BJ's Wholesale Club (BJ) PRE 14APreliminary proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

SCHEDULE 14A INFORMATION 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     ) 

BJ’s Wholesale Club Holdings, Inc. 

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

Dear Fellow

Shareholder:

BJ’s Wholesale Club Holdings, Inc. 2022 Annual Meeting of Shareholders (the “Annual Meeting”) will be held on Thursday, June 16, 2022, at 8:00 a.m., Eastern Time. The Annual Meeting will be held solely by means of remote communication in virtual meeting format. You will be able to attend and participate in the Annual Meeting online by visiting www.virtualshareholdermeeting.com/BJ2022, where you will be to listen to the Annual Meeting live, submit questions and vote.

All shareholders of record of our common stock at the close of business on April 25, 2022, the record date, are entitled to notice of and to vote at the Annual Meeting, or any continuation, postponement, or adjournment thereof.

Whether or not you expect to attend the Annual Meeting, we urge you to vote your shares by following the instructions on the notice and access card or proxy card you received as promptly as possible to ensure your representation and the presence of a quorum at the Annual Meeting. If you submit your voting instructions prior to the Annual Meeting, you may still decide to attend the Annual Meeting and vote your shares during the Annual Meeting. Your proxy is revocable in accordance with the procedures set forth in the Proxy Statement accompanying this letter.

Thank you for your continued support.

Sincerely,

Chris Baldwin Executive Chairman	Bob Eddy President & Chief Executive Officer
May __, 2022

BJ’S WHOLESALE CLUB HOLDINGS, INC. 2021 PROXY STATEMENT

Notice of Annual Meeting of Shareholders
Date Thursday, June 16, 2022   Time 8:00 a.m. Eastern Time   Place www.virtualshareholdermeeting.com/BJ2022   Record Date April 25, 2022   Availability of Materials The proxy statement and our Annual Report for the fiscal year ended January 29, 2022 are available at www.proxyvote.com			Items of Business   1. Election of seven director nominees   2. Approve, on an advisory (non-binding) basis, the compensation of the named executive officers   3. Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm   4. Approve the amendment to our Charter to eliminate supermajority vote requirements   5. To transact such other business, if any, as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof   The Board recommends that you vote “FOR” each director nominee included in Proposal 1 and “FOR” each of the other proposals. The full text of these proposals is set forth in the accompanying proxy statement. Registered shareholders of the Company at the close of business on the record date are eligible to vote at the meeting.   We recommend that you review the further information on the process for, and deadlines applicable to, voting, attending the meeting and appointing a proxy under “Questions and Answers About the Annual Meeting and Voting” on page 49 of the proxy statement. This Notice of annual Meeting and proxy statement are first being distributed or made available, as the case may be, on or about May 5, 2022.   By Order of the Board of Directors,
Your vote is important   To make sure your shares are represented, please cast your vote as soon as possible in one of the following ways:
Internet Online at www.proxyvote.com
Telephone Call 1 (800) 690-6903
Mail Mark, sign and date your proxy card or voting instruction form and return it in the postage-paid envelope
QR Code Scan this QR Code. Additional software may be required for scanning			Graham N. Luce Secretary May __, 2022

Voting Matters

Financial Highlights

Throughout fiscal year 2021, the Company met the challenges presented by COVID-19 while continuing to deliver significant value to our members. The fiscal year 2021 results below demonstrate the Company’s ability to thrive in difficult environments and return value to our stakeholders.

Directors

Our directors bring a mix of backgrounds and possess a broad range of skills and expertise that position the Board to effectively oversee the Company’s business.

Director Skills and Expertise

Senior Leadership Expertise	Retail Industry Expertise	Multi-Unit   Expertise		Public Company Board Experience	Fuel Industry  Expertise	Financial  Expertise

Director Nominees

	Name		Age(1)	Director Since	Independent	Committee Memberships
	Chris Baldwin		59	2018	-	-
	Darryl Brown		59	2021	●	-
	Michelle Gloeckler		55	2019	●	• Nominating & Governance
	Ken Parent		63	2011	●	• Compensation
	Chris Peterson		55	2018	●	• Audit (chair)
	Rob Steele		66	2016	●	• Audit
		Judy Werthauser	56	2018	●	• Nominating & Governance (chair) • Compensation (chair)

(1) Ages of Director Nominees are as of March 1, 2022

Governance Practices

Highlights

Shareholder Engagement

We perform shareholder outreach throughout the year to engage with shareholders on issues that are important to them. During Fiscal Year 2021, we requested meetings with shareholders representing nearly 83% (as of June 30, 2021) of shares outstanding. The results of our shareholder outreach are reported to the Board.

Team Member Diversity

We have approximately 34,000 diverse and amazing team members. We believe that the diversity of our team members plays a vital role in the Company’s culture and improves our ability to deliver growth and profitability.

*Above team member statistics are as of January 29, 2022

We have an Inclusion & Diversity council which is comprised of a cross-functional team representing diversity of backgrounds, ethnicity, gender, and self-identification. This council is responsible for identifying and driving actions and initiatives to advance the Company’s inclusion and diversity mission.

This proxy statement (this “Proxy Statement”) and our Annual Report for the fiscal year ended January 29, 2022 (the “Annual Report” and, together with this Proxy Statement, the “proxy materials”) are being furnished to you by and on behalf of the Board of Directors (the “Board” or the “Board of Directors”) of BJ’s Wholesale Club Holdings, Inc. in connection with our 2022 Annual Meeting of Shareholders (the “Annual Meeting”).  References herein to “fiscal year 2020”, “fiscal year 2021”, “fiscal year 2022”, and “fiscal year 2023” refer to the 52 weeks ending January 30, 2021, January 29, 2022, January 28, 2023, and February 3, 2024” respectively.  As used herein, the terms “Company”, “BJ’s”, “we”, “us”, or “our” refer to BJ’s Wholesale Club Holdings, Inc. and its consolidated subsidiaries unless otherwise stated or the context otherwise requires. This Proxy Statement and Annual Report are first being distributed or made available, as the case may be, on or about May 5, 2022.

The Board of Directors has adopted Corporate Governance Guidelines. A copy of these Corporate Governance Guidelines can be found in the “Governance Documents” section of the “Corporate Governance” page of our investor relations website located at www.investors.bjs.com, or by writing to our Secretary at our corporate offices.

Corporate Governance Practices

The Company has a history of strong corporate governance.  We are committed to governance policies and practices that serve the interests of the Company and its shareholders.  Over the years, our Board has evolved our practices in the interest of our shareholders.  Our governance practices and policies address the following topics, among others: 

Board Leadership Structure

Our Bylaws provide the Board of Directors with flexibility to combine or separate the positions of chairperson of the Board and Chief Executive Officer in accordance with its determination that utilizing one or the other structure would be in the best interests of the Company and its shareholders. In addition, our Corporate Governance Guidelines provide that, in order to maintain the independent integrity of the Board of Directors, if the chairperson of the Board is a member of management or does not otherwise qualify as an independent Director, the independent members of the Board may appoint an independent Director to serve as Lead Director.

The Board of Directors understands that no single approach to Board leadership is universally accepted and that the appropriate leadership structure may vary based on several factors, such as a company’s size, industry, operations, history and culture. Accordingly, the Board, with the assistance of the Nominating and Corporate Governance Committee, assesses its leadership structure in light of these factors and the current environment to achieve the optimal model for us and for our shareholders.

After careful consideration, the Board determined that, at this time, the Company and its shareholders are best served by the Company having separate Chairman of the Board and Chief Executive Officer roles and as described in more detail below, by also having a Lead Director. Currently, Mr. Baldwin serves as our Executive Chairman of the Board, Mr. Eddy serves as our Chief Executive Officer and Mr. Steele serves as our Lead Director. Mr. Steele was appointed Lead Director in May 2019 by the independent members then serving on the Board. The Board of Directors believes that this leadership structure best serves us and is appropriate given the needs of a company our size and the wide spectrum of issues we face because it (i) provides us with the continued benefits of the experience, knowledge and vision of Mr. Baldwin, who served as our Chief Executive Officer from February 2016 to February 2020 and as our Chairman or Executive Chairman, as applicable, of the Board from February 2018 until present and (ii) allows the Chief Executive Officer to focus his efforts on setting the strategic direction of the Company and providing day-to-day leadership of the Company while the Chairman of the Board focuses on presiding at meetings of the Board and overall planning and relations with Directors. In addition, the Board of Directors expects the Lead Director role to continue to enhance and provide further assurances to our shareholders regarding the strong independent oversight exercised by the Board. As Lead Director, Mr. Steele presides over all meetings of the Board at which the Chairman of the Board is not present, including executive sessions of independent Directors; approves Board meeting schedules and agendas; and acts as the liaison between the independent Directors and the Chief Executive Officer and the Chairman of the Board.

Director Independence

Under our Corporate Governance Guidelines and the New York Stock Exchange (the “NYSE”) rules, a Director is not independent unless the Board affirmatively determines that he or she does not have a direct or indirect material relationship with us or any of our subsidiaries. In addition, the Director must meet the bright-line tests for independence set forth by the NYSE rules. The Board of Directors has affirmatively determined that each of our Directors, other than Mr. Eddy, our Chief Executive Officer, and Mr. Baldwin, our Executive Chairman of the Board, qualifies as independent under the applicable NYSE rules.

In arriving at the foregoing independence determinations, the Board of Directors reviewed and discussed information provided by the directors with regard to each director’s business and personal activities and any relationships they have with us and our management. In making the director independence determinations regarding Messrs. Peterson and Steele, the Board considered that they serve as an executive officer and on the board of directors of Newell Brands, Inc., respectively, one of the Company’s vendors and from whom we purchase products in the ordinary course of business, on arm’s-length terms, in amounts and under other circumstances that the Board determined did not affect Messrs. Peterson and Steele’s independence. In fiscal year 2021, the Company’s payments to Newell Brands, Inc. were less than 1% of Newell Brands Inc.’s net sales, and Messrs. Peterson and Steele had no direct or indirect material interest in the sales Newell Brands, Inc. makes to the Company.

Board Committees

The Board of Directors has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, each of which has the composition and the responsibilities described below. In addition, from time to time, special committees may be established under the direction of the Board when necessary to address specific issues. Each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee operates under a written charter.

All members of our Audit Committee meet the requirements for financial literacy under the applicable rules and regulations of the NYSE. The Board of Directors has affirmatively determined that each of Ms. Naylor and Messrs. Peterson and Steele qualifies as “independent” under the NYSE’s standards and Rule 10A-3 of the Exchange Act of 1934, as amended (the “Exchange Act”), applicable to Audit Committee members. In addition, the Board of Directors has determined that each of Ms. Naylor and Mr. Peterson qualifies as an “Audit Committee Financial Expert,” as such term is defined in Item 407(d)(5) of Regulation S-K.    

The Board of Directors has determined that each of Messrs. Kingsbury and Parent and Ms. Werthauser qualify as “independent” under NYSE’s heightened standards applicable to Compensation Committee members and each of Mr. Parent and Ms. Werthauser qualifies as a “Non-Employee Director” as defined in Section 16b-3 of the Exchange Act.  

The Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors to assist in carrying out its responsibilities. Before selecting any such consultant, counsel or advisor, the Compensation Committee reviews and considers the independence of such consultant, counsel or advisor in accordance with applicable NYSE rules. We must provide appropriate funding for payment of reasonable compensation to any consultant, counsel or advisor retained by the Compensation Committee.    

Nominating and Corporate Governance Committee
Members  All Independent   Judy Werthauser (Chair)  Michelle Gloeckler O	Our Nominating and Corporate Governance Committee oversees and assists the Board of Directors in reviewing and recommending nominees for election as Directors. Our Nominating and Corporate Governance Committee is responsible for, among other things:
	•	identifying individuals qualified to become members of the Board of Directors, consistent with criteria approved by the Board of Directors, except where the Company is otherwise required to provide third parties with the right to designate Directors;
	•	recommending to the Board of Directors the nominees for election to the Board of Directors at Annual Meetings of our Shareholders;
	•	overseeing the annual self-evaluations of the Board of Directors and its committees; and
	•	developing and recommending to the Board of Directors a set of corporate governance guidelines and principles.
Oversees the Company’s corporate governance structure and practices.

The Board has determined that each of Mses. Gloeckler and Werthauser qualifies as “independent” under applicable NYSE rules for purposes of serving on the Nominating and Corporate Governance Committee.

Environmental, Social and Governance

Our Board recognizes that mitigating Environmental, Social and Governance (“ESG”) risks is fundamental to driving long-term shareholder value. Our sustainability page (https://investors.bjs.com) highlights many of our sustainability efforts and demonstrates how progress in ESG is embedded into our Company’s culture and aligns with our corporate strategy. We understand that there are still opportunities for improvement, and we continue to strive for improvement in our ever-changing and dynamic industry and environment.

We continued to make progress on ESG matters throughout 2021. Most notably:

The information contained on our website or that can be assessed through our website is not incorporated by reference and should not be considered a part of this Proxy Statement.

Shareholder Engagement

We regularly engage in outreach efforts with our shareholders. In October 2021, we requested meetings with shareholders representing nearly 83% of shares outstanding and ultimately met by phone or videoconference with shareholders representing approximately 22% of shares outstanding. We provided an open forum to each shareholder to discuss and comment on our business and ESG practices. Overall, we received constructive feedback from shareholders. The Company, after this engagement with its shareholders, agreed to continue to keep in contact with them, as well as the other shareholders who chose not to engage with the Company at that time. Maintaining ongoing relationships with our shareholders, and understanding our shareholders’ views, is a priority for both our Board and management team.

Committee Charters and Corporate Governance Guidelines

Our Corporate Governance Guidelines, charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee and other corporate governance information are available under the “Governance Documents” section of the “Corporate Governance” page of our investor relations website located at www.investors.bjs.com, or by writing to our Secretary at our corporate offices.

Code of Business Ethics

We have adopted a code of business ethics (the “Code of Conduct”) that applies to all of our Directors, officers and employees, including our Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller or persons performing similar functions. A copy of our Code of Conduct is available under the “Governance Documents” section of the “Corporate Governance” page of our investor relations website located at www.investors.bjs.com, or by writing to our Secretary at our corporate offices. We intend to make any legally required disclosures regarding amendments to, or waivers of, provisions of our Code of Conduct on our website rather than by filing a Current Report on Form 8-K.

Anti-Hedging and Anti-Pledging Policy

The Board of Directors has adopted an insider trading compliance policy, which applies to all of our Directors, officers and certain designated employees. The policy prohibits our Directors, officers and certain designated employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts, short sales, and transactions in publicly traded options, such as puts, calls and other derivatives involving our equity securities and also prohibits the pledging of the Company’s securities as collateral to secure loans. None of our NEOs has engaged in any hedging transactions with respect to our common stock or pledged any of his or her shares of common stock in the Company.

Board and Committee Meetings and Attendance

During fiscal year 2021, the Board of Directors met seven (7) times, the Audit Committee met seven (7) times, the Compensation Committee met six (6) times and the Nominating and Corporate Governance Committee met four (4) times. During fiscal year 2021, each of our Directors attended at least 75% of the aggregate of (1) the total number of meetings of the Board of Directors held during the period for which he or she was a Director and (2) the total number of meetings for all committees of the Board of Directors on which he or she served during the periods that he or she served.

Executive Sessions

Our Corporate Governance Guidelines require that the Board hold executive sessions, which are meetings of the non-management members of the Board, at least twice per year, and that our independent Directors meet in a private session that excludes management and any non-independent Directors at least once per year. Details of our executive session practices can be found in the “Board of Directors” section of the “Corporate Governance” page of our investor relations website located at www.investors.bjs.com.

Director Attendance at Annual Meeting of Shareholders

We do not have a formal policy regarding the attendance of our Board members at our Annual Meetings of Shareholders, but we expect all Directors to make every effort to attend any meeting of shareholders. All members of our Board of Directors then serving attended the 2021 Annual Meeting of Shareholders.

Communications with the Board

Any shareholder or any other interested party who desires to communicate with the Board of Directors, our non-management Directors or any specified individual Director, may do so by directing such correspondence to the attention of the Secretary at our offices at 25 Research Drive, Westborough, Massachusetts 01581. The Secretary will forward the communication to the appropriate Director or Directors.

We believe that all of our Directors and nominees display personal and professional integrity, satisfactory levels of education and/or business experience; broad-based business acumen, an appropriate level of understanding of our business and its industry and other industries relevant to our business, the ability and willingness to devote adequate time to the work of the Board and its committees, skills and personality that complement those of our other Directors that helps build a Board that is effective, collegial and responsive to the needs of our Company; strategic thinking and a willingness to share ideas; a diversity of experiences, expertise and background, and the ability to represent the interests of all of our shareholders.

Each Director nominee is currently serving as a Director of the Company. We have no reason to believe that any Director nominee will be unable or unwilling to serve, if elected. If, however, prior to the Annual Meeting, the Board of Directors should learn that any Director nominee is unable or unwilling to serve as a Director for any reason, and if the Board shall designate a substitute nominee, the persons named as proxies will vote for the election of the substitute nominee designated by the Board. Alternatively, the persons named as proxies, at the Board’s discretion, may vote for that fewer number of nominees as results from the inability of any nominee to serve.

Generally, vacancies or newly created Directorships on the Board will be filled only by vote of a majority of the Directors then in office and will not be filled by the shareholders, unless the Board determines by resolution otherwise.

Board Recommendation

The Board of Directors unanimously recommends you vote FOR the election of each of Chris Baldwin, Darryl Brown, Michelle Gloeckler, Ken Parent, Chris Peterson, Rob Steele and Judy Werthauser as a director to hold office until the 2023 Annual Meeting and until his or her successor has been duly elected and qualified.

The information presented below regarding each Director nominee and continuing Director also sets forth specific experience, qualifications, attributes and skills, in addition to those set forth above that led the Board to the conclusion that such individual should serve as a Director in light of our business and structure.

Director Nominee Biographies

(Directors with a Term Ending at the Annual Meeting)

Continuing Director Biographies

(Directors with a Term Ending at the 2023 Annual Meeting)

The Board of Directors is responsible for approving the compensation of our Non-Employee Director, provided that the Compensation Committee may make recommendations to the Board of Directors with respect to Non-Employee Director compensation.

For fiscal year 2021, the following changes were made to our Non-Employee Director compensation, effective October 1, 2021: (i) the Compensation Committee chair retainer increased from $20,000 to $25,000, (ii) the Nominating & Corporate Governance Committee chair retainer increased from $15,000 to $18,000; and (iii) the Nominating & Corporate Governance Committee member retainer increased from $7,500 to $8,000. These increases to Board compensation are based on the Compensation Committee’s review of benchmarking data for peer group companies and to remain competitive to the median of that established peer group.

The following table sets forth information concerning the compensation of our Non-Employee Directors during fiscal year 2021. Mr. Eddy, our current President and Chief Executive Officer, and Mr. Delaney, our former President and Chief Executive Officer, were employees of the Company during fiscal year 2021 and, therefore, did not receive compensation for their service as a director. The compensation of Messrs. Eddy and Delaney is reflected in the Summary Compensation Table.

Narrative Disclosure to Director Compensation Table

Pursuant to our Non-Employee Director Compensation Policy, each non-employee Director will receive a cash retainer for service on the Board of Directors and for service on each committee on which the Director is a member in the following amounts:

The annual retainers are earned on a quarterly basis based on a calendar quarter and are paid by the Company in arrears not later than the fifteenth day following the end of each calendar quarter. In the event a Non-Employee Director does not serve as a Director or in the applicable committee or board positions for an entire calendar quarter, such Director will receive a prorated portion of the applicable retainers otherwise payable to such Director for such calendar quarter. We also reimburse our Non-Employee Director for any travel or other business expenses related to their service as a Director.

In addition to the annual cash retainers, each Non-Employee Director receives an annual restricted stock unit grant with a fair market value on the date of grant of $150,000 per year, which is made pursuant to the BJ’s Wholesale Club Holdings, Inc. 2018 Incentive Award Plan (the “2018 Plan”). The annual equity award will be granted on the date of the Annual Meeting of Shareholders or on the date of such Director’s election or appointment to the Board of Directors, which awards will also be prorated if a Director is elected or appointed as of a date other than the date of the Annual Meeting of Shareholders. Each Director may elect to defer the annual restricted stock unit grant, subject to compliance with Section 409A of the Code, and the Board of Directors may determine, in its sole discretion, that such annual equity grant be in the form of deferred stock or in shares of common stock with equivalent value on the date of grant. Each equity award will vest and become exercisable on the earlier of (i) the day immediately preceding the date Annual Meeting of Shareholders following the date of grant and (ii) the first anniversary of the date of grant, subject to the Director continuing in service on the Board of Directors through the applicable vesting date. No portion of an annual equity award that is unvested or unexerciseable at the time of a Director’s termination of service on the Board of Directors will become vested and exercisable thereafter. In the event a Director is terminated upon or within 12 months following a change in control, as defined in the 2018 Plan, such Director’s outstanding equity awards will accelerate and vest in full.

Director Stock Ownership Guidelines

The Board adopted the Director Stock Ownership Guidelines, pursuant to which Non-Employee Directors are required to own equity in the Company at least equal to five times their retainer within five years of their election or appointment. Please see the disclosure under "Executive Compensation—Director and Executive Stock Ownership Guidelines" for more information.

	The Board unanimously recommends that you vote “FOR” this advisory proposal.

We encourage our shareholders to review the "Executive Compensation" section of this Proxy Statement for more information. As an advisory approval, this proposal is not binding upon us or the Board of Directors. However, the Compensation Committee, which is responsible for the design and administration of our executive compensation program, values the opinions of our shareholders expressed through your vote on this proposal. The Board and Compensation Committee will consider the outcome of this vote in making future compensation decisions for our named executive officers. Accordingly, we ask our shareholders to vote "FOR" the following resolution at the Annual Meeting:

"RESOLVED, that the shareholders of BJ’s Wholesale Club Holdings, Inc. approve, on an advisory basis, the fiscal year 2021 compensation of BJ’s Wholesale Club Holdings, Inc.’s named executive officers as described in the Compensation Discussion and Analysis and disclosed in the Summary Compensation Table and related compensation tables and narrative disclosure set forth in BJ’s Wholesale Club Holdings, Inc.’s Proxy Statement for the 2022 Annual Meeting of Shareholders."

Board Recommendation

The Board of Directors unanimously recommends you vote FOR the resolution to approve, on an advisory (non-binding) basis, the compensation of our NEOs, as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables and related narrative disclosure of this Proxy Statement.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This section discusses the philosophy and material components of our executive compensation program for our named executive officers and the objectives driving the associated practices and decisions.

Executive Summary

Our executive compensation program is designed to be flexible and complementary and to collectively serve the principles and objectives of our compensation and benefits programs, including to reflect shareholder values, enhance the link between executive pay and company performance, respond to changing market practices and retain effective leaders who have a significant understanding of our business.

Named Executive Officers

Our NEOs for fiscal year 2021 were:

Bob Eddy President and Chief Executive Officer	Laura Felice Executive Vice President, Chief Financial Officer	Paul Cichocki Executive Vice President, Chief Commercial Officer	Jeff Desroches  Executive Vice President, Chief Operations Officer	Bill Werner Executive Vice President, Strategy and Development

This discussion and analysis also covers compensation and benefits for fiscal year 2021 for Mr. Lee Delaney, who served as our President and Chief Executive Officer until his unexpected passing in April 2021. See “—Compensation Discussion and Analysis—Compensation of Mr. Delaney” for more information regarding Mr. Delaney’s fiscal year 2021 compensation. For all other sections included under “Executive Compensation”, Mr. Delaney is also included as an NEO.

Executive Compensation Philosophy and Objectives

Our executive team is critical to our success and to building value for our shareholders. The principles and objectives of our executive compensation program are to:

ATTRACT, engage and retain the best executives, with experience and managerial talent, enabling us to be an employer of choice in a highly competitive and dynamic industry

ALIGN compensation with our corporate strategies, business and financial objectives and the long-term interests of our shareholders

MOTIVATE and reward executives whose knowledge, skills and performance ensure our continued success

ENSURE that our total compensation is fair, reasonable and competitive

Elements of Compensation

The principal components of our executive compensation program are designed to fulfill one or more of the principles and objectives described above. Compensation of our NEOs includes each of the following key elements:

	Base Salary	Fixed Short-Term Cash	Provides market-competitive fixed cash compensation reflecting role, responsibility and experience.
	Annual Incentive Plan Awards	Variable Mid-Term Cash	Earned based on achievement of a pre- established Company financial metric (Adjusted EBITDA). Designed to align pay to both individual and Company performance for the fiscal year.
	Long-Term Incentive Awards*	Variable Long-Term Equity	Designed to drive Company performance; align interests with shareholders; and encourage long- term retention of executives.

 
*Annual performance share unit awards represent 50% of long-term incentive awards, vest over a three-year period and are earned based on the achievement of cumulative adjusted EPS growth compared to goals established by the Compensation Committee. The shares earned pursuant to these awards, if any, will cliff vest as of the end of the performance period, based on continued employment through such date. Annual restricted stock awards represent the remaining 50% of long-term incentive awards and vest ratably over a three-year grant period.

We view each component of our executive compensation program as related, but distinct, and we also regularly reassess the total compensation of our executive officers to ensure that our overall compensation objectives are met. In addition, we have determined the appropriate level for each compensation component, which is based on our understanding of the competitive market based on the experience of members of the Compensation Committee, advice and information provided by Exequity, our recruiting and retention goals, our view of internal equity and consistency, the length of service of our executive officers, our and each executive officer’s overall performance, and other considerations the Compensation Committee considers relevant. Our executive compensation program is designed to be flexible and complementary and to collectively serve all of the executive compensation principles and objectives described above.

We offer cash compensation, in the form of base salaries, annual Company performance-based bonuses and, as circumstances warrant, discretionary individual performance-based bonuses, that we believe appropriately rewards our executive officers for their contributions to our business. When making awards, the Compensation Committee considers the Company’s financial and operational performance. A key component of our executive compensation program is long-term incentive awards, which are comprised of performance-based and time-based awards as noted above. We emphasize the use of long-term equity awards to incentivize our executive officers to focus on the growth of our overall enterprise value and, correspondingly, the creation of value for our shareholders. Except as described below, we have not adopted any formal or informal policy or guidelines for allocating compensation between currently paid and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation.

Each of the primary elements of our executive compensation program is discussed in more detail below.

Key Compensation Practices

The following table highlights key features of our executive compensation program that demonstrate the Company’s ongoing commitment to promoting shareholder interests through sound compensation governance practices.

	WHAT WE DO		WHAT WE DON'T DO
	Align the interests of our NEOs with those of our long-term investors by awarding a meaningful percentage of total compensation in the form of equity		Do not allow hedging or pledging of Company securities
	Grant annual cash incentive compensation based on pre-established Company goals		Do not provide for "single trigger" payment of cash severance or acceleration of time-based equity
	Have robust equity ownership guidelines for our Directors and executive officers (for our CEO, 5x base salary)		Do not provide for Section 280G excise tax gross-up payments
	Have a clawback policy that allows for the recovery of previously paid incentive compensation in the event of a financial restatement		Do not encourage unnecessary or excessive risk-taking as a result of our compensation policies
	Engage an independent compensation consultant to advise the Compensation Committee		Do not allow for repricing of stock options without shareholder approval

Roles of the Compensation Committee, Chief Executive Officer and Management in Compensation Decisions

Role of the Compensation Committee

The Compensation Committee oversees key aspects of the Company’s executive compensation programs, including, base salaries, annual incentive and long-term incentive awards, and perquisites or other benefits for the Company’s executive officers, including our NEOs. The Compensation Committee approves performance goals for awards granted under our incentive compensation programs. In making its decisions the Compensation Committee considers a variety of factors, including, but not limited to:

Role of the Chief Executive Officer and Management

The Chief Executive Officer and management team manage the compensation programs based on the Compensation Committee’s decisions and directives. The Chief Executive Officer makes recommendations to the Compensation Committee regarding compensation of executive officers other than himself.

Engagement of Compensation Consultant 

The Compensation Committee is authorized to retain the services of one or more executive compensation advisors, in its discretion, to assist with the establishment and review of our compensation programs and related policies. In accordance with its authority to retain consultants and advisors described above, the Compensation Committee continued to engage the services of Exequity, LLP ("Exequity"), a national compensation consulting firm, as its compensation consultant to provide executive compensation advisory services, help evaluate our compensation philosophy and objectives and provide guidance in administering our compensation program and policies.

All services related to executive compensation provided by Exequity during fiscal year 2021 were conducted under the direction or authority of the Compensation Committee, and all work performed by Exequity was pre-approved by the Compensation Committee. Neither Exequity nor any of its affiliates maintains any other direct or indirect business relationships with us or any of our subsidiaries. Additionally, during fiscal year 2021, Exequity did not provide any services to us unrelated to executive and Director compensation.

The Compensation Committee evaluates Exequity's independence on an annual basis and has evaluated whether any work provided by Exequity raised any conflict of interest under applicable SEC or NYSE rules for services performed during fiscal year 2021 and determined that it did not.

Key Fiscal Year 2021 Compensation Decisions

The Compensation Committee generally approves annual compensation levels for NEOs in the first quarter of each fiscal year, though it may make adjustments to compensation at other times of the year. When determining base salaries, annual bonuses, long-term incentive awards, and other forms of compensation, the Compensation Committee takes into consideration a variety of information, including, but not limited to, data generated from the compensation practices of its peer group companies, internal equity, an executive’s experience, knowledge of our business and the retail industry, scope of responsibility, corporate performance and individual performance. In particular, the Compensation Committee made the following key compensation decisions for fiscal year 2021:

Assessing Competitive Practice Through Peer Group Comparisons

To gain a general understanding of our current compensation practices, the Compensation Committee reviews the compensation of executives serving in similar positions at peer group companies. The external market data reviewed for fiscal year 2021 was provided by Exequity.

In reviewing and developing the peer group companies for fiscal year 2021, the Compensation Committee considered, at the recommendation of Exequity, industry, annual revenue, market capitalization, enterprise value, EBITDA and gross margin, among other factors for each company. With respect to its executive compensation program, the Company is positioned near the median of the peer group companies based on annual revenue and market capitalization. The peer group companies, along with other market data, used for benchmarking our executive compensation program for fiscal year 2021 was the same as the peer group companies for fiscal year 2020. The Compensation Committee reviews and develops the peer group companies annually with input from Exequity. In its 2021 review of the peer group for setting 2022 compensation, the Compensation Committee removed The Michaels Companies, Inc in connection with it being acquired by Apollo and added Albertsons Companies, Inc. and Petco Health and Wellness Company, Inc. to the peer group as identified and recommended by Exequity.

In fiscal year 2021, the Compensation Committee considered the pay practices and compensation levels of executives serving in similar positions at the peer group companies when it determined the base salary adjustments, the promotional awards, the change in the target payout levels under our Annual Incentive Plan and the size and mix of equity awards granted to our NEOs, each as described below.

Base Salary

We believe it is important to provide a competitive fixed level of pay to attract and retain experienced and successful executives. Annual base salaries compensate our NEOs for fulfilling the requirements of their respective positions and provide them with a level of cash income predictability and stability with respect to a portion of their total compensation.

The following table sets forth fiscal year 2021 and fiscal year 2020 annual base salaries for our NEOs:

The base salaries of our executive officers, including our NEOs, are reviewed periodically by the Compensation Committee and our Chief Executive Officer (except with respect to his own base salary), and adjustments are made as deemed appropriate. In determining the amount of base salary that each NEO receives, we consider the executive’s current compensation, tenure, any change in the executive’s position or responsibilities and the complexity and scope of the executive’s position and responsibilities as compared to those of other executives within the Company and in similar positions at the peer group companies.

The increases to the base salaries of our NEOs for fiscal year 2021 were designed to maintain or establish, as applicable, each NEO’s base salary near the median of his or her counterparty within the peer group companies and were based on the Compensation Committee’s review of the benchmarking data for the peer group companies provided by Exequity. The additional increases in Messrs. Eddy’s, Cichocki’s and Werner’s and Ms. Felice’s base salaries were made based on a review of competitive market data for their respective positions and to reflect their promotions and their responsibilities in their respective new roles.

Annual Incentive Plan Awards

Our Annual Incentive Plan, which became effective on January 29, 2017 (the "Annual Incentive Plan") is designed to reward participants, including our NEOs, for their contributions to the Company based on the achievement of a pre-established company financial metric, Adjusted EBITDA. We use Adjusted EBITDA, which we define as income from continuing operations before interest expense, net, provision (benefit) for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including: compensatory payments related to options; stock-based compensation expense; pre-opening expenses; management fees; non-cash rent; strategic consulting; costs related to our IPO and the registered offerings by selling shareholders; club closing and impairment charges; reduction in force severance; gas profit outside of a specific collar and other adjustments as determined by the  Compensation Committee, to set our performance target under the Annual Incentive Plan because we believe it is a key financial metric measuring the progress of our operational strategy. As each NEO’s performance contributes to this metric, we believe it provides a fair and objective basis on which to evaluate each NEO’s performance and to determine each NEO’s annual cash incentive award under the Annual Incentive Plan.

The Compensation Committee established minimum, target range and maximum levels of performance for the Adjusted EBITDA goal shortly after the beginning of fiscal year 2021, based on an assessment of the operating landscape for fiscal year 2021, which may result in variations in these established levels from year to year. Overall, the goals for Adjusted EBITDA for fiscal year 2021 were largely consistent with the prior year, however, slight increases were made to the goals for Adjusted EBITDA for fiscal year 2021 and the Adjusted EBITDA goal for target was changed from a discrete target to a range due to the novel coronavirus (COVID-19) pandemic and goal-setting challenges it has resulted in for compensation. Pursuant to these levels of performance, each NEO could earn 0%, 100% or 200%, respectively, of his or her target annual cash incentive award.

Additionally, the Compensation Committee established an aggregate target amount of the bonus pool for fiscal year 2021 for purposes of determining the impact on each NEO’s cash incentive award of Adjusted EBITDA for fiscal year 2021 being greater than or less than the target performance level (the "Target Bonus Pool"). To the extent Adjusted EBITDA for fiscal year 2021 exceeded the target performance level, then the amount of the actual bonus pool would equal the sum of (i) the Target Bonus Pool and (ii) one-third of the amount by which Adjusted EBITDA for fiscal year 2021 (without taking into account the reduction to Adjusted EBITDA resulting from cash incentive awards above the target awards amounts) exceeded the target performance level. If Adjusted EBITDA for fiscal year 2021 was less than the target performance level, then the amount of the actual bonus pool would be calculated by subtracting (i) an amount equal to one-half of the amount by which the target performance level fell short of the Adjusted EBITDA for fiscal year 2021 (without taking into account the impact to Adjusted EBITDA resulting from cash incentive awards below the target awards amounts) from (ii) the Target Bonus Pool. The amount of each NEO’s annual cash incentive award, as a percentage of the target set for each NEO, is equal to the size of such actual bonus pool as a percentage of the Target Bonus Pool (up to a maximum of 200%).

The table below illustrates the relationship between Adjusted EBITDA for fiscal year 2021, cash incentive awards as a percentage of target performance and the size of the bonus pool, with interpolation applying for amounts between levels, as well as actual performance for fiscal year 2021, the percentage of target earned and the actual bonus pool.

The Compensation Committee determined that Adjusted EBITDA for fiscal year 2021 was greater than the maximum performance level, which resulted in an achievement level of 200%. Additionally, the total bonus pool was correspondingly increased by 1/3 the amount by which Adjusted EBITDA for fiscal year 2021 exceeded the target performance level.

Each NEO's target annual cash incentive award opportunity is expressed as a percentage of his or her base salary in effect at fiscal year-end and is based on peer group benchmark data and the scope of responsibility and impact the executive has on the Company's overall results. In fiscal year 2021, the Compensation Committee maintained each NEO's target payout percentage for his or her fiscal year 2021 award, consistent with fiscal year 2020, with the exception of Mr. Eddy's target payout percentage, which was increased to 150% of his base salary from 110% of his base salary and each of Ms. Felice’s and Mr. Werner’s target payout percentage, which was increased to 70% of their respective base salary from 60% of their respective base salary.

Given the base salary increases as well as the increase to the size of the total bonus pool, however, each NEO's target annual cash incentive award opportunity increased. These increases, as well as the increase in Messrs. Eddy's and Werner’s and Ms. Felice’s target payout percentages, were intended to more closely align each NEO's potential annual total cash compensation with the median of the annual total cash compensation paid to executives with similar roles and responsibilities at the peer group companies.

The following table sets forth fiscal year 2021 target bonuses for each of our NEOs as a percentage of base salary, the percentage of target bonus earned for each NEO as a percentage of base salary and the cash incentive award amounts that were paid to each NEO for fiscal year 2021 based on the achievement of the Adjusted EBITDA goal described above.

Long-Term Incentive Awards

For fiscal year 2021, each of our NEOs received long-term incentive awards comprised of performance share units and restricted stock awards. We designed these awards primarily to motivate, reward and retain our executive officers in a manner that best aligns their interests with the interests of our shareholders. Our executive officers earn performance share units based on the achievement of pre-defined cumulative adjusted EPS goals over a three-year performance period, determined by the Compensation Committee, and we believe these types of awards provide a direct line of sight for the NEOs between our financial performance and their long-term incentive rewards. Furthermore, the restricted stock component of our long-term incentive awards closely align the incentives provided by these awards with the interests of our shareholders as our executive officers benefit from restricted stock awards when the market price of our common stock increases and all changes to the value of stock, whether positive or negative, directly correspond to those experienced by our shareholders. Therefore, we believe that restricted stock awards and performance share units provide meaningful incentives to our executive officers to achieve increases in the value of our stock over time and are an effective tool for meeting our compensation goals of increasing long-term shareholder value by tying the value of the awards to our future performance and by aligning executive officer compensation with the interests of our shareholders.

Historically, when determining the amount and terms of equity compensation awards, we considered, among other things, market information provided by Exequity, individual performance history, job scope, function, title, outstanding and unvested equity awards and comparable awards granted to other executives at similar levels at the peer group companies. The Compensation Committee has also drawn upon the experience of its members in making such determinations.

Based on these considerations, the Compensation Committee determined not to increase the long-term incentive award amounts for the NEOs for fiscal year 2021. The following table sets forth the types of awards we granted, weighting (based on target value) allocated to each type of award for each of our NEOs and vesting terms of our long-term incentive compensation for fiscal year 2021:

In connection with the transition from non-qualified stock options to performance share units in fiscal year 2020, the Compensation Committee determined, after consideration of retention factors associated with the equity scheduled to vest each year given the new delayed vesting period associated with the performance shares units as opposed to the annual vesting associated with the non-qualified stock options, to grant cash transition awards equivalent to 25% of the annual long-term incentive award grant, with one-third of the cash transition award vesting after one year and the remaining two-thirds of the award vesting the year thereafter. The first cash transition awards were paid in fiscal year 2021.

Performance Share Unit Awards 

We granted performance share unit awards to our NEOs in fiscal year 2021 for 50% of their long-term incentive compensation awards. The performance share unit awards may be earned by our NEOs based on cumulative adjusted EPS growth achieved over a three-year performance period from January 30, 2021 to February 3, 2024. Cumulative adjusted EPS means the sum of the earnings per share, determined by the Compensation Committee in its sole discretion in accordance with generally accepted accounting practices in the United States, for each of the three fiscal years in the applicable performance period, adjusted to account for: (i) unusual or one-time items of expense or income, including without limitation, asset impairment charges, charges associated with closing or relocating of a club, charges related to debt refinancing or other capital market transactions; (ii) income or expense related to discontinued operations; (iii) restructuring charges including severance charges related to the restructuring and any other non-recurring or out of period charge as approved by the compensation committee and the tax impact of the foregoing adjustments on net income; (iv) the effects of acquisitions, divestitures, stock split-ups, stock dividends or distributions, recapitalizations, warrants or rights issuances or combinations, exchanges or reclassifications with respect to any outstanding class or series of our common stock; (v) a corporate transaction, such as any merger of the Company with another corporation, any consolidation of the Company and another corporation into another corporation, any separation of the Company or its business units; or (vi) any reorganization of us, or any partial or complete liquidation or sale of all or substantially all of our assets. We use cumulative adjusted EPS to set our performance target under the performance share unit awards because we believe (a) it aligns closely with overall shareholder value and indicates our ability to create the same and (b) it is a metric commonly used by companies in our peer group and in the general industry. As each NEO’s performance contributes to this metric, we believe it provides a fair and objective basis on which to evaluate each NEO’s performance and to determine each NEO’s performance share unit award.

The number of units that will be earned, as a percentage of the of the target number of units granted, will be based on threshold, target range and maximum levels of performance established by the compensation committee shortly after the beginning of fiscal year 2021, based on their assessment of the Company outlook, which may result in variations in these established levels from year to year. As with our Annual Incentive Plan, the adjusted EPS target performance level was changed from a discrete target to a target range due to the novel coronavirus (COVID-19) pandemic and the goal-setting challenges it has resulted in for compensation. If our cumulative adjusted EPS does not equal or exceed the threshold level established, then our NEOs will not be entitled to earn any shares pursuant to these performance share units. To the extent our performance falls between two of the established levels of performance, the percentage earned will be determined based on straight-line interpolation between the percentages that would have been earned for the established levels of performance. Pursuant to these levels of performance, each NEO could earn 50%, 100% or 200%, respectively, of his or her target performance share units. The shares earned, if any, will cliff vest as of the end of the three-year performance period based on continued employment through such date.

The table below illustrates the relationship between level of achievement and the performance share unit awards earned as a percentage of target performance, with interpolation applying for amounts between levels.

Restricted Stock Awards

We also granted restricted stock awards to our NEOs for fiscal year 2021. These awards comprise 50% of their long-term incentive compensation awards and vest in three equal annual installments commencing on April 1, 2022, subject to continued employment through such dates. The following table sets forth the restricted stock awards granted to each of our NEOs for fiscal year 2021.

Promotion Awards 

In connection with the promotions of Mr. Eddy, Ms. Felice, Mr. Cichocki and Mr. Werner, each of which were effective April 19, 2021, the Compensation Committee approved awards of performance-based restricted stock units (each a “PSU Promotion Award”) and awards of restricted stock (“Restricted Stock Promotion Awards”) pursuant to the 2018 Plan.

PSU Promotion Awards

The PSU Promotion Awards are subject to the same performance-based vesting hurdles as the performance share units granted to NEOs for fiscal year 2021, which are based on achievement of cumulative adjusted EPS growth during fiscal years 2021, 2022 and 2023, subject to continued employment through such dates. The number of restricted stock units that may be earned pursuant to the PSU Promotion Award range from 50%-200% of the target amount based on the same performance levels as the performance share units granted to NEOs for fiscal year 2021. None of the performance share units will be earned if the minimum performance-based vesting hurdle is not achieved. See “—Performance Share Unit Awards” above for additional information.

The table below illustrates the relationship between level of achievement and the PSU Promotion Award earned as a percentage of target performance, with interpolation applying for amounts between levels.

Restricted Stock Promotion Awards

The Restricted Stock Promotion Awards vest in three equal annual installments commencing on April 1, 2022, subject to continued employment through such dates. The following table sets forth the Restricted Stock Promotion Awards granted to each of the NEOs set forth therein.

In connection with Mr. Werner’s leadership with the strategic evaluation of the Company’s co-branded credit card program (“Co-Brand Initiative”), he received a grant of performance share units, with a target fair market value of $1,199,954 (the “Performance Award”) as well as a restricted stock award of 5,174 shares, with a fair market value of $299,988 on the grant date (the “RSA”), with one-third of the RSA scheduled to vest on each September 25, 2022, 2023 and 2024, subject to continued employment with us through such dates. 50% of the Performance Award may vest on each of September 2025 or September 2026, subject to Mr. Werner’s continued service through the end of the applicable performance period and the co-brand spend during such performance period (“the “Performance Target”). The Compensation Committee shall determine the achievement of the performance goals within the 90-day period following the end of the performance period (such date, the “Determination Date”). If the Performance Target is not achieved, 50% of the applicable tranche of the Performance Award may vest if the co-brand spend during the applicable performance period is at least 90% of the Performance Target (the “Floor”) and up to 200% of the shares subject to the Performance Award may vest upon the achievement of 110% of the Performance Target during the applicable performance year (the “Maximum”). Achievement of co-brand spend between the Floor, Performance Target and Maximum levels are determined by linear interpolation, provided that if co-brand spend is less than the Floor, no shares under the applicable Performance Award tranche shall vest. The number of shares subject to the RSA were determined by dividing $299,988 by the per share closing price of the common stock on the grant date.

Other Compensation Components

401(k) Plan 

We have established a 401(k) retirement savings plan for our employees, including our NEOs, who satisfy certain eligibility requirements. Under the 401(k) plan, eligible employees may elect to reduce their current compensation by up to the prescribed annual limit, and contribute these amounts to the 401(k) plan. This plan provides for Company matching contributions of 50% of the first 6% of an employee’s covered compensation.

Executive Retirement Plan

We maintain an executive retirement plan (the “Executive Retirement Plan”) in which a select group of our management and highly compensated employees are eligible to participate. Participants are selected by the Compensation Committee and are entitled to company contributions within 60 days of fiscal year end under the plan (the “Annual Retirement Contribution”) if they are actively employed by the Company on the last day of a plan year or if they are terminated prior to the end of the plan year due to (i) retirement on or after the attainment of age 55 or (ii) disability. Each year the Company makes an Annual Retirement Contribution to each participant under this plan with at least four years of credited service in an amount equal to at least 3% of the participant’s after-tax base salary earned for such year. For fiscal year 2021, we made a contribution of 5% of each NEO’s base salary, consistent with prior years. Annual Retirement Contributions to participants with at least four years of service are considered taxable income to the participants, and we make an additional tax gross-up contribution to each of these participants each year. For participants with less than four years of service by the end of the applicable plan year, the participant will accrue the right to an Annual Retirement Contribution each year, and, subject to continued employment, in the plan year in which the participant is first credited with four years of service, the Company will make an aggregate retirement contribution on behalf of the participant equal to the amount of the Annual Retirement Contribution for the applicable plan year and the previous three plan years (along with a tax gross-up contribution). Notwithstanding the foregoing, we have elected to make Annual Retirement Contributions on behalf of Mr. Cichocki though he has not yet achieved four years of credited service. If the employment of Mr. Cichocki is terminated prior to achieving four years of credited service, he will forfeit any Company contributions made under the plan. Tax gross up payments will be made to Mr. Cichocki when he achieves four years of credited service. Upon a change of control, each participant with less than four years of credited service will become fully vested in any benefit accrued under the plan, and each participant will receive an Annual Retirement Contribution for the year in which the change of control occurs.

Participants generally may elect to invest their balance under the Executive Retirement Plan in a variety of different tax-deferred investment vehicles. However, the Company selects the investments with respect to Annual Retirement Contributions made on behalf of Mr. Cichocki since he has not yet achieved four years of credited service.

Employee Benefits and Perquisites

Additional benefits received by our employees, including our NEOs, include medical and dental benefits, flexible spending accounts, short-term and long-term disability insurance and accidental death and dismemberment insurance. We also provide basic life insurance coverage to our employees, as well as executive life insurance to certain key executives, including our NEOs. We reimburse certain financial counseling and estate planning expenses for certain executives, including our NEOs. We believe providing such perquisites enables us to provide a competitive package that allows us to attract and retain top talent.

In addition, Mr. Eddy is provided an allowance to use Company aircraft for personal use. We have a written policy that sets forth guidelines and procedures regarding personal use of Company aircraft. Mr. Eddy (and immediate family members traveling with him) may use our Company aircraft for up to $200,000 per calendar year of personal flight time. We do not reimburse for taxes relating to any imputed income for his personal travel and the personal travel of his family members when they are accompanying him. For fiscal year 2021, the aggregate incremental cost of Mr. Eddy’s personal use of Company aircraft was $48,151. Such aggregate incremental cost of the personal use of our Company aircraft reflects the marginal incremental private plane charter costs to the Company and excludes any fixed contract costs.

We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices in the competitive market.

We do not view perquisites, other than the use of Company aircraft as discussed above, or other personal benefits as a significant component of our executive compensation program. We view the personal use of a Company aircraft to be a significant benefit that assists us in attracting and retaining top talent while allowing our executives to serve the Company without personal travel related distractions. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as where we believe it is appropriate to assist an individual executive officer in the performance of his or her duties, to make our executive officers more efficient and effective, and for recruitment, motivation or retention purposes. All future practices with respect to perquisites or other personal benefits for our NEOs will be approved and subject to periodic review by the Compensation Committee and we do not expect such perquisites to become a significant component of our compensation program.

Severance and Change in Control Benefits

We have entered into employment agreements with each of our NEOs and believe that it is in the best interests of our shareholders to extend the severance benefits set forth therein to our executives to reinforce and encourage retention and focus on shareholder value creation without distraction. In determining the appropriate severance entitlements to provide our NEOs, we looked to general market trends in consultation with our compensation consultant. The material elements of these employment agreements are summarized below under “—Fiscal Year 2021 Compensation for Chief Executive Officer” and “—Employment Agreements and Potential Payments Upon Termination or Change in Control.”

Executive Stock Ownership Guidelines

In order to complement our compensation programs and further align the interests of our NEOs with those of our shareholders, our Board of Directors adopted Executive Stock Ownership Guidelines pursuant to which (i) our Chief Executive Officer is required to own equity in the Company equal to at least five times his annual base salary, (ii) each Executive Vice President is required to own equity in the Company equal to at least three times his or her annual base salary and (iii) each Senior Vice President is required to own equity in the Company equal to at least one times his or her annual base salary. Please see the disclosure under “—Director and Executive Stock Ownership Guidelines” for more information.

Additional Information

Anti-Hedging and Anti-Pledging Policy 

None of our NEOs has engaged in any hedging transactions with respect to our common stock or pledged any of his or her shares of common stock in the Company. Additionally, our Board of Directors adopted an insider trading compliance policy, which applies to all of our Directors, officers and certain designated employees. The policy prohibits our Directors, officers and certain designated employees from engaging in hedging or monetization transactions, such as zero-cost collars and forward sale contracts, short sales and transactions in publicly traded options, such as puts, calls and other derivatives involving our equity securities and also prohibits the pledging of the Company’s securities as collateral to secure loans.

Clawback Policy

We have adopted a clawback policy that allows the Company to recoup cash and equity incentive compensation paid to, earned by or granted to our executive officers during the three completed fiscal years preceding the publication of a restatement of the Company’s financial statements if the financial results that are the subject of a restatement had been materially misstated due to an act of embezzlement, fraud, intentional misconduct or breach of fiduciary duty by any of our executive officers. In such circumstances, the Company may recoup the amount of cash and equity incentive compensation that was paid, earned or granted as a result of the incorrectly reported financial results of the Company that were the subject of the restatement that would not have been paid, earned or granted, as applicable, if determined based on the financial results of the Company set forth or reflected in the Company’s restated financial statements. Our clawback policy applies to all incentive compensation approved or awarded on or after March 3, 2020.

Modification of Equity Award Agreements 

In April 2021, following the unexpected passing of Mr. Delaney, the Company reviewed its policy for the treatment of outstanding equity upon termination by reason of death or disability. In connection with this review, the Compensation Committee considered, in consultation with Exequity, data regarding prevalent market practices, including through a review of its peer group’s practices, and determined that the Company’s then current treatment of equity upon death or disability was less favorable than typical market practices. Accordingly, the Compensation Committee determined to modify Mr. Delaney’s awards, and to amend all other outstanding equity award agreements, to provide for, upon termination due to death or disability, as applicable: (i) full vesting of all time-based awards, including restricted stock awards and stock options, (ii) pro-rata vesting of all performance-based awards, including performance share units, based on actual performance as of the end of the applicable performance period, pro-rated based on the period of employment during the applicable performance period, and (iii) the extension of the post-termination exercise window for vested stock options from 90 days to three years. For Mr. Delaney’s estate, these modifications were subject to execution of a release of claims in favor of the Company. In adjusting the treatment of outstanding equity upon termination by reason of death or disability, and modifying Mr. Delaney’s awards, the Compensation Committee intended to position the Company competitively with the market in order to better attract and retain equity-eligible employees and executives as well as to provide a post-termination exercise window that is sufficient to allow for the settlement of outstanding options prior to any court proceedings that may be required with respect to the award recipient’s estate.

Compensation of Mr. Delaney 

Mr. Delaney’s annual base salary during fiscal year 2021 was $1,230,000 and his target annual cash incentive award was $1,845,000, which was structured in the same manner as the target annual cash incentive awards for our NEOs. In addition, prior to his passing, Mr. Delaney received long-term incentive awards with a target value of $7,125,000, which were comprised of performance share units (with respect to 50% of the target value) and restricted stock (with respect to 50% of the target value) structured in the same manner as the awards received by our NEOs. Mr. Delaney’s base salary, target annual cash incentive award and target long-term incentive awards for fiscal year 2021 were determined based on the same considerations as those for the same type of compensation received by our NEOs for fiscal year 2021. Mr. Delaney’s salary earned through April 8, 2021 was paid to his estate. Mr. Delaney was not eligible to receive his full annual cash incentive award as his employment with the Company ceased during 2021. Mr. Delaney received a pro-rated annual cash incentive award through April 8, 2021.

In connection with Mr. Delaney’s passing, the Compensation Committee approved the modifications to his outstanding equity awards as described above under “—Compensation Discussion and Analysis—Modification of Equity Award Agreements,” which resulted in the accelerated vesting of 202,731 shares of restricted stock and 74,060 stock options with a weighted average exercise price of $20.89 that had been previously granted. As a result of these modifications, his estate also retained the right to earn up to 135,257 performance share unit awards that were originally granted in fiscal year 2020, and 4,921 performance share unit awards that were originally granted in fiscal year 2021, each of which represent a pro rata portion of the performance share unit awards originally granted prorated based on that portion of the performance period for each award during which Mr. Delaney was employed by us. No changes were made to the performance-based vesting criteria of these awards and, as a result, the percentage of the pro rata portion of these performance share units that will be earned, if any, will be determined in the same manner and using the same performance criteria as were originally established for the performance share units. These modifications resulted in an aggregate increase in the incremental fair value of those awards for accounting purposes of approximately $17,500,000.

Tax and Accounting Considerations 

Section 162(m) of the Internal Revenue Code 

Generally, Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), disallows a tax deduction to any publicly-held corporation for any individual remuneration in excess of $1 million paid in any taxable year to certain “covered employees.” We expect to be eligible for transition relief from the Section 162(m) deduction limitation that should generally extend until our 2022 Annual Meeting of Shareholders.

To the extent that this transition relief expires or is otherwise unavailable, we expect that the Compensation Committee will consider the potential future effects of Section 162(m) on the deductibility of executive compensation paid to our NEOs. As such, in approving the amount and form of compensation for our NEOs in the future, the Compensation Committee will consider all elements of the cost to us of providing such compensation, including the potential impact of Section 162(m). In appropriate circumstances, however, the Compensation Committee may implement programs that recognize a full range of criteria important to our success and to ensure that our executive officers are compensated in a manner consistent with our best interests and those of our shareholders, even where the compensation paid under such programs may not be deductible under Section 162(m) of the Internal Revenue Code.

Section 280G of the Internal Revenue Code 

Section 280G of the Internal Revenue Code disallows a tax deduction with respect to excess parachute payments to certain executives of companies which undergo a change in control. In addition, Section 4999 of the Internal Revenue Code imposes a 20% penalty on the individual receiving the excess payment. Parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G based on the executive’s prior compensation. In approving the compensation arrangements for our NEOs in the future, the Compensation Committee will consider all elements of the cost to the Company of providing such compensation, including the potential impact of Section 280G. However, the Compensation Committee may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G and the imposition of excise taxes under Section 4999 when it believes that such arrangements are appropriate to attract and retain executive talent.

Section 409A of the Internal Revenue Code 

Section 409A of the Internal Revenue Code requires that “non-qualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities, penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefits plans and arrangements for all of our employees and other service providers, including our NEOs, so that they are either exempt from, or satisfy the requirements of, Section 409A.

Accounting for Stock-Based Compensation 

We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718, for our stock-based compensation awards. ASC Topic 718 requires companies to calculate the grant date “fair value” of their stock-based awards using a variety of assumptions. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based awards in their income statements over the period that an employee is required to render service in exchange for the award. Grants of stock options, restricted stock, restricted stock units and other equity-based awards under our equity incentive award plans will be accounted for under ASC Topic 718. The Compensation Committee will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.

Summary Compensation Table 

The table below sets forth the compensation earned by or paid to our NEOs for fiscal year 2021, fiscal year 2020 and fiscal year 2019 presented in accordance with SEC rules. Ms. Felice and Mr. Werner were not NEOs in fiscal year 2019 and fiscal year 2020. Messrs. Cichocki and Desroches were not NEOs in fiscal year 2019.

All Other Compensation for Fiscal Year 2021

Grants of Plan-Based Awards in Fiscal Year 2021

The following table sets forth information regarding grants of plan-based awards made to our NEOs during fiscal year 2021:

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

Our executive compensation policies and practices, pursuant to which the compensation set forth in the Summary Compensation Table and Fiscal Year 2021 Grants of Plan-Based Awards table was paid or awarded, are described above under "—Compensation Discussion and Analysis."

In fiscal year 2021, we granted restricted stock awards and performance share unit awards to each of our NEOs. Additional awards of restricted stock and performance share units were granted to Mr. Eddy, Ms. Felice and Messrs. Cichocki and Werner in connection with their respective promotions on April 19, 2021. Mr. Werner also received an additional grant of performance share units for his leadership on the Company’s Co-Brand Initiative. All awards were granted pursuant to the 2018 Plan, as described in the Fiscal Year 2021 Grants of Plan-Based Awards table. The vesting of each award is subject to acceleration and post-termination exercisability in connection with the death or disability of the NEO as described above under “—Compensation Discussion and Analysis—Modification of Equity Award Agreements,” as well as certain termination triggering events described below under “—Employment Agreements and Potential Payments Upon Termination or Change in Control.” To the extent we pay dividends in the future, dividends otherwise payable with respect to unvested shares of restricted stock will be retained by us and will only be paid if and when the underlying shares of restricted stock vest.

The terms of the employment agreements that we have entered into with our NEOs are described below under “—Employment Agreements and Potential Payments Upon Termination or Change in Control.” 

Outstanding Equity Awards at Fiscal Year-End 

The following table sets forth certain information with respect to outstanding equity incentive plan awards held by our NEOs as of January 29, 2022:

Fiscal Year 2021 Option Exercises and Stock Vested 

The following table sets forth the aggregate number of options to purchase shares of our common stock exercised by our NEOs in fiscal year 2021 and the aggregate number of shares of restricted stock that vested in fiscal year 2021. The value realized on exercise of options is the product of (1) fair market value of a share of our common stock on the date of exercise minus the exercise price, multiplied by (2) the number of shares of common stock underlying the exercised options. The value realized on vesting of stock awards is the product of (i) the closing price of our common stock on the NYSE on the vesting date (or, if there were no reported sales on such date, the most recent previous date on which sales were reported), multiplied by (ii) the number of shares vesting.

Employment Agreements and Potential Payments Upon Termination or Change in Control

The following section describes the employment agreements that we have, or had, as applicable with our NEOs as well as other severance or change in control arrangements or policies, including applicable terms of equity awards. The Company, in its discretion, may also decide to provide payments or benefits that are not specifically required to these agreements, arrangements or policies in connection with any particular termination or change in control.

NEO Employment Agreements

BJ’s Wholesale Club, Inc. has entered into employment agreements with each of Mr. Eddy, dated as of January 30, 2011; Ms. Felice, dated May 10, 2021, Mr. Cichocki, dated as of January 30, 2020; Mr. Desroches, dated as of April 18, 2018; and Mr. Werner dated as of May 10, 2021. The initial term of Mr. Eddy’s employment agreement was for a period of five years, ending on January 30, 2016, after which he was to remain employed by the Company subject to the termination provisions of his agreement; none of Ms. Felice’s or Messrs. Cichocki’s, Desroches’s or Werner’s employment agreements specified a term of employment. Mr. Eddy is subject to a 24-month post termination non-competition covenant, a 24-month post-termination non-solicitation covenant, and a perpetual confidentiality covenant. Ms. Felice and Messrs. Cichocki, Desroches and Werner are each subject to a 12-month post termination non-competition covenant, a 24-month post-termination non-solicitation covenant, and a perpetual confidentiality covenant.

Pursuant to each employment agreement (except for Mr. Eddy), the Company has certain obligations that become due in the event of termination. If any of Ms. Felice and Messrs. Cichocki, Desroches and Werner are terminated by the Company without cause (as defined in the applicable employment agreement), then, subject to the executive entering into a binding and irrevocable release of claims and the executive’s continued compliance with the applicable post-termination non-competition, non-solicitation and confidentiality provisions, each executive is entitled to receive (i) a continuation of his base salary for a period of 24 months after termination, (ii) an amount equal to the difference between the executive’s actual COBRA premium costs and the amount the executive would have paid had he continued coverage as an employee under the Company’s applicable health plans for up to 24 months, subject to earlier termination in specified instances and payable over such period, (iii) a pro rata portion of any amounts the executive would have been entitled to receive under the Company’s Annual Incentive Plan had she or he remained employed by the Company until the end of the fiscal year during which termination occurred, payable in lump sum and (iv) any other payments or benefits arising from the executive’s participation in other Company plans to the extent such plans provide for post-termination employment benefits.

Upon a termination due to death or disability, in addition to the accrued amounts, subject to the execution of a release of claims, each of the executives is eligible to receive (i) the annual cash bonus the executive would have been entitled to receive had he remained employed until the end of the fiscal year (prorated for the period of active employment during the fiscal year), and (ii) any other payments or benefits arising from the executive’s participation in other Company plans to the extent such plans provide for post-termination employment benefits.

On May 10, 2021, the Company entered into an employment agreement with Mr. Eddy, in connection with his promotion to the office of President and Chief Executive Officer of the Company, effective April 19, 2021, which superseded his previous employment agreement described above. Pursuant to the terms of Mr. Eddy’s current employment agreement, he is entitled to an annual base salary of $1.2 million. Additionally, the compensation committee approved a fiscal year 2021 target annual cash incentive award opportunity equal to 150% of his annual base salary, and annual long-term incentive awards in the amount of $6.0 million, consisting of 50% performance-based restricted stock units and 50% restricted stock, for a target total direct compensation for fiscal year 2021 equal to $9.0 million. In connection with Mr. Eddy’s promotion, the compensation committee also approved an award of performance-based restricted stock units to Mr. Eddy pursuant to the 2018 Plan for a number of restricted stock units, at target, equal to $5.0 million divided by the fair market value of the Company’s common stock on the grant date. See “—Compensation Discussion and Analysis for a description of this award. The current employment agreement also provides that on or after April 19, 2021, to the extent Mr. Eddy’s employment is terminated without cause (as defined in such employment agreement), he is entitled to receive, in addition to any accrued amounts, subject to his entering into a binding and irrevocable release of claims and his continue compliance with the applicable post-termination non-competition, non-solicitation and confidentiality provisions, (i) an amount equal to the sum of (a) his base salary for a period of 12 months after termination and (b) his target annual cash bonus, payable in substantially equal installments in such manner and at such times as Mr. Eddy’s base salary was being paid immediately prior to such termination (or if such termination occurs upon or following the occurrence of a change in control, such amount will be paid in a single lump sum); (ii) an amount equal to the difference between Mr. Eddy’s actual COBRA premium costs and the amount he would have paid had he continued coverage as an employee under the Company’s applicable health plans for up to 12 months, subject to earlier termination in specified instances, (iii) if such termination had occurred on or after July 1^st of a fiscal year, a pro rata portion of the annual cash bonus to which Mr. Eddy would have been entitled had he remained employed by the Company until the end of the fiscal year, (iv) full accelerated vesting of any stock awards or stock options that are unvested and held by him as of the termination date and (v) any other payments or benefits arising from Mr. Eddy’s participation in other Company plans to the extent such plans provide for post-termination employment benefits. The employment agreement also includes provisions regarding termination due to death or disability that are the same as those contained in Mr. Eddy’s prior employment agreement. 

Equity Awards

Generally, the terms of our 2018 Plan and the applicable award agreements entered into with our NEOs provide that, as of the date of an NEO’s termination of employment, unvested options and restricted stock will automatically be forfeited, cancelled or repurchased, as applicable. In the event of a change in control, as defined in the 2018 Plan, any outstanding awards granted under the 2018 Plan (other than those subject to performance-based vesting) will continue in effect or be assumed or substituted by the successor of the Company or the Company, if the surviving entity, unless the Compensation Committee elects to (i) terminate such awards in exchange for cash, rights or property, or (ii) cause such awards to become fully exercisable and no longer subject to any forfeiture restrictions prior to the consummation of a change in control. Any awards subject to performance-based vesting terms will be treated as provided in the applicable award agreement or as determined by the Compensation Committee (or its successor) within its sole discretion. However, if the applicable NEO’s employment is terminated without cause (as such term is defined in the sole discretion of the Compensation Committee or set forth in the applicable award agreement) upon or within the 24 month period following a change in control, then the vesting of any awards that were continued, assumed or substituted will accelerate and the NEO will become fully vested in such awards. In the event of termination of employment with us, vested stock options granted under our 2018 Plan that would otherwise remain exercisable generally cease to be exercisable three months or 90 days after termination of employment. In the event of termination of employment with us, vested stock options under the 2011 Plan that would otherwise remain exercisable generally cease to be exercisable 90 days after termination of employment or, in the event of a termination due to death or disability, one year after termination of employment. All unexercised stock options are immediately forfeited in the event of a termination of employment for cause.

In April 2021, following the unexpected passing of Mr. Delaney, the Company reviewed its policy for the treatment of outstanding equity upon termination by reason of death. In connection with this review, the Compensation Committee considered, in consultation with Exequity, data regarding prevalent market practices, including through a review of its peer group’s practices, and determined that the Company’s then current treatment of equity upon death or disability was less favorable than typical market practices. Accordingly, the Compensation Committee determined to modify Mr. Delaney’s awards, and to amend all other outstanding equity award agreements, to provide for, upon termination due to death or disability, as applicable: (i) full vesting of all time-based awards, including restricted stock awards and stock options, (ii) pro-rata vesting of all performance-based awards, including performance share units, based on actual performance as of the end of the applicable performance period, pro-rated based on the period of employment during the applicable performance period, and (iii) the extension of the post-termination exercise window for vested stock options from 90 days to three years. For Mr. Delaney’s estate, these modifications were subject to execution of a release of claims in favor of the Company. See “[—Compensation Discussion and Analysis—Modification of Equity Award Agreements] for more detail regarding these modifications.”

Annual Incentive Plan 

Pursuant to the terms of the Annual Incentive Plan, if a participant’s employment is terminated during a fiscal year due to death, retirement on or after age 65 or retirement on or after age 55 with a minimum of ten years of service, then the participant is entitled to a pro rata portion of the annual cash bonus to which the participant would have been entitled for that fiscal year under the Annual Incentive Plan had the participant remained employed by the Company until the end of the fiscal year. 

Summary of Potential Payments Upon a Termination or Change in Control  

The following table summarizes the payments that would be made to our NEOs upon the occurrence of a qualifying termination of employment or change in control, assuming that each NEO’s termination of employment with the Company or a change in control occurred on January 29, 2022. Amounts shown do not include (i) accrued but unpaid salary through the date of termination, and (ii) other benefits earned or accrued by the NEO during his or her employment that are available to all salaried employees. Each of the payments below are subject to the NEOs compliance with certain restrictive covenants including, but not limited, to non-solicits and non-competes as provided in their respective employment agreements.

In connection with Mr. Delaney’s passing, the Compensation Committee approved the modifications to his outstanding equity awards as described above under “—Compensation Discussion and Analysis—Modification of Equity Award Agreements,” which resulted in the accelerated vesting of 202,731 shares of restricted stock and 74,060 stock options with a weighted average exercise price of $20.89 that had been previously granted. As a result of these modifications, his estate also retained the right to earn up to 135,257 performance share unit awards that were originally granted in fiscal year 2020 and 4,921 performance share unit awards that were originally granted in fiscal year 2021, which represent a pro rata portion of the performance share unit awards originally granted prorated based on that portion of the performance period for each award during which Mr. Delaney was employed by us. No changes were made to the performance-based vesting criteria of these awards and, as a result, the percentage of the pro rata portion of these performance share units that will be earned, if any, will be determined in the same manner and using the same performance criteria as were originally established for the performance share units. Based on a closing price of $57.93, which was the closing price of our common stock on the NYSE on January 28, 2022: (i) the value of the shares of restricted stock that vested upon Mr. Delaney’s passing was approximately $11,700,000, (ii) the value of the stock options that vested upon Mr. Delaney’s passing was approximately $2,700,000, calculated by multiplying the number of shares underlying such stock options by such closing price and then deducting the aggregate exercise price for the stock options and [(iii) the value of the maximum number of performance share units that could be earned by Mr. Delaney’s estate was approximately $15,700,000. See “—Compensation Discussion and Analysis—Modification of Equity Award Agreements and “—Compensation Discussion and Analysis—Compensation of Mr. Delaney.”

Compensation Risk Assessment and Management

We monitor our compensation policies and practices for our employees to determine whether they encourage unnecessary or excessive risk-taking. Due to the greater emphasis placed on incentive compensation at higher levels of our organization, and the fact that these individuals are more likely to make decisions that impact corporate performance and could have a material adverse effect on us, our review focuses primarily on our executive compensation policies and practices. We believe that the risks arising from our policies and practices for compensating employees are not reasonably likely to have a material adverse effect on us primarily because of the following reasons:

Director and Executive Stock Ownership Guidelines

In order to complement our compensation programs and further align the interests of our NEOs with those of our shareholders, our Board of Directors adopted Director Stock Ownership Guidelines and Executive Stock Ownership Guidelines pursuant to which the following persons are expected to own equity in the Company with the following aggregate market values:

Our non-employee Directors and our executive officers are expected to attain compliance with these ownership guidelines by the fifth anniversary of our IPO, if serving as a Non-Employee Director or executive officer at the time of our IPO, or by the fifth anniversary of their appointment or election, in the case of a non-employee Director, or their hire or promotion date, in the case of an executive officer. Thereafter, Non-Employee Directors and executive officers are required to certify as to his or her compliance with these ownership guidelines at least once each year.

2021 CEO Pay Ratio

As required by Item 402(u) of Regulation S-K, the Company is disclosing the following information about the relationship of the annual total compensation of our CEO and the median of the annual total compensation of our employees (other than the CEO) for fiscal year 2021:

We identified the median employee for fiscal year 2021 pay ratio using the following methodology and material assumptions. To identify the median of the total annual compensation of our active employees as of January 29, 2022, we used total wages from our payroll records for the period from January 30, 2021 (the first day of fiscal year 2021) through January 29, 2022 (the last day of fiscal year 2021); we included any full-time, part-time, temporary or seasonal employees but excluded our CEO; and we did not annualize compensation for any full-time or part-time permanent employees who were employed on January 30, 2021 but did not work for us the entire year or make any full-time equivalent adjustments for part-time employees. We consistently applied this compensation measure and methodology to all of our employees included in the calculation.

We determined the annual total compensation for fiscal year 2021 of our median employee (who was calculated to be a part-time employee) in the same manner that we determine the total compensation of our named executive officers for purposes of the Summary Compensation Table.

This information is being provided for compliance purposes. Neither the Compensation Committee nor management of the Company used the pay ratio measure in making compensation decisions.

Compensation Committee Interlocks and Insider Participation

During fiscal year 2021, the members of the Compensation Committee (or other committee performing equivalent functions) were Tom Kingsbury, Ken Parent and Judy Werthauser.

During fiscal year 2021, none of our executive officers served as a member of the Board of Directors or Compensation Committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on the Board of Directors or Compensation Committee.

Compensation Committee Report

The Compensation Committee has discussed and reviewed the prior Compensation Discussion and Analysis with management. Based upon this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by the Compensation Committee of the Board of Directors:

Judy Werthauser (Chair)

Tom Kingsbury

Ken Parent

The Board unanimously recommends that you vote “FOR” the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm.

Although ratification is not required by our Bylaws or otherwise, the Board is submitting the appointment of PricewaterhouseCoopers LLP to our shareholders for ratification because we value our shareholders’ views on the Company’s independent registered public accounting firm and it is a good corporate governance practice. If our shareholders do not ratify the appointment, the Audit Committee will take that act into consideration, together with such other factors it deems relevant, in determining its next appointment of independent auditors. Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders. Representatives of PricewaterhouseCoopers LLP are expected to attend the Annual Meeting and to have an opportunity to make a statement if they so desire and be available to respond to appropriate questions from shareholders.

Board Recommendation

The Board of Directors unanimously recommends you vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2022.

Audit, Audit-Related, Tax and All Other Fees

The table below sets forth the aggregate fees billed to BJ’s for services related to fiscal year 2021 and fiscal year 2020, respectively, by PricewaterhouseCoopers LLP, our independent registered public accounting firm.

Pre-Approval Policies and Procedures

The formal written charter for our Audit Committee requires that the Audit Committee pre-approve all audit services to be provided to us, whether provided by our principal auditor or other firms, and all other services (review, attest and non-audit) to be provided to us by our independent registered public accounting firm, other than de minimis non-audit services approved in accordance with applicable SEC rules.

The Audit Committee has adopted a pre-approval policy that sets forth the procedures and conditions pursuant to which audit and non-audit services proposed to be performed by our independent registered public accounting firm may be pre-approved. This pre-approval policy generally provides that the Audit Committee will not engage an independent registered public accounting firm to render any audit, audit-related, tax or permissible non-audit service unless the service is either (i) explicitly approved by the Audit Committee or (ii) entered into pursuant to the pre-approval policies and procedures described in the pre-approval policy. Unless a type of service to be provided by our independent registered public accounting firm has received this latter general pre-approval under the pre-approval policy, it requires specific pre-approval by the Audit Committee.

On an annual basis, the Audit Committee reviews and generally pre-approves the services (and related fee levels or budgeted amounts) that may be provided by the Company’s independent registered public accounting firm without first obtaining specific pre-approval from the Audit Committee. The Audit Committee may revise the list of general pre-approved services from time to time, based on subsequent determinations. Any member of the Audit Committee to whom the committee delegates authority to make pre-approval decisions must report any such pre-approval decisions to the Audit Committee at its next scheduled meeting. If circumstances arise where it becomes necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories or above the pre-approved amounts, the Audit Committee requires pre-approval for such additional services or such additional amounts.

The services provided to us by PricewaterhouseCoopers LLP in fiscal year 2021 and fiscal year 2020 were provided in accordance with our pre-approval policies and procedures, as applicable.

Audit Committee Report

The Audit Committee operates pursuant to a charter which is reviewed periodically by the Audit Committee. Additionally, a brief description of the primary responsibilities of the Audit Committee is included in this Proxy Statement under the discussion of "Corporate Governance—Audit Committee." Under the Audit Committee charter, management is responsible for the preparation, presentation and integrity of the Company’s financial statements, the application of accounting and financial reporting principles and our internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing our financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States.

In the performance of its oversight function, the Audit Committee reviewed and discussed with management the Company’s audited financial statements for fiscal year 2021. The Audit Committee also discussed with the Company’s independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the "PCAOB") and the SEC. In addition, the audit committee received and reviewed the written disclosures and the letters from the Company’s independent registered public accounting firm required by applicable requirements of the PCAOB, regarding such independent registered public accounting firm’s communications with the Audit Committee concerning independence, and discussed with the Company’s independent registered public accounting firm their independence from the Company.

Based upon the review and discussions described in the preceding paragraph, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in its Annual Report on Form 10-K for fiscal year 2021 filed with the SEC.

Submitted by the Audit Committee of the Board of Directors:

Chris Peterson (Chair)

Maile Naylor

Rob Steele 

Certain provisions of our Charter require the affirmative vote of holders of at least 66 2/3% of the voting power of our outstanding shares of stock entitled to vote with respect to such provisions to approve (i) amendments to our Charter and our Bylaws and (ii) the removal of directors from office (together, the “supermajority voting requirements”), each of which is discussed further below. We are seeking shareholder approval of an amendment to our Charter to eliminate these supermajority voting requirements from the Charter and to replace such requirements with a majority voting standard (the “Proposed Charter Amendment”).

The Board unanimously recommends that you vote “FOR” the Proposed Charter Amendment.

Rationale for Eliminating the Supermajority Vote Requirements

The Proposed Charter Amendment is a result of the Board’s ongoing review of our corporate governance principles and our commitment to good governance practices as we continue the transition from a controlled company to an independent company. It is the Board’s view that, subject to any applicable laws, our shareholders should have the ability to make changes to our Charter and Bylaws and to remove directors from office with majority support.

In developing the Proposed Charter Amendment, the Board carefully considered the implications of amending our Charter to eliminate the supermajority voting requirements. The supermajority voting requirements are intended to protect against self-interested action by large shareholders by requiring broad shareholder support for certain types of governance changes. By eliminating the supermajority voting requirements, the Proposed Charter Amendment may make it easier for one or more shareholders to remove directors or effect other corporate governance changes in the future and may also make it more difficult for the Board to protect shareholders’ interests if presented with an acquisition proposal that the Board believes undervalues the Company. Nevertheless, the Board is of the belief that eliminating the supermajority voting requirements is consistent with generally held views of good corporate governance, as evidenced by the fact that many other public companies have transitioned away from supermajority voting provisions in the years after going public. On balance, and in contemplation of the considerations described above, the Board believes this action is in the best interest of our company and our shareholders.

Eliminate Provisions Requiring a Supermajority Vote to Amend our Charter and Bylaws

Our Charter currently provides that, in addition to any affirmative vote of the holders of any particular class or series of stock required by law or our Charter, the affirmative vote of the holders of at least two-thirds of the voting power of the then outstanding shares of stock entitled to vote thereon, voting together as a single class, is required to alter, amend or repeal certain provisions of our Charter, including provisions relating to: (i) the powers, election of, removal of and terms of directors, (ii) shareholder action, (iii) limitation of liability, (iv) exclusive forum, (v) conflicts of interest and (vi) amendment of our Charter and Bylaws.

If Proposal 4 is approved by shareholders, the voting standard for shareholder approval of any future amendments to our Charter, including the provisions described above, would be by the affirmative vote of the holders of at least a majority of the voting power of the outstanding shares of stock entitled to vote thereon, voting together as a single class, which is the default voting standard under the DGCL. The Board will retain the right to amend, alter, change or repeal any provision of our Charter without seeking approval of our shareholders, except as required by the DGCL.

Currently, our shareholders may only alter, amend or repeal, in whole or in part, any provision of our Bylaws with the affirmative vote of at least two-thirds of the voting power of the outstanding shares of stock entitled to vote thereon, voting together as a single class.

If Proposal 4 is approved by shareholders, Article X, Section 2 of our Charter would be amended to replace the reference to “66-2/3%” with “a majority.” As a result, shareholders would be able to amend our Bylaws with the affirmative vote of the holders of at least a majority of the voting power of the outstanding shares of stock entitled to vote thereon, voting together as a single class. Unless otherwise required by law, the Board will also retain its right under our Charter to make, repeal, alter, amend and rescind, in whole or in part, our Bylaws by a majority vote of the directors then in office.

The Proposed Charter Amendment would also delete certain obsolete provisions in Article X relating to the equity ownership of our former sponsors.

Related Changes to our Bylaws

In connection with the Proposed Charter Amendment, the Board has approved a conforming amendment to our Bylaws. The amendment, which is contingent upon shareholder approval and implementation of Proposal 4, would amend Article X of our Bylaws to replace the provision requiring a supermajority vote in order to amend our Bylaws with a majority vote threshold. As permitted by the DGCL, our Bylaws will continue to allow the Board to make, repeal, alter, amend and rescind, in whole or in part, our Bylaws by a majority vote of the directors then in office, unless otherwise required by law.

Eliminate Provisions Requiring a Supermajority Vote to Remove Directors

The Charter also currently states that, subject to the rights of any holders of preferred stock to elect directors, from and after the date on which the Board ceases to be classified, which shall be after the 2022 Annual Meeting, any director may be removed from office, with cause by the affirmative vote of the holders of at least 66 2/3% of the voting power of the outstanding shares of our stock entitled to vote at an election of directors or without cause by the affirmative vote of the holders of at least 66 2/3% of the voting power of the outstanding shares of our stock entitled to vote on the election of such director.

Therefore, if Proposal 4 is approved, in addition to the amendments to our Charter and our Bylaws described above, shareholders would also be able to remove any director from office, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of our stock entitled to vote on the election of directors generally. This change aligns with the default voting standard under the DGCL. The Proposed Charter Amendment would also delete certain provisions relating to director removal rights when the Board is classified, as such provisions will become obsolete following the 2022 Annual Meeting.

Proposed Charter Amendment

The text of the Proposed Charter Amendment is attached as Annex A to this Proxy Statement and incorporated herein by reference.

As discussed, the Charter currently requires the approval of at least 66 2/3% of the voting power of the outstanding shares of our stock to approve Proposal 4. If Proposal 4 is approved by the requisite number of our shareholders, we will file a Certificate of Amendment to our Charter with the Secretary of State of the State of Delaware, which Certificate of Amendment will become effective at the time of filing. Additionally, the related conforming amendment to our Bylaws adopted by our Board will become effective upon such filing.

If Proposal 4 is not approved by the requisite vote, then a Certificate of Amendment to our Charter will not be filed with the Secretary of State of the State of Delaware, the related amendment to our Bylaws approved by the Board will not become effective and the supermajority voting requirements in both our Charter and Bylaws will remain in place.

Board Recommendation

The Board unanimously recommends that you vote “FOR” the Proposed Charter Amendment to eliminate the supermajority vote requirements in our Charter and Bylaws.

Beneficial Ownership

To our knowledge, except as otherwise indicated, each of the persons, groups of affiliated persons or entities listed in the tables below has sole voting and investment power with respect to the shares beneficially owned by him, her or such group or entity. For purposes of the tables below, “beneficial ownership” is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person is deemed to have “beneficial ownership” of any shares that such person has the right to acquire within 60 days after March 1, 2022. For purposes of computing the percentage of outstanding shares held by each person, group of affiliated persons or entities named below, any shares that such person, group of affiliated persons or entities has the right to acquire within 60 days after March 1, 2022 are deemed to be outstanding but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person, group of affiliated persons or entities. The percentage of shares beneficially owned is computed on the basis of 135,329,504 shares of our common stock outstanding as of March 1, 2022.

Beneficial Ownership of Directors and Executive Officers

The following beneficial ownership table sets forth, as of March 1, 2022, information regarding the beneficial ownership of the Company’s common stock by (i) each of our current Directors and our NEOs for fiscal year 2021; and (ii) all current Directors and executive officers as a group.

*Represents beneficial ownership of less than 1% of our outstanding common stock.

Beneficial Ownership of More Than 5% Shareholders

Based on information available as of March 1, 2022, the following are the only beneficial owners of more than 5% of the Company’s common stock:

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of our common stock, to file reports of ownership and changes in ownership with the SEC. Such officers, directors and shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file with the SEC. To our knowledge, based on review of the copies of such reports and amendments to such reports furnished to us with respect to fiscal year 2021, and based on written representations by our current directors and executive officers, all required Section 16 reports under the Exchange Act for our directors, executive officers and beneficial owners of greater than 10% of our common stock were filed on a timely basis during fiscal year 2021 and fiscal year 2022 to date, with the following exceptions: (i) Lee Delaney had a Form 4 amendment filing on April 7, 2021 to correct the number of shares of restricted stock reported as acquired on April 1, 2021; and (ii) Monica Schwartz had a Form 4 amendment filing on August 25, 2021 to correct the number of shares withheld by the Company for payment of tax liability incident to the vesting of shares of restricted stock on August 3, 2021.

Certain Relationships and Related Person Transactions

Review and Approval of Related Person Transactions

The Board of Directors recognizes that transactions with related persons present a heightened risk of conflicts of interests and/or improper valuation (or the perception thereof). The Board has adopted a written policy on transactions with related persons that is in conformity with the requirements for issuers having publicly-held common stock listed on the NYSE. Our related person transaction policy requires that the Audit Committee approve or ratify related person transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K (which are transactions in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any "related person" as defined under Item 404(a) of Regulation S-K had or will have a direct or indirect material interest). It is our policy that Directors interested in a related person transaction will recuse themselves from any vote on a related person transaction in which they have an interest. Each of the transactions described below entered into following the adoption of our related person transaction policy was approved in accordance with such policy.

Certain Related Person Transactions

Mr. Kingsbury’s daughter was employed by the Company in a non-executive role during fiscal year 2021. She received compensation and was eligible to participate in benefit plans consistent with employees of the Company in comparable positions.

Indemnification Agreements

Our Bylaws provide that we indemnify our Directors and officers to the fullest extent permitted by the Delaware General Corporation Law ("DGCL"), subject to certain exceptions contained in our Bylaws. In addition, our Charter provides that our Directors will not be liable for monetary damages for breach of fiduciary duty.

We have entered into indemnification agreements with each of our executive officers and Directors. The indemnification agreements provide the indemnitees with contractual rights to indemnification, and expense advancement and reimbursement, to the fullest extent permitted under the DGCL, subject to certain exceptions contained in those agreements.

There is no pending litigation or proceeding naming any of our Directors or officers for which indemnification is being sought, and we are not aware of any pending litigation that may result in claims for indemnification by any Director or executive officer.

Shareholder Proposals and Director Nominations

Shareholders who intend to have a proposal considered for inclusion in our proxy materials for presentation at the 2023 Annual Meeting pursuant to Rule 14a-8 under the Exchange Act must submit the proposal to our Secretary at our offices at 350 Campus Drive, Marlborough, Massachusetts 01752, in writing not later than January 5, 2023.

Shareholders intending to present a proposal at the 2023 Annual Meeting, but not to include the proposal in our Proxy Statement, or to nominate a person for election as a Director, must comply with the requirements set forth in our Bylaws. Our Bylaws require, among other things, that our Secretary receive written notice from the shareholder of record at the time of giving notice of their intent to present such proposal or nomination not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the anniversary of the preceding year’s Annual Meeting of Shareholders. Therefore, we must receive notice of such a proposal or nomination for the 2023 Annual Meeting no earlier than the close of business on February 16, 2023 and no later than the close of business on March 18, 2023. The notice must contain the information required by our Bylaws. In the event that the date of the 2023 Annual Meeting is more than 30 days before or more than 60 days after June 16, 2023, then our Secretary must receive such written notice not earlier than the close of business on the 120th day prior to the 2023 Annual Meeting and not later than the close of business of the 90th day prior to the 2023 Annual Meeting or, if later, the 10th day following the day on which public disclosure of the date of such meeting is first made by us. SEC rules permit management to vote proxies in its discretion in certain cases if the shareholder does not comply with this deadline and, in certain other cases notwithstanding the shareholder’s compliance with this deadline.

To comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 17, 2023.

We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with these or other applicable requirements.