November 16, 2013 as follows: 1,047 shares vest on each of November 16, 2013 and November 16, 2015, and 1,048 shares vest on each of November 16, 2014 and November 16, 2016, 1,640 shares of unvested restricted stock from the December 4, 2013 grant of 3,279 shares, which shares vest in four annual installments beginning on December 4, 2014 as follows: 819 shares vested on December 4, 2014, and 820 shares vest on each of December 4, 2015, December 4, 2016, and December 4, 2017, 6,104 shares of unvested restricted stock from the December 5, 2014 grant of 8,138 shares, which shares vest in four annual installments beginning on December 5, 2015 as follows: 2,034 shares vest on each of December 5, 2015 and December 5, 2017, and 2,035 shares vest on each of December 5, 2016 and December 5, 2018, and 11,683 shares of unvested restricted stock granted to Mr. Masciantonio on March 30, 2016, which shares vest in four (4) annual installments beginning on March 30, 2017 as follows: 2,920 shares vest on March 30, 2017, and 2,921 shares vest on each of March 30, 2018, March 30, 2019, and March 30, 2020. For additional information regarding the equity held by Mr. Masciantonio at the end of fiscal year 2015, please see the “Outstanding Equity Awards” table.

(e)

Includes 6,000 shares of unvested restricted stock expected to be granted upon completion of the Annual Meeting, subject to Mr. Ajdler’s re-election as a director and appointment as Non-Executive Chairman of the Board of Directors, and 4,160 shares of unvested restricted stock granted to Mr. Ajdler on March 30, 2016, which shares vest on the earlier of: (1) the end of the day immediately prior to the Annual Meeting held in 2017; (b) the end of Mr. Ajdler’s service on the Board of Directors other than via resignation; and (c) a change in control of the Company (as defined in the Company’s Amended and Restated 2005 Equity Incentive Plan).

(f)	Includes 4,000 shares of unvested restricted stock expected to be granted upon completion of the Annual Meeting, subject to Mr. Blitzer’s re-election as a director.

(g)

Includes 4,000 shares of unvested restricted stock expected to be granted upon completion of the Annual Meeting, subject to Mr. Erdos’ re-election as a director, and 5,547 shares of unvested restricted stock granted to Mr. Erdos on March 30, 2016, which shares vest on the earlier of: (1) the end of the day immediately prior to the Annual Meeting held in 2017; (b) the end of Mr. Erdos’ service on the Board of Directors other than via resignation; and (c) a change in control of the Company (as defined in the Company’s Amended and Restated 2005 Equity Incentive Plan).

(h)	Includes 4,000 shares of unvested restricted stock expected to be granted upon completion of the Annual Meeting, subject to Ms. Payner-Gregor’s re-election as a director.

(i)

Includes 4,000 shares of unvested restricted stock expected to be granted upon completion of the Annual Meeting, subject to Mr. Plants’ re-election as a director, and 4,160 shares of unvested restricted stock granted to Mr. Plants on March 30, 2016, which shares vest on the earlier of: (1) the end of the day immediately prior to the Annual Meeting held in 2017; (b) the end of Mr. Plants’ service on the Board of Directors other than via resignation; and (c) a change in control of the Company (as defined in the Company’s Amended and Restated 2005 Equity Incentive Plan). Mr. Plants is the Managing Partner of Voce Capital Management LLC (“VCM”), a holder of 327,412 shares. While Mr. Plants disclaims beneficial ownership of the shares owned by VCM except to the extent of his pecuniary interest therein, he has the sole or shared voting power of the shares.

(j)	Includes 4,000 shares of unvested restricted stock expected to be granted upon completion of the Annual Meeting, subject to Mr. Weinstein’s re-election as a director.

(k)	Information is based on the Schedule 13D/A filed with the SEC on March 18, 2016. According to that filing, Yeled S.A., as a result of its ownership of a controlling interest in Orchestra-Premaman S.A., may be deemed to beneficially own all of the shares specified on the above table.

(l)	Information is based on the Schedule 13G/A filed with the SEC on January 12, 2016. According to that filing, Royce & Associates, LLC beneficially owns all of the shares specified on the above table.

(m)

Information is based on the Schedule 13G/A filed with the SEC on February 9, 2016. According to that filing, Brown Advisory Incorporated, in its capacity as investment adviser, may be deemed to beneficially own all of the shares specified on the above table which are held of record by Brown Advisory, LLC and Brown Investment Advisory & Trust Company.

(n)

Information is based on the Schedule 13G/A filed with the SEC on February 11, 2016. According to that filing, Renaissance Technologies LLC (“RTC”), and Renaissance Technologies Holdings Corporation (“RTHC”), because of RTHC’s majority ownership of RTC, beneficially own all of the shares specified on the above table. Also according to that filing, certain funds and accounts managed by RTC have the right to receive dividends and proceeds from the sale of the shares.

(o)

Information is based on the Schedule 13G filed with the SEC on February 11, 2016. According to that filing, Wellington Management Group LLP, in its capacity as parent holding company of certain holding companies and certain investment advisers (the “Wellington Investment Advisers”), may be deemed to beneficially own all of the shares specified on the above table which are held of record by clients of Wellington Investment Advisers.

(p)	Information is based on the Schedule 13G/A filed with the SEC on February 10, 2016. According to that filing, RBC Global Asset Management (U.S.) Inc. beneficially owns all of the shares specified on the above table.

(q)

Includes the following number of shares purchasable upon exercise of stock options owned (or which may be deemed to be owned) by the following persons: Anthony M. Romano—53,086, Judd P. Tirnauer—62,932, and Ronald J. Masciantonio—53,776. Also includes the following number of shares of unvested restricted stock owned (or which may be deemed to be owned) by the following persons: Anthony M. Romano—49,758, Judd P. Tirnauer—9,033, Ronald J. Masciantonio—20,475, Arnaud Ajdler—10,160, Michael J. Blitzer—4,000, Barry Erdos—9,547, Melissa Payner-Gregor—4,000, J. Daniel Plants—8,160, and B. Allen Weinstein—4,000.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities (collectively, “Reporting Persons”) to file with the SEC initial reports of ownership (on Form 3) and reports of changes in ownership of the Common Stock and other equity securities of the Company (on Forms 4 and 5). Reporting Persons are additionally required to furnish us with copies of all Section 16(a) reports they file.

To our knowledge, based solely upon a review of the copies of such reports furnished to us, all Section 16(a) reports for the fiscal year ended January 30, 2016 were timely filed, with the exception of Orchestra-Premaman S.A., which did not timely file a Form 3 upon the attainment of beneficial ownership of more than 10% of our Common Stock and did not thereafter timely file Forms 4 upon the acquisition of shares on at least three subsequent dates.

COMPENSATION DISCUSSION AND ANALYSIS

Overview

The Compensation Committee of our Board of Directors (the “Committee”) has developed and implemented compensation policies, plans and programs that seek to enhance our profitability, and thus stockholder value, by aligning the financial interests of our senior management with those of our stockholders. Our compensation arrangements are designed to attract and retain corporate officers and other key employees and to motivate them to perform to the full extent of their abilities, in the best long-term interests of our stockholders.

Composition of the Committee

The Committee currently consists of Mr. Weinstein, Chair, Mr. Ajdler, and Mr. Erdos. None of these individuals has ever been an officer or employee of the Company. Each member of the Committee is considered to be an “independent director” under Nasdaq rules and the rules of the SEC. The Report of the Compensation Committee is set forth below after this “Compensation Discussion and Analysis” section.

The Committee meets at least annually regarding compensation decisions. In fiscal year 2015, the Committee met thirteen times.

Significant Corporate and Personnel Developments

In fiscal year 2015, our Chief Executive Officer and the senior management team, with the support of the Board, focused on certain key foundational changes in the way the Company operates with a view toward enabling scalable and repeatable success necessary to maximize long-term shareholder value. These changes included attracting key talent to join the existing talent in a new re-built senior management team, creation of processes and tools to allow better control over product planning, inventory management and overall merchandising, the selection and early implementation of a new best-in-class product allocation tool, the selection of a new web platform, and the selection of a new e-commerce focused order management system. Although all of the benefits of these efforts have not yet been realized, the management team did deliver Adjusted EBITDA performance that was significant, even if less than target.

It is the practice of the Committee to periodically review existing arrangements with our named executive officers to determine if such arrangements remain appropriate in the current commercial landscape. Whenever practicable, the Committee seeks to update existing arrangements to remove outdated terms and to otherwise ensure the arrangements remain effective and consistent with the best interests of our stockholders. In fiscal year 2015, the Committee negotiated a separation agreement with Mr. Daniel, our former President, upon his Termination.

Consideration of Most Recent Stockholder Advisory Vote on Executive Compensation

During fiscal year 2015, we again conducted a “Say-On-Pay” stockholder advisory vote, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Committee appreciates that once again over 98% of the shares voting approved of our executive compensation and believes, therefore, that our stockholders are highly supportive of our executive compensation practices. Nevertheless, the Committee continues to refine our executive compensation practices in its ongoing effort to ensure that those practices support our corporate goals and values. This year we are again providing stockholders with an opportunity to express their views on this topic in another “Say-On-Pay” stockholder advisory vote.

Significant Actions Taken

Significant compensation related actions taken during fiscal year 2015 and thereafter include the following:

(1)

Restructure of our senior management to combine the position of President and Chief Executive Officer, in order to streamline operations and to cut the operating costs of the Company.

(2)

Negotiation of a separation agreement with Mr. Daniel, upon the elimination of the President as a separate position, which was consistent with his severance entitlement under his employment agreement.

(3)

Establishment of 2015 annual incentive goals and payout of the earned 2015 annual incentive.

(4)

Approval of 2016 annual equity awards.

In addition to a discussion of our compensation philosophy in general, the following discussion highlights these specific decisions.

Total Compensation and Allocation Between Compensation Elements

Both the total amount of compensation paid to our named executive officers and the portion of total compensation represented by each element of compensation have been determined by the Committee with reference to each executive’s experience, capabilities, contributions and strategic importance, the pay levels for peer employees within the Company, the pay levels for similar positions at companies in our peer group and our performance as a whole. As further discussed below, in evaluating these considerations, the Committee sometimes solicits input from its compensation consultant, Korn Ferry Hay Group, an outside executive compensation consulting firm (“Korn Ferry”). The Committee worked with Korn Ferry to assist it in evaluating the Company’s executive compensation practices for senior management personnel and in developing and refining the Company’s peer group.

The input of Korn Ferry is given substantial weight and, in general, the Committee does not increase an executive’s total compensation, or any element of an executive’s compensation, unless it concludes that such increase was necessary to conform to the relevant peer group median or, based on the independent judgment and experience of the Committee members, was necessary for a strategic reason (e.g., the retention of a key executive).

In fiscal year 2015 and the Transition Period, Korn Ferry received payment from the Company in the amount of $29,160 in connection with a review of the Company’s peer group, a review of the compensation for the Company’s named executive officers and a review of the Company’s non-employee director compensation policy.

The Committee has concluded that Korn Ferry’s work for us does not raise any conflict of interest. The Committee has also considered the independence of Korn Ferry. Because of policies and procedures Korn Ferry and the Committee have in place, the Committee is confident that the advice it receives from executive compensation consultants at Korn Ferry is objective and not influenced by Korn Ferry’s or its affiliates’ relationships with the Company or its officers. These policies and procedures include the following:

•

the consultants receive no incentive or other compensation based on the fees charged to the Company for other services provided by Korn Ferry or any of its affiliates;

•

the consultants are not responsible for selling other Korn Ferry or affiliate services to the Company;

•

Korn Ferry’s professional standards prohibit the individual consultant from considering any other relationships Korn Ferry or its affiliates may have with the Company in rendering his or her advice and recommendations;

•

the consultants have direct access to the Committee without management intervention;

•

the Committee has the sole authority to retain and terminate Korn Ferry; and

•

the Committee evaluates the quality and objectivity of the services provided by Korn Ferry each year and determines whether to continue to retain Korn Ferry.

Benchmarking

In October 2015, Korn Ferry identified the following companies as our “peers”, both for purposes of benchmarking total compensation and individual pay elements:

Bebe Stores, Inc.

Build a Bear Workshop, Inc.

Cato Corp.

Christopher & Banks Corporation

Citi Trends, Inc.

Destination XL Group

Francesca’s

New York & Company, Inc.

Pacific Sunwear

Shoe Carnival, Inc.

Stein Mart

Tilly’s, Inc.

Vera Bradley, Inc.

Zumiez Inc.

This list reflects a comprehensive revision of our peer group by Korn Ferry in consultation with the Committee. While some members of the earlier peer group were retained, others were removed because they had ceased to be publicly traded and/or replaced because their revenues and/or market capitalization had ceased to be reasonably comparable to ours. The resulting group contains companies within the retail apparel industry which Korn Ferry considers comparable to our Company. Consistent with its typical process, Korn Ferry considered the following guidelines when reviewing the peer group companies to be used in assessing the Company’s compensation programs:

(a)

Size: revenues and / or market cap (Korn Ferry typically include companies in the range of approximately 0.4x to 2.5x the client revenues, subject to the availability of viable peer candidates);

(b)

Sector: industry / business competitors;

(c)

Talent market: companies from which Company executives may be recruited to or from;

(d)

Complexity: related to the number of “moving parts”, operating model or business strategy;

(e)

Location: a national or global presence is often appropriate at the executive level;

(f)

Customer base / market share: magnitude and demographics of customers; and

(g)

Unique circumstances: such as, for example, concentrated ownership; founder/family member with unusual compensation; pay practices that deviate from industry practices…etc.

Participation of Management in the Compensation Process

Mr. Romano was consulted regularly by the Committee in fiscal year 2015 and the Transition Period with respect to compensation decisions regarding, and the individual performance of, named executive officers other than himself. While his input in such matters was afforded substantial weight, the ultimate decision on all named executive officer compensation matters was made only by the Committee or the Board of Directors. The individual performance of Mr. Romano was evaluated by the Committee and the Board of Directors, without input from any employee.

At the request of the Committee, management assembles and distributes to the Committee, in advance of its meeting or meetings, information requested by the Committee to assist the Committee in its compensation decisions. Such information may include corporate financial data, historical compensation data (for us or members of our peer group) and information regarding the accounting, tax or legal consequences of proposed compensation arrangements, as prepared by internal personnel or external advisors.

Effect of Historical Contractual Arrangements

The Committee’s compensation decisions are made in light of our current and foreseeable future circumstances and with an eye toward conformity with perceived “best practices.” However, the Committee’s

approach to compensation is also influenced by our existing contractual commitments to named executive officers. When appropriate and practicable, the Committee will negotiate with named executive officers to update such “legacy” commitments to the extent necessary to reflect changed circumstances or evolving commercial practices.

Elements of Compensation

The principal elements of our named executive officers’ compensation are: (1) base salary, (2) annual cash bonuses, (3) special or discretionary cash bonuses, (4) equity-based incentives, and (5) severance and change in control benefits.

Base Salary: The base salary of each named executive officer constitutes compensation for discharging such named executive officer’s job responsibilities and is intended to achieve comparability with the base salaries of senior executives at similar companies holding comparable positions, taking into account such factors as the individual executive’s experience, tenure and alternative employment opportunities.

Individual salary adjustments also take into account individual performance contributions for the year, as well as sustained performance contributions over a number of years and significant changes in responsibilities, if any. The assessment of individual performance is subjective and is not intended to correlate to specific corporate performance measures.

For fiscal year 2015, based on updated benchmarking provided to the Committee by Korn Ferry and the application of its subjective judgment, the Committee determined that no named executive officer would receive a base salary increase.

Annual Bonuses: We pay annual bonuses in cash based on our achievement of corporate performance goals established by the Committee, with input from senior management. The target amount for each executive’s annual bonus is expressed as a percentage of the executive’s base salary for the fiscal year. Each executive’s target annual bonus and maximum annual bonus opportunity is set forth in his employment agreement. Other than Mr. Romano and Mr. Daniel, each named executive officer’s threshold annual bonus opportunity is 30% of his base salary, his target annual bonus opportunity is 60% of his base salary and his maximum annual bonus opportunity is 120% of his base salary for fiscal year 2015. To reflect an amendment to Mr. Daniel’s employment agreement made in 2014, his annual bonus opportunities for 2015 were increased. Accordingly, Mr. Daniel’s threshold annual bonus opportunity is 35% of his base salary, his target annual bonus opportunity is 70% of his base salary and his maximum annual bonus opportunity is 140% of his base salary for fiscal year 2015. Pursuant to a separation agreement between the Company and Mr. Daniel entered into on December 17, 2015 (the “Daniel Separation Agreement”), Mr. Daniel remained eligible to receive a pro rata portion of the bonus he would have otherwise received, if any, based on the attainment of the performance targets applicable to his bonus opportunity. Pursuant to his employment agreement, Mr. Romano is entitled to annual performance bonus opportunity with a threshold annual bonus of 50% of his base salary, a target annual bonus of 100% of his base salary and a maximum annual bonus of 200% of his base salary. Mr. Romano’s employment agreement was amended in December 2014 to provide that his 2015 bonus is to be multiplied by 1.33. The Committee provided for this because the change in the Company’s fiscal year effectively increased the bonus period from 12 to 16 months, an increase of 33%.

No adjustment was made to the annual bonus opportunities for the other named executive officers, because the Company provided each of the other named executive officers with a special retention bonus opportunity of $100,000. These special retention bonuses were generally contingent on such named executive officer remaining employed with the Company through November 1, 2015 (each, a “Retention Bonus”). The Retention Bonus would also have been payable to such executive officer if the officer’s employment was terminated by the Company without cause or by the executive for good reason, in either such case, prior to November 1, 2015. Each of Mr. Daniel, Mr. Masciantonio and Mr. Tirnauer received their respective retention bonus in November 2015.

Each executive’s actual annual bonus payment may be lower or higher than the target amount, based on actual corporate performance relative to the specified goals. In determining the amount of the annual bonus payable to an executive when the applicable performance goals have been met, the Committee may exercise negative discretion to reduce the amount of such annual bonus to ensure that the amount ultimately paid is commensurate with the executive’s contribution to the Company’s performance.

The Committee has utilized this same annual bonus approach for several years, and the arrangement is codified as our “Management Incentive Program.”

For fiscal year 2015, the Committee continued to use “Adjusted EBITDA” as the relevant performance metric for annual bonus purposes because it believes that continued profitability will be the key driver to increase stockholder value. For this purpose, “Adjusted EBITDA” represents earnings before interest, taxes, depreciation and amortization, adjusted to exclude: (i) loss on impairment of tangible or intangible assets; (ii) gain or loss on disposal of assets; (iii) gain or loss from the early extinguishment, redemption or repurchase of debt, (iv) stock-based compensation expense and (v) the impact of any changes to accounting principles that become effective during the relevant fiscal year. In addition, Adjusted EBITDA excludes expenses incurred by the Company in connection with certain extraordinary, unusual or infrequently occurring events reported in the Company’s public filings, which includes for fiscal year 2015, any expenses incurred by the Company in connection with the relocation of its corporate headquarters and distribution center facilities. For fiscal year 2016, the definition of “Adjusted EBITDA” was modified to remove the exclusion of expenses incurred in connection with the relocation as such relocation was completed in fiscal year 2015.

Fiscal Year 2015 Bonuses: With respect to fiscal year 2015 bonuses for named executive officers under the Management Incentive Program, on March 3, 2015 the Committee established that the level of Adjusted EBITDA which would yield 100% of target bonus is $25.2 million and that the level of Adjusted EBITDA which would yield the maximum bonus payment (200% of target bonus) is $32 million. The level of Adjusted EBITDA which would yield the threshold level of target bonus of 50% is $21 million. On March 4, 2016, the Committee determined that the Company’s Adjusted EBITDA for fiscal year 2015 was $22.8 million. Therefore, 72.0% of target bonus was payable for fiscal year 2015 under the Management Incentive Program.

Fiscal Year 2016 Bonuses: With respect to fiscal year 2016 bonuses for named executive officers under the Management Incentive Program, on April 6, 2016 the Committee established the levels of Adjusted EBITDA which would yield threshold, target, and maximum bonuses. For fiscal year 2016, the threshold level of bonus was set at 20%, the target level of bonus was set at 100%, and the maximum level of bonus was set at 200%.

Discretionary or Special Bonuses for Fiscal Year 2015: In addition to maintaining an annual bonus program with payments tied to the achievement of pre-established corporate performance goals, the Committee may also authorize the payment of additional cash bonuses on a discretionary or special basis, to reward extraordinary corporate and/or individual accomplishments or to accomplish specific recruitment or retention objectives. Due to the change in the fiscal year, the Committee awarded Mr. Daniel, Mr. Masciantonio and Mr. Tirnauer the Retention Bonuses as described above.

Equity-Based Incentives: The Committee believes that equity awards, when appropriately structured, provide powerful long-term incentives and align the interests of the named executive officers with the interests of our stockholders. Accordingly, we continue to emphasize equity in the total compensation packages provided to our named executive officers.

Awards with respect to Fiscal Year 2015 Performance: Although we did not make equity awards to our named executive officers in fiscal year 2015 (other than setting the performance criteria for the 2015 performance-based restricted stock unit awards as described below), we did make such grants during the Transition Period, which covered performance during such period as well as in fiscal year 2015. These

equity grants made to our named executive officers included a mix of performance-vested restricted stock units, time-vested restricted stock and time-vested options. Each performance-based restricted stock unit represents the right to receive one share of our common stock, upon satisfaction of specified performance conditions.

The total value of awards made to each named executive officer during the Transition Period were approximately as follows: $1,097,250 for Mr. Romano, $631,750 for Mr. Daniel, and $465,500 for each of Mr. Tirnauer, and Mr. Masciantonio. The Committee has generally set the grant date fair value of awards to the named executive officers other than Mr. Romano to approximate the median grant date fair value of annual awards delivered by our peer group companies to their executives serving in comparable positions as determined by Korn Ferry. However, due to the recent change in the Company’s fiscal year, the Committee did not intend to make annual equity grants to named executive officers until April 2016. Accordingly, these awards covered a 16 month period instead of the typical 12 months. Because of this the Committee increased the awards it would typically make to these named executive officers by 33%. The aggregate size of awards made to Mr. Romano are determined in accordance with his employment agreement, again increased by 33% to reflect the increased duration between intended equity grants. For each named executive officer, 25% of the value of these awards was in restricted stock, 50% of such value was in options and the remaining 25% of such value was in performance-based restricted stock units. As it has for the past several years, the Committee grants this particular mix of equity to the named executive officers, including performance-based restricted stock units, to incorporate multi-year metrics into our executive compensation, to ensure that performance-based metrics are diversified and to enlarge the at-risk portion of our executive compensation.

Fiscal Year 2015 Awards: On December 5, 2014 the Committee established the threshold, target and maximum number of shares issuable to each named executive officer pursuant to the performance-based restricted stock unit awards for fiscal year 2015. However, the performance criteria for such awards was set on April 1, 2015. Other than setting this performance criteria, no equity awards were made to our named executive officers during fiscal year 2015.

Post-Fiscal Year 2015 Awards: The total value of awards made to each named executive officer in fiscal year 2016 thus far were approximately as follows: $825,000 for Mr. Romano, and $350,000 for Mr. Masciantonio. These awards include a mix of performance-vested restricted stock units (described below), time-vested restricted stock and time-vested options, consistent with past practice. For each named executive officer, 25% of the value of these awards was in restricted stock, 50% of such value was in options and the remaining 25% of such value was in performance-based restricted stock units.

Performance-Based Restricted Stock Unit Grants through Fiscal Year 2014. For the 2013 and the 2014 awards, the performance condition was based on the Company’s cumulative operating income for the three year period beginning with the start of the fiscal year of issuance (the “Performance Period”). The Committee chose operating income as a measure because it believed that there is a strong relationship between growth in operating income and growth in stockholder value. For this purpose, the Committee determined that operating income will be adjusted to exclude: (i) any changes to accounting principles that become effective during the performance period; (ii) any expenses incurred by the Company in connection with certain extraordinary, unusual or infrequently occurring events reported in the Company’s public filings (which includes, for the fiscal year 2014 award, any expenses incurred by the Company in connection with the relocation of its corporate headquarters and distribution center facilities); (iii) gain or loss from the early extinguishment, redemption, or repurchase of debt; and (iv) gain or loss from all litigation and insurance claims and recoveries.

For the 2013 through 2014 awards, the following levels of cumulative operating income over the respective Performance Period will be used to determine the threshold, target and maximum performance-based restricted stock units earned for each grant:


Fiscal Year of RSU Grant	Performance Period (Fiscal Years)	Threshold Level ($)		Target Level ($)		Maximum Level ($)
2013	2013 through 2015		109,582,000		120,535,000		132,201,000
2014	2014 through 2016		124,110,000		136,516,000		149,728,000

Furthermore, for the fiscal year 2013 grant, regardless of achievement of a given performance level as set forth above, all performance-based restricted stock units will be forfeited if operating income for fiscal year 2015 does not equal or exceed $33,105,000 (which was the Company’s Operating Income in fiscal year 2012). Similarly, for the fiscal year 2014 grant, regardless of achievement of a given performance level as set forth above, all performance-based restricted stock units will be forfeited if operating income for fiscal year 2016 does not equal or exceed $37,494,000 (which was the Company’s Operating Income in fiscal year 2013).

The performance metrics applicable to the fiscal year 2013 awards were not achieved and, accordingly no performance-based restricted stock units will issue to the named executive officers pursuant to such awards.

Performance-Based Restricted Stock Unit Grants for Fiscal Year 2015 and Fiscal Year 2016. For the fiscal year 2015 and fiscal year 2016 awards, the performance condition was based on the Company’s cumulative Adjusted EBITDA, as reflected in the Company’s financials (“Adjusted EBITDA”) for the three year period commencing with the fiscal year in which the award was issued. Just as with the Company’s Management Incentive Program, the Committee chose Adjusted EBITDA as the relevant performance metric for the performance share grant because it believes that continued profitability will be the key driver to increase stockholder value. The Committee determined that earnings, before interest, taxes, depreciation and amortization will be adjusted to exclude the impact of: (i) loss on impairment of tangible or intangible assets; (ii) gain or loss on disposal of assets; (iii) gain or loss from the early extinguishment, redemption or repurchase of debt, (iv) stock-based compensation expense, (v) the impact of any changes to accounting principles that become effective during the Performance Period, and (vi) any expenses incurred by the Company in connection with certain extraordinary, unusual or infrequently occurring events reported in the Company’s public filings, which includes for fiscal year 2015, any expenses incurred by the Company in connection with the relocation of its corporate headquarters and distribution center facilities. For fiscal year 2016, the definition of “Adjusted EBITDA” was modified to remove the exclusion of expenses incurred in connection with the relocation because such relocation was completed in fiscal year 2015.

For these awards, the following levels of Adjusted EBITDA will be used to determine the threshold, target and maximum performance-based restricted stock units earned:


Fiscal Year of RSU Grant	Performance Period (Fiscal Years)	Threshold Level ($)		Target Level ($)		Maximum Level ($)
2015	2015 through 2017		79,500,000		91,600,000		103,700,000
2016	2016 through 2018		81,200,000		101,500,000		114,898,000

The following table sets forth the threshold, target and maximum performance-based restricted stock units that may be earned by each named executive officer upon achievement of threshold, target and maximum levels of performance for each of the 2013, 2014, 2015 (including the TP) and 2016 awards:


Named Executive Officer	Fiscal Year of RSU Grant	Threshold Level (#)		Target Level (#)		Maximum Level (#)
Anthony M. Romano—	2015/TP		9,592		19,183		28,775
Chief Executive Officer & President	2016		6,885		27,537		41,306

	2013		4,714		9,427		14,141
Christopher F. Daniel—	2014		4,007		8,013		12,020
Former President	2015/TP		5,523		11,045		16,568

	2013		2,305		4,609		6,914
Judd P. Tirnauer—	2014		1,828		3,655		5,483
Executive Vice President & Chief Financial Officer	2015/TP		4,069		8,138		12,207

	2013		2,095		4,190		6,285
	2014		1,687		3,374		5,061
Ronald J. Masciantonio—	2015/TP		4,069		8,138		12,207
Executive Vice President & Chief Administrative Officer	2016		2,921		11,683		17,525

The Committee will interpolate to determine the performance-based restricted stock units earned for all levels of cumulative operating income above the threshold level but below the maximum level.

Any dividends declared on the shares of Company stock underlying the performance-based restricted stock units will be credited as additional performance-based restricted stock units based on the fair market value of the Company stock on the dividend record date. Those additional performance-based restricted stock units will be earned, if at all, on the same terms as the original performance-based restricted stock units.

Pursuant to the Company’s form performance-based restricted stock unit award agreement, vesting is contingent not only on satisfaction of the applicable performance conditions, but also generally on the executive’s continued employment with the Company throughout the applicable performance period. Notwithstanding the foregoing, if the executive’s employment terminates or is terminated (a) due to the executive’s death, (b) due to the executive’s disability, (c) by the executive for good reason, or (d) by the Company without Cause, then the executive would remain eligible to vest in a pro-rated portion of the units based on the actual performance of the Company through the end of the applicable performance period. Additionally, upon a change in control of the Company, all performance-based restricted stock unit that have not been forfeited as of such date will vest at the target level.

Pursuant to the Daniel Separation Agreement and the Company’s standard performance-based restricted stock unit award agreement, a pro-rata portion of each of the 2013, 2014 and 2015 performance-based restricted stock unit awards remained outstanding upon his termination of employment and such outstanding portion will vest, if at all, based on attainment of the goals applicable to such award. Based on the Company’s performance with respect to the 2013 performance-based restricted stock unit award, the Company did not attain the applicable performance goals and Mr. Daniel’s 2013 award was forfeited without any shares being delivered.

Severance and Change in Control Benefits: The specific terms of our severance and change in control arrangements are discussed below under the heading “Potential Payments upon Termination or Change in Control.”

The Committee has noted the prevalence of severance and change in control arrangements among our peer companies and believes that such arrangements, when properly tailored, are appropriate and necessary. Specifically, the Committee has concluded that such commitments are required to retain the continued service of Mr. Romano, Mr. Tirnauer and Mr. Masciantonio and were required with respect to Mr. Daniel. Further, in the case of any potential change in control, the Committee has concluded that such commitments are necessary to enable our named executive officers to evaluate objectively the benefits to stockholders of the proposed transaction, notwithstanding any potential effects on their own job security.

The Committee also believes that reasonable severance and change in control benefits (1) should be established with reference to an executive’s position and current cash compensation opportunities, not with reference to his or her tenure, (2) should be conditioned upon execution of a release of claims against the employer and its affiliates, and (3) should be conditioned on the executive’s commitment not to compete for a reasonable period following any cessation of his or her employment.

In general, cash severance benefits are expressed as a function of each executive’s base salary (or base salary and target bonus) as in effect at the time of separation.

No named executive officer of the Company has a right to receive a tax gross-up related to the impact of the excise tax under Section 280G of the Internal Revenue Code.

Additional Compensation Information

Tax and Accounting Considerations Affecting Executive Compensation. We endeavor to design our equity incentive awards so that they are accounted for under standards governing equity-based arrangements and, more specifically, so that they are afforded fixed treatment under those standards. We generally attempt to structure our arrangements to maximize the tax deductibility of compensation, by taking advantage of performance-based exemptions to the limits of Section 162(m) of the Internal Revenue Code. However, the Committee reserves the right to approve compensation that is not fully deductible.

Compensation Risk Analysis. The Committee is keenly aware that compensation arrangements, if not properly structured, may encourage inappropriate risk-taking. In designing our compensation programs, the Committee seeks to mitigate such risk by:

(a)

providing a meaningful portion of total compensation in the form of equity incentives that are earned over multiple years (to encourage an appropriately long-term focus);

(b)

capping annual cash bonuses for named executive officers under the Management Incentive Program at 200% of base salary for Mr. Romano, 140% of base salary Mr. Daniel, and 120% of base salary for Messrs. Tirnauer and Masciantonio (to provide appropriate balance between short- and long-term objectives) for fiscal year 2015; and

(c)

reserving the discretion to reduce annual bonuses otherwise payable under the Management Incentive Program (to allow recognition of the relationship between individual executive contributions and the achievement of specified performance metrics).

Stock Ownership Guidelines. The Committee recommended to the Board of Directors that a formal stock ownership guideline be implemented with respect to our management team. Based on the Committee’s recommendation, the Board adopted such a policy on January 24, 2014. Pursuant to this policy,

•

The Chief Executive Officer is required to own shares of our common stock having a fair market value equal to or greater than three times his or her then current annual base salary; and

•

Each other named executive officer is required to own shares of our common stock having a fair market value equal to or greater than his or her then current annual base salary.

Named executive officers are required to attain the specified level of stock ownership (a) within three years from the date of the adoption of these guidelines with respect to named executive officers then currently employed as of the date of adoption or (b) within five years of the named executive officer’s date of hire, with respect to officers employed after such date.

The failure of a named executive officer to comply with these guidelines will be considered by the Committee when determining future equity grants for such named executive officer. Although compliance with these guidelines may be waived at the discretion of the Board, such waiver is expected to be rare. We believe that these ownership guidelines will provide a significant incentive for each of the named executive officers to ensure that his or her actions, and the actions of all those reporting to such officer, are focused on the creation of sustainable stockholder value and the avoidance of excessive risk.

The changes to the stock ownership guidelines applicable to our non-employee directors are discussed above under the heading “Compensation of Directors.”

The Committee continues to evaluate the implementation of a clawback policy and intends to adopt such a policy after the SEC provides further guidance on that issue.

REPORTS OF COMMITTEES OF THE BOARD OF DIRECTORS

Report of the Compensation Committee

We, the members of the Compensation Committee, have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

The Compensation Committee

B. Allen Weinstein, Chair

Arnaud Ajdler

Barry Erdos

Report of the Audit Committee

The Audit Committee of the Board of Directors has:

•

Reviewed and discussed the Company’s audited consolidated financial statements for fiscal year 2015 and the Transition Period with management;

•

Discussed with the Company’s independent registered public accountants matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16, Communications with Audit Committees, in connection with the audit of the Company’s consolidated financial statements for fiscal year 2015 and the Transition Period; and

•

Received the written disclosures and the letter from the independent registered public accountants required by applicable requirements of the Public Company Accounting Oversight Board for its communications with the Audit Committee regarding independence, and has discussed with the independent registered public accountants its independence.

In reliance on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for filing with the SEC for fiscal year 2015 and the Transition Period.

The Audit Committee

Barry Erdos, Chair

Michael J. Blitzer

J. Daniel Plants

William A. Schwartz, Jr.

The foregoing Audit Committee Report shall not be deemed to be incorporated by reference into any filing made by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, notwithstanding any general statement contained in any such filing incorporating this proxy statement by reference, except to the extent the Company incorporates such report by specific reference.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table provides information about all compensation earned during our fiscal years ended January 30, 2016, the Transition Period, and our fiscal years ended September 30, 2014 and 2013 by the individuals who served as our executive officers during that year (collectively referred to as the “named executive officers”):


Name and Principal Position	Fiscal Year		Salary ($)		Bonus ($)		Non-Equity Incentive Plan Compensation ($)		Stock Awards ($) (1)		Option Awards ($) (1)		All Other Compensation ($)			Total ($)
Anthony M. Romano—		2015		825,000		—		790,291		—		—		12,000	(2)		1,627,291
Chief Executive Officer & President		TP		275,000		—		—		274,317		549,372		4,000	(2)		1,102,689
Chief Executive Officer & President		2014		117,404		—		—		206,249		205,006		6,673			535,332

Christopher F. Daniel—		2015		452,692		—		—		—		—		882,909	(3)		1,335,601
Former President (until December 7, 2015)		TP		178,333		100,000		—		157,944		316,306		4,000	(3)		756,853
		2014		533,333		—		—		356,242		119,055		—			1,008,630
		2013		525,000		—		223,650		281,245		93,663		—			1,123,558

Judd P. Tirnauer—		2015		405,000		—		175,020		—		—		12,000	(4)		592,020
Executive Vice President & Chief Financial Officer		TP		135,000		100,000		—		116,373		233,067		4,000	(4)		588,440
		2014		401,667		—		—		216,670		108,615		780			727,732
		2013		383,333		—		163,191		183,346		91,583		4,505			825,958

Ronald J. Masciantonio—		2015		390,000		—		168,538		—		—		12,000	(4)		570,538
Executive Vice President & Chief Administrative Officer		TP		130,000		100,000		—		116,373		233,067		4,000	(4)		583,440
		2014		385,000		—		—		200,015		100,260		780			686,055
		2013		353,333		—		150,083		166,678		83,261		980			754,335

(1)

The amounts in the columns titled “Stock Awards” and “Option Awards” reflect the grant date fair values of awards made during the identified fiscal year, as computed in accordance with FASB ASC Topic 718 and the assumptions stated in footnote #13 of our Form 10-K filed on December 12, 2014. These amounts also include the grant date fair value of currently unearned performance-based restricted stock units issued during fiscal year 2013, 2014 and 2015 at the target level of achievement. However, during fiscal year 2014 (with respect to the 2013 and 2014 awards), the Company determined pursuant to FASB ASC Topic 718 that such awards were unlikely to be earned, even at the threshold level.

(2)	The value shown for Mr. Romano under the heading “All Other Compensation” for the Transition Period and fiscal year 2015 represent automobile expense reimbursement.

(3)

The value shown for Mr. Daniel under the heading “All Other Compensation” for the Transition Period represents automobile expense reimbursement. The values shown for Mr. Daniel under the heading “All Other Compensation” for fiscal year 2015 represents amounts paid or payable by the Company for Mr. Daniel’s severance of $863,255.

(4)	The values shown for Messrs. Tirnauer and Masciantonio under the heading “All Other Compensation” for the Transition Period and fiscal year 2015 represent automobile expense reimbursement.

Grants of Plan-Based Awards

The following table sets forth information regarding grants of plan-based awards to each of our named executive officers during our fiscal year ended January 30, 2016 and the Transition Period.


				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 Shares of Stock or Units (#) (3)		All Other Option Awards: Number of Shares Underlying Options (#) (4)		Exercise Price of Option Awards ($ / Sh)		Grant Date Fair Value of Stock and Option Awards ($) (5)
Name	Grant Date			Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)						Exercise Price of Option Awards ($ / Sh)		Grant Date Fair Value of Stock and Option Awards ($) (5)
Anthony M. Romano		03/03/2015			548,625		1,097,250		2,194,500		—		—		—		—		—		—		—
		04/01/2015	(6)		—		—		—		9,592		19,183		28,775		—		—		—		286,594
		12/05/2014			—		—		—		—		—		—		19,183		—		—		274,317
		12/05/2014			—		—		—		—		—		—		—		177,618		14.30		549,372

Christopher F. Daniel		03/03/2015			187,250		374,500		749,000		—		—		—		—		—		—		—
		04/01/2015	(6)		—		—		—		5,523		11,045		16,568		—		—		—		165,012
		12/05/2014			—		—		—		—		—		—		11,045		—		—		157,944
		12/05/2014			—		—		—		—		—		—		—		102,265		14.30		316,306

Judd P. Tirnauer		03/03/2015			121,500		243,000		486,000		—		—		—		—		—		—		—
		04/01/2015	(6)		—		—		—		4,069		8,138		12,207		—		—		—		121,582
		12/05/2014			—		—		—		—		—		—		8,138		—		—		116,373
		12/05/2014			—		—		—		—		—		—		—		75,353		14.30		233,067

Ronald J. Masciantonio		03/03/2015			117,000		234,000		468,000		—		—		—		—		—		—		—
		04/01/2015	(6)		—		—		—		4,069		8,138		12,207		—		—		—		121,582
		12/05/2014			—		—		—		—		—		—		8,138		—		—		116,373
		12/05/2014			—		—		—		—		—		—		—		75,353		14.30		233,067

(1)

The amounts in the column under “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” represent potential threshold, target and maximum bonuses available to the named executive officers under the Company’s Management Incentive Program. The term “Threshold” means the lowest non-zero amount that could be paid as a bonus under the applicable programs if a bonus is payable for the applicable fiscal year. The threshold is not a minimum bonus. There is no minimum bonus under the Company’s Management Incentive Program. If specified performance objectives are not met for the applicable fiscal year, no bonus is payable for that fiscal year. On March 4, 2016, the Committee determined that the Company’s Adjusted EBITDA for fiscal year 2015 was $22.8 million. Therefore, 72.0% of target bonus was payable for fiscal year 2015 under the Management Incentive Program.

(2)

The amounts in the column under “Estimated Future Payouts Under Equity Incentive Plan Awards” represent potential threshold, target and maximum performance-based restricted stock units available to the named executive officers based upon the Company’s performance over a three year period (as described above). The term “Threshold” means the lowest non-zero amount that could be delivered as restricted stock units based on the Company’s performance over a three-year performance period. The threshold is not a minimum amount payable or deliverable. If specified performance objectives are not met for the applicable performance period, no restricted stock unit is payable or deliverable for that performance period.

(3)

The amounts in the column under “All Other Stock Awards” represent shares of restricted stock that vest over time. The vesting schedule is described in the footnotes to the “Outstanding Equity Awards” table below. Dividends are payable on these shares of restricted stock on the same basis that dividends are payable with respect to our common stock generally, except that payment of dividends on unvested shares of restricted stock is deferred until vesting.

(4)	The amounts in the column under “All Other Option Awards” represent shares underlying options awarded, each of which vests over time. The vesting schedule is described in the footnotes to the “Outstanding Equity Awards” table below.

(5)

The amounts in the column under “Grant Date Fair Value of Stock and Option Awards” with respect to stock awards and option awards represent the fair value of the awards on the date of grant, as computed in accordance with applicable accounting standards and the assumptions stated in footnote #12 of our Form 10-K filed on April 14, 2016. The amounts in the column under “Grant Date Fair Value of Stock and Option Awards” with respect to performance-based restricted stock unit awards represent the expected value of the award, based on the target level of performance and the fair market value of our stock on the date of grant. The grant date value of these performance-based restricted stock units based on the fair market value of our stock on the date of grant and the maximum level of performance for each executive for these fiscal year 2015 grants would be: $429,899 for Mr. Romano, $247,526 for Mr. Daniel (but for Mr. Daniel’s separation), $182,373 for Mr. Tirnauer, and $182,373 for Mr. Masciantonio. Please note that the performance period for the awards extends through the end of fiscal year 2017 and, accordingly, none of these restricted stock units have yet been earned.

(6)	On December 5, 2014 the Committee established the threshold, target and maximum number of shares issuable to each named executive officer pursuant to the performance-based restricted stock unit awards for fiscal year 2015. However, the performance criteria for such awards was set on April 1, 2015.

Outstanding Equity Awards

The following table sets forth unexercised stock options, stock that has not yet vested and equity incentive plan awards outstanding as of January 30, 2016, for each of our named executive officers.


	Option Awards										Stock Awards
Name	Number of Securities Underlying Unexercised Options Exercisable (#)		Number of Securities Underlying Unexercised Options Unexercisable (#) (1)		Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($) (2)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) (3)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) (2)
Anthony M. Romano (4)		8,682		26,047		—		19.750		08/11/2024		—		—		—		—
		44,404		133,214		—		14.300		12/05/2024		—		—		—		—
		—		—		—		—		—		22,221		148,658		9,591		64,164

Christopher F. Daniel (5)		16,000		8,000		—		20,620		03/01/2021		—		—		—		—
		2,503		—		—		14.510		11/18/2021		—		—		—		—
		5,808		2,904		—		19.890		11/16/2022		—		—		—		—
		4,624		4,624		—		30.500		12/04/2023		—		—		—		—
		25,566		76,699		—		14.300		12/05/2024		—		—		—		—
		—		—		—		—		—		—		—		1,558		10,423

Judd P. Tirnauer (6)		16,000		2,503		—		11.890		01/29/2020		—		—		—		—
		8,000		4,000		—		22.130		03/03/2021		—		—		—		—
		6,198		—		—		14.510		11/18/2021		—		—		—		—
		5,678		2,840		—		19.890		11/16/2022		—		—		—		—
		4,218		4,219		—		30.500		12/04/2023		—		—		—		—
		18,838		56,515		—		14.300		12/05/2024		—		—		—		—
		—		—		—		—		—		9,033		60,431		5,897		39,451

Ronald J. Masciantonio (7)		12,000		—		—		11.890		01/29/2020		—		—		—		—
		9,000		—		—		22.130		03/03/2021		—		—		—		—
		4,882		—		—		14.510		11/18/2021		—		—		—		—
		5,162		2,582		—		19.890		11/16/2022		—		—		—		—
		3,894		3,894		—		30.500		12/04/2023		—		—		—		—
		18,838		56,515		—		14.300		12/05/2024		—		—		—		—
		—		—		—		—		—		8,792		58,818		5,756		38,508

(1)

In addition to the five year service-based time vesting requirement, all of the shares underlying the stock options issued to Mr. Tirnauer and Mr. Masciantonio in January 2010 (each a “Performance Grant”), were to become exercisable if, prior to the fifth anniversary of the date of grant (but no later than the cessation of the executive’s service), a change in control occurred or the closing price of the Company’s Common Stock shall have exceeded $15.00 for 30 consecutive trading days on the principal national securities exchange on which the Company’s Common Stock is listed or admitted to trading. This closing price performance condition was satisfied during the first quarter of fiscal year 2011.

(2)	The market value is based upon the closing price of our Common Stock on January 29, 2016 ($6.69).

(3)

Except for Mr. Daniel, amounts included under “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested” represent the threshold award of performance-based restricted stock units issuable to each executive upon achievement of the threshold level of performance for each grant (for more information see the description of the Company’s performance-based restricted stock units above in “Compensation Discussion and Analysis”). As more fully described above, these performance-based restricted stock units for each award will vest, if at all, on the basis of the Company’s achievement of the specified performance metric over the subject three-year performance period. For Mr. Daniel, the amount represents a pro-rata portion of the threshold amount (per the terms of the Daniel Separation Agreement). However, during fiscal year 2014, the Company determined pursuant to FASB ASC Topic 718 that such fiscal year 2014 awards were unlikely to be earned, even at the threshold level.

(4)

The stock options and shares of restricted stock granted to Mr. Romano vest in four substantially equal installments over the four-year period following the grant date. The 34,729 shares of restricted stock granted to Mr. Romano on August 11, 2014, 26,047 of which were unvested as of January 30, 2016, vest in substantially equal annual installments over the four-year period following the grant date.

The 177,618 shares of restricted stock granted to Mr. Romano on December 5, 2014, 133,214 of which were unvested as of January 30, 2016, vest in substantially equal annual installments over the four-year period following the grant date.

(5)

The stock options granted to Mr. Daniel on June 1, 2011 vest in five equal annual installments over the five-year period following the grant date. The stock options granted to Mr. Daniel on November 18, 2011 vest over the four-year period following the grant date in substantially equal annual installments. The stock options granted to Mr. Daniel on November 16, 2012 vest in substantially equal annual installments over the four-year period following the grant date. All shares of unvested restricted stock previously held by Mr. Daniel were forfeited due to his termination on December 7, 2015. Additionally, all of the aforementioned stock options expired without being exercised subsequent to Mr. Daniel’s termination.

(6)

With the exception of the stock options and shares of restricted stock granted to Mr. Tirnauer on January 29, 2010 and March 3, 2011, all stock options and restricted stock held by Mr. Tirnauer as of January 30, 2016 vest in four substantially equal annual installments over the four-year period following the grant date. The stock options and restricted stock granted to Mr. Tirnauer on January 29, 2010 and March 3, 2011 vest in equal annual installments over the five-year period following the grant date. 2,000 of the 10,000 shares of restricted stock granted to Mr. Tirnauer on March 3, 2011 were unvested as of January 30, 2016. The 5,417 shares of restricted stock granted to Mr. Tirnauer on November 18, 2011, none of which were unvested as of January 30, 2016, vest in substantially equal annual installments over the four-year period following the grant date. The 4,609 shares of restricted stock granted to Mr. Tirnauer on November 16, 2012, 1,153 of which were unvested as of January 30, 2016, vest in substantially equal annual installments over the four-year period following the grant date. The 3,552 shares of restricted stock granted to Mr. Tirnauer on December 4, 2013, 1,776 of which were unvested as of January 30, 2016, vest in substantially equal annual installments over the four-year period following the grant date. The 8,138 shares of restricted stock granted to Mr. Tirnauer on December 5, 2014, 6,104 of which were unvested as of January 30, 2016, vest in substantially equal annual installments over the four-year period following the grant date. The stock options granted to Mr. Tirnauer on January 29, 2010 are also subject to accelerated vesting upon a change in control.

(7)

With the exception of the stock options and shares of restricted stock granted to Mr. Masciantonio on January 29, 2010 and March 3, 2011, all stock options and restricted stock held by Mr. Masciantonio as of January 30, 2016vest in four substantially equal annual installments over the four-year period following the grant date. The stock options granted to Mr. Masciantonio on January 29, 2010 and March 3, 2011 vest in equal annual installments over the five-year period following the grant date. 1,600 of the 8,000 shares of restricted stock granted to Mr. Masciantonio on March 3, 2011 were unvested as of January 30, 2016. The 4,267 shares of restricted stock granted to Mr. Masciantonio on November 18, 2011, none of which were unvested as of January 30, 2016, vest in substantially equal annual installments over the four-year period following the grant date. The 4,190 shares of restricted stock granted to Mr. Masciantonio on November 16, 2012, 1,048 of which were unvested as of January 30, 2016, vest in substantially equal annual installments over the four-year period following the grant date. The 3,279 shares of restricted stock granted to Mr. Masciantonio on December 4, 2013, 1,640 of which were unvested as of January 30, 2016, vest in substantially equal annual installments over the four-year period following the grant date. The 8,138 shares of restricted stock granted to Mr. Masciantonio on December 5, 2014, 6,104 of which were unvested as of January 30, 2016, vest in substantially equal annual installments over the four-year period following the grant date. The stock options granted to Mr. Masciantonio on January 29, 2010 are also subject to accelerated vesting upon a change in control.

Option Exercises and Stock Vested

The following table sets forth options exercised by, and stock awards vested to, our named executive officers during our fiscal year 2015 and the Transition Period:


	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)
Anthony M. Romano		—		—		7,405		62,264
Christopher F. Daniel		—		—		10,157		94,953
Judd P. Tirnauer		—		—		10,823		115,952
Ronald J. Masciantonio		—		—		9,502		100,054

Potential Payments upon Termination or Change in Control

We have entered into agreements with each of our current named executive officers that provide payments and benefits to the executive in the event of his termination of employment under various circumstances, including a change of control. The following tables reflect the amount of compensation payable to each of our current named executive officers upon these various events. The amounts shown assume that such termination was effective as of January 30, 2016, the last day of our fiscal year (or with respect to Mr. Daniel, December 7, 2015, the date of his termination of employment). The amounts are calculated using various assumptions and are therefore only estimates of the amounts that could become payable to our current named executive officers. The actual amounts to be paid out can only be determined at the time of an actual termination or change in control.

General Amounts Due Upon Termination. Generally, upon a termination of employment for any reason, each current named executive officer is entitled to receive the payment of certain accrued obligations, including the following (none of which are included on the trigger event tables presented below for each named executive officer):

•

annual base salary through the date of termination, to the extent not previously paid;

•

any annual bonus earned but not previously paid with respect to a year ended prior to the date of termination;

•

any accrued, but unused, vacation pay; and

•

any unreimbursed business expenses.

Anthony M. Romano

Under the terms of the Employment Agreement with Mr. Romano, as amended, Mr. Romano has the following severance rights:

Termination without Cause or Resignation due to Good Reason. Upon a termination of employment without “cause” or resignation due to “good reason” that, in either such case, does not occur within the 2 year period after a “change in control,” Mr. Romano will be entitled to the following payments and/or benefits:

•

continuation of base salary for 12 months;

•

payment of an amount equal to the average annual bonus earned by Mr. Romano over the preceding two years (or over the period of employment if termination occurs prior to the end of the second fiscal year following commencement of employment), which shall be paid in equal installments over the 12 months following such termination;

•

the Initial Grant would vest in full;

•

with respect to each outstanding grant of time-based restricted stock, time-based restricted stock units or stock options (exclusive of the Initial Grant), vesting of the tranche that was next scheduled to vest pursuant to each such grant shall be accelerated;

•

a pro-rata portion of any outstanding performance-based restricted stock units will remain outstanding and will vest to the extent earned based on the actual performance of the Company through the end of the applicable performance period; provided however, if a change in control occurs during the performance period, such units will then vest at the target level and be immediately settled;

•

payment of a pro-rata portion of the annual bonus he would otherwise be entitled to receive for the year of termination based on actual corporate and/or individual performance for that year; and

•

continued coverage (for himself and, to the extent covered immediately prior to the date of termination, his spouse and eligible dependents) under our group health plan for one year.

Termination without Cause or Resignation due to Good Reason in the 24 Month Period Following a Change in Control. Upon a termination of employment without “cause” or resignation due to “good reason,” that, in either such case, occurs within the 24 month period immediately following a “change in control,” Mr. Romano will be entitled to the following payments and/or benefits:

•

continuation of base salary for 24 months;

•

all outstanding grants of time-based restricted stock, time-based restricted stock units or stock options, including the Initial Grant, would vest in full;

•

all outstanding performance-based restricted stock units will vest at the target level and be immediately settled;

•

payment of a pro-rata portion of the annual bonus he would otherwise be entitled to receive for the year of termination based on actual corporate and/or individual performance for that year;

•

continued coverage (for himself and, to the extent covered immediately prior to the date of termination, his spouse and eligible dependents) under our group health plan for 24 months; and

•

payments by us to or for the benefit of Mr. Romano shall be limited to the largest amount that could be payable to Mr. Romano without causing the application of the excise tax under Section 4999 of the Code; provided that such reduction shall only be imposed if the aggregate after-tax value of such amounts is equal to or greater than the aggregate after-tax value (after giving effect to the excise tax) of such amount without any such reduction.

Death. In the event of his termination of employment due to death, Mr. Romano’s executors, legal representatives or administrators will be entitled to the following payments and/or benefits:

•

the Initial Grant would vest in full; and

•

payment of a pro-rata portion of the annual bonus he would otherwise be entitled to receive for the year of termination based on actual corporate and/or individual performance for that year.

Disability. In the event of his termination of employment due to disability, Mr. Romano will be entitled to the following payments and/or benefits:

•

the Initial Grant would vest in full; and

•

payment of a pro-rata portion of the annual bonus he would otherwise be entitled to receive for the year of termination based on actual corporate and/or individual performance for that year.

Mr. Romano is bound by certain non-competition and non-solicitation covenants, which extend for a period of 12 months following termination of employment (or the applicable severance period, if longer). To receive any severance or termination payments or benefits described above, Mr. Romano is required to timely execute and deliver a general release and non-disparagement agreement in a form prescribed by us.

Amendment to Employment Agreement. Mr. Romano’s employment agreement was amended on December 4, 2014 to address the change in the Company’s fiscal year. Pursuant to such amendment, Mr. Romano’s bonus opportunity for fiscal year 2015 was 133% of the otherwise applicable annual amount in lieu of any bonus opportunity with respect to the Transition Period and Mr. Romano’s equity grant made in the Transition Period would also be 133% of the applicable amount, while the mix of such equity would be 50% stock options, 25% restricted stock and 25% performance-based restricted stock units. His employment agreement was further amended to provide the Committee with flexibility in the administration of the Company’s cash bonus program due to the change in the Company’s fiscal year.

Description of Triggering Events

Cause. Mr. Romano’s employment may be terminated by us for “cause” upon Mr. Romano’s (a) conviction of, or the entry of a plea of guilty or no contest to, a crime, other than a minor traffic offense; (b) alcohol abuse or addiction to a controlled drug (other than in accordance with a physician’s prescription); (c) willful misconduct or gross negligence in the course of employment; (d) material breach of any material published Company policy; (e) material breach of any agreement with or duty owed to the Company or any of its affiliates; or (f) refusal to perform the lawful and reasonable directives of the Board of Directors or any committee thereof.

Good Reason. Mr. Romano may terminate his employment for “good reason” upon the occurrence of any of the following without his prior consent: (i) a material, adverse change in title, authority or duties; (ii) a reduction in base salary or bonus opportunity; or (iii) a relocation of his principal worksite more than 50 miles from the Company’s headquarters.

Disability. Under Mr. Romano’s employment agreement, “disability” has the same definition as such term does under the Company’s long-term disability plan.

Change in Control. The “change in control” provisions of Mr. Romano’s employment agreement will generally be triggered upon the first to occur of any of the following:

•

any person becomes beneficial owner of more than 50% of the voting power of the Company’s then outstanding securities;

•

a consolidation, share exchange, reorganization or merger of the Company resulting in the stockholders of the Company immediately prior to such event not owning at least a majority of the voting power of the resulting entity’s securities outstanding immediately following such event;

•

the sale of substantially all of our assets; or

•

a liquidation or dissolution of the Company.

Assuming one of the following events occurred on January 30, 2016, Mr. Romano’s payments and benefits have an estimated value of:


	Severance Payment ($)			Payment of Pro-Rata Annual Bonus ($)		Additional Severance Payment			Health Benefit Continuation ($)			Other ($)		Value of Options Subject to Acceleration ($)		Value of Restricted Stock and Restricted Stock Units Subject to Acceleration ($)			Total ($)
For Cause		—			—		—			—			—		—		—			—
Voluntary Resignation (without Good Reason)		—			—		—			—			—		—		—			—
Death		—			790,291		—			—			—		—		52,403	(1)		842,694
Disability		—			790,291		—			—			—		—		52,403	(1)		842,694
Without Cause or for Good Reason		825,000	(2)		790,291		790,291	(3)		21,297	(4)		—		—		130,561	(5)		2,557,440
Without Cause or for Good Reason in connection with a Change in Control		1,650,000	(6)		790,291		790,291	(3)		42,593	(7)		—		—		286,884	(8)		3,560,059
Change in Control (without termination)		—			—		—			—			—		—		138,226	(9)		138,226

(1)	This amount represents the value of 7,833 shares of otherwise unvested Common Stock, based on $6.69, the closing price of our Common Stock on January 29, 2016.

(2)	This amount is equal to 12 months of Mr. Romano’s monthly base salary as of January 30, 2016.

(3)	This amount represents an amount equal to the average annual bonus earned over Mr. Romano’s period of employment.

(4)	This amount represents premium payments for 12 months of continued group health coverage.

(5)

This amount represents (a) the value of 7,833 shares of otherwise unvested Common Stock, based on $6.69, the closing price of our Common Stock on January 29, 2016 ($52,403), plus (b) the value of 4,796 shares of otherwise unvested Common Stock (which represents restricted stock that would have vested at the next scheduled vest after January 30, 2016), based on $6.69, the closing price of our Common Stock on January 29, 2016 ($32,085), plus (c) with respect to the fiscal year 2015 grant of restricted stock units, (i) the value of 6,394 shares of otherwise unvested and unearned performance-based restricted stock units (a pro-rated portion of the target level of the performance-based grant through January 30, 2016), based on $6.69, the closing price of our Common Stock on January 29, 2016 ($42,776) plus (ii) the value of additional performance-based restricted stock units that would be issued due to cash dividends paid on our Common Stock during the performance period with respect to the 6,394 shares underlying those units ($3,297) Although Mr. Romano would be entitled to a portion of certain currently unearned performance-based restricted stock units from the fiscal year 2014 award if earned, no value is shown here because the Company determined pursuant to FASB ASC Topic 718 that such awards are unlikely to be earned, even at the threshold level.

(6)	This amount is equal to 24 months of Mr. Romano’s monthly base salary as of January 30, 2016.

(7)	This amount represents premium payments for 24 months of continued group health coverage.

(8)

This amount represents (a) the value of 22,221 shares of otherwise unvested Common Stock, based on $6.69, the closing price of our Common Stock on January 29, 2016 ($148,658), plus (b) the value of 19,183 shares of otherwise unvested and unearned performance-based restricted stock units (the target level of the performance-based grant), based on $6.69, the closing price of our Common Stock on January 29, 2016 ($128,334), plus (c) the value of additional performance-based restricted stock units that would be issued due to cash dividends paid on our Common Stock during the performance period with respect to the 19,183 shares underlying those units ($9,892).

(9)

This amount represents (a) the value of 19,183 shares of otherwise unvested and unearned performance-based restricted stock units (the target level of the performance-based grant), based on $6.69, the closing price of our Common Stock on January 29, 2016 ($128,334), plus (b) the value of additional performance-based restricted stock units that would be issued due to cash dividends paid on our Common Stock during the performance period with respect to the 19,183 shares underlying those units ($9,892).

Christopher F. Daniel

Termination of Mr. Daniel’s Employment on December 7, 2015. In connection with the elimination of the separate title of President, the Company terminated the employment of Mr. Daniel, effective December 7, 2015. In connection with Mr. Daniel’s separation of service with the Company, the Company entered into the Daniel Separation Agreement, pursuant to which Mr. Daniel received or will receive certain payments, accelerated vesting of certain outstanding restricted stock and stock options, and other benefits that were materially consistent with such payments and benefits provided under his then existing employment agreement.

Accordingly, pursuant to the Daniel Separation Agreement, Mr. Daniel was entitled to the following payments and/or benefits upon his resignation:

•

12 monthly severance payments equal to his monthly base salary of $44,583 each;

•

an additional severance payment equal to a pro-rata portion of the annual bonus he would otherwise be entitled to receive for fiscal year 2015 (based on actual corporate performance, the amount payable was $229,088;

•

outstanding performance-vested restricted stock units will vest on a pro-rata basis (pro-rated based on the portion of the performance period completed by the time of the executive’s termination) to the extent the underlying performance goals are attained at the end of the applicable performance period (with respect to Mr. Daniel’s 2013 performance-vested restricted stock units, all units were forfeited);

•

waiver of the premium for continued coverage (for himself and, to the extent covered immediately prior to the date of termination, his spouse and eligible dependents) under our group health plan for one year; and

•

the non-competition provisions applicable to Mr. Daniel were limited such that it would no longer be a violation to provide services to a “competing business” if sales of “competing products” (as such terms are defined Mr. Daniel’s Employment Agreement) by that business do not exceed 10% of that business’ gross revenues for the 12 month period prior to that date that Mr. Daniel accepts employment with such business.

In order to receive the payments or benefits described above, Mr. Daniel was required to and did timely execute and deliver a general release and non-disparagement agreement in a form prescribed by us.

Mr. Daniel is bound by certain non-competition and non-solicitation covenants, which extend for a period of 24 months following any termination of employment.

In connection with the Daniel Separation Agreement, Mr. Daniel also agreed to provide consulting services to the Company for approximately one day per week from the date of his termination until January 31, 2016. In exchange for his provision of such service the Company agreed to provide Mr. Daniel with (a) a lump sum payment of $89,167, an amount equal to two months base salary, (b) waiver of the premium for continued coverage for an additional two months (increasing the total period of coverage from the 12 months described above to 14 months total), (c) reimbursement of $5,000 in legal fees with respect to the negotiation of the Daniel Separation Agreement, (d) an additional lump sum payment of $10,000, and (e) the personal use of travel credits.

Based on his termination of employment on December 7, 2015, Mr. Daniel’s payments and benefits have an estimated value of:


	Severance Payment ($)			Additional Severance Payment of Pro-Rata Annual Bonus ($)			Health Benefit Continuation ($)			Other ($)			Value of Performance- Based Stock Units ($)			Total ($)
Termination as of December 7, 2015 pursuant to the Daniel Separation Agreement		535,000	(1)		229,088	(2)		21,927	(3)		107,821	(4)		22,445	(5)		916,281

(1)	This amount represents 12 monthly severance payments equal to Mr. Daniel’s monthly base salary.

(2)	This amount represents an additional severance payment equal to a pro-rata portion of the annual bonus Mr. Daniel otherwise be entitled to receive for fiscal year 2015 (based on actual corporate performance).

(3)	This amount represents premium payments for 12 months of continued group health coverage.

(4)

This amount represents the following amounts payable to Mr. Daniel in exchange for consulting services: (a) a lump sum payment of $89,167, an amount equal to two months base salary, (b) waiver of the premium for continued group health coverage for an additional two months, (c) reimbursement of $5,000 in legal fees with respect to the negotiation of the Daniel Separation Agreement, and (d) an additional lump sum payment of $10,000.

(5)

This amount represents the value of 3,115 shares outstanding performance-vested restricted stock units (the pro-rated target level of the performance-based grant) from the 2015 grant, based on $6.69, the closing price of our Common Stock on January 29, 2016 ($20,839), plus (b) the value of additional performance-based restricted stock units that would be issued due to cash dividends paid on our Common Stock during the performance period with respect to the 3,115 shares underlying those units ($1,606). Although Mr. Daniel would also be entitled to certain currently unearned performance-based restricted stock units from the fiscal year 2014 award if earned, no value is shown here because the Company determined pursuant to FASB ASC Topic 718 that such awards are unlikely to be earned, even at the threshold level.

Judd P. Tirnauer

Under the terms of his employment agreement, Mr. Tirnauer has the following severance rights:

Termination without Cause or Resignation due to Good Reason. Upon a termination of employment without “cause” or resignation due to “good reason” that, in either such case, does not occur within the 12 month period after a “change in control,” Mr. Tirnauer will be entitled to the following payments and/or benefits:

•

continuation of base salary for 12 months;

•

payment of a pro-rata portion of the annual bonus he would otherwise be entitled to receive for the year of termination based on actual corporate and/or individual performance for that year; and

•

continued coverage (for himself and, to the extent covered immediately prior to the date of termination, his spouse and eligible dependents) under our group health plan for one year.

Termination without Cause or Resignation due to Good Reason in the 12 Month Period Following a Change in Control. Upon a termination of employment without “cause” or resignation due to “good reason,” that, in either such case, occurs within the 12 month period immediately following a “change in control,” Mr. Tirnauer will be entitled to the following payments and/or benefits:

•

continuation of base salary for 18 months;

•

payment of a pro-rata portion of the annual bonus he would otherwise be entitled to receive for the year of termination based on actual corporate and/or individual performance for that year;

•

continued coverage (for himself and, to the extent covered immediately prior to the date of termination, his spouse and eligible dependents) under our group health plan for 18 months;

•

all outstanding unvested options under the option grant issued to Mr. Tirnauer on January 29, 2010 shall become fully vested; and

•

payments by us to or for the benefit of Mr. Tirnauer shall be limited to the largest amount that could be payable to Mr. Tirnauer without causing the application of the excise tax under Section 4999 of the Code.

Mr. Tirnauer is bound by certain non-competition and non-solicitation covenants, which extend for a period of 24 months following termination of employment. In order to receive any severance or termination payments or benefits described above, Mr. Tirnauer is required to timely execute and deliver a general release and non-disparagement agreement in a form prescribed by us.

Description of Triggering Events

Cause. Mr. Tirnauer’s employment may be terminated by us for “cause,” which means (i) conviction of, or the entry of a plea of guilty or no contest to, a crime, other than a minor traffic offense; (ii) alcohol abuse or use of controlled drugs (other than in accordance with a physician’s prescription); (iii) willful misconduct or gross negligence in the course of employment; (iv) material breach of any published Company policy, including (without limitation) the Company’s ethics guidelines, insider trading policies or policies regarding employment practices; (v) material breach of any agreement with or duty owed to the Company or any of its affiliates; or (vi) refusal to perform the lawful and reasonable directives of a supervisor.

Good Reason. The definition of “good reason” in Mr. Tirnauer’s employment agreement is substantially the same as described above with respect to Mr. Romano’s employment agreement.

Change in Control. The definition of “change in control” in Mr. Tirnauer’s employment agreement is substantially the same as described above with respect to Mr. Romano’s employment agreement.

Acceleration of Certain Unvested Equity. Under the terms of certain of Mr. Tirnauer’s time-vested stock option and restricted stock awards, the vesting of those awards would accelerate in the event of a change in control. In particular, all remaining outstanding unvested options under the option grant issued to Mr. Tirnauer on January 29, 2010 shall become fully vested.

Additionally, if Mr. Tirnauer’s employment with the Company is terminated prior to distribution of his performance-based restricted stock units (i) due to his death, (ii) due to his becoming “disabled”, (iii) by the Company without “cause” or (iv) by Mr. Tirnauer for “good reason,” then notwithstanding such termination of employment, to the extent the underlying performance goals are attained at the end of an applicable performance period, Mr. Tirnauer’s performance-based restricted stock units will vest in a pro-rata portion based on Mr. Tirnauer’s service during the performance period prior to his termination. If a change in control occurs during Mr. Tirnauer’s employment with the Company, but prior to distribution of his performance-based restricted stock units, the performance-based restricted stock units will be earned and distributed at the target level.

Amendment to Employment Agreement. Mr. Tirnauer’s employment agreement was amended on December 4, 2014 to address the change in the Company’s fiscal year. Pursuant to such amendment, Mr. Tirnauer received a special retention bonus of $100,000, which was generally contingent on his continued employment with the Company through November 1, 2015 (the “Retention Bonus”). Mr. Tirnauer’s employment agreement was further amended to provide the Committee with flexibility in the administration of the Company’s cash bonus program due to the change in the Company’s fiscal year.

Assuming one of the following events occurred on January 30, 2016, Mr. Tirnauer’s payments and benefits have an estimated value of:


	Severance Payment ($)			Payment of Pro-Rata Annual Bonus ($)		Health Benefit Continuation ($)			Value of Performance- Based Stock Units Subject to Acceleration ($)			Total ($)
Without Cause or for Good Reason		405,000	(1)		175,020		13,922	(2)		19,549	(3)		613,491
Without Cause or for Good Reason 12 months after a Change in Control		607,500	(4)		175,020		20,882	(5)		85,958	(6)		889,360
Change in Control (without termination)		—			—		—			85,958	(6)		89,958

(1)	This amount is equal to 12 months of Mr. Tirnauer’s monthly base salary as of January 30, 2016.

(2)	This amount represents premium payments for 12 months of continued group health coverage.

(3)

With respect to the fiscal year 2015 grant, this amount represents (a) the value of 2,713 shares of otherwise unvested and unearned performance-based restricted stock units (a pro-rated portion of the target level of the performance-based grant through January 30, 2016), based on $6.69, the closing price of our Common Stock on January 29, 2016 ($18,150) plus (b) the value of additional performance-based restricted stock units that would be issued due to cash dividends paid on our Common Stock during the performance period with respect to the 2,713 shares underlying those units ($1,399) Although Mr. Tirnauer would be entitled to a portion of certain currently unearned performance-based restricted stock units from the fiscal year 2014 award if earned, no value is shown here because the Company determined pursuant to FASB ASC Topic 718 that such awards are unlikely to be earned, even at the threshold level.

(4)	This amount is equal to 18 months of Mr. Tirnauer’s monthly base salary as of January 30, 2016.

(5)	This amount represents premium payments for 18 months of continued group health coverage.

(6)

This amount represents (a) the value of 11,793 shares of otherwise unvested and unearned performance-based restricted stock units (the target level of the performance-based grant), based on $6.69, the closing price of our Common Stock on January 29, 2016 ($78,895) plus (b) the value of additional performance-based restricted stock units that would be issued due to cash dividends paid on our Common Stock during the performance period with respect to the 11,793 shares underlying those units ($7,063).

Ronald J. Masciantonio

Under the terms of his employment agreement, as amended, Mr. Masciantonio has the following severance rights:

Termination without Cause or Resignation due to Good Reason. Upon a termination of employment without “cause” or resignation due to “good reason” that, in either such case, does not occur within the 12 month period after a “change in control,” Mr. Masciantonio will be entitled to the following payments and/or benefits:

•

monthly severance payment of one-ninth of his base salary for nine months;

•

payment of a pro-rata portion of the annual bonus he would otherwise be entitled to receive for the year of termination based on actual corporate and/or individual performance for that year; and

•

continued coverage (for himself and, to the extent covered immediately prior to the date of termination, his spouse and eligible dependents) under our group health plan for one year.

Termination without Cause or Resignation due to Good Reason in the 12 Month Period Following a Change in Control. Upon a termination of employment without “cause” or resignation due to “good reason,” that, in either such case, occurs within the 12 month period immediately following a “change in control,” Mr. Masciantonio will be entitled to the following payments and/or benefits:

•

monthly severance payment of one-tenth of his base salary for 15 months;

•

payment of a pro-rata portion of the annual bonus he would otherwise be entitled to receive for the year of termination based on actual corporate and/or individual performance for that year;

•

continued coverage (for himself and, to the extent covered immediately prior to the date of termination, his spouse and eligible dependents) under our group health plan for 18 months;

•

any unvested portion of the option issued to Mr. Masciantonio on January 29, 2010 shall become fully vested; and

•

payments by us to or for the benefit of Mr. Masciantonio shall be limited to the largest amount that could be payable to Mr. Masciantonio without causing the application of the excise tax under Section 4999 of the Code.

Mr. Masciantonio is bound by certain non-competition and non-solicitation covenants, which extend for a period of 24 months following termination of employment. In order to receive any severance or termination payments or benefits described above, Mr. Masciantonio is required to timely execute and deliver a general release and non-disparagement agreement in a form prescribed by us.

Description of Triggering Events

Cause. The definition of “cause” in Mr. Masciantonio’s employment agreement is substantially the same as described above with respect to Mr. Tirnauer’s agreement.

Good Reason. The definition of “good reason” in Mr. Masciantonio’s employment agreement is substantially the same as described above with respect to Mr. Romano’s employment agreement.

Change in Control. The definition of “change in control” in Mr. Masciantonio’s employment agreement is substantially the same as described above with respect to Mr. Romano’s employment agreement.

Acceleration of Certain Unvested Equity. Under the terms of certain of Mr. Masciantonio’s time-vested stock option and restricted stock awards, the vesting of those awards would accelerate in the event of a change in control. In particular, all remaining outstanding unvested options under the option grant issued to Mr. Masciantonio on January 29, 2010 would become fully vested.

Additionally, if Mr. Masciantonio’s employment with the Company is terminated prior to distribution of his performance-based restricted stock units (i) due to his death, (ii) due to his becoming “disabled”, (iii) by the Company without “cause” or (iv) by Mr. Masciantonio for “good reason,” then notwithstanding such termination of employment, to the extent the underlying performance goals are attained at the end of an applicable performance period, Mr. Masciantonio’s performance-based restricted stock units will vest in a pro-rata portion based on Mr. Masciantonio’s service during the performance period prior to his termination. If a change in control occurs during Mr. Masciantonio’s employment with the Company, but prior to distribution of his performance-based restricted stock units, the performance-based restricted stock units will be earned and distributed at the target level.

Amendment to Employment Agreement. As described above, Mr. Masciantonio’s employment agreement was amended on December 4, 2014 to address the change in the Company’s fiscal year. Pursuant to such amendment, Mr. Masciantonio received a special retention bonus of $100,000, which was generally contingent on his continued employment with the Company through November 1, 2015 (the “Retention Bonus”). Mr. Masciantonio’s employment agreement was further amended to provide the Committee with flexibility in the administration of the Company’s cash bonus program due to the change in the Company’s fiscal year.

Assuming one of the following events occurred on January 30, 2016, Mr. Masciantonio’s payments and benefits have an estimated value of:


	Severance Payment ($)			Payment of Pro-Rata Annual Bonus ($)		Health Benefit Continuation ($)			Value of Performance- Based Stock Units Subject to Acceleration ($)			Total ($)
Without Cause or for Good Reason		390,000	(1)		168,538		21,297	(2)		19,549	(3)		599,384
Without Cause or for Good Reason 12 months after a Change in Control		585,000	(4)		168,538		31,945	(5)		83,857	(6)		869,340
Change in Control (without termination)		—			—		—			83,857	(6)		83,857

(1)	This amount is equal to 12 months of Mr. Masciantonio’s monthly base salary as of January 30, 2016.

(2)	This amount represents premium payments for 12 months of continued group health coverage.

(3)

With respect to the fiscal year 2015 grant, this amount represents (a) the value of 2,713 shares of otherwise unvested and unearned performance-based restricted stock units (a pro-rated portion of the target level of the performance-based grant through January 30, 2016), based on $6.69, the closing price of our Common Stock on January 29, 2016 ($18,150) plus (b) the value of additional performance-based restricted stock units that would be issued due to cash dividends paid on our Common Stock during the performance period with respect to the 2,713 shares underlying those units ($1,399). Although Mr. Masciantonio would be entitled to a portion of certain currently unearned performance-based restricted stock units from the fiscal year 2014 award if earned, no value is shown here because the Company determined pursuant to FASB ASC Topic 718 that such awards are unlikely to be earned, even at the threshold level.

(4)	This amount is equal to 18 months of Mr. Masciantonio’s monthly base salary as of January 30, 2016.

(5)	This amount represents premium payments for 18 months of continued group health coverage.

(6)

This amount represents (a) the value of 11,512 shares of otherwise unvested and unearned performance-based restricted stock units (the target level of the performance-based grant), based on $6.69, the closing price of our Common Stock on January 29, 2016 ($77,015) plus (b) the value of additional performance-based restricted stock units that would be issued due to cash dividends paid on our Common Stock during the performance period with respect to the 11,512 shares underlying those units ($6,842).

PROPOSALS FOR CONSIDERATION BY THE STOCKHOLDERS

ELECTION OF DIRECTORS

(PROPOSAL 1)

Our Board of Directors currently consists of eight members whose terms will expire at the Annual Meeting. Our Bylaws provide for the size of the Board of Directors to be determined by Board action taken from time to time. We are nominating seven of our eight existing directors for re-election at the Annual Meeting, and the size of the Board of Directors will be reduced to seven members at the Annual Meeting.

Unless otherwise specified in the accompanying proxy, the shares voted pursuant thereto will be cast for each of the nominees named below for a one-year term expiring at the next annual meeting of stockholders. If, for any reason, at the time of election, any of the nominees named should decline or be unable to accept his or her nomination or election, it is intended that such proxy will be voted for the election, in the nominee’s place, of a substituted nominee, who would be recommended by the Board of Directors. The Board of Directors, however, has no reason to believe that any of the nominees will be unable to serve as a director.

The following biographical information is furnished as to each nominee for election as a director:

Arnaud Ajdler, 40, has served as a director of the Company since March 2008, and as Non-Executive Chairman of the Board of Directors since February 2011. Mr. Ajdler is currently Managing Partner of Engine Capital LP. Prior to founding Engine Capital in February 2013, Mr. Ajdler served as a Managing Director of Crescendo Partners II, L.P. from December 2005 to February 2013. He has also served as a director and on the compensation and nominating and corporate governance committees of Stewart Information Services Corporation since May 2014 and as a director and on the compensation committee of StarTek since May 2015. Mr. Ajdler is also an Adjunct Professor at Columbia University Business School where he teaches a course in Value Investing. He also served as a director and chair of the corporate governance and nominating committee of Charming Shoppes, Inc. from 2008 until the company was acquired in June 2012, as a director and on the compensation and human resources committee of O’Charley’s Inc. from March 2012 until the Company was acquired in April 2012, and as a director and on the audit and corporate governance, human resources and compensation committees of Imvescor Restaurant Group from July 2013 to March 2016. Since its inception in June 2006, Mr. Ajdler has served as a member of the board of directors and the Secretary of Rhapsody Acquisition Corp., an OTC Bulletin Board-listed blank check company formed to effect a business combination with an operating business. From June 2004 until June 2006, Mr. Ajdler also served as the Chief Financial Officer, a director and the Secretary of Arpeggio Acquisition Corporation. Arpeggio completed its business combination with Hill International, Inc. in June 2006, and until June 2009, Mr. Ajdler served as a director of the surviving company, a NYSE listed company. From August 2006 until the company was acquired in October 2007, Mr. Ajdler served as a director of The Topps Company, Inc. As a managing director of an investment firm that has investments in a number of apparel companies, Mr. Ajdler has gained extensive knowledge of our industry. He also brings significant experience gained from service on the board of directors of several companies.

Michael J. Blitzer, 66, has served as a director of the Company since January 2013. Mr. Blitzer has been a principal at Portsmouth Partners, LLC, an advisory firm that provides operational and strategic services to private equity groups that focus on retail, wholesale and consumer industries, since September 2005. He is also currently an advisory partner to Goode Partners, LLC, a private equity firm specializing in consumer industries, a position he has held since March 2006. Mr. Blitzer was an advisor to the Chief Executive Officer of The Kellwood Company, owned by Sun Capital Partners, Inc., a leading private investment firm focused on leveraged buyouts, equity, debt, and other investments in market-leading companies, from June 2012 to May 2013. From November 2002 to September 2005, Mr. Blitzer served as the Lead Independent Director and Vice Chairman of the board of directors of LeSportsac, Inc. Previously, Mr. Blitzer served as the Vice Chairman of Phillips-Van Heusen Corporation, one of the world’s largest apparel companies, from September 1997 until he retired in November 2002. Mr. Blitzer spent over 30 years combined at Phillips-Van Heusen Corporation and at Macy’s in various

executive merchandising positions in Women’s and Menswear, Accessories, and Footwear. He has also worked as a consultant for a variety of companies in both apparel and accessories, including Neiman Marcus Group and Liz Claiborne, Inc. He currently serves on the board of Dover Saddlery, a privately held equestrian omni channel brand. In addition to LeSportsac, Inc., Mr. Blitzer has, in the past, served on the boards of directors of Kate Spade, LLC, Kenneth Cole Productions, Inc., Charming Shoppes, Inc., All Saints Retail Limited, Charlotte Russe Holdings, Inc., Modell’s Sporting Goods, Intermix, LLC, and FULLBEAUTY brands. Mr. Blitzer brings to our Board of Directors his extensive experience in the various executive positions he has held in the apparel and accessories sectors, both retail and wholesale, and the perspective of an advisor who regularly deals with operational and strategic planning.

Barry Erdos, 71, has served as a director of the Company since January 2010. Mr. Erdos is a consultant in the retail industry. Mr. Erdos served as Chief Executive Officer of F.A.O. Schwarz, Inc. from March 2009 until its acquisition by Toys “R” Us in May 2009. From 2005 until 2008, Mr. Erdos was a director of Bluefly, Inc. where he was also President and Chief Operating Officer in 2008. Prior to joining Bluefly, Inc., Mr. Erdos held senior management positions with prominent retailers, including President and Chief Operating Officer of Build A Bear Workshop, Chief Operating Officer of Ann Taylor, Inc., Chief Operating Officer of J. Crew Group, and Executive Vice President and Chief Financial Officer of The Limited Inc.’s Limited Express division. Mr. Erdos also served as a director of Trio Merger Corp. Mr. Erdos qualifies as an “audit committee financial expert” satisfying the rules of the SEC. Mr. Erdos’s qualification as an audit committee financial expert as well as his extensive management experience make him highly qualified to serve both as a director of the Company and a financial expert on the Audit Committee.

Melissa Payner-Gregor, 57, has served as a director of the Company since August 2009. Ms. Payner-Gregor is currently an advisor to Bluefly, Inc. She continues working as a consultant for several retail/e-commerce companies. She served as the Chief Executive Officer of Bluefly, Inc. from August 2004 to February 2012, having previously served as President of Bluefly from September 2003. Prior to joining Bluefly, Ms. Payner-Gregor held senior management positions with prominent retailers and consumer products companies, including Chief Executive Officer and President of Spiegel Catalog and President of Chico’s FAS. Ms. Payner-Gregor’s experience as manager of several successful retail establishments allows her to bring an important perspective to our Board of Directors, given the Company’s participation in the retail market. Through her experience as the chief executive officer of a leading online retailer and senior manager of several other successful retailers, Ms. Payner-Gregor brings significant knowledge to our Board of Directors in the areas of merchandising, marketing, eCommerce, business operations, risk management and corporate governance.

J. Daniel Plants, 49, has served as a director of the Company since November 2014. Mr. Plants has been Managing Partner of Voce Capital Management LLC since 2009. Prior to founding Voce Capital Management, Mr. Plants held a number of positions at leading Wall Street firms, including executive roles in investment banking at Goldman Sachs and JPMorgan Chase and as a corporate attorney with Sullivan & Cromwell. Mr. Plants is a member of the Board of Directors of Cutera Inc., a publicly traded medical device company. Mr. Plants is also the co-founder of the Bay Area Urban Debate League, a San Francisco based charitable organization dedicated to expanding opportunities for area youth to become articulate, informed leaders. Mr. Plants served as the organization’s Vice Chair from 2008 to 2012. Mr. Plants holds a Juris Doctorate degree from University of Michigan Law School and an undergraduate degree from Baylor University. Mr. Plants’ substantial experience as a strategic advisor and corporate attorney, as well as his role as the founder of a successful investment management firm and status as a significant Company stockholder, bring valuable skills and perspective to the Board in the areas of finance, capital markets, strategy and corporate governance.

Anthony M. Romano, 53, has served as a director of the Company and its Chief Executive Officer since August 2014, and as its President since December 2015. Prior to joining the Company, Mr. Romano served as an independent management consultant since March 2013. From November 2013 through the present, Mr. Romano has been a member of the Board of Directors of Benco Dental Supply Company, a privately owned distributor of dental supplies, dental equipment and equipment services. Mr. Romano served as the President and Chief

Executive Officer of Charming Shoppes, Inc., a women’s plus-size specialty apparel retailer, from March 2011 until March 2013, and as a Director of Charming Shoppes from March 2011 until June 2012. Charming Shoppes was a Nasdaq-traded public company until its acquisition by Ascena Retail Group, Inc. in June 2012. Mr. Romano served as Charming Shoppes’ Chief Operating Officer and acting CEO from October 2010 to March 2011, and as Charming Shoppes’ Executive Vice President–Global Sourcing and Business Transformation from February 2009 until October 2010. Prior to joining Charming Shoppes in February 2009, he served as executive vice president and chief supply chain officer for the women’s clothing retailer, Ann Taylor, Inc. (now owned by Ascena Retail Group, Inc.) from May 2005 through July 2008; as executive vice president, corporate operations for Ann Taylor from March 2004 through May 2005; and as senior vice president global logistics for Ann Taylor from June 1997 through March 2004. He started his career as a certified public accountant with the predecessor firm to Ernst & Young, and is a summa cum laude graduate of Syracuse University where he earned a Bachelor of Science degree in Accounting. In considering Mr. Romano for Director of the Company, the Board took into account his credentials and past working with other retailers.

B. Allen Weinstein, 69, has served as a director of the Company since January 2010. Mr. Weinstein is currently Executive Chairman and a director of Villa, a privately owned footwear and apparel retailer. From August 2009 to August 2012, Mr. Weinstein served as the Chief Executive Officer and a director of Body Central Corporation. Prior to joining Body Central, Mr. Weinstein was the Executive Vice President-Chief Merchandising Officer of The Cato Corporation from 2005 to 2009, having previously served as Executive Vice President, Chief Merchandising Officer of the Cato Division since 1997. From 1995 to 1997, Mr. Weinstein was Senior Vice President-Merchandising of Catherines Stores Corporation. From 1981 to 1995, he served as Senior Vice President of Merchandising of Beall’s, Inc. Mr. Weinstein currently serves as a member of the board of directors of Dignity U Wear, a nonprofit organization whose mission is to positively impact the lives of children and their families in need by providing new clothing at no cost to the recipients. Mr. Weinstein’s extensive senior management experience in other apparel companies has exposed him to various retail business techniques, and provides him with relevant expertise in retailing that he brings to the Company’s Board of Directors.

The Board of Directors recommends that you vote FOR this Proposal 1 to elect all Nominees to the Board of Directors for a One-Year Term Expiring at the next Annual Meeting of Stockholders.

RATIFICATION OF

APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

(PROPOSAL 2)

The Audit Committee of our Board of Directors has appointed the firm of KPMG LLP as independent registered public accountants to audit and report on the consolidated financial statements of the Company and its subsidiaries for fiscal year 2016, and the Company’s internal control over financial reporting as of January 28, 2017, and to perform such other appropriate accounting and related services as may be required by the Audit Committee. KPMG LLP has served as our independent registered public accountants since June 6, 2002. The Board of Directors recommends that the stockholders ratify such selection. This appointment will be submitted to the stockholders for ratification at the Annual Meeting.

The submission of the appointment of KPMG LLP is not required by law or by the By-laws of the Company. The Board of Directors is nevertheless submitting it to the stockholders to ascertain their views. If the stockholders do not ratify the appointment, the selection of other independent registered public accountants will be considered by the Board of Directors. If KPMG LLP shall decline to accept or become incapable of accepting its appointment, or if its appointment is otherwise discontinued, the Board of Directors will appoint other independent registered public accountants.

A representative of KPMG LLP is expected to be present at the Annual Meeting. The representative will have the opportunity to make a statement and will be available to respond to appropriate questions.

The Board of Directors recommends that you vote FOR this Proposal 2 to ratify the appointment of KPMG LLP as independent registered public accountants for fiscal year 2016.

Auditor Fees and Services

The following is a summary of the fees billed to the Company by KPMG LLP for professional services rendered for fiscal years 2015 and 2014 and the Transition Period:


Fee Category	Fiscal Year 2015 Fees ($)		Transition Period Fees ($)		Fiscal Year 2014 Fees ($)
Audit Fees (1)		850,625		690,776		820,195
Audit-Related Fees (2)		—		—		—
Tax Fees (3)		198,313		144,531		230,367

Total Fees		1,048,938		835,307		1,050,562

(1)

Audit Fees consist of fees billed for professional services rendered for the annual audit of the Company’s consolidated financial statements and internal control over financial reporting, for reviews of the interim financial statements included in the Company’s quarterly reports on Form 10-Q, and for services provided in connection with certain statutory and regulatory filings.

(2)	Audit-Related Fees consist of fees billed for professional services rendered for audit-related services including consultations on proposed financial accounting and reporting related matters.

(3)	Tax Fees consist of fees billed for professional services relating to tax compliance and other tax advice.

The Audit Committee’s pre-approval policies and procedures provide for pre-approval of audit, audit-related, tax and other services. Unless a type of service to be provided by the independent registered public accountants has received general pre-approval, it will require specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved fee levels require specific pre-approval by the Audit Committee. The pre-approval fee levels for all services to be provided by the independent registered public accountants are established annually by the Audit Committee. The Audit Committee pre-approved all audit, audit-related and non-audit services described above rendered to the Company by KPMG LLP during fiscal years 2014 and 2015 and during the Transition Period and has pre-approved similar services to be rendered during the fiscal year 2016. The Audit Committee believes the rendering of these services is not incompatible with the independent registered public accountants maintaining their independence.

ADVISORY VOTE RELATED TO EXECUTIVE COMPENSATION

(PROPOSAL 3)

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. At our Annual Meeting of Stockholders held in February 2011, our stockholders were asked to vote on whether the “Say-on-Pay” advisory vote should be held annually, every two years or every three years. Our stockholders indicated a preference for holding such a vote on an annual basis. Our Board determined, as a result of such vote on the frequency of the advisory vote to approve our executive compensation, that we will hold a “Say-On-Pay” stockholder advisory vote to approve our executive compensation every year. The Company’s “Say-On-Pay” stockholder advisory vote received over 98% approval last year and over 99% approval in the prior year.

As described in detail under the heading “Executive Compensation–Compensation Discussion and Analysis,” our executive compensation programs are designed to attract, motivate and retain our named executive officers, who are critical to our success. Under these programs, our named executive officers are rewarded for the achievement of specific annual, long-term and strategic goals, corporate goals, and the realization of increased stockholder value. Please read the “Executive Compensation–Compensation Discussion and Analysis” for additional details about our executive compensation programs, including information about the fiscal year 2015 compensation of our named executive officers.

We are asking our stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2016 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”

The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board of Directors. Nonetheless, our Board of Directors and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

The Board of Directors recommends that you vote FOR this Proposal 3 to ratify the compensation of the named executive officers.

ADDITIONAL INFORMATION

Householding of Proxy Materials

The SEC has adopted rules that allow a company to deliver a single proxy statement or annual report to an address shared by two or more of its stockholders. This method of delivery, known as “householding,” permits us to realize significant cost savings, reduces the amount of duplicate information stockholders receive, and reduces the environmental impact of printing and mailing documents to you. Under this process, certain stockholders will receive only one copy of our proxy materials and any additional proxy materials that are delivered until such time as one or more of these stockholders notifies us that they want to receive separate copies. Any stockholders who object to or wish to begin householding may notify us at investor_relations@DestinationMaternity.com or Investor Relations, Destination Maternity Corporation, 232 Strawbridge Drive, Moorestown, New Jersey 08057. We will send an individual copy of the proxy statement to any stockholder who revokes their consent to householding within 30 days of our receipt of such revocation.

Other Business

Management knows of no other matters that will be presented at the Annual Meeting. However, if any other matter properly comes before the meeting, or any adjournment or postponement thereof, it is intended that proxies in the accompanying form will be voted in accordance with the judgment of the persons named therein.

Annual Report

A copy of the Company’s Annual Report to Stockholders for fiscal year 2015 and the Transition Period accompanies this proxy statement.

The Company will provide to each person solicited, without charge except for exhibits, upon request in writing, a copy of its Annual Report on Form 10-K, including the consolidated financial statements and financial statement schedule, as filed with the Securities and Exchange Commission for the fiscal year ended January 30, 2016. Requests should be directed to Destination Maternity Corporation, Attention: Chief Financial Officer, 232 Strawbridge Drive, Moorestown, New Jersey 08057.

Stockholder Proposals

Stockholders may nominate director candidates and make proposals to be considered at the Annual Meeting of Stockholders to be held in 2017 (the “2017 Annual Meeting”). It is currently anticipated that the 2016 Annual Meeting will be held on May 18, 2017. Based on this date, in order for a stockholder’s nomination of one or more candidates for election as directors at the 2017 Annual Meeting or any other proposal to be considered at the 2017 Annual Meeting, the notice described below must be received by us at the address set forth below, together with certain information specified in our By-laws, between February 17, 2017 and March 20, 2017.

A stockholder who proposes to nominate an individual for election to the Board of Directors at the 2017 Annual Meeting must deliver a written notice to the Secretary of the Company, which includes: (i) a complete description of the proposed nominee’s qualifications, experience and background, and any and all other information that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; (ii) a description of all relationships between the proposed nominee and such stockholder and any agreements or understandings between such stockholders and the proposed nominee regarding the nomination; (iii) a description of all relationships between the proposed nominee and any of the Company’s competitors, customers, suppliers, labor unions (if any) and any other persons with special interests regarding the Company; and (iv) a statement signed by the proposed nominee in which he or she consents to being named in the proxy statement as a nominee and to serving as a director if elected.

In addition, a stockholder who either proposes to nominate an individual for election to the Board of Directors or intends to propose any other business that is a proper matter for stockholder action at the 2017 Annual Meeting must deliver a written notice to the Secretary of the Company, which includes: (i) the name and address of the stockholder giving the notice, as it appears on the Company’s books, and the telephone number of such stockholder; (ii) the name, address and telephone number of the beneficial owner, if any, on whose behalf the nomination is being made; (iii) the class and number of shares of the Company which are owned beneficially and of record by such stockholder and such beneficial owner and the time period for which such shares have been held; (iv) a representation that such stockholder and beneficial owner intend to appear in person or by proxy at the meeting; (v) a representation that such stockholder and such beneficial owner intend to continue to hold the reported shares through the date of the meeting; and (vi) with respect to any proper business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made. If a recommendation is submitted by a group of two or more stockholders, the information regarding the recommending stockholders and beneficial owners, if any, must be submitted with respect to each stockholder in the group and any beneficial owners. The stockholder’s written notice should be sent to the attention of the Secretary, c/o Destination Maternity Corporation, 232 Strawbridge Drive, Moorestown, New Jersey 08057.

In addition to being able to present proposals for consideration at the Annual Meeting, stockholders may also be able to have their proposals for any proper business (not including director nominations) included in our proxy statement and form of proxy for the 2017 Annual Meeting. In order to have any such stockholder proposal included in the proxy statement and form of proxy, the proposal must be delivered to us at the address set forth below not later than December 20, 2016, and the stockholder must otherwise comply with applicable SEC requirements and our By-laws. If the stockholder complies with these requirements for inclusion of a proposal in our proxy statement and form of proxy, the stockholder need not comply with the notice requirements described in the preceding paragraph.

The form of proxy issued with our 2017 proxy statement will confer discretionary authority to vote for or against any proposal made by a stockholder at our 2017 Annual Meeting and which is not included in our proxy statement. However, such discretionary authority is not permitted to be exercised if the stockholder proponent has given notice to our Secretary of such proposal between February 17, 2017 and March 20, 2017 and certain other conditions provided for in the SEC’s rules have been satisfied.

A copy of the full text of the By-law provisions discussed above may be obtained by writing to our Secretary, and all notices and nominations referred to above must be sent to our Secretary, at the following address: Destination Maternity Corporation, Attention: Secretary, 232 Strawbridge Drive, Moorestown, New Jersey 08057.

By Order of the Board of Directors

Anthony M. Romano

Chief Executive Officer & President

Philadelphia, Pennsylvania

April 19, 2016

LOGO

DESTINATION
MATERNITY®
CORPORATION
C/O BROADRIDGE ISSUER SOLUTIONS
P.O. BOX 1342
BRENTWOOD, NY 11717
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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,
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E09702-P76709
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DESTINATION MATERNITY CORPORATION The Board of Directors recommends you vote FOR the following:
1. Election of Directors (nominees 1a. through 1g.) to serve for a one-year term.
For Against Abstain
1a. Arnaud Ajdler ¨ ¨ ¨
1b. Michael J. Blitzer ¨ ¨ ¨
1c. Barry Erdos ¨ ¨ ¨
1d. Melissa Payner-Gregor ¨ ¨ ¨
1e. J. Daniel Plants ¨ ¨ ¨
1f. Anthony M. Romano ¨ ¨ ¨
1g. B. Allen Weinstein ¨ ¨ ¨
The Board of Directors recommends you vote FOR proposals 2 and 3. For Against Abstain 2.Ratification of the appointment of KPMG LLP as independent registered public accountants.¨¨¨ 3.Approval, by non-binding advisory vote, of executive compensation.¨¨¨
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please have an authorized officer sign in full corporate or partnership name.
Signature [PLEASE SIGN WITHIN BOX]
Date
Signature (Joint Owners)
Date

LOGO

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
E09703-P76709
DESTINATION MATERNITY CORPORATION
Annual Meeting of Stockholders
May 19, 2016, 9:15 AM
This proxy is solicited by the Board of Directors
The stockholder signing this proxy, revoking all previous proxies, hereby appoints Anthony M. Romano and Ronald J. Masciantonio, and each of them acting individually, as the attorney and proxy of the undersigned, with full power of substitution, to vote, as indicated on the reverse side and in their discretion upon such other matters as may properly come before the meeting, all shares which the undersigned would be entitled to vote at the Annual Meeting of the Stockholders of the Company to be held on May 19, 2016, and at any adjournment or postponement thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED “FOR” THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED ON THE REVERSE SIDE HEREOF, “FOR” RATIFICATION OF APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING JANUARY 28, 2017, AND “FOR” THE ADVISORY VOTE ON EXECUTIVE COMPENSATION. THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THE STOCKHOLDER SIGNING THIS PROXY HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING AND PROXY STATEMENT.
Please sign and date your Proxy on the reverse side and return it promptly.
Continued and to be signed on reverse side