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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

(Amendment No. 1)

x      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016

OR

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                       TO                    .

Commission file number: 1-10689

KATE SPADE & COMPANY

(Exact name of Registrant as specified in its charter)

2 Park Avenue, New York, New York 10016

(Address of principal executive offices, including zip code)

Registrant’s Telephone Number, Including Area Code: (212) 354-4900

Securities Registered Pursuant to Section 12(b) of the Act:

Securities Registered Pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known, seasoned issuer, as defined in Rule 405 of the Securities Act:

Yes x                  No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the “Act”).

Yes o                  No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x                  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x                  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Based upon the closing sale price on the New York Stock Exchange on July 1, 2016, the last business day of the registrant’s most recently completed second fiscal quarter, which quarter ended July 2, 2016, the aggregate market value of the registrant’s Common Stock, par value $1.00 per share, held by non-affiliates of the registrant on such date was approximately $2,680,850,000. For purposes of this calculation, only executive officers and directors are deemed to be the affiliates of the registrant.

Number of shares of the registrant’s Common Stock, par value $1.00 per share, outstanding as of February 10, 2017: 128,291,120 shares.

Documents Incorporated by Reference:

None.

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EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A (this “Form 10-K/A”) to the Annual Report on Form 10-K of Kate Spade & Company (the “Company”) for its fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2017 (the “Original 10-K”) is being filed solely for the purpose of including the information required by Part III of Form 10-K. At the time the Company filed the Original 10-K, it intended to file a definitive proxy statement for its 2017 Annual Meeting of Shareholders within 120 days after the end of the 2016 fiscal year pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended. However, as we will now not file the definitive proxy statement within such 120-day period, the information required by Part III (Items 10-14) of Form 10-K is filed herewith and provided below.

As required by Rule 12b-15, in connection with this Form 10-K/A, the Company’s Principal Executive Officer and Chief Financial Officer are providing Rule 13a-14(a) certifications as included herein.

Except as described above, this Form 10-K/A does not modify or update disclosure in, or exhibits to, the Original 10-K.  Furthermore, this Form 10-K/A does not change any previously reported financial results, nor does it reflect events occurring after the date of the Original 10-K.  Information not affected by this Form 10-K/A remains unchanged and reflects the disclosures made at the time the Original 10-K was filed.

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PART III

Item 10.                 Directors, Executive Officers and Corporate Governance

Board of Directors

Our board of directors (our “Board” or “Board of Directors”) as of the date of this Form 10-K/A consists of eleven members, as determined in accordance with our By-laws (our “By-laws”). In 2010, our shareholders approved an amendment to our Certificate of Incorporation that eliminated the classified board. Accordingly, all Directors are up for re-election each year, for a proposed one-year term expiring at the next annual meeting of shareholders. The Board is currently comprised of the following directors:

Lawrence S. Benjamin, age 61, was elected a Director of the Company in January 2011. In March 2015, Mr. Benjamin was elected to the board and selected to be board chairman of Diversified Foodservice Supply, Inc., a restaurant equipment distributor. Since January 2012, Mr. Benjamin has served as a Senior Advisor for New Mountain Capital, a private equity firm, and, since February 2011, as a Managing Director of Capwell Partners LLC, a private equity firm. In September 2011, Mr. Benjamin was elected to the board of IRI, a market research company. In February 2012, Mr. Benjamin was elected to the board of Sun Products Corporation, a consumer products company, and served on that company’s board until its dissolution in September 2016. In November 2012, Mr. Benjamin was elected to the board of ABB Optical Group, LLC, an optical distributor and manufacturer. In October 2016, Mr. Benjamin was elected to the board of Strategic Partners, Inc., a manufacturer and distributor of medical apparel. From 2006 until his retirement in February 2011, he served as Chief Operating Officer of Ahold USA, a subsidiary of Koninklijke Ahold NV, an international food retailing group based in the Netherlands. Mr. Benjamin was Ahold’s highest ranking executive in the U.S., responsible for the Stop & Shop/Giant-Landover and Giant-Carlisle superstores and supermarkets, as well as all operations in the country. In 2009, he was also appointed global Executive Vice President and appointed to Ahold’s global Corporate Executive Board. Mr. Benjamin joined Ahold in October of 2003 as President and Chief Executive Officer of U.S. Foodservice. Prior to joining Ahold, Mr. Benjamin worked with several private equity firms, where he held several operating positions, including serving as Chief Executive Officer at NutraSweet Company, Specialty Foods Corporation and Stella Foods. Previously, he held management-level positions in the retail and ingredient divisions of Kraft Foods. Mr. Benjamin also serves on the boards of three non-profit organizations (The Nature Conservancy of Rhode Island, the International Crane Foundation and the Rainforest Trust) and is a life trustee of Lake Forest Academy. Mr. Benjamin’s long history in key operating roles with global brands and experience with a variety of strategic initiatives related to corporate governance, standardizing operations and turnarounds, among others, provides the Board with significant input on a variety of matters.

Raul J. Fernandez, age 50, was elected a Director of the Company in 2000. Mr. Fernandez is Chairman of ObjectVideo, Inc. From 2000 to 2002, he served as Chief Executive Officer for Dimension Data North America, an information systems integrator company, and as a director of its parent company, Dimension Data Holdings Plc, in 2001. Mr. Fernandez is also currently on the board of directors at AtSite, Inc., a privately held company that provides innovative building performance management solutions, and PerfectSense, a digital application development company. He previously served as Chairman of the Board, Chief Executive Officer and President of Proxicom, Inc., a publicly traded internet development and e-business consulting company he founded in 1991. Mr. Fernandez is also Vice Chairman of Monumental Sports & Entertainment, a private partnership which owns the NBA’s Washington Wizards, the NHL’s Washington Capitals, the WNBA’s Washington Mystics and owns and operates the Verizon Center. Mr. Fernandez, a native Washingtonian, is an active philanthropist in D.C. regional non-profits, focusing his energy primarily on educational reform. In 2000, he co-founded Venture Philanthropy Partners, a philanthropic investment organization based out of Washington, D.C. Mr. Fernandez is the Chairman of Fight for Children and sits on various other non-profit boards, including the D.C. College Access Program (DCCAP), the D.C. Public Education Fund and the Fernandez Foundation. He holds a Bachelor’s degree in Economics from the University of Maryland. Mr. Fernandez’ extensive operating experience and entrepreneurial background as founder and chief executive officer of technology companies, including in the area of e-business, provides the Board with valuable views in the areas of technology and information systems.

Carsten Fischer, age 55, was appointed a Director of the Company in July 2016. Mr. Fischer has nearly 30 years of experience in global marketing and leadership roles for brands across the luxury and consumer goods categories. In 2015, Mr. Fischer was appointed to the Board of Directors of Seiko Holdings Co. Ltd. where he acts as a senior advisor for global branding for the global watch and electronics corporation. Prior to his appointment to the Seiko Board of Directors, Mr. Fischer held various senior executive roles at Shiseido Co., Ltd., a Japanese multinational personal care company, and Procter and Gamble Co., a consumer goods company. At Shiseido, Mr. Fischer served as Representative Director, Corporate Senior Executive Office, responsible for strategic channel expansion and globalization. Prior to Shiseido, Mr. Fischer was the President of Professional Care and Corporate Officer at Procter & Gamble Co. He also served as the Executive Vice President of Global Marketing at Wella AG and President and Chief Executive Officer of Wella AG Japan, Ltd., divisions of Procter & Gamble Co. Mr. Fischer also held leadership roles in Asia at Henkel AG &

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Co., a German based multinational company operating in the areas of laundry and home care, beauty care and adhesive technologies. Mr. Fischer’s deep industry insight and global experience provides the Board with an important perspective as the Company continues to execute its international expansion strategy.

Kenneth B. Gilman, age 70, was elected a Director of the Company in February 2008. Mr. Gilman served as the Chief Executive Officer of Asbury Automotive Group, an automotive retailing and services company, from 2001 to May 2007. Previously, from 1976 to 2001, Mr. Gilman was employed in a variety of capacities with L Brands Inc. (“L Brands”), a specialty apparel retailer, where his most recent assignment was Chief Executive Officer of Lane Bryant. From 1993 to 2001, Mr. Gilman served as Vice Chairman and Chief Administrative Officer of L Brands, with responsibility for finance, information technology, supply chain management, production, real estate, legal and internal audit. From 1987 to 1993, he was Executive Vice President and Chief Financial Officer of L Brands. He joined L Brands’ executive committee in 1987 and was elected to its board of directors in 1990. Mr. Gilman serves as a director of Aeropostale, Inc., a retailer of teen focused men’s and women’s apparel. Mr. Gilman also serves as a member of the Board of Governors of Hebrew Union College — Jewish Institute of Religion and as a Trustee for the Jewish Center of the Hamptons and The Manhattan Institute, all not-for-profit organizations. Mr. Gilman’s extensive operating experience as chief financial officer, chief administrative officer and chief executive officer of retail companies, including 25 years of experience at L Brands, provides the Board with useful insight into operational issues, particularly in the retail sector, and financial matters.

Nancy J. Karch, age 69, was elected a Director of the Company in 2000. Effective following our 2013 Annual Meeting of Shareholders on May 14, 2013, Ms. Karch became the non-executive Board Chair of the Company. Ms. Karch was a Director (senior partner) of McKinsey & Co., an independent consulting firm, from 1988 until her retirement in 2000. She had served in various executive capacities at McKinsey since 1974. Ms. Karch is a Director Emeritus of McKinsey & Co., and serves as a director of Kimberly-Clark, a consumer products company and MasterCard Inc., a payment systems brand and processor. She also serves as Chair of the board of Northern Westchester Hospital as well as a board member of Northwell Health, both not-for-profit organizations. Ms. Karch’s background as a consultant to companies in the retail and consumer products sector, and her extensive experience as a public company director, provides the Board beneficial insight into the retail industry and matters relating to brand marketing and corporate governance.

Kenneth P. Kopelman, age 65, was elected a Director of the Company in 1996. From 1984 through 2015, Mr. Kopelman was a partner in the New York City law firm of Kramer Levin Naftalis & Frankel LLP; he currently remains of counsel to the firm. He is a director and Chair of the New York Chapter of the National Association of Corporate Directors, a national not-for-profit membership organization serving the corporate governance needs of corporate boards and directors, and he was recognized in 2011 as one of the most influential leaders in the corporate governance community by the NACD’s national magazine, Directorship, which named him to its annual list, the “Directorship 100.” Mr. Kopelman previously served through June 2007 as a director of Mobius Management Systems, Inc., a computer software company. Mr. Kopelman’s background as a corporate attorney and counselor provides the Board helpful insight in the areas of corporate governance and financing, and his long-time experience within the apparel industry and association with the Company provides the Board valuable perspective.

Craig A. Leavitt, age 56, is Chief Executive Officer of Kate Spade & Company. Mr. Leavitt was elected to the Board of Directors in February 2014. He served as Co-President and Chief Operating Officer of Kate Spade, LLC from his arrival in April 2008 through October 2010, at which time, he was named Chief Executive Officer of Kate Spade, LLC. Prior to joining Kate Spade, LLC, Mr. Leavitt was President of Global Retail at Link Theory Holdings, where he had total responsibility for merchandising, operations, planning, allocation and real estate for the Theory and Helmut Lang retail businesses. Previously, Mr. Leavitt spent several years at Diesel, most recently as Executive Vice President of Sales and Retail. Mr. Leavitt also spent 16 years at Polo Ralph Lauren, where he held positions of increasing responsibility, the last being Executive Vice President of Retail. Mr. Leavitt’s strategic planning, leadership skills and retail experience within the industry provide the Board valuable insight into retail operations.

Deborah J. Lloyd, age 52, is Chief Creative Officer of Kate Spade & Company. Ms. Lloyd was elected to the Board of Directors in February 2014. Ms. Lloyd joined Kate Spade, LLC as Co-President and Chief Creative Officer in November 2007 and has overseen all creative aspects of the Kate Spade brands since that time. Prior to joining Kate Spade, LLC, Ms. Lloyd spent six years as Executive Vice President of Design and Product Development at Banana Republic and five years at Burberry. Previously, Ms. Lloyd honed her skills at such brands as Aquascutum, Kenzo and Daniel Hechter. Ms. Lloyd is an active member of the Council of Fashion Designers of America and sits on the organization’s board of directors. Ms. Lloyd has received several British Fashion Council Awards for her work at Burberry and was named an Independent Handbag Designer Awards Iconoclast Award Winner in 2010. Ms. Lloyd’s creative talent and experience in design and product development provide important insight to the Board on the creative and product development process.

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Douglas Mack, age 48, was elected a Director of the Company in June 2014. Mr. Mack serves as Chief Executive Officer of Fanatics, Inc., a leading retailer of licensed sports merchandise and a billion dollar e-commerce company. Previously, Mr. Mack was Chief Executive Officer of One Kings Lane, a leading online destination for home design, which he joined as a $10M start-up and led its growth into an Internet Retailer Top 100 company. Prior to One Kings Lane, Mr. Mack was Chief Executive Officer of Scene7, the leading rich-media platform for e-commerce, which has powered websites for more than 1,000 global retailers. After completing the sale of Scene7 to Adobe, Mr. Mack joined the Adobe leadership team, and ultimately became GM of the digital media division, which included flagship properties such as Adobe Photoshop and Adobe Flash Media Server. Mr. Mack began his career in the General Electric management training programs, was an engagement manager with McKinsey & Company and later became Executive Vice President of Broderbund Software. As an e-commerce innovator, Mr. Mack provides the Board with extensive knowledge in key retail areas including technology, marketing and customer experience.

Jan Singer, age 53, was elected a Director of the Company at our 2015 Annual Meeting of Shareholders on May 19, 2015. Ms. Singer serves as Chief Executive Officer of Victoria’s Secret, a lingerie, womenswear and beauty products company and subsidiary of L Brands, Inc., a specialty apparel, personal care, home fragrance and beauty retailer. She formerly served as the Chief Executive Officer of Spanx, Inc., a privately held shapewear design, manufacturing and marketing company, from July 2014 to March 2016. Prior to that role, she worked at Nike, Inc. for ten years, where she held various senior executive roles including Corporate Vice President of Global Apparel from 2011 to 2014 and Corporate Vice President of Global Footwear from 2008 to 2011. Previously, from 2001 to 2004, Ms. Singer was the Vice President and General Manager of Global Product, Merchandising and Marketing for Reebok International Limited’s women’s business. Ms. Singer also had key marketing and global communications roles for the luxury brands Chanel, Calvin Klein and Prada. Ms. Singer’s experience and leadership roles related to marketing aspirational brands across the apparel, footwear and cosmetics product categories provide the Board valuable perspective into the apparel industry and matters related to brand marketing, both domestically and internationally.

Doreen A. Toben, age 67, was elected a Director of the Company in 2009. Most recently, Ms. Toben served as Executive Vice President of Verizon Communications, Inc., a position from which she retired in June 2009. From April 2002 to February 2009, she served as Verizon’s Chief Financial Officer and was responsible for its finance and strategic planning efforts. Prior to April 2002, Ms. Toben was Senior Vice President and Chief Financial Officer with responsibility for finance and strategic planning for Verizon’s Telecom Group. A 30-year telecommunications veteran, she began her career at AT&T Corp. and over the years held various positions of increasing responsibility primarily in treasury, strategic planning and finance both there, and beginning in 1984, at Bell Atlantic Inc. Ms. Toben also serves as a director of the New York Times Company and as a director of ARRIS Group, a video and broadband technology company. Ms. Toben’s experience during her 21 years at Verizon in the areas of finance and strategic planning provides the Board perspective of someone familiar with all facets of a global enterprise, particularly in light of her recent direct responsibility for financial and accounting matters.

Executive Officers

For information relating to our executive officers, please see “Executive Officers of the Registrant” in Part I of the Original 10-K.

Corporate Governance

The Company believes that its standards for corporate governance reflect current best practices and serve the best interests of its shareholders. Recognizing that those corporate governance standards continually evolve, the Nominating and Governance Committee of the Board monitors developments in governance best practices to ensure that the Company continues to effectively represent the interests of its shareholders. Included among the key corporate governance practices the Company has adopted in support of this commitment are:

·                  Strong Board independence (9 of 11 Director nominees are independent)

·                  Declassified Board of Directors with all members standing for election annually

·                  Majority vote standard for uncontested director elections

·                  Independent Board Chair separate from CEO

·                  Simple majority vote standard for by-law/charter amendments and transactions

·                  Anti-hedging and anti-pledging policies

·                  Clawback policy

·                  Stock ownership requirements for executive officers and directors

·                  Shareholders with 25% or more of our outstanding stock have right to call a special meeting

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·                  By-laws provide eligible shareholders with proxy access to nominate Board candidates

·                  Robust shareholder engagement practices

Many of these practices as well as the criteria for selecting Directors and Director duties and responsibilities are contained in the Company’s current Corporate Governance Guidelines, a copy of which is available at our website at www.katespadeandcompany.com under “Corporate Governance” in the Investor Relations section.

Proxy Access

In 2016, the Company implemented proxy access providing eligible shareholders (including a group of up to 20) who meet certain conditions, including holding a net long position of at least 3% of the Company’s outstanding Common Stock continuously for at least three years, the right to use the Company’s proxy statement to nominate at an annual meeting Director candidates comprising up to 20% of the Board, but not less than two candidates.

Meetings of Independent Directors

Majority Vote Standard

In 2008, the Company adopted a majority vote standard for uncontested Director elections. Under this standard, in order for a nominee to be elected in an uncontested election, such nominee must receive the affirmative vote of a majority of the votes cast on such nominee’s election (votes cast “FOR” a nominee must exceed votes cast “AGAINST” the nominee). The Company maintains a plurality vote standard in contested Director elections, where the number of nominees exceeds the number of Directors to be elected.

In addition, as part of our Corporate Governance Guidelines, if an incumbent Director is not elected by a majority of the votes cast in an uncontested election, it is the policy that such Director will tender his or her resignation to the Chairman of the Board promptly following certification of the shareholder vote, such resignation to be effective upon acceptance by the Board. A recommendation on whether to accept any such resignation will be made by the Nominating and Governance Committee to the Board, or if a majority of the members of the Nominating and Governance Committee did not receive the required majority vote for re-election to the Board, a special committee of independent Directors. Generally, a Director who fails to receive a required majority vote will not participate in the Nominating and Governance Committee or Board Meetings considering the resignation. The Board will act on any resignation within 90 days and such action may include: (i) accepting the resignation offer; (ii) deferring acceptance of the resignation offer until a replacement Director with certain necessary qualifications held by the subject Director (e.g., accounting or related financial management expertise) can be identified and elected to the Board; (iii) maintaining the Director but addressing what the Board believes to be the underlying cause of the “against” votes; (iv) maintaining the Director but resolving that the Director will not be re-nominated in the future for election; or (v) rejecting the resignation offer. If accepting such resignation would result in the Company having (x) fewer than a majority of Directors who were in office before the election or (y) fewer than a majority of independent Directors as required under the rules of the NYSE, such 90-day period may be extended by an additional 90 days, if such extension is in the best interest of the Company. If the Board does not accept the resignation, the Director will continue to serve until his or her successor is duly elected, or until his or her earlier death, resignation or removal. If the Board accepts the resignation, then the Board, acting on the recommendation of the Nominating and Governance Committee, may fill any resulting vacancy or may decrease the size of the Board. The Board of Directors will promptly publicly disclose the Board’s decision and explain any determination not to accept the Director’s resignation.

Independent Board Chair Separate from CEO

Although we do not have a formal policy mandating the separation of the roles of Board Chair and Chief Executive Officer, we have kept the two as separate positions since 2006. Our Board’s current Chair is Nancy J. Karch, who was appointed to that position in May 2013 and is an independent Director. The Board reserves the right to determine the appropriate leadership structure for the Board on a case-by-case basis and believes that the separation remains appropriate. It allows our CEO to focus on the day-to-day operation and management of the Company, while the Board Chair focuses on leading the Board in overseeing the interests of the Company and its shareholders. The Chairman of the Board is responsible for managing Board functions, including setting the Board agenda (with Board and management input), facilitating communication among Directors, presiding at meetings of the Board of Directors and shareholders, sitting as chair at executive sessions at each regularly scheduled Board Meeting, and providing feedback to the Chief Executive Officer.

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Special Meetings

Under the Company’s By-laws, the Board of Directors has the authority to call special meetings of shareholders where the Directors, in the exercise of their fiduciary duties, determine such a meeting to be in the best interests of the Company. In addition, as a result of a proposal approved by the Company’s shareholders at the 2015 Annual Meeting of Shareholders, the Company’s By-laws permit record holders of at least 25% of the Company’s outstanding shares of Common Stock to call a special meeting (subject to certain qualifications designed to prevent duplicative and unnecessary meetings).

Action by Written Consent

Record holders of at least 35% of the shares of the Company’s outstanding Common Stock may act by written consent in lieu of a meeting.

Board and Committee Meetings; Director Attendance

During the fiscal year ended December 31, 2016, the Board of Directors held eleven meetings, and the Audit, Compensation and Nominating and Governance Committees of the Board held a total of 21 meetings. Except Mr. Mack and Mr. Benjamin, who were each unable to attend one Board meeting, each current Director attended all of the meetings held by the Board of Directors and each committee on which he or she served during such fiscal year and, with respect to Mr. Fischer, since his election to the Board of Directors on July 1, 2016. Our Corporate Governance Guidelines provide that all Directors are expected to attend the Annual Meeting of Shareholders, except in the event of special circumstances. All of our then current Directors attended our 2016 Annual Meeting of Shareholders.

Executive Sessions

Pursuant to our Corporate Governance Guidelines, the independent Board members meet in an executive session (without management present) at each regular Board Meeting, as well as when as a group they deem such a meeting necessary or appropriate.

Information About Committees of the Board of Directors

The Board of Directors currently has three standing Committees, as described below (each a “Board Committee” and, collectively, “the Board Committees”). All members of the Nominating and Governance Committee, the Audit Committee and the Compensation Committee are independent, as such term is defined in the NYSE Corporate Governance Standards and our Corporate Governance Guidelines.

Current members of the Board Committees are as follows:

* Current Chair

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Nominating and Governance Committee

The Nominating and Governance Committee is responsible for making recommendations to the Board with respect to the nomination of qualified candidates to serve as Directors of the Company. In addition, it is responsible for Board Committee assignments and chair appointments, overseeing the annual performance evaluations of the Board, its Committees and senior management, and reviewing and advising the Board on issues of corporate governance (including the Company’s Corporate Governance Guidelines) and corporate and social responsibility. The Committee’s responsibilities are set forth in the Nominating and Governance Committee charter, which is available at www.katespadeandcompany.com under “Corporate Governance” in the Investor Relations section. A copy may also be obtained by sending a request, care of the Company’s Corporate Secretary, to 2 Park Avenue, New York, New York 10016. The Nominating and Governance Committee met four times during the 2016 fiscal year. The Board has determined that each of the Nominating and Governance Committee members is independent under the NYSE Corporate Governance Standards, as well as the Company’s Corporate Governance Guidelines.

Consideration of Director Nominees

Our Nominating and Governance Committee, composed entirely of independent Directors, is responsible for identifying and evaluating our nominees for Director. While the Board considers specific areas of expertise when identifying nominees, the Board seeks Board members with broad-based experiences, complementary skill sets and a number of areas of focus, who can make important contributions to the Board’s deliberations and decisions on a wide variety of strategic and operational challenges. Furthermore, although there is no formal policy concerning diversity considerations, the Nominating and Governance Committee does consider diversity with respect to viewpoint, skills and experience in determining the appropriate composition of the Board and identifying Director nominees. In addition, the Board is committed to maintaining the Company’s long-standing tradition of inclusion and diversity within the Board, following the Company’s policy of non-discrimination based on sex, sexual preference, race, religion or national origin.

Process for Identifying and Evaluating New Director Candidates

The Nominating and Governance Committee regularly assesses the appropriate size of the Board and mix of Directors and solicits ongoing input from the Board (including the Board Chair) with the goal of identifying and informally approaching possible Director candidates in advance of actual need.

When an expected or actual need for a new Director is identified, the Nominating and Governance Committee considers what qualities or skills would be most appropriate; this is informed by the then mix of talent and expertise of sitting Directors, developments (current and anticipated) in the Company’s business, the skill set embodied by a departing Director, and other factors. In considering candidates, the Board is committed to maintaining the Company’s tradition of inclusion and diversity within the Board. A set of search criteria, including those set forth under “Director Qualifications” below, is then developed by the Nominating and Governance Committee for discussion with the full Board. Once those search criteria are finalized, the Nominating and Governance Committee’s practice is to engage one or more independent search firms to identify appropriate candidates, the Committee having the sole authority to retain and terminate any such search firms and determine the fees and terms of engagement of any such firms. Current Directors may also identify, either directly or through their personal networks, potential candidates meeting one or more of the criteria. Potential candidates may also come to the Nominating and Governance Committee’s attention through shareholders and others. Once candidates who meet one or more of the search criteria are identified, the Nominating and Governance Committee evaluates and discusses the potential Director candidates with the full Board and arranges for meetings with appropriate candidates. The Nominating and Governance Committee discusses the results of these sessions and other background information and determines whether to make a recommendation to the full Board as to the candidate’s nomination. The full Board, after considering the recommendation and report of the Nominating and Governance Committee, then determines whether to extend the candidate an offer to join.

Director Qualifications

The Board requires that all Director nominees be able to fulfill a Director’s fiduciary duties in the best interests of the Company and all of its shareholders. In this connection, all nominees must meet the criteria listed in our Corporate Governance Guidelines under “Board Membership Criteria,” including:

·                  unquestioned integrity and strength of character;

·                  practical and mature judgment;

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·                  substantial business experience with practical application to the Company’s needs;

·                  adequate time to devote to service on the Board;

·                  no conflicts of interest that would interfere with Board service; and

·                  a commitment to having a meaningful long-term equity ownership stake in the Company.

The Company also requires that:

·                  a substantial majority of Directors be independent;

·                  at least three of the independent Directors have the financial literacy necessary for service on the Audit Committee and that at least one of these Directors qualifies as an “audit committee financial expert”;

·                  some of the independent Directors have service as a senior executive of a public or substantial private company; and

·                  some of the independent Directors have an in-depth familiarity with the apparel and retail industries.

The current composition of our Board reflects these qualities and attributes and is characterized by a complementary combination of backgrounds, areas of expertise and skill sets.

Process for Evaluating Incumbent Directors

As a general matter, the Nominating and Governance Committee is of the view that the continued service of qualified incumbents gives the Company the benefit of familiarity with and insight into the Company’s affairs that such Directors have accumulated during their tenure, while contributing to the Board’s ability to work as a collective body for the benefit of all of its shareholders. Accordingly, in selecting candidates for nomination at the Annual Meeting, the Committee begins by determining whether the incumbent Directors desire and are qualified to continue their service on the Board. The Committee reviews and evaluates each incumbent’s performance during her or his prior term. If the evaluation is favorable, the incumbent continues to satisfy the criteria for Board membership, and the Committee believes the incumbent will continue to make important contributions to the Board, the Committee will, absent special circumstances, nominate the incumbent for re-election as a Director.

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Shareholder Nomination of Candidates for Election as Directors

The Nominating and Governance Committee will consider Director nominations submitted by shareholders that comply with the process for such nominations as set forth in the Company’s Certificate of Incorporation and By-laws. The Nominating and Governance Committee will evaluate these candidates in the same manner as candidates recommended by other persons, except that the Nominating and Governance Committee may consider, as one of the factors in its evaluation of shareholder-nominated candidates, the size and duration of the interest of the nominating shareholder or shareholder group in the equity of the Company. A shareholder wishing to nominate a candidate for election as Director without inclusion of the nomination in the Company’s proxy statement must submit written notice of the nomination to the Company’s Corporate Secretary, at the Company’s principal executive offices located at 2 Park Avenue, New York, New York 10016. In the case of an annual meeting of shareholders, such notice is required not less than 60 days and not more than 90 days prior to the first anniversary of the date of the prior year’s annual meeting of shareholders, subject to certain exceptions; and in the case of a special meeting of shareholders, (i) not less than the later of (x) 60 days prior to such special meeting and (y) 10 days following the day on which public announcement of such meeting is first made by the Company and (ii) not more than 90 days prior to such special meeting. Each such notice must include the name, age, business and residence address and principal occupation or employment of, and the number of shares of Common Stock beneficially owned by, each nominee, along with such information regarding the nominee as would be required to be disclosed in a proxy statement under SEC regulations, as well as the shareholder or group of shareholders making the nomination, information concerning any relationships between the nominating shareholder(s) and the nominee, the qualifications of the nominee to serve as a Director, and such other information required under the Company’s By-laws which can be found on the Company’s website at www.katespadeandcompany.com under “Corporate Governance” in the Investor Relations section. The notice from the nominating shareholder must also be accompanied by the consent of the nominee to serve if elected.

At the 2016 Annual Meeting, shareholders approved the amendment to the Company’s Certificate of Incorporation and the amendment and restatement of the Company’s By-laws to provide that a shareholder, or group of up to 20 shareholders, who maintained continuous ownership of at least 3% of our Common Stock for at least three years may nominate and include a specified number of Director nominees in our annual meeting proxy statement. The maximum number of shareholder-nominated candidates that may appear in our annual meeting proxy statement is the greater of two Director nominees and 20% of the number of Directors then serving on the Board of Directors.

Audit Committee

The Audit Committee is responsible for assisting the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices and financial statements of the Company, the independence, qualifications and performance of the Company’s independent registered public accounting firm, the Company’s compliance with legal and regulatory requirements, the performance of the Company’s internal audit function and any firm providing internal audit services. The Committee is directly responsible for the appointment, compensation, retention, termination and oversight of the independent registered public accounting firm and reviewing and approving in advance audit engagement fees and all permitted non-audit services and fees. Additionally, following the dissolution of the Finance Committee in 2014 and the amendments to the Audit Committee’s charter, the Audit Committee’s responsibilities also include advising the Board on a variety of corporate finance issues, including the Company’s policies regarding dividends, investments, issuances and purchases of securities, capital expenditures, and proposed acquisition and divestiture matters. The Audit Committee’s responsibilities are set forth in the Audit Committee charter, which is available at www.katespadeandcompany.com.com under “Corporate Governance” in the Investor Relations section. A copy may also be obtained by sending a request, care of the Company’s Corporate Secretary, to 2 Park Avenue, New York, New York 10016. The Audit Committee met nine times during the 2016 fiscal year.

The Board has determined that each of the Audit Committee members is “independent” under the applicable SEC regulations and the NYSE Corporate Governance Standards, as well as the Company’s Corporate Governance Guidelines. The Board has further determined that all members of the Audit Committee are “financially literate” under the NYSE Corporate Governance Standards and that Ms. Toben qualifies as an “audit committee financial expert” within the meaning of SEC regulations, with accounting and related financial management expertise within the meaning of the NYSE Corporate Governance Standards.

Compensation Committee

The Compensation Committee has overall responsibility for evaluating and approving the executive compensation and benefit plans, policies and programs of the Company. The Committee makes determinations on the Chief Executive Officer’s salary and bonus and approves salaries and bonuses for the other executive officers. The Committee also makes award decisions on equity-based

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compensation plans. The Compensation Committee also has responsibility for determining the independence of the Committee’s consultants and advisors, as well as the responsibility to monitor the Company’s compensation structure to ensure it does not lead to inappropriate risk-taking behavior. The Compensation Committee stays informed of current regulatory and legislative issues as well as executive compensation best practices and is committed to ensuring the Company’s compensation programs support its business plans and the interests of shareholders. The Committee’s responsibilities are set forth in the Compensation Committee charter, which is available at www.katespadeandcompany.com under “Corporate Governance” in the Investor Relations section. A copy may also be obtained by sending a request, care of the Company’s Corporate Secretary, to 2 Park Avenue, New York, New York 10016. The Compensation Committee met eight times during the 2016 fiscal year.

The Board has determined that each of the Compensation Committee members is independent under the NYSE Corporate Governance Standards, as well as the Company’s Corporate Governance Guidelines. All Compensation Committee determinations that are intended to comply with Section 162(m) of the Internal Revenue Code (“Section 162(m)”) are made by at least two Compensation Committee members who qualify as “outside directors” under Section 162(m).

The Compensation Committee has the sole authority to select, retain, and terminate compensation consultants as well as the sole authority to direct any compensation consultant’s work and approve fees.

In August 2015, the Compensation Committee selected and engaged Steven Hall & Partners, a third-party executive compensation consulting firm, to advise the Compensation Committee in connection with its review of executive and director compensation matters, including the level of total compensation packages provided to executive officers. The aggregate fees incurred related to Steven Hall and Partners for services were approximately $604,025 in 2016. The Compensation Committee has assessed the independence of its legal advisors and Steven Hall & Partners, and concluded that their work for the Compensation Committee does not raise any conflict of interest.

During 2016, the Compensation Committee directed the compensation consultants it engaged to provide the following services:

·                  Assessment of competitive pay levels for executive officers and the Board of Directors using survey and peer group proxy data sources;

·                  Review of the Company’s compensation peer group;

·                  Review of the competitive severance and change-in-control practices;

·                  Review of market trends in executive compensation, including pay mix, annual and long-term incentive plan design and other compensation-related governance practices;

·                  Review of regulatory requirements related to executive compensation;

·                  Advice and support in preparing for the Company’s advisory vote on executive compensation submitted at our 2016 Annual Meeting of Shareholders;

·                  Advice and support in preparing for and facilitating the Company’s shareholder outreach efforts;

·                  Assessment of shareholder advisory firms’ executive compensation policies and implications for Company practices;

·                  Advice and support to the Compensation Committee in its review of the Company’s Compensation Discussion and Analysis;

·                  Advice regarding appropriate design and metrics for annual and long-term incentive programs; and

·                  Advice and assistance to Company management, on the Committee’s behalf, in completing the compensation risk assessment process for 2016.

Board’s Role in Risk Oversight

Our Board has an active role in risk oversight of the Company. While Company management is charged with the day-to-day management of risks the Company faces, the Board, as a whole as well as through the Board Committees, is responsible for oversight of risk management. To this end, each of our Board Committees meets regularly with management and discusses the risks within its areas of responsibility and reports to the full Board at each regularly scheduled Board meeting. The Audit Committee has responsibility for oversight of financial reporting related risks, including those related to the Company’s accounting, auditing and financial reporting practices. The Audit Committee reviews an annual risk assessment report, prepared by the Company’s internal audit team, which identifies internal control risks and informs the internal audit plan for the next fiscal year. The Audit Committee also reviews reports of the anonymous calls made to the Company’s ethics “hotline,” and considers any material allegations and disciplinary actions brought to its attention as well as other reports of issues under the Company’s Code of Ethics and Business Practices, as defined in the “Additional Information” section. Additionally, the Audit Committee oversees corporate finance related

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risks and monitors the Company’s financial condition, capital structure and financing strategies, and makes recommendations for mitigating associated risks. The Audit Committee also oversees and discusses with management other significant business risks, including those related to data privacy and network security. The Compensation Committee oversees risks arising from the Company’s compensation policies and programs. The Compensation Committee has responsibility for evaluating and approving the executive compensation and benefit plans, policies and programs of the Company. The Nominating and Governance Committee oversees corporate governance risks, and oversees and advises the Board with respect to the Company’s positions and practices regarding significant issues of corporate and social responsibility.

Communications with the Board

Shareholders and other interested parties may communicate with the Board, the independent Directors as a group, any Board Committee or any individual member of the Board, including the Chair of the Nominating and Governance Committee, by either writing care of the Company’s Corporate Secretary at 2 Park Avenue, New York, New York 10016 or by emailing the Company’s Corporate Secretary at corporate.secretary@katespade.com. All communications will be reviewed by the Company’s Corporate Secretary, who will then forward such communications or a summary thereof to the appropriate Directors. Any communication related to accounting, internal controls or auditing matters will be brought promptly to the attention of the Chair of the Audit Committee.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Directors, executive officers, certain other officers, and persons owning more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership of such equity securities with the SEC and the NYSE. To the Company’s knowledge, based solely on the information furnished to the Company and written representations by such persons, all filing requirements under Section 16(a) have been complied with in a timely fashion.

Company Code of Ethics and Business Practices

The Company has established a Code of Ethics and Business Practices (“Code of Ethics and Business Practices”) which applies to all of its associates, including its Chief Executive Officer and Chief Financial Officer/Chief Accounting Officer, as well as to the Company’s Board of Directors and to temporary personnel. A copy of the Code of Ethics and Business Practices is available on the Company’s website at www.katespadeandcompany.com, under “Corporate Governance” in the Investor Relations section. A copy may also be obtained by sending a request care of the Company’s Corporate Secretary at 2 Park Avenue, New York, NY 10016. The Company will disclose on the Company’s website any amendment to, and any waiver of, the Code of Ethics and Business Practices with respect to the Company’s Directors or executive officers. The Company has established an Ethics and Business Practices Committee, consisting of the President and Chief Operating Officer, Chief Legal Officer and Chief Financial Officer/Chief Accounting Officer, with responsibility for administering the Code of Ethics and Business Practices.

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Item 11.                                                  Executive Compensation

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) describes the design and operation of the compensation program for our Named Executive Officers (“NEOs”). During 2016, our NEOs were the following individuals:

·                  Craig Leavitt, Chief Executive Officer;

·                  Deborah Lloyd, Chief Creative Officer;

·                  George Carrara, President & Chief Operating Officer;

·                  Thomas Linko, Senior Vice President, Chief Financial Officer; and

·                  Linda Yanussi, Senior Vice President, Global Operations and Chief Information Officer.

Overview

Kate Spade & Company is a global multichannel lifestyle brand that operates in four categories: Women’s, Men’s, Children’s and Home. We are a leader in the accessible luxury market, with success across multiple lifestyle categories. The kate spade new york collection includes handbags, small leather goods, jewelry and apparel, along with licensed products including footwear, fragrances, swimwear, watches, children’s wear, tech accessories, optics, tabletop products, legwear, fashion accessories, furniture, bedding, housewares, table linens, loungewear, pillows, lighting, activewear and stationery.

As illustrated in the charts below, we continued to experience strong financial results in 2016. Sales increased 13.7% from 2015 to 2016 coupled with substantial growth in Adjusted EBITDA over the same time period. Additionally, we experienced a modest increase in Total Shareholder Return for the one-year period.

Note: Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. A complete definition of these terms and reconciliation to GAAP is provided in Appendix B.

(1)Net sales in 2015 exclude wind-down operations (Kate Spade Saturday, Jack Spade brick and mortar, Kate Spade Brazil, and brand exits in Adelington Design Group segment).

(2)Adjusted EBITDA and Adjusted EBITDA % in 2015 exclude wind-down operations.

The fundamental goal of our compensation program is to pay for performance-motivating executives to drive capital-efficient, profitable multi-year quantitative and qualitative growth that will create sustained long-term shareholder value.

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Key Pillars of Our Compensation Philosophy Include:

Shareholder Engagement and Compensation Changes

At our annual meeting last year, our Say-on-Pay proposal received more than 98% support. While we viewed this as positive recognition of recently adopted changes to our pay programs, we also recognized that there were additional opportunities to further strengthen the program and our performance focus. Accordingly, in keeping with the Committee’s regular and ongoing practice of evaluating our compensation program to proactively ensure that the program reflects the changing needs of the business, we have made several additional changes to our pay program for 2017.

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The following is a summary of changes to our compensation program for 2015, 2016 and 2017.

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Operational and Financial Performance Highlights

In 2016, we delivered strong operational and financial results, including a substantial Adjusted EBITDA increase over 2015 (28.7%), continued sales growth, substantial increase in Operating Income as well as significant growth in direct-to-consumer sales and in our International segment. Net cash provided by operating activities of our continuing operations was $247.3 million in 2016 compared to $120.5 million in 2015 or a $126.8 million year-over-year increase which allowed us to increase our net cash position in 2016 by $184.0 million.

Although we experienced substantial growth in 2016, we did not meet our planned annual targets and therefore, consistent with our pay-for-performance philosophy, actual annual incentive payouts for our Named Executive Officers declined in 2016.

Note: Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. A complete definition of these terms and reconciliation to GAAP is provided in Appendix B.

(1)Adjusted EBITDA and Adjusted EBITDA % in 2015 exclude wind-down operations.

We experienced a modest increase in our stock price during 2016 amidst considerable industry volatility. The consumer retail sector, and many of our direct peers, have recently suffered significant P/E multiple compression. Despite these challenges, we remain the leader among all, but two, of our primary peers in share price gains.

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Strategic Priorities and Key Accomplishments in 2016

(1)             Net sales in 2015 exclude wind-down operations.

(2)             2015 Adjusted EBITDA Margin excludes the results of wind-down operations.

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2016 Compensation Program Overview

The table below summarizes our executive compensation program for 2016.

CEO and NEO Pay Mix for 2016

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Our Compensation Program Reflects Governance Best Practices

* Upon resignation without “good reason” or retirement, CEO and Chief Creative Officer are required to retain the number of shares that they hold as of their employment termination date for at least six months to comply with their stock ownership requirement. See the description of the CEO’s and Chief Creative Officer’s employment agreements in the section titled “Agreements with the Named Executive Officers” for additional details.

Executive Compensation Program Elements

The fundamental goal of our compensation program is to pay for performance — motivating executives to drive capital efficient profitable multi-year quantitative and qualitative growth that will create shareholder value over time.

Based on extensive shareholder engagement, we have responded to issues raised with regard to our compensation program. Beginning in 2015 and through 2016, we have made meaningful modifications to our long term incentive plan to strengthen the alignment between the interests of shareholders and executives. This has resulted in modifications to the metrics and vehicles used, maximum payouts and increased downside risk related to our relative TSR performance.

The primary elements of our 2016 compensation program were base salary, annual incentives and long-term incentives (PSUs for 60%, and RSUs for 40%).

The elements of our 2016 executive compensation program are summarized in the table on page 19 above, and are described in detail below.

Base Salary

Base salaries for our NEOs are determined by our Compensation Committee after consideration of a variety of factors including (1) scope and complexity of the role; (2) experience; (3) performance of the individual; and (4) comparisons to the external market and internal management team.

Occasionally adjustments are made, at the Committee’s discretion, when the Committee believes that an executive’s salary is not reflective of the appropriate relative positioning when compared to either internal or external reference points, or when a promotion or other change in responsibilities or contribution warrants adjustment.

Base salaries and target annual incentive percents (as a percentage of base salary) for the NEOs from 2014 to 2016 are shown below. For the last three years (2014 to 2016), the Committee has not increased the base salaries or target annual incentives of the CEO, Chief Creative Officer and COO. As discussed above, the Committee regularly reviews the compensation program to ensure that it is aligned with our overall business plan as well as with shareholder interests. We are keenly aware of the competitive market and

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believe our executives are positioned appropriately vis-à-vis the market at this time. Any future adjustments will be considered as warranted for the reasons mentioned above.

Annual Cash Incentive Plan

Annual cash payments are made under our Annual Incentive Plan (“AIP”) to our NEOs and other corporate associates each March for performance in the previous fiscal year. Our annual incentive program is designed to motivate and reward executives for achievement of short-term annual objectives believed by the Compensation Committee to be critical drivers of sustainable stock price growth over the long-term.

Annual Incentive Plan Performance Metric and Target Setting Process

In 2016, we tied 100% of the annual incentive opportunity to Adjusted Operating Income. The Compensation Committee selected this metric because it is a critical driver of our performance and sustainable shareholder returns over the long-term while serving as an appropriate measure in a short-term program. In light of shareholders’ continuing focus on Adjusted EBITDA, the Committee, for 2017, has tied 100% of the annual incentive opportunity to Adjusted EBITDA which the Committee believes similarly drives performance over both the short- and the long-term and is of meaningful importance to investors.

The Committee selects threshold, target and maximum performance goals for the Annual Incentive Plan. This performance range reflects the Committee’s commitment to setting rigorous goals that reflect expected performance and support our long-term plan. At the same time, while the maximum performance goal was determined by the Committee to be challenging, it was also judged to be appropriate within the context of the Company’s overall plan and not reasonably likely to encourage inappropriate or excessive risk-taking.

In 2016, Adjusted Operating Income increased to $202.8 million, or 33.6% compared to $151.8 million in 2015, which resulted in an annual cash incentive payout at 51.1% of target, demonstrating the rigor of our performance standards.

2016 Annual Incentive Plan (AIP)

Annual Incentive Plan Targets and Payouts

Annual incentive targets as well as actual incentive plan payouts for fiscal 2016 performance are provided in the chart below.

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Long-Term Incentive Program

The Company annually grants long-term incentive (“LTI”) awards as part of our ongoing compensation program. Our long-term incentive program is designed to motivate and reward executives when:

·                  We meet and/or exceed rigorous financial goals

·                  The Company’s TSR keeps pace with or exceeds a broader market index

·                  Shareholders realize gains

The Majority of Our Long-Term Incentive Pay Vests Based on Performance

In 2016, our long-term incentive program reflected a mix of PSUs (60%) and time-vested RSUs (40%), providing clarity of focus on strategic long-term financial performance.

The Compensation Committee believes that the focus on long-term incentives generally, and the significant weighting applied to PSUs in particular, provide strong alignment between executive pay and the interests of shareholders.

2016 Long-Term Incentive Targets for Our NEOs

For the last three years (2014 to 2016), the Committee has not increased the target long-term incentives of the CEO, Chief Creative Officer and COO.

*All target long-term incentive values approved by the Compensation Committee are converted to shares or units using the average closing price of the Company’s common stock over the prior consecutive 40 trading days through the date of grant.

Performance-Based Stock Units (PSUs)

Our 2016 PSU awards will be earned based upon the achievement of rigorous financial performance goals with respect to Cumulative Adjusted EBITDA and Average Cumulative EBITDA Margin % over the three year period 2016 to 2018. After the awards have been earned, the payout amounts will be further adjusted to reflect our TSR performance relative to that of other companies in the S&P MidCap 400 (the “Index TSR”).

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Below is the calculation to be used to determine PSU payouts for the 2016 to 2018 performance cycle:

* In 2015, the number of performance shares which could be earned ranged from 0 to 200% of target; in 2016, the number of performance shares which can be earned range from 0 to 160%.

** The relative TSR modifier decreases shares earned by —33% for bottom quartile relative TSR performance, while only increasing shares earned by +25% for top quartile relative TSR Performance.

When selecting the three-year performance targets for the 2016 PSUs, the Compensation Committee considered, among other metrics, the Company’s 2016 budget and 2016 to 2018 long-range plan.

The table below summarizes TSR impact on 2016 Long Term Incentive Program PSU payouts:

Restricted Stock Units (RSUs)

Beginning in 2016, we have incorporated time-vested restricted stock units (RSUs) into our long-term incentive program to promote a clear alignment between the interests of our executives and those of our shareholders. For 2016, PSUs continued to constitute 60% of the long-term awards, with 40% delivered in RSUs. The RSU awards will vest in two equal tranches on each of the second and third anniversaries of the date of grant.

For 2017, we revised the mix of long-term incentive compensation to be comprised 50% in the form of RSUs and 50% in the form of PSUs. The PSU award will be earned based upon the achievement of TSR performance relative to the group of global luxury peers comprising the “BL Global Luxury Goods Competitive Peers” index. The Compensation Committee believes that TSR performance relative to the Company’s luxury peers best encourages management to focus on overall Company performance and long-term shareholder value creation (over the three years, 2017 to 2019 inclusive) and provides a proper balance to internally focused operating metrics.

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In selecting the “BL Global Luxury Goods Competitive Peers” index, the Committee considered various criteria including:

·                  The importance of measuring against other companies that compete in the luxury and  near-luxury space;

·                  The relevance of the companies in the index to the Company’s business

·                  The number of companies comprising the index.

The Committee concluded, after examining independently published indices which include the Company, that the use of the “BL Global Luxury Goods Competitive Peers” index best matches these criteria.

Potential PSU payouts under the TSR relative performance plan will range from zero to 200% of the target number of shares depending upon the percentile ranking of the Company’s TSR compared to that of each company in the index as follows:

If the Company’s TSR for the three-year performance period 2017-2019 inclusive is below the 30th percentile, no portion of the PSUs will be earned. Percentile performance levels (and payouts) that fall between the 30th and 80th percentiles will be interpolated on a straight-line basis. Lastly, if the Company’s TSR is negative over the three-year performance period regardless of the Company’s percentile ranking relative to the peers in the index, the maximum payout cannot exceed 100% of target.

We believe that the mix and the payment vehicles are appropriate, communicates the Committee’s desire to pay for performance, aligns the interests of our executives and our shareholders and will ultimately drive shareholder value creation.

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Our Compensation Program is Heavily Weighted Towards Variable Incentive Pay

As presented previously, the charts below demonstrate the emphasis placed on variable pay versus fixed compensation.

Other Elements of Our Compensation Program

Perquisites and Executive Benefits

We offer our NEOs a total compensation package that emphasizes long-term contribution and stability rather than extra benefits, particularly benefits not available to a broader employee population.

Our NEOs receive the same medical, dental, vision, employee discount and 401(k) benefits as the broader associate population. The perquisites provided to our NEOs are available to other executives in the Company and include an Executive Life Insurance Program providing coverage equal to two times annual base salary, clothing allowance, financial counseling and for certain executives, unlimited use of a car service for business purposes only.

Employment and Severance Agreements

In January 2014, the Company entered into employment agreements with Mr. Leavitt and Ms. Lloyd in connection with their transition to Chief Executive Officer and Chief Creative Officer, respectively. Additionally, the Company has entered into Executive Severance Agreements with each of the NEOs. These agreements are described in more detail below under the “Agreements with the Named Executive Officers” section.

Compensation Process

Our Philosophy Regarding Competitive Pay Positioning

The Compensation Committee does not use competitive market data as the sole determinant of executive pay, but rather uses this data as one of several reference points considered when evaluating the appropriateness of target pay levels for the management team. Other important considerations include each executive’s particular experience, unique and critical skills, scope of responsibilities, proven performance, succession management and retention considerations, and the need to recruit new executives. Additionally, the Committee considers pay in the context of the complex dynamics of the Company’s business, including:

·                  Planned growth trajectory of the Company

·                  Highly competitive luxury retail market

·                  Limited pool of world class creative talent among luxury competitors

·                  Need for talent capable of continually evolving brands and engaging customers while staying true to our unique aesthetic and brand voice

·                  Need for talent with the skills and breadth required to conceptualize and realize new lifestyle offerings consistent with our brand before sales for those offerings have materialized

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As an initial starting point, the Compensation Committee considers the median of the competitive market when making determinations regarding pay levels for individual executives, with adjustments made, either up or down, to reflect the additional factors described above.

The Compensation Committee does not have specific benchmarking targets for individual pay elements, but rather determines pay mix on an individual basis. Each individual’s pay mix is reflective of the competitive market for that position, as well as the Committee’s judgment of the mix most appropriate to retain and motivate that executive to achieve the strategic objectives of the Company.

Our Sources for Competitive Market Data

Unlike many companies, our most meaningful talent competitors are larger than the Company on a sales and market capitalization basis. Companies in the luxury retail market are unique in that the size of the company rarely correlates to the true power and desirability of the brand. For example, leaders in our industry are often attracted to the opportunity to work for a particular brand, rather than a particular company. Additionally, launching new products or brands in our space requires individuals with the talent and skills required to conceptualize and bring to market a fully realized offering, consistent with the global brand, regardless of whether sales are initially $1 or $100 million; it is quite difficult and risky to seek to “upgrade” talent as the product or brand awareness and corresponding sales grow.

Our business is growing, and we need an executive team capable of understanding and embracing who we are as a brand and effectively managing our business for the long-term benefit of our shareholders. For this reason, the companies from whom we recruit talent, and the companies to which we believe we are most vulnerable to lose talent, are not necessarily constrained by the typical .5x to 2x revenue rule of thumb used by many companies to develop a comparator group for purposes of assessing compensation levels and practices. The Compensation Committee has had extensive conversations with shareholders about these challenges, and continually reviews the set of comparators to ensure that we remain mindful of the views of our shareholders while also ensuring that we can effectively recruit, motivate and retain the talent we need to successfully manage our business.

Our comparator groups are comprised of companies that are of similar size and in similar industries with a particular focus on companies that share other characteristics with us, including:

·                  Similar or related products;

·                  Companies on our non-compete list;

·                  Companies with meaningful e-commerce channels;

·                  Companies with meaningful international sales; and

·                  High growth companies.

In addition to our Primary Peer Group, the Compensation Committee also referenced a Secondary Peer Group. The Secondary Peers, although much larger than the Company, represent key sources and possible destinations for executive talent and are some of our most direct business competitors and for this reason represented a critical point of reference for Mr. Leavitt and Ms. Lloyd. This group serves as a secondary reference point for the Compensation Committee.

In 2016, as part of its annual review of compensation-related matters, the Compensation Committee again reviewed the constituents of the Primary and Secondary Peer Groups. Following this review, the Compensation Committee reaffirmed both the Primary and Secondary Peer Groups. As in 2015, the companies that comprise the Primary Peer Group were size-appropriate. The current approved groups consist of the following companies:

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Participants in the Process

The Role of the Compensation Committee and its Independent Consultant

Our executive compensation programs, policies and plans are evaluated and approved by the Compensation Committee. As part of the annual compensation approval process, the Compensation Committee considers the advice of management, as well as that of its independent compensation consultants. In 2016, our independent compensation consultant was Steven Hall & Partners.

For additional information regarding the role of the Compensation Committee and services provided by its independent compensation consultants in 2016, please see the section entitled “Compensation Committee” on page 11.

The Role of Management

Our management develops proposals and recommendations regarding pay changes, awards, plan design, appropriate performance metrics and targets for our annual and long-term incentive compensation programs for the Compensation Committee’s consideration and approval. Our management is also responsible for responding to any Compensation Committee requests for information, analysis, or perspective as it relates to topics that may arise during the course of the year. No executive officer is involved in the determination of his or her own compensation.

Our Compensation Governance Policies

Stock Ownership Guidelines and Retention Policies

In order to further align the interests of our executives with those of our shareholders, the Compensation Committee has adopted executive stock ownership guidelines. These guidelines apply to the NEOs as well as other executive officers in the Company. Individuals are required to hold a number of shares of Company Common Stock having a value established as a multiple of base salary. The multiples of base salary for the NEOs are:

·                  Five times for the Chief Executive Officer

·                  Four times for the Chief Creative Officer

·                  Two times for the other NEOs

Until the applicable multiple of salary requirement is met, the guidelines require the executive to retain 75% of the net, after-tax shares received from any long-term incentive awards. The Company’s objective is to have executives reach their guideline within five years, provided that in the event of a promotion which results in an increase in the number of shares required to be held, the individual is provided five years to meet the new requirements, starting from the promotion date.

In addition, Mr. Leavitt and Ms. Lloyd, upon their resignation of employment from the Company without Good Reason or due to retirement, are contractually obligated to retain the number of Company shares that they hold as of the date of employment termination for at least six months to comply with their stock ownership requirement. Beginning on the six-month anniversary of their separation date, they may sell 50% of those shares and the remainder may be sold beginning on the one-year anniversary of their separation date.

Ownership holdings were most recently reassessed in February 2017. All NEOs are currently in compliance with our guidelines.

Hedging and Pledging Policy

The Company prohibits executives and members of the Board from hedging or pledging the economic risk of their ownership of Company securities, which includes entering into any derivative transaction on Company stock (e.g., any short-sale, forward, option, collar).

Clawback Policy

The Company maintains a formal policy on the adjustment or recovery of any awards made under our 162(m) plan in connection with a restatement or adjustment of financial statements, or an error in calculating performance achieved that would otherwise have

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resulted in a change to the size of an award or payment. To the extent necessary, the Company’s policy for the adjustment or recovery of awards will be revised to comply with changes to legislative requirements.

While the Company has not experienced any clawback situations or occasions that would result in a reduction in the size of the award or payment, the plan allows the Compensation Committee to assess the circumstances relating to adjustments or changes in performance and take such legally permissible actions as it believes to be appropriate to correct award sizes.

Compensation Risk Assessment

In 2016, the Company and the Compensation Committee engaged in a formal risk assessment process with the assistance of the Compensation Committee’s independent compensation consultant. This process included a full inventory of incentive plans, a review of potential risks and factors mitigating such risks, as well as a review of the enterprise risks associated with the Company’s compensation practices and programs. We have concluded that our compensation policies and practices have counterbalances that mitigate risks and do not create risks that are reasonably likely to have a material adverse effect on the Company.

Formal Equity Grant Policy

The Company has adopted a formal equity grant policy. All equity grants are approved at Compensation Committee meetings (and documented in the minutes of such meetings) or, within certain limitations, approved by delegation to the Chairman of the Compensation Committee.

The grant date for awards is the first trading day of the month following the approval of the award by the Compensation Committee (or, for new hires, the hire date except that if the hire date is a not a trading day then the grant date is the next trading day after the hire date), unless, in any event, such trading day is within two business days of an earnings release in which event the grant date is the first business day after the earnings release. For option awards, the exercise price equals the closing stock price on the date of grant.

All grants to NEOs in 2016 complied with the Company’s equity grant policy.

Tax and Accounting Considerations

Tax Considerations

The Compensation Committee attempts to structure compensation for executive officers that is tax deductible to the Company to the extent feasible and takes the tax deductibility of compensation into account when making compensation decisions.

When it reviews compensation matters, the Compensation Committee considers the anticipated tax and accounting treatment of various payments and benefits to the Company and, when relevant, to the executive. Section 162(m) limits to $1 million the annual tax deduction for compensation paid to each of the chief executive officer and the three other highest paid executive officers employed at the end of the year (other than the chief financial officer). However, compensation that does not exceed $1 million during any fiscal year or that qualifies as “performance-based compensation” (as defined in Section 162(m)) is deductible. The Compensation Committee considers these requirements when designing compensation programs for named executive officers. Although the Company has plans that permit the award of deductible compensation under Section 162(m), the Compensation Committee does not necessarily limit executive compensation to the amount deductible under that provision. Rather, it considers the available alternatives and acts to preserve the deductibility of compensation to the extent reasonably practicable and consistent with its other compensation objectives. Although most of the Company’s plans are designed to qualify for deductibility under Section 162(m), in certain situations, the Compensation Committee may approve compensation that will not meet these requirements in order to ensure competitive levels of total compensation for the named executive officers or for other reasons.

The Compensation Committee took into account that the following compensation may not be fully deductible when paid:

·                  Mr. Leavitt’s and Ms. Lloyd’s base salaries over $1 million; and

·                  Certain payments in the event of a change-in-control.

The vesting of the Company’s stock awards is currently structured to accelerate in the event of a change-in-control and qualifying termination of employment. This “double-trigger” acceleration could contribute to potential excess parachute payments.

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Each year the Committee establishes threshold performance goals for preserving the tax deductibility of awards paid to the NEOs subject to Section 162(m) of the Internal Revenue Code. For fiscal year 2016, the threshold performance goals were set at the achievement of Adjusted Operating Income of at least $20 million. If the threshold performance goals were not met, no awards would be earned; and if the threshold goals were met, then the awards would be earned to the extent that the remaining performance metrics were achieved. The Adjusted Operating Income threshold goal was achieved in fiscal year 2016.

Accounting Considerations

Stock options, restricted stock, and performance shares are accounted for based on their grant date fair value, as determined under FASB ASC Topic 718 (see Note 1 “Basis of Presentation and Significant Accounting Policies — Share Based Compensation” and Note 14 “Share-Based Compensation” in the Notes to Consolidated Financial Statements included in the Original 10-K). Because the performance shares include financial performance conditions, the compensation cost of the awards will be reversed if the performance conditions are not met or the employee does not remain employed by the Company throughout the performance period.

Director Compensation

Directors, other than Directors who are Company employees, are compensated for their services. During 2016, independent Directors received the following compensation:

·                  Annual Retainers:

·                  $150,000 for serving as a Director, with approximately $100,000 payable in the form of Common Stock (the “Annual Stock Retainer”), subject to transfer restrictions discussed below; new Directors receive a pro-rata grant of the Annual Stock Retainer upon election and a pro-rata portion of the cash retainer, based on the number of whole and partial fiscal quarters remaining during the fiscal year of their election;

·                  In addition, $100,000 for the non-executive Board Chair for serving as such, with approximately $50,000 payable in the form of Common Stock, subject to the same transfer restrictions as the Annual Stock Retainer discussed below;

·                  $10,000 for the Chair of the Nominating and Governance Committee for serving as such; and

·                  $20,000 for the Chairs of each of the Audit Committee and Compensation Committee for serving as such.

·                  $1,000 for each Board meeting or Committee meeting attended;

·                  A $6,000 allowance for the purchase of Company products (based on prices which are net of the usual Company employee discount); and

·                  Reimbursement for out-of-pocket travel expenses incurred in connection with attendance at Board meetings and Committee meetings.

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The following table sets forth information concerning Director compensation earned by independent Directors for the 2016

fiscal year:

(1)         The amount indicated includes the applicable annual cash retainer (inclusive of all applicable annual cash retainers for serving as a Committee Chair) as well as all applicable Board meeting and Committee meeting fees.

(2)         The amount indicated reflects the Annual Stock Retainer grant of 9,063 shares of Common Stock, granted on January 11, 2016, to Nancy Karch, the non-executive Board Chair; the Annual Stock Retainer grant of 6,042 shares of Common Stock, granted on January 11, 2016, to each of the other Directors except for Mr. Fischer and a pro-rated Annual Stock Retainer grant of 2,402 shares of Common Stock, granted on July 1, 2016, to Mr. Fischer. The amounts indicated represent the dollar amount recognized by the Company for financial statement reporting purposes with respect to the 2016 fiscal year for the fair value of stock under Statement of Financial Accounting Standards Board ASC Topic 718, “Compensation — Stock Compensation.” See Note 1 “Basis of Presentation and Significant Accounting Policies — Share Based Compensation” and Note 14 “Share Based Compensation” in the Notes to the Company’s audited financial statements for the fiscal year ended December 31, 2016, included in our Original 10-K filed with the SEC on February 23, 2017.

(3)         Each Director is provided a $6,000 allowance for the purchase of Company products (based on prices which are net of the usual discount available to all Company employees for the purchase of Company products). The amounts listed above equal the taxable amount attributable to the actual allowance utilized, as applicable.

The Company’s Outside Directors’ Deferral Plan (the “Outside Directors’ Deferral Plan”) enables each independent Director to elect, prior to any calendar year, to defer cash and/or Common Stock fees otherwise payable in that year. Deferred cash fees are deemed invested in phantom shares of Common Stock or credited with imputed interest at the prime rate plus 1%, whichever the Director specifies at the time of election. Deferred Common Stock fees are deemed invested in phantom shares of Common Stock, with dividends deemed reinvested in additional phantom shares. Upon a lapse of the deferral, payment is made in the form specified by the Director at the time of the deferral election.

The Company does not provide any retirement benefits to Directors.

The Company’s Corporate Governance Guidelines set out the Board’s expectation that each Director will accumulate over time a holding of shares of Common Stock having a value equal to three times the value of the Annual Stock Retainer. In addition, notwithstanding a Director having met such shareholding guideline, Annual Stock Retainer shares are (subject to an exception for sales made to pay taxes due on the receipt of such shares) non-transferable until the first anniversary of grant, with 25% becoming transferable on each of the first and second anniversaries of the grant date, and the remaining 50% becoming transferable on the third anniversary of the grant date. Any remaining transfer restrictions lapse one year after Board service ends, or immediately upon death.

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Executive Compensation

Summary Compensation

The following table sets forth information concerning the compensation for services in all capacities of the Company’s Named Executive Officers for the 2016 fiscal year.

(1)         All awards shown at grant date fair value in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 718 Compensation — Stock Compensation (ASC 718). Includes annual awards of MSUs, PSUs and Stock Options. See Note 1 “Basis of Presentation and Significant Accounting Policies — Share-Based Compensation” and Note 14 “Share-Based Compensation” in the Notes to the Company’s audited financial statements for the fiscal year ended December 31, 2016, included in our Original 10-K filed with the SEC on February 23, 2017.

(2)         All Other Compensation has been further detailed in the additional table below.

(a)         The amount indicated represents the cost to the Company for financial advisory services provided to the executive by a third-party financial consultant.

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(b)   The amount indicated equals the taxable amount attributable to the actual product incentive utilized (based on prices which are net of the usual discount offered to all Company employees for the purchase of Company products).

(c)   The amount reported reflects the value of holiday gifts purchased by the Company for the executive in conjunction with a Company-sponsored celebration. The amount reflects the full market value paid by the Company for each item, which has been included in the executives’ taxable income.

(d)   The amount reported reflects tax payments made to the IRS on behalf of the executive for the value of company paid executive life premiums not included in executive’s gross wages from April 2013 through September 2015.

(e)   The amount reported reflects income taxes paid by the Company to cover the executive’s tax obligation due in 2016 resulting from the amount listed under “Taxable Benefit”.

Grant of Plan-Based Awards Table

(a)       Represents the range of possible cash payouts for fiscal year 2016 associated with estimated levels of performance under the Annual Incentive Plan. Amounts actually earned are set forth in the Summary Compensation Table. For details please see the “Annual Cash Incentive Plan” section of the CD&A.

(b)       Represents the range of possible share payouts associated with pre-established levels of performance. These awards are described in the “Long Term Incentive Program” section of the CD&A.

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Salary, Bonus and Non-Equity Incentive Compensation

For a discussion of 2016 salary and bonus compensation for the NEOs, see the “Compensation Discussion and Analysis” section above.

Stock Options Exercised and Awards Vested in 2016